Transcripts For CNBC Squawk Box 20140725 : vimarsana.com

We have a number of stocks to watch this morning. All names that reported after the opening bell. Amazon posted a quarterly loss nearly double wall streets consensus. The results were hurt as the Company Continues a rapid pace of investment. Amazons cfo says the company is spending more than 100 million on original video content in the third quarter. Were going to be talking to an amazon analyst coming. Up lets say that again. Amazon analyst coming up in the next half hour. Visa posted betterthanexpected earnings and revenue. Thats mostly because of growth and cross border transactions than been slowing amid a stronger dollar. And starbucks earnings amid the street. Stronger than expected and take a look, that stock still down by about 2. 5 . Andrew, well send it over to you and the big question is, did you get picked for jury duty yesterday . I did not get picked for jury duty yesterday. I have one more day to go. Supposedly you do two days max if you dont get picked. Im hoping its a summer friday and they could let us out by lunchtime. I do not know. But we have a number of amazing squawk viewers who are panelists with me. So i got to have many conversations, many of them are watching us this morning and hopefully i thought these were the people that were actually being led around in the orange suits. So they were the possible jurors, not the actual perpetrators of all the right . We might have some viewers who are definitely. Well take them where we can get them. We will, we will. Do they have cable in racars. American greed. There they all watch themselves on american greed. They do, they do. Let me tell you about a couple other stocks to watch this morning. Pandora shares are coming under a bit of pressure. The companys quarter shares came under pressure after the forecast falls short. Down 9 . Baidu now gets 30 of its revenue from mobile services, up from about 20 previously. Then, the news of the morning, mr. Kernen had referenced earlier, this is media tech news. Britains bskyb paying 8. 3 billion in cash to buy Rupert Murdochs pay tv assets in germany and italy. Murdochs 21st century fox is also the top shareholders in bskyb. As a result, its going to have a cash infusion which may allow it to take the proceeds from that partial exit from europe and take it and put it you know where. Into his bid for time warner. Its happening over the next i heard that. Usually you say when you put it you know where, you know where to stick it. And what country is bskyb in . Bskyb is in britain. And this is in germany. Heres was going to happen. Speaking of white collar criminals, Rupert Murdoch, why didnt out put that in there . I didnt think of that, joe. You know where your mind is. Over the next few weeks, were getting Earnings Report from time warner. Youre getting Earnings Reports from news corp. , but its really 21st century fox. Depending on where those news reports check out, youll see the month of august to be a jockeying effort in terms of where shareholders are going to land on all this. I imagine time warner privately has been working on a plan to show the public probably for early september, depending on sort of where things stand with shareholders and how much pressure there is is to show what they can do independently. So i think this whole sort of game, it is a game, is going to begin in earnest. So youre suggesting both companies are going to try to make those numbers look as strong as possible . Everyone is going to try to look as strong as possible in the next two weeks. Then well have a an august behind the scenes jockeying with shareholders to decide who is winning. And then time warner may or may not come out with a public presentation about how well they can do independently. And then after all that, thats when and if you may see a new bid by mr. Murdoch in using some of this cash. And then the question becomes how high he can go. I imagine theres two bids in this. I imagine you raise and 96, 98, and then as they say, some bankers look to say on wall street, with one final bid, you get over like 102 or something and hope that puts it over the top. Andrew, in toerchls what time warner did earlier this week with changing some of the bylaws, where you cant call a meeting earlier, what does that do in terms of it makes it much more complicated and difficult to actually announce a meaningful proxy test or for the shareholders to win out in terms of being able to throw over the board. 100 true. Having said that, im of the view that that does not necessarily stop Rupert Murdoch from coming forward with a new bid and that unto itself can continue to put pressure on the company. We will see. Lets check on the markets this morning. Take a quick look at the futures. After a data kind of felt summery yesterday in terms of you know, theres a lot of results coming out. So it would be a time where people that have positions would be moving around. You can see it in individual issues, but the overall markets are feeling a little bit not dollar based quite yet. What is it, july something . 25th today, right . Yeah. The dog days are in august, usually, arent they . Yeah. I think youve the still got a few weeks. People do spread out. Well, youre leaving. Im leaving. Is that today . Today is your last day, right . I didnt even realize vacation you didnt realize vacation was after friday . No. Ive been worried about andrew. He gets manhattan affective disorder when he doesnt get his dose of jersey sunshine. Poor andrew. And how nice the people are out here and, you know, you didnt i know you miss it. Did you visit it temporarily at all yesterday or you were jersey free yesterday and today . I was jersey free yesterday. I may the urge, it could pull me over the bridge later today because i havent id be at least 24 hours out of the space. Thats like a fourday weekend for you. You should just drive part way across the George Washington bridge and then if anyone is following you, pull a uturn. Remember how they do that . You should do that just to get a quick little dose. I should. A lot of people do call it a dose when they come if you get halfway across the bridge, is that technically jersey . Technically jersey. In the lincoln tunnel, theres the line. Thats true. We could probably do it in the tunnel, but its probably more complicated to do the big swerve. Well, i dont think you can do it on the gw bridge any more. Joe, i may stop by to see your place in the afternoon just to give a hug before you take this vacation. You know, that would be fine. Stop by this afternoon. Were leaving at 11 00. So come on by. Were really not leaving at 11 00. You can stop by. Lets look at the oil markets today. 102. 11. Up 4 cents. 2. 5 on the tenyear. Take a quick look at the dollar. 1. 34. Thats almost time, sorkin, almost time. 1. 34. What are you waiting for . 1. 30. Im not paying 22 for a croissant. I cant. Youd rather pay 18. Yeah. And a little smidgenon of coffee. They call that coffee. What is that . And there is gold which is now below 1,300. Unfortunately, the geopolitical did you see russia . Yes. Is this for real . Thats what i was wondering. The story in the wall street journal today is that russia is firing on ukraine. Its not separatists. No. Theyre firing from russias borders, theyre saying. At ukrainian troops . Thats right. That this is now happening when does it become a Ukraine Russia war . This is the first step of us accusing them. Yeah, right. Lets talk about the other news out there, the gaza death toll has now passed 800. U. S. Secretary of state john kerry is pressing mediators. Martin fletcher joins us this morning from tel aviv. Martin, what can you tell us at this point . Becky, this seems to be building up into make or break days. John kerry, the secretary of state, is leaving cairo earlier in the afternoon to return to washington. Now, hes leaving behind a ceasefire proposal, which has been leaked. Not sure exactly what the details are, but from israeli leaks, it appears to be that hes proposing a oneweek ceasefire beginning sunday during which the the various sides will deal with the key issues remaining, most on israel will is side that they want to continue dealing with the tunnels and destroy those Tunnel Networks from the political sides. They want the siege in gaza lifted. But its not clear what will happen now. The Israeli Cabinet has delayed a meeting by a couple of hours this afternoon. It appears theyre waiting for the First Response to that ceasefire proposal from hamas. If he agrees to the proposal, if hamas agrees, it appears that israel will also agree and then well hopefully have a week of silence during which they can work out all the remaining issues. So thats the stage where we are now in the ceasefire proposals looking good. But the fighting is intensifying. But theres a shifting in the focus today to the west bank. Last night, there were demonstrations in the west bank, a calamity of the crossing from close to jerusalem. Between 10,000 and 20,000 palestinians at nighttime marched across the borders. They were met with israelis who stopped them. There were gunfire, rubber bullets, tear gas, a real melee. Today were waiting to see wal happen after friday prayers, which is the main prayer of the week. Hamas has called for an on the west bank calling on west Bank Palestinians to rally to begin another uprising in israel to coincide with their fight in gaza. So israel, of course, is very concerned about that happening. So were looking at two things today in particular. The potential of a ceasefire agreement and potential of the opposite, the fighting spreading to the west bank. Becky. That sounds like a fairley a lot of material trying to adjust. If youre sitting in the situation where hamas is calling on the west bank to start an uprising like this, how serious can we take this idea of a ceasefire . Well, its a matter of what comes first. The ceasefire, if there was one, would presumably water down the cause on the west bank farther. Where you have an uprising, it is peace and quiet in gaza. But it does seem to be an either or choice at the moment. If theres a ceasefire, looking good on both sides. If theres not a ceasefire, looking bad on both sides. Now to the interview that were all talking about this morning, Steve Liesman sitting down with president obama late yesterday, all the way out on the west coast. Among the topics, discuss taxes. What im saying is that companies flock to the United States in part because they benefit from the best University System in the world, the best infrastructure, although id like to see it be a little better on production. Infrastructure. There are a whole range of benefits that help to create value, create profits. For you to continue to benefit from that entire architecture that helps you thrive, but move your technical address simply to avoid paying taxes is neither fair nor is it something thats going to be good for the country over the longterm. And this is basically taking advantage of tax provisions that are technically legal, but i think most people would say if youre doing business here, if youre basically still an American Company, then youre simply changing your Mailing Address in order to avoid paying taxes, then youre really not doing right by the country and by the American People. You said a bunch of times that getting the wealthy to pay a little bit more, and weve succeeded in raising that top tax rate to 39 or rolling back, is there a limit there . Is there a limit to how much you believe the government should take from an individual in terms of a top tax rate . You know, i dont have a particular number in mind. But if you look at our history, we are still well below what, you know, the marginal tax rates were under Dwight Eisenhower or all the way up through Ronald Reagan. Tax rates are still lower for most folks. And what that means is that we probably can make some more headway than closing loopholes that folks take advantage of as opposed to necessarily raising marginal rates. Joining us now on the right or in the right no, it says on the right, republican political strategist joe watkins of former white house aide. I dont have any opinion either way. A former white house aide under president george h. W. Bush. And on the left, someone that really is i dont know. We agree on so much more than we disagree on, zimmy, jimmy williams. Both are cnbc contributors. Jimmy is i think a little bit confused about where he stands on these things. I dont expect much of an argument here. Gentlemen, did you see what . Did you read the whole transcript, jimmy and joe . Oh, yes. I did, i did. All right. I think the president well, let me just say that im tired of dividing and preparing for 20 for november. I saw a couple of things that we could agree on and that is we both want the president , democrats, republicans want the United States to be the best place in business. We want business to come here because its the place they want to be. They dont even want to leave because its the most competitive place to operate in the private sector and then from which all good things come, jobs, tax revenues, building infrastructure. Cant we agree on that, jimmy . No . Absolutely. But i dont think anyone is talking about american businesses leaving. Its simply how much of their profits they store offshore. But there are people that build facilities elsewhere, either theyre delivering thats right. But theyre all delawarebased corporations. So lets not act like theyre leaving the country. Theyre not. Okay. Some of them actually are either doing business over there for a reason because its not i mean, jimmy, you do not think that our corporate rate is too high as it is . I do, i do. And michael steele, who is speaker boehners spokesman said yesterday in the Washington Post that under president obama, the u. S. Has the highest public tax rate in the developed world. Its the same rate that it was in bush and clinton. Im not sure why its president obamas tax rate. Im of the school of thought that its too high. The world has moved i the world agrees. I understand the lap occur. Why you then dont start you know, its not no, no, its not uncompetitive in the last ten years. Gentlemen, the president of the United States set a Corporate Tax bill to the congress four years ago to take it down 28 and what did they do . Nothing. They did nothing with it. The president of the United States is on the record for the corporate rate being 28 . I happen to be of the school of thought that Corporate America shouldnt be of one rate. On the individual side, you pay five rates why cant Corporate America pay five rates. Make it 10, 20, 30, i dont care what it is. Jimmy, what the president is trying to do is hes trying to punish companies. If youre a company and you see an increasing amount of your revenue coming from overseas sources, it makes sense for you to try and maximize profits for your shareholders. It makes sense for you allowing the foreign entity to buy your operations and reincorporate so you dont get hit twice. We have the highest effective Corporate Tax rate in the world. Even our three largest thats not true. It is true. No, its not. Its we lowered ours in the developed world. But at the same time, we ought to be able to compete. And our folks are looking for way toes compete to joe, why is there no agreement that, joe, it sounds like jimmy and joe both want lower rates. Why dont we have lower rates . Jimmy, you just said there was a proposal put forth. Why has that not been accepted . Well, of course, im hoping that this fall when we are able to elect effectively a Republican Senate as well as a returning of Republican House, we might have a chance in the next session to get something done. But isnt here theres a problem with that. Chairman camp of the ways and Means Committee put out a tax bill. Hits entire party pooh poohed it. Thets no, were not sure sure what chairman camp put out. Why . Its a remarkably progressive tax bill. So if the house cant pass their own bill, dont blame if the president cant even get harry reid to do trade initiatives but neither side is doing what the leaders of the the entire city of washington, d. C. Is completely dysfunctional. My point is, the president put it at 28 . The Republican House has done nothing and the Democratic Senate has done nothing. So in the terms of the timing other than oh, really . How much time has he spent on minimum wage versus others things. Thats right. The president has not led on Corporate Tax reform. Thats exactly right. By the way, Howard Schultz will be on your show today at 9 30. The amazon number troubles me. Microsoft laying off 16,000 people troubles. Pe 52 straight months of job growth. Im pretty sure that Corporate America is doing pretty good right now, guys. Is the gdp seem like its doing pretty good, too, jimmy . No, id like for participation. How about a labor force participation, jimmy . And youre exact lit rye. Lowering unemployment number you might be in the stock market feeling flush and a time of people attribute that to the fed and its hurting income inequality and everything else. Are you feeling flush, jimmy inspect do you think you can go out and poll people and say things are going great in this country right now . No, no. I dont feel that. I think many in the country obviously wrong direction, right direction on the economic front. Most people would say its not going that way. But what i can tell you is were not shedding 800,000 jobs a month as we were guys, how do we get Corporate Tax reform . If both sides say theyre for it, what has to happen . I hate to say this and this is going to sound pessimistic at 6 21 in the morning. Until barack obama is gone, youre never going to find a Company Continues<\/a> a rapid pace of investment. Amazons cfo says the company is spending more than 100 million on original video content in the third quarter. Were going to be talking to an amazon analyst coming. Up lets say that again. Amazon analyst coming up in the next half hour. Visa posted betterthanexpected earnings and revenue. Thats mostly because of growth and cross border transactions than been slowing amid a stronger dollar. And starbucks earnings amid the street. Stronger than expected and take a look, that stock still down by about 2. 5 . Andrew, well send it over to you and the big question is, did you get picked for jury duty yesterday . I did not get picked for jury duty yesterday. I have one more day to go. Supposedly you do two days max if you dont get picked. Im hoping its a summer friday and they could let us out by lunchtime. I do not know. But we have a number of amazing squawk viewers who are panelists with me. So i got to have many conversations, many of them are watching us this morning and hopefully i thought these were the people that were actually being led around in the orange suits. So they were the possible jurors, not the actual perpetrators of all the right . We might have some viewers who are definitely. Well take them where we can get them. We will, we will. Do they have cable in racars. American greed. There they all watch themselves on american greed. They do, they do. Let me tell you about a couple other stocks to watch this morning. Pandora shares are coming under a bit of pressure. The companys quarter shares came under pressure after the forecast falls short. Down 9 . Baidu now gets 30 of its revenue from mobile services, up from about 20 previously. Then, the news of the morning, mr. Kernen had referenced earlier, this is media tech news. Britains bskyb paying 8. 