Transcripts For CNBC Squawk Box 20140605

What, if you feel better later, you can read some of my stuff. Tag team. Youll owe me if i read this for you. Why did you do the back of your hand . Oh, you were doing the fist pump. You know why we do that . Germs. You dont care about germs. No, for you. The ecb decision is expected around 7 45 eastern. All these comments are going to be important for mario draghi. Hell host the News Conference about 47 minutes later. You think about what will it do to the euro versus the dollar versus the yen, what about, we always talk about why our tenyear is where it is. Germany, theyre even lower over there. You think about how impactful the recession in europe from a couple years ago and how much it impacted what our fed did here and what our economy does. Its a big trading partner. We may have but for the first time maybe theyd be moving in a different direction. Its important for us. I dont like to give them that much importance. I think our economy, were the strongest. Today for a little while there theyre the dog. The small dog. Yip, yip. Theyre a medium size. Like a cocker spaniel. I think this is important. Theres lucky. Or maybe a cockapoo. Whats the other . Poodle. Either poodles arent real choosy about who they, you know, with. Or theyre just really smart. People use poodles, l labrodoodles, cockapoos theyre high strung. German shepherds are amazing. They are great, just great. As joe mentioned gm is set to release its if shes watching, shes happy i mentioned her. Phil lebeau is reporting that Ceo Mary Barra is taking significant action following the investigation, including holding specific employees accountable for the ignition switch defect. The wall street journal says the probe is expected to conclude there was no concerted effort at covering things up and that clear Senior Management it will clear seen more management to blame. More next hour. Lets get to andrew who is standing by in california, i believe youve probably been up all night, andrew. Hi, guys. No time. Jacket, no tie. I figure nod tie. Im in the valley. Youre not supposed to wear a tie out here. Theres no pollen out here. The weather, i dont know how people do any work out here. Beautiful. Even now its dark outside. If you wear no tie, you know what the next question is, that everybody still wants to know. Oh, dear, what is it . Socks . Socks . Yes or no . Socks, yes. Shoes, yes. Prove it. Underwear . Im talking socks from the other day. From the other day. We were talking about your feet again. Nobodys feet yours arent bad but not his feet, though, but feet in general are gross. The best feet is disgusting. A little boney. Go ahead. Were on the west coast. This is becoming global news this morning, sprint and tmobile, theyre finally moving closer to that deal that weve been talking about for many, many weeks if not months. Sources telling us that sprint agreed to pay about 40 a share to buy its smaller rival. The terms are now outlined. This is not a done deal yet but it is about a 17 premium to the carriers close yesterday. Now that they at least have those terms on the sheet of paper, Deutsche Telekom as part of this, expected to keep a 15 to 20 stake of the combined company. It currently owns 67 of tmobile. A couple other pieces of the deal that have been agreed upon thus far. Theres a billion dollar breakup fee. You should also know it looks like the ceo of tmobile, not the ceo of sprint will ultimately run the company. Well talk to a Telecom Analyst in just a couple minutes about all of this. I should also tell you the sprint tmobile deal was one of many topics we talked about the the Media Telecom world yesterday. All these deals facing regulatory review. I sat down right here in Silicon Valley with Venture Capitalist mark andreasen. We talked about consolidation and whether all these deals, whether its comcast Time Warner Cable deal or the directv at t deal, whether they should go through. Heres what he had to say. Generally, whatever i think leads to increased investment and competition is good. You have to reconcile investment and competition. With too much competition, too many parallel pipes you wont get a Critical Mass of investment. I think we need a balance. This is what i talked about quite a bit around net neutrality. I think there should be five broad band connections, a cable connection, a telco connection, a mobile telco connection, a wired one and mobile one separate and then i think there should be wifi. And then on top of that, google fiber which is growing very, very fast. I think we should try to live in a world, if the fcc asks my opinion, we need to live in a world where 10 years from now, 20 years from now, as Many American homes as possible have five different pipes. We need to set those companies up so they can move aggressively in providing broad band. Marc is probably one the joe, you would appreciate marc. He is a true capitalist. He wants the fcc to try to step in to force, you know, some more competition in these markets. Hes not against deals like this but at the same time, he doesnt want so much concentration that theres too much power. We talked about municipalities how if youre going to try to get wired to the home, if he wants to get five Different Companies to the home, how do you do that without Companies Like an at t and comcast trying to block those efforts . In certain cities they have sued when google fiber has emerged. The question is could you allow these deals to go through and have the fcc try to protect it. I know at t and others have tried to block it. Its ausing their poles to go through. Whats the fair agreement for how much google would have to pay using their infrastructure. Im confused when it comes down to that. Part of it is an infrastructure issue. Its rare where in these cities there was a huge amount of money spent, not to build these things out, yes, to build them out but more importantly in terms of to buy the license. These licenses were sold for relatively cheap decades ago. Youre talking about for cable . For cable. For cable or the telephone. In some cities, these licenses affected were given away virt l virtually for free. Then the question becomes its not just how much frr pinfrastre was paid for by the pole and then the issue is can you go down the street. If i have been maintaining these poles and everything along the line, i can understand wanting to get paid for you to run your wires along the same lines. I get confused. It would be good to have marc here for that. In a competitive world, given that you cant have two or three poles on the street. Thats the other problem. One set of poles or no set of poles. Shouldnt there be a standard fee to use the poles . Youre the competition, you can come in and use all of the poles that i maintain without paying anything for it. The issue in many cities isnt the Cable Company or the telephone operator saying you cant you can just pay us some fee. Its usually you have to pay us in exorbitant fee or we dont want you running on our poles at all. The other issue with google, i heard, theyre only coming to municipalities where municipalities are putting up all the money. Its not necessarily a google infrastructure. Theyve turned the whole process around in reverse. Instead of going to cities and saying we want to come to you. Theyre saying come to us if you can offer us a deal. The view is if they can get enough of those cities they can force the issue elsewhere. It is not going to be coming to the cities that dont have the economics. Its cities who are willing to bid for it or allow it to happen. Its not just about cities that have money. The goal, the way google is approaching, if they can get enough cities who accept it, your neighbors will start hearing about it or well be talking about it, google fiber is running at multiple speeds. Youll say i want it and finally you may press your municipality into trying to push to get a google fiber in your town. Did you notice the lighting out there, how good it is . Everybody has better lighting. He looks good. Thank you. He always does. He looks much better than he does here. I cant see that far. Just the lighting. Thanks, andrew. Did you see in Tiananmen Square, theyre celebrating the what happened oh, no, thats not Tiananmen Square, apparently. See the times has the picture. The times has both. Probably not in Tiananmen Square. Watch this, every time i say that, according to eunice, they turn us off over there. Well talk twitter. This is Tiananmen Square. Over in china theyre doing this. What i dont understand, between the two pictures, you see the separation in hong kong. You see nothing here. How do they deal with the juxtaposition . Nothing to see here. Nothing happened there. Google it over there. Nothing happened there. Its a square in its classic, though. Really, theyre switching on and off. The guy, now hes mad over there. Somebody compared it. Theyre gois going ng to mis of these times. In the teases, well tell you more. Honestly. Even squawk box on cnbc, they wont let that be seen. This is power. I feel we can add as many people died in Tiananmen Square as did on september 11th here in new york city. The guy who the one guy with the standing in front of the tank. Were off again. Our ratings go they dont measure us in china. Its okay. They dont measure us well here. No. Thats true. Twitter has reportedly been in talks with sound cloud. The ft says this is part of the social media giants efforts to add a Music Service to its offerings. The paper reports that twitter has considered buying Music Streaming Service spotify and pandora. Your turn. As many people i was reading yesterday. They didnt let that get out. Were back off again. A little over 2,000 people. 15 years after the fact someone went around and asked people what happened on this date 15 years later on june 4th and the amazeding thing was a lot of people didnt know about it. Others tried to like say it without saying it because theyve been taught not to talk about it. Can you imagine 15 years after 9 11 and walk around new york city and not find anybody who knew of this day. Andrew is going to tease us it says here. Im going to tease you, joe. You will enjoy this, i think. When squawk box returns, marc andreasen will give us his view of french economist thomas pick picke pickety. Squawk box returns after this short break. And youre on tv. Oh, yeah. Youre right. In case you missed it, it was horrific. I went to bed after the first period. The rangers were playing great after the first period, they really were. The Los Angeles Kings took game one of the stanley cup finals with an overtime win over the new york rangers. It was 21 when i went to bed. The rangers took an early lead where one of the kings kicked it was classic. I love when that happens. What did he do . It almost went in, it bounced and hit one of the kings skates and went back in. They couldnt hold on with the lead. I guess overtime, my kids and wife waited around. They waited and saw the whole thing. Waited around for overtime. It only lasted 30 seconds or something. Horrible. Unfortunately theres a horrible statistic about teams that win the first game. Im not going to repeat it here. Is anyone in l. A. Watching right now . Think youre safe. I dont like the stars that go to the game out there. We have them here, too. Theyre more more what . Our stars here, some of them have actual theyre journalists. They dont memorize scripts, lines and pretend to be other people. Some of the people in l. A. Are incredibly creative. Nbc universal has a lot of creative people out there. We do, we do. I have to admit that. Ron myers is great. I can think of talented people. Ill tell you later what i didnt say. Yesterday you told me what you didnt say when i said something on air. Did i Say Something with sexual innuendo . I didnt say that. Ill tell you in a little bit. Donald sterlings lawyer says the embattled l. A. Clippers owner has agreed to sign off on selling the team to former microsoft ceo steve ballmer. Sterling sued the nba alleging that the league violate the his Constitutional Rights by relying on information of what he calls an illegal recording that publicized racist remarks. Hes agreed to approve the 2 billion deal negotiated by his wife, shelly. Andrew. I got a chance to ask Marc Andreessen about thomas picketty. There is a reason people are passionate about this. Its not just inequality, its standard of living. Have be people be better off and provide for their families. My view of picketty, he has a backward view of how the economy works. They have a socialist party in france, still. Hes an adviser to it. My understanding of the economy is almost the exact opposite of his. Technology in the short term will make it better or worse . Much better. Technology is creating jobs all over the economy. Apple had their big announcement this week. Apple number one, apple is hiring like crazy. Apple and google are creating more jobs than people understand in the United States. The big job is how much apple and google are taking down and how many people theyre hiring. Larry page is talking openly about having the First Company with a million engineers. They view themselves as gigantic job creators and they have been. Marc said he read the whole book. Hes not just skimming it or reading the back. He doesnt just have a problem by the way with the prescriptions unto themselves at the end. To some degree he has a problem with the data, his view, he says, is that globally inequality has gone down, not up, and that what youre looking at is really developed countries or mostly developed countries, that when you start thinking about china, india and all the other places we talked about, the middle classes that have emerged, hes suggesting that the inequality problem is not a problem. And joe, you will appreciate. He said its if the a zero sum game. I said is it possible over there they win and it comes at their expense . He ever the optimist, everybody is an optimist by the way. Once you make once you acknowledge its not a zero sum game and that theres wealth cooperation, that makes the conversation a whole different animal. If a corporate, a ceo creates 5 billion, 10 billion worth of market cap worth in a company, thats quite a bit. I read the cato comments on picketty and everybody made the case. You cant say it in public that in, for example, developed countries its not an argument about people just trying to survive and have shelter and food. Its about having a lot of things and other people having a lot more things. The Huffington Post would go wild if they saw this. There still is poverty in this country. Its something that we need to deal with all the time. But when were talking about the bottom 20 or 30 in the United States, versus the bottom 20 or 30 in developing countries, its like night and day. And we mentioned it when we had picketty. He criticizes growing income and inequality in china, when hundreds of millions of people have been lifted from base poverty into near middle class based on capitalism. The whole book is preposterous. Youre kind of surprised that its way out there. I immediately thought you are 3,000 miles closer to france than he is. That explains i mean, right . How far is he from france . Hes probably 9,000 miles. Hes a little farther. Were only 6,000. I will say this just to give you optimism, though. Youre always the eternal optimist. We talked on the program about how