Transcripts For CNBC Squawk Box 20120820

more unpredictable set of tea leaves out there. some of groupon's earliest backers are getting out of the company. "wall street journal report"ing four pre-ipo investors have sold or significantly cut their stakes in reason months. take a look at that stock at $4.77. that's assad state of affairs. miss quick, welcome back. >> thank you, andrew. great to be back. look at all those early investors and you figure those are the guys that made money in these new dot-com ipos. jpmorgan's board has tapped former exxonmobil ceo to chair the committee that's investigating the banks multibillion dollar loss. the committee will have the foretalk to anyone in the company. also double check the bank's previous finding. raymond won't complete his review until late fall or early winter. people say he's someone jamie dimon has gone to and asked for counselling but pointed out he's a tough cookie and not someone likely to blend the truth anywhere, he'll say exactly what he finds. the paper reports the committee can impose a number of punishments on jamie dimon. former j and j ceo the chairman of j and j a jpmorgan director and is on that panel. more drama in men. best buy founder said he's disappointed and surprised his offer to buy the struggling electronics retailer has been rejected by the company. he expressed interest in taking best buy private for more than $8 billion. separately the "wall street journal" reports best buy has named former carlson chief as its new ceo. carlson is the parent of radisson hotels and tgi fridays. >> i just got off a source. schultze. it seems to me that he is either trying to torment the company. what happened over the weekend was they tried to come to some agreement so he could move forward with a transaction. the board of best buy is not convinced that he has the financing, that he has the backers, they have that famous letter from credit suisse that looks like a confidence letter. but over the weekend what they said to him was look if you want to make a bid go ahead but you need to also sign what's called an agreement which is traditionally what happens when you try to do a friendly deal. we'll let you in and you can see the center fold of the magazine, see everything we got but you can't then try to launch a hostile deal on us at least until after christmas, try to get them through the holiday season. they want this period. he said no. the question is that an excuse because he really wants to go hostile or is that an excuse because he doesn't have it lined up? >> or he thinks they are trying to tie his hands and not go friendly with him until after that. by the way, that deal is crossing the wires now the one you had been talking about before aetna and coventry. that's official at this point. what were you saying at the top? you were saying that they get the chance to buy, to have more patients -- >> this is a play, a medicare play in a very big way. you saw it earlier this year, wellpoint but ameriprise. the interesting part of this from what i understand is there's a real sense in wash that somehow the republicans are going to roll back obama care. that roll back may not happen the way some people talk about. >> we have peter orzon talking to us about medicare, paul ryan's plan, problems he has with paul ryan's plan. that gives us more to talk about coming up at 7:10 a.m. >> former barclays chief executive bob diamond lashed back at british lawmakers who claimed he gave highly selective evidence about the libor scandal in a report that was issued saturday very early saturday morning. lawmakers accused him of holding back information when they questioned diamond last month. diamond who resigned last month said he answered every question truthfully and candidly and he refuts any suggestion to the contrary. one other piece. mervin king looks like he is singularly responsible for the ouster of bob diamond. they said that the government should not be trying to manage, if you will, who is the ceo and who shot this. there looks like there was an implicit threat the night that bob diamond was forced to resign in part because they were worried that he might offer some damning testimony the next day against paul tucker who works for mervin king. there's a whole sort of back story to this. >> as their regulator what authorities should they have? >> this is always -- this is the million trillion, billion, gazillion dollar question. >> if you hadn't noticed the idea of selling in may and going away that was the exact wrong strategy that you should have employed because while you were away and not paying attention the dow, the s&p, the nasdaq all of these indices have been climbing higher. the s&p is up 12% since early june. the dow has been up for the last six straight weeks in a row. up 9.7% since june. last week you did see some modest gains. s&p was up boy 0.9%. nasdaq was up by 1.85%. if you haven't been paying attention there's been a slow and steady climb and stocks have come roaring back. >> you really should always listen to george castanza. >> volatility has been dropping. headline late friday said the vix was down to 1.5. that was the lowest level since june 19th of 2007. you're talking about markets that are back near five year highs at this point. again, if you haven't been take attention sit up and start paying attention. futures are indicated slightly lower. losses in tokyo. >> did you see this story about monday. monday are historically -- >> volatility rises on mondays. >> every other day of the week, historically because markets have gone up over time you'll make money on tuesday, wednesday or friday. >> everybody talking about monday. wake up look at the rally and look out for mondays not the greatest. volatility rises. volatility rises on mondays but the vix was at the lower level since june of 2007. take it for what it's worth. take a look at oil prices. at this point you'll see oil prices are down six cents, 95.95. the ten year yields have been creeping higher once again bouncing off those multiyear low. the ten year is yielding 1.8%. bounced from last week after record lows set. 1.5%. even below that. breaking 1.4%. again if you haven't refinanced as you got your -- >> don't look at me. you might have too. >> i locked in a rate. yield is 1.8% on that ten year note. also gold prices are -- we didn't look at dollar. absolutely nothing is happening in the for maerkts. dollar sitting at yen 79.47. euro is -- euro has always been in the middle. euro at this point, dollar euro at .8116. this is a different board than we were using. >> i'm not sure when that happen. >> why are we looking at the dollar instead of the euro. >> that might have been the right choice to have the euro at the top. >> let's take a look at gold prices too. gold prices this morning are actually sitting down about 2.7%. 1,616.70 an ounce. you have to watch the stock markets. will the fed act as people have been suspecting when you see better economic numbers? >> or maybe not which is the new prevailing wisdom and maybe we should listen to george castanza. kelly evans standing by in london, kelly we had a cameo of ross westgate i think on friday we missed you. how are you doing? >> yes. i know. i'm back. great to see becky back as well. hello, i'm sure ross will be back by popular demand. picking up on the theme you were talking over in the u.s. where we saw this slow and steady rally in stocks. 15% is what the europe stoxx 600 is up. this morning quiet up about .1%. this is the theme. the rally that happened while you western looking. taking a closer look across the board. xetra dax up .4%. ftse slightly positive. ibex 35 in spain is up 27% over the last month. again we're talking about a huge declines prior to that. talk being about relief in snap back rallies driven by short coverings or bank stocks. the rally has gotten to be significant. asia overnight more mixed picture. the hang seng was down. shanghai was lower. flirting with about three year loss earlier. xetra dax up .4%. deutsche bank in particular one of the biggest components here down 1.2%, markets rallying. this is on reports it is now being probed by u.s. regulators over payments linked to iran follows all the news we had on standard charter in the last couple of weeks. to get a broader sense of the tone let's look at the bond. we had a little bit of return of the european politicking to the forefront comment this morning first saying ecb was mulling a program whereby they would cap peripheral bond yields. now german finance minister said he doesn't know of those plans or would support them. tlip's ten year and spain both seeing yields lower on the day so not too much of a concern. 5.7, 6.2 are the levels respectively. france, germany there we're seeing selloff. euro/dollar, becky the way you're used to see it. 1.2321 down .2%. we were higher but then got this remps from the german finance minister. key meetings between the greek, germans and french and have a lot to do with how markets trade. watch for that headline mix over the next couple of days. back to you. >> i needed to see it that way. appreciate it. 1.23 makes sense to me. we'll be waiting to hear what happens between the germans and greek but there has been a lot of tough talk and thank you for the update on that. >> let's get a monday morning outlook from our next guest joining us from houston, texas, the vice president and portfolio strategy for core investment management. good morning to you, sir. >> good morning, andrew, how are you >> there's an article in today's "wall street journal," i don't know if you can see it here, epic stock rally finding few fans. there it is. >> right. >> are you with aretha franklin? can this thing get any respect or rodney dangerfield, name your person. >> getting a lot of respect from professional investors. >> but if you read through this piece and i'm not suggesting this piece is right it says ultimately right now everybody is on tender hooks and by the end the year we may not continue to go up from here. do you agree with that? >> absolutely. you have to look back, take it in the context of the last 10, 15 years. we're at the top end of the trading range. we've been in this big broad trading range in the s&p 500 and now we have silently creeped up to the top of the range. woe look at it as a good time to be patient and take your foot off the gas pedal. >> your saying sell? >> i'm not saying -- >> rebalance? >> be opportunistic. look for opportunities but not at these prices. we've had a big surge in the last month so it makes a lot more sense to let the market breathe, let the market come in a little bit. becky just mentioned with the vix printing in the 13s all of a sudden not time to press your bets, lay off your bets a little bit. >> if you had to pick or two to be opportunistic with they would be what? >> europe. there's a lot of opportunities in europe >> you're going there. >> a lot of good valuations in europe relative to the u.s. yields are lower, p.e. ratios, a lot of good things. siemens relative. you can buy these. europe is extremely compelling. >> what's your sense much what will happen over the next couple of weeks. post-labor day that one week will be critical especially as this conversation in europe develops. this week unto itself may be a pivotal week as well. >> that's a great point. we have jackson hole. >> that's true too. >> two years ago pre-jackson hole is when bernanke came out with his first quantitative easing discussion and the parkt took off. maybe we just had sort of that surge pre-jackson hole and really again in my view is a time to be less aggressive because maybe the market is anticipating what might be coming out in a week or two. >> what your anticipating out of jackson hole? >> i suspect, you know, the fed has been giving very much telegraphing more of the same. i don't expect them to press aggressive stances. they are telegraphing that status quo. >> thank you so much. >> thanks for having me. >> coupling we'll talk the low down on lowe's the retailer released quarterly results a couple of moments ago. should you add some home improvement to your portfolio? plus house minority leader nancy pelosi making the late night round where paul ryan's ads were center of attention. take a listen. >> how about romney's pick, paul ryan. what are you thoughts on him? ? he's a nice person. >> yes. [ laughter ] >> i don't really know him well because i've never been to the gym. [ laughter ] >> the gop convention and "newsweek" cover story that's generating a bit of buzz this morning, john harwood will join us next from washington. you're watching "squawk box" back after this very quick break. wanted to provide better employee benefits while balancing the company's bottom line, their very first word was... [ to the tune of "lullaby and good night" ] ♪ af-lac ♪ aflac [ male announcer ] find out more at... [ duck ] aflac! [ male announcer ] ...forbusiness.com. [ yawning sound ] > welcome back, everybody. home improvement retailer lowe's rolling out its quarterly results a few ming ago. the results were not good. the company came in earnings with 65 sharnts when you strip out certain items. five cents below what the street was expecting. company is warning it's going to be coming in with earnings of just $1.64. they expect at this point the street was 1.80. these numbers well below what the street was expecting. joining us now is brian nagel, managing director with 0 p oppenheimer. what happened? >> everybody will look at these results relative to home depot. clearly softer than home depot. the real key here to keep in mind this reflects lowe's issues and not, you know, some type of weakening in home improvement demand. home improvement demand is picking up. the company is going to through a rather significant remerchandising of its stores. something it should have done more aggressively over the last few years. they are going product by product, line by line deciding which items work best and weeding out those that do not. what happened here, we had a very challenging weather throughout the past few months. i think given the transitions happening in lowe's stores they were not as quick to adapt their business to the weather as home depot was. >> i know that when you were looking at these two stocks you warned before we got this number lowe's was going to have a tougher time than home depot. home depot came in with strong numbers last week. if you had to pick between these two stocks on the expectation this stock will trade down today, it's hard to say exactly where it is now, looking at the bid ask, if the stock trades down today would you then be a buyer of lowe's or is this something you need to see some real results first. >> in the nearer term, looking shorter term much better to play home depot. investor wants to play home improvement, play home depot. both home depot and lowe's are well positioned. lowe's will get its house in order and benefit from improving demand within the home improvement sector. new said the home improvement, the improvement in the housing market is here. when do we expect to see that showing up at lowe's and home depot. >> it's starting to happen now. it will gain steam over the next several quarters. what's happening housing activity is picking up. confidence among homeowners to maybe start make being some small improvements in their homes. that's all going to build on these