Transcripts For CNBC Squawk Box 20140612

And then weve got business inventories, also worth noting today, the treasury is holding a 30year bond auction at 1 00 p. M. Eastern. Some of these bond auctions have been interesting to watch. You can see this morning the 30year is yielding 3. 428 . Twitter said to be considering a shakeup of the top executives. Reporting this includes a possible shift in the duties. Ali rowghani recently had some responsibility taken off his plate. Some members of twitters top staff have been upset he sold 300,000 shares of stock last month. Twitter shares under pressure. Also insiders and cofounders jack dorsey and Evan Williams have vowed not to sell as a signal of confidence. And then the story joe was referring to at the top of the hour, a hall of fame golfer, phil mickelson, reportedly not involved in Insider Trading in the shares of clorox when icahn was attempting that unsolicited takeover in 2011. The Consumer Products company among the stocks that the feds were examining as part of the investigation into welltimed trades that mickelson and friend of his Billy Walters had made. The New York Times reports the fbi and s. E. C. Did not find evidence that mickelson traded clorox shares. Theyre said to remain under investigation on the clorox shares. He didnt even trade any . No. Nothing to do with dean foods. So why has it ballooned into this . I have an explanation for what happened. But the times reports that mickelson is not in the clear on dean foods. So that is still under investigation. Okay. But he never even traded the icahn where they walked out on the golf course. The icahn walter shares are on the other side. Again, you just figured out he never traded shares . This is two weeks after they assaulted him on a golf course . Correct. Now, unclear to me whether the s. E. C. And fbi just realized that portion of it. I believe they were always focused on dean foods and the earlier media reports were inaccurate about the clorox piece. If you read the stories very closely, and i unfortunately know too much. You know everything. So why would dean foods been on anyones radar. What went on in dean foods that would have been inside information for mickelson . Im not sure exactly what was related but there was some kind of trade made in 2011 relating to dean foods that walters and he made ahead of ahead of inside information . I dont know. Thats whats under investigation. You cant blame the messenger. Thats what happens. That seems but the connection between whats clearly wrong the connection between icahn and mickelson. And day one as we all know, icahn says i dont know this guy, i dont know anything about this, i had nothing to do with this. Having said that, i believe that the dean foods piece of it is whats under investigation. I believe the early reports on this which first came from the wall street journal on a friday evening and spurred a number of more reports on it. Id like to see they have some sort of information to find out they are doing this in a public way in the middle of a big tournament. Well, what made it so interesting was that you that it tied icahn to mickelson. It makes it much less interesting if thats not true. Who knows with dean foods whether Billy Walters had inside information. Unfortunately, we dont know. What if he said, you should buy some dean foods. We dont know enough about the there was nothing collected. Certainly whether it was an error, or not, in the fog of whatever you want to call the stories like this, they accosted him at the memorial tournament. And because people had found out about it. And the media chased into it because it sounded like a salacious story. So youd have to say it was typical, probably not great. I guess we should wait to see if the evidence is out there. Let me suggest this. I think the media ran away with a story around icahn and clorox. Whether theres real evidence around dean foods, the people involved in the matter believe there is at least something theyre investigating. Its not clear to me you could pull them off yen ragenerated by the idea middle of a tournament. Correct. But where i was going to go with this is, it doesnt i dont know if you should pull them off the golf course, or not. You could pull off the golf course related to clorox or dean foods, carl icahn, doesnt matter. It was related to the idea it had those two huge but what im suggesting, i think it has a lot more to do with the media in this particular case than it did with the actual investigation. I believe that when you read the stories, you will see over the next several days that it had to do with people inside giving Bad Information to the media. Why, i dont know. Well, the media wouldnt have done anything if they had accosted him on the golf course and now it wasnt anything to do with clorox. Trying to generate. And thats the piece i disagree with. Well, you go after a witness for two reasons, one to rattle them in a situation. And in the case of somebody like phil mickelson, you are doing it to generate negative publicity. Why did they have to go to the golf course . Not what generated the news story, though. What do you mean . Going on the golf course didnt generate the news story. Thats what generated my interest. That might have generated your interest, but not what generated the news story. You wouldnt have known. Its a very complicated it was designed to attract as much attention thats the part im not sure is accurate. They didnt do it to attract attention . But thats not how the story came out. Theres so no one wouldve seen the fbi accost him on the golf course . Thats not why they would have seen him get triple bogies on the last four holes. I know a number of people involved in this youre saying the story generated before that happened. But that happening it was not a precipitating factor in the story. It wasnt. In the original story. But then what followed afterwards, it was. That goes to what i said the media did. What the media did was related directly to what they did coming after him in the middle of a tournament. Okay. Maybe not the original story, but the pickup and the follow and what happened throughout that. Yes. All of these little pieces. And doing that in the middle of the golf course was designed to make sure people followed. Thats the part well thats the part i dont think is right about that part. Chief operating officer stepping down amid a probe of the french banks operations. New yorks banking regulators having asked the c. O. O. Involving sanctions violations, i think a spokeswoman for the bank says the executive had planned to retire this year anyway and would not comment on the u. S. Proceeding. And Goldman Sachs and bain capital will pay a combined 121 million to settle their portions of a lawsuit accusing several private equity giants not to outbid each other. The preliminary settlement with former shareholders of publicly traded companies. Details were disclosed in court papers filed yesterday. Goldman will pay 67 million. And intel has lost its challenge against the record 1. 4 billion European Union find. Eu antitrust regulators handed down the fine five years ago said intel tried to block the rival by giving rebates to pc makers, dell, hp and lonovo. Its already been five years. Wow. Kind of astounding. At t is defending its directv acquisition to regulators. The deal would offer consumers access to video and a variety of media. It would save customers money by bundling services and give the Company Scale to compete with larger cable competitors. Those comments come in a filing with the fcc. With a vote set on june 19th, lets talk to about who could replace eric cantor in the leadership role with our washington correspondent john harwood. John, its funny. I remember the way the media used to portray eric cantor. We hardly knew you. And he shows a lot of class in the speech and both sides of the aisle. You know, noting some of the things that he said and, you know, boehner. Still, eric showed a lot of class yesterday. And suddenly the liberals say, wow, this is bad for president obama because now were not going to do immigration and not going to do couple of other things he was import, export, voting, what recently happened with voting and southern states. He was going to introduce something for someone for that. Now, everybody misses eric. He also gave endorsement. One of the three young mavericks that wrote that book, right . Kevin . Yeah, Kevin Mccarthy, his good buddy is his chosen candidate. He looks like the favorite to win. Do you miss him, too . I can see you even. Its funny the way that happens, isnt it . Well, look, i mean, any time somebody is defeated and shows grace in defeat, thats thats something that people react favorably to. This is the guy that says this is why we have elections and you need to suck it up. Yeah, one of obamas former spokeman last night said would it make me a jerk to remind everyone that of what president obama said to eric cantor that elections have consequences . Yep. So right. Yeah, look. I dont know if any if people are going to miss eric cantor. One of the problems that he had, and you saw this in some of the commentary from conservatives and it was also echoed on the democratic side of the aisle was that kantcanadia cantors persot one that was endearing. He could be arrogant at times. Sa sara fagan, our colleague, said he had an issue being arrogant sometimes. So all of those things contributed along with the issues, like immigration and other things to the defeat. But he looked good yesterday. And so people react to that. Yeah. It does appear. Its a really big policy for a politician as weve learned in other situations. Wow, that is the worst thing you can be. Thank god its just eric. The other thing that i was saying. But you do have to be in touch with your district to stick around. Thats what i was going to say. This is the lesson he was in washington being a big muckity muck and he forgot in northern virginia. And becky mentioned yesterday, see, i hadnt been reading. I see what people tweet and follow, and id seen her tweeting about cantor again and again. But p i didnt know she became almost a Campaign Poster child for brat. And she went out of her way to try to make a difference in this election. She seemed to mark levin and ingraham were part of the campaign. So, yes, theyre the ones that made. This was driven a lot by talk radio. Yeah, john. I, you know, mosul, number two, theyre all gone. I guess, its in the papers, obviously. But is baghdad going to fall . The people the United States left in charge of security, theyre dropping their weapons, taking off their uniforms, leaving the military vehicles that we supplied and theyre running. Its a horrible situation. Are we going to lose baghdad . Well, look. Im not there and i dont know. Will obama okay air strikes . Now it says here that the i doubt it. The iraqis are now saying they would allow. Would allow u. S. Air strikes. But will he do it . I would be stunned for the president sent military force into iraq in response to this. How will we feel about all the sacrifices made and watching this happen . Terrible. What does it mean for the future in terms of what we might or might not get involved in. Like a syrian Iraqi Alliance in that part of the world. And in a haven for jihadists and terrorists. Its a complete mess. And its destabilizing and adverse to interests. I dont know what the answer is. Wheres john kerry . A Climate Change thing . Whats he doing right now . Measuring co2 levels . Where is he . Maybe hes wind surfing, who knows. Maybe hes avoiding taxation on a yacht in rhode island. No, look. Obviously i was kidding. I dont know what the United States response is going to be. Because as you said, you know, the we undertook this war. And the premise of getting out of the war was we were turning over security to a liberated country. And they are not up to it. And that i dont know who to blame for that. But its do you think the left, you know, we shouldnt have shouldnt have gone in the first place . It doesnt matter if we lose it now . Do you think that will be the narrative . Well, i think, i dont know what narrative youre talking about, but i think the view of the administration is that the future of iraq is going to be settled by iraqis and not by the United States. And that was the original problem with the war that we were remaking in other countries. Foreign policy hot spots. Is it me or have there been a few . Seems like every week yeah. Quite a few. Theres stuff hitting the fan, is there not . Is there anyone monitoring all of this . Do you know . Theres a large number of people monitoring this. Just monitoring . Can i talk about the one other revolution before we go . Sure. In the house leadership. Its not going to be a dramatic change. I would expect that Kevin Mccarthy is going to become the republican leader and i would expect that steve of louisiana is going to be the one to replace him. Therell be a race, but thats the lineup that i expect to emerge from that race. And john boehner signaled to his caucus yesterday that all of the retirement rumors, dont believe it. Hes going to stick around, going to be there to try to stabilize the ship. I think some people i think some people on the right dislike cantor more than people on the left now. Its very weird. Because of the immigration thing and the amnesty. Thanks. Coming up in the next hour of squawk box, dick armey, and one of the Top Democrats on the hill House Minority whip steny hoyer is going to be here. And weve got much more straight ahead on squawk Box Including the author of how the poor can save capitalism. And the world cup kicking off today. A live report from brazil on some of the big controversy surrounding the tournament. Squawk box returns in a moment. Welcome back to squawk box. Weve got a special guest with us. The founder, chairman, ceo of operation hope and a member of president obamas Advisory Council on Financial Capability for young americans, and he has a new book out. It is called how the poor can save capitalism. Which climbed to number one on amazons best sellers list. Number nine. Number nine, i apologize. Wed love one. Were all going for one. After this. After this. Absolutely. Were hoping, john. So heres the question, this is the book. And, just answer the question. Lets put a question mark at the end of this. How the poor can save capital. How can they . They already are. 70 of Consumer Spending is this nations gdp. Buying coffee, going to breakfast in the morning, house notes, car notes. Its already being driven by the working class. And on top of that, people who make 50,000 a year or less in income put 80 , 90 of the money back into the economy versus those who have more who tend to keep more. Number one, were already saving the economy. Number two, every product that we love, cell phones, laptops, restaurants, automobiles, were originally created as toys were luxuries for the wealthy. They were commoditized. Africa, probably becoming the first wireless continent. Theyll jump right over land line phones. 