it's friday, may 26, 2017, "squawk box" starts right now. >> live from new york where business never sleeps, this is "squawk box." gfrnlgt friday mo >> good friday morning. this is "squawk box" live from times square. our guest host of the hour is joe terranova. good morning, joe. >> good morning, becky. andrew, joe. >> you ready to go? >> i'm ready to go. >> we're watching technology stocks once again today. the nasdaq coming off a record high posting its ninth positive session out of the last ten. amazon is particularly in focus as that stock closes in on $1,000 a share. came within a dollar of that price target yesterday. it closed at $995.

jeff bezos is within spitting distance of becoming the richest person in the world. the dow is down by about 20 points below fair value after six sessions in a row of gains. the nasdaq is down by 2.5. overnight in asia, we'll see that the nikkei was down by 0.6%. hang seng was flat. as was the shanghai. in europe and early trading this morning, as things get started, most of the markets are weaker. the dax is down by almost a half percent. cac down by three quarters of a percent. ftse up by 0.1%. markets in italy and spain are weaker. crude prices are higher after dropping by 5% in yesterday's trading session. analysts say that extension of opec's production cuts where they agreed to make the extension was already priced in the market was looking for cuts to last longer than nine months or deeper cuts. neither of those things

happened. this morning wti back up by 25 cents. it is below $50 a barrel. >> a couple big stories we're watching. jim bullard speaking in tokyo overnight and said the path of inflation in the u.s. is worrisome and the plans for raising rates over the next year is aggressive. bullard is not currently a voting member of the fomc. >> makes no sense. worried about inflation -- >> which part? >> those are anathetical statements. i'm worried about inflation, but we're raising rapts too quites . if you're worried about inflation, you would raise rates. >> he said the fed's plan for raising rates is too aggressive. >> makes no sense. if you're worry the about inflation, you would think you would need to raise rates more

quickly. >> it's not the rates that matter, it's the balance sheet. >> the only way to fight inflation is to raise rates. >> normalize rates. it's really a normalization of rates. >> once you started that, andrew, james bullard, i was going to cut you off there. >> say he's not a voting member. >> no, because we don't need to do these guys. you started with james bullard -- i was going to go, eh! not even comment on what -- >> let me tell you another news story. >> let's see if this one measures up. >> get your red button out. talking currently. the pound is under pressure on polling data that's out in the uk. where is your eh? nobody cares about polls. polls are wrong. the first ugov survey conducted since the terror attack in manchester showing the conser conservatives lost a full percent this week and the labour

party picked up three. >> they lost a full percentage point. as we know, that's their limits of resolution. they're not even good within five points. >> on today's agenda there's a trio of economic reports out. >> i like those. those are important. april durable goods out at 8:30 a.m. eastern time along with the second estimate on first quarter gdp. growth revised up slightly to just 0.8%. 10:00 a.m., may consumer sentiment. becky has news on bullard. >> it makes sense, he's worried that inflation is too low. >> he's worried about the absence of inflation. >> he's worried about inflation not being high enough. >> then he's worried about deflation. he's worried about that potentially. >> you could probably write the story three years from now. >> it makes his views

consistent. >> any way, i'm excited about my new word which i heard on the show before us. one analyst said we're in a siculal. it's secular and cyclical. >> does that make you a buyer or seller? >> i have a chart of the s&p here. >> how does it look? >> an all-time high. >> we have to guess when it will end. >> why? >> because that's what we do every day. >> i know. i know. katie stock was on the other day. wasn't she 2650? if we get through 2420 or so -- we're at 2415. the santoli bottom was 2315. don't chase the market at 2315.

we're now 100 points. not that much, 5% or so? but the market was chasible at that point. >> a lot to worry about at that point. >> a lot of worry, as there always is. on the acela, i think we're definitely -- we're out of delaware now. does it go below d.c.? >> i'm on a bicycle at this point. >> we're at bwi. here is sorkin. please. his thumb out on the highway. >> didn't you jump on board at some point? >> with trump as president? no. >> i was -- >> it's a precipice. >> that wasn't a trump hit. >> 11:00 to 12:30 yesterday, as oil declined, everybody wanted to get out of equities. that's the most foolish strategy. >> because it's supply, not demand. >> what's happening with oil is a good condition.

i think we finally have to say to ourselves, let's remove oil from the grand conversation about the path of equities. oil will be range bound. it's 45 to 55. what we witnessed -- >> there's no linkage. >> the correlation, it's not there. >> it's not signaling a weak economy. >> no. >> may not be a linkage with the ten-year either. >> that's the weirdest thing. >> the ten-year was down go. >> the weighting of equities is 6%. doesn't have the impact. >> low on the vix, it is a 25-year low, 978, we're at 1008 today. there are some stocks to watch today. costco beating on the bottom and top lines. comparable sales above expectations thanks to higher membership fees and higher u.s. sales. did they mean ultra? did they leave out -- >> no, ulta.

ulta beauty. >> they wanted to name it that? >> yeah. >> any knew ultra was taken or something -- ulta is not a word, is it? >> like ultimate. >> this is one of the fastest growing beauty retailer -- the fastest beauty retailer in the country. bigger than sephora. this is an amazing story. >> they are counter to the trends because most of their stores are outside the malls. >> so they have retail stores. >> yes. this is a bricks and mortar story. i'll let you tell it. >> no. okay. i don't know if i'll get to that. i'm just definitely just reading here. shares of ulta beauty getting a bump after beating wall street estimates. the beauty products retailer -- >> they make their own stuff? >> no, they sell everybody. >> but all that stuff in one place. hair, makeup, beauty. >> now you're speaking my language. one-stop shopping. >> yes.

>> you get a chart for three years on this thing, it's like a 300% -- >> okay. >> remarkable story. >> are you kidding me, $18 billion company? >> yes. >> by the wear, costco's earnings, witness what we saw yesterday with west bubest buy, consumer not doing that bad. >> it's a mall story. >> it's about brands, less about brick-and-mortar, but there are some success stories in retail that indicate the consumer is out there feeling more confident, optimistic and spending money. >> frond is a word. >> did you know that? >> nobody heard a plant, frond. >> there's no segue to this.

you guys were playing that game yesterday. >> you won't play. >> i tried frond and i still lost. >> you say it's a frond palm? >> if you have a fern, it's frond. >> ults is not a word either. >> but we digress. gamestop falling despite solid quarterly results. they had their first increase in sales thanks to the anyone tend to switch game. shares are down because the company wasn't able to raise its full-year guidance. down about 7%. the ceo paul raines will talk about this. he will be on the show at 7:40 a.m. eastern. i knew that. i read system of the notes already. it's my interview, in fact, it will be incredible. >> stay tuned. >> we'll await that. >> talk about the cicular uptrend. >> you may want to brush up on the nintendo -- >> on switch.

>> we haven't decided. >> gaming is incredible. >> are you a screen time kind of family? they have to read dickens? >> no, they know the passwords on the ipads, a problem already. go back to the best buy earnings and the numbers on nintendo. >> gaming is a huge part of this. target referred back to that. president trump attending the g7 meeting in sicily. he will be attending meetings on terrorism, immigration and refugee policy today. eamon javers has more on all of this. >> on these overseas trips they have to work odd hours. the g7 arrival happened in sicily a few moments ago. we have some video of that. this is a big day for the president in italy. there are some of the leaders arriving earlier today. just within the past half hour. the president earlier today met with shinzo abe, the japanese

prime minister. next up a reception and luncheon for the g7 leaders this afternoon. he and the first lady are also going to attend the philharmonic orchestra concert. tonight a dinner hosted by the president of italy as well. it's apparently a beautiful seaside location where the g7 is being held today, turned into an armed fortress for all these world leaders arriving. business on the agenda today. back at home, the president not able to escape bad headlines surrounding the russian investigation. late last night it was reported that jared kushner is someone of interest to the fbi in this investigation. he's, of course a senior white house adviser and the president's son-in-law. a powerful figure inside the trump white house. nbc news reporting that investigators believe kushner has significant information that they would like to know in their russia probe. but cautioning that does not mean that they suspect kushner

of a crime or intend to charge him. kushner in a slightly different bucket in this investigation than paul manafort or michael flynn who are of more intense interest to the fbi right now. still that puts that -- that puts puts that investigation into the white house and into the president's family. back over to you. >> right. right. we know jared. he's such a nice -- i don't know. i can't believe this will -- i don't know. stranger things have happened, i guess. i don't know. jared? does anyone believe he was meeting with these guys going, listen, you guys get the wikileaks stuff. you hack into that? you release that before the election. all the podesta stuff. that comes out. my father-in-law -- do we believe that? honestly? i don't know. we'll wait and see what investigators discover. >> right. >> clearly investigators think

something is amiss. right? that's why they're asking the questions. >> i don't know. that's certainly what the democrats say, there must be something there. because of the investigation there thrust must be something . >> what cia director john brennan said this week, he saw contacts between people in the trump camp and the russians that caused -- that were cause for concern. when he left the cia earlier -- >> not the subject or the content, just the actual meet -- >> just the contacts, but we don't know the content. it's a big country. >> that's why he said we need an investigation. >> okay. we do. we'll let it run course. everybody trusts this guy, mueller, to do a good job, nonpartisan job. then we'll finally know. >> the problem for the trump white house is that this is hugely distracting. if you're jared kushner, you have to get lawyers, pr advice.

you have to be careful about what you say and do inside the white house. all of that will affect a certain number of brain power and your waking day. at some point that means less brain power and less hours in the day for the other stuff this white house is trying to do. >> for the last ten days, it has not been distracting. i know it's the back drop, but i'm watching what's happening over there. i know the media loves it. c nshg cnn, they barely broke to cover manchester. it took them -- they had to be dagged kicking a ege eged dragg screaming because of some russia thing they were on. they have the guests there, all of themthem frothing at the mou. >> were they frothing? >> they were frothing. lie

l like i am now. >> more importantly the market has not paid attention. >> i hope there is something for your sake, andrew. >> how long does the mueller investigation take? >> a long time. >> they could find a blue dress. >> a year, could take two years. could go on for a long time. >> it started as an arkansas land deal, it went to paula jones, then the intern at the white house. it could go anywhere. >> that said, mueller doesn't have those kinds of speaking authorities -- >> right. >> so he has to kind of stay in his lane a bit more than what we have seen in that investigation. but it can be sprawling. >> not to get to the market -- but to the extent people talk about healthcare, tax reform s this disruptive to those things? >> actually beneficial. goldman sachs, alex philips puts out a great report, because of this mueller investigation, the chances of a government shutdown

at the end of september are lessened because of the investigation going on. >> why? >> don't want to take the chance with the investigation out there and a contentious battle to shut down the government. makes a strong argument about that, which i agree with. >> mnuchin is already trying to get congress to act on this quickly. >> what about other policy issues? >> self-preservation, taxes. self-preservation for the republicans. in 2018, they have to give the voting public something. here is the one grand achievement that we have, the easiest thing is a taxes -- maybe not the magnitude of the trillions of dollars being put for the now. maybe 1.5 trillion, but i still think that's the asymmetric risk. >> a percent will do a bill that's different in the house. >> that same logic makes it difficult for the trump administration. if you're that eager to get some accomplishments on the board,

that eager to avoid a government shutdown that weakens your negotiating position going into both of those things. that will make it tougher for them to get what they want. >> but that's the point. this could be a trillion, 1.5 trillion. >> we'll move on. let's get to the broader markets. joining us is rich steinburg, president and chief investment officer at steinburg global asset management, and joe terranova, our guest host. rich, you think we're getting to the high end of a trading range where you need to start worrying. you can't claim the trading range was something you were expecting as a now point to get less bullish. >> listen, joe, the reality is this, the market is run by three things. trend, sentiment and valuation.

the first two have been really driving this market. the s&p's returns this year to date, ten stocks are driving 50% of the s&p's returns. we have not caught all this market. we caught about 70% of the market because we have a hedge in place. i insure my car, that doesn't mean i want to have a car crash, but i'm willing to have that insurance in place. >> this conversation we had last time you were on, 100 points lower on the s&p. >> i know. but, you know what? alt at $131 in earnings this year, at 17 times plus earnings, 118% of the 15-year average, joe, i'm willing to take a bit off the table and not be full metal invested right now. >> were you on november 10th, were you bullish? >> we had that same hedge in place. we had about a 15% hedge in place. >> ouch.

okay. >> joe, there's different types of investors in the market. we're investing for families, endowments and foundations. it's different when you have to look at the risk profile of the clients that you're taking, so when we put our hedges in place, it's in context for the underlying investor that we're working with. >> rich f you', if you're invesr the long-term, for families what are you doing for the income side? >> it's hard. our duration is down to two years now. we had some money in the intermediate part of the curve. we took that off when the ten-year came down to 2.2. i run the short duration part of the firm. the duration has always averaged 3 to 5 years. we're on the low end of that now. i'm not sure the fed will -- they'll do a deal in june. but i think we are not going to

see extremely high rates. and we're starting to -- if rates stay this low, we may extend duration a bit. my issue is this on the stock market. 22 -- this is the best quarter we've had in 22 quarters. valuation is just a bit out of whack right now for us. >> yeah. valuation -- >> valuations are hard to determine. >> it is. and it can get more and more stretched. now oil is back, not necessarily going to be a tax on the consumer. rates. now they're worried about raising them. >> i think an interesting play may be if in the mid cap space right now, we're trading at about 18 times next year's earnings. small cap is a bit extended. there's a lot of banks in the small cap space. if we do start to get higher

rates, you may see money flow back to the small cap space. the trump rally ripped the small caps. they've been lagging. but i want to see proof in the pudding in the next couple quarters, and the big overhang, which you were talking about before are tax and policies still. >> all this happened without that -- i wonder what happens if that does look likely. rich, thanks. >> take care. >> see you. i will be with us for the rest of the hour -- no you'll be with us. >> the two joes. >> all of us will be with us. >> the two jakes, a movie. not bad. remake of china town or sequel. >> coming up, mark zuckerberg returning to harvard to give the commencement address. he's calling for the government to give everyone a basic income. we have details and the debate on that after the break.

