Transcripts For CNBC Squawk Box 20140611 : vimarsana.com

Multibillion dollar mortgage settlement deal has reportedly reached an impassion. The New York Times says the talks stalled after bank of americas latest offer of more than 12 billion fell short of what prosecutors were demanding. Apparently it fell far short, too. 12 billion isnt enough, i dont know what it would take to settle this. Take a look at that stock, down by 8 cents. In housing news, mortgage politics rising by more than 10 on the latest week. There was an increase in purchase and refinancing applications. Joe . Joining us now to talk more about House Majority leader eric cantors surprising primary defeat is cnbcs chief washington correspondent john harwood. There you are my pren. I could approach this from about ten different angles. Everybody in washington is. The establishment gop seemed to reasserting itself in a lot of different places. Obviously it couldnt do so in this part of virginia. A lot of people were talking about immigration, and that might have been his fatal flaw in this case. Romney thought he might win the presidency but didnt cantor think he was ahead or his people think he was ahead by 30 points or something . Yes. There are very few times, joe, when people are absolutely stunned by a political result. This is one of those times. Eric cantor, though everybody knew he had a primary challenge and they were making some noise with that challenge, especially people opposed to Immigration Reform, were pouring an unusual amount of attention on eric cantors challenger. Nobody thought he was going to actually lose. 5 million he had a conservative reputation. Last night when the numbers started coming in and people said, wait a minute, 60 person runs in, eric cantor is down by ten points, is that going to change . As it solidified in the night, you had shock waves going around washington. People are trying to figure out what it means. Theres no singular explanation. You had a lot of back and forth, one of denny hastert, the former House Speaker, strategist said late last night, this wasnt about immigration. This is about eric cantor not paying attention to his district. I thought of something else, too. Do you remember when cantor got a part of the gop to go around to others with obamacare, they said it wasnt because we endorsed obamacare, we just let something happen. Was it medicaid . It was something. The right got all they were furious with cantor for that, too. What im going to be talking about, i know im going to get a lot of pushback, the left is going to say this is great news, it shows once again, that well have a who was that crazy christine odonnell. We had heard, the one out in nevada. Todd aiken, richard murdoch, all those people. Theyre going to say this is all good because it splits the republicans. But i wonder whether it just shows, you know, that maybe theres just a general mood in the country, one, against people that are already there and two, against any move further left in a lot of different areas. Remember the circumstances, joe. This is one house district. Youre talking about low turnout primary situations. This is a warning what was the turnout . People dont think they need to vote in primaries. It was lower than normal. Its not about how low it was relative to normal because normal is very low in this country. Were talking about one in five people who are eligible to vote in primaries. Eric cantor got 28,000 votes. Dave brat got 30,000 votes in a district of 750,000 people. Now the tea party is alive. You take nothing away . Im sorry, what did you say, andrew. To the extent, some people said the tea party was dead. Some people were saying the tea party is alive and well. Which is it . Or can you take nothing away from this . Its not one or the other. The tea party is diminished. Look, they didnt beat mitch mcconnell. They didnt beat Lindsey Graham last night. If you had asked people at the beginning of the year to make a bet, whos more likely to lose a primary challenge, eric cantor or richmond, virginia or Lindsey Graham in South Carolina, literally everyone would have bet Lindsey Graham. And Lindsey Graham ended up winning. Whats the takeaway . Whats that. To the extent is there a larger takeaway for the rest of the country . The takeaway what does this mean . The Republican Party is an intensely con se lly conservati. He had talk radio people behind him. He had an issue on immigration. We dont know how potent that was as a driving force. But when you have conditions line up in a certain way, they can still knock off members of the establishment. That doesnt mean theyre going to in most cases and they didnt in most cases so far this year but theyre not dead. By the way, one thing to keep in mind, everybody who watches our network, eric cantor was a wall street conservative. He had tremendous financial backing from blackstone, Goldman Sachs, from people who care about the financial machinery of this country. And he got beat by an economics professor. John, but that is also, even among tea party people, being cozy with wall street is not thats not a positive for a lot of tea party viewers. You are exactly right. I want to make one point. Im going to show this once in a while. We had extra time one day. I asked him about whether the Republican Party this was like a year ago, over a year ago is the Republican Party going to be behind on every social issue like gay marriage . Are you going to be behind the curve on this . He didnt move to the center on this. He stayed and appeased conservatives. He said i think both sides ought to be able to decide whether were actually going to show tape. If someone thinks that people shouldnt get married, that should be their right. Im like, eric, no one is asking you to marry a man. I said that to him and he laughed. He toed the line with the partys base on gay marriage and still got thrown out by the base. He did. Eric cantor got a lot of flack, one of the things that drove the energy of those who wanted to knock him off was him embracing the cause of dreamers in the immigration debate, saying maybe we can do we can provide legal stall us to some of those children who serve in the military and have other special circumstances. And he got a lot of flack from the absolutists who say that we cant have anything thats max of amnesty. Andrew asked about the takeaway. Whatever this says about the status of the tea party, the result of this is going to be as one republican strategist told me last night, no house member is doing goigoing to take any p risks this year or the next couple of years. Nothing substantial will advance in the house. The takeaway from the white house or others, this freezes legislative activity. Youre not going to get tax reform. Youre not going to get Immigration Reform. You probably werent going to get those things anyway. This pretty much locks those things down. Let me ask one more question about what does it mean in 2016 . What does it mean for jeb bush and Chris Christie . Jeb bush had an open take on immigration and has taken some flack already. Maybe to add to what becky is saying, maybe texas isnt that far from virginia. Maybe ted cruz plays in texas at this point, he might play in that county in virginia, too. I think all bets are off on all this stuff now. On beckys question its the same question. Jeb bush, last night you had one of the conservative voices who was pushing the antiamnesty line saying i hope this dissuades keeps jeb bush out of the republican primary. I think that is something that theres a potential for him to look at this party and say this is not the party i want to run in. Thats bad news for republicans. Jeb bush is the one whos most likely to be able to compete. Even though hes getting 2 in the straw polls in texas and cruz is getting 25. It was basically background levels. Thats just texas. I understand that. I mean, general elections are a whole different animal. I want to bring up one other issue. There was an issue on the table last night that he said was relevant. I dont know because i wasnt covering that race. He said the fact that eric cantor is jewish played a role in this conservative district. They dont like jewish people . Well, in certain parts of the country, that could be a negative, yes. Theres jewish democrats, right . Hes a jewish republican. Right. Thats interesting. So theres antisemitism that hes suggesting played out . How did he get elected the last six times. The district when it was redrawn got more rural, culturally conservative. In a circumstance like that, the fact that eric cantor is jewish could have hurt him. Wow. Theyre running that on the front page of the Huffington Post this morning. Wow. That sentiment, only jewish republican in congress. I saw the Huffington Post was making fun of msnbc and saying Rachel Maddows in big trouble because jon stewart got a much Higher Credibility rating. Msnbc was 5 and fox was like 20 or something. The Huffington Post is laughing at msnbc. Theyre the msnbcs equivalent on the web. I wouldnt laugh too hard at that. Who did you say was making those charges . Im sorry. I didnt catch the beginning. You probably heard of charlie cook, the political analyst. He has a newsletter called the Cook Political Report an authoritative source on house races in particular. And Dave Wasserman said last night he thought that was the excuse the expression the elephant in the room and the people needed to recognize that could have been a factor. Okay. John, thank you. We will see you again in the next hour. You bet. We have a bit of Corporate News to get to this morning as well. Apple and starbucks are under investigation by the European Union, the European Commission looking into whether tax authorities in ireland, new zealand and luxembourg complied with rules. Irelands finance department has already come out with a statement saying it didnt give apple any special treatment. Apple also says it received no special treatment in ireland as well. Target holding its Shareholder Meeting today, that gathering coming in the wake of the retailers data breach. The latest target announced that gm executive brad majaranini, this is part of the companys efforts to tighten controls after it was the victim of a major cyberattack in december. There goes your smooth anchor read. Target is of course not alone in dealing with Security Issues. Pf changs china bistro investigating claims of a breach involving credit and debt cards, stolen from its restaurants. This is like a weekly occurrence at this point. Im being realistic. I dont need a mallbased dont you have your own Chinese Restaurant . We do. I dont think theres a p. F. Changs in new york. I heard it in there, we do have them in new york. I hear you have the real authentic chinese place. I know what youre saying, out here in jersey, were all going to p. F. Changs saying we all eat chinese today. Mexican, you have rosa mexicana. Im out here going to taco bell. Theres rosa mexicanas out here, too. Speak for yourself. Im implying that. Have you ever eaten at a p. F. Changs . I dont prejudge. Have you ever eaten at p. F. Chang . I have, actually, in denver or utah. A flyover state, you were stuck, looking around, what am i going to do . Pretty much. No. Whats going on with opec . Do they let toddlers and babies in p. F. Changs . That would be a deal breaker for you, too. We made a shot yesterday of the mail carriers carrying the babies and we never used it. We have to keep working on this. Keep using it. I dont know if we still have it. Probably. Do you think we do . Probably. Im not winning this one. I talked to a number of people. Its kind of anti baby . Antibaby, antiwomen. If you send them back in coach, its anticoach people. Am i right . Its 1 . Really . Just between you and me. Okay, connie, thank you. Just between you and me. In the meantime, let me tell you, there is something happening in vienna today. Opecs leaders are meeting there. Thats where we find steve sedgwick. He jones us with tjoins with th. Steve . A lot of subtle changes going on. Yes, weve had a couple of years after stable prices. Opec has enjoyed 108 a barrel for its oil the last two years. The pressures we came into this year, thinking about the downshade, the impact of shale and the fact that there was going to be more oil coming back on the table, those subtle changes mean were worried about the upside rather than the downside. Weve stayed where we are, stubbornly above 100 a barrel. The iraqis, iranians, the libyans failing to produce the oil they said they were going to produce, a lot of analysts are worried about a breakout above 110 an a barrel. There has been an outbreak in mosul. I spoke to see if this is going to have impact. The south is very safe. Theres no citizen in this area. The accident only in the north. And the government today starting to take a very, very strong action. So there are no threats to supply, which is circa 3. 6 Million Barrels a day, no threat to current supply and exports from iraq . No, no, no, absolutely. But people are beginning to worry. The call on opec for the second half of the year will be above that official level of 30 Million Barrels a day. We all know they like to cheat on the production levels. Its saudi who is the swing producer as well. If these countries such as iran, iraq, libya, nigeria and others cant produce the oil they promised theyre going to produce as well. Saudi which has been producing 9. 5, 10 Million Barrels a day ma i have to go up as high as 11 Million Barrels. They can produce 12. 