good morning. welcome to "squawk box" here on cnbc. i'm andrew ross sorkin with joe kernen. becky has some -- enjoy something good time off today. we'll see her soon. our guest host, rebecca patterson, chief investment officer, we'll talk to her about the markets in a moment. first, let's get you up to speed. joe just mentioned alcoa, the largest aluminum produce, posting better than expected earnings and the company saying it still sees global demand for aluminum products growing 7% this year driven by the aerospace and commercial transportation sectors. the ceo on closing bell yesterday. >> there are some exciting opportunities in the auto, aerospace, consumer electronics are some of those. we come down on the upstream business, which we can control the aluminum price. what we can control is where we are on the cost curve. we're copping doming down, brin

saudi arabia online, the lowest cost facility on this planet. and on top of it, there are legacy issues like the one that we are removing this quarter, trying to remove this quarter, with a new initiations. >> we also have global news today. china consumer inflation picking up more than expected in june. but deflation remains for a 16th straight month. country's central bank is seen keeping policy largely neutral in the near term as a result of that. here say look at the major asian markets today. the nikkei recouping all of the previous day's decline, shy of a new six-week high. there is a boj policy meeting there tomorrow. two reports to note, at 7:30 eastern time, the nfi survey of small business sentiment, we'll get that. at 10:00, the labor department will release its survey of job openings and labor turnover in may. joe? >> andrew. >> yes, sir. >> how are you? >> how do you solve a problem like alcoa? i guess it is maria, though. a $7 stock, $8 billion market

cap. and i like kline felt. he acknowledges we can't do anything, nothing to do with us. just aluminum prices. >> 7% you'll take, right? >> right. but, yeah, but it is a dow component. do you keep it in there because it is -- >> you saw who is going in, not into the dow but the other index, oracle getting kicked out and tesla going in. >> why is oracle getting kicked out? >> i don't know. >> oracle is being kicked out. >> oracle was -- i'll do a little -- >> moving to the nyse. that makes sense. >> tesla is coming in. did you see that? >> yeah, it is weird. the highest percentage of government involvement of any company, right? but i wonder, alcoa, how much we still get from that. >> they make planes out of composite -- >> that's true too. like sellgene, $8 billion and

can't control what happens, just control the cost. so it is just weird. it is the first -- >> who would you like to put in? >> i can think of a lot of different people. i would start with april. >> if you had apple, what would you -- >> i don't know. the market cap is 50 times the size. it seems more important to our economy. in corporate news, a number of headliners on the never-ending dell story. glass lewis and eagan jones are joining iss in recommending that dell shareholders vote for the proposed sale transaction. it is 13.65 a share in cash. dell shareholder -- what the heck is that, andrew? pze pzena. >> penza. >> because pzena would be different. >> it would. >> it will vote against the buyout offer calling it unreasonable. who is penza? some guy? yesterday -- it was yesterday.

southeastern and carl icahn, that could be anything, had urged led -- i'm sorry, dell stockholders to vote against the transaction. all things d reports that microsoft will announce a division restructure on thursday. steve balmer also is said to want to alter the structure of microsoft segment reporting. and barnes & noble's ceo resigned. news comes amid a slump in nook sales. the book sales. the bookstore chain failed to compete against the like of amazon, apple, google in the ereader and the tablet market. you have a nook. >> i have a kindle and an ipad. >> that's different. >> you should be very worried about this situation as a book author. i don't know if you read the piece in the new york times earlier this week about how amazon is starting to raise prices on books. >> oh. >> not good if you're trying to sell your book -- >> not trying to sell anything,

not really. not at this point. you still -- you still -- how often do you get a check? >> i think it is quarterly. maybe quarterly or -- half -- every six months. >> they're small now, aren't they? still -- >> not bad. it is good for the family. >> really? >> not -- >> you use it for tips for the people that work for you or -- >> you can -- >> you're not going to say no, that's not mine. >> that's a good book to buy, your teacher said what? >> you have my -- >> blake kernen, available on -- >> blog today about entrepreneurs. >> how much are they charging? >> in the huffington post. >> let me try again. see if you can -- blake blogged today in the huffington po post about entrepreneurial ship where were you trying to go is this. >> trying to sell her book. >> we're like two clock radios sometimes, talking to one

another, both turned on loud and poor rebecca is sitting here going -- do i get -- you don't get paid enough. >> it is good. i get to wake up slowly while you banter and come into the news. >> i was supposed to -- i promised that you would be talking about markets today. >> okay. i'd like to. >> i know. when we do talk about that, if you had to pick one market since you looked at so many different ones and all unrelated, which ones would you look at today? >> i think the ten-year yield is driving everything now. today i would stay focused on the bond market. if i'm taking a look over the next six months, one-year, i'm going to be focused on emerging market equities. i think the love affair with bricks for now is over. >> someone yesterday said it is not over j. >> jim o'neil. >> jim o'neil, the man who made the term bricks. >> yeah. >> he's written a few books. >> he has a book.

a couple of books. >> yeah. i'm not saying that -- gold will find a floor eventually. people will always want to have something for the unknown unknowns, but with rising interest rates -- >> that doesn't help me. the floor could be 700. >> i don't think we'll get that far. not near term. >> it is hard to tell. yesterday, whenever i see cnbc talking about it, the thing at the bottom said, has gold found a bottom? i would put at the bottom, how low can gold go. that would be my thing. and that's the way we look at things. on apple, on the way apple down from 800 to 390 it was, you know, 700, has it hit a bottom. is this the bottom? is the bottom? 500, every time we reported on it, it was is this a bottom instead of how low can it go. >> let me tell you what i'm doing, that's rather than me pontificating, we have about 1%, under 1% allocation of gold in our client's portfolios,

smallest we have had in years. we keep a residual there as part of the tail risk assets we own in aggregate. i don't think we take it to zero. i'm not looking to add it at these price levels. at the margin, it could go down further. >> what are you locking at over there? we'll talk about banking news? >> if you must. >> regulators are expected to propose stricter rules for banks. we're going to be talking to mr. buvet later. they want eight of the nation's largest banks to meet a tougher measure of health to reduce the threat that they will pose to the financial system. ca kate kelly reported yesterday, they're expected to raise the ratio from 5% -- or 2.5% to 3%. that could have a pretty interesting impact. tony fratto and others pushing back as you would imagine, arguing this will take credit out of the system at a time when

things are fragile already. i don't know if you agree or degr disagree. >> it would be a pity if that's the case. that's one of the things we need to see to get the economy to have more traction, more breadth than just homes and autos and the consumer. so if that's an unintended consequence of them trying to rein in risk, that would be a shame. >> do you buy it? or do you think banks are saying, look, the only time we make money is when we're leveraged. the more leverage you take out of the system, the less money we make? that's the business. >> right. the question is what is the ideal amount of leverage? 5% the magic number, 3%. i haven't seen -- >> if you want a banking story, this is the british banking story is more interesting, don't you think? >> the wall street reporting on the front page there? >> you wanted to -- >> can you explain to the audience what is on the front page?

>> i'll read it right now. you've been wanting to do this for a while. senior bankers who are reckless in taking risks could face prison terms in the uk under a plan -- >> how do they define risk? >> that's a good question. shakespeare kill the -- no, that's kill the lawyers. what about this? >> we have tlilawyers that watc this program. >> i know. and you're from a law family. i am too, when i think about it. bankers, people have hated banks since the beginning of the country. but fdr was very outspoken about this. >> what is supposed to happen is the bank goes out of business and shareholders lose all their money and you lose your job. are you supposed to go and get a big strapping cell mate as your punishment for risk? taking up risk? >> that's the big. >> he certain levels of risk taking, they go to jail already

in the u.s. >> not -- >> not all the time, but -- >> what's criminal and what's not and what intent is and whether you're -- if you're defrauding investors or customers, that's different. if this is just -- >> who decides? you give someone a business loan that doesn't work out it was risky. let's say for solar energy. >> the biggest risk the banks take, which nobody likes to admit, is the loan book. that's the -- mortgages, businesses, loans to businesses -- that's the real risk. all this other stuff, you know, is risky. it is a whole different level in terms of magnitude. >> what about risk of other types of companies, other sectors of the economy that are taking risk with investments or different expansion plans. >> should the obama officials that lent the half a billion to -- should they go to jail? >> is that risky or reckless? >> michelle obama is now pushing

greek yogurt. i eat it every day. she wants people to eat greek yogurt. >> specifically? >> in the schools now, greek yogurt for everybody. chibani, a big seller on this, still a private company. garies agay genzler is layi proposals for swap rules. the new rules would require banks operating abroad to hold more capital. some commissioners fear this would hurt the competitiveness of u.s. banks. there has been a big debate going on inside the cftc including bart chilten who has come on about this. and big questions about the future of gary gensler and if he'll remain the head of the firm. the dow closed at 15,224. indicated higher this morning. we'll check on the futures. so we have digested that move in the ten-year and we're almost back to -- >> it is working.

it is working. >> what? we always said the near term it would be rocky and then long term maybe -- >> when do we say ben bernanke, he's done this right, we have been complaining. >> we're not going to know -- >> years from now. >> hasn't done any tapering yet. >> just getting warmed up. >> 4 trillion -- >> we're handling. >> it is working this week. it is going to be a bumpy summer. we have speeches, we have more meetings, we have to figure out who the next fed chairman is, that's -- >> what do you think, by the way, our friend mm, morning money, did you see the -- >> isn't cnbc more of an expert than split cpolitico on economi matters. what is ben saying today? >> that story we read yesterday which we did read about larry summers being a real possibility is actually a real possibility,

meaning we sort of, i think, pew p pooh-poohed it a little bit. >> you did a week ago, it was out last week, wasn't it? we talked about it more so last week, that larry summers -- >> how do you think his confirmation would go? >> i think it would be a tough one. i like him personally a lot, but i think it would be a tough, tough road. >> by the way. it was a tough road for ben bernanke the second round. tim geithner would face the same thing. >> he's making $400,000 for giving two speeches. >> doing just fine. >> yelin, i think she would have the easiest time in. >> that's one factor. >> don't you think the gop would try to block her nomination? >> yelin for being too dovish? i don't think they could. i think larry would have a harder time. >> he height comight come on. >> he would come on "squawk".

