Transcripts For CNBC Squawk Box 20140710

Lower by 126 points, the s p lower by 14 and the nasdaq lower by 29. Yesterday, though, stocks did get a boost from last months Federal Reserve meeting. The notes are suggesting quantitative easing will likely end in october. The central bank will move slowly to raise rates after that. Today, the focus turns to the other side of the pond. Were waiting for a position decision from the bank of england. Thats going to happen around 7 00 a. M. Eastern time. Bank of england expected to leave its key rate on hold at a record low 0. 5 . As for the u. S. Economic calendar, here is what were watching. Jobless claims expected to increase by 4,000 to 319,000. Then wholesale trade is out at 10 00 a. M. Corporate news, bank of america is reportedly seeking fed approval again for a 5 cent quarterly dividend. In march, the firm revised an okay to boost its way out, but it had to withdraw the plan after discovering it miscalculated capital levels. In other news on the bank, attorney general eric holder has reportedly refused to meet with bofa Ceo Brian Moynihan to resolve a mortgage settlement deal. Moynahan received a last last month saying the bank and the government remained too far apart. Jamie dimons bank negotiated a 13 billion settlement. Israels aerial assault on gas is now in his third day. Martin joins us now with the latest. When you were talking earlier about the world cup. Last night in gaza, there was a group of gazans watching the game and they were hit by an israeli rocket, five palestinians killed. It was the worst night of israeisrae israeli rockets. 320 rockets were fired at palestinian targets in gaza. The five killed in that cafe. A family of eight were killed in one building in gaza city. The israelians didnt say what they were target, but they have been targeting secret tunnels in gaza, rocket systems where theyre and krael says this will continue to launch rockets into gaza until the palestinians tom your town. Theres every sign things will get worse in the next few days. Those rockets, you cant really aim them. Its all collateral damage, right . Its a bad situation, martin, and, you know, you could go back in time and in other instances, this would be the same news. You could have read almost the same script and you couldnt tell what year it is, which is a sad commentary. Yeah. Unfortunately, thats true. Thats the last was two years ago and three years ago before that. The Israeli Military has a term for it, they call it mowing the grass. What they say is that the palestinians are building up their rocket capability in gaza to attack israel, getting stronger all the time. And, therefore, israel needs every so often to go in and to do what they say their phrase mowing the grass. They know the palestinian capability will grow up again. That they need to reduce it. Because israel lives in permanent fear, certainly the israeli towns in the south of these rocket campaigns from gaza. So israel needs to do what it feels its doing. But, of course, ultimately, peace negotiations will of course be a better way of going. Yeah. Amazing that, you know, life goes on as weve seen with israeli corporations. But its hard to imagine for us. An incredibly telling phrase, mowing the grass, this is essentially like maintenance, basically. Martin fletcher, we appreciate it. And you be safe. Hes hearing things exploding as hes doing the report. Boeing is forecasting demand for nearly 37,000 new airplanes. That would have to be looking far out into the future. Just think of that number. Thats how many trillion . 5. 2 trillion, but this is over the next 20 years. Its an increase of more than 4 from last years forecast. This is the most bullish the company has been about its 20 year prospects for demand since 2011. Among the catalysts, and you can probably figure it out, demand for the continued emergence of low Cost Carriers and simple as the world slowly moved up into the middle class. Think of how many air mraeps china is going to need. Were going to have a guest later on talking about baby boomers. 2012 was the first year, where there were more than 1 billion international travelers. 1 billion international travelers. Think about that. And its hard to travel by ground and get anywhere. Right. Internationally, particularly. Particularly internationally. Youve got to go i even think if you take the longest route, you still need a couple of boats. Right . Right. Am i right about that . Youre good. And ibm plans to invest 3 billion over the next several years in Chip Research and development. The Company Hopes a break through in that business could revive its struggling hardware unit. Ibm is set to report Quarterly Results next week. And many of the nations retailers r going to report monthly reports today. Costco reporting samestore sales. Results were helped by higher fuel prices. Very quickly, were living in a rental, sort of. So the people that live there, obviously, they must go to costco. And i said why . And she opened the door, the pantry, and there was a jar of pickles that was this big. Ive never seen anything and the pickles were big and they were all in there. And i looked at it. I dont know, i was scared, kind of. I mean, theyre weird looking. They look like theyre in for mall dehide or something. Theyre huge and it was from costco. You could buy pickle thats you would never buy pickles again i think. Why are you looking at me like that i have this dilemma all the time. What if you dont like the pickles. What if you bought the big jar and there was not one pickle missing. If it was the apocalypse this is why im here. To ask the probing questions. You can use these things with a lot of use. Do your vegetable. It looks like a club. How about the markets . Pickles is agency much of appear interesting conversation as the markets this morning. All right. The futures, if you want to take a look, its messy this morning. Right now, the dow would open lower by 130 points. The s p 500 lower by nearly 16 points and the nasdaq lower by 32. 5 points. This is the big fall out from europe where a number of catalysts saw the European Markets lower. Look down at the bottom. Portugal is lower by 4 . One of the catalysts stemming from there, their largest listed bank issues that have been bublging for a while, but coming to a head today. Overall. Yeah. Does anybody know more about banks and investing in Foreign Countries after its perfect. What was that one he bought in england, the one that it was a huge run. I read that and i go, youre kidding. You already started this, but no, i didnt. What was it . Northern something. Yeah. Northern rock. Again, one of these guys and it quadrupled. I mean one of those main ties and hes swimming. Michelle, you started mentioning it earlier. I want to add to it. I think a big theme of the day is the weakness overseas. Yep. Japan factory orders, china, as well. Theyre talking about a contraction now in france and italy, too. And italy, as well. Theres this theme emerging which is a big reason why u. S. Gdp was so weak. In the first quarter, weather that was a reflection of what was happening, but were not seeing any help from abroad in terms of the global economies. Oil i bet su lower if youre worried about the Global Economy and the fears about iraq have subsided a little bit. Brent is up now 108. We were talking about 115. Wti is at 101. 78. They are down, but not by too much. The tenyear yield, this will be at 2. 52 . Wow. We were at 2. 61 before the fed. And its 2. 6233 or whatever it is. And rick gave the tenyear note a bad grade because it tailed. And then all of those guys, the dealers took down 45 , they all made money after the fed because the yield declined and the price rose. Right. Okay. Lets show you whats going on with the dollar. Here is the tenyear. Look at that. You can see the move yesterday. Then this morning as it continues to fall in safe haven buying. The dollar is stronger against the pound and the euro weaker against the yen. The euro will cost you 1. 36. The pound will cost you 1. 711. President obama is in texas today to deliver a speech about the economy. But looming large in the background will be the Immigration Crisis at the mexican border. Joining us now to talk about that and the strange relationship with the gop, and Corporate America it says here is cnbcs chief washington correspondent john harwood. Youve been looking, john, at the political calculus and how the white house is handling the immigration thing and you visit texas at the same time. And im just trying to be as objective as i can to figure out what the thinking is. Because, i dont know, it seems to be a big problem, especially if you ask for 4 billion to try and figure out what to do with all these kids and things. And then you would think it would be a natural time to go to where its actually happening and get firsthand knowledge like you do when you have a fly over and a helicopter anything going on, usually the and i realize there would be a lot of pictures taken so that that would put him do they correlate that with cause and effect, that its his fault that its happening . If youve seen at the scene of where its happening. Why not go there and get a look at whats happening . Politically, it makes for a bad photo opportunity is all i can figure. And raising money in austin and other places for the dnc . Can we use any of that money for the 4 billion that its going to cost or that goes right to campaign couffers. Am i on to anything here . No, youre not. But look, this is the case where i think actually the two sides are likely to come together and do something. Its a little bit different than other partisan fights where everybody sort of lines up in their corners. Does that just fester and die . I just answered the last part of your question. And the answer to that was no. Whats the political calculus of why he is in the states but wont go to where the actual site of all this stuff happening is . Whats the real reason . Well, i think first of all it was principally a campaign trip. Hes raising money. People in both parties raise money all the time. Second of all, i think he has decided hes at a point in his presidency where he is not going to give in to the theatrical requirements of the job. And he made a reference to that yesterday. This isnt a photo open. By the way, hes not the only one. Chris christie the other day, when he said he was not going to meet with the parents of the people who wanted to appeal to him about Gun Legislation said, look, that was an emotional hook, it wasnt going to change my opinion. That seems to me a totally different situation. This is affecting the entire country right now and the other is a purely symbolic gesture. I dont even see how thats even in the same thats not even in the same story, much less ballpark. Of course it is, joe. Joe, youre wrong about that. If the president went to the border, that still is an ongoing thing that were going to deal with here. I dont know. I well, do you think hes unaware identity . Do you think hes unacquire of it . Do you think he doesnt get it . While youre down there, i figure you can take a break from even if it was planned to be a political trip, i can you think take three hours and go down there. Im not arguing the case 1 way or the other. You asked me to explain why he didnt and i think hes sticking with his schedule. He doesnt want to associate with what is there happening because it would look like its his fault for no, no, anything that happens when youre the president , especially on this subject, is going to be blamed on him, anyway. It doesnt make any difference. I thought you were going to say its blamed on bush. No, no, no. What . Did you see his Approval Ratings . Thats people thinking on their own, not thinking from what the Mainstream Media gave them. Youre whole world view revolves around what other people in something called the Mainstream Media do as opposed to the actual substance of the situation. Well, theyre usually completely far apart in terms of theyre not you wouldnt even know you were talking about the same story. Okay. Like i was saying earlier, joe, i think this is a case where we seem to be moving closer to some sort of republican democrat action in concert. You know, i think it was interesting that governor perry, putting pressure on the white house, actually got a result, which is he got a meeting with the president. The president then tried to use that meeting to leverage pressure on republicans to act and when you hear the back and forth between republicans and democrats, the republicans in congress are not flat refusing to spend that money. Theyre putting some conditions on it. And there is some level of agreement between the white house and congress, republicans, about adjusting that 2008 law which has contributed as the president s policy has also contributed. Okay. Im trying to think. I guess youve seen the reds, right . I dont know what it means for the national webs but wow, theyre on a roll, are they not . I didnt watch the whole game, but theyve beaten chicago and its like six straight. I think theyre only two or three balk from milwaukee now, which that spells doom for the nationals, as you probably well, the nats are ahead by a game. They won again last night. Were playing pretty good ball. As soon as broois harper gets his act together and starts producing, were going to be rolling. Do you watch any of the world cup yesterday, john . I did. What did you think . I thought that i did not see any of the 71 brazil game. So i didnt see it the. But i did see every minute of yesterdays. I will tell you that it is an acquired taste. Having seen some other games, like i remember belgium against the u. S. , remember how many shots on goal there were . You watch the way those guys played defense yesterday where every time you even get anywhere near it a guy comes in and kicks it. If you can appreciate defense, and i guess we all should understand soccer because of the low skoring, so if you appreciate defense oh, yeah. They sit around, where are they . So if you can appreciate it, then its you know, i still wish it and then i will say that those penalty kicks, that was pretty exciting. And you know what . You know i dont like im like that, i dont like pollen because of that coach, that skating coach. I was going to say, if the dutch won this, we were going to invite him back on. He brags and all this. And i hope hey, michelle . Yes . I sent word out to him, how does that feel . Joe, i watched that game. Just for the record, the crowd was booing how the dutch played. They were playing such a defensive game that i just thought it was boring. It was so michelle . Yes . Go ahead, john. Are you really into soccer . Did you grow up with soccer . No, no, im not. No, im asking michelle. My husband is really, really into soccer, so i end up watching a lot of soccer. What i want to know is how people im not a real genuine soccer fan. Its kind of an acquired taste. Most of my friends who played soccer or are really into it dont like this penalty kick thing because its very fan friendly. Its like deciding the master wes a windmill hole at a miniature golf. But you know, youve got to do it. And you know what . After they play for an hour and 25 minutes or whatever and they totally come up, you know, like that, and theyre remember that very first kick yesterday . You knew right then that guy needed to kick that in the goal. When youre starting awe, you need to put that first one in there. Nine out of ten go in and you cant put the first one in that was pretty good. Think about the extra pain in brazil that their archrival. Year up first in south america. You have to be careful about saying anything about germany, right . Why . I guess because its theyve beat france and holland again. Right. Supposedly