"squawk box. good morning, everybody. welcome to "squawk box" on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with andrew ross sorkin joe is out today our guest host for this hour is the chief economist of the americas at netixis, joe thanks for being here have a lot to talk about u.s. equity futures are looking like they would open up about 145 points for the dow s&p indicated up by 14 nasdaq up by 37, this comes after a big down day yesterday for the markets. dow was down almost 400 points at the end of the day. that was off the worst levels of the day. dow was down by as much as 505 points, decline of 2% at the lowest levels of the day s&p closed down 1.1% the nasdaq was off a half

percent. stocks were looking at the biggest declines, three week lows, worst day since april 24th overnight in asia, look and you'll see there were red arrows across the board the nikkei was down by 1.5%. the hang seng off by 1.4%. stocks in china down 2.5% after concern about new trade issues potentially between the u.s. and china. we continue to watch the situation out of italy very closely. this morning the leader of lega, one of italy's main populist parties is calling for new elections as soon as possible. this after the italian president refused to allow lega and one other party to form a government out of all of this, that set off allof concerns about wha this means for the euro. we'll talk about it today. italy stocks rebounding there.

across the board, most of the major averages are in the korean the cac in france is the only big exception to the rule. now down by a half percent look at italian bonds. yesterday the italian ten-year hit the highest yield since march of 2014. you can see the two-year this morning is at 2.025% the two-year was at levels it had not seen since june of 2013. we'll continue to keep an eye on all of this. the euro, which was under pressure yesterday, it is up slightly it's up by 0.6%. 1.1614 is the latest when you look at the euro versus the dollar a live report from italy in a moment treasury yields in the united states, which did come under some pressure yesterday, you can see now the ten-year is yielding 2.864% >> that's a lot. in addition to that we have other headlines to bring you

a tesla sedan in autopilot mode crashing into a parked police cruiser yesterday in lagoon fla beach, california. the officer was not in the cruiser at the time, but police say the vehicle was totaled. the tesla driver suffering minor injury the driverless assist feature has come under scrutiny following a number of recent incidents. tesla has repeatedly warned drivers to stay alert and keep their hands on the wheel while using the autopilot statement. tesla says it has always been clear that autopilot does not make the car impervious to all accidents. it's a fancy version of cruise control. it's not autonomous driving feature. >> that's what people are using it as time after time, which raises questions should there be preventions to keep them from doing that if your eyes are noticed not to

be there >> because it's marketed in this way as if it's some kind of autonomous driving feature relative -- like what cadillac is doing it uses sensors, radar, it does similar things i'm not sure exactly what distinctions are you don't hear about these accidents in the same way. that may be because we're so much more sensitive to tesla as a company and elon musk made that point given the number of vehicle crashes and deaths in other vehicles and brands that we don't talk about. >> we've seen video of people driving like idiots. in england last week there was somebody riding in the passenger seat people are acting like idiots in these vehicles >> autopilot is not the same thing as a plane on a plane they can take off and land with without the pilot touching anything. >> right

>> wrong name. >> yes i wonder if because of how it's been marketed or if it's the idea that there are safety features you could put in where if you're not paying attention it could shut off. >> we talked about the idea of looking at your eyes, doing these other things we'll keep our eyes on this story. salesforce beating the street in its latest quarter and now raising its outlook for the year on continued demand for its clo cloudware software in an interview last night marc benioff credits the good economy. this is what he said to jim cramer >> we can really see what's happening in the market today is a huge investment by our customers. the economy is really ripping. and you can see that customers are going through this massive digital transformation every digital transformation starts and ends with the customer >> benioff says there has been phenomenal growth among salesforce's largest customers

like citigroup and adidas. >> this is a story that keeps happening to this guy. we had him on so many times. bill browder in the headlines this morning early this morning he said he was arrested in spain. he tweeted the news along with a picture of himself in the back of a police car. he's one of vladimir putin's most vocal critics and a familiar face to cnbc and "squawk" viewers within the last half hour he tweeted out good news, spanish national police released me after interpol general secretary lyon advised them not to honor the new russian interpol red notice. this is the sixth time that russia abused interpol in my case fascinating. i didn't realize they could do that >> interpol, i guess they can push through >> it's interesting spain lets him out of it.

>> he's tweeting for good reason he wants the news out. back to the political drama in italy andrea cabrini is live with more on that. good morning good morning to you. here in milan apparently fear is easing and tension on the market spreads are tightening this morning after the selloff peaked yesterday. today we had an important auction of italian bdp, ten-year yields went up but demand was robust, and this is a sign of appetite for italian bdps at this time. it's a crucial day from a political standpoint still confusion. all the options are on the table. first snap election as earl live as late july this is what some from lega are

asking for on the other hand, between lega and five star movement, the populist parties that had the best return in the election, they're starting to create a dialogue there are talks under way to create a political government. this is completely uncertain president mattarella will have new talks in the afternoon with carlo cottarelli, he gave a mandate to create a technical government so a lot of confusion. and keep in mind for the market the key factors of vulnerabilities for the country is public debt two-thirds controlled by italian investors and ecb, one-third from international investors if the next election turns into a referendum on the euro membership of italy, this might be a real concern. yesterday the governor of the italian central bank said we cannot stop the consolidation of public finance any turning back might be a risk for the country. >> thank you for that report

want to get straight to our market roundtable and try to make sense of what's going on and what to do about it. sam stovel is here, and jeff crezenik is also here, and our guest host is still here, chief economist at the americas at nitixis. good morning to everybody. let's go straight to the question what do you do about this let's talk italy we can talk china. right now there's a lot of uncertainty about where we are >> sure. let's start with italy i think for investors, there's not a major change in stocks, bonds. but however it makes for a more u.s. bias. and also it changes the sectors that you waieight or overweightn your portfolio >> why did we see a knee jerk reaction to the down side yesterday? >> i think the difference is people are trying to grexit, the

greek exit greece had no real incentive to exit they're not an export-driven economy. what they export can't be increased if they deprecate their currency italy has some advantages from a deprecated currency. they're a bigger exporter. 1 trillion plus export economy >> that sounds like you think it is more likely italy would leave the euro which may lead to chaos. >> i think this is going to be a long, drawn out battle with some serious consideration given at the end of the day i don't think they exit. but it does mean the ecb is likely to stay on hold much longer and be more accommodative. that changes the direction of the dollar and that changes u.s. sgr interest rates does that mean the fed doesn't raise interest rates either? >> i think the fed will not be put on hold by this, but it has

an implication for u.s. bonds because we already believe low european and japanese yields are suppressing the ten-year, about 100 basis points >> which also has been making a much smaller spread between the short end and the long end which people worry about, too. >> as they should. as we know, each of the last six, seven recessions. i think people will be more forgiving about an inverted yield curve this time or will view it as something that has a greater lead time because everyone understands the influence of overseas interest rates. >> here's the question if you believe that we'll be living through this for a long time, for the past year or two people have come on the show regularly and said, look, actually the real action is in europe you want a real return go to europe would you touch europe now >> i think so. when you look to overall valuations, earnings growth, the fact they underperformed the

s&p -- >> if i told you italy could leave, what is the contagion looking like how do the dominos fall? >> first off, the could is a big -- a really big assumption because the likelihood is that they're not going to >> right >> but at the same time, if you do see -- >> we thought the likelihood of the uk -- keep going >> sure. the feeling is that i think the ecb and other leaders would be doing whatever they could to make sure the remainder of the european union remains intact. they realize what consequences would come from an unwinding of that i think, yes, it is a resurrection of the 2010/2011/2015 worries as a result they really want to be focusing on it as quickly as possible >> does our fed -- sort of the becky question turning it around. does our fed look at this differently than -- i'll call it the new fed. does the trump fed look at this

differently than the old fed >> i think the fed does watch this that's why we think we'll have three rate hikes this year we have one in june. we have one more in the second half but we don't have the fourth rate hike because of that increased concern. >> i thought two all year. but i agree with sam the difference between now and 2010/11 and early '12 is the ecb is there why is this coming up now? partly because of the elections and the ecb is unwinding its balance sheet. in september they will basically stop reinvesting the market is looking forward and realizing what happens next? that's why italy is a problem. >> is it a problem for u.s. stocks >> it is because of the integration of global markets, especially financial players who have exposure to italy i can't speak to certain banks, but italy is the fourth large

effort bond m s bond market in the world >> you think the odds are high or very low that italy would actually leave >> very low. that's not to say the euro will last in terp tu iperpetuity, bu. >> it's low, but there's much more rational for the italians that, i do think changes the nature of this >> what is a safe place to go? you said u.s. stocks joe, where do you look do you look at u.s. stocks outside the financial? >> i looked at the s&p nine years in a row of positive returns. last year was the fourth highest year for sharp ratio cash for now, probably long risk after the midterms in anything >> historically volatility picks up in the second and third

quarters of midterm election years. typically it rises by almost 15% in the second quarter and 25% in the third quarter. so prepare for more volatility yet in the 18 years after midterm elections the market was up 18 of 18 times rising about 16.5%. >> 18 years after 18 different midterm elections? >> correct so 100% of the time. that does not guarantee this time will be positive. once the uncertainty is out of the way and that increased volatility has run its course, investors tend to buy back into equities >> there's one risk to u.s. stocks that's that this whole action gives strength to the dollar if we have a strong dollar as in the past that hurts u.s. earnings >> and keeps inflation down and less likely that the fed has to raise rates. >> we'll leave the conversation there. lots more to talk about today. now to the morning's biggest

headlines out of washington. we want to get over to eamon javers who is in the nation's capital. >> good morning. two stories to update you on this morning that have been ongoing for a while. in this ongoing china fight, you remember the united states' big complaint in terms of trade with china is about the theft of intellectual property. the state department signed off on new rules last night that they announced late in the day which would tighten visas for chinese citizens coming to the united states. this is designed to protect u.s. intellectual property here they could shorten the amount of time that chinese folks can stay in the united states but it will be decided, they say, on a case by case basis that's set to begin on june 11th some tightening of visa concerns there amid these worries about intellectual property theft. there's concern that students in particular coming to the united states going to research