the poor in the United States has been lifted up. You can have a home, a car, a flat screen tv and still be considered poor but the big issues in this country are health care and education. When you talk to him about some of the new technology stuff that they are doing and investing in when it comes to education, some really cool stuff out here and some of the health stuff, what he believes it will do to the cost. Weve been talking about this for the past two decades. Theres an inflection point. You really do, at least when youre here, theres a koolaid thing going on. He was slippery, too. He started out by saying economics is not an exact science. All i really want to do is do education and infrastructure and be able to invest he said if we had a 4 or 5 growth rate in gdp it wouldnt be a problem. He acts like hes interested in equalizing opportunities, not outcome. If youre suggesting an 80 tax that we coordinate around the globe on anyone with a salary over 500,000, in addition to that at least a 2 Global Wealth tax, thats redistribution. I also will toll you, i would suggest that mark is for a lot of infrastructure spending. He does believe there is a role for the government in a major way, perhaps more than you may as well. I dont know who needs to do states, private. Im also for education but not just you know, we have to fix that. There are people who say theyre for education but they dont want to do anything other than entrench the unions. Theres charter schools, theres tenyear cant exist the way that it is right now. Theres a lot of things that need to be fixed there. Were having trouble fixing them and guys that want to do it. They are running into a buzz saw, rahm emanuel. Talking about that election might even be tough for him. Hes taking on they talk about the coke brothers. The teachers unions. Anyway we have to go. See you later. We have to go. Youll stay for this. Im not going anywhere. You got me for three hours. I woke up to are you. Its 3 30 in the morning here. You had me at hello as ive said many times. Lets get more on the pending mega merger between sprint and tmobile. Kev kevin smith is with us, Senior Analyst at mcquarry. People have tmobile and sprint and tmobile might actually get some business versus at t and verizon, right . We think that the issue, the transaction is Regulatory Approval and what the doj and the fcc ultimately think about it. We like the merits of the transaction. You know, somebody earlier commented about infrastructure spending. These Companies Need to invest to stay competitive, invest in spectrum, invest in towers, that requires profitability. Theres a balance that the regulators in the u. S. Will have to balance between allowing this merger and promoting infrastructure spending, ultimately by sprint, a combined entity and you know, a classical definition of competition. Andrew, you know that stupid i think your dad actually put that together, that begins with an eight. What is that ratio . Theres no way . The hhi index. Theres no way that will work. That they would put it above what does hhi stand for. Herschhorn they add up all that. The issue on this transaction is not going to be striblly about concentration. Its going to be ultimately about whether sprint and tmobile have an impact on the rest of the industry. Whether its pricing, innovation. You wouldnt let anyone merge if you had your way. Im sorry, joe. At t and tmobile, theyre drowning. Let them hold on to each other as they go down. I think this is a good deal. Im not against this deal. If you are a regulator, theres not a concentration this particular deal is not a concentration deal. They have plenty of ideas, the regulators. One of the remedies we think, we think theres three remedies that could help the transaction. One is, we wrote about this today, that sprint can open up its network to mvno partners. Amazon is launching a new phone as you reported. They could be interested in 3467 mvno. Sprint and tmobile would be a logical partner. Dish would also be a logical partner for that as well as potentially google. So we think opening up their network to wholesale partners who have a history of price competition and subsidizing and driving down pricing in the industry could really help sprint. The other thing, we were with at t management last night. Theyre going to try this and their merger, to build out Rural Broadband in Rural America where speeds are low. Its basically cable or dsl. Theyre able to offer over wireless spectrum a Home Broadband solution. We think sprint will try this as well as at t and tray to get Regulatory Approval there. Obviously they can divest in spectrum to the competitors to try to create a more level Playing Field. Spectrum is a scarce resource. They have to be able to provide the infrastructure. They said let the markets work. As an analyst, you cant assume theyll let the markets work. We downgraded tmobile this week because we are concerned that the stock had priced in at 40, a 40 deal at 35 that it has already priced in a regulatory discount and an arp spread. Wed expect the stock to trade flattish today given the 40 share price. We like the sinn synergies long. It will take a year plus to close. It hasnt even been announced. We predict a 45 chance that the regulators turn it down. 45 . We have higher odds than most of the street on the Regulatory Approval process. See yb joe, im not crazy. I know youre not. Thats what scares me, andrew. Theres a lot of people like that. Thats what scares me. I just think at t should have been able to do it. The idea that sprint can do it, they were worried about examine and serious. Theyre meddling bureaucrats that dont understand innovation. There are arguments made including with the comcast time warner. You have to watch whats there. Thats another one. You do remember when at t was trying to do tmobile and the deal was falling apart, the regulators were going to block it, everybody was tmobiles argument was they would be left for dead. Here we are. I know. I know. We have a huge takeover premium. Kevin, thank you for coming in today. Within we come back, well talk about whether ecb president mario draghi will be able to get more euros into the hands of his people. His possible game plan, right after this. The fastest printer. The fastest lunch. Turkey club. The fastest pencil sharpener. The fastest elevator. The fastest speed dial. The Fastest Office plant. So why wouldnt i choose the fastest wifi . I would. Switch to comcast Business Internet and get the fastest wifi included. Comcast business. Built for business. But at xerox weve embraced a new role. Working behind the scenes to provide companies with services. Like helping hr departments manage benefits and pensions for over 11 million employees. Reducing document costs by up to 30 . And processing 421 billion dollars in accounts payables each year. Helping thousands of companies simplify how work gets done. Hows that for an encore . With xerox, youre ready for real business. Hows that for an encore . man speaking chinese [ girl ] my mom, she makes underwater fans that are powered by the moon. She can print Amazing Things, right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. My mom works at ge. Good morning and welcome back to squawk box here on cnbc, im joe kernen along with becky quick and Andrew Ross Sorkin who is reporting from Silicon Valley. Making headlines, gm is set to release its recall report later this morning. The wall street journal says the probe is expected to conclude there was no concerted coverup. Its also going to clear Senior Management. Phil lebeau reports that Ceo Mary Barra is taking significant actions following the investigation, including holding some specific employees accountable for the ignition switch defect. We were just talking sprints and tmobile are moving closer to a deal. Sources say sprint agreed to pay 40 a share. In media news, netflix is telling customers that verizon and other internet providers are to blame for slow speeds on video streaming. The company has been calling on the fcc to do away with the fees that content Companies Pay for faster deliveries of movies and tv shows. If i had the pipes and spent the money on the pipes, id make netflix deliver like this. If they dont like it, they can go and build their own pipes. Verizon came out with a harsh statement saying, look, this was not us slowing things down. This is because how they choose to connect through their system, saying that was their choice on these things. It all comes down to the fees, should you pay or should you not. In any other business in the world youre allowed to charge for faster delivery. If you built everything out, people are using a lot of it. Its supply and demanded. If you are responsible for twothirds of the traffic, you should be paying more. This is so not true. Supply and demand. Supply and demand. I have to disagree with you. Let it happen. I know. I have to disagree with this, verizon ultimately is Holding Things back. Its not simply that theyve decided to do business with the wrong people. And yes, they decided theyre not paying netflix isnt paying but at the same time verizon said is effectively throttling the network. If youre using twothirds of it, you should pay more for what comes through. Im not a netflix customer. Im having to pay for what other people are doing to use that because its not going to be verizon that pays for that. Its going to be what they charge to every consumer. They can do that. Im suggesting to you, theres a larger point, verizon, comcast, at t, everybody has been a huge beneficiary all all the content that goes over these pipes. The reason so many people have signed up for faster broad band isnt a function that somehow comcast or at t they want to get access to this stuff. In the end you were talking about a consumer who should be willing to pay to get access. They are paying. Not every consumer should have to pay for all of the other stuff that gets used. I use a lot less. I dont need netflix. Every time i try to rent a movie on netflix they say here are other movies similar to the one you want to rent because we dont have it. That i agree with too, joe. I love netflix for the kids. Once youve gone through a handful of the original movies youre sort of done. Again, though, you should pay your way. If youll be using more of the bandwidth you should pay more for it. Im talking about the consumers ultimately paying it. Its going to be the consumer who ends up paying for it one way or the other. Is it netflix consumer or verizon, every consumer . Thats what it comes down to. A little more than an hour from now well hear from the European Central bank on Interest Rates and potentially a whole lot more. Its one of the most widely watched ecb announcements in recent memory. Our Michelle Carusocabrera is here with a preview. This could be a really big deal. Yes, it could. Steve liesman was here yesterday, he had a great survey on what participants think the ecb will do. Im here with the sequel so to speak. In the question and answer session today he has to do something bigger, badder, better in order to please the market and ultimately help the european economy. First, what is Mario Draghis problem . He has inflation thats too low, potentially deflation. Why is it happening . Due to a contraction in credit. Banks arent lending. The last point on the full screen is the most important. Why arent they lending . Because the banks are capital constrained. A lot of them are in countries where you wouldnt want to make loans anyway. Basically, these banks are terrified of the stress test. They didnt raise capital. They are hoarding money. That is so important. It negates a lot of the tools mario draghi has at his disposal. Negative deposit rates. Im a bank and i have money at the ecb and mario draghi says well charge you money for that. Okay, you know what, print those euros up, ill store them in the vault in the basement. You dont think that would push it . It might pressure the currency. It might make the euro more of a funding currency, like the time but that takes time. It doesnt get more credit into the economy. Longterm funding. Weve done this before. Widescale asset purchases. This is what ben bernanke did in the United States. The problem is, there arent a lot of assets to purchase in europe. Theyen do the have a securitization market like we do. Securitization was so common in the United States, remember south park did a whole episode about securitization of blenders. But they only have 94 billion worth of assets to buy. They just cant do it. What do we think happens today . He has to tell the market something, i promise you a year from now well be able to buy assets. We think, maybe, theres a new acronym, special term refinancing operation, stro, special term means heres 100 million euros, go make 52 million euro loans to Small Businesses and maybe he does something very creative where he says the haircuts wont be as big when you drop them as collateral. What youll have to hold as capital, et cetera, et cetera. He has to bypass the banks in some way. The question is if he doesnt come up with something new and special that we havent thought of, how does the market react . I think we see the euro its interesting. What happens to the euro, does it rise or fall . Its hard to know. I know theres a big short position in the euro possibly but theres disappointment. He has to convince them hes going to do something for the economy. I think the euro goes up, i think. Because its been down since the last meeting . Maybe. Well check in with you just a little bit later. When we come back, michelle will be back at 7 45 eastern. Within we come back, Sallie Krawcheck is launching a new fund thats betting big on women. Well get the details, right after this. Welcome back. Former wall street executive Sallie Krawcheck is joining forces with a Fund Management company to open an index fund betting big on women. That fund will invest in companies that have more females in positions of power either in boardrooms or executive suites. Joining us now is Sallie Krawcheck herself, the owner of the professional Womens Network elevate which was formerly known as 85 broads. Thanks for being here. Thank you for having me. 85 broads became elevate. Why . 