results. >> brian, thanks a lot. great talking to you. >> we're just a week away from the kick-off of the gop convention. should we expect any fireworks in tampa. john harwood will be very every step. way. he's got some answers and joins us now from washington. good morning to you, john. >> reporter: good morning. the short answer is no fireworks that's what the selection of paul ryan accomplished for mitt romney, which is to really unify his the party. they were going to support romney and since he wrapped up the nomination over santorum and gingrich and the others he had been consolidating republican support. this gives real energy to that support among conservatives and as a result you'll see a pretty harmless convention. >> did you see the cover of "newsweek". this week's cover of "newsweek" says "hit the road barack, why we need a new president" by neil ferguson. surprising at some level. tina brown behind that magazine. do you have any thoughts on that? >> reporter: i haven't seen i want but, you know, those news magazines are so desperate, "newsweek" is so desperate to get attention. they did a cover a few weeks ago with mitt romney, a cover that "newsweek" did for george w. bush the whip factor. you go from calling mitt romney a wimp to saying obama should be fired, to me that is simply a reflection of the media marketplace and the desire for magazines to be relevance in a way that, in fact, they no longer are. >> another political issue over the ad. the republican senate nominee from missouri, you know where i'm going with this. >> reporter: that's a legitimate story. i'm telling you that right now. >> he made a comment over the weekend that he said that when there is what he described as legitimate rape, that women's bodies can somehow block an unwanted pregnancy and it's gotten a lot of people clearly and i would argue for the right reasons quite upset. >> what was this guy thinking. >> reporter: that's one of the most stupid, ignorant comments i ever heard a major nominee for a significant office make, and becky's reaction is just the one that my daughter, my 23-year-old daughter had while i was talking about it with her, what is he talking about? and i think not only women, but men with brains are also going to be looking at that and saying where is this guy coming from. >> the romney campaign tried to distance themselves from this. >> reporter: they put out a statement saying they disagreed and a romney/ryan administration would not oppose abortion in cases of rape which is a significant statement by the campaign. you know statistics show there's something like 30,000 bortions from rape every year. todd aiken is a social conservative in missouri which is a socially conservative state. he's been leading the incumbent democrat in the polls. he may win that want race. he's got a legitimate shot to win the race but i think his chance of winning shrunk a little bit and as a result of that the democrats chances of holding the senate got a little bit better because of that idiotic remark he made on television. >> john we got to leave it there. thanks so much. there's a lot of stuff that happened over the weekend. >> how about skinny dipping in the galileo. >> there was a story how some republican lawmakers were skinny dipping in the sea of galilee. there was an investigation into what happened. decided a little bit of drinking could have gone into some of this -- >> reporter: that's possible. there are some lawmakers who have been known to drink alcohol and do silly things. >> i was going ask john about romney opening up his church to the press this weekend. but we'll lafayette it alone. >> reporter: that was smart. >> we'll talk to you later this week. coming up at 8:30 a.m. eastern time republican national committee chairman reinc reince priebus. >> still to come will the nation's appetite for credit put capitalism in jeopardy. plus football starting here at 7:00 a.m. houston texans bob macnir, miami dolphins owner and roger goodell. that has changed the modern world... would define you as an innovator. to hold more than one patent of this caliber... would define you as a true leader. to hold over 80,000... well, that would make you... the creators of the 2012 mercedes-benz e-class... quite possibly the most advanced luxury sedan ever. ♪ join mercedes-benz usa on facebook for the best summer sweepstakes. tdd#: 1-800-345-2550 hours can go by before i realize tdd#: 1-800-345-2550 that i haven't even looked away from my screen. tdd#: 1-800-5-2550 tdd#: 1-800-345-2550 that kind of focus... tdd#: 1-800-345-2550 that's what i have when i trade. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 and the streetsmart edge trading platform from charles schwab... tdd#: 1-800-345-2550 ...helps me keep an eye on what's really important to me. tdd#: 1-800-345-2550 it's packed with tools that help me work my strategies, tdd#: 1-800-345-2550 spot patterns and find opportunities more easily. tdd#: 1-800-345-2550 then, when i'm ready... act decisively. tdd#: 1-800-345-2550 i can even access it from the cloud and trade on any computer. tdd#: 1-800-345-2550 with the exact same tools, the exact same way. tdd#: 1-800-345-2550 and the reality is, with schwab mobile, tdd#: 1-800-345-2550 i can focus on trading anyplace, anytime... tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 ...until i choose to focus on something else. tdd#: 1-800-345-2550 trade at schwab for $8.95 a trade. tdd#: 1-800-345-2550 open an account and trade tdd#: 1-800-345-2550 up to 6 months commission-free online equity trading tdd#: 1-800-345-2550 with a $50,000 deposit. tdd#: 1-800-345-2550 call 1-866-516-0492 tdd#: 1-800-345-2550 and a trading specialist tdd#: 1-800-345-2550 will help you get started today. who have used androgel 1%, there's big news. presenting androgel 1.62%. both are used to treat men with low testosterone. androgel 1.62% is from the makers of the number one prescribed testosterone replacement therapy. it raises your testosterone levels, and... is concentrated, so you could use less gel. and with androgel 1.62%, you can save on your monthly prescription. 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this is big news. reince preibus. good morning, everybody. welcome back to box here on cnbc. i'm becky quick along with andrew ross sorkin. joe is off today. we got a lot of news on this monday morning. in our headlines we'll be watching shares of coventry health. that company just moments ago the announcement came that coventry will be acquired by aetna for $5.7 billion in cash and stock. that comes after 42.08 a 20% premium to friday's close. that stock up by 20% up just over $7.20. also lowe's coming in with earnings they came within 65 cents a share when you strip out certain items. second quarter numbers were five accidents below what the street had been expected. you saw lower than expected revenue numbers coming in. home improvement retailer forecasting full year earnings that falls below what the street was expecting. best buy said founder richard schultze has rejected to let them do due diligence. he offered to buy the company. for his partal schultze was dismayed by this. >> how shell shocked he was. dow looks -- dow open as point lower. nasdaq slightly off. s&p slightly off. all of this could change as the morning progresses. we can take a quick look at the oil board as we speak as it turns around on us. there it is. 96 bucks. >> again, there is nothing happening. >> nothing happening. >> that may be the case this morning. if you soldier in may and went away you missed out. the dow has been up by 9.7%. >> call at any time dog days of summer for so long when all that movement is going on. ten inquiry at 1.857 which is a huge move up on a relative basis compared to where we were a couple of weeks ago. let's take a quick look at the dollar. 79.52 and gold. >> we got our board back the way i look it. euro at 1.2322. >> can we look at gold? there we got it. 1616. not so bad. let's talk about the markets. let's talk about credit. let's talk about capitalism. i don't know if that's a strange introduction. total credit in u.s. has expanded 50 times from $1 trillion to $50 trillion in about 30 years but will too much credit lead to the downfall of capitalism. that's the contention and question this morning and joining us now to help us answer that question is richard duncan, the author of "the new depression, the break down of the paper money economy." good morning. >> good morning. >> you say the problems -- capitalism is over and we're in something you're describing as creditism. what is that? >> in 1968 we broke the link between dollars and gold and afterwards that removed all the constraints an credit creation. and credit grew from $1 trillion then to $50 trillion just before the crisis started and the credit growth drove the economic growth. it created a massive worldwide economic boom. the problem is it now looks like credit can't expand any more because private sector can't bear any more debt. if credit stops expanding this 4 1/2 decade, $50 trillion expansion of debt this boom will turn into a protracted severe depression. >> that's what we've been talking about for a while. mohamed el-erian says this is the new normal. we have to get used to lower growth and consumers can't take on any more debt. is there any idea to think that maybe we go through contraction period like we have been since 2008, we come back out on the other side and maybe there's more room to refuel with some of the credit. >> if you look back to 1952 on an inflation adjusted basis, there's only been nine years when credit grew less by 2%. every time there was a recession. recession didn't end until there was another big surge of credit expansion. now the only thing that's keeping us from collapsing into a depression right away is the massive budget deficits. trillion dollar budget deficits. that's keeping the total debt slightly expanding rather than contracting. we're on government life support. without this trillion dollar budget deficits we would spiral into a great depression. >> when we get our financial houses in order in the united states you say we're in for a rough road. >> i think there are three paths forward for us as a society. the basic thing to understand is every economy is made up of just four parts. personal consumption expenditure about 70% of gdp. business investment 16% of gdp. nept trade that dedoubts 4% of gdp and rest government spending about 20% of gdp. so three possibilities going forward. we do what the tea party wants and immediately cut government spending or have a $16 trillion economy. budget deficit is 1.3 trillion. balance the budget and we have a 7.3 trillion economy. if the government spend less money tens of millions of people lose their jobs and consumption collapses and business investment collapses and we immediate spiral into a depression. that's the first option. >> that's a good one. two more. i'm hoping there's a silver lining. >> second option is the japan model. >> not so good. >> japan's crises started 22 years ago and they had massive budget deficits ever since then. they've taken government debt from 60% of gdp up to 240% of gdp. that way they have prevent ad great depression there but this is going to have a bad ending sooner or later. that's the model we're on now. massive government spending until we go broke. we can do that for another ten years. >> how long do you think this japanese depression will last? >> this isn't a depression. they haven't had a depression because they had so much government debt. >> you say it will end worse in japan. >> yes. so far japan is quite prosperous. i was there recently. >> although they've had some big set backs in their standard of living people who took hundred year mortgages on places, kids who have that live with their parents for the rest of their lives. we've seen repercussions. third option is a better one? >> third option is we need to learn from japan's experience. if the japanese have understood 22 years ago their crisis was going to go on for 25 years and they would spend trillions of dollars they wouldn't have wasted all this government spending to build bridges to nowhere and paving the japanese country side with cement. they would have come up with a strategy to invest in 21st cutting-edge technologies. if they did that they would be a global economic superpower. the united states needs to learn that. we'll spend trillions of dollars supporting the economy. will we waste this on too much consumption and war or invest it and grow our way out. >> you talked about these depressions or these issues almost individually by country. we talk about the japan, talk about the u.s. you look at europe, i don't know if you think there's any way out of that and how that rebounds on us. >> well, the global crisis is one big crisis of global trade imbalances financed with debt. but in order to resolve the global crisis we have to fix the u.s. economy because it's the largest economy by far and drives global growth. fix our economy otherwise there's no hope for the rest of the world. >> investing in what types of things >> what i would like to see over the next ten years i would like to see the u.s. government invest a trillion dollars in solar energy, a trillion dollars in dehe in tick energy, biotand nato technology. >> you're not talking about delevering you're talking about major stimulus. >> if we delever our civilization collapses. that's not an option. the only option is for us to invest and grow our way out. in other words u.s. has global military dominance. because the u.s. government invests more in our military than the rest of the world combined. >> why solar? >> it's time to apply this very successful government investment strategy to american industry. and american power generation. if we do we'll have dominance in those fields as well. >> why solar? there's lots of incredibly smart people say nuclear is the way to go. >> or fusion. i'm not a scientist. maybe fusion is the way to go. what i have in mind is carpeting the nevada desert with hundreds of thousands of american made solar panels and building a grid coast to coast to transmit the energy on transitioning the automobile industry from being gasoline burning to being electric burning and developing battery that make cars go 70 miles per hour for a very long time. if we do we can end our depend skre enc oempb on foreign oil. >> throw enough money at it and we'll have these things. for instance think about the man project. the government took all the geniuses it could fine, put them together in new mexico threw limitless amounts of money at them and they came up with a won weapon that won the war. >> there's a whole other side of the political spectrum these days that thinks we're spending way too much money we need to delever immediately and if we spend one more dollar today or tomorrow we're putting ourselves in peril. >> under that. >> you tell them what? >> tell them that we are already -- we don't have capitalism. the biggest frontal boundary overco -- the biggest problem is the government spend 24% of gdp. >> a lot of people think that unto itself is the problem the role of government has grown too large. >> the problem is how do you wean us off the government life support. the government spend $1 out of every 4. cut the government spending our economy collapses. if they understand austerity means death they would see a much more sensible approach to continue spend but spend in a way that generates massive investment returns so that want we can grow our way out of this crisis. >> is there a way to stimulate the private sector? >> the private-sector, with almost every major industry in this country is being subsidized one way or another by the government. manufacturing, the agriculture, you name it. every industry is support by the government. 