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mark zuckerberg gave the commencement address for harvard yesterday. he called for a universal basic income as a solution for inequality. >> now it's time for our generation to define a new social contract. we should have a society that measures progress, not just by economic metrics like gdp, but by how many of us have a role we find meaningful. we should explore ideas like universal basic income to make sure everyone has a cushion to try new ideas. >> zuckerberg said he was only able to pursue his passion in facebook because he had a safety net to fall back on. >> who was that, his parents? >> must have been. you can't run for president until you're 35 years old, right? >> right. >> they're talking about him wanting to run for president.

>> they're talking about the rock running for president. >> they are talking about the rock running for president. >> they are talking about kanye running for president. they talked about chelsea running for president. >> howard schultz. >> it's true. >> just because it happened this time, i know you think anybody can get elected. but i'm not sure that's the case. universal basic income -- you can't do a knee jerk reaction to it. >> it's the alternative to the earned income tax. >> all welfare goes away, all food stamps go away. everything goes away. you have to live on what you get. zuckerberg would get the same amount of ubi as people who make no money. >> that's part of what irritates the far left on that idea. that it would not be means tested. >> i don't know. >> you have to means test it. >> if you think the border adjustment tax is a change, this

is a change. >> i wouldn't do it. >> but i would means test social security, i would means test healthcare. ichlgts wasn >> i wasn't around in 1776, i think earn success, profit incentive. you get an idea, you can commercialize it because you own it. you employ people to help commercialize the idea. you succeed, they succeed. >> i go back to the big fat people circling the earth in wally. >> if you are trying to convince people to work -- >> the dignity of work. that's why we are -- >> along with the different floor for people. >> what about the different cohorts over time in terms of who gets into the top brackets. not the tip top bracket. >> it's tough. but we do it here better than anybody else. >> we do it here better, but the question is can you do it even

better? >> then we're back to the langone education, and we can't do education because of the unions. we're back to the same thing. >> and education starting at ages 2, 3, 4 years old. none of these are changes that take place overnight. >> it's hard. >> it's work. >> we have to decide. we have to decide, one has to be the decider. coming up, president trump's budget calls for $3 billion to bolster the country's cyberdefense. the ceo of endgame joins us. his company takes a proactive approach for hunting cyberthreats before they attack. i pray andrew is doing that interview. as we head to break, yesterday's winners and losers. 't become a gd just by playing air guitar.

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♪ good morning. let's look at equity futures. they're indicated to open down. down 12 on the doi. point and a half on the s&p. nasdaq also red ink this morning. that's been a strong -- one of the stronger of the three

averages, or the strongest of the three. shares of nintendo are climbing to the highest level since october of 2008 this after c capcon announced they would release their version of "monster hunter" for the anyo nintendo switch console. the game is popular in japan, it was released on 3ds in 2011. president trump's 2018 budget proposal seeking $3 billion to increase cybersecurity. we have nathan picfick, ceo of endgame. you say rather be on the defense, you need to be on the offense. you talk about the idea of hunting hackers which is different than hacking back.

explain what you mean by that. >> there's a huge difference between hunting and hacking back. hunting is going after adversaries on computers you own. it's essential. hacking back is hunting on computerers you don rs you don'. >> when people say we don't want to be defensive. if you're not on the defense, you're on the offense, to be on the offense means you have to be on the other side of your fence. >> getting out on the other side of your fence is both illegal and stupid because i don't care if you're a wall street bank spending a quarter billion on security, you're picking a fight with the chinese army or russian mob, do you think you'll win? >> against a nation state. >> if you don't have escalation dominance, don't pick the fight. but hunting on your own network means bringing some of the principles of offense to bear to level the playing field. one of the realities of cyber is

offense is structurally dominant. >> policy question then. if you think about what the trump proposal, the budget proposal represents, one of the things they are talking about is perimeter security. this goes back to where the fence is, where you are. does the proposal make sense to you? >> perimeter security makes as much sense as the magino line. it doesn't work. in an era of infrastructure as a service and mobility and complicated supply chains, risk fed rates across the relationships, there is no perimeter anymore. >> if the president is watching this morning, he's somewhere in europe right now. >> you don't know where he is? >> right this second? >> yeah. >> he's in taormina. >> has the meeting started? so he's probably not watching, he's at the meeting.

wloo would you te what would i tell him to do? >> make suwe haven't figured ou to bring all of our american power to bear in the cyberdomain, military, economic, diplomatic. people come at us because they know we won't do anything. >> it feels like the rules of engagement changed. not only are the russians coming after us and hacking some things, but potentially with north korea or wloefr it whoeve who came out with this -- it's like looking at the old way of doing things and getting attacked with guerrilla compo t compoints. >> wannacry pointed out lives are at risk. >> if you look at security, how do you think different companies are approaching this problem?

>> it's a crowded market. 1500 private companies. the platforms will win. customers want integrated comprehensive solutions. they want a single product that can do as much of the security for them as possible. they probably want some integrated services. we're at the beginning of a wave of consolidation. what do you think will happen? does that mean aws, google, microsoft, they will all buy up all of these providers, build it into what's called the stack? >> you will see a lot of integration of security in the stack, in the operating system. the big security players buy up the niche differentiated capabilities, layer them in, get them deployed across more of the base. >> is it safer to be one of these three platforms, these large cloud platforms than an individual platform? the argument had always been -- >> ask hillary clinton. >> as we all move into the cloud, is that better or worse?

>> far better. >> far better. >> yes. this is what they do every day and they're spending enormous resources on that security infrastructure. >> it doesn't create one end point, so if you break that point, you're in trouble. >> monocultures are dangerous. there is some security in diversity. gently speaking most people, most companies are better off with data in aws than they are with it on their own server in the basement. >> when you say diversity, does that mean go to aws and microsoft or google? >> means back up. it means have some redundancy, have a plan for resilience. but i think most enterprises can look to the big infrastructure providers with confidence. >> selfish news you can use. he said before we got on the air, use one of these password protectors. >> don't write it down in the back of your notebook. >> thank you, nate. >> thanks. opec extending production cuts but the crude prices dipped

back below $50 a barrel because much of this was anticipated. dan yergin will talk about oil and geopolitics. and safeguarding against terror for the holiday weekend. bill bratton will join us on set. and later this morning, gamestop after posting an earnings beat, shares have been falling on a lackluster forecast. paul raines will join us on a first on cnbc interview. you're watching "squawk box" on cnbc. hi. hi. you guys going to the company picnic this weekend? picnics are delightful. oh, wish we could. but we're stuck here catching up on claims. but we just compared historical claims to coverages. but we have those new audits. my natural language api can help us score those by noon. great. see you guys there. we would not miss it. watson, you gotta learn how to take a hint. i love to learn.

time for today's executive edge. flight delays, long layovers, crack of dawn departures, what would tortured travelers pay for peace. contessa brewer will give us more information on relief at the airport. they say you're in dallas. >> today i'm in dallas and i'm loving every minute of it because i got a big old texas welcome. if you're feeling tired and stressed out at the airport. for $42, 56 square feet can be yours for one hour. look at this. this has a place where you can

actually stretch out and take a nap. there's room for two people. there's two sleeping surfaces here. you can make a business phone call in complete quiet where no one can overhear you. there's a computer available for you as well as netflix. if you need a little bit more space, you big spender, you're willing to spend $80, this much larger suite can be yours for an hour. this comes complete even with an en suite bathroom and a shower. this is really big enough for families. we watched a family come in yesterday. they can get about 2,000 guests a month. they're in three cities, atlanta, philadelphia and dfw. though there's interest from other airports, they've been slow to expand. >> we could be in 40, 50 airports today. we had the discipline to say no. we wait for the right

opportunity as a new concept. don't put me in the mezzanine next to the janitor's closet. >> you get that? nobody puts baby in the corner. they do take reservations at this location and locations across the nation. they say early mornings and late afternoons are the busiest times. i talked to an airport official yesterday. the airport loves them. thinks that minute suites is giving them a competitive advantage against other globe hubs that other travelers might choose. they say they're glad to have them here. minute suites hopes to expand but slowly. they'll do this in a methodical manner. >> there's a place right down here on 43rd street. it's 25 an hour. right -- right over here that -- andrew -- you told me about that place, right? >> i just don't understand -- has anyone seen the movie "up in the air?" >> yes. >> people meet each other on

planes, supposedly -- >> then they can go here? >> i don't know. i'm asking contessa brewer -- >> that's sicker than my comment. >> i have answers. you want answers? >> i want answers. >> by the hour thing. i got it for you. they say surprisingly -- no, it was surprising to me, they're not surprised by it. these are business travelers. people who need a nap. >> of course that's what they'll say. >> yeah. >> you know, like honestly, it doesn't lend itself to the mood music. were you just playing '70s porn music? >> we were. porn music. >> that doesn't exist here. i wint know anythiouldn't know . >> you said the bed could fit two people. only if they were stacked. that made no sense. >> it's a pull-out. >> okay. >> trundle bed. >> while we're on the topic, just because i found this app recently. just so you know about this. there's an app called recharge

which allows you to buy hotel rooms by the hour. similar to this minute situation. >> i can -- >> which also makes me think the idea is recharging for sleep. >> i get it. i get it in an airport environment, i don't get it off-airport. i don't need a hotel in the middle of the day for an hour. if you're th >> if you're that desperate for a fling, you don't have to leave security. you can do it all within the airport. >> contessa, i'm a little hurt -- we have been playing this porn music. you've been watching "morning joe" in the morning. you verdhaven't heard this musi before? >> i'm trying to not taint myself with the music. >> very nice. >> you mean because she's in a

place -- >> she doesn't need a nap. she's in a place where she can nap. not looking for that app. no great advertising, instagram, those great ads -- >> get yourself out of this. >> i thought what is this. >> you don't use that chat room functions on planes either, right? >> no. none. >> okay. coming up, when we return, new survey data on some of the youngest members of the american work force. 44% of college seniors say they are prepared for their careers. the ceo of mcgraw-hill education has more survey results after the break. "squawk box" returns in a moment. stay with me, mr. parker. when a critical patient is far from the hospital, the hospital must come to the patient. stay with me, mr. parker. the at&t network is helping first responders connect with medical teams in near real time...