5 Million Barrels if they need to. The problem is Spare Capacity as well. Its limiting the amount of spare in the system. Its that Spare Capacity thats in the past sent the price higher. The pivot, everyone is looking at this, is slightly above where were trading on brent at the moment. Expect no change in the official level. But the subtle subtext is interesting for the producers. I spoke to the oil minister of nigeria. She said we used to export 40 of our ill export oil exports d states. Because of shale, we are exrt positiving nothing now. Shell is having an effect but it may not be enough to stop prices going higher in the second half of the year if indeed these guys dont come back with the kind of production they promised but havent delivered. Back to you. Coming up, this mornings executive edge, including protests under and against uber. And then later, Lloyd Blankfein will join us during the 8 00 hour, the chairman and ceo of Goldman Sachs. A lot more squawk box coming right up. Fame, lets him loose, hard to swallow fame, puts you there where things are hollow the evolution of luxury continues. The next generation 2015 escalade. Fame we stathat the kid onhe thought the back of the bus might have a song that he has in his head but he just cant get out. With the technology of cloud, we change all that. I can sing something into my device. Up to the cloud it goes. Back down it comes sounding better. We break down the walls of creation, and we give music creation for the masses. Welcome back to xb can be this morning. It is time for the executive edge. Taxis in many european cities have planned a strike for today. Theyre protesting against governments that are allowing companies such as uber to operate. How do you feel about that . Anybody . You guys arent uber its no surprise. I cant believe this doesnt happen more frequently and more often. You have heavily regulated Industries Like cabs who are going up against people who are completely unregulated stepping into it. There has to be a clash. Im surprised you dont see these protests more often. Bizarrely, medallion prices have gone up. Whats so strange about this, in a free market, you would think the medalli daliaal medallio should have come down. The prices have maintained if not gone up. They will fight back. This whole cab thing, if you try and get a cab a lot of times in new york if its raining or something, if youre youre at Madison Square garden, you cant get them. These medallions, theres a lot of people who would love to be cab drivers to satisfy the demand. Same with airbnb. The hotel people dont want that the happening either. Its illegal in new york to rent it out. The states will get much more involved as are the local yunus pa municipalities. Its a big source of income, taxes. Taxes, too. Theyre enabled by local governments. In paris now, which are where some of the protests will take place, you cant get an uber that they have literally made the technology so you cant get the car to come for 15 minutes. If you want to get a car immediately, thats a taxi. If you want to get an uber or some other kind of limousine, it will come up 15 minutes later. They made uber set up that technology . Thats what ive been told. The only reason you use it i use it as an arbitrage between the taxi. Their antitrust is based on not losing jobs. Everything about europe is not about new business, its making sure you dont lose or disrupt any of the jobs in europe. Thats not how to run a place. I think it will have the same issues here in the United States, in new york city. I know i can get you to agree with this. Auto dealers, entrenched auto dealers. I think theres a time and place for them. I agree with that. I know you do. Lets get your views on this story. Amazon now has stopped preorders of upcoming time warner home video titles. Those include the lego movie. The New York Times reports the Company Started refusing orders in midmay. A few years ago the company blocked consumers blocked works published by mcmillan in a dispute over ebooks. This goes to the issue of how much dominance do you think amazon has . Does it matter . I dont know who we talked to recently who said it doesnt matter. Marc andreessen. Why are you giving amazon a hard time . If you want it, you go to go to walmart. Com or other stores in town. But you cant get it delivered for free because you have amazon prime. They represent a third of the market. Willie geist has a back out thats a book. They were doing it for fathers day. That was an issue. Its a changing Business Model slightly for amazon, because jeff bezos has been concerned about the customer, making sure the customer can have whatever they want. Theres been an argument for a long time they have to boost their margins at some point. That was not a universal film, was it . The lego movie . Dont know if it is. Jeff bezos would say the shortterm hit is you wont have access to it on your site for the next month or two but if we can get lower prices for our consumers. That would be his argument. You remember the villain in the lego movie. I didnt see it. Its your kind of movie. Lord business. Lord business. From the uk. Just trying to take over trying to looking for profits wherever you want find them at the expense of people. Lego pieces . Just at the expense of people trying to earn profits. Hes a capitalist. Lego capitalist. Job creator. Taxpay taxpayer. You can defend. I do, defend against anarchists and communists. Right. When we come back, the markets front and center after another record close for the dow. It wasnt much to write home about but well call it a new record. We have the results of the allamerica Economic Survey with the grade on the nations growth, will it be good, fair or poor . Well find out in the next half hour. Squawk box will be right back. , you cant settle for slow. Thats why i always choose the fastest intern. The fastest printer. The fastest lunch. Turkey club. The fastest pencil sharpener. The fastest elevator. The fastest speed dial. The Fastest Office plant. So why wouldnt i choose the fastest wifi . I would. Switch to comcast Business Internet and get the fastest wifi included. Comcast business. Built for business. Are the largest targets in the world, for every hacker, crook and nuisance in the world. But systems policed by hps Cyber Security team are constantly monitored for threats. Outside and in. Thats why hp reports and helps neutralize more intrusions than anyone. In the world. If Hp Security Solutions can help keep the Worlds Largest organizations safe, they can keep yours safe, too. Make it matter. Good morning and welcome back to squawk box here on cnbc. Im joe kernen along with becky quick and andrew ross sorkin. In the headlines, apple and starbucks are the targets of a European Union tack probe. Ouch. Officials thats the word, isnt it . Probe. Yes, it is a word. Makes you uncomfortable. Anybody over 50 and heres probe, gets uncomfortable. You move around in your seat a little. Officials want to know if the two Companies Got favorable tax treatment that would be in violation of eu rules. Theyre looking at apples business in ireland. We looked into that a little bit here. Remember those hearings. Starbucks operations in the netherlands, apple and irish officials of both have issued statements saying that the company i got no special tax treatment in that country compared to here. Its very special tax treatment. Its not special for the type of treatment in ireland, right . Everything is relevant. Its much more favorable than the tax treatment here. Aig is naming a new ceo. Ben mashay iss benmosche plan to retire. Aig names Peter Hancock as ceo. Youve seen where is that, castle rock . I dont know which part its supposed to be in the game of thrones. It looks like a place. Its unbelievable. And alibaba is going on a spending spree. The company is buying remaining shares of browser ucweb. Alibaba spent 4. 8 billion making investments in the past six months but this would be the biggest to date. Touch screen chipmaker s synaptics. Its chips are used in galaxy s5. Shares of synaptics jumping on that news. Yesterday, almost the day that didnt happen. Barely budging on any of these levels. The dow was up by just over 2 points. The s p down by less than half a point. Take a look this morning, youll see the futures are indicated lower. Dow futures down by 39 points. S p futures down by 5. 5 points below fair value. In europe, youll see at least at this point its i dont have any idea what it is. When the boards bet there well check it out. Lets take a look at whats been happening with oil and some of the other issues. If you look at the tenyear note, the yield rose yesterday for the eighth out of the ninth time in the last as many sessions. 2. 63 , a onemonth high. This morning, that yield is pushing even higher, 2. 649 . We did see that small gain that gives the dow its fourth Straight Record close, continuing a record run for the major averages over the last few weeks. Joining us right now with their market and economic outlooks, jeremy zarin, chief equity strategist and michelle girard, chief economist at rbs. The tenyear has been steadily moving higher that had been the thing that had everybody thinking it was goldilocks, that wed be seeing low rates and will continue to rise. 2. 63 is still low. If it continues to climb, does that pose a threat . I dont think it poses a material stretch of the equity markets unless we get 3. 5 or 4 . It depends on the pace of the increase. Its been slow. And last year when Interest Rates started to back up rapidly, in may, june of last year, the markets had a hiccup. Case in point, last year, Interest Rates 2 , 3 and the equity markets were at 30 . It doesnt pose a threat to anything close to under 3. 5 or so. The euro at 1. 35, the lowest level in about four months. Maybe this is something after what we saw last week from draghi where there is a change thats ben put in, people have been waiting for parody, essentially, with the euro. Right. I guess were continuing to watch this as we had said, were skeptical actually on how far we can actually see the euro weaken. I guess ultimately, i guess thats the question. But as we talked about, i think from a fundamental standpoint, actually, the moves in all these markets, particularly when you go back to the bond market, what you mentioned, we talked about the stock market. Its almost like the day that didnt happen. It feels like that. We talk about it over and over, the lack of volatility in these markets. The fact that we talk about yields moving up five or ten basis points. That speaks to the fact, i dont know if its 234complacency. We use that word a lot. One of the things weve talked about, boy, when we talk about expectations for the fed and how little tightening the market is pricing in, looking at euro dollar futures well below even what the feds own guidance has been, potentially thats a bit unsettling and thats, i think, what were watchful on. Joe said yesterday its too quiet out there. I picked up the money and investing section of the journal and they have a story about calm and are people being too complacent . What do you think, jeremy . I think this year has gone according to plan. This year, were halfway through the year, im looking at 8 to 10 Earnings Growth for the year. Our call all year has been the markets will appreciate in line with the markets. Stock markets have deified gravity. Its been several years since weve seen a pull back of 10 . That cant happen for forever. Pull backs do not happen because of the calendar. Pull backs happen because there is a fundamental trigger. I think the underlying u. S. Economy is improving. The earnings picture is accelerating. Last year andings grew 6. 5 . Im look for 8. 5 this year. With that backdrop, better household fundamentals, corporate fundamentals, any pull back should be a buying opportunity. If everyone here is assuming a pull back, first of all, within you say a pull back, pull back in the next six months. The question becomes how deep is the pull back. If youre saying to yourself, does that mean i buy now still . Because he still seems bullish generally or do i wait . If you wait for a 10 pull back, are we 10 higher . Dont try to time the pull back. Dont wait on the sidelines waiting for a pull back when valuations are reasonable. The economy is sk sell rating and Monetary Policy is remaining easy. If you dropped from the sky from mars today, and you said, the markets are trading at 15. 5 times forward earnings, the economy is picking up some steam, Earnings Growth will be in the high Single Digits and Interest Rates at 2. 6 , youd say thats a good time to buy equities. People are saying rates will be low for three years. Europe is embarking on what we did. Were trying to get out. Interest rates will be low for years to come. We talk about what would be the trigger potentially. I think the most obvious thing would be if theres a rethink about the fed and this assumption that here rates will be low, when they start to hike them, theyll move gradually. If theres a rethink because the data gets stronger or because inflation begins to firm and the firm said we need infla igs tion is one thing. I think youre exactly right. Without confirmation that the slack is actually diminishing that were getting upward pressure on wages. Under a scenario where the economy is doing well and the fed is moving aguessively, theres probably a kneejerk negative reaction. Ultimately thats not necessarily a bad situation for equities. Thats another thing to keep in mind, if that is the trigger, a stronger economy, more aggressive fed because of Pricing Power and so forth, it may not be as negative for equities as it is say for the bond market. Sure. Bond markets typically dont end after the first rate hike. Its usually about two years after the fed starts to tighten. Youre looking at a bull market that could run for another four or five years . We think so. Potentially theres no reason that earnings should disappoint. What ends bull mark pets at the end of the day is recession. When the fed starts tightening, its getting less accommodative. We may have a accommodative policy until 2018 or 2019 where the funds rate is below neutral. Even after they start to tighten, there will be support underlying this economy from the fed as well. The ft yesterday had a piece on that the volatility and the lack thereof is global. Its because of global Central Banks. Well have lloyd on later today, blank fi blankfein. It was his guy, kohn, who said we dont know what to do to try to make money. I worry longer term what is that masking . Where would the markets be if it want for central bankers around the world . You have to go whats the real price . I dont necessarily know, particularly on the equities side how much of this is because of Central Banks and Monetary Policy. I think theres a case to be made fundamentally. I will say in terms of bond yields and such, we are below levels. I would say i wouldnt know because of how slow growth has been globally, i dont know how off the bond market is either. Thats not off that much either. The old rule of thumb was that a tenyear yield should be around the level of nominal gdp. 4 , 4. 