700 million cell phones. People dont have running water, but they have a cell phone in africa. Thats whats driving the growth there. Cocacola is doing okay here, but kicking rear end in africa, china. And on the consumer side, the story has already been written. What we have to do now is create some demand side, some ownership of the side because entrepreneurship is dying in america. Thats the real story. More Small Business deaths than Small Business births. Why do you think that is . Gotten lazy, lost our game, we think were important. I dont know what it is. But weve lost our story line. And you dont see any action by a larger government in regulation . I think you dont think thats whats hurting any Small Businesses . I think thats the back story. Yes, i do believe that more regulation dampens growth. Look at france and how theyre treating business and what thats done to their economy and the by the way, the french president s reversing himself. Thats the back story, i think. The real story is culture. I think for 80 years, we were obsessed with ideas. You talk about them all the time. The steve jobs. Excited about an idea. The money was a byproduct. The wealth was a byproduct. Weve traded the byproduct with the product. Now you ask somebody why youre on wall street, i want to get paid. Why are you starting a business . I want to get paid. The byproduct became the product, we lost our story line. I think we lost that edge, the special sauce. Were going to get it back. Were doing hope business in a box academies. Solutions in this book, in schools to stoke young entrepreneurship energy. Do you know, if you want to high academic iq. Its called grades. You want to find out who the Canadian Hockey League players will be, theyll tell you in elementary school. You try to find the entrepreneurs, the Small Business owners, the job creators, theres no system for that k12 in america. So were its like trying to come over all these bridges coming here and nobody has a drivers license. Its like teaching business and why Business Matters and what you can do. Yes. We found, the index found that 47 of all kids in High School Want to be Small Business owners. They want to be entrepreneurs, but only 5 of kids getting a business internship, hello. Then youve got on the other hand, these numbers where Small Businesses are dying more than giving birth. And were all role modelling. I dont know your story personally, but i know your story. Youre sitting there in part because you saw a woman at so businessman, im not a genius, im role modelling, right. My mother told me she loved me, i believed it. You see urban city communities. Kids want to be rap stars, athletes and drug dealers. Theyre not dumb and not stupid. Theyre brilliant. Theyre role modelling, modelling what they see. Were all aspirational. The question is, what are you seeing as a result of your aspirations . We can turn that around. In the last ten years weve made dumb sexy. And weve got to make smart sexy again. Were going to put in place a system to measure and stoke entrepreneurship, a Small Business in the Elementary Schools and for adults, were going to create the First National private banker for the working poor, the struggling class and the struggling middle class made 50,000 a year or less, which is half of america by stoking credit scores. Nothing changes your life more than than god or love than moving your credit score 120 points. Let me ask you one larger question. This goes to the inequality issues in america. And there is a question mark, actually, another author on. You know the economist, who was here. Yeah, good guy. Good argument. But he this is the answer to it. This is the answer to it. In a positive way. He makes an argument that from a long history is technically correct. It misses the American Special sauce. It misses the human dimension. Were not human doings, were human beings for i did some with my daughter, trying to teach young kids about capitalism. And she was invited to speak. There are theres an i was trying to find an Entrepreneurial Organization that goes into even elementary school. The National Foundation for teaching exactly. Nifty and she was going to speak at one of the conferences. And i talked to the lady that runs it and how yeah. Theyre doing their damn best to try to instill these things. And their unabashed capitalists. But we are the tail is wagging the dog here. The urge is crowded out the important. Look, we need a cultural revolution. Financial literacy has to become a civil rights issue. Im serious about this. I agree. Look, the root of the problem is really simple. President lincoln, not some civil not some minority advocate, president lincoln, after he signs the emancipation proclamation, gave people physical freedom, the next thing he did in 1865, create the friedmans bank. The mission was to teach freed slaves about money. Can you imagine . Thought the most important thing he can do. Give people freedom, oh, teach them about free enterprise. He was killed two weeks later, okay. The bank fell into disrepair. One of his general said give him 40 acres and a mule. Can you imagine . Youre talking about earned success here. Weve had a young lady industry i cant remember, remember, she said thank god now, the west is not giving us as much aid, now were developing our own infrastructure, our own economy. Thats whats going to take it. Internally generated capital. Yes, and no. Its not an either or. In this country, do you give any credence to the notion its way too easy not to try to earn your success . Yes. Look at saudi arabia, they put their people to sleep. This is not an american problem, this is a global crisis. We, americans, are the ones that innovated this western capitalism and enterprise. Depends on earned success and working hard and being rewarded for what you do. All right. I agree. Okay. Now, we need to do more than agree. Weve got to have more than ph. D. S, we need p. H. Dos. Not p. H. Dodos. What we need is complete movement. Im with you. Where every Business Leader said, look, you get a b minus or better and ill hire you right out of high school. You crushed the dropout rate because all a kid wants is a good job or shot at economic opportunity. Were connecting education with aspiration. Nobody wants a mortgage, they want to become a homeowner. They want to know they can be successful. And so ill say one last controversial thing. Show you about the aspirations of the earned aspirations of these communities. Drug dealers, its unethical, its immoral. Folks who sell drugs, probably a special place in hell reserved for them. But if youre a successful drug dealer, one thing youre not, dumb. You understand import export, these are entrepreneurial talents with no role models and no guidance. John. I love having you here. Come on back. The book how the poor can save capitalism. I said number one on amazon and we hope it gets there. We can do this. You asked him him on, but implied on that is that were going to save capitalism, which im surprised you invited him on. Come on. Implied in this you want to keep the system of capitalism. Yes. You didnt realize that. We all live in a system of enterprise. Thats implied in the whole thing. That is implied. When we come back this morning, what will set the tone on wall street today after one of the worst market days in weeks. Plus, do you have what it takes to be an iron man . Stick around, squawk box will be right back. Did you know a tensecond test could help your business avoid hours of delay caused by slow internet from the phone company . Thats enough time to record a memo. Idea for sales giveaway. Return a call. Sign a contract. Pick a tie. Take a break with mr. Duck. Practice up for the business trip. Fly to florida. Win an award. Close a deal. Hire an intern. And still have time to spare. Check your speed. See how fast your internet can be. Switch now and add voice and tv for 34. 90. Comcast business. Built for business. [ girl ] my dad, he makes underwater fans that are powered by the moon. [ birds squawking ] my dad makes airplane engines that can talk. [ birds squawking ] my dad makes hospitals you can hold in your hand. My dad can print Amazing Things right from his computer. [ whirring ] [ train whistle blows ] my dad makes trains that are friends with trees. [ train whistle blows ] my dad works at ge. Good morning, and welcome back to squawk box here on cnbc. Stocks finally retreated from the alltime highs yesterday. Both the dow and the s p had their worst day in three weeks. And, wow. I saw a little bit of programming later in the day. And finally, someone said, were talking about, you know, less than 100 points. Lets it was like, what happened, whats going on, what does it mean . Higher, higher, higher. Joining us now from drw trading group, and on the economy. We have Patrick Newport at ihs global insight. But, then again, lou, the sharp, fast large moves in the market usually scare enough people to make a move higher. We dont like a nice slow decline. Do you think weve at least on a shortterm or intermediate term seen some of the highs . Are we going to keep grinding ahead . You know, its possible weve seen the highs. Were down on the s p. Were off 1 off the alltime high. I dont know how you can take anything away as far as a future you know a forecast based on what happened yesterday. You know, were just grinding higher, thats been the thing. You know, its one of those things where it seems like a pullback would be a thing would happen for good or for bad. It doesnt happen. It becomes more complacent the further we go. Yesterday, i dont see much to notice from that. Yesterday we have feldstein on today, so i was going back reading the stuff i hadnt read closely enough. His argument is that inflation is actually percolating. And the ppi, if you go to the yearoveryear, and that the slack in the labor market, he takes the idea that maybe these people that are already out of the workforce arent coming back so that there really might be some wage pressure. That would ruin our idea to stay at zero for two or three years on Interest Rates. And i think the market right now is trying to decide. If we do stay that low, people are going to keep buying stocks. Are we going to stay that low for years . I think so. You have to look at the data. The cost index had a very bad quarter, itll be a weak quarter in the First Quarter. And weve had maybe the core consumption grow at. 2 for a couple of months and based on that, people are thinking inflation is accelerating. Its really low, really low abroad. And we need about three or four months of. 2 ,. 