Transcripts For CNBC Squawk Box 20120529

euro has not been a good thing for them. but they still don't want to go back to their old currencies. this is a poll taken by the pew research center in washington. it talked to people in germany, france, italy, spain and greece. >> in corporate headlines, after a three day weekend, jpmorgan dipping into the cookie jar. the bank selling an estimated $25 billion of profitable securities in an effort to offset trading losses tied to the bank's infamous london whale. it will trigger taxes on the gains by eliminating future earnings from the securities. and it's official, the crippled law firm dewey filing for bankruptcy protection. it will seek approval to liquidate its business after failing to find a merger partner. you knew this would happen. this marks the biggest bankruptcy of a law firm in u.s. history. and finally a human genome investor has filed a lawsuit wants the company to be restrain president using a poison pill in response to the hostile $2.6 billion takeover offer. also this morning in stocks to watch, foxconn has reportedly received orders for a trial production of apple tv. this according to a chinese news source earlier this month, foxconn denied reports that apple was preparing for which would be called itv. and facebook options are available today. the company shares have been trading on the nasdaq for six sessions. i was trying to figure it out about the facebook phone that was all over the weekend. research in motion which suppose lid could be easily bought by facebook as a platform since facebook is a software company, reportedly preparing for a major restructuring. it will eliminate at least 2,000 jobs worldwide. you read all the stuff about the facebook phone. they tried to make it and it's like this is really hard. a bunch of chips that have to go this here. so they hired all the people from apple to come in and they said you change one thing, and every antenna has to be switched around and this is really -- it's hard work. so we'll see. but supposedly it wouldn't need to be a ground shaking phone that would displace the iphone. they would take on android apparently because all these -- i'm lost trying to figure it out. but did you realize that should be their next step? >> i actually don't think it should be. but they think it should be. what am i to tell them. >> i wouldn't put it past to you think you know better. >> it's not that i know better. i tried to do facebook on my mobile devices. it's very difficult. the experience is not nearly as good. and a bigger problem to sell advertising. you layer in the advertising and you have a secondary problem. >> there are carcasses on the landscape of people who ride to make smart phones, right? hp and across the board. >> google had to buy motorola. >> yeah. so for a lot of most which -- you have a new sort of shrinkier air did this morning. it's kind of sexy. like you're looking out from under it sort of. like a hither thing even though you're not wearing red, right? i look at her objectively. i'm thinking about -- >> and i can guarantee you do. >> i look at her objectively and think about what viewer -- i can't vouch for viewers because of some of the pervs that he where i write in here. >> he look at how he points that camera at you. of course you're married and makmax is over there hiding. >> my big brother. >> you have a big one, don't influence. >> no, i don't. >> you are the oddest. you're the queen, that's right. let's get a check on the markets. futures are looking stronger. up by about a 4. s&p 500 up by just over 5. remember we have a trading shortened week, but we also have the jobs number coming up on friday. you'll see if you take a look at oil prices up about 35 kreptss. i saw gas at $3.39 yesterday. >> for memorial day. >> supposed to be going higher and it has not been. >> is that good, though? i don't know. it's good, but it just means -- >> the reason is coming down is because of demand. but other than that, it's all good. we did talk about how spain is looking at incredibly high borrowing rates. set a record friday. right now the u.s. ten year note yields at 1.717%. the dollar up across the board. and euro trading at 1 about..25. gold prices up a little higher. $1572.60 an ounce. >> obama administration plans to arm italy's fleet of drone aircraft. the "wall street journal" says the move could open the door for sales of advance hunter killer drone tech knowledge to other allies. do you remember the last time -- did you see terminator some het? hunter killers. and i saw terminator 2. >> that's the one i actually saw. >> saw terminate ter twice. arnold, full frontal in terminator one, which is a little hard to explain to my kids if you haven't seen it. no kidding. >> i don't remember that at all. >> my point is that we got this stuff and the uk has it. why does italy need -- out of all the countries in all the world, italy needs some hunt her killer drone -- why? >> i don't know. >> do they have domestic issues? i mean, i understand business and selling stuff to other countries. italy has operations in afghanistan and i understand why they need it, but i just thought it was a little bit odd. it really is called hunter killer. >> and you combine it with the cloud. >> that's when you get worried. actually, we're past the gates in the renlg terminator where this was supposed to start happening. >> i have to go back and rewatch. >> now you want to watch 1 because i told but arnold. >> what about 3? >> 3, too, but 2 is the straightening one pmt. >> a squawk ward moment. >> you see his butt, but you don't seat full frontal. anyway, this is when he's walk up, i think he's at the hollywood like the observatory up there in griffith park. and bill paxton has blue spiked air. >> that's bill paxton? >> that's bill paxton when he was young. i didn't way -- and then arnold comes walking out of the dark. what a shocker. uk government says pasty -- >> it's their pies. >> or pastry if you'd like to call it that. >> i see pasties, i think -- >> no, no, no. ♪ >> i know what you were thinking. i'll take your word for it. they'll no longer -- >> you eat them in the uk. >> have v.a.t. the change comes after protests from bakeries and others over the budget proposal suggesting any food served above a certain temperature would be taxed taxed at 20%. >> you have to start worrying about food safety issues. >> aim going to google pasty. >> i think i know someone who could help us with this. kelly evans, she is standing by in london. kelly, help us out on this this. >> wikipedia has my -- any way, go ahead. it has my definite it nation. >> it's been the same thing over here. it's pronounced pasty, because we alle i in the u.s. it's a different term. we can show you some pictures. they're savory breakfast treats and they're at the center of the tax budget plan here. >> in wick speed yarks the first definition are the patches that cover anatomy and the second did i have any is the pastry. so my mind didn't go there because it's in the gutter. >> i've been trying to keep a straight face reporting on it over here. but, yes, pasty. in any case, that's what's been happening in london. but the real story is what's happening in spain. we're about even, but the biggest declines are happening among spanish banks in particular bankia which was down about 12%. at this point the stoxx 600 after trading in the group is now just barely lower. the big news of the morning is that spain taking news according to reuters to help bail out troubled regions and also to recapitalize. by not necessarily injecting bonds, but by basically doing it the same thing in a roundabout way. down just shy of 2%. cac 40 in paris looking better. xetra dax is up. and ftse 100 now lower. when you move a lot of private sector debt on to the public borrowing sheets, your costs jump. italy okay this morning, but spain 6.493%, that's the level now, but the key threshold now, 6.5% once we go up further through those levels, we near bailout levels that we've seen in other nations and of course it just generally gives you a sense of how investors view risks there. the euro-dollar again the one to watch this morning. we're in the green earlier which indicated that we might have had an okay session. details came out about bankia. spanish retail sales were terrible. so now lower on the day. >> all right, kelly, thank you very much. >> i have something for andrew. i have an award for you. >> you have an award for me? >> because you went to paris. >> this weekend. and i enjoyed the euro being at such a low -- >> but he just to prevent anything from happening to you even worse than going to france, i gave you arthur brooks book to read. road to freedom. >> you did. >> and i offered you a dollar a page if you would read it. >> dyou did, it was a bribe. >> he did read it and i have a presentation it for you. i'll give this to you since you're back from france. >> i just want to show you -- >> i want to find out what you learned, but here's a check. i'm talking to my accountant, i may be able to write this off. >> just know you gave me a real book. i read it on the ipad. >> there are footnotes. he's trying to squeeze me for the footnotes. you're not getting paid for the note into thes. 175 pages about. >> 214 pages. i went online and read some of the footnotes because if you do it -- if you read this way, they have links in the back and you can click on the links. >> here's your check. >> how much are you paying him? >> $175. that's how many pages there are. i want on just read one thing. i'll tell you what i learned. >> are you going to expense this? >> i'm going to write that off as a business expense. >> then maybe you should go to 215. john, listen to this. it these are the two ideas for america for a government and what it should do. >> and i want to say thank you. one real -- >> let me read this p. the first idea is that the key to our success as a nation resides with the government. the government will restart our economy with more stimulus, more taxes and more borrowing and morally, and i always get this from you, the government holds the secret to fairness through income redistribution and taxation of the wealthy. the government will lift up the poor and disadvantaged, we need government programs in order to pursue our happiness. that's one way of looking at it. >> that's not his way. >> here's the second way. the second idea is that the key to our success lies in free enterprise, that the system our founders left us to maximize liberty and create opportunity and reward entrepreneurship. it waet kr5e9s the opportunities will is why people came to america to pursue their happiness, they weren't nobility, no upward mobility where there were because they weren't nobles. and over here, they were rewarded for hard work and personal responsibility and made it country of the immigrants the most prosperous nation in the world. earned success versus -- now, did you really -- reading this, what did you disagree with? >> my big takeaway, we actually are in agreement small government traditionally better than big government so long as there is some form of a social safety net, but the safety net is not to bring people up to a level, but is really to make sure that they don't fall. >> a bridge. it's a bridge hopefully to -- so we got that. >> that's a large theme throughout the book. we have to tackle entitlements. something i've with an wanted to do since the day i met you. taxes, his view is lower taxes across the board. i agree with that in the context of one thing that he says is very important in the book. which is that the other side of this is this awful thing call crony capitalism, the idea that we have loopholes in the tax system, that we have cronies paying people in some cases more than they should be paid because they're a part of this. >> this is not divided down political lines. it's not. >> and actually i can get behind a lot of what's in this book because at the really makes sense of it, but you do have to do all the sides of it. the problem is to make it work -- >> robert rubin says next year is the year to do it. >> he says the fiscal tax cliff will put pressure on everybody, both political parties have something to lose and they'll have to come together. >> this is not something i think i disagree with, but he doesn't really -- he talks about about inequality, but he doesn't really address this issue. i do ultimately think that inequality just by reading other historical books can become a problem from a social perspective and what that ultimately means to