5 with is where nominal gdp is. Were well below those levels. Its kind of as an old anchor. Because you have the inflation component, a real yield. From an economics standpoint, big picture macro, thats what im saying. There does look to be potentially an adjustment. Its a chicken, egg thing, too. If it is slow globally, then the federal bank central bankers come in and make it low. So maybe its not at 2. 6 because its low. Because its 2. 6 because the central bankers are in. Spain would not be a 2. 4 without the ucb, would it . I you know would normal people buy a tenyear in spain . I still dont understand at 2. 4 would you put your money there versus here . Versus here or versus stock, versus pfizer. Thats one of the reasons Interest Rates have declined, the relative yield. Absolutely. The whole global situation. When you look at the u. S. And say oh, my gosh, how could we be at these levels . Then you look at that versus elsewhere, you think its still cheap, its its still good. Its nice over there. So buy the gelatto. Dont buy the bonds. For tourism and everything else,fy owned italy i could make a go of it. I really could, with businesses, shoes, pasta, all that. Huh . Pasta . All that stuff. If i owned italy i could make a go of it. Look what we deal with it over here. Were trying to run our Car Companies in detroit. The costs would be tough. No one would want to go to work. Thats the problem. How are you going to handle that . In spain they take off three hours in the middle of the day. I think id make a welfare state capitalist over there. Thats the only way to do it. Michelle, jeremy, thank you both. Whats next for the gop party after House Speaker eric cantors stunning primary loss to a Tea Party Candidate . Well bring that to the floor in just a couple minutes. And this will be your premium right here. Sorry to interrupt, i just want to say, i combined home and auto with state farm, saved 760 bucks. Love this guy. Okay, does it bother anybody else that the mime is talking . Frrreeeeaky [ male announcer ] bundle home and auto and you could save 760 bucks. Alright, mama, lets get going. [ yawns ] naptime is calling my name. [ male announcer ] get to a better state. State farm. Welcome back to squawk box this morning. Were talking about the lottery during the break. Some of us are going on that 260 million powerball. The u. S. Equity futures are not looking good at this hour. Maybe a reason to play the lottery. Joe says theres no reason to play the lottery. Nasdaq off 13 points and the s p 500 off about 7 points. Also, Jane Mendello guided 32. 7 billion endowment through the finance crisis and the aftermath. University reported average annual returns between 11 and 12 for the last five years. Trivia question how does that match up against the s p over the last five years . Not bad. It could be you said something. It could be mendello. It could be either. I have a trivia question for you. How much do you think the head of the harvard endowment gets paid . I have the 2012 number. You do . I do. I know the guy at yale who was great, was making 10 mill. I know its not 2 and 20. You want to throw out a number. 250,000. 3. 5 million. Thats it . Somebody else was getting paid 4. 5 million under here. Thats just pc enough to satisfy the communist in cambrid cambridge. That number may be different in 2013 and 2014. I should walk that back. Socialist. Im sorry. Right . Teppers really good. He made what . 4 billion. 4 billion. This person pretty good, 3. 5 million. Heres part of the distinction. Traditionally, investors invest in an Investment Fund because of the person, that person ends up raising the money. You could argue that in the case of an endowment, people are donating their money to the university, irrespective of who is managing the money. The guy at yale was one of the best anywhere. Notre dame. Theyve had an incredible investment history, too. Harvards had mixed its an understatement to say theyve its an understatement to say theyve under performed in recent years. You know who im talking about. Theyve under performed in recent years. Did they save a lot of money by doing 3. 5 million instead of getting someone who could have gone 21 million a year . Was that a good decision to save money on the shower . Next. What have you got . I would rather get the best purse, i dont care what it would cost. I would hope that fund will go up and double every year, double every three years. Well, then, its tied to performance. Next, google dropping a half a billion for a startup. That story next. And the fallout from House Majority leader eric cantors shocking defeat in the virginia, in his district in virginia, how will this shape up capitol hill . What does it mean for 2014 and 2016 . Were coming back in just a moment. Fifteen minutes could save you fifteen percent or more on car insurance. Yeah. Everybody knows that. Did you know there is an oldest trick in the book . What . Trick number one. Lookest over there. Ha ha. Madeest thou look. So endeth the trick. Hey. Yes. Geico. Fifteen minutes could save you. Well, you know. You stand behind what you say. Theres a saying around here, around here you dont make excuses. You make commitments. And when you cant live up to them, you own up, and make it right. Some people think the kind of accountability that thrives on so many streets in this country has gone missing in the places where its needed most. But i know youll still find it when you know where to look. How can a tablet replace your laptop . Start with the best writing experience. Make it incredibly thin. Add an adjustable kickstand, a keyboard, a usb port, and the freedom of touch. And, of course, make it run microsoft office, with the power and speed to do real work. Introducing surface pro 3. The tablet that can replace your laptop. Welcome back to squawk box this morning. Amazon reportedly plans a local service marketplace, reporting this will include anything from handymen to babysitters, re code starts in one market to test demand and logistics. A local Amazon Marketplace could compete with consumer rereceive sites yelp and anythingys list. Do you think is it okay for harvard to just for a second. Or back to. S p is 21. 5 just over five years. Harvard is 11. They put 11, 12 . Over six years. Now it includes 2000 its almost worth it. Corporate company say, you dont want that going up, obviously, at all costs, so you should give up a certain amount for the endowment. So you can do not what i say, what i do. Do you really want that endowment earning more than they are entitled to . I didnt foe about this. What i cant speak with authority is what was she left with. Im not putting her down. The harvard mentality you dont want to outperform. You can get good things from them. You dont want to outperform everyone else, you dont want more than you are entitled to, do you . Why do you believe she wasplay paid differently . Gee, you dont think that you can actually be good at something and earn success . Im saying the most Successful Hedge Fund managers you know the part they raised the funds. They also delivered. The reason they raised the funds is because theyre good. Folks, our guest host today has the pulse of the consumer, joining me fed chairman martin frankel. Stick around, squawk box will be right back. Ve House Majority leader eric cantor loses in a primary battle. Thank you. Look, obviously, we came up short. Where does this leave the Party Heading into the midterms . Time to get up in your grill with our guest host. Martin franklin, executive chairman of consumer giant jardin has just the item andrew needs to complete his summit. Robots invade the squawk set. Hello, do you read me . Suitable technologies beaming into the show. This mission is too important for me to allow you to jeopardize it. The second hour of squawk box begins right now. [ music playing ]. Its a great shot. You dont know what that is, it turns like that. I think it should be a little baby with brat space. If we didnt have time, because this kind of music, were going to talk a lot about that. I got some more stuff here, like details, its immigration. Immigration and its not just limbaugh that is the radio shot. Theres like female radio show conservatives and i never understood, its going off on cantor about amnesty. You were off about it. God, they really are, but then this latest episode with all the children that are, what is it like 40,000 . But you are for it. I am for everybody getting along and being able to hire the people that we need. Im for Immigration Reform in some matter. I dont know how to do it, andrew. You know, at this point i wouldnt count on it. I was not counting on it. Welcome to squawk box on cnbc. Our guest host this morning jardin executive chairman Martin Franklin. Many topics to cover with him, including its been barbque season for a while . Yeah. This segment is coming up on sunday. Every people, couldnt you grill something every meal and be healthy, it would be the best way to do it . Chicken. Im happy. Fish . Fish, absolutely. You can do vegetables. Vegetables, everything, andrew. I mean, you are cooped up in that, is the airconditioning ever off . Are you always in that . Its bad for you. Do you ever have the windows opened . No, never. Are there any do they open . No. I like his point. Your windows dont even open . They, do they do open. You never . No. Why would do you that . You have someone open and close them. Even they, you dont instruct them . The future, i dont like these futures, the journal called new high fresh. Even somehow it was a fresh high, not a smelly, it wasnt a rancid new high or it was a fresh new high. But today its called lower the ten year, take a quebec look. Its been up in the 2460s, 23464 now. Someone said 2442. You did. I called the top ten. Big deal, where is that going to get owe its 20 basis point moves, who cares . Anyway. It has been up in the last eight of nine sexes. Thats news can you use, where did you read that . In our overnight note. Awesome. Lets talk about some Corporate News real quick. We got apple, which says it has received for the favorable tax treatment in ireland. Irish officials stay same. Theyre saying all of this because the european economicser is looking into taxes paid by apple in ireland and also by starbucks in the netherlands and whether any of these tax deals violated e. U. Rules, starbucks issued its own statement saying it complies with all relevant tax laws in the netherlands. Separately, amazon. Com refusing to take any preorders for home videos produced by time warner, what appears to be a contract dispute, thats according to New York Times, amazon hams not commented thus far. A spokesman for time warner saying that i dont comment on contract points or any proprietary issues involving its partners. That comes amid the negotiations going on with questions about concentration, things like that. Media is amazing. Amazon, its everywhere. Its everywhere. You need to be smart. Because that is a daunting future that we all face, isnt it . Its amazing, so here its time warner versus time warner, its content. Amazon wants to shed the content and amazon wants to sell it. Well talk to our guest host about what these contract disputes really mean. Its content and distribution. Its going to carry on. As technology changes, i think at the end of the day, u. S. Content. At the end of the day is going to survive. Should we care about this concentration issue . So . Yes. This hashet dispute happened, people somehow had this different category. Amazon controls a third of the market and that itself not a monopoly, people say these are sort of tendencys that make people anxious. Now we have this situation. Do you get nervous . You dont provide content . In a way i do. I provide goods that people want through distribution and amazon is a distribution. Between amazon and walmart, they own what percent of the Retail Market . Do they own too much . Thats a tough question. I think in a cemented market its too much. I think at the end of the day, the beautiful thing about electronic consistent buicks is you can have newcomeers who can compete. I think if reality, go back to the publishers who, people want to read someones book, they will find ways to have that somewhere else. That will be the balance of power. That goes for the same for goods, if 3450e78 want our goods, if they cant get them through one distribution the competitive situation is such they cant distribute, they will find another way to bite them. You think content is king. Are you also a content provider. My job is to sell through a content provider. My job is to sell through the most Distribution Channel possible t. Infrastructure of jardin is to create a platform that has enough large scale that can be a distributor relative to its competitors. Two other distributors go on sale to the consumer. So. Well talk more with martin about all of this. He is with us for the rest of the morning t. Other big story of the morning is the shocking defeat of eric cantor losing to steve brat. John harwood, when we spoke with you the last time, you said the big message for washington is nothing will get passed in any form of legislation. Yeah. I dont think people will take risc. You know, whether or not it was immigration, whether it was eric cantors personality the fact that hes a member of leadership t. Fact that he was aligned with sort of big business and the establishment. All of those may have played factors. But the way its going to be interpreted as one republican strategist told me is nothing is going to move in the house of representatives. Jack, what does that mean from wall streets perspective . No Immigration Reform . Yeah, theyve certainly wanted Immigration Reform. I think the expectations have been on the low side of Immigration Reform, there has been a pure play of sorts in the outsourcing companies and this has been hanging over them a little bit and so, you know, were looking now at the prospect that we wont have Immigration Reform through 2016. Certainly, thats a victory of sorts for Hillary Clinton. Its a bit of relief perhaps for to it it outsource. T. It outsou. Is that why they lost . Is that what it was . It was a large factor, joe, i mean, yeah, a lot of republicans would like to think its because democrats lost over, its very likely, lost 11 by six or 47,000 votes. Yeah, the fact that, i think john pointed this out earlier the fact that you had the South Carolina race and Lindsey Graham, who