facilities and leaving with high-tech u.s. secrets that's something to monitor. also to monitor this morning i want to bring you this story that the "new york times" reported yesterday, which is that president trump back in march of 2017 berated jeff sessions and asked him to reverse his decision to recuse himself in the russia matter according to the "new york times" trump told aides that he needed a loyalist overseeing the russian investigation and that the president berated sessions telling him to reverse that decision and recuse himself. we know robert mueller is probing this episode as part of the larger obstruction of justice inquirinquiry. so was did the president say to his attorney general and did any of that conversation, given that the president is within his rights to talk to the attorney general, could any of that conversation amount to obstruction of justice obstruction of justic or be

part of obstruction of justice the "new york times" reporting that the team is talking to former white house aides about this episode and asking them what they think the president's intent was the times quoting rudy giuliani who says even if you say as president of the united states to your attorney general unrecuse yourself, that's not obstruction of justice it could imply he wants the attorney general to take charge of it and handle the case responsibly. that's what rudy skrulny told the "new york times" in a story last night >> what's the prevailing view in washington on that issue obstruction or not >> i think you'll have a lot of lawyers parsing this carefully ultimately i think you'll look for a pattern of behavior here if mueller finds there's a number of things that all indicate that the president's state of mind in terms of obstruction, he might move forward. it's difficult the president has the constitutional authority to do a lot of things he's done, like firing comey, which the president said he did for a

number of different reasons, but ultimately he doesn't really need a reason to fire comey. all of this gets into the president's head in terms of intent and what he was trying to accomplish here with these moves, whether these were for legitimate constitutional reasons or whether the steps were taken to impede the investigation into his own conduct. i think it's a tight one i don't think anyone in washington who is smart is going to be in the business of betting on what robert mueller is going to do. he knows so much more than the rest of us do publicly about where the investigation is >> you deserve credit for this i don't know if you remember, but after the north korea talks broke down, you were one of the first people to spell out how you thought this would come back to bite the talks with china when you think about those talks and you think about the trip that wilbur ross is on this week, any news positive or negative that you think could emerge based on the reporting you've been doing that's going

to rattle the markets? i feel like we're in rattle mode now. >> anything can happen on the china front. it's clear the president wants to keep up the pressure on the chinese on the trade front because he views them as critical in terms of the north korea negotiations and nuclear negotiations the president has been frustrated with the chinese, that's part of why you're seeing some of these measures in terms of the chinese visa issue. i'm tempted to get out of the prediction game altogether it's been so volatile already, it's hard to say where we'll go from here. there's two delicate negotiations going on simultaneously, they're interacting in ways we can't predict. the president put these tariff dead lines out on june 15th after june 12th, which is at least possibly the date now of the north korea summit so it could be that the tariffs and the trade measures are being used as leverage over the

chinese in terms of the north korea negotiations that could be addressed after the negotiation summit at this point it's a wildcard. >> okay. we'll leave it there good to see you. >> thanks. when we come back, abc canceling roseanne's show after a racist twit errant find out what she is saying about all of this this morning that's up when "squawk box" returns.

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welcome back we are in the chairs talking about water cooler stories the biggest is roseanne barr apologizing for a racist tweet that got her sitcom canceled the star tweeting don't feel story for me, i want to apologize to the hundreds of people and wonderful writer the all liberal and talented actors who lost their jobs on my show due to my stupid tweet the star blaming the tweet on the late hour, 2:00 in the morning and the sleep aid ambien. we've all talked about what ambien can do to people.

don't know if that's a fair way to think about it. >> people knew that roseanne barr had tweeted stuff that was controversial in the past. i think they were joking about it at abc up fronts. some reporters in the stands were saying that i'm sorry to see it, too i loved roseanne growing up. loved the revival of it. it had people like wanda sykes working on it and sarah gilbert bourq working on it. gilbert said she was disappointed in roseanne, the statement, everything that happened >> there us with a lot of chatter internally that some of these people didn't want to come back >> wanda sykes said she wasn't going to be returning. after the tweet but before the show got canceled. >> if you look at some of the

articles, they talked about internal drama during the show, that some people working on the show were not happy about it. >> the show itself tackled some interesting issues they had muslim neighbors living next door. tackled some issues that i think are good -- >> but with twitter you can e p evaporate your brand instantly >> not a surprising response from disney. >> i would go so far as saying it's indefensible what she said. to me, the sad part, i'm glad she's apologizing to them, is not just her, but everybody else who gets really damaged by this. the other piece that is interesting is the fact that the reruns have gotten pulled, which is where the real money for her has all been now she's done quite well over the years.

i would also say credit to bob iger for jumping in front of this himself >> right >> i think there were always a lot of people inside disney who had huge misgivings not just about roseanne, you may think the show was good, but just misgivings about the show a >> i think the show is a good show >> the old show was all right. >> did you see the new one i think bringing that discussion to the forefront, it was doing a service by doing that. yeah roseanne is incredibly controversial. i can't say i'm surprised to see her tweeting stuff like this i've seen it in the past i think disney made the right move you have to get away from that amazon will be holding a

shareholder meeting today. a group of protesters called sum of us plans to fly a plane near the meeting saying bezos needs a boss alson's boa amazon's board has to reject such considerations. it looks like as consumers they want to put pressure on this >> they want higher prices and worse service. >> not sure they will get a reaction from shareholders who have done so well under bezos. the "new york times" piece has been chronicling conditions for workers in the packing areas >> the large question is not --

we've been the great beneficiary of low prices and this great service, it's changed the way we shop the question -- the question that trump other others might ask, is it a monopoly and how do you measure -- it would not -- amazon would not fall under traditional antitrust metrics, but given the spread of it into so many places, is one business getting subsidized >> but you get low costs >> but you would be hurting consumers. >> as long as the service is good, let it be. >> bill simon who used to run walmart's stores from 2010 to 2014 will join us later. he's made the argument that congress should look at

splitting up amazon. but his argument, all those arguments are arguments made against walmart. >> he does have an axe to grind. >> it's the same thing people used to criticize walmart for. we'll talk more about these things >> when we come back, we will have more to talk about. don't be distracted by the story out of italy u.s. yields are collapsing we'll talk about the impact on u.s. bank stocks and broader markets. as we head to break, a look at yesterday's s&p 500 winners and losers it can grow out of control,

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welcome back you're watching "squawk box" live from the nasdaq market site in times square. good morning welcome back to "squawk box" on cnbc u.s. equity futures at this hour let's show you what's been going on after a bit of a roller coaster ride lots of news out of italy. the dow looking like it would open higher by 162 points. nasdaq up by 42 points the s&p 500 opening up about 16 points higher. some other headlines to tell you about. hp inc.'s second quarter revenue topping analysts forecast. that company raising its

guidance for the year on the back of rising notebook purchases. political turmoil in ilt it rattling the global markets but things are calming down this morning. the italian two-year note at 1.966% the fut rur ures indicated heres well the ten-year is 2.87 p%. joining us is mark grant, chief global strategist at b. rile riley fdr. you have been warning about italy for a while. you think this is just the beginning of what's to come. what do you see happening in. >> i'm delighted to be on with joe. he's one of the best economists on wall street

>> i could not disagree with you. >> thank you to answer your question, yes, this is a momentary lull this morning in the news the president was calling for a technocrat government, now that's in question apparently the lega and five star movement are trying to renegotiate with the president of italy and install a political government everything is up in the air. i think the bounce back this morning is just that a bounce back. i think the situation knitly wi i italy will get more serious than previous guests think. what i think will happen is not that there's going to be some referendum on the european union in terms of a real referendum, but i think what will happen is brussels will tell them to do this, that and the other and they'll say no by the way, the programs that both the lega coalition and the

five star movement want to put in place, i did some rough calculations the current debt to gdp ratio is around 133%. it looks like it would go to 155% to 160% just behind greece i think we're just at the beginning of seeing a lot of commotion. >> you don't think the italians will vote to leave the euro, but you think they will tell brussels to stuff it and then the ball is in brussel's court to decide whether to allow them to stay or force them out? >> i think there are two sides here, the italians could say no, we're not going to do it or the italians could actually vote to leave. but also, as you just said and you're right, brussels could say well if you're not going to follow what we're telling you to do, if you won't hold your budget within limits, then to protect the rest of the european union, you have to go. >> one more scenario

they could leave them, allow them to have it happen and everyone looks at a much weakened euro state between all of them if we're not going to enforce the rules, right >> that would be another option. some way or another to keep the european union together, people have to observe the rules or they'll have to be hit on the head for not doing so. >> mark, what role do you see the ecb playing and how could they stabilize things at some point? >> the ecb only can buy about 30% of any country's debt. they're getting close to that with italy they have about 700 billion of total italian sovereign and corporate debt one of the real dangers here is if for any reason that italy leaves, and redenominates its currency, the ecb would take a

tremendous hit that could bankrupt them unless the other countries put up more money. >> we're out of time what does this mean for u.s. stocks what does this mean for investors at home? >> i think the biggest impact for u.s. stocks is the strengthening of the dollar. i think it could go to 1.14, 1.12 and this would have a major impact on the equity markets in the united states as far as earnings of our international companies. >> always good to see you. hope to see you again soon >> thank you when we return, show us the money. show us the money. a new ranking of the 25 highest earning hedge fund managers, we will tell you who they are and what the top names are next. and later, amazon and walmart holding shareholder meetings on the same day we'll talk retail with former walmart u.s. ceo bill simon. at 8:15 eastern time we'll bring you the adp

employment report. that may move markets today. you're watching "squawk box" on cnbc

it is time for our executive edge institutional investor magazine out with its 17th annual rich list ranking the 25 highest earning hedge fund managers based on income for a single year 2017 looks like one of the best years since 2013 joining us with the list is kip mcdaniel, chief content officer at institutional investors this is one of those lists, if i was last on the list i would still be happy >> same here >> i wouldn't be -- great. if i'm last on the list, that's a good question. how much would i have made if i'm at the bottom? >> there's a first team and second time. >> i'd be happy to be on the "b" team or "c" team >> $60 million. >> i could dig that. at the top of the "a" team is brian higgins -- the bottom of the "a" team, he got 2$225 million. >> that's twice as much as it took to get on the first team last year. it was a good year to be a hedge

fund manager >> do you want to do this as a top ten letterman style? we go backwards? >> you'll be testing my photographic memory. >> james dimon, 1$1.7 billion >> mm-hmm. there's always a debate around these numbers. this is not necessarily just the fees that they are getting this includes the amount -- their own capital at risk. >> mm-hmm. yeah it's not a -- it's not a paycheck it's their cut of the fees, based on their ownership in the firm and the money they have in funds growing or that shah rink i -- shrinking. >> you lay it out, who performed better than in previous years. i want a list ochf the people wo made money because they earned it, their performance is up,

they beat the s&p 500 and because they have their own money invested alongside investors. >> that's what this list shows five men mad out or above a billion. simon, tepper, dalio, griffin and izz englander. not one of them beat the s&p 500 last year. they'll say that's not our benchmark. only one of them beat their historical annualized returns. to get impressive performance you have to go low on the list jeffrey epstein -- sorry, edelman is the top performer on the list 41% returns. he only took home 525 million. >> let's pick on somebody we know tepper calls into the show over the years. he made 1$1.5 billion you say -- what was his gain for the year >> depending on the fund it's around 13% not exceptional. not above his historical annualized return.