3 billion in cash to buy Rupert Murdochs<\/a> pay tv assets in germany and italy. Murdochs 21st century fox is also the top shareholders in bskyb. As a result, its going to have a cash infusion which may allow it to take the proceeds from that partial exit from europe and take it and put it you know where. Into his bid for time warner. Its happening over the next i heard that. Usually you say when you put it you know where, you know where to stick it. And what country is bskyb in . Bskyb is in britain. And this is in germany. Heres was going to happen. Speaking of white collar criminals, Rupert Murdoch<\/a>, why didnt out put that in there . I didnt think of that, joe. You know where your mind is. Over the next few weeks, were getting Earnings Report<\/a> from time warner. Youre getting Earnings Report<\/a>s from news corp. , but its really 21st century fox. Depending on where those news reports check out, youll see the month of august to be a jockeying effort in terms of where shareholders are going to land on all this. I imagine time warner privately has been working on a plan to show the public probably for early september, depending on sort of where things stand with shareholders and how much pressure there is is to show what they can do independently. So i think this whole sort of game, it is a game, is going to begin in earnest. So youre suggesting both companies are going to try to make those numbers look as strong as possible . Everyone is going to try to look as strong as possible in the next two weeks. Then well have a an august behind the scenes jockeying with shareholders to decide who is winning. And then time warner may or may not come out with a public presentation about how well they can do independently. And then after all that, thats when and if you may see a new bid by mr. Murdoch in using some of this cash. And then the question becomes how high he can go. I imagine theres two bids in this. I imagine you raise and 96, 98, and then as they say, some bankers look to say on wall street, with one final bid, you get over like 102 or something and hope that puts it over the top. Andrew, in toerchls what time warner did earlier this week with changing some of the bylaws, where you cant call a meeting earlier, what does that do in terms of it makes it much more complicated and difficult to actually announce a meaningful proxy test or for the shareholders to win out in terms of being able to throw over the board. 100 true. Having said that, im of the view that that does not necessarily stop Rupert Murdoch<\/a> from coming forward with a new bid and that unto itself can continue to put pressure on the company. We will see. Lets check on the markets this morning. Take a quick look at the futures. After a data kind of felt summery yesterday in terms of you know, theres a lot of results coming out. So it would be a time where people that have positions would be moving around. You can see it in individual issues, but the overall markets are feeling a little bit not dollar based quite yet. What is it, july something . 25th today, right . Yeah. The dog days are in august, usually, arent they . Yeah. I think youve the still got a few weeks. People do spread out. Well, youre leaving. Im leaving. Is that today . Today is your last day, right . I didnt even realize vacation you didnt realize vacation was after friday . No. Ive been worried about andrew. He gets manhattan affective disorder when he doesnt get his dose of jersey sunshine. Poor andrew. And how nice the people are out here and, you know, you didnt i know you miss it. Did you visit it temporarily at all yesterday or you were jersey free yesterday and today . I was jersey free yesterday. I may the urge, it could pull me over the bridge later today because i havent id be at least 24 hours out of the space. Thats like a fourday weekend for you. You should just drive part way across the George Washington<\/a> bridge and then if anyone is following you, pull a uturn. Remember how they do that . You should do that just to get a quick little dose. I should. A lot of people do call it a dose when they come if you get halfway across the bridge, is that technically jersey . Technically jersey. In the lincoln tunnel, theres the line. Thats true. We could probably do it in the tunnel, but its probably more complicated to do the big swerve. Well, i dont think you can do it on the gw bridge any more. Joe, i may stop by to see your place in the afternoon just to give a hug before you take this vacation. You know, that would be fine. Stop by this afternoon. Were leaving at 11 00. So come on by. Were really not leaving at 11 00. You can stop by. Lets look at the oil markets today. 102. 11. Up 4 cents. 2. 5 on the tenyear. Take a quick look at the dollar. 1. 34. Thats almost time, sorkin, almost time. 1. 34. What are you waiting for . 1. 30. Im not paying 22 for a croissant. I cant. Youd rather pay 18. Yeah. And a little smidgenon of coffee. They call that coffee. What is that . And there is gold which is now below 1,300. Unfortunately, the geopolitical did you see russia . Yes. Is this for real . Thats what i was wondering. The story in the wall street journal today is that russia is firing on ukraine. Its not separatists. No. Theyre firing from russias borders, theyre saying. At ukrainian troops . Thats right. That this is now happening when does it become a Ukraine Russia<\/a> war . This is the first step of us accusing them. Yeah, right. Lets talk about the other news out there, the gaza death toll has now passed 800. U. S. Secretary of state john kerry is pressing mediators. Martin fletcher joins us this morning from tel aviv. Martin, what can you tell us at this point . Becky, this seems to be building up into make or break days. John kerry, the secretary of state, is leaving cairo earlier in the afternoon to return to washington. Now, hes leaving behind a ceasefire proposal, which has been leaked. Not sure exactly what the details are, but from israeli leaks, it appears to be that hes proposing a oneweek ceasefire beginning sunday during which the the various sides will deal with the key issues remaining, most on israel will is side that they want to continue dealing with the tunnels and destroy those Tunnel Networks<\/a> from the political sides. They want the siege in gaza lifted. But its not clear what will happen now. The Israeli Cabinet<\/a> has delayed a meeting by a couple of hours this afternoon. It appears theyre waiting for the First Response<\/a> to that ceasefire proposal from hamas. If he agrees to the proposal, if hamas agrees, it appears that israel will also agree and then well hopefully have a week of silence during which they can work out all the remaining issues. So thats the stage where we are now in the ceasefire proposals looking good. But the fighting is intensifying. But theres a shifting in the focus today to the west bank. Last night, there were demonstrations in the west bank, a calamity of the crossing from close to jerusalem. Between 10,000 and 20,000 palestinians at nighttime marched across the borders. They were met with israelis who stopped them. There were gunfire, rubber bullets, tear gas, a real melee. Today were waiting to see wal happen after friday prayers, which is the main prayer of the week. Hamas has called for an on the west bank calling on west Bank Palestinians<\/a> to rally to begin another uprising in israel to coincide with their fight in gaza. So israel, of course, is very concerned about that happening. So were looking at two things today in particular. The potential of a ceasefire agreement and potential of the opposite, the fighting spreading to the west bank. Becky. That sounds like a fairley a lot of material trying to adjust. If youre sitting in the situation where hamas is calling on the west bank to start an uprising like this, how serious can we take this idea of a ceasefire . Well, its a matter of what comes first. The ceasefire, if there was one, would presumably water down the cause on the west bank farther. Where you have an uprising, it is peace and quiet in gaza. But it does seem to be an either or choice at the moment. If theres a ceasefire, looking good on both sides. If theres not a ceasefire, looking bad on both sides. Now to the interview that were all talking about this morning, Steve Liesman<\/a> sitting down with president obama late yesterday, all the way out on the west coast. Among the topics, discuss taxes. What im saying is that companies flock to the United States<\/a> in part because they benefit from the best University System<\/a> in the world, the best infrastructure, although id like to see it be a little better on production. Infrastructure. There are a whole range of benefits that help to create value, create profits. For you to continue to benefit from that entire architecture that helps you thrive, but move your technical address simply to avoid paying taxes is neither fair nor is it something thats going to be good for the country over the longterm. And this is basically taking advantage of tax provisions that are technically legal, but i think most people would say if youre doing business here, if youre basically still an American Company<\/a>, then youre simply changing your Mailing Address<\/a> in order to avoid paying taxes, then youre really not doing right by the country and by the American People<\/a>. You said a bunch of times that getting the wealthy to pay a little bit more, and weve succeeded in raising that top tax rate to 39 or rolling back, is there a limit there . Is there a limit to how much you believe the government should take from an individual in terms of a top tax rate . You know, i dont have a particular number in mind. But if you look at our history, we are still well below what, you know, the marginal tax rates were under Dwight Eisenhower<\/a> or all the way up through Ronald Reagan<\/a>. Tax rates are still lower for most folks. And what that means is that we probably can make some more headway than closing loopholes that folks take advantage of as opposed to necessarily raising marginal rates. Joining us now on the right or in the right no, it says on the right, republican political strategist joe watkins of former white house aide. I dont have any opinion either way. A former white house aide under president george h. W. Bush. And on the left, someone that really is i dont know. We agree on so much more than we disagree on, zimmy, jimmy williams. Both are cnbc contributors. Jimmy is i think a little bit confused about where he stands on these things. I dont expect much of an argument here. Gentlemen, did you see what . Did you read the whole transcript, jimmy and joe . Oh, yes. I did, i did. All right. I think the president well, let me just say that im tired of dividing and preparing for 20 for november. I saw a couple of things that we could agree on and that is we both want the president , democrats, republicans want the United States<\/a> to be the best place in business. We want business to come here because its the place they want to be. They dont even want to leave because its the most competitive place to operate in the private sector and then from which all good things come, jobs, tax revenues, building infrastructure. Cant we agree on that, jimmy . No . Absolutely. But i dont think anyone is talking about american businesses leaving. Its simply how much of their profits they store offshore. But there are people that build facilities elsewhere, either theyre delivering thats right. But theyre all delawarebased corporations. So lets not act like theyre leaving the country. Theyre not. Okay. Some of them actually are either doing business over there for a reason because its not i mean, jimmy, you do not think that our corporate rate is too high as it is . I do, i do. And michael steele, who is speaker boehners spokesman said yesterday in the Washington Post<\/a> that under president obama, the u. S. Has the highest public tax rate in the developed world. Its the same rate that it was in bush and clinton. Im not sure why its president obamas tax rate. Im of the school of thought that its too high. The world has moved i the world agrees. I understand the lap occur. Why you then dont start you know, its not no, no, its not uncompetitive in the last ten years. Gentlemen, the president of the United States<\/a> set a Corporate Tax<\/a> bill to the congress four years ago to take it down 28 and what did they do . Nothing. They did nothing with it. The president of the United States<\/a> is on the record for the corporate rate being 28 . I happen to be of the school of thought that Corporate America<\/a> shouldnt be of one rate. On the individual side, you pay five rates why cant Corporate America<\/a> pay five rates. Make it 10, 20, 30, i dont care what it is. Jimmy, what the president is trying to do is hes trying to punish companies. If youre a company and you see an increasing amount of your revenue coming from overseas sources, it makes sense for you to try and maximize profits for your shareholders. It makes sense for you allowing the foreign entity to buy your operations and reincorporate so you dont get hit twice. We have the highest effective Corporate Tax<\/a> rate in the world. Even our three largest thats not true. It is true. No, its not. Its we lowered ours in the developed world. But at the same time, we ought to be able to compete. And our folks are looking for way toes compete to joe, why is there no agreement that, joe, it sounds like jimmy and joe both want lower rates. Why dont we have lower rates . Jimmy, you just said there was a proposal put forth. Why has that not been accepted . Well, of course, im hoping that this fall when we are able to elect effectively a Republican Senate<\/a> as well as a returning of Republican House<\/a>, we might have a chance in the next session to get something done. But isnt here theres a problem with that. Chairman camp of the ways and Means Committee<\/a> put out a tax bill. Hits entire party pooh poohed it. Thets no, were not sure sure what chairman camp put out. Why . Its a remarkably progressive tax bill. So if the house cant pass their own bill, dont blame if the president cant even get harry reid to do trade initiatives but neither side is doing what the leaders of the the entire city of washington, d. C. Is completely dysfunctional. My point is, the president put it at 28 . The Republican House<\/a> has done nothing and the Democratic Senate<\/a> has done nothing. So in the terms of the timing other than oh, really . How much time has he spent on minimum wage versus others things. Thats right. The president has not led on Corporate Tax<\/a> reform. Thats exactly right. By the way, Howard Schultz<\/a> will be on your show today at 9 30. The amazon number troubles me. Microsoft laying off 16,000 people troubles. Pe 52 straight months of job growth. Im pretty sure that Corporate America<\/a> is doing pretty good right now, guys. Is the gdp seem like its doing pretty good, too, jimmy . No, id like for participation. How about a labor force participation, jimmy . And youre exact lit rye. Lowering unemployment number you might be in the stock market feeling flush and a time of people attribute that to the fed and its hurting income inequality and everything else. Are you feeling flush, jimmy inspect do you think you can go out and poll people and say things are going great in this country right now . No, no. I dont feel that. I think many in the country obviously wrong direction, right direction on the economic front. Most people would say its not going that way. But what i can tell you is were not shedding 800,000 jobs a month as we were guys, how do we get Corporate Tax<\/a> reform . If both sides say theyre for it, what has to happen . I hate to say this and this is going to sound pessimistic at 6 21 in the morning. Until barack obama is gone, youre never going to find a Republican Chamber<\/a> or either house of Congress Passing<\/a> anything. Thats something i can agree with you on. Until barack obama is gone, theres not a whole lot of things that are going to happen. Jimmy, is that a personal anamus . Why is it one individual . Because the idea behind Barack Obamas<\/a> legacy is from from the day he was inaugurated until now is to do anything to destroy that. Im not the only person who thinks that. I hope thats not true. I hope joe, my good friends, i think youre a sensible person. Are you telling me on inaugural day in 2009 the republicans sat in the u. S. Capital and planned Barack Obamas<\/a> demise for the 2012 elections and beyond . Tell me, jimmy, when does the party out of power from the white house not plotted to get back into the white house . After bill clinton was to try to win the white house back . You cant after bill clinton was impeached, he worked with the congress to get stuff down because they finally got their blood. Theyre never going to let barack obama get away and if you think they do youre i remember a lot of people in this country being hopeful and a lot more open to things before the way health care was handled and, really, not sanl republican vote and all the special deals and the nebraska purchase. You know, lost the seat in massachusetts and then had to go rec sill ate you look at those first two years the way that was done, i dont know how you can blame anyone for not wanting to work with the other side after that. Well, i mean, that was four years ago. I was be bitter at my ex boirnd, but hes still my exboyfriend, i could care less. We can be bitter about barack obama and i can tell you, that has and thats what ushered in a lot of the resistance in the house in 2010. And then you know what . We should just wait until barack obama is gone and Hillary Clinton<\/a> is president and jimmy, republicans didnt have any great love for Lyndon Johnson<\/a>, but Lyndon Johnson<\/a> still got civil rights down, he got Voting Rights<\/a> done, he got housing done. Bill clinton did not have a lot of republicans, but he still managed to get a budget surplus. He still managed to do something about welfare reform. Tease what leadership is all about. Its getting above the noise and thats your talking point president barack obama is not a leader. Tell Osama Bin Laden<\/a> that. Im not saying that. Im saying this could be his legacy to be able to bring republicans and democrats together to get a tax reform. Theyre never going to give him a win. If you think theyre going to give him a win, then please, ive got land in florida i mean, come on, guys. You all know theyre not going to do that. Theyre not. All right. Were done again. I started out with such promise, i thought, and its just i heard becky just sigh. Its friday, becky. It went so long. The thing thats so crazy is the three of you, i know, agree on so many points. Jimmy, i read your stuff last night. I know you could all sit down and find a plan you could all agree with. The difference between us and them and the congress is they take we dont. Thats why we can say what we say. Werent you a republican once, jimmy . I was and then i saw the light, the bright light. In his heart of hearts. The opposite way. Come back to the right side, jimmy. Their brain takes over from their heart. Anyway, gentlemen, thank you. Have a great weekend, everybody. Who needs this . Im going to have have a a little umbrella drink in it. Pretty drink . Yeah. Enjoy yourself. Im going to get hammered. We were just talking about hammered again after this. Man, what a month, what a six months that weve had. Yeah. On policy and all this stuff. Although the markets, you know, i guess they should be ignoring it. That shows you that the market does not dictate necessarily that everything is flush and what do you mean . Actually, the markets you should feel awful happy about the markets and yet we dont. That just shows you, its not the ultimate indicator. Arbiter of how things are going, yeah. Especially with whats been happening geopolitically. Andrew is