>> we consider him a friend of the show. i don't know if it would be good for the country, but -- >> good for you. >> am i doing this? okay. it is good for me. joe kernen. oil board. it used to be that guys like fisher and others pointed to oil going up for no reason as one of the negative effects of qe. and now we don't talk about that anymore. somehow we're at 103. the economy isn't horrible, obviously. but europe, it is not like europe is going gangbusters, not like china looks great. and here we are stubbornly above 103 and you wonder what some of the markets -- i don't know how it ends. it doesn't have to be the train wreck with qe doesn't have to be inflation. the train wreck could be trying to unwind and something else happens. i'm not sure what it would be or how it happened. people like krugman say everybody has been wrong, qe has been negative, no inflation, we're not out of this yet and nobody knows how it will turn out. >> i'm going to beat my dead horse with emerging markets.

think about a stronger dollar, think about rising yields in the u.s. and how people are taking money out of emerging market debt because the carry isn't as interesting. growth is slow. because their currencies are getting weaker, brazil will raise rates this week. turkey tightens. we think about how big em is today. when clients ask me what keeps you up at night, this is one. what could make this go badly wrong? if you had enough growth and political problems combined in a number of big enough emerging market companies and aggregate that could -- >> half of them are dependent, mostly on china. how many are dependent mostly on china? >> all the commodity exporters and all the asian region. >> that hasn't gotten as big as some thought it could. >> i think china will get through this. they want to rebalance and slow down growth a little bit. >> rising rates here? >> you get the stronger dollar with that too and lower

commodities. that trifecta that together i think are creating some pain for emerging markets. if it got bad enough that could feed through back into the developed markets and certainly as something we're going to hear a lot about during earnings season. >> okay. want to go west? >> time for the global markets report where ross westgate is in london. good morning, ross. good a good name there. i like it. my middle one. >> i like yours, good morning to you. similar gains to yesterday. advancers outpaced decliners here by a ratio of 8 to 1. not quite up at the session. getting back down towards the session low. ftse yesterday up about a percent. earlier on we were repeating that gain. little below at the moment. just up .9, the cac up two-thirds. ftse up about a third. look at the sectors earlier on today, no sectors in negative

resources. basic resources leading the way. this is sectors. resources still up this morning. inflation data out of china stronger than expected for the month of june. 2.7%. looking for 2.5. a lot of that coming through in food prices. producer prices actually fell, so not quite the worry we might have thought previously. just telecoms fairly flat at the moment. lvmh one stock in focus today. the french luxury goods group, up 2.2%. they announced they're spending $2 billion to buy loro piana. not often you get stock going up when it makes a buy. silvio ferragamo up 1.68%. we're getting a phrase that may be made in italy but not owned in italy as a lot of fashion houses coming under the spotlight as a result of that deal as well.

greece has got their money. we'll have to see how they meet the conditions. that did help greek, lower today. spanish yields, a little higher, yielding 4.73%. but they have got their money and portuguese government is holding firm as well at the moment. currency markets today fairly steady, posting nonfarm payrolls. eyes on sterling. we had for the first time today weaker than expected data out of the uk. first time in a while coming in slightly less than we thought. that's where we stand in europe. >> do you want to spend your poor bankers to prison if they take too much risk? >> how do you measure reckless? >> i don't know. >> what is the difference between reckless and incompetent? >> i don't know. >> what is the answer? what is going to happen, ross? >> i don't think it is going to get into law because of that

particular issue. >> doesn't anyone ever think about these things before they start -- you're so -- you fly off half cocked over there in that country sometimes. i watch the way -- >> they like to float -- no, politicians like to float ideas, right, they like to float them out to see what the reception is and then make a decision. >> i watch those two houses you have and we have two also that are starkly different, but it is like a fight every day in the house of commons, isn't there? you need to get a little more civilized. >> it is an adversarial chamber, two sides facing each other and get joke and all that kind of stuff. on the bankers side, they have also talked about whether they should put the burden of proof on the banker to prove that he wasn't reckless. not sure that will happen. that takes away the innocence until proven guilty. >> and they don't want to do this in any other industry, right?

>> no, just in banking. the other question is, on the one side, if you are in danger of going to prison because you're reckless, what does that do to your risk strategy? >> what if you actually do something to -- do we save torture for, like, madoff? if you got reckless, they make the wrong move, they go to prison, what do you do for actual malfeasance and fraud? it is hardly going to encourage you to expand your loan book, which is funny enough, exactly what politicians bang on about all the time. >> ross dude, you still -- i was just there. you still got that stuff in the tower of london. not being used. people are milling by, looking at it. it is ready to go. really. the iron maiden, there is a lot of things that are ready to go right in that place. right? >> the tower has been underused

for too long, joe. >> right? you got the facilities sitting there idle. all right, we're going to -- >> right in the city. you're right. it is the perfect position. >> i thought that was crazy. thank you. thank him. and what's coming up. >> thank you, ross. coming up, could there be a market storm brewing in the form of quarterly results? we'll get a forecast on that. a real storm developing in the caribbean and could be headed for florida. say hello to chantel. "squawk box" coming right back.

we have a tropical storm developing, let's get the national forecast from the weather channel's alex wallace. it is -- it is july 9th or something. is that where we are? we're on c. is that normal? slow? where are sfwwe? >> running maybe one or two storms above normal at this point. it is not unheard of, but certainly a quick start to things. three named storms at this point. we'll talk about chantel in a second. update on the northeast, unsettled, a storm system

hanging around that will keep us a little showery and stormy for the day. best chances back across the interior areas of the northeast. but even up and down 95, the threat for storms in place there. into the south, just a very muggy humid time and with all that moisture in the atmosphere, we get to the afternoons, those storms will begin to pop up. nothing organized, but keep that umbrella handy. made it in places like atlanta, back towards charlotte and even around birmingham. then as we track our way to the middle of the country, heat the story building the ridge of high pressure here. triple digit numbers pretty widespread including down around dallas. as you mentioned, our tropical storm is getting close to the lesser antilles, to the east of barbados and moving to the west/northwest at 26 miles per hour. projected path as we head through time, moving to the caribbean, impacting the island of hispaniola and towards the

end of the week, palbahamas and maybe by the weekend, parts of the southeast coast may have to deal with chantal. >> 2005 was really active. we were in es and fs and got to gs in july. but that was one of the most active i think in history. we were on dennis on july 5th already. we're on chantal. so how big -- what is the worst case snare yes fcenario for thi? >> the system hanging out here and slowing down and dumping a lot of rain. that would be the worst case. it already is very wet across florida and the northeast. we're not thinking this is going to blow up into a big, powerful wind maker, but rain. >> last time it hit, like eight years or something. do you know? >> off the top of my head, can't quite recall. a while, though.

>> doesn't look -- just a tropical storm at this point. >> right, right. >> let's get a check on the markets. joining us is surat seth. and our guest host, rebecca patterson. you're called the principal. what is a higher or lower title than a principal? >> principal means you're the owner of the company. if you're a partner -- can't call yourself a partner if you're an s-corp. a little term we use. principal is a -- >> interesting. i knew it was -- i didn't know if that meant you were founder and owner. doesn't matter. let's talk earnings. we had alcoa, some big ones coming up, yum later this week, jpmorgan, wells later this week and then the train truly leaves the station. your expectation for what we're going to see? >> i think we'll see earnings come down a bit. the expectations are flat, we're

not going to -- >> we'll be honest and say sandbags. >> i think the companies that going to sandbag are going to get hurt. the market is looking for growth. if you're not going to show top line growth, you have three years to really redo your balance sheets, interest rates have been low. you can invest in different areas. if you didn't do that and now still making excuses, commodity prices have come down. we know the dollar has gone up and you'll get hurt and talking about emerging markets and international. if you can't show you have the products, the revenue growth and just financial reengineering, you'll get hurt and your multiple will -- >> three weeks from now, if you came back on the program, to look back at what's just happen ed, will we be happy with the earnings picture? will we say ben bernanke, boy, can he taper? the employment picture is better than what we thought? >> i think it will be uneven around sectors. consumer staples, utilities get hurt because they're already at

much higher multiples than they should be. commodity prices come down, but won't show revenue growth. you'll see cyclicals like autos and industrials showing the next two to three years will be much better. semiconductors depending where you are, industrial sector, you have to pick your spots. and then you got say, these are the areas i want to be in. i don't want to be in areas that are not going to grow and those multiples which you've already seen are much higher than the market are going to come down. >> you would not buy an index right about now? >> i wouldn't, no. we're looking very bottom up. our sector bets tend to be organically grown, if you will. but right now we are relatively more focused on u.s. stocks. taking harder looks at companies that are going to benefit from low input costs to your point commodity prices coming down that will benefit from the u.s. doing better. i thought the alcoa comments were interesting in that despite their exposure to china, clearly slowing, they're doing okay in part because of the financial

engineering you mentioned and also in part because of autos. >> they won't get the multiple for the financial engineering. >> no. >> they'll get a multiple expansion. you need aluminum prices, half their business. but the other part, the auto parts, the airlines, that's doing well. that's a foreboding to say well, industrial sectors will do well and certain companies in those areas like the autos will do well. >> emerging markets, it has been killed. >> it is going to keep getting killed for the reasons you mentioned before. >> the theme and i heard it from other people, you got to get in right now. it has been hit, it's been hurt. if you're a long-term player -- >> do the yums or autos where they see growth and not get exposed to the brick and get hurt even more. >> thank you for this. we'll check back in a couple of weeks see how it turns out. later, we'll turn to the big financial reports due to hit the streets later this week.

we'll talk to dick bove. >> coming up, a live report from cairo. video of the army shooting -- stoking so much anger there. the washington monument was lit last night. the 488 lamps turning on, a blue fabric wrapped around the monument as the building has been undergoing repairs it sustained during that 2011 earthquake. officials hope the lighting of the monument will reduce disappointment by visitors still unable to go inside. i've tried to go up in there and you not to wait in line to get tickets. the monument will be lit each night at dusk while the building is being repaired over the next year. >> how does that play with spending cuts? >> right. i think a lot of it is privately funded. >> oh. weekdays are for rising to the challenge.