50% of all the households are on some sort of government support. if you take away the government support this doesn't magazinically unleash the private sector energy this results in millions of people losing their jobs and spiral into a depression that's not at all certain democracy can survive. >> a lot of people would like to debate you on this issue. the book called "the new depression." thank you for coming in. >> if you have any comments or question e-mail us as squawkbox@cnbc.com. when we come back we'll talk about america's favorite stock. could it be walmart. is it still a buy? we have a bull/bear debate. we strike up the health care debate with peter orszag. he's got some thoughts about medicare. 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[ all ] i'm with scottrade. ♪ ♪ i'm back, back in the new york groove ♪ . >> welcome back to squawk. there's a live shot of times square. take a look at u.s. equity futures. dow would open up slightly. nasdaq same thing. s&p 500 looks krk i say it's up. >> it's up. >> but call it the chicago invasion, folks from the cme in on this. the cme group has applied for lay sense to set up operations in the uk. the group which is america's biggest exchange operator they expect cme europe to be set up by mid-2013. the group says cme europe will begin by trading foreign exchange futures. a lot of other derivative businesses where there's higher profit margins. i wonder if there's a regulatory play. what does it took like there and how those margins work. >> a lot of people will start looking at how we fare up versus our regulations versus theirs and whether we lose our edge. flight attendants at american airlines accepted what the carrier offer its last and final contract offer. amr won't be going to court to void the prior contract and work its way out of bankruptcy. recently it went to work to void its agreement with the pilots an attempt that was ultimately unbeingful. yet another patent claim in apple in the news. google as motorola mobility line has filed a claim saying apple infringed seven of its patents. those patents relate to the apple devices like the ipad, iphone and iran pad touch and these patent wars are being watched very closely because it will determine the future of what probably all mobile phones look like. >> this is a big week for apple and samsung. jury this week that should be determining the result of that case. we talked about it while you were on vacation. we should find out about what end up happening. coming up we got a post-vacation edition of shares from miss quick and some stuff from the weekend that grabbed our attention. right now on squawk, in the boardroom, bob mcnair the owner of the houston texans. ready to kick off the 7:00 a.m. hour as guest host. we'll talk business, politics on and off the field with him. box is back after this quick time-out. born with. and inspires the things you choose to do. you do what you do... because it matters. at hp we don't just believe in the power of technology. we believe in the power of people when technology works for you. to dream. to create. to work. if you're going to do something. make it matter. gomery and abigail higgins had... ...a tree that bore the most rare and magical fruit. which provided for their every financial need. and then, in one blinding blink of an eye, their tree had given its last. but with their raymond james financial advisor, they had prepared for even the unthinkable. and they danced. see what a raymond james advisor can do for you. 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[ male announcer ] ...forbusiness.com. ♪ ha ha! in communities across the country. whether it's supporting a delaware nonprofit that's providing training and employment opportunities, investing in the revitalization of a neighborhood in the bronx, or providing the financing to help a beloved san diego bakery expand, what's important to communities across the country is important to us. and we're proud to work with all of those who are creating a stronger future for everyone. sylvester stallone and almost every action hero from the '70s and '80s were at the top of the box office this weekend again, "expandibles 2" debuted with $28.8 million "the bourne legacy" with 17 million, two-week total is $70 million, it's a universal movie like cnbc of course it's good, it actually is great. >> and works without matt damon. >> and i think it's jeremy rehner was terrific. we have sad news from hollywood, director and producer tony scott died after jumping off a bridge in los angeles, known for "top gun" beverly hills cop 2" and many more, 68 years old, his brother, ridley scott as well, horrible, tragic story this morning. >> it is. you've been looking at other stories in the papers this morning. >> "new york times" this is about the republican national conventions and how they've tried to up the ante this year, make it more tv friendly, hired the director or rather the set directors that worked with oprah winfrey and mtv, spending $2.5 million on the stage, hired a former producer from nbc news to try to make it feel more theatrical and dramatic. they say the democrats have done a better job making these more dramatic. >> four years ago didn't steven spielberg, the movie, the setup for barack obama. there know how to pull the hollywood strings. it's no longer the smoke filled jockeying like in 196 in chicago. at this point it's more theater than anything else. we know who is going to be coming. there aren't any surprises expected out of this whole thing. >> it's a tv production. >> it is. i also saw a fun story in the "wall street journal" about the chestnut tree which chestnut trees have such a huge legacy in american history, used to be out to the east host, ohio and pennsylvania and early 1900s they were wiped out by an asian fungus. they found a version resistance to the fungus that wiped them out, they exist in the southwest. >> so are we going to be overrun by chestnut trees in the future? >> they're known for sturdy wood, you think about "chestnuts roasting on an open fire" a huge part of our history and it would be amazing to see something reintroduced. >> i haven't spent a lot of time think being chestnut trees. >> they haven't existed, went all the way up to maine, down to tennessee and beyond, maybe mississippi and alabama even, it was a huge swathe of the nation that was heavily populated with chestnut trees that have been wiped out and they've been trying for a long time to find some version of the tree that could come back resistance to the asian fungus so perhaps they are on the verge of it. it's one of a lot of things we'll be talking about. up next we're asking the question, are you ready for some football, politics and a bull bear debate? we have all that next taken starts out with our guest host, houston texans owner bob mcnair, miami dolphins owner stephen ross and the nfl commissioner himself roger goodell, plus peter orszag is here to take a few shots at paul ryan's health care proposals. we will talk about each of these proposals, which one has legs. we've got more "squawk" right after this. 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and going long on success. houston texans owner bob mcnair talks up america's entrepreneurial spirit, tax reform and the economy. the second hour of "squawk box" begins right now. good morning, welcome back to "squawk box" on cnbc. i'm becky quick along with andrew ross sorkin. joe is on vacation this week. in studio with us this morning our guest host is houston texans owner and businessman robert mcnair. we've been watching the future this is morning and not a lot of activity at this point because you have seen a slow and steady build for these markets over the last six weeks, just since the beginning of june, you've got the dow up by about 10%, the s&p is up by about 12% over that time period. this morning barely budging but there's been a lot happening in the markets. to your monday morning headlines, u.s. stocks aiming at some fresh milestones today. the dow is just about four points shy of its highest close since december of 2007 and the 1.500 fell by about a point short friday of posting its highest close since april of 2008. also news this morning, coventry health care shares jumping in the premarket trading. aetna is buying often tree for $5.7 billion in stock. the deal is a 20% premium to friday's close for coventry and that's where the shares are trading. moments ago best buy announced that hubert jolie is taking the top job, former head of travel company carlson, this comes as the electronics retailer dispute with founder richard schultz's sclats says schultz rejected its offer to allow him to do due diligence. schultz wants to buy the company for $24 to $26 a share. the presidential campaign heating one financial and economic issues of course at the center of the debate, joining us now from new york is peter orszag, citigroup global banking vice chairman and former white house budget director, peter, of course we have bob mcnair here as well this morning. >> hi, bob. >> good morning. >> let's go right to it. you wrote a piece last week about the ryan medicare plan, the health care plan, you think there's a problem here. >> look, yeah the problem is health care is a different beast than most other markets. health care costs, concentrated among a very small number of beneficiaries, that's where all the money is, and most of the proposals that believe in this sort of health care competition tooth fairy don't really take that into account, so paul ryan's plan is flawed because it just puts all its chips down on believing that competition will reduce costs and there's no evidence that that actually works. >> now, you've made the case that we're already starting to bend the curve, the cost curve, that is. i've seen some commentaries that have been critical of your assessment in that we started at a much higher base and we need to somehow not only bend the cost curve from where we are here but really bring it down materially. >> i agree on the objective. there's an ongoing debate about the degree to which -- what's causing the recent slowdown and the degree to which we need to do more. i think everyone agrees we need to do more and that's what we should be focused on. >> it's more than just that, it's not just trying to agree on the idea that we need to do more. if you look at health care costs they're growing as a percent of gdp. erskine bowles expects it to come at 20% of gdp versus 17% a few years ago. this is a massive problem we need to contain somehow. >> facts are important so let's break this down a little bit. health care costs slowed down, the cost growth has slowed down dramatically. over the past year it's not true medicare will rise as a share of gdp just as one example. >> not medicare. he was talking about health care costs overall part of our expense of gdp. >> there's been a dramatic deceleration. the share of gdp can get messed up because we're in the midst of a recession. >> people say that's why health care costs have slowed. >> that's the debate and there's a growing body of evidence that says that's not true. variety of things, first, if it were the economy you wouldn't expect medicare to slow down more than private health market has, that's what's happened, if it were the economy if you looked across states you'd expect to see a relationship between the increase in unemployment and the deceleration in health care, that's also not true, so on and so forth, that is what the debate is. that's almost not the point. the point is everyone agrees if you look at 20, 30, 40 years we've got a problem, what are we going to do about that. >> what's wrong with the voucher system in. >> the voucher system -- >> you just called it a -- >> competition tooth fairy. the key to getting constraining health care costs is attacking those high cost cases, chronic conditions, people that are in severe shape, and for those people the ski what the hospital and doctors are recommending. if you're in an ambulance, just had a heart attack you're not choosing hospital "a" versus hospital "b" depending on saving $200 on your cost sharing. the key is why is that doctor or hospital treating this particular condition in this way versus that way and how can we alter that over time? there is progress being made as we move away from fee-for-service payment which is happening more dramatically than people know, that is perhaps the single most important thing we could be doing. >> a question, why is it that we don't allow individuals to purchase their health care coverage and get the same tax benefits that they do through service to a corporation, until the consumer is the one that's paying the bill, i don't think we'll ever get the cost under control, because right now there's always someone else who is paying the bill, and so if i go in and my doctor doesn't even tell me what it's going to cost, and so i'm out of the loop, but if i know what it's going to cost and i'm going to pay for it, i'm going to ask questions about the value-added, and until we do something like that, i don't think we'll ever get the cost under control. >> peter? >> well, mr. mcnair, let me first say my in-laws are from houston and i don't want to get in trouble at all so i have great respect for you and the entire city, but let me just say, look, cost sharing and consumer-driven health care can help. it can help. there is a variety of evidence suggesting more cost sharing can help and more skin in the game helps but the question is how much? most health care costs are in the catastrophic and really high cost range, if you take medicare beneficiaries and you rank them by their cost the top 5% account for the 40% of the total, the top 25% account for 85% of total medicare costs and those people are never going to face significant cost sharing because the costs are just, the whole purpose of insurance is to protect against those high costs so cost sharing helps for the other 75% of beneficiaries but they're 15% of the total, you don't get that much traction. it's worth doing but you don't get that much traction, not where the money is. >> if i were that chronic person or that person had six months to live and i knew what the cost was going to be to maintain my life for another six months, and i call my family in and i say, we're going to wipe out our net worth over the next six months if you sustain my life for six months, and the quality of my life is not going to be there, i'd like to be able to make that decision as to what i'm going to do and avoid that excess cost, but most people's estates are almost wiped out in the last six to nine months of their life. >> well, actually you're identifying where i think consumer-driven health care could have its biggest effect, which is in those kinds of end of life decisions, where i would note most consumer-driven health folks don't want to promote advanced directives and other tools that allow people to make their own decisions. it's