messi is so machine like and military. Any references to that, youre uncomfortable. Yeah. So naturally youre rooting for them, then, right . My adopted before i was adopted, my name wag gunther, so yes. Gunther. When we return, folks, allergan defending itself against a hostile takeover. The ceo of the botoxmaker say down with jim cramer. Thats, in. As we head to break, we are following the futures which are down sharper this morning. More squawk in just a moment. Woish to squawk box. The futures are suggesting a negative open. The dow would open lower by 130 points, the s p lower by 15 and the nasdaq down by 30. A lot of that follow on from europe where we see those markets sharply lower, especially portugal by more than 4 off. Poor Industrial Production data out of two Different Countries and some weak chinese data overnight. Joe. Allergans ce on o comes out swinging against unwanted advances. Activist investor bill ackman and valeant pharmaceuticals. More on what he said to jim on mad money as a resisting and oh, yeah. He says a lot of the things that you read about in the press say we like to do a lot of research. Were not going to be part of a roll up where we generate more cash flow. We want to stay where we are. You said more of that last night . Absolutely. It was his first tv interview since this whole thing started. This is about a 50 billion deal, just to review a few facts about it. Valeant has taken it directly to allergan shareholders now. Theyre partnered with bill ackman which opens about 10 of stock. Theyve suggested a slate of about six Board Members they would like to nominate to allergans board. Theyre seeking enough votes to call a special meeting to allergan. Last night, David Payette on mad money saying hes out there talking to shareholders and we should expect big restructuring to be announced. We heard from our investors, we need to do some more. Now were going to take a dooeep lo and see where we can do our trimming ourselves and raise the value we offer to stockholders even further. So the company is saying theyre talking to shareholders. Some analysts suggesting a recapitalization, eventually a stock buyback. David payette saying they are looking at acquisitions. Our vision of looking at suitable partners, suitable acquisition assets is companies that are specialized and in some way have differentiated technology, great connectivity with a physician and Customer Base and growth profile. Because clearly were a company that is an outlook of double digit Revenue Growth every year for the next five years. To go and buy a company, say, that was growing 1 would make no sense. Now, of course, jim asks the question will they look for tax benefits in pursuing acquisitions . Theres been some speculation that allergan will be out there looking at shire which has a 12. 5 tax base in ireland. David pyott saying tax considerations certainly are on the table, but its not something theyre looking for sclus ofly, but theyre keeping their options open. Now the next thing were looking at, next earnings coming up in the next few weeks and we should get a lot more info then. Weve heard from shareholders, we have to do something. Thats going to impact the entire industry. This is researching a whole use of money. That is the ultimate question, right . And i dont know enough about the subject to come up with the answer, but that seems to be the core debate. I think they think its a dangerous thing to have happen when you come in and cut r d. But when a company then comes in response and cuts costs, what analysts are saying is that he thinks they will come out and say told you so when they announce these cost cuts. If you dont do research, what do you do . You sell drugs that are already there. The whole argument is instead of the 100 that fail and one that makes it, you let universities or start ups or vc coming up with that and do all that legwork. Then you see one that finally is going to be commercially successful and then you go in there and its cheaper to buy it that way than it is to do it all in house. Its basic research. Governments do the basic research. Companies are supposed to do that middle area of developing the drugs and getting them, testing them with enough patience to get them out of the lab. They want to shut that further up the pipeline is what they want to do. Valeant wants to come in as phase three. If you look at the big ones, merck, all of those bigger drugs came from a biotech company. Absolutely. Theyre kind of morphing themselves into biotech companies. Thank you. When squawk returns, the easy money era of the fed expected to wrap up this fall. How much longer can the central bank remain dovish . And is it behind the curve . That discussion, next. Plus, billionaire investor wilbur ross will tell us why hes seeing asset bubbles everywhere. As we head to break, a look at yesterdays winners and losers. 4 good morning and welcome back to squawk box here on cnbc. Liesman took off his jacket finally. I wasnt going to say anything. When you wear a jacket, you look like a guest. If you want to be accepted as far out, right. If you want to be accepted as an integral part of the actually anchor team, you take your ourselves i come ready for that, you know. Come on. The skills or the desire that we to be at the desk. Thats what we produced with management before this happened. I agree with you. That goes by 12 years. Youre being funny . Everybody is he tries to be. Everybody it depends. Dont get on this bandwagon. I have enough over here with kernen. Im a pile onner. It starts. Funny how . Funny how . Exactly. Like the clown . The record for f words on that show, really . That was funny how . That was goodfellas. I didnt know he set the record. Joe peschi. Makes sense. Do you ever feel like your life is the last scene of that movie . You know what im saying . Youve got to stir the sauce. Get the hat. Secretly somewhere. And the helicopters are overhead. I feel a lot of times like my life is can you read this . Sorry. Please move on. To Global Markets. Theyre under pressure. European stocks are sharply lower, among the regions being cited, trade data out of china overnight. Industrial product number lower. I produce things. The north does, absolutely. But the gdp the ever. Mounting fears about the health of portugals largest listed bank. Actually, both of these are great countries, but i would think tourism is what keeps them both afloat at this point. Anyway, u. S. Equity futures down 129 points. That makes people so mad. I dont mean only tour im, but theyre great places, thats all im saying, grape places to visit. But lately its been tough to be a entrepreneur in italy or portugal. Yeah. But its a great safety net in almost all of europe. For now. There are arguments about the way but not winning one. That happened to a lot of the guys in the second term. Go ahead. Joining us now is julian emanuel, u. S. Equity strategist. And we have the bank of tokyo Mitsubishi Ufj on the phone. You see what were opening with. Economic data of europe, is that a excuse leading up to the li lineup . Its news to me. Just waking up, i hadnt been looking at dow stock futures Early Morning for quite some time. I think its one of those things that will come and go. Certainly europe is part of the picture of World Economic growth. Sometimes i always wonder like why is inflation not going again . Why is commodity demand not there . Maybe its simply the fact that europe is growing less than 1 where it was growing in the early 2000s like over 2 . Maybe thats maybe europe is part of the thing behind why were not seeing inflation. What do you make of the selloff this morning, is this an excuse or is it justified, considering well, when you look at whats happened to risk premiums over the last several months, whether its the s p, vix, oil volatility, whether its peripheral bond spreads, theres clearly overconfidence about, you happen, it seems like earnings in the u. S. And an underestimation of geopolitical risks and what the fed may or may not do. But its just the rubber band is a bit too stretched. Old markets climb the wall of worry. There isnt much of the wall left right now. So the s p can get to 2050 by the end of the your, but youre worried shortterm . Yeah. Thats our best case scenario. What we see coming into earnings season is people are just overconfident here thinking that you can grow 6 in the second quarter, which is doable. But when you look at the full year, you need to growth in the third and fourth quarters, which is potential lay stretch. What are the impacts for qe and to do more purchases after october . Big impact . That was ridiculous, wasnt it . They sat down and discussed whether we should cut the final by 15 billion or 10 billion. I kind of like that they said its going to be theyre cutting in 10 billion increments. Its either 15 or cut who says yellen is dovish . Wow, instead of going if five, five, five, she does the big 15 in one month. Thats a hawk. Qe, they were insane. Theyve done it in permanent now. She finally says, i have to hand it to her, wow. It could well be that the markets we have been molded into the idea that this is so normal. Its a technical matter. I know its technical. It sounds great. You didnt do ten and then five. Wow. Thats maybe the battle over something larger, which is raising Interest Rates. It is. There was going to be a considerable period. If they went and of course its when the clock starts ticking, whether its aix month employment. I really saw it. They should have done 35. They went 15 instead of 10 and th then 5 . No one knows how no one does know, youre right. So the history could be one where it says, if the fed waited another year or two, it must have gotten well, one more thing, this is just no longer buying. Right . What about the unwind of Everything Else . Theres a big part of that in the minutes. Its just going to sit and critters control that would cause a lot of market volatility. I dont think they want that. Theyre errored on the side predictability. If you look at the price of gold in the last couple of days and you look at how gold reacted at the last press conference, maybe there is a little bit of concern about that issue. When you look at most markets that would be sensitive to information or higher rates, december fed fund futures 2015. I see very little reaction. Remember the twoyear note . It was 41 now its 51 now its back down. Its hard to see a market where when we discuss at this table here the notion that people think the fed is behind the curve, i dont see that market because people are expecting to cover. Joe, me . No. Europe has given the fed cover because oh, europe. Yeah. Europe has given the fed cover. That if not for the a. R. M. What about if its inn market, its very hard to get a market where the market is sxrensing concern about inflation. I dont know we know how things get messed up when the fed makes a mistake. If you look at the last time and say thats not happening this time, you dont even know where its like this its got to get out somehow. If youre totally you know, if theres way too much of something and theres dislocations all over the place, i dont even know where its going to be. Im not smart enough to know. Is that a forecast or is that a way to run your life . No. You dont do once in a Central Emergency accommodation based on numbers we have. Here is the go back in. The fed is going to err on the side of doing more rather than less. End of story. When it comes down do it, thats what theyre going to do 37. They can claim theyre doing both things, right . Theyre going to buy more in october than they would have otherwise. Theyre leaving it off the theyre not buying. Theyve done ten and then five. Okay. Thank you, guys. Coming up, troubled bank in portugal sparking a selloff in europe. Were going to talk to a dealmaker that knows a thing about betting. As we hoed to break, here is quick of whats happening in the European Markets. Welcome back to squawk box. U. S. Equity futures are lower because of problems in europe and china is what is being cited. We look at the European Markets and see that is where it started base odd some trouble wes a bank in portugal. Reports out of china that maybe exports werent as good as people thought. I cant believe china can still disappoint on the numbers. Everybody has assumed that, you know, they have to be pretty bad to be worse than people thought. Coming up, were going to have a live report from europe. Also, is jcpenney about to turn the retailer around . Ron johnson is revealing he even tried to quit several times. The details, next on squawk box. Dont just visit rome. [ thud ] visit tripadvisor rome. With millions of reviews, tripadvisor makes any destination better. Some candid and surprising comments from former jcpenney ceo ron johnson. Their retail magazine racked reports that johnson spoke to a classroom full of Stanford Business School Students about how not to do it no, about how he left jcpenney, and he said, in his words, i resigned three times. In february i offered to resign. In march, i offered to resign. And finally in april, the board chair said, ron, finally, we will accept your resignation. Joining us now is a Retail Industry veteran, former chairman and ceo of toys r us. Hes now the ceo of storch advisers and worked with johnson at target when johnson was Vice President of merchandising for the company. What are your thoughts, gerald on whether he was ever the right guy. I said i could have been a retailing genius at the apple stores. I do. I could have figured out a way to display those items and i would have sold a lot of apple items. That doesnt mean im going to know how to stack apparel and what people are going to buy at jcpenney. I cant speak for ron. I know ron. Hes a brilliant guy. I know what hes trying 20 do. Department stores, particularly middle Market Department stores, are a diseased, you know, troubled entity. Right not specific just to jcpenney. No, its not. Look at sears. Look at a lot of them. The customers been aging out. Theyre getting older and older and older. The segment as a whole is squeezed. People are going to fast retail, you know, uniqlo, or target. He needed to recite massive change to try to save what would have been perhaps a slow spiral down. So thats what hes trying to do. By his own admission he moved too fast. He had to change the merchandise. Thats good. I think thats right. Thats exactly what was needed. But he moved too fast, overshot the customer. For some other reason, though, you know, they went to change the promotional strategy of the business. And that was the the unnecessary activity that sank the ship. Promotional strategy we should tell people, sales. Coupons, or run ads telling people arent you good youre not getting coupons anymore in the mail. Customers thought they liked getting deals, liked getting coupons. So sales crashed far more than anyone had expected. I think hes a smart guy. He figured this out, wanted to change direction. You know, guessing he probably talked to people, said look, its going to take longer than i thought. Do you have confidence in me or not . Oldman is a good guy, savvy and sophisticated retailer, bring him back. He knows all of this he said he tried to quit three times and why didnt the board listen to him the first time . I have no idea what he did or didnt do. I certainly believe he had serious conversations saying this is going to take longer, i now know what to do. I moved too fast. Thats what he said in the speech, i moved too fast. I know how to fix this. The merchandising direction is generally correct. We got to address the Pricing Strategy of the company. Its going to take awhile. Are you going to wait with me or not . Who wins in all of this . Any of these guys left, jcpenney, sears, what you call the middle Market Department stores . Is it just nordstroms and target, walmart down there . I wouldnt i think the people provide great value to the customer are going to win. Ive said that consistently. Costco reported great numbers today. 