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'sup the more you know, the better you can plan for what's ahead. talk to farmers and get smarter about your insurance. ♪ we are farmers bum - pa - dum, bum - bum - bum -bum ♪ welcome back. the egyptian military release video it says is proof that its troops were tacked. it claims to show supporters firing at security forces at the republican guard building in cairo. yousef gamal el-din joins us live from cairo with more on this story. >> it is still not quite clear

what exactly happened at the republican guard headquarters, conflicting stories and conflicting evidence as well because both videos, the ones that were presented by the pro morsi supporters and the videos outlined by the army show snipers and shooters from rooftops. not clear who the people belong to or what group they are part of. so still a lot of mystery surrounding this shocking and very disturbing incident that killed 51 people. also, of course, added fuel to the fire when it comes to the political impasse because the only islamist representation in the political transition, the islamist nor party has withdrawn in objection to the violence that happened on the streets. that is delaying the cabinet announcement. we have a decree from the new transitional government. they're now saying that they are hoping the spirit will take less than six months, going through

parliamentary elections, presidential elections. that is a bit of a stretch, analysts say. the market is trading to the upside and shows that investors, despite the violence, are encouraged by the progress they're seeing on the political front. >> thank you for this. appreciate it. i'm sure we'll be talking over the next hours and days. >> just, you know, so much chaos. how do you know? i'm sure both sides have, you know, have firearms, right? >> and then you don't -- how do you go back and figure out who -- >> and six months until an election, a lot can happen in six months. that's a long time to wait. >> back to the markets. we had someone the other day state fair value for the ten-year is 230 to 280. >> i was saying to rebecca, one of the things our strategist has done is look at where real yields have been and -- >> based on gdp? >> based on actually looking at where nominal yields are less.

so looking at real yields and based on again, the core pc deflator, like 140 is an average level. if inflation now is running 11, let's assume it is 1 1/2, our guys put it closer to -- not far from where we are, that's why our strategists are thinking for the most part, the back upup in yield has run its course. we'll look for tapering in september. this is going to -- just like the fed has guided us, this is going to be a slow wind down through the middle of the year. it seems like people are better positioned now for that scenario. >> why did anyone think the fed would lose control of the situation if the yields were basically where they would be even without qe? >> well, okay, i guess what i think the market was always kind of struggling with and this is the problem with open ended qe is we couldn't -- i don't think the market knew where yields

should be. >> why didn't they do that calculation? >> the open -- okay, you could come to that kind of level, but the open ended nature of qe kind of distorted, i think, the price section. if people knew we would get 600 billion, everyone would run their models and figure out this is where yields are, this is why, i think what happened was without being able to do that, it was hard to figure out -- >> maybe people were anticipating inflation and that would change your formula. >> that's exactly right that could absolutely be the case. also the truth is, i mean, we don't necessarily sit at fair value. if there is -- there are times where you run real yields are higher than that and lower. it isn't necessarily -- people looked at where we were on yields before we had qe and much higher levels. >> did europe and china and the rest of the world help us minimize inflationary expectations by being so slow and being so problem ridden? >> i think that and just the

fact that inflation has been so well contained here. even myself who looked from the beginning at this very aggressive monetary policy, and was always quite worried about inflation, and every year the numbers are kind of stubbornly steady or lower, so you start to wonder if the calculus has changed. and the product of easy money is no longer report and consumer price inflation but asset values or things along those lines. >> if you're thinking the ten-year is basically baking in, tapering, and they're not going to rise meaningfully for a long period of time, would that suggest that you think housing can keep slowly ticking along? >> right. there is certainly a lot of concern, what will be the impact of the backup on the economy. i was saying, first of all, this recovery hasn't been the normal interest rate driven -- interest rates have sparked all of this activity. most of the decline we have seen thus far in activity, i should say, is refi activity as the

result of this bracket. we're on the purchase side. if i'm correct, or if our strategies are correct also, and most of the backup in yields has been seen, i don't think this is enough to derail the recovery. i think it would argue against an acceleration in the second half of the year, which a lot of people are looking for, this will work against that. but let's face it, people getting jobs and the economy, people growing more confident in the economy, not being worried about fiscal, you know, drag, perhaps, turning things slower, i think all of that -- every month somebody else gets a job, you have a potential home buyer that you didn't have perhaps the month before. i think in the end that ends up being somewhat of an offset. >> thanks, michelle. >> thanks. coming up, the stories like lighting up the news wires including outflows at pimco. check out the headliners for cnbc's delivering alpha conference on wednesday, july 17th. we have nelson peltz, carl icahn and john paulson.

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welcome back to "squawk box." pimco suffering record outflows across its u.s. mutual outfunds in june to $14.5 billion. we could whistle at that. the outflows were the first across pimco's u.s. funds since december of 2011. and we should probably talk to mohammad larry about this. coming up, while watching tv may never be the same again, you're about to meet some pretty interesting people. check out some new technology that raises the bar on being

interactive. meet the disrupters, a touch cast, right after the break on "squawk box." my mantra?

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. >> welcome back to "squawk box." our next guest, if they get

their way, we will all be searching the web. touch cast co-founder and ceo. you goes were showing us stuff during the break. can you give us a along at what's going on? just explain what this new technology is. it's pretty mind blowing stuff that may revolutionize what we do every day. >> we don't do a lot of cutting. >> we will be, very soon. ito, explain what this is? >> we expect the consumers will be dock a lot of touching. they are expecting to touch every screen, similar to this viral video of a little 2 i don't recall touching a magazine with her finger feeling like it's broken because it's not responding, the same will happen for broadcast, we believe. as people at home are watching this. they will be expect to touch every graphic an interact with it. when you talk about a story, pull up some video, they will be able to tap it, interact with it. we believe the future of the web which is currently based on a magazine metaphor, a premetaphor

is going to shift into the metaphor of the cnbc, where the canvass of the web -- >> is the assumption, therefore, that everybody will be watching tv on an ipad, are people going to literally go up to the tv and start touching it? how is it going to work? >> 23 think the ipad is a precursor for what the tv will be in the future. we don't know when that is going to happen. everyone has been expecting apple to come out with an apple tv. they have been expecting that for years. hopefully, we have the ipad as a precurse roar, until that time, can you watch it on the icast and the web on a web browser. you can open up a web browser and stetd of having a magazine-like experience, can you have more of a broadcast tv experience. >> so if you are watching, let's say you are watching cnbc. >> or go to the website. >> or go to cnbc website. ly have both of those things on the screen at the same time. ly have the ability to pop up.

when june says something about alcoa, i can click on it and find more. >> i have cnbc's website right here that i popped up. if you look at it, it looks lo like a magazine. >> so here we are. why does cnbc's website look like a pittsburgh when it could look like a tv show? you don't want to give up all of the interactivity at the web touch cast, you can add elements of the web into the video. you don't have to give up that interactivity. that's what people want on the web. they want tob able to control. >> to click on -- >> if they clicked on my little head there, what would happen? >> would it fix his hair? >> you are not interactive. all the almosts you place into the video. >> if there is a chart of alcoa, can you touch the chart of alcoa and get data out of it? >> yes. in fact, i set up a cart right here where i have dell stock.

>> check out this over here. >> it's after hours, not much is happening. if that was during trading hours, you'd see apple trading stock. >> that would pop up on top of what we're doing? >> and as a viewer, can you look. >> you have an image behind you of the desk of us? >> right. >> and then you, i would place you. >> so here i am in the middle. so this is how you think we will all want. >> you will develop something that doesn't smudge? the screens are disgusting, some of them after a while. i don't want that on my tv screen. i don't want fingerprints. can't you develop something? >> a hologram. >> microsoft is working on that pretty aggressively. >> they are. it's gross. >> you use your hands, it's like the knect. you can interact with it. in the future, you can interact with this information. >> you don't want to stand up and go to your tv. you want to be able to stay on your couch. >> this is all "minority report." you should see what they do for

professionals. meaning tv broadcasters, we will have screens and playing with this stuff? front of us. >> we started with an ipad, a consumer app. it's free. you can download it from the store. anyone can produce a touchcap. >> check this out. this is what we're talking about here. he's now moving around a professional screen. all right. is this what we're looking at? >> media companies such as cnbc could use our rig or our pc version. go down to the ipad. you can give the ipad to reporters in the field. they can have a tv truck in their hands. right now, a lot of media companies are having reporters cheat obvious iphones with no graphics. >> can we talk about the money? where is the money to be made for you and the broadcaster in owl of this? >> basically, our business is to support people like you and give you the tools to move into this new era of the new videowell web. we also have a model for consumers, whereby they get this free app, they can upgrade to

functionality. >> is it nbc universal will make more money ultimately bus we will be building alds? is there going to be product placement, where all of a sudden you will see, if you like this tie, i'm going to click on andrew's tie, i'm going to buy it from hugo boss? >> i think the key term that's relative is engagement. whenever we get them to enga ij in a more indepth way, i think we will create new forms of advertising, we will engage in interesting ways. so whatever product the company you are interviewing will talk about, they will doiv in. >> everybody is chasing video ads online today. they're plain vanilla sit back and watch. >> they're non-engaging. >> thank you for coming in this morning. this is really interesting. come on back. we should play with this stuff. >> coming up, we will turn the focus on financials. plus, how should investors play this earnings season? the strategist at bemo capital

markets will join the conversation when "squawk box" continues ♪ norfolk southern what's your function? ♪ hooking up the country helping business run ♪ ♪ trains! they haul everything, safely and on time. ♪ tracks! they connect the factories built along the lines. and that means jobs, lots of people, making lots and lots of things. let's get your business rolling now, everybody sing. ♪ norfolk southern what's your function? ♪ ♪ helping this big country move ahead as one ♪ ♪ norfolk southern how's that function? ♪

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. >> good morning, welcome to "squawk box." take a look at the futures this morning. the dow looks like it will open 46 points higher t. s&p up 6 points. the nasdaq a little over 9 points. let's check markets around the globe. asian stocks are rebounding overnight, nikkei leading gains with a 2.6% move higher.

european stocks are up. alcoa got second quarter earnings off to a decent start. take a look at where the european equities are. you have green arose. i don't want to say up a percent we round up, that's where we go. gold is rising the most in seven secs after a breaking through a key tactical level inflation data out of china. here's where gold stands right now. you can see it there. 1246. let's talk about the other news, we talked about alcoa, reporting second quarter profit up 7 cents per share. 1 cent above estimates. alcoa is feeling the effects of lower aluminum prices. also, wd-40 earned 66 cents per share for its third quarter 10 cents above stills with ref few beating consensus, the maker of

the popular yearly forecast on stronger than expected sales. you are give egg me a funny look. >> wd-40, i learned yesterday an interesting fact that they hired a person to develop the smell of wd-40, which is one of its secrets of success. a very specific manley but not overly manley clean car smell. >> kind of a nasty smell. >> really? i don't. >> you can fix anything with wd-40 and a little duct tape. that's in a song, actually. >> wd-406789 i was looking at it. i wouldn't have been surprised if it had a bigger market. it's only 800 million. but i love our, it works for us. we will stick wit. so is the dow. microsoft had low revenues in an hour almost than alcoa as in a quarter. microsoft expected to announce a major restructuring of the company on thursday.

according to all things digital, an announcement is coming, the timing could change. ceo steve ballmer signaled to shareholders last fall, he intended to reorganize the company. it's so divisive, i go es the stocks have been doing a little too well for ballmer, finally, it looks like it's ready to break out, almost. we'll take care of that. an announcement has been expected. lost week, it was reported the revamp was a reason the x-box guy was interesting. >> actually, a good guy. >> he left the company to become the ceo of zynga. also, this morning, barnes and noble ceo resigning from his post effective immediately. no successor has been named of. for now, three division chiefs were named. they will report to the executive chaerm. the trio is michael huesby, mitchell clipper around barnes

and noble college ceo mat schriver. they're all pretty good guys. i hate to tell you, i don't know any of those guys. >> you don't know any of those guys? >> i heard of roberts and clipper. roberts runs the college division which is actually still a very possible business. >> is that what you are trying to suggest? >> eventually, everything will not be a big heavy return. >> check out shares of barnes and noble in premarket trading. you can see there the stocks up, we'll call it marginally, after a tough day before. there you go. our next guest says it's hard to tell if the dramatic rise in yields is over. it looks like this great rotation is under way here now. robert tipp, chief prudential strategist. robert, tipps, seriously? >> i will not have a focus on tips today. >> we talked to a guy named dow

about stocks and tipps about tips. i say bemo. is it also a bank? >> everybody needs a bemo. >> all right. but it's bank of montreal, right? >> rebecca pat terson is here from bessemer trust. mr. tipp, what are you telling me the dramatic rise in yields is overdone? >> yeah, i think it is, i think we saw a mini stampede, that people have been fearing for some time that retail is going to sell their bond funds and stocks have been doing really well. the economy is recovering. people have that knee-jerk reaction. reusually find, though, when the economy is recovering, when are you waiting for the fed, people are getting anxious, you have a big sell-off. that's usually the buying opportunity. you can't wait until the economy crests. usually the big yield happens in advance. >> it has to be then, we have to look at it then not on an absolute basis? >> that's right.