very clear, their own decisions about what course of treatment they would prefer, and you're right that that's where a lot of the money is, 25% of medicare beneficiaries are in the last six months of life, if we can be promoting more informed decision-making in those cases. i think that's all for the good. >> peter, do you see a compromise here, meaning is there any form of a voucher system, and i know for some people on certain sides of the political spectrum, that is almost a pejorative these days but is there a voucher system that in your mind would work? >> if you look at where some of the debate is going, originally paul ryan had proposed that the entire medicare system over time would move to a private plan kind of approach. ryan 2.0 instead has those private plans coexist with traditional medicare. i note we already have that system. it's called medicare advantage, almost 30% of medicare beneficiaries are in medicare advantage, so you can imagine some tweaks to that system that would perhaps bridge some of the gap here but in terms of the mega vision of moving an entire program to a defined contribution privately-run type of thing, i think that's kind of hard to bridge that gap. >> although peter, it seems to me there is room for all kinds of innovation both from introducing more competition with the insurance companies coming at it. if you look at the president's health care plan, the way it cuts costs and cuts the medicare spending happening is basically directly cutting the payments that are made to providers, something like $260 billion over the next ten years and there have been some studies, i'm sure you've seen them, that suggest that maybe one in six hospitals would no longer be profitable under this payment schedule. so it seems to me there are problems with both plans and maybe some sort of a mixture would be a better way of looking at it. >> i'm in favor of trying lots of things. my problem with the ryan plan it's a mistake to plop all of your chips on one bet that has not been shown to work in the past. the medicare advantage plans i mentioned earlier which are basically what mr. ryan is proposing have not worked to reduce costs. on the medicare changes the important things are not the blunt paymentductireductions. it's not the key. the key is changing the payment system apay for fee-for-service, towards bundled payment and accountable care organizations and that's happening much more rapidly than people in washington at least know or maybe appreciate which is why you're seeing and we had news out this morning, why you're seeing the dividing line between payers, providers and insurance eroding. if you're at risk as a provider for excessive utilization, the dividing line with an insurance company xwets blurry and you're seeing the private market already acting on that belief. >> peter, there was this transaction, aetna buying coventry this morning. what does that deal mean in your mind in. >> i don't want to comment on a specific transaction but the broader theme is merging, there's going to be a lot more of these transactions to come. >> peter thank you for coming this morning. >> thank you. coming up, we sit down and talk exclusively with our guest host, self-made millionaire, bob mcnair talking business and football. later it is the world's largest retailer and widely held stocks. how walmart brings customers to the store and keeps them happy. bull/bear debate. "squawk" will be back in two minutes. comments? questions? send them to @squawkcnbc on twitter, follow the show and look for updates from andrew, becky, joe and the "squawk" staff. "squawk box" on cnbc and on twitter. we're back this morning on "squawk." cow would open five points lower, s&p 500 almost slightly up but that's not saying much. becky? >> our guest co-host may be known as the nfl owner of the houston texans but he created cogen technologies in 1960, sold it to enron in 1999, ceo of the mcnair group, a financial and real estate firm and owner of palmetto partners, a private investment company and chairman of cogene biotech ventures. nice to have you here today. >> thank you, nice to be with you. >> you built businesses up time and time again, self-made man, done a lot of things and seen a lot of things that have happened in this country. we look around and the jobs picture is pretty bleak. from your perspective what should we be doing to try and attack that problem? >> well really when you look at hiring people, it's no different than buying a piece of equipment, because you're looking at making an investment, and you make that investment if you think it's going to enhance your profit. if you don't think there's going to be an adequate return for the risk that you're taking, you don't take that risk and what we're doing now is adding more and more risk to hiring that person or making that investment. >> how so? >> well, through regulations, through unknown health care costs in the future. it's just employment policies, union policies, where there's a greater threat of unionization, and all of these things are not contributing to the ease of employment, and so it enhances the risk and yet the reward is not going up. >> big businesses seem to be doing just fine, companies profits have been coming in, stock markets up 10% for the dow just over the last six weeks or so. >> big businesses can handle a lot of these things. my philosophy has been take care of small business. big business has adequate capital to do it, it can hire the lawyers and accountants and deal with the regulations. good example is community banks. community banks having to adhere to the same regulations the mega banks are having to adhere to, they're not in a position to do it and it's creating a real problem for them and that's typical of small business around the u.s. >> i've heard some big investors in fact say that when you look at some of those banks, some of those small banks they consider $1 billion or less in market cap say they're not going to be around in the future because they can't afford to go through the regulations on their own. >> that's true and it's unfortunate because i believe it's true that small community banks are the ones that lend 60% of the funds to small business, so you're taking out a large segment of the capital structure for small business. small business is the generator of the economy, that's where the creativity comes from. the bigger you get, the more bureaucratic you become. the more bureaucratic you become the less creative you've become. >> we've had steve case talk about entrepreneurial spirit and trying to change the rules for entrepreneurs. i don't know if you followed any of what he's been trying to do, trying to bring a bipartisan group together to cut through the morass and make it through to the entrepreneurs. >> i'm not that familiar with it but we do a lot of things to try to encourage entrepreneurship and the creation of new businesses, and the big thing s number one, they don't have capital so you have to provide capital to them, but also you have to provide an opportunity for them to grow their business, and bureaucracy slows things down, and unfortunately, we have a world now in which we have these giant businesses and a giant government, and their bureaucracies can survive all of this. they're built for it, and so they can succeed, but right now, for them, you know, you have such a low cost of capital, if anyone's not making money now, they probably ought to look at what they're doing. >> bob, with we henry blodget on last week. he owns a small business, a website, trying to make it a big business and he made the argument as long as there's demand there, he will keep hiring new people. he said forget about the regulations, we've heard from executives and other people say it's the regulation bogging us down. have you been in a position where you've had demand for your product and looked at the regulations and you said you know what? i'm not doing it, even with the demand there? >> what it takes, it takes excessive demand, unusual demand to overcome the risk that you're going to be encountering and if you're in that position you will go ahead and hire people but that's an unusual situation. that's not normal. our economy is bobbing along, there's not any excess demand out there. >> this is the ultimate chicken or egg issue, it could be the regulation versus the demand? >> well, we want to put people in the position where the risk is commensurate with the reward, and right now it's not and that's why you see people are not taking that risk. they're not buying that much in the way of capital machinery either. most of that's being exported. >> bob is our guest host, going to be with us for the rest of the program and we have a lot more to talk about. >> and we're going to talk football, coming up, wildfires plaguing the northwest, that's not funny, forcing thousands from their homes, that story and more after the break. "squawk's" nfl scrimmage continues with miami dolphins owner stephen ross, what does this business signal caller see for the economy both on and off the field? we huddle up and get his call in just a bit. time for today's aflac trivia question, which city had the united states first pizzeria established in 1905? the answer when cnbc's "squawk box" continues. ash. aflac! ha! isn't major medical enough? huh! no! who's gonna help cover the holes in their plans? aflac! quack! like medical bills they don't pay for? aflac! or help pay the mortgage? quack! or child care? quack! aflaaac! and everyday expenses? huh?! blurlbrlblrlbr!!! [ thlurp! ] aflac! [ male announcer ] help your family stay afloat at aflac.com. plegh! to experience the ultimate expression of power... control. 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we'll find out in a few moments. in communities across the country. whether it's supporting a delaware nonprofit that's providing training and employment opportunities, investing in the revitalization of a neighborhood in the bronx, or providing the financing to help a beloved san diego bakery expand, what's important to communities across the country is important to us. and we're proud to work with all of those who are creating a stronger future for everyone. welcome back to "squawk" this morning. let's get you caught up on big headlines. shares of coventry health are jumping on news the company is being aquard by aetna for $5.7 billion in stock, works out to a 20% premium over friday's close. lowe's shares under pressure. second quarter earnings of 65 cents per share were five cents short of consensus. sales fell short. best buy shares taking a hit, two pieces of news, its founder richard schultz rejected its offer to let him do diligence on his buyout bid a statement schultz says surprised him a function of the fact that you had to have an agreement which means he can't go hostile on his own and best buy naming a new ceo, the former head of travel company carlsson. our first stock of the day is walmart, in the last two months walmart has seen its best performance in 13 years, trading around $72 a share, over the last ten years the stock is up 33%, short of the dow's 49% gain over that time. should you hold onto your money here or put it else where? cnbc's courtney reagan joins us now and she has more on that. >> good morning, becky. the world's largest retailer has proven to be the best performing stock in the dow over the last six months despite serious allegations of bribery in mexico over that time period. as economic continues continue to remain strained, does walmart shares have room to run? the latest $1.18 per share profit, a penny above expectations. total revenue of $114.3 billion fell short of the $115.8 expected, the $2.2 billion shortfall represents an unexpected strength in the dollar, a lot of companies experience this. u.s. same store sales grow 2.2%, a key trend breaking through years of declining comps. while walmart's international net sales are growing at a faster rate than domestic sales it was the low slowest rate in 11 quarters. the sales metrics show gains on the latest earnings call walmart executives noted the pronounced paycheck cycle domestically and abroad and then there's the $34 million walmart spent on the investigation into the bribery allegations in mexico, the retailer forecast the forward run rate for the next two quarters will be $35 million to $40 million for that and the steps added to the real estate process in mexico extended store opening dates slowing the process and in brazil walmart slowed store growth after having trouble executing its everyday price there is. the challenge is walmart's ability to post the 2% to 3% same-store sales store comps for the third quarter. >> courtney the paycheck cycle, they see it more frequently because consumers are really pinched? >> exactly so they spend when they get their paycheck and pull back and they haven't noted that paycheck cycle in quite some time domestically. i'm not sure they've ever mentioned it's been a problem abroad. that's something a lot of analysts thought it was interesting. >> particularly when you have so much retail sales going into walmart maybe that tells us something about the economy as well. courtney thank you very much. let's get more perspective on walmart, bud begatch and cart carter wirth. >> you see the stock relative to other consumer staples and relative to the market, any way you cut it this wonderful stock has been a bit too much, too far, too fast, too much of a good thing and we would trim longs. >> you say sell but a price target of $68 so you're not looking at massive drops from here, you think it's kind of run out of steam? >> right and specifically optically it's the april/august advance. this stock moved from 57 to 75, up 30% in a matter of two to four months, called a powerful intermediate advance but leaves it not only having achieved an all-time high ex-peding its december highs of 1999 in $70 but far above its normal trend and doubling the performance up on a 12-month basis 40% versus the sector up 20, doubling the s&p, it's discounting a whole lot at this point. >> bud we have you listed as a bull but you have a neutral rating on the stock. what do you see happening? >> we see good fundamentals domestically the company taking a little bit of a breather as courtney noted internationally to get its traffic really traffic metrics to perform better. the company is doing a lot of the right things and the fundamentals look good. we're going to continue to see increased earnings and sales for an extended period of time of walmart. i think we have become neutral on the stock primarily because of valuation. we think our portfolio manager clients who have this on their benchmark should be equally weighted as opposed to a previous position where we thought they should overlook the tock. >> walmart's stock is up 33%, which sounds impressive until you xa irit with the dow over the last ten years. some of the big cap stocks in general have had trouble moving. there's not been a lot of investor love for some of the big cap names. where do you come down on the argument of whether it is big caps time right now? >> i think it depends on valuation, becky. we look at items one by one and case by case. when the stock was hitting in the lower 50s it was time to own the stock. the yield was above the s&p, it was a time for this company that has done a lot of good things particularly domestically recently to own the stock and we see that on other large cap names, too, from as we look at valuation. i think you have to look at that case by case basis as opposed to a broader generalization. >> what you just said, setting it up, is that when it was back in the '50s that was the valuation. when it's trading above 70 what is the value matchup at that point? >> i don't disagree with carter. i think the stock has a little bit of a breather here and that's reflected in our rating. we like what the company is doing, we think that on almost every score, they are performing very well but quite frankly the stock has moved a little quickly for our taste, so we have told our portfolio manager clients to equal weight the shares as opposed to overweight them. >> carter, budd, thank you both for your time today. >> thank you. coming up, we're going to be talking texas justice, that's right, he is a tea party favorite and republican candidate for the u.s. senate, ted cruz will join us next to talk about the economy, paul ryan and much, much more and 8:40 eastern, the football bonanza continues, we've got the commiss, nfl commissioner roger goodlogical join us and our guest host, the houston texans owner, bob mcnair, to talk about the upcoming regular season. 