Transcripts For CNBC Squawk Box 20140624 : comparemela.com

then at 10:00, we have new home sales and consumer confidence. this afternoon, treasury will she auctioning $30 billion in two-year notes. and don't forget about the fed. a number of speakers today including philly president charles plosser, bill dudley and john williams. we'll be talking more about the economy in the next few minutes with strategists. first, let's get more on corporate news. >> i'll tell you what's going on that insider trading case. reportedly dean foods has been subpoenaed. it involves carl icahn and phil mickelson and las vegas trader billy walters. looking at securities around july 2011. which is when icahn made an offer to buy that company. as for dean foods, investors are focusing on trading related to the 2012 spin-off of its white wave food. also, the u.s. export/import has been in the headlines in recent days. this morning, it's in the news for another reason. "the wall street journal" reporting that ximf bank has now suspended or removed four officials as investigators look into allegations of improperer gifts and kickbacks. now, the agency helped export finance of goods and services. "the wall street journal" reporting one official allegedly took cash payments in exchange for attempting to assist the company into getting federal finance for export construction equipment. joe, one of the things going on with this export/import bank is the support they're getting from firms look caterpillar and bo n boeing, which are not small businesses at all, which is what they really support. but when you look at the numbers, something like 29% of the money has funneled its way into boeing, or at least that's what reports suggested this morning. >> and then are we going to talk about -- richard anderson is expected to back the export/import bank for providing some support for the sale is of boling's biggest jet. i don't know. >> some conservatives have tapped into it and saidite corporate cronyism. boeing stock was down last week one day on the idea that the xm bank would not receive renewed funding from congress. >> it's been a bick deal. >> it would somehow get the funding for it. the new majority leader is not in favor of it. >> has been the staunchest critic of the xim bank. xm bank arguing support for the bank rival carriers overseas an unfair advantage by raising costs for them. that's weird. so it's not crony capitalism for us here? it's crony capitalism for those overseas. >> they say it chooses big businesses over small ones. >> i don't know how that applies to boeing. >> no. they say the money for funding for some of these companies going back to it. the only way they're able to make these deals -- >> they're able to buy cheaper goods because they're financing small businesses which provide those goods and services to boeing. >> and so he was a critic of it and now he's not. i'm going to have to read the whole piece here. but yeah, suddenly we're all talking about it. is pfizer doing something with astrazeneca? >> a saw a couple of headlines. i don't think we're there yet. >> how long do we have to wait? >> i believe it's several months unless fiepfizer is -- pfizer i not allowed to make a new bid but astrazeneca could come back. >> and ask for something new? >> i believe if astrazeneca asks for something, more could happen. >> i know ian reed. i called and said you was to come on. he said well, i want to let all this quiet down. i said no, that's why i'm asking you. >> this would be the time we would like to talk to you. >> and i was thinking about him yesterday. i wonder whether we should have him on now. he probably would say the same thing. >> the other thing, if i recall late last week, astrazeneca was trying to bolster the consensus. >> did you see these headlines? >> analysts -- bnp analysts say pfizer could boost its bid or bid 75 sterling. >> but i believe -- so last week, astrazeneca tried to increase some of the defenses of the company. you say why did they need the defenses? that would only be if pfizer were to come back. if pfizer can't come back for, i think, three months? >> did you see your poster child? >> who is my poster child? >> poster child for compassionate capitalism. >> who is that? >> howard schultz. >> what did howard do? >> howard is saying can only six countries in the world cause corporation taxes. mr. schultz thinks you should be able to bring it back at a lower rate. 1.9 billion in cash at starbucks, 1.9 billion outside the u.s. and they said would you invest a lot more in this education program that you recently had if we bring that back? he goes yeah, we would probably invest a lot more. and he thinks the money that's held outside the united states is not anything back here would be better than leaving it over there, which is like you like to do because he think it might go to shareholders or dividends. >> no. i would like to come up with a true tax reform program so that -- >> you all say that. >> that's my preference. >> you know who you all are. >> it would be better because otherwise you create a system where the mope gets left over there until the next vacation. >> i don't see what's wrong with letting it build up every time and bringing it back. but you don't know when the vacation is happening. you build it up -- >> you leave it over there, anyway. as long as it's 35% here, you leave it over there. >> if you need to be able to bring i back to do things like build manufacturering plans and build other long-term business, that's not going to happen if you have a one off holiday. >> this is why we're sitting at 2% again. >> talking about a howard shutty and things to do, did you see what gas is doing today? >> wear white. >> are you going to boycott the gas in the banana republic? >> no. gap has decided on its own that it's going to raise wages. $9 this year and $10 next year. >> and i believe all the clothes they're wearing, it's something that they've chosen to do. >> what is this? >> everyone is supposed to wear white in solidarity to show that they've raised the minimum wage. the hashtag on twitter is we can do more. >> gap, any company that decides for the pr benefit of doing that is hoping that all their competitors are forced into doing it, as well, because they would hate to rescind it when they were totally uncometive and no one else follows them. you wouldn't see fast food restaurants doing this anytime soon. in gleebl market news, europe's largest economy is taking a break. companies are concerned about political crises in the ukraine. i'm bringing back the ukraine. it's too confusinconfusing. and in iraq. and speaking of the situation in iraq, secretary of state john kerry is in kurdistan urging political leaders not the withdraw from the political leadership in afghanistan. you do realize that by bringing back the "the" you're siding with the russians? >> putin has a 90% approval rating. are you one of the 10% that don't like him? yes. you're not? joe, just to answer a question on pfizer -- >> decisionmaker. he's firm. >> this is my friend chad bray writing in from london, base t on the profile, after three months, they can't look a the more takeover options. and what about sweden? if sweden comes in -- >> my pronunciation of ts has a d in it. >> sweet'en. what if they norway the offer or they denmark the offer? what if they finland the offer. >> the vision heads to zero. stocks are treated from record levels, but the dow is still just inches away from 17,000, even though it's numbers. do you know how that works? >> no. >> that's a mixed metaphor that doesn't work for me. so are stock he moving in lock step or are individual means a bet right now? joining us w is tienberg, president and ceo and david joy, chief market strategist at am e ameriprize financial. when everyone is talking about the stock market and our ratings are hitting the stratosphere, many times that's what there's consternation, fear. it's so quiet and nobody seems to be watching quickly. does this portend that something is going to happen soon and do we want that to happen? >> well, you know, the focus on 17,000, joe, for the dow is certainly a psychological factor. it has a valuation guide. it's hard 20 justify at these levels, the dow trading at 15 times this year's earnings and 14 sometimes next year's earn g earnings investors are going to have to put the twitch at 15,000 applied earnings. i think we'll get a better sense in early july of whether or not companies and enough investors will be looking through the windshield and not the rearview mirror. >> david, i was trying to get at just the volume. the volume on the exchanges it goes down and down and down, down. the volatility, down and down and down and down. you saw the chart we were just looking at. we're probably averaging like 15 or 20 points in the up trend. we've had, you know, 22 times we set a new high and we're up only 5%. so it's just been grinding higher. it almost looks like it's because of the fed. there's more around. it has nowhere else to go, and it's finding its way there. but there's no conviction or excitement. >> that's right. and the agree with my colleague. the economic data is firming, the fed is supportive. so there is a fundamental explanation for why the market is grinding higher. at the same time, as you point out, the vix is a 10, an 1 1. to me, this is an opportunity to buy relatively cheap insurance. i don't know if it means something bad is going to happen, but why not take out a little insurance policy here and buy some volatility or at the very least, maybe raise a little bit of cash if it's a taktsiccal play and something bad does happen. >> we've been hit with a lot of things. baghdad is ready to fall. russia can an ex parts of a adjacent end territory. i wonder if putin got 65,000 troops on alert, i wonder what it would be that would cause something to get to the vision despite the 15 or 20 and cause the markets -- we never know before it happens, i guess. but do you feel like we're getting close to something like that? >> well, i think the most likely candidate right now is the price of oil. it's eased off a little bit in the last day or two, but i don't have much expectation that john kerry is going to, you know, meet with much success here. in baghdad. and i think as a result, the price of oil could go higher here. that could derail spending plans. if you look at the history of economic down turns in this country, a lot of them are preceded by spikes in oil and that's not something everybody was spething here. to me, that's the most immediate threat. >> what do you think, rich? >> i agree. you know, consumer confidence is a very key issue. again, nls until jobs start to pick up, joe, and we get some increase in wages, we could slog around here. but the valuation, really, is getting tougher to justify. we still hold through our 19 s&p target for this year. we would expect if there was some kind of dislocation over the next month or so to maybe start to reallocate catch back to work around the 19 hundred level. that would be something to get us up that many days in a row. that's probably what would happen at this point instead of down. thanks, guys. rich and david, thanks. >> okay. when we come back, there is fashionably late and then there's just plain rude. but did gentleman look chief marissa mayer really fall asleep and keep a roomful of executives waiting for hours? across the pond last week. >> understanding. >> we've got that story when we return. and the world cup is making it to the executive edge after huge ratings for the match between the u.s. and portugal. we talked about that yesterday. now more highlights from monday's action including three goals in ten minutes by mexico. "squawk box" returns in just two minutes. means keeping seven billion ctransactions flowing.g, and when weather hits, it's data mayhem. but airlines running hp end-to-end solutions are always calm during a storm. so if your business deals with the unexpected, hp big data and cloud solutions make sure you always know what's coming - and are ready for it. make it matter. in welcome back, everybody. marissa mayer arrived nearly two hours late for a dinner. she reportedly told some employees at the cannes advertising festival that she had fall ann sleep. mayer is said to have arrived so late that the ad firm's ceo and other attendees left before she even arrived. gentlemen. >> rude, rude, rude. >> having said that, i've been to this conference years ago, and i do recall being very tired because you go over -- >> jet lag. >> jet lag can get you. it happens. but i don't understand -- doesn't she -- she has a team of people. aren't they knocking on her door? >> i guess the surprise is nobody even bothered to make sure -- >> i don't even know if we know the real story here. she does what she wants, right? >> you mean taking care? >> stood us up without even -- we never heard anything. >> that's true. we were in davos and we were supposed to have a dinner with her. >> but more important, this was for marketers who she -- she fired the guy who used to be in charge -- >> she didn't care about -- >> we're not paying customers. >> and the rap and knock on yahoo! and particularly on marissa has been that she's not a client focused person. she's a technology and innovative focused person. but when you think about the revenue potential for yahoo! it is an advertising story. >> so technology and a person, a people person, i think. >> you don't think i'm a people person. >> of course i do. i've watched you work. it's all furthering your own, you know, career and everything, but you're very good at it. >> thank you. >> say thank you i think and let's move on with that. if you are a big soccer fan and work is getting in the way of your world cup viewing, you might be jealous of workers in latin america. students went home early, apparently it's a national holiday every time their team plays. sunday's game between the united states and portugal drew an audience of 25 million. ta makes the game a bigger draw than the nba finals or the world series. i think that's true. we've all been watching it, too. >> oh, yeah. what i was interested in today is that, you know, everybody is talking about a draw, that germany and the u.s. don't need to do anything and they both get to know. and our coach said we want to crush the germans. >> of course you do. of course you do. >> and i would like to crush the german team, as well. >> no team wants to question -- >> well, every goal matters. they go back and count that stuff later. >> that part doesn't matter. but you are -- >> you are cynical. >> no. >> you don't think it's a bitter end? >> no. i don't think that's going to have anything to do with both teams winning to move one more notch forward. do you watch those guys? i'll tell you what i watched yesterday. are they going to have helmets some day? >> there's concern about helmets. >> they do it in slow motion and these guys going for the ball and they looked likeco nut ko c hitting. >> for soccer in the united states, do you think it's a tipping point, the idea that joe is on board? >> if you read the twitter, tweeter -- >> but are you going to follow the premier league? >> i don't know. >> nbc's -- >> or are you going to follow mls? >> that i don't know. >> i would go to a soccer game. there's several soccer stadiums around here. it's fun to watch. >> you can either go to the soccer game or watch the stock market. >> on or watch your grass dry and your paint grow. google is opening its world to third party apps. this is notable because