Transcripts For CNBC Squawk Box 20140528

In fiveyear notes and well be watching the price of gold today as well. The precious metal dropping 2 yesterday. That was the worst day in six weeks. You can see right now its trading at 1,264. 70 an ounce. Andrew, over to you. Thank you, becky. Welcome back. We have corporate news, tech news, talking about re code. General electric Ceo Jeff Immelt is in france, meeting with president hollande, also with the countrys economic minister to discuss ges bid for alstom. An official in hollandes office says ge has improved its offer for the french train and turbine maker. The comments could suggest a change. This could be a change for the first time for the french government which until now has been critical of ges bid. We will see where all of that heads. In other european news, this morning, the uks fraud office launched a formal criminal investigation into Glaxo Smithkline amid claims of foreign bribery. The Company Faces claims in china and four other countries. Weve talked about this before. A couple weeks ago, Chinese Police said investigation there found evidence of an elaborate scheme to bribe doctors and hospitals. Well have more from london in a couple minutes. Facebook seeking an eu antitrust review of its 19 billion wh billi billion whatsapp purchase. The deal could help facebook avoid national probes, joe. Whatsapp facebook, did you see Gwyneth Paltrows comments at the re code conference about facebook last night . No. Nobodys paying attention to what Gwyneth Paltrow would be saying at re code except when you think about how facebook started, it started as a whats hot and whats not. People would rate the looks of celebrities it was college kids, what have you and how the internet has grown up. All i want tell you about gowyneth paltrow was that i was listening last week on sirius and cold play, may 5th, Cinco De Mayo had a big concert in new york at the whats the place where everyone plays, the ball room or wherever it is . The beacon. The beacon. I listened to it. Yes. For minutes on minutes. I was i like cold play. This is an admission. Yes. Welcome to the club. Welcome. I listened to like six or seven, maybe eight songs. I was like, these guys are phenomenal. You just like them because for some reason i like him more now that he shook off that to bring you into the full loop tell me. According to some reports yesterday he may be trying to consciously recouple. Sorry. With her . With her. If you focus on the gossip reports, they are saying contemplating this and she may be open to it as well. She is him. Does he write the songs . Yes, he does write the songs. Its all him. They are tight. Good band. I think he might be a genius, a musical genius. Thats probably what she found so attractive. I might trade in my man crush on Henrik Lundqvist for chris whats his name martin. Chris martin. Valeant raised its cash portion by 10. They did. Improving it by 10 . 22 increase, thats a good deal. In the cash part. The total doesnt go up, does it . The new offer is 58. 30, up 10 from the prior offer. It includes a greater value in the noncash portion of the bid. You have to believe in the stock then. Val and is the holding a public investor meeting in new york today. I would have to say, just in reading commentary and listening to commentary, that it kind of shifted back to where allergan has been the company that people say they built that from the ground up where valeant its just a big rollup. Thats what it is. Its a tax deal. And they cut costs as they come in, they cut r d when they come in. If it doesnt go through and allergan stock drops back and ackman makes no money youll have to take back everything you said about it being front running and crooked and its too easy. Maybe its not. He could lose, hed be in the same position as pfizer or Something Like that, where it didnt work. Except he could have sold if he wanted to. I dont think he could. Legally he could. I thought the deal that he struck with them in the deal he struck with valeant he cant. Legally, anyone, this is a larger policy thing, not necessarily about Glaxo Smithkline. Not in this particular deal. Can i ask you a question . You can. The market hit another new high yesterday. I am now asking who has been waiting longer, the people that have been waiting for the correction or the people that have been waiting for the tenyear to go up . The yield. And is it related . I think it is related. I think it is related. We have a new list of clowns in the past month or two. They waited, they waited, they waited, they waited. Okay now. Why . Youre never going to be right about it. Its going to happen when youre saying no. When you finally say you have to let it go. If youre looking as a longtime investor, let it go. In the meantime, nestle you missed my mispronunciation yesterday. I just need to say that now. I will end up someone will say, see . Nestle announcing it is buying the rights of several dermatology products. Dermatology. From valeant from im not making fun of you. Im making fun of the generic bad prompter reader. I really wasnt. Val and the for 1. 4 billion in cash. The swiss food giant looking to boost its skin care business. In other drug news, sanofi and eli lilly pursue cialis overthecounter approval. It has recorded total sales of more than 14 billion since its launch in 2002. If you watch the commercials now, theyre very strange to me. It used to be, you know, there would be two people in an individual hot tub and theyd be gone. It looked like theyd be in the privacy of their own home. Now a guy makes a putt and they put the flag back in and they look at each other and its like where did they go . Next to the bunker . In this rain shelter . I have not seen these ads. Theyre out in public. Im like what are they saying here . Theyre basically saying youre ready any time. You have a particular interest in this topic. No, i dont. The golf course. For you its a plane. They should shoot it in the first class cabin. They look at each other, right . Then you see the occupied thing. Right. I like that. Good idea. Oh, boy. Watch for those, though. Its not just the golf course. Theyre at a mall. Then they look at each other and its like im not going to touch anything anymore in public places. Anywhere. I cant believe you finally eight songs i listened to. You told me to come on. And now i think its finally come around. People like him again. He grew a spine, grew a backbone. What happens if they consciously couple . Its too late for me. Ive said it. This will last forever. Good. Youre stuck and youre in this position. Were going to remember this. A familiar face is on its way back to pimco. That the not him. Down from the mountain top. The bearded version. Long hair. He was going to get his haircut on our air at one point. I forget what happened with the logistics. He looks like a yogi. This is a newly created role for paul. Stability. Bring back familiar faces. Bring back a guy who left, grew his hair down to his waist and went off to a mountain somewhere. What would happen if you were off the air for a while. Id be listening to cold play. Toll brothers says its quarterly profit more than doubled. Revenue rose more than 67 as the nations largest luxury home builder sold more homes at higher prices. Toll brothers stock is up by 1. 25 . Lets get out to california this morning where the code conference is taking place. Jon fortt joins us. He has a look at everything from googles Driverless Cars and the new brand for the pc. Its 3 00 a. M. Here. Good morning. Gwyneth paltrow, im going to say it, she rambled. People found her message important about being more sensitive on the internet but she did ramble. Lets talk about satya nadella, microsoft ceo had his first time in a hot seat in an interview on stage. Comported himself well. He showed off skype translate, it does realtime translation between languages, the head of the Communication Division spoke in english with someone on the other end speaking in german. Satya nadella had this to say about bill gates return to a daytoday role at microsoft. Listen. I think of bills presence, bills sort of push, high standards, is helpful. At the end the day, theres no confusion, i run the place, im the ceo. Im responsible for it and bills helping. And make no mistake, also he wasnt going to divulge too much about operational plans, even about strategic plans but when asked about whether he needs to buy something big, he did say not so much about buying, its about what microsoft itself is going to do. Take a listen to that. I think we have to build something big. If along the way we have to buy things, thats fine but we have to build something big. We build, id say, three big things, and you can say 3 1 2 if you add xbox into it. And its time for us to build the next big thing. Well, a lot of people would agree with him. Sergei brynn took the stage a little later after gwyneth. He was a bit looser. Wore a tshirt and crocs. He talked about Driverless Cars. Before he got to that, he talked about the nsa revelations. He had this to say. The most noted revelations were a huge disappointment to me and obviously to the world as a whole. I think i think from my perspective, if you go back to the cold war when presumably the nsa was spying on a relatively small number of people, you know, soviet, whatever generals and various communist Party Officials and so forth, and as a consequence, protecting us from nuclear annihilation, thats one kind of balance. I think the balance looks different. He notably got kara swisher to put on a pair of google glass, something she said she didnt want them on her face. He also agreed with kara, he could make a good bond villain. The driverless car, this is one google itself has designed. Google had help. Sergey brin explains that. Listen. We worked with partners in the detroit area, germany and california. We used automotive suppliers. This is using car parts that are standard but sometimes wed modified them to our needs. How about the whole body . Yes, weve worked with partners, auto manufacturing firms that have helped us with the body. Unless you live in mountainview, dont expect to see those cars going down the street anytime soon. They pretty much tested them in parking lots up to this point. These things have no Steering Wheels, no pedals. Its kind of like a ski lift experience except its completely enclosed. Brin says theyll be really safe because of the way theyre designed just for people and they even talk about impact scenarios. You wouldnt want to get hit in these. They only go 25 miles per hour, guys. John, stay where you are. I want to bring somebody else into the conversation and get your perspective on more of this as well. Good morning to you as well. I want to talk google cars for just one second if youd indulge me. What i dont understand about this, john jump in as well on this conversation, is this idea that the reason that theyre moving towards these cars without Steering Wheels is that people who actually cars that do have Steering Wheels are less safe and i wonder whether this is a step back or truly a step forward since it doesnt sound like were going to have Driverless Cars in five years the way google had been talking about just several months ago. I think if you look at Driverless Cars, you have to look at the rate in terms of driving in the United States. Arguably were losing tens of thousands of people per year in terms of unsafe driving. Having vehicles that potentially are controlled remotely, have greater controls over them, obviously its anatheciccal to the idea of mobility. Theres an argument to be made for it. The other point to be made here is the fact that google car is the idea behind it, its not individually owned. Its owned by a third party. These are vehicles that are always in operation and from that standpoint, if we look at the individual car, its typically not used, probably 95 of the time. If youre actually looking at capacity utilization, far more efficient from a social standpoint to have these types of vehicles running around rather than have individuals owning their own car. Is this a step forward or step back . It doesnt sound to me like youll see these cars on the road anytime soon. No. I wouldnt say that this is a replacement for the type of car thats just a regular car that has googles technology bolted on to it. I think sergei was talking about this as a matter of convenience. Mentioned an old lady at a bus stop who misses the bus. In the future at some point, she might be able to call one of these cars to pick her up, take her where she wants to go, based on the coordinates plugged into a phone. Maybe google would run this, dispatch or uber. Brin says he expects to contract the dispatch part out to someone else at some point. Also about design, googles able to design this car more tightly because the technology is built in more essentially. Lets flip the conversation over to microsoft for a second. We saw the new ceo of the company at re code for the first time, talking about this new skype program. Ive seen it demo. Were you impressed . Certainly. I was impressed, yes. The fact that you have machine translate 40 languages to each other. Doing it with live speech is a different order of complexity. To the extent that, you no know, microsoft is rolling this out, it wouldnt be a stretch to see them have an app or Something Like that rolled on to windows powered smartphones as well. Maybe 2015, 2016. This is an interesting it indicates that microsoft is doing interesting things in terms of Technology Despite what people say. Is there a way