yellen and company kicking off a two-day -- what do you call it, a meeting. a pow-wow. it's tuesday, june 14th, 2016, and "squawk box" begins right now. ♪ >> announcer: live from new york, where business never sleeps, this is "squawk box." good morning, everyone. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernin and andrew ross sorkin. take a look at u.s. equity futures. yesterday, the market closed at three week lows. the s&p 500 the nasdaq had the lowest losing streak in four months. however not as bad as what we've seen in the overseas market. the dow futures down by 23 points. s&p down by 5.5. nasdaq down by almost 10. in europe, taking a look at early trading.

weak tln weakness there. you did see the dax is down by 0.8%. losses by more than 1% in germany. the cac is down by 1.3%. take a look at the benchmark, ten-year german bund, turning negative, 0.013%. that comes after pressure on treasuries around the globe yesterday. you saw the u.s. ten-year, yelled was at its lowest level for sometimes since 2012. that was 1.6%. this morning, even lower, 1.586%. when you check out the 30-year, 2.58%. and the nasdaq bass down. and shanghai composite managed to hold on to gains, hang seng

was down by 0.6%. crude oil looking to decline. wti. and the brexit vote and the most recent polls, the latest yougov poll now giving the leave campaign a seven-point lead if you can believe this over remain. 11% undecided. 4% won't vote. other polls are also putting leave ahead now. two icm polls, one online, one by phone, finding outholding 4353% support. betting aulds on brexit are now narrowing a probability of a vote to stay in the eu fell to 59%. that's down from a 78% probability of an in vote of a week ago. this is rupert murdoch's own son now endorsing a brexit calling

on voters to "beleave" in britain. >> that's spelled like that? >> apparently not. you know me and spelling. the front page editorial flaegd part "this is our last chance to remove ourselves from the undemocratic brussels machine and it's time to take it." a trio of jobs reports, we've got retail says and imports coming up at 8:30. sales having risen after surging in april. coming up at 10:00 a.m. look for april inventory. and fed is kirking off that two-day policy meeting today. no interest rate moves expected. the central bank could tweak its view on the economy and interest rate forecasts. switching gears entirely. i hope this doesn't go from here on out because we're a business network. there was terror in france.

overnight. a senior french police killed a knife-wielding man in paris. the woman said to be the police officer's partner was also killed. a young boy was found unharmed. the attacker was then killed when elite police commando stormed the residence, and isis has claimed responsibility for it. meantime, the investigation continues this morning into the orlando nightclub terrorist attack. eamon javers joins us with more. eamon. >> reporter: yeah, good morning. orlando is a city in mourning today. last night, thousands of city residents came together in a downtown orlando square here to pay their respects, to stand in solidarity. and members of the city's gay community said in particular they have been so hard hit by this. it's such a tight-knit community they said almost everybody knows somebody who was killed in the

pulse nightclub over the weekend. meanwhile, investigators are learning a lot more about the background of the killer here, omar mateen. 29 years old. born in the united states in new york. he moved to florida. now "the washington post" is reporting while in high school in florida he was a sophomore in high school at the time of the 9/11 attacks in new york. and according to some of his former classmates at the high school, he either cheered or smiled during the 9/11 coverage that they were all witnessing together on tv in the high school. that according to people who went to school with omar mateen. "the washington post" reporting this morning a new dimension to this case. they say that omar mateen who attacked a gay nightclub here in orlando may very well been a frequent user of gay dating apps. and may have been a frequent visitor to that gay bar himself over the past several years. several witnesses who say they saw him on the apps or at the

bar multiple times. that adds another element to this story as we try to build a personality profile of who this killer was. and what was in his mind. why did he do this horrific thing that he did over the weekend here in orlando, florida. meanwhile, guys, we're learning that the president of the united states will be here in orlando on thursday to express his solidarity with the victims and their families. and the entire community here. and will go through the rest of the day, today, expecting more briefings and updates from the fbi as to everything that they're learning about how this attack came together. back over to you. >> eamon, i suppose some of us look at this there's a digital fingerprint that can be followed. that may take weeks or dice find information that should provide a lot more choose about some of these circumstances, right? >> reporter: yeah, we learned yesterday that they've been able to obtain some of mateen's communication devices, cell phone, perhaps a computer. some of those devices have been sent to an fbi lab in quantico,

virginia, for analysis. they said one of the horrific details in all of this they had to clean the cell phone of blood before they could ship it and send it to the fbi forensics team to look for that digital trail. >> are we able to get to some of the stuff or staff it encrypted? >> reporter: yeah, well, that's a really good question. what we've learned so far is that mateen did not have an iphone. so this won't be a decision for apple to make as we saw in the wake of the san bernardino shooting where apple said they were not able to unlock the phone of the user. in this case, you're not dealing with apple so it may be more impossible for investigators to wet into phone. it might be that the company leadership decides they want to communicate and do what they can to help the fbi get access to those devices. >> eamon javers on the scene in orlando.

we'll be checking in with him throughout the market. meantime to the markets, a check of equities, dow futures down by 22 points. s&p down by 5.5. nasdaq down by 8. currency is where a lot of chaos has played out. a lot of heavy trading. the dollar is up against the euro trading at 1.1215. obviously, questions around the brexit. the pound yesterday was down by 1.5% because of concerns. the dollar is up against the pound at one point at 41.43. the surging yen has been another problem. that's part of the reason we saw the japanese stock market down by 3% yesterday. today, it's at 1.0586. >> equity markets three straight days of declines just as the fed begins its two-day policy meeting. volatility heightened monday. both of our next guests think it

could get worse before better. joining us is strategist at capital markets. says it's not a tanning machine which is bad for you. >> they have better weather. >> boehner says it's from the golf course. who am i to say it's true or not. >> you know the great thing about the midwest, we actually cut our own grass as i did in new jersey i cut my own grass. this thing called the sun -- >> guys, directors, i don't know what to do with this, they're going from him to michael zinn, michael zinn is senior vice president and wealth management at ubs, and he apparently does a lot of research inside and probably got better calls. both of you guys do think that

this flat market in volatility. i'll start with you, you've been bullish, and you still are as far as the long-term bull market. when did you get -- i remember you've been a long time friend of the show -- i remember more recently you got even more bullish. did you foresee this sideways action for the last year or so? >> you know, we did. we talked about 2016 in the year ahead piece that we published in november and we said in print that the market would correct 1800 and be in this 1800 to 2100 rinse and repeat, rinse and repeat, rinse and repeat-type market as we transition away from this need of commodities, emerging markets and quantitative easing and towards more fundamental investing. we think there's three parts to the market. near term, intermediate term and long term. long term is the secular bull market. in the intermediate term, we

think that u.s. stocks are assets in terms of establishment. near term, joe, this summer heading into the election it's going to be bumpy. you have brexit. you have fed fears and commodities weakness. it's not a fundamental rally. and of course what's going on in terms of near term performance in the market which is on very light volume. we see weakness this summer. >> i don't know about -- we got to 50, we said, look, almost assume iing i was going to get . my target is 60. we're almost there. and now turning down to 50. who knows with the negative german ten-year what does that imply about inflation? >> the same people calling for 70, $80 oil, are calling for $10, $15 oil. this is clearly more of a momentum play so from a

fundamental perspective supply is in pressure and global growth remains -- a lot of pressure on global growth. >> you also say the election is going to give people fits. is that because -- i mean, minnesota you've just got a bunch of democrats. have you ever had a republican from that place? >> no, minnesota has not voted for a republican. you got eugene mccarthy and franken. it keeps on going. >> exactly, one after theory. you say trump, oh, the markets -- is that what you're saying? >> it's not just trump. noise is created. election years are typically positive. >> we did have a socialist, we got like 50% of the democratic vote. that might cause some free market people to have pause, although in minnesota you probably think it's a great idea. >> yeah, i'm not going to counter that. >> all right, michael, you say it's the place to be? >> correct. >> how about you? >> i would go along with that --

>> the socialist, love bernie sanders part? >> no i was going to say we do think -- i do think there's going to be a pretty jumpy market ahead of this, you know, sharknado of economic and political data. >> i like that. >> that's good. >> yeah. >> and that sharknado is difficult, and i do think that the big take away, i think for u.s. investors are things are getting better here. there are signs to see improving earning expectations. economic data. and that investors have been set up defensively to begin with. and, so, you know, that puts, i think, u.s. markets in a decent foundation withstand shocks. and as they say, you make all your money in lousy markets. you just don't know it at the time. so, i think it's important to

keep a cool head and pick your spots. >> and the market could be good after all? >> it could be good. i mean, i don't think you can discount what the effects are going to be if we have some of these referendums go. you know, people don't really know. but i would look at aft least this market in an opportunistic way and say maybe there are some decent companies here that are selling at bigger discounts than they were. and they may get the discounts and continue to increase. and so, you know, don't just run fully into the bunker. >> some people think that the fed -- it should worry about high inflation, worry about heightened inflation, because that's the things that have caused big problems in the past. in the '70s or whatever. and to try to deliberately engender inflation is like the wrong move but then nobody wants deflation. negative interest rate paid to take a mortgage. wouldn't you like to be the mortgage person?

>> you want to be in japan? >> i don't. >> they got different dem graphics issues. they don't have kids. >> they do inflationary issues have created all kinds of problems. >> is zero bad? >> real wages -- you want real wages to rise, not inflation wages. >> but if you're in an inflationary environment, japan has hundred-year mortgages. literally that multiple generations of families have to sign off on. >> are we at 1% inflation? >> this has been the slowest recovery in the history of recoveries. >> right. >> the reason is it's been driven by monetary policy. there's been no fiscal policy. so we think going forward, we're going to see fiscal policy. it will be very strong for earnings markets and u.s. market. >> but why now? >> we knew that the administration was not going to be for fiscal policy and will continue to be more dovish. and that's what we've seen. >> and -- we're going to have

steve ruseman on. do you think hillary clinton is going to be less dovish than obama? >> i wouldn't jump to that conclusion. >> on what part? >> that wall street thinks hillary is the next president. >> what day is it? >> i think it's too early to be calling this. >> hillary is just so -- so ready. has there never been anyone more prepared. hey, venezuela, imf sees venezuela inflation rocketing, too, in 2016? 720, baby. 7:20. i tried to explain that to my kids at home. if it's 720 how quickly do

prices double when you buy something? >> got to have shortages. >> but does it double ever week and a half? >> probably, right? >> i'm not sure. i'd have to do every month and a half. >> month and a half. >> on hp calculator. >> so buy bread now and freeze it? >> it's just -- 720 that will get your attention. >> if you have a freezer. >> or the electricity to run it. >> all right, gentlemen, thank you. i hope the sun's not out -- you don't need any. just relax. >> i'm going to hang out right here. >> when he comes back from his summer vacation he looks the same. >> i know. >> after two weeks. >> you got to wear the sunscreen. >> maybe you're not -- >> it's good polish skin. coming up, microsoft getting into the social business of its acquisition of linkedin.