it's the first time that nest has allowed third party companies access sess to its devices. andrew, i think we look to you on this. >> this is a direct response to what apple was doing. apple announced that they were effectively creating a standard by which you would be able to use your device on outline sorts is of home appliances. the only question i have is why didn't they try to come out with the standard before apple came out with their standard. >> wait a second. to think this is a response to something from two weeks ago, doesn't it take more time than that to bring this to the planning? >> to me raises that question knowing apple was going to have that press conference, why they didn't try to get ahead of it. >> if we were talking about the app you were talking about -- my kids aren't watching, are they? i don't want anyone to find out about it. >> oh, the app you were talking about in the makeup room? >> yeah. >> yeah, yeah. >> so we should probably not talk about that app. >> kids do play spin the bottle and i guess i can't prevent it and bottles are around. but this is an app where -- this is an app where the phone becomes the bottle. >> and you leave it there and you press it. i don't have to spin the phone itself. >> no, you spin the phone. >> you do spin the phone. because i was thinking we could play it on the set. >> i'm staying over here. you guys can play. >> and have to live by what it said. how bad does it get? >> there are some things on there that are pretty bad. >> that we would have to do. >> yes. >> it might be worth it as a gross ratings ploy. >> this is business weekly. wait. >> we would like to keep our viewers so maybe we shouldn't do this. >> it talks about a big open mouth french thing. >> we have officially jumped the -- >> hugging and -- >> other things that happen, yeah. >> what else? >> this squawk-ward moment has been brought to you by joe kernen. >> what are you talking about? you told me about it in makeup. >> off the air. it was not intended for the air. i watched -- i should just tell everybody -- >> how did you find out about it? >> because i was watching leftovers on hbo. i saw the premier of it last night. >> another premier you were at last night. not surprised. >> it was terrific. and i don't want to give anything away, but in that -- >> they use the app? >> the app. >> and it's a real app? >> supposedly. >> you don't even know if it's a real app. >> i didn't go online to see if it was a real app. >> to play it? >> no, not to play it. how about with my wife? that would be good. >> do you need to spice things up battles bit? there's only two of you playing. did you consider that? it's going to be one or the other. >> i'm digging a hole. >> you are. >> all right. becky -- >> i am not coming back to the set. >> your wife would agree to play that because she knows there's only -- >> thank you. >> all right, gentlemen, when we come back, where a primary in mississippi has big implications for the future of the tea party, that's next. and mississippi probably won't be cnbc's top state for business, but we will try to trick scott cohen into tricking us where he is today. right now as we head to a break, take a look at yesterday's winners and losers. when you run a business, you can't settle for slow. that's 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 wouldn't i choose the fastest wifi? 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[ male announcer ] see if your business qualifies. good morning and welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick and andrew ross sorkin. making headlines, avon products is going to cut about 600 jobs. the cosmeticsmaker says its restriction efforts are expected to result in annual saves of about $50 million to $55 million. and micron is posting better than expected quarterly results. there have been signs of stabilization in the pc industry and that could fuel demand for more memory made by companies that include micron. also, an air bag recall is spreading to more automakers. bmw now, chrysler, ford, honda, mazda, nissan are all recalling cars because their air bag inflaters could rupture. the air bags are made by a company called recatta. that's incredible, one company that does the air bags for everybody. >> that is what they worried about when you worried if any of the big three are going to go under. let's take a look at the markets this morning. right now, futures are indicated lower. if we were to open right now, the dow would you down by 43 points. the nas could be would be down by 9 1/2. this comes after a mix dollars day for the markets. you can look at the dow and the s&p 500, those snapping six day winning streaks. the nasdaq did eek out another gain to close at yet another 14-year high. things have moved, but barely. italy is the biggest mover, down by just over 105 points. in asia overnight, you'll see the nikkei ended up barely two. i guess we could say that for just about every one of these markets. shanghai was up by close to .5%. oil prices were down by about 66 cents, but that was the biggest drop we've seen in a month for oil prices. this morning, they're up by 9 cents. $106.26 is wti crude right now. the ten-year note, 2.603%. if you take a look at the dollar, you'll see right now it is down against the euro, which is still trading above 136. it is up against the pound and it's down against the yen, as well, as 101.88. and gold prices for the fourth session in a row yesterday, settling at the highest level since mid april. $1,325.10 an ounce. >> our washington guy, harwood, is going to join us here. it's not november, but it will be. it's like june. >> it's not november, it's june. you're right. >> so it's not the middle of -- and we all waited for summer. and it finally stopped raining around here and it's been really nice. >> it's been beautiful. >> and the reds are a game above . 500 and washington is in first place. >> wow. >> yeah. i think we have -- is that the lead, john? you are actually -- there's a runoff electric that's going to matter. that's what i talked about in november. cochran and chris mcdaniel is being held the day it has big implications for the tea party, which everybody is talking about now again because of eric cantor. >> that was nice of you to read that, joe. >> to finally read it? didn't you like my intro better? because i talked about the -- oh, you saw what was in the prompter? >> i was aware of it. >> oh, you were? all right. well, you are in hattiesberg, which i think that's a cute name for a town. >> i'm in hattiesberg, mississippi, where we're going to get one more piece of evidence for the question we've been asking for the election part of this spring, which is is it more pragmatic and temperate brand of conservativism going to take the reigns of the republican party heading into november or is it going to be the more confrontational and idea logical tea party wing of the party? the tea party got a huge boost a couple of weeks ago when dave brad defeated eric cantor in his primary in virginia. today we're going to settle the contest between ted cochran and chris mcdaniel. they had a primary three weeks ago, chris mcdaniel barely led, but you have to have 50%. they're going to settle it with just two candidates today. but i have to say already the tea party wing, the outside hard charging conservative group like the club for growth insists that the debate is moving in their direction. and just take the comments from over the weekend on where the debate is moving. >> ten years ago, we wouldn't have the debate. now the newly elected majority leader of the house has said that he doesn't party renewing the xm bank authority that expires in, i think, in september. and so the debate is moving in the right direction. >> now, the question is going to be settled today by turnover. typically, the turnout goes way down when you move from a -- the first primary to a runoff. and that typically favors the candidate with the most zealous supporters. but thad cochran has tried to expand the electorate, bring new people in, including democrats who may have supported thad cochran in general elections in the past. not easy to get those kind of people to come out for an election like this. we'll see if they can do it today. >> and this is what we talked about for most of the interview, john. and that is which republican party are we going to be talking about in 2014 and in 2016? but then just listening to you, i don't even know for sure whether we can -- with the tea party. isn't it possible to be a libertarian tea party person and maybe nos him down in all the -- you know, the reaction? so but most people on the left think of the tea party as the far right religious conservative part of the republican -- and i'm not sure what -- there's about five different republican parties, you know, at this point. it might be about immigration, it might be about common core. i don't know what it is any more. >> well, you're exactly right. it is sloppy thinking to conflate the religious conservatives with the tea party per se. there are a lot of religious conservatives in the tea party, but that's not all of it. there's a significant number of joe kernens in there. >> i don't know. i just don't know what -- and we were trying to get ron johnson to weigh in on how does the -- you know, to govern and to do what you wanted to, you need to get elected. and we saw that the last time and we saw it -- unfortunately the debate last time wasn't about social issues. we had newt gingrich pushing romney to the right on private equity and on capitalism. and that gave the left all the ammunition it needed to defeat romney based on him being a one percenter that didn't care about people -- you know, the have-nots. i don't know what these debates are going to do. they're trying to tone these down next time and be more of an inclusive -- you know, everybody get along. but that's not going to happen in the republican party. >> well, it depends on who emerging in late 2015, early 2016 as the republican nominee. that's where we're going to define the character of the party. >> but you have jeb bush -- look how popular cruz and rand paul are in the early going here in some of these states. and think about those two compared to jeb bush and -- >> but for jeb bush, that's the challenge. you have to beat those guys. >> what do you think about that? we've heard people go back and forth about whether they think jeb bush will run. what do you think the odds are at this point? >> you know, i think the -- i think politics is a vacuum and there is a vacuum of the kind of leadership that jeb bush is talking about. there's a vacuum in the electability space of the republican party. i think a lot of people know that. so there's going to be a lot of pressure on him to get in. i don't know if he really wants to. >> it seems like he wants to. >> if i had to -- >> what about another bush? >> if i had to bet, i would say he gets in, but i'm in the minority of people that -- >> bush versus clinton? >> very good. >> do you think chris christie runs, too? >> he'll run, if he can. >> i think if jeb bush gets in, that narrows the window for christie. i think he's well along on attemptsing i think a realistic look at what's happened to him tells you that he's taken on a lot of water because of the bridge scandal. can he overcome that? you know, i think it's difficult. and part of the cues that will help him settle that are going to be who else is in and who is going to take the lane that i'm trying to take. and i think jeb bush would take that lane. and then 2014, yeah. that's going to be interesting, also. what's going to happen with -- are we ever going to find out anything about the irs, john? it's gone for -- what about the people on the other side of the e-mails? >> isn't that illegal to throw the hard drive away? in they could have recovered it if they had done what was necessary to do and they said they didn't want to spend the money doing that but they spent it on other stuff. >> in most other instance webs if you destroy evidence in some kind of case, that becomes a problem for punish. john, do you not ascribe to the notion that if this was reversed and this was the republicans that had done this, you don't think this would be a bigger scandal? >> well, it was reversed in the -- it was reversed in the u.s. attorney's scandal under president obama and they lost a huge volume of e-mails. so it -- >> it's happened both ways. >> if there was at least the perception that the irs had been commandered by the administration to punish its enemies, it seems like a much bigger deal. >> but the u.s. attorney scandal, the allegation was that the justice department and the federal prosecutors had been hijacked by a political party. >> i remember that one. that was much more specific and sort of technical. this affects -- could theoretically affect everyone in the kin and we're sort of yawning. has the "new york times" even covered it? have they even mentioned it? you should do it, john. don't you work for the "new york times" sometimes? >> i do. sorkin is my colleague. >> have you been tow told not to? >> only by sorkin. >> he's the one that doles out some of this stuff, gladly. >> gladly. you know, i do all the assignments, including to paul and everybody else. >> the nationals against the reds when it comes down to it. >> he's -- sorkin is kind of the puppet master, you know. >> thank you, john. when we come back, if you don't trust the data coming out of china, you are not alone. we're going to talk about that when we come back. thank you daddy. military families are uniquely thankful for many things, the legacy of usaa auto insurance can be one of them. if you're a current or former military member or their family, get an auto insurance quote and see why 92% of our members plan to stay for life. welcome back, everybody. right now, i'm tight for the squawk planner. coming up, we have the ca case-shiller home prices. then it's the consumer confidence report for june. at 10:30 eastern time today, at&t's ceo and directv's ceo michael white will be testifying before the house judiciary subcommittee on a proposed merger and why it should pass anti-trust hurdles. >> when "squawk box" returns, trusting china. there are many nonbelievers when it comes to the economic data coming out of beijing. we're going to get the real story about the chinese economy, next. and later, sun microsystems scott daley will be our special guest. a lot more squawk in just a moment. ameriprise asked people a simple question: can you keep your lifestyle in retirement? 