but pretty good. >> he's a great investor, too. >> how do they match up over years? would you be doing better as an investor giving them money than investing in the s&p 500 >> tepper i would guess absolutely >> take james simon at the top anyone would have been happy to give him a dollar many years ago because it's been an astounding return >> he's been incredibly consistent >> he's been on the list all 17 years. this is his third list in a row at the top of it he's extremely consistent. tepper is consistent ray dalio is extremely consistent some have had a bit of a bad run. >> complicated question for you. of these, who made the most simply off of fees >> the most off of fees. >> just off of fees. if you take out their own capital and just go straight fee

success. >> i'd venture a guess, ray dalio. >> that's because of the amount of money they have under management >> they have by most measures the world's largest hedge fund, pure alpha, their flagship fund was up 2.5% last year. the bulk of gains is not coming from that. they have other funds all weather, which is up 13%, but not a hedge fund product his 1.3 billion is largely based on the back of the management fee that comes with managing 0 $100 billion plus. >> how do you find how much the hedge fund manager owns? their percentage of the fund >> that's the secret sauce from our journalists. not every hedge fund manager cooperates, you would be surprised how many want some sort of -- >> that's what i was going to ask. we always heard donald trump trying to call the forbes list to get himself higher on the list how much campaigning goes on for this list?

other people would call forbes i don't want to be on this list and try to take their number down >> a lot less than you think i have to be careful we don't want to reveal sources. one incident this year, we were going to give a bigger number that would have been a headline number, they said, hey, i'd love to have that number, but that's not actually accurate. i want this to be accurate there is gaming. some people don't want their name on the list >> great to see you. take a look at the list if you get a chance we'll see you in a bit. when we come back, it's not your grandfather's refrigerator. we'll introduce you to a disruptor trying to change the world of groceries one cooling machine at a time. at&t provides edge-to-edge intelligence, covering virtually every part of your retail business. so that if your customer needs shoes, & he's got wide feet.

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welcome back, everybody. as temperatures rise with the unofficial start of summer, our next guest has a high-tech way of keeping cool. let's bring in tony adi. i would say it's not rocket science to come up with a new way of cooling things, but you are actually a former scientist with nasa's jet propulsion lab so explain this to us. what's the science behind it >> through the magic of semiconductor innovation, we got

examples of semiconductor innovation that gave you a new technology and approach. with cooling and efrigeration, we've been stuck in the past phononic are trying to displace the heat fan. >> you've got something here, it's a box that's on set with us if you could take a picture of this i don't see any connected wires, anything along those lines i don't hear anything. >> when you think of this box and its merchandising application -- >> open it up. >> typically refrigeration and freezing has been relegated to the back of the store. so i brought breakfast. >> these are all cold. it is plugged? >> it is and you can freeze, refrigerate, or even heat which gives retailers tremendous flexibility. >> what -- if i'm a retailer, i can place it somewhere differently.

how much does something like this cost? >> for the major consumer product brand -- >> sorry she wants more i'm okay i'm good >> there's two different techniquings we follow budgets for capital equipment, do a model based on the inventory and place in the store with a payback period built in but for the smaller brands that struggle to differentiate themselves against the giants, we can do a rental or a lease agreement such that based on the revenue generated we share in that margin and it gives them placement in the retailer. >> this is all being used right now in the retail environment. >> we have optical components, hospitals and clinics where we're refrigerating drugs did and pharmaceuticals. and now we're launching if u ii. >> we have a subzero refrigerator in my home -- >> will we be in your home

we will. through full product innovation, demonstrate the -- >> why is this so much better than the fan model >> we're headed inside where we can use our chips in someone else's cabinet the value depends on the user. you get rid of the compressor, it's energy efficient, completely sustainable we have no toxic or flammable refrigerant. and there's no noise you can build perishable goods around it. >> what's the difference in terms of cost to this versus a comparable old school version? >> in many markets we price that with the incumbents that are there. so we leverage high volume se semiconductor best practices used throughout that world >> over time, you think you'll be able to get this price even lower than the old school -- >>. >> that's where the semiconductor innovation comes

in yes. >> what's the maintenance on it, if any >> none. there's not much that can break. when you think of the retail environment, you don't have to restock as frequently because you have more space to play with and you can put this at the point of sale which is what consumers want to experience coming into a store. that's the highest margin real estate in a retail environment >> thank you for coming in >> thanks for having us. >> it's cool very cool. joe, thank you for hanging out with us. come on back >> thank you when we return and come on back, we will ask the question should investors be scared of the latest drama in italy. plus at home, the index dropping yesterday. we're going to talk u.s. financials, whether things are oversold or whether it's just getting started. quk l going to talk about al th aad"sawbox" returns on cnbc (baby crying)

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market rebound stocks in the u.s. looking to bounce back after political drama in italy spooks investors around the world we're going to tell you why it matters to your money. one day, two big shareholder meetings amazon and walmart both. our discussion, former walmart ceo bill simon and disney pulls the plug. "roseanne" show canceled after a racist tweet now the actress is back on twitter. we'll tell you what she said the second hour of "squawk box" begins right now ♪

live from the beating heart of business, new york, this is "squawk box. >> good morning. welcome to "squawk box" right here on cnbc we're live at the nasdaq market site i'm andrew ross sorkin along with a band of everybody brian sullivan is here joe kernen is off. becky is here. we've got mcc here wilf is back from his wedding duties we're going to get to the markets right now. the italian market stabilizing after selloff and u.s. stocks are pointing to a much calmer open equity futures right now, dow jones up about 168 points. s&p 500 up about six points. let's fly over to europe, show you what's going on over there a little bit muted and getting better germany up the ftse up.

spain also up, by the way, talking about bill browder getting arrested in spain. talk about that later. the 10-year right now, show you the note 2.871% and finally overnight in asia, stocks dropping sharply following renewed operations to impose 25% tariffs on $50 billion worth of goods from china and place new limits on -- wilbur ross scheduled to arrive in beijing secretary ross speaking out on u.s. trade negotiations with the eu secretary ross said the block could still talk about opening up their markets even if washington imposed tariffs secretary ross made those comments at an economic development forum in paris

eu lawmakers have previously said they were open to negotiations here's what else is happening at this hour several key events coming today. in a little over an hour we'll be getting the may adp report on private sector employment. calling for 187,000 new private sector jobs. that would follow an addition of 204,000 jobs that we saw back in april. at 8:30 a.m. eastern time, we'll be getting the second quarter estimate along with the growth rate expected to remain at 2.3%. and the federal reserve will be out with its beige book today. also sales of -- >> what? >> watch yourself. >> she said by the seashore. >> shares of salesforce.com are higher in the premarket trading. the company beating forecasts on both the top and bottom lines for the latest quarter also raised its full year

forecast that stock is up by about 5% >> we can sit because we weren't shabby that's what i said your top money story political turmoil in italy taking its toll on the global markets. at one point yesterday the dow wuss down more than 100 points before turning around a bit. one of italy's main populist parties is now calling for another round of elections as soon as possible wilfred frost joining us more on whether italy's turmoil is going to spark a contagion michelle, let's start with you t is this greece all over again? >> it could be one political party there saying new elections. however, take a look at italy's 2-year yield which has dropped dramatically in the last couple of hours that's because a different political party has said we're going to wait and try to form a government and maybe avoid elections. take a look at the intraday and

you can see the yield on the 2-year is now back below 2%. now we're showing you the 1-year chart. that's to give you context yesterday's rise in italy's 2-year yield was the biggest scene in a single day since 1996 understand what's happening in italy is a political crisis. it is not yet a financial crisis but it could become a financial rice how would that happen. economists want to say what is the transition mechanism every time their debt is much higher than it otherwise would have been, when they roll over that debt, they're paying much more in interest all the money they had put aside to pay for health care, whatever they really want to spend their money on actually has to get diverted to paying interest payments, right? so every time they roll over debt at higher interest rates, more and more money gets diverted at some point, that becomes a

crisis right? because they have to divert so much money they did several auctions today. they auctioned off five years, seven years, and ten years in bonds. the good news is, market bought it investors bought it. bad news is much higher interest rates between 2% and 3%. a few weeks ago that was close to zero. the other transition mechanism is the italian banks they own a lot of italian debt all of a sudden if this starts dropping in value, you've got to recapitalize the banks >> we're not there yet but mark grant took it a few steps further this morning where he said it could be not just the italianbanks that are in trouble but the ecb. and you're talking about going from maybe he thinks 130% of debt -- >> debt to gdp uh-huh >> up to 150% or north of it >> right, right. >> i'm sorry, based on what the

plans of these two political parties would like to do >> right so you don't have to know much about italian politics you're going to hear a lot of names and it's going to be very opaque to most people. here's what we got to know the people who are eventually going to run the italian government, do they want to stick with the plan or don't they and if they don't want to stick with the plan, then we're going to be in trouble. >> is the plan the eurozone or the payback of debt? >> we're going to continue to run a primary budget surplus in other words, when we don't have to pay the debt, we still have a surplus the way we run the government, we run a surplus the more surplus we have, the more debt we can pay down. right? these guys thus far don't want to >> something we've seen time and time again >> these guys are pulling greece

