tv Squawk Box CNBC June 30, 2016 6:00am-9:01am EDT
phelps. >> it's thursday, june 30, 2016, and "squawk box" is live right now. good morning, everybody. and welcome to squawk box here on cnbc. joe, welcome back. >> welcome back. >> wake up! he doesn't have a mike on. >> let's take a look at the u.s. equity futures this morning. we are continuing the rally. dow futures are up this morning after ending up over 2.70 points. that followed gains from the day before. you have seen a very sharp comeback. >> biggest gains. >> biggest gains we've seen since february. >> no bigger than february. >> point wise, not percentage-wise. >> if it bleeds, it leads. >> exactly.
the world was supposed to end and it didn't. >> it has been the same case with the ftse. >> ftse is right at 6% yesterday and bringing it back to higher levels. >> i know he wanted to hear this. i wanted to tell him this. >> no, no. it's not about me. never about me, but mark grant is going to come on. >> thus far you have been right. >> mark grant is going to come on and say it's not the uk shouldn't be the ones worried, it's the eu that should be worried. >> sterling has gotten hit pretty hard. jim paulson is going to come on tomorrow and say the same thing. >> call it a wom-- >> went to cast right now because it's a little bit too
progressive. >> have you heard that. >> i have no the. >> they have a show. >> you heard that from what, your twitter followers. >> don't you see that. >> we'll share with our twitter followers. >> you go wild, don't you. >> when the cats away, the mouse will play. >> it's like video "new york times" not bad? no? >> no, no. >> what did holeman say last night. >> he wrote a big global warming piece. >> we did not talk about that. >> censored. >> let take a look at what happened overnight once again in asia. the nikkei ended flat. shanghai was flat as well. in europe the early trading there you're going to continue to see green arrows as well. these are more modest advances, but the dax is up by.3%.
take a look at currencies because again that's where a lot of havoc has played out. the pound has stabilized. dollar is up against the yen. still sthen take a look at crud oil prices because cramer has been telling us all along. right nowwti is down about 50 cents. >> number of big stories we have on top today. i didn't know you were back in town. we'll get there in just a minute. >> jet lag. >> no. do you have a mic on? >> in the meantime, george giving a speech in front of parliament this morning. decision to leave the european union has unleashed a crisis similar to 2008 crisis. i don't know who wants to say
they're right here. or is rsoros pair of economic r coming up on the agenda. that's at 8:30 eastern time. june chicago, pmi comes out just before 10 am. speaking in london today about economy policy. and on the earnings calendar we'll be hearing from con ag ra, consolation, consolation,. yahoo holding anim ing annu shareholder meeting. we will see ceo taking the stage in santa clara california. that is going to be streamed
live. investors will have plenty of questions for her about the core internet business. expected to make decisions on the first week new mexico july. among the potential buyers, everybody has heard these names before. verizon, at, and t. quicken loan. >> he may not be wrong. >> no. >> for me, i'm more in the greenspan camp. when eread the headline, he was saying it could be at bad as 2008. he wasn't talking about brexit. he was talking about central banks. >> yes. >> i don't know kwa cauwhat cau day of reckoning that causes it. >> you don't buy into the direction. >> knost the brexit, but the. >> the krak crack at the rest of the eu. >> i think the eu as a whole has
been responsible for if below par growth or at least not helping get out of the below par growth. >> does it spark a global financial crisis? >> no. i mean, maybe that does. if they come up for all eight years of all this easing might, but not this. >> honestly, that's part of what soros' part was to take this and restructure the eu. >> it's similar to the financial cris crisis except that it's the opposite so far. because the ftse is above -- it's almost at a new high. >> sterling still at 1.34. >> we're supposed to be down about 5 thousand points. >> what you've already seen is the draw down in the banks. could they be a financial contagion. >> we look at italy. they've got to inject money into
is the banking system. who was i talking to about this? when that happens, the gdp couple of guys getting makeup. the gdp metrics, they're going to throw that totally and the eu is going to go -- well, they've never held anyone to the parameters that were part of being in that union. they've never had it and they wonder why it doesn't work. >> and they have mandates saying that should raise taxes to meet some of those man dats. good luck raising taxes at this point. >> that's the last time soros has been right. he's had so many putts and short positions. he has had huge s&p positions and i don't know. anyway, stocks to watch today stars and lions gate. reportedly in talks to purchase stars and could pay $30 in cash
in stock. i saw a lot of these. you will see a lot of these when you're on the road. in fact, we stayed right across the street from one. you astro do this. >> tractor supply. >> you have to stay at a holiday in express. you have to go to the place called cracker barrel. >> he has a thing with salad bars. >> it was a serious issue back in the day. >> but cracker barrel. >> love cracker barrel, but you have to go -- everybody is happy. >> happy country. >> yes, it is. >> tractor supply taking a big hit after lowering. ka bell las has its own water tower. firm cut its outlook on weak secondary quarter results. visa filed a lawsuit against
walmart claiming the retailer secretly began recon fig you aring payment terminals. >> last month walmart sued visa to use visa more costly verification process. >> i never give me pin number because i don't trust the retailers to keep it safe. >> you use your credit card, you use your debit card to get cash. >> yes. right. >> what about gasoline. >> same thing. i don't give my pin number to any other -- why would you give your pin number to any other retailer, to any vendor along the way. >> because i don't want to run up any credit. i'm a child of depression. >> you use your debit card. i like to pay cash. >> hold on, do you really not. >> it's cheaper.
i get a cash discount. >> if you took the points it would be cheaper. >> points for miles. >> if you had a capitol one, you can get cash back. >> not in my wallet. >> i get 1.75 back. >> there's a 6% cash back. >> no. >> if you find it, tell me. >> i saw ittiz advertised. >> by the way, folks, if you weren't watching the cincinnati reds game monday night, our very own joe threw out the first pitch. >> if i had gotten -- i didn't practice. i didn't walk off a couple of times. i walked off 60 feet, but physicif i practiced, i would have done it full on. i wanted the guy to be able to catch it.
it rolled back to the -- i just wanted to get it to where billy could catch it. >> no injuries. >> nobody got hurt and the mayor showed up. >> i saw. >> mayor cranely who has been on the show before. >> is your foot on the -- >> no, no, i'm sort of in the front part of the mound. >> i'm on the. >> i thought you got behind and throw on top. >> my instructions once you get there are just -- that was the way they said. >> no tommy john surgery after that. >> no, no, i didn't really lean into -- you know what, did you wear your tommy johns though. >> no. you know how you talk about asymmetric writs, that was asmetic wrist. >> right. like i was thinking i really should just lean into this and full wind up on the rubber and try to do it and just take what comes. >> but then it looks crazy.
>> but no one would have said, wow, you are a good pitcher. >> i'm impressed. i would not make it halfway to the plate. >> i didn't think i would be, but when it happened i was a little consternation. nothing can happen when you're throwing a ball, but when you're there it's like something definitely could happen. >> people are watching. >> just to answer your question, it's a blue american express card, you get 6% back on the first six,000 spent at a super market. >> chase does a card at 5% for super market stuff. >> how did you find that out so quickly. >> little google ninja. >> hands on ceo. let's talk banks on the other end. bank stocks are on the move this morning. following the results of yesterday's stress test, we saw a flurry of buy backs and
dividend moves. >> coming all the way back from london just for this. >> just to do this story. i would come back. there are only a couple days a year that the banks sector as a whole gets news that moves the stocks in a mostive direction and this in the past few years has come to be one of those. the c car results. 31 of 33 banks passed. morgan substantiinoorgan stanle pass. deutsche bank and santander both did not pass. further drawing the line between the health of the u.s. banking system and the health of the european banking system, but they have not been participating in this process for as long, but it is interesting to see whether this maybe sets an example for the way barclays fair when they go through the test next year.