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>> you can't just look at one number. this is why the pmi is dangerous to overrely on. what you want to look at is whether rebalancing is occurring. how are services in retail doing in comparison to manufacturing. the answer is not good this quarter. also how investments do against consumption. that's where we saw a major difference. investment was dropping significantly. consumption was, too. investment dropped significantly this quarter for the first time in our survey. your ens is that it becomes a straight line down or this is a hammock situation? what does it look like? >> probably neither. you never see a straight downward decline. there's stimulus. there's other things. but what's interesting now is we saw cap-ex and cap-ex expectations drop significantly for the first time in the survey. it means that people are spending less. they seem to be internalizing the fact that this slowdown is something more than a blip. >> what is a realistic gdp expectation? >> well, you know, again, we think this thing is pretty much made up. it's unreliable. so, if they don't show at least a few tenths of a point downward you know they're not even trying to play the game. >> what's a fake number? >> i would say, if -- i would guess 7.2 because they have to reflect the property sector. if they don't -- >> the property sector. he wonders whether you have an actual estimate of what residential real estate construction, how much of the gdp is residential? he says the official number is 12%. but in his view it's much higher, 16% to 20%. >> we try to push back the entire gdp argument. we're not trying to get percentages of gdp. we're trying to show trends in realty -- >> what do you think residential? i mean, what's the answer? is it as low as 12? or do you think it's much higher? >> i think it's much higher. my guess i would say it's much higher. realty did very, very poorly this quarter which is why the numbers did go down. construction did surprisingly well. >> and that's because the government is paying -- >> stimulus is keeping things going. >> i know you want to stay away from the gdp. what do you think the distinction between what you call fake gdp number? what do you think it really is? how far off is it from what we see? >> well, you know, it's hard to say what i think the problem is, it's not that these people are in a back room smoking cigars and picking numbers out of the air. the problem is there's huge problems with methodology, double counting. the idea they report gdp a few days after the quarter ends. they can't possibly be getting real date fa. what happens is a lot of data gets smoothed over the course of a lot of months and they make sure there's no zig and zag. they want smooth sign ways. >> if you're an investor looking at multinational companies that do business in china who has the most exposure you'd be worried about given the numbers you suggested? >> anyone doing construction and going into saying we're waiting for the rebound or watching the bounceback i would be very -- >> retail tips? >> retail, you know, retail is doing really well for two years and i think right now retail is hurting across the board. the larger they are and the more concentrated they are in the regions that are suffering, you know, i'm not sure anyone's safe if you're talking -- >> if you come back at the end of the year, what's it going to look like? >> before the end of the year we're going to see a bounceback in some of the data somewhere. >> because? >> because, they stimulate, and certain sectors, they overreact on the regulation side and they free things up. they're trying to mechanically move this. the reality is china is slowing down. anyone thinks it's not slowing down is going to be in for a rude surprise at the end of the year. >> okay. thank you for joining us this morning. >> pleasure. >> and the economist has a big piece of cover story, nippers not wanted. all about businesses that are banning children. in most cases like breweries and bars and places where people have asked for the music to be turned down in a pub. nippers are little kids. little kids. >> this is the segue without the segue about a story that you read about -- >> no i'm reading it right now. >> a brewery in brooklyn -- >> that's not the only thing. balancing the interest of parents and nonparents is hard. families like to travel but on long haul flights they want -- the economist has published something on advocating for child-free zones on planes and trains. malaysian airlines has done it and banned infants from first class. >> you have to be kidding. >> they've banned infants from first class. so far no american airline -- >> as a parent would you fly on an airline -- >> parents by and large think nonparents should grin and bear it. because that's what they -- people are kicking up your calls. >> but he is a parent. i can't believe -- >> coming up, paranormal activity in the markets. stay with us. and for many, it's a struggle to keep your a1c down. so imagine -- what if there was a new class of medicine that works differently to lower blood sugar? 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the "squawk" ceo call goes out to ingram micro. is this i.t. giant seeing signs of life in the pc market or is it all about going mobile in the cloud? and using technology and consumer satisfaction to disrupt the housing market. meet redfin, member of the disruptor 50. the second hour of "squawk box" begins right now. welcome back, everybody. we do have some breaking news. rebekah brooks, the former head of the news of the world in london, has been found not guilty on several of the charges that had been held against her. there were four charges that were held and it looks like the major charges she was found not guilty of phone hacking conspiracy, that was related to the time between the years 2000 and 2006 when she was the editor of the "news of the world." she's also been found not guilty of making illegal payments to public officials. she had been charged potentially with sanctioning corrupt payments to a minister of defense official. she's been found not guilty on that charge, as well. she's also been found not guilty of the charge of perverting the course of justice. there were two charges, one that she hid evidence from police investigating phone hacking back in july of 2011, and another charge that she removed seven boxes of archived material from news international that could have been relevant to the police investigation. again we are just getting the very opening flashes on this. looks like she has been found not guilty on three counts of not four. >> there's not a guilty on anything yet. >> we haven't seen the response for a number of other people that are part of today's case. so we don't know. >> i will say i think there were seven defendants. we haven't seen andy cowlson was charged -- have not seen that yet. her former deputy, also david cameron's former spin doctor. some of the charges were brought against both rebekah brooks and other people including her husband and her former secretary. if she was found not guilty of some of those charges, i'd be surprised if the people associated with that had been. but we'll continue to see. these are just the early flashes, the very first things we've seen. >> all right. >> hold on. coulson was just found guilty of intercepting those phone messages. that's just coming across the wire right now. we will keep an eye on exactly what's going on here as this verdict does come out. should say that a maximum sentence a judge can impose on a defendant convicted of perverting a course of justice is life imprisonment. historically that's carried about a ten month sentence. >> sounds like the jury is still deliberating, they say, on two additional counts. so we'll continue to hear more on this. >> there's also breaking economic news in the pharmaceutical sector from meg terrell. what's going on? >> getting some breaking news here from vertex pharmaceutical reporting phase three data from two studies in cystic fibrosis. one of the most anticipated events of the year for biotech and analysts. those studies met their primary end points, statistically significant improvements in lung function. that's the most important gauge for cystic fibrosis patients. the key metric 2.6 to 4 percentage points improvement from baseline compared to placebo for the patients in these two studies. also seeing a reduced rate of pulmonary exacerbation due to the problems that put patients into the hospital, put them on antibiotics. this is huge news for vertex pharmaceuticals. the stock could have gone to 100 on good news, down to 40 on bad news. currently i believe is halted. we should look to see what those shares do when they open back up. >> it is halted. at this point, so -- and we don't have an indication on where that could open. that would be great news for a lot of reasons. that's a nasty disease that we've had very little success fighting other than just the, you know, trying to clear people's lungs, but you know, it's heartbreak and a lot of people i think don't live full lives, obviously, and parents, gut wrenching cystic fibrosis. but that could be good. and the $15 billion, almost $16 billion, vertex made its a lot of its money within the hiv cockta cocktail. >> oh, right. >> this would be a big deal for vertex and we'll be watching it. if we get an indication of where it's likely to open. they built it all the way into a $16 billion biotech company. >> let's turn to the markets. the dow coming off its first loss in seven sessions. meantime the ten-year treasury yield added a couple of basis points. blackrock's jeff rosenberg says the current disconnect between stocks and bonds worries investors for what it might mean about their stock portfolio. jeff is chief investment strategist for fixed income at blackrock. also joining us is chris resler. coportfolio manager of the growth fund and our guest host today former honeywell chairman and ceo larry bossidy. great to have you here. >> thank you. >> why don't we start with what you think. do you have any -- >> i mean, i think that it's been -- it wasn't predicted to be this way. certainly the bond market is better than people thought it would be. stock market moves on. i think the big difference is there's not much action going on. i mean i think you make money with volatility, and volume, and none of it -- neither of that has occurred. so i think the markets are okay. i think they'll edge along. we'll have a correction before the end of the year but we'll be plus on the year. i think the ten-year has always been -- it's always at 2.60 but i think it will ultimately get over 3. by the year end and so i think it will be a decent year but not one that we'll look back if history and say it was great. >> jeff you agree with that? you think we will see more than 3% on the ten-year by the end of the year? >> our forecast is around 3. could be a little bit higher if economic growth and expectations sort of surge when we see the recovery in the second half. but 3% in, you know, long-term growth rate environment, the fed updated last week around 2% is about the right level. so 3% is what we think we're going to get. >> what's going on? why is there this huge disconnect? >> larry just mentioned the ten-year is at 2.6%. go back to the end of january and the yield on the ten-year. we started at 3%. we ended at 2.6%. so a big move that happened in the first month of the year was because we saw stocks drop about 6% in the first month. so big reason why bonds are better this year, these people didn't have enough bonds in their portfolio. and when they saw equities lose money, they saw that bonds could help balance their portfolios. >> really just a move back in for a lot of people? >> a big move back in. after what had happened in 2013 a lot of people got out of bonds. most importantly the longer maturity bonds that really provide most of the balanced effect of bonds in a portfolio and the second reason is what's going on in europe, and globally, the relative value of u.s. bonds, was improved when the rest of global central bankers were providing very accommodative policy. >> that's true. i can't imagine buying an italian bond over a u.s. bond. >> or a spanish bond. >> for a long time spanish yields and italian yields, the periphery was in an area where you could find higher yields and those came down dramatically fall lowing draghi's interventions and spanish yields dropped below u.s. treasury yields the relative value flipped back to the u.s. that helps keep u.s. yields lower. >> larry mentioned the idea that the volatility is so low that kills people on the street that's how they make money but does it affect the average consumer sitting at home? >> you know, i think right now we are in the summer months. and volatility kind of dries up. volumes have dried up. people are probably at the beaches right now getting ready for july fourth. so, for long-term investors, it's probably a great opportunity to be digging around, finding good opportunity. but for the day traders, yeah, it's a difficult situation. we like to take a long-term view, and look for companies that are good, secular trends. one theme we're really focused on right now are companies that can return the nice return investment and provide efficiency. so companies, there's a big refresh in the semiconductor space for enterprise spend this fall. so that's going to provide efficiency. the servers are taken offline. they're no longer on warranty. companies have to spend money. so it's not really discretionary. they have to put the money in to make their businesses more efficient. >> we've seen a number of stocks that have been trading around this idea, even micron today. is this really more demand for pcs? this is just what happens when you get to this point in cycle and you have to have some buildup in inventory? >> well i mean i think one thing we spoke about in the past has coming to carmax. weather was terrible in the first quarter then they put up numbers a week ago which were amazing. because people need to have cars. and you can only put off certain things for so long. then you have to spend money. and as employment is getting better, people need cars to get to work. so it's just kind of a rational, logical investment. that, too, happens in big businesses where we see that they need to spend money, they can't put off certain things forever. and the pc cycle certainly is one of them. but micron also is really benefiting from mobile d-ramp which is going into a lot of these handhelds. >> jeff, what would surprise you the most? 3% is where you think the ten-year is going to be. what would come as a huge shock to you? >> you know, i've had this conversation with you guys, the programs. everybody asks me the question about the ten-year. always the outlook for the ten-year for the last four or five years the ten-year has been the only thing that's mattered. we have to start shifting our focus to the front end of the yield curve. if the fed is going to face the better economic data that we expect it to in the second half of the year the challenge will be can they really restrain zero interest rate expectations in the front end of the yield curve and big changes in interest rates. think of last year's taper tantrum. there was 150 basis point increase in the back end of the yield curve. when you're going to have that kind of reaction or more when you start pricing in changes in the fed moving out of zero interest rates. so the increase is in the front end of the yield curve that are i think going to surprise most of the investors. not really going to surprise us. we think that's what's going to have to happen. as the fed faces this better economic outlook. >> all right. jeff, chris, thank you both very much for coming in today. we're going to have a lot more with larry in just a moment. >> let's get you updated on this developing story out of london. former news of the world editor rebekah brooks has been found not guilty of phone hacking and phone hacking conspiracy. cleared it looks like now on all counts. however, fellow editor andy coulson who was her deputy at the time was found guilty of conspiring to intercept communications. this comes after a month's long trial that focused on illegal activity at the heart of rupert murdoch's newspaper empire. of course we're going to be monitoring this verdict and all the news that results throughout the morning. but, rebekah brooks who was very, very close to rupert murdoch, and