Transcripts For CNBC Squawk Box 20130715

This mornings headliner citigroup. Well have analysts looking to earn 1. 17 on revenue of 19. 7 billion. For now im going to send it over to our good friend, michelle. Michelle . In global news china is the big story today. The economy there slowing further in the latest quarter. Second quarter gdp grew by 7. 5 down from 7. 7 in the previous quarter. But in line with the average and a list forecast. Meantime chinas implied oil demand rebounded in june to the highest level in four months. Among the reasons, refineries returned for maintenance. Analysts say they still expect growth in oil used to be roughly flat. Eu Officials Say talks on resolving a trade dispute over solar panels reached an impasse. An august 6th deadline is looming for an increase in tariffs. If the deal isnt reached, chinas Solar Energy Industry could have products face average eu tariff for near. An investigation into the cause of that friday fire on an ethiopian airliner. It was a 787. Unbelievable. Theres no evidence the battery caused the fire. Also the journal reports the early probe suggests the fire appears to have occurred in the overhead area in the back of the plane. And we need to figure this out. Then i thought they said it was where i dont know, for some reason i thought it might be a cigarette or something. I dont know. I know i interviewed jeff two weeks ago ought in aspen. What do you think about the 787 . He said they always have teething problems. But if its nowhere near the bat theory people in the air teething problems . You cant have teething problems in airplanes. Its just not acceptable. Unacceptable. I still think i worry about fire. I got a ticket to wherever youre making like six jumps to different you remember the air tran there was some it could have been cargo, there was some cargo that was combustible . What was it called . But you dont hear any other reports of 777s. Theres fires. The theres constant smoke in the cabins. Constant . Its not that unusual that there may be some friction. And we just dont report it . Well, it doesnt get the play, but until you know what if you find out that it was totally something that was in the plane that had nothing to do with the construction of the 787 . Here you are already worried about if it was nowhere near the battery and didnt give you any Additional Information there was another flight in the midair which they decide d o divert to go back. They didnt like the way things were going. Right. You know what im really glad with . Im glad the San Francisco plane was not a 787 for your sake. Youd have it canceled. Youd have the entire Program Canceled if the San Francisco flight had been ten less. You know my worry about that. Fuselage made out of composite. The new ones wont be cracks. It doesnt bend. Its a different situation. So if meaning . If he is on the one crash that owe can curse in ten years, 50,000 takeoffs and landings every day, then he might not survive that one. Meaning, we are very grateful so many people were able to get out of that alive uninjured. And there are some views in the analyst and Engineering Community that would have been tougher it. In a 787. But composite. Yeah, okay. Generally. Andrew, if i would assume, and its very rare, plane crashes correct. If you are in a plane crash of a big jetliner, youre probably going to die. I would not hope to survive most of those. So if one occurs every eight years or something, god forbid, and its been better it depends on how the plane crashes. There are two general ways a plane can crash. It can come in and land and be a very rough, awful landing. Thats not a crash. Or does it just fall out of the sky . Were not used to those, the twa one. Boeing says the composite is as strong as the aluminum. You want to walk away from a major airliner . Well, look, there have been a number of instances, whether its chesley sullenberger. That was a miracle. It was a miracle but does a composite plane break up . By the way, there are some views the composite is even stronger. With the Sully Sullenberger situation, how do you balance your environmentalism with your fear of flying . Should we just kill all the birds . Just kill them all. Right . That is what happened. Yeah, yeah. Lets get to things this is something you and i might know something about. More than airplanes. At t is buying leap wireless for 15 a share in cash or about 1. 2 billion, an 88 premium to the close. Its the latest example of some of the u. S. Carriers scrambling to acquire valuable wireless spectrums. This was a small deal, not a tmobile deal. Leap almost went into that tmobile deal at one point when they were trying to negotiate all of this. But this im starting to think of these real estate deals. Thats what this is. Youre buying certain real estate on the spectrum. Theres just not enough left. Its beach front property. This may be the worst neighborhood in town. You can call it whatever you want. You just want to own any of the property. The government has the beach front property and so do the tv stations, the networks. They have beach front property in the sky. Is this a feelgood thing . I dont know. Yes. A small deal acquiring taylor capital. Thats why he doesnt know about it. Its not even a billion dollar deal. Why are we talking about it . The stock and the offer represents a premium of 26 to taylor capital. Back when the deals were really going on i dont wake up for less than 10 billion. You said something about a transaction years and years ago. He did wake up last week and came in. I know, i watched. And someone tweet ed about a puppet. Two puppets. I dont know. Remember that first caricature they did of you . Yeah. This puppet was about on the same level. I looked like i dont know. I dont know who i looked like. Maybe fred willard. Hes about 90 now. I kind of look like him after hes had a few actually. The f itt reports apple has g on a hiring for the iwatch. I saw one. Probably does a lot of stuff. The timing of the hiring suggests the wearable device will not be ready for launch until the latter part of next year. You should wait on getting a watch. He is going to get a watch. You might as well i dont wear a watch since i got a phone. This could disappoint some investo investors. Well, there was an expectation tim cook said a number of new products through 2014. This could still come. He could make this right. Well see. This will be the next step up in apple hype, do you think . Is it big enough . Could it be big enough to be a game changer like a tablet or an iphone . Some people think it could be. It could be huge. An ugly looking thing. Its a first generation. That image thats online not real . No, its somebody who made up what they think an apple device should look like. By the way, i did play with ios 7 the new apple operating system. No, but ill take your word for it. Its the new operating system on your iphone. Pretty cool. Is it on my iphone . Not yet. It will be. Okay. Not yet. I use add phone last week that didnt even have a mute button in cuba. Im surprised they have phones. Yeah. A million people. A better life. A simpler life. Socialism thats one place you can point that it actually worked. That is the end result. Who needs air conditioning . Who needs to communicate with family . Your Carbon Footprint is much small smaller. Much less complicated. I dont like having a lot of choices about what to eat. Not a whole lot of obesitobe. They dont have diabetes issues like in other countries. See what comes from nasty capitalism . People dont know how to handle prosperity. Give them very little is better. Should we talk about capitalism and prosperity across the ocean. Is there capitalism and prosperity across the ocean . A version of it. A version. A version of capitalism. Are where the elites do forget where they got where they are and they have a permanent leisure class that doesnt think you need capitalism. Lets see what Ross Westgate has to say. We are going to go across the pond and say hi to our good friend ross this morning. Ross. Hey, roscoe. Morning, andrew. Good to see you. I think youll find here in the uk were the most open economy, one of the most open economies on the globe. Were happy for anybody to come and buy our companies at a fair price. Well talk about invensys in a few moments time. Right now we are on the session lows here in europe. You can see advancers only outpaced decliners on the Dow Jones Stoxx 600 a couple hours ago. That was nearly 81. So we have gone down to the bottom of the graph as we got closer to the u. S. Open. We woke up this morning sort of cheered by the chinese gdp data. A lot of fears it wouldnt come in that michelle talked about to that 7 mark. It has meant the ftse 100 is doing well. Back to the low point the ftse 100 like u. S. Markets having its best or the second best week of the year up 2. 7 right now up a third. We have been up threequarters this morning. 0. 4 for the cac 40. The ftse mib is fairly flat. Break down the sectors, the benefit of the chinese data. Resources one of the best performing sectors this morning. Right now technology and media. Resources have just dropped out. This was the best about an hour ago. Now the red sector in. Autos and Financial Services are down. So things have certainly turned around and i talked about m a. Invensys talk iing about a bid from schneider electric. Invensys up at 510. 50. Ge is now eyeing the rule over whether it wants to buy the uk engineer talking around the schneider bid is around 5 billion equivalent. Talking about a potential bid of 5. 3 billion from ge. So the speculation in the uk this British Engineering company could become a bid battle. There is a date of august the 8th for schneider to decide what theyre going to do with that bid. Keep your eyes on that. The u. S. Boys could get involved. Thats where we stand now. Back to you. Okay. I always ask you this. It has to be within a week or two, muirfield, right . This week. Phil won the Scottish Open up at castle stewart. Great links course. Hes looking good. Nice. Wow. And once again, no idea who to pick. It could be anybody, right . Depends on the weather. Depend on the wind. Remember that storm came in on a saturday. I think tiger shot 81 or whatever. It depends on your timing. Theres a bit of luck involved. Faldo is playing, too. He was in here. Hes a smart ass, faldo. He is. He really is. Big guy. It did you know that . Hes like 8 feet tall. Hes huge. Hes like paul bunyan. Really . Never knew that watching him play. I thought he was your size, ross. Hes not. Hes huge. Hes a monster. And he was kind of a bully with me. Really . He was mean. Well, it takes one to yeah, he was mean to me. Talked about my arms, you know, said the only thing under 21 because i wanted to join his tour where you have to be under 21. The only thing under 21 on you are your biceps. I dont get it. The measurements . Oh, okay. Im not very manly. I dont know, he was just mean. The way you boys insult each other. I could have come back with a really funny thing and he never would have come back again but i didnt say anything back about things that are 21 years old maybe in his life. Whoa. Google. I know. Congress returns to work today among the big stories this week, in the Senate Democrats are threatening to change the rules to speed up the nominating process. Thats when Nuclear Option, the filibuster type thing that henry reid swore he would protect. And in the House Republicans want to delay parts of obama care and hit the reset button on the debate on immigration reform. John harwood joining us from d. C. This morning. Whats front and center . Congress is probably reporter first of all, the british open, im picking tom watson. This is his year. He almost won it a couple years ago. I know he did, but that was it, dont you think, john . Its too hard. The nerves go. Well, you know that. Dont you get the shakes now . Reporter it was such a tragedy. He was right there. I remember the shot the he hit on 18 that got a bad kick to the back of the fringe, remember that . Reporter yep. And then the next shot about a five on a scale of one to ten and then that putt was not even close. Reporter he couldnt have struck that ball any better. The one that he hit in. I know, i know. And for all of us that are over 35, that was painful, right, over 35 years of age, because we, you know, we were pulling for him, right . Reporter exactly. I think 46 is the oldest to win a major . Reporter nicklaus. Hale was 46 in one of his u. S. Opens. What is the most trayvon people in congress, are he they is that going to occupy any of their time this week . Thats such a huge story everywhere else, john. Reporter there will be a lot of talk about it and the administration has got this Justice Department look into whether there were federal civil rights violations. I dont think anybody expects a federal civil rights case out of it, but theyre going to go through the process of reviewing as they had done before the state charges were brought. The president put out a statement yesterday, and i think everybody has been gratified there hasnt been the sort of violence some people predicted in the wake of the verdict. I think this is going to be a washington talking story which, of course, most washington stories are. What is i cant believe bernanke is talking again. I think this week he goes back to, yeah, were tapering soon. Every week he just