2015 right? >> i think back to all the times you were standing over there covering this from the acropolis. >> and now you've got these guys saying we don't want to do that anymore. now, when it was said in greece, the germans said fine. have at it >> the greeks had to do that because it wouldn't help them all that much to have an economy where you have a devaluing currency >> yeah. >> it was a different situation. >> i think the difference -- the thing is, italy is too big to fail and too big to bail out right? it would be much more important if italy, we get to the point where suddenly we're having to vote on the euro >> andrew's got a second book. >> i like that >> there's not the political will across europe from a few years ago to do everything it takes to save it right?

that has disappeared >> and you did it without saying italeave which is the new brexit. let's get to wilfred frost because there's an impact on our financials and global financials as well. >> exactly right so u.s. large cap banks exposure to total italian debt is, in fact, less than 1% of assets why such a big selloff in u.s. bank stocks yesterday? the main reason is low italian yields spiked. the u.s. yield curve fell sharply and flattened significantly. the spread is now at its lowest since 2007 fed rate hike expectations will also push back all of which is bad for banks. also fair to say there are plenty of stale bulls in banks who saw a huge run-up in 2017. why hold onto them now that there's a risk of a euro crisis which creates bad memories of investors? and finally yesterday, jpmorgan guided that trading would be

flat or low single digit year on year growth compared to mid-teen expectations so that also weighed on u.s. banks. but what about the european banks? in the very least they hold more italian bonds as michelle has said which have fallen in value. but their ecb rises have been pushed back further delaying any possible return to a seriously profitable environment in european banks if we did reach italeave or quitily. >> that's good >> we're a long way from quitaly or italeave. >> i think quitaly is a lot better we said the other one is -- >> creating confusion. >> the crucial reason we spiked yesterday was the possibility of further elections and the

thought these two populists might do better. the difference to the march election where they already did better than expected was into march, they both promised they wouldn't form a coalition. so even though they've risen in the polls since because of this decision by the president to reject their choice of finance minister, when we get to the crunch of another election with the left leaning populist and the right leaning populist really turn out and vote for their individual parties in the same way when they think they may form a coalition we'll have to wait and see brexit united those things because it was a single decision this will have to wait and see >> stay here we want to bring into the conversation principle and chief strategist at chandler o'neil. what do you disagree with about what they just said? >> none of it. it's fine. and michelle, i think, nails italy as expected very well. let me take this transmission mechanism up one more step

europe is 35% of global imports. china is 10% we get all excited about china in the trade war it's really smart to worry about europe and secondly, the euro has in my mind always been the san andreas fault. it's there so that's going to be an instability that will always haunt us and the presumption is this all eventually settles down or we have a rather headachy summer until it does. but the bottom line, europe is the biggest risk if you want to worry. i understand why the market did what it did yesterday. and it's not over. also the market did what it did yesterday because there's such ill liquidity in markets we've got our own problem here until we fix voellcker. does it affect the -- as you pointed out, interest rate cycle

we're looking at it might here's the key difference. this is the first time ever that the fed has a tool, a really big tool to control the long end of the market >> robert, let me ask you this >> as they start selling more. they can move the long end >> if this does slow interest rate hikes you would think that u.s. stocks would get more glee out of that. not the financials because they would like to see higher interest rates but the rest of the market has sold off >> it's totally right. what i've been worried about most, eventually equities go down all right? so do bonds. >> so does that look like a better place to put your money >> i'd still argue banks are probably a very good place to buy here because they've got another couple years to run. they've also got a big shot in the arm from regulatory relief $2.3 billion of bank assets they can now get out to make

acquisitions i'd be a buyer in this noise but it's not going to be a smooth summer. >> you'd be a buyer in this noise but you'll see further declined >> when we say banks, i'm not talking about the hugest amount. regional on down the higher loan growth already they're the ones that are going to benefit from consolidation and they're going to get benefit from margin. >> why kwould you buy today? >> i think they oversold already. they overreacted to risk >> it's only an issue for u.s. exports if you've got the disaster scenario in italy of the government wanting to pull out of the euro. or is it even an issue if they want to spend more than, perhaps, the policy should warrant? >> i think we're only a hostage if they really create hask voc n terms of the euro. that would transmit here and sort of go down.

>> wouldn't that be a good thing? couldn't that help us by lowering interest rates? >> no. because we don't need any interest rate help we've had it for a decade. we've got to get rid of it, get off it, and normalize. it's not we're going to tighten or stop the music. it's we're going to slow this momentum that's coming unnaturally. that's a good thing. we don't need lower rates at this point that's the last thing we need. >> robert, sounds like we're going to be having you back a lot more this summer >> happy to be here. always enjoy it. >> thank you when we come back, weekly mortgage applications just hitting the tape we will bring you those numbers next and in the next half hour, one day, two dualing shareholder meetings we'll take you live to walmart and amazon's meetings. plus we'll talk with former walmart ceo bill simon talking about whether businesses should split up or trade

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all right. welcome back to a busy "squawk box" on a wednesday morning. futures right now indicating your money is going to rebound a little bit from yesterday's big drop yesterday we initially were down over 500 points. the dow scraped and clawed its way back a bit similar story this morning we came in this morning, the futures up about 60 points now they're up 177 so the implied open looking pretty good at least for now weekly mortgage applications, those numbers just crossing the wires and diana olick has the details. >> good morning. after rising all month, mortgage rates took a step but that did nothing to juice demand. total mortgage application volume decreased 2.9% for the week that's the sixth straight week of losses. volume was 10% lower compared to the same week one year ago refinance volume which is most rate sensitive and usually rises when rates fall did the opposite

fell 5% to the lowest level since december 2000. now, the weekly drop in rates was not enough to get the often tedious rate fell to 4.84% from 4.86% mortgage applications to purchase a home fell 2% for the week but were 2% higher compared to a year ago. home buyers today are less worried about interest rates and more concerned about high home prices affordability is weakening especially at the lower end of the housing market where demand is highest and supply is leanest. >> thanks. coming up when we return, you're never going to guess who's headed to the white house. you want to guess? anybody? >> well, i can see it in the prompter >> kim kardashian is going to be there. >> also that's her picture >> we have details and what she's going to be talking about when we come back. in the next half hour,

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welcome back to "squawk box. a tesla sedan in autopilot mode parking into a parked police cruiser yesterday. the officer not in the cruiser at the time of the accident, but police say the vehicle was totaled. the tesla driver suffered minor injuries tesla's autopilot driver feature has as you know come under a lot of scrutiny following a number of recent accidents. tesla has repeatedly warned drivers to stay alert and keep their hands on the wheel while using the autopilot system it's always been clear that autopilot doesn't make the car impervious to all accidents, they said. and as we said before, it is not an autonomous vehicle. i think there's been this misimpression that somehow it is it's like a fancy version of cruise control that's how i'd describe it >> which means you should not be looking at your phone. >> you can't be sitting in the passenger seat you can't be watching a movie.

>> don't do those things >> that's what people do because they think it's autopilot, there's a cool factor to it. i've driven them >> i spent a lot of time on the roads this holiday weekend drove out to ohio and back >> why >> my cousin was graduating from high school. >> still not a good reason not good enough. >> but watching people as you're driving down the road and you're bored because i was in the passenger seat, things people doing in their cars when they're driving and there's no -- >> i've got that jeep, you're jacked up and look down in car literally 100% of people are texting and driving. they've got it in their lap. >> pay attention to the road, people >> terrifying. all right. when we come back, two of the world's biggest retailers and bitter rivals are holding their meetings today separately not together we have reporters at both events as they kick off later today we'll give you a preview

plus the former ceo of walmart bill simon has strong words for what he thinks needs to happen to amazon. you'll hear him coming up.

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good morning, everybody. that's what i was thinking too >> it sounds like the girl from "america's got talent. that's florence and the machine. >> welcome back to "squawk box" here on cnbc, everybody. we are live from the nasdaq market site in times square. let's get a check of the markets this morning yesterday a lot of red arrows. you saw the dow down over 500 points it closed the day down just under 400 points but you are seeing a bounceback this morning dow indicated up about 190 points this is reflecting what we're seeing in europe as well most of the major averages there higher especially in italy. s&p 500 right now looks like it would open up about 18 points. and the nasdaq up by about 43. concerns about italy not gone.

just the market is sloughing some of them off if you look at what happened to the 10-year or what's happening to the 10-year after yields here were under pressure yesterday, you can see right now the 10-year is hitting a 2.884%. morning the stories front and center, airline satisfaction is up. among the key contributors, airline investments and newer jets and cheaper fares the number of electric vehicles on the road has jumped past the 3 million mark the international energy agency said the total reached a record 1.3 million in 2017. that was up 15% from the prior year 40% of those cars were in china. mortgage applications in the united states fall by 2.9% in the last week. both new purchase applications and refinancing activity fell. although the average 30-year mortgage rate did fall slightly

to 4.48% okay this is a wild story bill browder said he was air forced -- arrested in spain. he tweeted a picture of himself in the back of a police car. he is one of vladimir putin's biggest critics. he said good news, spanish national police just released me after interpol secretary in lyon advised them not to honor new russian interpol red notice. two of the world's biggest retailers, bitter rivals, are holding annual meetings today. courtney reagan is on walmart's home turf. and aditi roy is in seattle with amazon aditi, we'll start with you. tell us what to expect today

>> about a hundred amazon shareholders are expected to gather in the building behind me later on this morning. they're going to be talking about a number of usual business items starting with the election of nine directors. they're also going to be talking about a number of shareholder proposals including one that would require that the chairman of the board be an independent director and to that point a group of protesters is also expected to be out here flying a plane with a banner reading, bezos needs a boss of course referring to the current chairman and ceo jeff bezos who just last month wrote a letter to shareholders saying -- announcing for the first time that amazon prime has more than 100 million subscribers. he's expected to talk to shareholders later today and also looking for more commentary on the company's plan for building up prime capabilities including any updates on that much anticipate d prime delivery

service. we'll look to any response he has to president trump's recent tweets to amazon which has called call -- said they are costing the post office massive amounts of money. this as the stock has skyrocketed. moving up more than 60% in the last 12 months alone and as of the close yesterday, the company's just a mere $217 billion away from being a trillion-dollar company. becky, back to you >> thank you very much let's get to courtney reagan who is covering walmart shareholder meeting. courtney >> hi there, becky yeah this is the biggest week of the year for the world's largest retailer we're here in northwest arkansas of course where walmart is founded. thousands of associates from all over the world will be here today and through the week to really celebrate the year they've had and look forward to

the future this morning u.s. associates and international associates will be meeting at separate locations. and that happens before the shareholder business takes place here at around 11:00 a.m. eastern time now, this is a bit of a departure from what we have seen in years past when the shareholder votes and business was taken care of on friday at that big celebratory event but today shareholders will come together to vote on executive compensation, approve the company's auditor, as well as the board. mcdonald's ceo steve easterbrook is up for election to the board. and marissa mayer, three walton family members are among those up for re-election there are also two shareholder proposals that are on the proxy. the first of which like amazon seeking an independent chairman that is a non-executive and non-walton family member also a request for a report on any racial or ethnic pay gaps.