6 samestore sales. Gas up, it was 5 without the gasoline. That is a retailers retail. They provide tremendous value to the customer every day. People who are internet savvy, you know, nordstrom for example is very internet savvy. Theyre not growing because theyre highend department stores. Their service is awesome. Theyre growing on the internet at nordstrom. They have a great internet model. Theyre also growing at Nordstrom Rack which is an offsurprise strategy that competes to high end t. J. Maxx. People like Dollar General are winning. For all this talk about how bad the economy, how bad retail is, there are people winning big time. Walmart the other day, gentleman said the consumer is like, you know, in a funk, and then we werent making a big deal Container Store. You have . All right. I dont know. But youve never been . No. Oh, geez. They dont start this again. No doubt the economy is soft. No doubt about it whatsoever. Employment, though, as you point out, and liesman will not like that youre saying this, but we see these numbers, many workers below their talent level. A lot of parttime people. A lot of i agree. Its not flush. Theres no doubt the economy is soft. Ive been saying this consistently. The other thing was a silly, silly waste of time. The weather discussion during the first quarter, go back, the weather is ridiculous as an argument. That hid the fact that it was weak in the first quarter, too. Its been weak the whole time. It never got strong. It was weak over christmas. Weak in the first quarter. Employment picture. Taxes, concern over health care. Its not a robust time. Having said that, right, some of these numbers people are posting arent just because of the economy. Its because of them. Theyre not addressing fundamental trends like value and the internet. We talk about jcpenney. Jcpenney last i looked 12 billion, 13 billion in annual sales. Amazons going to hit 90. Thats seven jc pens. 90 billion. The economy is shifting very rapidly. And theyre not. Toward value and internet. Theyre not. Theyre going to lose. Were out of here. Thank you for coming in. We appreciate it. You have 15 seconds michelle. When we return an update on the early market selloff hitting the futures and europe. Plus the decision from the bank of england, and the market buzz word of the week has been bubble. Our guest host makes his living buying assets on the cheap but now he says your rheumatologist about a biologic. This is humira. This is humira helping to relieve my pain. This is humira helping me lay the groundwork. This is humira helping to protect my joints from further damage. Doctors have been prescribing humira for ten years. Humira works by targeting and helping to block a specific source of inflammation that contributes to ra symptoms. Humira is proven to help relieve pain and stop further joint damage in many adults. Humira can lower your ability to fight infections, including tuberculosis. Serious, sometimes fatal events, such as infections, lymphoma, or other types of cancer, have happened. Blood, liver and nervous system problems, serious allergic reactions, and new or worsening Heart Failure have occurred. Before starting humira, your doctor should test you for tb. Ask your doctor if you live in or have been to a region where certain fungal infections are common. Tell your doctor if you have had tb, hepatitis b, are prone to infections, or have symptoms such as fever, fatigue, cough, or sores. You should not start humira if you have any kind of infection. Take the next step. Talk to your doctor. This is humira at work. At every ford dealership, youll find the works its a complete checkup of the services your vehicle needs. So prepare your car for any road trip by taking it to an expert ford technician. Because no matter your destination good maintenance helps you save at the pump. Get our multipoint inspection with a Synthetic Blend Oil change, tire rotation, Brake Inspection and more for 29. 95 or less. Get a complete vehicle checkup only at your ford dealer. Thats why i always choose the fastest intern. R slow. The fastest printer. The fastest lunch. Turkey club. The fastest pencil sharpener. The fastest elevator. The fastest speed dial. The Fastest Office plant. So why wouldnt i choose the fastest wifi . I would. Switch to comcast Business Internet and get the fastest wifi included. Comcast business. Built for business. Bubbles. Bubbles, and more bubbles. Wilbur ross is seeing asset bubbles everywhere. And the billionaire investor known for swooping in for bargain deals is now in sell mode. What is making wilbur a seller right now. The nations Immigration Crisis, a big problem for washington, but when will it turn into a problem for big business . And, the baby boomer effect, working longer, playing harder, spending more. The Luxury Vacations that have boomers laying down big bucks. The second hour of squawk box begins right now. Good morning. And welcome to squawk box on cnbc. Im joe kernen along with Michelle Carusocabrera and steve liesman. Becky and andrew are off today. If youre just waking up this morning were seeing a global selloff in the markets. The equity markets this morning. U. S. Equity futures are getting worse as the day goes on. Down 144 points. We, dont forget, though, have been above 17,000 on the dow recently, which was where weve never been before. So were still in the Single Digits in terms of a pullback even after today. But this is about european fears. A big part of the story today. Among the reasons for the red arrows, disappointing Industrial Production numbers out of italy. And mounting fears about the health of portugals largest listed bank. And also not helping things weaker than expected trade data out of china overnight. Well have more from our colleagues in london in just a minute. But first, michelle has some of the local at least this country, mostly this countrys top corporate stories. We have been telling people if you look at the bottom of the screen, the bank of england leaving the key Interest Rate unchanged at 0. 5 . Also bank of america reportedly submitting its capital plan to the Federal Reserve for a third time. Dow jones reports the bank has again asked for permission to pay dividend of 5 cents per share. Its first request was rejected back in 2011. A second capital plan was submitted in march and approved but later withdrawn because the bank had miscalculated its capital. Were going to be watching shares of costco today, as well. The warehouse retailer reported that Comparable Store sales rose better than expected 6 in june. Theyre much bigger than the Container Store, joe. You need really big containers for stuff you buy at costco. I was told that the Container Store is really kind of a new york, manhattan sort of store. Because people have no room. Exactly. And they need things storage. Yeah. Higher fuel prices have helped costcos results. Online Video Company aereo is trying to base its future on the high profile case its recently lost in the supreme court. The High Court Ruled aereo was selling the programming of tv broadcasters without permission, describing aereos highly similar to a cable system. Aereo now arguing that if it is a Cable Company the law requires that it be sold a license to access content. I thought barry diller said its over . Maybe among other stocks to watch this morning, shares of Lumber Liquidators falling sharply this morning. The company cutting its guidance. No pun intending on the cutting. Earnings and revenues falling short of estimates. Results were hurt by a decline in its america segment. Sandwich chain pot belly, something i know nothing about, warning of weaker than expected you might not know know nothing about a sandwich chain. You might not know about the sandwich chain but you doth protest too much. Youre familiar with the term. Weaker than expected. But potbelly results. The company hit by disappointing comp sales and higher expenses primarily for advertising. Potbelly is a small market cap named specialty retailer. What is the market how do you say this zumiez zumiezraising its quarterly i dont do stocks. Better than expected june comps. Shares rising on the news and zynga getting a boost following an announcement it has appointed google executive regina dugan to its board. She leads the search giants advanced technology and projects group which works on new inventions that are like a tablet that uses 3d motion and Depth Sensing capabilities. Whats the last word in the dictionary . Because we were trying to think of it yesterday and i came up with zynga. But zy is pretty good, isnt it . Can you do better than zy . The question is whether zz top. If zzzz as in sleeping would be acceptable in scrabble. As in viewers during your fed report . Ooh. Or perhaps viewers during your repeated oh, no dont go there. What about you know, joe, you can no, no, no. What if the answers zynga . You can make fun of it. But guess what moves the market, the fed. You can talk about all the stuff you talk about that will end some day. The stuff i report on, up 100 im sorry. I apologized to wapner yesterday. Maybe its boring, joe. But it moves the market. He told wapner yesterday that he was wrong. Joe kernen admitted he was wrong. About the Container Store. Are there two full moons this month . Pigs are flying. Pigs are marrying people. Don sterling says hes married to a pig. He says did you see this on the post . Is it a male pig or a female pig . Why would that matter . Just looking youre not a Marriage Equality person . It doesnt matter whether its a male pig or a female pig. Whats wrong with you . We got to get this is a serious story. Is martin with us again . Day three of the israeli assault in the gaza strip. At least 75 palestinians have been killed. Israel says it continues to intercept rockets fired by gaza militants and the Israeli Military has mobilized 25,000 reservists for possible ground operation. Nbcs Martin Fletcher is back with us from tel aviv in the next half an hour. Treasury secretary jack lew continues his meeting in beijing today. Among the head lines, he says china is committed to reducing its intervention in the Foreign Exchange market and is preparing to increase the transparency of its currency policy. Meantime secretary of state john kerry says china and the United States had a Frank Exchange about cybersecurity issues, and have agreed to continue those discussions. And speaking of china and cybersecurity, the New York Times reports chinese hackers broke into the Computer Networks of the u. S. Governments agency that keeps the personal information of all federal employees. This happened in march. The story suggests the hackers appear to be targeting files on tens of thousands of employees who have applied for top secret security clearances. Some access was gained before federal authorities detected the threat and blocked the hackers from the network. Thats pretty amazing. So they know who our spies are. We did not say that treasury secretary jack lew will be one of our keynote speakers on wednesday, and he can debrief us on everything he just found out while he was in china. Yeah. Perfect. Wednesday. Where you are going to be interviewing stan druckenmiller. And nelson peltz, john paulson, governor christie. Im actually going to be listening to im going to stay this year. Going to stay. Im staying. Im not going to leave. See we do the show there at 6 00 in the morning until 9 00, and then last year you left . A little earlier than maybe you would otherwise this year . I guess i did. Although its a phenomenal conference, i had something to do. Really. Thats lets get back to europe and the selloff. There it is full day. Its awesome. Its going to be great. And dont i think theres going to be some programming. That day that were going to be able to show viewers. But it would really be better if you were there in person and signed up. Cue the crickets because its the second day of Janet Yellens testimony, i believe, in front of Congress Next week. It will be a good day to be talking about what happened on what do you do when rob do you just ignore him . Watch this. The producer is yelling at us right now. See that . Is he yelling . I dont know get started. Is he still yelling . Hes not yelling anymore. I dont know. Karen cho joins us now from london. This better be good, karen. There are a lot of fears around the portuguese Banking Sector today. So let me just flesh that out for you. Yes a lot of news to focus on here. Big bubble digit declines again and banker desanto this is where a lot of fears are emanating from. The background is theres a proposed structure by the Holding Company of the founding family of the largest lender in portugal which is this bank. There are reports that the energy in question at es pir ito santo is considering filing for debt solvency. Currently there are talks about extending maturity on the Debt Repayment or you may see a debt to equity swap. The concerns are enough to push the stock lower because there may be a funding gap in that particular bank but its also hurt some of the other banks around portugal, as well. Its almost infectious across this market. 8 down you can see for the other names. Also caught up in some of the whitewash has been Portugal Telecom which has bought some of the debt in their exposure. You can see right across the portuguese stock market which has been one of the better performers on the periphery so far this year it is currently down another fourplus percent today. The fears also impacting the bond markets. And this is where it is key, because youre talking about the largest lender in portugal, and how that impacts the sovereign. So theres been impacts at the short end, the two end, twoyear Government Bond market but also the tenyear because one of the feelings is that if banker Espirito Santo needs to capitalize it may not be buying as many portuguese bonds as it has in the past. Youre saying how big a story could this be for a selloff across European Markets . There is a feeling thats been mainly some of the local Fund Managers that have been buying the portuguese debt so far. Not hedge funds so you shouldnt see a quick slice away from some of these exposures. Just also quickly i can show you the other european banks when you can see just how much Downside Pressure there is across even the french name, some of the german names. It is a move to the downside today. Well and truly all those portuguese names. I hope youre happy with that one. It was awesome. Worth the wait. I see why the producer wanted to get to you so quickly. Thank you. Our guest host today, and wilbur you expressed an interest here the last word in the injury is zyxt, zyxt. The second indicative of the word zy. Theres also zyzzyva which is a tropical american weevil. How do you think immigration policy will affect thats a good question. Our host, our guest host today is wilbur ross and youre chairman and ceo of w. L. Ross. How did you come up with that name, w. L. Ross i couldnt think of anything else. Thats good. So we were just talking, and i tried to figure out, you havent calculated whether you doubled your billions in the last three years. But you whats cool is liesman, he was in here while you were buying Northern Rock, and we thought he was, you know, we didnt know at the time that was going to work out. That was remember the institution in the uk. Big trouble and bank united here in the United States with fdic assistance. Both of those investments return at least double your money, triple . What was it . Well, Northern Rock is now part of virgin money it