>> if are you characterizing a move from 2 to 2.7 as a stam speed, what happens when we get back to normalized? . >> we were at 2.4, now 2.7. >> it doubled. >> you remember bernanke in 2002 talked about the risk of deflation. since then, the ten-year treasury averaged 3.5%. yet the average level of growth in this country and cpi inflation continue to come down. so given the overall backdrop of how high leverage is here the fiscal consolidation, we have been doing a 2% growth here. that's where the sub 2% ten-year note. i don't think we can take a higher level of interest. be i the way, the u.s. economy is a bright spot. i'm not suggesting 1.5% for five year and a ten-year note is something that's attractive. you should buy, medium grade muns pals, high yield bonds, emerging markets, talking five plus interest rates out there that will be attractive for retail investors, either in

traditional fixed income products or there is also the corporate community. you remember back in 2008, stock prices were depressed. interest rates were down, pension funds were underfunded. they were saying, you know, when stock prices come back up, interest rates go up a bit, i will buy longer maturity corporate bonds. that commune is the out there as a potential buyer as well. >> what i'm sear e hearing is that both the global economic outlook and global inflation outlook neither one of those really disagree with what our bond are right now, what the ten year is. this is not an unusual place to be? >> no, it's not. does it matter where these investors purchase their bond funds? the majority of the inflows we have seen in the last five years happened in 2009, right, in the bond funds? sample we had steady inflows. >> the majority at that level. you mentioned 1.4% him how many

people bottom ticked at 1.4? >> then you have to think about demographic trends. >> absolutely. where is the pain threshold? because from our viewpoint, investors will sell their bonn when they feel pain, right? that was the asset choice, it was the safety net. when they look at their statements and see losses, they will feel pain. so what's that pain threshold from your lens? >> you know, we have seen some volatility in bonds. you remember in, you know, the first half of 2009, it was up 200 basis points. at the end of the 2010, we sold off 150 basis points on the ten year. people have seen volatility in the market. i think it's an underlying bid. even last week, after the declines we have seen, the emerging markets and high yield, you see a number of categories go positive last week. i can tell you this is the high and yields. people are going to go back to sitting there in zero, in cash. they will see the volatility in

the stockmarket. it will be a long time until you get the feds. >> until you get an idea of where you think it is. >> why don't you tell us where the pain is then, brian? are you socrates? >> where do you think the pain is? >> i think there is a huge dichotomy between the feelings of a bond bubble. because there can with the a bond bubble, because you hold your bonds to maturity and you get your interest back. >> so where is it? 3%? >> i think it starts at 3%. think of mom and pop in topeka, kansas, they bought a total bond fund at 1%. all of a sudden they open up the newspaper the new york times, they see se -- >> 3%, i don't think so. >> whatever. kansas city star. >> good bless them. they're the salt of the earth. >> exactly. >> they see 3%. is that enough pain? to your point, robert, we saw these huge flows in the fourth quarter of 2008. out of equities into cash is the weigh station right? then they went to bonds.

i think there will be a similar type of transition. >> 3%, that i go into cash, eventually into stocks? that's what you are saying? >> we see two kind of clients. we have clients that think about their bonds like some think about their gold or their home. they're not going to sell it no matter what. they will sit on it until it matures until we advise them. we have others that say, jesus, get me out of these bonds now, i'm scared. >> their broker's name is jesus? is that why you said it? >> i know that guy, in the business. jesus, sell my -- in your view then, this is the calm before the storm in the equity rally? so that would be pa lot of money coming in equity. >> i think people have it completely wrong. we still have a chip on our shoulders about equities, it's been 30 years our bonds have had a great run. we think we are headed. >> a 15 year growth market.

>> remember they kept talking about he had the worst ever. people will notice that on their statement eventually, right? >> think about the pension funds, everybody had the risk parody strategies why they levered long-term bonds, that was bridgewater's key to success for the last several years, a hugely successful thing when rates are coming down, they posted pretty nasty numbers. >> can we get you to recommend tips? wouldn't it make sense? >> i like the long ones. but that is the sector that was the most. if there was a bubble, it was in the tips market. i they the pain train is going to be the zero yield factor. you know, our yields are up here 2.5, in germany there is some 2%. there is some 1%. it's a big world out there. i don't know if i want to follow the tren in retail. i think we saw a mini stampede, the opportunities are good, for people that can't stomach the traditional fixed income space. >> so you might be buying a tip.

if you had a 2.8, you'd buy? >> on tips? i think, i don't know if you want to go by treasuries here. i think you want to go into the spread product t. high yield corporates, immediate merging bonds, some of the international. >> you guys disagree, i think. >> i agree on stocks, that's true. i think the big migration is going to be out of the cash into longer term assets. >> you haven't told me why you think we are going up above the 3, that's the thing. >> well, the thing about interest rates and the bond market, we have no now reconnect with the fundamental also the economy continues to improve. it's not about inflation. it's about the economy chugging along, joe. >> remember, what's the average ten-year treasury yield the last 100 years? >> 6, 5. >> anyone? >> 100 years. >> probably 3, right? >> 4.84. over 100 years. >> that's really skewed by your 1960. >> that is the problem when everyone says normalized

interest rates. you tell me where you got a normalized thing. >> where was it in the united kingdom in the 19th century? under 4%. those were real markets. so you know. >> are you saying our market is not a real market? >> he's saying if the banker -- i know you, i understand your point. >> i think the economy is chugging along, unemployment rate is higher than the peak level of the last recession. that's one of the more favorable. >> all right. gentleman, robert tipp. >> robert tipp. that's cool. what is that? >> a shortened slavic name. >> just for today you didn't think andrew could pro noupt it. >> trust me. >> that was a smart move. how about brean. >> very good. >> mine was shortened, too.

bellski. >> your last i'm in. >> okay. if you got comments, questions, about anything you see here on "squawk" including my own mispronounceation of names, shoot us an e-mail. you can always follow us on twitter. still to come this morning, wells fargo and j. perform morgan this friday. should investors wait for the numbers or by now? dick bervais will join us when we return. .

. >> checking the futures right now, we have been in a pretty good place after that scary week, we were ahead that 400-point move down. we've gotten almost all of it back. supermarket giant kroger, let's go kroger. oh my word. are you kidding me? i know harris teeter so well. harris teeter. it's a great, great supermarket. croaker is my hometown. let's go krogering at the happy latest shop. buying harris teeter supermarkets, croaker is either based in cincinnati or, you know, it was the supermarket of record growing up. it's going to pay, my uncle had his own, it was a dirty word in my house. it will pay 49.38 a share. harris teeter ahead announced in january it was considering

strategic alternatives. harris teeter has more than 200 stores primarily in the mid-atlantic and southeast. >> there you go. >> look at you with your two market geography. >> like sully. it's all coming back to me. croaker says it should increase 6 to 9 cents a share following completion. they're going to bovay. >> we're going to florida. fdic announcing new -- >> is he french? bovay is very cosmopolitan. >> i don't know the answer. he is wearing a three-piece suit. the fdic announcing new requirements for the boompg. let's get a preview on what to expect. joining us from tampa capital vice president of equity research. he is wearing a three piece and pin striepts. is it italian? >> italian. >> the suit or you?

>> both, programs. the word bovay means a bow in italy. >> that explains a lot. >> same difference. >> before we even talk about any of the earnings stuff, we were talking earlier on the front page of the "wall street journal," i don't know if you saw it on what's going on in europe, in the u.k. specifically, how they want to go after bankers who are reckless, put them in policen. do you want to weigh in? >> it's obviously absurd. it's basically the story was sold to the populations of the united states and britain that the bank has caused the great financial crisis and now politicians are doing everything they can to ride the wave of popularism by saying, we're going to get the bankers for this for that. what they've forgot isn't not every country in the world is attempting to harm their bankers, bemo in canada has no restrictions on the ability to grow. it's growing in the united states t. chinese banks have for

the restrictions to grow. so these angelo countries that are attacking these banks are going to winds up with a lot of chinese banks and canadian banks all over the place. >> let me segue from there then with this question, is the fdic attacking the banks by trying to raise the capital ratio at these banks from 3 to 5%? >> well, it's kind of a turf war. i think they they will go 3 to 6%ment it's a turf war by the ted which believes in the basal 3, methodology allows banks to cheat in order to get high capital ratings. soitative come up -- they're cheating because they can do something called risk waiting of their ray sets. in other words, if they have $100 billion in treasuries, which a lot of the big ones do, that's weighted at zero. allows your capital ratio to be much higher buus the denominator in the calculation is low. so the fdic says, look, you guys

are allowing them to cheat. they've hit these high capital ratios because they're cheating. so we want a different ratio. we want to use a leverage ratio. the federal reserve board comes back and says, well, we don't like the leverage ratio. if we use a leverage ratio, we have no way to gain owe the conclusion is let's use both of them. >> in the dick bovay, if you were the world, tow, what should be the right conclusion, both from the perspective of being a citizen of this country and wants our banks to be pros republican, then you can put your investment research on. >> i think the fdic approach is a better one. i think it's straight common equity divided by assets the ratio should be between 6 and 7%. i think that's a simplistic method. it's one that worked the last 75 years. i think it's the right way to