happy, though. What, have you got a lot of comcast or something . That almost hit a new high yesterday. Ive got a drink down here with an umbrella. Im happy. Sitting here on the floor of the stock exchange. Goldman sachs beating wall street to develop its own chat tool. We have that story in todays executive edge. Squawk box returns in just a moment. Announcer stay tuned to vote. Which home is the best bang for your buck . Place your vote for the winning home. Go to cnbc. Com vote right now. And get ready to start voting. At humana, we believe if healthcare changes, if frustration and paperwork decrease. The gap begins to close. So lets simplify things. Lets close the gap between people and care. The fc reported that Goldman Sachs<\/a> bankers want their own chat room. They are developing a chat tool called babble to replace the instant messaging service. Tension between the bank and bloomberg seemed pretty tense last year when news broke reporters used private term to track bankers, guys. Thats the first thing i thought of was how is bloomberg going to get all his scoop . Dont they have a show called inside info or something . What is the name of that show . Surveillance. Yeah. Where they show the ins and outs is that what it is . No. Not close. I figured you would want to use it all the time. Babble seems very funny. I was thinking immediately that these fat cat bankers at goldman, thats a good name for it. Babble. What do they talk about, boom boom room type stuff . Where theyre taking their clients . What do they talk about, andrew . Its like an instant messaging service. People use it all day. Its the stickiest piece to some degree of the bloom berg terminal. Is it snap chat or does it last forever . It lasts forever. Well, i would never say anything there. Is this something that you would be it would not not just goldman, it would be goldman and others . Goldman and others, right. So goldman has been developing this for about a year or two now, but now they have it in place and perhaps now want to try to develop it use it with other it would only work if anybody had it. But its the same thing as nbc trying to say were going to create our own nielsen box. You have to be an independent entity for other companies to trust arent chat rooms where people go to argue with i see people argue with one person all day long. No one ever wins and i have no i have no time or i will not go on any of those things. And i say the same thing. If you wrestle with pigs, youre going to get dirty. Theres no reason to wrestle with haters. Most of it is private chatting, joe. Instant messaging . A lot of it is literally instant messaging. If Lee Cooperman<\/a> wanted to message eddie lampert, you go on the system and message a name and it goes. But, again, it seems to me like it would be better if it was an independent just because bloomberg was that independent thing before. They lost that independence with the scandal that came through. Are you going to trust a competing bank to not be using or looking through any of that information . One point of defense about the terminals. In regard to the allegations. It wasnt that reporters were somehow having access to the chat rooms. Thats been a concern, whether they could potentially. But that wasnt what that particular issue was about. So unclear. What they could see, by the way, was whether people have logged on the system. In the past, you told me about private chat rooms, you were talking about something totally different, andrew. And i dont know that you want to do that if youre into that, thats fine. What whatever your cup of tea is. But, you see, ive never been in a private chat room. Because you taught me about that incognito thing, i dont know what to say. Yeah, the turning on the privacy. Have you ever done that . No. Me, neither. Coming up ive heard about it. Amazon shares are being punished this morning. As we head to break, a look at yesterdays winners and losers. With diabetes, its tough to keep life balanced. I dont always have time to eat like i should. And the more i focus on everything else, the less time i have to take care of me. Thats why i like glucerna shakes. They have slowly digestible carbs to help minimize blood sugar spikes. Glucerna products help me keep everythibalanced. crash ugh im good. Well, almost everything. [male announcer] glucerna. Delicious shakes and bars. E financial noise financial noise financial noise financial noise if energy could come from anything . Or if power could go anywhere . Or if light could seek out the dark . What would happen if that happens . Anything. He cadillac summer collection is here. During the cadillac summers best event, lease this all new 2014 cts for around 459 a month or purchase with 0 apr and make this the summer of style. Amazon post ago much bigger quarterly loss for extended trading. Now to break down the results, ron josie at jmp securities. A lot of people concerned about this stock because the profit didnt come in where they thought the revenue continues to go up, about 23 . So its sort of a tale of two cities. Yeah, andrew. It wasnt too bad. I think the concern and the reason the stock jumps down so much in the aftermarket is aws giving pricing, growth on a revenue basis slowed down pretty dramatically. But almost more importantly, their guidance for the quarter includes a lot of increased costs. I think the question is whether were about to embark on a new investment or whether this is a onetime blip where all these costs sort of came together. Thats the question. Ron, you talk about aws being the cloud piece of their business. We dont talk about it enough. Its now driving so much of their business. As you said, that business up 38 from the same quarter last year. But revenues are growing 60 . This is under the other category. They dont break out exactly what that is. Is that what youre referring to . Yeah. In one q, that other revenue grew 60 . But you can assume thats about a growth rate. So from 60 to 38 , thats a little concerning. Thats a pretty big detail. The good news is that while amazon did decrease prices dramatically beginning in april so its selfinflicted, thats driving the decline in revenue. Usage is up 90 year over year. So the core product seems to be working. Its a pricing issue for them. When you talk about investment spend and now the concern is how much are they investing and frankly i imagine how disciplined are they going to be . What are you worried more about . I think a matter of both, really. I mean, the thing that was surprising, everyone was expecting at least some sort of profitable from an operating income perspective in q2. Certainly losing money at the mid point. So the question is on what . So theyre spending an additional 100 million on content, new centers are coming out here. Aws head count expansion overseas. Theres just a lot of things going on. So what is in there that you say is a mistake longterm . Do us i dont want them in the content business . Do us i dont want them in the telephone business . Im not saying those are the right ones or the wrong ones, but what is it about what theyre doing beyond just the total number that has you anxious . Thats a great question. Its awfully early in regards to ecommerce and penetration. Its hard to say what they shouldnt be doing. As an example, i think from their content, i think five of their original content shows are in production, focus pilots are booel being filmed at this point. Its early. We dont know what they do with conte content, but where does in actually go . Next quarter or two quarters down, are you spending on ten original content shows . Unclear and unclear how that benefits the overall business, given that this is relatively a the content is included in video which gets into prime which helps overall spending for sure, but its awfully early there. Hard to tell, andrew. Ron, what is your target price on this company . So we dont have a target price on it, per se. But, you know, our advice is, you know, we wouldnt be sellers here. We just think we would be allocating capital via facebook or a google at this point. So thats interesting. If you had a dollar of capital right now, you would not put it in amazon . We like facebook. Facebook over google, just to be clear. For sure, yeah. Ron, thank you for joining us this morning. Thank you. Appreciate it very much. All right. We will have more of Steve Liesman<\/a>s exclusive interview with president obama. Find out what the president had to say about janet yellen. Squawk box will be right back. Sdwla stay tuned to vote. Which home is the best bang for your buck . Place your vote for the winning home. Go to cnbc. Com vote right now. C can. Welcome back to squawk box. Weve been talking about Steve Liesman<\/a>s exclusive interview with president obama. I try to avoid commenting on the daytoday trends in the stock market. I think that is true is that the Federal Reserve<\/a> has properly focused on the need for us to bring unemployment down. The costs of unemployment particularly longterm unemployment as well as unemployment for young people just Getting Started<\/a> in their careers. Thats something that has devastating effects on the economy for generations or for decades to come. So i think janet yellen has said this is a focus of ours right now. Inflation remains relatively low. Yeah. I dont know. Andrew, i dont know whether i the president s opinion on bubble or not i think he was smart to stay out of it after yellen kind of stepped in it a week or two ago. I think he was smart to stay out of it. I said yellen, the more i think about it, she said that for a reason. Shes on record. But the president commenting on stocks makes no sense. No. It was a tough question to be asked and he answered as well as he could, i imagine. I was once again you know, i had to say, but i once again was hearing through the whole thing, you didnt build that. That just kept coming back to me and back to me again. We do have a great infrastructure. And we do have great universities. But every single thing the government has ever done has been paid for by the private sector generating revenues rather than tax. The president s salary, everybodys salary, every government employee, every government program, everything the government has done, a vibrant private sector generates the prosperity in the capital and the wealth that has been taxed and goes towards paying for all those things. Joe, i dont understand how you how do you separate the chicken and egg things is wrong. If the government didnt come first and then the corporation ves to pan their and enable the government the government did come first, actually, in this case. In this case, we came over from england, we came here, we created a government because we wanted policies that allowed capitalism, all the things that you love so much to flourish in this country. Andrew, it started with the xhe commerce itself in the colonies, it started with people making candles and being able to go back and forth. It was probably 2 of what the gdp was back then went to this framework of a government that did allow for law and private property and things like that, but its never been the government that has made this country great. Its been the people. And the government should be the government should be doing all it can for the people and for the capital generators and for the private sector. The government is unpatriotic for the government not to make it you know what is unpatriotic to stay in this country . You would like them to move at this point. Not what im saying. Im saying the government should be in a position to do all they can to make Companies Want<\/a> to stay here. You want to build this country as attractive as humanly possible. It shouldnt be finger pointing, it shouldnt be youre doing this, youre doing that. The government didnt give them these things. Private sector generate today revenue that allowed the university, that allowed the build out of the infrastructure, that allowed the function and all. Were not going to solve the chicken and egg question. No, i know. But all i heard is you didnt build that again. The government is either there to help the private sector or the private sector is there to joe, who created the internet . Honest to god. Im not talking about al gore. Where do you get its basic science that we support with the government, we use it with money in the private sector. But its money from the private sector that supports the scientific grants. The government doesnt create any money. Announcer stay tuned to vote, which home is the best bang for your buck . Place your vote for the winning home. Go to cnbc. Com vote right now. And get ready to start voting. Vehicle needs. So prepare your car for any road trip by taking it to an expert ford technician. Because no matter your destination good maintenance helps you save at the pump. Get our multipoint inspection with a Synthetic Blend Oil<\/a> change, tire rotation, Brake Inspection<\/a> and more for 29. 95 or less. Get a complete vehicle checkup only at your ford dealer. Then boom. What happened . Stress, fun, bad habits kids, now what . Lets build a new, smarter bed using the dualair chambers to sense your movement, heartbeat, breathing. Introducing the sleep number bed with sleepiqtm technology. It tracks your sleep and tells you how to adjust for a good, better and an awesome night. The difference . Try adjusting up or down. Youll know cuz sleep iq\u2122 tells you. Only at a sleep number store, mattresses with sleepiq start at just 999. 98. Knetter sleep with sleep number. horn, ding, ding how long have i had my Car Insurance<\/a> . I dont know, eight, ten years. I couldnt tell you but things were a lot less expensive back then. If youre 50 or over you should take a new look at your Auto Insurance<\/a>. You may be overpaying. Actually that makes a lot of sense. Old policy. Old rates. And thanks to your experience behind the wheel, you might save 404 by switching to the aarp Auto Insurance<\/a> program from the hartford. Plus, youll get benefits that reward your driving record, like our promise that you wont be dropped. Wait, you wont drop me . Seriously . Thats right, you wont be dropped. And, if you know anyone whos been dropped by their Insurance Company<\/a>, you know thats a hassle you dont need. Especially these days. Plus youll get recovercare, which helps you pay for Everyday Needs<\/a> like House Cleaning<\/a>, lawn care and pet services if youre injured in an accident. So my Auto Insurance<\/a> is going to help pay the House Cleaning<\/a> if im injured . Did you say lawn care . And if i cant walk my dog, theyll help me pay someone to do it for me . Call the number on your screen to switch to the aarp Auto Insurance<\/a> program from the hartford and be rewarded for your experience behind the wheel. Recovercare, Auto Insurance<\/a> that helps take care of me. Now ive seen it all. You wont drop me, you take care of me as well as my car, and you offer savings to switch. Its unbelievable if youre 50 or over call now to request your free quote. Im gonna call. Im calling. Im calling. Im calling. Call the hartford at the number on you screen to request your free quote. Well even send you this free calculator. Call now. Why wait . Cnbcs popular Million Dollar<\/a> home competition is back. This time, six homes are battling it out to see which one is best in terms of the bang for your buck. And this time we are looking at reclaimed homes. Each property was originally built for another purpose. Something like a church, maybe a warehouse originally. Heres how it works. We have two 1 million homes facing off. And for the First Time Ever<\/a> we are going to have you, the viewers, decide who the winner is. You can go and look right now. You can vote by going to cnbc. Com vote. Check it out. Youll see the two right there. This is only going to be open for about 90 seconds. Take a look at it. The winner is going to move on to the next round. The loser is eliminated. The reporters dont say where they are. Well figure out where we get a look for this round. We have Morgan Brennan<\/a> in the mill manx and meg tirrell in the reclaimed warehouse. This former flour mill sits on 3. 75 acres. Built in 1835 its listed on the National Historic<\/a> register and recently bithsen functioning as a bed and breakfast. Inside this 6,000 square foot home many pieces of the original machinery remain. Like these authentic grain funnels now lights inside this enormous commercial grade kitchen. This property has three bedrooms, one full bathroom and two half baths, with wide open floor plans. Across four levels. And this detached guest cottage used to be the hog house. In the early 19th century this waterfall powered the mill. Today it adds to the peacefulness of this farm country property. This Historic Stone<\/a> mill for a Million Dollar<\/a>s. This condo is in a converted warehouse that used to store goods for Companies Like<\/a> cocacola and wrigley. But its transformed in a city whose motto is keep it weird. While you get no land youre surrounded by city attractions like a world famous bookstore and a simply delicious doughnut shop. The kitchen flows into a 2200 square foot living space that used to be three separate condos all filled with the character of a 100yearold building. Plus the owners added touch of reclaimed windows, doors and even wallpapers. Theres three bedrooms and 2 1 2 baths. The master bedroom is specially created to capture the morning sunlight and the owners also designed custom shutters out of local reclaimed wood. This bathroom is a zen retreat where you can kick back in a japanese soaking tub plus have your own outdoor space with this private rooftop garden. And if you still need to get away youre an hour from the coast and the mountains. All of this for just 1. 25 million. All right. Check it out. We are watching the votes come in right now cnbc. Com vote. You only get to vote for another 30 or 45 seconds. Joining us right now to talk more about it is real estate supper broker dolly len. I think the big question has to be where these two properties are. Generally location, location, location. Mill mansion, which is a lovely home, an interesting home, is in montgomery county, st. Johnsville, new york. Okay. So it was so difficult to gather statistics for anything sold in that area. That i guess i dont know how buyers are going to find a house. You know. I would say that is a problem for the sale of the house. Its on the market awhile. Its had pricing from 2. 5 million down to where it is now. And it still remains unsold. Okay. And i think thats a lot to do with where it is. Nice though. Outdoors. The other place reclaimed warehouse looked like it was reclaimed by squatters and like they broke into a warehouse down in kendall but its cool. It looks like its young, its cool, its in a great location. Its walking distance to anywhere you want to be. Where is it . Its in oregon where theres no state sales tax. Think about that. No state sales tax. You have to live in a warehouse. No, you dont have to. Theres lots of other choices. Portland is one of the coolest to live in this warehouse looks like squatters broke in a window and like put in a put down a futon. I challenge you to come with me and look at it. Im going to the mill. Joe, you have it with our viewers right now the mill is winning. The water the outdoors. 