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tv   Squawk Box  CNBC  June 12, 2012 6:00am-9:00am EDT

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and andrew ross sorkin. opec ministers are arriving in vienna for meetings. venezuela says it will call on the cartel to cut back on overproduction, that's what they're calling it. extra production is pushing the group above the 30 million barrel a day ceiling. >> customers, customers come, they say we want oil. what do you do? you give it to them. >> the euphoria about spain's bail-out seems to be short-lived. investors are worried about the chance that italy could be next, and as a result investors are selling italian stocks and bonds. back in the united states, a few economic reports to watch today. at 7:30 eastern, we have the nifb survey of small business sentiment. at 8:30, import prices. then this afternoon we get an
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update on the federal budget. let's talk corporate headlines. jamie dimon is preparing to testify before the senate banking committee tomorrow. there's a front-page article in the "wall street journal," it says certain directors were made aware in 2010 of bad debts made on forex but were told the trader behind the action would be reined in. additional steps are said to be attempted last year to curb the practice but they weren't. "squawk box" will be live on capitol hill for the dimon hearing tomorrow. among our special guests, mike mayo will be with us. sally krawcheck and richard shelby that will be an interesting program. in other corporate news, general motors is holding its annual meeting. the company's ceo says gm only succeeded in changing its culture 20%, 25% from before the
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bankruptcy. dan ackerson will tell phil l libeau more about that at 8:30. and berkshire hathaway offering to buy rescap's mortgage unit and a portfolio of loans put up for auction. a few stocks question watch, texas instruments is narrowing its forecast for second quarter earnin earnings. demand for chips held up despite global economic uncertainties. vehicle navigation systemsmaker tomtom striking a deal to license its maps to apple. the company looking to tap into demand for cheap or free navigation software for smartphones and tablets. shares in the dutch firm rising sharply in early morning
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trading. >> can i talk about that story? >> the apple story or the tomtom? >> i don't know if you saw all the mapping guys got killed yesterday in the stock market because apple is introducing this new mapping software that will compete with google's android. >> i read about that before. >> about a week ago we started talking about it. there were rumors that finally apple would kick google off of its system. google can still have the application on the phone. the question is what happens to the garmins and tomtoms of the world. interestingly yesterday it was on, just looking through the back end of the system that tomtom was providing much of the data and services for the apple new mapping service. i have to say, it was a very cool mapping service. >> yeah. i don't understand why the stock market just realized it yesterday when there was all this talk that it was going to happen. >> i think they knew it was going happen but not the extent of it. i think people thought it would
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be crude, rudimentary -- >> but this is top of the line. this is almost as good as the google maps, with the exception of -- i don't know if we talked about this, street view on google. so apple doesn't have that. but they've been running these planes with military-grade cameras going over the country and over cities so they have mapped almost to a t every building, every tree. unbelievable. >> pretty cool. >> is cool. >> nobody has privacy anymore. >> apple stock did not do well. >> because they were expecting something bigger. >> people thought you get apple tv. >> that's a weird conjecture, is this it? so you were listening -- >> i watched the whole thing. >> you were disappointed you didn't get something? >> i have a macbook air. i was hoping they would -- >> they did do something. new memory. >> it's not a reason to upgrade. so that's the big question. >> so you have one you were hoping they would make it obsolete?
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>> i was hoping they would come up with so great. maybe retina display, better battery life, have all of these other things. they didn't give you a reason to upgrade. but there is some cool stuff happening. >> apple tv will be disappointed, too. do they know what they're doing? people have said there's no way they'll get into the commodity business of making big screens, it's already hard for sam shushung sung -- >> i think it will be a box -- >> people say it will be a remote control. >> they do build a defensive moat around the system. all of the new stuff they're building into the software makes you want to stay in the family. >> if i was going ask someone what was going on, i think i would probably ask you, you know all these weird apps on the apple devices. i don't have an iphone. i have an ipad, i finally got my e-mail that comes on my blackberry to come on one of the
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ipads. >> you're ahead of where i am. >> tommy did that. >> we'll spend some time together, maybe during the commercial breaks. i know three hours is enough for you -- >> can i just state how i am? >> you could, if you want. >> you could, if you want. >> will you fix mine. >> i'll work with becky. >> shares of seagate technology got a boost in after-hours trading. the catalyst, a regulatory finding that shows david einhorn's green light capital increased its stake in the hard disk drive maker. there's all kinds of minefields through there. floppy disks, hard disks, hard disk drives. there's -- i've seen it done by some of most experienced anchor that anchor with maria i won't mention any names. >> you're so kind. >> i want to welcome you for a
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tuesday. let's check the markets this morning. >> the original awkward moment was brought to you by -- >> i've had plenty of my own. >> you have. let's check into the futures. >> you weren't here for that. >> i wasn't. >> a cross between reese's pieces and peanut butter. >> this morning will you see green arrows. we saw this yesterday. it didn't last long. in fact, yesterday the dow was down by the end of the day 142 points. selling accelerated into the close as people decided the spanish bailout was not all that it had promised to be. this may be the shortest-lived rally we've seen from a euro plan. didn't even last one day. right now again you see some green arrows, but real concern about italy what will happen with them. things are playing out there. we will talk to kelly evans and
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get more on that. let's talk about oil prices. right now down about 35 cents, 82.35. this is coming, again as we mentioned, venezuela coming up with complaints about overproduction. saudi arabia doesn't look like they're backing down. so that's why you see continued pressure on oil prices. the ten-year right now is yielding 1.61%. slightly higher than where it closed yesterday. and the dollar as we continue to see pressure on some of these global stock markets, the dollar is down against the euro, up against the yen. 1.2507 is the euro. dollar/yen is trading at 79.50. and euro/dollar is 1.25. our favorite subject, it's time for the global markets report and ross westgate is back. ross is back. >> we missed you, ross. >> that is very true.
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what's going on over there. >> he's slumming with us. >> kelly is on her way to the opec meeting. that's why you got me today. nice to see you again. we are -- we are weighted to the downside in terms of stock volume. advances out-paced by decliners by a little more than 5-4 at the moment. the indices themselves are up after what ended up being a very flat day. this time yesterday european stocks were up 1.5%, nearly 2%. we started seeing spanish yields and italian yields climb higher and we ended up flat. right now the ibex is up about three quarters. so a turnaround. no particular reason for that. you talk about apple and tomtom, just to show you the stock today. tomtom stock in denmark up 12%,
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3.67 euros. this is a took that in 2008 was trading at around 55 -- sorry, 55 euros. in amsterdam, i should say, not denmark. as far as the real focus continues to be what's going on with bond yields in spain. they are still elevated today. we closed around 3 for spain, around 6.54%. we're back up again today. 6. 6.67%. those yields are higher and higher in italy as well. still firmly above the 6% mark, 6.12%. also higher yields in france as well and in germany. still down at 1.37 level. service the currency market is concerned, euro/dollar,
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yesterday up to 1.2672. trading around the 1.25 level at the moment. sterile hag been interesting. euro/sterling still above the 80 mark. we have disappointing manufacturing figures in april, much weaker than we expected for the uk. and in spain, we have heard today from abc, media report in spain, saying if we get some bank loans, it will be an interest rate of 3%, 3.5%. the term would be 10 to 15 years. they did not cite a source for that report. so that is still speculation. and we know that we'll get some memorandum here that will be signed by spain somewhere from the 21st to the 28th of june is when we should officially know what details will be. >> we'll see what happens in greece first. ross, by the way -- >> yeah.
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>> do you miss us, too? >> i miss you. i'm here. i'm here every day when kelly isn't here. i stand at the sidelines and watch misty-eyed. >> we think we need some visits from you, too. >> yes. >> can we twist your arm? >> yeah. you can. >> okay. >> you can we need to come over there with the show. we'll work that out. >> we want to see you every once in a while. don't you stand on the sidelines. >> we had him. it was all too short he was on every day. >> i wasn't even here. >> i know. he was on every day. >> i love the music. >> guys, i'm here for the rest of the week. for the rest of the week, it's me. >> all right. >> i want to talk a bit here. mark grant was on, remember? were you there for that part? i don't know -- >> yeah. >> he did all this great stuff. he asked mark grant to block him. i hope he still blocked you. >> no i'm back on.
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>> did you see this? who is this guy? italy is rearing its ugly head as the problem now. >> italy? >> italy. italy. so there's a guy there that we're quoting, his name is fector this will be an issue, fector -- it's not a gichuy, ita lady. she says she sees no indication that italy will request aid, that italy's economy is a strong economy and they will not need a bailout. >> who is miss fector? >> we will find out. somebody in position to speak. >> is she an official? >> an austrian finance minister. >> well, we had this last week. >> these are the words used for greece, portugal, ireland and spain. he says same exact words -- he says those are the exact words. which is good, same of exact. but get used to it, fector. be careful. that's all i'm saying.
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you heard floppy disks. >> i had issues. >> i'll give this guy -- dana millbank wrote a piece that june is the worst month ever. the latest is this commerce secretary story. i will give him -- commerce secretary john bryson will take a medical leave of absence. the announcement comes after he suffered a seizure in connection with two traffic accidents in the l.a. area. bryson will undergo tests and evaluations. he transferred his functions and duties to rebecca blank, now acting commerce secretary. he was cited for a felony, felony hit and run. there's no evidence of drugs or alcohol. i used to live right where this was happening, near the san gabriel valley. rosemead. he rear ends people, three people in the car. he gets out. talks to them, but doesn't
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exchange information. gets back in the car. as he's driving off, hits them again. they follow him -- >> he hit somebody else. >> he hit somebody else. gets out of the car there, gets back in, police find him unconscious. the seizure would be -- he never had a seizure before. you could have a brain tumor or something. >> could be a stroke. east 68, who knows what happened. >> the president is wishing his condolences. >> we all are. it would not be a felony if there's a medical reason. >> you don't need to cry, andrew. he's okay. >> we should have music and cry. >> you are so touching. >> if he had a stroke or whatever -- >> it's a fender bender. there's nothing to be sad about. >> no about his health condition. not about the fender bender itself. >> you are very nice. very empathetic.
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so you will be sad -- >> i feel bad for him and his family. >> we wish him a speedy recovery. >> we spend out our best wishes. it's a fender bender. he was hurt. car was hurt. not as bad as lindsay's car, i don't think. that was a rear ender. >> you are talking about ms. lohan. >> that was a rear ender that was totaled. did you see she said she recently switched her brakes or something? >> she also probably switched some of the things she takes. coming up, we talked about the big stories of the morning, don't know if you got that joke. we will see how likely they are to impact today's trading session. first, i apologize to becky in advance -- possibly to joe given where -- >> no, i don't care. >> the kings winning their first stanley cup in franchise history. you always like to make a joke about ice meting in los angeles. kings beating the new jersey devils 6-1 last night.
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the kings are the first number eight seed to win the cup. >> that guy who was the mvp, john quick. i think that's him. >> was broadcast on nbc.