3 increases of that deflator to really consider the possibility that deflation may be accelerating, but it is not yet. If we do stay if the feds right, theyre going to be able to stay here for a while and stocks will be the only game in town, will we still see stocks grinding higher week after week, you know, no big moves, but no big selloffs . Oh, is that for the other guest . Im not good at forecasting the stock market. The stock market goes up and down. But it matters whether Interest Rates go up as to whether people will sort of look the other way. They dont look at earnings as much as they used to. As long as theres nothing else to do, people are going to keep buying yield stocks or going into the stock market. So it matters whether rates go up. We see that rates holding steady, the fed starting to increase rates in 2015. We think that the that inflations going to start that inflation will grow at a 2 rate and inflation will slowly come down. Itll start raising rates in response to stronger labor market in late 2015. Lou, what would the canary in the coal mine be. The vix is so dead in the water. What should we be watching . To get get an inkling something might be a miss . Well, you know, i have not a clue on that. I mean, i think that any kind of volatility will be reactive to market moves. I think that the most likely scenario is something coming out of the fed that upsets the market over time. You know, the idea that the qe has generated stock market rallies and lack of qe has generated the stock market to pull back each time. This is the taper. At some point during the taper, do we have the effect, we can see the end and now start going down . Other than that, some black swan. Because were not going up on the economy. The aggregate demand has been quite low. Historically so since the stock market bottomed. But the s p has tripled during that time, and wages and aggregate demand remain very slack. And its almost that corporate profit expansion, the profit margin thats been driving it, not the economic results. Okay. Gentlemen, thank you. Were going to bounce back a little today and we didnt sell off that much in the first place. Okay. Coming up, the cantor fallout from the other side of the aisle. A House Minority whip steny hoyer will join us within the hour. A quick check of whats happening in the european markets as we speak. Welcome back, everybody. Take a look at some of the oil prices this morning. Additional violence in iraq that has been pushing prices even higher. There are concerns at this point about supply, whether that would be cut off at some point. You can see this morning, oil prices up by 1. 56 for wti. 105. 96, just over 106. When we come back this morning, a 2. 4 mile swim, a 112mile bike ride. How long do i have . Weeks . No, 11 hours. Oh. No, no, no. No. No. I thought you meant this summer. Over the course of a month . Or two or three . To most people, doing any of these three sounds not just tough but downright impossible. Not for an iron man, though. The big business of endurance sports. Stick around, squawk box will be right back. Shes still the one for you. And cialis for daily use helps you be Ready Anytime the moment is right. Cialis is also the only daily ed tablet approved to treat symptoms of bph, like needing to go frequently. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. 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We are now supporting over 25 million users each month. Show em the curve. Its beautiful. Its more than that. Its perfect. Introducing curved Ultra High Definition Television from samsung. Well, the new york rangers arent going to be swept. They will live to see a game five. Ive got plans friday night. Im happy for nbc. Are you going . No, its in l. A. I have plans to watch. There you go. I have something to do friday night in my life. And, you know, last night, i saw the first period. And you could tell, i mean, your guy is unbelievable. Your guy named quick. My guy. Henrik saved the day. Henrik lundqvist. 40 shots stopped from the los angeles kings. Its nerve wracking. Is it 31 . Its 31. Its nerve wracking, but people have come back. It hasnt been since 1942 the maple leafs came back in 1942 from down 30. But in the last period, he saved so many shots. Im glad i didnt see it because i would have been nervous. Rangers won the game, 21. Its the best of 7 series, heads back to l. A. , comes back here and it would go back to l. A. If there were to be a game seven. But i was thinking about it again, its high def. Its what it is. Its high def, the size of our screens now. In the first period yesterday, there was one that henrik stopped where you could see it and they froze the puck where heres the line it has to get beyond. You could actually see, they showed that the puck went this far over the line, but the entire unlike other sports, it has to be all the way over. The whole puck. It didnt count, made a great call. You think the bigger tvs . Its bigger tvs, highdef. How can you not like soccer . Because its the same rules essentially. Were hoping in soccer that combined there are three goals scored. Last night it could happen in hockey games, too. Not normally. Do you like when they make the puck glow . No. Do you remember that . Its fine right now. Really good and, you know, we were very opportunistic at nbc when we took a chance on now its paying off. And friday night should be great, huge ratings again and its all good. All right. Lets tell you about another huge sport that is really phenomenal at this point. Iron man is the worlds leading brand and endurance events. The companys on a mission to broaden its appeal in the sports world. Joining us now is andrew mesik. And andrew, great to have you here. Great to be here. I didnt realize this started in 1978 with 15 people. 15 people who are arguing whether the rough water swim or Honolulu Marathon was harder. So they decided to sort it all by doing all on the same day. 15 people. 12 finished. Where are you today . We expect to have 85,000 people come across an iron man finish at one of 37 races around the world. I cant believe you can convince 85,000 people to do that. Most of our races sell out. Some of them sell out a year in advance. And some, if anything, we have more people who want to do our races than we have an ability to accommodate. Average income is 164 . I guess you need the money the in order to trade for this. 170,000 average income. I know of no other demo. I know of no other sport. The richest cities in the u. S. The richest at 165,000. Iron man appeals to successoriented type a people or athletes or super educated, they care a lot. Its really, really hard. Dedication. And it requires the kind of person for whom that difficulty becomes the challenge and the satisfaction. So the first was not in kona. It was oahu. Ironman has such a huge grasp on that market. You were talking about how sometimes the race will sell out in a minute or two after you open. Other races that tried to pop up doing the same thing, the same sort of triathlon will get 50, 60 people. And we get 3,000. Why is that . I think ironman, for almost everyone in the world, we represent the longest triathlon. People understand our events. They understand what an ironman is. And why would you go through the agony of preparing for and competing in an event where no one knows what it is. If you cant say im an ironman. People will say i did a race. What kind of race . Just like an ironman but it wasnt an ironman. So why do that to yourself . Its the ironman but you have a substantial number of women. 25 of our athletes are women. Higher in the United States and canada. Lower in other places. We had one perform. Shes a stud. Shes unbelievable. Shes a tough chick. I said earlier im going to do an ironman this summer. But its going to be spaced out over the summer. Im going to do 26 miles. Swimming, 2. 4 . 2. 4. 112 on bike. How many times have you done it . Three. Would you do it again . Oh, yeah. Probably will this year. So you will spread it out over three months. Im going to do a half mile today swimming maybe. Its not cumulative. You have to do it in 11 hours. That might be a problem. Generally we start at 7 00 in the morning and you have until midnight. Thats 17 hours. So the first eight or so bikes arent motorized . No. No flippers . No flippers, no paddles. You have to be in shape. You really do. As a business, how is it growing . It is a great business. We have more than 70. 3, which are halfdistance races in 26 countries around the world. But the big money is tv licensing . Big athletes just signing up. Thats more than half our revenue. How much does it cost to sign up . Our least expense sieve malaysia, 500. Or melbourne, which is 900 bucks. So people pay to do this. Absolutely. Can you ever make the athletes themselves become sort of celebrity athletes, if you will . Does that change the game from a media perspective in terms of the mix of what you look at as a business . We have professional athletes who compete and earn their living competing in our races. And we do have celebrities. Gordon ramsey did kona last year. Do the athletes get elevated to this extra level of celebrity . You would have to win every one. Is there a Michael Jordan of your not quite Michael Jordan. But theres a handful of professional athletes that within our community are it. Are it. We are looking at how do we promote those athletes . They are extraordinary ambassadors, dedicated and super, super, super fast. Youre not going to watch for 11 hours, though. Thats the thing. The terms of the visual. We have had a partnership with nbc. And more recently with nbc sports to broadcast our races. It has to be produced. It has to be produced. And our show thats generally in november or december on nbc focuses somewhat on the professional race but talks about stories of more typical athletes. People watch the tour de france. That can go on for hours. Not 11 hours. I dont sit there watching the tour de france. I know some people do. Lance armstrong became famous. I wasnt going to mention him actually for ironman. Kelly slater for surfing. People know who he is. By its hard. The x games guys. Who is the guy shaun white. Whats the guy on the skateboard . Tony hawk. An tkraourbdre andrew, thank you very much for coming in. Do you have a video game . We to the floor a video game. You need a video game. Boring the new beautiful . What you can expect in the days ahead. Squawk box will be right back. Show em the curve. Its beautiful. Its more than that. Its perfect. Introducing curved Ultra High Definition Television from samsung. Who will take over for House Speaker eric cantor . More trouble in iraq. We watch oil prices as violence threatens major cities in the region. And squawk call going out to the fast food nation. Colonel sanders better look out. Pieeyes making a serious challenge in the fry chicken game. The second hour of squawk box begins right now. Good morning and welcome to squawk box. Im joe kernen along with becky quick and andrew ross sorkin. The futures are looking a little friendlier than yesterday. Mainly because fair value is down. Were up six points. S p was didnt do it wasnt down as much on a percentage basis, i dont think, yesterday. The 10year is now 2. 65 . When we talk 2. 40 to 2. 65 . If it was at 7 , we would not be talking 25. The needle has moved nine out of 10 sessions. On a percentage basis in reality below five is not something to get all excited about. There are people with positions. Theres dislocation when it moves quickly. The price of crude today, were calling this more violence in iraq. We are seeing a slow motion unraveling. And just hearing about it on the news each night is very disconcerting. But, hey, what can i were just commenting on it. They are not far from baghdad now. They will say on the news. Watching the news, people over there say, wait, what about baghdad . We have no idea when the iraqi troops can even attempt to hold it. They take off their uniforms, take off their weapons and leave their vehicles behind. It will be interesting if maliki i dont know. I get mixed up with each one. If the iraqis ask for air strikes. That will be an interesting decision for obama given, you know, when he tries to satisfy the left. Hard not to do it but we will see. Facebook is expanding the amount of information that advertisers can access to target userss profiles. They will now include external web sites and mobile apps. The move will mean more relevant ads for users. But the move likely to spark more privacy concerns since they will follow your cookies around. They will know not only whats going on on facebook but other sites as well. Watching shares of lululemon. Makers of yoga wear. First quarter comparable sayles and guidance falling short of consensus. That stock under pressure he as a result. 7 in the premarket. Also, a nearly 2 billion real estate deal is coming up this morning. Shopping center owner dvr teaming up with an affiliate of Blackstone Group for 76 Shopping Centers from american realty. They are buying red lobster from darden group. This will help fund that deal. Phil mickelson back in the news this morning. New york times reports he was not involved in Insider Trading in the shares of clorox when carl icahn was attempting an unsolicited takeover. The fed was examining part of an examination into welltimed trades between mickelson and Billy Walters. The times reports they did not find evidence that mickelson traded clorox shares. The times is reporting that mickelson is not on the clean when it comes to dean foods. Authorities are continued to investigate welltimed trades. We will hear more about that potentially. Twitter is said to be considering a shakeup of top executives. Ali rowghani. He had been considered one of twitters most valuable people. But recently has had some responsibility taken off his plate. Some members of staff have been upset that rowghani sold stud for 9. 