56 to 44 . We will proclaim the mill the winner for this time around. I felt like i was in dolly heartbroken. I felt like i was in a 19th century novel. I love the portland place. Love it. Yeah, very urban. I like the breeze, animals and things. Coming up did proximity. Coming up nax crusader glover nor crist reacts to president obamas comments on inversion. I dont know where hell come down. E financial noise financial noise financial noise financial noise machines will be sprayed to be made. And making something stronger. Will mean making it lighter. One day, factories will work with the cloud. One day. Is today. A cnbc exclusive. President obama speaks out on the economy. Jobs. And taxes. Is there a limit to how much you believe the government should take from an individual . We probably can make some more headway in closing the loopholes that folks take advantage of. Today, washington and wall street react. Tax crusader Grover Norquist<\/a>, senator rob portman and citigroup vice chairman and performer omb director peter orszag. The second hour of squawk box begins right now. Good morning and welcome back to squawk box right here on cnbc. Im andrew ross sorkin. Joe kernen and becky quick, they are back at headquarters this morning. Our guest host all morning, Charles Kantor<\/a>, managing director at neuberger burrman, a founder of the cantor group. Look at the futures see how the markets are setting themselves up for this morning. We have some red arrows right now. Dow looks like it would open off about 47 points. Nasdaq open off about 17 points and the s p 500 off close to 5 points. If you take a look at the ten year you can see whats going on in the number right now, 2. 505. Lets get you through some of the morning head lines. Amazon posted a quarterly loss that was nearly double wall street consensus. The results as the Company Continues<\/a> a rapid pace of investment in new businesses. Also, visa posting better than expected earnings and revenues, but that company is cutting its revenue forecast for the year. Thats mostly because growth in crossborder transactions is slowing amid a stronger dollar. Joe . Yes. Over to you, sir yes, andrew. Andrew. Thank you, president obama stirring the tax debate last night in an exclusive interview with Steve Liesman<\/a>, among the biggest topics, inversions. I think most people would say, if youre doing business here, if youre basically still an American Company<\/a>, but youre simply changing your Mailing Address<\/a> in order to avoid paying taxes, then youre really not doing right by the country, and by the American People<\/a>. Youve said a bunch of times that getting the wealthy to pay a little bit more, and youve succeeded in raising that top tax rate to 39 or rolling back the tax cuts, is there a limit there . Is there a limit to how much you believe the government should take from an individual in terms of the top tax rate . You know, i dont have a particular number in mind. But if you look at our history, we are still well below what, you know, the marginal tax rates were under Dwight Eisenhower<\/a>, or all the way up through Ronald Reagan<\/a>. Tax rates are still lower, on average, for most folks, and what that means is that we probably can make some more headway in closing the loopholes that folks take advantage of, as opposed to necessarily raising marginal rates. For more reaction to the president s position on Corporate Tax<\/a>es, we are joined by Grover Norquist<\/a>, who is the founder of americans for tax reform. Grover we can guess what you think about some of this, but lets just start with the corporate inversions themselves. What do you think of the idea of Companies Going<\/a> ahead to take advantage of this loophole some people will call it in the tax system . Well, its interesting that the president s from illinois, durban, senator durbin who is taking the lead complaining about inversions, is from illinois. American companies in illinois have, for the last 20 years, have been moving to the other 49 states. Okay . Because illinois has high taxes, and high regulations, and theyre moving to states with lower taxes. About 2 million americans, not just companies, but americans have moved from highincome tax states to low, or noincome tax states in the United States<\/a>. What happens with inversions is the United States<\/a> has a 35 marginal tax rate. Nobody makes a decision based on average tax rates. 35 marginal tax rate on the last dollar that you earn. Other companies in europe, european countries, have an average of 25. Which means half of them are lower than 25. Canadas at about 17. 5. A company that buys an American Firm<\/a>, if that American Firm<\/a> deals with international trade, what the president wants to do is tax business overseas, run by American Companies<\/a>, at higher rates than other companies would do so. Then hes surprised when this is very damaging to those companies and the same Company Bought<\/a> by a british or European Firm<\/a> is worth more the day its ownership transfers, and thats not something you can stop. Because people can buy companies. Right. The president s fault that he has done nothing, nothing, nothing, nothing in five years to reduce corporate rates, which he said he was going to do. Right. And he hasnt. His point is that he sent a bill to congress, suggesting a 28 Corporate Tax<\/a> rate. What do you say back . He says ive sent it to congress and theyre sitting on it, theyre not doing anything with it. Well, he might call harry reid, he runs the Democratic Senate<\/a>. The president of the United States<\/a> had a supermajority in the house for two years, a supermajority in the senate for two years, and when he did, for 700 days, he woke up, did nothing, went to bed, and for 700 days he woke up, did nothing, and went to bed, and now he wants to tell us now that hes lost control of the house, that he really has an interest in this. He didnt do it when he had to do it all by himself, and if you ask both the president , his own statements, and harry reids, theyll only do Corporate Tax<\/a> reform if its a trillion dollar tax increase. Hes not he wants to use those high rates to punish American Workers<\/a> and companies. Would you go along with a revenue neutral policy so that if we bring it down to 28 there are going to be some companies that are paying more than they were before, some that will be paying less. Would you go along with a revenue neutral policy . Look, and the republicans in the house under dave camp ways and means have put to the both corporate and individual tax reform in that direction. It is revenue neutral. Actually, raises revenue straight from growth. But static model, its revenue neutral. Right. So yes, the Republican House<\/a>, ways and Means Committee<\/a>, has put to the a package from the senate, that reid could pass something tomorrow if he wanted to. But the president and harry reid are holding Corporate Tax<\/a> reform hostage to a 1 to 1. 4 trillion tax increase they want and the president whines this is damaging American Companies<\/a> to the point where theyre more theyre worth more if a european buys them. He caused this problem. Dave camp, his proposals, even though hes a republican, that doesnt have massive republican support that goes along with it. Okay. The president could get into this conversation by getting the Democratic Senate<\/a> to pass anything. When there was an effort by bachus, chairman bachus on the Senate Finance<\/a> committee to come up with an idea, wasnt my cup of tea, but it was something, harry reid says not until you find me a trillion dollars in higher taxes. Okay. Thats what this is about. The president wants higher taxes. You saw last night when he was asked, do you think rates could go up, he said well, weve got some room. We could go back to eisenhowers rates, he didnt tell the viewers he didnt say we could, he just pointed out that we are below what the rates were during eisenhower. Lets just remind viewers what he didnt mention. 90 , that was the rate under eisenhower. But people paid 5 people paid 5 with the loophole. He didnt mention that either, grover. What did he mean up to did he say up to Ronald Reagan<\/a> ow there are what was he saying about Ronald Reagan<\/a> . Since Ronald Reagan<\/a> brought the rates from 70 top rate individual from 70 to 28 corporate down to 28. Were not at 39. 5. You got to add that 3. 8 tax for obamacare. So were at about 44 , guys. And at present rates and hes talking about up to 90 might be acceptable. Those 90 rates kick in at pretty high rates but they were damaging enough that when we got rid of them we had the 60s. The growth in the 1960s. Grover, what happens if you dont get a deal in the next two years and over the next two years, if i could speculate rate knew that you lose 30 of the russell 1,000, or even s p 500, in the United States<\/a>, that go abroad and they are gone and that toothpaste is out of the tube and they are gone for good. Well, this is what people have been telling the president , Corporate America<\/a>s been telling this white house this for five years now. We could have done something to allow repatriation, as president bush did. And about 400 billion came back pap. People believe that 800 billion to a trillion would come back if we did that again this time the president has put the kibosh on that every time. This is a crisis of his manufacturing and we need to fix it. Do you think theres anything unpatriotic or unamerican about leaving . And lets just define what leaving is. Its actually staying, and getting a different effectively a different postal address and paying taxes differently as if you were somewhere else. In a free market, if your a publicly owned company, somebodys allowed to buy you if they offer more money. That somebody could be british or belgian, because the company will be worth more owned by overseas rather than here. Because of the way we tax overseas earnings. Not how we tax anything earned and produced in the United States<\/a>. That we can hit with a 35 corporate rate if it makes the president happy. But its because we do that for overseas earnings, as well. Thats what we in north korea do differently than other normal countries. And its not a good idea. Its damaging. Its stupid. It should have stopped a long time ago. An drew, wasnt it and grover, it was reductionist logic that we heard last night, where the only people were talking about are big companies, that moved to ireland, where they have ten employees, and they pay zero thats the reductionist whos going to say that thats okay . Everybody is going to say, okay, thats something that we dont want to happen. But thats whats happening. Andrew you heard whats happening. Companies are for sale. Theyre worth more to foreign buyers. Theyre worth more they just go on the stock market and buy them. If you want to reduce it to the minimalist they arent foreign buyers. They are not foreign buyers. The transactions that are taking place are traditionally use doing these reverse mergers. Were losing them both ways and also losing manufacturing and jobs for the same reason. I think this is a natural response that Corporate America<\/a> wants the cash theyve already earned and theyve already paid taxes on. It would be like saying to you, joe, you have 100 in your bank account when you want it youre only going to get 65. But you already paid taxes on it. That doesnt seem to make sense. And Corporate America<\/a> is responding now, because we threw the business cycle, and theyre looking for ways to improve their businesses, and taxes tax is a business cost. And it impacts off the tax returns in very, very meaningful ways. Youre having this debate now because the businesses that want to do the tax inversions are looking for ways to increase shareholder value, and on the margin probably feel the least best about the growth prospects. This is not just companies. Americans living overseas are hit with this worldwide taxation policy of the United States<\/a> that the rest of the world does not have, because it doesnt make a lot of sense, and its not a good idea. And were forcing people to either come back to the United States<\/a>, not work abroad, or some people, thousands of people in the last year, have given up their citizenship because its so expensive to continue to pay american taxes if youre living in canada for the last 20 years. And its counterproductive and we end up losing money because of it losing tax dollars because of it. And then you try to just, you know, you try to legislate against the symptom of the underlying cause, and nothing is blaming the victim. Right. I think its a reflection of globalization. Labor and capital move to places that can earn the best risk adjusted reward for their effort. Wherever that may be. And thats what Corporate America<\/a> is doing, and thats what humans you know what you dont consider . Patriotism and fairness. And thats where youre wrong. Grover i have to say, i agree with you on many points. But i wouldnt call Corporate America<\/a> a victim at this point. Well, when were paying a well theyre not paying. For large corporations its not the effective tax rate. Effective tax rates dont matter. You can drown walking across a river with an average depth of two feet. What matters is the marginal tax rate you pay on the next dollar you earn. Thats what makes decisions one way or the other. Yes, but the marginal tax rate matters. But if you look at the gao, the studies that the gao has done in 2010 and 2011, a look at the actual rates that major corporations paid, they are well below the 25 . In 2010 and 2011 it was all the writeoffs from the financial crisis. From 2008. And its the blended rate because theyve already moved so many operations offshore that youre averaging the 35 with the 10 that theyre getting in the foreign Corporate Tax<\/a> reform needs to happen. But to say that youre blaming the victim. In other countries that have 20 also have lower actual because there are a lot of companies that pay less. Over there, as well. Its not just the rates, guys, its the fact that other guys dont impose their second level of taxation that is fair. That is absolutely fair. Grover thats what were talking about. How do you feel about the fact that other countries have price controls on drugs. Our Drug Companies<\/a> are deciding to go over there but theyre not all of a sudden going to start charging us the same price for the drugs here. There are so many different tradeoffs i think were picking the apples and the oranges that we like. Yes, exactly. We should stop doing stupid things, and we should allow the europeans to continue to do stupid things. We should make a distinction between destructive stupid things, let the europeans do those and good ideas. Id like to give them our tort law. So youre for price controls . No, no. Thats under the stupid things. So andrew youre for price controls . No im not for price controls. Then make up your mind. You just said thats how they do it. Its bad. We dont want to do it, too. You move to the netherlands you pretend to move to the netherlands and there are price controls over there that the individual theyre wrong. Individual tax rate by the way is over 50 , so the distinction if you want to move to the netherlands go move to the netherlands and enjoy it but its just a different experience and we need to acknowledge what we get from being an American Country<\/a> and an American Company<\/a> from what is going on over there. But i just Perfect Point<\/a> you shouldnt patriotic paying half as much in taxes we really could. I agree with grovers point. You cant compete globally if youre set up in an unfair system. And we all want i think everybody around the table wants a lower rate. So lets do it. What we want is for this country to be the place where Everyone Wants<\/a> to do business. And its not. Completely agree. I think it is. I think it is despite on then why are people leaving . On the margin its becoming less competitive. But to say that this is not where they want to be. We could do better. Sure. But where would businesses rather go, france . Apparently theyre going other places and being bought because theyre cheaper in other places. It should be cheaper here to do business. We should be more competitive globally, and wed have more jobs based on it. I dont take the same dour approach that businesses dont want to do business here in america. The whole discussion is about why theyre leaving. Youre right, america sucks. Thats not what im saying. Im saying the whole discussion is about trying to keep them here. We do want to be the place they want to do business. I think they want to do business here despite a terrible tax policy. Do we want to stop americans from moving from high tax states to low tax states totally different. Are they unpatriotic . I find that to be one of the most unfair arguments in this whole thing in part because theyre not moving theyre moving from state to state but theyre actually moving the whole company. This is pretend. Theyre moving theyre postal address. Totally different argument plus theyre leaving the whole country. Just one mans view. Move to where theyre not as illtreated. And the same thing with capital. Thats the yeah the just moving the address. Thats the thats the thats the very foreign and in that you should you know in the big overall Corporate Tax<\/a> reform you should address that. Because our conversation on tax reform thanks grover just Getting Started<\/a> this morning. Still ahead senator rob portman on the fight in congress and then at the top of the next hour, a former obama omb director peter orszag. S its a complete checkup of the services your vehicle needs. So prepare your car for any road trip by taking it to an expert ford technician. Because no matter your destination good maintenance helps you save at the pump. Get our multipoint inspection with a Synthetic Blend Oil<\/a> change, tire rotation, Brake Inspection<\/a> and more for 29. 95 or less. Get a complete vehicle checkup only at your ford dealer. In a we believe outshining the competition tomorrow requires challenging your Business Inside<\/a> and out today. At cognizant, we help forwardlooking Companies Run<\/a> 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. Still to come this morning, geopolitical concerns in iraq and gaza. Also some disappointing results out of amazon last night. Those are the stories that are likely to drive todays trading session. You can take a look right now. The dow futures down about 38 points below fair value. S p futures off by 4. 