85 broads was a great name for so many years and was sort of i think it was almost a triple entandra. It was an Informal Network of women who worked there. The network grew so much over the years. Today were 34,000 strong, global and well outside Financial Services across industries. The name the old name was a great name, time to retire it. The new name, you know, is elevate, ellllevate. Clever. That name is a little out there. And immediately i heard about the change. I thought, okay, its good change. I like the elle. I like that you played on that, too. Id love to join but i think youve got are you already up to 85 and i never worked at goldman. It was time. Well, sallie, lets talk about this new fund that youre launching. What inspired you to do this . Why now . Inspired by a couple of things, one of which, becky, were having a National Conversation about women and the power of diversity in driving higher roes, lower risk, lower volatility, lower gender pay disparity. All the research we see on gender diversity leads to positive things. So the research is there and then frankly were seeing the demand. Were seeing lots of women and millennials saying they want to invest for a fair return and their values. How do you measure companies to figure out which ones would qualify for this . Yes, were looking at this. Its an index fund. Its quantitatively derived. Were looking at things like the percentage of women in management, whether theres a woman ceo, cfo. Its primarily the percent of women in management roles. I thought is this going to be a dippy, whippy sort of companies you never heard of before . The search i think indicated and is showing these are Companies Like ge, pepsico, xerox, procter gamble, avon, high quality, very global companies. That sort of screen out to the top of the index. Its the top 400 brand name, very global companies. You know, it strikes me that you might be able to find companies and put them in but what happens, do these Companies Get kicked out if they have a turnover in management . Oh, sure. Of course. Thats one component to it. Because there are i want to be very clear, there are a lot of Good Companies run by men, becky. As i said, its percent after Senior Management and boards are the primary targets. What is a percent after Senior Management that qualifies you as being high . For the fund on average, its 31 women as a percent of the board, 24 Senior Management as compared to an 11 global average overall. Triple and double the percent that are there. Wow. If the research holds these are companies that should offer a fair return to investors. If you look at those companies, if you had invested in them over the last five years or so, how would you have fared versus the major averages . Not that looking backwards is only so interesting but the Research Shows one would have done very well, outperformed the indices. I dont want to make it all about that. You know, what i want to what were hearing from these groups of what i think of emerging investors, im talking a lot to Financial Advisers about this, they really are looking to invest differently. You know, just as women and millennials in their jobs, you know, they say the number one thing they want is meaning and purpose. In their investments theyre looking for the same thing as well as a fair return. Okay. Say, sallie, as always, great talking to you. Thank you so much for joining me. Thank you. Andrew . We have linked in ceo jeff weiner on doing business in china. That story coming up on squawk box right after the break. At t can help simplify how you manage it. So you can focus on what you love most. When everyone and everything works together, business just sings. You wouldnt have it she any other way. Our toes. 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And no matter how much thought you put into it, and our team spent a lot of time, asking a lot of questions about what we were trying to accomplish. And what the costs could be. And where we would have to make compromises. What do you worry about most . Whats the biggest for starters . They shut you down completely . No, we want to keep people safe. We want to keep members safe and our employees safe. Thats first and foremost. Thats way more important than being shut down. Have the other Tech Companies that have given up their ambitions in those countries, in china for now, have they made a mistake . Has google made a mistake . Has facebook made a mistake . Are they not seeing something that youre seeing . I think, for starters, there are companies that are very interested in doing business in china, who havent yet had the opportunity to do business in china for a whole host of reasons. And i think a lot of companies recognize the value that they can deliver to members, to users, to customers, and the difference they can make. I think, in certain situations, companies are not in a position where they can do business in china, for a number of reasons, starting with context. And the Chinese Government may or may not be open to that. And i think by virtue of our focus on creating economic opportunity, were in a position where we can make a difference. And so we have this opportunity. And we want to be really thoughtful about the way in which were operating there. And we take censorship, we take filtering very seriously. Jeff weiner, treading a fine line in terms of what he can and cannot say given the amount of business they do and are hoping to do in china. In the next hour, though, we are going to hear from ebay ceo, john donahoe, and also mark andreess andreessen, hes sounding off on Edward Snowden. Coming up, the countdown to the ecb decision and how its going to play out in the u. S. Markets. Plus, waiting on the details of gms internal probe on the recall and a possible megadeal between sprint and tmobile. Well have all those stories and other top stories next on squawk box. Okay, listen up im reworkin the menu. Mayo . Corn dogs . You are so outta here aah [ female announcer ] the complete balanced nutrition of greattasting ensure. 24 vitamins and minerals, antioxidants, and 9 grams of protein. [ bottle ] ensure®. Nutrition in charge™. [ bottle ] ensure®. Big job, big city, big new come with country. Wife said. How can i move to a city, he said. Im a country boy. Let me see what i can do, she said. So she opened a bank account, sent money, rented an apartment. And found him a little bit of country. In over 700 cities worldwide, products and services that make a citi client anywhere a citi client everywhere. Welcome back to squawk box. Waiting on the ecb. What will mario an draghi do to give the eurozone a boost and what will it mean for the action on wall street. That discussion is straight ahead. Plus, an exclusive interview with tech visionary, Marc Andreessen. By the end of the decade, basically everyone on the planet will have a smartphone. What do you use . Oh, i use everything. The second hour of squawk box begins right now. Good morning, everyone. Welcome back to squawk box here on cnbc. Im becky quick along with jeff horken and Andrew Ross Sorkin. Things have barely budged, because things are waiting on the ecb decision thats coming in about 45 minutes. And also take a look at the tenyear. Right now our tenyear is yielding 2. 548 . But the big story the this morning is whats happening with the euro. The euro is trading near a fourmonth low as they await that decision from the federal bank, that is expected with the ecb widely expected to push its deposit rate into negative territory. Well have the details when the bank issues that statement at 7 45. Right now, the euro is setting at 136. We just got the policy statement from the bank of england, which has left its key lending rate unchanged at half a percent. One economic report out this morning, we have the Labor Department issuing its weekly report on firsttime jobless claims. Economists are looking for 310,000 new claims for last week. That would be up slightly from the week before. Well get that number at 8 30. And as andrew has been reporting, sprint is close to finalizing a deal to buy tmobile u. S. For 40 a share. That would value tmobile at more than 32 billion. Sprint and tmobile are the third and fourth largest u. S. Wireless carriers. Deutsche telecom would keep a 15 to 20 stake in the company after the combined deal. Okay. Andrews not with us, is he . I am, im right here. Absolutely. Andrew, i was having trouble responding to this tweet. Im just wondering whether you would cop to this. Okay. Someone wrote in, you are always siding with your friends, the capitalists. So im scratching my head and im thinking, is that a putdown . And i was thinking, i wonder if andrew would cop to that. Because, i said, you know, im guilty. I do. I side with the capitalists. And then i said, are my alternatives i tried to figure out my alternatives. Youve got socialists, so thats a no. Youve got communists, thats a no. Youve got anarchists, thats a no. Do you is there something im missing no would you cop to siding with capitalists, andrew. Would you say, yes, i always side with capitalists . I think the right answer is that you always side with capitalists and you should without siding with crony capitalism, how about that . Excellent that is excellent excellent thats the goal. Because crony capitalism isnt capitalism. When you started, you said, theres a but coming, but you and both of these guys sat down, bellski and my charles. Chuck. I didnt even recognize you here without your did you have a beard or a mustache or something . No. Anyway, weve golfed and everything. You have a heck of a swing. Both of you guys side with capitalists, dont you . Would you cop to that . Yes. Even from minnesota . Oh, yeah, joe. All right. Were going to move on. I was trying to think of that guys trying to put me down. The Huffington Post would also say, probably, that, and theyd think they really nailed me, they really got me, because i side with capitalists. It is funny to try and think isnt this a capitalist society . Yeah. Okay. Because i just wanted to be sure that im not wrong about this. Gm is set to release its recall report later this morning. Lebeau has got that french name. Auto reporter phil lebeau joins us now with some details. Is it canadian or french, phil . Canadianfrench, joe, hows that for you . You like that . I do like it. Whats going on . So doesnt go all the way to the top. This is kind of what we figured, i guess. Reporter yeah, i think all along, people knew that it was not going to go all the way to the top. And mary barra all along said she did not know about this ignition switch defect and didnt learn about it until the end of last year. Heres some details about what we expect to happen over the next couple of hours from talking with sources inside General Motors. First of all, mary barra is expected to announce shes taking significant actions. That includes Holding People accountable, a sizable number of people accountable for what went wrong with the ignition switch defect. There will be people dismissed from General Motors. The exact number is unclear at this point, but we have learned that ray dejoerngeorgeio, the engineer who worked on a defective engine switch, he is being dismissed by General Motors. Still no question about whether or not gary altman, another engineer who worked on the ignition switch, whether or not hes being disciplined by General Motors. So what will happen shortly after 9 00 this morning, mary barra will announce the results of the gm recall investigation. Specifically, what went wrong. A timeline of when the company knew about it, when the company failed to take action, why it was so slow to act, and again, who exactly was involved with this, as the case unfolded. Keep in mind, General Motors says 13 fatalities and 47 crashes are linked to the ignition switch. Although we have talked with a number of lawyers who have filed lawsuits against the company, representing victims who say that number is underreported. That it should be much higher. General motors is also expected to announce changes to catch and announce defects sooner. Weve been told that mary barra is going to be announcing a series of steps to make sure that General Motors does not go down this path again. As you take a look at shares of General Motors, down 10 yeartodate, but look at the uptick over the last couple of days. A lot of people have waited for this announcement to say, okay, a big hurdle has been cleared. Whats next for General Motors . Again, the press conference is going to happen at 9 30, but at 9 00 is when we get specific details about this investigation. And we should point out again, joe, as you mentioned, it is expected to clear top executives within General Motors. However, we have learned that there will be a number of employees linked with this ignition switch defect. The recall, the slow action, a number of them will be dismissed from General Motors. Guys, back to you. Phil, i expect that well be getting the details when they come up with this press conference. Theyll give the details as why they think the buck stops with those employees . Reporter absolutely. Because the internal investigation, as i understand it, the internal investigation shows that at some point, when it finally was alerted to certain level of executives, they said, wait a second, we need to take some action here. That was far too late for what happened. Remember, they knew about this more than a decade ago, but it wasnt until the end of last year that they really stepped forward and when i say they, the company stepped forward and took action. And what were expecting from this investigation is to say, here is where it went wrong. In the Ignition Department and the engineering department. We are 45 minutes away from that ecb announcement and a day away from the u. S. Jobs report. Our guest host this morning, Charles Kantor is the founder and Portfolio Manager of the kantor group. Also joining us, brian bellski at bmo Capital Markets. Great to see both of you this morning. Good morning. Lets talk about the ecb Rate Decision first. Thats less than 40 minutes away right now. What do you expect to hear from them . Do you think this could create a little bit of havoc in the markets . I think the europeans are well behind the curve relative to the u. S. I thought i saw yesterday, theyve had 17 negative fixed investment courts, which is five of the last six years. So they need liquidity, they need to stimulate fixed investment spending and inventory rebuild and build confidence back into the system. So, i think its been reasonably well telegraphed, what they have to say. So i wouldnt suggest expectations are modest. It will be up to them to satisfy those expectations and to stimulate lending back in the economy. Thats the question, though, brian. We were talking about this with michelle a few minutes ago. If they go ahead and lower rates and start charging banks to keep that money as deposits, those are two things they can do, but is that enough . They probably need to do more. And one of the biggest surprises the last couple of years is really the overall strength of the euro. Weve had the turnaround growth and recovery growth last year with respect to not only european stocks, but to some degree, their economies there. Now is the next phase. When we start to see real substantiative economic and fundamental growth there. And we think that there has to be some sort of a stimulation to get things going here. And its just going to be a longer term process, we think. And we think to some degree, today will be the start of that, but its going to be, its not going to be a onestep type of thing. You can see the euro now at 136. It has come down on anticipation of what they think is going to happen today. It seems to me that the u. S. Central bank was always a little better at telegraphing to the markets and then coming through with that. The ecb has not been quite as good. And i wonder if the surprise could be, its just what we expect on those two counts and nothing more. Does the euro pop back up . I think bernanke was magnificent at being clear around communication in financial crisis and then continue to share his Forward Guidance and gave you clear indicators of what he was looking at. Theres a tendency, when things are bad, to share left, and he shared a lot and helped to rebuild the confidence in the system. And to the degree we are uncertain on whether androgi will deliver is expectations. You go back to management. Volcker was a change manager. Greenspan was a trend manager. Bernanke was a crisis manager. Looks to us like yellen is going to