to get us to keep us on our toes. Reporter if ben bernanke says anything about trayvon, you can knock me over with a feather. That will probably not happen. Theres such a vacuum for other stuff actually getting done there. Washington is just like almost like a soap opera now. Theres nothing really happening legislation wise. What about harry reid . Reporter thats a real soap opera. They have all the senators meeting tonight bipartisan session to try to avert the terrible damage that would be done to the senate that the republ republicans are warning against just like democrats warned against the terrible damage to the senate in the mid2000s when bush was president and democrats were frustrating his nominees and republicans considered the Nuclear Option. Now democrats are doing the same thing. This ises a reflection of the way our two parties contest each other so fiercely at every turn and, you know, the filibuster has become a routine weapon. I still suspect that they will avert the Nuclear Option because there is lingering attachment to the old traditions of the senate which dont carry as much weight as they once did. Remember, youve got two nominees to the National Labor relations board. Youve got richard cordray, all of those are the legality of those are disputed. Republicans are saying well give you the two cabinet members who are legally appointed who weve been holding up but were not going to give you the ones we believe were illegal because of a Circuit Court ruling. I dont know how theyre going to work that out. Im still betting that theyll work it out. Senators will talk tonight. Then tomorrow theyre going to be cloture votes which normally require 60 votes. Thats the filibuster issue. And well see how republicans deal with it and whether or not they can come out with a deal. All right. Thats about it, i guess. Hold on. I have one question for him. Go ahead. Theres a big coming out, john. Supposed to be the hottest book in all of d. C. This week. This town. Reporter ive been reading it. Whats in it . Theres no index. People are up in arms. You have to actually read it. You cant do the washington read apparently with this book. Also the wall street read. Reporter the Washington Post created a bootleg index of the thing. No, look, this is an interesting situation. My colleague at the New York Times has written he a piece that the subtitle was initially suckup city and he was talking about the permanent class in washington that is out to succeed financially, that its revolving door. That is a truth about washington and theres a lot of people who he skewers in that book that deserve to be skewered. Thats a different washington than the one that cant get anything done because the two parties hate each other. There are parallel realities about people who live here and sort of the permanent lobbying class, but you also have these parties which are not the accommodating one another, which are not back scratching. They are, in fact, stopping everything the other side wants to do. I should mention we have mark on the show on wednesday and the book already number ten on amazon and its not even out. Its preordered. Its the hottest thing. I thought it was just hot in washington but clearly hot across the country. Thanks, john. Coming up chinas economy slowing further. The full story from beijing and what it means for the Global Markets next. First, though, the end of an era. Part of Communications History shut down for good. Indias last telegram went out late yesterday. I think i might have seen some of those in cuba. Marks the end of a service that provided indians with a fast and reliable mode of indication. The state owned Telecom Company behind the service forced to wind down the telegraph service. India has 182 telegraph offices. Smart phones and other technology has hurt the Telecom Industry over the last decade. A real statement of the obvious. announcer scottrade knows our clients trade and invest their own way. With scottrades smart text, i can quickly understand my charts, and spend more time trading. Their quick trade bar lets my account follow me online so i can react in realtime. Plus, my local scottrade office is there to help. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer scottrade. Voted best Investment Services company. Welcome back to squawk box. Making headlines this morning, wells fargo check out cnbc. Com today. Driven by reader feedback weve come up with a new clean look. We hope it makes cnbc. Com easier to use and read stories and data, much more simple and easier to find including being able to find those stories by social media feeds from cnbc anchors and reporters. All your favorite features are still there and you can find stormi stories clustered around topics you care about. The alpha Conference Begins wednesday. I checked it out late last night. It is a huge improvement. Its awesome. Love it. It makes it a lot easier. The idea you can sit in your office now finally and if you dont have a tv you can actually watch us just stream right over online. You have to have your cable provider, a password to make it happen. I think its pretty cool. Chinas economy slowing further. Second quarter g did dp grew by 7. 5 . Joining us from bay gypping is eunice yoon and the author of the coming collapse of china and also a columnist at forbes. Eunice, let me start with you. Its not just the data that comes out in china but all the talk by government officials around the data. What are they saying, the message they are trying to get a across . Reporter well, what was really interesting today, we did see a relief rally. A lot of that was because of the expectations for these numbers managed down so low not only because the numbers that weve seen in the past couple of months have been really terrible comparatively but also because of some comments that we heard in the past couple of days, the finance minister. So everybody here was really so fearful that these numbers would be terrible so when they hit and meet expectations at 7. 0. 5 , people were saying, hey, these numbers really arent so bad. But overall we are seeing a weakening trend. And the officials here did say that we are seeing a slowdown but that the economic conditions, they said, are still ripe for the economy to actually meet the official target of 7. 5 on the year. They also said that part of the slowdown is deliberate. They are pushing through a lot of structural reform so the question, though, a lot of people have here is just how far are they going to allow the economy to slow down before theyre going to want to step in . Michelle . Do you want to weigh in in terms of the numbers . You dont believe the numbers. You never have believed the numbers. And we should point out that due to the wikileaks we know from the wikileaks data the number two guy in the government has told members of the state department the gdp number is manufactured. Its manmade. Dont believe it actually. So what do we take from this number . Yeah, its not growing in the 7s. Its probably in the 3s and the 4s. You look at electricity, manufacturing, price indices, trade data. All of this is looking very, very bad. You look at aggregate financing, it collapsed by 41. 6 . That doesnt happen in a robust econo economy. What are the implications considering china can has all kinds of Foreign Exchange reserves which they can stimulate or backstop banks. They have a local currency crisis. Foreign exchange, dollars, pounds, yen, doesnt help them that much. The only thing they can do with that is to recapitalize the banks. That takes a long time. In a crisis when things move quick, its irrelevant. The real problem here is that china is not reforming. Whats happened is theyve just about come to the end of their growth model, export heavy, investment led. Leaders cannot make the changes necessary to get consumption growing. Are you ready to decide that yet when weve seen what theyve done recently with the central bank really squeezing the junkie lending that they dont like, that they say is showing they really do have a commitment to financial reform to eventually letting Interest Rates flow and not fixing prices when it comes to banks . Thats what they said but i dont think they actually did that because if we were to believe that they say. They just took over late last year. They say theyre going to do that. Its every single day in the press they talk about that is coming. Yeah, and they talk about it so much and what do you think theyre going to do . They cant do it. You have entrenched interest. The apex of political power in china. The conservatives, basically the hard line reformers have at least four of the seven seats, maybe even as many as five or six of the seven seats. The only known reformers, the premier, and that doos not make us optimistic about pushing through Structural Reforms which are painful, which theyve been talking about for more than a half decade and they have not implemented. Eunice, do you want to weigh in here . Reporter well, i think whats really interesting is that, yes, thats true. For years and years the government really didnt push through Economic Reforms but we are starting to hear more comments that would suggest the mentality of the government now is different than it was before in that, for example, these economic numbers that we had, 7. 5 , i can tell you that a couple of years ago if the same economic numbers had come out, the government would come in guns blazing and start pumping up the economy. That didnt happen this time around. Whether or not you believe the actual number, were still seeing a slowdown. If you think its 7. 5 or 6. 5 or whatever, its still a slowdown and were seeing that the government is actually at least tolerating this type of slowdown and whats also interesting is you even saw it at the top with some of the comments and the confusion at the top. We heard a lot of commentary that we have that a country has to live through a slowdown process in order to get to a better financial position. Gordon, youve been rolling your eyes. Yeah, because everyone says, well, theyre not stimulating the economy. If you go through china, you go through those cities and towns and villages, you see the stimulus money is coming through. They do it differently than in 2009. Theyre doing it now through the five largest banks. But that money is going into a lot of infrastructure projects. So, for instance, steel usage now, most goes into infrastructure not into housing construction. Thats a big change from a year ago. You know, they always say, look, were not going to try to do all these things but theyre actually doing them. We have to see what they actu actually do, not what they tell us. Always a mystery. Eunice, thank you so much. Gordon, to you as well. All right. Coming up, advertising. The state of the global economy. Nick reid on the current environment from wpp. A former Goldman Sachs trader faces trial to determine if he cheated people out of securities. The story of fabulous fab. 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I have a bad wheel i must say. My car is running quite well. Keep your car healthy with the works. 29. 95 or less after 10 mailin rebate at your participating ford dealer. So you gotta take care of yourself . Yes you do. You gotta take care of your baby . Oh yeah always go the extra mile. To treat my low testosterone, i did my research. My doctor and i went with axiron, the only underarm low t treatment. Axiron can restore t levels to normal in about 2 weeks in most men. Axiron is not for use in women or anyone younger than 18 or men with prostate or breast cancer. Women, especially those who are or who may become pregnant and children should avoid contact where axiron is applied as unexpected signs of puberty in children or changes in body hair or increased acne in women may occur. Report these symptoms to your doctor. Tell your doctor about all medical conditions and medications. 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But, also, the migration which we talked about but he understa understands, i dont, to digital in advertising. We better understand. Advertising a subscription. We were talking about the challenges to Network Television and what are the models did and cable, though, if they ever make it are where you theyd better not, where you pick channels you carry. Once you go a la carte, what does that mean . Its a daunting future. Youll have less people watching espn but youre paying more to watch it, are they therefore more valuable, less valuable . A mix model between subscription and advertising so were going to have to get use ed to dealing with both. Well, we have dealt with subscriptions for many years. Not just in television but in magazines and newspapers. Lets get a macro question out of the way. Is the reason that the fed eventually tapers because if we are improving, i mean, is it a good thing . Just go back 0 to allen and company, that was mixture. Those people who thought it was Getting Better and i think Clayton Christensen has three types of innovation, the big innovation which creates jobs and then theres a smaller cost cutting, cost refinement innovation and you can hardly call it innovation, adjustment. The bulk of whats happening, were saving labor. The latest thing to happen in our industry was this extension of payment that we are starting to see out to as much as 120 a day. Smaller companies are being asked to act as bankers to the bigger companies. This, to my mind, is another example Smaller Companies including ourselves to be back. You dont sound that positive. Are we still in a deleveraging mode . Business is tough in the sense that clients are continuo continuously cost focussed. For example, looking at had lehman and warren buff at the time Warren Buffetts takeover. The last couple of weeks in europe, the severe cost cutting thats gone on inside that organization from the start, from the getgo theyre famous for that and expect it. That may be the first of many of the things weve heard in the last few months. This strain of private equity, very rich families. You see it with the coffee industry. And this is a new strain of private equity much more longer term. We heard it in the microsoft conference. And they talked about the first time in their lives. They never imagined they would be able to borrow money so cheaply long term. We as a company borrowed at 5. 