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welcome back, everybody. a new future workforce survey by mcgraw-hill education reveals what's in the minds of recent graduates and how they're feeling about entering the job market. let's get the details from david levin, the ceo of mcgraw-hill education. thanks for being here today. >> good morning, becky. >> my guess is and it looks like your survey shows out that a lot of graduates are worried about how much debt they've taken on when they first get out into the workforce and that has to be weighing pretty heavily on them. >> yes it does. the average graduate is coming out with $37,000 of debt. but the thing is the numbers who haven't graduated, who have much smaller amounts of debt but

can't get their way out. >> that's interesting. i hadn't thought of that. they have smaller amount of debt but they don't have the path to paying that -- >> that's correct. the actual, the most striking statistic out there, of course, is the success rate, the actual proportion who complete is so low, it comes in, most people are pretty shocked by it. >> what is it? >> the more debt you have, the easier it is to get out of it, but -- >> if you graduate. >> but it's a reverse correlation -- >> andrew, if you've got a degree, you're going to get a job. >> right. >> and you're going to have a way out. so the real -- i mean it's tough to have debt for everybody. and colleges got more expensive so there's more debt so that's not great. but the worst of the problem is that half, approximately half of people in four year schools, maybe 45%, don't graduate. >> that's shocking. that's a shocking number. >> and in two-year schools seven out of ten don't graduate. so they may have one semester's worth of debt, but it could be only $3,000, $4,000, $5,000, but it's a mountain.

they can't pay it off >> is that number the number of people who don't graduate, who started, has that gone up drastically in recent years? >> it hasn't gone up. but the point is it hasn't improved. we've actually got a system where nobody knows that figure. if you ask people what proportion graduate from community college you'd never guess seven out of ten. >> i have a philosophical question for you. there are some economists who think when it comes to student debt that it -- that there should be different interest rates and different loan arrangements depending on what major and what school you go to. which is to say, if you go to a school is it likelier chance you're going to get a job and get a higher payment if you're going to be an engineer rather than a literacy major. what do you think of that? >> i think we can get very clever on pricing and some economists will spend a lot of time on that. the core thing we want as a society is to get more people to be better educated because we'll all be better off. and the problem here is that large numbers of people are not getting the skills that we need.

we have an economy which is craving people with talent. you just had a segment on cybersecurity. we can't produce enough people with those skills. so the issue isn't pricing more people out or trying to be clever on the pricing. it's getting more people in and crucially getting them through. and that's the crucial thing. >> did you just say russian literature? >> yeah. >> you just can't help yourself. i mean -- it's unbelievable. i mean russia is every -- i mean why russian literature? >> because the president was on my brain. >> david, how has technology changed things? >> so i think that is the exciting thing. you can now use, we've got a.i. for example which really helps in classrooms where you've got students who are not well enough prepared, and the a.i. systems are excellent at really identifying what people don't know and helping them refocus on that. so you can move graduation rates through applying technologies, and using the data that comes out of that to help the teacher do what they're meant to be doing, which is teach.

so, support -- support the student much better. >> how much of the cost of education niece days are the books? >> about 1.5%. >> wow. >> that's a good answer. >> yeah. >> i thought they were going to be a lot more than that. >> no, i think the cost of instructional materials as a whole, across the whole of education, around between 1.5% and 2%. so clearly -- and by the way, andrew, books count for 31% of our revenue in the first quarter. so we're actually, we've made the move that the core of what we're doing is now software and all of us want to get away from the high priced textbook. not just because of price, but most of all because we've got better solutions which are aib. >> david thanks so much for joining us. >> great to see you. >> and thank you for being with us for the hour. great to see you. have a wonderful weekend. >> you all have a good weekend. >> thanks, you, too. >> russian literature. >> relentless. >> god. it's on the brain. coming up game stop posting an earnings beat on strong sales of nintendo switch.

♪ ♪ i'm dr. kelsey mcneely and some day you might be calling me an energy farmer. ♪ energy lives here.

the dow, the nasdaq and the s&p 500 all posting their sixth positive session in a row. the nasdaq closing at a record high. but futures this morning pointing to a slightly lower open. a run-through of what you need to watch ahead of the holiday weekend. and the unofficial start of summer. the g7 summit. president trump continues his marathon of meetings with world leaders in italy today. a look at what's coming up on the agenda. plus we hit the water and find out what is keeping boat sales afloat. >> move over, i'm driving. ♪ >> grab a towel, sit back and relax as the second hour of "squawk box" begins right now. >> it's easy to grin when your ship comes in, and you've got

the stock market beat, but the man worthwhile is the man who can smile, when his shorts are too tight in the seat. ♪ love boat soon we'll making another run ♪ live from the beating heart of business, new york city, this is "squawk box." >> good morning, welcome back to "squawk box" right here on cnbc. we're live at the nasdaq marketsite in times square. i'm andrew ross sorkin along with becky quick and joe kernen. take a look at the futures at this hour. this music is very lively. dow looks like it would open down about 12 points off. nasdaq off marginally about half a point. s&p 500 off about a point and a half. here's what's making head lines, two economic reports out ahead this morning. the government will be out with durable goods orders for april at 8:30 eastern time. consensus forecast calling for a

1.8% decline. we're also going to get first revision, rather, of the first quarter gdp. that's expected to come in at 0.8% annual rate. that's slightly faster than the initial reading. also u.p.s. has been fined nearly $247 million after being accused of illegally shipping large volumes of untaxed cigarettes in new york state and new york city. u.p.s. says it is disappointed in the decision and plans to appeal. calls the penalty, quote, excessive, given that the shipments in question generated only about $1 million in total revenue. of course they say they weren't the ones actually sending the cigarettes, they were just shipping them and claim to not have fully known what was going on inside the boxes. but, of course, there's some evidence that maybe they did know what was going on inside the boxes. anyway. presidential adviser and donald trump's son-in-law jared kushner under some scrutiny by the fbi today. nbc news has learned from multiple u.s. sources that investigators believe kushner had significant information into the russian investigation but that doesn't mean they suspect him of a crime.

it's unclear what specific information kushner may have, though he did meet last year with a russian banker in december with the russian ambassador. kushner's lawyer told nbc news he has already vowed to tell congress about those meetings and will share the same information if there's any inquiry. we heard he was a person -- or we heard there was a person of interest. not really a legal phrase last week, and now it appears that mr. kushner is that person. >> that lively music you alluded to. >> the love boat? >> was that really before your time? >> no, i remember the love boat. >> okay. >> yeah. it was in repeats at that point. >> was it? >> yeah. >> used to be on friday nights back-to-back with fantasy island. >> jack jones. yeah, it did. julie and gavin mclaud. >> i do think it was -- >> it was a '70s 140e. >> would have been late '70s, early '80s. >> i was watching in the '80s like in the afternoons where facts of life and different

strokes were on. >> fantasy island. >> fantasy island backed it up. >> you know it's coming back, too? dynasty. >> oh, yeah? >> shoulder pads. >> yeah. >> and fights. >> yeah. >> all right, i just wondered, because you kind of alluded to just some lively music. but that's a pretty -- i know every word, obviously. >> i'm sure you do. >> open smile and a friendly shore. it's love, andrew. welcome aboard. it's love. few stocks on the move this morning. you know -- you know who liked this? terranova talked all about costco. costco reported a better than expected quarterly profit helped by higher membership fees, strong sales, membership fees rose 4%. it's been a pretty good stock over the years. game stop posting its first increase in sales in five quarters as robust demand for the nintendo switch hardware, the gaming console itself, helped offset some weak video game sales. and talked to actually the ceo,

soon, the company reported 63 cents versus 51 cents, revenue was strong at over $2 billion. analysts say the shares are down because the company wasn't able to raise its full-year guidance if we went back further on the chart, sorkin, you know we've talked about this again and again. how do you send off the downloading of all your entertainment software? and you think this company is the writings -- and the stock price looks like you're going to end up being like it's a blockbuster, sort of. >> we've always -- >> you always said that. look at that. does that look like it's salvageable? we're going to -- >> the question is whether you could transform -- the question is -- >> why don't they do a netflix. yeah, they should do a netflix. that's their only hope i think, right? they get one thing that does work is bringing in the used games, and they don't give you much for them and then they sell them again for more. and that's a really profitable business. we'll talk to the ceo and find out -- >> but we always knew at some point there may be a tipping point in their business. right? >> when people would leave the

bricks and mortar. that was always sort of the fundamental question. then we talked about mary dylan and ulta beauty and you say to yourself maybe operationally if you can somehow get people in the store it's a whole different game. >> isaac i like, the bartender. wasn't he nice? >> on the boat? >> you know who was supposedly a nut job not only comey but the bar tender. the bartender. i mean -- >> doc. >> not the bartender, doc. >> did everyone just catch the joke? >> yeah. >> i just want to make sure. i mean, i'm slow, as you know. so i just want to make sure the viewer was with -- >> what i said, not just comey? >> not just comey, just threw that in there. >> all right let's get to the markets right now after another record high for the s&p 500 and the nasdaq. joining us right now is steven wood. he is chief market strategist at russell investments. and rebecca patterson, who is chief investment officer at bessemer trust. she's also a cnbc contributor. we look at this, and zbies, was this the answer? six days in a row of gains after

that deep drop-off that people thought maybe this was the beginning of the end. what does that tell you about this market, rebecca? >> i think at the end of the day as long as the economy is continuing to grow and the fed is moving cautiously and we don't have an inflation risk that will suddenly make the fed move faster, stocks are going to recover from these dips. i mean, it's so simple, but at the end of the day, most sustained pullbacks, the vast majority of sustained pullbacks in equity markets come into and during recessions. and if you don't think a recession is imminent, then these dips provide opportunities for people who've been waiting. >> that's what i was going to say. even if it's a slight pullback like that, 300, 400 points is that when you're hitting the buy button immediately on that? >> if someone's been waiting for an entry level any time you see those things you do want to take advantage of it. just like the day after the french election we got the news, people had bought the rumor, they sold the fact, french equities were down that day. our portfolio managers were looking to add some exposure on slightly better levels. so, yeah, i think that should be your strategy. >> steven what are you telling

people right now? >> i think political headlines can provide some episodic opportunity and i think what we saw over the last number of days is part of that. but the larger issue, we think, is there's a separation of fundamentals with valuations in the u.s. and we've been saying this for some time. we don't think there's a recession in the u.s. and we think the fundamentals are good and getting modestly better. even a little bit better. at these valuation levels i think you want better than not bad or good. you need very good. valuations, so our advice is a simple one. if you cut loose of your home country bias you don't force yourself into decisions you don't need to make. so we're more global while we've been adding to europe for awhile. valuations globally can be attractive. relative to the u.s. certainly. so we're just looking globally and in multi-asset space not just in equities, where valuations are closely aligned to fundamentals. >> you talk about how our fundamentals are okay, the valuations have gotten much higher and that's probably in large part because of what you see in places like the bond market. it's shocking to see -- >> correct. >> -- the yield this morning for the 10-year is back below 2.25%.

>> yeah. >> what is that telling us? particularly when we think thatted fed's likely to raise rates next month. >> right. and the market is pricing in a decent probability of a june hike. i think it's still around or a little over 60%. down a bit but it's still high. you know, i think bond yields, to get things moving, you need to have some inflation or at least reflationary hope. that's why today's united states of michigan numbers, one piece of that, very important the fed the long-term inflation expectations and they're sitting at cycle lows. they're incredibly low. so the fed is raising rates but they're not going to move quickly. so we're going to have very easy monetary policy lingering for awhile. even if we're starting to slowly take a little of the booze out of the punch bowl. >> steven if you're looking at valuations and thinking they're getting stretched when it comes to stocks, what in the world do you tell people when it comes to bonds? >> exactly. and that's where you're seeing the divergence. which one is more right? the equity markets or the bond market? i say when in doubt go with the bond market.

you're looking at those valuations in the bond market are telling us that there is a softness right now in the u.s. economy, europe right now is growing faster than the u.s. at this very moment. we think that the earnings forecast looks better in europe and broadly across the world than it does here. i think in fixed income you probably want to look global. you probably want to do more credit work than you did. probably less rate work and i think if you're looking in not only just advanced economies if you're looking at emerging markets globally. so i think there are opportunities in fixed income, but you really got to do a lot of homework as well. >> what about oil? do either of you make any bets when it comes to oil? >> our base case is that oil prices, barring some big shock, are likely to say relatively range bound for the next six, nine months. >> range bound between 40 and 50? >> yeah. >> 40 and 60? >> they've been 46 to around 58 so far this year. >> back below 50 bucks this morning. >> i tend to look at brent nor than wti. directionally the same thing. any time we get lower prices we get more production coming out of the u.s.

any time we start getting higher prices, not production ramps up, supply comes up and that caps us. so i think we're probably just sitting between a range which is not the end of the world. right? the only difficulty is if oil prices stay relatively low and in a range, you don't have this commodity price lift that would be very helpful for emerging market equities, a lot of those, and for that reflationary trade. which seems to have stalled quite a bit in recent months. >> fine, good. you know -- one of my buddies is watching. he says sorkin is back. and it's all love. >> all love. >> it's all love. >> all love. >> he did my friend eric he did that grateful dead movie. so he's -- >> eric? >> yeah, it's all love. >> it's all love. >> you know how much love there is? he also sent me an e-mail. >> no way! >> hey eric, nice to see you. just saying. >> he knows, he fessed up he said he e-mails you a lot. >> he did. >> but now he's got a new friend. i think you're going to keep e-mailing.