was also even a bigger champion of Immigration Reform won handily in his primary in South Carolina. Its a mixed message. John, were getting a lot of stuff out there everybody is mad you talked about antisemitism and there is no evidence that had to do with that. Could that have happened because suddenly people realized eric was jewish and they didnt vote for him . I seriously doubt that. I frankly liked his 60 minutes, you know, up close type of touchy feely thing about a year ago. But a lot of people are going to compare this to the earthquake that happened in his district. It was the epicenter of his district three years ago. But i think thats a little bit of an exaggeration. He was a little bit aloof. This is a signal that, yes, the tea party is still alive n. A narrow little republican district, you know, an incumbent who has become unpopular can be out muscled by a guy that may come out like dick army. We see what kind of personality he has. What does this mean for boehner . How does he reassess . He has been playing hard bail with a lot of people. A lot of people, including me, expected john boehner was going to leave the congress after this term that he sort of had enough for, with dealing with the difficulties of running the republican caucus, he was going to step aside, eric cantor was likely, maybe with someone like paul ryan to be the next speaker of the house. Some of his people were saying last night, this makes it more likely john boehner will stick around because you need to provide some stability to the republican leadership. Its going to be a wide opened race to succeed john boehner whenever he decides to leave. You got Kevin Mccarthy, paul ryan. Sorry. Who is going to take. The majority leader. These same people. Thats the discussion, Kevin Mccarthy would be the obvious one to move up. But you got people like Jeb Hensarling who are well regarded among conservatives. Jim, isnt it . Jeb. I know, obama called him jim when he asked a question. Chuck, chuck, in the last hour, we were describing some of many cantor, we were described i describing mr. Cantor, i dont know if joe said it, described him as a wall street conservative and to be, does wall street play into this at all . I mean, given that we are a business channel . Im just curious him i ask it also because on the other side, you look at, you know, Hillary Clinton. Shes even in the past couple of days been killed for her connections, if you will, to wall street. You dont want an overt wall street connection and i think the. Itse the. There, is, particularly after john boehner took on water for trying to negotiate with obama on the budget. Have you this bur lap sack number of kittens, which is the republican caucus, they all on boehner for the deals to negotiate and had to get done. Immigration reform the Business Community wants on things like the stock act which without wall Street Research at risk, he had moved towards rational responses, he has been expected, frankly, to try to navigate and deliver reauthorization of the xm bank, very important to the boeing later this year and the terrorism reinsurance act tria, he will be budding with mr. Hensarling, so maybe he seemed as a prowall street guy. Io eng this was a vote against wall street in his, you know, seventh district in virginia. Guys, i got to give props to chuck. He broke new ground there. I have not heard a bur happen sack number of kittens to describe that caucus. Cantor spent 5 million. His opponent spent more. Money is overrated in politics. Amen. Thank god after citizens. Chuck, guys, thank you. Thank you, becky. Unless its the coke brother, then they control everything. Coming up, Consumer Products as far as the eye can see, our guest host Martin Franklin will tell us about the jardin economy as the summer starts to heat up and we have a robot. Robot. You learned how to say it. Becky says i says robut. Running around the set, if it becomes self aware, i may have to send it back to the future. We will check in with our robot later this hour. Having the cloud allows us to rapid prototype a lot of ideas. Being able to pay as we go is crucial for a start up. Having to fork out a lot of money up front was risky. We can launch a feature really quick, and if the feature doesnt work, we havent lost anything, and we can have something up and running in days. And this would not be possible without the cloud. We are now supporting over 25 million users each month. Our guest house is Martin Franklin from jardin. The consumer is flush or is he not, a five or a six on one to ten . What is she . She is a seven or an eight. A seven or an eight. Not doing so badly. Really . I dont know with jardin, do we do for the consumer . We do a Yankee Candle, 93 of our customers. What about coleman . Coleman mixed, much more 96 i mixed. But were coming up into the peak of the season now, its pretty good out there. Pos has been pretty strong, memorial day weekend, good weather around the country. For retail. Which division is the majority of your sales and which is the majority of your earnings . You know, its interesting. Our earnings are pretty evenly spread out between our divisions. I think are oneing, Yankee Candle skewed our consumerable margins up somewhat. We average 14. 5 in the down margins. Is it coleman . Who are you seeing . Ski brands are k2 bless you. Bindings. You want k2 boots . K2 bother, do you melt them, they form around your ankles . The reality is what you really want is a boot that has a shell that fits the form of your foot, k2 has done a good job. We now know the form of andrews feet. You heard. Last week, we had a gentleman rub lotion all over his feet and massage them on national tv. I wouldnt have done that. You would not have . You wouldnt have been andrew or the person, would you . No, ive done a lot of things to make a seam. I dont think i whof done that. Is jardin, do have you enough is your portfolio complete right now or are you in the were always look. Were look at at three or four what i call tuckins. Acquisitions. Things that make existing businesses stronger. Something that may help distribution, may add a product into that we can put into our existing plan. Thats just what the b g guys said the other day, because he buys baked bones, hes got a pirates booty. Hes got b g pickles. I said, how do you decide . He said our brands are our brand names. We dont try to make them better or sell more the synergy the shelf space. Are you dealing with private equity or do you ive made a living competing with private equity or buying from equity, we bought Yankee Candle from privateic writety. We would describe ourselves as owners than renters. You buy something, theyre going to sell it. Which we can provide a permanent home for business, which is appealing to some owners. So the price is not keeping you out of these things, if you see something, you will buy . Yeah. I mean, we are very disciplined how we buy. We catch them federal government time around. A good example, it was bought if 2007, 1,100 ebita. We didnt boy it. What about now . The break even ebita. There are things cheap enough to boy now . Theyre not cheap. Rates are low, they stay low. Its relative value out there. Nothing presses out of control on the stockmarket . No, i think as long as this goes for europe and the u. S. , i think as long as rates and whole policies raise the bottoms in terms of yields, acid inflation is going to stay high. You have a girlfriend that will look at it at some point . With pleasure. Inside the ferrari red colored one. If you, people that like grill pence their apartments can die from the fumes or something . Pence. Then i dont know whether you will be able to, like what about on a buy. A buyers scape. People outside are cooking out of those barrels at night you see in new york city. Its not your neighborhood. Not in my neighborhood. Mark will be with us for the rest of the show. All right, coming up, changing the world, the amazing story of a triathlete and spokesman for the challenge. Her story and how she is getting wall street heavyweights to help amputees get back into sports. Squawk box returns right after this. Kate kelly has a special guest to present. Kate. Reporter thanks, im here at the Goldman Sachs energy summit, day two, they kicked off a special event moderated by the ceo of foreign minsters and officials from here. I want to kick it off, the commodity analyst for Goldman Sachs, he has put out a provocative page. The psych qui Energy Wealth we have in north america. We risk squandering infrastructure with high quality jobs. Thank you for being here with us. Its a pleasure. Tell me more about your thesis in terms of the Economic Opportunities that we could forego if we dont take steps to improve our demand side investment. I think we are looking at where the failure is. If we look at the amount of investment thats been onto the supply side, last 84, north america spent 200 billion on gas, thats more than 50 of the worlds investment in upstream oil and gas. In addition they outspent russia and saudi arabia by a factor of 10to1 wealth. Supply is demanding ahead, demand is lacking. The demand phase of shale revolution is beginning to stall. You have a couple metrics in their e here i thought were compelling. Up to 2 million jobs could be lost if we dont step our investment, emissions could be curbed. Gdp in mexico could be what . You put it altogether, you could add another 1 gdp growth rate itself in the next decade. Next decade. I think the key here is these problems share a common solution. Thats well defined, clear, credible and durable energy, environment am and transportation policy. All right. So easier said than done. What are some of the specific areas that need to be attacked that are soderable. We dont need to tackle the answers. We want to pose five questions. First question we want to ask what are the best fracking and water use rules we can employ around fracking. Second question, pipeline policy and regulation, allowing for quicker turn around on perming. The permitting. The future methane emissions, controlling that will make gas permably. Fourth e85 electric vehicles. The fivest power generation, focusing on longterm contracts and how to redo the grid and generation. All right. Thank you so much, i will let you go. You are giving a speech if five minutes. Becky, back to you. Kate, thank you very much. When we come back the squawk ceo call goes out to Specialty Products, that itself the company that makes components for smartphones around other things, daniel weaver is joining us right on set right after this. Ty, he said. Welcome back to squawk box, everyone. In our headlines today, bank of americas multibillion Dollar Settlement deal reached an impasse. They stalled after the latest offer of more than 12 billion fell apart short of prosecutors demands. They want more. Yep. Wow. Kind of mind blowing, 12 billion will not be enough. New details what did j. P. Morgan pay . Was it 23 in total . They already paid a lot. Im not saying this is too much, too little. Im saying the calculation of how they come to those numbers . No. There is no calculation. How much can i force to give you . Thats the calculation. That is the logic. How much can we waste and get absolutely nothing for it once we get it from you . Everyone is sitting in. There is another piece to it. The question is, where does the money go . You tell me. Some of it goes back, is supposed to go for forgiveness to mortgage builders. 4 or 5 billion. Its been 50 or less in most of these funds, anyway, new details on the planned initial offering from High Definition camera maker go pro. The Company Plans to sell 17. 8 million shares at 21 million a share. That would raise up to 427 million. I wish we had one of those when you were hang glideing over victoria falls. I have a great film of it. You do . I do. I will bring it in. Bring it in. I have it on dvd. You do, really . Yee. There was a camera back before they were go pros attached to the thing. I want to sight. Anyway, you may not know the name. You may know the company it used to be. You definitely used the platform Specialty Products produces a range of items from finishes on sishlth boards to hard coated film for touch screens on phones the auto sector the stock nearly doubled since going pub leg. Here is a ceo of platform Specialty Products, Martin Franklin is here, hes kind of a, its different than jardin, but you are acquiring and welcome, you kind of acquire things that maybe arent, wouldnt be a core asset for someone else, but you are able acquire it probably cheaply because they want out. Then you are able to make big margins on it. Its the old mcdermott, which people remember was an old company, not mcdermott. Dermig. You bought it after it went private. You brought it out. You started making these 66s. Can you tell us about some of the products, first of all . Sure. You mentioned smartphones, tablets, electronics apparatus, we make the Circuit Boards or the finishes for Circuit Boards so any smartphone for tablet you might have has our product in it. That comes raw, people go in, put the circumstances on it . You are an outsourcer . We supply the chemicals to the producers, mostly in asia, they get inserted. What are they made of . All times of different, very, very specialized materials. A specialty chemical. Other products, automotive. If you have a bright and shiny the finishes on cars that make them bright and shiny. We have applications in oil and gas and control systems . Oil and gas. We recently announced an acquisition in the protection spice. It sounds like things i used to hear with dupont and dow chemical. I know they have been selling a lot. Have you been a buyer of any of those assets . We havent bought anything from dow or dupont. Certainly, that itself the opportunity. Our company has founded platform Specialty Products by martin frankel, who is here. Martin had the idea in the specialty chemical space of trying to build an enterprise similar to the way hes done in jardin. Right. So we like to think were in like rounding one on winning one or two of a buildup strategy that jardin only is in the chemical space. What got to you do that . You know, for me, its sort of the use of a Public Company as a Building Platform is a better form of growth than doing it in private equity. And so, when i met dan, dan was looking for a partner to build up the business. You