5. Squawk box will be right back. As long as ive lived in iowa, theres always been wind. strauss blue danube playing if energy could come from anything . Or if power could go anywhere . Or if light could seek out the dark . What would happen if that happens . Anything. Yyyup. With xfinity internet soyour family can use all their devices at once. Works anywhere in the house. Even in the garage. Max whats going on . Were doing a tech startup. Were going public [cheering] the fastest inhome wifi for your entire family. Only from xfinity. Welcome back to squawk box. Were talking markets. Joining us allison deans chief Investment Officer<\/a> of crt global and our guest host Charles Kantor<\/a>. Were about halfway through more than halfway through earnings season and wanted to get your gauge of where you think we are. Fairly priced, overpriced, underpriced, allison . You know, i felt like the markets fairly valued. I had forward earnings estimate about 123, and its 16 times earnings. The thing thats making me hesitate a little, though, is more than twothirds of the companies are coming in with earnings better than expected. Growth better than expected. And top line results better than expected. So i am thinking 123 might be a little too low. But at 16 times earnings im not sure it would go up more than 1 or two so it still doesnt look like a very inexpensive market to make. How surprised are you that it doesnt feel like anybody seems to really care about whats happening geopolitically. I mean weve had sort of momentary impacts but not in any meaningful way. Im very surprised. When i look at whats going on with russia right now and ukraine i feel that that could have a Global Economic<\/a> impact. Its one of the reasons why, while were frustrated with europe i understand why theyre hesitant. Which is there could be very big economic implications, and that could have a Ripple Effect<\/a> on corporate profit growth. So, to me, with the market and these valuations im surprised the markets not a little concerned about that. Does that mean more Downside Risk<\/a> right now . I think it could be a risk of a pullback because if some news comes out that could have some Economic Impact<\/a> with the market valuations you could see people charles where you at . I think id be probably closer to cheaper than expensive. I think the argument around the multiple folks forget that over the last 30 years operating margin in the s p has expanded. You now have higher highs and higher lows in terms of operating margins. That means Corporate America<\/a> has done a fantastic job in running their businesses i think theyve used lead manufacturing, Capital Allocation<\/a> strategies, innovation, globalization to build much Better Business<\/a>es, and in the world of investing, if you have a Better Business<\/a> with higher highs and higher lows in terms of operating cash flow and margin that has to be worth more. So i stand on the side of cheaper versus more expensive. In terms of the market not caring about geopolitical risk i would suggest to you, i think the question depends which market, we tend to look at credit spreads as an indicator of riskiness and risk tolerance. Option adjustment spreads in the high yield market have expanded over 50 basis points over the last month so the credit markets a little nervous. Equity markets havent yet got nervous and thats mostly i think a reflection of the fact that you entered the earnings season expecting 3 growth and you ended up with 6 growth. Although its interesting, having followed financials early in my career i find the bond market typically predicts whats going to happen in the equity market so i think its another reason to be a little bit cautious going into the next few months. Okay. We are going to leave the conversation there. Allison charles, thank you very, very much. When we come back, were going to talk to senator rob portman, because hes going to be speaking out on the tax debate. President obama, talking about that yesterday, inversions and much, much more. Squawk box returns in just a moment. I dont always have time to eat like i should. And the more i focus on everything else, the less time i have to take care of me. Thats why i like glucerna shakes. They have slowly digestible carbs to help minimize blood sugar spikes. Glucerna products help me keep everythibalanced. crash ugh im good. Well, almost everything. [male announcer] glucerna. Delicious shakes and bars. Welcome back to squawk box everyone. Amazon shares trading sharply lower after the ecommerce giant posted a bigger than expected loss. The results were hit as the company spent big on Business Investment<\/a>s. Stock was hit big, too. You can see right now its down about 10 . In europe bank lending in ireland sees its steepest fall since late 2011. The data from the ecb highlighting one of the impediments to growth in the eurozone. In asia, mcdonalds is suspending sales of its Chicken Nuggets<\/a> and other items in hong kong. That decision comes after the fast food giant acknowledged that it had imported products from the company at the center of a food safety scare in china. You hear this, joe . Mcdonalds is saying forget it because some of that meat was like a year old. A year . Was it frozen . I was hoping it was frozen. I didnt see the details on that. But this is smart. At this point they say forget it. Theyre going to be doing their outsourcing no longer from any chinese companies, from thailand to make sure theyre getting quality products. My nuggets, i eat them. I had some this week. Theyre good. Its okay. Its questionable enough. I know. I know. What it is. And if its really old, then, even the i mean you know, you saw the parts is parts. Remember that commercial . I know. God knows what it is. At least it shouldnt be a year old. Youre taking a chance eating it in the first place. Definitely better off right. I dont think it was the Chinese Company<\/a> that they were sourcing some of this stuff from feeding to many different companies. Any of it breasts . I dont know. I doubt it. Why not i did why not make that product . What . Why not make that product if youve done white breast only . White breast nuggets. You can. They exist. They dont make it . I dont think at the fast food restaurants. Ive bought them for the kids. Yeah, i mean you mean mrs. Pauls or something. Theres an organic like apple farm applegate farms. Thats the one. Yeah. We use the same one. We do, too. Our next guest places big bets on the market and was featured in michael lewiss the big short for his massive trade on the chance of the Housing Market<\/a> in 2006. So whats his next great trade and where is he seeing opportunity now . Joining us is paul trichle, partner and head of global event trading at the 4 billion hedge fund whitebox advisers. Still with us is our guest host Charles Kantor<\/a> from neuberger berman. Thanks for having us. Thank you for having me. Youre going to tell us all your secret trading opportuniti opportunities . At whitebox advisers we like to focus on trades that bring asymmetry between risk and reward. Thats what led us to the mortgage trade in the first lace. Thats a lot harder to find today, though. It is well, it is. Except for we believe that there is an opportunity that creates that type of risk reward environment now. Especially if you look at, theres a significant, we think, mispricing between where our european sovereign yields are, the u. S. Yields on fixed income instruments, and where currency volume exists. European sorry, european yields have collapsed significantly. Right. Which may be appropriate. It might be that, you know, that the ecb has said that its going to back all of the poor sovereign countries no matter how dire things get, were skeptical of that. We also believe that theres a potential there could be recovery in europe. Either case, in either case, if you have a huge downturn, or a huge upturn, the fixed income yields are mispriced. Theyre far too low. In the u. S. , you have significantly higher yields for the most part than the core of europe. Again were farther along in the recovery. And its probably justified that theyre there, as well. But if you combine those two factors, in a world where European Central<\/a> banks are continually printing money, that cant work equally for everyone. And currency volatility is at an alltime record low. So if you combine those three trades, we feel you can trade positive carry very positively. Youre not talking about buying u. S. Treasuries, though . Well, not exactly u. S. Treasuries. Other fixed income instruments in the u. S. , that are very similar to treasurylike exposure that we think the credits solid but you get more spread. What kind of things . Theres certain Municipal Bonds<\/a> that we still think are very attractive. There are r and bs securities that are attractive and corporate issues that we think. So its a combination of those types of securities, and then having an underlying european short and a long currency volatility position. And you think about the investment what do you worry about on the downside . Where could you be wrong potentially . We could be wrong in a lot of ways potentially. I think its not like were a huge macro we make macro calls. What we feel protected against is even if were wrong, the amount of money well lose is not very much. Were very protected on the downside. The fact is it could make us wrong would just be a that everything is priced like it is, and currencies even though we feel the euro is very overvalued, and the ecb would prefer to have it lower, that the currencies can trade very technically. Its been surprising that the euro has hung in could stay technically strong. Is the debt principally a bet on increased vol or are you hoping for more volatility or something structural about the relative value of the euro versus the dollar . Its a combination of both. We are hoping for more vol fillty. But its one of the rare situations where we can put on a trade where we benefit from increased volatility, yet, we can structure it so its positive carry so we have staying power in the trade. Oftentimes when you trade short trades, like with the mortgage short it was critical component of that was being able to time it. Otherwise you expect if you bleed carry you get tired of the trade, youre expected return becomes very, very poor if you dont time a short trade correctly so you either have to be able to time it or carry it. How problematic would it be if the u. S. Ten year was yielding, lets say 2. 4 , 2. 3 towards the end of this year . The yield has been stubbornly low and has surprised a lot of people by not rising. For this trade that wouldnt be problematic at all because most of the credits that well be picking we think will have more fixed income exposure than they will will have credit exposure a the ten year like rallying will probably help this trade. Where were protected is because of the difference in carry we get we can short more than were long. So were able to be afforded to put on more short paper so generally if global Interest Rates<\/a> rise were plow texted and will benefit how much capital are you putting toward versus leverage to make the risk adjusted returns you anticipate making if youre right . On this trade, we dont feel you need to use very much leverage. We would be levered on the long side at just one dollar long per asset invested, and then that will afford you to be able to on the short side be levered around 2. 5 to 1 on the short and then equal dollars on currency through options. So its not a very highly leveraged trade. Total leverage . 3. 5 to one on sovereign like instruments. Its a low levered trade. And again the reason for this is, again, there are risks. And theres mark to market risk. The mortgage trade through cbs you could trade it up with explicit options so you could absolutely quantify your downside from a mark to market perspective. When this is a long option trade but its more implicitly long so when you create an implicitly long option trade, you are subject to some extreme market to market moves so you want to reduce the amount of leverage you use in those trades. Paul, thank you so much for coming in. Its always a pleasure talking to you. All right, great, thank you. Andrew . Great conversation. Coming up next, senator rob portman on tax inversions. Squawk box returns in just a moment. Every ford dealership, youll find the works its a complete checkup coming up next, senator rob portman on tax inversions. Squawk box returns in just a moment. Xpert ford technician. Because no matter your destination good maintenance helps you save at the pump. Get our multipoint inspection with a Synthetic Blend Oil<\/a> change, tire rotation, Brake Inspection<\/a> and more for 29. 95 or less. Get a complete vehicle checkup only at your ford dealer. Having a perfectly nice day, when out of nowhere a pickup truck slams into your brand new car. One second it wasnt there and the next second. Boom youve had your first accident. Now you have to make your first claim. So you talk to your Insurance Company<\/a> and. Boom youre blindsided for a second time. They wont give you enough money to replace your brand new car. Dont those people know youre already shaken up . Liberty mutuals new car replacement will pay for the entire value of your car plus depreciation. Call and for drivers with accident forgiveness, Liberty Mutual<\/a> wont raise your rates due to your first accident. Switch to Liberty Mutual<\/a> insurance and you could save up to 423 dollars. Call Liberty Mutual<\/a> for a free quote today at see Car Insurance<\/a> in a whole new light. Liberty mutual insurance. Developers are all about speeds and feeds. Its all about latency. Its all about how fast does it run. I often sit with enterprises who ask me about how Mission Critical<\/a> and hows the performance of the cloud. And i tell them, if you can make gamers happy, you can make anybody happy. Speed is made with the ibm cloud. The ibm cloud is the cloud for business. You know what i love america . Fine barbecue, good times and zero heart burn. And thats why i take prilosec otc each morning for my frequent heart burn because it gives me zero heart burn. Prilosec otc the number one dr. Recomended frequent heart burn medicine for nine straight years. You can beat zero herat burn prilosec otc one pill each morning 24hrs, zero heart burn president obama making a case for a bill that would prevent companies from moving headquarters overseas to avoid paying u. S. Corporate taxes. Weve reached out repeatedly to both democrats and republicans and our argument is simple, if we lower Corporate Tax<\/a> rates, and close loopholes, theres going to be more certainty in terms of what corporations pay. So theres a whole bunch of good reasons why we should do it. Ill be honest with you, steve, the reason its not getting done right now is that congress, you may have noticed, is not just real productive. And they have trouble getting stuff done right now, even when they say they want to do something. Senator rob portman is a member of the finance committee. He joins us now with his reaction to the president s position on tax inversions. Senator, how are you . Its good to see you. Im doing good. How are you . What are the chances that what are the chances that congress or the house would pass a bill that would just close this loophole . Is it possible that that would happen . Well, you cant really close the loophole because people are going to find, you know, other ways to become foreign corporations, and would be terrible tax policy, joe. Weve got to reform the tax code. Weve got to get at the underlying problem. There are people that think that they can do it the other way. We tried that a few years ago and it didnt work. And it doesnt work because if you make it even more disadvantageous to be an American Company<\/a>, whats going to happen . Youre going to see more companies become Foreign Companies<\/a>, maybe not through inversions which i think is reallied tip of the iceberg. Well look at it. There are all sorts of companies being acquired by Foreign Companies<\/a> today, try to buy an american beer right now. You know. I mean theyre bought by Foreign Companies<\/a>, because the bottom line, aftertax profit is better for these Foreign Companies<\/a> so they can afford to pay a premium. Thats whats going to happen and will accelerate if we make it harder to be a u. S. Company. Weve got to get at the underlying problem. I heard the president s speech yesterday. He called these companies economic deserters. And you know the problem is washington. In a way these companies are economic refugees. In other words, i dont think they want to leave the United States<\/a>, i think what theyre saying is i cant keep my fiduciary responsibility to my shareholders and be an American Company<\/a> anymore which is incredibly sad, because the american tax system is so noncompetitive. The rates too high and International System<\/a> doesnt allow us to compete effectively so weve got to look at washington not call these companies names. Sorkin, im looking at, you know, i dont ever expect to see this in the new york times. And senator portman, ill just reference this, the f. T. Basically agrees with you, andrew, that a company like apple has benefited from u. S. Innovation, the rule of law, other advantages of the american system to become globally dominant but they didnt reach the top via philanthropy and expecting them to change their act is quixotic. But, the f. T. Goes on to conclude that this wont fly, just closing that loophole wont fly. I dont disagree with you. And the president probably, his advisers, they say, have argued you cant waste capital on a big tax reform because it wont happen. But this wont happen, either. If youre going to try to do something, why not try for the grand bargain that actually solves the problem . I dont disagree with you. I look i think everybody the f. T. Actually comes to that conclusion. That because all youll do is have more lawyers finding more ways of getting around this loophole. I could make the argument. I could make the argument that president obama is trying to drive a wedge in washington right now so that we actually do get some form of Corporate Tax<\/a> reform given the fact that not only republicans but many democrats, and by the way, everybody really does want to get to some form of reform. But then we sit around and say we cant get there. You dont think this is senator portman to me it looks like, it looks like theres an eye on november and its an easy position to take that the draft dodging corporations are the bad guys. Exactly. And Congress Wont<\/a> raise the minimum wage and they wont close this loophole. What am i to do . Elect more democrats in november . Look, i hope the president s interview yesterday with steve was accurate, and that he is going to send a detailed tax proposal for it. He wasnt yet. Back in 2012 they sent a 25page white paper from treasury. Thats great. They have not. Engaged with us on Corporate Tax<\/a> reform. I hope they will. As you know, because ive talked about this on this show for the last three years, this is not just an important problem. It is an urgent problem. And the people who are suffering are American Workers<\/a>. Because when you have these high tax rates, based on all the economic analysis, including a Congressional Budget Office<\/a> report, 70 of the harm goes to workers in terms of lower pay, lower benefits, and the ability to have a job. So, you know, this is an issue that ought to be something the president leads on. It sounds like last night that he wants to start leading on it based on his interview with you guys. Thats great. But its not going to be solved by just doing these political oneoffs where we make it even harder to be an American Company<\/a>. You mentioned apple. You know, they drapged apple up here to the hill, the democrats, to give them a hard time about using creative tax planning. Okay . And said, you know, basically what the president said yesterday, they didnt use economic disorder they used the word economic patriotism means you shouldnt go overseas. Listen, what we did, in that period, is we came forward and said this is what samsung pays after all these creative tax planning by apple samsung pays less, and so if youre apple, what are you to do . You know. And every other country in the world that is part of the oecd, all the developed countries, have all reformed their tax code since 1984 when we last touched it. So senator and were just sitting at the side lines. And theres an opportunity here. Getting to the nittygritty. We all want this country to be the most attractive place to do business. What does that mean slightly. Has to be for i. Its got to be at least 25 . It would be better to be lower because 25 is slightly above the average when you include the state taxes because were really at 39 now but its got to be at least to 25, and weve got to have a tax system internationally that theres a territorial type tax system. Ive had it scored by the committee on taxation up here to be revenue neutral. Ive shared those details, im happy to share it with others. Frankly the democrats i talked to about it are interested up to a point but theyre looking for some cover and some support from the white house. So i think theres an