9 million. As a signal of confidence about the companys prospects. That was probably the height of the social media buzz, wasnt it . It got up to 70. Show a chart. Pull up a quick chart. Remember people werent buying it on the open. Yeah. It went over 70. 74. 73. Its back to 36 a share. I dont know. I get an ad once in a while. I have never done anything about it. I see ads that you dont realize they are ads. They get wrapped into your feeds. Do people pay for those . Yeah. People that are paying for them, do they feel like they are getting their moneys worth with Brand Recognition . Thats a good question. Do they have ask anyone to act . There are a lot sorts of things going on. They will ask you to put a hashtag in for American Express and give you points on your cards. Hashtag, i dont understand. Its things that are trending. Hashtag iraq. It will tell you whats trending. Its a number sign. Like uber from yesterday. Just a bunch of people talking about it. A particular topic. Iraq is number three in trending. World cup is number two. Iraq is number three . Yeah. The markets and the possible issues now pressuring stocks. We turn to jim powell son at Wells Capital management in minneapolis. Also, jim dunnigan, chief Investment Officer at pnc in philadelphia. Jim paulson, lets start with you. Whats pressuring stocks. This comes after one down day of 100 points. We have been steadily climbing higher this whole time. Yeah, it has been. I think, becky, there are things im watching for potential correction. Most of them still arent there. I think ultimately if we get a pullback in the second half it will be because we get more concerned about inflationary concerns, inflationary evidence and bond yields have to back up. I would like to see the market advance be less methodical and controlled and more irrational or exciting in its advance. That would tell me we might be getting close to a top. I certainly would like to see calls about the correction sort of fade away. As you mentioned, you know, we get a little decline and everybody is talking about whether its a correction. Thats not a good thing. You generally dont have a correction. Everybody is thinking we will. Bond yields certainly have to go higher. The 10year needs to get above 3 , 3. 5 if we are going to have any meaningful pullback. Evidence of inflation is certainly increasing. I see that. Others are starting to talk about it. That ultimately holds the key, i think, for bond markets, as well as stocks. And i think im also looking at the discussion surrounding the fed both inside and outside the fed. I think that has to become decidely more hawkish in tone that would also create a little more turbulence for stock. Most of those things they talk about, becky, i dont see them in place for a correction. So probably we still meander higher. There are good odds we might have more turbulence, but i dont see the ingredients there yet. Jim dunnigan, i was speaking with someone who works on the street talking about these incredibly low volumes and there is this huge amount of apathy. You have june, july and august ahead of you. What do you think is causing that . Jims point, buyers are pretty much hanging on here. We havent seen much in the way of any pressured selling. Jims point, we have been quietly inching our way up the next month or so with the market up 4. 5 without a 1 change in the day, the longest in 15 years. Its been a very quiet period. And in may, we havent seen that. But i wouldnt suggest anybody go away. It is still important to remain vigilant. None of those big collection fears are out here. We may have a period of consolidation, but i dont think we will have a meltup or meltdown. Jim, what do you hear from your clients . What are they concerned about when they call in . The headline probably is inflation. Many of them see it in prices they see. We dont see it in the underlying wage inflation, still tame. They have fears with with all this monetary inflation we have seen. Oxygenrich environment, they fear it is just on the horizon. I dont think thats the case. Jims point, i think we are starting to see some pickup, which is actually a positive. I would say that too. For signs of Economic Growth. Some inflation is a good thing. It shows the economy is improving and were headed in the right direction. Absolutely. I think youre right, becky. I do see a fair amount of evidence starting to come up with inflation. For 80 of wage earners have seen inflation go from 1. 3 to 2. 4 . The Small Business Compensation Survey has been accelerating fairly rapidly of late. We have accelerations in core ppi, cpi and p. C. Deflatodeflat. But i agree with you. The fed and others are looking so far as a good thing. I ultimately think at least the bond market will start looking at it as a bad thing. So i still think there are decent odds where we get a little turbulence on fears of overheated inflation before the year is out. I agree with jim right now. You cant see it right now. I think we go higher first. You think if there is a correction it starts in the bond market. And its because yields jump higher in a quick manner . I think so, becky. My best guess, and it doesnt seem like it at the moment, we will see the 10year yield above 3 yet this year. But for that to happen, were going to have to get a consensus that gets more spooked about inflation not being a good thing but starting to be a bad thing, forcing the fed to accelerate the tightening process. I think it still could materialize before the year is out. Thank you both. Appreciate talking to you. Thanks, becky. Thank you. Did you go to this New York Times opinion pages app party on tuesday . I got invited to that. I did not go. Were you invited . I am on the other side of the wall. Mayor de blasio was there. David geffen. Meeeo and ronan farrow. Arthur saltburg jr. And hardcore porn stars. Heard of them. How do you know they arent the people you know . I dont know these people. Do you know these people . I know james dean but this is james deen. The scramble to find a new majority leader after eric cantors stunning primary defeat. New life breathed into the tea party. It standed for tax enough already. 7 30 a. M. , House Minority whip steny hoyer will be our special guest. More squawk box in just a moment. So i can reach ally bank 24 7 but there are no branches . 24 7 im sorry im just really reluctant to try new things. Really . Whats wrong with trying new things . You feel that in your muscles . Yeah. I do. Drink water. Its a long story. Well, not having branches lets us give you great rates and service. Id like that. Experience a new way to bank where no branches great rates. Ally bank. Your money needs an ally. Welcome back to squawk box. Checking the futures. Whats going on in the middle east not impacting the markets right now. Dow looks like it opens up 27 points higher. Nasdaq a little over a point. Members of congress jockeying for eric cantors leadership position. Dick army joins us now with outlook. I dont know what it is, leader army. Whether its social media or the speed of the internet. But we had postmortems occurring within 20 minutes of when it was going to happen. And i still dont know if i understand what happened. It seemed a perfect storm in these primary elections that also went into it. Do you think there are bigger things happening here and what are they . No. I think people are making too much of this. What it really was first of all, no Establishment Tea Party organization involved themselves in this race. Right. So you cant call it a tryout for the tea party. But you can call it a triumph for grassroots activism and grassroots campaigning over big money. This guy did a campaign where the candidate himself went door to door. That inspired others to do it on his behalf. So it was a grassroots campaign. Secondly, what you see was a discerning voting aoe electorate that said we like the guys involved. Principals and Public Policy objectives for the country. And were tired of the game who devoted his own time in washington in his own political career. It was a triumph for policy over politics, which is a healthy sign, i hope, for what lessons the republicans should draw. Go back to what we know for years. Good policy makes good politics. Get committed to doing good work for the nation. And people will, once again, appreciate you and vote for you. So many times when using your description and your analogy, nine out of ten times the guy doing the right things for his career does get elected and it doesnt have to do with policy. It doesnt work the other way. Theres Something Else going on here. Let me shift gears for a second. There are people, commentators that represent the base, the Republican Base that absolutely point to immigration and the word amnesty. And there is a ground swell in Middle America that really do not want amnesty or any type of Immigration Reform to happen. And my question is, if the Republican Party isnt able to attract hispanic voters, which eventually there are estimates, dick, within, i dont know what, 10, 15 years, its going to be a majority. Or there will be many more hispanic people. If the republicans cant appeal to them, how are they going to elected . If you dont get elected, up cant governing. Should republicans be issuing any type of Immigration Reform . Well, no. First of all, dont overplay the Immigration Reform ticket. Remember, the fact of the matter is that same issue was involved in South Carolina on the very day, and it didnt effect the outcome of that election. Conversely, to the senator over there. So the fact is people dont want amnesty but they do want Immigration Reform. If you understand a commitment to first reforming and enforcing the security of our borders, you can then move on to a appreciative and productive use of legitimate guest workers, for example, thats respectful of all the hispanic working, entrepreneurial, good citizens have to offer. But our problem is we will first let the government continue to do the sloppy work of border control. Then we have the infusion of illegals that makes it just an unacceptable proposition. So its a disciplined exercise of the legitimate necessary duties of government allows you to then accommodate to those freedom loving people who really want to take care of their families that are legitimate and desirable people and deserve to be appreciated and respected. I dont know what happened in 2014. People are trying to extrapolate to the on 2016 president ial election and what this indicates. We had someone on yesterday with strong opinions. She points out that democrats run people that the majority would say are unelectedable. Jimmy carter. Bill clinton was supposedly unelectable. President obama. They always worry about whether someone is moderate enough to be electable. Hence, we dont have a president dole, mccain or romney. Do you think in 2016 that the republicans should go with someone moderate and safe, or could someone like ted cruz be the candidate of the party and does he have a chance . Well, remember, the greatest republican Success Story in our lifetime is ronald reagan. He had a hard commitment to the principals of small government, free market enterprise and responsible restraint of big government. But he was a goodnatured fellow. Ronald reagan never said an unkind or unhappy word. And republicans this this image of being grumpy people wore w eye dee logically hide baugh. So you need good policy changes we can make to enhance this government. And, frankly, the conservative principals that are now in this nation with our great many constitution so far are good principals. But you have to have a sincere commitment. I dont know how he did it. He got flack constantly. He was looking at jimmy carters record. I dont know how he wasnt grumpy from what was happening in this country. I dont know how you can not be grumpy. I will try take your advice. Are you kidding . Things are great. You have a great life. Watch steny hoyer. He is wrong about everything, but he is going to be a happy guest. Mr. Steny hoyer on. Time for todays of black trivia question. What wedding themed song by the dixie cups topped the billboard charts 50 years ago today . The answer when cnbcs squawk box continues. 