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welcome back. jeff mo morrow joins us from th weather channel for today's forecast. give us yesterday's forecast. >> you already have things done. i don't have to look into the
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future. >> that's what we do with the stock markets. >> yesterday's news tomorrow. you would be so much better as a weather guy. >> i would never be wrong. it rained in the midwest yesterday. some of it was heavy. >> expecting some big trees in the pacific northwest, aren't you? >> exactly. wet along the coast if you go in the water. all right. let's talk about some of this rain up and down the east coast. there in new york, you guys will probably see this later on today. scattered showers and thunderstorms. some of them heavy. we have been talking about flooding along the gulf coast. in the middle of the country, beautiful day here. in chicago, you earned it, it was hot earlier this week, now it's pleasant. out to the west coast, just a few showers in the pacific northwest. cool in seattle. looks like much of california, desert southwest, typical for this time of year. watch out for a few of these storms to be heavy in the
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northeast. the biggest threat of severe weather is in the northwest. i will repeat this forecast again tomorrow and i won't have anything wrong. >> jeff, that's perfect. we will do the same thing and tell everybody what happened with yesterday's stock market. if you were watching the stock market yesterday it was down 142 points. joining us to talk about it is kevin carrone, and also with us, kevin ferry. kevin ferry, start out by telling us how things are shaping up. there's concern and fear factor about italy at this point. how is that playing out this morning? >> i can still get friday and monday wrong. so i think it's probably two of the craziest sessions in the market that we've seen in a long ti time. the volatility was massive. the liquidity was nonexistent. i think both of those things are
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concerns for people like me that have to wallow around in these things on a daily basis. i would say this, beware of anyone who comes on to your show today or going forward telling you they think they know what's going on because they're kidding themselves. we're kind of, i think, in a better position this morning to see stability coming into the capital markets but it won't last for long. >> kevin carrone, would you like to tell us what you think is happening? >> in europe a lot of decision also have to be made. we have the greek elections coming up this weekend. going into next week, we will hear from the federal reserve in terms of what their plans are. overall you are coming to this inflection point where the situation in europe has become severe enough, and the markets,
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especially yesterday's reaction were completely unimpressed with the bailout for spain. >> too little too late. >> the things that need to happen, you need to have shared willingness to take on debts and to take -- pay for each other's debts, which is not there yet. you need to have more common governance which is not there yet. ultimately you need to have a package for growth. there was talk about it, but there's little consensus about what kind of form that will take. >> how do you position yourself? going into what we think is the next week or two of craziness, one way or the other we could get an answer. there could be good upside surprise, i personally think it's doubtful, but how do you look at this? >> our approach has been and continues to be focus on the equity side of the portfolio. there's different ways to invest. if you're focused on consistency, strong balance
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sheets, dividend paying ability you will probably do better in the equity markets if the worse case unfolds. if things break for a positive, i agree with you, when you get these periods of stress there's an opportunity. the opportunity is with all of the data expectations priced into the market, any good news, any relief could give you nice upside. if you have upside, those same companies won't hurt you either. >> this italy thing, we saw that spain will need a lot of dough. we know that. that's a lot of money. >> they need more than that. >> they need more maybe. we saw if you just take germany out of the 17-member eu, it's a growing economy. it's great, but not really that big. after germany who you got? number two, you have france. who is number three? italy is not growing at all. they got to pitch in to help spain. and they are not growing enough to pay off their own debt. >> not to mention they have to borrow at 6%, lend at 3%.
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>> they have to borrow at 6%, lend to spain at 3%, they're not growing enough to pay off their whole debts. how many hours did it take yesterday where we got spain it was good. by the end we were down 150 points here. >> that's why you need this growth -- >> this is before greece. >> this is why you need to focus on growth and policies that will stimulate growth. >> then if you are going to focus on growth -- kevin ferry f you're going to focus on growth you need the germans to pick up the tab. >> right. two positives that could have been. first of all, classic central bank mistake. the ecb should have cut the rate at the same time they did the bailout. so they're taxing their own system for the reasons you described. this is like don't think about it too much. the silliness of it all is too obvious. the other thing you can see, finally they are dealing with something we have talked about
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on the show for a long time, that's loss recognition or psi. between the lines of what you saw in the bailout over the weekend was who will get hit, how they'll take it and how they will buttress the people who will take the hit. from the very small kernel of heading in the right direction, i would say that's the best takeaway that i could -- >> this will be years, kevin, right? >> absolutely. >> these labor issues, these labor laws in all those countries this is 50 years of entitlement state labor law. how long -- we'll have slow growth for two years over there at least. >> minimal. so let's peek inside the box deeper. you have the second largest monetary regime in the world, basically operating in a splinter, or a possible fallapart. both libor are sourcing euros
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and dollars and has been put into a medical coma.
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♪ ♪ meet me in the crowd good morning. welcome back to "squawk box" on cnbc. we are discussing this company -- if you are in montreal -- >> it's bombardier. if you're in toronto, it's bombardier. >> you say -- what do you call it? >> bombardier. >> you do? >> it's like olan. it's a net jet story that is not
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emba embargoed anymore. >> it's 6:30, we're allowed to talk about it. >> cessna and $9.6 billion. my question when we talk about it, i guess it's mostly business, i think. not too many in this economy -- you got to be a tenth of a tenth of a tenth of a percent to own one of those cars. so businesses are finding reasons not to own a corporate jet. you don't even want the stigma, you want a net jet. they are making a huge commitment to this business. >> you said it's 0.10%? >> one of those -- >> kenny said you needed $10 million, $20 million as an individual before you start -- >> net jets planning to buy up to 425 new planes from cessna
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and bombardier for up to $9.6 billion. net jet said the order was big enough that they could try to customize the planes. the ceo of net jets will be joining us at 6:45 eastern. manpower says hiring prospects has improved slightly in the u.s. but cautions that companies are only adding workers when they absolute i will have to. and another story, this one we should talk about. the average family net worth is shrinking. the federal reserve reporting that after adjusting for inflation, here are the numbers, 2010 median family net worth was now no more than it had been back in 1992. it declined from $126,400 to now
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$77,300 in 2010. and two-thirds or three quarters of it are a function of real estate. >> housing prices are the biggest asset. >> and people on the west coast, that's where they got killed. >> housing prices have not rebounded, so these numbers are from 2010. housing prices have not rebounded since then. so you probably have not seen a change. if the housing market turns around, you would expect those numbers to rebound. >> in the past we talked about income disparity and that middle class people, their house is such a huge part of their balance sheet, they're the most effected by people that have -- how many houses does bloomberg got? 11 houses. so he would be effected, maybe. if you got 11 and it goes down. it's not his major part of his assets. his 11 houses could go to zero, it won't hurt his $16 billion net worth. >> for some reason, i don't
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think high-end homes have been hurt. >> they have been hurt. >> did you see dan lobe, $40 million house, now on the market for $100 million. >> at a certain level houses are selling. you got above a couple million -- >> there was a huge story about the most expensive property ever. >> you are talking about the place in california. spelling. the spelling estate. >> that's a hideous play. >> beverly hills. >> didn't it go to a third of the asking price? >> looks like a hotel. >> it was a hugely expensive property that went for a third of what they had been asking. >> but it was still the most expensive property. it was the daughter of a russian businessman, otherwise known as an oligarch. i can't think of his name and i will. >> let's look at the markets. we are seeing green arrows once
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again. but we've seen this story before. yesterday we started out with strong green arrows, triple digit gains for the dow. by the end of the day, the dow was down 142 points. futures are pointing to a higher open of about 60 points for the dow. look at oil prices which have been coming down as venezuela is complaining about the overproduction from opec. twle p saudi arabia says they will continue to pump, and that's maybe why you are seeing pressure on oil. ten-year now is yield 1g.61%. the dollar has been mixed today. it's weaker against the euro, stronger against the yen. the dollar/yen at 79.54. and the gold comeex is at 1593.
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>> it was candy spelling's home it was sold to the formula 1 he heiress. it sold for a lot less, but there's no knob. >> not as much money sloshing around. >> i can't believe they put you back on, getting more stuff from mark grant. >> i am. >> i loved when you weren't getting it. you told him to take you off the list. >> i like you not knowing it. now that you told him to take you off the list because you dirt need it, because you already -- >> that's not what happened. i'll tell you the story later. >> because it says bloomberg on it. >> i didn't think it was from him. >> the supreme court will hand down its decision on obamacare
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by the end of the month. to talk about winners and losers is gary brode, a contributor to for some reason i had so many people, gary, come in here and say that just normal businesses are worried about taking on a million dollar liability, a new ploy, in other words. partly because of obamacare, partly because of taxes and these other things. i was worried if the overall market, if the supreme court were to throw this out, if the overall market would get a boost because some uncertainty would go away for all businesses. >> there's no question the market hates uncertainty. anything to alleviate excess government regulations are a good thing for the market with certain health care stocks it will help them. for others, it will hurt them. we actually think the ruling will be overturned at the supreme court. most people think that -- >> the whole ruling.
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>> right. most people think it will be upheld. we think they're analyzing it wrong. >> they think kennedy will -- even though he asks tough questions, they think he goes with the liberals and it's a 5-4 upheld? >> no, it's 5-4 to overturn. >> that's what you're saying. you think that's an outlying opinion? that jumped up to 60% on trade. >> the individual mandate? >> it gets thrown out. >> right. but we also think the rest of the law will be thrown out as well. >> right. some of the justices had a great sense of humor on that when presented with the idea that the supreme court should go through this 2,700 page bill -- >> to find out what's in it, according to nancy pelosi. >> right. and when confronted with this idea of going through page by page on what should stay and go, justice scalia called that cruel
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and unusual punishment. >> great piece in the journal today. the kinsler toesen e-mails today. occupy wall street and tea party are joined together if you look at the way this thing went with the crony capitalism. does big pharma get hurt? won't the hmos be crying in their beer if this gets overturned? >> the legislation adds an enormous burden on them in terms of taxes. there are also various provisions that will force the hmos to take unprofitable patients. >> but some of them said they will keep some of those things. they would keep the idea of making sure pre-existing conditions are still covered. united health said keeping kids up to the age of 26 with that's parents. >> they are already charging for those plans now. if you have a 26-year-old child on your plan, the hmos are covering that. they don't want to give up that
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business and reduce rates for people. >> so it's a profitable business. >> right. that part wasn't in the press release they put out. >> so what stocks and groups would you buy? you would buy medical devicemakers, i would think. >> the tax would go away that would be a huge help. our favorite name in the sector is wellpointe. it's a managed care company, and for wellpoint earnings are a good proxy your cash flow. they will spend $2.5 billion this year to buy back stock. >> why would the supreme court decision help wellpoint if they threw it out. >> because they wouldn't have to -- you end up with something called the free rider problem. if the legislation goes into effect, somebody would sign up for health insurance in an ambulance on the way to the hospital. you think your health insurance premiums are high now, imagine what they'll be when you have to cover everybody if they're
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buying their insurance on the way to the hospital. >> all right. when is it going to happen? >> probably sometime later in june. july is a possibility, but june is the best bet. possibly next monday. >> we sometimes hear people say it could happen on a tuesday. today is a tuesday. >> they can decide any time they want to. >> by the way, they already decided, right? >> they already decided, we just don't know what the decision is. >> they probably already have. >> someone has printed this out and knows the answer? >> probably. there have been rare cases when the decision has been written. >> another hard break. coming up, a new book "the lost bank" some new reporting on the collapse of washington mutual and some lessons we may be able to take away from it. ttd#: 1-800-345-2550 you get at some places. ttd#: 1-800-345-2550 they say you have to do this, have that, invest here ttd#: 1-800-345-2550 ttd#: 1-800-345-2550 you know what? ttd#: 1-800-345-2550 you can't create a retirement plan based on ttd#: 1-800-345-2550 a predetermined script. ttd#: 1-800-345-2550 at charles schwab, we actually take the time to listen - ttd#: 1-800-345-2550 to understand you and your goals...
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ttd#: 1-800-345-2550 together we can find real-life answers for your ttd#: 1-800-345-2550 real-life retirement. ttd#: 1-800-345-2550 talk to chuck ttd#: 1-800-345-2550 and let's write a script based on your life story. ttd#: 1-800-345-2550 focus lolo, focust sanya let's do this i am from baltimore south carolina... bloomington, california... austin, texas... we are all here to represent the country we love this is for everyone back home it's go time. across america, we're all committed to team usa.