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[ all ] i'm with scottrade. we're back this morning. let's turn to bob mcnair, own he were of the houston texans, ceo of mcnair group, owner of palmetto partners and chairman of biotech ventures. when becky was talking to you earlier we briefly hinted at it but enron, you sold your business to enron and you had been asked to be on the company's board and you said no. >> yes. >> why? >> well, i knew that they were doing a lot of things that i thought bordered, you know, not going over the line maybe but being very close to the line, and i was very much concerned about some of the transactions and how aggressive they were, so i was concerned about that. >> the obvious follow-up should be why would you sell your business to them in. >> because i got cash. >> but did you really think you had a sense there was something amiss at that time? >> well, i didn't think they were doing anything illegal. i thought that maybe what they were doing would border on unethical but not illegal. i was surprised to see that some of the actions were actually illegal. >> had they tried to propose paying you in stock at all? was that even an issue on the table in. >> well i had 20% stock but i sold that in the first year, so we got it -- >> a lockup on you. >> we got out pretty soon but it's the same thing that we see around this quite often, andrew, so much of the value that we see in the world is intangible, and once confidence level changes, the intangible value is gone and so the value disappears overnight, and that's what happened in their case, people lost confidence in them and their trading activities were very strong and very profitable. >> it's unbelievable. during the break we were talking about transparency and you were on the board of the fed both dallas and houston. >> yes. >> do you think there should be more transparency inside the fed? >> i think transparency benefits us at all times. sometimes it's painful, but i think it's been fisneficial. it keeps us on our toes, brings a level of discipline and the fed is active in the marketplace today so i think it is important that we have transparency. >> what is the difference between transparency and regulation? a lot of people say these regulations are here to create more transparency so we really understand what's happening in businesses. >> well, in the case of transparency, you can have markets as an example, market gives you transparency, regulation doesn't necessarily do that, so there might be some regulations that in effect call for transparency, so in that case they would be equal but otherwise i wouldn't put them in the same category. >> question about the fed and the way these boards are structures. do you believe that ceos of banks, this has become controversial post crisis should be on the board? jamie dimon is on the board of the new york fed. i think his term comes up at the end of this year, but do you think that's right, do you think that's wrong? does it create an appearance issue, does it not? >> it might create an appearance issue but what you're trying to do with these regional boards is get a sense of what's taking place throughout the country on a firsthand basis. the bankers in each of these communities have their finger on the pulse of the community so if you take them off the board, i think you're reducing some of that pulse that you really need. >> that's a good point. we have not heard that from a lot of people who have sat on those boards, too. >> we were on it, and they would ask us about employment and about our own particular business and we had different businesses on there represented so you'd see what august sell s were doing. >> we had sandy weill on a couple of weeks ago. do you have a view on what should happen to big banks, should they stay big, be broken up? >> there's a different culture between being a commercial banker and investment banker and i would find it difficult to be ceo of an institution that did both because i relate it to taking your salesman and making him credit manager, or take the credit manager and make him the salesman. can you imagine the conflict in cultures? you know, a commercial banker is taught to take no risk. investment banker is taking all kinds of risks but it's with other people's money. so how do you bring those two together? >> are you arguing to break them up? >> i don't think it's beneficial to have them combined. i do not. >> but is that a profit issue for you or a safety soundness issue? >> i think it's a soundness issue and i think that commercial banks, you know, they have guaranteed deposits and that being the case, they should be taking much, much less risk, and it's hard to draw, you know, they say there's a wall between the investment bank and the commercial bank, but it's hard to see that wall. >> you'll take a little regulation on the banking side? >> well, you know, as big as they are, i don't know if you can break them up at this point. but from a corporate standpoint it wouldn't benefit the shareholders to separate them. >> that was sandy weill's point, too, shareholders have not been the beneficiaries of any of this. >> i don't believe they have. i don't believe they have. and i think it would clean up the appearance. even if the risk isn't there, there's the appearance of sustained risk that's being taken at the expense of citizens, and we don't like that. >> thank you, bob. you're going to be sticking around for the rest of the show? >> i'll hang around. >> other great football business legends joining us in a little bit. when we come back, u.s. senate gop nominee ted cruz on what the republicans need to do to win the white house. coming up at the top of the hour, stories moving markets this morning, including earnings from lowe's and a big deal in the health care sector. 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[ yawning sound ] if this presidential race focuses on the issues, president obama's abysmal record, governor romney will win. >> joining us now from houston, texas's ted cruz, the republican candidate for u.s. senate and former solicitor general for texas and ted thank you for joining us this morning. >> good morning, it's great to be with you. >> we have bob mcnair on the set, i imagine he may have some questions for you as well. i wanted to start with this. you are in favor of cutting a number of department's programs, some people would describe it as draconian, others saying it's the right thing to do. we had a guest on earlier today talking about the need not to cut but for stimulus, that the argument was that the more you cut right now, given the fragile state of the economy, the more danger or in peril we will put it in. what do you think of that? >> well, i think it is based on keynesian assumptions that don't make sense. the keynesian multiplier has not played out. it is amazing how folks in washington think if government could spend more and more and more money it would magically get the economy to turn around. they forget every $1 government spends it has to take from the american people first, it takes it directly in the form of taxes or it takes it indirectly in the form of debt that represents future taxes or in terms of inflating the currency, in any respect, it is a more efficient allocation of capital to have those in the private sector allocating dollars than it is to have those in government, and look, we are seeing the limits of keynesianism right now. we've got a national debt that's larger than our gross domestic product and yet the answer from the left is still the same, keep spending and spending and spending, and we know where that ends up. we just have to look across the atlantic to see the end of that journey. >> ted, what's the transition for the economy look like, though? if you really were to make some of these cuts and i'm looking here, talking about the commerce department, the education department, the energy department, the irs, transportation security administration, i'm not suggesting that all those things are not ripe to be cut, my question is, between now and then, what happens to the economy? >> well, i any ythink you have combine any cuts with significant pro-growth policies that are reducing tax rates, reducing the corporate tax rates, reducing the enormous regulatory burden on the economy, and as you know, we've got gdp right now that's below 2%. as long as gdp remains anemic, we're not going to turn around our employment picture. we're not going to turn around our fiscal picture in washington unless we can get growth going and it is interesting, those who oppose cuts, they talk about how horrible it would be if you shut everything down, so far, no one in washington has even tried serious cuts. i mean washington is this strange world where a slight decrease in a future rate of growth is called a cut. in the rest of america, if i were working for bob in his company and we were losing money and i came and suggested, well, let's lose slightly less money next year, that wouldn't work in the private sector. we have not, in modern times, seen real cuts, and yet the casandra's cry that if anything is cut that it will have enormous consequences, i think the american people are looking for leaders in washington to get our fiscal house in order. >> ted, nice to see you this morning. >> good to see you, bob. >> one of the questions that i've got, and i have some of the similar views that you do relative toment some of the departments even the commerce department which is supposed to be pro-business. it would be interesting to see how much money we spent on commerce, education and energy over the last 20 years or so and then try to determine what real value has ever been created and i'm sort of at a loss to determine what value has been created there. >> i think that's exactly right. i remember back in 1995, with the government shutdown, and when the government shut down occurred, they sent home all non-essential federal employees and the department of commerce put out a press release, 70% of their employees were sent home, they only had 30% of the employees but the press said "fear not, all essential functions of the department of commerce were carried out" and i remember laughing at the time and thinking well that's an interesting admission about what the other 70% are doing when they show up at work every day when it's not shut down. >> ted, you are an interesting candidate. you got a lot of publicity later on. you were seen as the underdog for a long time and you came back and you really picked up on a lot of popularity, but you are not the republican establishment candidate. you are somebody who is getting a lot of support from the tea party and other places and i just wonder what you think about mitt romney? >> well, i think mitt romney and paul ryan are doing a very good job right now of presenting a clear alternative to barack obama, and in my view, i think the tea party is overwhelmingly going to be behind mitt romney because politically there is no more important choice in this country than the presidential election in november, and i think defeating barack obama is the most critical step for getting our economy turned around and for getting the 23 million people who are out of work back to work. >> i asked you about mitt romney and i noticed you put paul ryan into that. was the choice for paul ryan as a vice presidential candidate the right one n your opinion, one that fires up the tea party base? >> i think the choice of paul ryan was a fantastic choice. i am a big, big fan of paul ryan's, and the most important reason is not even the political consequences that sometimes you gain play of one choice versus the other but it's the consequence on the discussion, which is, as the clip you played at the opening of this segment, as i mentioned yesterday, i think if this election focuses on economic issues, if it focuses on the enormous fiscal and economical challenges facing our nation and if it focuses on president obama's terrible economic record then i think republicans win in november. if this race becomes a battle of personalities which is what the white house wants, then i think republicans lose and the reason i'm thrilled with the paul ryan choice is that it is driving the discussion and it will drive the discussion from now until november about fiscal and economic issues which is what we should be talking about. >> ted, is there any worry it changes the conversation from the unemployment picture which does not bode well for the president and moves it on to a conversation about health care and medicare and entitlements which may be the most critical issue but at the same time is not a popular one on the other side? >> look, i don't doubt there's some republican strategists that are nervous about that, but the obama administration was going to attack mitt romney on medicare anyway. these attacks were going to come anyway and i think it's far better to get serious and talk about it. we're going to test a proposition for decades. it was the case that even mentioning entitlements was the third rail of politics, if you touched it, you'd get electrocuted. we're in a different situation right now. i think the american people are ready for serious leadership to step up and save social security and medicare. one of the things paul ryan and mitt romney is doing effectively is making clear that this battle is about making sure that these fundamentals of our society are present not just now for current beneficiaries who maintain every single penny of their benefits, but for future beneficiaries. i'm 41. an awful lot of people my age don't think social security and medicare are going to be there for us in the first place. if we step up and have leadership now to save those programs, they will be there, not just for when i retire but when my kids and grandkids retire and i think president obama and the democrats are being irresponsible in demagoguing rather than stepping up and getting serious about saving these programs. >> although there are serious differences about how to save those programs, the plan that paul ryan laid out is one that puts some of the cost on the insurance companies, looks for competition and tries to do that and also says we're going to cap how much we pay out, puts limits and pushes some of it back to the states to deal with. the plan the president has put out is one that cuts medicare by saying we're going to cut our spending by cutting what we pay to the providers. those are two different plans. >> well, they are and what the president has chosen to do is take $ 16 billion out of medicare to cut it out of payments to the providers teen use that not for medicare, not for strengthening the program for seniors but instead use it for obama care and i think that's a choice that the american people are not going to like and it's not proving popular with the voters. >> ted, they're playing the music, means we have to run but thank you for joining us. we'd love to have you again. >> thank you, it's great to be with you. up next a multibillion-dollar health care deal and major retailer falling short of expectations, all moving stocks this morning. as we head to a break look at the futures at this hour. 