go. however, no one in banking ever comes up with a simple solution to anything. maybe you or i would understand what they are doing. >> exactly. what are we going to understand on the earnings front? on friday as well as wells fargo, then we get into bigger action next week with morgan stanley group et cetera. >> this should be a sloppy quarter. i think it's tough for them to do it for a 15th time. i think the reason is pretty simple, banks do pretty much what the economy does. we did not have a great second quarter from an economic stand point. so we're not going to have a great second quarter in terms of bank earnings. i think that loan volume in the two big areas, commercial, industrial and residential mortgage have slowed down dramatically, price competition has picked up to push margins lower. you got this issue with

long-term rates going up, creating issues of our capital. you got the fact that trading, you know, did pick up pretty good for a couple months in the quarter but wasn't great the whole quarter. so it's just not going to be a great quarter. >> dick at $55 per share for j. pm morgan, a fair price shourld you sell out of these numbers? >> well, i have been pretty messed up the last month-and-a-half, because i have been expecting a 10% pullback in the market, which obviously did not occur. so now i'm chasing. i don't want to give up my holding of j. president mitterand morgan or bank or america or citigroup or morgan stanley or whomever, bake amy, i think the second half of the year is going to be pretty strong. again, if banks are going to reflect the economy and the economy is going to be advantage in the second half, basically, i want to stay with these stocks. >> so if the numbers are lousy on friday, how much are we going to take away from that vs. what

we will be hearing in terms of forecast? what are you actually listening for? >> well, i'm looking for a buck 44 for 1.91 cents for the other one, j.p. morgan and wells with the 91 cents. i think if we miss those numbers, the stocks will come down a bit. i would buy them on the weakness, because i think that the second half they're going to be quite strong. >> okay. if you take a look at the various elements of the economy, it looks like bank earnings could be quite good. >> dick, do you think, what we do for politicians? what if we sent them for jail for a crappy law or ineffective law or money that they lose, i'm looking at new york, do you know how many politicians were convicted in office? have you ever looked this up in your home state? >> have more bankers been to jail? more politicians gone to jail? how many football players. >> like 25 were arrested since

the super bowl or something, new york, i mean, bruno and monsurrat. i think they're doing time right now, dick. i don't know, politician, now i see why they want to send so many people to jail, they're used to it, right? i guess. >> i guess. if you put all the politicians in jail, washington would be a ghost town, that would hurt the economy. >> then we'd be doing 6% gdp growth, dick. anyway, thank you. see you later. >> italian. >> from my hometown. >> tampa. >> yes. >> coming up, the state of small business, we will hear from the nfi chief economist in a couple minutes. we will ask him whether it's clear sailing because of the employer mandate pushed back. we are striking up the band. the animal orchestra is back in town. playing its greatest hits. type out which names need to be on your watch list. "squawk box" will return after a quick break. oh, he's a fighter alright.

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weekdays are for rising to the challenge.

they're the days to take care of business. when possibilities become reality. with centurylink as your trusted partner, our visionary cloud infrastructure and global broadband network free you to focus on what matters. with custom communications solutions and responsive, dedicated support, we constantly evolve to meet your needs. every day of the week. centurylink® your link to what's next. . >> welcome back to "squawk box"

this morning. the headlines, kroger, joe's supermarket of choice, buying rival supermarket operator harris teeter in a 2.5 million dollar cash deal. teert supermarket of choice. kroger will be paying $49.38 per share. they have announced back in january that it was considering strategic alternatives. now, kroger is your supermarket of choice. >> they own harris teeter. >> the treasury is also going to be selling $32 billion in the three-year ♪ set today with the results of that option available shortly after 1:00 p.m. eastern time. these auctions have been watched as yields have been rising obviously to their highest in two years or more. finally, pimco, morningstar reporting the bond fund giant saw outflows of $14.5 billion last month. keeping record 20 years ago.

joe. >> i looked at jersey, it's much smaller politicians because they didn't name all of them. that's why it's smaller. >> 44 just in one bid rigging case. remember that one? >> the fbi, anyway, we were talking about politicians in jail. since in england. >> give 93 nfl number. >> it's 25 arrests since the super bowl. >> an fbi sting operation invited 44 officials and several rabbis. remember that, mainly for bribery, counterfeiting, money laundering, organ harvesting. >> i remember that. >> they don't mean, they mean kidney. nice. all right, the national federation of independent business out with its latest reading on the economy. nfi small business optimism down in june. joining us is the chief economist at the national federation of independent business and you talk about whatever you want to, bill, have you been on since the employer

mandate was, are you allowed to do that? isn't it law? are you allowed to say the law is not the law? can we just say, we'll give an extra year? do you know? can we do that? >> you know, i'm not a lawyer, but it looks strange to me. it's kind of like having a lean item veto or a temporary veto. it's the law of the land that's supposed to start. >> money is a little tight for me right now, bill. would you mind if i pay my taxes in a year, would that bother you? it's just i got some other things going on. give me a year, would you? >> well, if the irs says you can do that, they won't come after you by default, you can get away with it. >> this irs isn't going to cut me any breaks, i can tell you this much. they watch cnbc occasionally. all right. tell me about whether this mandate is at a positive, does it remove any uncertainty? it's something that business supposedly wanted. now that they've gotten it, will

it help? >> well, i'm not sure they wanted a delay per se other than that, everybody is not ready for this thing, including the government, the exchanges aren't even in place, so in some sense, i feel it's a relief because chaos would be a lot worse than, you know, than putting it off for a year, but still, the fact that the government had to put it off and say they're not ready, all the confusion, it's just, you know, that's just more your honor u uncertainty, when will it come in place? you know it will come in some form or other, you don't know what the form is. so you are just guessing. so as many as 40% of the small businesses say they've put all their growth plans on hold, about 38% or so said, we just have a freeze on hiring until we find what's really happening in this market. that's certainly not conducive to job growth. >> bill, it's rebecca. i saw the business sent i.s it

was a little weaker than expected this month. in that report, it looks like the jobs expectations numbers is ticking along nicely, small business being about half of private sector jobs, are you still pretty optimistic going forward that we will see this part of the economy growing jobs? >> well, becky, you picked up the one piece out of the ten components that did advance. we did see a 2-point gain in the job creations plans. that's good. but there are still some interesting issues going on out there. first of all, you saw that big swing in june, a lost of jobs, 240,000 and a gain of 360 part-timers. that's positioning for what we thought it would be obamacare taking effect with a six month look back period. so that certainly happened out there. we are hiring some. we flattened out for this, for the last two months. we have been hiring. but nonetheless, it's been weak, even though the job numbers that

look pretty good, 200,000 is way below what it should be. the flipside of that question is we have been doing 200,000 a month for the lost few months, where is the gdp? these people must be making something, maybe it will show up in the third quarter, which would be nice if that happens. so we're just not sure what's going on out there. we do know. >> job growth, sorry, if it's slow, if job growth is slow and the economy is disappointing, then how come business sentiment is still near a one-year high, what's supporting the sentiment? >> well, it's a one-year high, but it's a 40-year low, the problem is that the optimism index is 7 points below its average going into 2008. so 38-year average, we're 7 points below it. we're like 14 or 15 points below where you should be on a good expansion. so historically, if you look at where the numbers are, we're not in very good shape. we're kind of high end recession

numbers here. what question need is these people to get more optimistic in the future and hire, there are two sources of jobs here in the small business sector. one, of course, is new terms. it looks like we have new firms starting than losing. that's good news. the other thing is the people that fired everybody in the 2008, 2009 recession need to hire them back. that's what's not happening. so we stopped firing people, we're not hiring them yet. >> the employment rate is at a three-year high. >> right. it's still a glass half empty. >> it's 7.6%. >> exactly. >> you can't seem to beat that down. >> nobody is saying we're at a new yearly high for a business conference. it's much lower than it was. all right. usually they have enough confidence. have you enough confidence to wear that outfit, which i know i don't. i know i don't. >> they look bad. >> so you will get everybody's attention, say, i'm going to

shake things up a little what color is that shirt? idz a red. >> it's the blood red. >> yeah. put it in. >> it's got a little fish on the tie, which i'm going to be using while i go fishing in jackson hole the next few days. >> oh, are you going, that's nice. in the summer. man, that place. >> we have global independence center has a conference there friday. >> is liesman going? >> i don't know. >> i know this place, that's where there's like 80 guys in 32 bunks. it's very strange. anyway, whatever. that's the coat top thing. he overbooks it, it's like, whatever. anyway, bill, if we had our normal audio guy. you know. >> yes. >> no, no, no. >> anyway. >> before. yeah. >> what a moment.

>> thanks, bill dunkelberg. that was from the collection at men's wearhouse. comments, questions, e-mail us at squawk@cnbc.com. you can follow us on twitter. next we will talk earnings at the top of the hour, senator bob corker joins us to talk financials, the economy and the latest from the beltway. "squawk box" will be right back. ♪ that's me... i made you something. ♪ i made you something, too. ♪ see you next summer. ♪ [ male announcer ] get exceptional values on the highest quality cars at the summer of audi sales event. ♪

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. >> coming up, earlier, we spoke to dick bovay about financials. >> the banks have had 14 quarters in a row in which their earnings have been up year over year. i think it's going to be tough for them to do it for a 15th time. >> j.p. morgan will be the first to report. we want to hear from you about all this. play armchair analyst. visit our facebook page. will they have a sloppy quarter?

will j.p. morgan miss or beat expectation? we have have more right here on "squawk box." we are coming back in just a moment. who is healthier, you or your car? i would say my car. .

. >> welcome back. investors are looking for signs of economic improvement. could corporate earnings give stocks a leg up? the managing partner at edward jones, i'll put it to you that way. do you think when all is said and done, two, three weeks from now, we will see earnings that will not disappoint but surprise on the upside and stocks go higher? >> oh, i think we are looking for earnings to improve and for the better managed companies, we're not making a general market call and to say, you know, will you see weakness or a big surprise in the upside, not what we're about. it's, you know, you are seeing a little improvement in the economy. you are seeing a little improvement in the employment numbers. that's encouraging on a longer-term basis. we would expect this year probably two, 2.5% growth on an overallawi in kind of basis. >> do you think we can see real top line growth? can revenue increase or to the extent we see good numbers, it

will be the squeeze? >> i don't think you got an awful lot of squeeze left. you have good management teams taking a lot of expenses out of the operating results. you got the opportunity to fwroe the top line. that's really where it has to come from. it will be gradual. there won't be a lot of huge increases, it's going to have to come from increasing revenues. >> jim, do you think the softness from oversees is priced in at this point? we seen so many negative preannouncements. we seen expectations coming down a lot. do you think we will see that in the guidance still or it's pretty much all out there? >> it's a good question. i'm not an analyst or an economist to be sure. i certainly have opinions. i think the issue is internationally europe and otherwise, are driving some dollars and investors to the u.s. we are still the stability in terms of economic and political opportunities. so i think we're benefitting from that and may continue to on

a short-term basis. you know, are all the issues on an international basis priced in? there will be some surprises, i'm sure, perhaps most of them are. >> jim, we will leave it there. we will appreciate your perspective, great. >> coming up, stocks to watch. we will talk to a potential candidate, also to replace mayor mike and there are some sort of similarities, both of them billionaires, both of them were kind of written off in the early part of their candidacy. john castanetes. i want to talk to you whether you had a good or bad, a small part. that was my home supermarket. >> that's the guy. >> 100%. >> my friend bob steele there on the right. >> he's leaving, unless he changes the law again for a fourth term, because the city couldn't possibly drink without

him. we'd all be drinking with big sodas. >> i can't live out him. >> we will find out what he says about eliot spitzer getting back in politics? "squawk box" is coming right back. up next on "squawk box," don't start your day without knowing the names that will make you money. joe has your lest of stocks to watch right after the break we'ro be an even better company - and to keep our commitments. and we've made a big commitment to america. .