however, because the walton family members do own a majority of the stake for the walmart shares, we are pretty sure that like in the past, the walmart proposals will pass. the shareholder proposals will not. but we won't get the official results until much later in the afternoon. but there's a big week ahead here in northwest arkansas i'm sure we'll see you in the days to come too >> all right thank you very much. joining us right now to talk about all of these things is former walmart ceo bill simon. thank you for joining us >> hey, becky. good to be with you again. >> let's talk about walmart first, let's say this is a company that's pretty different since you left it back in 2014. you think through things like flipkart and jet.com and those purchases and then also the sale of azeda this company has changed a lot >> sure they have. they've declared what their strategy is and they're executing it you think about what happened in

the last month there they bought flipkart for $16 billion. flipkart sales $5 billion and loses $1.5 billion and they sold azeda that made about $1.5 billion so they're all in on digital and moving in that direction and it's very expensive. you know, that one move right there will cost them about another $2.5 billion in operating income for the year. but they're committed and moving in that direction. >> you sound a little skeptical. you think that's the right move? >> i'm not skeptical you know, they've declared their intention and they're moving that way i'd like to know where it ends i'd ask amazon the same question what does this look like when the transformation is over you know, in 2015, walmart delivered $29 billion in operating income in this past. the moves they recently made will cost them another $2.5 billion. what does this look like from an investor's perspective this would be a good week to

outline that >> it's a bit of a catch 22 for any traditional company trying to keep up with an e-commerce company because they have to basically change the wheels, drop the engine, and do all of this while they continue to operate on the fly amazon has been able to do this and has had a kind of free reign from the shareholders saying we're okay to continue investing. i know there have been skeptics all along with amazon. but amazon now seems to be at a point they can ratchet up profitability quickly by doing things like raising prime, how much they're charging for that, and not getting pushback from customers. do you think walmart is going to be able to do those things too >> i think amazon has redefined what it looks like to be an investment company, not an operating company but an investment company investors remained completely exuberant. i thought amazon was overvalued and it's four times that today

you know, it's a business that needs -- we need some more information. i feel that way. you know, they're operating in different segments they're operating in retail and web services they bought whole foods. everybody had forgotten about that it's a $13 billion company haven't reported same store sales. haven't told us how whole foods is doing other than to say they're happy with it. >> if i made you king for a day or regulator for the day with no court, you would do what >> i'd like to see amazon report and maybe even trade separately by segments. you know, investors need to understand what's happening in web services looks like a really good business in a place that investors might want to put their money. the retail business is different. >> look. a lot of people want more transparency just makes the investment case easier once you know more information. or you're making the case there's something fundamentally wrong about the structure of the company vis-a-vis competition.

>> i think the way that they're operating where they use the profitability of a completely unrelated segment of business to drive out competitors and build market share in another segment of business would be akin to exxonmobil deciding to get into the restaurant business and using profits from oil to sell below cost and to build market share. >> it's brian sullivan look, you guys -- this is interesting though because you guys for years were the big retail bad guy in america. you may disagree with that, but there were protests around walmart and they were saying walmart was destroying small towns. walmart has sort of shifted in some ways to becoming the big guy -- >> or the underdog >> exactly so you've kind of flipped the script if you had to defend amazon in a specific way, how would it be? >> how would you defend amazon they're a brilliant business and excellent at customer service. and deliver a product that

really can't be matched by anybody in retail today. and they built their business organically. so, you know, they have a lot of good things going for them i use them they're a great service. >> bill, to brian's point, all of these same arguments were made against walmart over the years by small retailers who said, look, we can't compete because walmart drives down prices so much they take it out of the vendor's pocket and pass that to the consumer and they are killing us because we're not big enough to be able to do that that's anti-competitive, they said >> well, the difference is, becky, that walmart did it in the same line of business. they didn't have a completely different business model or different business segment and take the profits from that and drive it into the cost of the business they -- >> you're talking about amazon web service where is they're making money >> yeah. and advertising and the other models where amazon's, you know, deriving what little profit they can deliver.

walmart went out head-to-head, knuckle to knuckle and won market share by executing a business model that customers wanted >> i think amazon would say the same thing >> well, they are. in part. and losing money at it and they're gaining traction and profitability by other business activity that has nothing to do with retail. >> before we let you go, how do you think about the big tech giants would you split them up too? >> no. you know, as long as they're operating in a space that's, you know, defined and reported, i think investors have pretty good clarity into what those guys are doing. >> okay. great. nice to see you, bill. thank you. great conversation. >> appreciate it thanks when we come back, disney pulling the plug on "roseanne" after the actress' racist tweet. we'll talk about it.

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welcome back to "squawk box" this morning roseanne barr apologizing for a racist tweet that got her show canceled by abc. she tweeted, don't feel sorry for me guys. i just want to apologize to hundreds of people and wonderful writers all liberal and talented actors who lost their jobs on my show due to my stupid tweet. she blamed it on the late hour, 2:00 in the morning. then later said, ambien was at play she also blamed memorial weekend for a bit of the problem i don't know if you saw that part of the tweet. joining us right now jason lynch. he is author of last week's cover story about roseanne he's been living all this. >> i get the ambien. i don't justify it but the memorial day part of that tweet, does that imply

there may have been a liquid involved it was also memorial weekend >> like, it was 2:00 in the morning, i was ambien tweeting, it was memorial day too. i went too far and i don't want to defend it she says i honestly thought she was jewish and persian ignorant for me for sure then she said, i mistakenly thought she was white. it devolves. >> hi, by the way. >> nice to see you >> welcome to the weird, wacky world of roseanne on twitter >> i think the larger question here is, from a corporate standpoint is wasn't she known as a danger at least on twitter to begin with? >> she was and this was something that whenever we had an opportunity to talk to channing dungey, we said you see her twitter feed. she says things that are

controversial and outrageous the response was always we control all we can we've talked to her. she understands that we don't want her tweets to overshadow the show you know, kind of fingers crossed almost obviously that's not what ended up happening >> didn't take the account away. >> yesterday i think she called george soros a nazi on twitter i mean, at what point -- sort of what was the threshold >> obviously we saw yesterday what the threshold was but earlier in the year before her show had premiered, her kids had taken her social media account away and even when she kind of got it back, her kids would come in and delete tweets. but this was clearly going to be a problem. i talked to abc about this for a cover story last week and again it was just always fingers crossed. >> what about all the people who worked on the show? we heard wanda sykes didn't want to come back but there were others throughout the production of the show, people that were anxious about their participations

>> i think during the show itself, everybody had nice things to say and the feeling was well, yes, this is going on. but we can make it work. and clearly the last few days, her twitter feed, it was an untenable situation. and there were several cast members, people behind the scenes yesterday who indicated they were going to quit if abc hadn't taken action. >> does disney -- did they recognize do you think in your reporting fully the risk of bringing this show back online given her nature >> i think they knew that there was a risk they felt that the reward was going to outweigh the risk clearly. i'm still surprised that there wasn't -- they didn't take the step of saying, okay if you want to come back, no social media >> by the way, they were right with the ratings >> what does this say about -- they were heralded -- the first week out of the box, it was a huge ratings winner. and also it suggested, you know, people always talk about the liberal media. here was this show that really

sort of represented the middle ground or even a sort of conservative viewpoint what does this say for the future of writers, actors who may try to pursue a show in this realm? does it say anything about that? or do you think this is specific to her >> i think it is specific to her. and abc always made the point that this was not just a conservative show. you don't get 30 million people to watch a show which is what tuned in for that premiere episode if it's just conservative fox news would be getting 30 million viewers a night if that was the case it kind of got everybody into the tent clearly if you have another person like roseanne with a toxic twitter feed, this would happen again >> do you think clients are all calling saying to go through the twitter feed >> you think they had to have

something in mind. >> and the line is moving rapidly. >> exactly now we see something else with these tweets this is another thing to consider if you're going to get in business with somebody. >> okay. great to see you thank you. appreciate it. speaking of media, media moguls and technology titans taking center stage at the code conference yesterday afternoon out west where facebook came under attack julia boorstin joins us now with more >> well, brian, it's a theme that we can expect to hear a lot more about today facebook under fire with recurring themes of data privacy and unchecked power of big tech front and center here at the code conference. 21st century fox ceo attacking facebook when he was asked about the dwindling power of fox ads >> our communication platform for connecting billions of people where everything conversation is mediated by somebody spending money precisely to manipulate them is probably not something that i think from the societal

perspective, you know, a great thing to have. then you have the second issue is it's more of an attack surface at this point. from a national security standpoint as well >> then snap ceo when pressed about facebook copying snapchat's features shooting back with this >> we would appreciate if they copied our data protection practices also >> i was waiting for that. >> after spiegel said facebook would have a hard time changing the dna of their company then sheryl sandberg came on stage and pledged to make changes. >> we can get better we can be more transparent we can put a lot more resources and a lot more thought both technology, automation and people >> coming up today, we'll hear from a range of big names. at&t ceo randall stephenson is

taking the stage and should be sitting down with the ceo of hulu and pandora back over to you >> thank you thap sounds like a great conference thank you for waking up so early in the morning there when we return, coming up in the next half hour, the ceo of ca technologies is going to be ringing the bell but first going to be talking to us that conversation at 8:40 a.m. eastern time the adp employment report coming up as well lots to come your muscles look good, but we should be seeing more range of motion. i'm fine. okay, well let's see you get up from the couch. i'm sorry, what? grandpa come. at cognizant, we're uniting doctors, insurers and patients on a collaborative care platform, making it easier to do what's best for everyone's health, every step of the way. you may need more physical therapy.