>> the love boat, 1977, the year i was born, till 1987. so i was only 10 years old. and that's why -- >> but it was for kids. i mean a lot of kids loved -- >> but i think i had -- >> if you were watching that really closely, you -- you know, a little bit -- >> i was more of like an 18 kind of guy at that point. knight rider. >> you're right about the fantasy island. i think it's almost the same show. >> friday night. >> 8:00 and 9:00. >> friday night. >> that's what kids did back then. friday night we had dinner and then the parents turned on the tv and that was our baby-sitter. >> the one tv. >> and we'd have to change the channel with our hand. >> you know what? if there were a fantasy island, you would have gone. definitely. you know what i'm saying? what about good times? did you watch good times? dyd-o-mite. >> jeffersons. >> okay. >> we're just going to have a love in. we got to go. coming up when we return we're

going to talk oil prices dropping after opec's production cut. a closer look at the oil market, the president's plan for possible sell-off of half the controlling reserve with dan yergen. and then a leak of information from the manchester attack causing a lot of concern over information sharing on terrorism. former nypd commissioner bill bratton is going to join us to discuss national security and how to protect soft targets. and later the ceo of gamestop on the company's quarterly results. you're watching "squawk box." >> i was trying to make you jealous. mobility is very important to me.

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it's a new kind of network. xfinity mobile. ♪ we're moving on up to the east side ♪ ♪ to a deluxe apartment in the sky ♪ ♪ moving on up moving on up ♪ ♪ to the east side moving on up ♪ >> all right, crude prices dipping -- we're going to do a lot of these. >> we're moving to the '80s. >> '80s. >> '80s tv. >> great year for the markets. >> the jeffersons were earlier. they were in the '70s. >> was it? i think so. that was an all in the family sort of a spinoff, wasn't it? >> jeffersons was -- >> yergin's here. yergin's here. oil dipping back below the $50 level after opec and other major produces extended their current deal to cap production for another nine months. joining us now with more on opec's strategy, dan yergin.

counselor to the president, and also ihs market vice chairman. not overstating that, am i? >> you're on target. >> yeah. >> sitting at that table. >> yeah. >> that table with all the -- >> right. >> what did they want to talk to you about? what is oil going to do? is that what part of the reason -- >> no it was infrastructure. >> really? >> infrastructure. but oil is part of it. >> we have said again and again, dan, that fracking and horizontal drilling made us the swing producer, and that the influence of opec has been diminishing for years. i mean is this another example -- >> i think -- >> how do they decide to cut production when they need the money? >> i think opec is actually back in business. as a swing producer. but so i think they're back in business. but the other side of it, too, is they're still struggling to have to adapt to this new world of shale oil in which the u.s. plays a much more important role than it has in the past. >> i mean it's watching the dynamic is kind of interesting.

they try to, you know, they try to keep prices low, so to put the shale guys out of business, but then they're not -- >> it didn't work. no there's been this whole, on the one hand the oil market is rebalancing. on the other hand this recalibration of costs is going on. i just was down in houston yesterday and again you talk to the producers at $40 to $50, they're now competitive. certainly at $50. so we're going to see a big increase this year in u.s. oil production, almost 900,000 million barrels a day. >> that's pretty amazing. a lot of people said they have to get back to 80. >> i think that was before this went -- before november of 2014 when the prices started down, there was this widespread thinking 70 to 80. but it's been so innovative, and just -- it's almost like we're looking at shale 2.0. this is almost a different industry than it was three years ago. >> that's -- that is pretty -- >> i do think that next year, actually, we think that oil -- u.s. oil production will not increase as much, because they've increased so much this year they have a lot to make up for next year.

so, i think that's the kind of viewpoint opec took that they've got to run this thing into next year, and of course, it's not just opec now, it's opec and russia. >> is a super spike even possible anymore, ever? >> of this sort of a commodity? i think at least certainly the producers never want to see that again. >> is it possible, given that we -- we're going to sell half our spr because we don't need it anymore. >> super spike commodity only if you had a really major disruption or crisis. >> you have the middle east, you negotiation i don't know whether it's getting -- i don't know whether it's getting more stable over there or not. >> we do have to change the way we look at the market. used to be opec and non-opec. now you have to look at the big three, saudi arabia, russia and the united states. >> russia? >> russia again. ding! >> you know, maybe we should start instead of the ding for too big to fail, every time. we used to do -- you know when else we used to do it? >> weiner. >> right. >> wooenergate.

>> weiner, weiner, ding, ding, ding. yeah, we should do it for -- all right, so that's what we're talking about. and it hasn't helped russia either and part of this whole dynamic with putin is because they aren't making as much money there, and he needs to exert -- >> well i think the russians have been really -- putin has made it very clear that he wants to have a deal with opec. and that was the thing the saudis said we won't do this. we won't cut back unless russia is part of it. and now you see the russian oil ministers there in vienna, and that they're part of the game. and so it's really now like almost a super opec with russia as part of it. >> so what about renewables? i mean, how far has the age of the renewable been pushed back to where it can replace 50% -- >> well oil really doesn't compete with renewables. because renewables is bringing electricity and at least in our numbers, given the incentives that exist in everything -- >> well without -- >> you know we can't have incentives forever, can we? >> well, i think they go to

2021, 2022. the bulk of the new capacity that will be added for electric generation in the united states will be renewables, and natural gas over -- >> with as much oil that we're having as much natural gas and i know you say it's not a direct competition but can -- >> gas is. >> gas is then. so when is the day when it becomes, without any government incentives, it becomes superior on a price basis, on a value basis, to use renewables? when does that -- >> it depends what part of the country you're in. if you're in arizona it's a different answer than it is if you're in new hampshire. because of the amount of sun, and heat that you get. or the amount of wind you get. so in some parts of the country it would be competitive. in other parts it's still incentive. >> but it's never going to supplant completely? >> well, no, but it's going to be renewables will be a growing part -- >> what sit now in terms of electrical generation, what's the percentage? >> i don't have that number in my head. it's still small number.

but if you look at the new capacity that's being added, it's a big number. >> all right. >> dan, question for you, given the advice that you've offered the president related to infrastructure, just over the weekend, the saudis put $20 billion into blackstone, into what will be a $40 billion investment fund based on infrastructure. how do you think about the money that saudi arabia is now investing in the united states? how should we think about that? >> well i think that the saudis have decided that they want to be not only a force in global oil, but they also want to be a very big force in the global financial system. and this is part of it. i think it's also part of kind of trying to tie the two countries together. >> together. >> and they've heard, they really heard the president talk about jobs. and this is the way to show that they are contributing to it. so i think that's an important part of the dialogue. >> okay. >> fair enough. dan, thank you. >> thank you. >> thank you. >> thanks for bringing up -- we're bringing up russia, too. >> always. got to get our quota in. as an nbc entity. >> bill bratton is coming up.

maybe we'll throw in russia, too, protecting soft targets amid jitters of more terror attacks across the globe. he's going to join us in just a little bit at 7:30 eastern time. check out futures right now. you're looking at red arrows dow looks like it would open off about 18 points, nasdaq off about close to two points and s&p 500 after about 2.5 points. we're back in just a moment. time now for today's aflac trivia question -- what happened? dad kinda walked into my swing. huh? don't you mean dad kind of ruined our hawaii fund? i thud go to the thothpital. there goes the airfair. i don't think health insurance will cover all... of that. buth my fathe! without that cash from - aflac! - we might have to choose between hawaii or your face. hawaii! what? haha...hawaii!

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get ready, because we're helping leading companies lead with digital. now the answer to today's aflac trivia question -- when we come back, outsmarting terrorists and protecting soft targets. former nypd commissioner and executive chairman of tenio risk bill bratton will join us. and then gamestop trying to get back into the game with investors. the company's ceo will be here. as we head to a break take a look at the u.s. equity futures after six days of gains you are seeing a little bit of pushback

this morning. dow futures indicated down by about 28 points. s&p futures off by almost 4 and the nasdaq down by close to 5. "squawk box" will be right back. r of innovative thinking. the power of 100 of the world's top companies. the power of an etf. the power of qqq. the thinking we put in, clients get out. power your client's portfolio at powershares.com/qqq. before investing, consider the fund's investment objectives, risks, charges and expenses. call 800-983-0903 for the prospectus containing this information. read it carefully. distributed by invesco distributors inc. containing this information. read it carefully. i count on my dell small for tech advice. with one phone call, i get products that suit my needs and i get back to business. ♪ ♪ it'that can make a worldces, of difference.

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♪ welcome back your dreams were your ticket out ♪ ♪ welcome back to that same old place that you laughed about ♪ good morning, everybody. welcome back to "squawk box" here on cnbc. live from the nasdaq marketsite in times square, among the stories that are front and center this morning, even amid record highs for the s&p 500 and the nasdaq investors are pulling money from stock funds. the latest data shows that u.s. based stock funds saw a $10.1 billion outflow during this past week. that is the fourth straight week of outflows. u.s. car prices are tumbling according to a survey by the national automobile dealers association. prices were down 7% in march compared with a year ago. the reason, a flood of cars that are coming off leases. and we are watching shares of discount retailer big lots this morning. big lots earned $1.15 a share for the first quarter. that was 16 cents better than the street was expecting. another rare retailer that's really blowing out expectations.

however, the company did see an unexpected drop in comparable store sales but raised its earnings forecast for the full year and that stock is up by 9%. >> okay, travelers, more cautious this memorial weekend in the wake of the manchester terror attack. but as the terrorists get smarter, so does law enforcement. joining us right now is former nypd commissioner bill bratton, teneo's risk executive chairman. and we're thrilled to have him here this morning to help us just try to understand what we're doing or what the government is doing, to protect soft targets. >> well, the reality is soft targets are anywhere. and they are much more difficult to protect than hard targets, major venues like madison square garden. >> right. >> and the reality is that you can't protect all of them. that is the reality. and that is the significant benefit that a terrorist would have in that they don't clearly that we can't protect everything. >> would you be nervous going to a sporting event for a concert these days? >> not at all. >> because? >> the security that is in

place, and security that is constantly being expanded upon, we'll watch very closely what happened in manchester and one of the learning things that have come out of that event is understanding the importance of protecting the perimeter outside the venue. the venues are pretty secure in terms of bag checks, bomb sniffing dogs. >> you're saying the lesson was what? >> the idea that the protection of an event, both before and after, external to the site itself. the idea of the transit system. madison square garden is a good case in point. there's a story in the paper this morning about the billy joel concert. >> right. >> about the extra security. not only the perimeter, but down into the subway station and down to penn station. >> and then what manchester also showed us is not just security as you're coming in, but security as you're leaving. are we prepared to continue to have -- is security still there after an event, too? >> certainly. but the -- have a lot of experience in the hardening of

sites, if you will. times square, for example. we're very involved in trying to make that more secure. the perfect event there several days ago the new devices that have been put there the stanchions stop that from being an even worse situation than it was. you'll see coming out of that once again we'll learn from that. there will be more of those types of devices placed in the square. even some consideration on making the square a vehicle-free zone. >> maybe they don't do new york. maybe like instead of london it was manchester. so it's -- >> i just saw a report overnight about two people who had been picked up, two men who'd been picked up in minneapolis. >> minneapolis. >> who had weapons in the car, and devices or the potential for building bombs. which i don't know if the reports were accurate or not. >> the world we live in unfortunately. >> but there's fewer here, right? there are fewer -- i mean we can take some solace in the united states because there probably aren't quite as many -- >> that's the question, can we? >> actually, you can. our experience is very different than europe's, in that europe has -- england for example.