know, i have done these vehicles in the past and the idea was very simply a nonexecutive role, but basically show him what we have done if terms of putting these things together to create different verticals. In the case of the special chemical space the theme acted like high touch. All of these businesses are Service Oriented businesses, mcdermott 2 thouf chemists. You do something that the private guy, private equity guys have said their whole model is that you cant do this in the public market. You need to do with the behind the curtain, its too difficult to do in the public market. Not true. Look at jardin, look at cole fax, there are a number of capitals that had superior terms. Ackman is your largest shareholder. Sitting here, listening, an chew, we like our job and everything and you will the all this other stuff, but we should take, talk to him, the two of us i know you should have another area to do this. We should get on the board, we are spinning our wheel, wasting our time. We can both be worth a lot. Xh plus. You will do this again. I think its a scalable, i think these are scalable models. It works. How much wealth do you how many times in the food space . Another vehicle, another vehicle, buffet has done it with a different vehicle in a different way. Its the same principal, these are longterm hold investments, but you have to start with the philosophy that actually makes commercial sense and you need somebody who really understands the space. In the case of Specialty Products, specialty chemicals, is somebody who has been in the industry for 30 years. These are assets. In other words, you dont want pardon . But theyre noncore to these other companies. So theyre willing to sell them. They probably sell them for less than they are actually worth. They are valuable to you. You make a goal of them. Lfrls your margins are up. Andrew. One of the key strategies for us is this high Business Model generates more cash than typically you would see in a company. So we can capitalize this high cash flow model at a better cap rate, if you will, than the Big Companies can, so these assets are actually more valuable to us than to them. To them. Its very intrigued. You dont have to, listen, were going to go to be right back. Thanks. You read the teleprompter. You dont want to consider this . I think, we got to come up with a lot of ideas, in media. Right. Hell think of it. What is your next idea . Lets wait until we go to break. Coming up, shes been on the amazing race the first efemale leg amputee to complete the championship in kona, half, is now look fog qualify for the paralympics in 2016, paralympic track star sarah reinerston is here. She will join us next to talk money and sports and beyond. We are back in just a moment. In a world thats changing faster than ever, 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. White chocolate loversividual. Dont like dark chocolate. Milk chocolate lovers dont necessarily like dark or white. Before we couldnt really allow the consumer to customize their preferred chocolate. We needed the scalable Cloud Solution allowing them to see all 800 products and select what they are looking for. Now there is endless opportunity to indulge. Welcome back to squawk box this morning, a quick programing noted, gold man sax chairman ceo will be joining us in the next hour. Lots to discuss with him from Interest Rates to mergers and 66s activity, the dow approaching 17,000. He will be our very special guest. Thats coming up at 48 15 a. M. Eastern time this morning. They help amputees run, cycle, take part in all times of sports. Today wall street heavy hitters will be opening their funds to help wounded veterans to run awayne. Pershing founder bill ackman will be honored. Joining us is sarah reinertsen. Sarah, its great to have you here. Thank you so much. Our guest host, of course, Martin Franklin is here with us. Sarah, you are an amazing athlete. Lets tell people who dont know your story a little about it. What happened . Sure, i was seven years ol, i had a tissue disease as a child. So they amputated my leg so i can take advantage of better pros pros at the time tik s pros set the ticks. I was the first on an artificial leg to do the hawaii ironman. A marathon is okay. But the ironman is tough. There were other men on prosthetic legs doing the iron man, they used to say, a chick can never do that, i was like, oh, yeah. So i really wanted to prove them wrong. But i also wanted to create a platform, too, where i could help raise up other amputees. So it wasnt just about me. I also wanted to inspire and encourage another people to get active and use the body they have. Whatever shape that is. Lets talk about the challenged athletes that, foundation what does it do, exactly . We are an organization that gives away the adaptive equipment that a person with disability would need to participate in sport. Whether thats a prosthetic running leg, a wheelchair, a tandem bike arc monoski. My running leg retails for 36,000. At an out of pocket expense. Its not covered by insurance. You cant get it from insurance . Yeah. So if you want to run, have you to have that cash out of pocket. We know thats unattainable for a lot of people t. Caf is a part of giving access to sport for so many people with disabilities. Martin, how did you get involved . I met sarah i think at konat. Reality is i have been involved in the project the same with the veterans coming back and i saw the synergy in that at the time and a friend of mine is a el with manager at ubs, he started the scarlet dinner and asked if i would be a prior honoree and get more involved, which i did. But the work they do mostly with kids and veterans, its amazing. And you know to witness it, they have a program, having people skiing, having, they take soldiers come back fromable of duty, get on prosthetic, get them to ski, sarah is involved in it on a daytoday basis. What i see is mag 95 sent. How many people can you help in a year . Well, we just gave away about 1,500 grants to folks and paying for things, you know, like, yeah, machine no skis, hand cycles, tandem bikes. We also do a large number of programs. We teach people how to run. I think we saw footage of our rin clinic in boston. We did one at harvard. We got local amputees the boston bombing survivors as well were at that clinic, getting them up and running again. So our reach is very far through our programing. How do you pick who is eligible, not who is eligible how do you pick . We have a Grant Application process, go to athletes. Org. You fill out an application, you have to prove you are disabled and that you know they fill out that form and depending on what their need or ask is, then we kind of assess that way and we may give a running leg. Dont have to be an elite athlete. We believe sports at any level can improve your quality of life. So we have given grants to kids who are fiveyearsold. We gave a leg to a 72yearold guy who lost his leg in an accident. He is doing track. Its ageless, weekend warriors to paralympic hopefuls, we want to help individuals at all levels. In terms of do nateling, where should they go . We are doing our event tonight at the waldorf astoria, can you go to our website challengeathletes. Org, make a donation. Has yen one accused you of having an easier time of it . Yes, i have been told i have an advantage with ironman with my one leg. Because of the bounce. I have one prosthetic leg, so i, certainly the Technology Helps make it possible for me to consider doing Something Like the aironman, i am not an advantage, i use 40 more oxygen and twice the energy to walk. No leg when you swim . , nothing. How far is the swimming in the iroggeman . 2. 4 mime swim. In the ocean. The first time you tried it you didnt make the cutoff . I missed it the first time. Because of timeing . And wasnt allowed to finish the run. If you dont make the cutoff, they pull you out of the race. Then they stop you . They stop. Thats so bad. Yeah. But i didnt want different rules because im zavenltd i wanted to be like everybody else, so i missed the cutoff, fair enough. I had to train even harder. I came back and got it done. Congratulations. Did you crawl the whole time . Free style. I wasnt a good swimmer when i started, but you figure it out. Then a full marathon. Then a full marathon, yeah. Thats unbelievable. Sarah, its an inspiration to hear you, hear what you are talking about. Thank you for coming in to talk about it. When we come back, a political upset as House Majority leader eric cantor loses his primary to a Tea Party Challenger, the first person in American History to lose the partys primary holding the position of House Majority leader. We will have more to come. First the future is now, Michelle Carusocabrera joins us via robot. Reporter hey, there, becky, im an a beam, this is a telepresence robot. I will join us on the set. Too es are becoming more ubiquetous as the price comes down. Can see max so clearly, should i take a right, sooner, later . Come back. Come backwards. We are going to do more after the break. Come back and take a right. Take a right. All right. There you are. Okay. Yeah, here i come. There is a cord there that i can see, im a little bit nervous. Seeing the world in reverse, and i loved every minute of it. But then you grow up and theres no going back. But its okay, its just a new kind of adventure. And really, who wants to look backwards when you can look forward . Are the largest targets in the world, for every hacker, crook and nuisance in the world. But systems policed by hps Cyber Security team are constantly monitored for threats. Outside and in. Thats why hp reports and helps neutralize more intrusions than anyone. In the world. If Hp Security Solutions can help keep the Worlds Largest organizations safe, they can keep yours safe, too. Make it matter. Singularity is here. Welcome back to squawk box. Beam me up. Allowing folks to attends classes from the comfort of their own home, Michelle Carusocabrera joins us with a special interview with a special guest. Pishl. Reporter hey there, anthony, thanks so much. Day two of singularity, its super exciting. We will hear from the ceo of sprint as well. Right now we will interview the ceo of suitable technologies, hes not here physically with me. He is joining us via one of his beam units if california. So first and foremost, thanks for getting up so early for this. Thanks so much, michelle. I have already gotten myself in trouble during the commercial break. I called this unit here the beam, a telepresence robot. You dont like that name. Why not . Well, i mean, robots are going to take over the world. This is not a rot bo at all. This is painly a remote presence that will allow you to be somewhere else. We call it the smart presence system to try to get away from those terms. This is you are in full control over this system from anywhere in the world. Right. So, the other thing that you got upset with me is the way i described the real me. I said, there is a telepresence view and the real you. You think its the real you all the time . Yeah, you have your meat body and a beam the beam body. Meat body versus a beam body. Yeah. You are physically present even though you are using a beam, a beam is a physical device, so. So how did you come up with this idea and how much do they cost . We came up with it through making a much more complicated robot, the pr2 while in the process of making this much more complicated robot, one of my engineers used the very parts to work on it and came up with this and over time we were like oh, this is very useful for remote ploy i dont see to be working remotely from anywhere in the world. That itself why we started building this. So an accidently byproduct of some other efforts, which often happens in technology i think. At one point, i was saying, why are you working so much on this side project . You need to work on the main project. Which is the actual full robot. But this turned out to be much more marketable right now. This is 16,000 the professional unit. Have you the consumer unit coming for 1,500 bucks, is that correct . Sorry the retail price will be 1995 t. Reorder is 1495. A little teaser discount. How many have you sold professionally, how many consumers you think will want one around their house or wherever . I would say we havent sold enough, as a company, we are trying to sell a lot more i think this can change the landscape. I sit on boards, i beam in regularly to boards all around the world. Its superefficient, super fast for me. What does the Software Cost . Were cnbc, if you came up with one of these that were better that had the audio where we could pipe it wage. If we could send very cheap guests, could we have almost anybody join us on the set if we had one of these units . I believe so, yes. How much is the software alone . We dont charge for the software. Its basically a part of the system. When you buy a beam pro, you get unlimited number of users of that beam pro, does that make sense . You get a license for purchasing the unit. Can we see this the wider shot here, is this possible . So can you goes see, the beam i am controlling in the studio, i do it from this laptop this camera here. I got two different views, it is so easy, guys, i can back up a little bit. I can move forward, its got a fish eye, so its not like i feel like i have a stiff neck and i have to turn my whole body. Its really incredible. Do you have any questions for scott or . Looking at the screen, im seeing this happen, i look at you. The telepresence, when would you be moving around in a real meaningful way . Im still missing . When would you be moving around in a real meaningful way, for example . Right now . Yeah. Or in the studio, if we wanted to use this in the studio. Well, i mean, i think in your use, its moving around, thats a good question, its mostly for corporation and we have a Large Corporation when you want to move around pence of that and actually interact with other employees and going to a meeting room and things like that. So the ceo wants to come in a day, walk around, meet a bunch of employees . I think the other direction you would do, you would ship a unit to offsite when you want to do an interview, so instead of you coming here, you would actually, you would be interviewing me and you would be on the beam. My bosses would love that, that would be so much cheaper okay. Scott, this