government and to voting and frankly to the economy because you've seen what happens in the arab spring and this and that. so there are other aspects to this. but i would actually tell you that this book i think i learned some things and i actually think i agree with a lot more of it it than you probably thought i would. >> anybody that reads it i think pine and he will go what is have i been thinking my entire life. like john lackey was a total liberal. the play wright. he has no friends left to talk him out of it because he read one page and road to surf dom which made him devour the rest of free enterprise type -- >> the only thing i would say is i don't think it should be ideological in terms of being dogmatic about one side or another. what i'm saying is i agree with most of it, but i agree with most because i think the economics of what he's saying work and make sense. it's not because of a view that i have now as a result of the book. so much as because i think the math works. >> we got to talk to harwood after the break now. i think if harwood and this book got together, the universe might end. it might be like matter running in to each other and we -- there may be nothing left. tdd# 1-800-345-2550 let's talk about the personal attention tdd# 1-800-345-2550 you and your money deserve. tdd# 1-800-345-2550 at charles schwab, that means taking a close look at you tdd# 1-800-345-2550 as well as your portfolio. tdd# 1-800-345-2550 we ask the right questions, tdd# 1-800-345-2550 then we actually listen to the answers tdd# 1-800-345-2550 before giving you practical ideas you can act on. tdd# 1-800-345-2550 so talk to chuck online, on the phone, tdd# 1-800-345-2550 or come in and pull up a chair. john harwood joins us from washington. i don't know how much of that last conversation you were listening to. >> i think that joe is totally expense ing that check. >> all part of it. i'm justified to do that, right? it is a business expense. my accountant is looking into it. how about andrew trying to get me for the footnotes. i offer him a dollar a page. >> the dude is a capitalist. what do you want? >> he is now. i actually respect for you that. >> and i read the acknowledgeme acknowledgements, too. >> more pages. hey, john, we know that today is the day romney is expected to take the actual mantle piece for the republican nominee. >> this is when joe and i are confirmed correct in our predictions. we've been talking about this for months. and we sort of -- we were saying we were correct in january and february, we were going to be correct and it was going to work out. now it's going to be certificate p vert filed. >> and there's a column laying out the reasons why for why he thinks rob portman would be a strong vice presidential candidate. >> i read that column and i agree with every word in it. i think portman is the most sensible -- there are several sensible choices for romney if he wants to avoid the palin problem, if he wants to target a state that is significant or a region that is significant, and have somebody who reinforces his own strengths in the race. i think rob portman does that better than anyone else. and so we've talked about this on the show before. that's where i'm putting my $175 check down in terms of wagering on where romney will go. we'll see. most vice presidential choices surprise us in one way or the other, but i think that's a very strong possibility. >> how much of it because of ohio needing the votes there? >> clearly mitt romney needs to carry ohio. that's a takeaway that is very doable. maybe especially more likely than not that romney takes that state from obama. portman could help that. vice presidents don't really deliver states very much anymore. lyndon johnson delivered test as for jo text a fas for jfk. many candidates have not tried to take a state. george w. bush with dick cheney had a particular role that he wanted for fill, a particular function he wanted his vice president dick cheney to perform for him. he needed experience, he needed gravitas and he got that, but it turned tout to an controversial choice. bill clinton picked al gore, somebody to reinforce his strengths. and i think that would be the kind of choice that romney would make if he picks portman. >> we're watching the markets for this jobs number on friday. but it's something that the campaigns have to be watching very closely, too. when do we get to -- every jobs number is important, but i guess next couple are incredibly important for the election. >> the political scientists will tell you that the way people peel about the economy in the early summer of an election year tends to be where their attitudes kind of harden about where things go. so that's one reason why the number is important. also important because we've seen 2012 begin to repeat the pattern of 2011 where we had robust growth at the very beginning of the year and then we have a stall. and every degree to which our economy slows down, stalls, the job market soften, austin goolsly thingools austan goolsbee thinks the prospect is getting smaller because of what's happening in europe and other factors. that makes obama's path to wing a second term more difficult. you know, it's one thing with 3% growth. another thing with 2% growth. and if you continue to get that job market improving and unemployment coming down that brighten's obama's prospects p and if we get confirmation again that the recovery is slowing, that it's not as strong as we thought it was, that's a sign that mitt romney and maybe rob portman will have a better chance than we thought a month or two ago. >> john, thanks you very much. >> coming up, the facebook fallout and what went wrong. [ engine turns over ] [ male announcer ] we began with the rx. [ tires squeal ] then we turned the page, creating the rx hybrid. ♪ now we've turned the page again with the all-new rx f sport. ♪ this is the next chapter for the rx and the next chapter for lexus. see your lexus dealer. between morning and welcome back to "squawk box." i'm joe kernen along with becky quick and andrew ross sorkin.mo back to "squawk box." i'm joe kernen along with becky quick and andrew ross sorkin. the first day of the rest of andrew's life after reading road to freedom. >> is arthur brooks going to come on the show? >> i want to make him a con contributor. you got arthur and then you got -- well, i won't go into it. but at a network and all of our sister networks, we have a lot of work to do to try and maybe just make things, you know, kind of objective. fair and balanced, right? we have some work to do. >> but it would be boring. >> me and you? >> i disagree with everything you both say any way. >> what about this? top stories before facebook options will begin trading. targeting the underwriters as shares fell below the ipo price. francis gaskins is with us. i said this beforehand, when it's all said and done in hindsight, we'll have all the answers. and it always happens that way, doesn't it? i look back now and i think we should have seen -- we did talk about a lot of the issue, the 25% increase in price from selling shareholders. we talked about a lot of that. but at this point, it just seems like we should have seen it coming. >> that's true. what i noticed over the weekend is that the message boards have turned incredibly negative on facebook. two weeks ago everybody was positive. somebody puts out a comment that says facebook is a buy at 30, they get totally slammed. i think part of the problem is zuckerberg got married the day after and then they totally disappeared. and i'm just trying to think of analogies. remember e.t.? phone home. hello, mark, phone home. he didn't do it. and then there's another movie out, catch me if you can, that kind of applies. where is he. and thenan another analogy is y play monopoly, you pass go and get out of jail free card. all those things, people are talking about those things. and then even on youtube, there's zuckerberg the musical, which is a parity. any of never seen anything change so quickly. what the bulls talk about, which now people aren't believing, they did believe a couple weeks ago, people believe about the facebook phone coming out and that was going to be one way to monetize mobile. and then but who is going to use a facebook phone and have their -- facebook has privacy issues. we know that. but you don't want them tracking your phone and doing all that kind of stuff. and then the bulls also talk about look at facebook, they'll become an e-commerce company like ebay and amazon? i don't think so. there was a recent survey that said that 82% of the people don't want to give their credit card to facebook because of the privacy concerns. and then over the weekend, there was something where facebook said they'll get in the money transfer business in russia. that's stretching. they might make money in the money transfer, but facebook scale is so large. that independent could have stuff just doesn't count. >> and there's an article in the "new york times" over the weekend, where he suggested that we're make too much of this, that facebook's ipo was a success because the context for an ipo in his mind is raising capital at the maximum possible price for facebook the company. he says virtually everybody who bought facebook on that first day was making a one day get rich quick calculation, quote, it didn't work out, too bad. what do you say to that? >> i read that article. the thing is there's so much stock that will hit the market as we all know in the next trhre to six months that normally what you do in an ipo is you offer the stock and then create additional demand for the stock coming to the public. but i think what happened here was, right, the selling shareholders pocketed -- the scale is enormous. total market cap with vink ga was about $8 billion. zuckerberg probably blindsided the investment bankers. and from their side, they shouldn't have accepted it. aren't they analysts? can't they check the assumptions and do it? so it was okay for the shareholders. they bailed out. and never to be seen again except for when more stock is coming out. so the whole thing i think has been -- the problem i have with it is that now the retail people that thought there was free money and by the way there's no free money, they're a little bit jaundiced about the ipo market and some probably shouldn't have been in there in the first place and they probably won't come back. so i'm not sure -- i don't think it was a success. >> i can almost -- i never know what the hell he's going to say honestly. but in this case, i think he's missing the point francis made, that all those selling shareholders got monetized at $104 billion. and they got their cash already. and the selling shareholders collected as much as the entire market cap valuation of those other companies when they went public. to get out of $8 billion worth of stock at market cap of $104 billion for the company that's huge for those people that got this early. you wonder why they accepted, say, yeah, i'll take 30 whatever -- what was it? you wonder why they took $38? if you were bono, would you take $38 if you got in at $2 or something when you may never actually be able to monetize it at $104 billion. so it wasn't just the money -- if it all went to the company for corporate proceeds and it was going to be used to expand facebook, it's one thing. but letting every single angel investor get out at $104 billion market cap is shameful. >> i think we'll have to see where it is in 30 days, 90 days, 108 days. >> you can figure out hates wall street, hates 1%, but in this case because -- >> joe actually has a view which we've debate this had issue before. and he wrote a column about linkedin where he said the price was too low, that the company lost out and the bankers won. this is the opposite. >> left money on the table or take -- >> when you write a column will, you get to be a professional monday morning quarterback, so it's difficult. >> in is true. francis, thank you very much. among our other top stories this morning, there are continuing questions about the stability of greece. jewel kulia chatterley joins us athens. what do we know about public opinion polls at this point? >> well, it's very interesting. we had five public opinion polls published over the weekend. all suggesting that the new democracy, the conservative party, is pulling ahead of the leftist syriza party that's caused the market so much concern. they have's talked about ripping up the bailout deal, but they have tempered their language. the other news, the four largest banks here have finally received their first recapitalization, 18 billion euros to the four largest banks. it will allow help now regain access to liquidity from the european central bank and reduce the need for emergency liquidity from the central bank. so it's a positive step. i do have to temper that, though, ultimately the finer details of this bailout, this recapitalization program for the banks, are yet unknown and they won't be decided until after june 17th after election results and hopefully see a new government. and this is one of the keyica w see written down before they'll provide the next bailout. and of course the financing conditions in the interim period is still a huge concern for the markets. also toon the political side, we've had a leftist party, a much smaller party say that these are a couple of ways of how we would enter a coalition. and they do seem to fit with what we're hearing from new a democracy and from pasok. so if you look at what we saw at the last election, these three parties now could have formed a viable coalition government. the election is still arguably wide open, but we are seeing positive signs here from greece. back it to you. >> julia, thank you very much. if you've got comments, questions about anything you see here, squawk@cnbc.com. coming up, what the situation in europe means for the markets here at home. kevin ferry will be putting it all in perspective next. 