to make the translation go ahead, john. The translation wasnt absolutely perfect. The german speakers in the audience said it was pretty good, okay for casual conversation. You probably couldnt close a business deal using this. And microsoft also said the acoustics, the sound from the microphone is important to making this work. Satya nadella says he expects this to be everywhere the skype app is. It might be limited at first with the sound quality. It seems like its a business product more than a consumer product. I think it has applications in both areas. To the extent they get it more perfect in terms of the translation becomes more suitable to the business market. Right. John, there was a comment apparently satya was asked about nokia, whether this was a good deal and dodged the question. What happened . Well, he was asked actually whether he agreed with the nokia acquisition at the time. When it happened. He said im not going to answer that. There was a bit of a laugh in the room. It seemed obviously he didnt agree with it at the time or he would have said, well, sure, i thought it was a good idea. He went on to explain what the logic behind it was and what his plans for nokia would be. Hes stuck with it now one way or the other. Were people impressed with him or no . I would say people felt like he was kind of in the tim cook mode of not saying that much overall. You know, this is a ceo whos on the public stage for the first time. I think hes in a tough spot, right . He cant blame the previous guy, thats ballmer, the individual share holder in microsoft right now. He cant blame the guy before that. Thats bill gates whos back to a daytoday roll and an iconic figure. He couldnt blame his predecessors. He talked about what he wanted to do with the future. He squirmed a little bit. If youre not a founder and youre on this stage for that amount of time, youre going to end up squirming. Thank you so much for your perspective this morning. Also mr. Ballmer, trying to buy the clippers. Met with mrs. Sterling the past couple days. Well see whether he ends up owning that team. This one congressman got defeated. In texas . Yes. 91. He was the oldest serving in our congress. In two years hes going to rerun. I dont know if hes going to do that. God bless him. Didnt that the give you hope . Yes. You dont need to have hope yet. 91 is the new 81. Which is the new 65. I keep coming down and down and down. I older we get, the more kindly we look at all these ages. Within we come back as andrew mentioned, a group of wellknown investors are said to plan a join the bid for the clippers. Well talk more about that. Hockey news, montreal is still alive in the nhls eastern conference finals. The canadiens beating the new york rangers 74 last night. Still alive. The rangers will host game six tomorrow. The rangers i think were on the cover of sports illustrated, too. Oh, perfect. Theres the kiss of death for you. Mine was earned in korea in 1953. Afghanistan, in 2009. Orbiting the moon in 1971. [ male announcer ] once its earned, usaa Auto Insurance is often handed down from generation to generation. Because it offers a superior level of protection. And because usaas commitment to serve current and former military members and their families is without equal. Begin your legacy. Get an Auto Insurance quote. Usaa. We know what it means to serve. They plan to submit a join the bid for the los angeles clippers. The Group Includes oprah winfrey, Magic Johnson and oracle ceo larry ellison. The bids due by the end of tomorrow. A decision could be made by the end of the week. Mr. Ballmer, also trying to get in on that action. On the topic of sports, check out this video. Rapper 50 cent threw out the first pitch of the mets game and threw the ball almost sideways, at least ten feet wide of the plate. Wow. I cant claim to be a great athlete. I kind of think i could get closer. I kind of think i could get closer. I think hes kidding, isnt he . Hes a strong, athletic guy. Hes a ripped dude. Just because youre ripped doesnt mean youre athletic. I dont think i could get it to the plate. I think i could do it. If i was allowed to lob it i could get it there. If you aim at the glove its going to be short. On the grounded. What happened there . I dont know. Im not going to say anything. I think i have a picture mccauley. Paul . From the mountain picture . Drum roll, please. This is your new chief economist. Been a lot of flux. For stability, theyre bringing back mccauley. We have bob bowles coming up here. Bowlesby. You got it or not. No. While were waiting to are that, lets talk about the u. S. Chamber of commerce. Here it is. I think thats really him, too. We got it. He went from that other shot to that. No word yet on whether hes goi going. De niro had to make a movie about his father, a documentary. Because it was his duty, his responsibility. Why . Because he can. Id make a film about this. Id make one, too. All of us could make a film about our father. Just because he memorizes lines for a living. I think its a good thing. If you could, you would, too. The one funny joke the guy at the white house Correspondents Dinner said, you see how he answers his phone . Ill do it talking about some of the roles hes taken on recently. I appreciate somebody can take this a little less serious. The meet the fockers thing. I remember when they were talking about that. Was it fun doing it . No, no, no. Is that what he said . One of the comedies where it was just no, no, no. All of us have to he had to make this he had to was his responsibility. Im going to start working on this. All of our fathers arent deserving . They are. The difference is he can make a film about his father. He believes that. Hes memorized lines for a living. Because his father produced him. Mean while, back to people who actually work. The u. S. Chamber of commerce is planning an Upcoming Trip to cuba and the Senate Foreign Relations Committee chairman says its a bad idea. Bob menendez argues that cuba isnt an attractive Investment Opportunity because the government jails foreign Business Leaders and breaks International Labor standards. Hes questioning why the chamber would engage with the controlling government that controls almost all of the countrys economic activity. Chamber head, tom donahue will be meeting with entrepreneurs, officials and university students. Business executives will accompany him. Okay. Coming up, upbeat Economic Data giving the bulls another boost to start their holiday shortened week. Well Start Talking about that and the market test just ahead. And then later, the man responsible for running the big 12. Hell talk to us about college athletics. From meal allowances to medical care. First, though, take a look at yesterdays winners and losers. The Performance Review. That corporate trial by fire when every slacker gets his due. And yet, theres someone around the office who hasnt had a Performance Review in a while. Someone whose poor performance is slowing down the entire organization. Im looking at you phone company dsl. Check your speed. See how fast your internet can be. Switch now and add voice and tv for 34. 90. Comcast business built for business. Tdd 18003452550 life inspires your trading. Tdd 18003452550 where others see fads. Tdd 18003452550. You see opportunities. Tdd 18003452550 at schwab, were here to help tdd 18003452550 turn inspiration into action. Tdd 18003452550 we have intuitive platforms tdd 18003452550 to help you discover whats trending. Tdd 18003452550 and seasoned market experts to help sharpen your instincts. Tdd 18003452550 so you can take charge tdd 18003452550 of your trading. Welcome back, everybody. Stocks are on a fourday winning streak with the s p closing at a record high. Joining us right now from the cme, j. J. Kennihan. On set chris rupke. Gentlemen, welcome to both of you. J. J. , explain what you think has been happening in terms of the stock increases we continue to see. I think its a combination of things, becky. The first one being the economic numbers have been not great but good. Combine that with the fact that the fed has had some language thats encourage people that theyre still going to be there to support things, then along with that, you saw a little bit of a rollover in that its a bit of a chase for yield. If you think back four or five years ago, how this whole thing got started with the market increasing so much, if that youre seeing folks going for the lower beta varieties in ge, ciscotype stocks that pay yields between 4. 3 and 4. 25 . When you have a tenyear yield at 2. 5 . They rolled out of the russell, the higher beta or many would say riskier stocks into these stocks that are considered more stalwarts, i guess, to get the yield from it. Thats helping us continue higher. This is interesting. Joe brought this point up in the last half hour. Just the idea that stocks continue to push higher which is befuddled a lot of people but also that the tenyear is still yielding just about 2. 5 . You sound like theres a connection between the two. Stocks are pushing higher because of the tenyear being so low, the yield . I think its taken people by surprise. Keep in mind when we started all this talk about that the fed will taper, the tenyear yield was 2. 87. We think back about six months ago, i think it was taken for granted that well be between 3. 25 and 3. 5 by this time on the tenyear yield. You didnt hear anybody saying i think the tenyear is going back down to 2. 5. Right. I think thats a big part of it. Chris, what do you expect out of the economy . Are things go inge to continue to improve . Things look pretty good from where i sit. The feds own indicator, industrial production, they produce it. It is another measure of output in the economy. Like gdp. Its at an alltime record high. Sometimes i dont like the characterization that the fed does now. In a way theyre jaw boning, right . If they say the economy is strong, then longterm rates move up. And thats what they dont want. But too many things out there are good to suggest theres that much slack in the economy, looking at the Unemployment Rate. Why do we have 2. 5 . It cant be just job owning . No, i know. Theres a couple different stories. You can treat either the slack economy looking at the Unemployment Rate or 2 gdp. Thats not 3 . Or you can look at all these other indicators, retail sales, record highs, private nonfarm payroll jobs, record highs. Durable goods orders yesterday. It came down from record highs. I mean, Business Capital spending is back. So one of the differences gdp isnt 3 something instead of 2 is government spending, maybe a half there. In the late 90s government was adding half a percentage point to gdp. Where do you think the tenyear will be at the end of the year . Higher, higher. Ive been saying that for a long time. Higher. We are surprised it broke below 2. 6. I think the fed and the market the fed is still buying so much of it even though they keep tapering. They are. Maybe that will push up yields a little bit. Dont forget the time they have to hike rates the first time, its coming forward. Its somewhere in the middle of next year. That eventually will push up tenyear treasury yields above 3 . You think it will be above 3 by the end of this year. Certainly, sure. J. J. , what are you doing if youre looking at the stock market and thinking, wow, i missed the move, im waiting for the pull back, the correction. One of the things thats interesting here, becky, one of the ways people can hedge themselves if they are going in is vix. We talk about it a lot when im on, volatility is at such a low level. Its like it went from spring break right into summer vacation. It keeps going away. But with that being said, the last time we were this low, last two times actually, the vix almost double the within the next three weeks. I think thats something we have to keep our on eye overall. Volatility at some point should come back into the market. If you look at risk reward, thats something people can look at right now, how much down side there is to up side. With that, those that are long stocks, were seeing more retail clients going out and using those types of products to hedge their overall positions. Because its so funny to me when i look at this rally. Everybody i talked to who is short is confident in their position. Theyre like this is a great position. Everybody who is long is nervous, even though they made money over the last six months if you will. While the shorts keep losing money. They think they have the greatest position of all time. That is an interesting point. Thank you for joining us and chris, thanks for coming in. Always a pleasure. I think that means its going higher. Yes. Coming up, Edward Snowden speaks out in an nbc news exclusive. With Brian Williams. Its interesting. And a vocal advocate of ncaa reform, the big 12 dmigser joins us to talk about everything from increased power for the most prominent conferences to paying student athletes. First as we head to break, a quick check on the dollar. And a little more cold play. Were hearing from Edward Snowden today in an nbc news exclusive, living in exile in russia. Snowden talked to Brian Williams about what he did for the government, how he describes his job, traning and career right up until he put an end to it. Heres a piece of that conversation. Were you trained as a spy . It seems to me spies probably look a lot more like ed snowden and a lot less than james bond these days. Its no secret that the u. S. Tends to get more and better intelligence out of computers nowadays than they do out of people. I was trained