opportunity here, lets look at this, as the opportunity to take advantage of a bad situation, these inversions, and actually do something to help the country move forward. By the way, it also responds to the question that a lot of people have about why do some corporations in america not pay taxes, so hardly any taxes. If you did this reform, everybody would be paying taxes. All right. Because youd have fewer preferences, exemptions, credits, deductions, and you know, so its good for the country to reform this code but its also good for the american worker, who right now is getting the short end of the stick. Right. Senator, do you think you could carry ohio in 2016 . No, seriously. Do you think you could . Well im up for reelection so i hope so. I dont mean that. I mean how about portman, becky . I mean, ill put becky on the spot. No on social irus youre where im glad where you are, because i think, you know, that its not divisive, and you speak youre kind of boring maybe, but it could we could spruce you up a little bit. But you know what . I think boring in a good way. But i think the social issues might not allow you to appease the base. But you would be joe im with joe. Where are you . Were back to you know we got two families that can run this country . Those are the only people that can run . I moon i dont get it. Heres where i am. The countrys in trouble. Were in trouble because we are slipping behind. Because were not doing what we need to do on tax reform as we talk about but its much bigger than that. Its about regulations, its about what we do in terms of international trade, where we are sitting on the sidelines and American Workers<\/a> getting hurt. Its about what were doing in terms of Health Care Costs<\/a> dramatically increasing at a time when you already have a middle class squeezed out there with wages going down. So look i think the country is in trouble. The debt and deficit is a real issue. I did a little and got a lot of grief from the right and the left saying why are you talking about the debt and deficit . Im talking about it because its at record levels and it enables us as americans, over the next 30 years, to add another 70 trillion dollars to the debt. So these are big issues. And if we dont address them, you know, i think the countrys not going to be able to get back on its feet and were not going to be able to pass along to our kids and grandkids a better country. Thats what im focused on. Im doing it in the senate now and i hope to continue dont change the subject. What were you omb youve done like ten things in washington, right . You got all this experience too, right . I cant keep a job. Will you think about it . Not vp. Just think about it. You know, it great state of ohio. A lot of president s come from ohio. You know that, right . You just got this ohio bias, joe. By the way, our Cincinnati Reds<\/a> are having a tough time. If you could throw out the first pitch. I just checked. They get to 1 1 2 games back from milwaukee before the allstar break. I go to one of the games against the yankees, they get swept by the yankees, theyve lost six straights. Theyre six back again and its like why do i try . Why do i no, theres still room for comeback. A lot of injuries. Got the nats town this weekend. You jinxed them. Yeah. You made a lot of sense. The president yesterday said he was four square what does four square behind mean . Hes four square behind doing this tax reform. Lets take him at his word and get busy on it. I think the American People<\/a> are looking for leadership right now and this is one area where theyre seeing these companies go overseas they dont like it. I dont like it. You dont like it. Lets do something about it that actually gets to the core of the problem which is weve got a noncompetitive tax code. What drives me nuts is the is just the, you know, picking fights, pointing at fingers, and elections coming up and these guys are this and divide its all the same crap. I dont know if youre going to see anything get introduced. Looks like more posturing and we have five years of it. But senator, appreciate it. Thanks, joe. See you, andrew. Take care, guys. When we come back we do have stomp stocks to watch today and at the top of the hour, more of Steve Liesman<\/a>s interview with president obama. Also, reaction from citigroups vice chair of corporate and Investment Banking<\/a> peter orszag. Squawk box will be right back. Thank ythank you for defendiyour sacrifice. And thank you for your bravery. Thank you colonel. Thank you daddy. Military families are uniquely thankful for many things, the legacy of usaa Auto Insurance<\/a> can be one of them. If youre a current or former military member or their family, get an Auto Insurance<\/a> quote and see why 92 of our members plan to stay for life. Lets take a look at some stocks to watch this morning. Chinese internet search giant bidu blowing past wall street targets helped by a jump in mobile revenue. Pandora shares coming under pressure. The Company Current<\/a> quarter forecast was below where wall street was estimating. Pandora says it plans to put a lot of money back into its business. Visa posted better than expected earnings and revenue. The company is cutting its revenue forecast for the year because growth in crossborder transactions is slowing amid a stronger dollar. Is that a dow component. Mmhmm. I had to look up. Mmhmm. It was like uhhuh and huhuh together. Mmhmm. Starbucks beat the street with its earnings. Samestore sales growth in its Americas Region<\/a> was stronger than expected. Starbucks boss, Howard Schultz<\/a> will join the squawk on the street team at nine eastern, looks like 9 45. Andrew . We do have a big hour still to come before we head to that break though check out the futures. See how things are setting themselves up i believe right over there. Hang on a second. Andrew are you leaving for jury duty . I am not. We have peter orszag also coming up in the 8 00 hour. I will be right here with you. Okay. When we return. And we will return with some of those red arrows as well. Because it looks like the markets going to open down about 30 points. Mplt coming up, the president s message to american business. If youre doing business here but youre simply changing your Mailing Address<\/a> in order to avoid paying taxes, then youre really not doing right by the country well have more of Steve Liesman<\/a>s groundbreaking interview in just a couple of minutes. Right here on squawk box. We never thought wed be farming wind out here. Its not just building jobs here, its helping our community. Siemens location here has just received a major order of wind turbines. It puts a huge smile on my face. Cause im like, this is what we do. the fact that iowa is leading the way in wind energy, im so proud, like, its just amazing. If energy could come from anything . Or if power could go anywhere . Or if light could seek out the dark . What would happen if that happens . Anything. He cadillac summer collection is here. During the cadillac summers best event, lease this 2014 ats for around 299 a month and make this the summer of style. Washington takes on tax inversions. There are policies we can put in place that can help that. Some of it has to do with globalization. Some of it has to do with technology. Some of it has to do with what some have called a shift to a more winner take all economy. The president sets out his plan to keep business growing in america. His view on the economy, jobs, and the geopolitical turmoil gripping markets around the globe. Peter orszag joins us with his reaction to cnbcs interview with the president. And the ceo of homeaway on the Vacation Rental<\/a> landscape. A whole week youll be here. Ha, ha, ha. Okay. Oh, wow. Just something. This, plus your morning head lines. As the final hour of squawk box begins right now. Welcome back to squawk box here on cnbc first in business worldwide. Im joe kernen along with becky quick, and and drew ross sorkin, man of the hour is here. Did you read the f. T. . I just came in on the plane. Just read that. Obamas dilemma over tax inversions. You want to do the rest of the show and ill read this we didnt know we were going to talk to you. Im not a speed reader. Plod through it. Plod through it . Prod through it . Thoughts on the market Charles Kantor<\/a> of neuberger berman. Check i think its plod through. Plod your way along. Plodding your way. Okay. Plot is like were down about 30 points. Not a whole lot happening in the equity markets. At this point. But, that could all change. Although it is it is. And by the way, if you look at some of the individual stocks you do have some big movers. Amazon is the stock to watch today. The online retailer posting a quarterly loss that was nearly double what wall street was expecting. Results were hurt as the Company Continues<\/a> a rapid pace of investment in new businesses. Amazons cfo says that the company is spending more than 100 million on original video content in the third quarter. It was the real reason that the stock took a hit. You can see right now, its down about 10 . Its a decline of 35 to 322. 92. Britains bskyb is paying 8. 3 billion in cash to buy Rupert Murdochs<\/a> pay tv assets in germany and italy. Murdochs 21st century fox is also the top shareholder in bskyb. Fox is expected to use the proceeds from its partial exit from europe to help its bid for time warner. You can see that stock is up by about 50 cents. In geopolitical news, secretary of state john kerry is pressing for a gaza ceasefire. The civilian death toll soaring to more than 800. There is worry that the Israeli Palestinian<\/a> bloodshed could spread to the west bank and jerusalem in the occupied west bank roughly 10,000 demonstrators marched in solidarity with gaza overnight. Steve oh, president barack obama may be stirring up the Midterm Election<\/a> debate by going after what he calls a Corporate Tax<\/a> loophole. Cnbc Steve Liesman<\/a> joins us now the entire companys going to join us now with more of his just call of cnbc. All of cnbc is going to join us now no. I guess you are cnbc. Now my point here we like watching and were proud of you for getting it. And you say he did not cop to actually asking for me to be audited personally. That was not he never mentioned me and didnt say i asked for he just said that they happened to be in a rotation of doing people with initials j. K. In jersey. And that that he said it was random. Because i asked. All the discs have been destroyed on why im getting they dont understand agent fees. My point here, steve, is the f. T. Comes at this i did this story. But it comes at frite the left saying that these companies are im not going to say dirt bags but theyre basically, even apple has benefited from everything its gotten in this country but dont expect them to be thrillen tlopic. Its quixotic to think theyre going to be good corporate citizens. Then it says this is not going to pass just closing loophole. Right. So if hes going to fry to spend some capital why not do the grand bargain thats my story, joe. Thats what i have in the prompter right here. Thats why i think oh, i got to do it again . Did i do it again . I did just go and tell you how did you spill the coffee all over . It was how did your entire the entire how did he came directly from the plane coming back from california. So you were rushing or something . Just back there in the makeup area. Did you just pour it on yourself . Joe, youre the guy who when you have a bad back comes up and slaps you on the back and asks you how youre doing. Exactly. Thats who you are. You know that about yourself and youre comfortable. Joe my question this morning for investors is whether this tax inversion thing could be, and i say could be, the thing, the catalyst, that sparks the longawaited broader tax reform. President obama made a forthright pledge, made it to me. Made it to cnbc, that his administration, now in its sixth year, stands ready now to push it. Were eager to make it happen. Invariably it takes some time to work through a big tax reform piece of legislation. When Ronald Reagan<\/a> last did it back in 8687 it was about a year and a half long process. Now is the time for us to get started. I think that people should expect that this administration will be foresquare behind it. What does that mean . I asked what that meant. Four square means all the way. All the way behind it. The question of political muscle but the president insists tax reform will be simpler and fairer which in his mind is not just lowering the rate but also eliminating what he calls unproductive loopholes. Hes backed the 28 rate. Republicans wanted 25. But heres the question is whether either side in this Congressional Election<\/a> year prepared to take on what im calling the loophole lovin lobbies who stand behind all these tax breaks. Now on the issue of inversions, which is what the f. T. Deals with, by the way joe had no idea i was doing this question. I asked the president if the company wasnt just doing their job by maximizing profits. Heres what the president had to say. It is true that there are a lot of things that may be legal that probably arent the right thing to do by the country. People are paid to maximize profits, but people are also paid to be good corporate citizens. Theyre also paid to make sure that theyre thinking about, in addition to shareholder value, how do you grow a company over the longterm, and this kind of strategy, i think, undermines peoples confidence in how companies are thinking about their responsibilities to the country as a whole. So most of the political analysts of which i admit to not being one say no chance on tax inversion. No chance on broader tax reform. Almost ever during the obama administration. But something needs to be done about these Companies Moving<\/a> overseas. It remains possible in my mind that this is the issue that propels broader reform and brings both parties to the table. You know we had naive, maybe. Well, you know, we had Grover Norquist<\/a>, not cleveland, Grover Norquist<\/a> on this morning, and he hes from ohio. He is. President from ohio. Yeah. His point is that the plan that the president s put forward, and that the democrats on the side want a trillion dollars in additional taxes right because they want to use for infrastructure and for other things. Is there a way to do this, a revenue neutral bring it down to 28 . Look, i the last i have enough trouble understanding economics as joe says almost every day. And politics is the last thing but a trillion is an opening bid. Could it be a half a trillion, could it be a quarter of a trillion could it be revenue neutral . I dont fixing the tax code and helping out the Small Businesses<\/a> that cant take advantage of these loopholes . In the old world you could couple tax reform with maybe a half of the rise in the minimum wage the president wants . You know, somewhere in there. But why doesnt this issue stand on its own . If both sides are in favor of it, why cant this issue stand on its own . Weve got to get harwood on the phone. Hes doing National Public<\/a> radio this week. This is something that as joe noser ra wrote in the times earlier this week the democrats agree is something that would create jobs in this country. The republicans say it and it remains absolutely insaeb to me that what youre talking about, becky, cant happen. That theres not some im not ready to give blame either side. Whether whether the republicans have just been so nasty to him or whether he really just doesnt have the stomach for doing whats necessary, i do you see him rolling up his sleeves and governing and getting down and dirty with all of congress and trying to get this done . I dont see that. Its beneath him to do that. Heres what he said joe. He said to me, and he said this before, that the problem in congress is not the republicans. He says its a faction within the republican party. He doesnt say that its harry reid . Harry reid wont pass any of his trade deals. Thats true, too. The democrats at this point will not do anything to lower the head line rate. The republicans have the are with the companies that want some of the tax what i dont understand is why he never engaged with dave camp. Camp had a bunch of things see the in his proposal that obama add wanted and the republicans hate it. If i wanted to get down and dirty in a political conversation with the president instead of a broader economic one id have asked him. You say youre naive. I want to be like you. I want to be naive about having a chance you have what scares me is my cynical nature because i saw that jobs plan that he kept putting forward in front of all the people, all the speeches that he gave, that was pure posturing to paint republicans and this will be again, too for november. This will be the republicans want to help these tax dodgers get out of the country. They dont want to raise the minimum wage. I dont i dont think weve got to go. But i disagree a little bit with you, joe. The president wants these things to happen. Hes not he could have done it in his first two years and he could have many times still in his presidency. I know. Many times i thought youre cutting off your nose to spite your face. You will be getting more job creation if you were nicer to the private sector and helping the private sector help your president. It never worked. I agree. I think theres plenty of room for compromise. Steve loved the interview. When we return former omb director peter orszag will join the conversation. Check out the squawk box market indicator. Bopp. In india we have 400 Million People<\/a> who dont have electricity and i just figured that its time i do something about it. What were doing right now, along with ibm, is to actually transfer data through a satellite from our wind farms directly onto the cloud. I think we could create a far more efficient system across the whole network where we could actually draw down different kinds of energy based on when its needed by the consumer. A smarter Energy System<\/a> is made with the ibm cloud. The ibm cloud is the cloud for business. Just take a closer look. It works how you want to work. With a Fidelity Investment<\/a> professional. Or managing your investments on your own. Helping you find new ways to plan for retirement. And save on taxes where you can. So you can invest in the life that you want today. Tap into the full power of your fidelity greenline. Call or come in today for a free oneonone review. Welcome back to squawk box everyone. Weve been watching the futures this morning. It does look like we see some red arrows. Those dow futures look like theyd open down by about 39 points below fair value. S p futures would open down by just over four points. Also, abbvies Second Quarter<\/a> earnings beating the street by six cents a share. Revenue also topping consensus. Among the drivers you had surging global sales of its humira treatment for rheumatoid arthritis. Abbvie agreed to pay 50 billion to acquire irelands shire. Okay. Lets continue our conversation now about the president s interview last night with Steve Liesman<\/a>. Joining us is peter orszag, citigroups vice chairman of corporate and Investment Banking<\/a>. Also, of course, the former director of the office of management and budget under president obama. Steve liesman, of course, also with us. Peter i dont know if you got the chance to hear the earlier conversations weve been having. I did. Joe has made the argument repeatedly that whatever is happening here, there is really no way, unfortunately, or fortunately, for president obamas proposal around inversions to actually get through and we need to ultimately work on a much larger package, which also may not happen either. Is that how you