people had suggested if she knew, did rupert know? well in this case she has been cleared, clearly the deputy not. >> andrew coulson used to work for david scam ron. >> yes, he did. >> so this is going to be at the top levels. >> it's a point to the huffington post and other -- never mind. >> anyway. in terms of its effect on rupert, and -- coming up, transforming general electric. jeff immelt will be speaking in europe later this morning. didn't mention anybody else just said -- >> i hear you. >> okay. >> are you okay with this? >> i'm completely okay. >> all right. >> about the deal, about the ge chief make the right move by not giving up once the french government got deeply involved? that's next. and is the death of the pc greatly exaggerated? the ceo of ingram micro answers the "squawk" call. we're coming right back. financial noise financial noise financial noise welcome back, everybody. well for everybody who's been complaining about the lack of movement, take a look at the futures this morning. it does look like some red arrows. the more we talk about this the less the decline looks like it would be earlier. we were down by almost 50 points below fair value. right now we're down about 31 points. s&p futures down by five points and the nasdaq off by just over eight. >> a lot of head lines on the u.s. export/import bank. some in congress are calling for it to be wound down. today "the wall street journal" reports that the ex-m bank has suspended or removed four officials as investigators look into allegations of improper gifts and kickbacks. the agency helps finance exports of u.s. goods and services. meantime, unrelated to this news the "journal" reports that delta airlines ceo richard anderson is expected to support the agency's assistance for sale of boeing jets that would be a change. he's soft in his language and delta's long argued that the bank financing allows foreign competitors to buy boeing planes on better credit for terms than it can get it. >> and delta can get itself. >> specifically, one of the emirates which got a big -- >> great deal, right. >> and they got plenty of money, i guess, is what anderson -- but then larry, we've talked about it. let's turn to our guest host this morning larry bossidy. the airbus countries, anyone in europe is involved with -- there's three countries involved with the manufacturing, they have huge -- >> they have an entity that's the same as this and gives huge subsidies to sell the airbus planes. how do you compete with that? >> the only boeing competitor is really airbus and they're subsidized in every one of their offerings. so what the bank has done is allow boeing to compete in those situations. boeing is a big employer in this country. we have enough trouble with corporate america with the tax rate that we have. why put another nail in the coffin and eliminate ex-m bank. ge has used it well. boeing and others. it's a competitive equalizer. >> honeywell ever did? >> no. we're not in the kind of business -- but okay -- >> the hard core libertarian or tea party and you don't even have to be, kevin mccarthy, he's a moderate. >> but there's no business in california so why would he care? >> there's no manufacturing. >> right. i mean they drove them out of there a long time ago. >> but he's now he's representing more than just -- >> he is -- >> there's other people who think it doesn't deserve the financing it gets but i think it's another arrow in the quiver for the u.s. to be competitive and i think it's silly to eliminate it. >> what do you think, what got to richard anderson? kwf he -- >> i think they probably had a little chat with him. >> boeing? >> yeah. >> in terms of where his -- his bread might be buttered. all of a sudden he had a change of heart. >> i don't know that but my suspicion is that there was a little huddle and he probably thought it better to change his position. it was probably a little easier to be opposed to the ex-im bank when it looked like it was going to be passed by congress again. i think this is a huge surprise to many in the business community that they might not get funding. >> now that mr. cantor went down, he was one of the proponents, as you know, and they thought it's up in the air. it isn't helped this morning by the news that four of them are being charged with bad behavior. nonetheless, i think it's a good thing for our country and hope it gets approved. >> and the crony capitalism that you're referring to would be for boeing. because we're giving it to the financing is these no-name carriers abroad. >> this is what i'm referring to which is stuff that some people, some republicans have picked up, and have started hammering about it. they call it crony capitalism. >> for boeing. >> picking winners. >> it's our only -- >> we ought to fly our own flag for awhile. >> it's our biggest manufacturer, and it's our -- >> jobs. biggest exporter. >> we sat here looking on in judgment when the french were protected. >> i was going to say the alstom deal. >> with airbus, with boeing, airbus, it's always anybody who complains about what we do for boeing it's like just look at what's done for airbus, and it's -- >> tit for tat when you look at -- >> may not be right in either but that's reality. that's the queue it is. >> yeah. >> you're going to get rid of crony capitalism here long before -- >> look at the alstom situation, though. how do you think the french government behaved? they've got to have a 20% interest in the company. they bought it -- >> as a ceo would you ever want to be in business with the french government? >> well you know, it isn't what you want to be. it's what you can attain. ge wanted the deal which was a good deal for the gas business which is a powerful component which helps ge with its strategy. in order to get it you've got to have a 50/50 joint venture -- >> they can't complain about the french government. they can't complain -- >> but they've had a joint gent your with the french government in an engine contract for years. it worked fine. obviously they think they can manage it. if you had your druthers would you architect it this way? no. but is it worthwhile in terms of getting the bigger picture? i guess it was. >> people going to be visiting your operations, and take paris or siberia, the rich creamy sauces or the wine. >> you go to paris to meet with your -- >> it's a nice operation. >> on the champs-elysees. >> at that place -- >> want to work 35 hours a week, as you know. and they ask you not to make decisions. >> exactly. and no e-mails or phone calls after like, noon on friday. i think. >> but anyway i think it's a good deal for ge and even though they had to make compromises, i think down the road it will turn out to be -- >> and it helps with lessening their dependence on the capital. >> yes. and yesterday at the same time they sold their finance business in the north countries, their consumer finance business. they have banco santander. they're getting to their state of reducing ge capital as percent of their earnings and become more industrialized. i think both of these steps are in that direction. >> including their operations in sweden. >> yeah. >> we're doing sweden. >> sweeten the pie. >> sweeten the pie in manhattan. make sure you have all your buttons. much more with larry, throughout the program. >> coming up, more on the verdict in the uk hacking trial. we're going to have a live report from london in just a moment talking about rebekah brooks. she was found not guilty, however her deputy was found guilty on at least one charge. today we're unveiling cnbc's list of the top states for business. scott cohn's twitter followers have been tweeting their guesses with the #topstatesscottcohn. he's going to join us from the next hour from a secret location. super secret location for this year's top state. we're going to try to trick him into giving away the state. ear back in a moment. we're moving our company to new york state. the numbers are impressive. over 400,000 new private sector jobs... making new york state number two in the nation in new private sector job creation... with 10 regional development strategies to fit your business needs. and now it's even better because they've introduced startup new york... with the state creating dozens of tax-free zones where businesses pay no taxes for ten years. become the next business to discover the new new york. [ male announcer ] see if your business qualifies. in a we believe outshining the competition tomorrow quires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present. welcome back. we're watching the russian stock market as well. it hit a five-month high after president putin asked the upper house of parliament to revoke its prior approval for russia to send its military forces to ukraine. that comes amid increasing pressure from the west for russia to resolve the situation in ukraine or face further sanctions. up next, many have calls for the death of the pc. but is it really happening? "squawk" ceo calls out to ingram micro's chief. we'll be talking to him about the i.t. side of the industry. also disrupting the housing market. redfin is becoming a serious competitor to traditional real estate brokers. find out their secret to success in the next half hour. "squawk box" will be right back. hey there can i help you? shhhhhh (whispering) sorry (whispering) hi, uh we need a new family plan. (whispering) how about 10 gigs f data to share and unlimited talk and text. (whispering) oh ten gigs sounds pretty good. (whispering) yeah really good. (whispering) and for a family of four, it's $160 a month (impressed, breaks whisper mode) what! get outta here! (whispering) i'm sorry are we still doing the whisper thing? or? (whispering) o! sorry! yes yes! we'll take it. at&t introduces our best-ever family pricing. for instance, a family of four gets 10 gigs of data, with unlimited talk & text, for $160 dollars a month. welcome back, everybody. we do have some breaking news from across the pond today. this is a live shot. take a look right here. this is a live shot you're seeing outside a court in london. that's where the former "news of the world" editor rebekah brooks has been found not guilty of a phone hacking conspiracy. there were four counts against her. she was found not guilty on all four counts. her fellow editor andy coulson was found guilty of conspiring to intercept communications and we'll wait to hear more on that. >> intel recently boosted its revenue forecast for the second quarter setting stronger demand for business pcs. so is that a sign that chief technology officers are spending? describing us now is the ceo of ingram micro, the world's largest i.t. supply chain management company with a presence in 170 companies around the globe. so help us here. are people having -- when intel came out with that, did that make sense to you? you see it every day. >> yes, no of course it made sense. at the same time, you know, pcs have been around for a long time. and over the last couple of years, i would say, the demand was very, very -- that's true around the world. so it was due for a refresh in any case. to the ex-pc situation added to it, if you will. but companies need to refresh their fleets. that's what they are doing and have been doing over the last couple of quarters. it may get in to, you know, second half of this year. but long-term, you do have to take into account that tablets are taking a very, very -- >> what percent, if you look down five years from now, what percentage of new devices do you think businesses are going to be buying? we're all going to have tablets? we're not going to have computers at our desk? >> i think we'll have both. >> both is not bad for your business. both is good for everybody's business. >> it is good for everybody's business. and if you look at the evolution of technology, to certain extent there is a cannibalization of the devices. but if you look at yourself, you probably carry three devices or have, you know, five devices which you include at home. so that is what's going on in the industry now, and i would say that in one hand pcs are going to be less of the center of the universe. mobility is the center of the universe as far as devices but they will complete each other. you'll have, you know, a tablet, a hand phone, a pc. >> it reminds me almost of a supermarket chain. the reason is because of your margins. what are your margins right now? >> they're not high enough alain. >> isn't it a practice? >> we've been inching up to 6%. and so you can -- >> the market cap of the company? $4 billion. what do you do in sales per year? 50 billion? >> 42. >> 42 billion. so on $42 billion in sales, you make $60 million. >> you make 300 in a year. >> so that's tough. you've got to watch. >> particularly when you have -- at any point in time we're carrying 3.5 billion of inventory. >> of stock. >> that turns in less than a month. the obsolescence there is huge. at the same time parallel we offer about $4 billion plus of credit. for $250 -- >> how many different things do you sell? >> we carry about 7 million skus. we sell around close to 100,000 units per hour. >> is there really a slowdown in the first quarter or is it more of an inventory situation? >> second quarter i can't really comment on the end of our quarter. but in q1 there are different dynamics. on the pcs we were just talking about that. the refresh cycle comes in to big deals. and at ingram we really choose our deals based on returns. and in the first quarter we just chose not to participate completely to the refresh. so our pc sales were flat, at best. although when you compare to last year, they were minus 12% last year. so the comparisons are good. but the business is not that great as far as pcs go. >> alain, you deal with a lot of competitors, apple, microsoft, hp, et cetera. does that cause you difficulties in terms of how you run your business? by the way, alain and i have worked together before. he's done a great job honeywell, i'm sure he's doing a great job now. how do you separate those combatants? >> it's also a big question. when the established market, you know, they're all used to compete with each other. cisco with juniper, there is a system that exists. but when new entrants come, and there are a few disruptors coming into the industry, it is a question, because, as distributors we have to offer all of the solutions that customers need. and of course, the partners we have don't always take it lightly but that's our business. that's what we do. and we'll continue to do it. >> wearables. everybody's talking about wearables. i'm wearing this thing. >> right. >> i wonder whether it's overhyped though. and are businesses buying wearables? >> i think it's more than wearables. it's really the internet of things that is happening. wearables is the most fashionable one, the most visible because it's individual, and it's related to, you know, activities that are more personal. but when you think of many, many other machine to machine evolution, this is going to be a revolution where a lot of units are going to be talking to each other, and automatically you don't choose what machine talks to what machine. they will automatically link up and be on the internet for you. >> let me ask you a separate question unrelated to your business. you're on the board of amazon. we talk about amazon all the time. i mean all the time. amazon is in a big fight with, even in your own company you say you got to provide all the products that the customer wants. what do you think the long-term implications of this