>> it's politically incorrect to talk about this. i mean is the president on to something in terms of the extreme vetting? i mean should we not feel ashamed to -- to do -- to take a closer look at who comes in here? >> you can always improve the vetting. the vetting is already pretty extensive as it is. situation in our country, very different than europe, is that the muslim community for example in this country, which is the focus of so much of the terrorist concern at the moment, has been very assimilated into the country. in europe, they are very isolated, usually in poor areas of the cities. so the european experience with their immigrant population is a very different experience than that here in the united states. >> in the news from yesterday, sessions has taken it all the way to the supreme court now, because another appeals court, the second one upheld the ban. >> that's right. >> do you think -- do you hope that the -- do you hope that the ban gets lifted by the supreme court, and that the president

can do what he wants? or do you -- >> i think the idea of banning from those seven countries exclusively is not necessary. i think you can tighten the vetting, if you will, the visas, et cetera, in general, without identifying seven countries, which has got him jammed up -- >> -- the president as the executive in chief have the authority to do it? >> that's what the court also actually decide. >> they've been saying no. these are courts that obama sto stacked with nominees, right? >> dare i ask, what are we not doing that we should be? >> in terms of what we're not doing is, making enough effort to educate inform. the strength of working against terrorism is awareness. and so the see something, say something, seems somewhat trite sometimes when you hear it but that is so important that people's awareness without raising to the level of fear. so when you go to a movie theater and it will start off with that little advertisement, see something, say something.

increasingly identifying where the exits are in case of a fire. i like when they come in and identify the exits. it's just that additional awareness, without raising the fear level, and so i think we can do so much more. the idea of train, the active shooter, the great concern in this country with so many guns. the idea of hide, run, fight. the training, the education, the awareness. >> what about stopping it before it gets to that level? i mean there are reports in the situation in manchester that the guy who did this was out praying very loudly in the streets in the hours leading up to this and the neighbors were very concerned about him. still not much you can do. >> exactly. well that's the idea of in this country a report that was done for homeland security several years ago, i'm the vice chairman of the homeland security advisory council to the secretary, and that report indicated that the vast majority, 70% of the incidents that had been uncovered had been foiled, had been thwarted, were not the work of investigations

by law enforcement, but were initiated by a citizen. >> a concerned citizen? >> seeing something and saying something. >> there was news just in the past 24, 48 hours about what the tsa plans to do at the airports in terms of making people open their bags even more when it comes to not just electronics, but everything. >> right. >> does that make sense to you? some people have argued over the years, as you know, that airport security, some people call security theater. given that we -- the tests often done every couple years where you hear this terrible stories where, you know, people are putting guns and other things on these planes. >> well, look at it this way. we have not had a successful terrorist event involving an airplane in years. >> right. >> but quite obviously tsa, the government, are very concerned with the latest terrorist threat information about the capability to plant a bomb in a electronic device and even smaller device than a laptop computer. the dilemma for tsa, understanding the crowding concerns, the delay concerns,

against the safety concerns, what is the appropriate balance? and i've sat in those meetings with the tsa director, where he makes presentations about the weighing of that. >> right. >> quite obviously at the moment that the information is out in public, there is a real concern that they have perfected a device that effectively would be much smaller than a laptop computer. >> the final question i have is actually just about intelligence sharing. not just intelligence sharing among the agencies in the u.s., but intelligence sharing among different countries. obviously this leak of these pictures from manchester created a little bit of a rift between the u.s. and the uk. there's obviously questions about what the president had said perhaps the russians about some intelligence that had been received perhaps from israel. how big an issue is that for you? >> two thoughts, that the issue of intelligence sharing, the good news is, my experience the last three years as police commissioner of new york, it is better than it's ever been.

the relationships in this city between the u.s. agencies, fbi, et cetera, have never been better. the relationships from a personal experience of the 12 detectives at the nypd has in foreign countries, the exchange of information during the recent manchester bombing between the nypd and their counterparts, never been better. but the release, the leak, if you will, of that information about the device, how it was carried, inexcusable. inexcusable. so they should, in fact, investigate that. that information was so damaging to the investigation of the event by effectively informing the terrorists who perpetrated it, we're on to you. we know how the device was made. with that, you identify who the potential creator of the bomb was. where are they. so it gives them an early warning, versus the first day or so, there wasn't much information out there. so they could feel comfortable -- >> yeah, that wasn't -- you know the trump leaking to israel, this is somebody -- this is one of trump's -- one of his

problems, leaking to "the new york times," not him, obviously. >> no, no. >> there's two issues, right? >> right. >> there's the most recent issue related to manchester. this is more about our relationship and trust in terms of being able to -- >> no, i know. >> -- share information. >> i don't think it was the trump administration. i think it's this intelligence agency. >> oh, i believe the skwels agencies, irrespective of trump were responsible for the manchester situation. >> right, right. for them to not have trump's best interests in mind, either. >> that's true, too. but the question is whether trump implicated israel without necessarily saying -- >> that was the previous. this is a leak -- >> the leak of that. >> yes. >> it was a very interesting article in today's papers, "journal," "new york times" on this very issue about our first amendment, how different it is in the united states versus other countries, england in particular, where they have the official secrets act that they can shut all this information down, and they pursue it very vigorously if there's a leak. in our country, it is a tradition, whether from the president on down, it's leaks

are part of our very being. that is the reality of it. >> commissioner, we appreciate you coming in this morning. >> great to be with you all this morning. >> thank you. coming up the ceo of gamestop on how the company's trying to prove to wall street that it's not just about video games. the company's stock has seen a drop of more than 20% over the past year. the plan to turn things around is next. and a programming note, tuesday right here on "squawk box," the fed's richard kaplan sits down with steve liesman for an exclusive interview. we'll ask if a june rate hike is in the cards. "squawk box" returns after a quick break. i count on my dell small business advisor

for tech advice. with one phone call, i get products that suit my needs and i get back to business. ♪ ♪

♪ here's the story of a lovely lady ♪ ♪ who was bringing up three very lovely girls ♪ >> you know, i never get this right. okay how is that? >> oh, i got to look this way? >> no -- >> oh, there's -- >> there's a six box, not a nine box. >> it was a nine box for the brady bunch. >> right. who is alice? >> alice was in the middle. >> she's in the middle. >> cindy, alice -- >> the poor gamestop guy, he's like. is he still there? gamestop out with earnings, shares of the largest video game retailer under pressure despite

a beat on the top and bottom lines. gamestop reporting its first sales increase in five quarters. thanks to high demand for the hardware. i guess this nintendo switch. joining us now paul raines ceo of gamestop. paul we've been talking about gamestop for years and years, and worrying about downloads, and things like that. and whether the business model needs to change in some way. and it's been -- you've done -- i mean it's been like five years and my kids still go to gamestop all the time. so it hasn't happened. but is it still something on the horizon that, you know, that needs to be dealt with? >> well, joe, it's good to be with you. you know, i've been on this -- coming on this show i think for ten years maybe. >> yeah, maybe longer. >> i'm still here. i'm not a virtual image. i'm pinching myself. we're still in business. look it's great to be here talking about growth today. you know, we comped 2.3%. we grew our business 4%. we had 93% omni channel sales. but yes, our business model

always has to change. that's what we do. we do that very well if you look at our history, we've gone through a series of transformations. and today we're moving into a diversified space with collectibles, and telecommunications businesses. but our core video game business is typically cyclical. that's what you're seeing now. and gamestop is always a great value when you enter a cycle and it's always a challenge when you exit. that's why we diversified. we're very bullish and optimistic on our future. >> but in the current quarter, stocks not down a lot but it has been a little bit of a downturn for a year or so. but the analysts today said that the hardware sales were good, but that maybe the game sales themselves weren't as good. and maybe not quite as good aon the used games. does he have that right? >> well, certainly, you know, if you look at our history we tend to move with the pre-owned games tend to move with the new software. and of course, there's more full game downloads than ever. and we estimate that at about 35% this year. but we've adjusted for that. and we actually sell full game

downloads. and our pre-owned business trails that. but what we've done, though, joe is we've introduced new businesses in to our portfolio. collectibles this year we're shootings for $750 million at significant margins. we grew that 39%. we've got other businesses that are replacing some of this stuff. and again, when you look at our diversified portfolio, there's a lot of profitability that we're bringing into the business. but certainly, always we'll be fighting battles as the cycle of consoles shake through. by the way, i will tell you, i think this nintendo switch, i know you heard from best buy yesterday, we're the market share leader on that launch. it's running ahead of the nintendo wii. so these are very good signs for investors. >> makes me want to get one. i have a 70 inch tv. what's the switch do that's different than the wii? they keep getting better and better and making advances, right? do i need to buy this? >> i'm surprised you don't already have one, joe. i know you're kind of a gamer with your family.

look the switch is a hybrid mobile and console device. you can play it on your tv. it's got motion sensor controls. you can also grab it and take it with you and it will have a pretty good battery life to go on a flight. go on a trip. so, yeah, you should. there's a lot of original ip that's out with it. we got a mario card already, a super mario coming. a lot of good games. our own heroes that we publish is out there for the stwich. so yeah i think you got to go get two of them. >> i mean, the lowest scores i've ever had in golf have been on the wii. i mean, there's a lot of -- i don't know, i'm able to -- >> is there wind? >> i'm able to gauge. >> even better you can buy it on omni channel. we've got a tremendous omni channel experience now. we grew it 93%. it was greater than that in the u.s. and you can buy online, pick up and store, you can go to a store and order it and have it shipped to your home. you can order it from home, have it shipped to your home. or you can order it from home and have it shipped to a store.

we've got all kinds of twice help you on that omni channel ordering. >> i love the way i said used and you just came right back with pre-owned. >> we learned that from the car guys, joe. they don't call that stuff used. they call it pre-owned and certified. >> it's even better if it's pre-owned. someone's tested it out. andrew, what do you think? blockbuster model? we worry, right? >> we worry but i think it's possible he might make the turn. we hope you make the turn, right, paul? >> i hope so. >> the question is whether there's an inflection point and we were talking, by the way -- >> netflix -- >> well there's the netflix thing. but the question is what he's doing in store seems to be wo working to some degree. >> you think so much of it goes online. and then what do you do to replace it. >> well, as a lot of retailers have said recently, you know, we look at the stores as an asset. >> right. >> so we're driving a lot of volume through omni channel to our stores. and you know, you go to our stores you know we are uniquely qualified to handle those orders. big boxes struggle a little bit with that. we've been able to --

>> real quick, five years from now you think you'll have more stores or less? >> well i think we'll have less video game stores. we've said that publicly. >> right. >> i think we'll have more telecommunication stores and definitely more stand-alone collectible stores. if you go to our think geek store there on 33rd and broadway i think you'll get a feel for what we're doing with collectibles. it's pretty exciting. >> great. >> paul, thank you. >> thanks, guys. >> all right, thanks for coming on. i appreciate it. >> when the three of us come back, low interest rates and a rising stock market keeping boat sales afloat. but it is not mega yachts that are driving growth. we're going to get you ready for the water and talk about what's trending this summer when "squawk box" returns. ink traffi, the future's going to be a nightmare! does nobody like the future? c'mon, the future. he obviously doesn't know intel is helping power autonomous cars and the 5g network they connect to. with this, won't happen in the future. thanks, jim. there's some napkins in the glovebox. okay, but why would i need a napkin?

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♪ love it. >> good ad. >> you can tell it's friday. and it feels like a three-day weekend after that. what was that show, greco? when one was that? >> that was -- >> that was chips. hard to remember sometimes. hogan's heroes -- >> don't tell us anymore. make us guess. >> all right. let's take a look at a couple stocks. the orchestra was really good. a couple of stocks and that crazy lady there.

deckers outdoor posted 11 cents a share for its fiscal fourth quarter. analysts had been predicting a loss and the maker of ugg boots also gave strong full year guidance. costco, if you weren't watching, they earned $1.40 a share, way above estimates and comp-store sales were better. rose 5%, which was unexpected. cost costco's results were helped by strong u.s. sales and higher membership fees. new boat sales are at a post-recession high but it is not the mega yachts that are driving the growth. those sales have been sinking. landon dowdy joins us from florida with more on this $36 billion industry. landon, good morning. >> hi there, becky, good morning. that's right, these multimillion dollar yachts that you see behind me, they're all geared up for the memorial day weekend. the manager here at new snirna marina says he expects every single one of these slips to be filled this weekend. that could be because boat sales aare at a post recession high. pontoon boats up 5% year over

year. the fiberglass outboard segment up 7%. the one segment that is struggling though is the yacht segment. that's down at 19% year over year. yesterday i visited high end boatmaker boston whaler which is owned by publicly traded brunswick in nearby edgewater florida. hugh bower, the president of the company telling me industry data has shown weakness in the yacht segment for the last three to four quarters. analysts telling me they attribute that slowdown in american made yachts to a stronger dollar which has helped european competitors. that on top of growing concern from one percenters as to if president trump will actually be able to pass tax cuts they're expecting. what's interesting is the folks at boston whaler tell me the people buying those boats are families with household incomes of $100,000 or less. so boston whaler says that their most popular boat is the 35 to 40 foot outrage. i actually got to drive one of these yesterday, guys. it's crazy. the speed is amazing. i have zero 2350u9 your as a

captain, though. back over to you. >> all right, landon. you know what tonight is landonen? >> what's tonight? it's friday night. >> it's blood line. >> i'm getting one of these boats. >> blood line, steven rayburn has a marina. that's much nicer than his. but we've got to see what happens. >> i'm going to watch a repeat of "the love boat." >> yeah, yeah. well, yeah. there's a lot of stuff down in the keys. a lot of boats. anyway, landon, thank you. >> lots of boats. lots of boaters. supposed to be crazy. >> thanks, guys. >> tough gig. >> coming up when we return g7 leaders meeting in italy. a preview of today's agenda as president trump wraps up his big travel trip overseas. and then bitcoin's run has been nothing short of amazing. we're going to speak to the head of the largest digital currency exchange in the u.s. about the recent run-up and whether or not the crypto currency can hit 3,000. "squawk box" returns in a moment. so you miss the big city? i don't miss much... definitely not the traffic. excuse me, doctor...