. >> let's look at stocks to watch, start with sirius, xm radio. funny, i was just thinking about playing that song the highway, is highway is channel 59 on my system. anyway, raising its full year guidance, 1st subscriber editions from the prior 1.4, also announced new net subscribers for the second quarter, putting it past the 25 million mark. >> but you need a car. so i would recommend it to you. you got spotify or something. >> i got spootfy and/or fox. >> how are you doing? >> you are covered. >> oh.

>>. >> tesla will be added to the nasdaq. not that there is anything wrong. >> good friends on. tesla will be added to the nasdaq 100 replacing oracle, which is moving to the new york stock exchange. ibm downgraded by goldman sachs to neutral goldman saying it sees pressure on ibm's growth marke market. >> did they call warren before they did that? >> higher strains, that would be positive. when did warren buy that stock? >> he gave us a great tease. >> around 185. i think so. where is it now, still above 200? >> it was, can we go back to that chart? >> no, it's not. it's 192. i think test around there. >> i thought it was in the fall. >> it might have been right in the october. i will go back and look.

>> it's right around 185. would make me right? >> always, joe. i can't remember the story how that was discovered. i think it was it might have been for hair growth at one point or impotence. remember minoxodyl. >> the successor hasn't been named. they are reviewing the overall strategy and intuitive surgical, i saw this, herb was tweeting about this yesterday, forecasting second quarter sales. a huge stock. huge story stock certainly e second quarter sales cite sighting economic pressures to hold off on purchasing new

equipment. the company points to a more conservative payment decisions. >> i want to tell you how right you are. november 2011, mr. buffet purchased this. 185. he fight have gotten it lower. that's when it happened. i think this is a one year. we're missing it. there you have it. >> i remember what it was. >> you, my friend, are correct. >> i was correct. about this i don't know about the impending tidal wave that will flood the entire coast. >> coming up, senator. >> oh, we are. we can only. i just hope they're right. gosh, i would be so

disappointing if the world didn't end, wouldn't you? keep our fingers crossed. >> i want to talk about spitzer. >>. >> let your mind go rhode island right there. >> i don't know what you'd use that for. look, i'm getting censored. >> what did they take you off of that? stay off. >> the reason is it's a business story here on "squawk box" is because you can actually get to this position as comptroller, he will be a huge shareholder in companies across the country. he's clearly made it very clear what he wants to do as a shareholder. he says he wants to revolutionize the position and become an activist. >> which position, mustang ranch, do you know? >> is that a two year office or

four-year office? >> for one, i don't know the answer. what's the trend? >> i think the chance are better than people are giving them. yesterday, apparently, he was walking around union squarement he got only ten signatures. >> he was surrounded by the media. >> he is hoping students don't know who he is. >> people were going up to him heckling him. others were going up, saying, everybody deserves redemption. >> he got redemption, didn't they? far be it? i know there is ratings. he was opining, judging other people. he came on here, we said, are you sure you shouldn't have been maybe prosecuted because you would have prosecuted the person? he goes, oh, absolutely not, i shouldn't have been. >> this was a moral failing. what's next for him? >> it will be interesting.

the new york times, you were saying the liberals were out to get them. the new york times not so happy by this choice, their editorial this morning is about how they don't like him. >> this comes after sanford, they saw that happen in south carolina. then they saw what's happening in the polls with weiner. >> oh, there we go. with weiner. >> and weiner is doing well in the polls. weiner is tied with, in some polls, weiner is tied with you continue do. remember the other day with the weiner-eating contest. ehas one weiner under his belt. another weiner. can i make a plea? if ken is watching in europe, calm into the show. we want to hear what are you up to. only because some of the news reports were saying you were going to mount a campaign so to speak. mount. >> oh. >> mounting a campaign. >> do you think eliot spitzer, we want to know about it. you have our phone number.

we look forward to hearing from yo you. >> they are black. >> you leave them on, do you? >> coming up, senator bob corker will join us to talk about the loss. >> here's the answer, i'm not wearing any. >> you wear english leather or nothing at all? anyway, we will talk about the bailout terms of fannie and freddie. health care, immigration reform. plus the host of hgtv's property virgins. on the recovery in the housing mark. .

. >> senator corker, he will join us to talk housing, health care, a lot more. now we will talk real skaet estate with egypt. >> i have my work cut out for me. the property virgins, she will bring us up to speed on the summer selling season. the new york city mayoral race is heating up. the ceo wants to be the mayor of the big apple. >> first of all, mr. mayor, it's a great pleasure to see you again.

we'd like to say almost 50% of you voted for you in the last election. >> he will join us as the third hour of "squawk box" begins right now. >>. >> welcome back to "squawk box." becky quick is off today. brian belski, ed bemo capital markets. more from rebecca and fine still ahead. first, though, andrew had your morning headline. >> my kids are watching. they will think it's nemo. >> let's take a look at the markets. the s&p up a little over 7 points. the nasdaq up over 10 points. asian stocks rebounded.

the nikkei leading gains, moved higher, check out europe as we put that screen around. you will see green arrows as well the footsy up almost a percent. joe has a new favorite supermarket, croaker is buying his favorite supermarket rival supermarket operator harris teeter in a $2.5 billion dole. kroger will be paying $49.38 per share. can you see. i like king stock going up. in a statement, kroger said harris teeter will continue koerpt operate it's stores as a subsidiary. are you going, why hasn't it jumped? it has jumped in part because they were looking. in tech news this morning, they are report, microsoft will announce its much anticipated division restructure on thursday. steve ballmer will alter segment reporting. also, we will be watching alcoa, they reported better than expected revenues and earnings after the bell.

marks the official start of earnings season. analysts expect earnings to rise 2.9% in the second quarter from a year ago. that's down from the 5.4% growth in the first quarter. on friday, we get quarterly reportsment we want you to play armchair analyst with us. so do you think j.p. morgan's report on friday will meet, beat, or miss wall street expectations of a $1.43 per share. can you vote on the "squawk box" facebook page. a quick hint. dick bovay said he expected earnings to be quote sloppy. >> okay. >> hedge fund perry capital is suing the treasury department over the bailout of fannie mae and freddie mac. bob corker wants to make them a thing of the past. he is taking on home finance reform in a new bill that's gained pi partisan support. is our news hock to bring you on today, senator.

we don't need a hook for bob corcoran. >> there are a million things we can talk about. since that's what we brought you on for, let's talk about it. some people look at the 700 whatever it is, whatever the deficit will be this year and think about fannie and freddiement we did okay there. at least recently, right? >> look. our bill issing a nostic on the lawsuit. more power to him. what is not agnostic son we don't ever again have a situation where you have private loss, i will say i feel a little better about the motive here. in summer of 2008, when these entities were taken over, everybody was jumping up saying, please, don't take my insolvent company that doesn't have a chance of ever making a dime. people have jumped into the fray. again, you know, that's why we have a judicial branch.

i think what most americans wholeheartedly agree with is we don't want to have another situation where you got the government backstopping an entity like this. this is the only way you guarantee their income and when things are good, they make money. within they are bad, they are left with $180 become worth of funding. >> i don't know how we get out. with renowhere near extricating ourselves from the way it is right now. >> i don't know about that. i think there is a chance we do extricate ourselves. this suit actually has no bearing on what we're doing. but i think there is some momentum around this. as you mentioned, there is bipartisan support. hopefully the house will take something up. hopefully, we will in september. i do think if we don't do this pretty soon the window is going to close, we're not going to have an opportunity to do what

every american knows what needs to be done. >> how important is housing right now, senator, for the small tepid growth we're getting? that's like getting rid of the mortgage deduction right now. >>. no. no. nochlt i i don't think you understand necessarily what this bill does. we understand that housing is important and that's why the bill is craft ed in the way tha it does. there is an express it guarantee. it's a very different way. if thesentties had 5% loss, that takes into account the importance of housing. i think it's a good bill. it can be improved. hopefully as we move through the process, it will be. >> do you put in the bankers go to jail if they do anything risky? oh, that's in england? do you see that, senator? does that make anything about that? >> you know, i just got back from afghanistan and pakistan. i may have missed that. but i'll let you guys do. andrew might want to return it.

but what about i'm hearing there is no path for immigration. where down that is? what do your colleagues in the house tell you? >> i hope what will happen is the house will take up a border security bill an pass it out. hopefully, they can agree on that. one thing we did do in this bill is create a border surge. european one concerned about border security, hopefully with passage of the bill is not concerned about that. they may be concerned about other divisions, hopefully they will pass it. we'll have a conference. many divisions in the senate bill will make it back out of conference, i think it's the right thing economically for our country. it's the right thing from the standpoint of deficit reduction. i think it's a great thing for the nation to encourage this and change right now in our nation. i hope you will talk about the

health care bill and what's happening, it's almost beyond belief. >> wow, far be it for me to bring that up out of the blue, senator. >> you know, this is pretty fascinating. i start at the top. you know, every american can get behind the notion of hoping that americans will have affordable health care. i mean, honest telely. i think as we have gone beyond the romance of all of this, the makeup and lipstick are off, people are waking up to look at this bill. it is a serious thing. let's face it. think about it in the height of the greatest recession we create a piece of legislation that says, be city way, if you will move your full-time employees down to part time, wink, wink, you don't have to cover them in health care, most recently, we have this provision which says that by the way, you just self declare how much you make. so you can decide whether you want a $1,000 subsidy or a