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[ male announcer ] it's a network of possibilities -- helping you do what you do... even better. ♪ welcome back. kevin ferry joins us from the futures pits in chicago. it's he been a long weekend and a lot of news about europe, what's happening in greece. what is the issue du jour for you? >> i think things where looking better and equity markets holding 6, 7 points higher right now. but the key was deterioration from the spanish. most of the weekend feelings were that they were going to go away from the debt markets to recap the banks in spain and looks that the call from the ecb was that they would not take part in that type of collateral. so that deteriorated about 3:00 central time this morning. >> how much are you looking at the elections in greece and what's happening there, the polls, everything else? >> less so. but mainly because the polls shifted a little bit more towards the yay austerity crowd. but i think that overall they feel 18 billion, whatever, at least they're dealing with a much smaller factor. so traders are definitely more in the domino effect keeping an eye on spain and keeping an eye on italy. that type of thing. and so the tone looks like it's going to shift. >> so set the table for the week. right now bullish, bearish? i know it's only 5:54 where you are. >> here's the apprehension. traders would like to see a change move come from down. so buying the market up 6, 7, 8 handles, even more than that last night, is not the way they want to see this develop. second of all, as this large information week here in the states comes out, we're also shifting from june contracts to subcontracts. ultra bond in september is probably one of the most expensive new pieces of paper that people will be trading with. so watch the shape of the curve for that. so i think the good part of this andrew is that the headline news should shift from political and training news in europe towards domestic information here in the states as the dominant factor. so that will be the key for this week here. >> so walk me into this friday when we could get the jobs report. what's the play ahead of it and what's your sxenltation? >> i'd say continued trepidation into it and our view is more positive out of it. so we're trying to buy the market equity wise on the cheap by fear, by headline. a lot of rumor mongering that has caused vol volatility. use that to get on the good side of the market and these will be new sep contracts we're trading in treasuries by friday morning's number. keep an eye on those things. they're in record unchartered historical never been here before territory. >> why is everything so calm today with spain? >> that's a good point. i couldn't really put my finger on why, but it's started for develop in our view thursday and friday. you could see that the market -- although there's no real release of the collateral, no release of the flight to high quality paper that you would expect there better news, the news did seem to calm some. so i still think that's the country to watch over greece. and i think that eventually someone will grow a brain over there and they'll fund it. and when that happens, i think that will set the tone -- >> all of the banks? >> there will be a little bit of triage. but that's what's interesting about bankia being the key right now. i mean, you don't want to get into another dexia or something. they're just going to have to draw line and say these guys may get it, these guys don't. and so -- >> crazy, though. i don't understand what they're talking about. swap for government bonds and then the ecb -- just such a reverse repo -- i don't know what the hell we're doing. >> that's right. it's destruction. >> all i do read is if bankia goes down, spain goes down. and it's at 6.5%. if it gets to 7% on bonds, then that's the same level that -- >> and that's more than 5% over the german bund. >> where is it today, is it trading? the bonds. >> 6.47. >> so they're not 7 yet. okay. >> no. but even though over the weekend we were saying this, to heck with the country. save the banks. we're really through the looking glass here. but again, default, print, move on. we're heading in the right direction. it's just really messy stuff. >> ke >> kevin, appreciate it very much. we'll seal you later this week. coming up, the alpha masters are rarely seen or heard from publicly. but these hedge fund managers are changing the investment world. we'll bring you a rare inside look at names like paulson, dalio ackman. of how a shipping giant can befriend a forest may seem like the stuff of fairy tales. but if you take away the faces on the trees... take away the pixie dust. take away the singing animals, and the storybook narrator... [ man ] you're left with more electric trucks. more recycled shipping materials... and a growing number of lower emissions planes... which still makes for a pretty enchanted tale. ♪ la la la [ man ] whoops, forgot one... [ male announcer ] sustainable solutions. fedex. solutions that matter. we're in the chairs on this tuesday morning and we're adding a special author to our box book group today. sheep has spent the last three years putting together "the alpha managers." you get behind it in a way in a i don't think we've seen before. >> thanks, guys. thanks for having me. >> and we all call you by one name because you're a one-word person -- >> like madonna! >> exactly. >> eye like talking about a dalia because we've had him on. he never came on but someone came on because someone said he had a cult. and he came on to refute that. but i wanted to join his cult. >> the world bean was his first client. they convinced dalio to manage money. mcdonald's hired him to hedge chick i don't know prices. >> what made you want to write this book? >> a couple of my sources came and said you have incredible access. >> best rolodex in the business. by a mine. >> only because it's the best show in the business, right in people actually want to come on where we're all working toward a collective goal here. >>. >> what about at thor? >> goldman said it might be suggested he made some questionable trades. >> you have a chapter of the man on the other side of the jpmorgan london wales, tell bus it. >> boaz weinstein, he started on wall street at 18, i started at 17. he way more intelligent than i am. he got in on this trade on november of last year and he presented it at the harvard conference that cnbc covered in february and it recently got picked up in the news. >> the "new york times" had a huge write um on him in the sunday business section saying he's the first guy that stapott the problems in the markets. >> there's only one jpmorgan but how many hedge funds did really well on this? it could be $4 billion they split up eventually, right? >> right. >> but it's also about being the market, be so large in the trades that you become the market so everybody feeds off of you. >> you spent so much time with so many of these big name hedge fund folks, is will there a theme, something about them collective collectively, something that you take away, the way they think about the world that's even singular or -- >> for sure. there are a couple of common commonalities i didn't figure out until recently. every one of these guys is self-made, they're all relentless. dalio started caddying when he was 12 years old. >> are any of them happy and well adjusted? >> they are happy. >> it's not about the money. >> it's not about the money because they could buy us and sell us 1 times -- 12 times over. >> squawk will be right back. it's like, ah, it's part of me. ck. it's me again. now that i'm retiring they all have plans for me. i'm excited. ♪ ♪ ♪ [ male announcer ] the tight-turning, space-saving, eco-friendly smart. escape your stuff. ♪ in that time there've been some good days. and some difficult ones. but, through it all, we've persevered, supporting some of the biggest ideas in modern history. so why should our anniversary matter to you? because for 200 years, we've been helping ideas move from ambition to achievement. and the next great idea could be yours. ♪ powering america's future. southern company's ceo tom fanning is here on what policy makers in d.c. should be doing to ensure the country's energy supply. >> cracking the activist. bill ackman on the move. we'll talk about what he's buying now and why. >> and it's time for trump tuesday. the donald speaks out on politics, jobs and the economy -- >> i think it's going to be amazing. >> the second hour of "squawk box" begins right now. ♪ money, money, money, money i'm becky quick along with joe kernen and andrew ross sorkin. let's get to your headlines. spanish stocks take a hit this morning. retail sales dropped 9.8% compared to year earlier. greece is supporting its four largest banks with an 18 billion euro injection. the money is coming via bonds through the european stability fund. the data on home prices will be out at 9:00 eastern board. the may consumer confidence index is later and the futures are indicated higher this morning, despite all those concerns about greece and spain. the s&p futures up by just over 8. europe continues to be a focus. julia chatterly joins us from athens with the latest. julia in. >> the greek banks have received their first infusion of capital. this is one of the keefe things that the eu and imf still need to give greece the next piece of the bailout puzzle. also positive results from the polls we got over the weekend. each one of those five polls showed the new democracy, the conservatives here have been pulling ahead in the lead from the leftist party. they want to negotiate with the bailout and they want to do it with europe in tow. the election result we're expecting on june the 17th still wide open but we are seeing what seems to be positive signs. i think that's what helped lift the markets yesterday. >> thanks, julia. appreciate it very much. our guest host is the chairman and ceo of southern company and appointed to the atlanta fed's board in february. his name is tom fanning. thank you for being here. i want to talk to you about the economy and about greece. because we introduced as a new member of the fed, tell me what's that like. an issue has been who sits on the board because jamie dimon is on the board of the new york fed, runs jpmorgan and there have been calls from some critics that he should not be on that board. tim geithner was quoted as saying maybe there's sort of a -- it may look bad, it may not be a problem but he sort of suggests that we don't want to get it all muddled. i'm curious how you think about that. >> my experience with the fed board has been terrific. the quality is terrific, they have the right purpose in mind, they do quality work. i've been very impressed with them. why am i on the board? we're the largest electric company in america. we're a long smaller than the nation of australia and we cover pretty much the southeast. we're a dynamite indicator of the economy and what's going on. some of the members of the board help inform -- >> it's an advisory role. >> absolutely. >> do you think there's a problem with bankers