let's go through some of tyler flowers plans. morgan stanley raising the dividend to.20 a share. the buyback was raised to $10.6 billion. bank of america 7.5 dividend. the real big news was city group more than tripling its dividend and also raising its buyback to $8.6 billion. should be noted just in terms of dividend yield, this is still one of the lowest sectors because they've been held back by the feds, but even p you get good news in dribbles for people who hold the stocks, it's not bad. >> it's been a huge news week for all of these banks. not only what happened in europe with the brexit vote, but probably more importantly what that means for central banks and how long it will be before they raise interest rates because that's so important to the health of the financial sector too. >> i think people focus on the banks and we talk about brexit they say oh the bank shares are
down 25%, 30%. the bond side of the picture is holding up so people aren't really perceiving there's a run on the bank. they're not panicking, but the bigger fear too is how far does this go until tin the economy. you saw the home building stocks falling. if people perceive their home is worth less, if the people buying real estate there have to sell and leave the country, what does that coto the housing market, what does it do the people who would otherwise be spending money and driving the economy forward. >> cool. kayla, thank you. from canada, to london, to here. >> all in a week's work. >> yes. >> thank you we'll see you in just a little bit. in the meantime the major u.s. averages have recovered about 60% of the post brexit losses. dow and s&p climbing back into positive territory. joining us is mark travis. he is chief investment officer
and portfolio manager. june yan emmanuel. there is a bit of a debate that is taking place. which camp do either of you fall into. are you in the camp this was not a huge deal and it has come back or are you in the camp that looks at this as another potential financial crisis across the globe. >> we have to step back and say in crisis there are two elements. danger and opportunity. the first few days after the referendum, the markets sensed the danger of it and clearly there is danger if there is an inaction, but i think what we've seen after the last couple of days is politicians are taking a step back. i think this is a wakeup call for the european union. there's going to have to be some sort of restructures. we heard that from one of the potential candidates this morning for prime minister in
the uk and it's an evolving process, but in the end, this could be something that moves the political process forward. and could end up being as we've seen in the u.s., an net positive on balance. >> mark, what do you think. >> i think prices fall quicker than they go up. that was evidenced early this week. our firm depends on a dislocation between price and value. so we look at this is an opportunity to put some capitol work. >> even with the rebound that we've seen over the last couple of days. >> well, i was active in the market on monday. so i think that taking a step back further, we've made very little forward progress here today. year over year, the markets depending which index, flat to negative. the rustle 2,000 was off double digits a s and trailing 12 mont it's not been a great
environment for equity investors. >> you think that's the case particularly with the rustle 2,000. >> we've gone through a very benign low volatile period. you have many people going to a passive index which will create its own imbalances. >> you mean the s&p 500. >> any type of index. we have a lot of products in the etfs in my opinion that are ill suited for being an perks tf. high yield bond. we saw that last august. i'm positively expecting there will be opportunities. it's been an interesting year. a good year for us, but we need volatility to take advantage of it. >> julian, let me ask you, you think this is a situation where cooler heads will prevail in which case this is not cause for ala alarm, but what do you think about valuations where they stand? we haven't made much progress,
but we are not far from highs either. >> you have to think in a number of ways. the benefit as we've seen over the last week is the interest rate markets, if any, are going to stay subdued. that certainly works in stocks favor. in terms of valuation, no question we are high by standards of the post financial crisis, but we are still two full turns that's 200 points in the s&p or below average market peaks. that's again compared to a ten year yield of 1.5 or lower. >> that's in comparison with bonds. >> right. we are not concerned overly with valuation here. particularly when you look at all the volatility in the currency market. if dollar is still largely unchanged over the last year and oil is recovered those will both be tail winds for irnearnings gg forward. >> i want to thank you both for
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welcome back to "squawk box." the yawn is trading at the lowest level in more than five years. joining us now to talk china trade. i want to talk to you about clinton and trump's position on trade with china because you've heard a lot from them recently. miller is here. you say the numbers are better than we expected. >> yes. after six months of seeing some of the worst numbers we've ever seen, things look better. it's clear on quarter improvement. the mixed picture on year, but on quarter. >> where are the numbers wrong before and we're getting a better new read on all of this or things are actually picking up. >> things are picking up. you have two different dynamics. fourth quarter start of this trend of extraordinary weakness
and some of it wasn't reflecting official data. you saw capital outflow crisis. you saw all the other worries about china in the last six months. these affected the business environment. we saw improvement since then and also saw it show up in the data. the combination has been good for the number. >> put china in context with what we've been dealing with, the word brexit, the last week. there's question whether china is a winner in all of this. >> it's going to be a winner. it can make friends that need friends rights now. economically it's unclear. they're going to have pressure through the currency channel. brexit is not going to directly affect china. the problem is it does some thing to other people, to japan, makes the dollar go crazy and that puts tremendous pressure on china to do something stupid. >> when you say china do something stupid. >> lay out some possibilities of
that. >> confuse people on the currency. so we saw something. dwre yes, the yuan movement has been more dramatic in the last few days. not looking for large devaluation. every time the currency moves back and forth, traders get an si and say this could be our big shot to make the trade. >> what is the view in china about the implications of donald trump or hillary clinton giving some of the anti-globalization, anti-trade comments that have come out from both, trump being harsher than clinton. >> it's weird because of all the anti-china rhetoric, i think people think trump is hate instead china. i think a lot of people in china see donald trump, they see a negotiator. they say hillary clinton, we know she's going to be maintain to us. donald trump wants to make a deal. let's look at donald trump as an
interesting opportunity. i think they are actually more protrump than clinton. >> is the south china see south of china. >> they think he's so stupid he doesn't know where the south china sea is? >> you're that much smarter than he is? >> you got 5 billion, 1 brett lawrie billion -- >> that's a political issue. >> about china. i'm not a smart guy i figure i could probably figure where that is. >> how do you factor the u.s. elections into whatever you think is going to happen to china in their future? it sounds like both sides no matter who win ss going to try to make a better deal or at least a more add venn tajs deal for the u.s. >> you can lay out the political case and talk about how the united states may be more or
less active in asia. whether the alliance system with japan, korea, taiwan will suffer, but from an economic standpoint, china is on a long-term slow down. that's going to happen regardless of who is in the white house. as a result they will be reacting to the own domestic issues. to some degree, domestic crisis. this is apart from who is running the united states government. that said the degree to which the two can get along and the potential for conflict will be dictated. >> before you go, one last final question, yesterday we were talking about how it's been very hard for the globalist if you will to articulate to the american public the benefits of it. do you have a way of doing it? ghaichb you studied china and the benefits of trade there. >> look, it's a really difficult case to make. even if everybody is better in the long run overall. there's always losers. there has to be a rethinking of how betrayed globalization all
these other things are presented because right now the average person on the street is saying this is not for me. this is not helping. now the latest numbers on this have been abysmal. >> nice to hear that china is rebounding a little bit. when we come back today is the last day for conservatives to announce running for prime ministers. plus jimmy johns is looking for a hero. we have the details next. right now as we head to break, take a look at s&p 500 winners and losers. this is shaving.
welcome back to "squawk box." right here on cnbc. we are first in business worldwide. take a look at u.s. equity futures at this hour this morning. dow jones looks like it is going to open up almost 80 points higher. >> right now time for the executive edge. jimmy johns is hitting the auction block. reportedly looking to sell a major equity stake to a firm that could value it over $2 billion. jimmy johns tried to sell back in 2014 and explored a possible ipo last year. >> that was a kind of surgery.
jimmy johns surgery. >> no, you've heard of this jimmy johns. >> tommy johns is the underwear. >> that's what you think of immediately. >> we had a guest in here. >> wearing tommy johns too. >> that doesn't surprise me one bit. i heard from him too. >> that is the elitist brand. expensive. it's -- >> you can get it for $11 at century 21. >> i payless. >> now to the latest from the uk and the political chaos, i haven't seen wilfred in a while. the deadline for conservatives to declare their intention to run for prime minster. how has he been? he's been good. hanging in. >> steady. >> looks good. >> wilfred frost, joins us now with more. did the shock wear off yet?
>> of course. we're trying to joe. house of cards move over, the drama in uk politics continues. as you said today is the last chance for contenders for the conservative party leadership and the next prime minster to put their names into the hat. there's half an hour left before the ballot closes. then once we have all the names, the 330 members of parliament for the conservative party slim that down to just two candidates and the wider membership of the party vote between those two by the ninth of september. there's about 140,000 wider members of the party who will get to vote on that. let's look at who the contenders are at the moment. we've got the likes of boris johnson. the big dwromt dromt this morning is mie kol gove also put his name in the hat. he was expected to back boris johnson. he will be surprised by that. the favorite is theresa may. she was on the remain side of
things, but not throughout the campaign and because michael gove has come out and sort of split the leave vote between him and boris, the favorite now clearly theresa may. i want to bring you a clip earlier of what she said when she announced her candidacy. i remind you again she's on the remain side. look at what she said about the chance of another referendum. >> brexit means brexit. the campaign was fought. the vote was held, turnout was high, and the public gave their verdict. there must be no attempts to remain inside the eu. no attempts to rejoin it through the back door and no second referendum. there should be no general election until 2020. >> theresa may, she's the current home secretary and now the favorite to be prime minster. still a lot of moving parts and very clearly coming out to say there will not be a second
referendum. there will not be a general election. she said article 50 will be invoked, but not until next year. i want to mentioning that and make sure people are aware. there won't actually be a brexit. perhaps people need to focus on this race for conservative leadership because the next prime minster will be one of those named and if it is theresa may, she made it very clear, brexit means brexit. >> you got to get the journal again today. ceo of the nasdaq. britain is going to become a free trade model. the overblown brexit market panic. i read this and once again, i'm long-lived the queen. don't you think the queen wanted to leave, wilfred? >> i think she's genuinely impartial. whatever the result, i agree with you, long-lived the queen. >> all right. wilfred, while i was gone, i did think about how you were fairing
and i'm -- you look fine. you got rose. >> wilfred, when are you coming back? >> don't come back yet. >> it's not going to happen. >> coming back on your independence day on the fourth of july. i fly back. be in the states next week. >> that worked out pretty well for us. i don't know whether you noticed. not for nothing, but, you know, only one super power until world really left, wilfred. >> did you go to the -- >> i still haven't. i was in brussels the last couple of days. i've got a weekend coming up. hopefully won't have quite as much brexit coverage. i look forward to getting to some of my favorite places. >> you were in brussels. can you just feel the buour roc si there? >> i wouldn't say that. the biggest take away from me the sentiment was still one of
defiance against the move for reform than the acceptance of the change that might be needed, but the biggest key point i'd make from the eu submit is the decisions will be made by the individual heads of states. not the head of the european union. i think whoever does this negotiation from the british side will find a little bit more common ground when they talk to people like hollande and merkel. >> sore losers. all right. thank you. thank you wilfred, get there. got to get some of that snitsle. coming up, the impact of the brexit. says the uk is going to be just fine, but watch out for the fallout in the european union. quick check at what's happening in the european markets right now.
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our next guest master of conventional wisdom. here now to help us find pockets of opportunity and safe havens and put the whole brexit thing in perspective. we spoke to him frequently. speaking to him more and more frequently. mark grant, managing director at hill top securities. your notion is it was weird mark because even when it was happening, like uk was down like 2.5%. or down 7 or 8% and everybody else down double digits. right from the start it looked like wait a minute, the country leaving seems to be having less stress on the financial markets than maybe some of the countries stays. >> i think there's a reason for that. great britain is going to be just fine. they have their own infrastructure. go through some short term pain. the big pain is the yurnd and i'm not sure they're going to survive. >> who is not going to -- we're going to have a new president
some day. who is not going to negotiate with the uk on trade deals. who is going to put the uk at the back of the line like president obama said? nobody. >> i'm sorry. i thought that comment was absolutely one of the most ridiculous and stupid comments. >> that might have been good for two percentage points of brexit vote there. >> that's true. people were very agitated about that. >> so you make some comments about this latest news from italy, which is not the poster child, but certainly one of the examples of why it's so hard to get this union to work. have they ever had their gdp debt numbers where they need. >> no. >> they've never had them. >> what has the eu said to them all along. >> close enough for government work or. >> they say mots rel la, blowny and give another exception, but you have to look at this. >> explain to everyone.
how much money are they going to need to inject into is the banks. >> they put 44 billion into the banks like oh, we're just making a capital injection. >> after brexit. >> the issue is that the banks over there are you can say someplace between in trouble and out of business so they had to take public money again. renzi had to go to the eu again and beg for the exception on not using public money. >> all smoking mirrors. >> what are they really needing to clean it up? 44 billion is like nothing. >> they need hundreds. >> $346 billion to clean it up. >> isn't it euros. it may be even more. >> you spread that around in the eu and it's not so bad. why does the uk need to -- why do they need to be part of that problem? >> people wonder why they left, right? that's the.