$9,400 subsidy. just think what people are going to be doing. so i think, look, we need to stop. we ned to put this on permanent hold. we need to fix it. young americans are beginning to realize that because of the guaranteed issued piece, they don't have to actually boy healthcare until they're sick. there is so many provisions in this bill that disincent people to do the things, that are rit for the our koun country. i think this is a great example of the flaws that are there that need to be fixed. hopefully, we can slow this down and really start all over. i think it would be a better way for us to go. but there are serious flaws in this bill. disincentive to employment. moving back a year is not going to cause people to discontinue this effort of moving number-time folks down to part-time employment. >> senator, i got two other topics for you, one being the farm bill. there is a report out this morning that says that eric cantor was scolding several republican committee chairman who voted against that bill.

what do you make of the house, does cantor have control of his own party there? >> look, it's sort of difficult for me to criticize. i voted against the farm bill. i'm sorry. the subsidies that exist. 80% of it is food stamps. i'm sorry. it's still not a serious attempt to reform our ag programs in this country nor the food stamp proms programs, so, it's hard for me to criticize, i'm sorry, it just does not do the job. it doesn't generate near the sievings. so again, hard for me to criticize, apparently, they did have some kind of deal moving into this that fell apart. i'm sure that's what he's upset about. >> senator one other topic. it's not an issue. you mentioned a narrowing window for pieces of lenlslation going

through now. one we think about with the financial markets is the continuing resolution and the debt ceiling, both of which come to a head sometime september, october. what can we expect this fall? are we going to see more partisan fighting, more bipartisan agreement? could this derail marks again? >> so there is an opportunity for something still pretty good to happen. we're having discussions with the white house. there isn't yet a process in place that will generate the kind of resolve we need as a nation. so i'm still hopeful. i think everybody understands the nexus of all of this is pro growth hatch reform. link to entitlement reform. i still think that is where we need to be as a nation. i still think it's one of the great imped ims to a more robust economic report. i stand willing and able as do numbers of our colleagues to work with the white house towards that answer. >> senator corker.

finally, weigh in if you could on eliot spitzer's re-introduction into politics. at least in new york. >> well, i will say, i've enjoyed reading the editorials this morning. i stay out of local politics. i know right there in your hometown. i'll let you goes, you know, i don't really talk about things i don't know much about. >> i'm sure, i knew that's why you come down on that. we just like to talk about it. i guess. >> yeah. >> what, getting back to the debt ceiling, i don't think the democrats lock at the debt ceiling in the same way you are looking at it. they just want it raised. you seem to think it's being framed in some type of tax reform entitlement reform context. do you think there is any interest or appetite on that side of the aisle to address any of those? we got immigration, climate change. we got all this other stuff that, you know, in the backdrop of 7.6% unemployment.

if they can't get like a stimulus, an infrastructure stimulus, they don't see, they don't really know of any other tools to try to get job growth or the economy going. they're going to focus on other things if you don't cooperate with this other stuff. >> so, look, you know, i certainly wasn't born yesterday. i realize the intense city around this issue has diminished as the deficit has reduced somewhat. in there right. >> we all know it will hockey stick back up. i still think, joe, there is a glimmer of hope. i wouldn't put it over 50% or anything like that. but there is still a glimmer of hope that something happens. and i think as long as you realize that this bill is the biggest issue facing our nation today, you still have to put out effort to try to resolve it. to be candid, who would have thought during the last two weeks of the immigration bill what happened where you end up with an overwhelming passage in the united states senate. so look, i'm going to continue

to work on it. i plan on calling the white house today to again push for some kind of process to be put in place that is meaningful, but, look, there is no question. americans candidly are fatigued with this issue. they really are. you feel it around here. to me again, it's still the most important issue. that's why they sent me here. i will continue to push forward. >> senator. >> thank you, guys. >> ewe have the wrong audio. i will ask for busy signals. that's what you will get. anyway, thank you. keep trying. number is down, not tied up. all circuits are busy. go ahead. ring ring. coming up, we are counting on business an investing experience to convince voters to make him the next mayor, up next, he will tell us why he's the man for the job. .

. >> welcome back to "squawk box" this morning. the interest rate known as libor. you know it. they will have a new administrator. the new york stock exchange will be taking over the determination of libor from the british bank association. libor of course was at the center of that rate rigging scandal. so for three banks have settled charges paying $3.25 billion in penalties. the transfer is expected to be completed early next year. we will see whether things change. i tell you, you look at libor rates now and there are things about it that still don't make much sense because people are still submitting rates in an environment where you are not sure of what's going on here. by the way, we know now the shibor in china was manipulated as anything else too. so i'm not sure whether the administrator has anything to do with it so much as those that contribute to the ultimate numbers. joe, we bought the the potential

next mayor coming up. >> the shibor. >> in china. we will talk about this race. it's happened before in this city. is a guy with no political experience who happened to be a millionaire. he became mayor. >> oh, did he? >> i used to shop at the supermarket. to get the guy out of office has been difficult. or next guest, real estate magnet. >> and red apple. those are small parts of his empire. >> he is joining us now. john, people probably say how are you going to do this? you got no experience, number one, you got a lot of money if you decide to spend some of it like bloomberg did. number two, can you look around? i look, nobody is saftd with

anybody at this point. i look at christine quinn. people say, no, i can't do that and loda and antony weiner, when the guy is tied for the lead, it's not as crazy as it sounds, john? >> thank you, joe. i have run all kind of companies, airlines, corporate jet companies, i've run energy companies. i've run banks. i've run jewelry companies, real estate companies. i run almost every type of company there is and you know bloomberg has set a standard in the world about running a city and i want to be able to maintain that standard. don't forget, i know mayor bloomberg, tens of millions of dollars have flowed into new york. what's happened? depression, went through a recession. new york, we went through a hiccup, with i is great. i think you set the standard. i want to maintain that standard. and as a visionary, of all the people running, i'm the only one

whose created tens of thousands of jobs. of all the people running, i am the most qualified to run it rajd to make common sense division i decisions. you know, our operation union operations in the xreet journal last week, one of the unions i do business with made a comment, said, yeah, john is tough. but he's fair. so i'm capable of dealing with both sides. both republican, democrats. >> john, your.is the a ceo is the right type of person not a politician. is that start of the case you are making for running new york city? >> new york city is a $70 billion enterprise. tell me which one of all the democratic candidates that's running would you turn over your company if you had to turn over your company for someone to run it? i asked that of a bunch of business people, hedge fund guys

a couple weeks ago. they laughed. that was the answer. who is capable of running it? >> on the left, alec baldwin. they are saying the income disparity between the haves and have nots is soglarying, you need someone, not a ceo, you need someone that can level the playing field for all the new york city. >> absolutely. i grew up in harlem, check me out. i grew up in harlem, i clawed my way out of there. and i go back to harlem all the time and we help the kids through the police athletic league and other functions and i never forgot where i came from. i am there running as pro safety in our streets. how am i a liberal? i believe we have to take care of the elderly. and we also have to take care of

the kids in our poor neighborhoods and give them hope and opportunity. that's because that's where i'm from. these kids have no hope. we have a 40% dropout rate. who is? i am there to tell them i am going to give you a hand and help you pull you out. i made it. you can make it, too. and that's my message to those kids. that's why i'm a republican and a liberal in new york city, which is the, that's the way bloomberg won. that's the way mayor guiliani won. that's the way oh john lindsay won. that's the message i'm throwing out. >> one quick question, then, you sound like you want to extend what bloomberg has done. can you tell us new yorkers, what would be the biggest change that you would institute in your administration relative to what have you seen and supported with respect to bloomberg in. >> i am more people friendly. i got my training being people

friendly. every, you know the out of borough -- other boroughs feel that manhattan, new york city is ignoring. i have made a commitment to them. i will put a deputy mayor in charge of everyboro to make sure the job is done and they have representation and they have the mayor's ear in new york city. i've gotten wide iplauz for that. it's like the corporate world. if you have five subsidiaries or five reasons, you put somebody in charge, if he doesn't do the job, he gets fired or she gets fired. that's what we need, somebody to have the ear of the people around to feel the people's pain notice that's what i do. makes me different than bloomberg. bloomberg is very, very tough. i feel people's pain. >> if you feel people's pain, tell us, there is going to be a number of union contracts there that will come up in your administration if you were to win, including police teachers,

virtually all of it across the board. how are you going to handle that? we do have a bit of a budget crunch in the city. >> i've had unions all my life and you sit down, you don't run away from them. you sit down, you eat spaiz at 5:00 in the morning. and you make a deal. and that's the most important part and union leaders respect that you will sit down with them. >> are you going to hold the line on increases in salaries, for example? >> i'm not going to negotiate the contract today. all i can tell you is the taxpayers, i'm going to be fair to the taxpayers brew i'm also going to be fair to the workers. you have to make a deal. >> previously, you said you expend up to $20 million to do it. i'm wondering what your game plan is, because you are not as well known now and as far as the polls go, it doesn't look like you are going to end up. >> we are within the margin of

error right now. >> so what's the game plan? >> the became the intlan our budget was a million dollars a month for the primary. we're right on budget. we might be spending a little bit more. then we'll spend whatever we have to spend for the november election. >> yeah. because if you got, i don't know the estimates are $3 billion. you can spend a million a month. i'm not a math ma joe, but isn't that $3,000 million? >> that's what it comes back to. i am a common sense guy. don't forget, i'm cheap. i started as a grocer. mike bloomberg said, you earn a floor a year. i said i started as a grocer. >> john, would you be happy if spitzer was your comptroller? >> i think spitzer is a smart guy. we need somebody in the controllers job capable of earning mohr 1.67. i think that was the number earned in the pension fund. >> you'd take him?

>> you know why, because anything less than 7.5%, the city budget has to write a check for into that pension fund. >> all right. john, all right. i don't know whether you'd take him or not. we got 20 seconds. >> he is a smart guy. >> he is smart we appreciate it. good to see you. we will be watching. we're ready to follow this i guess. >> thank you. >> see you later. >> coming up, andrew is going to talk real estate with egypt's host of hgtv's property virgins. >> i thought we were talking about real estate in egypt. am i right? prices are going down. the last thing i want is to feel like someone is giving me a sales pitch, .

. >> welcome back to "squawk box." ibm has been downgraded at goldman sachs, they see pressure on the ibm growth markets. inyou the it surgical is taking a hit this morning. the maker of the robotic system is forecasting second quarter sales below street estimates. hospitals are delaying purchases of new equipment because of economic pressures. the company points to more conservative payment decisions by insurance companies. tesla will be joining the nasdaq 100. s&p earlier, which wouldn't have made any sense. >> it was 6:00 in the morning. 6:01 in the morning.