71 . 3 after tax. Effectively the multiple is 33 times before you start to feel it. Ben bernanke, its working, right . Thats what he wants to happen. He wants cheap money. He wants borrowing to build. Yes, but we saw that adjustment, michelle, the last few weeks. The moment the market thinks tapering or withdrawal not tapering but withdrawal, they start to get nervous. The adjustment has to be the issue, talking just to go back to joes question, talk in to people, the economist who replaced at goldman, this is as of four or five weeks ago looking for Worldwide Growth next year to be 4 as opposed to 3 this year, so thats real. Nominal would be 5 this year, inflation at 2 and next year at 1. 5 slightly tapering. Now advertising stays at the same gdp, thats not bad for us. We can manage that. We had a record year in 2011. A record year in 2012. But, again, it comes back to that christensen point that it is it has more to do with whats happening in the economy and this sort of fierce focus on cost now. We think longer term because obviously our business is about growing the top line and whether its fast growth market, myanmar a case of that or digital as we talk about. I think the pendulum swings back and forth. Myanmar is something else. 60 million people. I know. Amazing. Well, i dont know. Were out of time. We will have enough time when we go to dinner. When i claim my bet. I mention it every time and you never follow through. And i get the message. I get the message. Its bad. Can we bring andrew, too . Definitely. To balance things out. Well all go. I would love that. We wont even go through the drivethrough. We can talk fashion sense. Yes. Well eat in the Ronald Mcdonald is that where were going . Thank you. Good to see you that morning. Thank you very much. He has some better clients than that. We can go there. Youve been very quiet. I wanted to talk about netflix and facebook and the fabulous fab. Hes heading to court in new york. The charges against the former Goldman Sachs trader. Mary thompson will join us with a look at that trial when we return. Welcome back to squawk box. Three years after the s. E. C. Charged him with securities fraud the trial of former Goldman Sachs Vice President fabrice tourre, one of the highest profile cases to actually go to trial. Good morning to you, mary. Reporter good morning to you, andrew. What the s. E. C. Is banking on is they can cop vince a jury the then 28yearold tourre, withheld information from investors who lost about a billion dollars betting on the Housing Market in 2007. Now 34yearold candidate at the university of chicago after student volunteer work, tourre denies any wrongdoing 0. This is not his first stint in the spotlight. He testified in front of congress in 2010 with former coworkers after his former employer Goldman Sachs released embarrassing and personal emails he had written about the u. S. Housing market and his job in january of 07 saying the entire system is about to crumble at any moment. The only survivor the fabulous fab. Joking in an email ive managed to sell a few abacus bonds to widows and orphans. Tourre sold abacus bonds to two sophisticated institutions. They went long. With the security intent being if the mortgages performed well, the longs would be paid. If they defaulted the short would get the payoff. Now what the s. E. C. Will try to prove is that tourre delibera deliberately misled investors that hedge Fund Director john paulson failed to tell another paulsons hedge fubd was the short and involved in the bet. They deem this information critical because paulson earned billions of dollars betting against the u. S. Housing market. Now like Tourre Goldman stood accused of securities fraud but settled in 2010 paying 550 million at the time without admitting or denying any guilt. Tourre says he did nothing illegal. He was selling these to sophisticated investors who knew how they were structured. The shorts identity wasnt revealed. This is a case wall street will be keeping a close eye on. We will be bringing you the details. Andrew, back to you. Thank you, mary. Real quick, some people think this is a thin case. Do you . Reporter i think from what ive heard, and what you have to do is look back at what the situation was back in 2007. Was paulson, of course, the name everyone knew betting against the Housing Market . Then you also have to look at was it typical for the short not to be identified in the marketing material as they maintain. That appears to have been common practice so, yes, it could be a thin case. And then you have to look at some of the other cases the s. E. C. Has brought, specifically they point to the case against citigroups brian stoker which the s. E. C. It did not win. He was what the jury found he was a cog in the wheel of a machine and it was wrong to place all the burden of guilt sole solely on him. Real quick, though reporter some people would say yes. Is it fair to suggest this is a signature case for the s. E. C. . Im thinking a jury, you get a jury involved, you mentioned the financial crisis, that may actually go from being if it was a thin case it gets thicker pretty quick. Reporter of course. Listen, what you have in this case is you have some very compelling emails. You have memories of the financial crisis still fresh in a jurys mind. You have the difficulty of explaining a very complicated financial instrument. All of this, again, could play in the s. E. C. s hand. On the other hand they could say this is a 28yearold kid in a massive investment bank. Was he really the only one either doing wrong here or was he just following typical procedure . It will be an interesting case to watch. Back to you. Thank you, mary. Coming up, just returned from cuba yesterday, got a firsthand look at business in the country. If we could call it that. The highlights next. The highlights of socialism next. Delivering alpha. I will interview nathan peltz. You want to understand the way he thinks about activism, the way he thinks about takeovers. And were going to try to find out where hes going next. The biggest invest or event t the year delivering alpha. Exclusive coverage all day tomorrow. Mr. Goldman loved his family a lot, didnt he dad . He sure did. Thats why he had state farm Life Insurance. Like you. So his family never has to worry, right . Mr. Goldman didnt have Life Insurance. Why not . Well, hes just a goldfish. Ignore him. [ male announcer ] youve got questions. Your state farm agent has answers. Backed by the Life Insurance Company Millions of moms and dads already trust. We put the life back in Life Insurance. Will soon be responsible for paying bills, managing creditcard spending, and applying for loans. But most of them dont have the financial skills to handle it. Pwc is doing something about that. Im bob moritz, u. S. Chairman of pwc. Pwcs earn your future is a 5year, 160 million commitment of funding, volunteer hours and curricula to help prepare students for the Financial Realities that await them. Pwcs earn your future empowering students and future leaders through financial responsibility. Michael, we are bigger than u. S. Steel. That, of course, a scene talking to Michael Corleoni doing business in cube be before the revolution right before his kisses fredo and tells him, i know it was you. Anyway, michelle just got back from havana. Its a movie. You know, i get mixed up about what really happened and what didnt in terms of the movie. But the idea of what could have been in cuba without castro, to me, people would say, well, you are just a capitalist pig. You see exploiting the island and its people for tourism for your casinos and for all the vice that you want to bring 90 miles from florida. I think the way that country would have been, if that hadnt come to pass, where they built a beautiful strip. All people would have benefitted. Lets roll the video of the cars Everybody Loves to see. When martin sorow was on, we were having discussions about priceing. I spent my last week nearly unable call the occupation, unable get on the internet. Look, this country is being so left behind. At least there was a point you could say the cars are old. At least they have cars. But now with the digital revolution in the world, they are so at risk. Now, lets keep in mind that, i are lifting the lid just a teeny little bit on economic repression. Is there a 1 elite class down there . The artist, the pantier, actually. Are there anyone, are the people that live really well down there in. Yeah, there are people that live really well the artists class. They in the 90s were allowed to keep their earnings and to travel. And also if you were kept to the military. Tugalitarian people are poor. Its not okay t. People on the ground will tell you its not okay. Thatcher played when she was getting pillarried, we showed her great speech. She said, you want the disparity, you dont want to lift anyone up to the high end, you want to bring everyone down and be equal at the low. They are equal at the low end except for a few people, right . Thats true. Now they have cell phones . Theres 11 people with 1. 5 million cell phones that are crap. Theyre little. What we used ten years ago. This is the socialist utopian, if you take, they never want to connect the dots. But there are access to cable tv. Illegally. They have to do it secretly or else they get arrested. They have people bring in the pieces. They get to watch the honeymooners. Can i point out one more thing. Lets roll the videotape the woman has three Singer Sewing machines, it was a set up be i the government, admittedly, talking to her, the light in her eye and the moment you lift even a tiny bit of economic repression, you see somebody actually taking their destiny into their own hands. Coming up, citigroup an ben bernanke, we are back with a lot more after this. Good morning, welcome to squawk box here on cnbc. Becky quick is off today. Shes back tomorrow. Take a look at futures. We do have red arrows, its hardly a red arrow. It looks like its off. The s p are a 500 off 2 point t. Nasdaq close to 4 points off. Lets take a look at the Global Markets. China is the big focus as the worlds second largest economy had an annual rate of 7. 5 in the Second Quarter. It slowed from 7. 7 in the first quarter. In europe, stocks are higher this morning t. Kak 40 index shaking off a ratings downgrade from fitch that came on friday in the you can. Prices of houses hit a record high in july. Take a look at how europe is shaping up right now t. Kak is up marginally. The footsy 100 up. The dax as well. We should mention in asia, the nikkei closed today for marine day, joe. Right . Yes. Also, Oil Moving Lower that morning, following those china growth figures. Gulf ceo Joe Petrowski will be joining us with an outlook on oil prices and why he thinks 50 bucks at the end of the year is possible. 50 bucks a barrel . Thats what he says. Marine day in japan has nothing to do with our marine. It has to do with ocean die, a sea day, a National Holiday celebrated on the third monday in july, but happens to be what today is, the purpose is to give thanks to the ocean, to consider the importance of the island nation. Most people take advantage of the holiday by in the summer weather to take a beach trip on this other oceanrelated festivities observed as well. Marine memorial day. Thats why the nikkei is closed. Do we have that holiday here in. We had an island nation. No, were not. Kind of if you think of a it looks like mote on either side . I havent looked up who that is on google. Have you . It depends, manhattan can have its rembrandts 407th birthday, i assume hes dead. Is that the goggle thing . I think rembrandt is dead. Citigroup set out its quarterly number, consensus forecasts call for a Second Quarter profit of 1. 17 on revenue of 19. 