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box." this morning, microsoft adding linkedin to its social profile network. the software giant has a spolty portfolio, though, of past and previous acquisitions.ing nokia. joining us here, tom warren, he covers microsoft at the verge. you saw the headline cross the tape, you said to yourself, genius or crazy? >> i said to myself, what in the world is happening here. i think the price is -- it's a nice premium of current holders of linkedin, certainly. it's a big enough move for microsoft that shows they have to really commit to this. >> do you say to yourself, i can see two or three years from now

microsoft combined with linkedin and the opportunity out there? >> the why is the question. i scratch my head. why would they do this. from linkedin perspective it makes sense. the growth has slowed on the aftering business a fifth of their sales as well as users but from microsoft's perspective, why would they want this? one of the big parts of linkedin it's really used as a lead generation tool for salespeople. for recruiting purpose, yes, it's a subscription purpose they can pay into. for a lost companies looking for people to sell for, they need to find who is the right person. and i think that's the big part of what microsoft sees as value. >> is that effective? >> you'd be surprised. you'd be surprised how effective it can be. >> tom, i am in ed's camp here.

i think it's genius if you're selling right now. but on the stock side, explain. what do you think? >> yeah, it's a few minutes with it and essentially i think it really boils down to the whole cloud and just getting access to data. it's really quite as simple as that. when you look at google and you look at facebook and some of the constitutions that they have in place, they have the social data. microsoft doesn't have that. when you look at that, it doesn't make sense. maybe the cross doesn't necessarily make sense. >> when you say the data to mine -- returning to sales force, can they take this lead generation tool, truly build tools around it, and put themselves in business against a sales force? >> well, i think microsoft brings a lot of engineering talent. i think that's one thing that linkedin has suffered from lately. not that they don't have engineering talent but they

haven't improved their product for those services. one thing for skepticism, data, we throw around that world like it's a thing. but it's a big question mark. that's a part we haven't figured out yet. >> other question i have there were two things happening yesterday. one is linkedin is going to remain independent, independent, independent. and yet sthey say we're going t integrate it with office 365, how is that going to work? >> that's unclear. i think personally they're going to to try to use the news stream and news feed. some of the point this gave around picking out what business relationships that exist mining into that. for example, they gave an example of news that you see someone is working on a similar project from a company that you might be sorgtassociated with.

and then know exactly how much business interest there is in that, especially around the core, so i think to see how that plays out. but i think the main key reason is to have a social presence and integrate into outlook and skype and office, all of that sort of stuff, that's pretty much key why they're going for this. >> ed, before you go, what do you make of the fact that the deal is all cap? what does it mean linked in selling they're not falling into this? >> right. linkedin in terms of their business, i think they're willing to -- a lot of those guys want to cash out. it's an exit for a lot of early investors. for a lot of big shareholders.

>> how long do you think jeff stays? >> he's staying. >> he's name was bandied around to be ceo. that's years ago before satya got the job. >> and if they build that business up, he comes in line, right. >> one thing we talked about very early yesterday, whether or not microsoft has a cool factor when it comes to silicon valley? >> it's sort of one of the least cool silicone families out there. i don't mean to disparage it. >> it's a professional business in sort of seeing customers. >> basically, if you're an engineer in silicon valley, linkedin is not a place to work. >> thanks. coming up, giving grows. plus, red hot, irving and lebron keeping the cavs alive. highlights from game five of the nba finals. as we head to break, here's a look at yesterday's s&p's

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points higher. s&p 500 about 5 points higher. and nasdaq -- i just said higher. i meant lower. lower across the board. they're all in the red. take a look at the yield on the benchmark, german ten-year treasury falling into negative territory for the first time ever. also new this morning, imf saying progress in china's economic reforms has been uneven. the imf also saying that china's ability to deal with stocks eroding. cities answer the country continue to pay tribute to victims of the shooting in a gay nightclub. the mayor gathering at the stonewall inn. the names of all 49 victims were ahead. members of the lgbt community lit candles and prayed outside of city hall. in los angeles, the l.a. men's gay choir gathered there.

the crowd held signs and embraced. singer lady gaga spoke at the vigil calling the shootings an attack on humanity itself. meanwhile stirring up rhetoric on both sides of the aisle. john harwood joins us. john. >> becky, we have a pretty sharp contrast in the republican and democratic candidates. first to speak about hillary clinton, she called for in the wake of the shooting military response in terms a ramped up campaign and domestically to hunt after lone wolf suspects and preerchvent that kind of st but she cautioned against. >> in muslim rhetoric intent to fan families and friends of muslim americans southwest muslim business people and tourists from entering our

country hurts the vast majority of muslims who love freedom and hate terror. so does saying that we have to start special surveillance on our fellow americans because of their emergency. >> now, donald trump took the opposite approach in his speech which occurred later in new hampshire. he said we do have to ramp up surveillance of mosques in the united states. and he painted a picture of uncontrolled immigration, a potentially dangerous muslims. and said he was going to stop it with his plan to temporarily ban muslims from coming into the united states. here's donald trump. >> the immigration laws of the united states give the president powers to suspend entry into the country of any class of persons. now, any class, it really is determined and to be determined by the president. for the interests of the united states. >> now, the concern among republican leaders is that this rhetoric which was successful in the primary is going to turn off

voters in the general election and hurt the republican party. as well as the fact that military leaders say this kind of approach will not work in the united states. we have seen results from the nbc news survey monkey poll which has just come out this morning reflecting events over the last week. not just the terrorist attack. but also the controversies that donald trump ran into last week when he went after that hispanic judge. the hispanic-american judge. hillary clinton in this poll is leading donald trump seven points. she was leading by four points in the last poll. so a lost concern among republicans about donald trump right now. we'll see how it plays out in the next few days. it's possible he could get a bump from this terrorist attack box of the fear from americans. >> when was the polling, john? what dates? >> this is a continual poll. but it's a rolling online survey that continually cycles in interviews. so, it has a long tail to it, so to speak.

>> the 12th, right? >> uh-huh. >> the 12th. >> so it will probably be another week before we see how this plays out. john, thank you very much. >> before we see effects of the terrorist attacks itself, that's right. shifting gears now, more americans than ever are giving. more generous than ever. a new report from giving usa foundation shows a record amount was donated to charity. total donations rose 4% to $370 billion. which means on average americans gave about $3 billion. contributions from all sources rose, foundations, corporate giving and charitable plus. driving the donations, economic recovery and disposable income.

now to sports, we know the cleveland cavaliers did avoid elimination in the nba finals. cavs pulling away from the wa z goldgold golden star warriors. the warriors lead the series three games to two as they look for the second straight nba title. game six back in cleveland on thursday night. and fantasy sports firms fanduel and draftkings are reportedly in talks to merge. merger of these two rivals would give the companies in control of 95% of the daily fangt taes sports industry. it would lower legal costs against lawmakers that want to impose regulations and restrictions leveled by at least ten states. the combination could reduce advertising both have spent very aggressively to try to battle

against market share against each other. each topping about $1 billion last year. >> a multiple report saying there's this deal, dan primack who we had on the show before say don't mean to impugn a certain source which is ours. we're trying to figure it out. when we come back, the possibility of the voting to leave the european union. the possibility of a brexit. and this week, the top of central bank meeting with the top visor of pimco. here's a check of the european markets right now.

welcome back, time for the "squawk planner" a trio of economic reports topped the agenda. main lee taretail sales at 8 o . 8:30. 10:00 a.m. eastern, look for april business inventories. and then, of course, the fed is starting its two-day policy

meeting today. also a policy decision is expected at 2:00 eastern tomorrow along with the latest economic projections. the brexit vote is just over a week away and polls that show greater odds of uk leaving the european union are actually causing jitters in the market. joining us for the potential for brexit, former assistant of the u.s. treasury department. rich, the market has been writing this off for quite a while, that the bids odds that this would go and vote to stay in. how is the market catching it? >> well, the market is starting to pay more attention to it, becky. you know, the polls are breaking in the direction of an exit. depends how you ask the question. telephone or online. clearly, exit has an argument. our view it intends to be a

close call and will be remain. obviously it's going to be a nail-biter going down to election next week. >> we've seen currency markets in particular disrupted by this with the pound weakening substantially. >> i think you have a triple whammy. you have a very weak payroll number and janet yellen expressing concern about the economy and now brexit. you throw all three of those into the soup and it's definitely stirring up volatility for sure. >> what happens if the brexit determines to leave? >> there's this unknown. it won't be clean. even if it's a brexit vote it sets it up for a two or three or four or five-year term. it's like a messy divorce. it's just another set of negotiations if it happens. >> and the market reaction if this happens what do you think the immediate result is? we're talking about a vote a week from thursday. >> i believe if there is an

impact, it's because of the continual contagion. what makes it interesting europe will have an interest to strike a very clear bargain with the uk. precisely because the u.s. is a copycat. >> at the same time, they don't want to cut off their nose spite their face for britain is a major trading partner and could have an impact? >> of course, i do think there's going to be a volatility price to be paid if there's a brexit vote. we don't think it changes the view of europe but adds noise to the understanding. >> let's talk about what's happening with interest rates. watching germany fall into negative territory for the ten-year. what's happening? >> well, it tells us that the markets don't believe that the ecb is able to reinflate the economy. belatedly, they're all in on this massive program. this is one case we're lower on

bund. negative ten-year yields is not negative but lack of confidence in the policy process. >> it also follows there's all kinds of major implications with what the fed can and cannot do here. when you look at negative interest rates in germany, negative rates in japan. will the fed be able to raise rates. even though we don't think they're able to do it today, there's an expectation they can do it in july or september? will they do that? >> well, the rest of the world impacts the pace of the liftoff. the fed still wants to liftoff. but you are right, in the sense impact on the dollar and capital flows is an important factor for the fed. we continue to think they're going to continue to hike very gradually. there will be more than one hike. >> very gradually. this is the longest lived ever wait for the second move in a rate hike. at this point, you're also -- question whether we're even in a rate hiking environment.