being on the board? >> no. there's three different kinds of directors and some of them are banks. i think that's important. i think it's fully appropriate. >> i am with you on this but i was curious of what you thought because people have made such a big issue of this. have you been watching this, joe? >> a little bit. i wastorying of some of bloomberg's comments over the weekend about where we are with pension assumptions, we're all at 8%, 7% is a joke. i have to give some props to fanning here because i'm looking at a ten-year chart -- >> southern company. >> that's a winner. >> look at the dividends. >> average annual return, 11.8% over the past ten years if you reinvest the dividend combined with the principal. and that can be done in a conservative way. i'm worried about dividend tax policy. >> absolutely. i think that's huge. but before you get there total shareholder return 11.4, on a risk adjusted basis we look terrific. now, dividend policy. really i tend to talk about kind of fiscal responsibility in three layers, one of those is tax policy. the first one goes to overreaching regulation. when you look at the hidden tax on the united states economy by overreaching regulation, particularly now, bad news. secondly, we got to get our national financial integrity in order because what's coming if we don't is inescapable higher interest rates and higher taxes, which will slow down our chances to grow the economy and the third thing of difficult dead taxes. why in the world would federal policy dictate people po move into higher, riskier investments. think about financial policy. dividend yield is particularly gook where there's muted economic growth and perhaps a view where the future is riskier. they require more income as a result. that's particularly where we are right now, right? if you look at credit quality by stocks that doesn't pay dividends versus people that do, credit quality is higher for dividends that do. why would tax policy favor higher risk investments in an environment look this? look at the demographic of america, people going to retire. we should keep alonged dividend and tax rates. one of the propose als is to ta dividends to 43% and any prag l -- rational investor would go to capital gains. >> we seem to see a recovery, albeit fragile. one of of the issues we've had is we haven't attracted job growth like we wish we would. one of the nings that taxing capital formation does, it tends to inhibit cap-x. >> how much do you do in cap-x? >> we do over $20 billion a year. it's particularly important for to us have tax policies that encourages capital formation, that encourages cap-x, that encourages job growth and growth in personal income. >> you tie all those taxes to the same level and it meets one level, which is making sure it's connected to cap gains. and that was ronald reagan approved. >> we need to keep capital gains low. >> what if this was something put off for two or three years. robert reuben has a piece in the journal today, he said we should do this but down the road so the economy has a chance to rebound. >> if the notion is we're going to defer until we see, i could be for that. but here's the other idea. i'm on the business round table and active in this discussion. the notion is that the tax system is just broken. this is southern company's math. but i think this math generally holds true for corporate america but it's way off for certain companies within corporate america and that is i'd be willing to trade every tax benefit we get, you name it, in exchange for a lower corporate income tax rate and that for us would be about 25%. >> what is your effective tax rate now in. >> it's an s curve. during stimulus where they gave immediate write-offs for cap-x, it's low. >> being? >> under 10%. >> but in a normal year when you don't have stimulus, it's up above 33. and then generally the math for the -- >> the business round table, this big plan that could come next year, you need these guys on board and they probably for the most part would get on board with 25 to give up everything, unless you make ethanol or something. >> but the devil in the detail there is that so many people have different pets in there, oil and gas production -- >> if you can lower the corporate tax rate, make it 25, 28, but get rid of all the loopholes, how then do you feel if we were to lower overall income tax rates but include capital gains and dividends in that? what happens then? >> so then you go to becky's point, tell me where we're going as far as a sustainable economy. we are so weak right now. the surest way to create jobs is encourage capital formation and cap-x. >> up next, we'll be talking alpha masters, a look inside the world of some of the most powerful investors. fill akers talks about making money in this market. ♪ ♪ ♪ [ male announcer ] the tight-turning, space-saving, eco-friendly smart. escape your stuff. ♪ welcome back. checking the futures right now, up 70. spain is -- i don't understand how this works but we are going to do a rebound a little bit today. it hasn't been a great two or three weeks. goldman sachs has been forced to delay the launch of its new bond trading platform due to glitches. >> in the last hour we heard from one of our squawk producers, the author of the newly released " alpha masters." we're pleased to have one of the masters prominently featured in her book. we get to talk to you a lot and we have many conversations. in the book there were things about you we did not know. she was with you when you went to a class, i think it was at the wharton school and someone there asked you what it is that motivates people and you said -- >> you read the book apparently. i'm not sure i'm allowed to use that word on set. >> you are. >> i said sex. i was doing my best to attract their attention. >> that's what i wanted to know. is this something was truly believe or were you trying to get their attention. >> well, ultimately we're animals, right? we're motivated to succeed. >> you've seen the choo choo going through a tunnel, right? >> brain in the gutter. >> the problem with the book was i let her actually record what i said. >> so she had access to a lot of different things. >> that's correct. >> people look at a number of the trades you've made and got i don't know behind, jcpenney is one that search watching. this is a retailer that needed a turn around. you have ron johnson, who came in from apple, who has big plans but this going to be a painful transition. same-store sales were down 18%. what happened? >> it's expected plus or minus. when we hired ron to be ceo of the company, we said you make it happen. the company had to chang its image in the mind of the consumer, attract different brands to come to jcpenney and it couldn't do that in what had become an extremely promotional verne. if you walked into the jcpenney of six months ago, everybody would be 15% off, they would hand you a coupon as you walked in the door and come over the speaker if you buy now, it will be this much more off. so ron got away from that and marked the goods at a fair and square price. so insfed of coming in it's $40, you get a 50% discount and a $5 coupon. now he marks it with a correct price. ron has changed the brand, changed the image. the new product he ordered doesn't come in until the beginning of august. it's a difficult transition -- there are some extreme couponing people who we probably lost money coming on who may not come back but the people focused on quality and value and ultimately product, we should be okay. >> when do you measure? >> i would say we start to see real progress againing next year. s you'll see product next year -- >> you don't think there's a transitionary period once that new product is there given the customer base? >> the company focused on the brand marketing and didn't focus on the price and value offering. it takes time to educate the customer. time is your friend, because eventually people will get it. >> how much patience do you have? >> a lot of patience. ron started november 1st, they're working on store redesign, the new brands they'll announce in august and announce things on the technology side in terms of of the customer experience. i would say i'll take on jim cramer on jcpenney. >> the journal piece i read the next day said ron johnson's learning what it's like to run a retail outlet where you don't have products that are just jumping off of the shelf. it's one thing to design a cool apple store with nothing around and it's real austere and there's the products but you don't go into jcpenney and design a real store, you got to know what kids are going to buy, the stock, the prices. it's a pain. it's so different than apple, right? >> he went 15 years at target and then he went to apple. you can buy -- the apple ipad is a commodity product you can buy anywhere but people pay full price to buy at an apple store versus buying at a discount elsewhere. >> here'scpenneyjcpenney, you r railroad in canada. where wh do you decide to get into this? >> we look on the wide side in value, we tend to focus on large company north american businesses and look to stand what causes that spread to exist. is there a management error, a strategy mistake, is the structure of the business wrong, is there a conglomerate where there's hidden value? it's a discrepancy between what wor it's worth and could be worth. there was a negotiation over the principally the pension of the canadian pacific workers that began many months ago. i think even before the proxy contest started and ultimately they couldn't come to a resolution. pacific pension is probably 50% greater per worker and that's not really sustainable. >> what will your guy come in? when he comes in, he'll be able to -- >> i think if it's hunter harrison, who is a guy we had on the show who we think very highly of, he's always taken a very direct approach with the union and tries to come up with a deal that maximizes the benefit to both parties. i got a call from the union of the leader and said, bill, we've been talking for two minutes and this is more time than i spent with the ceo of canadian pacific and he's been there for section year. so our ceo, whether it'sunter harrison or ultimately whoever the board chooses, will sit down at the table and figure out how to make a deal and do it personally. that will help a lot as opposed to seasoneding a team in of negotiators. what i'm reading in the papers is the government is going to get involved and hopefully the streak will be resolved and hopefully a new ceo here can negotiate a deal that's better for both the worker and the company. >> we want to thank you very much for your time today. >> what about that book "alpha masters." i make no profits from the book. >> it's a great book. >> it is quite good. i read earlier versions of the whole book. you can ignore my chapter about sex. >> coming up, donald trump joins us from vegas at 7:30 eastern time. in here, great food demands a great presentation. so at&t showed corporate caterers how to better collaborate by using a mobile solution, in a whole new way. using real-time photo sharing abilities, they can create and maintain high standards, from kitchen to table. this technology allows us to collaborate with our drivers to make a better experience for our customers. 