>> the bigger issue is immigration, at which yesterday there was a plea from the uk to say look, if we could still be part of this union and not have immigration forced on us we would be okay with it. >> that's part. >> but do you think this is sort of the complete disintegration of the eu. >> yes. >> is that a good thing and what is the transition and how painful is whatever that is. >> transition will be unbelievable painful. equally as bad as leaving. that's the piece that really is scary. you have the five-star party. you have wilders in the neters lands. you have nationalism on the rise. you've seen great britain leave. >> is the stock market crazy to react the way it has thus far. >> the stock market is not a question of crazy. the issue here is one of the
most interesting things that took place that hasn't been presented in the media was draghi's comment on monday. he wants the fed to reverse course and get on board with the ecb and the japanese central bank which means the feds are going to reverse and we're going to go down to interest rates that are -- i mean, i remember when i said 1.25. >> what do you say now. >> under 1% now. >> under 1% in the ten years. >> no, before the. >> so i said o1.25 earlier and you eyes were big and here we are. >> we do that and got our domestic economy and consumers and this is going to be a place where money is going to come in here. it's going to go into the stock market. >> exactly. that is exactly right. here is the one thing we know for sure. when there's no yield anyplace else in the world, money comes
to the united states because it's the only place left with yield. i don't care what anybody else says or what any other arguments made, all that money out of europe and all that money out of japan is going to drive our yields down. i don't care what the fed does so we're going to have lower and lower yields. that creates massive problems for banks, insurance companies, 401( 401(k)s. >> it helps the stock market. europe was never great, even with the eu. it's bad and maybe gets a little worse. maybe we continue to do well here. >> you have $11.7 trillion now according to fich and negative yield and bonds. the money is going to come to where there's yield. >> that fallout will land on the stores. >> yes. >> how are you feeling? that's not so bad, right? >> you see the research report. you see comcast going up in a
global storm. >> i saw that. >> didn't you have tears in your eyes. music playing and stuff. >> we threw a party last night. the one and only mark grant. thank you for being here in person, no less. when we come back, will the british vote to leave the eu help or hurt. make healthcare more personal with patient-centric, digital innovations; from self-monitoring devices that can interpret personal data and enable targeted care, to cloud platforms that invite providers to collaborate with the patients they serve. that's why over 90% of the top 25 global pharmaceutical companies are turning to cognizant. our domain experts, technologists, digital and data specialists, clinicians and scientists are transforming the way clinical research sites collaborate with pharmaceutical companies,
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welcome back to "squawk box." brexit -- from brexit to texit. we're not talking about texas in this case. we're tauk tech-it. could mean pain for the start-up community. for more on the impact -- good morning. so uk was to be the next hot, hot european version of silicon valley. and now what? >> well, it's unclear. the word of the week has been uncertainty. so when you make predictions or blanket statements about the uk, you have to exercise measure of restraint. all that anyone steeped in start-up dynamics will tell you about the importants are capital and talent.
as of exactly one week ago, the perception around both of those issues are called into question. >> you think there's going to be not just a flight of capital but a flight of talent to the eu? i mean, is that what's on tap here? if you're a venture capitalist, are you not going to invest in the next great amazon you hear about? >> i wouldn't say that. what i would say, if i were a young and talented, say, machine learning specialist coming out of a ph.d. program out of helsinki i'm thinking where do i want to build my career. until last thursday, london might have been the top of my list for the capital reasons and also -- >> not silicon valley? you think london would have been higher? >> if you're european focused. to be fair. with the questions now around policies, free movement of people, that has been called into question. maybe now i'm looking at paris, berlin, amsterdam, or the u.s.
>> so -- but we don't think this is going to play out for a long time. if you listen to max grant before, he would tell you the whole eu is going to break up. >> i think that's pretty challenging to predict. but what i would say, if i were a uk-based entrepreneur right now, i'd be thinking two things. one, how am i going to advocate policy makers empowering skills in demand. and two, what am i going to do to attract the machine learning specialist from helsinki to make sure they feel appealed to join my company. >> do you believe this brexit is going to be terrible for facebook, google. they're going to be harsher because the uk played a moderating role in some of this? >> well, you know, the reality is tech companies like to be near their customers. and so there is always that
risk. but i spent a lot of my day thinking about start-ups. the reality is true innovation takes years to evolve. when we talk with our entrepreneurs we say it's important to be aware of broader market trends, the opening and closure of foreign markets, et cetera. but when great companies get built, they get built in times of market exuberance. but also during down cycles. in fact, the ipo last week is a great example of a company. i think it was founded in spring of 2008? now, if you were to retroactively look back over the last ten years and rank the quarters you want to found a company, that wouldn't be near the top of the list. that being said, they capitalized on what emerged out of that down cycle. but also the pressure on cost structures and application oriented. >> we've got to run. thank you for coming in. we are just hearing that borse johnson is saying that he has decided not to run to be the
prime minister. this is the last day that people in the uk can say that they will be running. he has decided not to run. we'll have more on that in just a moment. when we return, we'll also be speaking with george mitchell. he will be our guest host. he has some post-brexit advice for the uk and eu. and later up, jeff rosenberg. "squawk box" will be right back. ♪
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straight ahead. billionaire george soros sounding the alarm on brexit saying the uk vote has unleashed the next financial crisis. we will take to senator george mitchell from the uk's political turmoil to donald trump and the race to the white house, plus the war on terror. nothing is off the table. and joe threw out the first pitch at the cincinnati reds game. but did he avoid the first pitch curse? ♪ you're going to have to stick around to find out. the second hour of "squawk box" begins right now. live from the beating heart of business, new york city, this is "squawk box." >> welcome back to "squawk box" right here on cnbc, first in business worldwide. i'm andrew ross sorkin with becky quick. joe kernen is back in the saddle after throwing out that first pitch. our guest host is senator george
mitchell. we're going to get to him in just a couple minutes. lots to talk to him about. in the meantime, we have some news. >> yeah, we do. let's get to wilfred in a second but let's check on the markets so far this morning. it's been kind of a meltup again. it was quieter earlier. it was up 80 after the biggest two-day point gain we've had for the year. not percentage gain, but point gain. a couple of big sessions. and watching it was -- you know, i kept expecting sort of it to -- >> to taper off towards the end of the session but it builds up each day. >> in europe, we'll take a quick look. europe is also probably confounded people that were expecting much more of a selloff since last -- what was that? thursday night. and now you can see green across the board. and if you look at where the ftse is, it's almost back to new highs for the year. oil -- actually, there's the --
look what's happening in hang seng. nice day up almost 2%. shanghai has been above 2900. that has not been on our screen for problems in recent sessions like it was about a year ago. finally there's oil. right now let's get to wilfred frost with some of the news out of the uk. we're talking specifically about this surprising -- these comments from boris johnson. i thought it was weird he also said i'm a tax cutting conservative but i want a fair capitalism. is he sort of indicating that there are people in the conservative party that want him to be more conservative than he is and therefore he doesn't want to go that route? >> well, to be honest, it's irrelevant now in the content of almost all of that speech that boris johnson just gave because the headline is he is not standing to be the leader of the party. he is not tending to be the next prime minister. let's listen to the moment he just delivered that bombshell. >> my friends, you who have
waited faithfully for the punchline of this speech. that having consulted colleagues and in view of the circumstances in parliament, i have concluded that person cannot be me. >> this is an extraordinary development. earlier this morning as we all woke up, it was almost certain that boris johnson would announce his candidacy to be the next leader of the conservative party. he was expected to be backed by michael gove. we also thought that michael gove would manage his campaign. but he was bashed over the head by gove when gove announced his own candidacy. johnson pulled out thinking it's not worth splitting the vote in this race. of course many said he left to back his career. so all of that ambition winding in the past few moments.
wii left with five candidates. the favorite is theresa may. and boris johnson not even in the race. guys? >> wilfred, what's he saying? i mean, you say it's irrelevant but i'm trying to figure out what went into his thinking. it almost sounded like he didn't want to deal with parliament as it's currently constructed. i guess there were a lot of people that, you know, i guess blamed him for brexit. a lot of the sore losers and he was hammered from that. maybe he had enough. i don't want to go through that. what do you think behind the scenes is going on? >> well, the first thing to point is there's now five candidates, would have been six if he was there. and the mp's. the members of parliament in the conservative party, they will slim this list down to two. boris johnson has great populous support but doesn't have huge support in the mp's of the conservative party.
so for him to get into the top two, it was thought there needed to be just one leave candidate that michael gove and others wouldn't challenge him. that's what boris johnson thought was the case up until about two hours ago. as soon as michael gove put his name forward, boris johnson felt he wouldn't have enough support from mp's to get into the top two. if he had, he'd have great populous support. but he feels he hasn't got enough backing. he's pulled out. >> did gove beat him to the punch by announcing before him? >> it's an interesting point. i'm sure gove was planning this either way. but it has been odd the last 24 hours when the time period has been open to announce. everyone waited. i don't know if they were seeking drama or final support. gove announced he's in, boris is not in the race. >> it's very different from the
u.s. system where the leader is going to be nominated by these 331 mp's. >> absolutely. >> it's very different than the u.s. if you think about the primary sort of setup here where donald trump would not have been anywhere near the top couple of choices if congress got to vote on this. or if the rnc got to vote on this. >> absolutely right. and it's very different how the opposition party, the labor party does it where jeremy corbyn who was an outsider became leader because he didn't have the party itself slimming it down to two people. this has been a crucial part of the conservative election rules which we've been aware of. as long as the lee campaign had united behind boris johnson, it was still likely he would be on the final ballot paper of two names. of course michael gove has thrown that out of the window. even once michael gove
announced, it wasn't expected that boris would stand down. it shows how little confidence boris johnson has that those 300 mp's have support for him. extraordinary development in this story in british politics which is just nuts at the moment. >> wow. yeah, it is. well, you know, you left, came over here. now you're at least back there for all this. think if you had missed this. we had someone earlier saying money is going to flood out of uk and technology and all this. so andrew and i decided we may buy over there. and i'm just wondering, what neighborhood would -- if we're going to share a flat -- time share. >> you guys should buy my apartment. i'll send you the details. >> he probably has a nice one. >> are you in mayfair? that's where we want to be. >> i'm in kensington. i'll give you a good tip when i get back. >> where's the bohemian -- where
can andrew feel happening? >> he should go to east london in shortage. it's the growing area and has a lot of tech as well. you could interview people for "squawk box" as well. >> so we've got ideas. it's really going -- that's what i'm saying. it's not going to happen otherwise people like us are going to be over there buying. >> i want to be -- i used to live near kings road. >> look, they're playing -- fast with that music. i'm not very clean or neat. is that going to be a problem? will that be a problem? you have everything sorted out. >> are you making him felix? >> wow. what a stretch. >> my wife has a view about how clean i am too. we might have an issue. let's get to our guest host who's like why do i say yes. joining us george mitchell who served as an envoy for ireland and the middle east. he's currently chairman emeritus
for the piper law firm. did you know all these things about parliament that you had to do and it was going to be tough for him because there'd only be two? we should have -- listening to wilfred explain it, how could he have stood for it? >> i was in uk when the vote occurred and i think there was an indication of this when boris johnson pub established an op-ed article in the daily telegraph the day after. it was not a fire breathing brexit statement. he set forth a goal of maintaining open status for british people in the eu really without giving up anything. and it was somewhat unrealistic expectation given the nature of things. so i'm not surprised in the announcement by michael gove the other mp who has been very active with this combined with
the strong support for theresa may. she's now the favorite. it might produce the unusual result that who called the referendum resigned because of it. but the prime minister to be elected if mrs. may also voted remain. and it -- you're right. it's quite different, becky, from the american political system. but i think that the real challenge is less economic. i think there will be economic consequences, but that's way down the road. i think the real challenge is to maintain the political stability in europe that the eu has contributed to. the eu is at heart a peace project. part of the post-war effort led by the united states but by far sided european leaders to create a series of political, military, nato, and other entanglements
that would make less likely a rumgs of conference in europe. devastated by three major land wars in the 75 years between 1870 and 1945. and it's been a very successful effort in that regard although it's awkward, clumsy, 28 countries trying to agree on everything. everybody with a veto power. and so it does have a democratic deficit, no doubt about it. but it's been successful and objective. and the key is to maintain that. and that will take active and i think skillful american leadership. the eu is an important market, an important partner. the uk has been a very valuable associate of the united states in that effort. >> where did the eu go wrong? because you can look at it and you look at the trade possibilities and it makes a lot of sense. but it's gotten very entangled particularly with immigration lately, particularly with restrictions that have been passed down from unelected leaders in brussels.