isnt public. Its doing very, very well. It made earnings in the very first year that we had it, which was pretty unusual. Do you have to do anything or just buy it . Well, theres a whole new management. Right. So you got management and you delegate them to make sure you turn this thing around, basically . Well, and also it was putting the virgin brand. Virgin is a very, very powerful brand, especially in the uk. And between that and j. N. Grardia who is the person running the bank theyve done a good job. Made him an equity guy too, right . John made quite a bit of money. And you did, too. Yes. And all your partners did. Indeed. What did you have to do there . Well, first of all, you had to have the courage to buy it. Right. That was when everybody thought florida was going to be the lost continent of atlantis and sink into the ocean. They still think that. Second, you had to have the team that could deal with the problem loans. And we not only saved fdic a billion dollars in terms of our bid versus the underbid, we never needed to use all the guarantees that they gave us. Because john was able to run things better, and further minimize. So we probably saved fdic a couple of billion dollars. Monday sternlicht was on, talking about chorus. You remember we were part of that. And everybody said that theyd pay 500 million over the nearest bid and they were going to they were greenhorns. I think it was 20 compounded return. Thats right. Turned out green was dollars. The green was dollars. So this bank in portugal now. You did you looked at it . Yeah, we took a look at it but we couldnt get our arms around it. What does that mean . Well, we didnt feel we really understood the balance sheet. They were trying to do what . Well, we were talking about whether they needed capital. Because weve kind of run out of big countries to invest in. So now were going to the smaller ones. So we went in to greece with euro bank, which is off to a very, very good start which you did invest in. Oh, yeah we invested there about a month ago. Were also looking at spain and we decided to look at portugal, and look at cyprus, because those are where the real problems in banking are right now. And with Espirito Santo, when you said you couldnt get your arms around the balance sheet, what do you mean . We didnt feel we understood quite what was going on. Now we understand a little bit of the reason for that. Are all the numbers there for you to see . Do you need someone to do the legwork to go see where the assets are . What do you mean . Oh, sure. We normally bring in local people, because we dont speak portuguese. So you need people who speak the language, the loans are obviously all in the local language. And so well bring in the can you imagine . That sounds difficult. Steve, to go in and do the Due Diligence to see whether you invest there. You got to hand it to people that go do things like that. Its part of the job. Its what you do. You might expect to see portuguese you dont want to lose your shirt. Oh, no id be taking the risk, and jumping the water is always risky. You havent said one thing that youre doing here. No. We havent been doing as much here. We did a few investments down in the basin in texas. We bought what was different . We bought building materials. Here we are, steve. Europe is where we were two years ago, three years ago in terms of their Central Banks. Its a great question. Its a great question as to whether or not the value is really in europe, and the value here is in the value here. On balance weve been a seller. Weve sold six times as much as we bought so far this year. Here in the United States or just in general. Everywhere. Everywhere . But when you see why . Well, with markets at alltime highs it shouldnt be surprising that there are more things that are attracted to sell than to buy. Does that mean that valuations are high . I think so. For example, in the last report sounds like. The average multiple of earnings before interest, taxes, depreciation and amortization that the lbo funds paid was 11. 2 times. Michelles explaining to our viewers what a promotional activity is and youre explaining that hes selling everything so youre saying our valuation is high. Our viewers are pretty smart our viewers are pretty smart. Our viewers are pretty smart. I want to know relative 11 times relative to what is a more normal thats a new alltime record what would you be looking for . Thats a peak in 2007 that got to about 9. 2. So its a couple of notches higher multiples now, in lbos, than it was at the peak thats what i was trying to say. The thing with these guys the thing with now hes got this i guarantee youre not just going to wait around for everything to go back down again. Youre constantly going to be doing things. So even though youre selling more i know youre looking for stuff. Not like theres nothing to buy. In fact Deutsche Bank and bank america raised for us a couple weeks ago, a special purpose acquisition. They gave us 500 million in what amounts to a blind pool to find an individual company to buy. A spec . Yes. A return of the sfooek . Yes, so with leverage that would be a billion or a billion and a quarter companies. So thats a big project now. To get in on this. Ive got 17 in my pocket. Sure, trades around 10. Steve, i got please. Okay robs yelling at me. When squawk box returns, millionaires, media moguls and big bankers making their annual pilgrimage to idaho. The buzz from sun valley next. And as we head to break check out the futures, getting worse this morning. Squawk will come back next. At every ford dealership, youll find the works its a complete checkup of the services your vehicle needs. So prepare your car for any road trip by taking it to an expert ford technician. Because no matter your destination good maintenance helps you save at the pump. Get our multipoint inspection with a Synthetic Blend Oil change, tire rotation, Brake Inspection and more for 29. 95 or less. Get a complete vehicle checkup only at your ford dealer. The annual conference taking place in sun valley this week. Its not just about who is there but who is hanging out with whom. Kayla tausche, shes hanging out. She joins us now. I am hanging out, steve. You know its funny, this conference has always been one with very heightened security. So much of it happens behind closed doors. Behind velvet ropes. So what piques curiosity the most is who these moguls are taking meetings with, and just what they are talking about. Theyre very rarely passive conversations. Yesterday, during lunch, we saw israeli content king taking a stroll with jeff buchananous who whom warner has been the subject of much speculation. When asked if they were making a deal, bewkes said were buying coffee. Tim cook and eddie cue spent much of the afternoon together. Apple has several product launches rumored to be hitting shelves this fall. So interesting that they probably had a lot of work to get done to the. They didnt make much time for reps from other companies yesterday. Comcast cfo taking meetings, spending some quality times with nhl commissioner gary bettman. Of course the nhl does much business with nbc universal. But they looked like they were having a good time. Air b and b ceo was talking with reid hoffman. He was one of the early investors in air bnb. They are now growing past a 10 billion valuation. This is the most interesting one to me. I dont know if you can see chase kerrys mustache. But chase kerry of 21st century fox sought out netflixs Reed Hastings and said, can we take a meeting tomorrow . I have some things id like to ask your advice about. I would kill to be in that meeting. Curiosity may just kill me on that one. The rumor mill, of course, always spins during this week and current eventswise there are three topics that have risen to the top of the conversation. The first is that speculation about time warner. Several executives i spoke to said that they thought the deal of the week was going to be a sale of univision or perhaps descripti scripps network. Now say they time warner is the buzz. Second aereos plan b or plan c and trying to rebrand itself as a Cable Company. Aereo is not here. The broadcasters are. Well hope to get their take a little later today. Finally, dish Networks Coming out and quashing not one, but both of those mega cable deals on the table right now. Hopefully well get a little bit of color on whether people think that actually means anything for the future of those deals that have spurred some other industry talk, too. So well have more for you later from sun valley. But its been a busy couple of days for the people who are on the ground here. Guys, back to you. Certainly. No baked potato yet. Not yet. I did have a nice steak. Our team had some elk burgers last night. Okay. We eat well out here, joe. All right. Keep me updated on your visit. I will. Coming up, getting away in style. We know baby boomers like to spend their money and one area benefiting from their spending power is Luxury Travel. The trends in the top vacation plans coming up in the next half hour. And as we head to break, check out the european stock markets this morning. Pretty sharply lower across the board including portugal. Talk more about that. Squawk is back in a moment. Really. So our business can be on at ts network for 175 dollars a month . Yup. All five of you for 175. Our clients need a lot of attention. Theres unlimited talk and text. Were working deals all day. You get 10 gigabytes of data to share. What about expansion potential . Add a line anytime for 15 bucks a month. Low dues. Great terms. Lets close. Introducing at t mobile share value plans. With our bestever pricing for business. In a we believe outshining the competition tomorrow quires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. When we return, president obama is in texas, set to speak about the economy. But the crisis at the border is looming in the background. Next, one senators crusade to protect our borders. Squawk box will return in just a moment. Yeah, girl you know, ive been thinking about us and, uh, i just cant fight it anymore its bundle time bundle mm, feel those savings, baby and thats how a home and auto bundle is made. Better he learns it here than on the streets. The miracle of bundling now, thats progressive. Welcome back to squawk box. Our top story this morning a Global Market selloff. European stocks are sharply in the red. Weve got a lot of reasons being cited. Weaker than expected trade data out of china overnight. Japanese industrial data also extremely disappointing. Industrial production numbers out of italy, also france and mounting fears about the health of portugals largest listed bank, hence why we are showing you portugal at the top of the list this morning. Normally we dont. That average is off by more than 4 . Italy is right behind. Now wilbur is that cheap enough . Too early. Too early still. U. S. Equities selling off, as well, as you can see. Can we go back to that . Go back to the european boards. You can see that italy is now down 2. 0973. Last time we showed you it was down 2. 0972. And then the first time we showed you, it was actually down 2. 0964. Were not sure why it is up for the italian its now four decimal points. But its now if we were going to show you pie it would be all wed show you today. They trade from 6 00 a. M. Like the old euro. Its historical. Oh, my god. Oh, my god. Now its 2. 11537942 in italy. More now on the on this mornings market selloff. Lets turn to jim iuorio. Now in that in that 10,000th place in italy what caused that latest move . 0. 0001. Whats happening . Whats most important . Is it china, portugal, italy . Portugal. Its europe. Its european peripheral bonds. If you listen to mark bond and peter schiff they say they see bubbles everywhere except in assets and gold. One thing most of us agree on is there probably is some sort of bubble in the european peripherals. That could have a destabilizing effect. This is relatively serious to me. The reason i think its only mildly serious at this point in time is because theyre not selling french bonds yet. To me that will be the indication that things are really crumbling in europe. But are portuguese and greek bonds mispriced . Of course they are. Its just a function of every central bank throwing tons of money into the system. There could easily be a bubble there. We watch china all the time, too. What really could be the indication of destabilization so when those european bonds start to go. Im not saying today is. If the stock market went about 15 handles lower than here and felt comfortable there i think the race could be on. Right now im just i think its worth watching. One of the discussions we always have here, jim, is how much the feds action is sort of masking, or somehow not showing the true state of affairs in this country. But then amen to that. But then you think about then you think about how bad off europe was, and some of those individual countries, and you think, wow, what if we take huge Central Bank Action there, i mean, the difference between reality and where the central bank has the markets could be, you know, here in the United States we could be here. Maybe its not that big a deal. Over there, i mean, i thought of spain and portugal and italy as one step away from, you know, from real trouble. Now all of a sudden they got lower yields than us. M that makes you think. Its the craziest thing ive ever seen. Its absolutely ridiculous. Spain has a 22 unemployment or whatever it is and theyre trading at lower yields than us. It is absolutely an enormous deal, a distortion of markets, however you want to call it. And everything that weve ever studied of economic history, if you distort markets long enough, eventually it comes to an abrupt end, or so jim thats what i thought was that the banks in portugal, the banks theyve had time, the banks in spain, i thought things had gotten better, so it was surprising to me why this one particular bank in portugal suddenly was in trouble. But if its really, if all these things, if yields have really just come down because of the central bank then maybe the underlying problems havent been fixed to the extent that we think they have. Maybe not at all. I dont think theres a maybe about it. And i think things did get better but they got better in the form of germany kind of being the wallet for everything. And thats so for us as traders and investors, we got to look for what the trigger is. And you look at all of them and you zero in on france. Because france is the hybrid. France certainly isnt germany. But it probably isnt portugal either. When the worm begins to turn there to me thats when the foundation crumbles. I dont think theres any maybe about it. I think they papered over their problems for more than we did. Thats a good term to use, papered over. Dont you think the real reason that these peripheral country bond yields have gone below ours is simply that so much money has gone in to emerging market funds that simply a supply demand thing. Its not an editorial khernt. Wilbur, theres no doubt about it. Once the different Investment Opportunities are taken away around the world then theres Pension Funds that need yield today. They dont they dont care about tomorrow because they lose their job if they dont find yields today. And then they start chasing those high yields there and they become low yields there. So i absolutely agree with you. Okay. All right. Thanks, jim. I679 urio you got one consonant. Iuourio. How many letters and one consonant . Its 82 vowels. Thats messed up. No its not. Its messed up. Thank you. Thank you. You got a few. Good scrabble word. Iou theyre yelling at me. Israels aerial assault on gaza now in the third day. Martin fletcher joins us from tel aviv with the latest. Good morning, martin. Good