as a spy in sort of the traditional sense of the word, in that i lived and worked undercover overseas, pretending to work in a job that im not and even being assigned a name that was not mine. But i am a technical specialist. I am a technical expert. I dont work with people. I dont recruit agents. What i do is i put systems to work for the United States. And ive done that the aall levels from the bottom on the ground all the way to the top. Now, the government might deny these things, might frame it in certain ways and say you know, hes a lowlevel analyst. But what theyre trying to do is theyre trying to use one position that ive had in a career here or there to distract from the totality of my experience. Which is that ive worked for the Central Intelligence agency undercover, overseas. Ive worked for the National Security agency undercover, overseas and ive worked for the defense Intelligence Agency as a lecturer at the joint counterintelligence training acadmy where i developed sources and methods for keeping our information and people secure in the most hostile and dangerous environments around the world. So when they say im a lowlevel systems administrator that i dont know what im talking about, id say its somewhat misleading. You can watch the entire conversation with Brian Williams with snowden. Thats going to air tonight on nbc at 10 00 eastern time. I am looking forward to it. That was a little weird. I am important, Pay Attention to me. That seemed defensive. I was there developing systems to make sure they didnt fall into the wrong hands. Thanks, edward. You did a hell of a job with that hold your head up proud. Hes a polarizing figure to say the least. But why so you know well, im not low level. What do you want him to say . I want him to say im going to come home and face the music. I dont think hes going to say that. I dont think hes coming home to face the music. He does want to come home. He says that but i dont think he want to face the music. I dont think hes going to face the music. Do you one day hell be pardoned, 25, 30 years from now . I dont think about him. Do you think hell be living in exile for the rest of his life . I dont have an opinion one way or another. A major debate of college athlet athletics, on and off campus, with millions of dollars at stake here. Well talk reform with the big 12 commissioner right after this. At the top of the hour, well check in with byron wien and see how his 2014 forecasts are vying so far. Stay tuned. Squawk box will be right back. She keeps you on your toes. You wouldnt have it any other way. But your erectile dysfunction it could be a question of blood flow. 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Ask your doctor about experiencing cialis for daily use and a free 30tablet trial. You go to the training meal, the last meal, youre not hungry. You cant take food to your room. Why . Why couldnt ipeople, youre no hungry. You cant take the food to your room. Thats all changing. Chicago coach John Calipari on squawk box talking about forms many say are needed. Joining us is the commissioner for the big 12. Good morning, thank you for joining us and were doing some work trying to prepare for what you are going to tell us. Its so daunting to try to level the Playing Field and, you know there is such big money. We see it. We work here at the network. I know what these things work, i dont know the way forward, do you have a blue prevent for the for the way forward . I wish i had a blue print for the way forward. Its a collaborative poempblt a lot of people had their hands on the orrs. Change is required, change in how we manage the concept of Intercollegiate Athletics in higher education. I think it reflects a changing involve nant with student athletes. The world has changed. A lot of aspects office how intercollegiates operates hasnt changed with it. This is long overdue t. High visibility conferences of which im one of the commissioners we are only 65 votes of 350 division 1 members. So its been a little difficult for us to be able to make change. When we talked intercollegiate athletes, were really talking football and basketball. I mean, they basically subsidize everything else, dont they . Well, thats true, but, you know, you apply any form of the labor theory of value, all student athletes work hard. There are certainly athletes that exert themselves at higher levels than football and basketball players. So if you they certainly do have the blessings of an adoreing public and thats where the majority of the revenue is generated. Big money. Big money. Thats true. Then you think of what is your analysis on the low cost colleges versus the high cost colleges. The low cost colleges have all that money to spend on recruitment, right . Its much easier to get a great team going it seems like at a school that is not so great . Well, having just come off of six years at stamford university, i disagree with that. But your point is certainly valid and there are some places where it costs more money to fund the Athletics Program by virtue of the city in which it reside or by virtue of the cost of the university and i think all of us can acknowledge there are expenses that go beyond room, board, books, tuition and fees, which has been the traditional scholarship for many decades and so thats one of the many things were looking at in terms of how do we go about implementing and activating around this new covenant with student athletes . Student athletes. Just that term. Because, right, i mean, the real high level athletes that really i dont know how often of their time is spent on athletics and arent we really sort of just, its idyllic and its a throwback to win one for the gipper and all that stuff and college spirit. But its just not like that. Theyre not they might be sturnts, but theyre really almost professional athletes. Well, pick up a 1927 New York Times and youll see the president s need to get control. The athletes are not real students. There is too much money in it. That is the times, though. They whine and you didnt expect that would have changed over the past. Perhaps a bad example if terms of my choice of newspapers. My point is that the dialogue on it hasnt changed much over the years, but it needs to. And this is about higher education. Only 11st of all student athletes even at the highest playing levels ever have a chance to be drafted into one of the professional leagues and less than. 5 make it to a level where theyre getting a paycheck. So this is really about helping 18yearold adolescents become 22yearold adults and at the same time, get a good education and have an opportunity for an extended and a high quality athletic experience. In reality, what does that reform look like, though . What would you envision . You know, there has been a lot of talk about the cost of attendance, the devil is in the details. At some institutions, the cost of attendance is 5,000 above room, board, books, fees. At other institutions, its 1,500. In a highly competitive environment we have things to work through. I think all of us agree there is more to going to college than just basic educational expenses and so i think through the provision of benefits and through the provision of incidental expens payments that there is an opportunity to improve the quality of life for student athletes. I think there is also the opportunity for Transitional Health care, perhaps the opportunity to come back and access scholarship support, long after you have been in college if you want to complete your degree. A higher level of career counseling, because you know an awful lot of young men and women come in aspirationally thinking about an olympic opportunity or a professional opportunity and all of a sudden they get to the end of their sophomore year and realize that maybe thats not going to happen and all of a sudden they go forward and get a good education. So you know, i think that we really will have lost our way if we begin to view College Athletes as employees. I just den think thats what this is about. It certainly isnt about that in the main because 99 are as the ncaa says correctly, are going pro in something other than their sport. All right. Thank you. We appreciate it. You are welcome. Colorado. Isnt colorado in your thats tough. They used to be. Used to be. Thats right. Were in the pack. Pac 12. You are right. Either place, we have been losing. Coming up, the best ideas for the second half. We will talk about that and technology. Fever, fatigue, cough, or sores. You should not start humira if you have any kind of infection. Ask your gastroenterologist about humira today. Remission is possible. I think we have to build something big. The trust that people have in us is very important to us as a company. We wont survive if people dont trust us. Good morning, everybody. Welcome back to squawk box here on cnbc. Im becky quick along with joe concern nan and andrew ross sorkin. Our guest host is byron weed. The futures after the gains we have seen recently are indicated higher once again, the dow futures look like they will open up another 26andahalf points. S p is up three points t. Nasdaq is up fiveandahalf the ten year, 2. 5 . In our headlines this morning, shares are rising, canadas valiant pharmaceuticals has raised its takeover bid. The cash portion goes up 10 to 58. 30 a share. Valiant is adding a contingent value, right, that says it could be worth up to 25 a share. Allergan shares are up. Only 98 cents. Thats a gain of less than. 6 of a percent. General electric improved its offer, thats according to an official and french president hol landes offices, source say improvement includes a pledge to create 1,000 new french jobs in three years. That follows a meeting between the ceo and shares are also higher up about 1. 14 percent. We are keeping an eye on shares of toll brothers, reporting profits of 8 cents better than the street was expecting. Toll brothers sold more homes at higher prices. Now lets get to the headlines coming out of the code, googles driverless car. The prototype doesnt have a Steering Wheel or brake pedals. Among the goals, taking the responsibility out of the hands of drivers who are too slow or distracted to make decisions of behind the wheel and, you know, john is joining us. At t, verizon, they need to spend more money because they dont text while driving is, i see it. Now i can predict watching the people in front of me. I can predict which people are texting bus theyre so erratic. Its a problem. We need, i think this is the answer because the people are doing too many things while theyre driving now. When you say it like that. You make it seem like google is replacing human beings with robots. I want them to. What happens web they come for you . Plets talk about microsoft ceo. You heard a little bit of what he had to say about the big Things Microsoft has to do. That might have been his clearest crystallized quote from his talk last night. Take a listen at the full. I think we have to build something big. If along the way we have to by things, thats fine. But we have to build something big. We build ill say three big things and you can say threeandahalf if you add xbucs for the it and its time for us to build the next big thing. Something else he said i would say almost provocative. He asked what he wont do as ceo. This is what he said. The one thing that i wont want to do is muddle along on things, with i is anything that we are doing where we are not doing great work. Its not about the Business Metrics that matter in the short run. Is it stuff that we are doing greats work thats got great usage, customers partners, its there in the air and i can feel it, everyone can 2350e8 it and if its the case, well stick with it. But there are things that we are doing that are subscale and that are not great. Then we wont do it. Id say it was almost provocative, then he was pressed about what exactly are you talking about . What if the latest version of the surface doesnt take off . Does that mean you will kill it . Not necessarily. There is Nothing Specific i have in mind to kill it. Everybody in the audience had one thing they would kill if it doesnt go somewhere soon. Sergei britain, of course, talked about the driverless car. They ripped off the Steering Wheel the pedals, everything you dont need in a car if it were gyrospear. Its interesting. He also talked about google glass. Someone asked him about a facial recognition app for glass . Britain said, actually, were not going to do that, listen. Not only have we completed our mission in glass. We actually asked our glass ware developers not to put that in. It certainly would be a handy feature especially at a kaurns like this, its just, you know, we also re there is a lot we have bitten offer with this project as is and i think the facial recognition is an area that society is still formulateing its views on, so there is a hundred other things for to us work on first. Something he said about that that i found interesting. He said he mostly wears glass outside when he is playing with his kids, not so much pence. The last time i saw him at sort of an event like this about a yearandahalf ago pence, he had glass on quite a bit. So i wonder is he even wearing glass . Well see. Back to. You john, one quick question on the cars. Did he talk about the implications for industry, meaning, taxi drivers, other types of cars, anyone who drives a car, it sounds to me eventually uber could be a driverless car that picks you up, takes you on your way, to the extent uber is createing jobs, this could have the opposite effect . He didnt specifically