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. Now the answer to todays of black trivia question . The answer, chapel of love. Up next, gop scramble and Immigration Reform from the other side of the aisle with steny hoyer. More squawk box right after this. em the curve. Do you know what this means . The greater the curvature, the bigger the difference. [scifi tractor beam sound]. Sucked me right in. Its beautiful. Gotta admit one thing. Cant beat the view. Introducing the worlds first curved Ultra High Definition Television from samsung. We stathat the kid onhe thought the back of the bus might have a song that he has in his head but he just cant get out. With the technology of cloud, we change all that. I can sing something into my device. Up to the cloud it goes. Back down it comes sounding better. We break down the walls of creation, and we give music creation for the masses. E financial noise financial noise financial noise financial noise welcome back to squawk box this morning. Were eating a little popeyes. Well talk about that later. Militants reportedly vow to go march on baghdad. They overran a number of cities earlier this week. We have been talking about what that means. And oil prices, we should say, rising on worries that the violence in iraq could upset supplies. And a lawsuit of collusion. I dont know if you remember this case. It has been going for years. Even was conspireing. Remember the club deals . They worked together. There were views this was an antitrust issue. Now they are splintering away. It may have a huge impact how it works. The preliminary settlement is with former shareholders that were a fired. Finally, amazon launching a streaming Music Service today. Its free with becky, youre a customer, right . Amazon prime . I am. Free streaming music. But it has a smaller selection of recent hits and rivals like spotify and beats music. You have to download the app. You can play it through your computer and phone. Not every song. But a lot of songs. Thats whats going on. God almighty. What happened . We have to put up a fiveyear chart of popeyes. Should Colonel Sanders be worried . No. They should be buying popeyes stock. 16 consecutive quarters of sales growth and largely outperformed its competitor yum brands. Cheryl is the ceo of popeyes louisiana kitchen. So many things to talk about, cheryl. I have sweet hone maple sauce. Just talking about the business, well get into the other metrics. But innovation and like the person thats putting together the recipes and how you make it, thats important. Yes. Innovation has been a huge part of the turnaround the last five years. We have an Incredible Team of chefs in our kitchen. Our kitchen sits in the center of our headquarters because it is the most important thing we should do. You are eating a chicken tender dipped in waffle batter and incredible honey maple sauce. Its like eating breakfast, lunch and dessert in one bite. Why did that not come sooner . People are asleep at the switch apparently. Some of the best ideas are the simplest ideas. I wondered. I picked that out without knowing that i was hitting the jackpot. Let me ask you. Look, you get concerned about the calorie count on it. You said one of those is only 110 calories. Chicken tenders are 110 calories. My favorite meal is two chicken tenders and green beans. Heres the other stuff to talk about. Chicken pricing is better this year . Second year in a row we have had favorable chicken pricing. Corn and soy crops are good. Its looking very good, which means there will be a lot of good chicken promotions this year. What we do is marry good value with these Innovative Products to stay ahead of our competition. You do franchise and companyowned. We own 53 restaurants primarily in memphis, new orleans, indianapolis and charlotte. Would you open more stores . How do you decide whether to do your own stores versus franchise . We love being a franchiser first and foremost. We built 194 last year. That is the best in the industry. Companywide, 10 to 15 this year, which is the right number. Yum brands, the biggest growth has been in china. Ever think of international . Absolutely. We have the ability to double our growth in the United States and internationally. Its probably easier to be popeyes at this point because you can grow more quickly, right . Do you crack the whip . Have you ever been inside a Fast Food Restaurant . How can you eat anything thats produced there. It needs to be clean. It needs to be all the materials need to be fresh. Right. How do you make sure they are up to par . We view our fran cheeses as as one of our greatest parts. They are zealous about getting quality food to our guests. Thats what ween stand for. Thats the value of the model. If we provide incredible food and the franchisees do their part, our guest gets an incredible experience. And thats the goal. The person that talked to you before you came on asked about the minimum wage. You dont couch it in any other term . There would be fewer people employed at popeyes if the minimum wage were to be raised. The challenge with minimum wage is we offer an entry level career to our employees. Were proud of the Career Opportunities we offer. Minimum wage reduces jobs and increases the price of your food. People will discount it because they say youre just a ceo saying it. You can connect the dots between fewer jobs and a higher minimum wage. And more automation. Correct. But what we are proudest of is the minimum wage is not where people stay. Its the beginning of a career. Our owner started as cooks and frontline employees. The president of the u. S. Operations was a Delivery Driver at minimum wage in his first job. Hes an executive today. So their there careers in management, ownership, and executive roles for people who start at minimum wage. You are seeing unequivocably negative if minimum wage is raised . In the industry, it would be negative jobs. Were growing, building stores. But for the industry it will be jobs. For popeyes it wont affect you . Just to clarify. She just said were growing. Were adding jobs because were adding restaurants. Were the Fastest Growing restaurant in the sector. So we will continue to grow. But on a perrestaurant basis it will encourage the owner to look for ways to reduce opportunities. Give us a quick rundown on samestore sales. How many positive quarters in samestore sales . Oh, my goodness. Always . We had six years of beating our chicken competitors. International has been strong. I dont think anybody has a longer track record of delivering positive sales. The other thing were really proud of is restaurant profitability is up 400, 500 basis points. Our owners are making good money. Thats whats happening them line up to build new restaurants. This is a great investment for our owners as well. And people buying green beans, huh . Yes. Because there is bacon in them . Yeah, turkey bacon. Just to clarify, median age of the person working at popeyes at minimum wage . Well, first of all, very few people are working at minimum wage because you start there and you get promoted. Anybody that wants to be an assistant or manager rapidly moves up in the wage. Just trying to understand all the dynamics and what it means. Cheryl, thank you. We will eat a lot of this chicken today. Which sauce do you think is the winner . Honey maple syrup. Enjoy. How long have you been ceo of o . Six and a half years. Stocks that you need to watch and minority whip steny hoyer. Eric cantor stepping down and a possible replacement. Squawk box will be right back. And if i tap my geico app here i can pay my bill. Tap it here, 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. Really on . Oh, my god, we are on. Okay. Thanks, matt. Got the wireless mike. We dont endorse products. But they said if youre over there, were going to take a quick show of you. Im going to do stocks to watch, although i dont have a teleprompter. Andrew was asking about the sauce. We have bayou buffalo. Sweet heat. Thats my nickname for you sometimes. Hey now. Hey now. Are you going to share that with everybody . Im eating healthy. Im eating green beans. Hewlettpackard upgraded to neutral from sell at goldman sex. Hp management has executed its strategy much better than it had anticipated. That was a fake eating sound. Geron is a small market cap stock. We used to talk about it in reference to stem cells. Looking to get a big boost today. The fda lifted a hold on a study involving the companys blood cancer. It was stopped on news that it might cause liver damage. And j and j with a new hiv drug. And restoration hardware, the home Goods Company says it is outperforming the Home Furnishings industry in general by a wide margin. Becky, what did you eat . I havent eaten anything. But youre going to. It smells really good. I have to tell you, i smelled it coming into the studio. It does smell delicious. Do you want me to bring anything . I could use another piece. What do you want me to bring you . The waffle. Watch yourself. I dont want everyone to know about my nickname. Document me to touch it . Dont let him touch it. When we come back, the economy through the eyes of Marty Feldstein. Up next, though, minority whip steny hoyer. Kid hey dad, who was that man . Dad hes our broker. He helps look after all our money. Kid do you pay him . Dad of course. Kid how much . Dad i dont know exactly. Kid what if youre not happy . 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Liberty Mutual Insurance responsibility. Whats your policy the fallout of House Majority leader eric cantor reverberating in the halls of congress. He announced he will step down asthma skwrort leader at the end of july. Joining us with more is minority whip steny hoyer. Leader hoyer, it is good to see you. You made me hungry. I was listen to go your program. You should smell it. It is really hard to resist. Steniy, you have always been a straight shooter. What do you think happened here . I have been saying for some period of time that the Republican Party is a deeply divided party and has been dysfunctional. We have seen that. Boehner has not been able to lead on issues he thought were important. The Republican Party has not put on an agenda that we can support. Export, import, minimum wage. So many issues that poll of poll that republicans havent been able to bring it to the floor and to act on it. I think cantors election showed, again, starkly and historically the deep divisions within their party. You were working with eric cantor on Immigration Reform. Yes. Export import. Is that entirely dead for the rest of this congress . No. I dont think its entirely dead. I dont think any one person, myself or others will be the determination on that. But it will be well see whether the Republican Party can move forward and reflect what the majority of the American People ought to think ought to be the majority of the congress. If it can, i think it will continue to follow deeper and deeper into its ideological corner. Immigration in particular is what some people are blaming for his stance, his willingness to work towards Immigration Reform. Speculation has been theres not a republican who will take a risk on this or a chance on that. Why do you think that is not the case . Well, its not the case if you read the wall street journal this morning, it says clearly that the ma skort of the American People. But the majority of republicans want to see Immigration Reform. Most republicans say the Immigration Reform system is broken. The speaker of the house john boehner put forward five principals. They were rejected. They were rejected because the far right of the Republican Party has control why out of proportion in my opinion to the numbers. It clearly has been able to work its will on a number of elections around the country. Mr. Cantor, who was clearly a conservative, sent out very tough stuff in the election on being a posed to amnesty. Being opposed to moving forward on immigration. So that the Republican Party is going to have to come to grips with the decision between its president ial wing which feels its got to show much more support of immigration, immigrants, and getting this country to fix its broken system. Or its going to Lose National elections. But thats the question, steny. Is your analysis that this particular primary election represents something larger than just the microcosm that is virginia in this district . I think, you know, tip oneill said all politics is local. To that extent of course this was a local election. But with historic implications after all, this is the first sitting majority leader in history to have been defeated. And clearly the professor that did raise immigration as the issue. But the irony was eric cantor wasnt bringing it to the floor. He wasnt bringing the senate bill to the floor, our bill to the floor and didnt bring the bills to the floor that were passed down the judiciary committee. It is because the Republican Party is in the grips of its far right element and reflects a deep division and dysfunction in their party. Both parties have some issues with their fringe groups. You cant get the president s trade deal even considered because harry reid rejects it . If you cant get along with each other in the Democratic Party and then the republicans cant get along, how can democrats and republicans ever get along . It just seems like i know you can point a lot of fingers at the republicans but this is a mess on both sides, isnt it . You pick out an individual issue. If you polled the American People on trade, they are very, very divided on that issue. And the Democratic Party has been divided on that issue. One of the problems now is the Republican Party is divided on trade. So you pick out one issue. I will tell you democrats historically during this congress has been able to marshall overwhelming majorities for issues that i was able to work on eggs port import bank. Democrats voted for sandy relief, while the republicans were divided on that. Violence against women, which used to pass overwhelmingly