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s. this tuesday morning a new book talks about the september 2008 collapse of washington mutual. the author kirsten grind joins us on set. the book is called "the lost bank: the story of washington mutual, the biggest bank failure in american history." congratulations on the book. >> thank you. >> talking about lessons learned. almost four years back. any lesson learned? jamie dimon going tomorrow -- >> the headlines seem the same almost as four years ago almost with risk being taken at the banks. >> what is the biggest lesson for this book that you take away? >> the big lesson is the loss of culture eroded overtime. you can't say enough about how a company's culture is important. you saw this when there was that
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big epic goldman resignation. the culture at wamu became eroded, it became detached from its customer. >> you walked through some of the great antidotes, this is almost a barbariansesque view of what's going on inside of the firm. if you were to pin the failure on one person, that would be whom? >> it's hard to put it on one person. i'm a firm believe their everything starts with the ceo. you had the ceo, karen killinger, who led the firm for 18 years, they went on to a deep dive. >> sheila baer, i got a bit of a mixed picture on her. >> sheila baer emerged from the financial crisis as someone who saw it coming, absolutely that's true. >> that's not what you paint in the book. >> no. the fdic, their track record on
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how they dealt with wamu and other failed banks, it was mixed. the way they handled indy mac bank, also a large bank failure in the summer of 2008, lines around the block, customers panicking. >> some of it is because some of these things were happening so fast. you know, did you an amazing job of chronicle this, putting it on with the timeline. do you really think the headlines today are nearly what we were facing back in 2008? especially for the u.s. sometimes in europe it feels like that. but in the u.s., even though we have not fixed everything -- >> in the u.s. it's not what we were facing in 2008. absolutely not. i think what i meant when i said that, you are still seeing these banks taking big risks. regulators are in the dark about everything. it's like nothing has been fixed. >> kirsten, we have to go. this bank failed. it wasn't propped up. >> absolutely. >> my question is does that mean
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the system ultimately worked? >> that's a difficult question because the sale was controversial. maybe it worked. maybe it didn't. we'll never know. >> go read the book "the lost bank." thank you for being here. >> thank you. coming up, net jet's big bet. billions of dollars in plane orders. that's next. ness credit card. your boa! [ garth ] thor's small business earns double miles on every purchase, every day! ahh, the new fabrics, put it on my spark card. [ garth ] why settle for less? the spiked heels are working. wait! [ garth ] great businesses deserve the most rewards! [ male announcer ] the spark business card from capital one. choose unlimited rewards with double miles or 2% cash back on every purchase, every day! what's in your wallet? [ cheers and applause ] if you're one of those folks who gets heartburn
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welcome back, everybody. it's been called the largest private aviation order in his
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30. net jets is buying $9.6 billion of new jets. the chairman and ceo joins us on set and thank you for being here. >> thank you very much for having me. >> this is a huge deal. why are you going about a deal of this size? because we were saying off set i remember you having a huge deal which i thought was the largest jet order recently about a year ago you said it was? >> it was. but a little over a year ago we had the largest jet order ever and we've surpassed that which we're very excited about but it's time to improve the fleet. there's amazing things going on in the private jet industry and we want to take advantage of it. >> when you order a lot of jets you get to customize them when you get a big order? >> these will all be the signature series, all the jets in the fleet and we've personalized them all given what we know about our owners' flying patterns. >> what's the bombardier, what does it look like, what is it
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called? >> the challenger 300, and the 34 is the global of bombardier 5000 that we bought last year. >> the global express? >> the 5,000. >> what's the big customization? >> we've got things we've done -- what's that? >> no. >> in-flight entertainment systems, lowers humidity, lower altitudes, fit and finish on the inside, all the things the owners told us they liked. >> where do you sell the old jets? >> all over the world. >> to whom? >> to people who want to own aircraft outright. >> businesses? >> businesses, individuals. >> you sell a lot of jets, right? >> we sell a fair amount of jets. >> are there enough individuals that are buying the car -- that are net jet, you got to be really rich? >> you've got to be fairly well off. mostly businesses. >> has there been a trend away from owning aircraft in recent
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years? >> there's a number of people that would like to get out of owning them outright and would prefer to be in a program like ours and own a piece. >> it's cheaper. >> it's cheaper and more efficient and it's more effective. >> what are the businesses you want, meaning your competitors? there's not a lot of them but there's others. >> there's some others, flex jet was one. >> notice he says it very softly. >> why can't you buy all-american? >> we try to buy the best possible aircraft we can, and the aircraft industry is global. even those outside of the united states have a large fraction of the componentry coming from the united states. >> what does your business tell us about the overall economy if a lot of those are businesses that don't want to own anymore? >> we feel relatively kawbt in the longer term and we do the long term and we call very good about it. >> what's the cheapest jet we
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could buy? >> a used one? >> a used one. would it be a citation. >> a citation bravo which is a seven seater. >> how old? >> how old? >> i can't stand in any of them. i'm 6'3". >> how old and what kind of terms can you give us? >> you're talki ing $116,000 or so. >> we want a "squawk" jet because we have to put branding on the plane. >> $2 million roughly. >> $2 million? >> are you ready? >> no, i'm not. >> too big to fail, you make $2 million on "too big to fail." >> i have to talk to jeeves to see if he can fly. >> maybe it would be better to buy the part. >> i would if i were you. >> you get two by lot pilots. >> the little citation has a bathroom, right? >> you don't need to stand
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there. >> yes. >> you stand very rarely in your 50s anyway. >> all right. >> jordan, thank you very much for coming in. we appreciate you joining us and we appreciate hearing the news about it. coming up, we'll talk this morning's top stories in "market action." and chris whalen will talk about what we should expect from jamie dimon when he visits capitol hill. tomorrow on "squawk box" jamie dimon will testify before the senate banking committee on jpmorgan's $2 billion trading loss. andrew will be live in washington for the hearing and we'll talk to ranking committee members richard shelby, and analysis from our guest hosts. don't miss "squawk box" starting tomorrow at 6:00 a.m. eastern. ♪
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searching for jewels. investors around the globe digging for positive signs. we've got the latest on europe and the global economy. could the king of wall street be dethroned? jamie dimon ready to hit the hill. we preview tomorrow's big hearing with banking experts. the king of real estate. it is 6-1. >> donald trump joins us for another edition of "trump tuesday." and the kings conquer the devils. we help l.a. celebrate as the second hour of "squawk box" begins right now. ♪ i love l.a. ♪ we love it ♪ i love l.a.
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♪ we love it good morning and welcome back to "squawk box" on cnbc. i'm andrew ross sorkin along with joe kernen and becky quick let's get you caught up on the morning headlines. the ongoing european debt fears among factors pushing oil lower. crude dipping as low as $81.07 a barrel the lowest in more than eight months and eastman kodak has asked a bankruptcy court for permission to auction more than 1,100 patents. the patents come from kodak's digital imaging systems portfolio and they expect a ruling on july 2nd the sale not working out so well. and this morning, from jp directors were reportedly alerted by risky trades two years ago before the recent le revealed $2 billion trading loss according to "the wall street journal." other reports have got into some of the details but the paper says directors were told the traders wouldn't be allowed to take excessive risks in the
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future and, of course, they were. let's take a look at futures this morning. we've got some green arrows across the board. we'll see if that holds up. the dow looks like it would open up about 46 points higher. and miss becky, back to you. >> andrew, thank you very much. there are growing concerns that italy could be the next victim of europe's financial woes. joining us is morgan stanley's chief u.s. economist, vincent reinhardt. we watched the market skepticism yesterday, and you've been beish on the situation, and the what are the odds that we'll look at a euro that exists 18 months from now. >> our european team marked it up to 35%. >> but that still means the most likely scenario is that the euro will exist. what has to happen to get us to that picture? >> so, if you told me there's a euro in 18 months, then europe's got to be a better fiscal union because it's not a particularly
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good currency union. if you have that possibility of fiscal transfers you will need strict budget rules. probably need a pan-european issuer. there's not enough resources, the german taxpayer won't put up everything. and the ecb has to be a bridge because it's a long slog, it's treatly-level negotiations among a lot of countries. >> we heard a week or two ago george soros thinks it has three months to get it right. is that a time frame you agree with? >> there's a couple forks in the road that's really key including the greek election and the next set of resources. there's this hazard every week there's a different risk event. always the possibility of something going wrong. >> if something goes wrong, i mean, walk us through what it looks like and what it means for our markets. >> so, it's another source of tension. it's another thing that makes
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investors skittish. we'll learn about some financial institutions balance sheets. we don't know which institutions they'll be and we're not exactly sure what we'll learn. it's a big risk event, no question about it. a break-up of the euro, a country leading the euro is going to be associated with deposit runs within europe, so there will have to be some form of capital controls. there will be a flight to liquidity. everyone will want to hold more reserves including dollar reserves, so you'll probably see the fed having some drawdowns as it swap lines. which, by the way, are unlimited. >> you are bearish on the stock market and that indicates that you think things are going to get worse before you get better? >> we're not that bearish on the u.s. economy. we basically think we're going to grow a trend of something in the neighborhood of 2% which is an accomplishment when europe is in a shallow recession and there's some question marks about emerging markets. the basic story is the world's a
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risky place and when the world's a risky place, investors lack conviction. if they lack conviction, you don't get durable wealth creation and it's wealth creation that gives us that upward lift relative to trend so we don't get that, we grow with trend. >> although there are some who would take the argument and say the world's always a risky place and if investors lack conviction that's the best time to be buying, because once are all convigesed it's the place to be, it's too late and you've missed the upswing. >> true, but i'm more on the cautiously pessimistic side, because the world is particularly risky because we have a flawed union at the heart of it and u.s. politicians unwilling to deal with the major issue, that is, when do we put a plan in place on fiscal consolidation. in that environment, if the political risks that are elevated and investors have to negotiate this minefield. >> is that something that we are looking at the end of the year, the fiscal cliff, what happens after the election?
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is there any chance that there are quick solutions to these issues? or at least quick things that kind of push the problems down the road a little? >> okay, so if you're asking quick and good or quick and, you know -- >> dirty? >> -- contemporizing. look, it is within our ability to fix these issues. in terms of fiscal policy. the u.s. is just really terrible at delivering fiscal policy. we have an inefficient tax systems, no budget rules, appropriation processed goes through 13 committees of congress. we could -- we're so bad, we're so far outside the efficient frontier there's no one fix direction to go. we could actually test the election on two coherent views of fiscal policy and whoever wins puts them in place. that would mean come the spring we're in a better spot. europe, european officialdom understands where they have to go, it's the question of can they convince their voters to get there. they've got to resolve that issue.
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>> and maybe it gets easier to do it, though, as things get more displaced in the markets when you have, you know, the issue is a gun at your head essentially. >> yeah, but i think leadership is trying to get people to where you think they need to be eventually rather than having markets force you summit meeting after summit meeting to budge. so, the model is officials don't want to get too far ahead of their voting public. they wait for markets to force them. they make a little movement and then they take the next step. sometimes it's tough to jump over a chasm in a bunch of little steps. >> you pointed out you're looking for 2% growth despite all these problems, so what are we doing right? >> market economies basically want to grow. we're a good engine of wealth creation. we have important sources of productivity enhancement including in the middle part of the country where we didn't have the housing excesses nearly as much and we're particularly good at producing a resource namely energy that we can't transport very far efficiently. so, that's going to give a local
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boost to manufacturing. and the good news is, is some of the things are behind us. there are long-lived consequences of the financial crisis, that's where trends are only 2%. but we are, you know, we've mar -- you know, we've basically shrunk housing and now it's contributing to activity. financial institutions in the u.s. have done a very good job in recapitalizing themselves and cleaning up their balance sheets. and, remember, nonfinancial firms have a mountain of cash on their balance sheets. so, we want to grow. we are just impeded by being in a risky world and having politicians that are fighting each other rather than fighting for the economy. >> all right. so, let's hope they get out of our way. vince, thank you very much for joining us. >> thanks for having me. if you have comments or questions about anything you see here on "squawk," e-mail us, you can also follow us on twitter. i'm over twitter.