morning, steve. Well, last night was the worst attack by the israelis on the palestinians, at least 320 separate attacks okay specific targets in gaza. The israelis say theyre targeting mostly secret tunnels and rocket launching sites. Theyve also been attacking the homes of hamas military leaders, sometimes giving warnings and unfortunately that led last night to tragedy. One rocket hit a palestinian home. Eight members from one family were killed. Including five children. And in another incident, just a few hours earlier, at a beach cafe on the gaza beach, palestinians were watching the world cup soccer game, where they were also hit by an israeli rocket. Five palestinians were hit watching holland lose to argentina. That was the worst night of israeli attacks on gaza but also there were at least 200 rocket attacks in the last 24 hours by the palestinians against israeli cities. So today there have been sirens all over israel. Here in tel aviv, at least three separate occasions Israeli Citizens were running for their lives, racing for the bomb shelters when the sirens went off. The israeli antirocket system intercepted those rockets so so far theres been no casualties among israelis from all those palestinian rockets. A remarkable achievement for this antirocket system. No israeli casualties and almost no israeli houses even damaged. But nevertheless, the next step israel if those rockets dont stop coming from gaza, israel is threatening a Ground Invasion of gaza. Joe . Okay, great, martin. We appreciate it. Thank you again. Saw you a couple of times today and we appreciate the work youre doing over there. President obama is going to be speaking in austin, texas, today about the economy. But the Immigration Crisis is looming large in the background, literally. Joining us now is senator john hoeven, he coauthored an amendment with senator bob corker on border security. It was passed in the senates immigration bill, and senator welcome. Its good to see you. And before we get on to the substance of the bill and how to perhaps deal with this, can you just can you weigh in on the notion that the president , okay i understand was planned to go down there as a political trip and a fundraising trip, but his critics that say youre in the area, why not go down and see whats happening, its can you figure out the reason why that doesnt make sense for the president , for the commander in chief to be down there . No, he really does need to go to the border. Hes right there. He could go down to mcallen, see whats going on. And even more importantly, he needs to enforce the border and return these young people who are coming here illegally to their home country. Why do you think hes not going down there . I guess thats just a rhetorical question. Is it not to be seen as associated with whats happening . Because that would mean a cause and an effect . But the buck stops with the president on all these issues, doesnt it . I mean de facto it is something that, you know, thats going to be on his desk. Why doesnt he go . I believe thats it. He just doesnt want to have a photograph with him standing there. But the reality is he needs to address this situation and Everybody Knows it. So i think hes not doing what he should be doing, which is going down there, looking at the situation, and then dealing with it. And that means specifically border enforcement, return these people who are coming here illegally, these young people, to their home countries. So, weve discussed here really what did happen. What changed in the last few years to where all of a sudden we have this problem, this specific problem with these young people. There was a New York Times piece that said it was a a law passed during the Bush Administration making it easier for them to stay. Other people want to say that the president hasnt deported anyone, so they know that theyre going to be able to stay. What caused this most recent increase in the influx . Well, we do need to repeal that 2008 law so we can return people who young people who come here illegally without a lengthy judicial proceeding. But, the reason whats changed is a recognition in Central America that the president is not enforcing the border, and so, young people are coming up here, and being allowed to stay, and that word has gotten around, and so, more and more are coming. And thats why the president needs to address this situation, and he needs to address it now. Why would he think that creating orphans out of these little children by sending them or letting them come in here helps anybody . It doesnt. It makes no sense. And thats why, look, hes advanced a supplemental request for funding. But the reality is, he again has a request for a lot of money to take care of young people here, meaning keeping the illegals here in this country, rather than sending them home. Congress is not going to support that, because thats not the way to deal with this problem. Okay. Im looking at your immigration bill with senator corker. And then im thinking what, you know, maybe democrats would put in a bill. That these bills seem far apart. What does your bill want to do . First thing we have to do is enforce the border. And thats whats not happening. And youre not going to get Congress Moving on any kind of further Immigration Reform until you first enforce the border. Thats what the American People want. Thats what needs to be done. And thats why weve got this humanitarian crisis on the border right now. Is because the administration is not enforcing the border. And what else what else is in then what . What do we do with the people that are here, i mean this doesnt seem like a comprehensive bill. Is it comprehensive . Well, look, youre not going to get the other steps that go in to Immigration Reform until you first secure the border. Thats got to be done first. And thats why congress isnt able to advance the bill, because nobody trusts the president to enforce the border. And thats the first order of business. So thats why this needs to be done first. Senator, yesterday, and i dont know whether i havent looked at the cbo report but our guest host that used to work in the white house alan krueger said that one of the biggest benefits of an immigration bill is to allow many, many more people to immigrate here and then they can become consumers, and that will help businesses, and that will help gdp. And i can think of the flip side, though, theres a lot of services needed that we give people, as well. I mean would it be a net positive in terms of spurring consumer demand . The concern is not legal immigration. Its all this illegal immigration. And youve got to do things in the right order. You first have to secure the border, deal with the humanitarian crisis, return these young people who are streaming over the border to their home country. Create some confidence that we have control of our borders, before you are able to then go on to things like making sure that we enforce workplace law. We have entry exit at all of our International Airports and seaports. But the spirit of the question is, is immigration good or bad for the United States . Should we welcome more people or not . Legal immigration is good for the country. Illegal immigration is not. But right now legally immigration is capped, right . Should there be more . It needs to be updated, and reformed. So we have it in the right mix in the right way to meet the needs of this country. But weve got to get a handle on the illegal immigration. And thats what the administrations got to do. Okay, senator, thank you for your opinions and your thoughts today. We appreciate it. Thanks, joe. Up next, baby boomers have the time, the money, to spend on Luxury Vacations. Thats why the sector has been doing so well. Were going to talk to the ceo of virtuoso, a Luxury Travel advisory company. Its seen a boost in business thanks to the boomer generation. I really do wish andrew was here for this if its really high end because im going to take notes for him. And then as we head to a break check out the futures of the day, which are sharply lower but theyre not as bad as they were last night. I make a lot of purchases for my business. And i get a lot in return with ink plus from chase. Like 50,000 bonus points when i spent 5,000 in the first 3 months after i opened my account. And i earn 5 times the rewards on internet, phone services and at Office Supply stores. With ink plus i can choose how to redeem my points. Travel, gift cards, even cash back. And my rewards points wont expire. So you can make owning a business even more rewarding. Ink from chase. So you can. Your studied day and night for her drivers test. Secretly inside, you hoped she wouldnt pass. The thought of your baby girl driving around all by herself was. You just werent ready. But she did pass. cause shes your baby girl. And now youre proud. A bundle of nerves proud. But proud. Get a discount when you add a newlylicensed teen to your Liberty Mutual insurance policy. Call to learn about our whole range of life event discounts. Newlywed discount. New College Graduate and retiree discounts. You could even get a discount when you add a car. Call Liberty Mutual for a free quote today at see Car Insurance in a whole new light. Liberty Mutual Insurance. [ girl ] my mom, she makes underwater fans that are powered by the moon. She can print amazing things, right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. My mom works at ge. Now getting to the final installment in our baby boomer effect series this week. One business is expecting a huge jump, travel and leisure. Baby boomers have the time and the money to spend to travel the world and theyre doing it in style. Cnbcs robert frank has the story. Thanks, guys. With more time on their hands, baby boomers are taking to the road. And the skies and the seas. Boomers spend over 150 billion a year on travel, which they rank as their top leisure activity. They take an average of 3. 7 trips a year. But theyre not just looking for a lounge on the beach. We spoke with Luxury Travel firm virtuoso about their three most popular trips for boomers. Topping the list is a world cruise. Most are more than 100 days. Crystal cruises has a 108 day trip around the world, including the caribbean, french polynesia, easter island, south africa and argentina. Prices range from 41,000, to 212,000 per person. Now upscale safaris are really big right now, with a 15day grand safari focusing on kenya and tanzania starting at 17,855 per person. And the land down under has become a top choice for roving boomers. Retirees have time to make the long flight and theres a tenday tour of sydney, the reef and rain forest starting at 3,390 per person. With adults over 50 accounting for 80 of travel spending this is the one generation you want to keep up with. Ill bet. Lets bring in matthew upchurch, the chairman and ceo of virtuoso. This is a Luxury Travel Advisers Network that targets 50, 60, and 70yearolds. Good to have you here. Great to be here. One of the stats that you brought us is that 2012 was the first year that more than 1 billion people in the world traveled internationally. And i said oh, its the chinese. Its the new emerging class. New middle class in brazil and indiana. But its also the retirement generation, right . Its both. Whats happened is both the aging boomers and the industrialized world are really driving that with basically the number one desire of boomers to do in the retirement is travel, by far. And then of course the rise of the rest of the world. Heres what i dont understand. We have all these stats. People arent saving enough for retirement. Most people havent saved enough for retirement. Yet theyre retiring early and spending money like crazy on these trips. Theres this huge transference of wealth. But what weve seen over the last 20 years is this huge shift in priorities. From the accumulation of stuff, to life experiences. And so its quite frankly a lot of people are focusing on life experiences, and travel as being one of the key, if not the key conduit for that. So its also a prioritization of their discretionary spending. I need to ask you a quick question. 50, 60 and 70yearolds. You can be 51. Is that your question . No, not at all. Confining it to just being 50, 60 or 70 seems limiting. What if youre 51. No, no, no. What about 62. I want to ask about 80yearolds. My dad is traveling. 82. Theres also 80s the actual intro to the package is we serve all generations, and actually youre right, the Fastest Growing segment is 80yearolds. I mean the health thats what i want to bring up. Theyre healthy. Their health and wellness and theyre doing crazy stuff. You dont have to be 80. In their 80s. Theyre going on safaris. Theyre healthy. Theyre active. Thats whats amazing. Wilburs got a question. Slas skwun who is approachin 80, im glad to hear this. Theyll take you on a trip. Of the billion people crossing borders, how many are actually americans . Well, right now i dont know that exact statistic so i wont make it up but i do know that the boomers right now in the developed world are driving that. The emerging markets are starting to contribute a lot to that. But theyre still not the preponderance of this. Steve this is for you. This stat point which is the one area where the u. S. Still has a trade surplus is is travel and tourism. People coming in. You cant even walk on fifth avenue anymore. Thats been one of my biggest frustrations when you talk about the reporting of travel and tourism. Because we report on airlines and hotels individually. We dont talk about the entire sector. I have as a whole. I have a macro business question for you. Youre targeting 50, 60 and 70yearolds. Whats interesting to us is thats outside what we call the demo. Everybody wants to target young people. Are businesses in general missing a huge opportunity to target this group, because they have a lot of money to spend and the general idea being they dont change their spending patterns . But youre saying you know what . I can make them change their spending patterns. No, absolutely. This is absolutely where the money is. And you know, ken dike wald who was on earlier, he said it best. They have not only the money, and the time. And theyre reinventing the way they retire. Theyre not just, you know, theyre not just doing something, and then finishing up. Theyre going back. Theyre doing volunteerism. Theyre starting entrepreneurial businesses. But theyre very, very active. And travel is a key. The other thing thats important about the boomers is that they are also the parents of the millennials. And the millennials, you know, the intro said that 50, 60 and 70. The millennials are spending more per diem than the boomers did. So the reality is when the echo boomers, another name for them. The boomers were the first generation, after the war, two generation, that did not see travel as a luxury. They saw it as a part of their life. They saw it as a right. Just incredible. And they also took the millennials with them, right . So the millennials have grown up as travelers. Skewed that crazy demo. Used to be 25 to 54. Then it went 18 to 49. They actually are worried about 15 to 30 and i think its because young people are controlling this. And thiey think that theres data that business does not follow demographics. Stanford Professor John keller coming up. Ete checkup of the services your vehicle needs. So prepare your car for any road trip by taking it to an expert ford technician. Because no matter your destination good maintenance helps you save at the pump. Get our multipoint inspection with a Synthetic Blend Oil change, tire rotation, Brake Inspection and more for 29. 