has been great. We really appreciate it. Thanks for getting up early. Thanks so much. Guys, back to you. If you see looking at the fish eye . Yeah. That looks just like hal. From the movie. The next thing you know, are you locked out studio will is no objection jen, you cant get in. This is happening. We still dont know, do they like us . Are they ambivalent towards us, or want to kill us . We still dont know about these machines. Anyway, something to consider. Thanks, michelle. Its like a combat zone, i need to ask why . I was warning the journalist, the liberty zone in boston, they tried to call at this time liberty zone. They call it the combat zone. I know exactly where it is the naked eye was the most famous place my friends told me. Coming up, a historic defeat the second most powerful man in the house goes down in defeat. Were moving our company to new york state. The numbers are impressive. Over 400,000 new private sector jobs. Making new york state number two in the nation in new private sector job creation. With 10 Regional Development strategies to fit your business needs. And now its even better because theyve introduced startup new york. With the state creating dozens of taxfree zones where businesses pay no taxes for ten years. Become the next business to discover the new new york. [ male announcer ] see if your business qualifies. How much money do you think youll need when you retire . Then we gave each person a ribbon to show how many years that amount might last. I was trying to, like, pull it a little further. [ woman ] got me to 70 years old. Im going to have to rethink this thing. Its hard to imagine how much well need for a retirement that could last 30 years or more. So maybe we need to approach things differently, if we want to be ready for a longer retirement. Beaten by a brat, House Majority leader eric cantor defeated by Tea Party Challenger david brat. We do not owe. You do. The first time in history, a majority leader has lost a primary, this shocker result, a major blow for the Republican Party. The state of financials joins us for a special interview from wall street to washington. We cover it all. Plus, we are on retail detail with the cfo of nordstroms as we push to bring back the pianos, the final hour of squawk box begins right now. [ music playing ] sing us a song are you the piano man sing us a song tonight when were all in the mood for a fell load welcome back to squawk box here on cnbc. First on Business World wide, im joe concern nan with becky quick and andrew ross sorkin. In studio is Martin Franklin, executive chairman of jardin komplgs you definitely know a lot of the stuff that jardin makes and any of the name Brand Products around your house, fishing equipment, playing cards, Yankee Candle, skiing equipment. Coleman grills. May more than you think. Its stuff like crackpot we knew, mr. Coffee, holmes, oster, rival, sunbeam. You made a crockpot with my picture on it. You didnt make that picture. At least one. You didnt make a commercial. We use it. People come into the house that dont know how it got there. Theyre very confused. It looks like its a sticker, its not. I gave one to my mother. With your pick on it . I had one, two too. Are you not on a heinz ketchup jar. Weiners prefer me. We have some other tips for you this morning. Prefer me. Apple and starbucks, tray the subjects of a European Union tax probe that just has been reported. Officials want to know if the companies received special tax treatment in violation of e. U. Rules. That probe is centering on how that works in ireland and starbucks in the netherlands. In a statement, apple says it pays every euro of every tax it owes and its taxes in ireland have increased tenfold since the iphone was launched in 2007 and forbe its part, starbucks saying it complies with all relative tax laws and it is scud that investigation. If another news this morning, we often talk about uber in the United States that 18 billion valuation given last week. Today the focus is across the pond, tax season in many european cities have planned a big strike today. They are protesting governments like uber to operate there, in london, a protest is expected to begin in Trafalgar Square in an hour. They will do it in madrid today as well and lots of conversation about whether, what this does to the valuation. Are they planning to rile regulators up . To effectively stop uber in its tracks wind chill ve a license in some places, they are paying up to 270,000. In the United States, you say if this can encroach on our business what do do you . Uber says were a limosine service not a taxi business, its fundamentally a different business. There are saul all sorts of issues revolving around insurance as well. A taxi in new york, for example, they have to have enormous amount of insurance, thats different in a uber car. Do you have to tell your insurance . You do, you need a license from the taxing and limosine commission. We cant just go and do it tomorrow. We have to do something else. There is a lot of issues around it and when you think about it 18 billion valuation that did not work if cities around the world decide this is not about the business, i dont think you can Wave Technology on this one, so. Back to the walk news of the day, pick up any newspaper, a surprise primary defeat for a House Majority leader eric cantor, quickly, i think we understand, we will miss eric cantor, he came on all the time on squawk box, he would sit with us. Do we have that . One time we talked to him about this. There are those of white house have personal religious convictions about the issue. I think we as a country need to respect people for their opinion no matter which side you come on. Thats lack income tall of this debate, you are right, there are are a lot of people, joe that, would really adhere to the kind of things that republicans stand for, but i think the last selection showed us some of the things that we stand for somehow arent being received in the proper way and its being portrayed as we dont care about people and it couldnt be further from the truth. What did that mean . That was after i asked him, are the republicans ever going to by a head of something social like gay marriage . I was pressing him on gay marriage and he would not move away from the conservative base and he said, other peoples opinions have to be respected that dont want gay marriage. I said, what do they got to do with people who want to get married . He was towing the line between the buys and moderates. Somehow even where he was, he didnt hold the line enough. So lets now get to Kelly Anne Conway president and ceo of the polk company and a former Senior Adviser to 2012 to the Newt Gingrich campaign and from walk jimmy williams, executive editor at blue fakes review an msnbc contributor. I would have to say like a reasonable progressive. Jimmy, you were actually a conservative at one point. You saw the light later in life and right, basically, you dont just have a checkmark on every issue . I dont vote with whats behind your name or with me on issues, i think most americans like that. You should own a gun unless are you crazy or a convicted felon. Im from the south. By the way, i live in the mountains, i have to have a gun. Look, i think most americans in the main stream think you out ought to stay out of peoples homes and bedrooms a and their lives, when the economy needs a deficit, can you balance it. Its not economiced interest we already have people on one sign saying that the market is weak today because it pines the republicans have now shown they are going to snatch defeat from the jaws of victory again if 2014 an 2016. They will run someone leak they ran against harry reed or the shyin in delaware. They still havent learned. You dont have that opinion . I certainly havent had that opinion. Im sorry eric cantor lost, because people forget now. They say hes defeated by the tea party. He was a big friend to the tea party in 20140, went all ever ar over this country, voted against the debt ceiling. People forget, one of very few people in the leadership who did. So i think wall street lost a friend in the majority leader. I also would like to focus a little on biography. It should harken anybody in politics for the right reasons. He started out as a driver for his local congressman and descended to number two the most prominent jewish man in the country. Its a lesson, voters starting with the diminution of earmarks, saying to their incumbent members, i dont care how senior you are. I dont care didnt deliver back home. Theyre willing to lock at somebody who they feel is in touch with them more than somebody who maybe can deliver the goods. Can you get them to touch with their constituency . To be honest, i dont know, his polk without a touch with his constituency. To be told you are ahead by 20 or 30 points, to not see this coming, really, there should be a lot of introspection. Is there a larger take away . Are we supposed to look at this and say this was a small microcosm of whatever it was . I this i the latter, andrew. For the following reason. This is one congressional drirkts mitt romney won by 15 points. I dont think any 81 with see its in peril. Last night nancy pelosi were asked f they didnt know who the democratic nominee was. They will lose the seat. Im suggesting does this mean something largerant, some people said the tea party was dead. Does this say they are alive and more powerful than it ever has been . The things. It shows the tea party, not just the tea party, anybody that wants to challenge establishment ideas. That overexaggerated and prematurely wren. Number two the two things will help the republican nominee prevail. One is it gets rid of this ridiculous notion of electability. Can you win, she should win. Dole and rom fi, nobody had an argument apart from the electability. Barak obama, jimmy carter proved you couldnt win, they all won, they ignored it. The third thing i hope will clean up what i call staff infection the arrogance of some of the people who arent elected officials to believe they are running the show. Theyre running k street and eric cantor, he, you know, hes got this new book out called room to grow. All free Market Solution on taxes the culture. I feel like had his constituents known about that book. Before we go, jimmy, is immigration dead now . Immigration, a poll came out, immigration eric cantor is a 72 approval. Its not dead, its absolutely dead, there is no way they will pass it. There would be a revolt in the republican caucusus. I want to push back on the tea party. It doesnt exist. Its the republican base, nobody has ever gone into ale poing both and checked off a name with the words the letters tp behind it. Its r. They got to own tear people and know who they are dealing with. Its a shrinking base. Lois lerner had a lot of check marks next to things called tea party. She definitely was checking off, i dont oh, yeah, come on. R, its called republican. Own the republicans have to own tear base. Your party is having a debate between the hard left and hard hard left. Ill take that debate. Thats an open and honest debate. Listen, thats a great debate. It may be a problem for hill are. Stand your ground. Bye, hymnry. Thank you. Jimmy. Wow. A lot of nice thing about you, jimmy, i hope you pay me back. You are a great guy, joe, i dont care what they say about you. He sounds like rant. He does. When we come back, Goldman Sachs chairman and veo, Lloyd Blankfein will talk about the financials in the economy. Red arrows for the futures. From news maker of the morning, kate kelly. Im sorry, kate, i would give that to you. You have another newsmaker. Joe, i present appreciate the complement. Thats a guy that wears a beard i think really well, im glad hes with you, kate, welcome. Huph heard of him, right . You guys have broken bread together . Is it blankfein. No extra en. I am here with the chairman and ceo. Aside from all the pleasantries. We are here at the Goldman Sachs energy summit. You guys have a provocative thesis. Thank you for joining us. We are wealthy in this part of the world, we risk squandering the opportunity if we dont build the infrastructure or create high quality jobs. Tell us more about that idea. Obviously, we have a blessing in energy. You have to take some steps to realize the benefits and ill tell you, there is a lot of issues. I can incapsulate it briefly saying we have to resolve some of the uncertainties, even tow without stable religionlation, a kind of an agreement and a compromise between the forces focused on the environment and those focused on jobs and growth, weve managed to do a lot of production of energy. What we havent done is we havent got an lot of commitments to build a downstream plants that create the manufacturing and the jobs and thats really what we do. Payback period for developing Energy Resources is very quick. The investment is very large the payback very long for building plants and factories for chemical plants, fertilizer plants and for those, we need to resolve some of the regulatory uncertainties. Sir, this is treacherous grounds you are treading on potentially when you get into policy. You are used to getting investment advice, now you are harnessing ideas on how best to solve the policy side. Tell me what came out of day one of this conference, which was last night. You moderated a panel with treasury secretary lew as well as his counterparts in canada and mexico. W4568s your take away . These things are hard. Its really not trenches. In a way, everybody ae grees we need sensible balance regulation. Its a question of right vs. Wrong. Everybody is right t. Question is how do you come to an aecom dapgs even in a particular domestic economy let alone among three countries. This is the 20th nifrls of and a half that, where as a result of very difficult compromises that were made, we managed to get an increasingly integrated economy for north america. The question, how do we get an integrated Energy Policy for north america . We have the opportunity to be energy sufficient in north america. Who would have thought that 20 years ago, ten years ago, and just think of the consequence of that. Think of how the last 40 years would have played out, had we not needed energy from all those difficult places in the world. That gives you some forward look on going forward. Sure. Sure. I got to go to joe who has a question