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[ male announcer ] one pill a day. 24 hours. zero heartburn. back to "squawk box" on this tuesday morning. among the stories that we're following this morning, at least 2,000 jobs and perhaps at many as 6,000 will reportedly be eliminated at blackberry research in motion. a major restructuring will be announced. and representatives are looking into bbp -- whether bp lied to congress. and "men in black 3" was the tops for the holiday weekend with ticket says of $70 million. >> done trump is hosting a fund-raiser for mitt romney this morning. donald trump, chairman and president of the trump organization. you have a place to stay out, there donald? >> i have a beautiful places are trump international and it's 4:30 in the morning and i'm watching you live and i think it's great. >> whoo-hoo, 4:30. >> are you in one of suppose suites from the first hangover? >> i don't know about hangover -- >> there's not a tiger in your room? >> nobody, just me. you'll be disappointed to hear but just me. >> i don't know where this whole thing with your buddy george will ever started but he -- what crawled up his butt again? >> years ago he spoke at mirlago and he bombed badly. i let him know he bombed of course. why wouldn't i? i've never been a fan. about six months ago he came out very strong against the republican party say they go couldn't win, which is obviously turning out to be false because some polls have mitt romney rom ahead. but he said that the republican party was not going to win the presidential deal and, you know, he's supposed to be a republican after all. he came out with some really stupid statements and frankly i let him have it. then he saw lots of people like me and he said i can't imagine why they're listening. i let him have it. i said he's not a smart guy, he's highly overrated, which i happen to believe. i let him have it and i guess unfortunately or fortunately the papers covered it and they covered it pretty big and that's fine with me. >> where are you now on this super pac? you were going to start one -- >> i think i am. we're looking into it now and i think we'll do our own super pac. a lot of people are coming and s saying will you put up millions, and if i'm going to do that, i ought to do it myself. >> how much would you put up? >> $5 or $10 million into a super pac and do your own thing. >> we're tacking about "road to freedom." you apparently think this election is important for the future of the company. sarah jessica parker had a fund-raiser for president obama. did you go to that? >> i did not. >> you were not invited. >> i didn't get the joke until you said that. >> what joke? >> but her parents -- she wants this country to be a place where -- i think she's from ohio, which embarrasses me a little bit -- where it's not about the 1%, where the middle class has a chance to flourish and in her view this is the most important election to reelect a president in her lifetime so people like her parents can have a fair shot in america. >> well, i think it's wonderful to save the middle class and i'm all for the middle class. i'm for the middle class probably beyond what she is and frankly i think that's what this election is going to be all about to a large extent. it's going to be the middle class and every other class. the country is doing so badly right now. you look at the inner city. let's not even talk about the middle class, talk about obama. you look at what's happening to the inner cities of this country, they are going down, 50, 60, 70% unemployment, they don't even exist and people are living in abject poverty and it's really, really sad what's going on. i don't know if she mentions inner cities, probably not. but you look at what's going on in the country and it's really a very serious situation, inner cities being number one. >> this is the ultimate question, though, donald, that's why it's some appealing to people with as rich as we are with the nation and as well as the one percenters are doing, why can't government come in here and help in areas like that? >> i think government can. i think the country has tremendous potential. we have unbelievable potential but the government can but we can't keep bowing down to china, can't be allowing china and other countries makes our product and build opec build airports and we come home to potholes all the way. i go to other countries, some of these super rich countries and to a certain extent because of us and i look at what they're doing and it's unbelievable, actually unbelievable. and then i come home and, you know, we used to be that country. you go back years ago and we used to be that country where we were admired by everybody. now we're laughed at. it's terrible. >> you my point is whether we go into this election, the average person on the street is going to maybe he's not as up on economics or all the issues. i mean, the case that the president is making sounds very plausible to the, i don't know, to a lot of people out there that more private sector involvement, akin to what a president romney would do would not be the answer. how does romney get elected by saying double down on the private sector? >> well, i think one of of the ways is just look at what's happening with this country. you look at our jobs, you look at what's going on with real unemployment, not the 8.2 and 8.3 where they don't count people that stopped looking for jobs. that's ridiculous. a person stops looking for a job because he can't find one and he's no longa arer a percentage the statistics go down. it's crazy. you have a lot of real unhappy people right now and that's being reflected now in the poll. romney is doing very well in the poll. i don't know if people are watching. the president can talk all he wants about class warfare but ultima ultimately if jobs numbers aren't a lot better than they are right now, he's going to have a very, very difficult time being reelected. >> donald, our guest host today is tom fanning from southern company. i know you're in las vegas. tom, do you want to lay out some of the tax restructuring arguments for donald and see what he thinks? >> good morning. >> good morning. >> reduce the overregulation and number two, restore america's financial integrity. behind that right now is inescapable higher taxes and high higher interest rates and, third, simplify the tax rate, make sure we have a much more transparent playing field to play on and more specifically don't tax capital formation, don't raise taxes on difficult depends, don't raise taxes on capital gains, encourage job prospects, personal encome growth. i agree on one, two and three. that was very easy. that's the easiest question so far today. i agree with tom and, by the way, tom run as agree company. we deal with them a little bit on different things, especially in florida and it's a great company, tom. congratulations. >> he laid out another point, though, that he would be willing to sit down and he thinks a lot of members of the business rond table would, would be willing to sit down and say we will trade off a lot of the tax breaks that we get in exchange for a lower tax rate, he said 25%. >> the dumb math would you if you give up investment tabs credits, accelerated depreciation, et cetera, the dumb math would say the equivalent tax rate is about 25%. now that's all over the map for different people in the s&p 500. >> i think it's right. the simplification, part of what you're saying is simplification, you have some arcane rules that are really wild. simplification is what you're really talking about and everybody is in favor at that and lower tax rates is very important. we're the highest tax rate in the world. plus we have to get some of the money back in that's sitting all over the world right now and can't come back into this country. we have to get some of that money coming in and tom would address that also i think with simplification. we have trillions of dollars sitting throughout that can't come back into the country because they're going tock taxed too high and that money has to be allowed to come back in. we have to be allowed to reinvest that money in this country, not in other countries. >> just to quick switch topics on you, i want to go back to the birther stuff. you were fanning the flames last week. are you back in the same place where you were before? >> i never really changed. nothing's changed my mind. you have a huge group of people. i walk down the street and people are screaming "please don't give that up." a publisher came out last week and had a statement about a young man doing a book, born in kenya and raised in indonesia. the publisher came out and said we made a mistake. what do we do? oh, we made a mistake. that's not the way life works. he's a young man doing a book and he said what he believed to be the truth. so there's a whole lot of things. his mother was never in the hospital, they don't know which hospital it was, his grandmother said he was born in kenya. it all wouldn't matter except if you're born in a foreign country, u you're not allowed to be president so this is a minor detail. so the publisher comes out last week and made this statement and said we made a mistake. is it an important thing? in a way it is because it says you're not allowed to be president if you're not born in the country. i'm not fanning flames. this is something that came out last week, a lot of people are questioning his birth certificate, questioning the authenticity of his birth certificate. i've been known as being a very smart giep for a long time. i don't consider myself birther or not birther but there are some major questions here and the press just refuses to cover it. now, if that were somebody else, they'd be covering it and throwing people out of office but they don't want to cover it. soap it's interesting. >> there is a weird -- in that same report that was on some of the conservative web sites and i haven't even confirmed it, donald, but there was a quote from one of his debates when he was running for state senator, i believe and one of his opponents said, well, this was at the time when the kenya thing was still on some of his biographies or something and the guy said you went money born here, he said it doesn't matter if i'm born here, i wasn't running for president at the time -- >> there was a quote. >> from him. but the question is whether there was a time in his life where he thought it was more attractive to be a more nt national type guy and maybe didn't change the impression that he wasn't. i don't know. >> joe, just to finish off, a lot of people want to see his college transcripts. they're not looking at his marks, his grade, was he a good student. they want to see what they say about place of birth. those transcripts have disappeared. nobody seems to be able to get them. i was able to get him to produce a birth certificate, if it was a correct birth certificate. a lot of people have very serious doubts. they want to see his college transcripts because they want to see what is he saying about place of birth. what did he say? well, he is really stone walling it, to use an old nixon term, he is really stone walling it when it comes to -- he just doesn't want to give those transcripts. what does he say at columbia and harvard and his other college where he supposedly did not get good marks and got into columbia. what does he say about place of birth? one other thing, the hospital. the mother was never in the hospital. these are minor details but they can't find any records that the mother was in the hospital. so it's a tough situation. >> you're not on a mattress on the roof of trump international, right? >> i'm in one of the most comfortable mattresses. it's called a trump mattress by serta. it's a great mattress, you should buy one. >> a trump mattress -- >> by serta. >> appreciate it. have fun in vegas. we won't tell anyone what you're doing throughout. >> coming up, counting down to friday's job reports. some companies looking to hire are having trouble finding skilled workers. and jackie suzy welch will be joining us as members of our prestigious book club. that's coming up at 8:30 eastern. we imagined a vehicle that can increase emergency braking power when you need it most. and we imagined it looking like nothing else on the road today. then...we built it. the 2012 glk. see your authorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services. you won't just find us online, you'll also find us in person, with dedicated support teams at over 500 branches nationwide. so when you call or visit, you can ask for a name you know. because personal service starts with a real person. [ rodger ] at scottrade, seven dollar trades are just the start. our support teams are nearby, ready to help. it's no wonder so many investors are saying... all ] i'm with scottrade. still to come this morning, the ceo of devon energy on natural gas prices and the company's energy policy. and in the next hour, the u.s. jobs picture as seen by the business round table president, john engler. plus we hand out a book club award to two of our favorite guests, jack and suzy welch. su. infrastructure, construction, production. we need it now more than ever. chevron's putting more than $8 billion dollars back in the u.s. economy this year. in pipes, cement, steel, jobs, energy. we need to get the wheels turning. i'm proud of that. making real things... for real. ...that make a real difference. ♪ [ engine turns over ] [ male announcer ] we began with the rx. [ tires squeal ] then we turned the page, creating the rx hybrid. ♪ now we've turned the page again with the all-new rx f sport. ♪ this is the next chapter for the rx and the next chapter for lexus. see your lexus dealer. welcome back. falling natural gas and crude prices could become a double whammy for