95 or less. Get a complete vehicle checkup only at your ford dealer. Coming up, markets around the globe in the red. Weaker than expected trade data out of china overnight. Disappointing Industrial Production numbers out of italy. Bad number froms from japan mounting fears about portugals largest listed bank. We get an update next. And later a disruptor that helps make smarter investment decisions. The ceo and cofounder of databox will be here to explain what they do and how their clants are taking advantage of their service. Once there was a girl who never settled for ordinary. Even in her laundry room. With downy unstoppables, she matched her one of a kind style with one of a kind scents. Downy unstoppables in wash scent boosters wash in the wow. Breaking economic news. Weekly jobless claims are just 30 minutes away. The numbers and Market Reaction are just ahead. A big data disruptor who helps Companies Make smarter decisions. The ceo of datafox talks about how they are changing the research landscape. Plus, the word on the street is that therapeutics may be looking to do a deal. We hear from the companys ceo and talk the future of medicine. As the final hour of squawk box begins right now. Welcome back to squawk box here on cnbc. Percentages or total numbers . First in business worldwide. Im joe kernen along with Michelle Carusocabrera. So theres ten times as many. What does that mean . Steve liesman percentages not numbers. Steve liesman is here. Becky and andrew are off today. In studio this morning, wilbur ross, chairman and ceo of w. L. Ross and company is with us. And we are seeing a big selloff in the Global Markets this morning. Lets show you whats going on. U. S. Equity futures right now are negative. They suggest the dow would open lower by about 140 points. The s p lower by 16. The nasdaq by about 34. The tenyear yield is at a fiveweek low . Falling to the lowest level in over five weeks. Twoyear treasuries the lowest level in three weeks. Because of the selloff that were seeing as people seek safety in the u. S. Treasury market. Lots of red arrows in europe is where this all started. Investors troubled by a whole bunch of stuff. Disaminuting Industrial Production numbers out of france and italy. Japanese numbers overnight when it comes to machine orders were horrendous. Chinese data was also bad. And then you also have mounting fears about the health of portugals largest listed bank. Also not helping, repeating myself here, weaker than expected trade data out of china overnight. One point, the japanese machinery orders numbers do raise questions about u. S. Capital spending because we import a lot of our machinery from over there. Capex turning around is a big part of the outlook for later this year as women as the Federal Reserve. And data could be volatile. Its one month but its a big decline. And i remember when we hit the low. In the yield. Because remember that day, it was the day the gdp number was released down 2. 9. I said 2. 43 will be the low on the ten year, then it went back up to 270. Now its back down lets show you more about whats going on in europe. Karen cho is standing by in london with a lot more on the selloff there. Particularly with whats happening with the banks. Thanks very much. Youre right to highlight the data because we have had a run of it this week. We had italy today but it started with germany. And the uk added into that picture this week. But we have concerns about the portuguese Banking System. It stems around banco es spirito santo. This is the largest lender in portugal. This is concerns about the Holding Structure of the founding family of this bank. We had the stock selling off double digits again today. The stock has been halted recently as the market offer waits for more information from the company. Its impacted other banks around portugal as well. We had Portugal Telecom because it owns Espirito Santo. It doesnt end on the equity picture. We have had a selloff in recent days to a cross on the bond markets. Theres been some very low yields right across the border here. There are concerns that if banco Espirito Santo has some difficulties it may stop buying portuguese debt. Dont forget there has been a lot of purchases by the local banks into the sovereign of late so there is a lot of chatter out there that the government might be forced to delay any further issuance of portuguese debt. So weve had movement at the short end. The twoyear, but also on the tenyear. Weve actually pushed through the 4 mark on the yield today. You can see weve come back a little bit since then but that rubicon has been breached today. Is this a catalyst for a broader selloff . One of the big concerns is whos been holding the debt. I mention the local banks. Its not hedge funds. Thats the good news. Some of the french banks have been doing a lot of work on this exposure. They say theres no deep fear in the market that hedge funds are going to be a catalyst for exiting this market. So that is a notion of confidence, i guess, in the overall Banking System. But you can see right across the charts today, weve got a selloff in the banking space, the names under pressure after the weak Industrial Production figure came out today. Thats impacted the sector which was showing some strength yesterday into the European Market close. Sharply on the back foot today but its taking with it the other peripheral names, spanish names going south. And also the french names, bnp paribas stock under water. The german bank struggling. Separately theres been other issues around fines against commerzbank and any further settlements with u. S. Authorities. Theres a lot of different issues investors are grappling with and its all negative on this side of the world. Let me toss it back to you. Thank you so much, karen cho. I looked at the euro 1. 36. Thats way too high. Its ridiculous. It should be a dollar. This is not a good year to go to europe. Were you going to go . No, i got other things going on. It makes no sense whatsoever. Really doesnt. The only way they can get out of this germany. They need to because otherwise youre just going to have internal wage deflation, which is really whats been going on. Much better to devalue the currency. We were joking during the break when karen shows that whole board of banks selling off. Does that make you drool, finally were getting to some place where i might actually go in . I think many of these need more than a few points down. So its too early still . For us. Mmhmm. He doesnt drool. Im not old enough to drool. You have to be over 80 to drool. Young people, wilbur, theyre going to be young forever, thats what they think, dont they . I hope so. Because the alternative. They can talk to us like that. The House Financial Services committee set for a hearing on new proposals for increased fed scrutiny. Joining us is john taylor a Hoover Institution senior fellow and stanford economics professor. Hes going to testify at that hearing. Can you give us great to have you. Always good to see you. Will you what are you going to say, what are your thoughts on those on that issue . Well, i think they got some good proposals. Good legislative proposals submitted on which would have the fed announce a strategy and stick to it. It would be the feds decision, of course. This is not micromanaging. But i think its providing a good degree of clarity to how Monetary Policy works. We have a lot of experience over time but when Monetary Policy works better and when it doesnt and i think this legislation takes account of that research in history. And comes up with a pretty good strategy for giving the fed some particular things to do. I mean its like two kinds of people in the world. Dog and cat people i think. And then theres people that think the fed should be right where they are right now. And even err on the side of even more accommodation. And then there are people that will just so sure that the economy at this point is Strong Enough to not need all of this. And that, i mean, these they point out that these measures that were seeing right now are really once in a generation, once in a century measures. Emergency measures, and yet you look at a lot of different metrics, and the economys pretty good. And thats got to come out in the wash somehow that theyre way too easy right now. Where are you on this . Well, i think the rates too low. But this is really more about a longerterm strategy type of thing. You know, you could say this is a once in a century thing, but geez, how many once in a century things are we going to be doing . What we do know in the past century is when the fed had a pretty good strategy, like in the 80s and 90s, things worked pretty well. Its really just in the last decade or so of course it has not been a good economy. We hope its going to get better. But i think the debate is not so much hawks versus doves, its whether youre going to have some rules and strategies per policy or just be dominated by these you dont think theres a day of reckoning coming from whats been done so far . And certainly you look at you know it makes it hard to raise rates when you look at what europes doing anyway at this point. So wed be almost in a, i know its a multispeed world, but it would just, you know, its almost like everybodys doing it so why should we stop . Well, thats the whole problem, quite frankly. You know, Central Banks tend to follow each other. They start on one route and follows. I think you can see that recently. You know, i just spent some time in singapore. They have a zero rate because the fed has a zero rate. And it spreads. You cant say lets do it because everybody else is doing it especially if youre the fed because youre the Major Central Bank and make a big difference. So i think legislation like this is really important. I think if it passes it will be a landmark. And it will make things a lot better. Is there legislation for getting rid of the dual mandate . This legislation doesnt focus on that per se but it just says heres a way for you to tell the markets what youre doing. Its your job to do that in a way thats transparent and they report. So no, theres a focus here on keeping policy less interventionist, put it that way. Less all these special programs which people question. I agree with you, theres debate about their impacts. But theres uncertainty about their impacts. And it may be a day of reckoning. I tend to think it is. But the main thing is to get to a better strategy. So, john, do you really think that having congress have more of a voice in Federal Reserve policy is going to be helpful . Look at what they did to fannie and freddie, the things that they had the most influence over. Im very worried about anything that impinges the independence of the fed, then turns more power over to the congress. This doesnt impinge on the independence of the fed at all. In fact, its very explicit. Its the feds job to choose its strategy. But what the fed should do is make the strategy clear to the American People, and report to the congress. And moreover, if it goes off its strategy, explain why. So i think what weve seen independence is important but you know its not been enough to prevent these bouts of high intervention discretion. You need Something Else and thats what this is about. John, maybe some context would be helpful in the sense that you had a fantastic conference out in stanford, what about a month ago. Right. Which was all designed around this concept of rulesbased versus discretionary Monetary Policymaking. And what this bill in congress is about is the issue of should Congress Force the fed, essentially, to adopt a rule that it follows instead of this kind of human discretion around Monetary Policy. So, john, can you tell us, in a way thats not as wonky as perhaps you presented, in stanford, what would the rule be . How would the fed follow a rule, and what would the fed do in a situation like the financial crisis, where there appear to be a need for the fed to step outside of rulesbased Monetary Policymaking . I think in the heat of the crisis, in september, october, november 2008, that lender of last resort responsibility would work exactly the same. The real improvements would be going in to the crisis where we had those rates so low we really got off the policy rules that worked well then. And more recently. So the idea here, and youre quite right, steve, how do you explain this . And thats what the fed should be doing. We raise Interest Rates under certain circumstances. And a policy rule tells that. Basically and its not really rocket science. The fed has been talking about this internally for more than 20 years. So in many respects this is just taking the things that they have been doing internally and making it more public. And i think therefore more useful to the markets, and will result in better policy. John, well renowned economist, worked at the Federal Reserve, he got up and gave a critique of what youre talking about here and he said you know what . All of these rules sound really good except for in europe, we had these rules. And we didnt follow them. So what good are the rules in that sense . You know, i dont think thats right. Hes basically a proponent of policy rules and has a particular one. Right. I think thats not really the way to describe it. Both the fed and the ecb before the crisis, thats why i think this is a part of the reason for the crisis, they got off of the policy rules and the strategies that were working quite well for 80s and nine90s until recentl. Theres debate about what the best policy rule is and thats why this legislation is wise to give the fed that responsibility. Its the independent central bank that what bothers me is every time theres a crisis its a little bit different. Every time were at an Inflection Point its a little different. Im not so sure theres a real benefit in having the feds hands be tied in any way by having to go back to congress and say, well, weve changed our mind, and heres why. I just dont see the value added. How many people in the congress could pass a test on what the Federal Reserves actions have actually been. I think very few. Your point is exactly right. This is a responsibility of the fed. But, the u. S. Congress has a responsibility for Monetary Policy. It actually passed the Federal Reserve. It has amended it. It took parts of the Federal Reserve act out in the year 2000. Which had some specifics about what the fed should be reporting. In many respects, this puts back in place things that were taken out of the Federal Reserve act in the year 2000. And the Congress Certainly has responsibility for that kind of action. John, wed be wrong if we let you go and didnt draw on your international expertise. You were a Top International official at the treasury. Were getting a wave of looks like economic weak economic reports from abroad this morning. Give us your general sense of whats happening abroad and whether or not thats something the u. S. Should now be concerned about. Well, i think basically the u. S. Should stick to whats helping the u. S. Economy. And thats a wide range of policies on regulatory and fiscal and monetary like were talking about. Ive been concerned about the world recovery. I think emerging markets have been doing quite well. Theyve kind of been distracted by the tempered paper, whatever you want to call it, the struggle last year of may and june. But i think were basically fine longerterm but this is going to be a little struggle. I think for the fed, for u. S. Policy, try to make the u. S. Economy as strong as it can. Try to get a Real Recovery going again, and that would be the key. Okay. All right. John we thank you. And that was the less that was the less wonky discussion that we had there. Than the u. S. Was joe, every day i struggle with it. Every day i struggle with it. Its something thats important to investors, its important to markets. If the feds going to adopt a rule youve got to explain what the rule is. Are you kidding me . Okay. But thank you john taylor thank you you didnt have to. Just clearing that up for anyone with that question whether that was the less wonky i think the best rule every morning. We got to go. Well talk about that in a second. Coming up a company that helps businesses make smarter decisions. The ceo of datafox talks big data disruption and how hes helping some of the biggest Financial Institutions pick investments and make money. As we head to break check out the squawk box market indicators. Rk for 175 dollars a month . Yup. All five of you for 175. Our clients need a lot of attention. Theres unlimited talk and text. Were working deals all day. You get 10 gigabytes of data to share. What about expansion potential . Add a line anytime for 15 bucks a month. Low dues. Great terms. Lets close. Introducing at t mobile share value plans. With our bestever pricing for business. 