that's where the pushback comes. do they not move fast enough to make this a unified market? or were they wrong in trying to overreach? >> many will argue that you can't have a common currency without a more common political union. we saw that happen in our country 225 years ago with the articles of confederation. but i'm not sure. i wouldn't say where they went wrong. it's very difficult to get 28 countries together. some would argue when they expanded into eastern europe, that was a step too far. but the people of eastern europe are europeans and they wanted to be part of the western world. the u.s.-led worse than alliance. so i think the real challenge, and it can be met, is to maintain a strong nato, a strong commitment to a continued economic growth and stability, and while the economic consequences may be dire for the uk or may be largely -- may be
minimal. the real issue -- they've spoken on that. it's a democracy. they voted and you have to accept their vote. but the effort now has to be, i think, to maintain political stability and peace in the region. you mentioned the problems they're having. one, of course, is immigration. and you have a truly ironic circumstance that in europe nationalism is resurgent. the whole post-war effort was to moderate nationalism. one to have the reasons it's resurgent is that in the middle east, nationalism is collapsing. and countries like syria, iraq, yemen, there's a return to identity through family, clan, tribe, religion. not national. so the collapse of nationalism in the middle east is creating an outflow of millions of people into europe which is creating a resurgence of nationalism within europe. and that's going to take a long
time to sort out and it's going to take skillful and effective american leadership to do it. >> that's a lot of things to chew on, senator. so we need the union basically so we don't have world war iii which is kind of a negative reason to do something. and then to throw all these nationalistic entities together and expect the economy to work with different languages and different multi-speed, you know, economic metrics. and different debt to gdp. you look at southern europe and you think about germany. i don't know. it just seems like a daunting task that at this point was -- we weren't ready for or wasn't ready for it. >> i think the circumstances have changed since this process was established. 75 years is a long time. political institutions often need to change and adapt.
>> to tamp down that nationalism is almost unnatural. and it almost seems like it's going to percolate up. it looks like you may have it under control. you see it here and there. and you talk about really proud countries too. >> very, very hard to get unanimous action. >> and then you're not reaping the benefits of this rip roaring economy by any stretch. you don't even get that. all you can get back on is hey there's no world war iii. that's the best we can get out of this? >> i don't minimize that. >> that's frightening. >> peace and political stability are important. >> i think -- >> we were -- you were around -- we don't remember and i think people that do, that has to be the most important thing. we think it could never happen. there would never be another world war. that's what we say. >> let me make one point. in world wars i and ii, in which the population was a third or a little more than what it is
today. it's ab -- it was absolutely devastating. and the prevention of that is attainable. >> thank you, senator mitchell. we're going to have more with the senator throughout the show. coming up, it is the final trading day o the month. we're closing the books on the first half. we're going to talk to blackrock's jeff rosenberg. as we head to break, take a look at the quarter's best performing dow components thus far. you would have been happy if you owned pfizer. we're back in a moment.
welcome back, everybody. the dow is coming off its best session since march. the dow and s&p at this point are both positive. they're on track for a third straight positive quarter at this point. today, of course, marks the final trading day of the second quart per and the first half. year to date here's how things stand up. the dow up 1.6%. the nasdaq is down over 4.5%. big winner is the dow jones utilities group. it is up more than 21% this year. if that tells you anything about how people feel, yeah. boring utilities are running away with it. joining us right now is jeff rosenberg. blackrock's strategist for fixed income. thanks for being here.
with yields coming down for treasuries all around the world, what does that do to your space? >> the initial market reaction in the bond market was very clearly surprised and the implications to the fed outlook was to push off any expectations for this past narrative that we had had only normalization. and normalization was out of the window. in which you had in the bond market is pricing in action probabilities of fed easing. >> yeah. >> and that's the change that's going on. the economic shock from brexit is this is a shock to economic activity. it's a tail risk to the recovery. and it represents a real challenge to the fed's narrative that they can continue down this path of nar mallization. >> we had mark grant on earlier. he said he thinks the 10-year which was yielding 1.4% earlier this week, he thinks it will go under 1%. he said this is the only place
you can get yield. when you're looking at negative rates in the world, more will come here and put more pressure on yields. >> the pressure on yields and the high yielding story has been there for years. you can't say the bond market is attractive source of yield. i think the real story is that we saw again the value of bonds in a portfolio. that people ask a lot of questions about why do i own bonds in a portfolio? yields are low, the expectation is that the fed's going to be raising interest rates. the real reason you own bonds in a portfolio is because when bad things happen, bonds were the only thing that went up when everything else in your portfolio went down. yes in the global context u.s. yields are the highest yielding sovereign debt asset. that makes them attractive. that keeps the lid on how interest rates can go and can potentially in a risk off environment like we've seen over
the initial reaction to brexit, they go lower. the value of bonds being reminded -- investors being reminded these are diversifying. >> it was a short lived reminder. we're already seeing equity markets pick back up. >> when you had the turnaround in the equity market, you had equities going back up but didn't have until the last hour of trading yesterday bond yields going back up. and that was a little bit of a question mark. i think what you're seeing now in the bond market is maybe some reconsideration. now, the boris johnson news that just broke is quite important because we're debating the scenarios for what brexit means. the it was a bad idea and then then concerning headline about the eu response that this will be a much more negative. if it's either more benign or they back away from brexit, then the tail risks are going down.
and maybe we've overreacted in terms of the bond market. you're seeing a bit of that in the bond market. >> what happens if you have a political establishment that looks at this referendum and says we want to back away from this? in the short-term that might mean good things for financial markets and people looking for some sort of calm to take over. in the long run, if you're ignoring the popular vote, what does that mean down the road. >> i don't even consider that a possibility. you really think that's a possibility? after that is frexit, then you might only have romania. >> i'm not saying this is my expectation, but what is the next, this is a possibility they'll pull away from that. and that's part of what the equity market reaction in terms of recovery was. maybe the outcome. let's take that scenario off the table far second and talk about the main likelihood which is it's brexit light which is where
you get a norway-type outcome. that's not quite so neg tuff. >> if everything in the market is building into this, then a negative market reaction may still be coming. >> and the events last night in terms of a hard line response from europe, the events this morning in terms of what does it mean if a more moderate campaign is out of the running and you get a more hard-line candidate for prime minister that is more antiimmigration and so it makes the conversation much more difficult. financial markets won't like that. i'm just talking about the last two day ifs you want to say, why did we have this big reaction on the -- >> if equities are rebounding and things are stabilizing and they're doing it under false pretenses, do we have more volatility ahead? >> absolutely. i think you have to draw back from the last one or two days moves in the equity market to say what is the real story here with regards to brexit is political risk. that's why we have a former senator with us here today. is that political risk is
rising. >> how do you price that in? if mark grant is right. if you think the eu is going to break up and i don't know how long that takes, how do you even begin to price that into what's going on here? >> it's very hard to price that in. in terms of pricing that in in the market, those kind of -- >> i mean, is that still -- is that the black swan scenario? or is that now within the reality -- within the frame? >> it's within the frame because black swan is the risk that you never saw happening. most people didn't see brexit happening. now we saw it happening, people are reassessing their ability to assess -- >> your take on this made me think you're someone who thought this wasn't going to happen. >> that what wasn't going to happen? >> the brexit. >> no, no. my take on brexit -- >> you thought it wasn't going to happen. you thought -- you sure? saying the worst case is a
brexit light. they're out and other people might be out. and the world's not ending. >> no doubt. i think what you look at from this reaction is that from a markets point of view -- back to the question -- you really don't have the ability to assess the political risks. right? the polls were wrong, the betting markets were wrong. financial market participants as they go into any one of these other political events, the confidence that you can have that you know what that outcome is and know how to position into it, all that confidence went down. and that confidence shocked in financial markets. one thing we go through the next set of elections. >> if the senator's right about -- you can feel it. it's called nationalism versus globalism. it's rising in certain places. but you can feel it. and you can't ignore it. i'm thinking there's going to be some -- like they're not going to do it or there's going to be another vote. a 52-48, that was impossible to do and they did it. >> joe, absolutely. the message from brexit is very clear.
they're choosing to leave the european unit. >> i don't know if i'd ever said maybe the markets are trading up because they don't believe it's going to happen. market's trading up because maybe they took their independence back and maybe it's good for the uk. you can't even -- you're speechless. >> that's certainly a possibility. >> all right. thank you. >> thank you for coming in. coming up, it's throwback thursday and a crystal clear '90s hit is making a comeback. more details. that's next.
among the -- we're back. among the stories front b and center, a brexit bombshell. boris johnson the former london mayor who helped lead the movement to leave the eu says he will not run for prime minister. he had been considered a favorite to replace david cameron but doesn't feel he has enough backing in parliament to actually get to where he could do that. so instead of trying, he's out. and the post-brexit strength in the corporate bond market continues. software maker oracle sold $14 billion in bonds yesterday. the third largest bond offering for the year.