for you. I have been waiting for a while to ask you this. It goes back to it started gary kuhn the president of your company talked about the lack of volatility. How hard it is to trade. Then i know citigroup talked about it. Yesterday the lead story in the Financial Times was bankers have taken the volatility out of all the markets and theyre not where theyd be without all this intervention and that just begs the question, of where should they be . Should they be a lot lower if it western for this and are you derisking at goldman because of this environment . I mean, is there something coming that we dont know about . Well, joe, there is always something coming that we den foe about because nobody know what is the future is. And, you know the second we assume there is not going to be any volatility. Its not just happenstance, you usually get shocks after, in fact, its the very complacency that always leads to that kind of aing sho you know at the end of the day markets are very calm. I think, given the calm in the market, we can look for explanations. I dont really understand it fully. I dont think anybody understands it fully. Some exongenous thing will happen. Eventually, people acknowledge higher growth. Money is a commodity will start to cost something again and that, in itself, will produce a shock to the mark as again a lot of department has been issudebt issued, acquired. Those portfolios will be markettomarket when Interest Rates rise, that, in itself, will be a shock to the market. Do you wake up in the middle of the night and say to yourself, liquidity . Your former cfo . I have a lot of bad dreams at night, liquidity is one of them. Thats your watch word . It still . It certainly was in 48 i would say that most, there are a lot of problems, with the way problems manifest themselves in a Financial Services firm ultimately is liquidity dries up. We are remote from a session like that. But we keep a very watchful eye on our liquidity as every Financial Institution should. Lloyd, its been unprecedented the volatility seems unprecedented. You never see how difficult the environment is to trade with no vol till. If something is coming, it just seems like it could be a doozy. But when we are taught to think weve already had the doozy the next doozy is we paid the piper. I mean, is it really, are we looking at something that could be quite it fromening coming up our not . Well, joe, one has to always be prepared. The answer is, i dont know, so i wouldnt, given enough time everything happens. Its not difficult to trade. In fact, when nothing is moving, its quite easy to trade. A lot of trading isnt going on, a lot of policency in the market for that. This could go on a while or change. Can i tell you, it wont go on forever. We should are the luxury of a steady, calm, quiet market forever. Its just not our lot in life to have that. I mean, i almost wish it would be like that. Weve accommodated our business to the levels of flow, now you can see what our returns on equities, you know, weve had for the past couple of years, low double digit returns in the markets we have now. Ill tell you, were an intermediary in the market. We are scaling ourselves with the current mark. We are preserveing our optionality to play our role in the market when volatility picks up, some say when volatility picks up, i dont want to quibble with that. I think in the long run, we cant lack on a volatility in the market. Were not that lucky. Speaking of the current trading, lloyd, how do you approach fixed income in this era. Its been a sore spot this past quarter or so. There is a lot of talk about the voelker rule and new representationlations and where the goat areas lie, do you have an answer on that yet . I would say everything has evolved, are there changes in the market . Probably not as radical as people think. The market is not as stable when they read about this in the paper every day. With reinvolved in technology, changes in rules and rec lakes, market conditions. Markets are always evolving. Id say the biggest effect on the market right now is partly voelker, but i would say its more a Capital Requirements for the amount of capital you have to hold in connection with inventories has been ratcheted upwards. As a consequence, people are trying to run fixed income businesses, buy from any seller or sell to any buyer when there is a real cost and a Price Associated with inventory. As a result of that, people who dont have scale are going to have to cut back in the market. Thats what we are reading about now. Were committed to the market. We have the scale. So were going to owe, were going to be one of the major players, if not the major player in the market. A question from Andrew Sorkin . A lot of confidence, a lot of mergers and acquisitions taking place, one of the trends, its a policy issue is this issue of inversions, with reseeing it with allergan playing out with valiant. We saw it play out earlier with pfizer and as tra zeneca. You played on two side as an ad advisor. As a ceo and a citizen, what do you think we should be doing about that . Well, again, we are sitting at a time where the politics are so poisonous in some way that its very, very hard to legislate. Listen, i pay, you know, i pay my taxes. We as a firm pay our taxes and you dont necessarily want a situation where everybody could point to a situation that shouldnt be allowed to pertain and yet it does at the same time if you are an executive, its not even, its not a duty. Its not a patriotic duty to maximize your taxes, so you have people who have pressure who are competing with companies that have a much lower tax rate and its not only apeeling, it may be compelling Certain Industries for u. S. Companies to have the same kind of a tax rate that their global competitors have. I see the poll of. That i dont leak it. Its wont be because we put pressure on the o, its because we amend the tax laws. Talking about confidence. Speaking of politics. Go ahead. No, i was curious what you thought about the eric cantor news from overnight. How does that affect your strategy from a policy standpoint or even the lobbying spend that you guys do at Goldman Sachs, knowing the political situation could change on a dime like that . Again, i thought it was stunning, eric contar was a sensible politician, dedicated himself to public service. I hope and suspect he will continue to dedicate himself to pub leg service. Can i tell you what i hope it doesnt mean, i hope it doesnt mean it will be impossible from the point forward to compromise on issues like the budget, on immigration policy or any of the issues racking the country. At the end of the day, i dont look forward to a time when every legislator goes to washington absolutely committed to an extreme point of view and can you never resolve anything, can you never move forward. Still i think this is not necessarily a good signal. We will have to see how this plays out. On the political side you have seen the criticism recently, Hillary Clinton and her, some of the things in her book. Irrespective of the books people criticized her for being too close to washington, in particular, said shes given speeches to gold man sax, some called eric cantor a wheat conservative. How do you think about that . You know, again, you know, we are all involved in the political process. We dont decide issues. You know, our influence, obviously, is limited, obviously, look at the last five years and the stresses we have been under. But at the same time, we have special expertise. Its not just our right in a what toy describe what we think is good outcomes, given what we know and our expertise. We think its actually a duty and we do this stuff transparentally in the public. Do you think its fair for criticized as being too close to you . There is a populist view out there that somehow she is too close. How do you think about that . Its not, no, ill answer your question, its totally unfair. I think that shes been, you know, she has been important for us, you know, if anybody who is anybody these days obie who is a moderate will be accused of each side being too close to the other side. We have 45 compromise. We have to get back to the time. I think people have to understand, elected representatives are sent to washington to compromise. Not to never compromise and thats, you know, we have to go through this seekle and get to the other side or else well diminish as a nation, frankly. Lloyd, we got to leave it there. Thank you so much for your time, we are looking forward to the north American Energy summit. Being to you, guys. Thank you, both. When we come back, we have results of the cnbc all America Survey. Stick around. Oh my god look. 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, everybody, the results of the cnbc all America Survey are in. Steve leisman joins us with the latest nations growth. What did we get, steve . Some important measures are returning to normal, prerecession, its been a long hard slog back him some of the numbers have achieved the prior precrisis levels, not all of them t. First one is the percentage of americans we polled, 800 americans around the country, rating the economy as poor. In 2007, a third of the nation, you can see it jumped up for the 70 , came back down. This time around a 5point drop. The excellent good really hasnt changed in a very long time. Where it goes is in those percentage of americans who think the economy is in fair shape. So a fivepoint jump there. You see those two things reverse themselves right there. Its progress. We are back to where we were. By the way, this comes with a bunch of other metrics, consumer surveys out there. The Small Business survey has gotten back to their prior level. A lot of numbers here the bottom lean is the percentage of the people who think it will stay the same in the future t. Percentage will get worse is down a little bit. Why is that . Because were tracking wages and housing prices. 38 expect wage increases at the second highest since 2008. Recaptureing some of those levels from the precrisis period, however, the average expected increase of 3. 5 . Houseling, 36 expecting an increase. The average gain again 2. 2 before the recession, they were looking for four, five, 6 and 7 . Gold is no longer americas favorite investment. If you were to pick which one, stocks or real estate do you think is football one . Stocks. Its real estate the love affair with gold over, the real estate another maybe big sign. Does this tend to be a leading or laging Economic Indicator . Some parts are leading when it comes to some of the better data we have. When things do improve, some of the met treks do leave. Its more coincident along with other pieces of data out there. It doesnt really tell you what itself going to happen several months from now. Right. But the current levels, for example, of retail sales can be. Okay. Steve, thank you for that. My pleasure. Coming up, new cloud protection from hewlett packard. We will hear from security and go shopping with the cfo from nordstroms. We will talk consumer trends, economy and the state of retail in just a bit. Squawk box is coming right back after this short break. All stations come over to mission a for a final go. This is for real this time. Step seven point two one two. Verify and lock. Command is locked. Five seconds. Three, two, one. Standing by for capture. The most Innovative Software on the planet. Dragon is captured. Is connecting todays leading companies to places beyond it. Siemens. Answers. E financial noise financial noise financial noise financial noise welcome back, everybody, hp announcing new encryption capabilities. Joining us to talk about the announce is art gililand. He joins us from the hp discover conference. Art, this stuff can get confusing for people listening in, but every day we may be using and making transactions you guys are protecting. Tell us what it is you do. Its great. What we talked about, this weekend, at discover, its really around the Encryption Technologies that we have been using to protect about 9 trillion over the last decades. We have been extending that technology to protect structured information that sits in your data centers, now that moves into your cloud deployments. The American Consumer at home, a businessman, we may be using that tech following hp is protecting, that encryption without protecting it, correct . Thats right. As you use atms today, 70 of atms use technology to protect the pen as it travels through the systems and so when you think about banks talking to other banks, that i have to pass that pin past that you authentication. We have been hearing with target and other retailers. This is different from that. This is a much higher level of encryption . Well the technology, itself, in encryption. When you look at things that happened in the markets today, what they are looking is volatility elsewhere, theyre stealing the data before its encrypted. The algorithms are seen and peer reviewed. So those things are very strong. Its just there are gaps between when its encrypted or not. Thats what happened in the target breach. What are the biggest Cyber Threats facing businesses today . I think when you think about whats happening in the industry today the biggest challenge is the fact that there is a marketbased ecosystem that the adversaries have. The bad guys are bakally partnering together to buy and Sell Services from each other to steal information and so when you look at the threats that we face, its that there is this massive ecosystem. That ecosystem is mais making so much. From stealing from us, whether for Cyber Espionage or cyber crime. The level of investment they make there is massive. So even though were spending about 46 billion a year on security, the fact that theyre a Profit Center and were a cost center makes it very difficult for to us keep up. What should businesses be doing . Should they be spending more money, that money smarter . Effect na, they should actually be spending it different will be they with are spending it today. We did research in october that we published that talks about sort of where you should be spending the incremental dollar. If you look at the top two places you should spend your money, the first is at being better at finding the adversary after theyve broken in and stolen data. They will get in. They are the best in the world. They will get in. So being better