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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. Welcome back to squawk box. Among the biggest stock movers today, lumber liquidator shares falling sharply after that company but its guidance. Machinists finally working. Okay, thats a 2 billion company. Thats fair game for Lumber Liquidators, ll. We are continuing our disruptor series now with a startup backed by Google Ventures that is shaking up the world of big data. Joining us now on set is cofounder and ceo of datafox. Datafox uses big data for indepth company and Investor Research and makes its algorithm generated data affordable to everyone from the individual investor to big time hedge funds. This goes up against the heavy price tag of traditional big data priors. Basti bastion, youre also dutch no black arm band. Any tears at all . No tears. Only internally. Would big data have saved the soccer match . Big data would not have saved the soccer match. You saw the first penalty kick . I saw the first penalty kick. I was pretty pessimistic after that first kick. That was a killer though. Yeah. So lets talk about what datafox is. What is the problem its trying to solve . The problem is that for a lot of people investing in private companies or advising private Companies Information is still gathered in a very manual way. I did this for four years working for a big baun and my Research Process was highly manual. Id have to try and look at a companys website, and the management profells for their leaders and try to garner some insight into how does this company compare against its competitors and how can i make some inference into how they will fare within their sector. So how can you use big data to make this into an automated process . The reality is Technology Companies in particular have growing online footprints. Their employees are on linkedin. The press releases on online. The companies are nicely structured. We can write algorithms that collect information from all these types of data sources in a more automated way enabling analysts to track many more companies what kind of data can you gather . Whats interesting is anything that we would we think would impact private companys valuation, right . So we put them into three buckets broadly speaking. Financing, human resources, and momentum. So financing, who are they backed by, how much capital have they raised . Human resources, what is the pedigree of management. How quickly are they hiring . Do people want to work there . And momentum, you mentioned in the press. Give us an example of Something Big data found leading to an investment choice that was perhaps unavailable by a guy picking up the phone or doing the manual work . Sure. So you know, we profile the sharing economy recently so that includes any companies that you would label as being in the collaborative consumption space. So, companies pooling to the resources. Anything from airbnb to uber for example. The problem is that if you look at Companies Like that today, you view them in a very siloed manner, right . Whereas the reality is if these companies become very successful, they could broaden into many other product categories. The same way that a google, for example is much more than a Search Company today. So what big data allows us to do, it allows us to see that in uber although it starts out as really a taxi app to many people, it can become the Logistics Company of the future. And we find that out by seeing the way that the company describes itself, and the companies that others view as its competitors. Do you turn big data in to big ideas by making recommendations . Or just providing the raw data and then receiver of the data makes the big ideas . Thats a great question. People say if you put dots on a chart its data. If you draw a line between them its insight. So we absolutely give we absolutely provide those insights. You can logon to datafox and create a list of Ten Companies youre tracking and then we can infer automatically which other companies that you may not have seen yet have most in common with those companies that youre already tracking. Do you come with a conclusion you like this one better than that one . Yeah, absolutely. So in those three, almost three in those three categories, financing, h. R. And momentum, we actually quantify those signals that we gather so we can tell you, look, of these Ten Companies with consumption, we think this company is best positioned at the moment absolutely. So you end up allocating a grade to each one . Thats right. Which company in your whole base has the highest grade right now . So of the sharing economy companies, uber currently has the highest score. Tell us something we dont know. Uber is a great big success. Show something you found that is not obvious to people. Well, so you know,atesy and airbnb are up there with uber. What are they up there with uber . What about your metrics puts them up there with them . Hiring great people at a high rate, theyve got backers who are have historically consistently been followed on in future rounds. So what that means, if you have a backer, so why do we feel great about having Google Venture as an investor because they have a track record of in other companies that they where they invest they are then followed on by other great investors. We have to follow what youre doing. Weve got to go. What grade did you give yourself . Youll have to look that up. He should be playing for the team. All right more on this mornings market selloff and a key data point that investors will be focused on. Jobless claims are just ahead. Squawk will be right back. At every ford dealership, youll find the works its a complete checkup of the services your vehicle needs. So prepare your car for any road trip by taking it to an expert ford technician. Because no matter your destination good maintenance helps you save at the pump. Get our multipoint inspection with a Synthetic Blend Oil change, tire rotation, Brake Inspection and more for 29. 95 or less. Get a complete vehicle checkup only at your ford dealer. Coming up, weekly jobless claims data that could move markets and the ceo of corda on the urge to merge in biotech. A number of deals, and theyve been mentioned quite a bit about possibly doing a deal. Were going to find out if the company is shopping. As we head to break, u. S. Equity futures continue to be negative. Dow would open lower by about 136 points. Welcome back to squawk box. Just seconds away from job also claims data, market looking for 319,000. A big number today, considering that all the foreign date that has been negative. See if the u. S. Can withstand that. Rick santellis at the cme in chicago. I dont think i got to talk to rick after the fed minutes. Do you think part of whats happening is rethinking the fed . We liked what we heard yesterday from the fed. Today we dont like it so much. You could hold onto that notion, but i dont think so. No, i think, actually the big trade yesterday was the nervousness in front of the meeting. Thinking that there would be a lot more objective reasoning with regard to crisis style policies, and maybe things ending sooner. The fact that it was just more of the same i think is what made the market all right here we go. 304. 304,000 uninitial jobless claims. That is down 11,000. As steve pointed out this is going to change everything going on in europe. Okay. 2. 58 million on continuing claims in portugal. Still has a bank thats probably insolvent. I dont know, i think whats going on in europe and whats going on with rates i congratulate joe. I know we have to move quickly. He did call 240 for closing bottom. But as i came back and told him, europe is going to continue to be a twoday. And even though the markets always has ranges weekly, quarterly, annual ranges in the big picture, in the big chart, it looks to me like were going to be challenging that yield again at some point. You said it was a shortterm or intermediate term low which is going to be a much better call than saying it was a stupid low. You know, joe, nowadays around here two weeks is considered like a longterm trade. And that will continue. Whats going on in europe is huge. Because what it does is, it tells us that the ownership of all that sovereign paper by the Banking System is each economy is not the answer. It was a stabilization that what have they done for the year and a half interim period after the stabilization . Nothing except i want to come back to you, rick, and i want to talk about Something Else, too. We got breaking news in the pharma industry. Meg terrell joins us on set. Just krousing now, longterm data on the drug for muscular dystrophy. Reporting data out to 144 weeks now showing that the drug seems to help stem the declines in walking ability you see in these boys. This has been incredibly volatile stock in an incredibly volatile therapeutic industry. Theyre trying to apply for approval by the end of this year. This keeps them on track for that. Haven seeing a lot of big moves in this stock. Further good news with sarepta. It went from when was that it had a recent spike . In april it had a big spike. You talked about it since then, though, right . We talked about it back in april actually. And we had Ptc Therapeutics and they got a fast forward in europe. Another company prosensea has gotten a pass this is the one that skips exon skipping. And it lets the a more complete molecule be made that its messed up in this really tough cases. It really is a tough disease. So its really important that this seems to be working. Good news. Okay, all right. Thank you. Thank you, meg. Lets get back to rick just for a second. Ill tell you something i said earlier, rick, i think i was needling liesman a little bit but who knew this wacky janet yellen was just a dyed in the wool hawk. Who takes 15 billion away at one time in one month . I mean thats insane thats crazy i mean we got to keep buying. I mean did that not shock you that she didnt go 10 and then end with another 5 one month later . I mean shes crazy. Shes liable to do anything at any time. Ear going to pull the reins so tight that horses eyes are going to bulge out like golf balls in a tight water cleaner. Dont just take 35 billion out. Just keep doing it and doing it and doing it every month. Actually what is 5, 10, 15 billion nowadays. Exactly. So that was shocking to me that that was like, whoa, wow, what a decision maker. Did some people call her a hawk . Are you kidding me . Instead of doing just 10, doing 15. Its 50 more. Joe, yesterday i talked about the notable and quotable from the day before yesterday about the princetonian interview with paul volcker. Incredible. Im telling you what, every time i read it i laugh so hard i cry. Boy, how far we have come. Did you see this . Steve was very, very funny no paul volcker did an interview with the daily princetonian and volcker literally yelled to the reporter, why are you asking me that . Do they teach you that here . That is so wrong, we discredited that 20 years ago. It was cute. Didnt see that. Just think, probably a lot of future economic advisers, the future president s, are in those classes that paul volcker was screaming about with regard to what theyre teaching. Let me tell you something, whether its debt and deficit, or debt income being synonymous, theres no way around the notion that the globe is definitely mortgaging lots of future growth for the price of stabilization. I hope theyre getting their money worth. There have been so many people negative about Southern Europe. Earlier, you heard rick talking, but you just invested in greece. I think the big fiction is the idea of europe being one place. Its not. Nobody has ever introduced themselves to me as a european. They introduce themselves as portuguese, or greek or italian. But is greece turning . I think greece is clearly turning. They had a positive primary Budget Surplus for the first time probably since the ottoman empi empire. If you dont think thats a turning point it really is. The only worry i have about greece is whether samaris can stay in power because he just has a very slim the communist, sexy alexi they call him. Mr. Ross one quick question. Sure. As a Global Investor of the highest order i understand that making money on economies that were worse and theyre not as bad is an investors mon tra. But, forgetting being an investor for a minute, do you think that Southern Europe over the next five years issing about to generate the type of growth to get to a stable 1. 5 outside of what germany and france contribute, maybe even france hasnt an asterisk there . I think its a work in progress. And i think the one thats lagging the most in terms of reform is italy. And unfortunately, thats the biggest of the seven european countries. So if youre going to talk about them as a group, you really have to focus italy, and i think italy is starting to change some of the new things they did about lending yesterday are potentially constructive. But theyve got to change the concept of the economy, particularly in southern italy its a political question. I even want to know michelles answer to that in a sense that from an economics point of view the only question is will prices adjust, will wages adjust to make those countries competitive. Those are essentially political economy questions. Now youre talking about deflation, steve. You should give lagarde a call. You just nailed what we debate on this floor. The solutions and the processes and the structures theyre trying to change are causing things to happen to make them more competitive. Lagarde says oh, thats deflation or disinflation. Its nothing like the 30s and it actually needs to happen. I dont think italy has to do anything. Keep the Ponty Vecchio open. Pick up the later. For everybody pick up make the beaches italys got everything. It doesnt need it doesnt need an economy. Thats sort of what they think. 