average yields on investment grade corporate bonds are about double that of 10-year treasuries. and the federal reserve has cleared 31 out of the 33 u.s. banks that were in its latest stress tests. the u.s. units were the only ones that didn't get the fed's okay. morgan stanley's approval was conditional. the fed wants changes in the internal processes. cisco executive chairman says the united states is falling behind other countries in transforming itself into a digital country. he told colleagues in paris that this presents an opportunity for companies like cisco. >> well, i'm cautiously optimistic. the u.s. is the only country in the world that does not have a digital plan for their country. and beyond a digital plan, look what both india and israel and france are doing. they have a digital plan and they're well into the implementation of it. sop my own view is for the first time ever, the u.s. is falling
behind in terms of the information age as this transition occurs. and i'm personally going to back whichever candidate is able to articulate a vision for our future country that encompasses a digital u.s., an ability to get pay raises again across all americans, that really creates an equal footing on a global basis. >> cisco shares are up more than 4% this year. that outperforms the major averages. okay. pepsi going retro. the company officially bringing back crystal pepsi. remember that? the clear cola drink that was briefly popular in the 1990s. it will be available far limited time. it was launched back in 1992 but disappeared two years later. they brought it back for two days in december as part of the contest on its app. so looks like sprite or 7-up but tastes like pepsi. >> i don't understand. i don't get it.
you remember zima? >> i do. >> how about moxie? anybody here remember moxie? >> yes, i've heard of it. wasn't it in brooklyn? >> maine, really. maine and brooklyn. all right. when we come back, we have much more from our guest host today. senator george mitchell. plus an economist and investor who voted for the uk to leave the eu. we'll talk to him about the possible fallout that could ensue. and before break look at the futures. s&p futures up by 6.5%. and "squawk box" will be right back. ♪
welcome back, everybody. some political observers and even donald trump himself draw a direct line between the brexit vote and the u.s. elections as anger seems to boil across america and against the political status quo. our special guest this hour is senator george mitchell. and leader, we've talked an awful lot about what this means for europe, what this means there. what we haven't talked about is what you think the political consequences are here in the united states, if any. >> it does have an effect. there is a uniform feeling of fear and anxiety in the western world. that's because of the
uncertainty about the integrative effects -- the effects of globalization, increased trade, and the technological revolution which is increasing productivity so dramatically that unemployment is rising and people are losing their jobs. you go back 250 years, that's when the industrial revolution started in england and there was a similar feeling then. that the fear that jobs displace men from work. there was riots and violence. what happened was productivity increased so dramatically, new products, new commerce, that the standard of living rules generally although there was some exploitation and misery. we now have the challenge -- and we haven't figured out how to do it. yet mitigate the adverse effects when you have high productivity gains that people are losing work. >> we don't have high productivity these days. that has stymied the fed.
declines in the advancement of productivity. >> i was speaking in terms of broad over many decades. we've had spectacular increases of productivity. there are ups and downs. i have no doubt it will continue to increase given technological advanc advances. i think future historians will regard this revolution as significant a turning point in history as was the industrial revolution. >> so what is the status quo supposed to do? what should the political establishment do? what should the economic establishment do? >> first i think the political -- our politics are broken. we have to try to fix it. part of the fear and anger is directed at a system that simply doesn't function, that congress has ceased functioning. and we have to hopefully reduce somewhat the hyperpartisanship that's developed. i think we need to have less partisan redistricting to make the house of representatives again truly competitive between
the two parties. >> do you see that as being realistic? >> i do. california, iowa, and others have led the way in trying to establish procedures that drain some, not all of the politics out of the redistricting projects. so i think there's some moving in that direction. >> but it's not just redistricting. it's also a sense the two parties won't work together. and this probably goes back through the obama administration. the feeling that, look. if you're not going to cooperate, we're going to find our own way to do things. >> that's driven in part by redistricting and by the excess i have amou ive amounts of money in politics. >> the divider in chief, come on. >> well, i don't share your view, joe. >> really? we're in the middle of a financial crisis, he spends two years doing obamacare without a single republican vote and that ushers in the tea party. that was a response to the way
that that was done. suddenly the whole environment is poisoned because of that. that in large part had -- and then it's gotten worse since then. >> was it wrong for the bush administration to pass their -- >> yes, probably. >> -- without a single democrat vote. >> and the iraq decision. so we're all a product of, you know, what happened in recent memory. he hasn't even -- senator, he didn't even visit democrats on the hill to try and get things done. >> i did not say -- i did not imply, i did not mean it's all one side or the other. >> kind of. citizens united and gerrymandering is what you said caused it basically. >> no, i said they were factors. they didn't cause it on its own. >> i do think money in politics makes things much more complicated. >> it clearly does. it has a devastating effect. not just the increase of money but a huge decline in transparency and accountability. >> but how do you fix that?
when there's no incentive for the politicians to do anything? is there incentive. >> i think there is incentive. >> what's the tipping point? >> well, there was a "60 minutes" show about a month ago a republican congressman from florida described the process by which he was introduced to the house and it was all -- >> the call centers in all this. >> that's right. you saw that. i think that's a powerful signal these guys don't like it themselves. >> two years -- >> the two-year election cycle. >> i agree. you can't identify just one or two factors as causes. >> just sitting where i sit in the last seven or eight years, we're definitely not -- haven't -- it hasn't been the uniter in chief. we are in much more dire straits than we were even at the beginning of all this. >> do you assign any responsibility to members of
congress who stood up when he was elected and said our first task is to make sure -- >> no, that was after the first -- i think that was after the midterms. >> that's early enough. >> by then a lot of people after watching the way -- you remember the way obamacare was -- >> that's why this conversation is so unproductive. >> it is circular. but we are -- the two sides have a very different view on whether it was congress. >> this may seem less significant, but can we talk soccer? >> you can. >> or football. what do you call it football or soccer? >> make up your mind. do you want to talk soccer or football. >> when you're in the u.s., you call it soccer. >> i'm an adviser to a group with the former commissioner of the nfl that is trying to establish an americas cup mod modeled on the european cup. i think there's a good demand
for it. >> have you always been a soccer fan? >> not always, no. i follow baseball. i played sports a lot as a kid and in college. but i do follow soccer, not as closely as i do some of the american sports. >> i've been surprised how long it seems like it's taken for soccer to catch on. i played as a kid. my brothers all played. our kids play. why is it taking so long to pick up as a professionally watched and attended game? >> so much competition in this game from well established professional sports. but it is growing. the u.s. population will go from 320 million today to 440 million by mid-century. one of the fastest growing countries in the world. much of it will be hispanic. they have roots in -- with the teams in their countries with the sport. there's a growing market for it here. and you see the popularity, the european league is now broadcast on american television. >> any thought that being able to use your hands and your arms? i mean, it just seems like there would be more goals.
>> you can if you're the goalie. >> is that a bad idea? just run down holding it and -- >> my kids are five. that's what they do. they kick it a couple of times and pick it up. >> it would be a lot more action. >> americans like a lot of scoring. >> well, senator mitchell, i want to thank you for spending the morning with us. >> i'm trolling europeans. they're going to be so mad i said that. >> they may be madder at that. >> i was kidding. i was kidding. i love soccer. it's great. coming up, could the brexit vote be reversed? a passionate argument. that's next. h braindrone? can't blame you. it's a drone you control with your brain, which controls your thumbs, which control this joystick. no, i'm actually over at the ge booth. we're creating the operating system for industry. it's called predix. it's gonna change the way the world works. ok, i'm telling my brain to tell the drone to get you a copy of my resume. umm, maybe keep your hands on the controller. look out!! ohhhhhhhhhh... you know what, i'm just gonna email it to you. yeah that's probably safer.
analysts and john kerry have suggested the brexit vote could be reversed. but jerome booth is an emerging markets investor and chairman of new spartage. make the case for us, mr. booth. exactly why you voted leave and why you think there is no chance to turn this the opposite way and why it shouldn't be. >> well, senator mitchell actually mentioned the globalization. that's that huge for developing
countries. there's no point ignoring it or cutting off, you know, ourselves from that. and i'm afraid to say that in europe we've been naval gazing for too long. but above all, the institutions in europe, you know, have not been working. i'm actually very pro europe. i like the cultural links with europe. i feel very much a part of that. but the institutions are not fit for purpose. and i think britain is much better off outside. this isn't actually also about economics. i'm an economist. i think the arguments on the economic side are the most important ones. the most important thing is about legitimacy, sovereignty, and the institutions in europe are not democratic enough for most brits. and i think that's the key issue. >> what about the economic implications not for the uk -- let's take them out of it for a moment. but does this lead to the breakup of the eu? and what does that mean when you
have this multi-speed economies where you have a germany doing very well and others that aren't? >> well, i think the europe project is completely unsustainable and will break up. i think politically there is a very strong case that, you know, the whole project will break up. and i think that's terrible in many senses. but it's also an opportunity to start again. i'm actually, you know, very supportive of having more referendum, having other countries reassess what they want out of europe. because i don't think the industry is going to range from the work. i don't think it's in anybody's interest. i don't think the electorates have been taken with this process in the appropriate way. i think there are, you know, two sort of end games. >> you don't think there's been any economic benefit? no economic benefit? >> i didn't say that. no. there benefits and there are costs. one of the things about this
whole debate is we're in the world of the unknown. we don't know. i think, however, that it does depend hugely on the policies that we adopt. i think the worst scenarios are -- were either that we stay in with the status quo or we come out and become little englanders. those are bad scenarios. the good scenarios where we stay in and have a fundamentally reformed eu or we don't come out and really engage with the growing parts of the global economy. >> but how are you gaming out the thought of a more nationalistic world, a more protectionist world -- >> no. not more protectionist. i'm not talking about that. i'm talking about the opposite. i'm talking about trying to engage. the problem with the uk economy is that since the late 1980s, we've had a trade deficit every single year. we used up all the oil, used up our savings, we're living off borrowed times. and our model is not working for
us and it will not work and there's a crash coming. the problem with europe is not that there was uncertainty if we leave. there's uncertainty anyway and it's massive. i think the biggest -- one of the biggest impacts also of this whole debate for everybody, not just in europe. but in the united states as well. i think it really should start shaking up our believes in how the world is structured. you know, we actually live in a very different world to the one, the cozy one that we think we live in. the fact this was not flagged by markets is itself quite shocking. this was very predictable. it was a close result. yet all the markets were positioned the other way. why is that? it's because there is this massive group think. and part of that is probably everything is behind us and the debt is no long aeroproblem. that is nonsense. the previous governor of the bank of england has just written a book and he has said clearly if we don't do much, much more structural reform if the finance
sector, we will get another crisis. that is certainly where we're headed. we need to do much, much more. we've been far too complacent. >> we feel like, you know, nationalism is a dirty word. jerome, i'm waiting for the au, the asian union between russia and china. because they're going to -- i think they're both going to swallow their nationalism and get together and do everything the same. >> i don't think so. i think there's lots of cases for -- >> dogs and cats! it's not going to happen. dogs living with cats. the whole thing is unnatural. and nationalism is not a horrible word. >> no. that's true. i think the nation state is not over. but i would hope we can also be internationalists but with institutions that actually work. the problem is the europeans don't work. i'd be happy to start again with institutions that do work and are legitimate. but they're not working at the moment. >> it's a fascinating conversation. we appreciate it very much. we'll talk to you again soon. thanks again.