energy prices. the president and ceo of devon energy, john, it's nice to have you on the show. >> nice to be here. >> when do you start drilling again? >> right now, as you know, at least as a result of winter not having occurred in a lot of the country last year, natural gas prices are very low. prices has traded as low asnd $2 in the last month or so and are just a bit over $2 today. that's what making oil and liquids rich gas drilling much more economic and create a better run for shareholders. but there's a lot of gas in the country that becomes pretty economical at a price of 3.50 to $4 and i'm sure we'll see it migrate that way in the future. >> hi, john, it's tom fanning. gas has gone from 16% to 47%. you're our fourth largest supplier of natural gas. now, what we want is lowest gas prices possible to serve our customers. the benefits of that we pass along. one of of the things i worry about in this historic shift in the united states energy infrastructure is what's going to happen to price and volatility when i think about things like exporting, things like shifting away from drilling the shale gas that we have now, when i think about -- when i think about production cost curves, when i think about demand consumption, what's going to happen to natural gas prices going down the road and what's devon's strategy to deal with it? >> tom, we've had a remarkable revolution in this country on the gas side, natural gas side, and we've got a wonderful opportunity actually. we've got a commodity that's abunda abundant, clean, safe, affordable, all pretty good characteristics. there's been a huge revolution with the advent of shale drilling over the last few years. as we go forward, we're always going to have some volatility in the price cycle. that's inevitable in any kind of a commodity but we think that the volatility is going to be much less than it has been in the pastt. the past where we saw natural gas prices fluctuate between $4 and $12, i don't think that's the future. maybe between $3.50 and $5.50 but this industry can get back to this very large resource that we've developed and respond to demand very, very quickly. the reason that there's volatility, there's always lag between prices and activity and then a lag between activity and supply. but we're going to be able to respond very, very quickly. so we got a lot of natural gas in this country. as you know, the potential gas committee, which is an independent committee headquartered out of boulder, colorado believes that at today's consumption rates weeks got well over 100 years of supply. so it's really a new day for the natural gas business in the united states. >> the data that i think about, though, if you think about kind of daily consumption, 67 bcf per day is the number i have, when i think about exporting, there are six or seven exporting facilities that could increase that by 13 bcf per day. if you get 10% transportation penetration, the pickens plan, that's another 12 bcf, when you look at my own industry, it's 10 bcf, so 35 on top of my number now, do you think the industry will be able to handle that? >> the other thing we have to look at is which portions of that and how much of those different potential demand situations move forward. for example, on the export, the export of lng -- >> john, i got to cut you off and i apologize because we have to go to break. we want to get you back soon so we can continue on this. >> all right. >> i gave you arthur brooks' book to read, "road to freedom." he did read it and i have a presentation for you, i want to give this to you since you're back from france. this is for you. >> here's your check. >> how much are you paying him? >> $175. >> i'd be willing to trade every tax credit we get in exchange for a lower corporate income tax rate and that for us would be about 25%. z >> i would say the bottom of sales for jcpenney. >> when do you measure? >> i would say we'll start to see real progress the beginning of next year. one that continually monitors and corrects for wheel slip. we imagined a vehicle that can increase emergency braking power when you need it most. and we imagined it looking like nothing else on the road today. then...we built it. the 2012 glk. see your authorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services. tdd# 1-800-345-2550 checking the charts. tdd# 1-800-345-2550 looking for support, tdd# 1-800-345-2550 resistance, breakouts, tdd# 1-800-345-2550 a few other tricks that i'll keep to myself. tdd# 1-800-345-2550 that's how i trade. tdd# 1-800-345-2550 and i do it all with charles schwab, tdd# 1-800-345-2550 because their streetsmart edge platform tdd# 1-800-345-2550 helps me trade quickly, intuitively. tdd# 1-800-345-2550 staying on top of the market is key! tdd# 1-800-345-2550 and the momentum tool, tdd# 1-800-345-2550 it lets me do it at a glance, tdd# 1-800-345-2550 so when things shift, i'm ready. tdd# 1-800-345-2550 then to track the stocks i have my eye on, tdd# 1-800-345-2550 i turn to schwab's high/low ticker. tdd# 1-800-345-2550 so i can spot a potential breakout tdd# 1-800-345-2550 before it breaks out. tdd# 1-800-345-2550 and get this...i can even trade, tdd# 1-800-345-2550 change my orders or check out my positions tdd# 1-800-345-2550 right on my chart. tdd# 1-800-345-2550 my system works for me. tdd# 1-800-345-2550 does yours work for you? 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>> you gave me a check $175, a dollar a page for reading "road to freedom." this is the future, i'm depositing the check online using the iphone -- >> you know what's great is he can frame it and deposit it. >> now i can frame the check. it's happening as we speak. it says use and next and it's confirming all of this information. in the meantime, we have some more news about chase of all things. >> you showed me on your kindle that the little things went blue when you supposedly read it. >> this shows i actually read it. >> but some of your comments today were so left wing you obviously just scanned the book. >> i actually went to the link and saw the harvard study that he used to get to some of those numbers. >> i asked you how many private sector jobs that are lost for every government job. you didn't have that answer. >> off the top of my head but it's in the first 30 pages. >> what did you get on your s.a.t.s. >> it's verifying and i am going to cash the check. and you say write it off, i wanted to know i considered this a check. >> it's a business expense for me. earned success here. >> jpmorgan dipping into the cookie jar to offset trading losses. the sales will increase their costs by limiting future earnings from the securities. over the weekend, some news that f foxconreceiving orders for trial production of the apple tv. and in another negative sign, the government reports retail sales dropped 9.8% in april and greece giving 22.6 billion to its biggest banks, allowing them to regain access to ecb eveneding. look at european equities at this hour. you're going to see a mix across the board, ftse is up, cac is up, dax is up. >> it's not affecting the futures here. dow up by about 62 points now. one question is account u.s. economy handle twhat's coming is way. vincent reinhart, we know there are some big questions now. we know that the job numbers on friday will give us a little insight. we're looking at a number of 160 to 165 but you're looking for a lower number in terms of payroll gains? >> for the friday number we're talking about 160,000 as well. where we're lower is we think the economy is in the process of going back to trend and trend is only a little above 2%. we get a little payback on weather so we think that at least for the next couple months we're in the neighborhood of 175,000 monthly gangs in -- gains in employment, taking into account the seasonals. >> i've spoken with some ceos reese lent ently who said things kind of dropped surprisingly at the beginning of may, there was a drop offin confidence, a dropoff of the things that had been coming through the pipeline. >> the world's a ris eke place, right? europe is back on the radar screen and even though that we've known that there would be a presidential election sense 1786, people are now only focusing on the fact that it really matters for fiscal policy. we don't know things like what the torn corporate income tax will be, what the top marginal tax rate will be, dividend policy, treatment of covered interest and attitudes toward environmental policy and the size of the military. ceos are sitting on a lot of cash but part of reason is they're not really sure what to do with it. >> vincent, this is tom fanning. i'm a big value of risk and return. risk is as important as a growing economy. seeps like the beta of the american economy is so much higher than it was in 2007. we're subject to event risk more than ever before. >> welcome to the fed, by the way. i spent almost 25 years there. i hope you have a good time. >> great folks. >> i think you're exactly right. the issue is essentially we went through a severe financial crisis. economies that go through a severe financial crisis l unfinished business, they grow a little bit slower for a long time after the crisis. and what that means is we're essentially flying the plane slower and closer to the ground and therefore more vulnerable to wind sheer. so i think you're right that we have to worry more about europe, we have to worry about the significant fiscal consolidation that comes absent legislation on december 31st. those are all risk factors that if we were growing faster, we'd be more resilient. >> the other thing i think about is about 40% of our customer base makes $40,000 or less. those people make hard decisions every day for every dollar they spend. when i think about the cost of overreaching regulation and the cost of government and the huger cost of the federal deficit, what do we say to those people? >> part of the problem of having large deficits and a big des death is we're less resilient. we don't have the resources to buffer against adverse shocks. we also don't get the chan chance to invest in infrastructure that could have a big payoff. so part of the answer is to tell the people the election should be contested on fiscal policy issues. every four years we say this is an important election, this time it probably true. this is our chance to litigate the issue, how big do we want the government to be, what do we want for tax policy. >> let say that we don't dpo some of the necessary this evening, we're at 25, it going to 38 in a couple years, the size of the government. there's a case made in this book we've been talking about all day long that our maximum potential gdp is no longer what it was in the 60s or 70s are 80s or 90s purely because of the size of our deficit and the size of our government. what do you think our maximum gdp potential is to grow? >> we've written down a trend rate of a little over 2%. >> is that not sad? we can't do anything. we can be like europe. but is that okay? because the other point is made that why don't we just relax a little? why don't we give the social safety net that everyone has -- why do we have to grow better than 2%? rich people are already rich. the answer is because we've lifted up the poor all around the world over the last 30 years as prosperity has sort of been exported around the globe. it the poor that are really going to suffer if we only grow 2% a year. >> we will be less resilient to shocks, less able to take advantage of myer return opportunities. my wife and ken rogoff and i just finished this paper where we looked at debt overhanks, episodes since the 1,800s, where economy himself public debt more than 90% of gdp and in those debt overhang episodes economies grew 1.2 percent and points slower when they had high debt than when they don't. we're oaf that 90% threshold. >> now, you looked at all the studies on that book. would you think that his study is valid or would you refute his study? >> i wouldn't refute his study. would you? >> no, i wouldn't. you like the other reinhart. you talk about rogoff-reinhart constantly but i think you ignore most of of the stuff the husband is saying, right? >> vens andrew says it's all the financial crisis. >> i want to be there for a dinner conversation. >> it's all because of the financial crisis, nothing to do with dereeg lags, tax policy. >> i want to be there for the dinner conversation. it would be interesting. >> so there's a couple things going on. financial crisis means we leave unfinished business, we got bad assets on intermediaries, those mortgages are impeding a lot of households' ability to function but we also have legislation and regulatory overshooting. that's a standard -- >> i'm going to pay $1 a word for vince. it's a free market, free enterprise. all right, andrew, thank you. you're the another gotten reinhart. he deposited the check. >> the check has been officially deposited. >> it's not a gift. >> it not a gift? >> i'm paying you for something. you need to declare it as income and i'm not going to pay the taxes on it. you only get to keep $100 and then you better do new york state tax to somebody. >> you already cashed it. >> where should we donate it? >> the brain injury alliance of new jersey. >> is that your -- >> does he have to pay taxes on it then? >> no, he gets to take it as a charitable donation. >> you have to declare it as something you paid him for, you get to pay the taxes on it. i'm already being audited. you guys are in big trouble next year. >> i hope they don't know kno w am with my comments. >> they're going through people's trash that give money to romney. they're going through people's trash. >> he's a former three-term governor of the state of michigan and former president and ceo of the national manufacturers. he's going to say some other stuff -- >> it going to be great. >> we'll talk jobs and competitiveness with john engler. and at 8:30 a.m. eastern, the first ever dual recipients of the blue chip book award, the husband and wife team jack and suzy welch will join us. 