handicap it . Yeah, i think thats probably right. I think the probability 6 a rifle shot fix here the way the administration has proposed is pretty small. Id also note, by the way, the administration came to this kind of slowly. If you look at their proposal, it was scored, the revenue impact over five years, was evaluated under 4 billion. So i think that reflects a lack of appreciation for how much of this activity was projected to be happening. You cant say that 4 billion over five years is the most important problem facing the United States<\/a>. So is the president being disingenuous when i makes the comments that he did yesterday to steve . No, no. I think the administration kind of missed the fact that this trend was developing. And so they were a little bit kind of slow off the mark. You have made a proposal, or at least a suggested proposal, around how you think we should do a territorial tax system, which really isnt that territorial at all, which i actually have to tell you, im a fan of. Maybe you can explain to the viewers and maybe some folks in washington what youre talking about. Sure. And by the way, everyone the reason that broad scale Corporate Tax<\/a> reform is so hard is everyone says im in favor of broad scale Corporate Tax<\/a> reform and then they mean completely Different Things<\/a> by it. The republicans generally mean a territorial system. The democrats often mean something else. I think the system that makes the most sense is basically what state governments in the United States<\/a> have done to tax corporations, theyve been struggling with the same set of mobile capital constraints that now nations face. And its very simple. Its called formulary apportionment. The thing thats hardest for companies to manipulate is where their sales occur. Everything else you can transfer pricing, what have you, you can play games. So therefore, if x percent of your global sales are in the United States<\/a>, x percent of your global profits should be taxed in the United States<\/a> regardless of where youre headquartered, period. Peter, i agree that this is a big issue and the administrations been slow on the uptake. Its well worth pointing out, though, that we all know capital can be moved. But its only what, in the last ten years or so that capitals been able to move as easily as it has been able to move, and the big struggle here is that capital is mobile, and governance is not is really not, right . Correct. That we cant we dont really deal with the french and the germans on how to tax corporations and this whole thing. Theyre really separate entities. I like your idea here but i just want to say, do we have to be as cynical as the political analysts here . Is it possible, indeed, that washington gets in the kind of a crisis mode here, and maybe makes a deal when it comes to either broader tax reform or at least the inversion . I want to believe, i really do, but i think the odds look, before the election, before the november election, even if you look at the calendar the number of days that congress has to deal with Something Like<\/a> this are very, very limited. So the odds before the election are extraordinarily low so take joes most cynical construct of what the president is doing. That he knows it will fail. And hes doing it to embarrass the republicans. Does it really embarrass the republicans . Do they really care . Will it matter if they end up voting down antitax inversion legislation . Or is it not an issue for them . Well, i think this could be a political issue. But look, theres lets just be clear here. There also is a substantive issue here that we all agree, joe agrees, even joe agrees, that reform of the Corporate Tax<\/a> system would be beneficial. So i think someone going out and talking about the need for reform of the Corporate Tax<\/a> system is not just wait a minute, it wouldnt even be joe agree im the one that wants the corporate it would be even you agree that we want okay. And by the way, ill sign up for revenue neutral also. I think i would, too. The peter whats the number . But will the president . Thats beckys good question. Heres the thing. The discussions about tax reform youve got to be clear, is it only Corporate Tax<\/a> reform . Theres no way youre going to get that much revenue increase out of a Corporate Tax<\/a> reform. The Corporate Tax<\/a> reform piece is going to be revenue neutral. The question is, do you do broader scale tax reform, including individual tax peter, peter think about people would say its crazy. They worry about the rurk to zero around the world. Think if we did go to zero. Think if the whole world went to zero on Corporate Tax<\/a>es and then we taxed think of all the jobs. All of a sudden theres all these jobs and weve got more people to tax individually. Think of all the dive debds go up and weve got more dividends to tax more capital gains. Why couldnt we just do it that way . Let all the corporations just unleash all of them around the world to compete equally based on innovation and everything else, and then tax it by instead of taxing it twice, tax it from the people that get the money from working for the corporations . So youd be in favor of high tax on capital income at the individual level . If i had to. If we had to. The reason we have a Corporate Tax<\/a> system is people worry that in practice, that there would be so much leakage from that individual side, especially in capital income, that its worth having a Corporate Income<\/a> tax. Right. But the key part to your proposal is there would have to be a pretty stiff tax on capital income at the individual level, and as we know, thats not popular, either. Peter, steve made the point earlier that when you get into the nittygritty of any of these conversations, youre going to get into all of the loopholes and every corporations going to try to protect them. Yeah. How do you stop that . Well, thats why this is so hard. Lets take a revenue neutral Corporate Tax<\/a> reform. By definition, that means that when some corporations effective tax rate all in including the loopholes goes down, other corporate effective tax rates have to go up. And therein lies the problem. You know, all of these breaks are protected by powerful lobbies. This is not an easy undertaking. And this is why, again, its always apple pie to say i want to broaden the base and lower the rate but no one wants to broaden the base by getting rid of the tax exclusion or deduction that benefits them. Okay. Peter were going to leave it Corporate Tax<\/a>es make up less than 10 . Dont go cynical on us. Im with you. Im smiling. No youre totally cynical. You know that. Peter, thank you for joining us. Steve, of course, congratulations on awesome interview yesterday. Thank you. Thats making a lot of waves yesterday and today. Andrew, now are you leaving for jury duty . I think right about now its time to go over to the new york state jury. Its criminal. Well see if i this is now this is the time to commit a crime because andrew will never vote to i mean, if im going to do something im going to do it right now. Because you just dont have the heart to actually hes too nice. Have a great weekend, everybody. Joe have a great vacation. Ill miss you. You know where to find me. I got an email. Weeping. Lets send each other selfies. Oh, know. Oh, boy. What . Mental image. When we come back, chipmaker rf microbeing boosted by iphones and samsung kwal axsys success. The numbers for june will be out at 8 30 eastern time. Just ahead squawk box will be right back. In a world thats changing faster than ever, we believe outshining the competition tomorrow requires challenging your Business Inside<\/a> and out today. At cognizant, we help forwardlooking Companies Run<\/a> 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. At every ford dealership, youll find the works its a complete checkup of the services your vehicle needs. So prepare your car for any road trip by taking it to an expert ford technician. Because no matter your destination good maintenance helps you save at the pump. Get our multipoint inspection with a Synthetic Blend Oil<\/a> change, tire rotation, Brake Inspection<\/a> and more for 29. 95 or less. Get a complete vehicle checkup only at your ford dealer. But parallel parking isnt one you do a lof them. Ings great. Youre either too far from the curb. Or too close to other cars. Its just a matter of time until you rip some guys bumper off. So, here are your choices take the bus. Or get Liberty Mutual<\/a> insurance. For drivers with accident forgiveness, Liberty Mutual<\/a> wont raise your rates due to your first accident. See Car Insurance<\/a> in a whole new light. Call Liberty Mutual<\/a> insurance. water dripping and dont juspipes clanging ncisco. Visit tripadvisor san francisco. soothing sound of a shower with millions of reviews, tripadvisor makes any destination better. Welcome back, everybody, Rf Micro Devices<\/a> is forecasting Second Quarter<\/a> results above expectations thanks for higher demand for its chips that connect iphones and Samsung Smartphones<\/a> to networks. Rf micro says it expects Second Quarter<\/a> revenue of about 345 million versus an estimate of 328 million. Earnings are expected to come out of 27 cents a share ahead of where the street was expecting. The apple supplier to expected to benefit from the rampup of the iphone 6 build. Analysts expect rf micro to have a larger role in the latest iphone than in the earlier versions. The stock is nearly doubled over the last year. If you take a look at the futures right now, you will see again that there are some red arrows. Dow futures down by about 32 points. Not bad. Off the worst levels in the morning. S p futures down by just about four points. Squawk box will be right back. Coming up after the break, durable goods data, and market reaction. And later, the ceo of homeaway, with his view of the vacation marketplace. Squawk box is back after a quick break. [ girl ] my mom, she makes underwater fans that are powered by the moon. She can print amazing things, right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. My mom works at ge. For that moment, where right place meets right time. And when i find it i go for it. announcer at scottrade, we share your passion for trading. Thats why we give you the edge, with innovative charting and trading features, plus powerful mobile apps so youre always connected, wherever you are. Because at scottrade, our passion is to power yours. He cadillac summer collection is here. During the cadillac summers best event, lease this all new 2014 cts for around 459 a month or purchase with 0 apr and make this the summer of style. Yyyup. With xfinity internet soyour family can use all their devices at once. Works anywhere in the house. Even in the garage. Max whats going on . Were doing a tech startup. Were going public [cheering] the fastest inhome wifi for your entire family. Only from xfinity. Welcome back to squawk box with durable goods for june out shortly. Steve liesman is here and these guys talking to charles, and charles has some analysis as to why now. He gets it. Fascinating theory. Why now . I think because corporate confidence is up, and ceos want access to their cash. Its incented in health care where you have a lot of high dividend yielding securities. Youve had those as a reflection to the low Interest Rate<\/a> environment. Investors want income, and the corporate cfos are sitting there saying i want my cash overseas but to bring it back, its really expensive. It turns in effective dividend yields from 4 to 6 when you bring it back. And so, in response to maintaining their dividends, theyre searching externally to do acquisitions. Theyre too high. I just want to go over the math, charles. You want to pay a 4 dividend in america. Right. You need 6 of money overseas to pay that dividend. To pay the 4. But if i do the inversion, 4 costs me once you do the inversion, you can get the cash, you can relever your Balance Sheet<\/a> potentially, and you can and you can have access to that cash flow on a future basis, which supports your dividend on a future basis because no ceo ever wants to reduce his dividend. Dividends are permanent. So the dividend players are in a stickier wicket so to speak than the buyback players because buybacks arent always permanent. So its a natural reflection of where we are in the cycle and where Interest Rates<\/a> are, and where our businesses have gone globally to build their business. I think at the beginning of i dont want to at the beginning of lets increase the dividend to attract income nevers, three, four years ago, peel didnt probably think through the math, and you cant take on debt forever to support your dividend. I dont think thats the primary reason for these deals. I maintain the primary reason is still strategic, but the opportunity for the ceos to get control of his own cash, that hes already paid taxes on in a foreign place, without any more cost is very attractive, especially when the tax doesnt apply to the future earnings after the inversion. So youre suggesting, one solution obviously would be an amnesty . An amnesty could at least reduce some of this rush to the exits, if they were to allowed to bring this cash back they wouldnt need to invert to get access to the cash. Thats right. Part of the rush to the exit i think is the Investment Bankers<\/a> out there, all about fear and greed. The fear is you close the loophole, you dont do the amnesty, the greed is, others are doing it so you better do it. The fear back in the corporate suite is ive got to fund this dividend yield possibly and i need the cheapest access to money possible to do that, and i cant take up my leverage anymore. Got to get to the numbers here. I dont have it yet, though, its 15 seconds. They want to run the animation. I got to put my were looking for up 0. 5 after a 0. 9 decline. Rick is not here today, so im going to be doing this. And usually i twist in the wind a little bit. Here we go. Up 0. 7 a little bit better than expected. And heres the table. I love it when the technology works. 0. 7 ex transportation up 0. 8 . They did revise down the may words by one tick to minus 1 so slightly worse in may. Better than expected in june. Let me see here, manufacturing with unfilled orders up onesixth. Im looking for the Business Investment<\/a>. Nondefense aircraft. Up 1. 4 after a minus 1. 2 number. Thats good. By the way it was down two months in a row and now its finally up, one of the central points that people are looking for when it comes to the second half turnaround in the United States<\/a> is Capital Investment<\/a> spending. Big jump by the way in defense aircraft up 15. 3. Thats been a bit of a tear here. Capital goods, so pretty good report. Im just looking here at the orders which are also up. And its the shipments im looking for. Sorry. Theyre also up, as well. So that figures into gdp. No. I didnt do it as excitingly as rick does it. I could have waves my arms, and the background of the the background helps. Helps a lot. But thats the best i can do up better than expected. Next time joe and i will jump around behind you. That will be good. Sounded good from here, streef. For more on the numbers and the economy were also joined by john silver chief economist of wells fargo along with our guest host Charles Kantor<\/a>. What do you think about this, john . What do you think about the numbers . I think steves got it right. These are good numbers. Unfilled orders means theyre still probably ahead of shipments means that youre taking in more orders than youre shipping out. Thats good. The orders ex transportation was another good number. I think this is a good number and i agree with steve. I think Capital Spending<\/a> in the second half of this year will be stronger than the first half and for all of 2014, better than 2013, its a good report. Charles just said that Business Confidence<\/a> is up, and thats what it takes really to do Business Investment<\/a> doesnt it, john . Oh, yeah. The combination of good confidence, a lot of cash flow, but again, expectations of an improving economy. That combination obviously with low Interest Rates<\/a>, which hasnt really changed all that much. It is a Good Environment<\/a> for Capital Spending<\/a> and thats what were seeing, steve, and i think your sum very right on. Chuck, nothing is more puzzling than whats happening in the real estate market. And theres no better missing link when it comes to the economy and you guys have a great beat on whats happening on Residential Real Estate<\/a> at wells fargo there. Whats your explanation for these lousy numbers weve been getting . Well, the contrast between existing home sales and new home sales is absolutely critical. Because what is happening with existing home sales, is their prices are really discounted relative to the new home sales. And so what weve seen is existing home sales, especially once you take out distressed home sales, have really improved. But new home sales remain very, very weak, relative to, you know, history. Its sort of a flat trend over last year but relatively weak compared to history simply because their prices are out of line with existing home sales. Were still working through the legacy of 20062008. Give us a gdp number for the second half. Second half of this year . Yeah. Oh, id say 2. 5 to 3 . Its a good number. Should be a good number. But its a lousy number when you average in the first half. Oh, well again, from our personal point of view, 2. 