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>> why? >> i don't know how to do everything and put other people's apps on there and i see things on twitter that i don't know what it means. >> hard? >> all the apps, ten people are included. >> that's so that they can see them, too. >> are there messages in there if you click on them? >> no. >> what are they? >> you go to their profile. so you see them. >> we'll teach you. >> that's our handle handle, @squawk@cnbc. jamie dimon heads to the hill to ask questions about the controversial "x" billion dollar trading loss, is it 2, is it 3, is it 4. i want you to find out tomorrow, you'll be down there. we'll talk to banking expert chris whalen next about what lawmakers want to know and why they care. tdd#: 1-800-345-2550
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welcome back, everybody. take a look at the futures, there are some green arrows this morning. right now you can see the dow futures are up by about 42 points above fair value, of course, we're a little hesitant to jump too quickly on any bandwagon after yesterday's actions. the dow was up to triple digits and at the end it was down close to 150. shares of michael cors jumpi
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jumping, five cents better than the street expecting. michael kors issishing on y youanyo guidance above expectations. ceo jamie dimon getting his day on the hill tomorrow, and ahead of that we'll be talking to chris whalen who is on set right now, he's an expert on the banking industry. he's senior managing director at tangent capital partners and it's good to see you. >> good morning. >> i'll be there tomorrow, what would you want to ask mr. dimon. >> i think first you want to ask him when he first became aware of the risks that were being taken by the gentlemen in london and the whole team. >> right. >> and then i think you want to try to drill down and understand the difference between their activities that were, in fact, hedging the long securities book of the bank and the allocations that each trader had to go off and essentially do principal risk. and i think that's what this was. i don't think it was hedging at all. >> it's just proprietary
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trading. >> the question is jamie dimon going to tell to us the whole truth and he hasn't done that. >> you used to work at the fed. the responsibility in regulators in all of this, should you be able to identify this risk and do something about it? >> that's the next question is, how did jamie dimon convince the fed and the occ not to look at them. >> what do you mean? >> the examiners are supposed to follow the audit trail in part. they have to go check all of the significant operations of the bank. this was a very significant part of the bank and it was growing. the exposures were growing and yet somehow or another jpmorgan management convinced the examiner in charge -- >> is it convincing or the regulators not knowing where to look? >> both. both. but what's the point of regulation if they're not diligent. that's what we pay them for. >> isn't it a better place if there had not been a financial crisis and this had not happened, we wouldn't be talking about it with the size of their balance sheet? >> no, i agree. >> is it better that we're in this period that we care so much about this, the banks are
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supposed to do -- >> there's a disclosure issue. >> they lose money all the time. >> because of investors there's disclosure. >> because of 2008 they disclose -- >> to put it in context, you are talking about disclosure on april 13th -- >> years ago, years ago. >> prior? >> you mean the office and -- >> in other words, you're taking principal risk instead of hedging. >> you're calling this. >> i think this was trading. >> you are saying it's not hedging. >> no, no, they're not. he may come out and say it morphed from a hedge to a proprietary trade. >> i wrote up on zero hedge. they were talking about taking a reserve against the positions in 2010 and what that means was it wasn't hedging. you don't reserve against a hedge. >> against these businesses. >> yes. >> way back then? >> yes. it was a liquidities based, and they looked at the indie sifs a indysys and they were looking at could they manage it
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effectively. >> if they knew it, why couldn't they get out of it? >> because it's what they do. they write off loan losses and securities losses, this happened to come at a time after jamie dimon publicly went after bloomberg and said no, no, you're wrong and two months later he had to come out and correct and i believe the counsel for jpmorgan said hey, hey, you put down a marker with respect to this issue and now you have to correct it. to your point i still don't think we have the full story. maybe tomorrow he'll come and look and say part of it was hedging for the bank's investment but everyone had an allocation. >> and is it fair to say it takes time to sort it out? >> no, i think it takes diligence by the examiners. they should already know this story. it's ridiculous. >> one of the things we've heard ahead of this hearing he may say there are certain things i will not be able to discuss if they're not finished with their analysis of what took place and they may wait until the second quarter to be able to answer fully and to really explain all the trades? >> i don't know.
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>> does that make sense to you? >> no, no. i think we probably know what happened or we should. >> we should by now. >> look, the head of the audit committee of the board of jpmorgan should be leading this parade because this is a case where the ceo is obviously conflicted and should be out of the loop. you know, this is -- look, this is a sarbanes/oxley issue, put internal systems in control. >> put it in context for a second which we've had people like jack welsh and steve schwartz and other people say in the grand scheme of jpmorgan this is completely irrelevant. >> correct. >> is it or not? >> it's what they do. they win and lose all the time as i've said. but the key issue here is you had management come out and i think make false statements in public about the nature of this loss. now we're e -- >> you are saying it's a fraud. >> i'm saying that they didn't act -- >> a fraud is a -- >> it's a failure to disclose but if you deliberately put out misinformation as i think jamie dimon did when he went after bloomberg and said, no, no,
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we're wrong and then we go to hedging with the conference call and tomorrow i think we'll hear a further evolution of the story. >> i don't understand the difference between hedging and proprietary trading -- >> it's a big difference. >> but there are some gray areas or, no, you make it sound like there's not at all. >> all i can say there's a big difference between running a short position that is addressing the overall long risk of their investment book, the held to maturity book and giving traders an allocation with leverage saying you can go out and generate returns are for the bank and income s based and gais based. two different issues here. >> one of the things semirelated is jamie was on the board of the new york fed. yesterday they are coming out and saying he should still be able to be a director. you worked at the fed, does it matter? should he be? shouldn't he be? is it just optics, what happens in reality if you are a director? >> federal reserve bank officers have no impact on the directors.
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>> it's a silly argument. >> it is. but in the old days the bankers wanted to run the fed and they were given the directorships as somewhat of a compromise. today should we have bankers on the board of the fed given that the fed is the agent for the government and they supervise the banks, no, i wouldn't let bankers sit on the board at all. >> if you could ask jamie one question in confidence, it would be what? >> well, why did he go after bloomberg. they should have left it alone. why not just leave this alone and then disclose the adjustment, lot, in the quarterly -- >> you don't believe that -- >> don't -- >> you don't believe at the time he knew? >> no, i don't believe that. >> you don't believe he talked to others who assured him it was fine? >> no, i think two years before at the cfo level of the bank they had a discuss of the trading activities, not the supposed hedging, but the allocation he had to go out and make money. that's what i'm concerned about. that's the key question. when did you know that the
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for-profit, principal-based activities of the london group were a problem such that they were thinking of posting reserve against it. >> lastly about the controls at jpmorgan and frankly all banks, one of the things you realize when you start looking at a trade like this, it's about three or four people who may have -- i don't know if they went off the reservation or not but they were doing things and certain people certainly couldn't control them if they were trying or not trying. >> was it a rogue hedge fund, it may be. they create problems that do not exist and when you get deep enough into them that you are a significant part of the market you're in trouble because the rest of the street figured it out and they started to trade against it. >> would you like to buy shares of jpmorgan? >> no, i'd rather buy preferred. and cramer will go after me later today. >> chris whalen, thank you for your perspective. tomorrow from "squawk" i'll be live from the capitol covering the hearing. our guests include mike mayo, and sally crawcheck and senate
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banking ranking member richard shelby. which website is best with connecting consumers with retailers? the answer will surprise you, i know it will surprise he. i have no idea. and the state of small business, we'll find out how moms and pops are feeling about the economy. the nfib latest number is coming up. if you are one of the millions of men
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we're back. we got a little bit of news. when it comes to connecting consumers and retailers, they scored 40% of online consumers follow retailers on social media but when it comes to specific websites those consumers follow an average of 9.3 retail companies on pinterest versus 8.5% on twitter and 6.9% via facebook. this is actually important when you think about the economy and revenue. >> i've heard of it. >> it's amazing. >> very cool. that's why i've heard of them. >> see? i'm not wrong. >> i'll have him yet. >> where do we have him?
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>> we'll have him on. he's going to come on. we haven't had him on yet. >> off the record type? >> look at that. >> look at you trying to rush into this. >> you are a father, get ready, joe, a new survey saying gift givers plan to spend the most ever on fathers day this year. this is actually good for us. total spending expected to hit nearly $13 billion, the average person will spend just over $117 on dad this year up 10% from last year. >> of course, any year you spend less on dad, wouldn't that be, i mean, with inflation? >> $117 for a tie, though, is a lot. >> there's nothing -- you'll get to the point where there's nothing that you need. yeah. and then with you, like i need a belt. you don't need -- you don't wear belts! >> i would wear a belt. >> if you had one, you would wear one. >> you don't have one. >> no, no, i do have one. >> but you get to the point. i asked the guy about the jet, i mostly have -- >> you have everything you need. >> i got so many ties and shirts
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and slippers -- >> you are lucky. >> you have your family and your health. >> i'll have to get you a market jet card. >> well, you could do it. if you ask me what i want, you know. >> i know exactly what. >> you got to pay for the gas, though. >> you're going to get your own jets? >> you complained about how much it cost to fill up that suburban, the expedition. let's get a check on the markets. the futures have been in positive today. right now you'll see they're up but only by about 36 points. we've been seeing them waver through the morning. the oil prices are a little bit weaker. there was talk that venezuela was looking for opec to cut back on the excess production capacity. saudi arabia has said it's been pumping because of the embargo situation. right now it's down by about 20 cents to $82.50. the ten-year at this point is yielding 1.616%, the dollar has been mixed today. dollar is down against the euro.
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up against the yen, 125.11 is where the your reuro stands. and 1593 is where gold stands. if you have comments on questions about what you see on "squawk," e-mail us, and you can follow us on twitte twitter @squawk@cnbc. and when we come back new numbers on small business. how they're feeling about the state of the economy. plus, it is trump tuesday, the billionaire investor and chairman and ceo of the trump organization joins us in a little bit.
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welcome back to "squawk," everybody, among the stories we're following this morning, shares of texas instruments are keeping an eye on that. the chip maker has narrowed its profit guidance from 32 to 36 cents a share. the prior guidance was 30 to 38 cents so they are narrowing that range. some analysts say it's an upbeat sign that ti has been able to maintain the guidance in an uncertain global economy. and u.s. states are remaining fiscally cautious as revenue rises.
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a survey of state budgets shows that revenues will increase 4.1% for the upcoming fiscal year but spending is set to rise by 2.2%. sunofi is applying for u.s. and european approval for its multiple sclerosis treatment, the treatment is given once a year, most ms drugs are administered weekly or even daily. if approved it could be on the market by the end of the year. the nfib is out with its latest small business optimism outlook and steve liesman has data and the guest. steve? >> the nfib small business index falling 0.1% in may to 94.4, and the good news is it held on to the gains which put it at the largest -- the highest level since december of 2007. the bad news being it remains relatively depressed. take a look at what happened with the index creating new jobs, that was positive. plus one at 6%, so all these numbers are relatively.