be a change manager again, if you think about that. The next great change in Interest Rates, whether or not that happens tomorrow or the next six months or six years, theyre going up. Volcker had the great pleasure of being able to combine Monetary Policy with fiscal policy, right . Yellen doesnt have that right now. Right. And so from that standpoint, it sure looks like Interest Rates are going to remain lower than most anticipate for a while. But volcker got his juice by really shocking the markets. Janet yellen has been the one all about open communication and trying to communicate clearly. And there was a tremendous amount of dissension in the fed in the 80s and volcker squashed that and greenspan shut it down. There was no dissension, virtually, during bernanke. Now is there going to start to be a little bit more dissension . Think about that. And we all know that and bernanke did more of a consensus. He was less of a squasher. But given that were so reactive in investing now, if theres any other chirping, to use a hockey fan, since were the stanley cup right now, if theres chirping with respect to the trend in Interest Rates, is that going to cause volatility in stocks . Thats a good question. I think the leadership is essential. Its my sense that yellens job, for a while here, is to convince folks like us that she has the credibility to act when she needs to act. So for now, her leadership is all around earning and Building Trust and reputation. And my expectation would be, she will do nothing to disrupt that, such that i would guess much later than we all expect, shes ready to act. So youre looking for lesser volatility in stocks, youre looking for more, am i fair to think is it fair to paint you guys that way . Yeah, i think sorry, go ahead. I dont know if im looking for less or more in terms of volatility. Clearly, whats been surprising has been the lack of volatility in equities as it relates to the volatility youve had in fixed income, specifically last year. Fixed income volatility of which there were, i think, five standard deviation event in tenyear treasuries in the middle of last year didnt move into stocks. There wasnt a 10 pullback in stocks last year, which made that rather unusual. I think most years are characterized by some pullback, and at some point, therell be more volatility. But for now, my sense is that you respect what you have and dont question the market. Thats exactly right. From a longer term perspective, i think were starting to normalize volatility. Nearterm, we could see a bit of a pickup in volatility, just for the fact that we havent seen the pullback, markets have become extremely complacent, investors are complacent, complacent about the fed, complacent about stocks nearterm. So we could get some kind of a surprise, but that does not derail the longer term fundamental strength of u. S. Stocks, which is very much in place. So you still like it . Very much so. Im not convinced that investors are complacent. We spend a ton of time speaking to High Net Worth individuals, and while they are less nervous, i dont think theyre yet complacent. And theyre asking some very fundamental questions around, how does one asset allocate within the context of the environment that were in, which i would describe as, its just not normal. And since its not normal, i think you want to think very creatively around why its not normal and how to make a reasonable riskadjusted return within the context of todays market. Brian, thank you very much for joining us today. Its great to see you. Thank you. And charles is going to be sticking around for the rest of the show. Right now, were going to send it to andrew in Silicon Valley. Thank you, becky. When we return, Marc Andreessen, he goes off on nsa leaker, Edward Snowden. What should happen to snowden . Oh, i mean, i think well, i dont know, s. E. A. L. Team 6 sounds like a good option. Keep it right here. Squawk box returns with that and a lot more in just a moment. Over 1. 2 billion eyeballs are on us during the two weeks at wimbledon. True tennis fans want to know whats happening, they dont want to just see whats happening, they want to know and understand why its happening. Anybody can just put data up, but we want to get a reaction, make it far more interactive. We rely on the cloud to provide that immersive digital capability. Thats keeping you from the healthcare you deserve. At humana, we believe if healthcare changes, if it becomes simpler. If frustration and paperwork decrease. If grandparents get to live at home instead of in a home. The gap begins to close. So lets simplify things. Lets close the gap between people and care. Welcome back to squawk box. This morning, leaders of some of the nations biggest media and Technology Companies issuing an open letter in todays New York Times. That fullpage ad is addressed to members of the senate and calls on legislators to reform government surveillance. It says in part, quote, confidence in the internet has been badly damaged over the last year. The letter is signed by top executives from aol, apple, twitter, dropbox, yahoo microsoft, google, linkedin and facebook. And were here in Silicon Valley this morning, we caught up with Marc Andreessen and talked about nsa and Edward Snowden. Obviously, hes a traitor. Like, if you look up in the encyclopedia, traitor, theres a picture of Edward Snowden. Hes a textbook traitor. Im in the distinct minority out here. I think most people in Silicon Valley would pick the other designation. And you think hes a traitor because . Because he stole National Security secrets and gave them to everybody on the planet. Did you know what was happening, though . Did you feel like he has exposed something you didnt know about . This is something people have got very upset at me for saying this. I think if you actually follow the nsa and read the books and the articles and understood the history, i think you generally assume that they were doing pretty much everything thats come out. And so, people were so shocked. Weve been funding this agency for years that have tens of billions of employees so youre not uncomfortable . I thought they were spying. Thats my impression. I thought thats what they were doing. I thought everybody knew that. So ive got to say, i am surprised that there is such a shock. Some of the shock, i think, is fake. Foreign governments getting so upset, thats for domestic political consumption. The germans and brits knew full well what was happening, the russians knew full well what was happening. And of course, they do many or all the same things themselves. But i think theres no question that a lot of americans were very surprised. And its implications out here, visavis, trying to do business abroad . Yeah, very serious and very worrying. And i would say in two categories. So first is just American Technology Companies Get a huge amount of revenue from outside the u. S. In fact, some of these Companies Get up to 70 of revenue outside the u. S. And theres a big open question right now, how successful our companies will be when they go to sell products overseas. And there are a lot of Foreign Countries that are very envious of Silicon Valley and americas domination of tech and wish they could implement protections policies and will use this whole affair as a reason to do that. As an excuse. Yeah, as an excuse. What should president obama do, and you have been very critical of him . Thats the big issue. Right now, as far as i can tell, theres no plan. Theres no plan, theres no strategy, theres no tactics, theres no nothing. Like snowden reveals, just keeps coming out. The administration is just letting theyre letting the american Tech Industry out to dry. I havent met anybody who feels like the white house has a plan, its just happening. Marc andreessen, never one to hold back on what he really thinks is going on. And i will say, his view is not a popular one out here. Hes popular in terms of what that ad in the New York Times does, but in terms of some of his other views, theres some people out here who really do think that Edward Snowden is a hero. Let me tell you about Something Else we covered. We talked about a number of topics with andreessen, including apple in the poststeve jobs era, and a recent beat steel weve talked about a lot at the table. I think it will. The early signs are very positive. First, the word of mouth coming from inside the company is pretty strong, which is usually a pretty good sign. And the other announcements this week, they were primarily software, but very, very impressive announcements. The funny thing thats happening right now, apple and google are both winning. So apple is doing phenomenally well at the high end of the smartphone market, and the iphone at 600 is selling incredibly fast. And android is just this gigantic success. And theres over a billion android phones. By the end of the decade, basically everybody on the planet will have a smartphone. What do you use . I use everything. I notice that when beats rumors of the beats transaction emerged, you said that you thought that they were undoubtedly getting a bargain. I was on the air and i thought the whole thing seemed like lunacy to me. Why did you think it was a good deal . We think about this stuff in terms of market size. Think about the number of people who have an iphone or ipad or mac and think about the number of people who will have those things in 20 years, and think about how important music is and sound is in peoples lives and in the Apple Ecosystem today and think about the advantage of having that brand with those products, think about having like those kind of headphones attached to every single mac and every single iphone. When you think about the attach rate and upsell and streaming service, they can layer that in, and think about having jimmy ivy on your team, which is one of the best entrepreneurs of our time. I think more than anything else, he thinks that the jimmy ivine piece of it is most important and the possibility to grow music. The possibility that apple could come back and transform the music business all over again. Wait a second, do i hear your opinion changing ton deal . No, no, no. I feel bad for andrew. Andrew, fess up, did you change your mind . One after another, now he says the apple is good. Hes knocking down your heroes, piketty, snowden, obama, one after another. And i was supposed to be you were like a fighter, youre just did you go down for the count after that . Youre getting pummeled. Um, my need to not my view did not change specifically, because i just dont know if the cans, whether they are just a fashion statement. You are not sounding as resolute as you were. Its chipping away at you, isnt it . He does this all the time, though. Flipflop, flipflop, i know. And then he thinks e e es he there all along. I dont think theres anything wrong with changing your opinion. When the facts change on the ground, you change your mind. I have not changed my mind just yet. Youre almost there a little closer. You know what the weather out here will do it. Youd go full stockholm out there in california if you got half a chance. Like you did in davos last year. Like i did in davos. Coming up, the countdown to the ecb decision. Speaking of europe, what does mario draghi have planned to pump stattrt the euro zone economy. Well be back in just a minute. Time for aflacs trivia question. By how much is the bitcoin down against the u. S. Dollar yeartodate . The answer when cnbc squawk box continues. Wrench . What . Aflac so this is who you brought to help us out . Oh yeah, hes the best. He doesnt look like hes seen a tool in his life. Oh, he doesnt know anything about tools. Aflacacacacacacac but when i broke my arm, he lent a hand. He paid my claim in just four days. Four days . Wow find out how fast aflac can pay you at aflac. Com. Better. Show em the curve. Its beautiful. Its more than that. Its perfect. Introducing curved Ultra High Definition Television from samsung. Now the answer to todays aflac trivia question. By how much is bitcoin down against the u. S. Dollar yeartodate . The answer, bitcoin is down 15. 2 yeartodate. Welcome back to squawk box. Japans soft bank will start selling humanlike robots for personal use early next year. These inflatable things have been on the market for years, havent they, for personal use . Yeah, i dont know why theyre better. I was talking about Something Else. Never mind. The price tag oh the price tag, never mind, about 1,900 each. You can get them online for about youve seen the idogs and you can get these things online for 89. Theyre hard to blow up. Youve got to get a pump. The company says that the robots could help address labor shortages in japan, with the ability to use as babysitters, medical emergency workers, or heres what im talking about, party companions. For all of your harassing andrew, you say, robutt, its robot. Well be back right after this. Theres this couple in sydney. Worked hard. Raised two kids. Theyve never been to moscow. But they sent money there. Rented an apartment. All because, they have this 19yearold daughter who loves to dance. In over 700 cities worldwide, products and services that make a citi client anywhere a citi client everywhere. E financial noise financial noise financial noise financial noise welcome back to squawk box, everybody. In our headlines today, the bank of england keeping its key Interest Rates steady at half a percent. Policymakers remain cautious about britains economic recovery. We are expecting a policy announcement from the ecb in just about 15 minutes. That is the biggy. Thats the one all the markets are waiting for this morning. The imf cutting its 2015 Economic Growth forecast for china to about 7 , but the organization is urging authorities to avoid further stimulus measures and instead concentrate on curtailing financial risks. And shares of siena getting a boost this morning. Earnings beating the street by 4 cents and the company says that revenue trends will strengthen in the second half of the year. All righty, then. Lets get back to andrew, whos in san jose. He caught up with ebays ceo and talked about bitcoin, amazon wait a second, theyve had bitcoin in there it was not for you, it was for everybody. And you know i love to ask everybody about bitcoin. And i have been skeptical, but, you know, becky said that when the facts change on the ground, youve got to change your view. This one i may be changing my view. No are you kidding . No look, john donahoe, ceo of ebay you wrote a column about this. I know, he thinks quite heavily that ebay may very soon start accepting bitcoins. This is what he had to say. I think theres no doubt Digital Currency is going to play an Important Role Going Forward, and at paypal, were going to have to integrate Digital Currencies into our wallet. So hand kicap it. How quickly do you think well see bitcoin in paypal . I dont know, i cant give a specific time. But i think youll see bitcoin used in different use cases, whether its a peertopeer use case, a crossborder transaction, someones sending currency to someone else, and over time, youll start to see it with some merchants accepting bitcoin. And i dont know how big it will get, how quickly, but the underlying theme is a digital coin something we should be aware of. Do you own any bitcoin, personally . Yes, i do. What do you think it should be worth . For me, im not buying it as an investment. Im buying it to