>> well, absolutely. i think the fed believes if they don't move at all this year, it may be tough ever to sort of get out of the gate. we think there will be a hike later this year. >> so, what's an investor to do at this point? >> well, i think there are a couple of things. first of all, you have to recognize the volatility. you have to look at companies and sectors that aren't overly dependent on sectors. we thing that's diminishing. on the other hand, there were markets there. we think it's a bottoms up market not a top-down market? >> what does that mean? >> well, you have to look at individual companies and the stocks you like as opposed to making a top-down macro calls. think about the surprises have not been in the macro data. >> as the market has gone flat and gone nowhere. i guess i wonder if you've been in a situation where the central banks are all in the same situation and not raising rates does that go back to a macro call?

>> well, i think it does go back to a macro call and going to be showing up in currency markets depending on how this plays out with the fed. >> depending on how it plays out with the fed, we'll see. >> yellen is trying to do something that no fed chair has not done. at least in my lifetime get a rate hike cycle in a situation that inflation is too low. they want inflation to go up. that's tough. we're hiking but we want inflation higher. >> you say it's sectors you like and companies you like. what are some sectors you like and do well in this environment? >> well, we think there are investment grade credits and fundamentals. we also think it's a global outlook where moving outside of the traditional markets can make some sense, in particular, some emerging economies for that. >> let's talk about financials, do you think they've been beaten up too much and at the same time, you don't think rate hikes

are coming anytime soon? >> well, absolutely. steeper curve. you have to look at the companies that are not overly dependent on the continued largess of the central bank. >> rich, thank you for coming in. >> you bet. i want to say congratulations to brad and nicole, my brother and sister-in-law they just became parents again, an hour and a half ago. they won't tell me it's whether it's a boy or girl. because they don't want to runt surpri -- ruin the surprise for my parents they're with the big sister. they get to open it up and that will tell them whether it's a boy or girl. >> they won't tell me the name, or the sex. 8 pounds 4 ounces. >> are they really worried that

your parents are watching the show this morning? >> no, what happened when my brother rob announced it, they got texts. >> just pretend everyone watches. i try to pretend everyone watches. >> congrats. did you read this in the journal? i think it's interesting. it's an editorial about it. seven times revenue. >> right. >> 27% below the high. >> uh-huh. >> and let's say, maybe he thinks that some day the fed's going to raise rates. and it's no longer going to be a liquidity-driven market. not only that, but also the why borrow money? because they got $1.5 billion in cash but none of it's here. they can't bring it back over here. plus, borrowing it -- it's even affecting businesses.

>> it's a business borrow. >> unlike the universal accolade yesterday, what is this, they're late on cloud, late on mobile, is this the way to do it? it's not making money. paying seven times revenue. >> did you read the column today? an interesting column about this whole topic. >> it's or column. >> by a guy i know. >> i get "the new york times," but if there's a way to cancel that revenue accruing to that company down the street i would, but i can't. >> who's the guy who wrote it? >> a guy who knows nothing. >> we heard his take yesterday. but then you had to call a bunch of people to get his real take. >> it's actually very different. the take is actually what drove this deal. sort of the unspoken moment of

this whole thing is that linkedin pays more stock-based comp to its people than anywhere in the valley. to wit certificate only one. 90% of profit goes to employees. >> if you left that out, you're not making years they've lost money. their stock has dropped, as you watched, basically 40% -- >> what are they trying to -- let -- >> -- became -- no. became an existential crisis inside the company. which is to say if your employees are your talent and you live in a world where everyone is getting paid stock and it's going down and it's not clear that the stock has a path to go up -- >> that explained linkedin but it doesn't explain why they wanted to buy it. >> i didn't explain that in the column. it's a serial situation. >> it is? coming up, this morning's -- >> can't wait to take more of

your subscription money. >> i have it here, i think. >> that's great. >> it's the bottom one. under "the daily news." which says something. coming up -- >> yeah. great. coming up this morning. previous movers. your list of stocks to watch. later, malcolm gladwell. >> this will be awesome. >> to talk about his new podcast series called "revisionist history." "squawk box" will be right back. ♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪

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. stocks to watch today. china's largest search engine cutting quarterly forecast by 10%. regulators have heightened scrutiny of the medical sector. nxp semi conductor is selling its standard product unit to two chinese firms for $2.7 billion. zimmer biomethod announcing the launch of a stock offering. the offering consists of more than 11 million shares. they said secondary. i don't know whether they're existing shares or new shares. hey! there is our guy. >> who is our guy? >> mike. mike our guy. >> oh. >> going to see whether the --

>> we got a security situation outside? is that what's happening? before we take a quick break, check this out. a powerful tornado was caught on camera yesterday as it ripped through madison, texas. bringing with it hail and dramatic lightning strikes. parts of the texas panhandle were still under storm watches and warnings early this morning. when we come back, our guest host for the morning, joshua cooper ramo joins us for the next couple hours to talk politics, the potential for a brexit and much more. >> a new book out too. >> he does. blackstone chairman and ceo steve schwarzman is our guest at the top of the hour. "squawk box" will be right back. my mom loves giving me advice. she even gives me advice...

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terror in orlando. new developments in the brutal massacre at the pulse nightclub. the latest details on the killer behind the attack. the connections to isis and more straight ahead. the countdown to a brexit vo vote. the fed kicks off its two-day meeting. we'll talk markets, rates and more with steve schwarzman and joshua cooper ramo. a potential fantasy sports dream team. the details on a possible tag-team tie-up between fanduel and draftkings as 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

weak again. but they've improved a little. they've narrowed the losses. down 15 points. triple digits yesterday. the vix hit a three or four-month high yesterday as people started saying, whoa, brexit? maybe it's a possibility. the european markets. all down 1% again. except for germany. down .8%. but france and the ftse 100, italy and spain all down over 1%. the german ten-year, first time ever, a negative yield. minus four ticks is the way to look at it. the u.s. ten-year -- this is pretty close to a record low for recent months. 1.5 -- >> yesterday it was at the lowest level since december of 2012. that was a 1.61%. >> now 1.58. we have guys like mark grant saying 1.25 is coming.

>> he has been saying that for a while. oil prices right now -- those were, you know, took a wrong turn on the way back to 60 or 70. we're now down, going back below 50 at $48.24. brent is below 50 now too. let's get you caught up on the headlines. economic data front and center. may retail sales and import prices coming out at 8:30. import sales expected to rebound. prices seen rising. apple rolling out software improvements at the developer's conference. upgrading. the tech giant announcing an overall of the music subscription service, apple music, to feature a simpler interface. stuff on the watch was cool. the new stuff on the phone was cool. felt a lot cooler.

the big data stuff i said i was worried they wouldn't be able to get at without being in the cloud, they seem to have figured out. i'm getting more excited. >> we'll see. you were excited at 130 on apple. here is what i was thinking yesterday. i might have been lying in bed. microsoft didn't buy -- >> these are the things you think about? >> after i -- i forgot they were going to pay $48 billion for yahoo. luckily they avoided that. they had a chance. theoretically they could have bot goog bought google. they could have bought apple. if they had steve jobs wouldn't have come back to policemapple wouldn't be walking around with

our thumb on this thing. >> i have both. >> think about what we used to do with the raised buttons. remember the print? it looked like it was from the stone ages or something. sorry. we digress. >> rant over. >> we have a couple more things to talk about. >> i know. i can see when we digress you are jonesing to read it. because you are an anchor. >> we have things to do. >> people know the feds are kicking off a meeting. and it's not live anymore. we should get a policy decision at 2:00 eastern toor tomorrow along with the latest projections. >> if it hadn't been for the employment report it looked like there was at least a chance they might go this week. clearly that's not happening. and now the question is really what do they signal about what happens after the -- after the june meeting, you know, july,

september, what do we see in the dot plot and so forth? >> fed chair janet yellen will holds a news conference at 2:30 eastern time tomorrow. joe. now. >> all right. all right. i am not in a big rush to read what people right. to the brexit vote. the most recent polls. the latest u-gov poll giving the leave campaign a 7-point lead over remain. 11% undecided. that's probably key. and 4% won't vote. last week the same poll showed a 1% vote for the leave. two icm polls, one only and one by phone, finds that people -- 53% want to leave. also notable, though -- and this is where you don't really understand -- it's like don't believe the polls. just believe where people are putting their money. because betting odds on brexit still imply a 59% probability of a stay.

55% of a stay. that's down, though, from 78% probability of an "in" vote less than a week ago. the momentum is moving that way. still, 67% stay. everybody we have on -- still everybody -- no one really believes it. that's why i don't think trades are necessarily set up for a leave yet. i don't think anyone really believes it. >> i don't think so either. >> what do you think? >> i mean, i think the nature of the world today is everybody is asking the same questions. you discover you're connected to all these risks. it's hard to handle right now. >> i would think most people know -- >> you can feel the unease. everywhere you travel in the world today, this is the core question, what am i connected to? what does it mean? i think you have a lot of people in the u.k. sitting around worrying about exactly this question. having a day where you have german interest rates going into negative territory has to unnerve them as well. >> right.

josh ramo is here. co-ceo of kissinger associates. new book out. you were talking about yahoo before. he almost got to run yahoo and didn't take the job. >> not run. one of my great career moves. number four, number five. no thank you. $800 million mistake. >> mistake that led to this book in parts. we'll get to that in a minute. the fed kicking off its two-day meeting. brexit fears mounting. ripple effects of the latest terror attack taking a toll in the marks. also we'll talk about china. steve schwarzman joins us. and also, as we said, our guest host for the morning, joshua cooper ramo, co-ceo and vice-chair at kissinger associates and he has the new book out called "the seventh sense." get it. power, fortune and survival in the age of networks. starting with you, steve. you're in london. we're thrilled to have you. help us understand the feeling

on the ground about the potential for a brexit. is it real? >> well, it's the first conversation you have with almost everybody here. they just bring it up. it's a fixation, of course. and it's swinging around. and it seems that the leave people have more momentum. former priememe ministers talki about what a terrible decision that will be, and nobody can quite figure it out. but it's certainly going to come to an ends i guess on the 23rd. >> what are the implications for your businesses? you own portfolio across the globe, of course, and all over europe. have you thought about it? have you had to make any contingency plans? >> well, the issues are sort of a bit subtle and unknowable. one of the major issues is what happens to the eu? does there create -- is there created an echo boom there to

other countries to start thinking about what's going on? in france i think there was a survey that said 60% of the people are unhappy with the eu. so it's hard to know what the impact is on the longer-term basis. usually in the short term there is always unsettlement. if the eu stays together there will be a period of adjustment. this doesn't happen in a day. it's years, really, to negotiate some kind of exit, if you were to have one, between the u.k. and the eu. i think most people would think it does create economic uncertainty with markets and probably does not help global growth over the short to intermediate term. >> josh, you have clients all over the world. i know you are a china expert. i imagine they talk to you about the implications of what's happening in europe as well. >> i think the tremendous