we've got snoop dogg here. however, there's a guy who made it across the plate. we know him, actually. his name is the joe kernen and he made us very proud recently this week as it happens. >> i told you. >> that was at cincinnati reds game monday night. >> i had a good catcher. that's not -- you know. i'm not impressed. >> you're not impressed with yourself? >> no. >> that's a first. >> exactly. there is some consternation and loathing when you're walking out there. >> i would throw up. i can't imagine. >> and i didn't go and practice either. and everybody kept asking me whether i practiced. i said no, i can throw a ball 60 feet. in that case it was probably only 55 feet. the whole trip was bizarre. hillary and elizabeth warren followed me to cincinnati. hillary stayed -- we were in the same -- she was on the 16th floor i think. >> did you come up to see her? >> no. but i walked into the executive
lounge in a side door and almost fell into senator warren's lap. >> did you give her as hard of a time as you give me? >> actually i didn't. i told her that she's a senator, she deserves respect. >> did you invite her back on the program? she's been on. >> she has been on many times. she's welcome here any time. and she's very nice. very nice to my kids and very pleasant. then she went and gave a hard core speech. the td ameritrade trader offices. steve, other than making me move stuff, what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place and lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim. td ameritrade.
the economy and the race for the white house, the brexit fallout, the great trade debate and more. we're going to talk with former white house economic adviser gene sperling. the zika threat. we'll get cleveland clinic ceo toby cosgrove's take ahead. and a moment in awkward presidential history. we're going to show you the three-way hand shake that's gone viral as the final hour of "squawk box" begins right now.
live from the most powerful city in the world, new york, this is "squawk box." >> all right. welcome back to "squawk box" here on cnbc, first in business worldwide. i'm joe kernen along with becky quick and andrew ross sorkin. we're less than 90 minutes away from the opening bell on wall street. futures have moderated. we're now up 26 on the dow. the s&p indicated up 2.5. the nasdaq up about just under 3. we did have the two biggest point session -- point gain sessions in the last two days. not on a percentage basis. a little bit better in february. but two pretty big snapback days. you can see what was all green earlier, not a lot, but it was all green. and now just the cac is up fractionally. we have a couple of top corporate stories to talk about this morning. almost all the big u.s. banks passing the fed's latest stress test. so cue the buybacks.
kayla tausche has more. >> just one of the 33 banks that went through the fed's stress tests passed this year. the last year the two that failed -- meaning it can increase its buyback in dividend. but it would do so but has to resubmit capital plan by the end of the year. same for bank of america, goldman sachs, and jpmorgan in years passed. citigroup had failed twice in the last five years, but last year it passed with the highest capital cushion. this year it made a huge increase to its dividend more than tripling its 5 cent dividend to 16 cents. it is increasing its buyback too. officials said it wouldn't be unreasonable to think there would be a time in the future when every bank passes the test. the fact that more european bank wills have to take part in this test starting next year makes that less likely. when fed officials were asked
about a brexit, those officials noted that some of the extreme stress scenarios that are included in the stress test already were in the uk and the eu. but of course the banks here in the u.s. have been increasing their capital by more than $700 billion since 2009. $1.2 trillion in common equity they currently have. so they are healthy. but interesting to note the fed officials said we did have a scenario in our test where the uk contracted by 4.5%. the eu contracted by 5.5%. the pound fell to 1.41 although that loox conservative. so that perhaps would cap any risks from a brexit. >> thank you. let's talk about some global news this morning. a political shocker. boris johnson just announcing earlier this morning he will not stand for british prime minister. wilfred frost joins us from parliament with the latest on a government in chaos. this certainly came as a shock
to us sitting here. >> it certainly did as well to me, becky. just last week boris, of course, celebrating an extraordinary election victory as britain voted to leave the european union. something many people thought would sweep boris johnson as the next prime minister. but speaking moments ago on the topic of who will be the next prime minister, he had this to say. >> my friends, you who have waited faithfully for the punchline of this speech, that having consulted colleagues and in view of the circumstances in parliament, i have concluded that person cannot be me. >> what has happened here in the last 24 hours is a house of cards style stab in the back of epic proportions. my sources tell me late yesterday boris johnson still
expected to announce hz candidacy to be with fellow leading leave campaigner michael gove standing by him as his campaign manager. that was turned on its head this morning when michael gove put in his name saying, quote, boris cannot build the team for the fight ahead. that scuffled boris johnson's chances. but he relied heavily on the support michael gove was going to bring him. particularly amongst members of parliament. has turned this whole race on its head. now, i just want to swing it back a little bit to markets. michael gove is now the second favorite if we look at the betting markets. the favorite is home tereheres y may. listen to what she had to say about brexit. >> brexit means brexit. the campaign was fought. the vote was held. turnout was high.
and the public gave their verdict. there must be no attempts to remain inside the eu, no attempts to rejoin it through the back door, and no second referendum. there should be no general election until 2020. >> so the two main candidates are someone who says that brexit means brexit. and also michael gove, one of the leading leave campaigners. so for all those people that wondered whether this brexit vote could unravel, whether there could be a second referendum or early general election, i think they need to take note of who the main two horses are to be the next prime minister of the united kingdom. >> wilfred, i know you live here now. why didn't you use your own guy? maybe because he's french? that was, like -- that was shakespearean. that was, like, you know, boris johnson turned around and got a knife right in the back from brutus almost. that's unbelievable, isn't it? it's worse than "house of
cards." >> the developments have been absolutely extraordinary, joe. and again, talking to sources there was this great story that came out yesterday. michael gove's wife -- an e-mail she sent was leaked to the press. crucially the membership will not have the necessary reassurance to back boris. it goes on to say instinctively people dislike boris but trust your ability enough to support a boris-gove ticket. be your stubborn best. this is the story yesterday that michael gove's wife, an e-mail she had sent to michael gove was leaked. it seemed embarrassing for michael gove that his wife didn't support the man he was supposed to be supporting for the candidacy. but this was probably leaked on purpose to test the water for a possible gove candidacy. either way things have been urn theed on their head in the last 24 hours. and just a day ago mr. johnson thought he was still the leading
contender to be the next prime minister. now he's not even a contender at all. >> well, i'm glad you showed that sound bite, too, with theresa may. anyone that would think that she -- since she was a remainer that she's not going to honor the will of the people. she made it pretty clear right there. >> but we did talk to jeff rosenberg earlier that said the market calm is people anticipating this may not happen. >> but you heard her. >> exactly. anybody thinking that is mistaken. you wonder if there's an impact on the market. will, thank you -- >> there's still a lot of -- >> go ahead. >> i was just going to say there's certainly still a lot of hoops to go through even if the next prime minister is certainly committed to getting through them. that's an issue. there's a long way to go. but absolutely right that the clear indication from the main contenders from the next prime minister are to carry out the wishes of the british people expressed last week in the referendum. >> thank you. we'll check back in with you in a bit.
meantime, a $4.4 billion deal being announced. lions gate is buying starz. that deal valued at $32.73 a share on cash and stock. "the wall street journal" had announced earlier the deal was imminent. here you see the news. they are holding a conference call coming up lionsgate shares up by 8.7% now. starz shares up by. 15%. >> change the game for lionsgate in a meaningful way. also great for starz. the british vote to leave the eu already being felt in the u.s. on the campaign trail. trump praising that vote. hillary clinton claiming losing a hundred billion dollars afterwards. here to speak on this, gene sperling, former director. good morning. help me with this. >> yeah. >> so hillary clinton's talking about how the world is ending in part as a function of brexit.
donald trump is praising it as one of the great sort of redeclarations of independence and talks about having his own redeclaration of independence here. who's right? >> i think what most people are looking at is they're seeing this type of volatility, this type of uncertainty. i think that just puts a focus that you want someone who has a bit of a steady hand. and there's not many democrats or republicans that think donald trump is a particularly steady hand in a storm. and i think when people are looking at brexit here, i think it's mostly a volatile and a little bit of a scary event. i think donald trump over talking how it might help his golf course or, you know, making these usual exaggerated statements is not going to be that effective. and i think it actually helps somebody like hillary clinton who looks ready. >> let me channel for a second. >> really? >> i'm going to and i believe this, by the way.
i'm knot just channelling him. it has been a surprise for a lot of people that brexit has not been the end of the world. the perhaps the people, if you will, of britain have spoken and all of the dire consequences have not come true. at least not yet. it's possible something else might happen. if something happens, now the new view is not that britain is going to get hurt. it's that the eu will. >> maybe it doesn't take a village. maybe it takes parents. >> first of all, it's early to tell and we know all those things. we know you don't know what the aftershock is. i don't see very much upside in the brexit. and i see a lot of downside. but i think when it comes to leadership, i think what i feel is most important is that there is a lot of unhappiness about how globalization and technology has been seen as hollowing out opposed to strengthening middle classes. there's a lot of anger about that both in the united states and the uk. the real question is do people take that anger and generate it
towards something positive that could make a difference in people's lives? or do you use it for things that are destructive that blame muslim immigrants or latinos. and i think that is -- i think what you see playing out there. that's where i think the united states we have to make a decision. not that we don't need change. not that we don't need to do aggressive things to help middle class families. but are we going to do it in a positive way or in a way that divides people? >> but how do you -- how does any party better or tick late to the american public somebody who has lost their job in the middle class in a manufacturing role, how do you articulate that the benefits, if you will, of globalization? i would argue that neither party has done that. and donald trump is now taking van of that. >> i don't think the goal is to tell people who are hurting they're not hurting or globalization is working for them when it's not. i think the great challenge of our time is to make sure that these forces are being shaped in a way that they strengthen the middle class families.