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capital spending falling one. actually that number is one of the decent ones. increased inventories up a little bit. business expectations still up a little bit. those expecting higher sales and the earnings trends both falling clearly a mixed index but maintaining a high low level. does that make sense to anybody? >> no. >> it rose up to -- >> the high level from the low level? >> it ro tozrose to a high leve since 2007. but let's bring in the president of the national federation of business. does it make any sense to you? maybe you can explain it to becky and andrew since i clearly failed. >> i think you did a good job, steve. good to see you, steve, it's been a while. if you look at the index going through 2007, since 1973, the average is 100. the average index since 2007 is 90, so we're ten points below
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the average for this period. now, it's improved a lot from its bottom of 80 -- you know, the low 80s, but nonetheless, you know, from a historical point of view, you look at the big chart. it's a recession-level reading. business owners are not optimistic about where we'll go so they're not putting their money on the table. they're not willing to take any bets. there's too much uncertainty there. >> bill, we have a chart that shows how good the nfib index is, but it puts in context of other recession recovery. what we see here we've been slowly in fits and starts climbing up from the bottom but we've just about reached the bottom of one of the prior two receptions. what you're looking at, folks, if you start at zero being the end of the prior recession, you can see here that we're just at the level that was the lowest or just about the lowest of the '91 recession and far below the recovery of the 2001 recovery.
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so, bill, i guess there's hope, but it's plodding home, right? >> you know, that apparently is the case. you know, we're just now -- we're kind of in maintenance mode, you know, so contrary to popular opinion or at least some people's opinion, the private sector is not doing well. this is half of the private sector here and they clearly aren't filling to do anything but kind of fix the roof when it's leaking or replace the machine when it actually fails, but there's -- >> bill -- we've got something that shows you're wrong and now you're right. and now you're right. that i was right and now i'm wrong. >> about what? >> about what the most important problems are facing business. what is happening joe and i have a running argument is it regulation or demand. and what the next chart shows, i believe -- >> it's a chart. >> chart shows. look, joe, shart? what this chart shows is that for a while there -- can we --
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let's just focus here, guys. focus. look what happened here, joe. >> something going on. >> what happened is weak sales were indeed the number one problem for business for a very long time and now you can see, joe, the blue line, regulations beginning to rise. >> becky's laughing. >> and that's the most important problem. >> bill, here's my question. we're on scodus watch, a supreme court watch for obama care, if that were to be overturned, would that remove some uncertainty for small businesses in terms of hiring? would you see a tangible difference do you think or does demand have to pick up? >> no, i think demand has to pick up fundamentally. i mean, we won't hire unless we have a reason to hire, but there is so much uncertainty. the cal cue luls of hiring or making an investment means all kind of things. the cost of labor. tax rates. >> hiring someone could be a million dollar liability at this point, couldn't it?
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it is in europe. >> you just have no idea. and we've we've taken a look at the alleged discounts we're going to get, the subsidies and, of course, subsidies can be taken away at any time. but you have to have a dinky little firm to even think you're going to get any kind of meaningful subsidy, we're just waiting to see some of this uncertainty cleared up. we'd like to see what tax rates are so we can compute the risks on investments and we've got owners thinking the economy will weaken over the next six months than get better and we've had a two-month decline in the expectations that sales will go up. hey, i need to save my money, what if europe goes in the tank and spreads over here, i have to be cautious. >> there's one chart that i think is interesting when we look at what planned increases are in wage compensation, it looks like there is -- there are
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some plans to raise salaries and wages out there. speak to that and whether or not it might be a good news for income. there's that -- >> absolute -- >> yeah, go ahead. >> yeah, you got it right. not only do more firms now plan to raise compensation but if you look at the actual reports of compensation hikes, those have been going up. that's the highest we've seen in, you know, like, 40 or 50 months. so, more compensation is being paid. labor markets are tightening up in some parts of the economy so we do have to pay more money to get the talent that we need and so we're seeing that kind of creep into the large economy picture. >> bill, wrap it all up for us real quickly here this index does a good job of predicting the current level of economic growth and the direction of it. what kind of economy is this numberswise and where's it headed right now? >> well, i think the index if you do an empirical thing with the index, then we're pretty much where we ought to be. you ought to get 2% growth. things are improving a little
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bit but not very much and we're not going to see anything until we see a major step-up in spending and hiring, and that's just not going to happen until owners are much more certain about the fact that customers might show up but that's the key. >> and real quick on the unemployment level if you look at this jobs number or the jobs index in the ffib report, where is unemployment and job growth headed. >> unemployment could actually go down a little bit. we had a three-point jump in the reports of hard-to-fill openings. that's always a good indicator of where the unemployment goes, if that goes up, unemployment rate goes down, and we'll continue to hire a few more people, but it will be weak. >> bill, thanks very much. >> thanks, take care. >> you can look at the urban dictionary, wikipedia, online slang dictionary all have it. i'm surprised. i'll tell you a joke when we go to break. >> i've been informed of it. it's hard to present the nfib
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report. >> let's all say it. >> i made a mistake! >> he didn't know. he didn't know. when we come back, donald trump talks europe and the economy and plans for the doral which he officially took over yesterday. look at the futures up 39 points. "squawk" will be right back.
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jpmorgan's jamie dimon testifying before the senate banking committee tomorrow, a big real estate deal closes in miami and energizing republicans in support of mitt romney all topic for trump tuesday, joining us on the "squawk" news line is donald trump, chairman and president of the trump organization. it's great to have you on on "trump tuesday" mr. trump, it wouldn't be "trump tuesday" unless ivanka came on or something. >> that's true. i hear your ratings on "trump tuesday" are absolutely through the roof. i'm so proud of you. >> i heard on the david faraday show that you had the highest ratings everything. i think people are waiting for you to say something. >> david wrote a letter out and it's the highest rating in the history of golf channel. i'm very prowled of that. >> he's a good guy. >> he's good. >> so, i had someone earlier, i think i asked chris whalen, we had the financial crisis so we
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know everything about banks and we watch them very closely now. in the old days jpmorgan could have lost $2 billion whether it's a loan and we do it all the time and we didn't used to knoww anything about it. is it good now that we have congressional hearings and that we're really delving into exactly what was happening? the thing that gets me is that you can conflate what jpmorgan did to taxpayer money and depositors' money when, you know, that happened in the financial crisis but it wasn't involved this time but most people on the street probably think that it was. i think that's a bad place to be. >> well, i have a lot of respect for jamie dimon but he actually played right into the hand of his many enemies. he's got a lot of enemies out there as you know and a lot of that's because he's done well and they haven't done so well and they're jealous and they're angry and they finally see a chance to get him. but rather than treating this as a deal gone bad, he treated it as something that should have never happened and he scolded everybody and fired people and made a big deal out of it. i mean, really, he should have
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treated it much differently. they made money by doing these trades and now they lost money and i think he just should have viewed it as a business transaction and not taken the kind of heat that he's taken. it's really hurt his reputation. it certainly hurt the stock price by billions and billions of dollars. and i think he should have treated this as a deal gone bad as opposed to this catastrophic event. >> although, donald, there's some people who have said, you know, there's a real sense of coming out and taking the knocks and admitting there was a mistake here. and because he had gone so after this report that there was the whale out there and said that, you know, they were crazy, they shouldn't have come out with that, he should have come out and say never mind, here's what happened. >> i think he played into the hands of, you know, a lot of isenemies and, you know, what about all the good deals that he made with the same type of transaction? i mean, they've made a lot of money this way, too, and we didn't talk about it.
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hey, we win some and we lose some and not made such a big deal and quietly fire people. but the fact is that it was, you know, i just think it's been handled very poorly. i think he handled it poorly for himself. >> right. all right. we'll move on. did you see the yesterday? >> they also bought in miami something that's great. >> right. we talked about it. >> they're going over to europe and they're looking around over there. i know you got some golf courses. those are sort of vanity projects for you a lot of times. are you sinking any real money into spain or italy or something? >> yeah, i have 2,000 acres in europe right on the north sea. and one of the things i do have is i've just built a golf course which is getting the ratings, the best ratings that i've ever seen for a golf course actually, and it's -- it was just ranked number eight in the world. it hasn't opened yet and -- >> but i mean buildings and
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multifamilies -- >> i have the right to build 3,000 units on that site. and i have other things in store. europe is a great place to invest, because it is in terrible, terrible trouble. i love investing in this country to be honest with you, but nobody knows what will happen in this country, but i did just buy doral yesterday in all fairness. >> did that close? we were talking about it. >> it was signed 90 days ago and we closed yesterday. it's a great location. just a fantastic place. >> in 90 days we've already all of a sudden all of us are just talking about miami, everybody is talking about this, that all the foreign money is coming in, suddenly miami has been one of the real bright spots and you probably got a pretty good deal even if it was 90 days ago because -- >> well, 90 days -- a lot has happened in miami in 90 days and i think the fact that richard bought and i bought and a lot of people are talking about, like, doral and what richard did, identify think has an impact. but the biggest impact is from
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brazil and venezuela and from argentina, i mean, they're pouring into miami. they like miami. it's got the spanish influence, i think i'm going to have to learn spanish, but it has the big spanish influence and miami is booming. i tell you what, i've never seen something recover a major place recover so quickly as miami. >> donald, i read a report that you're trying to build a film studio in southern florida now? >> yeah, we have a right and we have a very, very big relationship, 800 acres near miami, not in miami, but near miami, and the state wants me to build a major, major film studio. we're thinking about doing it. >> how big would the film studio -- >> well, it would be one of the bigger ones in the country and miami's got a lot of problems including the fact that you're a right-to-work state you're not going to have unions just absolutely decimating you. and we have a lot of advantages there. so, they're very much -- they want me to do it very badly and we've been working on it for quite a while.