question is independent of what happens on the 23rd what are the knock-on effects? this is something we have had a hard time mapping out because we've never seen anything like this before. it's that issue. not simply of question of how you price this in. structurally what does europe look like in the event of a brexit. steve, a different political question. last time we saw you you said -- this was back when the -- there were multiple candidates in the gop. you said you were going to support donald trump over mr. cruz. i assume you are still supporting donald trump. i don't know but i'll ask you that. also, the conversations that you are having with people in the u.k. and europe, what they think of what's happening here. >> well, i think, starting with the second piece of that, andrew, i think people are just sort of a bit curious and uncertain how the u.s. whole election process got to be so

odd, whether it's a socialist winning 22 or 23 states as a democrat or, you know, someone who has no political experience on the other side, on the republicans becoming so visible. and everybody wants to know because the u.s. is the dominant economic power in the world. and the dominant military power. and i think it makes people feel unsettled regarding the united states. >> josh, which part of it do you think makes people unsettled? does hillary clinton make them more unsettled for donald trump make them more unsettled? >> to steve's point, i think it's the process itself. there is no political process in the world more watched than this process. the whole world has become so unpredictable in a sense, then to have this one thing that people thought would be relatively reliable to turn out

in such a way. >> you have chinese clients in particular. >> we never have had chinese clients. >> we think of you as the china expert. >> you can have a great life in china without actually having chinese clients. >> hmm. let me move on, then, to a different issue unrelated to politics but perhaps related more to the economy. this is for steve. i don't know if you saw george soros recently said he was skeptical of china, in particular, and said he was going to be shorting some of the market. steve, you have been long china for a long time. >> well, i think china has clearly slowed down over time. their economy is divided between about half of it as a consumer economy. services, which is doing quite well. and half of it, which is a manufacturing economy, including manufacturing exports, which has

not done so well. the country has got a high level of leverage outside of the central government. and they continue to grow at a rate that's at least double the u.s. but not what it was. and so the issue, i think, is what's china going to be able to grow at over a sustained period of time during a period of transition? and i think george looks at that, because i did see interviews that he gave, and basically says i don't see the big upside there. in terms of that conclusion, that's -- that's probably right, over the short to intermediate term. nonetheless, it continues to grow at rates faster than almost any other place in the world. >> right. where do you stand? >> i think what -- if you follow

the soros stuff, he has had an incredible track regard of pattern recognition on currency-related issues. i think that's the bet he seems to be making at this point. the amount of money the chinese government is spending to maintain the currency where it is becomes more expensive than the benefits they're getting. they say we're in the midst of a reform process. it's a price we're willing to pay. the financial times has a number this mornings. half a million dollars. an extraordinary number. the people in beijing say it is an extraordinary number but it's necessary to keep stability so you can have the reform process. >> it raises the question is there a better way to do it. >> having one foot in the market world and one foot out of it raises these price distortions which create a lot of overhead. their bet is we're going to pay them to get to the other side and build a middle class. >> not that they're the only

ones doing it. steve, you made a comment about hedge funds a couple weeks ago, and the fact that their fee structure is coming down. you said you had little sympathy for them. i'm wondering whether you think it's going to hit everybody? >> i think what's happened in the hedge fund areas, for many of the funds, not all of them, of course, there has been a sustained period of underperformance. and it's a full fee structure. and what happens is customers become unhappy with -- with organizations that don't perform the way they put themselves forward. i think that pressure is much, much less, in areas that have, you know, terrific performance. because in a world where a third of the gdp of the world has either zero interest rates or

close to it, or negative, if you can produce in other areas, particularly in the alternative space, you know, double-digit plus returns, you know, there's really almost no place else you can go. so, in that regard, to the extent that performance stays up, which i think it should, then there should be relatively little pressure in that regard. >> okay. fair enough. steve, we appreciate you joining us from london this morning. josh, you're sticking with us for the rest of the show as our guest host. we appreciate all of that. we should say that -- are you -- an advisor and speaker for this year's -- steve is. mr. schwarzman is. i didn't know if you were or not. advisor and speaker for this year's delivering alpha, taking place on september 13th at new york's pr hotel. more details available at delivering alpha.com. >> that isn't in september. >> it's usually in july.

>> that's what threw me. >> yeah, yeah. sure. when we return, tapping into -- >> trying here. >> i don't believe anything you say. >> tapping into a seventh sense with guest host joshua cooper ramo and later in the program malcolm gladwell will be our special guest. the futures at this hour are down 15, down a little more. now down 21 on the dow. we will be right back. show me movies with romance.

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only with xfinity. . we're living in an age of connection. and the formation of networks across technology, finance, politics and other sectors represent the most significant shift in power in generations. joshua cooper ramo is our guest host this morning. i used to kid you and call you joshua bunker ramo. they used to use a bunker ramo machine. >> before i was born my parents' nickname was bunker based on that. >> his new book is called "the seventh sense." it dates me. those machines were replaced. before we get going, i had another revelation. i have a lot of these. there are a lot of people -- remember we almost closed the patent office in 1860 because there were no more inventions. people argue that the pace of inventions doesn't rival

airplanes and tv and things like that. i was thinking about this iphone that i had because i was sitting outside and i had sonus up to my apple music. any song i have ever liked i can play at any time from this little thing. then i was thinking i wanted to search something to find out because i couldn't remember something. anything that was in the encyclopedia britannica comes to me from a hand-held instrument this big. it's so powerful and incredible. my kids. my god. if wi-fi is down it's like, what kind of world is this, where i can't immediately have all this stuff. they have no idea how powerful and how -- how much this has changed everything we do. i think that's part of what you are talking about. >> it's the heart of the book. it's also just getting started. the basic argument is the process of keconnecting defies w we think about things. a year ago if we said who is likely to be the presidential

nominee. >> you know where you'd end up. if you had said here we are seven years -- seven years ago this summer we started to see the markets come apart. that we would head into a world of negative interest rates. nobody would have said that was the case. you find it's the new network dynamics at work. they're understandable and learnable. you have to roll up your sleeves and understand this is how they function. to your point, it's just getting started. people have said we're at the end but the networks are getting faster. then the humans can't keep up with them. >> can we figure out ways to see these things coming rather than analyze it after the fact? it makes perfect sense what you're saying but i don't know that i would be able to put two and two together ahead of time to get to negative interest rates eight years out. >> when you look at economics right now people say our traditional ways of thinking about economics are not working.

are there different ways to think. there is a new school of network economics, for instance, which begins to analyze things in terms of how fast connected systems process things like monetary policy in ways that are different than an industrial system might have. we are heading in this direction. these are skills you can master. the ability to look at a car seat -- we think car seat and he looks at it and sees what it means when it's connected. that's a masterable skill. >> the internet of things will connect even more things. >> yes. >> the heating -- a button will go off in a doctor's office if our blood pressure goes up above a certain level. >> not everything will be interconnected but you'll see massive -- the medical example. as we have more sensors on our body and more artificial intelligence -- >> i want to ask you about that. sentient artificial intelligence is how far off?

>> in 1997 when deep blue won the chess match the "new york times" won a piece saying it will be a long time before you can have a computer beat go. then it won 20 years later. it played itself a billion times a day. >> self-knowledge. a real analog to human -- >> human knowledge. >> a lot of people say the classic example is the thing called aturi touring test by al touring. the interesting question about a.i. and i have a chapter in the book about this. what happens when they start to think in ways humans can't understand. >> that's what i'm talking about. that's why becky said can you foresee it. the single airity says you cannot. when machines get a billion times all human knowledge, what

does that mean? i think we're all toast. they won't need us anymore. >> did you see the headlines today about the first computer robot -- >> the i robot. it doesn't have one of the main rules of i robot, not to hurt a human. we have seen it happen. wouldn't open the pod day doors. the guys -- remember? theoretically that guy is still like this. isn't he? >> i don't know. i have no idea. >> he would still be like that. unless he hit enough dust out there to slowly slow down. i think he is still going. when did that happen? 2001? 15 years ago. >> yep. >> we could really have some good geek talks, i think, joshua. i want to download my entire brain onto hardware so you can basically. >> so you've got it forever. >> kurzwell thinks you can do it

by 2045. >> there is a great piece in nautilus that says one of the limits we have is people seem to think about the brain like something that can be downloaded but it's more complicated than this. >> i think, all this raises the important question how do you regulate the world? >> i'm trying to pick which avatar to pick too. are you going to use yourself? >> as an avatar? >> i want to reserve you as my avatar. >> if you pay him, he'll let you. >> a licensing fee. >> you can have my avatar? >> you bought me more time? >> yes. >> more time, joseph. >> the book isn't mainly about a.i. >> it's a piece of it. the book is about the way in which all of these things will change the way we have to think about our policy. >> monetary policy and other sort of more mundane, but it will matter. >> it lands on business. the last time we saw a shift

this big was the enlightenment in the industrial revolution. that wiped out every institution in europe. they weren't built for the idea that individuals could decide what they wanted. the challenge is how do we begin to rebuild the institutions going forward. some people figured that out. that's what the book is about. >> start from scratch? >> the best thing is to try to reform some of the existing institutions. when we come back, two -- the economy is growing, with creative new business incentives, the lowest taxes in decades, and new infrastructure for a new generation attracting the talent and companies of tomorrow. like in rochester, with world-class botox. and in buffalo, where medicine meets the future. let us help grow your company's tomorrow - today - at business.ny.gov

the investigation of the gunman whose attack on a gay nightclub in orlando continuing this morning. all 49 victims of the shooting have been identified, and families have been notified. the president will deliver a statement today on the orlando attack and will be traveling there thursday to pay respects to the victims' families. the killer was investigated twice by the fbi and let go and was once on the terror watch list. eamon javers has the latest. >> reporter: we learned last night that the president will

travel here to orlando on thursday. the white house says he will be paying his respects and standing in solidarity with the community here in orlando. yesterday at the white house the president explained what we know so far about this killer. here is what he said. >> what is clear is that he was a person filled with hatred. over the coming days we'll uncover why and how this happened and we'll go wherever the facts lead us. >> reporter: now, as you point out, becky, there will be some questioning here of how the fbi handled this. we saw fbi director james comey yesterday standing up and defending the fbi agents who investigated omar mateen. they interviewed him three different times because colleagues of his, people he knew, whether concerned that he had a potential for violence here. ultimately the fbi was able to talk to him and determine that he was not a threat. that decision tragically will now be revisited.