address that impact on people who drive others for a living. He did say he doesnt see googles Driverless Car Technology as completely replacing cars people drive. He expects beth to sort of coexist. Obviously. For a while. Bur well, is anything like that obvious the way google thinks . Maybe they want to take over the world . And i resemble that you dont think im worried about the robots coming after me. I have been talking about that a lot. We play terminator music all the time. Have you read any verner vinge . Let me review his quote. Within 30 years, with will have the technological means to create super human intelligence, shortly thereafter the human era will be ended. So im well aware. Sarah conner chronicles . Sha short lived tv . Don conner, very similar to that. But im fully worried about whether they like us, they dont like us or whether theyre just ambivalent. John, stay with us, joining us from new york. Daniel easternst, Hudson Square principal, he covers google. Brent phil covers microshot, a Senior Analyst at the Software Group ubs. It must be daniel, we seize on the cars, its something we can understand. Thats really not the headline coming out of all this, is it . Well, my first reaction to this, lets say i believe you that this can work and that there is a real opportunity here, id say show me the money because google talks a lot about innovation and how successful that they have been in their moon shot projects, the biggest is android, a Great Success from adoption standpoint. The when we return big invention they monetize the core engine of profits which a stock analyst is still searched. They actually havent been successful in branching out beyond that. I think satya talked about their being successful outside of windows and officer and a little bit of xbox. But not a lot of companies have gone beyond their core competency as far as goggle is talking about. I would actually be happier to see a lot of those products pence of ge. Pence of a separate company the weigh elan musk, an outside company as can you or cannot invest in or even pence apple, which had demonstrated they can enter multiple success areas. They did the computer. They did the iphone. They did itunes, the ipod and the tabloid. Those are all so big that the scc says, actually, you have to report those out. Google doesnt have any of that. There are no separate reportable categories. They havent talked about youtube in three years, how well that is doing. So googled a 21 earnings is probably fairly valued. Apple is going to grow anemically. It probably has the most opportunities, a surprise. Microsoft has do you know great job in management and what is the next big thing . So i dont know. But they have a reasonable track record in doing that. I dont think google does. Yeah. When i heard brent, we got to build something big, yeah, talk is cheap. After windows, can anyone, it seems like the disruptors were all, that i have new names, and the Old Companies just dont have the, i dont know, there is Something Different about the environment there. Are the next big ideas going to come from the old company . We think some of them can. We think many of the new ideas right now are coming from the new breed of Companies Like sell source. Com and vm ware. I think satya mentioned about building the next thing we think around mobility the market share is disappointing it at less than 14 . On the enterprise cloud, there is a big turnt, where they have been transitioning to a subscription commercial modem. That business has been very good. We think there is capabilities pence microsoft to get there. They obviously had the cash position but i think we are early to see what this next big idea is. If i was him, i would continue to push on the strength, which is the Enterprise Commercial business. If you look at the last quarter the component grew 14 . Thats great growth. Its better than any megacap tech company out there in terms of when you look at the organic growth. So clearly, theyre executing. Its just the next big thing is still tough to see. Do you want them to stay, tow, in the consumer space . I think about the surface, for example, they about a week ago came out with this new service which is supposed to be about the tablet and the laptop, is that the future for them or should they get out of that business . I think the strength is, there is parts as a consumer they need to move out of. I dont think they have been very good. So if i was nadela. I would focus again on commercial and then pull back some of the consumer investments in areas where theyre good at. Theyre not good everywhere. I think theyre spending too much money. So we do think they need the pill back. We think theyre going to stick with surface for now. They will obviously stick with mobility, with nokia coming in here. But, yeah, i think this, their real core strength is for the last 20 years has been commercial. You got to stick with what you know. Thats where i would go. Are we at a point. I was in a talk by ben bernanke recently. He said the pace of technological change is going to slow down. Are we at that point now where the revolutionary ideas for the socalled big ideas are going to be fewer and farther between . I think thats exactly right. I think the way i measure that is what i call economic innovation, these are innovations that come out that are so big that you actually are growing earnings on them. You can report them out. So thats why i got to point to apple. They have innovations which have expanded their opportunity, whereas a golg has done the great job of expanding the opportunity for search. Its still that one invention that those guys did when they were at stamford is still the core of the company and to brents point about microsoft, you know, they havent done very well branching out beyond their abilities. You look at a company like ge, which for 100 years entered new product categories that a lot of times theyve invented. They hit a dividend for 100 years. The stock has gone nowhere. I think you are right. I think that level of innovation thats really pushing us isnt there yet. So you sort of appreciate what goggle is trying to do there. But as an investor, i want to see that somewhere else. I want to see it broken out as a vc Company Maybe i dont want to envest in, maybe i do. I think you are right, we are not really seeing that kind of impact on innovation. All right. Gentleman, thanks. See you later. Coming up, from tech to media. We will talk to time warner boss of enfor theization and the deal and what the consumer can expect in the future. Then later. Mr. Levin . Correct. Why one well known analyst is upgrading twitter this morning. He will join us. He will call in about 7 50 eastern time. Welcome back to squawk box, lets take a check on the shares of michael cors, reporting a profit of 78 cents per share, Beat Estimates by 10 cents. Same store sales jumping 26 . ComcastTime Warner Cable deal back in the headlines after the New York Times Editorial Board called for the government to block the merger. Comcast is the Parent Company of universal, joining me is jerry levin. Thanks for being here today. Thank you, becky. I know you said in the past you are if favor of this deal. Why is that . Well, i was really taken by surprise by what the great lady said yesterday. We are living in an era of rapid change, digital disruption, simply by adding Time Warner Cable systems to comcast and then shedding some of the charter does not make Brian Roberts a telecommunications colossas. In fact, we need the redefine the problem of the antitrust laws was to come from the gilded age, what company is a market in . Who is competing with comcast . When you look at collossi, you have to look at apple, amazon, google, microsoft, look at the transformation of at t, verizon and sprint. Look at the companys that are coming over the top with mobile applications and using the internet to deliver content and communications, netflix, hulu or yahoo. There is no such thing as a gate keeper anymore. Its not about gate keeping. Its about platforms and apps. I think its time to wake up and let these companies have a go at innovation. I mean, i understand what you are saying about being surprised. Logic would dictate someone would cake i take the other side of this argument is not very logical or thinking through him honestly, you were surprised that the New York Times came out against us . Im surprised someone could still take that position, but are you not surprised, honestly, that the New York Times took that position, are you . The New York Times is a company like all legacy print companies trying to do most indicate the internet and theyre having issues with it. And the editorial in a 2012 statistic about the ability to receive on smartphones, tablets, whatever i want, wherever i want it, you know, just belies a point of view. I mean, thats what surprised me. Its not surprising the times is anti there is an antimna. I wasnt surprised when i read the editorial, im never surprised. Let me play devils advocate with this, the times articles says 40 of American Homes will be getting high Speed Internet access from comcast if this were to go through. Does that concern you . No, it didnt concern me. Look around, look at young people, see how theyre getting their news, their information, their entertainment, their sports. Its on a mobile device. Thats where the technology is going. So that to quote that statistic doesnt really make sense. The other thing is its time to renovate the antitrust laws and for the government to stop looking at and stepping in when its already too late where the companies are looking at probably are going to get overtaken by the marketplace anyhow. And besides. Where should we be focusing right now . Focusing on not size alone, on what will promote innovation, Global Innovation in this Digital World. I mean, if we dont do that, you will find that a lot of Companies Experimenting in china, in japan, in korea and india are going to be developing in this digital disruptive world, new applications and our own American Companies will have to be answering to the government all the time and comcast has already agreed not to discriminate in favor. I am experienced where the government has come after us when we put time and carner together, time warner and turner together, obviously, when we put aol and time warner together, the government needs to renovate its own thinking. Jerry, i cant speak for the editorial page and the fork times. I want to put that out there before i begin on this. What does the future lock like. So if there were no antitrust laws at all and the fcc didnt have to regulate this particular type of transaction, three, four, five years from now, how Many Companies would there be, what would it look like . Probably there would be a hell oof a lot more companies than there are tonight you would see some innovation in not only content delivery, also in different forms of texting communications. Theyd all be wrapped into one. Youd find that its going to come from place you dont suspect. Jerry, why do you sigh that . The reason i raise the question is, most of the pipes require a huge capex. Huge capital investments. Apps i get, software i get. When it comes to actually transmitting stuff, you need to have a lot of money on the table. Why does there need to be more companies not less . Andrew, you are talking about pipes. The future isnt necessarily in pipes. The future is coming over the top. Its wireless. Of course, its wireless, that, the capital required forthat is nowhere near the capital we spent building this original infrastructure and the development of some form of platform or application coming from the cloud is going to transform the about to deliver new programing. And the idea that we can even control the amount of programing the new generation of texting, you know, is its time to recognize the Digital World has changed everything. Jerry, thank you. We appreciate it. And a programing note. Comcast chairman ceo Brian Roberts. Im putting him in the legend category. Youd remember his name. Brian roberts will be joining squawk on the street street. Making new york state number two in the nation coming up still, hedge fund Chris Pucillo on turning profits. Stay tuned. Squawk box will be right back. That are powered by the moon. She can print amazing things, right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. My mom works at ge. My mom works at ge. You need to see this. Show em the curve. Do you know what this means . The greater the curvature, the bigger the difference. [scifi tractor beam sound]. Sucked me right in. Its beautiful. Gotta admit one thing. Cant beat the view. Introducing the worlds first curved Ultra High Definition Television from samsung. Welcome back to squawk box. We do earnings reports out. Michael cors earning 78 cents a share, 10 cents above what they were expecting. The current fiscal year, same store sales jumped 26 in the quarter compared to a year ago. That stock up 4. 5 . It was not upbet for dsw, it earned 6 cents below what was expected. Revenue falling short. Current year earnings will fall below wall streets outlook. Dsw says its quarter was hurt by bad weather and a headley promotional environment. Sales are down 14. 5 . Mortgage applications fell. Ended may 23rd according to Mortgage Bankers association. Applications for new home and financings, declined. The average rate was 4 poeb 31 the lowest levels since last june. Our next guests made millions, including enron, worldcom and Lehman Brothers, sharing his thoughts on the market is Chris Pucillo, the Asset Management ceo and officer of solas. The fund has 23 annualized returns since inception. Thats pretty good. I assume i cant ask you that question. Thats correct. That is correct. For how long . I cant tell you that. What does that mean . When did you start the firm . 