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[ all ] i'm with scottrade. in every way, shape, and form. it's my dream vehicle. on a day to day basis, i am not using gas. my round trip is approximately 40 miles to work. head on home, stop at the grocery store, whatever else that i need to do -- still don't have to use gas. i'm never at the gas station unless i want some coffee. it's the best thing ever. as a matter of fact, i'm taking my savings so that i can go to hawaii. ♪ . what happens when the tax cuts expire at the end of of the year? can policy makesers come to an agreement before that happens? joining us the former president and ceo of the national manufacturers association. john, i appreciate you being here. first question out of the box, how long how big a deal is it? >> it's a real big deal. that's what tom fanning has been talking about thois morning, th uncertainty, the risk. 60 provisions expired a year ago, 41 more about this december 31. we don't have a tax code so to speak, we just have all these provisions. how do you make a decision? >> the effective corporate tax rate, what should that rate be? >> i think it's possible, we had a big discussion at the end of the year when this committee of 1 was meeting, we thought it was possible to get to a 25% rate, doing a lot of what tom talked about where you do have to take a love of these tax expenditure, deductions, credits, they all go. we thought it could be done on a revenue neutral basis. the complexity goes up at the end of this year because while we're talking about a competitor corporate tax rate, modernizing our code, which hasn't been changed sense '86 and get the foreign earnings back home, we're the on country that doesn't allow that. you got to fix both the rate and the international tax system. and we do that now against a back drop where if individual rates are rising, you're also increasing taxes on the subs, the partnerships so in effect you have the optics of a corporate tax cut while other tax rates are going up,s that a hard political position to be in, even if the corporate rate is in effect paid for by this modernization approach, which is sort of revenue neutral. >> governor, good morning, this is tom fanning. >> hi, tom. >> i think you serve america's purpose in restoring confidence in kind of business's role in helping america advance here. within of the things that under your leadership the business roundtable did was produce this road map for growth. there are a lot of issues here beyond just kind of tax policy that are important to advancing the cause of america through business. why don't up just give as you brief summary of that. >> sure, tom. i think it's especially important, the stakes have gotten higher with the mess in europe, with china slowing down, a lot of uncertainty around the world. the u.s. could be in a position to lead and show considerable strength. the energy sector is a real asset. even without a strategy. it would be nice to have one. and regulatory risk and uncertainty is part of this. nobody knows where we're going with dodd-frank. even how we handle end user derivatives, that's unclear. health care, court decision going to come down but regardless of the decision, we still got a problem there because health care is key to fixing the long-term fiscal health of the nation and the affordable care act does not do that. i think we have to think about how do you bring certainty? washington just isn't hitting for average, we're underperforming today at a time when the world really needs this nation to step up. we think you step up by making decisions, by providing certainty and clarity and letting the entrepreneurs going forward. we're much more competitive as a nation today but we're filled with risk. >> john, we have this saying at southern being bigger than your bottom line. corporations can advance the interests of america by promoting accountability to our customers, to our workforce and particularly in the area of education. one of the things we got to do is develop a workforce that will make us more competitive in the future. >> i think education is very important. there's couple of ways to look at it. one is that there's 3 million jobs unfilled today because people don't have the skills to do those jobs. that work is more than just showing up. you're going to have to have technical skills, the nature of the kind of work and employment that's there in so many areas of our economy has changed. so proper training, proper focus on how you get a workforce prepared. the second thing is to have a triage so we don't create additional problems in the future. we can't have dropout rates in some schools that are as high as 50%. we can't have literacy rates as low as they are. we ought to have every kid reading, every kid being able to go to college without needing remediation before they get there or go to the workforce that have been meshed or even better serified. >> i want to get back to how to create uncertainty -- certainty in an environment where there's no bipartisan anything. you'll have one side fighting the other side. as long as they're fighting, there's going to be no certainty because we're not going to know what's supposed to happen next. >> it's interesting. you're right but we're not at a nation that's absent bipartisanship. you've got a republican governor, democrat legislature in new jersey. missouri they have a democrat governor, republican legislature. you got governors in states all over america working things out. so there are democrats and republicans working together in america. it is uniquely a washington issue at the moment and i think that goes to a question of leadership. that's what we're going to have a big debate about all fall but we've worked together in the past. the jobs haven't been too big for the occupants in the past, they need not to be in the future. >> governor engler, thank you for being with us this morning. appreciate it very much. >> when we come back, we have more and two of our favorites, jack and suzy welch will be inaugurated into the "squawk box" book club. . we'll be right back. of how a shipping giant can befriend a forest may seem like the stuff of fairy tales. but if you take away the faces on the trees... take away the pixie dust. take away the singing animals, and the storybook narrator... 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[ whirring and beeping ] it's the at&t network -- doing more with data to help business do more for customers. ♪ welcome back to "squawk box," everyone. let's look at the futures on this tuesday morning. you're going to see there are some green arrows across the board. dow futures up by 70, s&p up by 7.5 points, despite what's happening in greece and in spain. shares are vertex pharmaceuticals are under pressure this morning, the company correcting previously released data from a trial involving cystic fibrosis treatment. it lowers the number of patients reported to see lung improvem t improvement. the stock is down sharply. >> dollar for announces a 2 for 1 stop split. >> coming up, jack and suzy welch will join us to receive three book awards. and friday we'll have a special guest, alan greenspan. greenspant in making things. infrastructure, construction, production. we need it now more than ever. chevron's putting more than $8 billion dollars back in the u.s. economy this year. in pipes, cement, steel, jobs, energy. we need to get the wheels turning. i'm proud of that. making real things... for real. ...that make a real difference. ♪ tdd# 1-800-345-2550 there are atm fees. tdd# 1-800-345-2550 account service fees. tdd# 1-800-345-2550 and the most dreaded fees of all, hidden fees. tdd# 1-800-345-2550 at charles schwab, you won't pay fees on top of fees. tdd# 1-800-345-2550 no monthly account service fees. tdd# 1-800-345-2550 no hidden fees. tdd# 1-800-345-2550 and we rebate every atm fee. tdd# 1-800-345-2550 so talk to chuck tdd# 1-800-345-2550 because when it comes to talking, there is no fee. despite an 18.9% drop in first quarter same-store sales, jcpenn jcpenney's shareholder says they are on track. >> i would say down 18.9 will be the bottom. >> when do you measure it? >> i would say you'll see real progress beginning next year. >> ackman says the retailer is in the middle of a painful process but expect to see progress next year. >> and suzy and jack welch join us from new york. you should get suzy to sign it next time you come in. we're willing to do this just in had case on a remote where you're not actually here. is that okay? >> that's great. >> thank you. >> suzy, you've been on before but usually we have your lesser half. >> my better half. >> you're both best. >> you guys have penned a lot of stuff together. if you were going to write a column today together, what do you think would be first and foremost on your mind? >> we're writing a column today as a matter of fact. >> what's it going to be about? >> bain and the silliness of the bain argument. >> it's about private equity. >> i'm not even going to mention the name. you were on another show and i guess you got friends over there or something, jack, i'm not really sure why. why don't you tell a show that actually has an audience what you said about private equity. >> well, joe, i think the silliness about private equity is people don't understand it well enough. and the idea that the vice president of the united states compared the skills of a private equity leader, with no offense to the vice president or a plumber, he couldn't be further from the truth. i don't know whether he lost it or what with that comment. look, the idea is there -- private equity does not buy growing, flourishing, shiny, healthy businesses. private equity buys broken businesses, either orphans of big companies or companies that are going down the drain all by themselves, and they come in and do lots of things with them. so the leader of a private equity company does four things that really give him enormous skills to teak into any other field. one, negotiation -- >> you're giving away the column. >> well, andrew's there so he'll debate it. >> one, negotiation. all the this evenings you have to do to negotiate with the seller and the business that's being sold, very tenuous negotiations and balance sheet work. >> jack, i agree with everything you're saying on private equity except for one thing which we haven't addressed yet and i think it's an issue that does keep coming up around private equity, the special dividend, recaps, when private equity firms take out money before their portfolio company has been successful. what do you think about that about? i don't think they take it out before, they take it out in the midst of being successful. you can't take it out very easily if you're in the same tank you're in when you got it. >> people get strauted that the risk-rewarve -- in some cases they've gone in after the private equity firms have taken it out. >> that has happened in some cases. but in by far the majority of cases you struggle with the asset for a long time to get it to health. >> jack, this is tom fanning. it's