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[ all ] i'm with scottrade. equities climbing closer to pre-crisis levels but investors viewing the rally with skepticism. find out what it's going to take for money to move off the sidelines. we're one week away from the republican national convention. we're going to talk to rnc chance rhines previs. and miami dolphins owner stephen ross and the commissioner himself roger goodell, they'll join us on the "squawk" set with our guest host houston texans owner bob mcnair. >> i cannot believe it! >> third hour of "squawk box" begins right now. ♪ there goes my hero, watch him as he goes ♪ welcome back to "squawk box" here on cnbc, first in business worldwide. i'm becky quick along with andrew ross sorkin. joe is off this week. our guest host is houston texans owner bob mcnair, by the way bob is also the ceo of the mcnair group, the owner of palmetto partners and chairman of cogene biotech ventures. u.s. stocks aiming at some fresh milestones today, the dow is just above four points shy of its highest close since december of 2007, it's come a long way and the s&p 500 fell about a point short friday of posting its highest close since april of 2008. take a look at u.s. equity futures as we speak. now we have red arrows, slightly more serious than they were before, dow looks like it would open 22 points off, nasdaq about three points off and s&p 500 about 1.5 points off. coventry health care shares jumping in premarket trading, aetna is buying coventry for $5.7 billion in cash and stock, that deal is worth $42.08 a share, that's a 20% premium to friday's close for coventry and we've got a programming note, etta chairman and ceo is going to be on "squawk on the street" today at 9:45 a.m. eastern time. we've also got a couple other headlines this morning, best buy is in the news, best buy has a new chief executive earlier this morning the company officially announced hubert joly will take the top job, former head of travel company carlsson as the company is in dispute with founder richard schultz, schultz rejected his offer to allow him to do due diligence. schultz wants to buy the company for $24 to $26 a share and as we said earlier they have asking for a standstill agreement as part of allowing him in the process to see the financials. shares of lowe's this morning company earned 65 cents per share, five cents below estimates. revenues came up short of consensus as did the fiscal year guidance. stocks have been on a tear over the last six weeks but does the recent rally we've been watching have legs? joining to us talk more about it is jim o'shaughnessy, he oversees about $4.7 billion in assets under management and also joining from us miami this morning is thomas lee, he is the chief u.s. equity strategist ffor jpmorg jpmorgan. tom, what are you doing in miami? >> i'm about to start a vacation, actually. >> working hard right up to the very last minute, which we appreciate. >> yes. >> gentlemen, we've been watching stocks. the dow is up about 10% just over the last six weeks and if you watch what's been happening with the s&p, it's up over 12% so tom, do you think this is a situation, there's a lot of questions including a "wall street journal" story today saying that investors aren't giving this any respect, does this rally continue from here? >> well, i think these are exactly the kind of headlines and stories you want to see, when a market is being met with a lot of skepticism you know that investor positioning isn't very bullish, which means the market has the potential to go a lot higher. so i'm actually encouraged. i think the opposite would be pretty alarming if we said people were pretty bullish and they were already expecting markets to make new highs, then you'd probably think a lot of that was discounted in stocks. >> you're so confident of this you raised your outlook for the s&p 500 to the end of the year saying 1475 by early november? >> that's right. i'm very concerned right now that investors aren't giving this rally enough credit. there's been a real recovery in u.s. construction and housing data, such a big rally in corporate credit and high yield and they're arguing for strong relative value and i'm looking at the continued slippage of institutional manager performance. this is really going to be so far one of the worst years for active managers since 1995, so with that as a combination, i just think there will be a big chase post labor day. >> jim, a lot of people say the reason the stock market is seeing the rallies, they are expecting the fed to step in, maybe the ecb to step in at some point, too. do you think this rally can continue and do you think that's why it's been running higher or do you think it's more of what tom was talking about? >> well i think it's a combination of both. i think i agree with tom about the lack of enthusiasm for stocks in general. you've got people like bill gross saying the love affair with stocks are over, very reminiscent of the "business week" "the death of equities." in these types of environment we are very, very bullish because generally speaking when you have a situation like you have with bonds, money is pouring in to bonds and yet through a study we did we found that the ten-year treasury has a 95% correlation, what you get ten years later from the current dividend yield so if you're looking at 1.8% right now, and inflation runs at around 3%, you're basically locking in a loss, so we're seeing a lot of what we believe is irrational behavior, and in fact, have come up with an opportunity to provide investors with income, but from a stock portfolio, not from a bond portfolio. >> jim, i know that you are interested in these stocks, you look for the best quality stocks but what surprises me is that you have 45% of your assets under management in european stocks. >> yes. >> versus 55% for the rest of north america and asia. what do you see in europe? >> what we see in europe are financially strong market leading companies that are paying very high dividend yields. the fund or the portfolio we're featuring today is called enhanced dividend and it's a global portfolio that seeks out high paying dividend stocks that nevertheless have the financial strength to continue to pay those dividends, and so i think one of the things that's very important is to separate the sovereign problems of europe from the companies. we've found that a much better indication of future performance from a stock are these metrics in terms of value, in terms of financial strength, et cetera, so there are a lot of tremendous barga bargains in right paying high dividends. the portfolio has a dividend yield of 5.3%, we contrast that with what investors can earn from the bond market it's not even close. in the bond market you're essentially buying a loss. look at the ten-year tips it's negative basis points. >> right. >> so why would any investor really want to buy and guaranty guarantee a loss. >> eli lilly, and sa. >> it is a french company. vodafone is up 5.7 and lilyly 5.9. we did an experiment, we said what if an investor chose to use this enhanced dividend strategy just for income, and so we ran it back to 1962, but the more germane part of this is what would happen if you did it in the worst decade in stocks for 110 years, that was 2000 through 2009 and the key element here is the investor has to focus only on the income portion of the portfolio, not on the balance or total value of the portfolio and what we found was over that worst of decades, you could have increased your dividend or your income by more than 12% per year, cumulative gain in income of 183%, all the while your overall portfolio is up 83%. one of the reasons we like this and now remember, that included 2008, right, the second worst calendar year since 1931 where the corpus of the portfolio went down by 41% but when stock prices go down, dividend yields go up, you actually saw an increase in income in that year, so if you could focus on just the income portion, it's a great way to get a rising income stream year over year. >> jim, thank you very much for joining us and tom, have a fantastic vacation. >> thank you. >> thank you both. >> have fun on vacation, tom. coming up, we're a week away from the republican national convention. in the next half hour we'll talk to rnc chair about that, about romney, ryan and what the gop hopes to achieve when the party gathers in tampa and making his way to the "squawk" set, stephen ross, miami dolphins owner and chairman and ceo of the related companies. bob mm nair, he'll sign a ball for us. stephen is going to sign it as well and then we've got roger goodell he's going to sign the ball for us, too, let's get the pen out and you guys can do the honors. who wants to start? you want to start with us here? okay. "squawk" will be back after the break. still to come another heavy-hitting "squawk box" interview. >> hey, bawdy. >> the man in charge of the future of football, nfl commissioner roger goodell will join us on set at 8:40 a.m. eastern. >> break was over 15 minutes ago! ♪ i can do anything ♪ i can do anything today ♪ i can go anywhere ♪ i can go anywhere today ♪ la la la la la la la [ male announcer ] dow solutions help millions of people by helping to make gluten free bread that doesn't taste gluten free. together, the elements of science and the human element can solve anything. solutionism. the new optimism. [ male announcer ] if you believe the mayan calendar, on december 21st polar shifts will reverse the earth's gravitational pull and hurtle us all into space. which would render retirement planning unnecessary. but say the sun rises on december 22nd, and you still need to retire. td ameritrade's investment consultants can help you build a plan that fits your life. we'll even throw in up to $600 when you open a new account or roll over an old 401(k). so who's in control now, mayans? to dabble with the idea of hybrid technology, it's already engrained in our dna. during the golden opportunity sales event, get great values on some of our newest models. this is the pursuit of perfection. >> welcome back to "squawk box" this morning. the inclusion of another business tigs end stephen ross, owner of the mmi dolphins and chairman and ceo of related companies. thank you for being here. we could talk business but i have a question about chad johnson, can i ask? >> sure. >> how involved, we saw it was done on tv, he was fired effectively on television. >> right. >> how involved do you get in these type of things? >> well, i mean, i don't get involved. the coach, you know, checks with me and confers but it's really his decision and he made that decision. i agreed with it, and it's done. >> is it a moral conversation, is that a business conversation? what kind of conversation is that? >> well, i mean with regard to that, i think a lot of that dealt with the integrity of how we feel what our team is about, what our brand is about and also what he was doing on the field. >> it wasn't just the off the field issue with his wife. >> no. the coach had said there were a number of reasons why, and i think he's looking overall what's going to help the team, what the impact is going to be on the team in the long run. >> let's talk football, twoable to tight ends here. you're trying to change the experience or better the experience for fans, by doing some pretty interesting stuff at the stadium. tell us about it. >> i found when i came in, i am a recent owner, there are very few things you can do impact the game, hire the right people and that's hopefully what your job really is and to support them and do everything you can to support the football team and help them win. what i found when i came in and bought a team, i said how can i impact it and i saw it was really what wasn't being done and putting fans coming out to the game, watching a game, because they do such a great job on television, and i think that's our biggest competitor. >> some people say tv is a better experience than being in the stadium depending on where you're sitting. >> depending on the stadium probably. >> that's true and so i looked at it and at first i looked at it from a technology standpoint and there was no technology, it was probably the one part of the aspect of life where technology really hadn't had that impact, and so i went out and tried to find why that was the case, and there wasn't enough bandwidth and cell phones. >> you've installed high density wifi in your stadiums? >> it's being installed actually starting today, it will be ready in about 12 weeks and we'll be the first stadium with high density wifi which means you can get live video on your smartphone at the game. >> how is that going to change the experience? you think people will sit there with their ipads in their lap and look forward and down? how is that going to work? >> today everybody is multitasking anyway, so it's not a question you're going to change that aspect of it, but i think people want to see some of that experience of the instant replays, what's going on at other games, you know, also you have to really incorporate social networking in there. today the fan is different than it was 10, 15 years ago. life is changing so fast and i think we, getting fans to come to our stadiums we have to keep up with that and give them a reason as opposed to sitting at home. >> bob, you've had some experience with that, too. >> yes. >> you put major work into the stadium you have and really got into it. you're sold out. >> we are sold out again this year. we've been sold out every year but steve's doing some good work on this and it is important for us to allow the fan to stay connected however they want to be connected. >> what's your cheapest ticket price and most expensive ticket price right now? >> we're about $25, $27 and then it goes up to i guess about $200. >> $200 is the highest. >> the average is about $67, something like that. >> miami has to be more expensive than that, right? >> no. >> no? >> miami is a difficult place, for winning it's great because it's the best te of the year in miami and there are so many alternative things you could be doing and so our cheapest seat is about $29 and it goes up to about the same as bob's, but it's harder to put the people in the seats, to dom ocome out to games. we haven't had the good fortune of winning as bob has