2002. Okay. Help us try to understand, a, you work at the bankruptcy market right now. There arent nearly the same types of bankruptcys we had before. Where do you see opportunity in all of this . Right now we have tsu one of the largest obos. There is lots of moans in the tsu complex. The bank that will get most likely the majority of the equity there. That can be extremely attractive. I think its one of the lower risk bankruptcy plays because of the valuation through the bank debt. So if are you playing at home to the extent you are. Is there a way for you to play there, to participate in this . You could buy tsu bonds, but theyre going to be more of a gamble. Did you do airlines is that a big one for you . Yes. Did you know, did you know it was going to work out as spectacularly as it did . No, no, definitely not. The thing about American Airlines was we were involved in a much smaller way up until the point that the unions sort of blessed the merger. Right. We had been involved in delta and northwest prior to that, years ago. And we were trying to get northwest and delta to merge before northwest came out. The unions didnt want it and that was costly. So once the unions said, they favor it the go ahead, then we started to get involved in a much bigger, a much bicker way. I have a Lehman Brothers question, i know everybody tries to go back and relive five, six years ago. Know whack we know now, looking at that bankruptcy. I know you have been a player in that. Yes. Do you think the company was insolvent . Whew, if things didnt clang for sure, because the bonds it looks now there was actually a lot of value in that company that we didnt present or thought that we could deal with. There is a lot of value. The problem is when a Financial Institution has a liquidity crisis, its lights out. Right. Thats really what happened lehman, they just cant fund themselves. On a shortterm basis definitely. On a longterm liquidation basis, theres lots of things that could happen n. Lemmans case the markets came screaming back, all the real estate they had became much more valuable than it was when they actually went under. All right. Are you on that particular topic . I think the management was not cooperative. If the management had been more realistic about their plight, it could have been savinged, i think. Because the assets were there. But they had to take haircuts they werent willing to take. If they had taken those haircuts, lehman could exist today. They played their hand a little too long. Broad sense of the markets where we are now . Equity markets. You do do play them sometimes . If we do, a lot of the debt we boy turns into equity. We have like American Airlines as an example. So we do have positions. Were comfortable with the equity markets right now. I know a lot of people are kind of calling the top. Bus its at the top. But i think the way things are going with the current, you know, gdp growth, its not a scary place to be. Can you explain whats going on with the ten year . We keep having this conversation about ten year versus where equities are, how related or unrelated that will be. Its definitely a conundrum. I dont know how to explain implt i think part of it is that the fed has taken about 40 billion out of the Purchase Program since december. You know, the markets see that as not meaningful. So the ten years is sort of sticking tight to this area. I think that, you know, with data getting better, postthe polar vortex. Right. We will not see any reason for the other tapering to continue another ten, over the next 10 billion a month for the next two meetings. That will get to us 25 billion. That i will move that between that point of time and the end of the year. So i think its sort of steady as she goes and the markets not reacting negatively. I dont think you commented on this just yet. No, look. There is a three amount of turbulence around the world. If you are somebody in an emerging market, youd be very nervous about your assets there. And you would want to park some of your assets in a safe place. There is no safer place than u. S. Treasuries. Thats why we are looking at these ridiculous yields. There is a tremendous amount of foreign flashlight capital coming into the treasury markets. Also, there are a lot of people who think the market is at the top. They know twoandahalf isnt much of a yield, but its better than losing money. So they pit their. There for a period of time. What do you make of all the mergers and acquisitions. How much are you playing that . It definitely is a part of our portfolio, you know, thesis where we own like i said postbankruptcy equities that we hope get taken out of through americaners and acquisitions. Right. I think corporates have cut a lot of expenses, theyve done a great job. There is not much more to cut. Right. In order for them to prove to their investors they will continue to grow, theyre not going to bailed new factory. They will buy a competitor. Thats what we were talking about yesterday. Thats not the confidence we need for the big investment with corporations for we need them to invest, not keep bogey other companies and rashlg rationalize the list. Mna is a sign of confidence. Theyre getting confident. Its also a lagging indicator. Exactly. Its the beginning or does it mean, you know, im not, maybe in the middle. In the middle. And also, you are seeing a pick up in capital expenditures, you know, for the first time. Right. So that the first time in years. Its late. But. Yeah. So how long does it last from here . If you are in the middle, are you looking at several more years of this . I think we could have several more years of slow growth. Growth below, between 2. 5 and 3 . I dont see proceedoff characterist blow off characteristics here. The multiple. Thats no wage presser. Thats like goldilocks. Riding along, you dont have to worry about it. All right. Chris, thank you for coming in. We appreciate it. A little less worry today. You learned quickly on snowden being at the New York Times now, you just dont say anything now, you have learned, its a possible people are crazy. He is one of the most have you learned, this starts early on, you make one comment, right. You got my trap. You got the pc, New York Times. Heres one person that says i couldnt agree with you more on that position. I think nothing of that coward. Another day says you are pathetic, concern nan, your imitation of snowden, you are a stain. Hold on, so then when i tried to block him, do you know there is check lists now, annoying, spam, all these things you can say, i took all of the above. Go ahead. He does this all the time. Your order on the Hedge Fund Market is getting too crowded. Its definitely a concern. I think that, you know, for the situations that were involved in right now, if its not too crowded, it does get a little kloppy. You know, like the shipping sector, its a big sector we have been involved in. Thats becoming a little more crowded. That just gives an opportunity to move out of one position and put another on as people come in and draw prices up. Crazy. Becky is dancing over here, i dont know few missed. Sorry. Thank you. Its a kind of annoying, a spam account. This account may be uncompromised. This user is abusive. There is not all of the would have. Summer conflict time t. President of stub hub comes to talk about the hottest tickets, including jayz and beyonce. Can you start tomorrow . Tomorrow were booked solid. We close on the house tomorrow. Tomorrow we go live. Its a day full of promise. And often, that day arrives by train. Big day today . Even bigger one tomorrow. Csx. How tomorrow moves. You wouldnt have it she any other way. Our toes. But your erectile dysfunction it could be a question of blood flow. Cialis tadalafil for daily use helps you be Ready Anytime the moments right. You can be more confident in your ability to be ready. 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Memorial day is the unofficial kickoff to the summer concert season and sizzling hot ticket prices for stub hub, the ticket reseller, the hot concert this summer is sir Paul Mccartney with tickets ranging as high as 3,000 or pop rapper royalty, beyonce and jayz, i dont think solange is coming. Id pay to see an elevator ride. Thats why we were playing it. If you leak it, you got to patriot ring on it beyonce. Tickets of up to 2,000 and president of stub hub joins us now with more. What else you got, chris, is cold play going to be around, do you know . How much would that cost me . It really matters, it depends on when they go on sale and how manytorys, how many concerts they do. On stub hub, seller sets the prices, so they can be as high as the numbers you mentioned or much lower. The other thing thats hot right now is obviously the nba and nhl playoffs. Yeah. Thats a sore spot today the nhl playoffs. I know tomorrow night. How much are ranger tickets going for tomorrow fight . Rangers tickets tomorrow night at Madison Square garden starts at 497 that includes all fees, on stub hub, when you see prices listed on the site, the prices are all in, they include all fees including delivery, unlike many of our competitors. Just one more, chris, can you is it inter lastic are we in a rip roaring recession based on or are people this is sort of a, you see your harleydavidsons were a dream buy, they were recession proof. People save up for it. I imagine in stub hub you do well in good times and in bad. What we find prices flow up as the economy gets better. As the economy gets worse, prices come down. So we have seen over the last five years, weve seen the average price of a ticket come down about 25 . That started in 2008, 2009, 2010. The last few years have been more or less flat. We see the impact on overall prices. The other thing that factors is this all in pricing we are doing. When you come to the site. You see the price of the ticket enexclusive of all fees, that makes the tickets appear more expensive than they were previously. The truth is theyre the same price. So on average, were seeing people are spending a little less this year because they see the price up front. When they check out, theyre very happily surprised there are no addon fees. The everio all order size is lower than it was last year. Is there more business strain in terms of buying tickets, is the market share changed versus consumers . We havent seen tamplt we have really on stub hub, we have a mix of both business and consumer buyers. We probably the majority of the sales we do are actually consumer buyers. So i dont think we have seen that change dramatically in the last year or so. Hey, chris, i would guess i are a pretty good gauge of not only who is hot and getting hotter, also, who is dropping off. I wonder if there are any bands you can tell us have dropped off substantially . I think of some of those tween bands, i wonder how one direction is fareing on your site . One direction is still in the top ten for concerts on stub hub, but lady gaga is not. Thats a little bit surprising this year, even though she is touring in generally doing a lot of concerts, shes not in our top ten this year. Chris the model, in fact, anders should probably talk more about this pandora, the way it works, concerts are how people make money at this point, that should be better for you, because its tough, cds, you know. Why do it for him, though . I dont think it changes. Thats where, if you want music, thats where its hot. Probably a lot more supply. Concepts are whats hot in music, right, not is there more supply . Well, there is more supply because more artists are touring as you said, Something Like 60 of an artists venue, of an artists revenue comes from touring. Its usually the majority of the money that an artist makes is from touring from doing concerts. So you will see more and more concerts. Taylor swift has been on concert for three years. Lady go ga has been on tour each of the last three years. That mean there is is more supply. Concerts on stub hub have grown fro 20 of our business to 30 pshs of our business, partially because we have targeted that market clearly and one is with all in surprise i pricing. Concert buyers like all in pricing better. 30 for concerts. Does that men 70 for sports . Its a little less than 70 for sports. 65, 70 for sports. Yeah. Okay. All right, chris. Can i make a plug for chris one second . We den know each other. Chris, you should know, i had a bad experience. This is where i want to go with it. They helped me. No, no, i called up the phone number. I was at a broadway show. I had picked the seat. You couldnt get in the door. I was struggling. They helped. They refunded the money, they did everything right. Chris, thank you. Thank you very much. Thank you for your business. Show tunes. Thats your stub hub experience. That is my experience. I had other stub hubs, this was the one i thought was note worthy. Rangers, rent . I was at a rangers game two weeks ago. Revenlt. I seen rent five times. Im going to you set yourself up. Get ready for the attack. One time opportunity. What im going to buy you some tickets. Who would you like to see . How about those young whipper snappers the Rolling Stones . The Rolling Stones. Absolutely. They sing that crazy rock n roll. He is now a grandfather. I am not even joke. I just seen that. Im not even joking. Look, joe, as youve known for a long time, life is over for me. You know. I mean. You own squawk box. Life begins at 60. Byron. You stay up later than we do, byron. We do. When we come back, now is the time to buy twitter. One analyst making the call saying this is the bottom for the stock. He joins us next. Plus we will head to the code conference with top tech Business Leaders are meeting. Later, a rampup in violence in ukraine, Richard Engel will bring us the latest. Squawk box will be right back. 12k3w4r6r7b8g9s. With the state creating dozens of taxfree zones where businesses pay no taxes for ten years. 