7 become. Its the first of several high profile Financial Company earnings this week. Goldman sachs is coming. See what Morgan Stanley whafx the fat cats are taking home at the engs pens of all the workers. And you see your in all of society. Did you see your editorial . Another one . Did you see the New York Times editorial . I did. Do you have a second . That editorial in the New York Times said, he was talking about the disparity. The New York Times has never mentioned before. From the top to the bottom. I believe they were looking at the immediate income. Yeah. The gap being somewhere between 202 to 1 or 273. Depending on whether you did Stock Options or not. Yeah, whats your point . Where are you on that . What do you mean where am i on that . Are you like ben and jerry as . Look. I believe if you reiate, for example, if you are a founder of a company. Why would you ask me where i am on that . Where are you on that . Is that what you want to say, where are you on that, andrew . Im conflicted. Im mixed. You are thinking of poseing the question. Shareholders . Its funny, i think of the founder of the company, he takes a very small salary, 85,000 or something, has made a huge amount of money by being a share older. If you come in as a manager of a company after the fact. You are not the original entrepreneur, there is competition for you. Its a marketplace. Can you become a great ceo, there is other places that will pay you that much. Why dont the envious journalists, why dont you go try to become a ceo. Start in the mail room, work your butt off, end up running the company. Why dont you do that . Most journalists cant do that. Why get involved . You know what the implication is . You know what theyre implying, the fcc and regulators need to come in and somehow make it harder to do this. No, but there is one real question. This is all fairness. Social mobile. Heres the issue. Heres my question for you. The number which is now 200 to 1 or whatever it is used to be Something Like 50 to 1 only 10 or 15 years ago. Whats happened . Mobilization. Maybe its the companies that have gotten in the marketplace. It happened in the marketplace, i dont question how or why. What it is, if shareholders want to get involved. I think there are questions. Robert robertson, can you help me at all with this . Id like to, yeah. No, i have been top 1 , bottom 1 . That itself not good math. We all know there is a lot of problems. Another big week. Let me introduce these two. Another big week from the nations financial giant. Citi will report later this hour. Some of the other big names, bank of america and they are here now. Bob dahl. And Robert Albertson samuel oneil, partners and chief strategists for people na took part, that hid taxpayer money, if you have, i like what you like to dork you dont want to may anyone, you get crappy people running it. No more conference, why would you get involved . Everything about the anything other than carp. Im an investor, okay. So when i invest in companies, i love for the ceo to make a bundle of money as long as its tied to the performance of the company. In one sentence, case closed. But it doesnt stop the New York Times from the editorials, the business, gretchen morgan, every week, its confrontation. Isnt eight part of the fact that when Interest Rates are so low, people are driven to desperation to capitalize in some way on their money. So who do you end up turning to . The Financial Services . There is a running anticorporatism at the New York Times. It is. Thats where all the jobs come from, the tax money, all the prosperity. Do you read the New York Times and see a running threat of anticorporatism . I sense that a little bit. I think you are on to something. Gee, i know, im shocked there is anticorporatism going on here. No, nothing. They dont have to worry about it. What is citigroup going to do about it . Well, i dont follow these companies anymore. I think the whole group now is poised well for surpriseing people on the positive. We finally have Interest Rate relief, which we have been waiting for, for years. You listened to the last two earnings calls, everyone is focused on mortgage originations, which is the one notable negative. They are missing all the positive. This is a very big plus for the financial sector, particularly banks. Its slowly getting us back to the new normal. The fact that the ten year has risen by 1 . The race in general look leak theyre going up, more importantly the yield curve. The way the engineering list, the yeel curve is going to stay positive sloping. They focus on the cautious comments that the mortgage business, that was the weekend journal. I understand. Because, look. This is on the yields, why not make an agreement to buy stocks when people are desperately looking for negatives. They find one, they focus on it. Theyre missing the other 90 . I actually like. Are you right, everyone is focused on. That look at all the positives to the spreads, look at all the positives to yields and banks. Were coming out of this pressure cooker. Its good, its good for the earnings. Its good for the stocks. Do you like the events . More than i did. I think the story will be less impressive. Will be good news. Joe is right, they will be picking on the edges. My problem with the banks is where does the longterm growth come from . Leverage is what drove their earnings into the peak in 08. Known e i dont know quite yet what to replace that. Stocks are cheap. Balance sheets seem to improve every quarter. So on the margin, i think the news will be okay. When you think about bernanke this week, do you think hes going to double back . Doesnt he have to double back . I think hes in a sense said the same thing over and over and over again. Did you listen differently . Exactly. So what happened last week . Whyd we did we take our happy pills . Bingo. We paid attention to the fact hes only going to do what hes planned to do. She said that the first time. He said that every time. I dont like twitter, andrew kerrthen needs a break after the show. Have him go to dvenlth he will fit right in. So who does he . Does he want me to go or you to go . He said andrew kerrthen. I know. Ookernen. Ing a pajed deal. Before you pick is up, can i point out another thing thats different for banks right now, i agree the Revenue Growth is going to be tough unless you are business cni commercial oriented. So you got to be picky. The other big difference is the mna cycle started. For the first time the earnings numbers are huge. People taking the buyers stock are getting those big kickup, so you now have buyer and sellers winning in an mna cycle. Thats interesting. Do you agree with that . We have its probably been true the last couple years. You saw the double digit. 20 is normal back when 5 you were lucky and it was the second or third year. I will tell you for the first time in maybe the last, for a long time the past two or three weeks, ive started to hear the pipeline is really, when we get to september, october, november, its finally a chance, i dont want to overstate it. I feel that times we thought this was going to happen before. I think we will see it. Convergence mondays again . We could get a little more corporate confidence. Thats what we need. Having fortune 500 or fortune 1,000, what percentage does office or corporate, cfo, ceo, what does pay represent . Is eight fraction of 1 . Is that it . A fraction of 1 . I dont understand. Its a fairness. It has nothing to do. Its background, almost noise on the Financial Reporting of the company and if the market cap of the company goes up billions of dollars, you are talking about a rounding error. I think its an interesting soes logical. Its back to the fairness thing, right . Not a fairness on what you earn. Not getting what you earn. You are trying to step back and impose the question. I wasnt going to let it just go. Its an egalitarian. Its an egalitarian its the 7 00 a. M. Hour. Thank you. He got him. Bob dole will be with us. You got it. Im a man of steel. We are. Thats when an orangutan swings through the jungle. Boeing passengers will be awaiting technology that makes up the boeing 787 fuselage and makes andrew very nervous. Cnbcs phil lebeau jones us with more. Reporter this all evolves around a Heathrow Airline on friday. Investigators have been work, over the weekend and will leakly take a couple move days at least to determine a cause of the fire. They did say on saturday that the fire is not livinged to the new retrofitted battery system. The investigators say the cause of the fire probably wont be determined for a couple of days, but the interesting thing is when you look at the closeup video here the area burned on the 787, well vth its in the back in the crown, in an area that typically would have a crew rest area. You a though, it does not have one on this plane. Area contains wiring, components and that carbon fiber composite burning is going to raise a lot of questions as well the ntsb and faa are in london, assisting the uk authorities with the investigation. Boeing for its part is sort of taking a wait and see attitude. They do have personnel in london who are assisting with the investigation as much as they can assist and they are saying the safety of passengers and crew members who fly airplanes is our highest priority. We are confident the 787 is safe. We stand behind its overall integrity. What about the airlines that fly the dream leaner. They are in service around the world. None of them have said, you know what, we will set them down while this investigation takes place. Take a look at shares of boeing, the main concern here is this a systemic problem . Is there a problem in the electronics within the dreamliner . Its too early to know for sure. This could be a case where you have one faulty component that went baaed that caused this fire or some other external factor that may have led to this fire. Again, we may not know for a couple of days, guys, it will be interesting to see the shares of boeing. On friday, they hit an all time high. I think it was 11 30 in the morning. I sent out a tweet, boeing shares in an all time high. Within five minutes, the came out of london regarding the firing. You see it radio knight right in the chart. We were talking in the 6 00 hurt on this, are there lots of other fires, mishaps or other things that happen on other airplanes around the world that just dont get reported because and the focus is on the 7787s . They smell smoke. They say its a teething problem. I say is that because theyre happening and we dont know about it or is that because they arent happening . Thompson airways outs of londoned on friday, they decided to take the dreamliner flight and bring it back for what they called a technical problem. That was i9. I was bombarded with emails from people. Oh my god, the dreamliner, heres another problem. Thompson came out on saturday, said we had a technical glitch. We fikted it. The plane is back in service. Happens a lot with a lot of boeing, airbus, it happens with a lot of planes. Its never reported. But now were in the headline risk when it comes to the dreamliner, thats what were seeing here. The other question is what do you make of the situation with the tv station out on the west coast . How on earth did executives, did government officials confirm that . We were told they confirmed those names. We are told it was an inturn, an inturn with the ntsb. Was an inturn doing constant confirming . Thats a great question. For those who dont know what we are talking about. Reporter this has gone viral. It essentially comes down to this somebody got ahold or sent a release at a tv station in San Francisco with names of supposed names. Reporter of the crew t. Names were things like we b too low. Som ting wong. Somebody in that tv station then called the ntsb press line, an inturn answered and confirmed that those were the names. The tv station put them on the air. They later apologized said, listen, a mistake. It was culturally offensive. Asiana is claiming to sue that tv station. Overnight there was a report not confirm owe. They may sue the ntsb. They are considering. What kind of dams could you claim in that case . I dont know. I think thats a tough case to bring as problematic as. If futures are still there. You can find topics that you care about. They are rolling out live tv. The delivering alpha conference on wednesday. You can finally see it at your desk. I thought you can do that for 22 bucks per month. You can through pro. This means can you do it as long as you have user name and password on the Time Warner Cable in manhattan. Its the cnbc version . Pretty much. That itself a good way. Im sure someone in the back room is saying that. Were not explaining it properly. Thats the way i see it at least. We have news to talk about. Fed chairman benefit bernanke will be talking Monetary Policy. Joining us is the executive director at j. P. Morgan funds, our guest host all morning is also with us. Help us, explain to us what is mr. Bernanke going to say . Is it different than anything he has said before. How will we react to it this week as opposed to last week. I dont think bernankes rhetoric changed over the past couple months. He will come out and reiterate the message he has been trying to deliver over the past few weeks which is tapering qe is not tightening money policy. If you are right, wlafls wrong with us a month ago and two months ago up until about a week ago sh. I think initially it was a bit of a kneejerk reaction. You hear the fed is going to start pulling back on this approach. They are weighing out the pros and cons, how much are the additional assets helping Economic Growth . We are making peace as a result of it. I think markets are coming to terms with it. Do you think hes dock a good job . The reason i cc is when we first started with this, people said tmi, too much information. Are you making things worse. The volatility is getting out of control. Its picking up in a big way, now, those of you, ah, look the markets took a couple steps