understand how it can be used. I think there are two sides of it, the investment side and the Digital Currency side. Im more interested in the Digital Currency side. I dont know if its a stockholm syndrome or what, but everybody that i talk to out here, and you sort of get into it, really does talk about bitcoin as the next big thing. And they believe it. And they mean it. It is not just some kind of flybynight thing they are playing with. They are serious and very Big Companies out here, very, very serious about it. The other topic we talked to john donahoe about, we talked about his competitor, amazon, whos in that big fight with book publisher, hatchette. Theyre in a battle. You cant go mr. Gladwells book now on amazon because of that battle and i asked him what he thought of all of that. Should we care about from a policy perspective, these kind of concentration issues . Thats a great question. Because what ebay represents is opportunity for small sellers. Thats what ebay is made up of. We arent a retailer. We dont compete with our sellers. We dont use scale against them. We give them the benefits of scale. Ebay, from its very beginning, took entrepreneurs, took Small Businesses, and now also some large businesses, can give them an equal Playing Field to reach 140 million buyers around the world. And you can buy gladwells book now on ebay, actually, to the on amazon. He took a minor little shot at amazon in a clip im not sure we have that piece of it. But that is a real skirmish and a lot of people also here talking about the concentration issues and this amazon situation, what it all means. I should tell you, by the way, we asked Mark Andreessen about amazon and he came out on the other side. He is an amazon fan and says he looks at what jeff besos has done for consumers in bringing down price and he said maybe the book industry shouldnt be considered more than anything else. With that, ill send it back to you guys. He likes im making a little list of things. I love him. Andreessen . Yeah. Yeah. I dont know, andrew, its just, hes made a lot of money in technology and hes just not, theres something about the hypocrisy of a lot of the guys who make a lot of dough and dont speak out for things like that. You know, they benefited from it and they i dont know. They just want to have their cake and eat it too. They want all their pc progressive friends to suck to them, but they wont give any credit to how they became one. Anyway, i dont want to get into that. The euro closed yes, you do. The euro is closed to a fourmonth low. As we get ready for the ecbs decision on Interest Rates. Joining us now, speaking of which, boras slosberg, hes a managing director at the best kind, right . Thats the best kind to be. Yeah, caviar kind. Hes director of bks. Ion you know what i said earlier, boris . Usually we dont take too much into consideration for what happens on the continent, but in terms of the dollar and in terms of the tenyear and in terms of whether the gdp over here hits these numbers, this is really important today, for once. The last 24 hours, all ive been hearing is ecb, ecb. But is it wrong . This is important. It is very important. First time, you know, First Time Ever we have a major g3 central bank entertaining the idea of negative Interest Rates. And i think, you know, the conventional wisdom going into this day today, going into the trade, is that its all in the price. You know, the curve is priced in negative Interest Rates. Its not going to be a big deal. The euro is probably not going to move much. But i think the market is underestimating a couple of things. First of all, i think negative Interest Rates will be a serious change. But more importantly, the last few times we had those negative Interest Rates, it was a gimmick. A very, very short time they kept them. If draghi comes out and says, hey, well keep these rates for a considerable period of time, thats going to change the landscape. And there have been leaks from the ecb saying, not only could he say this, but he can say, cutting them further in the next couple of meetings going out. And if he communicates any of those issues, the euro could be much more vulnerable to the downside. Because its going to radically change the Consumer Behavior in the euro zone. We always talking about how the japanese housewives would try to look to invest their Household Savings outside of the yen when the yen was at zero percent . We may have miss muler, you know, out of germany, start to change their whole saving behavior. Germans are notoriously ethnocentric. But if their money starts to lose money in their own banks, they might start to move it out. I was in frankfurt three weeks ago, and they reminded me that they could buy treasuries and double the yield. As you know, funds in germany are 1. 3 . So i think when you think about the rate environment, i would encourage folks to think about it as a global debate. Money moves around globally, and to understand our Interest Rates, i think, you immediate to understand how low Interest Rates are in the rest of the developed world. And less so about what does it say about our Economic Conditions here. Right. I think its not out of the question, for example, for german financial houses to start bundling these european, australian bonds, or european certificates of deposit. There are some trades where the euro could be an interesting takeaway. It all depends on what draghi says today. And thats why all eyes are rifted on the ecb press conference. Most thoughts because its never all. We get a lot of viewers theres a lot of people right now, trying to figure out who mario draghi is . You know, pushup bras, facial cream. What are on most morning shows . Its not this, i dont think. They may be talking about bergdahl. That is just we havent talked about that at all here. We havent. Its not our thats not really in our wheelhouse. We brought up it briefly with hardwood. Weve got to go. I was also thinking about what draghi does, what that does for ominomics. But its going to affect what happens in japan too. Weve got to go were going to go to black at 39 30, do you have a clock . Yeah, if u. S. Rates improve, thatll push our rates lower. We have to take a quick commercial break, because when we come back, well have the ecbs decision on Interest Rates, we have the announcement, the Market Reaction. Stay right here. You dont want to miss this. Also, ecb president mario draghi will be speaking later. Thats when things may get even more interesting. Its the devil always in the detail in these things. Stick around for that as well. Meanwhile, take a look at the futures. Dow fuches tures up by 16 pointt markets have barely budged. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. 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. So what im saying is, people like options. When you take geico, you can call them anytime you feel like saving money. It dont matter, day or night. Use your computer, your smartphone, your tablet, whatever. The point is, you have options. Oh, how convenient. Hey. Crab cakes, what are you looking at . Geico. Fifteen minutes could save you fifteen percent or more on car insurance. [ girl ] my mom, she makes underwater fans that are powered by the moon. She can print Amazing Things, right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. My mom works at ge. My mom works at ge. Over 1. 2 billion eyeballs are on us during the two weeks at wimbledon. True tennis fans want to know whats happening, they dont want to just see whats happening, they want to know and understand why its happening. Anybody can just put data up, but we want to get a reaction, make it far more interactive. We rely on the cloud to provide that immersive digital capability. All right. Welcome back, everybody. Here we go. We are expecting the ecb Rate Decision at any minute now. Lets get some thoughts ahead of the big number. Joining us right now is peter schafrick, head of rate strategy at rbc Capital Markets. What do you think is going to happen . Good morning, first of all. I think we heard it before, but the clear thing is the Interest Rate thing. But i would stress and also the previous speaker mentioned it, is not only the Rate Decision, per se, thats going to drive it, its whether theyre going to promise to keep it there for a long period of time, and also whether theyre going to keep the socalled downward bays in place, ie, whether they promise more. Thats the key thing to watch out. And there is going to be more to come. The market is expecting more. What else could there be . A targeted road, further measures is the key thing to watch out for. Peter, for the people playing along at home, watching this and the Market Reaction, at 7 45 what we traditionally get is a quick decision on Interest Rates. Youll probably not get much more until draghi actually starts speaking. So does the market potentially have a kneejerk reaction or do they hold off and wait to see what he says to see if there is more . I think weve got to wait to hear what he says, unless we get something radically different from what we expect, ie, a rate cut. But at 7 45 now, we will be getting the rate cut and thats it and then weve got to wait for 45 minutes. And if theres not an Interest Rate cut, what do you think actually happens . Whats the Market Reaction . If we dont get an Interest Rate cut, thats going to be a huge disappointment and certainly the euro is going to strengthen and probably equities are going down. What weve priced into the market, the front end of the euro rates market is way too much, so well get a snap reaction, all in all, a huge disappointment if we dont get a rate cut. If we do get a rate cut, do you expect to see much Market Reaction . No, thats pretty much what the markets are expecting. I think well be pretty steady as she goes until he speaks. And you think the market thats most important to watch, or the fluctuation, would be the euro itself . I think the euro is key, clearly. But theres going to be an impact on quite a lot of things. But the euro is going to be one of the key bellwethers. Okay, and again, this is something, you would say, this is the most important meeting weve seen since when . Well, probably for a very, very long time. I have to go way back in memory to say when we had such a big one in this one. As we heard before, were going into negative territory and its clearly uncharted water. Its probably the most important one we had since the ecb was created. Peter, thank you very much for joining us this morning. Were awaiting that Rate Decision. In the meantime, weve been talking about whats been happening with the marches. Dow futures up by about 21 points. The euro has been the big story this morning, because the euro has been sitting right at 136. Thats the market the people are expected to really see move. If you want to take a look at the euro right now, 136. 11. Again, this Rate Decision that were waiting on right now is just going to be the interest Rate Decision. Cuts the refinancing rate. By how much . To 0. 15. To 0. 15. That was the expected from 0. 25. A little bit higher than we had expected. Our survey showed 0. 11. I saw a bunch of commentary out there k llooking for 0. 10. And i dont have the deposit rate here, guys here it is. Cuts marginal lending rate to 0. 4. Thats just another rate the ecb has. I dont see the deposit rate, which would be the negative one. That may come later. Well have to see. So steve, this is a slightly less of a cut than your survey had predicted from what the yeah, its certainly within the range. I think what they give here is give themselves a little extra room to go down again if they want to. They could do another five or ten basis points if they need to. But i think the key here is the deposit rate. And one other thing relative to what the previous guest was just talking about, our survey showed that people are looking for not just oh, theres the deposit rate, cut to minus 0. 1. That is in line with what we have. This means that banks in europe would have to be paying pay the ecb holding those euros for them, which is a way to incentivize the banks to go ahead and lend outside. But it might not be enough. If you run a bank in europe, going to charge me now for my deposits instead of paying interest . Why not just print them up and store them in the vaults. I wont get interest, but wont be charged either. And it doesnt mean they necessarily want to lend them out, because theyre capital constrained, they fear the stress test, they havent raised enough capital, so they are disincentivized to lend right now. Its the mixed message that banks are getting. On the one hand, you have the ecb telling you to loan money, and on the other hand, you have regulators saying, you cant give out that capital. Its almost exactly what happened here in the United States in the wake of the financial crisis as well. Its a catch22 for these bankers to be stuck in a position like this. Guys in the back, i dont know if you have the boon up there, but i saw the yield actually rising there. So which would be a little counterintuiti counterintuitive. The tenyear bund was its a slight rise. Im always cautious of what i assume are algorithmic trades. Peter, youre still with us too. And i know you said that this could be the most important decision that weve seen since the ecb was created. Again, though, you point out its really more important what mario draghi says in just a little bit. Yeah, certainly. One of the things, if i heard you correctly, that we cut the repo rate to 10 and the deposit rate to minus 10. Peter, its 15. The refinance rate was 15. Okay, okay. So thats its pretty much in line as expected. And as i was saying earlier, we really have to see what else comes on top of that. What else are they going to do to, at the end of the day, kickstart lending in your area. Which is not happening at this stage. Whats on your list, peter. Our fed survey yesterday showed that people are expecting not just one thing. The market expectation is beyond just rate cuts. That there is an expectation out there, as you say, as one more thing. What would that one or more thing be, peter . First of all, as i was alluding to earlier, i think we have to clearly watch how they communicate this with regards to Forward Guidance. The second thing, theyre probably going to do some accelerating. The liquidity measures stopped the s p sterilization and these kind of things to put the fat down on the market fixings. And thirdly the big one, thats what a lot of people have been talking about. We think theyre probably going to do a targeted ltro, so where they give banks incentives to lend out at preferential rates. But, again, if thats going to come, thats going to be in the press conference. Peter, i just want to point out information. Stopping sterilization, thats qe, right . Thats really what youre talking about . I mine, you know, yes and no. Quite frankly, they havent done qe already havent they basically stopped already . They havent had a lot of uptick. Exactly. Exactly. But its important to remind ourselves of the context of this meeting. Inflation target in europe is well below what was acceptable for the ecb. I mean, their target is 2 . Theyve been well below 2 . Theyve made nop real commitment to get to that target. So the key here is not just what rates are today, but how long will you keep ratios such that you create something charles, theres our charts. We have year