12k3w4r6r7b8g9s. [ male announcer ] see if your business qualifies. Does it end after youve expanded your business . . After your companys gone public . And the capitals been invested . Or when your companys bought another . Is it over after youve given back . You never stop achieving. Thats why, at barclays, our ambition is to always realize yours. In a we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Welcome back. Squawk box. Securities has upgraded twitter from neutral to buy and slower media growth. Shares are down 50 yeartodate. Is twitter reaching its bottom . With us now the man calling the bottom here Senior Analyst calling in. You are calling the bottom . Hey, andrew, we are saying the market is expecting smaller user growth. It hayes priced in that expectation. What we are saying the market is giving limit or no credit for the possibility that improvements to the platform willry juv nate growth. We think risk is to the upside. I mean, thats the call on the users. What is your target on the stock now . 43. You know, the other thing i would add is that in addition to the users, we think modernization per user continues to be fastest in the internet. As budgets continue to shift, we are basically taking facebooks for 2013 and applying for twitter for 15, when i do that, we get a higher revenues and earnings estimates as well. The bankers knew exactly what it was worth, didnt they . This was the first time in history. What was the ipo pricing . 26. If you look at what internet has done. Where did it open that day . 38. 38. Yeah. Now it came, obviously, those metrics were pretty good. You can see the froth that was probably representative in all the stocks, i guess social media stocks. You can see it there illustrated. It came down basically to where it was priced, right . Definitely, now you are at a point where there is so much apathy, no one wants to touch it. Few drew a chart of apathy versus quality, this gets you to that upper right quadrant. We leak that. We basically think there is room for both facebook and twitter. Andy, what will they do that changes the game that pushes this up, in terms of operationally . Well, theyre embarking in a lot of improvements platform. It makes it easy for my parents to engage, make it easy to sign on with a mobile device, reducing the times for new users or improving the recommendation engine or even just making the app more aesthetically pleaseing. There is probably seven eight or nine small kind of improvements to the platform that i think, you know, i think are apg happening behind the scenes. Thats it. The other thing is international. Heres one thing i have to say. We got to run, unfortunately. International, a quarter of the revenue and 80 of the usage, thanks, guys. Thank you. We will see you. Are you supposed to be at a harvard reunion an important one . Yeah. You are, why are you blow tag off . Its huge, though. Is that one . I was asked. Well, how do you know that . Because. I just know things. Anyway. We will hit you more on this, byron. We got more to talk about when we come back, including squawk box master Jeremy Siegel. Cnbc is live, a special guests all day long, including comcast chairman and ceo Brian Roberts. In the next half hour, former yahoo member michael wolf. He will be our special guest. Well be right back. Closing out the first half of the year. Squawk master Jeremy Siegel on riding the rally. The first ever conference is in swing. Cofounder of activate talks about the battle for your living room. We grade byrons 2014 prediction, telling you whether he has been right or wrong. The final hour of squawk box begins right now. Snoetsz [ music playing ] 12k3w4r6r7b8g9s [ music playing ] [ music playing ] welcome back to squawk box on cnbc. Im joe kernan. We talked act chris martin in cold play. And we have the rico conference. Gwyneth and chris have nothing to do with each other. The rumors. Hone e i dont know, humpty dumpty. Its hard to put him back together. Is it not . If thats what they want to do. Dick and liz did that. Didnt they get married a couple of times, do you remember . Married, divorced. Married. You smother your sister. Your kind of people. But dick and liz . Yeah. Headlines . We do have headline, valley pharmaceuticals is boosting its bid for adding doctor 10 per share raising it to 5830. The stock portion remains the same. Vallient says could be worth up to 25 per share. People yes the shares as a currency. So now we are adding a major cash component. Toll brothers, the home builder Beat Estimates on the top and bottom lines for the latest quarter. It sold more homes as higher prices. Atlanta fed president Dennis Lockhart says hes not in a rush for the central bank to raise rates. He expects them to recover to a 3 annual growth rate later this year. We can only hope to raise rates sometime in 2013. He says the fed needs to wait until its clear that Economic Growth is sustainable. Rico hosting its first ever code conference in california, bringing together top influencers in media and technology to talk about the impact on our lives an our businesses. Googles headlineing last nights opening event. Among the topics. Sprint talked about the nsa spy scandal. Noted revelations are a huge disappointment to certainly to me and the world as a whole. I think, i think from my perspective, if you go back to the cold war when presumably the nsa was spying on a small number, relatively small number of people, soviet people, whatever, generals, various, you know, communist Party Officials and so forth and as a consequence in theory whats protecting us from total nuclear annilation, i think thats one kind of balance. I think the balance looks really different. Meantime, nadella addressed the future of microsoft in what we calls a postpostpc world. I think we have to build something big. If along the way we have to boy things, thats fine, but we have to build something big. We build i would say three big things, and you can say threeandahalf if you add xbox into it. And its time for us to build the next big thing. Joining us right now is michael wolf, active founder and managing director, a former yahoo builder of mtv networks. John, welcome to both of you. Michael, i was hoping to get your thoughts on saturdayy saturdayya nadela. He talked about a lot of things, also tried to make clear that he is definitely in charge. Even though bill gates is there to offer to help. What do you think about the jobs he has ahead of him and the early steps ahead of him . He was clear that bill gates said he will be spending 40 of his time there. Spat ya made it clear bill gates was there as the findr founder and satya was, in fact the ceo. What was clear was also the fact that they are going to be in the hardware business as well as the Software Business because they need the hardware business in order to be able define new categories. This was all very, it was welcomed by the crowd that was here, because they want to see. Everyone who opts to see microsoft come back strong. So what did you think last night just watching the whole thing . I think that what we saw was an incredibly confident ceo. One that seems like hes bringing an entire product in user orientation of the company that so many people were hoping to see Going Forward and one that a lot of people thought that was missing before. Michael. Its andrew again. Can you speak to the issue about the future of microsoft as an enterprise, business focused organization as opposed to a Consumer Organization and whether you think that they actually changed Strategic Direction . I, some of their most important applications, for example, officer, theyre still the most widely used world wide, despite the fact that there are applications available from google. Nadella talked about their interest in being in search and being importantly staying in the advertising business. So its clear, this is going to be a company thats going to be both. I, it doesnt seem that hes stepping back from the consumer side and it certainly doesnt seem like they will only be focused on enterprise. You were a board member from yahoo. We can call it maybe a complicated relationship with microsoft around search. What do you think will happen to that relationship . Microsoft has taken out the most expensive parts of the search process. Yahoo was very smart in doing this deal because microsoft is doing all of the stuff crawling the web, categorizeing, where yahoo can really personalize on the front end, so i dont know whats going to happen to this relationship. Dont they want out of that deal and build their own search . Those have been. Its not clear. You used to be pence the room. Yeah. I havent been in the room for a while. But there are pros and cons to the relationship and like any of these partnerships, theres going to be a lot of tension and i dont know what will end up happening here. John, let me ask you. We were just listening to a sound byte. By the way, that music playing behind you guys . Do you hear that . We are hearing that. I wanted to make sure it wasnt in my head again. John, lets heard what we heard from sergei brent. He mentioned nsa. He mentioned snowden. How big is that for the entire conference this week . I think its a pretty big topic. We will hear from a number of people who are affected by that. Drew houston from drop box is going to be up today. We expect to hear from tony fidel. Thats a concern that everybodys got in the larger internet space, particularly when you are talking about the cloud and putting Customer Data there and the trust that Companies Need in order to operate globally, something we have seen across both consumers, especially Enterprise Companies as the hit they took internationally once all this news came out. It seemed like a number of governments and companies were concerned, well, is the u. S. Government using a u. S. Trojan horse to try to spy on our governments or citizens. Its weird, though, john, listening to sergei brenna, i understand the notion of the cold war no one wants nuclear aim ination, i understand that. The reason we are using this huge brush is to try to find, you know, in the big data some way of analyzing whether you can see some yemen money moving, Something Like that, that could prevent not nuclear annilation babe i maybe a domestic terror attack. It strikes me as disingenuous. Google would like to use all that information to sell you something or to find out where you are or to do something in a commercial way that they dont want well intentioned Government People going out to try to prevent a terror attack. You cant see the discrepancy there . Its funny you mentioned that. Kara asked sergei about that. He addressed it. He said on the one hand, that is what the government initially set out to do. The calculus has changed. Its not necessarily nuclear annilation we are hearing now and the scope of whats fallen under under surveillance is a lot bigger. He said it might make sense to sort of readdress that. It seems like nobody went back in and sort of redid the balance there. Then as far as google is concerned, he tried to arc they because their customer base, because they need customer trust. They have an incentive to be a lot more up front about the data that theyre checkle. They kind of suggest they police internally. We are all left to make our judgments how effective that will be. Exactly. He also mentioned the wifi street vika controversy and said we are not always perfect, by we strive to be. One ask doing it for money the other for greater security. Hopefully. To feel whats clear is its in googles best interest and all of the companys best interest there is still privacy and trust for consumers. They want the consumers for the web to increase. Trust and privacy are important. John gave us his review of Gwyneth Paltrows surprise appearance. He said she was rambleing. Are you taking her seriously . She obviously runs goop . No. I think she was here as icing on the conference, not necessarily a Serious Business person. Okay. Michael, thank you very much for joining us. We will be hearing from you throughout the show. Thank you, both. When we come back, betterthanexpected reports, more data coming later this week. We will hear from a squawk master Jeremy Siegel. The futures this morning are still indicated higher even after the games we have seen, dow futures up twooe 23andahalf points, squawk box will be right back. Lets talk markets. Joining Us Pennsylvania Jeremy Siegel, president of the Wharton School of the university of pennsylvania. On the set, byron, i am sure you have crossed paths. Every time we hit a new high, jeremy, you kind of like you can wink at us and say, see, here we are again, the first time we have ever been at 1,900 or above on the s p. So far so good. What inning is this . I dont think were in the 9th inning or the big inning. The big news in 2014 is Interest Rates. At the end of december, i guess we would be bet a dime for a dollar that long rates would be 3. 5 . Instead, theyre 2. 