down, come back up. You know, this approach, this communication approach actually may be the right way to do it. I think its easy to be critical of the fed. Personally, looking at what hes done since his time, i applaud him and genuinely believe the fed avoid the financial. I think as far as additional asset purchases from this point on, i dont think it makes a deal of sense. I think what he is trying to do is be clear, manage expectations and say, this is not going to last forever. As a fed watcher, when b bernanke goes stage left, goodbye, exit, is there anybody you are worried about of the names out there that would make you anxious in. Not yet. I think its a little too early to say. You know, ive heard them saying it will turn around a bit. Are you fine with that . Im fine with that. I think so long as there is no very huge difference or direction in policy, thats what we have seen over the past few years, i think markets generally speaking. Larry somers. On average, all of them will do an excessible job. Its about the managing expectations for that day. Joe, can i move to the stockmarket as it relates to the fed. If the feds next e next move is in the other direction, is 3 to 4 gains enough to make the stockmarket go up . I think it is. I think its important to understand the instead saying we are looking further to Monetary Policy. Its important for investors to understand how they are justifying that. It is an economy growing. It is basically the fed telling you the economyshealing. We no longer continue to see medicine. Earnings growth, which is what we are looking for over the next couple quarters, i think sustainable Earnings Growth is probably what will lend itself best to see multiples actually start to expand t. Past couple quarters, we see multiple expansion do the heavy lifting. I think the Housing Market continues to recover, you probably are going to see multiples. I think again due to heavy lifting, we move forward. Joseph, thank you. Say hello to your big boss. Jamie dimon, he is bullish as well. Thanks for coming in. The most expensive house on the marks with rates this low, maybe you can afford it. Plus a special interview at the bottom of the hour. Why the ceo thinks oil will be 50 bucks by the end of the year. Maybe for half a barrel . Then at the top of the hour, all eyes will be i wont read that. I cant believe it got past me. Top of the hour. Going forward, were going to look at it we will report squawk box earnings allowed. No cliches allowed here. Aaa. Fffffff. Laclaclac. Hes an actor whos known for his voice. But his accident took that away. Thankfully, hes got aflac. Theyre gonna give him cash to help pay his bills so he can just focus on Getting Better. Were taking it one day at a time. One day at a time. [ male announcer ] see how the ducks lessons are going at aflac. Com when you do what i do, iyou think about risk. I dont like the ups and downs of the market, but i cant just sit on my cash. I want to be prepared for the long haul. Ishares minimum volatility etfs. Investments designed for a smoother ride. Find out why 9 out of 10 large professional investors choose ishares for their etfs. Ishares by blackrock. 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So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Welcome back to squawk box. June retail sales, thats coming at 8 30 eastern time, expected to show a rise of. 8 of a percent. We will get the new york empire state index at the same time. Citigroup earnings in about a half hour from now. They are expected to show 1. 15, towards the 7 billion number to watch. We will see if they beat it or miss it. Also, gasoline prices down slightly in the latest lungberg survey. The average unleaded regular down about twothirds of a cent from three weeks earlier. Prices are expected to increase over the next few weeks. Finally, at t wireless survivor, take a look at that stock t. Price 15 per share in cash or about 1. 2 billion. Thats an 88 premium to fridays closing price. The dole giving at t valuable wireless spectrum. They expand Network Capacity a. Winner in this dome, john paulsen we should note the largest shareholder. We should note he will be a guest speaker taking place this wednesday. Were going to get with him among others, you got nelson peltz there along with carl icahn. Jack lew, a starstudded event. Finally, a greenwich estate is now the priciest home on the market. It has 12 bedroom, 7 baths, six garages, two islands, almost a mime of shorefront gardens. A wall of gardens, spa, grass, tennis court, greenhouse, a stone Carriage House and a cottage. 50 acres tall. Its built in 1898 and it literally is one of a kind. How much do you think it goes for . We can all see the teleprompter. 190 million. 190 million. Thats not fair that somebody could actually boy that house is not spare. Not fair. Nobody should be allowed to boy that house. It should rot. Its twoandahalf times more than a normal house. It could rebound. It must come down in price. A spelling mansion in Beverly Hills was listed for 85 million and fetched 25 from a formula one manager. We will see. It is an ugly house. The 90 million house. Aaron spelling. A gift wrapping room. Questions about anything you see here on squawk box, email us. You can follow us on twitter. Up next, crude price, what it means for your wallet. Gulf oil ceo joe petdrowski, why oil prices already dlb 50 at the end of the year. Thats going out on a limb. Fus. Who is healthier, you or your car . I would say my car. Probably the car. Our next guest says futures are moving slower than they are. He jins us with his outlook. Wow, joe, good morning. This is one of the most daring calls i have seen. Tell me why. Well, simple economics. We are producing record apples of oil and natural gas to the United States and in canada. The markets oil supplies, opec supplies are higher as the price goes down, those two are targeting revenue actually have to sell more oil oto maintain. Places like venezuela and everybody else cheats. Theyre always competing. Its just the cheating accelerates as the price goes down. Chinas demand is swelling. Basically the supply demand situation in crude and natural gas is as good as ive ever seen it. Natural gas even at 4 is still 28 a barrel at a btu equivalent. When i saw the predictions for 50 a barrel, i got nervous. A lot of times that would suggest we were going to have an economic armageddon which would lower deman. You are saying more a supply than a demand story . The demand is weak internationally. Domestically, even demand slightly weaker. Traveling is picking up, were using much less oil. In fact, we are using no oil in the electric sector and natural gas has taken a lot of the heating sector away. So, in fact, its a demand story domestically. It does not have to do with demands. Its more efficient highs and switching to alternate fuel. We have a question for you. Joe, if this is all accurate, it sounds scary for the refinery business. Do you agree . Refinery, not necessarily. Refinery margins will come under pressure. I think and im going to walk after this interview to talk about the biofuels standards, thats adding to refiners costs. Price of rims are up to a , a rin is what a refiner has to produce to in effect comply with the air quality standards and a dollar an ethanol, with i is a 10 gasoline in the occupation, thats adding 10 cents to the price of gasoline. The fact that were relying on railroads and trucks to move product from refinery markets to inflation markets rather than pipelines is adding another 35 to 40 cents. So if you do the math, it is not translated to 2 gas leevenlt we still have to refine it and move it. Yes, refining margins will be under pressure. I still think we can keep a 15 or 15 crack in which most refiners. Joe, people will think we are in a global recession if we got to 80 or 70 for oil. This is on the supply side, it has nothing to do with demand . Its the supply side. I think i would worry much lower is the pressure on the countries that have sunni rulers and shia majorities like azerbaijan, saudi arabia, egypt. The political unrest will probably increase. You got oil money to placate the people to subsidize their lives, if they dont have that revenue, they dont have the same control of the population . Yeah. Nobody wants to live under an autocratic nonlibertarian regime, but its a lot easier to do it if the economy is doing well and you dont have that ethnic splits that we see in a lot of these countries between shias and sunnis. Actually, i worry about more political instability on the way down. From a u. S. Perspective, what i worry about is our refineries are concentrated in the gulf coast and in chicago. In chicago gasoline today is 4 because the bp refineries are having some problems. Just the other day the price of gasoline jumped 7 cents in boston because one of the refineries in canada. Right. We have made so many decisions in this dunt based on other issues besides the entity for the people, all these environmental considerations the administration likes to have. We appreciate it. All right, coming up, gold remains bullish despite the hammering it has taken this year. Could that all change if asias buying binge slows down . Check out the futures that suggest the dow would open higher t. S p and nasdaq slightly lower. Welcome back to squawk box. Gold prices are higher. Joining us to talk about it marcus grubbs, a managing direct ore and head of investment research. You say as perhaps it should be expected that Everybody Needs to have at least part of the their portfolio in gold medals. Yes. Why . I was reading esquire magazine over the weekend. I am not surprised. There is an article by steve ratner, the q a, it was asked, should you ever boy gold . He says, you should only buy things you understand. I happen to not understand gold, therefore, i think you shouldnt own it either. What do you make that . A lot of people say that. I think most of the time they dont understand the what i the gold market works. They dont understand because its a blob of gochld you dont know not at all t. Gold market is determined by what happens in the futures market. Its 80 globally. Every day these two sets of forces collide. The bit of loin of gold is its a fantastic hedge to have in your portfolio. Hedge asset just got a lot cheaper. At this point are you hedgeing ben bernanke . What is your hedge right now . There are many reasons gold is a good asset class. You are diversified. Its a great diversifier. It gives you better risks adjusted returnsment but beyond that. Whats the advantage . We reckon between 2 and 10 . Most currencies, that itself right wage in over 25 years. Do you think that people dont understand gold because in the United States and western europe, theyre living really in societies with rule of law, et cetera . I saw the session with cuba. I just came back, arts cashman has a thing, everybody laughs, ha, has ha, they live in a world they dont fear, in cuba, what does she do . She sewed gold coins into her skirts. So theyed a assets. In parts of the world that is true, i this i. That is an extremist a. Geopolitical hedge. Its portable. You can run with it if you nooid need to. Its more about golds role as a diversifier. Its a geopolitical head as a mining stock or the gold cone. You know, that use of gold is a way to preserve wealth if your society is breaking down. I think its in an extreme case. Gold goes up five or six fold, trades at 1,800 for three years. The people bought gold because they fear the worlds Financial System might end and or Central Banks would inevitably create inflation. Neither of those have come true. Why shouldnt gold go over first. I will say those investors have come out of gold. Thats why you have seen 5 to 600 tons. We still have close to 2,000 tons of gold regarding gold ets. I think those are the investors who believe in it as a longterm diversifier and a hedge asset. The last three years, inflation hasnt come through. What about the next three . In a way, the u. S. Treasury is headed, whats the return on the u. S. Treasury going to be . In your portfolio, what would you tell the viewer . My rue is you want a Little Corner view of portfolio in gold, if you understand it. Is it 2 or 5 percent . Closer to 2 for most people, hoping that it doesnt do well. Because if it doesnt, probably Everything Else is doing just fine, thank you. So where are you at right now . Zero. I thil think there are people that come out that bought it for the reason the world might end and we will have inflation. Ray ozzie. Yep. Bob bennett. He used to be at Liberty Media and james skinner, former Vice President and ceo of mcdonalds, the new directors of hp. People thought they needed some new people. They were at microsoft for a very long time. In 2010. And created, if im to believe they are competing. Thats the question. I believe thats right. It has nothing to do with harry. Go ahead, coming up, earnings from citigroup. Some are already gone. Citigroup the wall street reactions ahead. 