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box. president trump is meeting with kim but let's be careful here. not kim jong-un. at least not yet, officially but he is meeting with kim kardashian reality star with visit the white house today to meet with the president and jared kushner as well to discuss prison reform that's according to vanity fair. kardashian reportedly expected to ask him to pardon a woman serving life behind bars for a first-time drug offense. her husband kanye west will not be at the meeting. i wonder do they get to bring the cameras with them for the reality show >> that would be interesting hadn't thought that through. my guess would be no, but we'll see. >> you know, the president's used to that >> reality television. when we come back, two big economic reports about to hit the tape first a read on private sector employment then a look at the trump economy. we'll get a second estimate on

second quarter gdp we have the numbers and the market reaction coming up right after this right now you can see futures indicated to open up about 175 points on the dow. 10-year note yielding 2.877% "squawk box" will be right back. it can grow out of control, disrupting business and taking on a life of its own. its multi-cloud complexity creating friction... and slowing innovation. with software-defined solutions, like hpe oneview, you can tame the it monster. hewlett packard enterprise. less complexity. more visibility. us. it's what this country is made of. but right now, our bond is fraying.

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a world of worry is italy's political turmoil keeping you up at night? if so, you are not alone what investors need to know straight ahead breaking economic news the adp employment number just 15 minutes away. plus the great white way broadway smashing more box office records led by "hamilton" and "springsteen." "squawk box" begins right now. ♪ welcome back, every. we are live from the nasdaq market site in times square. i'm becky quick along with andrew ross sorkin and brian sullivan

joe is out today the adp employment number hits at 8:15 and then a revision to first quarter gdp at 8:30 eastern time take a look at the markets after a big down day yesterday where the dow was down by 400 points at one point closing the day by almost 400 points today indicated up 171 points. s&p futures up by 15 and the nasdaq off by 40 again, down by 500 points is a lot, but we should keep it in context. that was still only 2% of a decline. points aren't what they used to be as we keep getting reminded in all of these situations you can also see in europe, big bounceback for much of the market there especially italy after sparking all of this concern in the markets here and europe yesterday. france is down 0.4%. but the other major averages are all in the green among your big stock stories today are a big jump in the share of dick's sporting goods beating on both the top and

bottom line for the latest quarter. also raised its full year outlook. this stock, interesting, because they raised the age of selling guns to 21 there was a pro-nra boycott movement shares of michael kors beating estimates on the top and bottom line last quarter. also better than expected sales. but it's not what you did for me, it's what you're going to do for me full year earnings outlook falling below the consensus of many analysts. a big jump this morning for shares of movado group estimates came in well above wall street forecasts. raising its full year outlook. and dsw also beat on the top and bottom lines saw better than expected comparable store sales however, the stock is down dsw kept its full year outlook unchanged. consensus estimate now is $1.73. let's get back to the markets right now.

dom chu joins us now from cnbc headquarters dom, a lot of concern about what was happening in italy, what was playing out there. >> that's right. if you look at the dow futures implied open right now, we'll be up 170 points. that was about the same amount we were going to be down going into the open yesterday. i guess the bulls want to see the acceleration of these gains into the close just like we saw acceleration of the decrease yesterday. we've got interesting themes developing it very much was a defensive risk-on, risk-off whatever type of nature move the biggest decliners and sectors, the financials. no surprise there as interest rates fell some of the big banks especially the big ones like jpmorgan took hits there same thing for industrials the holdups here in terms of top performers, utilities actually eked out a slight move staples and energy

those were the relative top performers those interest rate plays. interest rate is a big part of that story as we talk about 10-year note yields, we saw 3.1%. we're recovering some of that now. and two places to find that play out. we talked about the money center banks. let's talk about these ones here this is one of the biggest decliners over the move lower we saw over the last couple of days maybe we'll see a bounceback on that today still pretty decent in terms of the overall bank picture and that's something to watch. whether or not that is a sentiment indicator. i would point one thing out for you here the semiconductor space. that was one we watched yesterday. and it was a relative out-performer overall versus the rest of the market technology, semiconductors in particular were some of the better performers there. so if you're looking for a sentiment gauge, that might be one place to see that play out so it's kind of interesting. we'll see if that plays out today. back to you.

>> we'll see you soon. thank you. joining us to wrap this up, ed campbell and steve parker guys, welcome. thank you very much. in your discussions yesterday, when all this is happening you probably got cnbc up on the screen how much was italy and europe a part of your discussion as far as strategy? and did anything change in your longer term outlook because of what we saw yesterday? >> i think a lot of the discussion was around italy in terms of how did it change anything it didn't. what we're looking at now in the absence of corporate earnings, there's a bit of a video camera consume f -- vacuum for markets. >> what do you mean? >> we're not hearing the earnings reports which i think at the oend t-- end of the day s driving us because we don't have that to anchor around, investors are looking at politics and

headlines. i think some of this is overdone europe is not exactly being a show of political stability recently and i think when you look in italy specifically while the headlines are worrisome, what we're looking at is actually italian consumer confidence. italian business confidence. still near record highs. if we were to see that deteriorate, that might cause us to change our view to us the political noise is just that. >> ed, listen. i understand and i appreciate sort of the calming effect we've heard a lot of that here on cnbc. at one point the dow was down 500 points bond yields have fallen 30 basis points in two weeks. and some are down 15%, 20% in a month. i understand why we're saying longer term, we're fine. but somebody's nervous >> you know, we've been hit left and right with risk scenarios this year. right? so last year was easy because we had a low volatility melt up this year we've been hit with

the interest rate inflation concerns, the trade war concerns now political risks in italy although we haven't changed anything just yet either, i do have to say i am a bit more concerned about italy than some of the other risks that we've seen this year >> why >> mainly because italy as a member of the eurozone is not sovereign in its own currency. the ecb is there as a backstop but that is not limited. so italy can be vulnerable to speculative attack in vicious circles where higher rates beget higher rates i don't think we're there yet. but we do remember what it was like during the sovereign debt crisis very significant drawdowns in equities with the s&p down >> are you predicting that >> i am not predicting that, but i think we're going to have to watch italy very closely to make sure that this is not -- that the situation in italy does not morph into a crisis. >> i would agree except for the

fact like i said you're still seeing business and consumer confidence even in italy remain elevated the other thing if you think back to february, the big concern for everyone around europe was the stronger currency the euro going to 130. that's bad for european services you add into the fact the ecb is going to remain committed to stability, i think we'll see some bottoming >> and i will add that one relief valve here is u.s. interest rates so we went through an earnings season where we had a booming corporate earning market >> do you think that our new fed chair is going to have the same view >> i think he shares dovish tendencies with her.

>> you do? >> yeah. >> are you in the same place on that >> i think the new fed, i think they are focused on financial stability. a ento the degree that what's going on globally has an impact on financial stability here in the u.s. i clearly think they're going to remain focused on that factor. >> you think andrew, there's a risk powell's unknown quantity if we see a crisis, you worry about how it's going to play out >> i just don't know how quickly he's going to be to just sit on the sidelines or to reduce interest rates >> i guess, then, steve, that begs -- i think what you're saying is does our fed have a lever over europe? is that fair >> potentially so i think markets are still pricing in about two fed hikes between now and the end of the year that's down from about two and a half earlier this month. so markets are still anticipating the fed will continue on its path

but i don't think that we're going to see the fed overshoot to the degree where it does become disruptive for the global economy. we'll see that in the fx markets in particular. >> i think the main takeaway for us is sort of moving money back to the u.s. from international markets and focusing on more domestically oriented markets like u.s. small cap. >> ed, steve, guys, thank you very much. good discussion. one that probably is not going away any time soon >> probably not. >> with my base knowledge of italian politics, i'm going to take a stretch on that one thank you. couple of other -- it's a health care deal, but a couple other corporate news deals to tell you about this morning. wellcare buying rival health care insurer meridian. the deal which also includes the acquisition of meridian rx will make it the biggest medicaid provider in michigan and illinois

also target adding the retailer stock to the u.s. number one list noting a number of initiatives that will drive comparable stores higher also exxonmobil upgraded to outperform at rbc capital. pointing to dividend growth as well as superior returns coming up when we return, got some breaking news bring you the adp report ahead of the jobs release number friday stay tuned you are watching "squawk box" right here on cnbc

welcome back to "squawk box," everybody. we've been watching the futures this morning i'm sure you have too after yesterday's big declines in the markets. this morning dow futures are indicated up right now looks like the dow would open up about 175 points s&p futures up by 16 and the nasdaq by 40 points. let's take a look at oil prices. oil prices which as you know have pushed ever so slightly higher this morning are up after a down day yesterday wti up by about 46 cents $67.18 in corporate news, starbucks stores, they are reopening this

morning after 8,000 locations closed yesterday for anti-bias training about 180,000 employees at starbucks and the company's headquarters received that training some experts estimate yesterday's closures may have cost the company more than $12 million in lost profit i would go so far as to say you're going to see that number in the tens of millions of dollars in terms of true cost to them based on the conversations i've had with people in and around this situation. this all follows the arrest of two black men last month for sitting -- they were arrested for sitting in a philadelphia starbucks waiting for a business associate to join them the men were asked to leave after one was denied access to a bathroom of course starbucks also changing its policies around who's allowed inside the stores really trying to open them up even more. if you have a moment, guys, and i see they've now released it.