fbi director comey saying yesterday the fbi itself will look into it, but he is not concerned that the fbi agents did anything improper. he thinks that they did exactly the right thing. obviously that's a decision people will focus on now because there is so much difficulty here for the fbi in managing all of the people that they have under investigation. the fbi director saying hundreds of people are under investigation at any given time, similar to the way omar mateen was under investigation. such difficulty figuring out who potentially presents and threat and who does not. >> several experts yesterday, law enforcement agents, what suggested the biggest thing is just making sure that there is a comprehensive database and that, if someone were to do something like buy guns after being on the watch list, that it would notify authorities. >> reporter: yeah. that's one piece that's being discussed. also, you saw the fbi director say not only are we looking in a

haystack for needles but we're looking for pieces of hay that might become needles in the future. the idea of people who are not guilty yet. if somebody has not committed a crime, how do you handle it if you think they might do so in the future. they don't have the resources to keep all these people under surveillance indefinitely. there is a civil liberties question if you do that to people who are innocent of any crime. >> thank you very much. in the meantime, switching gears to the markets. the fed. does the fed pay too much attention to market reactions to fed policy? that was a question in the latest survey. steve liesman is here with the results of that and what to expect from the latest meeting. >> let me go through the time line for the next couple of months. looking at when the next rate hike happens. it had been in the prior survey, august 2016. that's now been pushed later to

september 2016. so the flirtation with a summer rate hike is now more of a fall rate hike. when will the fed allow the balance sheet to decline? had been march 2017. new response, the possibility of later than may 2017. that's now average. the idea of the $4 trillion balance sheet remaining in place at least for a very long time. the terminal rate. when will the fed get done hiking in this cycle and what rate will it be? about the same. fourth quarter 2018. 2.64%. here is the trajectory of rates as averaged by our panel of 41 economists, fund manages and analysts. 0.7 for this year. looking for one and a half right hikes. 1.5%, 2017. 2.2 and 2.6 the long run rate. 3% in 2018. term nat rate of 3.3.

i don't even know anybody who really thinks 2% will be the funds rate in 2018 but that's the average right now. now let's look at what the fed pays too much, not enough and just the right amount of attention to. global economy. 60% say they're paying the right amount of attention to global economic developments. latest economic data, 50%. 70% say that the market pays too much attention to it. the market saying to the fed, ignore us. you're paying too much attention to the market reaction to the fed. john riding of rdq economics writes in, the fed has paid too much attention to short-term market volatility. communication is unclear. the fed needs to rethink and clarify the basis for policy decisions. and, guys, all of this will be available on the web sometime soon, perhaps in the next couple of minutes. we'll post a story. there is already a story there now about what the market things will happen with the election. >> thank you. coming up kwwhen we return.

author malcolm gladwell joins us. that interview straight ahead. back in a moment. more than an apparel company. we've always been an innovation company. using technology is a critical differentiator. changing the expectation that the consumer will have for what a sports brand should be for them. this is where we're going to need a big, bad, technology partner. bring in. cue the bell. sap. under armour is a live business.

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welcome back, everybody. fantasy sports firms fanduel and draftkings are reportedly in talks to merge. the combined companies would control over 95% of the daily

fantasy sports industry. it would also lower legal costs as the industry defends itself against lawmakers who want to impose regulation and restrictions that are being levelled by at least ten states. the combination could reduce advertising budgets because both have spent aggressively to try to battle each other for market share. each valuations topping $1 billion last year. comcast, the parent of this network, owns a stake in fanduel. the cavs pulling away from the golden state warriors in the second half of game five last night thanks to a monster night by lebron and kyrie irving who both scored 41 points. the cavs went on to win 112-97. game six back to cleveland on thursday night when it will be too late for me to watch again. 9:00 p.m. coming up rngs don-- don't about it. put it on at 9:00.

malcolm gladwell kicking off a new podcast called "revisionist history." he'll join our guest host to talk social connections and more. the futures have a big day with the fed talk and key economic data in less than an hour. down 5 on the s&p and 6 on the nasdaq. but grandma, we use charmin ultra soft

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welcome back, everybody. we have been talking about the power of connections this morning. our next guest is an expert at finding them in all sorted of unexpected places. malcolm gladwell is "the new yorker" staff writer. obviously he is an author. you know many of his books well. he has a new podcast called "revisionist history" that launches this week. our guest host is joshua cooper ramo and malcolm, welcome. great to have you here today. >> thank you. >> we have spent a lot of time over the last two days talking about what happened in orlando, the largest mass shooting in united states' history. you have spent time in the past, last fall you wrote a piece about sometimes how these things are catching and they're definitely influencing one another. what do you think of the situation in orlando and what we

have seen in paris, belgium and other places? >> yeah. yeah. without -- obviously we don't know all of the facts about this man just yet, but it does seem to fit into this broad pattern that these events, these shootings, feed on each other. each time someone commits an act, an atrocity like this, it makes it easier for the next person to do it. this is kind of a well-known theory in psychology, which is the threshold theory which says each of us have a different threshold for doing something unusual or heinous or what have you. and the more of these events that happen, the lower the threshold gets. so this man might have been incapable of performing this act ten years ago, when it was relatively rare 20 years ago, when it was relatively rare for a lone gunman to go in and shoot up a room or a -- but today, as those events get more and more common, it becomes easier for people to join in.

and that's the sort of -- that's the terrible cycle that we are trapped in, that we're getting these kinds of events because we had them in the past. >> when you put it that way, i can't help but think about the role that the media plays in this and how we add into this. i guess the question becomes how do you try and break that cycle? >> yeah. >> how do you take a step back? >> i think the media sometimes beats itself up a little bit too much. because when you look very closely at these sorts of shooters, they're not getting their inspiration and their scripts from the media. they're getting it from the internet. they're getting it from -- there are sub cultures. i wrote about how columbine has a hold offer these would-be shooters. they're going to the internet and finding there are these entire worlds that suck in young people and feed their fantasies that have nothing to do with the

mainstream media. >> but aren't those sites led but the material that underlies it from the media? or no? >> in the case of -- remember in columbine, the contribution of those two shooters was that they produced their own media and put it online. it's youtube videos, all kinds of material that's placed there by the individuals themselves and is fed on by -- to isis would be a similar case, it's not media coverage of isis that this guy, i am sure, was inspired by. it's stuff isis itself put up online. >> joshua, you talk about this, just with the connections and with the new networks that are built and this is the evil side of all of that. >> they're evolving. as malcolm says, over time they're getting more sophisticated and getting more adapted to the media age. today you have isis, the self-activating force and it makes it harder to combat. it becomes omni present. particularly the ability of

networks to reach people and activate them. it fundamentally changes the dynamics. >> why are governments so terrible at trying to counter act this in terms of producer their own online cultures and video that's aimed at this community and infiltrating it in a different way? >> if you look at the isis videos, they're so incredibly contagious. this is one of the things when people at the beginning said isis is the jv of terror. they didn't see they were connected to the ability to produce horrible but magnificently -- >> did people say that? >> obama called -- >> oh, obama. oh. i didn't know anyone else. >> many professional analysts had a view that these were a small group. now you see the self-activation element. >> is there a way to counter act it? >> ask yourself what credibility does the government have with 18 to 22-year-olds. >> lousy. the question is whether you could effectively create fake propaganda. >> they're trying to.

they put a new special forces guy in charge of trying to do that. it's really like trying to compete with facebook in a sense if you are an old-line media company. there is a legitimacy that comes from that that's hard to combat directly. >> i did a story for "the new yorker" on this would-be school shooter in minnesota who planned but was caught before he was able to pull off what would have been the biggest school shooting in the country. if you look at what he was consuming, it was all stuff that none of the rest of us have ever even heard of. it was all this kind of private world, the intersection between video games the detritus of previous school shootings, the world of home explosives. youtube videos and how to make little -- little bombs. i mean, it's the kind of stuff that's -- >> but he was caught because a house wife happened to watch him and thought he looked suspicious. is this an argument for monitoring those areas or an

argument for shutting some of those areas down? >> i think it's an argument for trying to find more productive things for teenaged boys to do. i mean, this -- the shooter in orlando -- and i think actually is very much of a piece with many of the school shootings we've seen in this country. it's the same notion of the very troubled, disaffected young men are drawn into the fantasy element of these kinds of movements or experiences. and, you know, in previous times we spent a lot of time and effort trying to give disaffected young men something to do. we drafted them into the army. we sent them overseas to fight wars. we did all these sort of things which in retrospect, if you look back on them, they had a primary function, defend the country, but they had a secondary function which was a rm to form distraction for kids at a vulnerable time.

>> you can draw these conclusions when you look overseas and the problems they've been having with people emigrating to their countries. >> the general view is it takes a network to fight a network. the old hierarchical structures don't work. this is just the beginning of this. because the ability to distribute the tools of destruction is greater than ever before. in a connected society, you can start something anywhere and it spreads everywhere. it's the feature of the landscape. i think just resetting our expectations matters a great deal. >> malcolm, i want to ask you about the podcast but quickly, the brexit polls have been cutting differently. it now shows that most polls show that britain will vote to leave. what do you think about the late break? how much should we read into this? >> i'm scarcely an expert on all

of that. i retain -- the only thing -- my only position on this is i retain a healthy skepticism about polls before the fact, that on an issue like this one would expect a great deal of volatility in people's opinions. >> because of the emotional nature? >> because of what the emotional nature of what they're responding to in the moment. i don't know how much to read into that. >> your advice would be take it with a grain of salt. >> yes. >> let's talk about the podcast. this is different for you. i heard one person describe it as your book come to life. this is going to be a series of ten podcast you're doing starting this thursday. >> this thursday. ten. all about 45 minutes each and each one takes some event or idea or person from the past and reinterprets it. so one show is about a painting from the late 19th century, and tells the whole story about it. it's an allegory about what it means for an outsider to be the first inside a previously closed

world. there are three shows about education that sort of examine the american dream about whether -- how hard is it really for bright, poor kids to make it in america. >> can you give us a hint? i know you need to listen to the podcast to get the whole thing. but the myth is that if you don't get involved from the very beginning, that they are going to have a massive hurdle that they have to overcome. >> yeah. that show focuses on what i think are the serious dysfunctions in the american university system, how we're spending money in all the wrong places. this is a -- happens to be a kind of personal obsession of mine. at every turn i do my best to attack elite universities in this country. in the show there are three episodes where i essentially go off on elite schools who i think have fundamentally -- >> didn't let you into graduate school? >> didn't let me into graduate school, yes. is there a personal objection? might be but --

>> we are all products of our personal experiences. >> that's right. >> can't run from them. malcolm, podcasts start this thursday, the 16th. "revisionist history." it will be every thursday for ten weeks in a row. >> yes. >> we really appreciate you being here today. >> thank you. when we come back, starbucks' digital strategy. how the company is tapping networks to brew up business. the company's chief digital officer joins our guest host, joshua cooper ramo next. also, brexit concerns hitting european stocks today. the german 10-year bund going negative for the first time ever today. "squawk box" will be right back. smart devices are up. cloud is up. analytics is up. seems like everything is up except your budget. introducing comcast business enterprise solutions. with a different kind of network that delivers the bandwidth you need without the high cost.