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yet a lot of people still build portfolios with strategies that just track the benchmarks. but investing isn't about achieving average. it's about achieving goals. and invesco believes doing that today requires the art and expertise of high-conviction investing. translation? why invest in average? president trump from the world stage, global leaders huddle at the g7 summit. on the agenda, trade and security. bitcoin goes wild. the digital currency near record levels. an expert tells us what's driving demand. straight ahead. >> plus if vacation is all

you've ever wanted turn off your iphone. >> this is no longer a vacation. it's a quest. it's a quest for fun. i'm going to have fun, and you're going to have fun. >> we'll tell you just how many employees will take work to the beach this holiday weekend. pack your bags, the final hour of "squawk box" begins right now. ♪ vacation all i wanted vacation have to get away ♪ ♪ >> live from the most powerful city in the world, new york. this is "squawk box." good morning and welcome back to "squawk box." here on cnbc. we're live from the nasdaq marketsite in times square. i'm joe kernen along with becky quick and andrew ross sorkin. still raining out. it's going to stop. it's going to stop sometime. some day it will stop and we'll get above 50. get above 59 degrees some day. because it's almost june. the futures right now -- >> it's insane. >> terrible. it's cold because it's warm or something. i don't know. warming causes cold.

the dow jones is down 37 points. it's gotten worse as the morning has progressed. the s&p down 4.27. the nasdaq down about 6. andrew, kevin rayburn has the marina on blood line. i don't know kevin, steven. i hate messing things pop culture references up. anyway, we'll see whether this improves throughout the session. we have six straight days, new high for the s&p. was it a new high for the nasdaq? >> it was. >> what about -- not the dow? >> the dow is 33 points away or something. or was before this morning's futures. >> okay. >> among the day's top stories, a couple things to tell you about. crude prices falling below $50. prices tumbled after disappointment by that opec led decision to extend current production curbs did not go even deeper. we're looking at wti crude at $48.52. it did hold up right when the announcement was made but has come down since. disney ceo bob iger says those reports that hackers stole a disney movie were probably

false. iger telling yahoo that to the company's knowledge they were not hacked. that the company, however, was threatened, instead. there were reports last week that iger had informed employees that hackers had stolen the latest installment of pirates of the caribbean and threatened to release the film in exchange for a ransom. i love pirates -- >> no, it wasn't true. who would steal that? and what would -- you know. what would they -- >> get a good review. >> who would steal it? and who would pay money to get it back? it's like, keep it. i think. >> $150 million later. a trio of economic reports on the agenda this morning in just about 30 minutes we're going to april durable goods and the second quarter on q1 gdp and then at 10:00 a.m., the final read on may consumer sentiment. what? >> i didn't believe you. >> you don't believe me? >> you don't want to miss this -- >> i didn't -- >> you're going to have to sell that harder. >> we're going to talk about some stocks move. but just excuse me for a second because i have a question for andrew. >> yes, sir.

>> when a show, a new season comes on on netflix. >> right. >> when is it watchable? >> all at one time. >> like at -- at certain time. so tonight at like 9:00 -- >> the entire -- >> not the entire season. >> no the entire season. >> you're kidding me. >> you are going to stay up all night. >> even for netflix originals. >> wait a second. wait a minute. wait a minute. >> you're going to have to -- >> i know about binge -- >> you're going to have to plan -- >> there will be the second episode -- >> joe's not going to go to bed until monday. >> yep. >> are you kidding me? >> no, i'm not. >> so blood line i can watch three episodes tonight. >> you can watch -- >> this is the greatest -- >> is it 10 or 12 episodes? >> this is just such the greatest thing. i'm going to start crying. this is the greatest thing i've ever heard. >> yes, it's called bingeing. >> what time tonight? but i thought that was after it already came out. >> no, no, no what time is it? i don't know what time they drop

it. >> is that what it's called? >> they drop it, yes. they drop the season. >> okay. holy moley. >> i don't know what time it is. i'll do -- >> and i'm off on monday. >> three days of nothing but binge. >> i'm going to spend the whole weekend in the keys. >> from his living room. >> the florida keys. few stocks to -- >> it's already out i'm told. what time did it come out dave? last night, midnight? >> so i'm -- >> you can go home -- >> no, no, no. i'm going to wait until tonight. >> you can go now. >> i do it all. margarita. oh, yeah, yeah, yeah. a few stocks on -- >> but this is what you have to look forward to. >> yeah. exactly. >> it's a simple life. big lots earned $1.125 a shaver for the first quarter. 16 cents better than estimates. company did see an unexpected drop, though, in comp-store sales but raised earnings forecasts for the year. gamestop said its ceo on posting its first increase in sales in five quarters, thanks to sales of the nintendo switch.

i'm not going to leave. i'm out of here. can i leave, quail? >> no. >> okay. >> the ceo of the video game retailer joined us in the last hour. >> our core video game business is typically cyclical. that's what you're seeing now. gamestop is always a great value when you enter a cycle and it's always a challenge when you exit. that's why we've diversified. we're very bullish and optimistic on our future. >> joseph's gone. >> wow. >> he wanted to go see blood line that badly. >> he wasn't joking. all right let me finish up, shares of gamestop, take a look at this. pay no attention to our departed host. shares of gamestop down by about 7%. >> bloodline apparently dropped at 3:00 a.m. eastern time, midnight pacific. >> that makes sense. because netflix is based in the pacific. >> so joseph is gone. to go get a margarita and watch bloodline. he loves it that much. >> he's excited. you've given him plans for the

entire three-day weekend. in the meantime, president trump is attending his first g7 summit today. it is the final leg of his foreign trip. willem marx is live in sicily. >> becky, to be honest, i think the president might be wanting to watch netflix this weekend after this trip just like joe. but instead he's here in taormina in sicily. he sat down with some other g7 foreign leaders. the official items on the agenda are foreign policy and security issues. trade is clearly going to be an important part of the conversation over the next couple days. something that's been kicked down the can to here in sicily over the last few months of g7 meetings. one other subject, very close to european leaders' hearts is really the focus on human rights and issues like that. let's have a listen to what the eu commission president jean-claude junker said earlier this morning. >> we stand up here as we are always doing for our shared values of freedom, democracy, rule of law and respect for human rights.

we do believe as europeans in open societies, and we are always seeking mullaly lateral solutions. we want to build bridges, not walls. >> not so subtle dig at prime minister. it seems to echo what angela merkel the german chancellor said yesterday in brussels. she talked about ice laying and building because was not what's caused success in these european countries, it was about these open societies. another issue that might cause some division over the next couple of days is going to be about russia. the europeans in particular are very keen to maintain sanctions against russia. last night according to reporters on air force one coming down here gary cohn said the president doesn't have a position on those sanctions. so that's something to watch, as well. >> all right, willem, thank you very much. you look like you could have some decent plans this weekend, too. nice back drop. anthony gardner joins us now. he served as u.s. ambassador to the eu until this past january.

he is now a visiting fellow with the college of europe and thank you very much for being with us, ambassador. >> thank you. >> we know that there has been a lot of things have been covered just over the stretch of this trip, it's been a fairly long and gruelling trip. why don't we start with the issue that willem said is going to be a big focus here with the g7 and that's trade. that's an issue that you're very closely aligned with. you work pretty closely on negotiating the tp. where do you think we stand right now? obviously a lot of things have changed since the tpp was first negotiated. what can we hope for? >> well, first of all, i hope we continue to negotiate a transatlantic trade investment partnership agreement. we shouldn't kid ourselves that it's become harder, not easier, because of this administration's policy on a range of things, including government procurement and maritime services and agriculture and so forth. so it's become harder. but i hope that the teams,

who've now been instructed to do work, will conclude that that's parts of what we did are not controversial. and they're so far advanced that we should continue to do more work. i'm thinking of regulatory, secretary oral cooperation. cars, chemicals, pharmaceuticals and some other areas. we should continue to work on those. trade facilitation, which is just a way of describing how we can make life easier, essentially, for small and medium-sized businesses that deal with a lot of red tape at the frontier. so there are a number of areas where i hope and believe that progress can be made. >> this administration, president trump in particular, has been focused on trying to improve trade from the american perspective. you think it's likely that there are areas where president trump can declare a win if he does negotiate some of these deals? >> well, i think it's of interest to us to clear away some of the obstacles that impede our small companies from selling into europe.

that make it difficult for us to deal with what we'll call technical barriers to trade. those difficults and differences in standards. we could be selling a lot more to europeans. and the big win for us is, frankly an agriculture, where we have a very large deficit. i saw this through my three years. you know, we are capable, and we do sell a lot to china, to asia, to the rest of the world, but we've been flat in our agricultural trade with europe. and that needs to change. we have about a $6 billion or more deficit in our ag trade with europe. we need to sell more and we can't. >> what about in terms of nato? and how that meeting went? this was a situation where donald trump was able to walk out and say he got what he wanted, which is all of these other nations to agree to spend more on defense spending. in turn i think they were looking for some sort of recommitment to the idea that if one nation is attacked we will be there. they did not get that. how would you describe our relationship with nato right now?

>> well, every president really has emphasized the importance of european spending more on their defense. he was quite right to do that. i mean, he did it in a much more aggressive way than prior presidents. but it's not a new theme. but we should be realistic that those spending by european countries are not going to increase overnight. it's going to take many, many years. and we all should be spending more time talking about how the money is spent. not just how much money is spent. but how it is spent, on combat relevant and ready equipment. look, there's another thing i want to say. you know, he's absolutely right to talk about burden sharing in the military sector. but he's now flown to sicily to the g7 meeting, as you were just saying, and it's not being held in sicily by pure coincidence. it's being held there because italy is on the front line of a migration crisis. and europeans are saying, look, particularly italy is saying, we want burden sharing in that issue, as well. and the administration is saying well we're not prepared to engage in burden sharing on

migration. and they're also saying we're not prepared to engage in burden sharing on climate change. and i think probably the message today was, look, burden sharing is right. but it shouldn't just apply to the military. it needs to apply also to more soft power issues like migration and climate change. >> although, you can say that we need to share everything. in the terms of us helping defend them, that's probably a more legitimate area where you can look for sharing back and forth, versus some of these issues that you can say are global issues, and my guess is that it's difficult to tie those two together, and it's not something the trump administration would go along with. >> no, probably not. but i think they have a legitimate -- a legitimate request here to the president saying, you know, we need to do more. we are doing more. the intention was signaled at the summit to spend more. on the other hand, the united states should remain a world leader. in every sense. not just as a military power, but as a soft power showing leadership.

and i think they'll want to see also from this administration a clear sense that we're not walking away from the rules -- based multilateral order. because that would leave a vacuum. europe cannot show leadership without the united states. the u.s. leadership is needed. >> ambassador gardner, thank you for your time today. >> thank you. >> all right. a lot still ahead on "squawk box." okay. just back to this for just a second. so, the only netflix series i've ever watched has been bloodline. >> right, right. >> so, that's the only time they drop -- they drop them all in at once? >> all like that. >> like i watch sons of anarchy. >> yes. >> on netflix. >> right. >> but that had been on -- >> that had already been on the air. >> so i know how to binge doing that. >> yes. >> but everything else, homeland, or game of thrones. >> right. >> you have to wait each week. >> for the new one, yes. >> and then when they all get on netflix eventually then you can binge. >> correct. >> this is new to me, because i

didn't do house of cards. and i don't remember with bloodline that -- i don't remember they dropped the second season in. do you know -- >> you probably started watching the first season after the second season was dropped. >> right, right. >> welcome to 2017. >> yeah, but, okay -- people think i'm stupid because i don't know how to work netflix now but i had never -- >> you'd never been plugged into a season, to a show that you were dying for the next season. >> i'm not kidding. knowing that they're dropping the whole third season in today is just -- >> it may be more like welcome to 2012, actually. >> okay, sorkin. you're the one sending in these things that people think they're getting a big kick out of this. fine. >> i am. >> up next, the digital -- what the hell is this? bitcoin. the digital currency bitcoin exchanges, coin base suffered outages after the unprecedented traffic this week. we're going to talk to an executive from that -- is orange is the blue black was that dropped in?