over year, euro zone cpi. Theres the 2 target. And you can see since late 2013, theyve been running below their target. You guys, it strikes me as a situation where the longer a central bank waits to do something, maybe the greater the move they actually have to come up with. But if draghi does not come up with something bigger and something we havent though of yet today, does that raise the question thats central bank doctrine. And the idea of the ecb having been people give draghi a lot of credit for bringing the ecb this far. With words, only. And no help at all from the governments. But from a central banking doctrine standpoint or conventional wisdom, theyve been well behind the curve. When we talk about targeted lco, mario draghi does something to encourage the banks to lend to small and mediumsized businesses. But heres the thing, if youre a bank, you can lend to a government, and when you lend to a government, the risk waiting on that is zero. It costs nothing. By virtue of lending the minute you lend to businesses so how does he get around regulations. You point out a really interesting point. Which is also true in the United States with dodd frank, but also true in europe, theres this push you, pull me thing going on with banks. Regulators saying, reserve, overcapitalize, and then lend, lend, lend. And theres this mixed message thats leading essentially to them fulfilling their regulatory requirements yeah, because you get fined to pieces if you so the moves weve watched through the markets for much of this have been negligible. The wires are pointing out that the yields fell in certain places, not really. If youre looking at the equities market, the dow futures are up about 23 points versus up 21 points before we got this news. Some modest advances if you look at some of the European Markets, but no disappointments so far is the way to describe it. And waiting to see what draghi but lets not lose the history of this. A major central bank, up with of the top three, has gone negative with one of its official rates. I didnt think wed ever get here. And i think the key is the commitment overtime and the longer it stays low, the higher the chances you get some lending to take place over time. But this one happened for 12 months. Okay. Everybody around the table will be staying here. Peter, thank you very much for joining us, we appreciate it. When we come back, we will have more on the markets, the ecb decision, and of course a preview of tomorrows big jobs number. Plus, a big day for gm. Ceo mary barra is getting ready for a News Conference to announce the results of the companys investigation into recalls. Phil lebeau will join us with what we can expect. Squawk box be right back. Dont just visit hawaii. Visit tripadvisor hawaii. With millions of reviews, tripadvisor makes any destination better. Still to come this morning, well check in with andrew. Hes on the west coast this morning. Hell be speaking with andreessen partner, scott cooper, and well get his outlook for venture spending and why he thinks fears of another bubble are overblown. Plus, gm, jobless claims, draghi, a lot more. One hour left of squawk box and it is a biggy. Stick around, well be right back. Lectronic Health Records for more than 30 million patients . Or that our Software Helps over 20 million smartphone users remotely configure email every month . Or how about processing nearly 5 billion in electronic toll payments a year . In fact, todays xerox is working in surprising ways to help companies simplify the way work gets done and life gets lived. With xerox, youre ready for real business. And life gets lived. Show em the curve. Its beautiful. Its more than that. Its perfect. Introducing curved Ultra High Definition Television from samsung. The Global Economy taking center stage. What will mario draghi say about the state of europe . His News Conference is just ahead. Plus, were getting ready for tomorrows big jobs report. What investors will need to know when the opening bell rings on wall street. And the view from the valley. The cofounder of coin base talking about the founder of bitcoin and the managing partner of tech Venture Capitalist firm, andreessen horowitz, scott kupor will be our special guest as the final hour of squawk box begins right now. Welcome back to squawk box here on cnbc, first in business worldwide. Im joe kernen along with becky quick and Andrew Ross Sorkin, who is in san jose this morning. One bubble left to be popped, unfortunately. Who else you forgot about the piketty snowden. Changing his mind on that. Piketty, snowden, obama no, no. Coming around on evine. I mean, it just i dont know, im coming around on bitcoin, but not completely, not completely. Youre coming around on beats, too. No, no, no. Im coming around on apple. Because i think they did some Amazing Things this week. Less ecstatic about beats, but we will see. But its good. Youre out getting lots of information, gathering lots of stuff and this helps all of us. So there you go. In the in the what . No, i was getting the stockholm syndrome. You come out here and drink the koolaid, the weathers back to you. All right. Phil, thank you once again now with the decision now out of the way, the Rate Decision markets are looking ahead to the jobs data due out tomorrow. Joining us is david biaco, deutsche bank. How are you doing . Good. How are you . Adp once again below 200. Market keeps grinding higher. Have we reset the 3 for the year expectation for gdp and now were thats good enough . I think its true most people are moving away from the 4 and higher expectations. Closer to 3 . We can talk about the second quarter. I think the key is what does growth look like for the rest of the year and even 2015. And were of the view that well get something close to 3 growth for the full year. Ed a then probably something a little shy of that beyond that. That aligns with my longer term expectation of 5 to 6 . The data is in the right direction, but slowly. And i say were on course to achieve what were expecting. Were a little above 16 times that right now in terms of a pe. We just had the ecb action. Watching jobs and the economy. When it comes to Interest Rates, the Central Banks action was basically the main event for the summer. In line with what was expected. Weve already seen yields come down. Weve seen the euro come down. Maybe there is a little more followthrough. But i think it is more or less done. And something to keep in mind is that while this is probably good for europe, every time thkind t comes off the euro ticks off a dollar of s p earnings. So this is one of those things where i would say earnings estimates are reasonable. But there isnt a whole lot of up side and equity market in terms of the pe where it is, especially the nonmega caps, its standing on the shoulders of the bond market. Its counting on the idea that Interest Rates will only go up slightly over the next several years as growth gets a little bit better from here. So you need the lack of available alternatives to justify the valuations for the market. Thats correct. That may be the world were living in, but i prefer to say we see axle raccelerated earnin growth for years to come. I do think it will do heavy lifting. Dividend still a good asset class. But to justify the pes exactly where they are we keep grinding 20, 30, 40 points a day in these s p milestones falling and no one is excited, no one saying anything. Which you you dont really want to tell anybody about the market because thats when people get excited and they end up holding the bag for everybody else. And people still are being look for a correction, too. We want something, dont we . We just didnt want every to know. Not yet. Bull markets have three cycles. First market goes up, no one believes. Things are going up for rational reasons. Cycle three, things go up because people believe they will never go down. I think were well away from cycle three. And maybe as far away from three as we are one. And i think things progress over time. I think this whole debate about the multiple is kind of really interesting. I think it loses sight of something that has happened across Corporate America the last 30 years. Which is that operating margins have meaningfully improved. General management has done better with labor, they have done better with pricing and have done better with capital deployment. And so you have higher highs in terms of operating margins and higher lows through cycles. And i have to believe that will be worth more over time. And for us to debate is always about where the market is going, not wheress been. And if youre Getting Better returns on capital, means businesses are worth more. Yes, the margins have improved and there is a lot of doubt about the sustainability in the margin improvement for a long time and now people are more confident in the idea that the efficiencies gained at Corporate America and replicating Good Business models abroad especially that that is all sustainle and thats why we saw the pes go from below normal to back to normal and slightly above. So i agree, i think that the margins are an important story and the market gave credit for that basically late 2013. But right now its really the Interest Rate issue, normalize the Interest Rates are the key debate. I dont want to count on a rational behavior. I would say even though im a bit uncomfortable with the idea that Interest Rates are going to stay low for a long time, that that lower return then history on the quit pi market may be fair, and thats just therefore well get a hire pe on that basis. People need to be willing to accept lower returns than they got historically. I think people are more than willing to accept 5 in equities. Id also suggest that to think about Interest Rates, you have to think about the influences of global liquidity. And the ecb is adding to liquidity, the chinese have been adding to liquidity. Were still not taking liquidity away. And i think yields in most of the developed world are much lower than our yields. And the s p is still 60 north american, 40 rest of the world. So our economy is more u. S. Than it is global. I think the bond markets are much more global than people appreciate. Is there any way were missing the we figure the feds already tapered, but this 45 billion is still coming in. They will go down from there. But you see smart guys talking about trading is hard. Citigroup, people like the volatility is being masked. Like there is so much money. When the fed really does get to zero where theyre not doing anything, we think that weve already priced that in. Is it possible we actually feel that when it goes to zero because this is a real thing that there is that much money . Yes, there are two things going on. Involvement of the fed is still significant at 45 is still significant. Because were acting like they passed the baton. Youre already saying, the market deserves to be here just based on there isnt clear transparency, from a marketsetting perspective on Interest Rates, not yet. And then there is the fed funds rate, and most investors have taken the view that its going to stay low for a long time, and plateau at levels low beneath historical norms. As earnings come through as david suggested and others, its higher, not lower. All right, thanks, david. Dont leave yet, you have a mic on. Youre stuck with us. Charles is with us for the rest of the program. The managing partner and ceo of andreessen horowitz, scott kupor, will be joining us next to talk about Venture Capital in the valley, the possibility of another tech bubble and where he is looking for the next big thing. Plus, as we head to a break right now, check out the squawk box market indicator. After the ecb dropped rates, dow futures are still sitting around 26 points. The same essentially where we were before all of that. The tenyear note is yielding a slightly higher yield. Squawk box will be right back. With fidelitys new active trader pro investing platform, the information thats important to you is all in one place, so finding more insight is easier. Its your idea powered by active trader pro. Another way fidelity gives you a more powerful investing experience. Call our specialists today to get up and running. In a we believe outshining the competition tomorrow quires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. 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 this morning. Weve got a bit of deal news this morning. Sprint and tmobile, they are now moving closer to a tieup. Sources telling us this morning that sprint agreed to pay about 40 a share to buy its smaller rival. There is no deal, we should say, just yet, but weve agreed, at least on the outlines of those terms. Also, we can tell you, theres a 1 billion breakup fee, as part of that transaction. We are here in Silicon Valley this morning. Yesterday, we spent some time with legendary bc investor, Marc Andreessen. Weve brought you bits of that interview throughout the morning. This morning, were joined by another partner of his, scott kupor, whos here. Thank you for waking up. Its what time is it now . Almost 5 00 . A little past 5 00. One of the questions i had for you out here, everyone says bubble, bubble, bubble bubble. What inning do you think we are really in right now, when you look at all the investments, and the big valuations on transactions . Yeah. So i think were really closer to 1996 than 99 and i had the privilege of being a banker back in 99, so i was probably part of the problem rather than part of the solution. But everyones talking about all these ipos, and if you look at it in historical context, we did 300 plus ipos in 99 and last year tech did about 45 ipos and on track to do the same number this year. So those numbers at least to us give us a lot of confidence that were very far from bubble territory. But one of the things you see now is latestage deals, private deals. The valuations are higher than what you could ever get in the Public Market. What does that say to you . I think whats happening is the biggest underlying change thats happened is ipo for company has elongated tremendously. If you look again back to 99, companies go public at about 4 years old. Now theyre going public at 9 years old. The bigger change is a Capital Markets change. Youve got a shift of wealth from the Public Markets into the private markets. And thats why you see hedge funds and mutual funds playing into this market. I think its a function of these companies being older and more mature, and therefore, its not surprising that we have billiondollar valuations in the private markets. You wrote a piece called unshackle the middle class. I talked to Marc Andreessen yesterday, you have a view that the middle class has been hurt by whats happened to the ipo markets. Yep. Whats the problem . I think the problem is this is, most americans, like 96 of americans is their only chance to invest is through the Public Markets. They invest their 401 k s in Public Companies. And ipos, weve gone from having 300 year roughly on average over the last 20 years to fewer than a hundred overall and in tech less than 50. So the problem is all the appreciation for these private companies is happening in the private markets so by the time they get to be Public Markets, theres not much growth left for the public investor. The perfect example is microsoft. Now its like a 300 billion market cap. Theyve gone up about 500 times in the Public