battle are going to be on the company and the way potentially the government and regulators and customers think about amazon? >> if you allow me i would prefer to leave it to the management to answer those questions. i on the board and i'm aware of a lot of things that are going on but frankly at this stage i would prefer management to respond to this question. >> are you going to get an amazon phone? >> of course. one more device. >> one more device. >> you're going to -- you're not going to sell the device? it's only going to come from amazon? >> we sell kindles. so -- at ingram we sell absolutely anything and everything that is out there. >> all right. >> i notice you've done a nice job in terms of some productivity programs, in terms of having been launched and that ought to help your margins. you've got to get up to 1% next. >> i learn from you, larry, i remember when you were there, it was 6% year over year over year and never stopped. so i'm trying to apply that. >> nice to see you. >> thank you, appreciate it very, very much. >> thank you. >> here's an indication on vertex meg terrell brought us this story. it closed at $66. it was halted, it's indicated $100 to $101. and this is after some positive result results from a cystic fibrosis experimental drug. it's a combination with another drug that's already approved for cystic fibrosis and it showed some positive results, this is the first drug, really, that actually treats the not the symptoms of the disease, but the cause of the disease. people that have it as they get into their 20s, they lose 2% of their lung function every year, and it's characterized by a buildup of mucous. it's hard to breathe. and even though it only improve lung function 4.3% to 6.7%, it also reduced the deterioration in lung function by 30% and 39% respectively. so definitely is efficacy that it's showing here in actually treating the cause of cf. which is a horrible -- >> wonderful. >> that's great news. and vertex, a lot of analysts think that they need this to be approved to return to profitability. so it's a 15 -- well it's going to be a lot more than $16 billion. now it's going up 50%. so it's going to be a $24 billion company now and it's not even profitable. they need this to return profitability. up next breaking news from across the pond. this is a live shot outside a court in london. that's where former "news of the world" editor rebekah brooks has been found not guilty of a phone hacking conspiracy. we're going to have much more after the break. and then, redefine disrupting the world of real estate. the company is the pioneer in a map-based real estate search. redfin. the ceo tells us what their data is saying about the state of real estate. "squawk box" will be right back. so what i'm saying is, people like options. when you take geico, you can call them anytime you feel like saving money. it don't matter, day or night. use your computer, your smartphone, your tablet, whatever. the point is, you have options. oh, how convenient. hey. crab cakes, what are you looking at? geico. fifteen minutes could save you fifteen percent or more on car insurance. we've got some breaking news from across the pond right now. this is a live shot outside of a court in london. that's where former news of the world editor rebekah brooks now been found not guilty of phone hacking in a conspiracy, fellow editor andy coulson, he was found guilty of conspiring to intercept communications, and we want to get on the phone with katherine boyle right now to get a handle of what's just happened. are you with us? >> yes, i'm with you. and rebekah brooks is about to walk out of london's old bailey a free woman. and she's been found not guilty four counts of conspiracy counts. phone conspiracy before the court of justice. but someone who is not going to be walking out with her is her former colleague at the "news of the world," and former romantic partner, andy coulson. because he has been found guilty of one kind of conspiracy to intercept communications. that basically means that he -- the jury found that he knew what was going on in the phone hacking at the "news of the world." now still reading verdicts on a further two counts with regards to mr. coulson and two former "news of the world" employees. but this is a really, really dramatic day, and brings to an end three years for rebekah brooks under which your reputation was under a serious cloud. let's not forget for almost three years this july, this allegation first emerged that the phone of the murdered schoolgirl had been hacked in 2002, and the debate over who knew what at the "news of the world" has continued. we've seen rupert murdoch, called up in front of the british mps. we've seen celebrities like jude law here in the dock here at the old bailey. it's been one of the most dramatic trials to cover. it's gone on for nearly eight months but we're now coming right into the final end. a verdict on almost all the charges today. still awaiting verdict on another of those two former charges, but because the judge has directed the jury to find a majority verdict that means that will probably speed up for them and we're hoping for a verdict within the next couple of days on these particular charges. for rebekah brooks, former head of news uk, for her husband charlie, and head of security mark hannah, this particular verdict is finally over. >> catherine, help us understand one thing. to the extent that rebekah brooks has been under fire and in the spotlight for several years now, where does this put her standing in london, and to the extent that she was always connected to rupert murdoch and she has been cleared to the extent that there have been rumors and speculation around mr. murdoch himself is there the perception that he will be vindicated by this, as well? well, i think they removed for james murdoch in particular going through any kind of time that he would have known about it. rebekah brooks was one of his favorite executives. she was a particular favorite for both and rupert murdoch. that's why she had this almost unprecedented for being a quite junior "news of the world" journalist right up to the very top of the organization in the uk. within the last sort of couple of decades. so having said that, the chances of coming back to a major job in the uk at age 46 are probably going to be fairly limited. having said that she got a pretty large payout from the organization whenever she left. so she probably can sit back and spend some time with her family, and just kind of have a feeling of relief about the outcome of this trial. >> catherine, on the other side, andy coulson. what time of sentence, typically comes with a guilty verdict like this? >> well, for andy coulson, of course, he was a really close adviser to the prime minister. he's going to look particularly bad for prime minister david cameron because he has him very much in his inner circle. she's the head of communications. and he was apparently taken on at the recommendation of rebekah brooks who is also very close to the prime minister. you'll all remember one of the things that came out through the course of this is david cameron, the prime minister had, in fact -- belonging to rebekah brooks, and so it's those kind of ties really on the question. the prime minister's judgment itself is going to be really called under question particularly mr. coulson is subsequently found guilty on another couple of charges. it's almost unprecedented for someone at this high level of politics to actually have to serve jail time here in the uk. >> and do we know what that jail time might be? just looking at historical guilty verdicts like this? >> we won't until the verdict has been reached on the other charges. but up to the maximum jail term is up to seven years. given we don't know the verdict on the other charges yet. the jury feels that mr. coulson, the judge decides what his own sentence is going to be. >> okay. catherine with that report. thank you very, very much. of course we'll be monitoring this throughout the day. fascinating. >> yeah. i guess it's been a long time coming. >> find out what happens here. when we come back this morning we're going to check on the housing market from a disruptor ahead of today's new home sales data. online reestate company redfin that says millennials are having a hard time trying to achieve the american dream. the ceo will join us right after this. searching for trade ideas that spark your curiosity tdd#: 1-800-345-2550 can take you in many directions. tdd#: 1-800-345-2550 you read this. watch that. tdd#: 1-800-345-2550 you look for what's next. tdd#: 1-800-345-2550 at schwab, we can help turn inspiration into action tdd#: 1-800-345-2550 boost your trading iq with the help of tdd#: 1-800-345-2550 our live online workshops tdd#: 1-800-345-2550 like identifying market trends. tdd#: 1-800-345-2550 now, earn 300 commission-free online trades. call 1-888-628-2419 or go to schwab.com/trading to learn how. tdd#: 1-800-345-2550 sharpen your instincts with market insight from schwab tdd#: 1-800-345-2550 experts like liz ann sonders and randy frederick. tdd#: 1-800-345-2550 get support and talk through your ideas with our tdd#: 1-800-345-2550 trading specialists. tdd#: 1-800-345-2550 all with no trade minimum. and only $8.95 a trade. tdd#: 1-800-345-2550 open an account and earn 300 commission-free online trades. call 1-888-628-2419 to learn more. tdd#: 1-800-345-2550 so you can take charge of your trading. but we're not in the business of naming names. the volkswagen passat is heads above the competition, the fact is, it comes standard with an engine that's been called the benchmark of its class. really, guys, i thought... it also has more rear legroom than other midsize sedans. and the volkswagen passat has a lower starting price than... much better. vo: hurry in and lease the 2014 passat s for $199 a month. visit vwdealer.com today. welcome back to "squawk box." is the american dream dead for millennials? this is a question raised. according to a new report out by redfin millennials are entering their peak home buying years but data shows as a group they are shrinking away from home ownership. joining us to talk about the report and the state of housing is glenn kelman, the ceo of redfin and number 34 of cnbc's disruptor 50 list. >> we meant the american dream for owning a home. you meant the overall american dream is over. >> i can't comment on that. >> because there's no -- >> the american dream. >> the overall dream is dead for millennials. >> the american dream is sort of the leave it to beaver american dream which is that -- >> you always explain it. >> you go to school, you get a house, you get a spouse, two kids, the dog the whole thing. the house is a big part of that. >> i can't comment on the spouse. that's your own problem. but the house, i'm here to discuss. >> okay. so let's talk about the house and let's talk about the problem with getting that house. what is the -- what is the problem? >> the problem is volatility. so people used to think that a house was the safe investment and then 2008 the bottom dropped out of the market. if you look, wall street has actually become less volatile than main street. so, people who used to think that housing was the safe place to put your money are now very skittish. and when they saw prices rise -- >> this is about them wanting houses and not necessarily that they can't get one because they can't qualify or a loan and they have student debt? >> this to me is a student debt story. >> it's lions and tigers and bears. there's student debt. there's lending regulations that have become tighter. but i think there's also a change in the american psyche where there are people who can afford to buy a home who have decided instead to rent it. and the reason is they see prices go up 10% to 15% in one year. they know that the bottom dropped out five years ago. they just step back. they say, i can bait. time is on my side. >> what percentage of potential home buyers do you think are sitting on the sidelines because of the issue that you're describing, relative to people who are potential homeowners who would love to buy a home but are either underwater on student debt or have other issues? >> i would say about a third of folks who could buy a home can't qualify for the mortgage. they don't have the dough. >> right. >> so ten years ago when wages were stagnant we still saw this expansion of credit. and that just allowed people to buy a home even when they couldn't afford it. those folks are out of the picture. now we have another cohort of folks who are buying a home and a third cohort who are deciding they don't want to. they think prices are going to flat-line or come down. they've been frustrated by the bidding wars. they've been frustrated by the inventory shortage and just say the heck with it. >> glenn, housing has been a big part of the economy over the years. what does this say if housing stalls, like it has been kind of in the last 12 months, what does this mean for the economy over the long run? >> well, i think it really puts some pressure on middle-class jobs. there's a lot of folks in construngz and real estate sales and lending who depend on sales volume. right now we see sales volume kind of stagnant. everybody thought the party was back in 2013 but it didn't last long. so i think it's going to be a real challenge for jobs growth if you don't see more new construction, more real estate sales. >> are we talking about markets across the country or are we just talking about hot markets like new york and san francisco and l.a.? >> well, there's probably three different markets you could talk about. san francisco is going to stay hot no matter what happens. same with new york. you've got hedge fund and tech money that's just blowing the places up -- >> have we decided that new york and san francisco are somehow insulated forever? we thought the whole country was insulated up until 2008. >> i would say that all the data the government has on incomes just doesn't take into account the huge capital gains that people are making on wall street. so you've got linked inin and google and facebook and all this twitter money just blowing up san francisco right now. then you've got a couple of second tier cities, dallas being a good example, where people are fleeing because they can't afford prices in the coastal cities. so washington, d.c., boston, places that used to be strong growers are giving it up for places like dallas and houston and salt lake city. but other places, you're not seeing the same sales growth that you would. >> washington, d.c. is not on the coast. >> washington, d.c. is on the coast. >> some day it will be. >> so how do you change, how do you adapt your strategy to take advantage of what's going on? >> well, we traditional appeal to really young home buyers, but our demographic is broadening. if you're a technology based disruptor the first people who are going to buy a house with you are 28 years old. we've seen that demographic really age. now our average home buyer is about 40 years old and focus more on moveup buyers. people who are going to cash out on one place and move up to a second place. >> can we talk about the flippers? i'm looking at a stat. you say that house flippers grossed more than ever in 2013, an average of $90,200 per home and $194,000 in san francisco. >> i think there's two groups of people. the investors like blackrock are sitting tight on the inventory. they're going to hold it for five to six years. but the mom and pop flippers who bought a