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what is bitcoin?

it's like cash for the internet, transferred between people via mobile app for a computer program. users request and send bitcoins to pay for goods and services. but the identities of users and the transactions are kept anonymous through complicated encryptions. and unlike real money, bitcoin has no centralized bank or authority that runs the system. instead it operates on an open source platform that can be accessed by anyone and it's controlled by the people who use it. and ultimately, the power of supply and demand. which brings us to the value of a bitcoin. since its creation in 2009, it's fluctuated dramatically. from pennies, to now over $2,000. >> i hope you were paying attention to that because that was an education on bitcoin. a little bit about bitcoin -- >> didn't you own bitcoin at one point? >> i owned one bitcoin. >> and you sold it at $5. >> no, i still have it, actually.

>> it's probably worth a lot. >> i was bequeathed. >> don't you have $2,000 now? >> no! >> i thought it went up a lot. >> i'm sorry, i didn't get one bitcoin -- you know, someone sent me like $10 worth of bitcoin. >> yeah. >> about three or four years ago. >> okay. >> and we have a guest to talk about this. with prices of crypto currency skyrocketing in the last several weeks, i should check this out, you're right, maybe it's worth something, the price of one bitcoin costing $2700 yesterday up from roughly $500 at this time last year. joining us right now adam weiss, vp and general manager of digital currency exchange g-dash. you weren't the one who sent me that, right? >> i don't think so. wasn't me. >> somebody. i got to go find the app. anyway, what is going on here? >> we're seeing what we've seen a couple times before in the digital currency space which is the market attempting to kind of fairly value this new asset. right? >> right. >> what we see is bitcoin is just kind of the first

implementation of black shame technology which i'm sure everyone's heard of at this point. bitcoin is the first, the oldest, and got essentially the most interest and awareness around it. what makes it unique is that it's an open block chain so anyone can acquire a little bit of this and trade it on the exchange. >> what do you think has happened in the past couple months that has -- >> yeah, i mean, first thing i think we're seeing continued growth in the fundamentals of the network. so when we look at the number of daily transactions that are occurring, the actual dollar volume that's being processed. i mean every minute we see about a half million dollars move through the bitcoin network. >> but something happened -- mean something about the psychology of the market and the way investors are approaching bitcoin significantly changed in the past couple months. what was the tipping point? do you remember? was there a moment? >> i don't think there was a specific catalyst. a lot of these things happen organically. so someone sends you $10 of bitcoin. you start to follow it. maybe you share it with someone else and slowly people start to become educated. >> so i heard an interesting thesis we talked about just

yesterday, companies buying up bitcoin in part to pay back some of these ransom offers. or -- you buy that or no? >> i think that's a stretch, right. so we see billions of dollars visual currency traded every day. it's unlikely we'd see bigs moving the market to acquire a couple thousand dollars of bitcoin. certainly it's a possibility but i think there's a lot of other use cases. >> what do you think this thing is really worth? >> i can't comment on that. i think our focus, right, so we operate the largest u.s. based digital currency exchange. it's essentially to create kind of a fair and open market that anyone can participate on, right? >> i guess what i'm trying to ask you a decade from now are we going to look at this and think oh, my, this is now worth $10,000? a bitcoin. or $20,000 for bitcoin? or is this -- is this fair value? i mean, how -- >> yeah, i think many of us in this industry, it's still the early days, right? so it's still coming about. we feel firmly and believe firmly that this is going to be a core part of the financial system.

so we're talking about bitcoin but bitcoin is only one example of a digital asset. right? the whole market cap of all digital assets is -- >> but we still have the regulatory issues that are over this, right? the winkleweis twins couldn't get -- >> it's not just the u.s. we look to japan. japan embarked about a three-year research and just came out and formalized regulation of bitcoin, calling it a type of prepaid debit instrument. and from what we've seen gmo conglomerate announce they're going to adopt in japan. >> thank you for coming in. >> thank you very much. >> it's amazing what happened here. >> it is. bitcoin -- >> i wish i had five bitcoins. >> i need to go find out what that app was that had the bitcoin. >> yes. i wish i had bought some early on. >> yes. >> just seems very weird that you're trying to use it as a cyber payment, a virtual payment, but the price is so volatile, it's weird. it's like -- it's hard to imagine you can use it, in lieu

of cash, when it has such huge swings. that doesn't seem like it's doing what it's supposed to do. >> many are adopting it more as a type of digital asset. they're sitting on it, storing on it, it's kind of known as digital gold in many ways. >> all right. digital gold. coming up, two out of three americans stay plugged in during their time off. when do you not look at -- i mean, of course. i'm checking my e-mails. we have a full rundown how people ruin their vacation, that's at 8:40 a.m. eastern time. "squawk box" will be right back. about your brokerage fees. n fees? what did you have in mind? i don't know. $4.95 per trade? uhhh. and i was wondering if your brokerage offers some sort of guarantee? guarantee? where we can get our fees and commissions back if we're not happy. so can you offer me what schwab is offering? what's with all the questions? ask your broker if they're offering $4.95 online equity trades and a satisfaction guarantee. if you don't like their answer, ask again at schwab.

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welcome back to "squawk box." quick update my $5 of bitcoin now worth $21.68. >> you must have bought at a peak. >> i'm doing okay. it was back in march of 2014. meantime, watch out uber. because lyft is going black. the ride sharing service is rolling out its own black car service under the names lyft lux and lux suv which officially launched in new york, san francisco, san jose, los angeles, and chicago all happened yesterday. >> when we come back, two key economic reports about to hit the tape, durable goods and a second read on first quarter gdp. we should do that meeting tomorrow. well wait. what did you think about her? it's definitely a new idea, but there's no business track record. well, have you seen her work? no. is it good? good? at cognizant, we're helping today's leading banks make better lending decisions with new sources of data-

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♪ we're just seconds away from durable goods and the second read on first quarter gdp. but i've got even more important news on monday.

>> yeah what's happening on monday? >> on tuesday we're going to drop the entire month of june for "squawk box." we're going to drop that into -- so that you can see it, all 20 episodes. >> what would happen if we just tapd an entire month's worth of shows in advance. >> that's what we're going to do. rick santelli at the cme. we'll talk in a second. rick the numbers, please. >> all right. your timing is impeccable. up, a nice revision. we're looking at a first look at first quarter gdp. ramp that up a half a percent. or close to it. up 1.2. up 1.2. not a terrific number. but you know, the world grade's on a curve now but it is better than we were looking at. consumption also moved up to 0.6. double its last look at 0.3. the price index really didn't give you any heat on any of those positive changes. it downgraded to 2.2 versus 2.3. now let's get our preliminary look at durable goods for the

month of april and what we have here is durable goods up 2.1. that's also a minor beat. let's get into the important issues, though. here's what i don't like. if you strip out transportation, the number is up 0.4. you know what? let's take that back. it's down 0.7. see i have a list this long and it flashes at 80 mile an hour. it's down 0.7. i apologize. 2.1 was personal consumption expenditure which popped out late. that was 2.1. sorry. down 0.7, down 0.4 ex-transportation. and if you look at the best, most important aspect of this. let's look at goods orders, nondefense ex-aircraft. we want to see big numbers there. that's all capital investment that fuels the future. unchanged. unchanged. following unarevised up half of one percent and if you look at shipments versus orders they're down 0.1 following a downward revision of 0.2 originally stood up half a percent.

so down 0.7 on durables. that is preliminary. the reason it's preliminary is there's some pieces of the puzzle that will be placed in as more numbers come through the system. and we'll get a better look at it. 2.23 before and after the number on 10s. a lot of guys down here have a rule, whatever way you move in front of long weekends, is usually the countertrend direction. for what it's worth. stocks are a little down now. rates are actually slipping to some of the lowest intradays we've seen in awhile. remember 2.18 is the most recent low yield close you want a benchmark, 2.25 to 2.27 has been the pivot. back to you guys and i hope you all have a very nice holiday weekend. >> all right, rick. thank you. we're going to get some reaction to the numbers. but we're going to revise that. we're not dropping the entire three-hour "squawk box." we're going to pretape all of the 6:00 a.m. shows. >> all the 6:00 a.m. shows. for june. >> because there's no economic numbers. we'll pretend that it's a different -- we'll talk about some new things.

and then we can all come in at 7:00. >> bingo. >> work for you? >> game for me. >> what about -- >> no? >> the futures might. >> becky could -- we could also -- >> you guys could feed the 6:00 -- >> cede the hour. >> i will take your time. >> wow. >> joining us now, maybe we better -- that's not going to work. >> works on netflix. maybe not for "squawk box." joining us now -- supposedly it works on netflix. lindsay, fixed income chief economist and jeff stout raymond james chief investment strategist. lindsay hold on for a second. i need to talk to jeff for a second. another longtime bull named mark grant who said that the swamp is resisting getting drained. it's not going to happen. too hard. too much -- too much muck to try to cut through therefore a lot of the things that we were expecting to happen pro-growth may not happen as quickly or may not happen at all. he's less bullish on equities. are you still real bullish, jeff? >> yeah, i sure am.

i still think that we're in an earnings driven secular bull market with years left to run on a short-term buy sis. the model says it's looking for a peak here and then a consolidation with no real downside traction for the next two weeks as the internal energy of the market gets rebuilt for another new leg to the upside. >> okay. so that's a little bit different. earnings would respond. you would think, to tax reform. and a tax cut. or, is it just happening because of a simultaneous, global recovery, and economy? is that what's doing it? or is it washington? >> you know it's really interesting that washington and president trump have been driving the market since the election. and not the federal reserve. what i'm hearing off the hill is that at least in the senate the republicans are deserting the health care bill, and trying to focus more on corporate taxes. and i think that's a good thing for the equity markets and for

corporate earnings. >> so even if it's not tax reform, just a corporate tax cut, god you think these guys could figure that out, jeff. i mean really they can't even get that done, you know, they put these guys finally can govern, and they're like keystone copps or something. >> yeah, my real question to mitch mcconnell is what the heck does the senate do all day? i watch them from time to time. i don't see where they're doing much of anything. so mark may be right. it may be gone with the wind for a lot of president trump's agenda. but i still think tax reform happens, and corporate tax reform, and i think that's very bullish for earnings, and for the equity markets. >> all right, lindsay, take it from a different perspective. not necessarily based on the equity markets but just the overall economy. can we do much better in the second quarter? are you looking for 3% or 4% at least for one quarter? >> unfortunately, i don't see 3% or 4% in the second quarter. i do see a lot of these lingering themes that kept growth at a very disappointing

level across the first three months of the year carry forward into the second quarter. as we saw this morning, durable goods showing that corporations are still very much sidelined at this point. now, of course, business investment was the bright spot in the first quarter. but that's following more than a year and a half of zero or negative business investment. so we're still not talking about a robust investment cycle which is really going to be needed to carry the economy forward. and of course, the consumer, january to march, virtually nonexistent. we did see a little bit of an upward revision. but when you talk about nearly 70% of the economy coming from the consumer, if it's a half a percent or 0.6%, that's not enough to suggest that we will see a sizable bump in activity going forward. now the fed remains very confident that the weakness early on was transitory, but the recent monthly data does not suggest a much improved profile going forward. so it's going to be a very difficult environment for them to push through a more

aggressive rate hike scenario, and even more difficult for the market to maintain these heightened levels if we don't see more pro-growth policies on the fiscal side. because clearly it's not the underlying economic data that's supporting market levels at this point. >> hmm. all right. that's a quick rundown from both. jeff, thank you. i don't know, we'll watch. we'll watch to see whether you or mark grant going to be right. lindsey, thank you. we appreciate it. have a great memorial day weekend. bloodline tonight. the whole season apparently. >> wow. >> yeah. >> the whole season? boom. >> boom. >> it's just unbelievable. >> what kind of sponsorship -- >> oh -- >> i'm saying you should -- >> oh, for bloodline. >> you should get something for this. >> when we were down there we visited the -- in the keys. the house -- >> you haven't really watched it all? >> i haven't. just the first season. >> you know the home that the -- >> rayburn inn.