>> if oracle was going, it wouldn't come out of the s&p 100? >> i didn't understand that. now i understand. i should know better. anyway, listen to me. let's check on the markets. i wouldn't listen to me either. rick santelli joins me from the cme. that's okay. what are you seeing this morning? >> well, we are seeing the dollar continue to hold some of its recent gains. still hovering right at a three-year high. we have supply today, three-year note auction. this is going to be very interesting, especially considering tomorrow and thursday, we get the long end in the form of 10s and 30s. the long end had the most move him. although an a sensitive basement, five year note yields have skyrocketed when you consider they were in the low 60s at the beginning of may. last year, they were below 55. here they now are at 150 about 13 a baker's dozen of basis points below where they were at this time yesterday morning.

to see if investors step up to the plate, there is a lot of nervous inside that the chinese have laid off treasury, direct bidding in some of the options, which is a proxy for some foreign entities who have been on the soft side. so the debate is this. with the new yields, we get new buyers coming in. we get new people like bond funds talking about buying treasuries, the plate is spread, for example, between jgb yields, which are low. this will be handicapping the recent move. i think i walk away with one notion, guy, despite all the issues about rates and how they can't go a whole lot higher, we are hovering at 150 and 5s, we're hovering at a 265 and 10s. these are lofty by any standards of the last several years. >> okay. rick santelli in chicago. thank you for that, sir. we will see you soon. coming up, a high profile trial being delayed. we will tell you why the captain

of the ship wrecked costa accordia, rather, is in court this weekend. then we will talk real estate of the host of hgtv's "property virgins" when "squawk box" returns. [ indistinct shouting ] [ male announcer ] time and sales data. split-second stats. [ indistinct shouting ] ♪ it's so close to the options floor... [ indistinct shouting, bell dinging ] ...you'll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪

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. >> the trial has been postponed. the cap tony of the ship wrecked costa concordia is facing charges which killed 32 peoplement about 1,000 witnesses are expected to testify. the captain showed up if court this morning, protection were put back to next week because of a nationwide lawyer's strike in italy goes to figure. >> you can't make that up. >> a lawyer's strike. >> how does that work? >> all the lawyers are on strike. >> they're not union, are they? >> we will get to the bottom of that one. we are in the thick of real estate season, sales have

jumped. joining us about this. the real estate expert and host of hgtv's property virgins him good morning. >> help us here through what's going on this summer. what are you seeing in terms of home prices going up or down amid what we're seeing obviously on the mortgage side. >> we're seeing a lot of activity, the national association of real stores released a report that home sales have increased nationally. so that's a great sign we are turning the corner. where i am in the atlanta market. where i have been working most recently, we are seeing bidding wars in every price point again, these are all signs we're turning the corner. >> we're seeing refinancings are down. are you worried mortgage rates will go up? is that overblown?

>> that's been all the talk. in may, we saw historical lows. it was a 3.31%. as of last week, rates jumped up 25%. that was acceleration on recreating an urgency. rates went up to just about 4.5%. of course many people were saying that was a gross overreaction to our federal chairman making comments and that's what we seen this week. right now, when i checked, rates were just over four and a quarter. they're predicting they will drop a little more. i say no reason for panic. it's still a great time to get in and buy. as a reasonsed real estate agent. i am behind homeownership. if people are sitting on the bench, waiting for the market to turn around, i don't know what we're waiting for. a big sign that says go, press the button, you are missing it.

things are turning. >> where are the markets quite soft? >> i think we are seeing most of the bidding wars and a lots of the action go on. that's the biggest struggle right now. in new york, l.a. the hot beds, atlanta as i mentioned, there is so much action. i just bought a house, myself, in november. i got into three bidding wars. i'm the property's virgins lady. nobody is exempt here. >> can we buy? >> in atlanta. i moved to there years ago. >> do you have time? >> i got a first call. >> i will stay focused. >> egypt, you know what i'm

hearing this about the bedroom community. i'm hear, it's the inventory. when something does come up, there is all kind of. >> we are seeing institution alibiing. it's very normal. where you have firms like the blackstone group coming in, buying up properties, particularly in high foreclosure markets. they're turning around renting them. there is so much supply and demand issue, where you have more buyers and you have less inventory on the mark, it's going to create a bidding war. >> the disparity ween the average rental rate today is the widest we have seen in 2025

years. aren't you going to see that shake out at some point? the incomes are growing. they will get the downpayment to buy the homestead of rent? >>. >> i think things are balancing out as the economy gets more legs, people are getting confident about homeownership. you have many who were of course with the bubble busting many families displaced. they were homeowners at one point. whether it was foreclosure or a short sale, they wound up becoming renters. as they get their credit back. they will get back into the homeownership market especially with rents rising so high. you will have people saying i can own a home when rates are relatively low for less. >> you are dealing with a specific subset of buyers. how have the characteristics

financially changed versus 2012. are your buyers working with putting down more money? how do they look financially? how are their balance sheets different this year than last year? >> i will be honest, i work with first time home buyers, people jumping in for the first time. so of course as you would guess, they don't necessarily have as much cash to put down so when you deal with the current market, what do you think will happen? cash is king. we are seeing cash offers. luckily state by state it depends on what market are you in. there are programs to help many of these new home buyers with a higher downpayment. >> what did you tell those people from the housewives of atlanta? >> v very funny. >> did they call?

>> do you have an act? >> put it this way, i'm not a housewife. i'm a working woman. >> i'm a hustler. >> instead of letting the cameras leave, all you got to do is let the cameras follow you home. >> you would think a lot different of me. >> caa. >> i will call ari. he might be getting a call. >> he's at morris. >> you will call the agency ad. >> now your name dropped. >> egypt thauchgs for joining us this morning. we will see if you switch agents. >> thank you so much. coming up, we're unveiling cnbc's list of the best states in the business scott cohn will join us.

where is he? north dakota. georgia? texas. virginia. why are you confusing me? >> we will count down on the big reveal. and check out these headliners. for cnbc's delivering alpha conference on wednesday july 17th. nelson peltz, is that your guy? >> i am. >> carl icon. >> john paulsen. >> not hang, john paul glenn or pat paulsen. >> who by the way, people want to hear from because i heard what you said, but if fabulous trial begins next week. >> for more action. >> i remember. what was it called? some people search for alpha, think about alpha, not many deliver alpha. this is what we do. announcer: where can an investor be a name and not a number?

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. >> let the countdown begin, the 7th ranking of america's top states or business. we will score all 50 states for competitiveness. correspondent scott cohn is live. top states for business. see if it was an old oak with a bunch of spanish moss. >> with leaves behind them. hold on, can you just go

profile? we need to spree file. what's find you there? >> i tell you what, this is seven years 23 have been doing this, this is probably the prettiest location we've had. >> this is nice. we will show it to you after we get through our countdown. let's look at state number five. it's a tie. you talk. the bee hiefb state and virginia. the old dominion. dead even at 1542 out of 2500 points. utah finished second. the best category, business

friendliness. utah finished fourth. the unemployment rate 4.6%. the state and local sales tax 5.7%. utah's largest private employer is inner mountain health care, a chain of hospitals and clinics. the largest industry is health care. virginia a three time winner of america's top state for business did best in our work force and business friendliness categories, came in 6th. the state falls to 38 in our cost of doing business category which carries extra weight this year, unemployment in virginia stands at 5.3%. the top individual income tax rate 5.75%. corporate rate 6%. the state and local sales tax 6% of the most populous areas of the state 5.3% elsewhere. virginia's largest private employer is newport news ship yard the largest industry in

agriculture. >> so there you go. we've never had a tie in the top five before. interesting bit of a come down for virginia which you know was the top state three years running and they fell down last year to 3rd place because the i situation and that's one of the reasons that the governor used to push through a $6 billion transportation bill. the state does improve a bit in infrastructure this year but probably too early to be the effects of that bill. so, we gave you the first hit yesterday as to where i am. that hint was big mouths and here's the next hint now as to what's america's top state for business. it is well anchored. well anchored. what does that mean? >> boating? >> oh boy. >> on the coast. >> i don't know. >> listen. we want to know your guesses. we want to know your thoughts. follow me on twitter. and of course, go to our website

stop states.cnbc.com. we unveil the number one state on "the closing bell" and see where all 50 states rate. >> you did some things different in terms of cost doing business. you're weighting more. right? >> that's right. that's right. and again, it's because that's what the states are talking about. that's what they're marketing. >> right. >> more that they market -- >> what about virginia costs more? so i figure out what states might not have those problems. >> virginia has a lot of the costs of particularly northern virginia. we look at wage costs among the different factors and the different metrics in cost of doing business. we do look at the tax burden, gasoline taxes, rents, office space, industrial space, commercial space. so, you know, a state like virginia will have a little bit of a disadvantage on cost no matter what they try to do on

cutting taxes. there are other costs that factor in and something that states look at. >> i don't know where you are. big mouth. >> alabama, georgia, mississippi are the big mouth bass states. >> i hope it's georgia. i'm going to build down there. anyway, but i don't see -- if it's a big oak with spanish moss, i would know. other times you have been in trouble at a highway or something and someone recognized you. you smartened up now in front of some rocks. >> we did one year where we were in front of the texas state capital and somebody figured out one of the trees. it was amazing. but look. if we have botanists out there that can -- >> pan the camera. all right, scott. it works. i want to know. see you later. thank you. how much would you pay for a 37-year-old computer? coming up, we have more on the auction of an original apple 1 when we return. ♪

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welcome back. futures looking up about 71 points higher. let's call it 69 points right about now. making headlines this morning, one of the few remaining apple 1 computers? it could be yours. today's the last day for an online bid at christie's. an hour left. the current hider bid, $320,000. coming up, several stocks on the move this morning. only one can be the stock of the day. we'll unveil it. and to keep our commitments. and we've made a big commitment to america. bp supports nearly 250,000 jobs here. through all of our energy operations, we invest more in the u.s. than any other place in the world. in fact, we've invested over $55 billion here in the last five years - making bp america's largest energy investor.

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increased red blood cell count, headache, diarrhea, vomiting, and increase in psa. ask your doctor about the only underarm low t treatment, axiron. stock of the day wd-40. raising the full-year profit. we're not going to say what you came up with but i think bellski got the state. >> analysts, joe, analyst. >> if you use those two clues -- anchored and big mouths. >> there you go. >> yeah. >> well anchored and big mouths. >> i'm mad i didn't get it. >> we're not going to talk about

it. >> i think of joe carney. >> that's true. that's true. >> there you go. >> we should thank our guest host this morning. >> yes, yes. >> it's been good. >> rebecca has. he wasn't. >> it just felt like he was here the whole time. >> anyway, make sure you join us tomorrow. "squawk on the street" begins right now. good tuesday morning. welcome to "squawk on the street." at the new york stock exchange, cramer is off today. finally got the first earnings report under our belt. alcoa with a slight beat. futures up after the highest close for stocks in about three weeks. nikkei at the highest in six weeks as asia mostly higher. the yen back to 101 against the dollar. there's a look at the 10-year this