had, at least last year anyway so we're looking to make sure we're winning on the field but doing things that bring the fans out. >> what are you seeing from the state of the american consumer based on ticket sales and what you get people to spend when they're in the stadiums, how are people feeling right now? >> i think it's all about the economy, in south florida the south florida economy is pretty weak right now, so they haven't had, they're kind of frustrated with the win/loss record. first of all there's nothing that beats winning that will bring the fans to the stadiums by far. if we were winning, i think we'd have those stadiums filled up. >> you haven't seen a turn in the south florida economy? some people like mike jackson from auto nation has seen it there, some of the real estate may have turned around from what we hear from on it alleged trump and othe donald trump and others. >> miami is doing well because of the influence of latin market. miami is totally different from the rest of south florida. i think south florida is limping along. there hasn't been a great recovery. i think the jobless hasn't improved that much but i think it's like the rest of the country. it's time for change, as they say. >> talking about change, i have here a note that says that you said, "a worldwide recession is in order if obama is reelected." why do you think that? >> well, i mean if you look and you see how what's happening in europe and you see the bric countries are really slowed down, and you have here in the united states you have the corporations today, the balance sheets are as good as they've been in many, many years. >> right. >> and it's really a lack of confidence in the leadership in washington, and i think that the one way to get this whole, the world out of the malaise that we're in right now, is the opportunity for the united states to take the lead, and i think that if we don't, i think this will continue for quite some time, i think it's a great opportunity in america, it's an important point in america and i think we really have to generate that confidence in business again that will create the jobs. >> you've been a supporter of romney's. what was your thought when you first heard that ryan was the pick? >> i thought it was a good choice. i mean it really addressed the issue. it's about jobs. it's about the economy. and that's today, it's critical at this point in time. >> you know, one of the things we've been talking about a little bit on set but also o off set is the question whether choosing ryan affects a state like florida, a swing state. i have heard seniors who are very concerned about his plans for medicare and what it might mean for the road. >> i think obama wants to scare the senior citizens about the medicare but i had heard that he was down there, and they did some polling and actually the senior citizens were in favor of what he's looking to do. we all know it's not going to impact them, and he's made that clear. obama's trying to confuse that issue, but i think that all the senior citizens today could be rest assured they're not going to be impacted by the change. we certainly need a change in our entitlement system today because we can't afford to keep doing what we're doing as a country. >> final football question, are you really changing the uniforms, is that true, the dolphins? >> this year they're the same. >> but next year, is there a plan -- >> we're looking into it. we haven't made any decision yet. >> is there a lot more money to be made if you change the uniforms? how does it work? >> i don't think so. it's updating things and being with today. it's been a long time and i think in any part of any business you want to keep looking at things and addressing them and updating them. >> okay. you buying any real estate, by the way? >> a little bit. >> where are you buying? >> well new york is still really a great market. >> you're doing some stuff over the hudson yards but that's been in the works for a while. >> we're starting construction in october, what will be the largest development ever in the united states. that's ek sixciting. >> i heard you talking football amongst yourselves coming back from commercial. >> we play each other first game this year. >> we open so they're coming to houston and i look forward to having steve over and they're doing a great job down there, and he has a tougher market than we do, because so many of the people down there are from other areas. they're from philadelphia, they're from boston. >> eagles fans, still giants fans. >> they go down there for a short period of time and they're still pulling for their home team back home and he's got to convert them to make them dolphin fans and so we're not faced with that problem, but steve does a great job. >> so who is going to win that game opener? >> he's a favorite, let's put it that way. >> we're both going to be there and make it an exciting game. >> i sure hope so. >> is there a beer riding on this or something? >> at least one. >> at least one. steve, thanks for coming here. >> thank you, pleasure being back. when we come back we will have more on the business of football with the commissioner himself, roger goodell will join us on set in the next half hour. tomorrow on "squawk box" a full line-up to tackle market and economic issues as we head into election season, guest host triple play including former rnc chairman michael steele, mark zandi, and john fund, senior editor of the "american spectator." also talking to donald trump, mohammed el erian and "new york times tom friedman. stick around for more today as well. i realize tdd#: 1-800-345-2550 that i haven't even looked away from my screen. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 that kind of focus... tdd#: 1-800-345-2550 that's what i have when i trade. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 and the streetsmart edge trading platform from charles schwab... tdd#: 1-800-345-2550 ...helps me keep an eye on what's really important to me. tdd#: 1-800-345-2550 it's packed with tools that help me work my strategies, tdd#: 1-800-345-2550 spot patterns and find opportunities more easily. tdd#: 1-800-345-2550 then, when i'm ready... act decisively. tdd#: 1-800-345-2550 i can even access it from the cloud and trade on any computer. tdd#: 1-800-345-2550 with the exact same tools, the exact same way. tdd#: 1-800-345-2550 and the reality is, with schwab mobile, tdd#: 1-800-345-2550 i can focus on trading anyplace, anytime... tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 ...until i choose to focus on something else. tdd#: 1-800-345-2550 trade at schwab for $8.95 a trade. tdd#: 1-800-345-2550 open an account and trade tdd#: 1-800-345-2550 up to 6 months commission-free online equity trading tdd#: 1-800-345-2550 with a $50,000 deposit. tdd#: 1-800-345-2550 call 1-866-516-0492 tdd#: 1-800-345-2550 and a trading specialist tdd#: 1-800-345-2550 will help you get started today. welcome back to "squawk box," everyone. let's get a look at the weekend box office. "the expendables 2" won the race, took ins it 28.8 million in north american ticket sales. however that was short of industry projections of $40 million. the original "expendables" had a $34.8 million debut weekend two years ago. another sequel "the bourne legacy" took the number two spot. when we come back, they are calling it the convention without walls, we're just one week away from the republican national convention in tampa, up next, we'll be talking to the rnc chair, reince priebus about mitt romney, paul ryan and the countdown to the election. and he is the man responsible for football in america, nfl commissioner roger goodell will join us on set in ten minutes. sometimes investing opportunities are hard to spot. you have to dig a little. fidelity's etf market tracker shows you the big picture on how different asset classes are performing, and it lets you go in for a closer look at areas within a class or sector that may be bucking a larger trend. i'm stephen hett of fidelity investments. the etf market tracker is one more innovative reason serious investors are choosing fidelity. get 200 free trades today and explore your next investing idea. 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[ male announcer ] ...forbusiness.com. ♪ ha ha! welcome back to "squawk box." among the stories wiies we are following this morning, lee raymond will be leading an investigation into jpmorgan chase's multibillion-dollar trading loss. also on that inquiry panel is johnson & johnson chairman bill welden. raymond led exxon from 1993 to 2005 is already on jpmorgan's board as an independent director. diageo may be heading the jose cuervo tequila family. and gm is recalling nearly 250,000 mid sized suvs, mostly involves 2006 and 2007 chevy trailblazer and gmc enjoy vehicles. possible short circuit could impact the operation of power windows and door locks and that could cause a fire. we are now just days away from the republican national convention, where governor mitt romney will become the official republican candidate for the 2012 presidential election. so what can we expect to see at the convention this year? joining us now for more on that and from the home of the rnc convention, already down in tampa, republican national committee chairman reince priebus, great to see you this morning. >> good morning from tampa, and you're right, we're down here already and we're expecting a big, big day today, we're unveiling the stage today, we're going to be in the forum, the press is coming, all of our committee meetings are happening this week, and then the convention obviously starts next week but it's a two-week deal. it's a lot of work but it's going to be important. >> we were reading the front page of "the new york times" about the staging that goes on on this convention. >> yes. >> how it's become more of a tv event necessarily than what people used to think of as the conventions. >> well, i mean there's a lot of different parts of a convention. obviously there's the delegate experience and all the people that are down here and it's an opportunity for a lot of groups that have interests in what we're doing here to get together, but then there's this piece that everyone else sees that we just have to really hone in on and we want to make sure we were able to tell the mitt romney story that we're really proud of and that happens at prime time obviously as you all know and you'll all be down there during between the hours of 8:00 and 11:00 at night every day. >> one of the things interesting about the story it suggested that republicans have not had necessarily the hollywood gloss some of the democrats have historically, becky was talking how steven spielberg made the video for obama in the past, and this year you're hiring some real tv folks to do it. could you speak to that? >> we have some real professionals that are involved here, had a lot of folks that are part of the romney campaign and others, but we're going to do some unveiling today, you're going to all be floored when you look at this stage and just the technology involved. we've got a convention without walls and we're trying to build out an entire network of social media around the convention. we think that we're going to be able to very effectively display to the american people an america that we believe is full of optimism and opportunity for people and that's really what mitt romney's vision is. >> can you give us a hint, what is this donald trump surprise supposed to be? he said on tuesday he wasn't going to be speaking there but was going to be there and he's tweeted he has a massive surprise, he was filming something so i'm thinking there's like a video bit going on, help us here. >> you don't think i really want to step on donald trump's toes, do ya? >> he's part of the "squawk" family so you can help us here. >> listen, i know he is and it's going to be a lot of fun, and it's going to be, it's going to be special, so i'm not going to step on our own parade, that's for sure. i will tell you that everyone that's involved, everyone that's speaking, everyone in all of the themes involved for each night, it all comes back to how we save this country from a president that really didn't fulfill his promises and we want to provide parents out there, no matter where you're at, republican, democrat, dreams for your kids that are all about success and getting ahead in life. >> tell us about the back room dra drama. how does it work? everybody wants to speak at the convention. how do people get selected, the order, all of that? >> well, i mean, a lot of folks are involved. the party's involved, mitt romney campaign and the producers. >> who makes the final decisions? >> it's a big group decision. these are things that everyone kind of we sit around, there's production meetings that go on and people come up with different themes for each night and try to figure out how each speaker and video and everything else that's looped into that production. >> is mitt romney the boss in this case? he put on the olympics so i figured he could put this on, too. >> mitt's ultimately the boss. there's no doubt about it, but i will tell you that you know, he's not, he doesn't really get in the weeds on every little decision that's made, i can promise you that. he's working on big things and he's getting around the country and speaking to the american people. >> i'd like to ask you this, good morning, first of all. >> good morning, sir. >> i'd like to ask you this question. i find mitt romney to be a very personable person, one on one he's absolutely terrific, and the public doesn't know him. i would hope that during this process you would have the opportunity to really introduce him to the american people and let them see what kind of guy is he. i understand as an example, when his dad passed away, he gave his inheritance away. i was unaware of that until a few months ago. he's a very generous person and his sharing and caring and yet he's portrayed as being someone who is sort of a technocrat or something, which really he's not. >> that's what the convention is really important for, which is telling that mitt romney story and part of campaigns i think in this particular case on our side, there are two components in this campaign. number one the first component is did barack obama fulfill the mission? did he meet the promises? are you better off? yes or no? you check that box but the other important component is have the republicans put an articulate, reasonable alternative that can lead this country and that means telling the mitt romney story. you're exactly right. gave away his father's inheritance, made something from nothing, a good father, a good husband, the olympics, a good governor, of a blue -- of a state run by democrats, and he was able to lead. there is so much to be proud of, and that's what we have to be able to articulate next week. >> reince, we have to run, what kind of numbers do you have to see coming out of this to claim success in terms of the polls? >> oh, i don't know. i think it can all be measured differently. i think momentum is important, that's our goal, we need to have a bump, but we need to tell mitt's story and explain to the american prosecute obama to the american people. >> prosecute obama, mr. priebus, thank you for joining us this morning. >> thank you. when we come back on "squawk box" the commissh is making his way to