an interesting argument but that is getting more into capitalism. we've got to defend our way of running the economy here and making sure america is better off because of it. >> let's go through quickly negotiation is a skill that private equity people have. talent. >> talent selection and picking the right people to go into the right places and having a global mindset. you can't fbs these very broken companies by hunkering down and staying local. you find private equity managers have a great global mindset. this notion that you don't have any skills that would preprepare you for higher office is ail will ludicrous to us. the whole idea of private equity is being conplated with vulture capitalism and it become very politicized obviously but what's being lost is what private equity actually really does. >> suzy, you were at harvard business review for a lot of years. we had this conversation about how every four years we feel this election is the most important. i'm trying to get a sense of what the business community is feeling look this time around. this very felt vilified like this in the past? is this something that happens every four or eight years? >> i think you're right that every election has this heightened sense that this is going to make or break america, this heightened sense of hostility, that business has become the enemy. even in the last election, we had a lot of friends in business who voted for obama because they felt that he would be moderate, that he would come to the center and that the rhetoric, the very sort of left rhetoric was something that was playing to the base. in the past couple of years, they said it was not playing to the base. we've had many people in business say we've got to chang the administration because business is going to be -- become the big negative force in society and that can't happen. >> it isn't about spreadsheet. >> you cannot serve from a empty wagon. you have to have a healthy private sector that can give back in good times and bad. and you can't have destroyed balance sheets and get anything out of private companies. >> so when you hear, jack, when you hear someone say that, you know, maximizing profits can hurt -- what was the term? maximizing profits can hurt companies, communities and workers i think, what should you do with a comment like that? is that a total election airing demagogue comment or does the president not get without profits there's no such thing as a corporation? >> winning is the right game, then you maximize profits and your employees can be become mentors, employees can give back. taxes are higher. all these things are good -- >> does he know that? >> you'd have to skim hp. >> the response that we're getting from mitt romney and from his team, do you guys think it's been add kwaut in terms of -- he's got to quack a fine line obviously. at at this point in a vk you'll u can define private equity as a vampire. representative clyburn said they're raping companies. there are people that are going to hear this stuff and it going to resonate with a lot of people. what should romney's tact be on this to try to push back and win the election? >> walking a fine line is not the answer here. they're coming out with both guns blazing so the response to romney has to say here's another bit too much -- i've heard jack say they should say bring it on, here's what's good about companies that are successful. instead of rolling on your back and say, well, there's some truth in what you're saying. >> look, joe biden's comment ought to be thank you, joe, let me tell what you a private equity leader does and why the globalization -- why negotiating skills, why strategy elements anding is are just the thing this country needs. he gave him a layup. we have to grab these silly comments. i don't know whether the vice president is losing it or not but what comment like that is crazy, joe! >> but it plays. >> it plays. >> but you got to play back in this case. if he's going to come out and say outrageous things like that, to let a comment like that sit there without having a strong response. >> hopefully you're going to see -- and the context that it being posited is that your experience in the private sector doesn't equip you to be president, i think they need to match it up with president obama's experience in the private sector. he's been president for a few years so he's got that, here can say i've been president but prior to that, are you telling me that being a governor of an eastern state, very successful in private equities, doing the olympics? >> we're with you on this one. >> i knew you wouldn't take it one. suzy would elbow that one if you took that one. >> i've been involved with private equity for 20 years and i've been in it for 11 years. there's no question that what people don't understand is you don't take healthy companies, you're not taking high growth companies. you're tacking companies that are hiddy for the death spin and then you work like hell on them for three, four, five, seven years and hopefully you are turn them around and then your pay day comes and it a big pay day. one of the arguments is, yes, private equity people make a lot of money but who is at the front door with the handout waiting for the gifts back for their campaigns but politicians of both stripes coming to private equity to please give them donations to carry out their campaigns. >> they're the beneficiaries of private equity success but they're the first to turn around and whack it so -- >> come on, andrew. >> what do you want me to say? i'm not disagreeing with what both of them are saying. >> we had heated discussions last night i guess it was about that there were times when private equity existed for its own sake. >> what about the idea of levering up a company? that's something a lot of companies got in trouble with in 2007 and 2008. if you were to take something out of a company -- >> becky, you have to lever a company. you have to buy the asset from a corporation. to do that, you put in equity and then you lever it up to take the company. then you've got to make the company work to pay off that debt. that's what the whole game is. and 80% of the time you're successful doing that. that steel company that's in the president's ad, that company wouldn't have gone ten more years -- >> and that one they actually updated -- they spent like $100 million updating the equipment in that plant in particular, that steel company in particular. >> jack, carried interest. that's always the other elephant in the room. >> i don't want to go there. >> because you're not supportive of it, right? >> i am in no -- what did you say, i'm a supporter? >> are you a supporter er er ot interest? >> i have trouble with that one. >> andrew -- >> otherwise -- >> andrew, no, no. take vice president biden's comment. that's the issue with it. that's developed from private equity. the argument is joe biden estoo there and said he wasn't as qualified as a plumber. come on, andrew. >> that won't go very far because it was biden and it going to be written off immediately. >> now the vice president came out and said he was in favor of gay marriage and the next thing the president was also. sometimes they put biden out there as a bomb -- >> they know if he says something really stupid, people are just going to write it off and it's not going to matter. >> i don't know. >> you're right. we're putting all of the books and we'll actually give you the physical award when you come in. make sure he gives you yours, suzy, he dront try keep both of them and he'll bring that back. before dress. >> oh, thank you. it is, i like it. it new. >> we'll see you soon, jack. >> thanks a lot. >> come into the studio next time. >> still to come this morning, jpmorgan's $2 billion trading loss putting the spotlight on regulators. steve liesman has a special report. and it may be a short trading week but it is going to be a busy one. we're going to count down to jobs friday. we'll bring you a preview of the events and what's likely to move the market ahead of that big jobs report on friday. we'll be right back. for accounts receivable today. i mean i know that this is important. well, both are important. let's be clear. they are but this is important too. [ man ] the receivables. [ male announcer ] michelin knows it's better for xerox to help manage their finance processing. so they can focus on keeping the world moving. with xerox, you're ready for real ness. how do you know which ones to follow? the equity summary score consolidates the ratings of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past. i'm howard spielberg of fidelity investments. the equity summary score is one more innovative reason serious investors are choosing fidelity. get 200 free trades today and explore your next investing idea. the $2 billion trading loss of jpmorgan bringing focus on the financials and regulation. steve liesman is here with more on the story. >> senior financial regulators telling cnbc they're examining their own performance in the derivatives debacles to determine if it's a series of trades and risk taking that the federal regulators should have caught. a "new york times" reporter over the weekend said there were no examiners of the london unit of the bank where the trades took place and questioned whether the regulators were tough enough on the bank. here are the areas of the investigation -- should regulators have seen the trades? would volcker rule is have prohibited the trades? were the trades actual macro-hedges and should the rules be toughened? let say supervisor are to advice medical somethi -- to have missed something they should have seen but regulators publicly insist it is not their job from making mistakes. >> i guess the question -- >> banks are going to make mistakes from time to time. our job is to ensure that the banks can survive stress events and that the financial system can continue unfettered, offering credit to households and businesses. >> becky, i understand you have a lot of question. senior regulators point out there's more to the volcker rule. banks are required to analyze whether a hedge fits with their overall risk assessment and it must be reviewed ahead of time and monitored while in place and prohibits them to add risk to a portfolio that didn't exist before the hedge was in place. $ cdx market where these trade look place, very illiquid. if the rule show it is wasn't strong enough, it will not be hesitant to make it tougher. >> i don't know if it means the regulators weren't tough enough or if it means the stuff is so complex, the regulators doesn't know what's happening either. zit hard to know that because it not clear if they were looking at the london trades. it didn't seem like thisunit, la lot of oversight. >> i understand they had no one stationed at the unit but they looked at them periodically. it wasn't that they ignored it, it not they weren't stationed there. >> it doesn't seem like jamjamie jamie dimon himself would ask questions of this guy to see how you're doing. >> exactly. so there is one upside to this thing. this vocal rule is not in lace yet. they have this test place to see and model whether or not the vocal would have caught that and that's part of what the regul regulators are doing right now. by the way, we're not sure if 2 billion is the right number. now, you hate saying all of this stuff. you influence by everything you say. >> that was the other thing. just to emphasize it. they were hedging corporate bond risks. so they got caught short. >> thank you, steve. my pleasure. appreciate it. for more on the trading week ahead, we'll go down to the new york stock exchange. that's coming up next. they remind a nation of the benefits of shopping small. on just one day, 100 million of us joined a movement... and main street found its might again. and main street found its fight again. and we, the locals, found delight again. that's the power of all of us. that's the power of all of us. that's the membership effect of american express. you walk into a conventional mattress store, it's really not about you. they say, "well, if you wanted a firm bed you can lie on one of those. we provide the exact individualization that your body needs. wow, that feels really good! once you experience it, there's no going back. during the final days of the sleep number memorial day sale, save 50% on our innovative sleep number silver edition bed. sale ends sunday. only at the sleep number store, where queen mattresses start at just $699. 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