Markets. And if you look at a company like facebook, which is a phenomenal company, a 100 billion ipo. If they were to go up 500 times in the post markets, i think they would be worth more than the entire listed global market. What is the risk if we opened up the market more, that you would have more losers. In the late 90s, there were many more losers as well. Im not saying we should go back to the 90s. You had Companies Going public with 10 million, 20 million worth of revenue. Im not suggesting ipos are great for every retail investor. But if you look at the overall u. S. Markets, listed stocks have fallen in half over the last 15 years. And so whats happening is, theres fewer public listed companies. Theres less growth generated in the Public Markets, and therefore, you know, as a public investor, theres just not that many places to put your money. When you see an ali baba going public, which were going to see very soon, and youre a private investor, but you look at the Public Market, do you say, i want to be in that, or do you say, whatever value could have already been whatever value there is, has already been created. I dont think thats true. I think its just a question of, whats your return expectation from the Public Market price, right . So, these Public Companies will still go up 2, 3, 4x, whatever the right number is. But if youre a venture investor like us, weve got to see things going up 25, 50, 100x. So as a venture investor, im not going to spend a lot of time investing in the Public Markets, but as a Public Market investor, thats a perfectly fine return. Talking a returns, you had a big return, but im told not as big as you wanted, which is occulus. This is the goggles, the sort of 3d world that you live in, sold to facebook. Marc andreessen on the board of that company. And that was a 10x deal . Meaning you made ten times your money . The deal hasnt closed yet, but yes. But originally you wanted to say no . Well, with all these deals, the way the Venture Business works is, youve got a tremendous amount of losers in your portfolio, right . And thats you all go in thinking all these deals are going to be 10, 20, 30x opportunities. The reality of this business is, we lose money probably at least half the time on all of our investments. So when you have thing like an occulus, which we think is an absolute gamechanging technology, which could be a 100x opportunity, 10x is great. Marc thought that business could be worth 100 billion some day. Whatever marc says, i agree with. You have not left money on the table. Let me ask you about one other issue this morning. Theres a huge ad in the New York Times today, from many industry players, this is around some of the nsa issues, and what that has the problems thats created. But more importantly, how do you see the sort of Regulatory Environment playing out here. And one of the things that marc said yesterday, theres been so much innovation here in part because theres not been a lot of regulation around technology. Over the next five years, ways going to happen . I think theres going to be much more intersection between the Venture Capital world and regulated industries. And for the most part, other than if you are a health care investor, you had to deal with the fda or other stuff like that. Most of the industries that Venture Capitalists invest in was pretty much free from regulation. Right now theres much more opportunity for intersection of that. Youve seen bitcoin, right . Theres no question, obviously, that there will be Regulatory Environment around that. Weve talked about companies in the collaborative consumption space. Theyve got to deal with who theyre with. Right, youve got to deal with these state and local regulatory stuff. So thats going to be a bigger piece of how we invest Going Forward and theres going to be a way to play it, but a much more important consideration Going Forward. Thank you for waking up early this morning. No problem, glad to be here. I know you have your investment day today, good luck with that. In the meantime, ill send it back to becky. Beck becky . No, its me. Back to joe. He has so much more money than you, and yet he still wears a tie. He does. He is wearing a tie. We were talking about that. So much more money than you. And yet he felt that it was appropriate, you know i thought we were in the he walked in, i thought, we were in the valley. He said he had never seen me without a jacket on. Did you get a stain on it or just didnt care enough, andrew . You know, ive watched jon fortt sit at this chair and desk for so many years with an open collar, i thought he can pull it off. What i didnt have was a check shirt or something. He can pull it off. Actually, andrew can pull it off too. I know, he can. They always take the camera and if youve now decided is it piketty, is it romadi . Are we switching . Rameti. But you said you did it again and it wasnt tomato tomato. It wasnt in the prompter. Piketty. And it wasnt now its now piketty. Coming up, rometty. Coming up, weekly jobless claims and ecb reports. With their electrical vehicles. But you cant take a trip from lisbon to stockholm if you cant plan and recharge along the way. The European Commission is using cloud to make this possible. Creating a single charging and Billing Network across 28 countries. So drivers can travel as far as they want to go and when they want to go. Welcome back to squawk box. Would a smartphone could it be in the works at amazon . The Company Revised speculation about its next major product using a mysterious Youtube Video and a website post to tease a june 18th launch event in seattle to be hosted by jeff besos. The 50second video posted by amazon featured people staring downward at something just offcamera. And amazon wouldnt elaborate further, but speculation is growing that the Internet Retailer is set to unveil some kind of smartphone or some device in the wake of several hardware launches over the past june. And the last time besos hosted a Major Press Conference they look way too excited for that to be a phone. If somebody put a new smartphone in front of you, is that what your face would look like . Depends on the phone. It would have to be a pretty cool phone. He had hair then. Is he shaving it now . Probably is. Thats toanother guy to thro in with the lex luther thats a good look. If i didnt have a really good system if you werent wearing a wig . If it wasnt real human hair. If it wasnt indistinguishable it ises s a slick look, ille you that. I cant believe we still use that video. I had a few jokes lately that have been really good, but i dont, because its always fun to can you do him one more time . No all right, just one more time for the sierra club. Baby seal walks into a club. Oh, no, dont make him laugh at that. All right. Whats the last thing a bug thinks of when it hits a web never mind, i cant say that one either. No, you cant. When we come back, we have jobless claims data and a report on how much Cash Companies are keeping in offshore safe havens. Stick around, well be right back. Digital insurance id card. And tap it here, boom, roadside assistance. Ontday ooklay, its axwellmay. The igpay . Otallytay. Take an icturepay onephay, onephay really, pig latin . [ male announcer ] geico. Anywhere, anytime. Just an aptay away on the geico appay. How much money do you think youll need when you retire . Then we gave each person a ribbon to show how many years that amount might last. I was trying to, like, pull it a little further. [ woman ] got me to 70 years old. Im going to have to rethink this thing. Its hard to imagine how much well need for a retirement that could last 30 years or more. So maybe we need to approach things differently, if we want to be ready for a longer retirement. E if we want to be ready for a longer retirement. Financial noise financial noise financial noise financial noise welcome back, everybody. Lets get right to rick. Rick . Up 8,000 on initial jobless claims, and thats from a 4,000 upwardly revised initial claims from last week. So last week it was 300, ends up at 304. 304 gets taken up to 312. Continuing claims hovering around 2. 60 in change million. And that actually is a marked move lower from last weak. I dont think these numbers are all that surprising. And a long time ago, i failed to find a huge amount of value, as they get close, stay close, or hover near 300,000. To me, it would be news if they went to 400,000. But its not going to be news when they go to 298 or 297 or 296. Were seeing what happens. Its kind of the North Carolina effect on the federal side. We see the Unemployment Rate moving down for all the wrong reasons. The jobless claims issue is eventually the benefits play into a dynamic i cant quite handicap yet. And speaking of handicapped, lets talk about central bankers around the globe. And of course, the ecb, negative deposit rate, as we continue to see monetary scientists playing with sharp instruments. Back to you. Yep. Okay. Yeah, i wonder what you thought about that. They always seem like theyve done so many half measures, shouldnt we be happy that theyre finally doing something, rick . They should step back too. You know, i guess i would look at it in the following way. I really dont think that the kind of growth that europe would like to see and the kind of unemployment they would like to see, the real type, is going to happen through anything a central banker is going to do. I think mario draghi was in a way, much more brilliant than many of us gave credit to him for, we buying them two years. Theyve already had 2 1 2 years prior to that. They need to get busy and create a fertile, you know, landscape for creation of jobs and, you know, longneeded reforms. I dont see that. I see tinkering at the edges. We think theres some comments coming out. Michelle. Yeah, michelles been monitoring those and i think she has some of them. Michelle . Mario draghi has just started, we dont have the details, but right at the beginning, he said, beyond what we already know, there will be targeted longer term refinancing measu measures, and also elimination of sterilization. Two of the things predicted immediately announced. As we get details, well bring them to you. Michelle, elimination of the sterilization . Number one. Which theyve already sort of done. With the equivalent of quantitative easing in some ways. It also targeted longer term refinancing operations. Trying to get loans to small and mediumsized businesses, and we assume thats what thats going to be about. Michelle, i have this headline, package includes preparatory work towards purchases of assetbacked securities. Right. So building now a process that would lead to them having a securitization process in europe, similar to what we have in the United States. Having assetbacked securities, mortgagebacked securities. Because one of the hurdles they face is unlike ben bernanke, who could buy lots of mortgagebacked securities, they dont exist so much in europe. So if they want to buy stuff like that, they have to create them first. So they have to create them and then theyll buy them . Exactly. Okay, becky, good job. I can do a dance out here and no one will notice. Guys, well continue monitoring this and have more from both steve and michelle on this. But there is a report being released on Corporate Cash offshore. Eamon javers has the details furs first on cnbc. Reporter this detail will come out later this morning and its about how much cash u. S. Companies are keeping in tax havens offshore. Take a look at some of the findings. Theyre looking at fortune 500 companies and say 72 of fortune 500 companies or 362 Companies Operate subsidiaries in tax havens. They also say that profits of u. S. Multinationals claimed in bermuda were 1,643 of bermudas gdp. Profits of u. S. Multinationals that were claimed in the caymans were 1,600 of the cayman gdp. They also cite a couple of specific companies here in this report, saying that bank of america has 264 subsidiaries and tax havens, more than any other company. Pepsi, they say, maintains 137 subsidiaries and tax havens, holding 34. 1 billion there. Pfizer operating 128 subsidiaries and tax havens, holding 69 billion there. This all, again, according to u. S. Pirg. We had a chance to talk to some of these Companies Last night. Pepsi told us they comply with tax laws everywhere they do business. Bank of america says, bank of america takes its role as a Corporate American citizen seriously and pays taxes in accordance with all applicable laws and regulations. So obviously, adding more fuel to the fire are those tax havens, eamon, or do we operate in the United States in a confiscatory tax retirement . Did you come up with tax haven thats u. S. Pirgs term. And one thing i should say, these companies have not had a chance to look at this report yet. Theyll go through this with a fine tooth comb. We can expect some more detailed response from the companies later on today. Thats what u. S. Pirg is saying. And more fuel for the fire here how does pirg even define it . Is it a tax haven, they set up subsidiary, because theyre operating in a different anyone with a lower rate than us. Ireland, all of europe. Theres some cases where you can push it and say this is the only place its not a tax haven. Theyre funneling money to other directions. Hey, theyre just doing business there. Are they counting those, too . Michelle, is there anyone with higher taxes than us. Were the only place thats not a tax haucven. Perhaps thats the way it works. Charles, is there anyone . I am so mentally somewhere else right now. Im sorry. Shes listening with the other ear. Shes trying to youve got to listen when eamon comes on. I would much rather listen to eamon, but im listening to mario draghi. What else did he say . The targeted ltos, these are the structures theyre going to put in place to target certain parts of the economy, hes described one, its going to be more mortgages, roughly 400 billion in size and it sounds like theres some the way theyre going to charge on the collateral or haircuts, et cetera, are going to be maybe easier terms than what would normally occur. So targeting mortgages right now, according to mario draghi. Great. Great that the oceb tax base, the u. S. Has the highest. Corporate tax base. Thats what were talking about. Eamon, ill be really interested to hear more about this later in the morning when the companies go through and respond, too. And it would be interesting to hear what congress thinks too. And because this report is under our embargo, we have not had a chance to share the report with the companies. So once they look at it, theyll analyze whether or not they think its fair. And obviously this is a hot debate in washington. U. S. Pirg trying to make pint that in their view, companies are keeping too much money offshore. Pirg is Public Interest Research Group . Yes, u. S. Public Interest Research group. And the effective tax rate discussion you guys are having but the reason its now lower, because everyones leaving to go elsewhere. Thats why the blended rate is so much lower. But steve, sometimes we do use taxes for punitive reasons. And each of these corporations were talking about are trying to earn profits true. So so youre saying they shouldnt be punitively punished . I dont think so. I didnt say anything eamon, before you go, do you think congress will act on taxes . No. The next two years . Well, in the next two years, possibly, but not