at finding them after they break in is a, if you spends your money there, its about a 21 greater roi on your return there. The second place you can spend your money is broader ice of encryptie use of encryption. You get a 17 greater return on your investment if you spend on encryption. So this week at discover, we talked about three different ways we are helping you. The first one is around helping deliver encryption more broadly pence your enterprise with no performance impact on your servers. Right. The second is as you move your data to the cloud in your applications, do the cloud, make sure the policies of encryption move with your data to the cloud and when its enkrichted in the cloud, you still own it. It sits in the cloud. You own the keys, which is the keys, you own the keys, i are the only one that can get access to it. The third one we talked about is around having the Security Policy actually follow the data, itself, as your employee use it. Because, typically, what happens is companies encrypt the data in a data store. Somebody like me whose authenticated and use id. I get in there, i save it on my laptop, all of the Security Policies we implemented in the databases are lost. So being able have those policies follow the data is correct, al for the future of how we will protect our information. Those are great tips. Thank you very much for joining us today. My pleasure. Thank you very much. Another cool looking guy. He did look good. You are starting to win me over. Guys, i dont know what thats for. What is that for . Because its so good there . Go with it, man. Anyway a few years back, nordstrom another great executive decision got rid of the piano and thepy an for the player in the ladies shoe section. It has its own attractions, the piano. Hopefully, we can bring our next guest and bring them to possibly bring him back. We will talk to the retail and consumer with the cfo, oh, man the cfo has to watch the money . Well see. Squawk will be right back. Having the cloud allows us to rapid prototype a lot of ideas. Being able to pay as we go is crucial for a start up. Having to fork out a lot of money up front was risky. We can launch a feature really quick, and if the feature doesnt work, we havent lost anything, and we can have something up and running in days. And this would not be possible without the cloud. We are now supporting over 25 million users each month. Welcome back to squawk box, high retailer nordstroms plans to open three new stores and 16 additional rack store sales, rather, this fall. Joining us to talk expansion plans on the strength ott of the consumer, mike apple, the executive president and chief Financial Officer for nordstroms. Good morning to you, the music you heard, with candles playing, joe is very concerned you have taken the piano players away. Its been a while from the womans shoe section. Is that what you recall . No, it wasntpy call. It was a customers call. Really . Our customers. Who cares about them . Theyre really important to us. They said thepy piano playe was annoying . What happened . They said we like a contemporary sound. We have pianos in some stores, we have gone more to contemporary music. Tell us about her the customer, her, tell us about the state of her at the moment. The state of her. The customer as weve seen over the last several years has slowly responded and gotten strovenger. There is a lot of indications that the strength in our credit card. And certain aspects of our business that spending has improved. Its been slow and methodical. That being said, the crest of the internet and the examiner having more choi customer hav is choices. In five years what does it look like to you . In the next five years, with see both our Internet Business and off price rack business 50 of total. Today theyre about 37, 38. I didnt realize you have more rack stores than nordstrom stores. Yes. Is that because you need to reach behind and get younger shoppers, too . Thats a big piece of it. We have been in the rack business for over 35 years and over the last ten years, weve really done a much better job of learning how to run that Business Model and engaging with those customers better. In fact, we have learned we do have some Cross Section with our full line shopper, but, in fact, we see lot of shoppers at the early stage of the life cycle eventually migrate. Its been a great acquisition channel for us. You guys are going to do a nordstrom store in new york city . Yes. For the first time. 2018 . Right . Why, why now and why havent you done it thus far . Well, its been a long journey for us to find the right location and the right deal, the right economics for us to feel like we could be in fork city and be successful. Its an entirely different model than Opening Stores in suburban malls where, you know, there is a handful of Great Developers that we partner with that we tends to have good economics and do very well. Manhattan is a different story. Well, whats their cost . We havent disclosed it. Suffice it to say it will be multiple times more than the average store. Are you the cfo. You sound like you are doing this begrudgingly going into manhattan. Its expensive. Yes, its expensive. I would say we expect the store to exceed our cost of capital. Which is how we look at our Capital Investments . So its not a lost leader . Yes. The reason it took so long is we are very patient. We looked at a number of different opportunities and this one we think is a great one. Its a great location. Its going to be an iconic building and we will be featured. Real quick. You have a huge credit business. Yes. One of the few retailers with that business. You look at the signature with target and the Security Issues related to that. How much time did you spend on that now . Do you worry about that . We spend a lot. We have been in the credit business for a long time. With reone of the few retailers that still own an operate a bank to issue our tenders. We, several years ago, invested a fair amount of money in security because we, you know, our customers are our most important asset. As we continue to go into the world of personalization, we saw the need to invest to assure that our customers information was protected. So we continue to do that. But we spend a lot of time on that and very focused and our regulators keep us focused on that as well. Do you look at macys and think, wow, theyre good, are they not . Its good to have competition. Competition is great. The same demographic . Hes nieman. More blooming dames. Dales. Coming up, jim cramer from the New York Stock Exchange. Ame dales. Coming up, jim cramer from the New York Stock Exchange. Mes dales. Coming up, jim cramer from the New York Stock Exchange. Es. Dales. Coming up, jim cramer from the New York Stock Exchange. S. Dales. Coming up, jim cramer from the New York Stock Exchange. Dales. Coming up, jim cramer from the New York Stock Exchange. Dales. Coming up, jim cramer from the New York Stock Exchange. D. Coming up, jim cramer from the new ydales. Coming up, jim cramer from the New York Stock Exchange. And see them through, we say lets get to work. Because the future belongs to those who challenge the present. Welcome back to squawk box. The fda is delaying a decision on orexigens obesity drug by three months. The shares plunging on the news. The fda rejected the drug in 2011. Lets get down to the New York Stock Exchange where jim cramer joins us now. We have talked Martin Franklin into partnering up with sorkin and me and doing like a and becky. Becky was not we have no money. Jim can join. Thats what im talking about. We cans really Fund Anything so we arent really offering a lot. Were inviting you in now. But you will have to be the financial backer. Money bags. I like martins involved in many Different Things and taken over a lot of shelf space at the targets of the world, done a great job. If youre in, im in. Think about it. We have the guy from what was the name of that, platform platform they went and bought macdermid and keep buying these specialty chemical operations the big guys dont want and the stock has more than doubled. Everyone seems right. Everyone is taking the cast off and doing fabulously. Its kind of things continual theme is that you take a pinnacle, just all castoffs and hillshire comes along. I still think pinnacle is in play. People dont want to say that. A castoff company like yesterday, wenner, who is going to continue to come on mad money but hes created a great castoff company in b and g foods. Theyre not just rollups. Valeant is considered to be a castoff company. Valeant doing a lot of aggressive things. Companies happy to take divisions, piling them up and making a lot of money. See you in a couple minutes. I love the nordstrom guy. The antitarget. Nordstrom did everything target didnt including slow integration to canada. Thank you, jim. We will see you on squawk on the street in a minute. On a grill for my apartment. Thats what were going to do. Martin franklin of the business of jarreden and much more, hes got the grill right there for me. Well be back in a moment. I had to do something. I saw my doctor. A blood test showed it was low testosterone, not age. We talked about axiron the only underarm low t treatment that can restore t levels to normal in about two weeks in most men. Axiron is not for use in women or anyone younger than 18 or men with prostate or breast cancer. Women, especially those who are or who may become pregnant, and children should avoid contact where axiron is applied as unexpected signs of puberty in children or changes in body hair or increased acne in women may occur. Report these symptoms to your doctor. Tell your doctor about all medical conditions and medications. Serious side effects could include increased risk of prostate cancer, worsening prostate symptoms, decreased sperm count, ankle, feet or body swelling, enlarged or painful breasts, problems breathing while sleeping and blood clots in the legs. Common side effects include skin redness or irritation where applied, increased red blood cell count, headache, diarrhea, vomiting, and increase in psa. Ask your doctor about axiron. Means keeping seven billion ctransactions flowing. G, and when weather hits, its data mayhem. But airlines running hp endtoend solutions are always calm during a storm. So if your business deals with the unexpected, hp big data and Cloud Solutions make sure you always know whats coming and are ready for it. Make it matter. Here at fidelity, we give you the most Free Research reports, customizable charts, powerful screening tools, and guaranteed 1second trades. And at the center of it all is a surprisingly low price just 7. 95. In fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and etrade. Im monica santiago of fidelity investments, and low fees and commissions are another reason serious investors are choosing fidelity. Call or click to open your fidelity account today. Lets get back to our guest host Martin Franklin. Are we going to what can we do . Are you going to get a grill . Were going to go over and look at the grill in a moment. Can i ask him about retail . Yes. Were talking off camera but i want to understand, when you think about all the retailers you deal with right now and we were talking about nordstrom, who do you think is like the best out there . I mean its hard for you to say, because you deal with so many, but are there ones underrated, overrated, walmart and amazon and crossco and sams club. I have to tell you, walmart is obviously the got amazing systems and, you know, theyre the most powerful retailer out there. I think target which has had a lot of problems given the Cyber Security issues theyve had, theyre a great retailer. And i think they know their stuff and theyre going to be a great retailer. You dont deal with them in canada, do you. I dont know what we do with them in canada, to be honest, but you asked me who i think is a great retailer. I think the companies that have great systems are the ones that over time will succeed, have made the investment in their stores. Do you sell product at jc penney or kmart for example . Very little to k mart. Theyre open to buys and its a difficult situation, but theyre a customer. But a fraction of the size of some of our other customers in the same space. You have a grill, i see, back there. We teased this before. A coleman road trip grill. I can use this if i had you can use it on your balcony. Its got wheels. Take it down to your into the garden downstairs. Char coal . Does it need charcoal . Does this have coal, burning co2. Its gas burning. You dont need a match or anything. It has an ignition. And how much does this retail for . Youre asking me . Yes, sir. I dont remember. Its okay. I think its 199. Im not going to stick my head too far out. Can you bring that in the house and try it quickly . Joe trying to kill me. He wants to outdoor use. Theres no maybe a George Foreman grill. My speed. People use those inside, dont they . You can do a George Foreman grill. He has no grill. What about like an electric ha bash chi thing. A panini grill. You look very uncomfortable at that thing. We make those. Very uncomfortable. Youre holding it the wrong way. Turn it around. You got it. I got it right. Spatula on the outside. Yes. Okay. Im not a total dope. A little dope but not a total dope. How does that feel . How does it feel . It feels good. Feels good. Im ready. This is really a the first. It is not. I can grill. You think ive never grilled before. I dont know. I would love to grill a dinner for you. Tailgating episode. Youre lying now. I have. Tofu. Not tofu. You could probably fry tofu on a grill. Some kind of garden burger. Thank you for joining us today. Its been a pleasure talking to you and we really appreciate your time. Andr andrew, you could look pretty good over there. Thank you. Thank you very much. Im supposed to tell everybody, can i get a camera to look at me, im going to look right here. Make sure you join us tomorrow squawk on the street begins right now. Nice. Thats nice. 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 quintanilla has the week off. Take a look at futures. We are leaded for a decidedly down open, perhaps for a number of reasons. Many of which well at least try to hit. Of course, you can actually go down. It does happen. It has happened on occasion. Though not lately. Lets take a look at the tenyear right now,