5 . This is very, very important. I know some people that put out the surprises, i wont mention any names, that had predicted 4 . Yeah, here we are 2. 5. So you would tie that no correction and a strong stockmarket, they are related. Everyone is waiting for the rates and the market to sell off . Exactly. Exactly. And i think the forces forcing rates down are very widespread. Go way beyond just the fed. We talked about it in some previous sessions, the aging of the population, the derisking of pension funds, people in general wanting not to take risks in the markets. So theyre going to those bonds and believe it or not. We got the deficit pretty much under control, certainly relative to a few years ago. So even with the fed not buying, were not pumping out as many bonds as we did before and people are buying them and that 2. 5 when the yield on the s p 500 is not that much lower. To me, people are saying, where do i want to be in the markets . I think thats a huge force driving stock prices upwards. Jeremy, even if rate rows, when to the 3 or 3. 5, the stockmarket would still be cheap in your opinion, wouldnt it . Yes. Even at these rates, because, you know, a lot of people, we have folks talking about the new neutral t. Fact that the fed forecast the fed hundz funds is way too high Going Forward. Agree with that. The bond market has had justed to the new neutral t. Stockmarket hasnt. Its still selling at the same ratio that weve had for 100 years when Interest Rates were 5, 6, 7 . So even 3. 5 is very low historically in the stockmarket. Jeremy, one thing thats important for your thesis is that the Interest Rates staying low, are you seeing that as a result of positive influences when its really easy to see that as the result of negative influences and i just mean that the growth is still not going to pick up and the Global Growth is still going to be slow and deflation is still a worry in parts of the world. Even here. That would make low Interest Rates a negative. Youd say why is the market so high when its obviously saying the economy is weak. You are right. But, joe. You are afflicted with a hangover of the first quarter. The low inflation is good. The low growth is not good. But what is interesting is that at these levels, we dont really need a lot of corporate Earnings Growth to justify buying stocks because theyre earning 6 on current prices and if they just go up as inflation, theyre going to be a big yield play over that of bonds. So we dont need that much growth. If we get the growth at s p and others expect, much higher, i think thats frosting on the cake for the stockmarket. Doesnt it look like we will get higher growth, almost everything you look at the purchasing manager index survey, promote manufacturing and services, initial unemployment claims, exam expenditures, railcar loadings, bank loans hotel bookings, all of those indicate the second half is going to be much stronger. Much stronger. I think we will get 3 to 3. 5 Going Forward. That will bring yields up. Listen, they will not stay at 2. 5 . But at that Economic Growth we can stand the long rate to go from 2. 5 to 3. 5ened have very attractive markets. If you look at the forecast for the second half of this year, i say, wow, if we could get anywhere near that, the trim to stocks will continue in this yield environment. You are right, we are not staying at 2. 5. With regoing up. Not anywhere near as much as we feared the end of last year. You make a lot of sense, jeremy, you always do. We appreciate it. I know where you live. We picked picked him up when we did the show down there. I know where you live. I dont know why that matters. Thanks, byron will be with us the rest of the show. You know where he lives is what you want to say. Coming up, pro russian separatists trying to seize an airport in ukraine. Ukraines new president vowing to use force to bring stability to the region. We will speak to nbcs chief foreign correspondent. Richard engel will join us and Austin Goolsbee on what investors should be watching. 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Lets head to moscow for an update on ukraine and more, Richard Engel joins us now and for anybody that is watching is casual i think, a casual observer, richard, its so hard to intrempt interpret. The idea that putin says, gee, you elected this guy. I will work with this guy. There is blood shed at the airport. Its hard for us to understand whats happening, how long it will last. Whether it almost seems too quiet. Well, i think it will last a long time according to source, u. S. Intelligence, they certainly believe russia is trying to undermine the new government in ukraine. They recently elected a new president. There are militias on the ground, russia militias that are continuing to do battle with the Ukrainian Government. They took over for the last several days the airport in the east. The interior minister says it has regained control of the airport. Again the morning, shots were heard not far from the airport. So still a fluid situation the russian militants say they lost 100 people in that battle. The new Ukrainian Government says it will keep fighting the russian militants. So going back to your question, what is moscows role, putins role . He says he wants to be a peace maker. He says hes pulled back his troops. He wants peace and quiet. He will work with there new government then pence ukraine, you have these russian militants, well armed, they move quickly and the military get their support from russia. So it seems like an insurgency. When i said how long will it last . I was ageeing with you that the sort of undermining of the new government will last for a long time, hes not finished. I was saying how long are we going to hear he will honor the cult results of the election and pretend to be working diplomatically with the new chocolate guy . In my mind were in the early stages. The chocolate guy . What if you had sold something else, a different product. Luckily he sold progress lat. You think he sold plumbing. We got to go with it. Use it. That was one of the bloodiest days over there. Wasnt it . This doesnt seem like things are quieting down. I think the watch is not quieting down. I think to watch for a tipping point. Russia says it wants to work with the new government, it wants peace and quiet, pull back its troops. But it deserves the right to defend russian nationals. We dont know if that reporteds we heard were about 20. If you see large numbers of russians getting killed pence eastern you crane, by the Ukrainian Government, then you could potentially putin saying, look, i gave peace a chance, its not my fault. I reached out to the new Ukrainian Government. They bit dun on my hand and killed russian nationalists. I had no other choice i would be watching for a bloody tiping point moment. A day, a week. Only sort of incident putin can use morally and otherwise to say he had no choice. What did they want, all of ukraine . No. There is a Different Things they want. Some of them say they injure want more autonomy when you crane. They want more regional rights but when you push most of them long enough. They want the government in kiev, the Ukrainian Government to be topplings. They want that part to come up with an Economic Alliance and maybe even full annexation with russia. They want to be, they say people in moscow live better than we do. They have been a lot of capital. In general, you live well here. This company is seeing relatively speaking disparity since the collapse of the soviet union. Within they watch Russian Television in eastern ukraine, they say we want that, to live like the russians do. Richard, thank you very much. When we come back. We will be talking more of the forbes list of the most powerful women. Its out now. As we head to the break, we will show you testimony hour. Squawk box will be right back. I take prilosec otc each morning for my frequent heartburn. Because you cant beat zero heartburn. Woo hoo [ male announcer ] prilosec otc is the number one doctor recommended frequent heartburn medicine for 8 straight years. One pill each morning. 24 hours. Zero heartburn. We have breaking news, robert steel is joining the firm, becoming the ceo of perella weinberg. That starts july 7th. Joseph perella, legend, a former Morgan Stanley left that firm if 2005. You remember the fight with bill purcell and started this firm. He will continue in an active role as chairman, most recently, he served as the deputy mayor for economic development. He had him on the program a number of times. He was the ceo of wachovia. He oversaw that form and joined the board until 2010 before that, of course, at Goldman Sachs about 30 years and when he left morgan or goldman rather, he was the head of the division. Whether he can take it to the next level we will see, you are seeing so many bo tekes, byron, become Public Companies and much bigger. I wonder whether he will focus more on the asset manage side or building the banking piece, but he can give it a new leg up. We will see what happens there. Also, this morning, forbes is releasing its 2014100 most powerful women on the list. There are a few surprises. Number five down one spot from last year, imf president christine lagarde. Brazilian president rousseff. Mellin the gates and janet yellin at number two, topping the list german chancellor angela merckel. Okay. Lyders of the European Union met tuesday evening after four days of balancing amid pressure to reform the way it is run Austin Goolsbee joins us now on the importance of this vote on the Global Economy and guest host, cohost with us as well. Hes a big fan, austin. He talked about you wondered what you were going to say, its redun davenlt we are all big fans. Byron and i go back. I love byron. Talk about what we set up. Were you a little bit surprised and what do you think it moretemore portend for november the crazy stuff that happened in u. K. And france, are they throwing the bums out or is it a move to the right . I think its a lot of throw the bums out. I think its important. The reason i think its important is not really that its going to alter the right vs. Left, which a lot of people are nervous about. I think its a sign that the europeans are not okay with extended austerity or extended subsidy of other countries, just the whole euro zone operation depends on guys willing inside to stick it out for a long period of time and i dont know now from this election if they really are going to have would you say, it says anything about their questioning just the whole structure of whats caldwell fair capitalism. You think there is still for that . Probably some. The basic problem is we talked about before joe is they got a bunch of companies locked in at the wrong Exchange Rates. Its gruesomely difficult if the Exchange Rate cant move. When we return of the big objections the voters have here is to essentially labor mobility. They dont want people moving into their countries from the other countries. Thats one of the only ways you can do it if you dont have the Exchange Rates. You got to move to where the jobs are essentially, we dont see all these people moving here. I dont see how it will work. Look. The big change was in 2010 when they recognized us a territory was not the answer, that was the most important inflexion point they faced in the last five years. Now they got to lower the value of the euro. That would benefit the continent entirely. The third thing is they need a Banking Union and more fiscal convergence. They havent done the structural things since between they need to do to sustain the European Union on a longterm basis. What are the odds that those things are going to take place . Yeah, pretty low odds. Look, i agree with byreason on most of those points. I would add even if the euro went down, they still have the problem that within the euro zone the Exchange Rate is wrong. So the euro going down will be great for germany, it will still be in a tough spot for greerks italy, spain, a whole bunch of other companies. Pain is coming back pretty well, isnt it . They still got unemployment in the 20 kind of range. So theyre coming back somewhat. But i mean its still pretty grim. Unemployment is a problem. But its a problem everywhere. You know, austin, we are grinding along here, the market likes it. The market likes 2, 2. 