the "squawk" set, roger goodell's business model and the upcoming nfl season. stick around, "squawk" will be right back. ♪ ♪ i can do anything ♪ i can do anything today ♪ i can go anywhere ♪ i can go anywhere today ♪ la la la la la la la [ male announcer ] dow solutions help millions of people by helping to make gluten free bread that doesn't taste gluten free. together, the elements of science and the human element can solve anything. solutionism. the new optimism. [ male announcer ] drive a car filled with as much advanced technology as the world around it. with the available lexus enform app suite, you can use opentable to make restaurant reservations. during the golden opportunity sales event, get great values on some of our newest models. this is the pur of perfection. welcome back to "squawk box" everyone. the 93rd nfl season is set to begin september 5th and this season promises to be exciting. peyton manning in denver, tim tebow in new york and the saints playing without their suspended head coach. joining us is roger goodell, commissioner of the national football league and roger, we always love having you on set. thank you for coming in. >> it's great to be here becky and great to be back to football. >> back to football, getting ready. i was watching some of the games including bob's. where are we headed as we get into this football season, how would you sum it up? >> with a great deal of excitement. we're coming off of one of the greatest seasons probably in the history of the nfl, we certainly are excited about all the headlines that you've talked about, but the stories are really yet to unfold. the great thing about football is you really don't know what's going to happen, it's the unpredictable nature of the game, who is going to do and not going to do well and that's what makes football great for our fans. >> we were talking off camera before but i did want to bring up what you announced last week with the youth program, heads up football. this is a big step and it's been seen as a huge step by a lot of people, including the brain injury association and other organizations that are watching this, but what you're doing is trying to make sure that kids, that youths are taught the proper way to tackle without getting hurt. >> we are, and we believe that we can have an impact at the nfl by doing things right, that's why we focus on our roles and equipment because it sends a message to youth football we're working through usa football to promote heads up football, teaching kids how to play the game safely and not just the kids but the coaches and the parents, so we're inviting the parents in so they can understand the way we can do this safely. the way we can promote our game. >> that's been a huge mission for you across the nfl as well, you've taken a lot of flack and stirred up controversy in terms of making sure bounty hits are not on the able anymore. you have vilma and others saying this is unfair, it shouldn't have gone down this way. looking back is it fair to say the message you're trying to send is this is not going to be tolerated in the nfl? >> i hope that's clear, becky, because it should be. if you go back to the facts, we are obviously discovered here there was a violation of a very important policy, which is we should not have any rewards for injuring opposing players. the evidence is overwhelmingly clear that it occurred. there have now been admissions in court, and the statement is very strong, because it's not part of our game and we owe that to them and after three years of denials, this went on, and that put our players at risk and that's something we're going to stand up very strongly for and make sure that our players aren't in a position where they're being targeted for injury. >> vilma says he never had any intentions of injuring anyone. >> becky i wish it never happened. that's how i would like to go. the facts are very clear that players were rewarded for injuring opponents. >> so you don't believe him? >> well the facts, you know, are very clear and we've seen that in documents, they've testified in court that they had what they call a cart off, when a player was taken off the field for injury, players rewarded for that, that is a bounty, illegal under our policy and getting strong discipline going forward. >> bob as an owner how do you come down on this? >> i think we have to protect the integrity of the game and this was something, it's not necessary. we can have an exciting game without having that sort of thing take place, and you know, the reason we have equipment is to protect the players. we like to see the violence, but we don't want to see somebody actually hurt from it and we have helmets, we have shoulder pads and we want the players to use that equipment, so the commissioner did what he had to do and it's unfortunate that he was put in that position, but i'm fully supportive of what was done. >> roger, what's going on in the equipment side, are there new things changing in terms of helmets and safety pads? >> yes, there's new technologies that can make our helmets safer and make the rest of our protection, we're looking to expand the protection, you may see a number of our players don't wear hip pads, knee pads anymore. that's an important part of the protection they have and technology has made those not only safer equipment, but also where the players can perform at a higher level and that's what they're interested in. we want to make sure they can perform but they can also be safe so the better equipment, the better they'll be safer. >> you've got tim tebow playing in new york now, and there's been a lot of excitement around that, a lot of questions when you still have mark sanchez, who is there as well. what does it mean to have some of these big names who stirred up so much excitement last year, have them playing in different markets this year? >> i think it's great for football but more importantly it's great for the fans because people are interested now. how are the jets going to use mark sanchez and tim tebow? how is peyton manning going to adjust to a new system and coming back after a year off? those are all part of the storylines going into the season. the question is what will be the storylines coming out of the season and that's what keeps the fans interested so it's part of the engagement of our fans and now our fans can engage not only through our network partners through through the nfl network and all the other new technologies so there's never been a better time to be an nfl fan. >> i was going to ask what you think of the reality tv around football, whether it's "hard knocks" good for the game, bad for the game? certain say it's fantastic, others who say almost too much. >> i think it's good for the game because particularly in "hard knocks" it gives our fans an opportunity to get closer to the game and to the people who play it and i was talking to some people this morning who said not only am i happy football's back i've been watching "hard knocks" and i'm mesmerized. >> not all coaches love it. >> no, coaches are focused on football. they want any distraction towards that focus on football is a negative one so they recognize that it's an important part of the nfl to make sure our fans can get closer to the game. >> the economics of those programs good for the nfl? you guys get paid something, but you're saying the argument is the marketing tool. >> andrew, it's marginal from an economic standpoint. it's really the ability to drive greater interest in their game, greater engagement and hopefully that will come through with our network partners. >> stephen ross we just had him on, talking about adding a lot of technology into the stadium. is that something you're encouraging, something you guys are working on as well with owners? >> absolutely. we're encouraging all of our teams to get focused on what they do to make the stadium experience a better experience. as you pointed out earlier, the television experience is a great experience, with high definition, super slomo, that's a great experience at home. we have to counter that by making the experience in the stadiums terrific and we have, new technology is part of that, making sure fans are safe, make sure it's a great experience when they come out to the stadium. we're still 96% full in our stadiums. we'd love to be 100% but 96% is a great number. >> jim harbaugh has been complaining recently about the replacement referees, he says the current officiating is giving him headaches at this point. what can you tell some of the people who have made these complaints about the replacement refs? >> i had the same call from jim last year. it goes back to coaches before, coaches, you know, they look at officiating it's an imperfect science. we think our officials are great but we're interested in making officiating better for the long-term and we have to reach a long-term agreement. we'd like to not only get an agreement on the right economic system but also we want to add additional crews. we want to train additional officials which we think will make officiating on the field is better, and then it will make jim harbaugh happy and our fans happy. >> we just said harbaugh, i know something about his complaints, but you know, we have complaints, it doesn't matter who is officiating and we look back at it as to those calls that we think were bad calls, and we don't have any more now than we had before, and clearly the officials that we have now are not as good professionally as the ones that we've had or else we would have had the others all along but in terms of the impact on the game, i've been watching it, and frankly, i can't see any difference. we have the same situation, we have some calls we don't like, we have some that should have been made that weren't made but we don't have any more and the players are just as well protected so i don't think safety is an issue at all. >> roger, atlanta was called by the wrong name twice, there have been some general confusion when it comes to the rules, some of the language that they use when trying to describe the calls, these aren't people that have experience doing this and it's hard to think you can put somebody who hasn't done it before and get the exact same officiating. >> those are administrative aspects of the game, they're not used to working with the mike. those are not issues we're as concerned about. we're concerned about protecting the integrity of the game and making sure the right calls are being made from a safety standpoint. the reality is when we went through this in 2001, we had less calls during the game, and actually the coaches, the fans, and the players actually liked that, because they weren't on the nit-picky calls. we think our officials are fantastic. it will get resolved, but we're prepared to go forward if we have to. >> roger, i want to thank you for coming in today. >> great to be here. >> gets us excited to thank you for being here today. we love seeing you. thank you so much. >> great to be with you. >> live sports. still works. olympics proved that. coming up, stocks on the move ahead of the trading week. we're going to get down to the "squawk on the street" when we return. 'born with.g you're >> announcer: squawk of the day is coming up. you're watching "squawk box," first in business worldwide. because it matters. at hp we don't just believe in the power of technology. we believe in the power of people when technology works for you. to dream. to create. to work. if you're going to do something. make it matter. 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. . welcome back to "squawk." gets bet back down to the new york stock exchange to mr. cramer. >> how are you? >> i'm good. i want to hear best buy, do you have thoughts, and what else are you looking at? >> best buy is done. i think you can stick a fork in that schultz deal and they didn't do due diligence. romney is going to lose otherwise you wouldn't make this acquisition. and i've got to tell you, i think it was only bad weather on lowe's side of the street. obviously they didn't do any gardening. must have been sunny on home depot's side because home depot trashed lowe's in the numbers. >> you know, jim, we just had roger goodell in and i saw some stuff by you where you stopped by the eagles' training chaamp. >> yeah, i got to sit with stan and the owner and the gm. all they asked was that i not sue them if anybody runs into me because we were right on the sideline. i think the commissioner is right. the owners are right. this is an amazing game. this is a national game. i don't care about any of the baseball teams other than the phillies. when i hear that brian sullivan is a charger fan, i can't get enough. i'm drafting first on the "mad money." wednesday night draft. i'm not revealing who. >> michael vick? >> vick is a second round play -- you do not -- you don't draft a quarterback anywhere in the top six, seven. that's just bad form. >> all right, jim. we'll see you in a few minutes. >> when we come back, bob mcnair. stick around. we'll be right back. >> announcer: tomorrow, the economy, the budget, market uncertainty, and the race for the white house. we're counting down to the election with the sidewalk box battle royale. two hours with michael steele, mark zandi, and interviews with donald trump and thomas friedman. two hours of "squawk box" you can't afford to miss tomorrow morning at 6:00 a.m. eastern. whether it's supporting a delaware nonprofit that's providing training and employment opportunities, investing in the revitalization of a neighborhood in the bronx, or providing the financing to help a beloved san diego bakery expand, what's important to communities across the country is important to us. and we're proud to work with all of those who are creating a stronger future for everyone. 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[ male announcer ] tempur-pedic. the most highly recommended bed in america. with the fidelity stock screener, you can try strategies from independent experts and see what criteria they use. such as a 5% yield on dividend-paying stocks. then you can customize the strategies and narrow down to exactly those stocks you want to follow. i'm mark allen of fidelity investments. the expert strategies feature is one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account. stock of the day today, can could have ven tree health care. it's being bought by aetna, a deal worth $42.08 a share. that's a 20% premium over friday's closing price. the stock is trading up close to 19%. let's get final thoughts from our guest hosts today. houston's owner, paul mcnair. you've got a lot of different hat. why don't we talk about your hat as the owner of the texans right now. >> that's more fun. >> it's a big time of year for you, too. you just beat san francisco and you're getting ready to play new orleans which is a big game. >> yes. >> this is where you can expect to see a lot of the first-string players? >> yeah, they will play close to three-quarter. it will be competitive for that time period. we enjoy going over to new orleans. it's going to be an exciting night. >> would you predict that you're going to go all the way this year? >> i'll predict that we're going to be in the playoffs and i would say that we have a very good team. how far we go, you know, depends on injuries and a lot of other

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