with 350 or more votes. The Voting Rights are 980. The export import bank, on what you would be giving away with leadership. Its not strictly a funding issue. I think it is an ideological issue. It wasnt like four or five republicans voted against it. 93 republicans, while frankly the overwhelming majority of labor and the Business Community are for that because they want to be competitive. I think the export import, which is a big part of the make it in america. We had a press conference yesterday. The creation of jobs and making sure it is competitive. Eric cantor was for it. In his deeply divided party he couldnt bring it back on the agenda. Thats unfortunate. Fallujah yesterday. They are talking about baghdad now. Nobody should try to a little bit size this and i agree with that. I understand. And you saw it. We havent spoken about the Bowe Bergdahl deal. But there was some by patterson at least controversy about that. I mean, do you feel like this discipline station has the Foreign Policy side of things under control at this point . Would you argue that . I wouldnt argue that we have things under control because this is a much more complicated world than we have had over the last couple of decades, frankly. Middle east in particular. Whether youre talking about egypt, syria, youre talking about iran. Iraq certainly is becoming very, very problematic. One of the problems is maliki, in my own view, has not reached out to bring in moderate elements of the sunni population. And therefore you have not undermined the basis for a, again, the sunni shia confrontation which is happening not only in iraq but many other parts of the middle east. So i agree with you. Its a complicated situation. Its much less stable than it has been. Many you urge president obama, if they ask for some type of, you know there would be some type of military involvement. Did they ask for it, should we do it . We certainly ought to consider making sure iraq does not fall apart. We spent very precious lives to try to stabilize iraq, give them the opportunity for democracy. I think unfortunately they have been moving ahead in a fashion which did not create consensus in their country. And i think thats one of the great problems they had. And certainly i think we ought to consider to see whether or not we can effectively help in tablizing the precious situation. Still with me . Yeah. So, again, lets go back to what this means in 2016. Right. Does this change the prospects . Does it change how each of the parties align themselves for the president ial election . Well, i think that our party is you know, i think pretty well aligned for the 2016 election. I think we have some excellent candidates who could run, including my own government. And obviously Hillary Clinton is perceived correctly i think to be the favorite if she runs. I think she has extraordinary experience. And i think but does this make it tougher . Thats another thought thats come out of this . Does it make it tougher for incumbents. Look, i think the American People are pretty fed up with all of us. They see their government is not functioning in an effective way. And i dont blame them for being frustrated. Im frustrated by it. We need to work better, more collegiately across party lines. We will see in this election thats coming up next week whether or not the republican partien wants to move in that direction or wants to move in the direction of being a more hardlined, more ideological party. Its frankly, in my view and ive been, as you know, elected in 66. So i have seveneded in a lot of contexts, state senate and here, right now the Republican Party suffers from the narrowest base of any party that ive seen in the 45 years ive been active. Leader hoyer, thank you for your time today. Thank you. Coming up when we return, harvard economics professor will talk state of the economy and why he thinks Thomas Piketty has a series of errors in his theory about redistribution. If youre looking for a summer vacation, wyndham worldwide may be able to help. The Company Offering everything a Business Traveler or family could need. The ceo will join us to talk about Summer Travel season. Squawk box returns after a quick break. Ull of promise. And often, that day arrives by train. Big day today . Even bigger one tomorrow. Csx. How tomorrow moves. White chocolate loversividual. Dont like dark chocolate. Milk chocolate lovers dont necessarily like dark or white. Before we couldnt really allow the consumer to customize their preferred chocolate. We needed the scalable Cloud Solution allowing them to see all 800 products and select what they are looking for. Now there is endless opportunity to indulge. Welcome back to squawk box here on cnbc, first in business worldwide. Im joe kernen along with becky quick and andrew ross sorkin. Were finished with the popeyes. Its weird they have a sauce named after my nickname, sweet heat. People are tweeting. You tell our secrets. But it is sweet feet, harkening back to your foot massage. One more time for babies on a plane. We have pictures. You want to do it now . First, lets look at the futures. Take care of business. Futures are up 27 points 25 points after trading lower yesterday. And then the price of crude, this is not the first thing i thought of. Ive got to be honest. I initially thought of all the sacrifice that we went through in iraq. And just watching this happen is very disconcerting. Its up because baghdad is in the crosshairs apparently. And they talk about this group that even al qaeda didnt want to associate. Its called isi. They wanted it to be in more than just iraq. Its the same group in syria as well. Thats why oil is up today. See if we take a look at anything else right now. Did you find it yet . All right. Were going to come back to that. Im not backing down. I know youre not. Theres a couple of things that we can do with these brats. The screaming, annoying i dont appreciate how politically incorrect my view seems to be. Andrew is mad that these screaming brats fly in first class. They should all be banned to steerage, coach. No. Thats not my view. My view is the Airlines Need to think about this. From an airline perspective. Frankly, i have a question about the parents too. Im going to go all out. Thats so wrong i try to quiet my children all the time. I feel horrible as a parent when my children are screaming. Its a horrible thing. You feel bad. But you dont want people like you judging you and looking over and making you feel worse. Its horrible when they do that. Supposedly back in the early 20th century you could mail children. There is a mail carrier. You put the stamps on the kids forehead. Right on the forehead. Then a mail company accompanies the kids on a train. How much do you think that costs . It was like 53 cents or something. Thats something. And then thats something that we could put in the back, maybe down in the luggage area of the plane if you could heat it to 60 degrees. People say the United States Postal Service is going bankrupt. This is an income opportunity. This is horrible. Now im a bleeding heart. You started out as a bleeding heart and then you came up with this whole stance that you took. Im merely pointing out the hipocracy. All im suggesting is there are restaurants that wont take children. Pools at hotels where they say this is for the family. Im just saying. They dont have enough money. By the way, when im the coach, regularly, my knees suffer as a result. Lets get to one of our very own squawk market masters. He thinks hes on Good Morning America or the today show. For more on the jobs and the economy, and plus his take on Thomas Pikettys book. You can do the peek if you want. Piketty is okay just not picketty. Former chair of the council of economic advisers under president ronald reagan. You know, we had him on, professor, piketty. And i actually didnt spend all the time talking about your take. Because your take on it was that a lot of the numbers that he arrived at just didnt take into account a lot of the facts like the change in tax law, and the amount of income that a person can get from the federal government. Our argument with piketty was just that capitalism has lifted millions of people across the world out of poverty. And to nitpick now like in china there there is some wealth disparity at the high end probably doesnt tell the whole story. Thats what we said. Do you agree with that . I agree with that. And ping agreed with that. He said to get rich is glor rouse. And he said some people will get rich before others do. So the chinese have been happy to see strong Economic Growth generated by a strong market economy. It wasnt in france really that his book made a big splash and was so well received. Four french economist immediate wrote all the Capital Gains were in the housing industry. It didnt even make sense. Over here, why are we so right . Is it selfloathing . Why such a ripe environment here . Well, i think the politics of the last few years with the president talking about millionaires and billionaires, the 1 against the 99 i think created an environment in skh a book that purported to support that factually had a big market. Its as simple as that. Right down from the top we have seen these wedge issues used for political reasons. It would be nice, though, if we could take some concrete steps to, you know, at least enhance the opportunity for everyone in this country to live to get rich and to become part of the income on the high end. Can the government do anything to help us with that . Well, it can take away some of the barriers that make it hard for especially very lowincome people to get on the job ladder. The minimum wage doesnt provide income support if you cant get a job. And so i think we ought to be integrating welfare and minimum wages so that very lowskilled people nevertheless get on to that job ladder and begin to work their way up. The other day you wrote about inflation. And you actually were talking about alan kruegers research. Have you agreed with him on many things in the past . Was this a first when you pointed to his research . Im sure we have agreed on many things over the years. Hes a very good economist. But i thought it was very interesting that he came out with this study. Worked on i think while he was still at the council of economic advisers to president obama. Warning us that the Unemployment Rate that drives inflation is the unemployment among those out of work for less than six months. And that the high measured Unemployment Rate, total Unemployment Rate, isnt really what one has to look at if you want to know whether were getting into the inflation danger zone. Yeah. So at least half of what we talk about if you look at people that havent been out of work for six months, the Unemployment Rate is down in the four years. Thats right. 4. 1 , the most recent number. That means if we get continued improvement, and you pointed out that the ppi year over year was up over 3 . Right. So this idea that we will be at zero the next three years, it has the stock market trading higher, that may not be the case. Well, you say zero for the federal funds rate . I think the fed is going to have to respond to this. I hope they do it soon enough. But if the fed were to keep the fed funds rate close to zero or move it up to 25, 50 basis points so there is still a very negative real fed funds rate, i think were going to see inflation picking up. You implied wait a second. When you say soon, how soon are you talking about, marty . For inflation . How soon would you expect to see the fed move on Something Like this . Well, they have said they will move next spring. The question is how rapidly will they move . From 0 to 25 basis points, thats not going to do very much. Were going to be looking at a fed funds rate. You said, marty, the third point you mailed was they dont get it. They have indicated in their language they are going to be asleep at the switch when inflation comes back and they will be too late . Who gives you that idea . Well, if you look at the statements of the fed, if you look at some of the speeches, the general tone is were going to stay low for a very long time because there is so much slack in the economy. And its a really dilemma for them. They want to deal with the high Unemployment Rate of people who have been out for a long time or on temporary jobs rather than fulltime jobs. But the inflation pressures, if alan krueger and others who have done work on this imply come from the people that have been out for less than six months, well, then were already developing i relatively tight labor market. Yeah. But im just getting back you think there are people on the fed misinterpreting this and that are wrong about the numbers that they are looking at and that by definition they are going to be late on this. But they must read your stuff. Arent you giving them a headsup . Well, i did. I did earlier this week in the wall street journal article that you are quoting. So i hope and of course i do talk with some of them. But i hope that as the realization that we are already i mean, again, the most recent numbers, monthly numbers tell us were at 2 , a little above 2 by the feds own measure. All right. They look back over 12 months and say, well, if you look back 12 months, the inflation rate is 1. 