8 10 eastern time, austan gold bee is coming up next. Peace of mind is important when youre running a successful business. So we provide it services you can rely on. With centurylink as your trusted it partner, youll experience reliable uptime for the network and services you depend on. Multilayered Security Solutions keep your information safe, and secure. And responsive dedicated support meets your needs, and eases your mind. Centurylink. Your link to whats next. We are a couple of days away from the key note speech from secretary lew, carl ikahn, nelson peltz will be there as well. Why it is more difficult to deliver alpha. We will be doing broadcasts down there. You are live from the pier . We are. It is fun. It should be a good time. Listen, we have been talking about this a few weeks now. The pier scare. Sorry. Pierre in lovely midtown, manhattan, the upper side. 51st. A live audience, perhaps. You have to talk like this when you are there. Is it safe . We should be okay. You dont get out of new jersey. Over the bridge. He worries about planes and stuff. I gets ill come. You worry about commuter traffic . About your work. I almost lost my life on the fdr this morning. All right. Well, anyways, this is a theme we have been hitting. Its getting harder to hit alpha. It was a decent run forhead hedge funds. They picked up steadily through may, reaching a twoyear high for that month. According to bark lay, hedge and trim tabs. On the performance, just about 5 . Sure, it wasnt as strong as the markets themselves, but investors voted with their wallets, continue to add money to hedge funds, remain relatively happy. All that changed in june when the flow of funds reversed along with returns. The average hedge funds were off more than 1 that month. And there were huge givebacks in fixed income as well. We are back in all time high territory. Investors get used to the idea the fed mayese off the measures they have been using for years now. If successful factors that distinguish themselves, leon cooperman and larry rob bins that, i show huge winning names and continue to do Old Fashion Research to make their selections on the merger side, another example would be john paulsen who has had a series of wins in telecom and mna and hes the biggest institutional shareholder o. You will be hearing from all three wednesday, guys. I am keen to hear inside for starters. That was announced friday night hopefully by john paulsen. Larry robbins called it in terms of obamacare, among other things, hes obviously been active recently with hma. Leon cooperman, ten out of ten picks last year did well. They all should have some interesting ideas. We have a very smart audience. What does it mean to deliver alpha . What does it mean . It means you are delivering upside, right, basically in. It means you have that added that will help you deliver added. Like an index return . A changeover. Its about the delta, the changeover, exactly. At the same time, i mean, its tougher to understand why a Hedge Fund Appeals in an environment where the s p is up close to 18 , maybe getting 20 the average hedge fund was up 5 . But if you listen to a defender eof the asset class, theyll tell you that essentially you look at the hedge report portfolio, you shouldnt have your hedge fun, maybe you want 5 of your assets in it. It will be less bad in the bad times and perhaps less good in the good times. Its not true of delivering alpha, mr. Paulsen has answered questions. Thats a good question here. I dont think hes testifying. He doul be testifying delivering at an alpha conference. I think there will be some focus on real estate. He has two private equity funds devoted to the update, which is kind of an interesting story. I think there will be some interesting q a. Hopefully, we will get a little perspective on that, looking forward to wednesday, coming up, were on earnings watch this morning. We report to citigroup. Take a look at that stock ahead of the numbers. Also look at futures ahead of those results, then, bernanke is in focus. He gets ready to talk qe. Former Council Economic adviser austan gools bow when goolsbee when squawk box returns. Iar keyboard. To update our status without opening an app. To have all our messages in one place. To browse. And share. Faster than ever. Its time to do everything better than before. The new blackberry q10. Its time. Clients are always learning more to make their money do more. ann to help me plan my next move, i take scottrades free, inbranch seminars. Plus, their live webinars. I use daily market commentary to improve my strategy. And my local scottrade Office Guides my learning every step of the way. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer scottrade. Ranked highest in Customer Loyalty for brokerage and investment companies. Thats me. I made you something. I made you something, too. See you next summer. [ male announcer ] get exceptional values on the highest quality cars at the summer of audi sales event. At the summer of audi sales event. Every day were working to and to keep our commitments. And weve made a big commitment to america. Bp supports nearly 250,000 jobs here. Through all of our energy operations, we invest more in the u. S. Than any other place in the world. In fact, weve invested over 55 billion here in the last five years making bp americas Largest Energy investor. Our commitment has never been stronger. Retail sales at 8 30 eastern time. I love the smell of congress in the morning. We will bring you the numbers and reaction. The third hour of squawk box starts right now. You can see it there, citigroup supporting 1. 25 vs. Expectation, we also have the revenue number. We gave that to you 20. 5 billion. If you exclude them, it was above the 19 and threequarter billion estimate. People have talked about is this the best performing bank stock vs. J. P. Morgan . That says 5 sip 1 ssh 8. Its. Says 5 1 8. In. Not as much as the other ones, that helps the results. That helps a lot less. You werent here for jpn. I missed that. Thats over a billion. In other words, they dont have to keep as much money on research fosser future losses . Exactly. They have been pushing down the near term loss. Thats the vp of cherrington investment investments. So you sioux saw the journal piece of j. P. Morgan. They were cautious because of mortgage slowdown. Heres the thing, when the chief Financial Officer of j. P. Puts out guidance on Forward Mortgage volumes the way marion lake did, you have to Pay Attention to that, there is a reason she said that. If its bake banking, you should do better. Precisely. We saw volumes go up as rates went up in the last decade. The question is, now we have large, obviously, the number 2 lender on wells telling us at given rates, they expect volumes to fall dramatically. So when you put the 2025 the industry was already expecting in terms of down. Shouldnt the margins on what you do do be much better . Yes. Sorry. If you trade off. Heres the problem, with all the regulation we put in place, we cut the bottom third of the market out. They cant get a mortgage. There are things that you they got the new guy who had to replace you also got when can they totally get out from underneath any taint of the government . Is that tough matters, if they thought there was going to be additional problems. When can they get back to being a bank that can deliver compensation and dividend . Can we ever get back to that law . I mean the fed is now supervisorsing compensation. More att citi then the other one. It depends on whether or not theyre in good graces in terms of capital, other issues. The fed can review you at any time. With Financial Institutions or just citi . The largest banks. Do we need to add to the staff so that fed can look at compensation on every company . The fed should be looking at dependation is. It should be the only thing. Thats not what i was saying. 500 people at j. P. Morgan working on issues. Thats extraordinary. We have put so much extra bureaucracy on top of lendors in this xaen country. During the crisis, people said, you know what, regulation will get so crazy, in the end, the banks will be like utilities. They will trade like utilities. I think if you look at the returns and the forward earnings revenue estimates, thats not unreasonable. You have said repeatedly on this, on this no less, on this table, we need more regulation, that the banks need to be better regulated, better monitored, now you are saying 500 people are too many people . I have always said we need to be cognizant of the risks they take. Unfortunately, doddfrank, what did we do . We avoided everything with housing reform. We come up with a vocal form halfway down the road. Not really. You would like to go all the way down that road. I would like to see the houses divided. I think it would be good for the markets. Look. Eitherer that or we have to repeal the rule. You know this story. The liquidity that we lost, j. P. Morgan was the biggest market maker in most preferred and fixed Income Securities that they hold in their portfolio we cant stay with we are. My problem when you talk around it is wheres the Revenue Growth come from . When you got all this regulation the bottom third of the market it will help. Improve him in the Balance Sheets will help. Eventually, you have to have revenue an utility. By if way. Do you make control guaranteed . There is two issues here, chris. There is do you want to raise capital farmers in the context of being a citizen of this country . . Then there is a shareholder, what do you think as a citizen of this company you have to grow the economy and the implication himself of raising the requirements. Bob, you have been waiting for Revenue Growth for the whole year there . You have been waiting. You need growth from 44 to 52 . I dont like this side. I dont have any Revenue Growth. The dax is a recovery from where were at. Im talking about 2 to 52. 20 billion, year over year, you got to have some really you have been saying we have Revenue Growth what he is trying to point out for the viewers is you are stuck with, im happy. There was no Revenue Growth. Ill deal with 24 larger issue. It will impact citigroup and the major banks out there. Whel, to me the depostory, the piece of the puzzle, it has the right for government support. I want that as trance parent and as simple as possible. Id like to get the dealer out of that house. The dealer and every big bank allows investment then. If you get what you want . No, you would have separate investment banks and depostories. I want the depostories very narrow, very boring. If you buy boring stocks like that. Okay. Thats the point. Thats what banks should be, all this alpha in the depostory. Federal deposit insurance, Everything Else, then they want more capital. We dont need more capital. We need to stop dock stupid rants. We will get going with earnings tomorrow. What do you expect to see there, how does that play into this conversation we are having . They are a different type of bank. Theyre a brokered dealer. They have a small bank appended to them. They fund like a berkeley deal. Therefore, do you want them regulated in different ways . I think they should get out of that. They did that because of the crisis. What are the numbers when they come out . Depending what the alpha side of the stop is going to do, theyre only one has to can tell you that. The dl that shop. How do you predict what Investment Bankers do . No, i like uncorrelated returns. Chris is pointing out, its a different business. It has a growth rate. It has an ability to make money. Its not going to become a utility. Its the interesting part. Look. Imagine a bank of america without a merrill lynch, much more pedestrian. I would also tell you, a much better investment for a risk of an investor. Thats what they want. They want stability. People might buy merrill if it was out from under bank of america. You will buy alpha. With the merrill trade, obviously. Are you allowed to talk about merrill . I can taul talk about it. Scars here and there, the makeup covers it. Look. Its the same business model. There is a growth rate t. Capital regulation isnt there. These are the kind of businesses we need to be healthy and to dproe from. I sold a couple of shares. Look at the difference between regulated banks and the nonbank sect ore, which, of course, nobody in the media is paying attention to the small banks the carington, the nation stars, theyre growing very rapidly, much better valuation than the bachgs, much better forward projections for revenue and earnings. Eventually, they will get big enough the street will Pay Attention to them. Theyre still very small. If we do 100 billion and turn over this year in terms of originations, it will be a loss, less than 10 t. Banks are leak this, you will see lending volumes in the banks go down. I think this is why bernanke will and cover ticks for twothirds of the businesses left. Thats what happens with Elizabeth Warren and to the mccains bill. They proposed it. I dont think it goes anywhere. We voted on that in doddfrank a couple times. It keeps coming back. She said, i want to Start Talking act a ctfd. It wont go anywhere. Fdr sent carter glass into the house with a piece of paper. They voted on it. He didnt read it. Oh, so, nothings changed. Those were different days. To get the congress with all of the competing political and economic interests to agree on Something Like that, no, you get a Christmas Tree every time your legislators the house has voted to repeal obamacare 37 times. They will do it again. She proposeing. Do any of them do anything that actually ever happens and becomes law . Its a democracy. Theyre not getting anything done. They have started lending to individuals in cuba last year. You know how much . 