house, they needed to cash that out. so they did it quickly. >> what happens when blackstones of the world do cash out? meaning do you believe that they own so much inventory that they are -- there's an overhang on the market effectively? >> there is. and it's like a mutual fund that takes a big position. it's hard to get out of it. so if you own a huge chunk of the market, you can't liquidate overnight. so it's going to take them years to unwind that position. the challenge they have right now is they got good at renting out the place the first time. now they have to find the second renter, the third renter. they've got to keep mowing the grass and fixing the broken windows and that's more management than they anticipated. >> the millennials if they're looking at buying a house, potentially not the best place for an investment. you think they are right in this or you think they are going to in the long run, have made a big mistake for not locking in rates when they were low? >> everybody expejts me to say you've got to buy now, now, now no matter what's happening. i would say the only good reason to buy a house when you're 30 years old is if you need shelter. you shouldn't buy a house as an investment unless you wear a tool belt all the time. there are people who are really good at walking through houses, fixing them up and flipping them for cash. but if you are thinking about this as an investor, you really need to have that skill set. otherwise i would think about it more like buying a blouse. you buy it because you like it. >> if you were renting instead of buying, because you think that it's not the best place for it, is that the right move? if it is for shelter? and maybe that's the case. we've looked at rates actually falling this year rather than rising. >> rents keep going up and some places the lines have crossed, in other places they haven't. so if you look in say downtown miami, that's a place where rents have been going so fast that actually makes sense to buy. and i think the other question is, just where else are you going to put your money? a year ago i felt like there was still room in the stock market for you to make more money than in housing. now we're starting to see some people take money out of the stock market and look to put it in real estate because they're worried we're at the top. >> you're not making -- >> appreciate it. >> no. >> and you didn't say anything -- is the american dream dead or not? for millennials? >> no, it's not dead. i just think there are a bunch of people who are worried about it. >> i don't mean housing, overall. any future whatsoever for a new one. >> you're going to have to hire a philosopher for that. >> we've got our own in-house philosopher. >> coming up. thank you for that. general electric's deal for alstom clearing the key french hurdle. ceo jeff immelt is going to hold a news conference. we'll monitor that. also talk about ge's not so hot stock performance. and then it's number five on cnbc's top states to do business. scott cohn unveiling the top states for doing business today, and we kick off all that in just a bit. 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[ male announcer ] there's a better way with creditcards.com. compare hundreds of cards from all the major banks to find the one that's right for you. it's simple. search, compare, and apply at creditcards.com. first round's on me. can ge deal without repower investors? ceo jeff immelt speaking in france about the deal. shareholder and money manager jack gaggen is here to defend the company's underperforming stock. >> from tech titan to caddie at the u.s. open. scott mcneely joins us to talk tech mergers and more. >> cnbc's top states for business is here. we're going to reveal five and get you ready for the big day ahead as the final hour of "squawk box" begins right now. welcome back to "squawk box" here on cnbc. first in business worldwide. >> loud and proud. >> from the coastal area, we're on the hudson. so we're coastal. >> the beaches -- >> that was actually the atlantic you were on. we're on the coastal hudson. i'm joe kernen along with becky quick. >> and the coastal river. did you know the tide goes all the way up here? >> why do you think i need to know anything about geography. in studio larry bossidy, former honeywell chairman and ceo joins us in studio. always good to have you in larry. and we're going to talk about some more stuff coming up. >> good. >> how are we doing? is the mayor -- i'm still talking about the american dream. we can still do it, can't we larry? >> we sure can. we have some impediments that i'd like to see us remove. for example, this tax inversion situation. >> we've got to talk about that. >> i don't blame anybody for doing it. but on the other hand, it does have the disadvantages in this country and maybe we'll talk about it later. >> that's good. >> in the meantime, some of the head lines very quickly, vertex pharma shares getting a boost. that's putting it mildly. the company reported a combination of two of its drugs successfully treated patients with the most common form of cystic fibrosis. that stock is up more than 56% this morning, last trading around 104. we've been talking a little bit about this. you know something about this drug, too. that it has really made strides. >> i've heard people, one person used it, and it's been remarkable. so i hope it's as good as it's advertised. >> again that stock up by more than 56% today. also u.s. authorities have reportedly subpoenaed dean foods and clorox in an insider trading probe involving carl icahn. the fbi and s.e.c. are both investigating the case which also involves pro golfer phil mickelson and las vegas gambler billy walters. the u.s. export-import bank has reportedly suspended or removed four officials as investigators look into allegations of improper gifts and kickbacks. the agency helps finance exports of u.s. goods and services. "the wall street journal" reports that one official allegedly took cash payments in an attempt to exchange or assist a company in getting federal financing to export construction equipment to latin america. and former "news of the world" editor rebekah brooks has been found not guilty of a phone hacking conspiracy. fellow editor andy coulson was found guilty of conspiring to intercept communications. this comes after a month-long trial that focused on illegal activity at the heart of rupert murdoch's newspaper empire. >> not a dry eye at the turnout this morning. >> this does not mean he's not a completely disreputable character, rupert murdoch. just because she got off does not mean that he's not lacing all the publications with right wing propaganda. am i right? >> i disagree complete ply. >> i want to be on record -- >> this does not -- >> i want to be on record as saying that i do not believe the news pages -- >> i was watching you do that story. we've got the news -- not guilty from -- not guilty of this. not guilty of that. not guilty of this. not >> and you thought i was -- >> i would prefer that nobody's guilty and then nobody does anything bad. >> okay, all right. >> as a storyteller by the way, i like a great story. >> oh, we'd be climbing up so quick. we'll be kicking a sellout for journalists. >> you would be picking a sellout. >> the human being part you don't want anybody to do anything wrong. >> you pick the wallpaper out for rupert's cell if she had been convicted. one of our next guests says that the market rally is going to run for years to come, jim paulsen, you know what i admire this guy i think. if the market really has been doing -- it's really dull jim. you said that. chief investment strategist at wells capital management. i also admire chris, one of our favorites andrew, right? chris? no? >> he didn't say it right away. portfolio manager of the turner titan fund. paulson this is like playing out sort of like -- >> we need it more often. >> because it's fascinating. >> jim, it is sort of what you said, isn't it? yeah we'll see how it turns out, joe. >> although i think you could have a pullback at some point instead of just this slow grind higher, right? >> i still do. i think that's a possibility here. i thought 2000 would be where we kind of peak out. i think that might be close to a high for this year. i still wonder if good news becomes bad news on the economy here and if that starts to move bond yields higher maybe we get a more difficult second half of the year. >> i don't want to get lost in that. i still think the market has quite a ways to go in the next few years even if it has a correction over the next several months. the most i probably do right now, joe, is rather than move out of the stock market i don't really want to go to ponds who get hit worse and cash still expensive about 400 times its earnings. so i'd say overweight stocks. i think i start to diversify a little bit away from cyclicality and i'd look to barbell the portfolio exposure a little bit. i still like material stocks which i think might do well if there's inflation fear. i still like tech stocks that might do well with the cap and spending cycle starting to perk up. but i'd also start to look at buying some defensives like the staple stocks and beyond yields move up i look at buying utilities and barbell my exposure for the rest of this year. i'd also move some offshore because i don't think that japan and europe, for example, are going to suffer from overheat fears even if the u.s. does. and i like the emerging markets, because they're on a completely different cycle after underperforming for the last two years and now bolt upping out. >> chris i'm reading you know, your thoughts and this is exactly what i was thinking. markets are like watching point grow, and it's really boring at this point. and you don't short a dull market. i know that's true. but do you attribute a lot of this to the -- we're not getting the normal moves we did because the fed is still so, involved in the game? >> good morning, joe. hopefully i didn't say paint growing but i would make the comment that, yes, i think that at this point i think m&a is really helping this market quite a bit. you know we were on here several weeks ago and i think the biggest change has been the inflection in m&a. that's really stopping the belief that we're going to have this big correction just because last year we had so many accesses that we have to correct a little bit just to take those accesses away. i think jim's commentary is right on a about the top down view. you really are forced at this point into stocks. m and a cycles being very supportive of that trend. >> when does it go from m and a where they're just nationalizing, they have to do it to get some growth by rationalizing operations, when did it go from that to where they're doing it because they think it's an additive and it's going to grow because they're excited about making additional investments and satisfying more customers. that doesn't seem to be what the m&a is about right now. >> yeah, i think it's a mix of things. but i think you're spot on, joe. it's not just about trying to grow their businesses and going into ancillary businesses where they can really make one plus one equal three. a lot of these companies are doing defensive moves. a lot of these companies are flush with cash so in the first five years, four years, post the great recession, it was all about dividend return and share repurchase and now there's a return on capital versus return of capital. and you've mentioned ge, as a precursor to our conversation. you know certainly what they're looking to do is a little bit more than just a defensive move. i think you're fwg to see a little bit more of those moves stretching out into ancillary areas over time, absolutely. >> all right. since you're overseeing you have to actually make decisions, don't you, chris, on individual names? on places they go? >> yeah, i do. >> are you buying anything, settling anything? >> yeah, you know, we still like the internet sector. again we're not trying to called market move to the next week or next three weeks, and really looking out six, maybe twelve months and the internet sector continues to be an area of very high focus for us. especially this stage we're in within the business cycle right now. so advertising continues to grow as cash flows are very strong for a lot of companies. big market shift from print media obviously to a more dispersed internet and digital platform and companies we like there, you've heard me talk about facebook before. we also like other companies like tripadvisor which is changing their business slightly over the last six to nine months we think is ready to take off again. >> jim, let me ask you a little bit about, you say you're still overweight the stock market although it does sound like you're saying that and kind of holding your nose at the same time. what would change your mind? what would make you think hold on, this is not the place i want to be. >> well i think that the biggest risk, becky, to boarding this bull run prematurely i think is inflation is an actual problem. does become an actual problem. run away inflation. not just the rising a little bit but it gets out of control. i still think there's some odds to that because of the unprecedented monetary policies that we've practiced all over the globe. it wouldn't be unrealistic to think that it could get out of control. but i think it's remote. i think it might be one in five chance. and if inflation doesn't get out of control, then i think, to me, we've got several more years of run left, because confidence is still only midland range. we still have an output gap. you know, people are just starting to borrow money again. as chris said, you know, corporations are just starting to spend their dry powder on their balance sheets. there's so much left in this recovery, but the risk, becky, would be if i get really concerned that inflation is getting out of control. i don't see that right now. but i do see a situation where we're starting to worry more about it this year, and that could be enough to raise bond yields to create a little turbulence. >> very quickly, though, jim, you would take money out of stocks if you saw inflation and put it in what? that's not a situation where you want it in cash? >> if inflation was really getting out of control, becky, you'd have to go, then, to cash, or low duration bonds or real estate, or commodities, but i'm not there yet at all. i don't see that as a most likely outcome at the moment. >> all right. jim, chris, thank you both for joining us today. >> thank you. >> thank you. >> we don't have any time -- do we have any time -- this is pretty fascinating here. it is. here's how this works though. they already had a drug, the first ever for treating the actual cause of the disease, caladeco. the population is very small. it helps the protein get to the surface of the cell where it helps them but only works on 4% of patients. only about 2,000 patients worldwide. but they charged $300,000 a year for it. so that brought in $100 million in vertex. this add-on drug to be used in combination does the same kind of thing, it helps more of this protein reach the cell surface, so it would work in vastly more patients, as many as 28,000 worldwide, or nearly half of the total population of cystic fibrosis. they wouldn't be able to charge $300,000 for it. but they could make $4 billion to $6 billion in revenue, because there's 28,000 patients, instead of 2,000 patients. and because there's no other option for the disease, it would reach its, you know, usually takes years to reach peak market penetration. it would reach it almost immediately. >> what do they charge for this? >> less than $300,000. >> who pays for it? >> i don't know. >> the pushback- >> it's not even approved yet. this is just -- >> over the weekend the pushback from the big insurance companies, pharmacies -- >> you can't pushback against something that there's no other -- and it's also -- there's no way. we'll see what the ten guys, or 15 guys that decide whether you get that panel that -- >> it is. sarah palin, she talked about repudiate certain -- sorry. >> we're going to talk more about all of this when we come back also though we'll be talking about whether general electric seeks to get back on the investor grid. the stock has been stuck in the $20 range since 20002012. chairman and ceo jeff immelt taking about the alstom deal. we'll get an update right after this. with all the opinions about stocks out there, how do you know which ones to follow? the equity summary score consolidates the ratings of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past. i'm howard spielberg of fidelity investments. the equity summary score is one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today. welcome back, everybody. general electric is the longest standing member of the dow 30. and in the last 14 years ge has underperformed the index more than 60% of the time. the stock is down about 5% so far this year. the dow is up only 2% this year. the question is, is ge still worth holding. joining us right now is jack naggant, chief investment officer at harvard advisory. he's owned general electric since the mid 1990s. you have been a stalwart with this. is the company doing the right thing and why do you think the stock market isn't responding? >> becky, i do think mr. immelt's done a pretty good job since the credit crisis in remaking the portfolio. ge got too far away from its industrial roots flout the late '90s and early 2000s and their management focus was spread over many industries, they didn't realize the risks they were taking in advance and with their short-term funding. since that time, however, the portfolio was changed drastically, earnings from financial businesses down to around 40-some percent now, and with this deal, would, by the end of the year, be down to about 30%. 