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coming up, former senator bill bradley on the race for the white house, the state of the economy and the battle against terrorism. starbucks digital strategy brewing sales for the coffee maker. squawk returns in a moment. put some distance between you and temptation

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a world of worry. brexit uncertainty, a u.s. presidential election. questions about economic growth. terror fears. we put everything into a global u.s. perspective with former u.s. senator bill bradley coming up. brewing sales. top starbucks executive joins us to talk about perking up the coffee business with mobile ordering and pay. all this, plus breaking economic news, key reads on the american consumer and global trade as the final hour of "squawk box" begins right now. live from the most powerful city in the world, new york, this is "squawk box." welcome back to "squawk box" here on cnbc, first in business worldwide. i'm joe kernen along with

rebecca quick and andrew ross sorkin. we're less than 90 minutes away from the opening bell on wall street. futures right now are now down just under 30 points. on the dow, the nasdaq is down 6.5. i'm sorry. s&p down 6.5. nasdaq down under 10. equity markets in europe have been down for the entire morning session. germany is down .75%. while most of the other are off more than 1%. france faring the worst. the german ten-year down -- it's minus three basis points. that's what you -- that's what you get paid to borrow money. that's the operative term. paid to borrow money. among our top stories this morning, the fed starts its two-day policy meeting today. a decision is expected at 2:00 eastern time tomorrow to come along with the members' latest projections for economics, where they see things and the point system, where they think you'll

actually see higher rates. janet yellen will hold a news conference at 2:30 tomorrow. the iea expects the oil market to be balanced in the second half of the year. agency revising the global forecast higher. last month saw the first significant drop in supply since 2013. crude prices this morning are down by another 1.5%. wti hovering at $40.16. brent now below $50 at $49.59. the brexit vote nine days away. latest polls showing increasing support for the leave campaign. betting odds on brexit are narrowing, though at this point they're still in favor of the stay camp. blackstone ceo steve schwarzman weighing in during the last hour. >> it's hard to know what the impact is on the longer-term basis. usually in the short term there is always unsettlement. i think most people would think

it does create economic uncertainty with markets and probably does not help global growth over the short to intermediate term. >> the volatility in the market has been playing out mostly in the currency markets. the dollar up against the pound again, trading at 141.25. baidu cutting quarterly forecast by 10%. the chinese search e. alibaba saying it expects to double its transaction volume by 2020. executive chairman jack ma pledging to heighten the company's crackdown on fake goods as well. and nxp semi conductor is selling its standard products unit to two chinese firms. the price tag, $2.7 billion. meanwhile, the investigation continues this morning into the orlando nightclub massacre.

aym eamon javers joins us with more. >> reporter: as you say, the search for clues here in orlando continues this morning. investigators circling in on just who omar mateen was and why he did what he did saturday night here in orlando. the fbi director, james comey, told reporters yesterday that the shooter actually made three points of contact with 911 operators during the course of the shooting. two times he called 911. during one of the calls he pledged allegiance to isis. and in the third call, it was the 911 operator calling him back trying to get any channel of communication open with him they could while the shooting was still ongoing. we also learned from the fbi director yesterday that they're exploiting all of the phones, communications devices and other things that mateen had in his apartment or in his possession trying to learn more about who he may have been in contact with. so far no evidence at all of any

overseas direction but possible overseas terrorist inspiration. the fbi director saying at various points mateen pledged allegiance to different terror groups. some of which are at odds with each other indicating that he may not have had a clear sense in his own minds of the these groups. he did have a tremendous amount of hatred and rage. later this morning we expect to hear from president obama. he is convening a meeting. at the treasury department. we expect remarks in washington later today and we may learn more details then. back to you. >> a special guest joins us on set this morning. former u.s. senator bill bradley, now a managing director with allen and company. you were the last guy that was as good on those outside shots as steph curry, i think. is that overstating how good you were? >> i think you are slightly

overstating. yeah. i didn't step back. >> i think he's got some kind of chip implanted some where. >> how do you do that? >> he has great balance. his legs are under him when he gets the ball. he can shoot by fading back as well as standing. >> this is the sny studio. it's a sports studio. i'm not off base. i am allowed to ask you these things. like i've said, i have tried to shoot three-pointers recently. if i hit any part of the rim, i count it. >> well, at least even within six feet of the rim. >> you weren't the first person to say politics is broken. you remember when you said it, right? >> i do. >> how long ago was that? >> 1995. >> so if politics was broken in 1995, what is it in 2016? you got a new word for that? there a hyperbolic broken?

can you square it or cube it? >> you can cube it. it's falling apart. it's crumbling. money in politics is distorting the whole process. >> you said $1.6 million you spent to go for the senate. another spent $63 million. now the presidential candidates will theoretically spend a billion dollars. >> no question. >> no question we're getting what we're paying for. you predicted this. we have two candidates each with 60% negative ratings. >> unfortunately things are not going to change until we take the money out of politics. >> is that really all it is, though, bill? >> no. you can't do that until you have a supreme court that reverses citizens united. and i think second, you have the issue of redistricting. congressional redistricting that polarizes the congress. third, you have the fact that more americans are being denied the right to vote by changes in laws in various states. there are 226 million americans

who are eligible to vote in america, only 153 million are registered, and only 90 million actually vote. seems to me, if we are the world's greatest democracy, our objective should be to expand the electorate, expand the number of people who can participate in the future of our country. >> so how -- the -- i don't know if money explains how we got here. you can -- you are a democrat. so i know what you're going to say about trump. i appreciate that. i also want to hear you talk about senator clinton, though. i mean, out of the entire democratic party, you have got -- you worked with different senators that you probably admired. you probably worked with governors that you admired. hillary clinton the best the democratic party could come up with this year? >> well, i think that you can find points that you might want to criticize her. i was with obama in 2008. this year it's no choice for me. hillary clinton over donald trump -- >> before it became hillary

clinton. why did it become hillary clinton? >> she is the run who ran. bernie ran. he put up a good race. he didn't make it. he raised important issues. and now she is the nominee of the party. by the time the convention is finished. and she'll be carrying what i think is the banner of hope against the banner of hate. >> you don't have a visceral reaction to someone running as a socialist? >> i think you got it mixed up. hillary is not bernie. bernie was the socialist. >> you just said bernie ran a campaign -- >> i think he raised important issues. >> the geographic center of the democratic party is now in a good place in your view? >> yeah. i think hillary will end up being a president that was governing from the middle. i think she'll be left-middle. to me that's where america is. it's not far right. and it's not at a hate level. and it's not at a level where i think the republican party will go under donald trump.

i mean, you know, the reality here is -- as somebody said to me the other day, you know, trump is nothing if not a leader, and he's not a leader. and i think that's obvious by how he's handled the last 48 hours. >> okay. we can -- like i said, we're -- you are a democrat. we expect to hear these things. no problems with ethics, with the clinton foundation? you saw bill was the chancellor of the -- well, you got the -- you don't want me to bring any of this stuff up? hillary yesterday said -- it's insane for anyone being looked at by the fbi to be able to -- and she -- she says that without a hint of irony. she was making that point. that's not a problem for you? anything of what we know about the clinton history for 20 years? >> yeah, yeah. >> none of it makes you think there is a little bit of ethically challenged situation? >> look. in my view we have a choice between two people, which one is the best for the country.

i think hillary is the best for the company. are there parts of the past that don't rise with me, absolutely. are there issues today that could be explosive? possibly. i also think that, quite frankly, i have a sense -- she did an interview the other day in the "new york times" that gave me the sense that she has the capability to take us to higher ground. when she talks about, you know, not just a job but a purpose. and i hope she talks more about purpose because that's what the country needs. it needs to feel that their leader sees ahead and can understand how important the values are in their lives. and to me that's what she -- she could offer, if she allows herself to be the good methodist girl as opposed to the former first lady. >> joshua, how do you explain some of these new networks and how we wound up with the candidates that we did? >> one of the issues i think joe touched on, the question of the

role of money generally both in politics and the larger economic issues that we face. we face the hollowing out of the middle class and the nature of the network systems that lead to high concentration that create a situation where the middle class is not as robust as it needs to be. the question is what is the right set of policies that's going to lead to a robust middle class in the united states? >> you think that explains the anger? >> it does. people feel hopeless. they look at the longer trends and the sense of powerlessness is very strong. it fits into the story that people don't trust the congress and the media. people are scrambling for something to believe in against a background where your opportunity as somebody in the middle class -- >> you think either candidate will change the money issue? >> i think, quite frankly, if hillary is president she'll have three supreme court appointments. i think the appointments she'll

make will be scrutinizing citizens united directly and we'll have the opportunity to change the role of money in politics. >> will it also affect the labor unions' money? money has gone up for decades. >> i believe the answer is public financing of congressional and senatorial campaigns. then it's the people putting money in. no special interests. there is an economist i like who once said in his book "rise of nations" there comes a time in democracy when sometimes the narrow interests control the process so much that the general interests cannot be served. that's exactly where we are now. we have bigger problems, though. this presidential race is really a pretty -- it is probably the most important race in my lifetime given what the alternatives are. >> both sides say that given the last eight years, if there is going to be a third obama term, people think -- they'll make the

same point you're making right now, it puts us past the point of no return in turning into a euro-style entitlement state. >> let me ask you. if you're going to get heart surgery, are you going to somebody who has never been the surgery? no. you want somebody who's done 5,000 surgeries. we're in a race now between someone with experience and the one without experience. you might say. i don't like the heart surgeon. i don't like her. or him. >> don't bring that up. >> that's what the real choice is. >> can i ask you. in terms of getting out the vote, if you will. how do you think you change that? what do you think the real impediments are? >> you could let all the felons vote. >> i think the key thing is make it easy for people to register and vote. same-day registration, voting by martin o'mall mail, a whole series of obvious things that would increase participation in the process. >> it didn't raise your eye bros

terry mcauliffe, executive order allowing 250 ex-felons to vote? is that a good thing in terms of the nice situation you described for more people voting? >> i think you could possibly have split the felons in different categories. >> don't set the -- the voting booth on death row was part of the equation. okay. it was fun meeting you. we both have great friends. snyder. he wanted to be president so bad. >> so did i. now we have the "the seventh sense." an important book. whoever is the next president has to read this book. it gives a whole, whole agenda for the next president. a. we've been talking about the book this morning with joshua cooper ramo. hit latest book called "the seventh sense." joshua will talk more about it.