25 or 1. 5 . But its really gotten up to their target level. And the pressure is for it to rise further. But the fear that people have suppressed that the markets right now look like they are drugged or something. Like theyre on what is it that calms you down. Like xanax or something. They are saying it is a central banked induced effect. They are lulled into low volatility. And it will end badly. It means something is brewing. In your view its inflation. Well, its inflation, but its also, again, risk taking. And what ive written about in the past is these very low Interest Rates, both at the short end and at the longer end, leads investors and lenders, banks and other lenders to reach for yield. And you reach for yield by taking risks. You go out the curve when you shouldnt. You take on low quality borrowers when you shouldnt. You have in adequate terms. All of that is builtin risks to the economy. So far they have not done any of this damage. But if the economy were to soften at all, we could see some of those bad loans and bad decisions about investing could actually come home to roost. Great. Okay. Thank you. Very interesting. Got some things out of the way. Thanks, professor feldstein. Appreciate it. See, i still think you should get away with it. Its piketty but its not picketty. If you say it in french its toma. We didnt side on peekity. Its piketty. I get his explanation. It is like romedi, or rowmedi. Its where you put it on the syllab syllable. Its time to go to break. Okay, sweet feet. Wyndhams stock up 30 in the past year. We will talk travel trends and the companys Growth Prospects next with the ceo. I believe they do allow babies at that hotel chain. As we head to break, check out the squawk box market indicator. , are we still on for tomorrow . Tomorrow. Quick look at the weather. Nice day, beautiful tomorrow. Tomorrow is full of promise. We can come back tomorrrow. And we promise to keep it that way. Driven to preserve the environment, csx moves a ton of freight nearly 450 miles on one gallon of fuel. What a day. Cant wait til tomorrow. Starts at 6 30 a. M. On the vo rush hounose. Und here but for me, it starts with the opening bell. And the rush i get, lasts way more than an hour. announcer at scottrade, we share your passion for trading. Thats why weve built powerful technology to alert you to your next opportunity. Because at scottrade, our passion is to power yours. Welcome back, everybody. Among the stocks were tracking today, lululemon. Beating the street. Full years earnings falls short of consensus. In other news, the yoga wear retailer announced a 450 million Share Repurchase program. Outlook is certainly among a big impact. Decline of 60. 50 to 37. 81 dollars. And all you privacy concerned freakouts out there, listen up to this news. Facebook is giving advertisers more information about users. It is expanding the user profiles the basis of its targeted advertising system. For the first Time Facebook will provide personal information. A user researches a new tv on an external website or mobile app. Now it might include the persons interest in televisions. That would make it easier for them to reach that user on facebook. So i guess it could be useful. If you are somebody concerned about privacy. This is basically what you have seen on other web sites. You go around. You click on one thing, and it will follow you to other web sites. The promise of facebook was it was going to know so much about you because of your friends, because of everybody you follow. And this clearly makes the service more valuable to an advertiser. I wonder whether its an acknowledgment that all the information they were trying to grab cant be found simply alone on facebook too. Thats interesting. Whenever google or facebook complains about the nsa, i think its funny. Hey, wait a second, were going to sell this info. What are you doing it for . To catch terrorists . Huhuh. Were spying on everyone. Dont you start. Its just kind of rich that they what . Youre looking at all of this stuff . If youre not going to use it to make money. No. Whenever we talk about nsa im going to play this big data song. Its by big data. Are we going to play it right how . I think were going to play it going to break. I have to read this first. Well play it while im reading. How about that . In media and tech news, amazon is launching a streaming Music Service today. Its free with a 99 amazon prime membership. The service has a smaller selection of recent hits than rivals spotify and apple beats news. When i play these songs i hear on sirius xm, i dont know what they mean half the time. And it could be something we dont know were doing. The other day on one of our competitors they played something. They came back and they said the m f word. Because it was in the song. They didnt know it was coming up. I get nervous. But i dont think theres anything in here. Ill keep reading and you can keep listening for bad words. Congress were man eric cantor is stepping down as House Majority leader. The loss raising a lot of questions about the future of his partys leadership and legislation. Now sitting on the hill. Talked to House Minority whip steny hoyer in the last hour. Eric cantor wasnt bringing Immigration Reform to the floor. He wasnt bringing the senate bill to the floor, our bill to the floor. And didnt bring the bills to the floor that were passed down the judiciary committee. And it was because the Republican Party is in the grips of its far right element. And reflects a deep division and dysfunction in their party. House republicans are set to vote on a new majority leader. That will help next week. Ceo of wyndham worldwide. Retail sales will be released in a couple of minutes, as well as initial jobless claims. If they hear about this, maybe we can get them to come in whenever we talk nsa. Would you go to starbucks for a glass of wine . Say that word for me. Croissant. Jane wells will join us with her review. Usually just focuses on pork, but she will be talking about this today. Utshining the competition tomorrow requires 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. E financial noise financial noise financial noise financial noise coming up, retail sales, jobless claims, import prices for may. As we go to commercial. Check out the futures ahead of the numbers. Data and market reaction. Dow looking like its off 18 points higher right about now. Were back in just a moment. Chocolate is very individual. White chocolate lovers dont like dark chocolate. Milk chocolate lovers dont necessarily like dark or white. Before we couldnt really allow the consumer to customize their preferred chocolate. We needed the scalable Cloud Solution allowing them to see all 800 products and select what they are looking for. Now there is endless opportunity to indulge. Welcome back to squawk box this morning. Were waiting. The countdown is on. Did you see this . You know this big alibaba. Goal man invested 3. 9 million in alibaba in 1999. They sold it in 2004. It would have been worth hundreds of billions of dollars. They got seven times their money. Anyway, just a random thought there. Take a look at futures to see how things are setting themselves up. Up about a point. 10year, 2. 653 . Well take a look quickly at the dollar. Rick santelli is standing by at the cme in chicago. Steve liesman in studio. And john is in new york. Rick, how are you did go . Not bad. Not bad. Goldman only made seven times their money. Thats like a loss for goldman. For may retail sales, headline up 0. 3 . Lets go through the xs. Take x autos up 0. 1 . Unchanged. They have this control number that is unchanged. Lets look at the previous month. Previous months headline ramped up 0. 4 . 0. 5 . And it went down from 0. 1 to up 0. 3 new now. It is much more positive if you look at it see consequentially versus averaging you get two different answers. Up 5,000 from revised 313,000, originally stated at im sorry. 312, up to 313. So up four, up to 317. That is the new number. 317. 2. 61 continuing claims. Pretty much we see Interest Rates moving down to 2. 63. So i guess there is a huge amount of significance now. Just kidding. Just kidding. Obviously retail sales weakness is whats most important. Nobody cares about First Quarter anymore. Revisions continue to get more negative. Back to you guys. Nothing has changed down the landsca landscape. Im not taking fair value into account. Joining sus Steve Liesman and john riding. Steve, anything that jumps out at you . Retail sales is the whole thing jumps out at me. I want to get to john as quickly as possible. April was a big number from march. Right. Im sorry. March was a big number. April was really sort of lame at 0. 1 . And now you have this revision up from april. Now, may was a big disappointment. They were looking for 0. 7. You got 0. 3. But the levels are higher. Im seeing a lot of negatives here in may. But im seeing a lot of positives and stronger numbers in april. I dont know if this is going to watch. Rick is right. Q1 numbers keep going down. I have seen minus 2 . The 3. 5 , 4 number looks like it is in danger for the Second Quarter. April higher but may lower or not as strong as expected. John . We have to see what may is going to be when they get around to revising it. Thats the best answer. It could be revised two more times. It does seem to be a pattern here in the employment data. It is typically what happens when the economy is doing better. I do agree, steve, we thought 4 gdp was going to be comfortable. After we saw the import data, the trade drag in april. It looks to be a bit more of a stretch right now. No doubt the economy is doing much better than it did in the First Quarter. Do i have that right, you have this bump up to a higher level in march after weakness in january and february. Then april was kind of right in line with march. Now april is higher. May is higher still. Back off of that, john, and give me a sense where Consumer Spending looks to be in the Second Quarter . Well, without seeing all the details in the report. Yeah, i know. Just hazarding the number is going to be probably somewhere in the neighborhood of 3 or so for real Consumer Spending could be my guess at this point. Weve had some decent momentum in the Consumer Spend reports of late. We have had a very good auto sales number. They were the Industry Data which were quite robust for may. So that is certainly going to help on the Consumer Spending front as well. I just want to ask about Marty Feldstein who was here talking about inflation. How much concern do you have overinflation . When do you start to ring the alarm bells . It is policy to bring inflation up. So its not surprise to go see it going up. But where is the level of concern . First of all, let me say that was a very good interview. Thank you. And i agree with everything marty said. No, we dont need you to say that. It is the timing of the fed rate hike needs to come sooner rather than later. It doesnt mean we have an inflation problem thats eu imminent. The fed, since 1960, has been further away from its macroeconomic objectives than at the present time. Threequarters of the time. So were closer to the feds objectives than threequarters of the time since 1960. Yet we have Monetary Policy on such an extreme setting of zero rates thats continuing the tapering. Do you think the central bank recognizes that . Do you think this is an issue of them trying to get to the point where they can communicate to the markets . Or is this a case where you dont think they agree with that perspective . Unfortunately, there isnt a central bank. Theres many central bankers. Janet yellen is still in the camp of longterm unemployment is too high. Which it is. We saw the jobs data for april. So i dont think that the problem with the longterm unemployed is a monetary problem. If you keep trying to address a nonmonetary problem with Monetary Policy you get a problem. If you had a problem in the economy, you might be able to lean or rely on the fiscal side to do something about it. This Federal Reserve faces i guess the world sclerotic washington that doesnt do anything about these problems, and its the only game in town. Well, but the problem is if you apply chemotherapy to something that isnt cancer, the side effects of chemotherapy may be a lot worse. Joe, i thought it was a good interview too. Thank you. When i studied in school, i read things. If i read things good if you prepare. Would you talk to my son, my 16yearold . Because when he prepares he does well. And i just prepared something here too. Whats that . Nbc sports. Think about nbc sports. Olympics, hockey, belmont, french open, u. S. Open. The u. S. Open today. They televise a lot of it. It starts at 9 00. Up next windham worldwide. Oh my god look. You need to see this. Show em the curve. Do you know what this means . The greater the curvature, the bigger the difference. [scifi tractor beam sound]. Sucked me right in. Its beautiful. Gotta admit one thing. Cant beat the view. Introducing the worlds first curved Ultra High Definition Television