there's a documentary video that they showed employees yesterday. it's about an eight-minute-long short. >> internally produced >> they actually had an african-american documentarian do it. it's extraordinary to watch. and it's controversial adp about to hit the tape. let's go to scott least man. >> 178,000 trying to estimate what private sector job growth is in the nation says may payrolls are up 178,000. big revision from the prior month. but looking at the nay number, 64,000 on goods. 114,000 on services. that's pretty good on the goods number and it's more or less in line for friday i wouldn't expect too many upward revisions let's take a deeper dive here. look at jobs by size

you can see here 38,000 small businesses, 84,000 medium, and 56,000 large you're getting good distribution across business size here. then looking down into what industry saw the job growth 39,000 for construction, that's a strong number. it's always there towards the top. it's a big growth area for jobs. manufacturing, that's a strong number 14,000 for manufacturing trade transport interesting number down. this is an area where we all know they need a lot of trade and transport workers. >> what is trade and transport does it count uber drivers >> it may. what i think is interesting is one of the -- you see that adp payroll growth is declined a bit, maybe because they can't find people to fill the jobs that are out there i know somebody who knows more about this than i do >> who would that be >> that would be mark zandi. he joins us now. >> i see what you did. >> mark, i'm setting you up on

this are we on a downward decline here on job growth because we can't find the workers. >> yeah. i think so the peak in job growth was actually 2015 we created 225,000 jobs per month on average. 2016 we were down to 195,000 last year 185,000. even with all the fiscal stimulus this year, we'd be lucky to get 185,000 i think it's because we can't -- businesses just can't fill the open positions which are now at a record high. this lack of labor is now becoming a binding constraint on growth >> and what about this trade transport area which saw the decline? we keep hearing all the stories. they need truckers trucking costs are going up. transport costs are going up is that because they can't find workers in that sector >> you know, that's retail trade. that's amazon killing the brick and mortar guys. there is one sector of the economy that's struggling with

lack of demand for labor that's brick and mortar retailer they're getting crushed. >> just to be clear, those jobs end up as transport jobs or warehouse jobs and they're not counted in the retail sector so the extent amazon destroys a job of a clerk, they create maybe not one for one but some number of jobs in warehouse and transportation >> yeah, correct but i don't think it's one for one. these are productivity gains we're getting. the retail sector, the brick and mortar retail sector hasn't been creating jobs for a year that's continuing. >> mark, let's move on now let's talk about wages if the job market is so tight such as they can't find workers. we see some data that there's wage growth and pressure out there. some data says it's not really happening. >> yeah. it's accelerated look there's lots of different measures of wages. we're going to get one on friday that happens to be the poorest measure of wage growth

the employment cost index, this is a quarterly series that comes out from the bureau of labor and statistics it is a mix of the jobs moving around in the economy. you look at wage and salary growth from the employment cost index. last quarter q1 it was 2.9% which is double what it was three, four years ago. so wage growth is accelerating one important point, though. the level of wage growth has not gone back to where we have seen it historically because the underlying level of productivity growth in the economy is much lower. at the end of the day, workers' wages, their growth in wages is tied to the growth in their productivity if underlie productivity growth is slower than it has been historically, so will their wage growth. >> if we have wage growth above theproductivity level, then that's something the federal reserve would consider inflationary. >> that's right. and i would expect that to start moving higher. obviously that cuts into profit

margins, corporate profitability, and ultimately it induces businesses to raise prices so we're now at the leading edge of, in my view, pricepressure with more inflation coming into the economy. >> let me ask you this everyone has been talking about this today do you think the fed will have to slow down its planned interest rate hikes based on anything that might develop out of italy or the european union >> only if it becomes armaged n armageddon only if it looks like this is really going to go down the path of a euro crackup. but i don't think so we're seeing a lot of volatility in financial markets, but, you know, you cut through the volatility and stock prices are still as close to high as they've ever been. asset markets broadly are still

highly valued. you know, you can construct scenarios, but it would be something on the tail of the distribution of scenarios i think would get the fed to stop or slow down their rate hikes. they're focused on unemployment number one inflation and inflation expectations number two and three. and all those i think are starting to signal they have to normalize rates more quickly >> ann said it's time to go. >> so you're actually not saying anything >> i like to follow the rules every now and then >> that's what i think >> especially when ann asks. >> hey, siri what happened to steve leisman >> i was on vacation i'm mellow >> thanks for joining us, mark and steve. >> i'll be back for the adp number >> nine minutes. >> don't go anywhere then. when we come back, another smashing year on broadway. cke big winners when we come ba the governor has declared a winter weather emergency... extreme risk of burst pipes and water damage...

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welcome back to "squawk box. futures right now indicating that your money should rebound a bit from yesterday's big slide again, not all of what we lost yesterday, but pretty good dow implied open of 175 points the nasdaq and s&p 500 also indicating that we should go up. you need to watch bond yields as well the last couple of weeks everybody said we're going to

3.5%, 4% on bond yields. we're back below 3%. it will probably creep up today i'm guessing based on where the futures are for equities but we'll have to wait and see, andrew in some media news this morning, 21st century fox scheduling a july 10th special meeting. the company's board recommending that shareholders approve that deal nbc universal parent company comcast has said it's considering and preparing an offer for the fox businesses that fox has agreed to sell to disney in its release today, fox says it may postpone or adjourn the meeting if comcast does make a formal offer of course we're all waiting on what's going to happen on or before june 12th when we should be hearing about how a judge is going to rule on the at&t/time warner transaction if that deal is allowed to go forward, the expectation is that comcast would then come forward with its bid for 21st century fox. all right. broadway just setting a box

office record with a little assistance from lynn manuel miranda and bruce springsteen. the shows help bring in $1.7 billion bounty over the past year that's according to the broadway league among the factors that drove the record season, rising demands and even faster rising ticket prices the average ticket price for "springsteen" on broadway is $513 and that's if you go through the box office if the people at the airports seem better nationwide, there's a reason according to a new survey, air travelers are actually more satisfied with north american airlines than in the past. we're laughing up here the survey found passengers' satisfaction with the airlines rose 6% from a year earlier from 726 albeit on a 1,000 point scale.

effectively they got a 67 which is a "c" to maybe c-plus alaska airlines scoring highest. followed by delta. guys, is this a case where like an economic expectation, that the expectation was so low that any beat is a win? >> that's true i mean -- and i hate to bring up an old argument we've had on this thing, but it's a monopoly. they operate as if they're a monopoly they don't care much -- some care a little bit about customer service. a lot don't. >> we got to go. coming up, another economic report about to hit the tape the adp numbers about to hit its multi-cloud complexity creating friction... and slowing innovation. with software-defined solutions, like hpe onesphere, you can tame the it monster.

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we are going to be much more skilled and prepared to mitigate that emergency for all concerned. the things we do every single day that puts ourselves in harm's way, and to have a partner that is so skilled at what they do is indispensable, and i couldn't ask for a better partner. welcome back to "squawk box. breaking news. first quarter gdp, up 0.2% of course it's not near 3% but then again, we all know there's an averaging process in the way the economy churns out gdp. in terms of personal consumption, it was up 1%. that's a bit on the light side following 1.1% and if we look at the price index, 1.9%.

0.1% lighter than our last look. and the personal consumption 2.3% that's 0.2% lighter than our last look. trade balance for the month of april. 68$68.2 billion. that's a deficit not a huge change there. wholesale inventories were unchanged. in terms of how all this impacted the market, the dollar index still down about a half a cent 10-year note yield at 2.85%. italian 10-year yield dropping and of course we're going to continue to monitor all that going into the dollar index, euro, and italian politics brian, back to you >> you got to end it with italian politics thanks steve leisman still with us here all right. 0.1% miss. will this bring out the course

of the economy slowing crowd >> no, it won't. the first quarter is the weaker of the four quarters is enga engrained in the market psychological now. they give it a pass. this could go on for years right? because the work i did sort of establishing the first quarter was the weaker quarter was the product of crunching 30 years of data there was a five-year span we won't know if the first quarter is back and well adjusted for many years. but there were some interesting changes in it. real quickly, consumer spending down just a 1% number for consumer spending. that was very weak in the first quarter. business investment. 9.2% so that was very strong. >> that's the number that's been confounding people we thought that people were feeling pretty confident about things, but consumer spending has been weaker than anticipated. what's going on?

>> durable goods down 2.6% i think that was autos i'd have to go back and check. services up 1.8% that's just part of the weakness in the first quarter housing investment revised down. the trade deficit is going to be revised up so some of the changes, they all equal about nothing. just 0.1% as brian said. interesting changes inside i want to show you where we are for the second quarter it averages out pretty nicely here we are tracking on our cnbc rapid update 3.4% for the current quarter. so you all can do the math there. what is that 5.6%? so we're going to be, you know, 2.5% range that's where we are for the quarter right now. i think it's worth talking quickly about the federal reserve. i want to show you the dramatic change in probabilities from last week to this week not that much in june, although it is down from a 90% range down to just 80% now probability for

june look what's happened in september. we're below the 50% line for september now. >> in terms of thinking that's -- >> that second rate hike one's already done two, you're right. third. the third. and then the probability of the fourth down to 19% i've seen that contract trade as high as i think 41%, 42% probability for the fourth hike. i think that's more extreme than i think the fed is thinking. i don't think it dramatically changes the medium term outlook for rates. i think there is an effect i don't think it's as dramatic as the market is put on it >> steve, thank you. great to see you let's talk more about what's been happening with the markets. the global markets selling off sharply on fears of italy political instability. joining us is co-portfolio manager of european funds. katrina, we have been asking

everyone all morning what this mess in italy means at this point beyond italy and beyond europe what do you think? >> italian politics is as messy as a bowl of spaghetti, isn't it if you look at what's happening and the risk we're looking at is the risk of contagion. here you've got the ecb has now tools in order to prevent moving outside of italy you have a situation think about it you look at all those movies where you have that one last hotel room left and you've got two strangers go in. in this case, you've got donald trump and bernie sanders effectively. no one wants to sleep on the couch. and they're both in bed together and they make very strange bedfellows >> you're talking about in italy. >> in italy. you've got the equivalent of a bernie sanders on the left looking for minimum k in and you've got on the right, people wanting tax reform. they've formed a coalition and they put that forward to the president and the president used his constitutional powers to

move that forward. it was in response to the fact they had an economics minister that was a real radical euro skeptic. brussels doesn't want that germany doesn't want that. and frankly we don't want that we don't want to see the euro region broken up >> the selloff we saw yesterday has been followed by the stocks picking up in italy. across most of europe and here in the united states was this an overreaction yesterday? or do you think there's much more to come >> i think what we're seeing is people are reacting to what's happening step by step so we had the meeting yesterday. but that did not happen. we've also had them backing down from the idea of impeaching the president for, you know, rejecting the government so i think that you've got people calming down somewhat, but obviously the situation is still fairly messy and also if this coalition which still could come to power, if you look at some of the policies, markets had already moved ahead of what happened on

sund sunday so you've already had some of that contagion into the market going into the weekend i think that you have a lessening of that pressure we're looking at it for an opportunity. >> is this an opportunity right now? or do you want to see more of a decline? >> carnage >> i wouldn't use the word carnage. the italian market is half energy and financials. so if you're going to buy the italian market, you need to have a strong view on that. on the energy side, obviously, you need to look at where oil prices and everything is we like various names. we like something like an nl in italy. >> energy company. >> yes that is an energy company. it's more in terms of the electricity side of things. >> isn't deutsche bank a bigger systemic threat? i know they're down 25% in 30 days >> yes >> deutsche bank is one of the world's -- it's not a -- this is a giant global bank whose shares have been decimated. >> they have been decimated.

i think what you're looking at is a bank that has got a new ceo in place they're looking to change the company and to reform it and get themselves out i think obviously the shares have been pummelled or have gone down significantly because you're looking at the prospects of people have been talking about an equity raise. they don't necessarily need to do that. but obviously once the market starts talking about it, the stock reacts i think you can look over at the italian banks. obviously the stock prices have gone down because they have large holdings of italian sovereigns and the yields on that have gone up and the prices have gone down that's been what's impacting the italian banks. >> katrina, thank you for coming in >> thank you coming up, we're going to talk tech. if you are a company trying to protect your data, our next guest is your guy. he's going to be joining us on set when "squawk box" returns.