this year. Its an election year, were out of time, total gridlock so well be lobbing hardballs back and forth about this. Therell be sternly worded letters sent back and forth, but no actual action here. Eamon, thank you. Well talk to you soon. But the euros going down. Where is it now . Below 136 . Its going to break 135 as we speak here. So that is a big drop. It had been sitting at 136, which was already drown, but it had been driven down by these expectations. We knew when mario draghi spoke, you would potentially see more reaction from the markets. Steves been monitoring this, michelles been monitoring this. We will have more. Up next, though, it has been the it has been called the paypal of bitcoin, one of the hottest startups in 2013. The ceo Bitcoin Exchange coin base will join andrew in san jose after this. And as we head to a break, take a look at bitcoin. Yeah, you can talk about the euro and how its moving. Bitcoin today up by 13. Marge you know, theres a more enjoyable way to get your fiber. Try phillips fiber good gummies. Theyre delicious, and an excellent source of fiber to help support regularity. Wife mmmm husband these are good marge the tasty side of fiber. From phillips. This is the case. And were investing, but were a Venture Capital firm. We can take these extreme bets, like, is it guaranteed to work . No. If it does work, it is important and very valuable . Yes. The other thing is bitcoin is a technology. The Technology Platform is incredibly valuable. So Warren Buffetts still wrong on this . Oh, absolutely, yeah. I mean, yes. If he took the time to study it, i think he would easily be able to wrap his head around it. And do you think he would be a buyer . I have no idea about that. But i literally dont think he understands it. That was Marc Andreessen, of course, bullish on bitcoin. We are now joined by bitcoins biggest wallet service, fred airsome, hes the cofounder of coin base, a Bitcoin Wallet and platform where merchants and consumers can transact with the Digital Currency. Coin base has raised 30 million indreessen is one of those investors. Thank you for waking up early with us. My pleasure, andrew. We were talking about this offcamera. If i wanted to buy bitcoin, i cant call Goldman Sachs or morgan stanley, you used to work at Goldman Sachs, a currency trader at Goldman Sachs, you cant call Goldman Sachs to buy this stuff. The way to actually do it is through you. Very much like you might with paypal and any u. S. Bank account and buy yourself some bitcoin. I would expect investment banks at some point enter the market, but its too early at this point. Weve been talking about bitcoin on the show and ive been skeptical, you hear people like Warren Buffett be skeptical and people like jamie dimon be skeptical. You are not. What sold you . I think the common theme youre seeing there are people who approach bitcoin first from the finance or the Monetary Policy perspective, rather than the technology and why is this network so valuable perspective. So again, think about it as sort of the early days of the internet, where this network now does something that was never possible before, which is remove the necessity for a third party in a transaction. And the efficiency gains from that are rather large. And thats ultimately what convinced m ed me. How much regulation is to come around bitcoin . And how much regulation is needed to the extent you think its necessary for bitcoin to succeed . So regulation, globally, is developing pretty rapidly around bitcoin. The u. S. Is actually probably the most advanced place, so treasury has issued guidance around how do you deal with bitcoin from a regular story perspective. And the irs weighed in recently too. I think theres more to come, and theres obviously a new area, because now you have what is a digital asset, really operating outside the scope of banks. So therell be some middle ground between how do we regulate this like a bank versus, how do we regulate it in an open network sense like the internet. We had john donahoe from ebay. He may accept bitcoin. You have done a deal with dish to accept bitcoin. Over the next two or three months, give us a hint. How many Major Companies do you think will start accepting this and how quickly . I think the trend is pretty clear here, especially when you think about a company like ebay, especially when its a twosided marketplace and people are getting hit with fees on the way in and out, especially on the payments. Over the next three months, youll see another couple billion dollar retailers jump on board. There has not been a lot of volatility in the past couple of months, which may have helped your cause. But to the extent it either goes up or down a lot anytime soon, how anxious are you that that will hold things back . So, i think volatility is a bit of a doubleedged sword here. On the one hand, i think youre right. It makes it more difficult to use practically as a currency. But on the other hand, i think were still very much in the early days and volatility is a bit natural, because people are going to be in some senses, still speculating. And also, rapidly entering the system. The growth is very, very large here. So theres going to be an acceptable period of time, where lots of people are entering the system. Volatility will be higher, but over time, the amount of transactions that are used for sort of real economic purposes, if you will, versus speculation, will shift. One of the things im not sure people paid attention to this week is apple is now letting your app and others, people who transact in bitcoin, on the service. Right. What is that going to do . I think it just enables people to use bitcoin in a more easy way. And you can do it before. Your app was unavailable. Available on android, unavailable on apple. That couldnt. But i cant buy bitcoin on my iphone still. Thats right. Its only for sending and receiving bitcoin, not buying and selling per their guidelines. So do you use bitcoins now . Absolutely. In your daily life . Absolutely. How . I spend them on overstock. Com, which you can buy pretty much anything on at this point. I used them this weekend to pay back a friend, because we went out to a bar in the evening. Really, really anything. I think its a significantly easier experience. Thank you for waking up early to do this. My pleasure. Joe, has he convinced you . Are you going to buy any bitcoin. No dont say that. Isnt overstock. Com that crazy bitcoins perfect for overstock, they were made for each other, arent they . I would argue that, sure, there might be just as people are speculating in the early days, some incentive, and people are getting into it for various reasons, but i think it will be a widespread things. Overstock. Com, what was the guys name . Patrick burn is a pretty outspoken ceo. There were a lot of bears that were after the stock at one point. When we first relaunched squawk box, he was a guest of ours and at the time, he thought we were trying to hijack the interview and so he was holding up signs, telling people where to go to read his blog, because he didnt think we were letting him get his is he still around . Yeah, hes still running it. And overstock. Com, by the way, is doing very well. Okay, good. They survived the chase from the bears and are flourishing. And they are a huge online retailer at this point. Ive bought a bunch of stuff from them, even after he held up the signs. I just want to ask one last very quick question, which is why, if you think bitcoins are worth so much money, why would you spend any on overstock. Com . The answer is theyre giving cash back to their consumers, because theyre giving so much accepting it. Theyre giving 1 back to any consumer that uses it. And i would love to have patrick on. If youre listening, we would love to have you on, patrick. He was mad at somebody. There was this whole, all these guys who were chasing the stock. Someone called me a luddite the other you know, luddites dont like heremachines, becaus they think its going to put people out of work. Im eagerly awaiting the singularity. I love machines. You know what i am . I sent back that im more of a philistine, which i think you would agree, right . Just any kind of culture, im just right, andrew . If someone asked you, thats what i want you to call me. Anyway, coming up, were going to check in with jim cramer at the New York Stock Exchange. Squawk box will be back after a quick break. Being a keen observer of the world has gotten you far, but what if you could see more of what you wanted to know . With fidelitys new active trader pro investing platform, the information thats important to you is all in one place, so finding more insight is easier. Its your idea powered by active trader pro. Another way fidelity gives you a more powerful investing experience. Call our specialists today to get up and running. Drivers want to go further with their electrical vehicles. But you cant take a trip from lisbon to stockholm if you cant plan and recharge along the way. The European Commission is using cloud to make this possible. Creating a single charging and Billing Network across 28 countries. So drivers can travel as far as they want to go and when they want to go. Welcome back to squawk box. The Global Markets responding to ecb president Mario Draghis News Conference. Going to roll through intraday charts here as i tell you highlights of what he said. You can see the moves in the euro in particular, right about 8 30 in the morning in the United States, when he started to his News Conference that he does after each monthly decision. Some of the things that he mentioned, Interest Rates are going to stay low for an extended period of time. He announced two kinds of financing operations, theyre going to be targeted towards the real economy to encourage banks in europe to lend to certain parts of the economy and whats important about them is one size, 400 billion worth, and also the length of time, four years. Thats a really long time. And theyre also going to work on preparing the European Market for more assetbacked securities. Those are we have those, very common in the United States. Put port mrts mortgages in them, car loans in them, they dont have them in europe. The eventuality he could buy them as a way to improve the european economy. The elimination of sterilization. That means when they inject liquidity into the economy, theyre not going to take it out as they have done in the past. Back to you. Thank you, michele. Lets get down to the New York Stock Exchange with jim cramer. I couldnt remember, do you have a problem im looking at overstock, 300 million company, jim, and we had andrews guest said he would use his bitcoin to buy stuff on overstock and to they that sounds perfect for bitcoin yoevgs stock. I have no comment. I dont remember in the old days what was going on i have no comment on that company. Im not going to comment. All right. Its 15 you know, i dont is there any other company in the entire universe of companies that you wont i found it. I found it. Thats the only company i wont comment. All right. So draghi, are we happy . Does he is he on the qe bandwagon . I think that he wants to be the biggest subprime lender in the world. I think he wants to create new markets that didnt exist. I think if you called him right now and said listen, i need a car loan, he would give it to you. Really . I think he would make you a mortgage loan, do anything. He is backing that malcolm x by any means necessary mode. Ive never heard honestly, this guy is thinking in the 1920s they had deflation in germany, it led to social unrest, we know where it went. Its not going to happen on my watch. He is so committed. Were the only country in the world cutting back stimulus. Everybody is stimulating. Even the uk is not cutting back and their country is booming. I tlipg our bonds are reflecting the fact that something, indeed, is going to happen in positive business formation. If it doesnt, i dont know. I want to go over and start a Small Business in it sfli you have a bunch of Small Businesses. Start a mexican bar in italy. Bed and breakfast in tuscany. He wants you to hire, he wants you to start a business. He is begging you to be entrepreneurial. Go start a business in tuscany. You know theres no places for rent in tuscany. Its impossible to find its totally remember the maestro on seinfeld. He told them theres no place, not a single place, in the entire area so rent. So you cant do that. Hey but what we know that manny last night said pvh, sales arent good in italy which i find kind of amazing. They will be. Youll be buying jeans all you want after what draghi did. You know how these guys are saying they cant trade no volatility because of the fed, do you see if you were running Cramer Berkowitz it would be different, wouldnt it . Honestly if you think long term theres so much money being made. These guys were all about scalping. Thats not where the money is being made. The money is being made by identifying incredible companies that get bids. Something these guys dont. All right, jim. See you. When we come back, the Ecbs Press Conference under way. Mario draghi speaking about the state of the state of the european economy. We will get an update on what hes saying and what investors should take away from it. Be sure to tune in tomorrow, we will be having the government jobs report hitting. The number of the month. Market reaction and more with larry kudlow. Squawk box will be right back. In a world thats changing faster than ever, we believe outshining the competition tomorrow quires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. 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, everybody. Steve liesman has been monitoring Mario Draghis comments and joins us with an update. The question how hes doing relative to Market Expectations. We gauged those Market Expectations in our cnbc fed survey ecb edition and people were looking for a bunch of these things but not everybody was looking for the whole panoply, the whole plan thats come out and i think draghi has exceeded expectations. The reviews im getting in, like kind of like film reviewers coming in right now are pretty pishl. Says draghi has announced a package of credit easing measures that on net exceeds even our High Expectations coming into the meeting. Our guest host your comment earlier. Did so much more than anyone expected. Its as big as you could have hoped for and that accelerates a global recovery. This is important because typically the review of the ecb were behind the curve. Is this a situation where maybe theyre ahead of the curve. If you want to put up that inflation chart, the u. S. Versus u. S. Inflation going up and ecb inflation coming down. Think about, you know, weve been doing this so long, steve, but think about remember the ecb waited so long because they were so they were worried about the wheelbarrow. Exactly. The limelar five years ago they wouldnt do anything, they wouldnt budge because of inflation. They were so wrong. They were wrong about that. Whos the guy before him . Trueshay. Very hardline and i like Jeanne Claude very much, ive gotten to know him well, but towards the end of his tenure he was much more hardlined at a time people thought he should be easing. They care about inflation and this will stimulate growth and bond yields will come on. What does this mean for the u. S. . This means youll have more earnings out of the s pnd