35%. >> which is exactly what the management has been saying all along, what immelt's been saying he was going to do. why do you think the market hasn't responded more positively to all its moves? >> well, i think it has begun to. you have to remember that when looking at the performance of the stock, ge had embedded within it one of the largest banks in the country. and so, if you think about it from the perspective of being half a bank in 2008, the other large banks, city corp down 90%, bank of america down 70% still, ge has outperformed those dramatically. >> right. >> it has to chain the perception to being an industrial from being a bank. and i think they're well on the way. >> hard to move that stock, jack. >> what do you think? you think the fact that the french own 20% of alstom and there's three 50/50 joint ventures, does that work negatively in terms of the share owner reaction? >> absolutely, larry. i mean you can imagine, you run a major organization, honeywell, and i'm sure that having the french as a major shareholder would not be your first choice. clearly they will not have the ability to rationalize costs and improve margins there as if they had complete control. so, i think this is what they had to do to get the deal done. it's still an acretive deal. it's still a deal which includes a very high percentage of recurring revenue which ge can improve the margins on so it will have an annuity stream there. it's still an attractive deal. >> it is. i know the alstom gas turbine business and it's really good property. they've had a voint venture with a french company for years in the engine business that's worked well so i think they can work themselves through it. and i do think it's a good step toward making a more industrialized enterprise going forward. >> i agree. >> i was reading some head lines. the french workers, alstom's french workers were relieved that ge wanted a deal. they didn't want to be working with siemens or anybody else. >> well, that's interesting. i'm not quite sure how to read that. but i'm pleased to hear it. because labor unrest, of course, is one of the biggest problems for a business running in france. >> jack, what do you think they are able to compound their dividend? within the last three or four years since that problem during the financial crisis? is it going up 10% a year? what's it going on? >> it's going up more than 10% if you take the first two years, where they raised it twice. >> what's the going rate, though? it seems like single digits, isn't it? and then i was going to ask -- >> it is. >> what's the earnings per share growth rate. that's single digits, too, isn't it? >> you bet it is. >> so what's the multiple? >> the stocks should get? >> it should have a market multiple are slightly better because industrial businesses generally have a slightly better than market multiple. and ge in the final analysis, i think, is a better than average managed business with a better than average cost of funds. so, i think it should be slightly better than that. >> jack, i just want to go back to the answer you had when becky asked you about the alstom deal and the employees liking it and you said you don't know how to see that you thought it was a positive. flip it around because i could tell there was something going on in your head and you were thinking maybe this is a negative? no, i guess when -- when you look at the relationship between labor and industry in france, it's a bit adversarial. and you have to say to yourself, well something is good for your adversary, is it necessarily going to be good for you? i think the belief is that ge is probably a better managed organization than siemens is. and so in the future their jobs will be safer. >> they say they feel a little more comfortable with it, they went and talk to work, about 2500 alstom employees there and they grew up working right next to the ge plant and they share the same canteen with some of those employees i think it's just a comfort level. >> by the way also when you know that the government is your partner, you also probably feel -- >> french government, andrew, do you? >> yeah. >> no, i'm thinking if you're the employee and you're thinking, all right i don't really want to work so hard. >> i thought jack was going to be on the other deal. >> why did you stay with the stock as long as you did? i admire you for doing it but it must have tested your patience over the years. explain yourself. >> well it certainly did. and you know, as one of our long-term holdings it's probably the poorest performing. luckily the market gave us a real nice opportunity in the spring of '09 to add to holdings. so, our experience hasn't been as bad as that of the shares. but, clearly we re-evaluate a holding as you go along. and we thought it was a great business that had a transient problem that they could work through. and they have. so it's actually worked out to be a decent holding. >> thanks, jack. all right we'll see you later. historically, when the uaw celebrated the terms of the contract, was that -- >> a big time to buy. >> when they were celebrating the terms. >> coming up, from tech gang to u.s. open caddie scott mcnealy joins us to discuss all things tech then cohn, scott cohn's twitter followers, both of them -- just kidding -- have been tweeting their guesses with the #topstates. scott cohn will join us next from a secret location in this year's top state. i am told we could have known where he was yesterday because it was light and humid and we should have known he was on the east coast. ♪ "first day of my life" by bright eyes ♪ you're not just looking for a house. you're looking for a place for your life to happen. it's calledew way truecar. car. and truecar users save time and money. so when you're ready to buy a car, make sure you never overpay. visit truecar.com today. the numbers are impressive.y to new york state. over 400,000 new private sector jobs... making new york state number two in the nation in new private sector job creation... with 10 regional development strategies to fit your business needs. and now it's even better because they've introduced startup new york... with the state creating dozens of tax-free zones where businesses pay no taxes for ten years. become the next business to discover the new new york. [ male announcer ] see if your business qualifies. welcome back to "squawk box." take a look at some stocks to watch. vertex pharmaceutical is now soaring on news that its new cystic fibrosis treatment did well in late stage trials. vertex plans to apply for fda approval for the treatment during the fourth quarter. that stock up literally almost 54%. >> $8 billion market cap. >> huge. >> on just prospect for it. >> also, walgreens this morning reported quarterly profit of 91 cents per share. pressure on its pharmaceutical operations and gross margins and up next techs starting to feel the urge to merge. yesterday was oracle buying softwaremaker micros systems. scott mcnealy founder of weigh-in and former sun microsystems ceo is going to join us after the break to talk deals and the latest from the valley. financial noise financial noise financial noise tap it here, digital insurance id card. and tap it here, boom, roadside assistance. on'tday ooklay, it's axwellmay. the igpay? otallytay. take an icturepay! onephay, onephay! really, pig latin? [ male announcer ] geico. anywhere, anytime. just an aptay away on the geico appay. welcome back to "squawk box" this morning. after a seven-month trial, murdoch protege rebekah brooks has been cleared of all hacking charges in that uk trial but andy coulson her deputy has been found guilty of being part of that phone hacking conspiracy. kayla tausche joins us now from the new york stock exchange. she's been following this story for years now. >> you wanted to say months but really, andrew, it's been over three years. >> tell us what it means. >> well, it's interesting, because british newspapers who had witnesses in the courtroom said she was overcome with emotion. it has been a three-year debacle. just in the public spotlight. of course this has been going behind the scenes for more than a decade at this point. but a jury did clear rebekah brooks of four charges that she had been charged with over the last few years, in a long-running trial, it was more than a seven-month trial. the jury has been drib rating for the last week or so, since june 11th. that jury made up of eight women and three men, and others were acquitted of charges as well, including rebekah brooks' husband charlie, her personal assistant and a couple of her security details, as brel. coulson and brooks, as well as these brothers, were part of this same crowd because they faced much of the similar set of facts due to them having been at trials together in the past, at hearings together. and also present during the disposal of certain documents that were thought to be conspiring to pervert the course of justice over the course of the last several months. now remember she resigned as chief of news international in july 2011. she was arrested shortly thereafter on these phone hacking charges, and she has said vehemently since then that she would be innocent. rupert murdoch, the ceo, and of course the figurehead of the news corp. empire has stood by her all this time. her lawyer steven parkinson has said she's not guilty. what's interesting about this is even with all of the clearing of these various charges that andy coulson, her deputy and a one-time press chief for david cameron was charged as well. and that just goes to show you how widespread this was and how far it stretched to the world of politics, the world of the police force and the world of media at a time when this very scandal was going on. >> okay, kayla tausche, thank you for that report. and we had oracle confirm yesterday it's going to acquire micros systems for $5.3 billion. the largest tech deal since the company bought sun micro in 2 0 2010. joining us is scott mcnealy, co-founder and chormer ceo of sun micro, also a chairman of weigh-in. how are you? >> doing great, thanks. >> larry knows what he's doing. you figure this will work out and he's done a lot of these acquisitions. this is a pretty big one, though. >> this is his m.o. he's always gone out and bought other enterprise software companies, enterprise infrastructure companies, and even hardware companies, and he's done a great job. he's got a great track record of buying competitors, and taking them off the market. and building a larger and ever more encompassing suite. he likes to buy things that have very high barriers to exit and raise the prices, and lower the delivery costs to the cost of delivering the software. to the customer and making money doing that. >> scott, you know, you're pitching about something here, something about irs, the irs? i've got "the new york times" here. i'm trying to figure, do some research on what you're trying to talk about here. i see that christie's, another bridge inquiry linked to chris christie. a couple of stars here on global warming in the "times." i don't myself see, i've looked in the entire front section nothing about the irs. what are you referring to? >> if you're following me on twitter you'll see i've been kind of raising against the machine here a little bit. it's just fascinating to me that lois lerner and a bunch of other folks lost their e-mail in this day and age i tell my boys anything you type in, or scan in, or take pictures of or whatever is a digital tattoo that you can never get rid of. >> unless you actually actively try to get rid of it, right? i mean you can -- can't you destroy data if you want to? >> i don't even understand that. how in the day and age of the cloud and backups, and everything going up to the cloud, you -- it's stunning to me that they could actually even pull that off. it doesn't happen accidentally in my view. it's got to be happening somehow, somebody who owns the cloud is -- can you imagine, the irs asks me to keep stuff for seven years. they actually lose e-mails? it's stunning to me. >> what's been -- i mean could you find it right how? or could you have tech people go in? couldn't you go to the recipients? isn't it somewhere? >> oh, there's two copies. there's who you sent it to. they didn't back that stuff up. somebody had a great suggestion. pardon snowden, bring him back in and let him find them. it's pretty interesting that they can't seem to find. i go back to when i was a young man and there was a 12-second, or a 12-minute lapse in tape of a recording in the white house, and it was called watergate. you know. now we have this little thing, and you're right, it's not really being covered very well. >> scott but tell me from a technology perspective, is it possible that they were lost? i can't even fathom that this, even if they threw the hard drives away i have to believe it's existing on some server somewhere that we don't know about. >> that's -- well that's what's incredible to me. i just can't imagine that they have vanished into virtual air here. how did the disc drives get disposed of? if i was a public company ceo and my company did that under an s.e.c. investigation holy mackerel i'd be doing a perp walk somewhere. and it just