and i don't think that that's been done as well. and i think president obama has tried but he had to deal with a financial crisis. he's had to deal with the republican congress. and what hillary clinton does is have a chance to come in with a complete focus on what are we going to do to have jobs in the united states. what's the focus going to be on our corporate tax code to be encouraging jobs here opposed to inversions and exits. what's the focus on infrastructure to rebuild our country, tighten labor markets, get wages going. and what are we going to do to make sure families have a degree of dignity in their lives even if they do go through a job loss. and those are things that have not been dealt with adequately. and the question is those are all proposals if you're creating infrastructure jobs, having family medical leave. those are things that help people. they're not just about blaming undocumented immigrants. >> make this case though. to the extend there's somebody out there on the fence or a trump voter and you'd like to
convince them that hillary clinton is the right choice, explain this. there's a certain group that says they think she's just corrupt. they just do. that's out there. and the second piece is they look and they think that she's representative of president obama and to the extent that you believe that his policies have not succeeded at fixing some of these problems. i would argue that some of them have been better than we think. but how do you make that case? >> i would say that hillary clinton has a singular focus on tangible things that will make middle class families' lives better. that will focus on the bedroom to grz, focus on whether jobs are being created in the united states. when you look at donald trump there's nothing there. i think -- and i'll give you this prediction now. i think as this campaign goes on, his private sector experience will become a liability. and i'll tell you. not any of the complicated financial issues. i think just things like trump university, taking advantage of
people. or the fact he has a career of consistently stiffing small businesses -- >> but none of that stuff seems to have mattered. that was all brought up in the primaries too. >> i disagree. i think that you will see that pounded on. and i think as people see that, they understand that a small business cabinet maker, someone who installs air conditioners, somebody who agrees they're going to pay their workers even when donald trump stiffs them, they're going to say if that's the way that guy has made money, that is not the values we want. and i think, you know, i have a piece in "the huffington post" today on his tax plan. when they look at the details, they're going to recognize that both his plans and his past private sector dealings show somebody who's basically been out for himself. who has not championed the little guy. and i think when -- the more they see hillary clinton's plans on infrastructure, on manufacturing, on family leave, on child care they're going to say this person is dealing with our kitchen table economic
challenges. >> how should particular viewers of this program think about hillary clinton's relationship with joe's new best friend. i don't know if you saw the picture. elizabeth warren. will she make elizabeth warren her vice presidential candidate? does that make sense? does that mean she's moving for left than we think? >> well, listen. i think elizabeth warren has been an important figure not just in the democratic party but for this country in making sure that when we're looking at financial issues, we're looking at it from the point of view of average americans who have been taken advantage. and i think that's an important thing. i think that's something hillary clinton believes in. and i think the contrast between the focus on our people being screwed over or taken vac of in places like trump u or when they had a mortgage sold to them compared to the type of behavior you've seen from trump, him deciding he's going to completely repeal dodd-frank, the consumer watch dog, all those things. it will paint a very important
contrast. so i think what elizabeth warren represents is to a lot of people a new focus that when we look at financialization, it's not just about the high financial transactions that are often talked here but how it's affecting people's kitchen table economics. >> okay. there you have it. gene sperling, thank you. >> thank you. >> did you see paul singer making a word for hillary. he said there would be a great depression if trump was -- >> i was so focused on joe's successful first pitch that nothing else mattered. you smiled and you showed like you were comfortable. and that's what really mattered. you did well. >> asymmetric wrists. if i burned in a fastball and it went in the dirt -- >> what happened? i thought you were going to throw a fastball at him. >> you know what? i respect gene and i know why he's here. i know why he's here and i'm going to let him do his thing. we'll have somebody on that does the other thing.
if i asked him anything it would have been about the meeting on the private plane yesterday. i love when the ag meets with bill. i don't know what they were talking about. grand kids, i guess. you know what's amazing? the game, i didn't tell you. chicago is who they played. there were like eight home runs in the game i got to watch after that. which was -- and chicago --
owen! hey kevin. hey, fancy seeing you here. uh, i live right over there actually. you've been to my place. no, i wasn't...oh look, you dropped something. it's your resume with a 20 dollar bill taped to it. that's weird. you want to work for ge too. hahaha, what? well we're always looking for developers who are up for big world changing challenges like making planes, trains and hospitals run better. why don't you check your new watch and tell me what time i should be there. oh, i don't hire people. i'm a developer. i'm gonna need monday off. again, not my call.
all right. the brexit causing a tremendous amount of uncertainty. where should investors run for safety? susan li brings us a few ideas. hey, susan. >> hi. the brexit vote has led to global selloff, very sharp spikes in the european and american volatilities. jumped close to 50%. the euro stoxx also seeing gains as well. there only have been times when they have jumped 20% in the same day. april 2005 during some poor earnings. february 2007. may 2010 with the greek debt crisis. then august 2011 with the u.s. losing aaa rating.
and just last year august 2015 during the china selloff. now, when volatility is off the charts where can you one? industrials have been a great bet. the sector out performs the s&p and there are some sure bets. with nearly perfect records. so services up 6.5% on average. trading positive 100% of the time. ge up close to 3% on average. trading positive 100% of the time. stericycle up 2.5%. and also trading 100% of the time. they say nothing's a sure thing, maybe not in this case. cummins up. and fluor up 5% on average and trading 83% of the time. sop there are places to run. back to you. >> all right. thank you very much. again, susan li. when we return, a new survey shows americans want
>> the catch is this. ultimately the most valuable part of self-driving cars will be the brains of the car. not as much the physical car. who controls the revenue streams, the artificial intelligence, the data within that vehicle. that's why this survey by alex partners is so interesting. when they asked people who should drive this car, who should be the brains behind a self-driving car, overwhelmingly they said tech companies. the silicon valley. number two in this survey, came out to be the japanese automakers followed by the big three way down there at 17%. furthermore when they asked people, if you had to name a self-driving car right now who builds one you're interested in? google was the highest. it's all about the artificial intelligence inside the car. physically building the car is important. certainly not something to be dismissed but they're focused on the data inside the vehicle.
they also want ownership of the data in the cars. that's why every major automaker whether it is audi, general motors, ford, they are working on self-driving cars. you look at shares of tesla. it is named as the second most favored or known self-driving car. remember they have autopilot. quickly show shares of hertz. announced a deal a few minuting ago. long-term rentals through lyft and ooub uber. . back to you. >> thank you very much. when we come back, breaking jobs data moments away. this man creates software, used by this bank, to protect this customer, who lives here and flies to hong kong, to visit this company that makes smart phones, used by this vice president, this little kid, oops, and this obstetrician,
welcome back to "squawk box." live breaking news. initial jobless claims for the week 268,000. that's a jump of an even 10 k. 2.12 million on continuing claims. that has dropped from 2.14 slightly revised. we still have chicago pmi to come out today. and of course we have a long weekend. the employment data will be of course a week from tomorrow. that may be an important event. right now we're looking at
yields. touching 150 at a 10-year note. keep in mind we spent a lot of time in the 140s. we did spent time in the 150s before brexit. if you're trying to calibrate the sovereign interest rate drops, there's a lot of fundamentals that play into those low yields. and of course on the foreign exchange side, the pound has a bit of cushion. it's playing in that 134 to 134.5 area that is off the worst area. but of course a 12% original drop 12.5% from close to 150 down to 132. but we want to keep an eye on this bounce. stabilization is a great thing. markets can read price. hey, that's what markets do. it's the path they take, how they treat investors along the way. many were puzzled by the vix. i'm not so puzzled by the vix. on topic today. if the fed had normalized to where they should have and they had a cushion, would they have
eased? i don't know. but to me i don't think there was a need. at least at this point. we don't want to dismiss all the effort yet. there's a lot of work yet to do on brexit. a lot of uncertainty. what kind of terms will the eurozone give them? you've seen divorce trial lawyers, they can get crazy. but all that's in the future. >> all right, rick. thank you. joining us markets are so
what happens where the surprises come from, i think you're going to have a bit of a shock in global growth. which has been in response the last couple years. >> right. the euro's cheaper. >> yes. >> the pound is cheaper. >> yes. >> doesn't that offset some of the export a little bit? >> that's the national thing that goes along with weaker growth. but we're going to have a shot. >> do you think if greece was out and devalued and some of these other dislocations because of the structure of the eu, free market forces were to be reasserted again, is it necessarily near term going to be a growth slowdown? or all these things -- could they actually end up being positive? >> rkt mas don't like uncertainty. what you have now is you have a big range of possible political outcomes from this process. and outcome where the euro and the eu are falling apart beyond brexit is an outcome that will cause uncertainty to spike further. people will pull back investment
and hiring plans in the short run. biel feel that markets will adjust to that. in the long run, it's harder. >> and so many -- and you go to japan and the strength of the yen. they're in no position to have a stronger yen. and then you go to china at this point they're looking over here what is the election going to look like? how does china -- they might look at brexit as analogous against moves around the world. this could end up affecting china negatively. >> china couldn't continue to invest at the pace they were five or ten years ago. and they're trying to adjust to their own domestic low to growth trends around that. this makes it look like the weak trade we had in the last two years, that's continued. >> you might put in no tourism through istanbul or who knows where the next place is going to
be either. you're not even factoring in that, are you? >> i mean, tourism to istanbul doesn't drive global growth. >> every major european city -- >> i don't know. pretty cheap to go to london right now. >> we're trying to decide where to go. definitely not to istanbul. >> i recommend it. >> well -- >> sure, why not? >> all right. okay. just a world -- i mean, there's a million things to talk about. >> we're going to the western u.s. this year. >> yeah. heading to georgia. thanks, james. >> nice to see you. when we come back, we have a lot more to talk about this morning. a new poll out tracking how much americans fear the zika virus. more in a moment.