25 . Multiples dont seem high. I was going to say do you have anything that will get us up to 3 . I was going to mention, few want to send me questions tore toma pickety. He will be on monday. Oh my goodness, are you serious . They need to put you in the cage, joe. Oh my gosh. What are you going to say . Sfwe. We are doing a thing. Is he staying in the twins room . We will be doing the interview from the house. Everybody will be comeing over monday morning. We will slather ourselves. Piketty will see his house and classify the enemy. All piketty books now, he will classify himself as the enemy. Austin, where do you stand on the book . Whats your opinion . I dont agree with to the issue he raises, if the returns are higher over a long period of time. I kind of en56, roll the tape 100 years, wed have 100 families with a trillion dollars each. Wed have half the country with the same real Living Standards they had and you know kwhaefr in 1899. That would be kind of a grim scenario. So im hoping that is not true. Austin, you saw the ceo report. Even the past 25 years, real income is up 49 and then you look at in the, go globally, you can see how many people have come into the middle class based on capitalism. I 100 agree with you, joe. Ive never disputed that. That itself the main engine we have. I just want that the, i hope that the returns to labor go up and the returns to capital do not remain at some extended basis. We all agree on trying to level the Playing Field and get opportunity even. Then we start getting bogged down if Charter Schools and teachers unions and infrastructure. Government. We all agree on it. We cant agree on how to level the Playing Field. Anyway, austin, you can send me, send me some questions if you want. I need to know how a far left liberal thinks. So send me some request es. I need to send him some defenses. I doubt if you need it. Thanks, austin. Great to see you guys. You didnt know he was going to be on monday. Well talk to you. You have a lot of comments. Coming up, bill murray with sound advice for a future husband. Details after the break. Cinderella boy. Then the boom in Energy Production in the United States is creating both jobs and investment opportunities. The ceo of interveil capital joins us next to talk Growth Opportunities and oil and gas. Squawk box will be right back. Beautiful day in baltimore where most people probably know that geico could save them money on car insurance, right . You see the thing is geico, well, could help them save on boat insurance too. Hey okay. Im ready to come in now. Hello . Im trying my best. Seriously, im. Im serious. Request to come ashore. Geico. Saving people money on more than just car insurance. At easy to use, platform. Nts really appreciate our powerful, no,thank you. We know youre always looking for the best fill price. And walk limit automatically tries to find it for you just set your start and end price. And let it do its thing. Wow, more fan mail. My uncle wanted to say thanks for idea hub. He loves how he can click on it and get specific actionable trade ideas with their probabilities throughout the day. Open an account and get a 150 amazon. Com gift card. Call 18003303136 now. Optionsxpress by charles schwab. Its the glow of opportunities of countless people, every one of us, striving to succeed. Thats what lights cities up for more than 200 years, citis job has been to help empower people and business. Wherever ideas come alive. Wherever you are. The worlds citi. So is now the time to capitalize, the Energy Segment created job opportunities. Interveil is joining us the cofounder and managing partner of interveil capital. Charles, thanks for being with us. Thanks, for having me. So you recently launched your third fund it was oversubscribed. You came in with 5 million. Are investors wanting to get in on this . That is correct. There strategy requires small standards. 500 almost was all we could take. There was demand for much more. Why does it require a smaller fund . Unlike the energy space, e p, power, midstream, it can scale up and require large amounts of capital. Services is a space in which you are investing in small mom and Pop Companies typically with high growth and putting great managers in from the Larger Service companies to help them kind of achieve their next level of growth and if you scale up andlet say you are trying to invest a billion or 2 billion into that space, you are competing against large equity firms, strategyic buyers, its become an attractive space. So we like to buy the raw product, professionalize it, grow and sell to those buyers on the back end. That sounds like Venture Capital investing, does this have a better track record . It does. The returns are much higher at the lower end of the market. Although, i wouldnt characterize it as venture investing, with retypically writing checks of 30 or 40 million for smaller companiesch when we sell, wed be looking to exit at prices from 250 million to as much as a billion dollars on the crest of the company. We heard about in terms of jobs and investing opportunities that these new arenas, particularly in energy can bring on. You bring up the point regulation is the wildcard, its not just federal but state regulation, where do we stand on that front right now . For us, regulation is actually a good thing. The more regulation the more services are required to satisfy them. So you have a deep kind of mixmash regulations from states, even municipalities in some cases are trying to get from on the action. Obviously the federal government. So the regulations are targeting, you know, treatment of water. Theyre methane, a lot of methane concerns, that it sort of leaks with pipe lines, leaks with the well site. Road traffic so you can imagine a place like the bakken shale up in north dakota where they dont have a lot of infrastructure. Trucks are driving out with water for fracks. Theyre taking water away. Because there arent pipelines, managing the extra abnormalities from this extra activity is a big deal. One of the things that concerns me is that there have been transportation accidents. Why dont they build a pipeline to transport all that oil coming out of the rack in the bakken . First of all, they are building pipelines, there is a distinction between a sort of a trunk line the superhighway that might bring the oil out of the play and to oil markets or refineries and the Gathering Systems that are required. So five years from now, there will be much more pipeline capacity, much more dense gathering infrastructure, but in the meantime, truck traffic is sort of the bridge between those two situations. At the beginning of the year, most people thought the price of oil would go down partly because of u. S. Production. But the price of oil is higher than it was at the beginning of the year and i think its going to go higher still because the demand of the world. Is higher good for this new fund of yours . Higher oil prices are good to a points. If prices get too high, then actually its a real break on Economic Growth. But you know its very hard to predict what will happen with oil prices Going Forward. Have you all of this sort of international wildcards, iraq, iran, libya, et cetera. What happens with their production . And in the u. S. We have a pressing concern for the industry, which is the export ban on oil. So we are not allowed to export any crude out of the United States because of a law put in place in 1973 in response to the whole opec crisis. We are almost out of refineing for u. S. Light sweet crude. Thats sort of the Principal Oil we bring out of the ground. I would say in the next 12 months, we will reach our saturation point on refineing capacity. It will have a major downward impact on prices. So the Obama Administration is looking at the issue. There are mixed feelings in congress about overturning the ban. If they dont, it could be a real shock for the industry in 2015. All right. Charles, thank you very much. Its great talking to you today. Thanks, for the time. When we come back, bill murrays advice for a bachelor. [ music playing ] those Little Things still get you. Cialis tadalafil for daily use helps you be Ready Anytime the moment is right. Cialis is also the only daily ed tablet approved to treat symptoms of bph, like needing to go frequently. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. 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You never know what could happen at a bachelor party. Over memorial day weekend a group of guys eating at a steakhouse in charleston, south carolina, when bill was spotted and offered the groom and his buddies some epic life advice. Buy a plane ticket for the two of you to travel all around the world and go to places that are hard to go to and hard to get out. Of. If when you come back to jfk, when you land in jfk, and youre still in love with that person, get married at the airport. He let me read this on, went on to entertain the group and told him bachelor parties are not for the groom, they are for the uncommitted. Hopefully. I always wonder about a groom that totally is allin on the bachelor party. That gets a little bit dicey at times. When we have been at the at t, called the at t the at t pebble beach. You dont have to say the pebble beach part. When at the at t he spent an hour and a half with us after he came on the show, a little embarrassing because i think i remember more of his lines than he did about and. I think you do too. Started thinking all right, yeah. A little scary. This guys a little too many. I dont think weve seen him since then. I dont think so either. Lets get to the new york stock exchange. Cramer has groupies like that too. Im sure. Right, jimbo . Oh, yeah. Exactly. I was walking the other day, in bryant park which is over in summit, you know exactly where it is, right . Uhhuh. Its very quiet and someone got right up in my face and my kids were walking behind me, he went booyah right in my face. We all jumped. I dont know whether he thought i was you or knew you lived message to be passed on. He got this close. After he passed us a couple times and he yelled booyah right in my ear, jim. You know, scared the heck out of all of us. But thank you for coming up with that booyah thing. Were in summit we dont do that stuff, right . In summit were like we go to roots and fiorinas and keep our nose down, people who are parents. Exactly. Thats what i like about it. We have pickty on monday. You have to send me your cerebral musings and the things we need to ask. It should be interesting. He became thats what i mean. The environment that were in right now sort of globally, that 42yearold economist writes a book and Almost Legendary already. Nobody has weighed in on it. No. It is incredible how we had the previous book Michael Lewis. People are reading. You got to give them that. Yeah. I guess we had Michael Lewis and then too big to fail. Right. Andrew. Six years ago. Up there for a couple days. Geithner talking. Yep. University panda. I liked the book. Michael lewis had a great review. He liked the book. Did you see that . Yes, he did. I thought that was very good. Now obviously gretchen didnt like the book because he takes a shot at her. I wish she disclosed that when she wrote her piece. What . In her piece. We have to go again. Thanks. See you in a couple minutes. Coming up, how byron 2014 predictions have fared. F faired. Far. Hes a fair guy. Almost at the halfway mark. A look back at what he said and where the markets stand and make sure you keep it locked on cnbc, coming up on squawk on the street, comcast chairman and ceo Brian Roberts live from the code conference in california. That you dont want to miss. Much more from the west coast in just a bit. In todays market, a lot can happen in a second. With fidelitys guaranteed onesecond trade execution, we route your order to up to 75 Market Centers to look for the best possible price, maybe even better than you expected. Its all part of our goal to execute your trade in one second. Im derrick chan of fidelity investments. Our onesecond trade execution is one more innovative reason serious investors are choosing fidelity. 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Lets get back to our byron and get an update on his surprises for 2014. Heres what you said, byron. You said, we experienced a dekeynesian market with the best and worst of times. The worst as geopolitical problems coupled with ufor rick extremes lead to a sharp correction of more than 10 . The best follows with a move to new highs as the s p 500 approaches a 20 total return by the end of the year. Sir. Well, we had a difficult first half. We didnt go down 10 but went down 6. But we didnt do anything for first half to speak of. Were up 4 now. I think we can certainly be up more than 10, maybe 15, and maybe even 20. The important thing is, i still think the second half is going to be a lot better. Let me give you the next one then. The u. S. Economy breaking out of its doldrums, growth exceeding 3 you say and the Unemployment Rate moves towards 6 . Fed tapering proves to be a nonevent. I definitely am adhering to that. The Second Quarter will be much stronger and third and fourth better yet. But not a 4 ten year. Not a 4 ten year. Changing that. Im giving you credit on the first one. Didnt go ten but if its crappy may be better in the second half. Couple more. Chinas third policies to rebalance the economy toward the consumer and away from dependence on investment spending slows the growth rate to 6 in 2014. Can you theyre not rebalancing but the growth is slowing. Probably is 6. Would you like to youre sticking by it. Sticking by it. And then you i dont know what theyll report but 6 is what theyll deliver. Exactly. You say in spite of increased u. S. Production the price of west texas intermediate crude exceeds 110. Demand from developing economies continue to outweigh conservation and reduce conservation in the developed world. Weve got from 98 to 104, on our way to 110. Not bad sir. Paul mccauley is going back to head pimco. Chief economist. I may come i may take the way he looked and adopt it as my own. I can either do that or grow your hair a little bit. I think i want to go all the way. Do we have that . Maybe we dont. Had me with looked like there he is. Hes the man. Thanks for coming in today. Thank you. That does it for us today. Join us tomorrow. Time for squawk on the street. Good morning and welcome to squawk on the street. Im david faber with jim cramer. We are live from the new york stock exchange. Carl kinquintanilla is in california at the inaugural code conference where heavy hitters in technology and media are making news. Hes going to tell us more in just a moment. A look at the futures this morning. You can see not much to speak of in terms of where we will hope or what the day will look like. 10year note yield, around 2. 5, excuse me, 2. 4