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>> what kind of films, donald? >> only big, beautiful, successful, like maybe we bring back the old ones like "gone with the wind." >> i know they are having some problems out in the valley, having some laws and stuff. i always look at you as a money -- you wouldn't go the larry flynt loroute, would you? >> no, no, no, although it's guaranteed money. >> you'd like to. >> that's the sure thing. i can't go that way. >> more paid for that type, and it just seems like a natural. anyway, look -- >> donald, you see the opec news this morning? venezuela wants opec to stop pumping more, overproducing, they are saying, that, because saudi arabia is pumping above the limits it's supposed to be doing to help us out a little bit and venezuela is complaining and right now you're looking at oil prices at about back around $82. >> that's still very high, becky, they should be at $30 if you look at free market. i think saudi arabia is doing
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obama a big favor. look, you have to do be a favor, i have to get elected, you can't do it like you've been doing the last three years driving it up to $150 because that's where it's going and i think saudi arabia is doing obama a big fat favor. i think he asked for the favor and prices are coming down, but also the economy's going bad so maybe it won't help that much. but as soon as -- assuming if obama got elected, you're going to see something with oil like you've never seen before, it will go through the roof. the favor will be repaid many times over. >> where do i want to go? i wanted to go somewhere else with you on all this, too. so, do you know what i at least want to bring up for a second because it's an nbc property is the open because it's my favorite -- >> that's great. >> the masters. and after memorial, don't you think the ratings will be off the charts now? >> i think the ratings will be amazing. tiger, you know, he was up 139% last week because he won the tournament in other words, he was in the hunt. it's amazing. mike davis is doing a fan itsic
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job and tom o'toole, they are doing an amazing job. >> do you remember the last time it was at olympic, it was almost impossible to play that course, wasn't that when retief was out there? he was the only guy that was anywhere near par i think. >> right. it's very tough. it's short but very tight and the greens are unbelievable. we just got the women's u.s. open at trump national so i was very happy about that. >> this is going to be thursday. and unlike the masters i think they show a lot of the tiger, phil, bubba, i mean, everybody. >> they have great threesomes set out initially in all great -- i think the ratings will be off the charts, i do. >> that belmont was so disappointing, although we went out on friday just to check it out. was that not as a horse racing fan, i was crestfallen when that happened, weren't you? >> well, it was a tough one. they could have raced the horse i guess, but it would have been
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probably dangerous so they did the right thing. it certainly took a lot of bloom off the rose, no question about that. >> donald, as always, thank you and appreciate it. >> thank you very much, joe. >> talk to you a little bit later. >> thank you. >> we're done with that. we're done with that. coming that, we'll go under the hood at general motors. we've got a exclusive ceo with dan hackerson, next on "squawk," another interview you can't afford to miss. ttd#: 1-800-345-2550
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el erian is happy about the king. >> stop! >> he's from l.a. he's a mets fans and a jets fan. now he goes out there and -- >> fair weather fan. >> exactly. coming up, michael kors reported. they didn't win when gretzky was there at all. >> i don't think they did. they never won it. >> they didn't. >> but the devils have won a lot of times. >> martin brodeur --
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>> excuse me? >> martin brodeur -- >> look at you. >> -- he said he'll probably come back. >> look at becky about hockey. the sport. >> martin brodeur. i like hockey. >> wow. >> wow. $1.21 a share for kors, and also issued current quarter guidance above street consensus, it will surge today. juniper networks announced a stock buyback of up to a billion dollars in addition to a prior billion dollar program. texas instruments narrowed its second quarter earnings share per out look from 32 to 38. so boring. although the midpoint of the new range -- >> it's hard seeing it as a big victory. >> and einhorn increased their stake in seagate technology. and former vice president dan quayle and his son ben are our special guests all coming up in the next hour.
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if you're just tuning in, you're two hours too late. >> beware of anyone who comes on to your show today or going forward and tells you they think they know what's going on, because they are kidding themselves. >> i don't think it was hedging at all. >> it's preprytary trading. >> right. the question is is jamie dimon going to tell us the whole truth tomorrow because he didn't yet. >> rather than treating this as a deal gone bad, he treated it as something that should have never happened and he scolded everybody and fired people and made a big deal out of it, i mean, really, he should have treated this much differently. they've made money by doing these trades. >> the third hour of "squawk box" starts right after the break. with dedicated support teams at over 500 branches nationwide. so when you call or visit, you can ask for a name you know. because personal service starts with a real person.
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it's go time. across america, we're all committed to team usa. and on small business saturday bothey remind a nations of the benefits of shopping small. on just one day, 100 million of us joined a movement... and main street found its might again. and main street found its fight again. and we, the locals, found delight again. that's the power of all of us. that's the power of all of us. that's the membership effect of american express. [ male announcer ] we began with the rx. ♪ then we turned the page, creating the rx hybrid. ♪ now we've turned the page again with the all-new rx f sport.
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♪ this is the next chapter for the rx. this is the next chapter for lexus. this is the pursuit of perfection. gm stock down nearly 25% in the last year. what will it take to bring investors back to the automaker, chairman and ceo dan ackerson answers the question for shareholders later today, he'll tell us first, though, at 8:30 a.m. eastern. a new plan to help create and retain jobs in america from starbucks. we'll talk to the chairman and ceo howard schultz. and our countdown to father's day continues with a politically successful father
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and son duo, former vice president dan quayle and his son congressman ben quayle will join us. the third hour of "squawk box" starts right now. ♪ ain't no thing papas got a brand-new bag ♪ ♪ enjoy, enjoy it when you're young. welcome back to "squawk box" on cnbc first in business worldwide, i'm joe kernen along with becky quick and andrew ross sorkin. checking u.s. futures after a kind of unexpected day yesterday. what's wrong? wasn't it unexpected? >> it was unexpected. up triple digits and down almost 150 at the end of the day. >> i didn't think it would go down that fast but i thought it was coming. >> it's the first time it's been one day where the market brushed it aside. >> i love the idea that it's a lot of money, great, and you think who is giving them the money. oh, don't worry, italy, and that
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makes no -- that's not going to work. >> italy has to borrow at 6%, they can't loan at 3%. italy is at 22%, they're responsible for 22% of the money. >> right. they don't have it. >> so, that's where you start. >> you also got spain that's now on the hook for the debt and the whole thing is a joke. >> and then cypress. >> if you had money in a spanish bank -- >> don't start this again. are you going to start the run stuff again? >> i won't. i don't have money in the spanish bank but if i did, i wouldn't. >> okay, there you go. you said it again. you're starting it again. let's get to our headlines jpmorgan ceo jamie dimon is prepping to testify before the senate banking committee tomorrow, we've been talking all morning about a front page article in "the journal" that certain directors were made aware in 2010 about bad bets made on forex, but they said they tried to curb the
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investment strategist, and andrew will be live for the dimon hearing. we've got famed financial analyst mike mayo, and sallie krawcheck and senate banking committee ranking member richard shelby tomorrow. also opec ministers are arriving in vienna for meetings. venezuela said it will call for a cutback on overproduction, they call it, the extra production is pushing the group's output above the ceiling they've set of 30 million barrels a day. the saudis, though, they say that they've been pumping more oil to try and offset supply losses from u.s. sanctions on iran and right now you can see that oil prices are down about 57 cents. $82.13 a barrel. there's also new data from the national federation of independent business showing weakness in small business optimism. the charts for nfib show that the optimism index was down 0.1% in may to 94.4, that's well below comparable levels in the 2001 recovery. in other corporate news, general motors is holding its
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annual meeting today. the company's ceo said gm has only succeeded in changing its culture 20% to 25% from what it was before bankruptcy. dan ackerson cautions that you' you're rock rassy remains in his words stifling, he said he has a plan to change it. he'll join phil lebeau, a big piece in "the wall street journal" today about how difficult and you would imagine that it would be -- as insular as gm and ford once was and detroit once was to go in there and try to change that culture with all the management layers and all the vps and everything else, it's very, very difficult, and you owe us a lot of money, so change, flourish, and pay us back is what we really expect them to do. and it is good because it will help detroit. it will help michigan. help the midwest. help the federal government in terms of tax revenue and help
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our manufacturing base, so godspeed, mr. ackerson. >> i'm curious about the union. >> you're curious about the union. >> the roles that unions play in the bureaucracy, how much wiggle room do you really have? >> you saw when they're trying to reform different countries in europe, you see with the union issues how the slightest baby step is almost impossible to reform. >> well, that was not the case with what happened with gm, they took some major steps to move away from some of those things. i wouldn't call it the slightest baby steps. i think they actually set the company up so it can be productive and make some money. >> we'll see. hopefully. that was part of the problem and management in the good times they -- i don't know. >> the management should not have done that along the way, but i think that they've set it up so they can make some money. >> you want to talk berkshire? berkshire hathaway is looking to
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buy rescap, and it's the offer to step in as a preliminary bidder for the mortgage origination and servicing business and a portfolio of loans that are being put up for option. and, well, we have some different things going on. >> i do. >> i think you are introducing the guest. >> it's coming back to me. our next guest has tips on how to prosper, his fund currently ranks in the top 1% of all equity income mutual funds both trailing and year to date. hirsch, just looking at this saga, because europe is something we're talking about all the time, is there one overriding thing that investors can do as we're buffeted with information? is there something to keep in mind when investing when looking at europe? >> yeah, thank you. i believe that, you know,
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europe, nobody knows exactly what will happen there. to me the bigger issue there is the fiscal cliff and the so-called fiscal cliff at the end of this year. and i think that that causes the market to be bound on the upside. there's a big risk premium in the market, but that will not go away until we get the fiscal and tax situations resolved. on the other hand, on the down side we seem to be i think supported by what i think are reasonable -- pretty reasonable valuations on stocks. certainly not excessive and probably cheap. so, i think what you have to do is use volatility in your favor, so when the market steams up and people get excited like they did by the end of the first quarter, then you back away a little bit. and as people get pessimistic and sentiment turns negative like it did in the last couple of weeks, you want to look to the great companies and the dividend raisers and use that as a chance to either buy or add to those. >> what is going to happen with the fiscal cliff in terms of
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your forecast? are you 50/50 that it comes out successfully? are you 90/10, what do you think you're going to do? >> i don't have a forecast, but i have a solution. use the old lbj technique of taking the congressional leaders, sticking them in a room and giving them a lot of coffee and locking the room until they come out with a decision, with a compromise. you need some leadership from the president and you need some leadership from congress. i don't know what's going to happen and that's part of the problem. i would like to see president obama say, yes, the private sector's profits are doing well but they won't start creating jobs until the uncertainty is eliminated. get them in a room. hammer out a compromise and we'll see. right now how can you predict? >> it is -- it is difficult. do you -- i'm asking everyone this question as we -- one of these mondays where we'll hear about obama care. if that were at least one way or the other, whatever the streupr
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court does, will it bring certainty? >> i don't think it brings certainty. i think it throws it more into question. united health care said they'll maintain certain things regardless. >> would it be good if they threw out the entire law? >> i don't know. >> that's not something -- that's not something that's holding back companies from hiring? >> do i think medical care costs in general have been holding back hiring in the last several years? do i think that obama care was probably an attempt to deal with it? i do. is it dealing with it. i don't understand it. i don't know anybody that read the whole thing and understands it. i don't see how anybody can answer that question. >> is the fiscal cliff the biggest uncertainty you are dealing with? liesman had a report earlier in the week about how flush corporations are. >> they are -- yeah, corporations have more cash on the balance sheets than they've had since the 1950s and i love the companies that are using that to raise their dividends
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and so that, you know, that is a good thing. >> but doesn't jive with 8.2% unemployment. >> why would companies go out on a big hiring spree now when they have no idea -- >> because they need employees to satisfy demand. >> productivity has gone up. the demand factor is a problem. the consumer doesn't have the wherewithal or the will to really spend. you know, personal debt as a percentage of household income went to 130% back in 2007. i think the last figure i saw was still 115% versus historical rate of 60%, so, you know, people are still indebted and that's an issue. >> hirsch, we've been trying for a while to figure out what the situation is and how you crack the chicken and egg situation with hiring and demand. >> right. >> i mean, you're not going to get companies to hire until they feel like there's more demand that's there, you won't get more demand until people have jobs. what's the logjam that needs to
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break? >> the definite first step would be to get an early resolution. the market's set up for positive surprises in terms of valuation. if president obama called for a closed door summit meeting with the congressional leaders and they managed to hammer something out, do i think it's likely, i don't. unfortunately i wish he would. i wish they would. then i think that would be the first step in clarifying things. once companies understand what their x taxes are going to be, once individuals understand what their taxes are going to be, i think it will make a big difference. is it going to solve all the problems? no, but i think companies might start hiring again. >> all right. so, then, if i got you correctly, what you're going to be doing is when the market runs up, you lighten up. when it runs down, you buy some dividend growers, is that basically it? >> that's the way it's supposed to work. >> i like it. and it works. and by the way, the dividend raisers have been separating themselves from the pack so, you know, you look at 3m and you look at comcast and disney and