senator bradley, thank you for your time today. >> great to see you. when we come back, a top mid-cap fund manager who has beat her peers more often than not. fair point capital ceo joins us. stay tuned. you're watching "squawk box" here on cnbc.

welcome back to "squawk box." morningstar holding its annual investment conference today. talking about the state of the market and where to invest. joining us from the conference is the ceo of fair point capital. good morning. theme of the day is trying to figure out what to do. i was looking at a list of stocks that auyou were holdings. she owns the "new york times." did i say he? i apologize. thyra. help us understand where you're putting your money to work given what's going on. given brexit and the other issues. if you could put money in two or three stocks. where would you put it? >> techno near term. it's the tv stations and the

digital. and what's near term probably the one with tv stations. the tv stations should benefit from the near-term political situation. in regional markets like arizona, maybe close races, there will be more money spent, you know, near term. so that's one. the company is attractively valued. the outside could be 30% to 50% from these levels. excellent management. that's one stock. another stock that's depressed is devry. devry education. they have veterinarian schools. nursing schools and medical schools. devry university. there was aening management cha. the stock was very depressed and i think the outlook is quite reasonable. and there are several catalysts that could help the stock.

some regulatory issues that could be resolved. that's one that could be bought today. and another one would be copa airlines. it's similar to southwest. we used to own southwest. it's panama based. the hub. they fly back and forth. similar to southwest. the stock is depressed because of brazil and venezuela. they're taking capacity out of both countries and putting it into north american markets. they fly to las vegas and recently san francisco. and very good planes. what's super interesting, a very young fleet. the average age is seven years. some of the u.s. companies have average fleet of 18 years. southwest has maybe 12, 13 years. a relatively young fleet. and it's at book value.

very good management, at book value, you can buy the stock today. those are three names. you have to be a stock picker in this market. >> it's a tough market out there. we appreciate your perspective this morning. thyra zerhusen from the morningstar conference. appreciate it. still to come, breaking commis news. retail sales and import/export prices coming up in nine minutes' time. numbers and market reaction straight ahead. stick around. "squawk box" will be right back. it t can a toothpaste do everything well?

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. welcome back, everybody. our guest host this morning is kissinger associates vice chair and co-ceo joshua cooper ramo. he has a new book out. it's called "the seventh sense." we've been talking about it this morning. we have touched on a lot of topics from the book. let's talk about how it could help us explain crazy phenomena we have been watching this morning. the german ten-year yielding negative interest rates for the first time in history. japan has been there for quite a bit longer. >> so many of the ways we used to think about things are getting overturned. the traditional economic idea that inflation is always and everywhere a monetary phenomena. it's like a core question of economics. one of the reasons we think we understand when you start to use network theory to understand it is a lot of it got concentrated

in the hands of a small group of people. got heavily financingized and was used to invest creating massive supply. you have a simultaneous reduction in demand. crash in demand and massive increase in supply leading to inflationary forces. that's why we find ourselves confronting problems that look very different than tradition the -- >> do we know how much inflation added. >> the internet create a huge supply shock. you know five years ago in new york city there were a whole bunch of car seats and bedrooms -- >> airbnb -- >> the pricing and technology itself -- >> the fundamental story of our age is the massive increase in supply. were it's oil rigs. spare bedrooms or car seats, combined with a reduction in demand. the majority of stimulus has gone to the hands of people with a low propensity to consume. that's something nobody would

have predicted in 2008. >> have central bankers around the globe read your book? >> there is a guy who has written about the way the network forces are emerging but it requires a whole new way to think about network economics to understand it. it's all as different from the industrial revolution as everything that came before the industrial revolution was from what happened over that period of time. >> considering that all that liquidity was ineffective in off-setting the deflationary forces, if we had not done it, at least interest rates would not have unduly advantaged the people that had assets. and the savers might actually -- we may not have the income inequality that we have if we hadn't had eight years of zirp. >> produced the exact opposite of what was intended. the most expensive war on terrorism in human history has managed to keep bringing out

terrorists. this has not stabilized the markets and not supported the middle class. the reality is there are network forces at work. when you walk through successful network systems, whether that's facebook or internet you can learn rules. that's the idea of the seventh sense. >> we'll talk more with josh in a minute. retail sales and import prices. key reads on consumer and trade. that's coming up next. who lives here and flies to hong kong, to visit this company that makes smart phones, used by this vice president, this little kid, oops, and this obstetrician, who works across the street from this man, who creates software. they all have insurance crafted personally for them. not just coverage, craftsmanship. not just insured. chubb insured.

welcome back to "squawk box." breaking news. litany of data for may. retail sales, import prices. the latter, of course, affected by energy. import prices month over month up 1.4%, double expectations. we doubled up last look from .3 to .7. year over year minus 5. looking for minus 5.8 to 6. let's go to retail sales. also for the month of may. headline number expected up .3. up .5. take out autos up .4. about as expected. take out autos and retail gas sales, you are looking at up .3.

that's about in line with expectations. let's look at the control group. lump it all together. that's what's used in other numbers to insert into the models. that's up .4. a little better than we were looking for, up .2 to .3 last look. upgraded .9 to .1. the control setting of up .4. how does that figure in? not only is it better than we were looking for. it's not a body number all in all when you consider last look is now 1%. that makes it the best we've seen on the 1% last month in quite a while. it looks like going all the way back to about february of 2014. so that's the high-water mark. even though up .4 is not as good, sequentially a little weaker. we are definitely looking at at least some improvement. now, will this make a difference with things like brexit and what's going on in china and what's going on with the flight

to safety, the dollar/yen. 105 handle on the dollar/yen. something to pay attention to. joe and the gang, back to you. >> rick, thanks. steve liesman on set again with us, steve. what do you say? you saw the ten-year. >> you know, rick asked the question does it matter for brexit? i think it does in the following way. when you have a potential shot coming to the economy where do you want to be? you want to be at your most stable moment. you want to be strong if you're getting hit by something. a lot of questions about the last report. up 1.3%. outsized gain in consumer spending. perhaps the result of timing as the easter. took away from march, gave to april. this confirms the consumer is okay here. let's be careful. some of it is a rebound in gasoline station prices. we did not see a surge in spending because of cheap gas. i don't expect to see a decline because gas prices are back. what we see is decent spending across the board.

0.5%. rick is right to point to the 0.4. goldman sachs had the consumer running at a 3.2% annualized rate of spending growth. that might be a little higher today because of that. that's a very healthy consumer. one area i want people to be careful about, though, is restaurants. one thing we did see, we did see a reaction of restaurants to cheap gas in a chart i title "eating cheap gas." what you have there is an increase in retail sales at restaurants and drinking places as a result or in response to lower gas prices. as gas prices have come back, you have to wonder what's going to happen to restaurants and eating out. that's one place we saw definitively where the money went. it keeps us on track with the second-quarter rebound and also points to the criticism we have on our fed survey that the fed is paying too much attention to one number, jobs, and not, as a lot of people in the survey said, that they should look at the broader data set that

suggests a decent rebound in the second quarter. one of the places people have been spending money when they eat out is starbucks. a huge chain that's seen massive growth. starbucks digital strategy is brewing sales for the coffee maker as well. nearly one in four u.s. starbucks transactions originate from a mobile device. adam brotman is the executive vice president and global chief digital officer at starbucks. he oversaw the launch of the mobile pay and order program. he joins us from the tasting room in seattle. adam, thank you for being here today. >> thanks for having me. >> you know, before we dig into what you have been doing and how you have been working on it, i would like to set this up. the reason you're here is because joshua cooper ramo is with us today. he has a new book that's out called "the seventh sense." josh, you talk about new networks and how it's changing things. how does it work when it comes to retail and dining

establishments? >> i am a director at starbucks. it gives the possibility for reinventing the consumer experience in ways. it's interesting that he's speaking from the roastry. it's a disneyland of coffee there. you see on the business and transaction end. starbucks has done a terrific job with that. adam has been essential with that. >> starbucks was one of the first to get out there with the idea of being able to order on a mobile app. how did you see it coming? how did you implement it and how did you take all this as part of the mind share of what you were doing at the time? >> well, the first thing i would say is that we watched in our stores that there was a great connection happening between our baristas and our customers. we also watched that over the last five years more and more of our customers were using their smartphone while waiting in line and just for every part of their life. so we had a sense that, if we could add more value, more

connection, to our customers through the smartphone, through the mobile app, that it would enhance our customers' experience that they have in our stores and would also drive our business. so we were keen to build great features like loyalty in ordering and payment on the phone. >> i thought part of it was just the skipping the line part. that made the most sense to me. you are talking about this as really a huge connection with your customers. >> yeah. it's really a platform. we really took a page out of silicon valley in terms of really thinking about inter-connected parts of a platform and how they could build a really great experience. so it's not just ordering ahead, which is really going well, by the way. but it's also being able to pay, being able to check your loyalty points, even connecting to the music in the store, understanding, you know, personalized offers that we have for customers. all these different points coming together on the mobile phone and provide a really great platform for us to engage with our customers. but you mentioned the ordering

ahead. that is going well. last quarter, for example, we got up to over 8 million mobile orders per month. that was up from the previous quarter. so that's continuing to grow and go really well. >> you know, i will ask, just at the risk of sounding old and kind of unconnected. i was surprised last week. i took our kids and went into a starbucks and was about to order, ordered something, then they ordered a drink i had never heard of. a pink drink, which i think they found out about online somehow. how do you do all of this without making some of us who are a little less connected not feel alienated because i changed my drink order, by the way, as soon as they ordered theirs. >> well, that's the trick is you have to make sure that you don't have technology as something that sort of is a bolt-on experience. it has to feel natural and seamless to what you're used to doing. we try to make sure that the mobile app, for example, is going to make it really easy for any starbucks customer, whether they're familiar with technology

or not, to order just like they normally would, to personalize their favorite drink and send the order to their favorite store or discover new items on our menu. food items or new cold-brewed items. we want to make it easy for everybody to discover and use. that's the beauty of technology is that, if you do a great design, it should feel seamless and easy no matter how tech savvy you are. >> do you consider starbucks to be a technology company? >> well, first of all, starbucks is a coffee company. if you look behind me, we're in the starbucks reserve roastary. we're passionate and focused on being the best coffee company in the world. we produce great experiences in our store. in this day and age, if you are not good at technology -- if you don't almost consider yourself a technology company as a consumer brand you can't create the kinds of experiences that consumers

expect. i think everybody is a technology company to some degree. >> i read recently that one in four starbucks transactions originates with a mobile device. did you anticipate that it would take off this quickly? >> well, i would say that, you know, to borrow from joshua's book, we sort of had a sense that mobile would be important in terms of taking off -- in terms of stickiness, in terms of enhancing our customers' experience. to be honest, it's actually gone faster than we even thought. i think the nature of our loyalty program connected to our mobile platform, connected to all these other parts and pieces i was mentioning, it even surprised us how well it's going. i think we had a sense of, if we did it well, it would be fast. >> a seventh sense. adam, thank you. the drone industry is taking

off. one start-up is looking to be the boeing for drones. we'll talk surveillance in the skies and the future of delivery with the ceo of sci-fi works next. olay regenerist renews from within... plumping surface cells for a dramatic transformation without the need for fillers. your concert tee might show your age...your skin never will. olay regenerist.