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welcome back to "squawk box," everybody. busy morning here. americans are largely unafraid of the zika virus but a large majority of them are in support of sending more money to prevent it. 72% of those said they should invest more money. combatting the threat of zika. this comes as lawmakers are at a stalemate over sica funding.
they've been fighting over this for months and now they're going home for the fourth of july recess and not dealing with it. joining us to talk about the zika virus, the president and ceo of the cleveland clinic. thanks for coming in. >> nice to see you. >> we've been having an ongoing debate about zika. anybody who is expecting a concerned about it. we have the cdc expecting the first transmission in the states to happen this summer. how big of a threat is this? how big are the concerns? what do you think? >> i think the cdc's done a great job. first of all, they have a terrific process of identifying where the sica virus is and they've done it very carefully. they're now following 500 people who have been exposed to it and have -- are positive. they put together a nice program for looking after the people who are exposed and testing them and suggesting how you avoid it going forward.
i think they've done a good job. >> i think the biggest concern is the money running out in terms of being able to test and eradicate mosquitoes and wipe out the threat of it. where do we stand on that front and with congress kind of reaching a stalemate on both sides? >> well, i'm sorry that congress has not appropriated more money for this. clearly the mosquito bourne viruses are across the united states. and there's important work to be done about getting rid of the viruses and testing people who have been exposed to mosquito bites. >> i asked about concern levels because present women whose doctors say every time you go outside make sure you're wearing deet. >> i think that may be an overstatement. there's a suggestion here that zika has spread to new york. there's few places that it has been identified. >> forget about new york.
what about if you're in miami and houston and along the gulf coast? >> i guess everybody's interest is to avoid getting bitten by mosquito mosquitoes. but i think if you are pregnant, then you need to consult your physician before you go to an infested area. be it a husband or wife. >> a number of athletes as you know headline after headline have decided not to go to rio because of zika. is that being overstated? i've read everyone that says it will only affect 1 to 8 people per million tourists and i've heard multiples of that. >> i can't believe that the olympic village is not going to be well protected from the mosquitoes. >> but could you actually make it fully protected from mosquitoes? >> you can't make anything 100% but the risk is small. for example, i was in vietnam and never bitten by a mosquito. >> seriously?
>> seriously. on the base. because we had such a tremendous protection from mosquitoes. and it was sprayed -- >> that's when they weren't afraid to spray. >> exactly. i think that the olympic village would be incredibly safe. i can't believe that the places that are -- that journalists and athletes are at high risk. let's shift gears. let's talk about obamacare, where we are at this point. there are a house bill to replace obamacare. a lot of people are trying to make of what we are. what do you think? >> where we are, we're now six years into it and it really has done three things. it was designed to do. it has got more people covered. we've seen gradually the quality improve across the country. and the third thing is we've seen the inflation rate and health care come down. now, it is probably going to go back up again because more people are being covered.
and how much of the decrease in the inflation rate is attributable to the aca, it's hard to say. >> the inflation rate in terms of health care cost -- or i should say health care insurance cost, to the consumer have gone up rapidly. there are a lot of places where insurers are pushing back saying they're not able to make money at the premium that had been set. so they need massive hikes. double digit increase over 25%. just because the number of healthier young people haven't come into the pools. >> exactly. >> so how does the consumer deal with that even if health care insurance costs -- if health care costs overall aren't seeing massive inflation, health care costs are seeing inflation. >> the insurance side, we're seeing an increase in health care costs. and i think you're going to see that insurance continue to go up until such time as the competition continues to drive health care costs down. and we're seeing that pressure
on us right now. and it continues and it'll be a constant drum beat to decrease the cost of providing care. and we're changing the way we're doing it. we've had new players coming in to disrupt health care. and we're seeing people get treated, who's treating them, and how they're getting treated is all changing to make us more efficient. one thing we have to look at is how the ftc deals with the consolidation with the health care providing. what's it going to do to what currently between humana and etna in terms of consolidation. what they're going to do in terms of consolidation of hospitals. it's hard to improve the efficiency of hospitals as they continue to remain in the industry. and every other industry -- >> meaning you think there's a big play for consolidation or should be. >> there is a big play in consolidation. and it's continuing. you're seeing mergers and acquisitions continuing.
this is going to continue simply to try and drive the efficiency. and people are making the argument -- excuse me -- that you're going to see prices go up because of that. >> right. >> but you have to figure that 60% of our pay right now is either by the government or it's no pay. >> 60% of your revenue. >> exactly. and so we can't drive that up. >> as a result, what types of things are you doing to increase your efficiencies? what are some of the examples? >> what we're doing is starting to see group visits. and so if you have 10 or 12 people who all have diabetes, they're being seen at the same time and getting their instructions the same way. we're seeing more and more virtual visits that will increase the ability to see people quickly. >> talk to a doctor over my computer? >> yes. you can get a consult from the cleveland clinic right now on your ipad. >> really? >> and so that is going up very
rapidly across the country. and i think that this is going to bring access to people anywhere, any time. i recently -- my daughter got in -- a rash on her face. i sent a picture to a dermatologist. poison ivy. you stop and think about that sort of efficiency. that saves travel and time. it's efficient nor the doctor. >> rapid prescription. >> and millennials want to be seen when they want to be seen where they want to be seen. >> dr. cosgrove, thank you for joining us. >> hold the phone. we have one more question. elizabeth holmes. last time you were here, they were going to send you stuff. you guys were going to start testing to see whether this was the real deal or not. update, please. >> our relationship with theranos remains the same. we don't have a financial investment.
but we have offered to test her machine any time she's willing to do that. we haven't progressed to that so far. >> are you surprised? last time we talked to you about it, it sounded like it was imminent we're going to send you a machine. are you surprised they still haven't sent you one? >> i'm disappointed. i hope that this will happen in the near future. the promise of that technology is huge. whether it works or not, we have to see. >> yeah, that would make a difference, i guess. do you know does it look like a little black box? is it painted black? is it square? do you know? >> i haven't seen it. >> you know if you get involved in it, you might get in the movie. >> who do you want to play you? >> i don't think there's much chance of me being an actor in hollywood. >> jennifer lawrence would play elizabeth holmes. >> hackman. you could do worse than that. >> well, residual is a good thing. >> it's true. >> and we haven't even talked
about lebron. cleveland guy. come on. >> fabulous. the city turned out 1.3 million people for the parade. >> were you there? >> i was not there. unfortunately. >> at your day job. >> right. >> dr. cosgrove thanks for coming in. >> thank you. speaking of hackman, friends with jim. coming up jim cramer joins us from the new york stock exchange. drew. ♪ ♪ she wants to change the world with you. ♪ ♪ she can program jet engines to talk and such. ♪ ♪ her biggest weakness is she cares too much. ♪ thank you. my friend really wants a job at ge. mine too. ♪ i'm a wise elf from a far off shire. ♪ and sanjay patel is who you should hire. ♪ thank you. seriously though, stacy went to a great school and she's really loyal. you should give her a shot. sanjay's a team player and uh...
let's get down to the new york stock exchange. jim cramer joins us now. jim, this is a theme you've early on as usual, but wow, we have a nice safe little country here and some ways don't we, with domestic companies that do what they do and with interest rates headed lower again no where else to go, you can do worse. >> you and i both were from a camp which said it wasn't the end of the world. we were, obviously, i think shouted out by people who said it was and they never get called into question when you say something calm about what you said, it's almost laughable to people. i think it's a shame. talk to ken powell at general mills and puts up great numbers. cheerios, the group of stock, much better. cereal terrific not dependent on brexit. we're drowned out, joe.
drowned out by people who say it's a financial disaster and they have great cojensy. you and i have been at this a long time i have to kick it back to you to wonder how they have so much power when we know they've proven wrong within three or four days for most stocks. >> the other thing, jim, and i -- you know, i never know where you're going to come down on certain things, another thing from globalization a couple years ago, you were willing to look at the downside to some of it and now i'm wondering why it took me to long to figure out nationalism has been -- i mean i don't want to be zen phobic but nationalism and looking out for your own citizens and everything else, it's almost like a dirty word now, almost like it takes a village and we're going to -- but, you know, everybody else is still playing by the old rules and, therefore, we got to look out for number one once the a while. >> a lot of money was stolen from me and a guy bought some houses in a place called san miguel in mexico, about seven
years ago, and i saw -- it happens to be next to a bunch of factories that would have been in the united states that were moved to mexico because it's $3 an hour and they got no health care costs and no pollution laws and a union pacific train there. when i realized i said oh, my, what the heck are we doing building plants in this country because of gobblization. the pull of nafta is amazing. go to the plants. i've been there. you see all these jobs that would have been american jobs, but nobody at these major american companies or bmw, toyota where the plants are, would ever want to put one up in the united states. and that's what i saw. i just saw massive unemployment coming because of where my house was. and i just had the luxury of having a place in mexico next to the fastest growing most populace, wealthy state in mexico. >> it's just weird that -- it's like a global phenomenon and then throw in immigration and everything else and there are some -- that's the buffalo, springfield. >> thank you for talking -- we're doing it calmly, not
talking about how jobs jobs -- i'm just saying they did have -- on new year's this year there was a massive number of trump balloons that were popped and people hate trump there, whatever. but they love him or hate him. the fact is most of the people employed in the state that i'm in, have some way or another of working for the germans orp japanese of the immigrants and that's because all the plants are going there and why not. it makes too much sense. >> jim, talk about ackman and buddy, hope he's well, going to play tobey -- >> i was thinking harrison ford has a little -- >> right. >> right. >> he's cool enough harrison ford could pull it off. >> thank you. >> when we come back the three amigos epic handshake fail. the video that's gone viral, next. first a programming note, don't miss nas sim ta leb, author of "black swan" on "power lunch." .
leader summit, but had a little awkward moment, maybe more than a little awkward moment, attempted a three-way handshake and all laughed it off and later president obama addressed the canadian parliament becoming the first american leader to do so since bill clinton back in 1995. >> wasn't too bad. >> it was a little -- >> all right. >> not so bad. >> how do you to a three-way handshake. >> it's hard unless you go like this. but that looks stupid too. >> let's try. >> i know your games. i know your games. it's official, michael phelps the most decorated athlete in olympic history is, in fact, going to head to rio. the first u.s. male swimmer to qualify for five olympic games and achieved the milestone by winning the 200 meter butterfly race at the u.s. swimming trials last night. phelps could compete in six events in rio looking to add to his 18 gold medals, 22 overall. the pool is cold and this guy, for his entire life, probably --
>> where are you going? >> 5:30 a.m., he gets up, jumps in a pool for six hours and you just -- five olympics, isn't that -- that's like a long time to still be training. you got to hand it to him. >> the great ones love it. >> think about jumping in a pool every morning at 5:30. >> i do. >> not going to -- >> i do jump in the pool every morning at 5:30. >> in the meantime we have to jump in the "squawk on the street" pool because they're up next. see you tomorrow. good morning and welcome to "squawk on the street." i'm david faber along with jim cramer live from the new york stock exchange. carl quintanilla has the week off. a look the at futures, after two strong days, making back a good amount of the losses that we saw on friday and monday,