tv Squawk on the Street CNBC July 30, 2013 9:00am-12:01pm EDT
i wanted to spread the guilt around and the blame, but you made me say it again, the shih tzu hitting the fan for fertilizer stocks. that is something that you don't see. because they have huge mark-ups and potash is on a plunge after breaking up with their partners in belarus. thank you, judd, for joining us. now it is time for "squawk on the street." good tuesday morning and welcome to "squawk on the street." i'm carl quintanilla with kelly evans and david faber, jim cramer with the day off. the case-shiller home index is out, and up on the composite, and some cities saw all-time highs going back to the crisis. we will talk to robert shiller in a few moments. meanwhile, retail mers the green, and we sift through merck
and fpfizer and getting ready fr the two-day meeting and waiting for the president to make a new proposal on tax reduction. and we will wait for the two components merck and pfizer. are patent problems looming. >> after posting weak sales in north america and announcing two executives leaving the company. and you heard it here first, two firms buying hmas. >> and watch the fertilizer stock, because they are down after one of the potash companies drops. >> slight sli above forecast and the revenues are shy of census, and fpfizer plans to go into three segments. meanwhile, merck's q2 earnings
were above estimates and the merck beats the earnings but profit is cut in the half. that is the repeating echo of the quarter and a lot of the names and in some cases blockbusters losing exclusivity and trying to fill the pipeline with stuff at the other end. >> that is the story of big pharma, and a pack of development and changing in recent months and years, carl. of course, replacing off patent with whatever you can whether it is a new formulation or an actual new drug has been the key, and they are dealing with the patent cliff for a big time the big names. >> pfizer and merck, and do you think, david, it spurs acquisitions or sparks the pharma loop that has been so hot this year? >> well, it is interesting, because there is one big action going on out there and that is onyx, and samgen is not big pharma, but big biotech there. and some of the pharmas are trading at multiples that are as
high if not higher of some of the big broker names. we talked to jim cramer about it whether it is celgene or gilead, and interesting, and we will see if there is more consolidation. i want to hear about the calls going on for merck and pfizerings because i nknow that the news is coming awe of those as well. should we get to it? get to the analysts to see what they have the say about it and get more insight on the big pharma. tony butler is at barclays, and seamus fernandez is at leering swan, an analyst. and thank you both. t tony, let me start with you, if i could get your fake on merck he here. i am looking at something in the conference call they said that operational x januvial is up, and anything come off of the conference call better than expected? >> well, that may have been the focus for the street, but q1 sales were dismal for a large driver to merck's revenue, and
you are talking about a product or two products under $36 billion in sales so based on the comments earlier, the period that merck is undergoing, they need the products to do well. q tlt 1 is dismal and picked it up in q2 and the u.s. is about 5% growth. they need to continue to grow these two products and it is very important. >> okay. so xus looks better than some may have anticipated going into the quarter? >> absolutely. that is key. i think that one thing to consider though it is x us including europe and merging market markets. japan is weak, and they get a tremendous amount of revenue in japan and in fact, the largest selling oral diabetes product in japan. japan's key for that growth xus. >> right. well, let's talk pfizer there.
scott, more or less inline in this quarter and restructuring is the key them that continues there. >> yeah, i think that the key is re really is exactly what you said the restructuring, and the company is talking about splitting the operating and reporting sessionment men in ii parts which may result in a further separation of the company into three segments. value segment, and two operational and innovative segment which is interesting than the street expected. two segments were more of the consensus expectation for a possible split up, but the fact that the company is looking at these as global operations across distribution lines that make sense, i do think it is doing to drive more interest. >> seamus, the company says they that have been asked about this today obviously and pushing back that this is a move to separate the value business, but you
believe it is? >> well, again, i think that it certainly sets up the possibility of executing that kind of separation, so it is l early for them to make a clear statement about that, but my understanding is ta thhat they provide us with the operational segments and then after that incremental color on the balance sheet and cash flow and tax report reporting statements in 2015 which could then allow the company to execute a tax-free separation in 2016. again, i think that they are lining up the pieces on the chess board, but you know, it does not necessarily mean that those steps are going to be taken. >> seamus, so interesting though, but a it is a detailed walk through of what might happen here that you would have to expect if the company were not seriously considering this, they would say to the people, look, relax on the speculation. >> sure. i think that the, you know, the pushback on the speculation,
they don't want the expectations to get too far ahead of themselves, and there are a number of important catalysts that need to kind of occur going forwa forward. those catalysts need to execute well on the launches of the innovative products on the one side. and so the cellgens and another product that is the ap anticoagulant that is going to launch right now have to do well for innovative core one to succeed. the other business which has the oncology business baked into it, really requires some meaningful success in the pipeline there and a product called pavlocyclid for breast cancer needs to succeed to drive the next steps of the separation. important pieces of the puzzle that we need to know over the next couple of years. >> on the merck side, tony, and in terms of trying to fill the pipeline, a lot of talk of the