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good morning, everybody. welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square among the stories front and center this morning, adp says the u.s. economy added 178,000 new private sector jobs this month. that's slightly below the consensus of 180,000 adp revised april to 163,000 a company best known for operating on the road is sticking its toe in the water. recreational vehicle maker

polaris is buying privately held boat holdings. it's an all cash deal valued at $805 million panasonic says it's seeking to develop new automative batteries that don't use cobalt. cobalt prices have been soaring in recent months as more electric vehicles are built. it's a trend that could eventually lead to shortages of cobalt businesses all over the world are shifting company policy to work with data protection and privacy joining us with steps businesses can take to secure their software and data, mike gregoire he is the ceo of ca technologies before we get into it, what do you think of this policy itself? >> you know, it's a good start when you take a look at the public/private cooperation, this is the first time that i've actually seen it work to a certain degree when that ruling first came out about four years ago and we were

working in brussels, it was a lot more draconian the fact of the matter is they've gotten more wind in their sales because if you see all of the breaches and how the data has been used, they're more right than wrong and their fears have been shown public that this is why they want to have something that's a little bit more focused. now, on the other hand, it's a very expensive way to solve this problem. and the thing that i am most concerned about, businesses will become very agile. we move very quickly we try, we fail, we fix. government policy does not work that way when you get a policy like dodd/frank or like gdpr, if it's not quite right, the opportunity to fix it quickly is very, very difficult. >> one thing we've heard from some people watching this is big companies have the time and the money and the ability to get ready for this that it might stifle competition and hurt smaller companies from being able to compete. >> that was a big article on the weekend. and most of the weekend press was this whole idea was to open

up competition, be more transparent, and not, you know, make the incumbents more powerful when you take a look at dodd/frank with the big banks and take a look at gdpr with the big internet companies, you know, we do have the resources and the capabilities to comply and a smaller company, you know, just doesn't have the ability to do that. and the finds are, does the crime fit the punishment it's hard to argue you're only as strong as the weakest link in the chain. you make one little mistake that could seem innocuous and not being done purposely, you lose all of your -- you know, you lose your whole business and all your shareholders and investors. >> what do you think the chances that this law or something even remotely similar gets enacted here in the united states? >> is it not enacted in the united states anyways? most of us are global companies. we have to comply with it. we also make tools to help customers deal with the way that they have to comply with it and

provide opportunities f >> unless you decide you're going implement all of these things here and some companies have because it's easier to do it across the board but other companies haven't. >> i think you're going to see, you know, we're pendulum swingers we're going to do what's required by law and we're going to do what's easiest for us to maintain at the end of the day, if you're writing code, you want to write it once, use it many and if you have one set of code that you're using to protect customers in europe, and by the way, you're going to have the same issue in australia. they have a similar point of view to europe on this so i do think it's going to tilt more towards what gdp looks like you're not going to want to run separate processes and systems >> to follow up on what andrew said, it goes to the argument we've been having with facebook. when it comes to software, do borders even matter? >> 22% of gdp on a global basis

is primarily digital that's why you see so many ceos and government officials especially in the united states getting amped up over the global trade agreements because if we don't have, you know, rules of law we're driving to the lowest common denominator, it's going to stifle overall economic growth i think we can be smarter about that >> what are your clients saying about the state of digital regulation right now obviously this is not -- i don't believe we're in the eighth inning we may be in the first inning or even pregame what do you think about where we are in terms of regulating the digital sphere and also what your clients are telling you >> well, the clients are absolutely trying to move into the digital sphere so they're very naive in a lot of circumstances of taking their business from analog to digital. it's a whole net new set of risks. boards are trying to understand what is their responsibility to keep the data and the trading that they do over a nedigital

medium that they have to support. so we are clearly in the very early days of this and i would hope that a lot of the different governance bodies we have, they're weighing in on this that jamie dimon has been weighing in on this with the brt. you're seeing us lobby on the hill and in brussels to get better public/private cooperation so we seek to understand how this is going to evolve so we don't end up with a regulation that is inappropriate and can't be changed over time because whatever we think today, we're going to have to be flexible enough to understand that we're going to learn more and try to do more and have the ability to do that down the road >> while we have you here, just want to talk about your restructuring which you announced earlier this month in terms of may 2nd is when you announced you were going to do this there's about 800 people that are going to be laid off in all this what does this mean in terms of what the total count will look

like when it's done? >> it'll probably be the same over time. >> what do you mean it'll probably be the same over time >> this was a whole reshaping of skil skills and also we are advocates of agile. you have to develop software together to get the geographic locations and have face-to-face interactions so we took a look at our total employee population. took a look at where they're geographicicly dispersed in skill sets and made some difficult decisions in order for us to grow the way the company needs to operate and the kind of skills we need this was a, you know, one-time event. i've been ceo for five years we made the difficult decision to -- >> so you're going to lose 800 jobs how far are you in that process right now? >> we're about 500 of the way through. >> just in the past two weeks then >> yeah. >> wow those must have been some hard conversations. >> two weeks -- over the last two weeks and 18 months of planning so this is not something we treat lightly. our culture is to invest in our

people you never want to be in a situation where you need to do that, but if you think of the other 12,000 people we have in the company and the expectations of the company to move forward, you have to protect those people as well. >> but if we're having this conversation is year from now, you think you're going to have the same total head count? >> pretty much pretty much. >> so you're going to be hiring another 800 people >> we've budgeted 650 based on, you know, that's not an exact science. it would be plus or minus 10%. >> okay. >> you're based in new york, actually, 520 madison. one of the few software companies it is, are you going to stay in new york? >> we are staying in new york. >> is that harder and harder to do these days? >> it's not -- you know, it's not the easiest place to get in and out of as you well know, but there is talent here in new york for specialized skills we're very enthused with some of our other locations. boston's on fire we have a thousand engineers in one location in boston primarily working on security. so getting that whole security

portfolio together under one roof where we can really provide a great work environment, i think is going to drive up our productivity, enhance products for our customers. >> michael, thank you. >> thank you good to see you. all right. when we come back, from the newk stock exchange here are the futures now as we head to break. they're up indicating a jump from 1 athop60t e en we're back after this. believe . she believes in research. it can take more than 10 years to develop a single medication. and only 1 in 10,000 ever make it to market. but what if ai could find connections faster. to help this researcher discover new treatments. that's why she's working with watson. it's a smart way to find new hope, which really can't wait. ♪ ♪ in 1948... [sfx: bottle sounds on conveyor] one bottle at a time. today, we produce nearly 20 million cases a year.

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we can see what is happening in the market today is a huge investment by our customers. the economy is ripping and you can see that customers are going through this massive digital transformation and every digital transformation starts and ends with the customer. >> that was sales force's ceo talking about the company's policy we want to get down to the man who interviewed him. jim cramer. >> wow you're talking about $20 billion in total sales and there's a new name he has for sales that haven't been recorded. short term rather amazing. and i think what is amazing who are the fabric of the new customers. the department of agriculture.

the va i mean, i used to think it had to be profit now it's not profit. it's government agency i don't know andrew, to me it's almost like they're just discovering these organizations that they, too, have to be part of the cloud and it's big you never saw these new customers come in. >> what is the fair way to value this company, at this point? >> i think you have to value it on cash flow, which is extraordinary. and, yes, you have to value it on the amount of actual sales looking at more than just the sales of this year because it's rate of the sales and i think this one makes sense. up $6. because it's got the fastest grower in the industry so you want to give it the highest. it doesn't make sense to evaluate on earnings per share it's a 60 times earnings no one wants to pay that. >> 30 seconds on italy and what

we're supposed to do. >>well, when they did the auction it turns out the interest rates were higher than where they got the auction done. there was a lot of demand for the auction. i think government is hard to value. they don't have a government but the fact is that was a price yesterday. it looks like the dow was an over reaction. >> okay. jim cramer good to see you. >> i like the show this morning. >> thank you. >> do they go to bed now and get up again later what do they do? >> they slept in, jim. i got up at 2:30 >> i haven't slept i got news for you i watch you every day and you tell the guests it's really early but it's late for you. >> how is your garden, jim >> all planted and ready

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financials fell over 3% on tuesday. after a similar one-day drop, the group tends to rebound up 1.5% two weeks later. all right. welcome back, everybody. a final check on the markets the futures this morning have been in the green all morning long we're not at the highest but not the lowest the dow futures indicated up 157 points after the dow fell by close to 400 yesterday the s&p futures up by 13 the nasdaq up by 29. we've been watching a rebound in most of europe, too. italy the stocks up by over 1.5. the ftse up. the cac is the only one bucking the trend. in france stocks are down by about .33. then you have oil prices slightly higher yesterday. up about 35 cents to $67.09.

the ten-year put under pressure yesterday. the dollar which was higher yesterday it looks like now the dollar is against the euro it's up against the yen and down against the pound. brian, thank you for being with us. >> thank you. >> nice to see you. >> i'll see you tomorrow make sure you join us. "squawk on the street" begins now. ♪ welcome to "squawk on the street." i'm david faber with jim cramer. we're live from the new york stock exchange carl quintanilla is in california a look at futures this morning of course, coming off a bad day, at least a yearlong. the stock market you can see we're set up for what appear