2 is probably the overall yearly number, so that First Quarter<\/a> really hurt us. The president the Larry Summers<\/a> idea. We are stuck at two. Steve stay focused on where the puck is going, not where the puck has been. I know. But we got to go. John, thank you for joining us. Steve, thank you. Really great stuff. Thank you. Charles, youre going to be with us for the rest of the show. Weve got a lot more to talk about. Up next, a surprise guest on tax inversions. You wont believe who we have on the phone with us right after the break, think shark tank and basketball. Uhhuh. Your 16yearold daughter studied day and night for her drivers test. Secretly inside, you hoped she wouldnt pass. The thought of your baby girl driving around all by herself was. You just werent ready. But she did pass. cause shes your baby girl. And now youre proud. A bundle of nerves proud. But proud. Get a discount when you add a newlylicensed teen to your Liberty Mutual<\/a> insurance policy. Call to learn about our whole range of life event discounts. Newlywed discount. New College Graduate<\/a> and retiree discounts. You could even get a discount when you add a car. Call Liberty Mutual<\/a> for a free quote today at see Car Insurance<\/a> in a whole new light. Liberty mutual insurance. Weits not justt wed be fabuilding jobs here,. Its helping our community. Siemens location here has just received a major order of wind turbines. It puts a huge smile on my face. Cause im like, this is what we do. the fact that iowa is leading the way in wind energy, im so proud, like, its just amazing. We have a surprise guest joining us on the squawk news line. If you didnt guess it from joes clues already. Think the nba and shark tank, well it is mark cuban, Dallas Mavericks<\/a> owner and shark tank cohost. Thank you so much for calling in today. My pleasure, guys. I hear you have a lot on your mind especially whats been happening with these tax inversi inversions. What do you think about it . When we talk about tax inversions we typically talk only about a Single Company<\/a> and what the impact is on that Single Company<\/a>. From an investor standpoint, whats the purpose of buying any equity and thats to improve your net worth. To increase your net worth. And you want to increase your net worth so you can increase your quality of life. So from an investors perspective, i think you have to look at it holistically. The realality is the ries risk, cost never leaves the system because one Company Takes<\/a> some action. If we get enough companies or in some cases big local Companies Moving<\/a> and inverting, well then that tax money has to be made up somewhere. Whos going to make it up . Its going to be shareholders across a lot of shareholders. But its going to be shareholders nonetheless. And then youve got to think about, okay, wholistically, your quality of life is impacted by what happens in this country. And if this is part of a movement where in aggregate it has a really Material Impact<\/a> on taxes paid, then again, taxes are going to go up, the governments going to screw something up in trying to deal with it, and it really creates a bad did we lose mark . I think we lost mark. Well get imto call back in. But im not sure where hes going with this, if this is an argument that was my next question to im, is he in favor of what the president has proposed to try and stop this . Because he was almost making an argument for why taxes would go up overall if this happens. My guess is thats not the case, though. I thought he was potentially heading down the line of thinking about the aftertax return for an individual. Right. Relative to a corporation. Potentially hes going i just dont know, but ultimately, if companies become more valuable by executing smart, strategic investment and Capital Allocation<\/a> policies, and individuals earn their securities, more wealth is good for quality of life. I mean the overall i just say it again and again and again. Theres two ways of looking at things, and the country seas split down the middle. And that is one that the private sector kind of exists to fund the government so that the government can do all these things in terms of redistributing wealth and making things more fair. And then theres the other notion that really the government is there to grease the the pathway for businesses to succeed which generates more jobs, which lowers the unemployment rate, and then more tax dollars come, more, you know, selfactualization for everyone who feels good about themselves and the whole general welfare is better with a vibrant private sector. And i think people on each side lose sight of that. I dont know how you cant i dont know how its not a chicken or egg thing. The government has never created a penny of wealth. Its only been able to redistribute the problem comes when the system is abused, and as a result you wind up with corporate cronyism, as a result you have corporate cronyism is the enemy of capitalism. But pure capitalism exists purely but the reason you have increased inequality is because in some places, the systems been abused. And you wonder where the government needs to step in on that. I agree with your idea all right. You back . Mark is back. Yeah, im back. I dont know where i lost you in that long die tribe so you have to let me. Start out tell us what youre arguing in favor of. Are you arguing in favor of the government changing Corporate Tax<\/a> overall . No. Thats not what im arguing because i think thats a difficult battle that given the system right now, its almost impossible. What i am also what i am saying is that shareholders should take responsibility. That were responsible for our own portfolios. And rather than looking at each stock singularly, you should look at it wholistically, what is going to impact your total net worth, including taxes going up, because someones got to make up those taxes that are being lost because of the inversion. And you know, how is that going to also make an impact on the country and your quality of life . So youre arguing against buying shares in companies that do these inversions because you think its unpatriotic and its going to hurt what theyre doing to shareholders i dont want to go as far as saying unpatriotic, because everybody can make their own choice in business. I dont consider that unpatriotic. But i think shareholders have to take more responsibility, and not close their eyes or the funds that theyre part of have to take more responsibility to say, look, the costs dont leave the system. Just because one company gets a shortterm benefit by inverting, and you still dont know if thats going to translate into a higher stock price, or a return of capital, or any type of return for the shareholder, you know, if that company is leaving, then as a shareholder, i need to say, how does this impact my total net worth. Because i might lose a little bit of money on the sale of the stock. I dont know if im going to gain money, if im keeping it, but what i do know is that theres extens of millions of dollars in taxes that were being paid last year that are not being paid next year, so somebodys got to pay that. So youre saying shareholders should vote with their feet yes. And leave those companies that are leaving the United States<\/a> . Right. Because you should evaluate your evaluate the cost of them leaving as it applies to your total net worth, not just to the price or potential price of one individual stock. And then also evaluate big picture, you know, by not by not selling your stock, does that encourage other companies to do the same thing. Which means even larger tax shortfalls, which means it costs us even more over the longterm, which means your net worth is going to go down. Right . So if the economy suffers, fewer taxes, your net worth is going down, whether you like it or not. And a part of that i think mark in the majority of the cases the shareholders have voted, the stocks have gone up because tax is an expense. And by getting access to cash thats already being taxed and free that up from a Capital Allocation<\/a> decision shareholder value has gone up. I dont think thats the primary reason of these deals. The primary reason is companies are thinking about theyre strt eveningic future. And where the individual shareholder has got hurt, and its out of their control, is tax inversions create taxable events for individual shareholders because you have to create a new company. So you may have been sitting on a very large unrealized gain that immediately becomes taxable. And thats tax leakage that happens to the individual, that tax goes back to the government, but the corporation themselves is protected. On an anecdotal basis for each company youre exactly right. But when they move overseas, right . That tax shortfall now happens year after year after year after year. Right . And so and we dont know, just because they have the capital overseas, doesnt mean that theyre going to allocate it correctly. Theres many a company that is able to create capital to reduce taxes that doesnt benefit the shareholder. And so you have a risk there, but the Bigger Picture<\/a> risk i think is much greater. Mark, let me ask you. You said youre not in favor of changing the Corporate Tax<\/a> code overall because you dont think its possible that would you agree that that would be the most the most wanted scenario. The most logical scenario to change it . No, i dont. I dont. And ive had this conversation with multiple politicians. I think the cost of doing business, all the forms, all the legal costs, all the tax costs, not the actual tax rate that we pay, but all the things involved in dealing with those, particularly for smaller companies, and individuals, and entrepreneurs, are easier to change, and have a far greater impact on our net worth than all the ramifications, all the ruminations that the government can try to go through to fix the tax code. Although, mark, i think the problem with the tax code right now is that you have a 35 rate. You have some companies that pay much less than that. That take advantage of some of the tax credits or other things that are out there. But its small companies, in particular, that dont hire legions of accountants to get around some of these things that get stuck with that. I think youre putting using the Corporate Tax<\/a> code the way it is today, i think is a huge impediment, and a huge problem for Small Businesses<\/a> in particular. I dont see it necessarily look, any tax amount is an impediment for any company, right . Thats just a given. If youre paying money out. But if you can hire legions of accountants im going to be paying 12 , 14 , not 35 . Well, youre still going to have to hire legions of accountants because whatever the government does in terms of tax reform, theyre going to complicate it, and the cost to deal with it is going to go up. Theyre not going to get it right. Were not going to get just a flat tax thats simple. But what we can change that everybodys going to agree on, is by simplifying the whole process. Simplifying the whole process of how companies do business, you mean in terms of regulation . Yes. Absolutely. Because individual regulations look, im going to use the worst example possible, and thats healthcare. Gov, right . It was a huge disaster technologically, until they got themselves somewhat together and then we were able to see that you can take tens of millions of people, have them fill in forms online, and have them implement insurance for tens of millions of people. Why cant we analogize that to one or two forms online for business, that we ask all the states to support, and reduce our costs of having to have 50 different accountants . When i sign my taxes right now, i have to sign 50 states, ive got to sign literally i have to take a whole day of signing stuff. Right. Its just ridiculous the overhead associated with dealing with taxes, and forms i wouldnt argue that with you. I agree simplification would be wonderful. But i dont think i dont think it should be an either or. I think if you can simplify some of that regulation but it is an either or, because we already know that its almost impossible to get realistic tax reform, because of all the special interests. No matter what you do, theres always going to be a loophole somewhere with someone protected. Whereas on the flip said did in 1986 they did a pretty good job of streamlining things. That was over 30 years ago. In a different world. Right it needs to be cleared up again. It was a different world. Will, look if i thought that was possible it would be an absolute yes. But if you ask me whats the path of least resistance i think simplifying all the forms and all the things we do, look its the old Lemonade Stand<\/a> thing. Kids arent allowed to open up Lemonade Stand<\/a>s because theres too many forms to fill out. Companies arent Getting Started<\/a> because of all the administration. Entrepreneurs have to spend money. All my shark tank deals i have to spend a god awful amount of money on accountants, on legal fees, all the different forms, all the different regulations, for each state that they do business. Its crazy. Those in aggregate, i think, add up to more, not just in absolute dollars, but in all the time it takes. The one thing we know about entrepreneurs, theyre not using their time best when theyre dealing with all this tax code, all the legal issues, all the licensing issues, all the forms that they have to deal with. That is not where theyre best suited and where theyre going to get the best return on the dime. So if you look at it, becky, say best return on time is where the Companies Get<\/a> their best upside, i think thats whats make it in reducing complexity rather than focus on tax reform. I hear you. Reducing complexity. Streamlining some of those processes. I think that makes a lot of sense but will you at least admit that the most desirable setup would be we have tax reform even if you dont think its possible . No. I think simplicity would be if you could have both, mark. Of course, if i could have both. Yeah, if i could take both, yeah, of course. Ill be greedy. But the reality is that if i had to choose between the two, a 10 Corporate Tax<\/a> reduction, or reducing all the administrativia where i could fill out one form and go to work id take that any time because i could apply my time and make more money on the return of my time and my effort than i can on the 10 . All right. So, this is the thing thats really bothering you right now . Yeah, because its crazy. Because the risks never leaves the system. And so, again, when we look at things anecdotally for individual companies, and they make let me take a step back. The biggest lie in business is that they say a ceo will say im doing this in the best interest of shareholders. Thats nonsense. Right . Nonsense. Right . Shareholders have different viewpoints on a lot of Different Things<\/a>. If you ask me if a ceo came to me and i owned, you know, 100 shares of their company and said, you know what, were thinking of laying people off, and we understand the impact on the country, we understand the impact on the local economy, not going to be good, would you be willing to give us a pe of, instead of the 18 were getting, would you be willing to take the 20 by not selling your stock . Chances are i would say yes. I dont think we communicate with shareholders. While youre here, let me ask you about area. It got a lot of coverage after the Supreme Court<\/a> declared it could not do what it was doing, basically stealing from broadcasters. You came up with this idea a long time ago with broadcast. Com. How do you think about how it all played out . All of a sudden people started saying, you know what, ill try to do it and then beg for forgiveness. In the interest of technology, we think we have a chance for it to be approved. Because thats exactly what happened with youtube. But, you know, they tried and i dont blame chad for trying. It was a good try. But it didnt surprise me that it didnt work. And, you know, i talked to chad, told him this, we tried it way back when, when the infrastructure but putting up an antenna, putting up a pc and streaming it individually, you know, it is an idea that makes sense, but it is not an idea that we thought legally would pass then. And i told him i would be shocked if it passed now. What do you think about where Technology Stocks<\/a> are trading at the levels if you look at the social media, some of the other companies we heard from, even janet yellen expressing some concern about the levels. There is only a few companies. You talk about social media, are you talking about just facebook and twitter, who else really . You can look at facebook, twitter, some of the other Technology Companies<\/a> that have ipod. I wont name names. Some have jumped. Do i think it is a bubble . No. It is not 1999 all over again by a long shocht. Youre not getting into an elevator and people are talking about jumps of 15 a day continuously. Were not seeing huge volume on any of these stocks. Were seeing decreased volume. It is just that, you know, there is half as many stocks to invest in today as there was 20 years ago when we are were going public. And so you got to put your money somewhere, and thats one of the reasons the market keeps on going up. If you want me to say something, okay, what catches my attention in technology, twitter has a 30 billion market cap, which is higher than netflix, and so i think netflix overall is more impactful and more Game Changing<\/a> than twitter is right now. Now, maybe twitter can rebound like facebook did in term of marketing. Falling all the way to 22 billion. Twitter is 22 billion now . Yeah. I just took a look. So, any event, it is approximately the same as netflix, right . To me, thats crazy. Because i think twitter has its challenges. It will improve its montiization like facebook did. But i think netflix is Game Changing<\/a> and has an opportunity to really change the game of presenting content even more. And so thats kind of a surprising pair and something im looking at. Mark, we love that you called in. Thank you so much for taking the time and hope youll come visit us on set next time youre in town. Absolutely. I just got my hip replaced two days ago. It was fun to sit here and do it and sit in my hospital bed. Anytime. We wish you all the best. Hope to see you soon. Hope youre feeling better. Feeling great. Appreciate it. Thanks, mark. We have more squawk Box Including<\/a> a Chicken Nugget<\/a> conundrum from mcdonalds. Well be right back. At every ford dealership, youll find the works its a complete checkup of the services your vehicle needs. So prepare your car for any road trip by taking it to an expert ford technician. Because no matter your destination good maintenance helps you save at the pump. Get our multipoint inspection with a Synthetic Blend Oil<\/a> change, tire rotation, Brake Inspection<\/a> and more for 29. 95 or less. Get a complete vehicle checkup only at your ford dealer. We stathat the kid on thehought 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. Unlock the creativity in anyone. With the ibm cloud. The ibm cloud is the cloud for business. Welcome back. Mcdonalds is suspending sales of Chicken Nuggets<\/a> and other items in hong kong after it acknowledged it imported products at the center of a food safety scare. It imported certain products from that company between july of last year to june of this year, though no food items from the supplier remained in its stock. Coming up on squawk on the street, starbucks founder and ceo Howard Schultz<\/a>. Stick around. Well be right back. What you w . With fidelitys new active trader pro investing platform, the information thats important to you is all in one place, so finding more insight is easier. Its your idea powered by active trader pro. Another way fidelity gives you a more powerful investing experience. Call our specialists today to get up and running. Having a perfectly nice day, when out of nowhere a pickup truck slams into your brand new car. One second it wasnt there and the next second. Boom youve had your first accident. Now you have to make your first claim. So you talk to your Insurance Company<\/a> and. Boom youre blindsided for a second time. They wont give you enough money to replace your brand new car. Dont those people know youre already shaken up . Liberty mutuals new car replacement will pay for the entire value of your car plus depreciation. Call and for drivers with accident forgiveness, Liberty Mutual<\/a> wont raise your rates due to your first accident. Switch to Liberty Mutual<\/a> insurance and you could save up to 423 dollars. Call Liberty Mutual<\/a> for a free quote today at see Car Insurance<\/a> in a whole new light. Liberty mutual insurance. Thats keeping you from the healthcare you deserve. At humana, we believe if healthcare changes, if frustration and paperwork decrease. The gap begins to close. So lets simplify things. Lets close the gap between people and care. Want to thank charles canter for joining us today. Have a great weekend. Join us on monday. Right now its squawk on the street. Good friday morning and welcome to squawk on the street. Im scott wapner with jim cramer live from the new york stock exchange. Carl and david are off today. Lets look at how the futures are setting up this morning. And there is how it looks. The Dow Jones Industrial<\/a> average looks like it is going to have a negative open of some 43 or so points, digesting earnings today, some economic data, the president s comments as well, the s p, by the way, having its","publisher":{"@type":"Organization","name":"archive.org","logo":{"@type":"ImageObject","width":"800","height":"600","url":"\/\/ia803400.us.archive.org\/22\/items\/CNBC_20140725_100000_Squawk_Box\/CNBC_20140725_100000_Squawk_Box.thumbs\/CNBC_20140725_100000_Squawk_Box_000001.jpg"}},"autauthor":{"@type":"Organization"},"author":{"sameAs":"archive.org","name":"archive.org"}}],"coverageEndTime":"20240620T12:35:10+00:00"}