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walmart and these companies have definitely been doing some utilities have been doing a lot better than the overall market. just compare intel to cisco one had a 4% yield and one went up 50% and the other is dormant. it's important. >> i was writing those down. did i hear you say comcast? >> love it. raised their dividend 44% this year. >> all right. >> and promise of more. >> great. >> i forgot. i forgot. sorry, i didn't mean to create a conflict here. >> that wasn't a conflict. we will set up another interview for you next week. we're going to ask you to come back. >> on my way up here, i want to mention what stocks are dividend raisers and that popped into my mind. >> good. the only thing you left out was ge which was 49%. >> they've done a great job and we had an internal debate do we add ge and clearly the perception of investors would
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definitely change if they, in fact, start selling off some of the less transparent financial stuff. >> interesting. >> i thought that's what their plan was. what did you decide? >> what did we decide? >> yeah. >> how can i say now? >> all right. sounds positive. hirsch cohen, thanks, we appreciate it. >> thank you. when we come back, the former head of munis at goldman salks is launching a new investment strategy to take advantage of the municipal credit market. we' he'll join us after this. we're continuing with the dynamic father/son duo, dan quayle and ben quayle will be joining us today. and new help from the jobs front from starbucks, howard schultz will join us at 8:30 a.m. eastern. getting general motors back on track, chairman and ceo can ackerson will answer shareholders' questions later this morning, but he'll anxious
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welcome back to "squawk box" this morning. our next guest says he is -- it is now time to take advantage of
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inefficiency in the municipal credit market joining us is former goldman salks head of municipal trading and trading opportunities co-ceo, good to see you this morning. thank you for being with us. >> thank you very much. >> you just left goldman a couple weeks ago to start this new fund. >> that's correct. >> and you're trying to find inefficiencies in the muni market. what are the inefficiencies you're talking about? >> i think a lot of discussion in the muni market gets wrapped up around credit and, of course, it's interesting and important given how the trajectory of credit has changed so long. for a long time municipals was quiet and there wasn't drama around credit. >> people want tax-free, passive income. >> the audience has gotten very small and basically it's gotten to be concentrated on people who are only interested in demanding tax-exempt income, the problem is that's out of sync with the demand from the issuers. we have over 60,000 issuers in this space and they are, of
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course, cities and counties and states but school districts and water districts, power systems, airports, stadiums, hospitals, a really diverse universe. that's not necessarily well served by a very narrow, passive investment community only focused on tax exemption. it used to be more well served when it was a broader audience, ba banks and hedge funds. they've withdrawn $300 billion from the investment marketplace. >> you said munis used to be the safe place and now when you're talking about all these other kind of areas, the safety, not so safe. >> certainly. you know, a lot of this was contributed to by -- there was an enormous concentrate on triple "a" insurers who homogenized it, it was augmented by active, portfolio managers like banks and insurance companies and hedge funds, they've withdrawn, so that
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community of very active investors has gone away. we now have an enormous difference in kind of diversity. there's a huge number of issuers with many different securities. who are focused on by a very narrow group of mandates. perfectly well meaning and capable fund managers but who are narrow and can only be dealing with passive and indexed to a benchmark and only dealing with tax exempt vehicles and that leaves an enormous marketplace unfocused on. >> what's the greatest opportunity in all of this? if you are watching this and watching you talk, where would you invest in this market, then? >> the way you need to think about it is first you have to think about what your mandate is. you have to define yourself as being patient in capital and very opportunistiopportunistic,d in other marketplaces, in corporate credit markets, and patient capital deployed when things are readily available and not narrowing yourself to just being focused on a passive, tax
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exempt approach. in the municipal market there's all kind of floating rate securities for a variety of reasons, low rates, you know, the fact that some of the floating rate securities have a taxable component of return, the all-in kneeled is not a current yield. you have a very limited audience that attends to that. so, you can buy, for example, battery park city the downtown development in lower manhattan, you can buy securities on that name that are substantial yield premium to current fix rate tax exempt bonds. >> what's the field? >> let's talk about the gap. the gap is what matters because that's where the opportunities is. because you are not buying them and holding them to security. you can buy a gap on something with a five-year investment horizon with about 200 to 300 basis points to pick-up in yield. the return, so much is attributable to taxable dollars that it's shunned by a large part of the marketplace. and so if you don't have a mandate that allows you to be broad and agnostic and only
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focused where opportunity presents itself, you just leave a whole bunch of stuff off the radar. >> it's very complicated stuff, though, when you think about an investor to sit at home and read through the prospectus on each issue and know what falls where and know when to sell it and get out of it. >> exactly why i'm looking forward to this opportunity to found the fundamental investment, to bring to bear a lot of expertise. i've been doing it for 25 years and the team who has, we've got decades of expertise that can quickly assess all the really complicated parts of the market because it is a really complicated market. >> in one of the deals, i forget which one, but we're going to pay for something and we were going for the tax exemption. we actually had someone in the white house that thought it would be a good idea to disallow tax-free interest for rich people who don't need any more money obviously. but government -- people in
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positions of power in government that thought that that would be okay even though states' borrowing costs would go up if it wasn't tax free. how can you launch a company when you don't know -- it wasn't even going to be grandfathered. did you call anyone? did you say, i think it's probably not a good idea? >> i am mixed on this, the marketplace is held by individuals that don't understand the complexity. but when we face a nearly $3 trillion infrastructure gap and when we have the needs of financings being limited only to an audience that cares on tax exemption there's an argument that maybe a mix of subsidies serves well. you know, a good example was the build america bond program. you know, we could talk about whether the subsidy was at the margin efficient or not, but at the end of the day there's no denying its success in drawing in a whole global community of investors to the tune of $185
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billion over two years was meaningful in creating better ewillibryium and balance and broader participation and liquidity and more transparency because it brought in more financial investors because they demanded greater clarity and exposure. unfortunately it's no longer in existence but it's a sample of what we can look to maybe think about augmenting it. >> would you hire meredith whitney? >> i think miss whitney, she had some important points to what she said. you say this all day long, i don't know how to deliver my message particularly well on tv, maybe she does. but the difficult thing is she probably overcommunicated a specific claim, but she did -- she did have a point which was there's a lot of stress around the marketplace. it's a very complicated marketplace and there's a lot of diversity in the issuers. i think that's one of the most important things. the trajectory among issuers is different.
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not every tax base in every school district is declining and some hospitals need to increase the physical plants and some hospitals are reeling from the local economies. it's a really diverse marketplace. it's complicated. >> you are talking about diversification, right? >> i think you need to buy someone who -- i think there's an opportunity here to have somebody who manages capital for you who can be responsive to all these very big evolutions in the marketplace. >> that would be you. that would be you. >> hector, thank you for being here this morning. >> thank you very much. coming up, more of our top stories and a cnbc exclusive on the health of the auto sector gm chairman and ceo dan ackerson will join us in the next half hour. plus, a special father's day week interview with former vice president dan quayle and his son, congressman ben quayle. ♪ [ female announcer ] you're the boss of your life.
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welcome back to "squawk box," everybody. here's some gloomy news to start off your tuesday morning. the average family net worth is shrinking. the fed's reporting after adjusting for inflation 2010 median family net worth was no more than it had been all the way back in 1992. it declined from $126,400 to 2007 to $77,300 in 2010. and the los angeles kings winning their first stanley cup
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in franchise history. why are you making me read this? the kings beating the new jersey devils 6-1 last night in game six. the kings are the first number eight seed to win the cup, blah blah blah. we'll get import price data from may and gm on track to lose well over a billion dollars this year. gm chairman and ceo dan ackerson will tell us how close the automaker is to solving those european problems. he'll join us next after the break. ♪ i want to drive it all night long ♪ s talk about the personal attention tdd# 1-800-345-2550 you and your money deserve. tdd# 1-800-345-2550 at charles schwab, that means taking a close look at you tdd# 1-800-345-2550 as well as your portfolio. tdd# 1-800-345-2550 we ask the right questions, tdd# 1-800-345-2550 then we actually listen to the answers tdd# 1-800-345-2550 before giving you practical ideas you can act on. tdd# 1-800-345-2550 so talk to chuck online, on the phone, tdd# 1-800-345-2550 or come in and pull up a chair.
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[ creaking ] [ male announcer ] trophies and awards lift you up. but they can also hold you back. unless you ask, what's next? [ zapping ] [ clang ] this is the next level of performance. the next level of innovation. the next rx. the all-new f sport. this is the pursuit of perfection.
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welcome back to "squawk box," may import prices out month over month were down 1% exactly as expecexpected. year over year down 0.3, smaller than expected. revisions from last month, month over month was down but now it's unchanged and an actual improvement on the year over year. so productivity in the here and now may keep some from getting jobs, but it is one of the sterling aspects of our vibrant economy at least when it's vibrant, back to you. >> all right, rick. thank you. gm is hosting its annual shareholder meeting in less than
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an hour. the struggling stock price no doubt will be a focus, a big piece in "the journal" today about what executives face at the auto giant which is in stock market terms down 24% in the last year. phil lebeau joins us now with a cnbc exclusive with gm ceo dan ackerson, hey, phil. >> hey, joe, i am joined by dan ackerson an hour before the annual meeting begins and let's talk about what really is the main question a lot of people have when they look at general motors. your stock is down 24%. you and i talked about it repeatedly. are you frustrated and how do you move the stock higher? >> well, first of all, you have both exogenous factors and what will happen in europe, it will get worse before it gets better. i don't know that we've seen the bottom, but another analogy might be we can see the corner. hopefully we've made some
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progression in europe to right size production to demand. but that's been a drag i think on the industry in whole. on a more of a microeconomy perspective, what's going on inside the company, we have to be happy warriors about this. none of us have came here, none of us that are still here, thought this was going to be an easy transformation from old gm to today's gm. and that i mean to be more fleet, faster, more responsive. >> more nimble. >> more nimble, yes. >> a couple of issues here. let's talk first about the treasury's stake in general motors. you've been on the record for some time saying that you would prefer they not have a stake in general motors and it not be a factor. and mitt romney said if i am president we'll dump the stock. and carl levin was quoted as saying hold on a second, let's wait and think about it in terms of getting rid of the shares of general motors. what's your position here?
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how would you like to see the treasury respond? would you like to see the treasury sell all the shares of gm? >> well, i think, first, i think they've been a good shareholder. they've been patient. they let the board and an aggregation of very talented executives advise and counsel the management of the company. and they've not been in the boardroom. i've said that publicly many times. i think the biggest challenge going forward for the u.s. treasury is how do they exit. and there are a myriad of options and alternatives. >> have you talked to them about this? >> not -- not lately. but, you know, i've wondered out loud. i don't think they owe me a response. they own shares just like if you own shares of general motors. you'll sell when you determine the time is appropriate. that being said, i think a shareholder of this magnitude and with the history that's associated with their
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participation in this company, in this industry, which i think has been positive, is they have to articulate a sell strategy such that it doesn't impact the stock disproportionately. so, i don't think you can -- and i don't know what governor romney said or didn't say and really i don't want to get into a political -- >> bottom line you think they should at least come out and say here's our definite strategy instead of saying, well, we're holding on to it until the foreseeable future and it gets up to 33 again. >> that depends on who you are talking about, the current treasury or a romney administration. i don't think romney is able to articulate a strategy. this administration is doing what they should be doing. they're concerned about the taxpayers' good money and what investment is going to be, how long do they have to stay in to reco recoup. i think there are two dimensions to the decisions, though, they invested for all the right reasons. very noble reasons, to save a
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company, to save an industry. now they have to say are they an investor in the traditional sense looking for a return or do they get a return in the social benefit that came with it. >> dan, i know that joe had a question for you back in the studio. joe? >> i do. dan, i guess you commented with "the journal" on this piece, it's an interesting piece. i'm sure you've had a chance to read it. but it has some classic words here. the old gm, the ghost of that bureaucracy, a plodding, unwieldy blob, and then also what roger smith used to call the bureaucracy, the frozen middle. and all these things are hard to -- like turning around an ocean liner, i guess, in a bathtub for you and trying to do it in a short period of time. are you as frustrated as you appear to be in this article? is it an accurate portrayal of what's happening? >> well, i don't know if i'm frustrated.