isla morado. >> i'm going to spend the weekend watching it. >> if i mention it enough i might get comped a room down there at the moorings. the moorings. joe kernen. the moorings. "squawk box." >> up next are you dreaming about a summer vacation? you won't know -- you know you'll never fully take? you aren't alone. americans are bringing their towel, their swimsuit, and unfortunately, their work phones to the beach. we're going to talk to a productivity expert about what this means if you're not fully disconnecting. that's right after this break. j. the baby's room won't build itself. and her paw won't heal on its own. we're all working forward to something. synchrony financial can help your customers make it happen sooner. so she can plug into her dreams... and they'll have a new addition for their new addition. whatever you're working forward to, even if it's chasing squirrels, synchrony financial can help you get there. even if it's chasing squirrels, ♪

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>> >> welcome back to "squawk box" this morning right here on cnbc we're live at the nasdaq marketsite in times square. among the stories front and center at this hour, blackberry is going to be receiving $940 from qualcomm to be paid over the next few days. that follows a preliminary arbitration award of $812 million announced last month. in a case involving overpayment of royalties. the new amount includes interest and legal fees and resolves all disputes between the two involving royalties. also a major operator of cancer treatment centers has filed for bankruptcy protection. 21st century oncology says the filing will not impact operations at the 179 treatment centers it has around the country. a handful of private equity funds and lenders are providing about $150 million in funding while the business reorganizes. that 19282 song vacation by the go goes would have you believe that vacation is all we ever wanted. if that's the case we're not doing a very good job of trying to get to that goal.

a study by glass door says nearly two-thirds of americans report working while they're on vacati vacation. why can't weep just unplug? joining us is steve mcclatchy the founder of alear training and consulting. the study finds we're not willing to completely let go of work. what did you find? >> half of americans are not taking their vacation. half. i can't believe the results of that study and 66% of people that do take a vacation work while they're on vacation. >> why do you think that is? it's not that we don't want the vacation time. >> it's getting stronger and stronger each and every year. what's cited to reasons is number one they don't want to fall behind at work. >> right. >> you can relate to that. you're coming back to a landslide of what you've fallen behind on and there's consequences to that. they don't believe other people can do the job as well as them. so when they come back they've got to deal with the consequences of their job not being done as well. they might miss out on a big opportunity at work while

they're -- >> promo. >> right. fear of missing out on a big opportunity at work. and the perception that they're not fully committed to their job, because they're on vacation. so all of that, really, at the heart of all of that is the fear -- >> but all of that is real. >> what they're doing is prioritizing the consequences of those things. >> right. >> over the benefits of going on the vacation, at the heart of the decision not to go is the fear of those consequences. >> is this something that got worse during the great rescission? where it really was the job higher's market not the employees? >> you know, job security, i mean we're post-recession. we're still in that world and that mind-set is real. and if you disappear for a week, and no one missed you -- >> right. >> longer than a week -- >> but how can you properly encourage vacation if that's the -- and that is the truth. that is the truth. >> that is the truth. it's absolutely truth. so what are we missing? the benefits of going on vacation. >> which the benefits are to not

only the person but i could guess for the employer as well. >> and your customers -- well we have to look at what are the benefits? our weapon against fear is desire. right. we desire vacations because they're exciting. if you don't plan an exciting vacation, right, you're missing the whole opportunity. so, when you don't have excite in your life, what happens when you go that route for too long? you end up burned out. and now when you're burned out what happens? the quality of your work goes down. you start falling behind at work. you're disengaged so people don't see that you fully commit. the same things that we're trying to prevent by not going on vacation is what we create when we don't go on vacation. >> the employers who are watching this program you would advise them to push their employees to go on vacation? >> 80% of the people that responded in the survey said that if their boss fully supported vacations, they would go on vacation. so, if you're an employer, you're a boss, and you realize the benefits of retaining your top talent, of keeping that talent balanced and not burned out, you're going to support, encourage, endorse going on a

vacation. >> not telling someone when they want to go on vacation, you can't? >> really. >> but here's the question, let's say your boss doesn't really want you to go on vacation. let's say you have not successfully persuaded -- there's a lot of bosses that still don't agree or accept this. if you're the employee what do you do about it? >> okay, so 25% of the respondents said their boss contacted them while they were on their vacation. not only do they not endorse it, they're really pulling them back off vacation. >> bingo. >> so it's real. it's real. >> so then what? >> so then what happens? you don't really refresh, replenish, go on a vacation where you really let go of work and really -- >> what are you supposed to do when the boss calls you on vacation? >> you should have prevented that from happening up front. >> how do you do that? >> okay. so there's some things you can do before you go on vacation that will prep that. and the first thing is set boundaries. set expectations. and let everyone know you're going on vacation. one of the things that happens is we spring a vacation on everyone at the last minute and the work that you could have been doing all week to prepare

so they weren't reaching out to you while you were on your vacation, now you've missed that opportunity to do it. and then we don't set the ground rules. >> there are people who are very good at that boundaries thing. >> the news happens all the time. do you ever go an hour without checking your e-mails? >> this is a constant battle. in my own family. around children no less. >> for us looking at what's happening in the world is not work. and checking work e-mails is not work. and i would never not do that. >> i have another thing we can do to prepare. and that is have somebody in your e-mail, and i mean full rights to all of your e-mail, and they can respond for you. >> if you see the stuff in my e-mail that's scary. we have to go but one final question which is to say, let's say you're on vacation, and everyone says you shouldn't look at your e-mail, you shouldn't do all this stuff. i have like withdrawal symptoms that i think are more painful than the actual -- than just keep going. >> andrew, your vacation needs to be more exciting. if you're not so engaged in your vacation that you're kind of going back to work, i want you to plan a better vacation.

>> he plans some pretty good vacations. >> does he? >> i think i have pretty good vacations. >> i want it to be so exciting you don't know where your phone is. >> no, no, no. >> that's why i love skiing. because you're -- >> in the zippered pocket. >> you're not the only one that says that. people like it when the environment forces their connection away from them. >> right. >> instead of making the decision to get that connection away from them. >> right. >> they want the external world to take it away interest them. we need to make better decisions about our vacations and our life than that. >> steve, thank you. >> thanks for having me. >> the wire. the wire. >> binge the wire. >> yeah, but it was -- >> it was available. >> it was ten years old. >> yeah. >> i don't know this new -- i'm still working on the difference between bingeing, and -- i don't know. thinking about it. >> when we return, forget about a border wall. what about a border mall? i like that idea. jane wells what do you have coming up for us? >> oh, hey, guys, buenos dias from breezy laredo where nearly

half the local economy is based on mexican shoppers. they cross the rio grande and the bridge there, it's backed up already with traffic. you can see motor coaches of tourists. up next has retail hit a wall here? literally when we come back. it's over. i've found a permanent escape from monotony. together, we are perfectly balanced, our senses awake, our hearts racing as one. i know this is sudden, but they say: if you love something... set it free. see you around, giulia ♪ i count on my dell small for tech advice. with one phone call, i get products that suit my needs and i get back to business. ♪ ♪

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welcome back to "squawk box." president trump is committed to building a wall along the border, so is now a bad time to open up a outlet mall in laredo, texas? jane wells has more. >> hey, andrew, you don't have to walk far on the streets of laredo before you're in mexico. there it is. there's the rio grande. there's a pedestrian bridge connecting the two countries and bringing a lot of people, they hope, here to that $120 million new outlet mall that has been built by two publicly traded developers. cbl and horizon group properties. years in the making, just opening with a new president talking tough about a wall and this place is counting on the free flow of mexican shoppers. >> we did it because mexican consumers love brands. they aren't able to buy a lot of the brands that we have here in mexico. and when they can, they're more expensive than here. they like the labels and they

like the prices. the timing was challenging, there's no two ways about it. it wasn't just the new administration. i mean, the peso has been weak for a couple of years now. which has hurt border shopping. >> our local economy is easily 40% or more dependent on the mexican shopper on the northern mexican -- the monterey, of course, you know laredo, all the northern border area. >> now further calderon said she's happy that the stores are so close to mexico where she lives and the sales tax receipts are down. he thinks it's due to the trump rhetoric, but that rhetoric is improving maybe. horizon group said that the mall in two weeks took in $4 million but listen to this, guys, 40% of the sales here are in cash. that's twice the norm and an indication of how many shoppers are from mexico.

back to you. >> okay, jane, thank you for that. that's kind of -- well, it's fascinating to see what's going to happen to this mall. are you -- can we get -- can you go back in about a year to see what happens, if the wall is built. >> i'll come back in a year. first of all, where are you going to put the wall here, the rio grande is the border, you'd put it in the middle of water that's difficult and legal access will continue over the bridge. the problem is there's a fear factor here where people have been reluctant to come across and shop. they're not quite sure, even if they want to come across and shop because they're sort of angry about the situation. but again, they love america's low prices. you cannot get these goods in mexico for the prices you can get here. and mexican shoppers like the ceo said, they love brands. they want to have that pony on their chest. >> okay.

thanks, jane. all right, come up, we have a roundup of some of the day's big movers coming up ahead. so if you didn't have a hulu favorite of an amazon favorite or a netflix, this is really new. i don't have to wait. i have 12 episodes. >> 12 episodes. >> everything i have ever done, it's only after they have already -- >> right. >> so this is -- >> good luck to you and the family this weekend. >> three day weekend. >> as we head to break, and did you see what kevin did to marco in the last -- >> i'm not up to date. >> as we head to break, quick programming -- i mean, i don't know how you get out of this. don't miss dallas fed president rob kaplan. he'll join us at tuesday, 7:120 eastern time. stay tuned. "squawk box" will be right back. my business was built with passion... but i keep it growing by making every dollar count. that's why i have the spark cash card from capital one.

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what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter. morgan stanley we just talked about unplugging while on vacation, but what about when you're around your kids? a new study says that parents who spend excessive time on their phones in front of their children are more likely see more behavioral problems from them, like tantrums and whining

and frustration. about 48% of parents admit that phones interrupted their parenting time at least three times a week. i do some -- three times a day. i do all those things. whining and crying. >> are you good about putting the phone down in front of the kids? >> no. i wish i could be. i try. >> i don't see -- there's times when i have thought about like if i'm getting on to the boat, if i drop my phone, i don't know whether i could go on. >> sounds like a good reason to have two phones. >> i don't know what i'd do. >> part of the reason i keep two phones. >> if i leave, i'm a half hour away from where i just left, nothing in the world previously would have made me go back -- but you have to turn around and go back to get your phone. but i need to see things. don't you? >> i do. i do. >> the twitter comment i need to see what someone thinks about something, you know what i mean? >> you're hooked. >> drudge. huff post.

daily kos. >> breitbart. >> did you eat any pasta this week? >> i'm -- i'm down -- >> talking about carbs. >> low carb, gluten free lifestyles it's catching up to pasta consumption. carbo phobia is impacting pasta sales and it's not just here in the united states as you might expect. this is everywhere around the globe including in italy. in italy, carb consumption, pasta consumption is down over the last five or six years, dropped by 10%. even though it's down 10% they still lead the globe in how much pasta they consume. here in the united states we're supposed to eat six pounds of pasta. do you know how much they eat in italy? >> 30 pounds. >> 33 pounds of pasta. down 10%. >> everything in moderation. got to have pasta. got to have it occasionally. >> once in a while that's the key. >> all right, in sports news an

epic finish in the nhl playoffs as the pittsburgh penguins face the ottawa senators in the finals, in double overtime. pittsburgh's kunitz gave the defending champs a 3-2 victory sending them back to the stanley cup final. the penguins are trying to win back-to-back titles. we saw gary bettman in the house. game one is monday night. i hope for nashville. >> folks, we are out of time. if you're going away for the three day weekend, enjoy your weekend. remember memorial day. right now, time for "squawk on the street." ♪ good friday morning. welcome to "squawk on the street." i'm carl quintanilla with david faber and sara eisen at the new york stock exchange. cramer is off today. the market looks to take a breather here today. plenty to work with on the last session before the memorial da