41 million in loans in the last yearandahalf or 60 thousand. They wouldnt tell us. If cuba opens, it will be one of the great investment opportunities. Squandered 30 years. I notice we talked about. That what we could have done there. We could have done. They did get well, never mind. Everybody is even there. I dont want to get michael kro orleoni elected president. We want kings in this country. Its so hard for us to sort out the different economic interests and make good policy, to your point, right . What was the simple answer . Stop doing stupid things. You dont need more capital. American banks are more capitalized compared to the european competitors. If you take outside rings, no amount of capital will help you. The hope bubble has been burst. You think hes a big regulator. He is. If you read him on reuters, he loves regulation. Thats true, if you put your hand in my pock, i will regulate you. You have to draw the line. Its an away game. Its a blow hard. He sat im not talking about that. Dont mention them on the ai air. Jack kevin, sorry. Thank you, we want to hear from you. Will Goldman Sachs Second Quarter report tomorrow, will it meet, beat or mission wall streets expectations . Vote now on the squawk box facebook page. The crowd is surfing. I dont want to get a squawk chimp that can take this stuff. Fed chairman ben bernanke is giving the semi annual testimony in Congress Wednesday and thursday of this week. Up next, austan goolsbee, what to expect, the former president obamas advisers. Check out our web page, we have come up with a clean look that we hope makes the website easier to read, stories, data, much simpler to find things, including stories by and feeds from the averageors and reporters. Now you can see streaming cnbc live. Which is pretty cool, too. We are back in just a moment. In todays markets, a lot can happen in a second. With fidelitys guaranteed onesecond trade execution, we route your order to up to 75 Market Centers to look for the best possible price maybe even better than you expected. Its all part of our goal to execute your trade in one second. Im derrick chan of fidelity investments. Our onesecond trade execution is one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Welcome back to squawk fox. Joining us now to make sense of it all, former counsel chairman University School of business professor austan goolsbee. Great to see you austan. Great to see you again. Help us here. What do you expect to hear . A lot of people say he hasnt changed his tune, its just us on the receiving end that has changed their tune. How is the market going to receive it . How should we be thinking about it . I agree with that. I think this is like as you all remember, joe will remember the old looney tunes sketch, a guy has a dog that can talk. He brings him in to try to make money off him. The dog sneezes and says roof to everything. I think bernanke isnt saying anything different in any one of these. We freak out. We are singeing on what he says. I think it has more to do with the market psychology than what it does with what bernanke is actually saying. I think in this case, he is very likely to say again, inflation is below the target. Growth is below the target and unemployment is above the targets. We will keep accommodative Monetary Policy until at least some of that is no longer true. Can you help me with something . Job growth is increasing. You are the economist. Doesnt make too much sense to me at least. I agree. There is a bit of a puzzle with that. Some of it is it believes the high job growth is correlated with part time jobs. You saw it as poelt total production hours. Its not growing as fast. I think thats the puzzle. The gdp numbers have been moderate and disappointing. The jobs numbers have been relatively strong and surprising to the upside and i think the past, you got up with of those two are going to converge. I tend to think of the gdp numbers as being better as an indicator of the economy than the job numbers. It has so many components. Should we care about the quality of these jobs. The reason i ask is the wall street journal this morning has an interesting piece about restaurants. Restaurants have been on a tear in terms of hiring, yet, at the same time, most of those jobs are part time. In some cases, theyre talking about effectively downgrading people, coming down to part timement some of that was ahead of what people thought would happen with obamacare and the Small Business 5050. A larger issue there . For sure you should care about the quality of jobs. I dont think you should make too much out of one anecdote, though. The best way to look at this is look at the aggregate earnings. What are the average earnings and the hours worked . Those are staying basically stable. So there may be a lot in the industry where it follows the natural process when you first start turning it around, a lot of times you start with the part time, not the full time. But for every parttime job, somebody has got to be earning more, otherwise, aggregate earnings would be falling and they havent been. I need you to do one thing, earlier in the program, we had a conversation about an op ed, it talked about the gap in ceo pay. Then the conversation turned into a conversation about social mobility in the United States and i arc you based on studies i have seen that we have actually been doing more on the social mobility scale for two years by kernen and michelle. I think you are with me. I could be wrong, too. Where are you . You are right. It has gotten worse, but they are right historically the u. S. Has high social mobility. Over the last two to three years, andrew is right, it has gotten worse, there is not any question about that. The data is clear. Food stamps have doubled too in the last two years. On that side of things because of the recession. You use the recession, you want it. You got to use it in both questions. I do. Thats exactly what i do say. Do you still talk, do they, are you still friends . Do you know what they will do with bernanke . Do they ask you your opinion . I still talk to them. Im not going to tell you. Do you know who its going to be . No, i dont know. Do you have a preference . I think its legitimate they havent decided that yet. They havent decided that yet. Why would they get rid of someone before they decided who they will get . My impression is theyre not getting rid of him owe o. I guess you missed that charlie rose interview where he got thrown under the bus saying he stayed way too long. Thats not what he said. Dont get me in trouble. He is getting himself in trouble without realizing he is getting in trouble. Because of the innuendo i put on that . The innuendo. He has gone on trial today, the ph. D. At the university of chicago. I dont think that i know him. I dont think i know him. I have been there 18 years. You gave him an a. How you came out left of central, the average student there, i dont know. I bought your book. You use that for a coaster . Im trying to get excited. You had a table with the leg of it was short sitting down. Exactly. Seriously, you have never run into we could use friends, probably. Im sure thats right. Austan goolsbee. Appreciate it very much. A fun conversation. Coming up, the government retail Sales Numbers due at 8 30. Right now, take a look at citigroup, the companys earnings and revenue, beating wall street action expectations. So im always looking to take them up a notch or two. Tdd 18003452550 and schwab really helps me step up my trading. Tdd 18003452550 theyve now put their most powerful platform, tdd 18003452550 streetsmart edge, in the cloud. 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Who is healthier, you or your car . I would say my car. Probably the car. Cause as you get older you start breaking down. I love my car. I want to take care of it. I have a bad wheel i must say. My car is running quite well. Keep your car healthy with the works. 29. 95 or less after 10 mailin rebate at your participating ford dealer. So you gotta take care of yourself . Yes you do. You gotta take care of your baby . Oh yeah peace of mind is important when so we provide it services you bucan rely on. With centurylink as your trusted it partner, youll experience reliable uptime for the network and services you depend on. Multilayered Security Solutions keep your information safe, and secure. And responsive dedicated support meets your needs, and eases your mind. Centurylink. Your link to whats next. Welcome back to squawk box. In new york moments ago, the trader is on trial. He cheated investors in a pack only of mortgagebacked securities. He is on a sunny day in new york city. Also, harry potter, jk rouling has released a crime novel under the pen name robert galbraith. Nobody knew he had anything to do with it. They thought it was a guy that had the history to avoid the hype and High Expectations of releasing a novel under her own name. The sunday Times Newspaper blew her cover. Now it shot to the top of the charts at amazon, its temporary out of stock. The publisher probably wishes they had printed a bajillion more copies. I think she wanted an honest discussion. Its perfect. Like an ipo you dont sell much. A part of it. She wanted to know what people thought without her name being there. Why would you want to do that to yourself . I think a previous book under her name she got mixed reviews. Because of who she was. Right. They expected more. Coming up, breaking economic data. We are minutes away from breaking june retail sales. When. Futures move first. Learn futures from experienced pros with dedicated chats and daily live webinars. And trade with papermoney to testdrive the market. All on thinkorswim. From td ameritrade. Welcome back to squawk box. 9. 6. That is revised. Look for june retail sales. Up back where we are expecting. Many were locking up to 1 pull fern percent. Autoings played a big part of headlines, if we look at exautos, exgas, it has a myious sign down. 1. We want to upgrade all of our statistics on the economy, especially as we get ready for in a couple of weeks, up see a first look at Second Quarter gdp which most likely is going to be somewhere between my fwhus moi 2 and plus. 7 to. 10. Back to you. For more on the day, any mur murring . We ned to stop that. Not a good number, joel. The control group there. Thats a number with gdp. Im trying to see. It looks like we did have the strength that was expected in the autos and all the weakness comes in the exautos part. Looking down, Building Materials down 2. 2 . Another big one here, a Department Store is down 1 . Miscellaneous Retail Stores down 2. 5, the one strength is Internet Sales up 2. 1 . This is going to as rick suggested cause a lot of gyrations in the Second Quarter gdp forecast. Before i went on vacation, there were rumors about a half a. To the one point. A big part of that was going to be Government Spending decline. Even when you get rid of that, it doesnt look like the private sector, itself, was all that strong. Now, there is more data to come. We will be looking. I know you guys dont like to talk about anything that exists after 9 00 in the morning. Its coming out today. Will play a role inside. I know. It will play a role inside the gdp, of course. I tell you what we will be looking at tuesday, that cpi number, the overall inflation. The hope for the economy at this point is going to be wage growth and job fwroet. If you get wage growth with low inflation, thats ultimately what you end up with bob dahl would be spending power into the Third Quarter as well as xing out some of these government cutbacks and the edge coming off. That i think, bob, thats where the market is tradeing now. I bleempblt i could be wrong about this. They have internalized a weak Second Quarter gdp numbers. I think you are right t. Jobs report, including your provision from the prior month was a good number. Like todays number. Most of what we have seen since the last unemployment report, its soggy. We had austan an earlier. He alluded to an interesting conflict right now, which is that the job numbers had been strong. Those can come together, especially they dont have to come together in a given quarter. They come together overtime there is a relationship. It could be the jobs numbers are higher than they ultimately have been revised to. What is your take . Revised up. What is your definition of advantage . I look at the gdp as the broadest number. They are making Investment Decision is it gdp . No, its a question of earnings. Thats why back to earlier. We had the fed as a help now for 18 months helping pe. Earnings has to get better. Its got to happen. We get paid and we have been saying that for the past months. Because it hasnt mattered. We have the fed, to the fed. The fed is saying they wont ape help anymore. Therefore, it has to be earnings. I think they will get better. A little more capital spending. Decent real wage gavenlts it wont be great but good enough. I think earnings have to get better in a specific way here. We may have gotten to a place where you cant cut your way to better profits anymore. It is nice corporations i believe are leveraged for better nominal growth. If that happens, i think we will have a powerful background on the earnings side. Its interesting, because you are not going to get the inflation article in the journal over the weekend, the markets expect a little inflation. Its phenomenal growth. You may get there. Rick, in answer to your question, you are right, its not all that strong. But its the relationship of gdp to jobs and ultimately what youve lad is you had stronger job growth. Theyre running through the roof. He seems to be correlateing his medicine to an area of low correlation to who hes trying to accomplish. As far as inflation 104 for crude oil. Call it what you want. I call it high. Thats a single aspect. One thing, ignore that thing. I didnt say ignore it. I said wer looking at a change, that itself how you make policy. Thats how you make Investment Decisions. You can make them based on a single component of the index, youd be wrong, rick. Or based on five years after the economy the country doing less than the gdp. Apparently, a postal service, Postal Services the whole facility is evacuated. Did you see this down in alabama . Something was leaking from a package and it spread and two workers were hospitalize, but they werent injured. It was actually a ky intense arousal gel. Im just saying they didnt know what it was. People got nervous it leaked and spread. It was a totally nonhazardous chemical as it turned out, intended to intensify sensation but people actually, it was shut down. People bought the ten year . They were evacuated and hospitalized. It turned out they were fine. Heres the biggest shocker and the clincher. Apparently the package had been addressed to someone in the entertainment industry. Which is not very surpriseing. Anyway, we are kind of in that business. You know who im talking . You had a blank in my mail. You had a blank look on your face. Coming up, get ready for the trading week ahead. We will talk technic also and citigroup the companys earning and ref few beating wall street expectations. Icon icon. Ishares incomes etfs. 