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i think i'm constructively impatient if there's such a descriptive. look, nobody came to this company and no one's here because they thought it would be easy. this is a company with 103-year history. i might also footnote that last year was the most profitable year in the history of the company. and i think that's a milestone we should not just simply dismiss. so, progress has been made. our margins, our operational efficiency where we want it to be? no. if i said yes, quite frankly, if we're on the board, i'd remove me. we are ever striving for better productivity and better financial results. so, i would say that we've made progress. we need to make more progress, and to build this company not for the next year or two. am i concerned about the stock? yes. but i'm more concerned about where the stock will be in two years, four years, five years,
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not two quarters or three quarters. >> but, dan, labor issues are not -- union issues -- the bankruptcy did help there. we were having a discussion earlier about whether there was still a problem with labor. the real problem at this point is not labor. you would say it is this bureaucracy, this insular remnants of the old gm with all the disparate manufacturing operations and all the so many different executives all vying for, you know, their own turf, is that still the main problem? >> well, i think there are many issues, some outside our control, market defined, and some are within the company. i do not think labor is the issue. at least in the united states. we have issues, labor issues, of right sizing our operation in europe in particular. but here in the united states, we struck a new contract, the uaw, last year, which was really record breaking, if you will, in terms of its new aspect of the
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contract. going forward, though, we do have to -- we have to modernize this company into -- to have better financial controls. that was an issue prior to the bankruptcy, so we have financial accountability. once we are able to essentially get on a common accounting protocol throughout the company on a worldwide basis, then we can maybe transform the organizational structure to parallel the business opportunities before us. right now we're in the midst of a massive financial overhaul on the financial controls going to sap software networks, around the globe. once we do that and we know we can maintain control of the financials which is imperative to the company going forward, then we intend to reorganize along different lines along brands more so than on regions. >> we are probably safe to say we all want gm to succeed. i'm going to buy a gm car. i have a ford.
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but anyway, thank you, dan ackerson, and our own gmc, like a denali or something i think. >> we really appreciate that, joe. >> thank you, phil. coming up, the countdown to father's day continues with former vice president dan quayle and his son, congressman ben quayle. ortho home defense max. with a new continuous spray wand. and a fast acting formula. so you can kill bugs inside, and keep bugs out. guaranteed. ortho home defense max.
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welcome back, everybody. our countdown to father's day continues with the politically successful father/son duo.
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joining us is dan quayle former vice president of the united states and his son congressman ben quayle, welcome to you, thanks for being here. >> thank you. >> mr. vice president, i'd like to start things off with you. we know you've traveled the globe. you are responsible for bringing in a lot of business, and i wondered if we could take this time for you to give us your assessment of the world economy right now. >> i think it's a little fragile obviously, you've been reporting it minute by minute on what's going on in europe. yesterday it's spain. today it's italy. there is a linkage between europe and the european economy and the american economy. china has slowed down a little bit. the fact that china reduced the interest rates for lending a half a percent or a quarter percent is indicative that the economy is relatively slow there. so, i think the world gdp, the growth, it's slow. but we will come back. the united states will come back, particularly if we, you know, have a leader that
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understands the free enterprise system and creation of jobs. but i think the world economy right now is rather fragile. >> how linked are we to both china and europe? do you think we decouple or follow them lower if their economies drop out? >> i don't buy into decoupling. it's a global economy. i've always been for coupling before. i remember many of my european friends before the rise of china would say, oh, well, you know, we're decoupled from the united states, and i would say, oh, really? and we're not decoupled from you. it is a global economy. now, look, the united states is still the largest economy. china will pass us in a few years as -- will become the larger economy. per capita, we're still the wealthiest country in the world. we're americans. we never give up. we love our freedom. we know how to create jobs. we've got the best ingenuity and people in the world, we'll come back and lead the recovery
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eventually. >> congressman quayle, obviously you have a family that is synonymous with politics, but how would you say you are different politically than your father? >> that's a loaded question, becky. >> this is going to be interesting. >> this will be an interesting father's day with that one. you know, i think that we come from different generations. we're facing different challenges right now than he faced when he was in congress. we really are at a fiscal cliff right now. we have about four to five years to be able to really handle our debt and get control of it before the debt controls us. it's a much different situation than it was back in the '70s and the '80s, but i think that we really need to see if we can get a leader, get a new president who can lead us just the way ronald reagan did out of the doldrums of the '70s and if we do that, then we can have a real prosperous future. >> congressman, you said at one point you thought barack obama was the worst president in history, but you stepped back from that a little bit when he agreed with you on the border tunnel prevention act. how would you size up about how
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you feel about him right now? >> well, i was glad that he signed that into law because there's a lot of border tunnel activity that's going on in arizona and in california and elsewhere. but he continues to pursue policies that is bad for our economy, bad for our future, and he's really taken us in a direction that we shouldn't be going. one of the things that has been really troubling is his pure disdain for congress and the role that it plays, not to mention just in terms of how he goes around the senate with recess appointments when the senate was in recess. so, there's a lot of different things, not just -- there's some things we can agree on, but the vast majority of it, you know, we are on opposite ends of the spectrum because we believe that he's taking us in a direction that we don't want to go, that we shouldn't go, that will not lead to prosperity, and that's why i think we need a new leader and new president when it comes to next january. >> vice president, you're in the private equity business, zuberus, i am curious, when you
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think about governor romney, do you think he should embrace private equity more than he has in his campaign and why has private equity done such a lousy job at marketing itself? >> this will be somewhat of an issue in the campaign. look, bill clinton said it best, governor romney had an excellent or sterling career at bain capital, created a lot of jobs there, a lot of good things. look, private equity is associated with wall street. wall street is not popular these days. i don't think any campaign that i've ever been in wall street is popular, but there's a lot of private equity outside of wall street. we happen to be wall street. very prejudiced to what we do as far as saving companies, turning companies around, creating jobs, saving jobs. this is what it's all about. but the election is not going to be about private equity. it's not going to be about bain capital. it's going to be about the economy. it's going to be about are you really better off today than you
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were before barack obama was elected. and i'm sure obama is going to blame george bush. but that's only going to go so far. he's been president. the romney story is a very short story, and it is i'm a job creator. i understand how to create jobs. i can fix it. give me the opportunity to fix the economy. i will do it. notwithstanding bain capital. but you asked the question why is private equity done a poor job in defending itself. they don't need to defend themselves. they've got a good record of creating jobs, but that won't be the issue in the campaign, it will be the economy, not wall street. >> mr. vice president, what was it like going from being a senator overnight to becoming the nominee for vice president? and what should the eventual nominee expect the minute that he accepts that position on the ticket? >> well, full scrutiny. it will take you -- turn you upside down, shake you by the bottom of your ankles to see if anything comes out.
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it's an open door. whatever you did in high school, grade school, college, it's all going to come out. and that's why they have the vetting process. and i know that the romney campaign is vetting their prospective candidates probably right now. the real vetting will be two or three weeks before the campaign -- or before the convention when they narrow it down to probably two or three potential candidates. but i would just say just beware. you may think you know what it's going to be like on the national stage, but you don't. but enjoy it. it's a great opportunity and it's very important for the country. >> vice president quayle and congressman quayle, we want to thank you both for joining us and wish you both a happy father's day. >> thank you very much. >> thank you. >> thank you. all right. coming up, a private sector push for job creation. starbucks chairman and ceo howard schultz will join us to discuss the company's new efforts to create and retain american jobs. how do you know which ones to follow? the equity summary score consolidates the ratings
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welcome back, starbucks trying to help perk up the jobs markets. it begins selling the indivisible collection today to create job for the usa fund. howard shultz the chairman and
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ceo, thank you for being here. we appreciate it very much. i see that citigroup also is putting a million into this thing? >> i years ago we begin a initiative of saying how did -- given that $14 million have been unemployed. we've done the wristband and collected millions to provide money in the form of lo-interest loans to businesses that could not have access to credit. this is different and confide dynamic. we're down to 9 million manufacturing jobs in america. 1979 we had over 30 million. we've asked ourself how can we start making things here in the usa. we found a facility in east liverpool, ohio that used to make many products. this town has been kind of left for dead based on the fact that
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the manufacturing industry there, which really was in the pottery business and kind of set the table for america has been wife out basically because all of its manufacturing is now overseas the indivisible mugs you see are made in the united states. this town, east liverpool is emblematic of hundreds of towns across the country that unfortunately do not have any kind of employment. 25% of its people are living under the poverty line, double-digit unemployment. i think when visiting this facility, i just could not believe i was in america. there's just something wrong. howard, there's a philosophical question for you, which is what should be the role of corporate america today in creating jobs? i ask that in this context, which is shareholder value,
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you're fiduciaries to your shareholder. i assume this is good business for starbucks, but if there wasn't, how would you think about it? >> well, i think it's the right question. i think the rules of engagement in terms of the responsibility for a public company today are somewhat different. that is, i think any company in america that is solely, solely focused on making money and the bottom line is going to i think recognize that there's much more to business. you're not going to be able to attract and retain great people if you don't create a good work environment and the customer is looking for values consistent and compatible with their own. we made a decision to build a new manufacturing facility to roast coffee in augusta, georgia. we could have built that facility offshore at a do you want, but we made the decision to invest back in america. we also think it's good
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business. we've had a record year, record revenue, record profit. i think one of the reasons is our customers recognize we provide health insurance to our people, and we're doing the right thing. howard, at 52 -- i mean, please, you have come back and this company is just as good as it ever was five years ago and there is some question when it was single digits a couple years ago, i mean, the into risas were doing weird stuff or -- i don't know, there were all kinds of reasons for it, but it's so much easier to doing what you're doing because you turned it around. it makes it much easier when it's firing on all cylinders. >> i think you're right. you have to have performance as a tail wind. >> but the profits allow it. profits allow it. >> yes, profits do allow it, but this is very important. i strongly believe that great companies that build an enduring business create the balance
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between profitability and responsibility. at this time, when washington is not doing what's necessary, when the country is basically in a stall because of the ideology, businesses and business leaders need to step up and do more. >> you left the board of groupon recently and illustrated to understand what that was all about. an indictment of the company? >> i'm not -- i've got confidence in groupon. i'm not here to talk about groupon. i want to create jobs for america. >> it's good work, howard, and appreciate you being on to talk about it, howard. 0-345-2550 ttd#: 1-800-345-2550 you know what? ttd#: 1-800-345-2550 you can't create a retirement plan based on ttd#: 1-800-345-2550 a predetermined script. ttd#: 1-800-345-2550 at charles schwab, we actually take the time to listen - ttd#: 1-800-345-2550 to understand you and your goals... ttd#: 1-800-345-2550 together we can find real-life answers for your ttd#: 1-800-345-2550 real-life retirement. ttd#: 1-800-345-2550 talk to chuck ttd#: 1-800-345-2550 and let's write a script based on your life story. ttd#: 1-800-345-2550
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stock of stock of the day, michael kors, well above expectations, 1.21, and also issuing guidance that was more positive than it had been prior to that. as you can see, the stock is going to be sharply higher, up almost 13% on the news. i want to thank becky quick for being here today. >> and andrew. >> a real pleasure. >> i'm in d.c. tomorrow. >> you're selling today? >> i won't tell them what train you're


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