from samsung. Just take a closer look. It works how you want to work. With a Fidelity Investment professional. Or managing your investments on your own. Helping you find new ways to plan for retirement. And save on taxes where you can. So you can invest in the life that you want today. Tap into the full power of your fidelity greenline. Call or come in today for a free oneonone review. Welcome back to squawk box. Summer traveling heating up. Lets check in with the Largest Hotel franchise in the world. Nearly 650,000 rooms. The stock rising nicely. Lets talk vacation trends, Business Travel Steven Holmes is joining us now. Good morning to you. Good morning. What is summer really going to look like . It feels like it is up 100 on a percentage basis. It is good across the globe. We have seen travel increasing. We have seen people booking earlier than they booked last year, which is a different trend we have seen the last 10 years. Whats the margin like for you . You mean the increase . Yeah. The increase in europe, we have a huge rental business. Villas in tuscany. Cottages in scotland. Hotel side, were up 12 , again, for the summer months of july and august for this point in time. What kind of occupancy rate are we talking about . Well see what it looks like when you get to july or august. Were talking about the the bookings made for that period of time. So, you know, i can see right now looking for were not going to be able to predict what the occupancy will be. Its not all the bookings that are done. You get closer to the books. Right. I was saying the margin on the price. Are you able to raise prices in this environment . Yeah. Rate is not going up as quickly as we thought. But it is going up. It is still increasing. That is generally what happens in a stronger occupancy. What were your expectations . Expectations this year, we thought the combination of the occupancy and the rate would be up 4 to 6 . We are seeing it trending above that. Its been trending that way First Quarter and Second Quarter. In terms of the strata, you do highend, midtier. How do you see that . We are mostly economy. We have windham and windham grand. It is upscale. In the economy sector, we are 80 of our product is, it looks strong. Its been building. And thats domestically and internationally we look a little bit different because we get more from the rental business. We just got these disappointing retail Sales Numbers for may. Some say that means bad news from the consumer. Youre not seeing any of that from your results in. No. In fact, it is telling to see people booking earlier. From the consumer standpoint, they are planning their vacation earlier. They want to make sure they are going to get where they want to get to. Thats Something Different than we have seen in the past. We are seeing the consumer strong. Again, both domestically and internationally. European markets we see good booking trends. We have been watching oil prices too touching around 106 on a lot of concerns about whats happening in iraq. I wonder if Oil Prices Continue to climb, that does that turn concern you that gasoline prices will go up and that could impact travel . We have never seen that. I have been in the business a long time. Back before the first persian gulf war. So we have seen, you know, Oil Prices Spike up and down. Price will not impact us. Theres no correlation between gas price and what happens in the hotel sector. Before you go, you have a deal with jim kmy buffets marc ga ritaville . Sure. It is being turned into margaritaville vacation club. The first will open in st. Thomas in 2015. It will be a different experience. Margaritaville is exponential. What is the price point . Its not much different than our time share product. Equivalent of a week for 20,000, 25,000. Thanks very much. Appreciate it. When we return, the first starbucks restaurant is opening for business for get the coffee. Order a beer. Jane wells will tell us all about this new concept. The companys plans for expansion. Squawk box returns with that and a lot more in just a moment. Come with me, his wife said. Big job, big city, big new country. 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. Call it match making for startups and fortune 500 companies. When conglomerates have trouble keeping up, they enlist the help of newer companies. Cofounder of brand garage and partner at bruan ventures, mobile stage companies. Good morning to you, cheryl. Hi. Explain what this business does. I understand youre a matchmaker. You talk about big companies, small companies. Youre not a banker. No, not a banker. Actually, at the core, more of a Venture Capitalist. So at blue run Venture Capital has become more Service Oriented as we align with entrepreneurs and help them grow their businesses. When i cofounded and helped start brand garage the thesis was around helping them bring that innovation to the next level by working with fortune 500 companies. We started seeing about four years ago a lot of fortune 500 companies coming to Silicon Valley to do their technology company. Instead of coming by for just a day we decided to create a program to work more indepth with them, which is what we call coinnovation. What does that mean in practice . Having a deep understanding of what the fortune 500 is trying to do from the Business Opportunity perspective. Reaching the consumer more. Doing what joe was talking about earlier in terms of building out more around big data. And then finding the Technology Partners building innovative things they can use with those Business Opportunities. So we will host events. So like an Advisory Service . Im just trying to understand in practice how it works, how you get paid, how the relationships develop. So we work closely with the fortune 500. So basically the fortune 500 retain us to work with them to identify strategic Opportunity Areas where they can work with startups. And then we leverage the Venture Community and the Startup Community here in Silicon Valley in new york, l. A. And find the best and the brightest startups who can do what we call a Pilot Program with these fortune 500s. So it isnt something necessarily you will see roll out in every store or every outlet right away. But its a little bit of what we call testing. Can you give us an example of who you worked with more and what they have done in terms of a startup . Sure. We have worked with sears. We continue to work with sears. And they actually have invested pretty in their data and technology and one of the things that weve done with them is host what we call startup challenges, where well bring a Business Opportunity or multiple Business Opportunities that sears would like to invest in technology with, to the Startup Community and well actually bring startups in for a whole weekend to work on this challenge with them. And theyll present ideas. The revenue mod for your business . You get paid for a fee, stake in this, how does it work . Well, so we are paid, were paid by the fortune 500 to help them identify these opportunities. Okay. Cheryl chen, appreciate your time this morning. Thanks for waking up early on the west coast. No problem. Thanks. And coming up, has starbucks finally figured out what to do with la see i got a problem there. Yeah. I cant help you. I cant help you. I thought they were talking about in los angeles what to do. The french theme bakery. Going to smile. I know. Happily smile today. I know im an idiot but im just trying to trying to i know im an idiot every day. Not l. A. And starbucks bought that back in 2012. Jane wells has that story next. Can i just most important thing to do today is go watch golf at 9 00. Thats on espn. You dont have to watch then although it does start. At 3 00 is nbcs coverage. The u. S. Open you get coverage on the front and back. Phil, people will be watching phil. I cant believe hes already off to that start. Well, without an Insider Trading investigation you feel better about yourself. Mcilroy, no, im not going to say, andre did play better after he didnt have someone nagging him all the time. With brooke shields. 180th in the world, came back number one. Watch what happens with macilroy, justin rose is good, jord spieth is there. Going to be a great tournament. You know, what i was saying, think about nbc. Belmont suddenly, everyone had it to watch. Everybody has to watch hockey. The olympics, french open. I mean its like the stars have been aligned for nbc, right . The stars have been aligned for nbc sports. I would have said that about some other network. Noise effects. Well be right back. Welcome back to squawk box. Starbucks diving into fast if food market head first. Coffee giant looking to sell burgers and beers. Jane wells joins us with more on that story. Good morning to you, jane. Hey, guys. Theyre getting ready to set up here. This is going to open as la boulange restaurant is going to open in about an hour. Starbucks is ven during outside its comfort zone again, brewing up a fast casual concept. A lot of foodie area part of town so the competition will be interesting. They let our cameras in early this week to show a mock test run. Its not a bakery cafe like the original la boulanges but a breakfast to dinner fast casual spot open until 10 00 p. M. With sandwiches, shakes, croissants, burgers. Two years since starbucks bought the san franciscobased la boulange for 100 million and eventually switched to its products inside its core stores, not without some protests from some customers. Starbucks said baked goods is helping sales and now its refreshing and ex panneding la boulange with this restaurant which will also serve booze, even cocktails. Its an expansion of what starbucks has been doing at some of its core stores with alcohol. Technomick says sales grew 11 last year, have 15 of market share. Think of the fast casual pizza chains, everybody wants in. Rj says la boulange products have done well so far inside starbucks themselves. We estimate that on a sale basis, the average la boulange is doing about 2 million in average unit volume which compares pretty favorably with the other players in the cafe, bakery concept space. Compares to panera doing about 2. 4 million a year. However at current share prices, hottovy thinks panera is more attractive although he likes both companies. He thinks there could be a couple hundred la boulanges in the next five years. This will be standalone brand. There wont be starbucks branding on this place, though there will be a special blend of cough fy just for this restaurant which i plan to taste test later along with some of the food. Ill give you my feedback. A la boulange spokesperson tells us at this point, though, guys, there is no plans yet for a second location. Well be back later with my taste test. Well taste test. This is the taste test of the Starbucks Coffee thats not the Starbucks Coffee. Thats right. And of the maybe croissant burger although im not sure what time they start rolling that baby out. How much do they charge for the croissant burger . I dont know yet. I have to get inside. Shes in l. A. , joe, but its not l. A. Its not its la. La boulange. Its la boulange. So you got to stay home for this report. Where were you last time . You were doing pork in iowa . I was at the pork show which, by the way, Starbucks Coffee i mean a latte coffee with the ribs i had at that place would be food heaven. Oh, by the way, i have to tell you theyve had some yelp review, four based on the mock test run they had. Kind of like the they love the duck. They thought the men few was good. Service a little slow but understand it was a mock run. Four yelp reviews already. Do you buy into yelp reviews . Do you look into yelp reviews. Theres questionability about it. If youre a competitor its easy to go on and trash. Jane someone just you didnt cover the o. J. Trial did you . Yeah. From day one. Day one. Yes, i did from the morning after the murders through two trials. Even though today how did you get a work permit when you were 9 years old . How did you yeah. Well i lied about my age. As i continue to do. No. 20 years ago tonight, the murders happened and im telling you, joe, if you lived in this town back then, for three years, it was the only story. I know. I remember what was in mezzaluna. Mezzaluna restaurant. I did live out there for a while. That was actually, that was became a starbucks, no kidding. We got to get cato callen on the program. I know cato. I knew him. He came in here. He was a nut job. Anyway. What was i going to say . Just interviewed in esquire magazine. Twitter and facebook and internet back then. White have been unbloovble. You would have had a gopro in the bronco. Judge ito would have been tweeting during the sdmcase. Squawk on the street is coming up next. Good morning and welcome to squawk on the street. Im david faber with scott wapner and sara eisen from the new york stock exchange. Carl has the day off, jim on assignment. Futures after yesterdays selloff, a rare one, at least of late. But you can see we are looking at perhaps a slightly down open. Although lets just call it more or less not much direction at this point. As for that tenyear note yield, take a look. Were weve been