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Welcome back to squawk box on this mon morning. Take a look at futures. Things are setting up just about, what do we say, 50 minutes away . Thats 8 points higher. The s p 500 off marginally the nasdaq off about 5 points. Lets go to market technic also. Our next guest says the increasing sentiment, he is seeing is a bull iran sign. Joining us is a bullish sign. Joining us right now. Good to have you. Last team we talked about what was going to happen in june. Tell us what will hatch the rest of the summer here why, are you bullish in. Its the 1,000 level. I know in late may i had resistance. Now we have cleared that big rounds 1,000 level where you have the all time highs. Nasdaq is making 13year highs. Yes, weve had a huge run the last several weeks. As long as its above that critical 1,000 area the summer ramally, or summer surprise rally i guess you call it, we think it still has legs here. What about all the q though in the market. Does that just feed into your thoughts about the market . We think it continues to feed in the last couple years t. Few things we had the fed, on pullbacks, you head up a 5 correction. They had that big spike above twevent on the surface, we are encouraged by the s p components. Short interest, actually, a new high, close to new highs in the calendar year 2013. Thats at 7 . S p is 10 . The multiples are higher. They come n. That can be bullish. To me all the shorts keep continuing. Ryan, inside the market, we seen deteriation in the bond like equities. Is there more of that coming with you . We think there is. Earlier this year we had those names leading. Thats not usually what you see. You want to see the good assets leading. Yes, you look at bonds, we have this big inflows. We know that, now the money shifts. There is a lot of room to go. Ryan, on the way up, we talked it was always too high. No, no, no, you got to wait. Its too high now. And, you know, they say wait for the 5 or 10 . Meanwhile, its up 30 or 40 . So it could have come down 5 or 10 . Those people wouldnt be negative as they were in the first place. Now we had may 22nd, bernanke said about tapering. The marnls sold off about 6 or 7 . None of those guys said thats not enough. They still missed out. It feels like right now, theyre still with the statement odd man tracks, no, no, no, its too high. Gets people the minute it moves higher the train is leaving the station again, theyre not on board. They never seem to get on board. Until they, do it will keep going higher, right . I agree with you, joe. We look at this year compared to 1995, it was nice. 30 . 5 pullback. This year, halfway through the year. 5 . You never pull the trigger. The ones that say, no, dont do it. Theyre in, they can go on and be on the successful side forever forever, never really lose their job. They never get anyone in, they are always worried about getting someone in right at the top, getting i guess criticized for losing 10 or 15 . They did not say buy down 6 . They missed again on the corrections. Now were back in new year highs. You are right, s p seven days in a row. Can you see, were up a lot. Right, since 1972 it happened 46 times. A month later, the average s p after the 7 million increase is twice, over a month or over a week or two, a month now, this is very strong this much demand is strong a month out. Maybe two months out in our opinion here still. Ryan in cincinnati, there is still up ward mobility. Cant you start small in cincinnati and make something of yourself if you work hard . Isnt that still possible . Absolutely. I think anywhere in the country thats the case. You have to get out in new york to see that. The only place cant be inner city detroit. Its not the place to go. He is in ener city detroit. When you leave leave new york city, do you go to like no, i go to big cities. Chicago, l. A. I have been to detroit. Ryan told you, its a lot of up mobile. Maybe its just sneet. I dont know what to tell you. Those parttime restaurant jobs can lead to management positions. They can. Look. Part of the problem is we have an entire society who dont want to have. When did you go to the New York Times . When i was 18yearsold. You never had a starter job . I was a waiter, paid. 75 cents a meal. For the New York Times . You were a waiter. When i was in camp. Oh. Ryan, thank you. Its not a job. Did you ever have a formal job . I was a waiter for the doctors table. I convinced a doctor so he may have this every week. Is it a do as i say not what i do . Quite different. Coming up, stocks, drivers. Out on your deck. A small doc. Stocks on the move ahead of the opening bell. Package was addressed to anthony weiner, apparently. A report with crimm cramer at the New York Stock Exchange next. Welcome back to squawk. We have a news alert making headlines. Carl icahn sent another letter to dell shareholders and starts by quoting and saying, it seems the dell board has shamelessly attempted to frighten stockholders throughout the process. He goes on to say, the companys going to tell you michael dell and silver lakes offer if it its turned down would loss the proxy fight. But its nonsense. Their aed by malrecord and turn down the recap offer unless the current board makes a superior offer. I should note mr. Icahn a speaker at alpha conference wednesday, well talk to him a lot about the dell situation the day before the vote on thursday. New york stock exchange, jim cramer is. Mr. Cramer, we can talk about that, citi, i imagine. Whats on your mind . Citis interesting because it looks to be a fabulous quarter. Remember, Charles Peabody came on air, predicting between 5 billion and 7 billion loss on Foreign Exchange. It came in at 1. 7 billion, off by as about 5. 3 billion, charles, and thats one of the things he had a sell on the stock, four guys had sell on the stock, guys have to eat crow, after what looks like a very good quarter for michael corbat. How do you set yourself up ahead of Goldman Sachs earnings. Look at trading revenues that jpmorgan had in fixed income, volatility will be Goldman Sachs friend, too. Goldman thrives in a volatile environment, i think goldman could deliver at least on that line pretty good numbers. Also ipos are good, too. I recognize the stocks going in premarket trading, makes sense. Talk about Goldman Sachs, and the next names been jpmorgan. Before that we talked about Morgan Stanley. Put them in context, theyve become a different firm, i think, than what they were a couple of years ago. Maybe retail sale, a big retail component because theyve brought all of the old smith barney and maybe that can generate a stable kind of earning stream. Citi sold it to them, people were saying it does dumb by citi. Thats an okay business. I like what citis doing with emerging markets going down. I can only imagine like the paper speculated today emerging markets bring in opportunity. Like citi more than morgan. I like goldman more than morgan. Morgan stanley. Jim, bob daal here. We talked about difference between those companies that have more regulated businesses and those that can operate without the capital regulation. Within financials. Right. A point of view there . I happen to like the regionals because i believe rates are going up and theyre going to reprice the cds will go up little but they can be able to make a lot more margin on, you know, everyday turning the lights on business. I thought the quote by john stump was fabulous about Checking Accounts. That thats what he monitors. You make a lot of money when you put money in the Checking Account for wells and then invest in the yield curve. A lot of ways for regionals to win. Im sure regulations a problem with jpmorgan. Using that as an example, dimon told me friday here, it all comes out in the wash in the end. This Banking Group is going higher. People are prized that wells was so good that was one people thought would be weaker. It remains a good place to be. Okay. Jim cramer. Well see you if a moment. I was a waiter, too. I didnt do as well as you did. Doesnt sound look a real waiter. At a summer camp . Summer camp. Where were you a waiter . At the block in clever which we called the block and cleavage. Pizza hut, first job, pizza hut waitress. Okay. By, by the way, camp, waiter of the year. I kid you not. Of course. Just telling you. Dont knock it. Dont knock it. 26 . How old were you . Back then, 12, 13 years old. Now . No, no. 13. Doctors at your camp you had to wait on . Doctors rotated. New doctor come every week. That way a big tune for a new tip every week. That way i could plug how much the last guy gave me. Coming up, our guest host has been bob daal. Last word. Capitalism at a young age what happened . When squawk box returns. announcer at scottrade, our clients trade and invest exactly how they want. With scottrades online banking, i get one view of my bank and brokerage accounts with one login. To easily move my money when i need to. Plus, when i call my local scottrade office, i can talk to someone who knows how i trade. Because i dont trade like everybody. I trade like me. Im with scottrade. announcer scottrade. Awarded fivestars from smartmoney magazine. A talking car. But ill tell you what impresses me. A talking train. This ge locomotive can tell you exactly where it is, what its carrying, while using less fuel. Delivering whatever the world needs, when it needs it. After all, whats the point of talking if you dont have something important to say . Theyre the days to take care of somethinbusiness. T to say . When possibilities become reality. With centurylink as your trusted partner, our visionary Cloud Infrastructure and Global Broadband network free you to focus on what matters. With Custom Communications solutions and responsive, dedicated support, we constantly evolve to meet your needs. Every day of the week. Centurylink® your link to whats next. Right here. Thanks. Hello mother, hello father. Yep. Very entertaining. Camp reunion, camp cedar. Some watch the show actually. You know, this is a song from an opera, right . I do. I do. I dont think we sang this around the campfire. We should have. It wasnt Camp Crystal Lake . No. You know what . The camp is up near where. Kill, kill, kill. I could be wrong, the lake where stephen king lives. Nice. Oh. Stock of the day, leap wireless, at t is buying the company for 15 a share. Hopefully andrew doesnt have a problem with this deal. No, love the deal with 88 premium. You scuttled the deal by yourself. Antitrust issues. Using the formula that is antiquated with the competition. Randalls doing just fine. Were not. We have the spectrum, 99 of the country would have it now. First name basis. Yeah, he is. All of the big oh. Fridays big winner. John paulson, biggest john biggest Institutional Investor in leap. Featured speaker, wednesday, some people talk search here, search there. Few people deliver alpha. Right. Which we will do wednesday. Randall stevens, have a great day. Thats right. The whole texting. No, no. Thank you. For being hoo for two hours. Still can i end with a camp packing list . Rain gear, dont forget your flashlights. For the markets. Bring protection from the sun. Go ahead. Always read. Make sure you join us tomorrow. Squawk on the street begins right now. Good monday morning. Welcome to squawk on the street. Im Carl Quintanilla with jim cramer, david faber. Coming off the second best week of the year, 78 points from a new intraday high on the dow. Citi beatsing pecktations this morning. A big week of earnings. Futures are mixed after retail sales dismiss and the china gdp number 7. 5. Gas prices theto