olay. ageless. and try regenerist micro-sculpting eyeswirl. it instantly hydrates to plump and lift. you recommend synthetic and can yover cedar?to me why "super food"? is that a real thing? it's a great school, but is it the right the one for her? is this really any better than the one you got last year? if we consolidate suppliers what's the savings there? so should we go with the 467 horsepower? or is a 423 enough? good question. you ask a lot of good questions... i think we should move you into our new fund. ok. sure. but are you asking enough about how your wealth is managed? wealth management, at charles schwab. thank you. ordering chinese food is a very predictable experience. i order b14. i get b14. no surprises. buying business internet, on the other hand, can be a roller coaster white knuckle thrill ride. you're promised one speed. but do you consistently get it? you do with comcast business. it's reliable. just like kung pao fish. thank you, ping.

reliably fast internet starts at $59.95 a month. comcast business. built for business. welcome back to "squawk box." futures right now, no, nothing changed. down 31. down 6.5 on the s&p. 31 on the dow and down 11.5 on the nasdaq. our ten-year went back above

160. the german ten-year, as you can see there, minus 0.032. minus three ticks for a negative yield. first time it has happened in germany, ever. we'll talk drones right now. the drone race is on. start-ups competing to disrupt the commercial drone space. one company leading the way, cyphy works. government customers worldwide with backers like motorola and ups. joining us is helen greiner, the founder and ceo. i don't want to take it away from you. you can explain it to us. the trick on your drones, which are different than so many others', they're ultimately tethered to the sky with an actual wire, am i right? >> yes. it's not just a tether. it supplies power and does communications. it supplies power so the drones can run for days at a time which is really exciting, the first drones that can do that. it also does communications so they can't be spoofed or intercepted.

no one can take control of them. they can't be jammed. we've really created a whole new category of drones, the tethered systems. >> dare i ask, why only days at a time? if it's attached to a wire, can't it stay up years? >> there are are quite a few mechanical components on board. there is a maintenance schedule. you bring it down, perform maintenance and send it back up. it's like having something that's up there long term. >> in terms of the wire, how far can it fly if it's effectively tethered to the sky? is it the idea it's going straight up? >> it's basically a tower without a tower. this is the microfilament tether. with this, it's 400 feet long. so it can fly as high as many of these buildings out here. from that vantage point you can see an entire facility, whether it's a farm, a construction site, a port or a mine. there are just many applications where you want to monitor an entire facility, and what's

exciting with artificial intelligence, you can start to manage the facility using this unique perspective. >> no worry, though, that another form of aviation, whether it be a plane or something, could get caught on this wire or break the wire? >> we have really -- >> i am thinking in some of the military situations -- >> in one spot. it will be at a combat outpost. it will know the drone is flying. you know exactly where it is. you send it up and it stays there persistently. >> what does a drone like this cost? >> well, it's not a hobby drone. it's more pricey. it's really one of the first that can really function persistently. we don't give out pricing, but imagine a system that you install and you have persistent views of the entire situation. >> there are all sorts of privacy issues, but are you a believer that -- i don't know how far along we are in this -- that we're going to literally look up in the sky and all the

time see drones delivering stuff to us and monitoring, that our skies will be full of drones in the next five or ten years? >> i absolutely agree with that. of course, they won't be tethered, but the learning we get from having drones that run for days at a time, drones that run persistently will feed into the delivery drones being safe and reliable and being able to run non-line of sight and over people without worrying about accidents happening. >> what about in a place like new york city? >> you mean delivery drones? >> delivery drones or just drones at large. the reason i ask, i wonder, given all of our conference about terrorism and other things, just the security concerns, the idea of a drone flying with something through times square, frankly, makes me a little anxious. >> i think there might be easier solutions for delivery in the city because there is a point you can -- they're already running delivery service in the city. when you get out to the suburbs,

i think it's a very efficient way to get from a fulfillment center or from a center directly to your home or in a rural area where, you know, you have trucks going these long distances just to deliver one package. and really, really great opportunities for drones. >> make a little bit bigger drone and deliver andrew out to the hamptons. >> they're doing -- >> people are starting to do that. >> they're like self-driving cars. like drones but you get into it and say where you want to go. >> they are doing that. we're going to take packages first, and maybe after we'll do people. >> what about the ability of a government and officials to actually take one of those drones out of the sky? i know there is a big issue around heathrow airport, drones that have gone up around arn airports and they're trying to develop services where they can shoot down the drone with an

electromagnetic something. >> that's great because you don't want hobbyists or anybody flying -- commercial entities usually don't fly near airports because they know the rules. a great feature of our tether is that it's impervious of jamming and the electromagnetic radiation. if you need your drone to stay up for a military or police application, we are not susceptible to that. we also don't fly near airports and air traffic. >> is your company profitable yet? >> we're still venture capital funded. >> is there any company out there that's truly profitable doing drones yet? >> i think djra as a consumer play is profitable, but i think that -- it's really a nascent industry in the commercial space. and one reason is regulation. the regulations have been really onerous on commercial applications of drones in this country, but come the summer, it's going to be legal to fly a drone without going through the

r rigga ma role of getting an exemption. >> i assume it's a function of very little regulation of where drones are really taking off. >> a few don't have many regulations but also don't have the world-class airspace that we have. but countries that do, like canada and u.k., japan, have been less restrictive and their drone industries are really -- have taken off already. >> so to speak. >> so to speak. >> thank you. appreciate it. >> do you have a drone yet? >> no. looking forward to getting one. i've known helen for 20 years now. everything she says tends to come true. i remember when you were predicting robots running around the home and sure enough, you built i-robot into a real company. >> vacuum cleaner. >> drones are pretty safe bet. when we come back, jim craner joi cramer joins us live. check out the futures. dow down 36 points. s&p futures off by 7.

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let's get down new york stock exchange. jim cramer joins us now. i don't know, it's not a live meeting anymore so now are we more interested in brexit now, jim? >> oil and brexit and i think what we're trying to do is price

in the dislocation that will occur next week. i think the problem here is that what's bad for them is actually good for us. no one wants to possibly think like that because there is just a mindseth right now, very high cash positions, worried about the risks ahead and very worried oil looks like it's peaked because oil is starting to come out of the ground again, venezuela starting to drop off, nigeria not been hurt, libya. the fears are being priced in and stocks go down and the charts look bad and everyone decided it's all bad, joe. i think you and i both know and when everyone says it's all bad there's going to come a time when it's pretty good. >> what would happen, jim, to the u.s. stock market if it's still 59% say, what if the betters are wrong and polls are right? >> you get a really nice rally. it was never that bad for us to begin with and then they start going up. we've been just taking their sell-offs. i'm looking at some of the

stocks trading here that are from over there and, obviously, now people are very worried. starting to hear neiman like comparison to the banks. even though we know the banks are tied with the government they didn't let that happen in 2011 and not now. we're starting to hear the great -- look at diaggio stock under 100, nor vo nor dis, fine companies going down because of the dollar and worries what's going to happen. let them price all that fear in and then try to figure out how it relates to whole foods. how does that happen, relates to tim horton, to, you know, to a company that is largely north american company that is connected with a burger joint, wendy's. i mean, i find all these things really let's just say ob truce but doesn't matter. you and i know the reason that brexit doesn't matter because we are doing better than everyone else. but when you say something like that you come off as a kok eyed

optimist and you're saying we have to get out of everything before brexit. scramble up 8% if brexit doesn't happen? >> right. >> to me that's not a strategy. that's how you underperform the market. >> right. >> all right, jim. >> thank you, guys. >> you got five minutes if you need to do anything, you know. >> that's about it. >> all right. >> coming up, much more from kissinger associate's vice chair joshua cooper. tomorrow another show including quaker media founder and ceo nick denton. you're watching "squawk box" on cnbc, first in business worldwide.

up,. welcome back to squawk. our guest host has been kissinger associate co-ceo and vice chair josh ramos. new book. >> "seven cents". >> we'll say it over again. practical advice as a self-help, it's not a self-help book but one or two things you can take away from it. >> you highlighted one of my career moments when i got flown out to yahoo! and had the opportunity to be employee number four and i thought this is a bunch of guys in flip flops in a warehouse. >> $8 thunz million later. >> what i wanted to do in the book was practically how do you

look at monetary policy, terrorism, how do you look at hedge funds and the way they're run and who's being successful because they understand networks. the book goes chapter by chapter talking to various people. there are people who get it. it's not ungetble. >> they're rare. >> hedge funds, do it real quick. >> you move into a world where concentration of information and artificial intelligence dominate more information. information and price are so highly correlateded. whole couple chapters where you dig into a world of what does it look like where you massive real-time -- >> gut is over,s who has a good gut, analysis piece doesn't matter in the same way. >> you see this with the quantitative funds with the way they operate. the interesting question this touches on your drone conversation which is another piece of this, right, we live in the cities which are not architect for drones to fly around and do everything is, what is the structure of the landscape, what's the network landscape you're building and what does that look like. that turns out to be the key question for the election. how do we design an economic

system that produces a middle class that thrives in a network age. >> are you optimistic? >> i am. >> all these challenges you've talked about. >> historical terms there's reasons to be pessimistic if you think this is the biggest change since the enlightenment of the industrial evolution, triggered wars but at the end of it we got this. >> thank you very much. >> the book -- >> appreciate it. >> great two hours. >> yep. >> okay. >> "squawk on the street" is next. good tuesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer at the new york stock exchange. david faber is off. markets under pressure as a two-day fed meeting begins. the german 10-year at last offers a negative yield for the first time. back in this country, retail sales of a bright spot but the 10-year, 1.58. road map with the three-day losing streaks for stocks, europe three month lows, fea