isn't even a big deal. it's kind of interesting. i love the story about phone hacking in the uk. imagine any company here in the u.s. doing that. it's just different when the government does it. i'm actually more concerned when the government does that kind of stuff than when private industry does that. we have the invisible hand to work the punishment, if you will, in the private sector. who's -- where's the oversight for the government? >> scott -- >> a beef like the irs. >> but you need a strong and -- this is where you need a strong and vibrant media sector. and >> bingo. >> it doesn't seem to this point fair when one side is -- you're not going to have it pursued nearly as zealously by these people that are supposedly protecting things, right? >> yeah. and i also think you have a lot of people who are afraid to say anything. and i get audited all the time anyhow. >> i would audit you immediately the way you talk. i would if i were lois lerner. you'd be on permanent audit. >> exactly. >> you would. i'm watching what you're saying right now and andrew's taking notes. when you first started talking the biggest yawns i've ever seen when we started talking about these. >> that is not true. >> let's go to the death of the desktop. because we're probably not going to solve this, and i guess it probably can just fall by the wayside. that's probably going to happen, isn't it, scott? we're never going to know, probably? the thing about technology is it never goes away. we still have main frames out there. the mainframe never died but it certainly isn't going to be as relevant or mildly relevant going forward. all these new technologies become much more relevant. and we talk about it at sun microsystems a long time ago. the internet of things. everything has a microprocessor, an operating environment, and it's connected to the network, either wireless or hard wired. and all of these things become far more interesting and more computing is happening off of the pc and off of the main frame every year by a huge margin. and there's hundreds of microprocessors in your automobile. so computing on your desktop is just a very tiny piece of the cpu cycles that any consumer or any corporation transacts these days. >> scott, larry bossidy. how are you? >> hey, larry. how you doing? >> look at big data begins to come into the fore across the country, what impact will that have on the devices that you're going to need to mine this data? >> well, i think you need devices -- devices are out there. you have cameras and microphones, and thermometers, and everything out there collecting all of this data. every transaction is happening electronically. cash is getting old. even cash is turning to virtual cash with bitcoins and those sorts of things. so, there's an enormous amount of data. the bigger problem you have is, who can help you inside your company manage this? my oldest son is going to stanford. he asked me dad, what should i major in? when i grew up it was plastics. literally my first job was plastics at rockwell international. for those of you who remember the old movie. but the new -- the new degree i believe is going to be big data computers -- big data scientist. and there's no such thing as a degree at stanford for big data. but he's inventing his own, studying math and statistics and computer science, economics, and a little polysci and building his own big data science degree. every corporation has a massive big data problem. what do they do with it? how do they manage it? the new company we started out is really focused on one of the biggest pieces of data which is the social media content out there and how do you turn that into social intelligence. everybody's facing that challenge. >> scott i found it in the "journal." the obama administration agreed to allow a white house lawyer to testify at a house hearing on irs. it's an a-3 and then i open it up to a-3, and it's not there. so i don't know -- >> somebody dropped the hard drive. the dog ate my homework. >> it is on a-4. but it's on a-4. >> at least they -- it's not in the front section of this of the paper. i don't think so. anyway, it seems like -- i want to know what really went on. and then math -- i don't know how you were watching your son, larry shot a 67 to qualify for the open. and then scott had to -- you think he might win the next u.s. open. i like you scott you never really overstate things or get pumped up about anything. so you think the next time he's not going to rye to make the cut he's actually going to try to win the open in 2015? >> well, we were actually trying to win it this time. we got to the 35th hole, he sinks a nine footer for birdie and we're on the cut line. unfortunately it was late in the day, got a little dark and he misread it a little bit and putt just didn't break. we were within a nine footer of i think going to the weekend. >> that's really the first day you were like four or five over, right? and so you must have been like even the second day. >> way were close to being -- we were two over at that time, got to one over, five over was the cut line we would have made it. but you know what? nobody was going to catch that martin kaymer. he was unbelievable. >> they get in a zone. >> like a machine. >> i've seen you get like that. not exactly but certainly in our -- we have our own mini zones, right, that last like two shots. anyway, thank you. thanks scott. good to see you. >> before we go, come here. i want to at least defend the honor of this paper for a second. >> what does it say? >> a-19. as the exchange erupted irs chief is questioned on messages. thank you very little. coming up next, larry bossidy on the tax inversion strategy that corporations are using to avoid uncle sam. and check out space and communications that company no longer talking to an investor group about a possible sale. the discussions are said to have fallen apart over a price for that deal. "squawk box" returns with that and more. still to come today, we are unveiling cnbc's list of the top states for business. scott cohn's twitter followers who are called cohn-heads have been tweeting their guesses with the #topstates. i know where i guess, texas. what's your guess, joe? >> all my exes live in texas. that's why i live in tennessee. >> you're guessing tennessee? >> no. >> that's why you hang your hat in tennessee. >> east coast. something east coast. >> washington, d.c. >> scott next from a secret location in this year's top state. we will try to get him to spill the beans. stick around, "squawk box" will be right back. to new york state. the numbers are impressive. over 400,000 new private sector jobs... making new york state number two in the nation in new private sector job creation... with 10 regional development strategies to fit your business needs. and now it's even better because they've introduced startup new york... with the state creating dozens of tax-free zones where businesses pay no taxes for ten years. become the next business to discover the new new york. [ male announcer ] see if your business qualifies. let the countdown begin. our eighth annual ranking of america's top states for business. senior correspondent scott cohn is live in the top state, which he will reveal -- oh, you're going to do that later today. we weren't able to go back and forth and talk yesterday scott because we tried to figure out, you know, if it was texas every year, we have to sort of look at different things, or virginia, why wouldn't virginia win again. was it virginia last year, scott? >> last year was south dakota actually, which surprised a lot of people. and it was -- and it was because south dakota last year was because of the low costs primarily, which always carries the highest weight in our study. but i want to tell you a little bit about, this is the eighth year that we've done this. a couple years ago we ranked rhode island number 50. and the state since then came out with about 28 pieces of legislation, business reform legislation, specifically aimed at moving the needle in the rankings. connecticut, the business and industry association there has set a goal now, because they've done poorly year after year, of being a top 20 state by 2017. so we'll start to see now if any of these efforts are paying off. let's get our countdown rolling with state number five. number . north carolina, the tar heel state, they have 2500 points, and north carolina finished 12th last year, the best categories are the economy, ranked fourth, and its mostly nonunion work force is fourth. north carolina lacks in education at 33rd and quality of life at 34th as the state tries to strike a balance in tax reform and preserving services. the tax rate just reduced is 5.8 percent, and corporate taxes is 6 %, and the sales tax is 6.75%. north carolina's largest employer is carolina's health care system. the largest industries are nondurable manufactures and financial services. so north carolina has often done well in our study, often placed in the top five. in fact, it was the number five state the first year we did this back in 2007, so the countdown is underway now. we'll give you at dhint. yesterday's hint, don't cry for me, and this is famous. >> it's overcast. >> it was overcast yesterday too. >> i think it's texas. >> there was -- yesterday, there was a river behind him. >> by the way, your hints stink. we want something real. >> a little something. >> let me guess, is this a state -- >> is this a state that's been number one before? >> i'll -- i don't want to give that away. >> don't cry for me argentina. >> as you know, we've had a lot of repeats over the years, texas and virginia had traded off the first few years, last year was south dakota, and we'll see who it is this year. >> i'm going east coast, i want to be clear, east coast, and maybe that lands in virginia again, i don't know. >> i'm texas. >> okay. scott, thank you, we'll, of course, be watching and waiting, all trying to figure out what it is. in the meantime, when we come back, more from larry, and later on "squawk on the street," the business of the world cup, adidas joining the game from post nine, and "squawk box" continues right after this short break. ♪ ♪ ♪ [ male announcer ] if you can't stand the heat, get off the test track. get the mercedes-benz you've been burning for at the summer event, going on now at your authorized mercedes-benz dealer. hurry, before this opportunity cools off. ♪ e financial noise financial noise financial noise financial noise appreciate our powerful, easy-to-use platform.o no,thank you. we know you're always looking for the best fill price. and walk limit automatically tries to find it for you just set your start and end price. and let it do its thing. wow, more fan mail. hey ray,my uncle wanted to say thanks for idea hub. oh,well tell him i said you're welcome. he loves how he can click on it and get specific actionable trade ideas with their probabilities throughout the day. yea, and these ideas are across the board -- bullish, bearish and neutral. i think you need a bigger desk, pal. another one? traders love our trading patterns, now with options patterns. what's not to love? they see what others are trading like the day's top 10 options trades by volume and get ideas! yea i have an idea: how about trading that in for a salad? so come trade at a place that's all about options and futures. optionsxpress. open an account today and get a $150 amazon.com gift card when you call 1-888-330-3137 now. optionsxpress by charles schwab. welcome back, everybody. we've been talking this morning about a "wall street journal" story suggesting that delta's ceo, richard anderson, is stepping back, maybe softening the position a little with the xm bank. in the past, delta has been opposed to things with the bank saying it allows for financing for the foreign competitors to get boeing planes cheaper than it, itself, pays. we heard from boeing today, that, no, the company has not changed its stance, and perhaps the lead and theheadline in the "wall street journal" is stronger than the nuance of the thing. larry, the honeywell chairman and ceo, larry, a complicated thing, a lot of mixed feelings about it, and you're out there in terms of your support for it? >> i think it helped u.s. business in terms of competing with foreign country producers subsidized by their governments. i think there's enough against the corporate citizen in the united states in terms of taxes, foreign and federal taxes, why another nail in the coffin? it's been good for boeing, ge, and the united states, and i'd like to see it continued in terms of discussion. >> the speech has not been given yet. >> will be given today in washington, d.c., and it's coming at a time -- >> that could change it. >> -- when politicians are on the rise, the new majority leader. >> proposing continued support sales of boeing. >> in some circumstances. >> in some circumstances, yeah. but all -- it is nuance here because it's not yet a word yet. >> one of the topics i want to talk to larry about, and we have two and a half minutes left, is inversions. >> yes. >> what you think from a policy perspective needs to be done about them? >> i don't blame companies doing them within the sense it's within the law, but skeptical of the reasons they are doing them, and they say for strategic reasons and may be some, but the differential in the state and 2 12.5% in ireland, it makes you skeptical. they will be able to invest in the united states without paying repatriation 35% tax rate in returning funds. that may be okay, investing in the united states, might build jobs, but also the u.s. -- the u.s. generated profits are taxed by our country. >> right. >> a lot of countries -- a lot of companies, not saying medtronic, use offshore devices to lower places, lower tax places, and that, i think, hurts the united states. it's a compelling argument that you got to change the u.s. tax code. >> right. >> and hopefully rather than talking about the symptom of what you do about tax inversion, they overhaul the corporate tax rate. >> let me ask you a question and you heard carl levin and others say it and broadly suggest tax reform, everybody says they want, but nobody mewants to do washington, off the table for two years, may not be possible. >> yes. >> if that's the case, and you listen to bankers, literally could be dozens of these transactions in two years, do you do what others suggest a somehow try to stop them in the interim? >> yes, i do. i don't think the -- i'm familiar with senator levin's bill. that doesn't do it. in my mind, in fact, encourages companies moving abroad more rapidly, but, yes, i think they should at least plug the loophole where you can move -- earnings from the united states to offshore affiliates and to lower tax countries. >> right. wow. did you expect that? >> i don't know. >> i think we need to fix the taxes. >> clearly. >> clearly. >> it's the best answer. >> larry kudlow, the other larry, go to 0 for taxation, this is not an issue. >> that won't happen, go to 20%, and that makes us at least competitive. >> that's not happening either. >> no, it's not. >> make sure you join us tomorrow." squawk on the street" is next. good tuesday morning, welcome to "squawk on the street," i'm simon, and s&p numbers out on a big week for housing this week, the numbers on the screen, and talking with robert schiler in a moment, the dow's winning streak is broken, futures are soft, people talking about 6% drop in dubai overnight, ten year under 26, and europe is

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