24 hours ago hours at a time. To the imf. Keep the museums open in florence. Seriously. I dont think italy needs to change the queen is excellent. And in the next bull market the mafia will go public. See that sore story by the way, according to european law theyre counting the underground economy they have to count the revenue generated in brothels and illegal gambling. The gdp got much bigger. They get better terms than most of the european banks. If you can count it why cant you stop it . When youre over there though and youre walking around, you look around and its like, why am i we live why do i care about anything . Do they want to live like us . No. Thats the question. At 2 00 the espresso places are packed. I cant understand. You want them to live no i want to live like them. They have no worries. I wouldnt think about fed funds or anything. Ceo is going to give us an outlook for biotech and talk about whether or not the companys shopping for a possible deal. Later an organization known as safe, securing Americas Future Energy putting a focus on saudi arabia in its latest oil Security Index. Well have the founder. Has gott, but what if you could see more of what you wanted to know . With fidelitys new active trader pro investing platform, the information thats important to you is all in one place, so finding more insight is easier. Its your idea powered by active trader pro. Another way fidelity gives you a more powerful investing experience. Call our specialists today to get up and running. Having a perfectly nice day, when out of nowhere a pickup truck slams into your brand new car. One second it wasnt there and the next second. Boom youve had your first accident. Now you have to make your first claim. So you talk to your Insurance Company and. Boom youre blindsided for a second time. They wont give you enough money to replace your brand new car. Dont those people know youre already shaken up . Liberty mutuals new car replacement will pay for the entire value of your car plus depreciation. Call and for drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. Switch to Liberty Mutual insurance and you could save up to 423 dollars. Call Liberty Mutual for a free quote today at see Car Insurance in a whole new light. Liberty Mutual Insurance. I dont have to leave my desk and get up and go to the post office anymore. [ male announcer ] with stamps. Com you can print real u. S. Postage for all your letters and packages. I have exactly the amount of postage i need, the instant i need it. Can you print only stamps . No. First class. Priority mail. Certified. International. And the mail man picks it up. I dont leave the shop anymore. [ male announcer ] get a 4 week trial plus 100 in extras including postage and a digital scale. Go to stamps. Com tv and never go to the post office again. You know ive got a real soul mate from acorda therapeutics. You have a twitter account . I do. Acorda therapeutics suing acti activeis over its generic improvement of empira. Currently developing six clinical stage therapies that address a range of disorders from strokes to spinal cord injuries. With us on set dr. Ron cohen, president and ceo of acorda therapeutics. And cnbc pharmaceutical reporter meg terrell is also here. And in the notes they had a bunch i didnt make that up. I guess you got a twitter account that says its your hair and Everything Else. Theres a twitter account called ron cohens hair. We actually tweet lighthearted comments about hair i have you guys created . Its not somebody else. No, we created it on april fools day because theres a very notable analyst in the biotech industry, hes got 90,000 followers, and he constantly talks about my hair in his notes about the company, and the industry. Unfortunately, many people on tv know we cant escape there are things that are all about the hair. And steve to this day, you still go to baldaholics anonymous. Its not a disease. Its not a handicap. Its like an affliction. Its not its okay. Ask wilbur. Wilbur is smart, and hes he has no hair. Listen to you, youre yelling. Is big hair therapeutically sound . Im glad were getting down to a serious biotechnology talk. I think thats going to take more time than we have this morning. But i will talk to you about that offline why are we talking about whether youre going to make an acquisition . Why would it make sense for you to make an acquisition . Are you a target yourself . Any company in the industry has to consider that theoretically its a target. Just the nature of our industry certainly m a is very big. There are certain discontinuities that are inherent in our industry. So for example when were developing these drugs of tomorrow, these terrific new therapies, the average time that it takes is 12 to 15 years. And the average cost is about 1. 4 billion now. That is not consistent with the Public Market environment in which Fund Managers, shareholders, are being marked to market every day. Our earlier discussion about allergan and activeis had to do with the two different models, because it takes time and money and theres two ways of doing it. Which are you . Were very firmly on the side of research. And investing in research. You know, if you take the model to its absurd extreme of just acquiring all of the assets that exist. All of the approved drugs skimming off the cream and not investing in the farm that makes the cows that makes the film that makes the cream eventually theres nothing left to give you cream. So you have to keep investing, and you have to have companies that are willing to take those risks that are smart but to use your metaphor you could buy milk over and over again from a supplier somewhere, right . Theoretically you could. But, you know, smart people, smart scientists, and wouldbe scientists, they can see whats going on. And if they see that theyre living in an environment where their work is going to be taken away from them just as soon as they have their first success, its a disincentive to bring theyll get paid. Hmm . Theyll get paid. Its a great incentive. You know the motivations for people who take these kind of risks and are creative and developing these drugs is not all about the money. Its important. Its important in any industry but the motivation is to be at the forefront. To be contributing. To be developing something incredible thats going to help a lot of people. And if you ron, is the answer you should do it where you have the comparative advantage of doing it . In other words milk producers are really good at making milk and egg producers are really good at making eggs. Does your company have a comparative advantage i think its a great point, steve, and i think the answer is absolutely yes. So in our case, we have developed over 17 years now a group of scientists, business people, finance people all of whom are united around this mission. Give me your top five and where delay in the process. In our case we have ampyra. Were taking the same ingredient. We found evidence that it may help people who have had strokes. Its starting phase three this year. What else . We are working on epilepsy, a product that breaks a cycle of break through seizures. Working on severe nerve pain. Which is poorly treated by available medications. But that works for very few people. We have a topical agent that appears to be very effective. Really . In helping people. Yep. Were working on Heart Failure. We have a novel biologic that appears to repair heart muscle tissue, something absolutely novel. We have initial proof of concept data already. Were working on repairing the nervous system in multiple scleros sclerosis. Repairing the insulation around the nerves with an antibody that weve already shown in Animal Studies is effective in at least for animals. That would, instead of halting the progress of the disease youd that would be the aim. It would be to repair the damage thats already been done. Essentially a huge thing but one last question i know were running low on time but youve got this patent for ampyra thats just come up. People expect you to buy something. If you have this challenge what are you going to buy . Are you going to buy something . First of all with regard to the challenge, we have five patents that are listed in the orange book which the official recognized book of patents by the fda. Were going to defend those patents. They go out up to 2027. Irrespective of that, we believe that the best way to balance out risk, balance out Value Creation for shareholders is to develop our pipeline, but also to acquire other products where we can use our comparative advantage, in neurology development, expertise in developing and commercializing drugs in this space, where we can add value to it because of our comparative advantage. And thats what wore out looking for now. All right. But thats investment in research. And in development. Thats not just taking products, although we would like to find inmarket products as well. Is baldness a disease . Thats what i was going to ask. Because if you develop one of these drugs does it happen to grow hair. Is that how you do you feel handicapped, wilbur . I only deal with sick things. I feel like my baldness why do you think hes worth like 8 billion. Hes overcompensated a little bit for the hair. Do you know where its not working for me. Baldness is a sign of testosterone, which from an evolutionary standpoint implies more masculinity and more you come right back were both girly men. We have a real problem. I dont care. Im proud to be who i am. Wilbur . You seen that bar in japan that gives a discount to bald men . No. Why . Because they feel bad for them or because they like them . We got to go. Thank you for joining us. Mercifully. All right. Coming up the latest oil Security Index from s. A. F. E. Well be right back. Tomorrow on squawk box, steve miller. Nonexecutive chairman of aig is our guest host. Plus, earnings from wells fargo. And, the best two days for a boat owner . The day they buy it. And the day they sell it. Dusty mccoy, ceo of brunswick, owner of brands like boston whaler and searay talking about what consumers are looking for on the water. Bring your lifevest, squawk box sets sail at 6 00 a. M. Eastern time. When you run a business, you cant settle for slow. Thats why i always choose the fastest intern. The fastest printer. The fastest lunch. Turkey club. The fastest pencil sharpener. The fastest elevator. The fastest speed dial. The Fastest Office plant. So why wouldnt i choose the fastest wifi . I would. Switch to comcast Business Internet and get the fastest wifi included. Comcast business. Built for business. Turning to the Energy Sector now, securing Americas Future Energy, known as safe for short, ranking the oil security of a dozen countries from around the world. The founder, president , and ceo of safe joining us now. Good to have you here. Thank you. So japan is at the very top . Right. Help me understand the index. At the top the least or most safe . Most. Why is japan the most safe . Counterintuitive. They produce no oil for itself, but they are first time. What we wanted to do in the index was take seven metrics, bundle them together and look at the risk of the economy from oil prices, the structural risks from oil, and them oil security itself, the production side. When you look at a country like japan, its so secure because its so less oil and it requires less oil per dollar of gdp, and it has a lot of stocks that it holds above ground storing over time in case of emergency. All right. We just showed everybody, and we have it back on the screen take the steady cam shot again. United states comes in fifth, actually improved. Why . Its actually improved, not its not such good news. It improved because everyone else went down. From a competitive basis, we went up. Its down in the methrics. We use more oil, Oil Intensity is up, vehicle miles travelled crept up again. We saw a decline in 2008, and second, because of the high oil prices, were actually spending more on oil now than we have in the past. Last year was 900 billion spent on oil, the most in history. Were less than half dependent on imports, and japan is more than half. How is that more secure . Exactly. Theres a global oil market. Theres one global oil price. Doesnt matter where the oil comes from. On whole, its better to produce the oil yourself because the moneys staying in your country. Sure. In consumer based economies like our own, if they pay more for global instability, iraq, saudi arabia, iran, venezuela, russiaukraine situation, we pay more. As aaa says im lost. Does i dont understand why it gets more economic output on less oil. Why . Because its an efficient economy. Cars are more efficient, produces goods much more efficient using less energy. Does it matter how many miles a gallon it goes if theres no gallons in the tank. Thats true. Were saying you have to look at a broader perspective. Its not just about its not just about where you produce the oil, but whats its impact on the broader economy. Shouldnt you look at natural gas as well if you are talking about Energy Dependence . Japan has become extremely dependent on imported natural gas. Right. From our perspective, its the dependence that the United States has, its totally and the world has totally dependent on oil for its transportation sector. We have a Global Mobile economy. The price of oil is absolutely determined into economic growth. Every recession is perceived by oil. We should switch. We need choice. Cant do airports or jets, obviously, but other thing we can. Zb theres advanced biofuels for that. Yeah, but no natural gas. Produce as much as we can domestically, but have alternatives. Im sick of germany on top, world cup, no debt. They are doing well. Sick of them being up there all the time. Over rated. Coming up, dabbling in the art market. We discuss that next. The futures right here, squawk back will be right back. During the two weeks at wimbledon. True tennis fans want to know whats happening. They dont want to just see whats happening, they want to know and understand why its happening. Anybody can just put data up, but we want to get a reaction, make it far more interactive. We rely on the cloud to provide that immersive digital capability. Give fans more then just the game with the ibm cloud. The porter was so incredibly. Careful. Careless. With our bags. And the room they gave us it was. Beautiful. A broom closet. But the best part but the worst part was the shower. My wife drying herself with the. Egyptian cotton towels. Shower curtain. Defined that whole vacation for her. Dont just visit new york. Visit tripadvisor new york. [ male announcer ] with millions of reviews, a visit to tripadvisor makes any destination better. [ male announcer ] with millions of reviews, humans. Even when we cross our ts and dot our is, we still run into problems. Thats why Liberty Mutual insurance offers accident forgiveness with our auto policies. If you qualify, your rates wont go up due to your first accident. Because making mistakes is only human, and so are we. We also offer new car replacement, so if you total your new car, well give you the money for a new one. Call Liberty Mutual insurance at. And ask us all about our auto features, like guaranteed repairs, where if you get into an accident and use one of our certified repair shops, the repairs are guaranteed for life. So call. To talk with an Insurance Expert about everything that comes standard with our base auto policy. And if you switch, you could save up to 423. Liberty Mutual Insurance responsibility. Whats your policy . I research. I dig. And dig some trader more. Search. Because, for me, the challenge of the search. Is almost as exciting as the thrill of the find. announcer at scottrade, we share your passion for trading. Thats why we rebuilt scottrade elite from the ground up including a proprietary momentum indicator that makes researching sectors and Industries Even easier. Because at scottrade, our passion is to power yours. Yeah, lets talk art with will burr ross. I dont mirren a person named art. Are you a collector . Paintings. Time to sell . No. If you deal with depressed company, collect surrealism. We collect those. Markets hot . Market for all art is hot, and a lot of it is the young hedge fund people, but also people from troubled countries. Is sutene a surreal . Yes. My favorite. On that note that could be sur realist. Join us tomorrow, squawk on tomorrow not surreal, totally real, is next. Good thursday morning, squawk on the street, im Carl Quintanilla with david faber, cramer back tomorrow. You wanted volatility, we will get some. Futures well below fair value on a number of head winds, portu l portugal, china exports, mic microdata, could be the first shot at a 1 move in the s p after 58 sessions without one. The real story in