insomnia drug that the fda will not approve in the short term, how close are researchers to new discoveries? >> well sh, with the ip some kn ya drug, quite frankly, this will put you to sleep, but what you need the focus on is a couple of the more innovative products that they have developed. one is for alzheimer's which is late stage development, and interesting and based on the elegant gin net enetics and the is cancer. it is pd1 and a cell sep or t-- receptor, and they and bristol mi iers are on the forefront to look at ways to improve the outcome of a lot of tumors and not just melanoma or other sing single-cell cancers, but those are vast for merck, and i would separate it vastly. >> and so from the stock point,
tony, preference or maybe you go elsewhere? >> listen, we have been recommending j&j, because they have the biggest pharmaceutical drivers and the m&a is quite high, but i prefer merck over pfizer, and innovation is the key. merck today leads a little greater on the innovation side. i think it is great for reorganization for pfizer, but it is reorganization to drive the revenue. >> tony and seamus, thank you very much and a lot to talk about with two famous names. and merck is now the most shorted down stock according to forbes this morning replacing industrial. >> i would not expect it for a big name like that. >> and meanwhile, coach is falling in the market, and they posted 89 cents a share in the fourth quarter in line with forecasts, and the same store sales in north america is down 1.7. they announce the president and the ceo and president are leaving the company at the end
of august. the down 1.7 numbers and the estimate is plus 1, so it is not a miserable miss, but they are dealing with the easy compares and the notion they lose shares to michael kors and or ttoriort is interesting. >> they are lagging a company like tiffany's who say that coach, or is tiffany's in danger of losing on the fashion segment, and the investor's answer is that they are much more concerned with coach as the name than other places. >> and we have seen it do well, and not fairly well, but well. >> i wonder if coach is luxury enough. i wonder if coach is luxury enough, and that is interesting that they are spinning off the more luxury handbag, because at this point, you want to be the super high end name or the name that is a little bit more mass
market. maybe they are getting squeezed. >> i love the point that dana tellsey made that regular clothes labels on the inside, and accessories, the labels are on the outside. that is one big purchase motivator to show what you own. >> and china with the same focus as burberry is the same, and people don't care, because it is the north american number. >> we are running out of time, and do you want to do the hma? >> well, the deal was so complex, and hma is going to pay largely stock and cash and take under -- so many reiterations on this and we need more time and coming up against the break. so we will tell you about this and tell you about the shares, and chs is appearing to be up, and hma is weak today, and the
key is glenview and 15% of hma in the midst of the consensus consolidation, and the 10% owner ocommunity health. what will they do? i have comments, but i use it a as tease to keep the viewers tuned in. i don't know how many care about hma, but who those who do, will keep on watching. >> yes, darn it. and we will also talk about the unbelievable margin cap lost, and including a cff who had an interesting day yesterday. >> yes, and this is a big market story today that we have to follow. >> and case-shiller, and we will talk to robert killer of the case-shiller index u with his take on the data reelised a few moments ago and talk about the shares of housing, and then discovery shares up 6% in 12 months and did you know that own is the fastest growing cable network for women from ages 25-5
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wow, it is a rough morning for fertilizer producers pot tash agrium and they are tumbling in the breakup of one of the largest potash partnerships in belarus. they say that it could drop to below $300 a ton. and this is hurting potash and monsanto was down for a sector that people had been feeling good about including ceos on this way on the way off of the set saying, i'm into fertilizer. >> yes, carl. people have been looking into potash, and this is going back to where there was a concern about the worry of a shortage of it, and you can see how unexpected with people saying, wait a minute, we have gone from getting our hands on the stuff
to the availability of it now. >> the volumes probably go up. prices come down sharply as the volumes come up, and the p-multiples are coming down, and that is what you are seeing coming down with so many of the names. this is essentially a cartel that kept the prices at a certain point, and it seemed largely about china as you might expect where a lot of the stuff goes, and so many of the things go. we will watch them all. yesterday, we mentioned that shares of cfn industries and nitrogen and fertilizer, but not potash and lumped in hee, they were up 12%. this is when the quarterly letter that dan loebs puts out to the investors indicated a new position there, and talked about the fact that the company could significantly increase the dividend. i know others who believed it was undervalued and we will see if there is a re-evaluation across the board for those companies that are not necessarily right down the middle of the potash and if you
are in the larger fertilizer area. >> and potash had cut the outlook a few days ago so a sort of negative atmosphere, but this is a period on it. that blood letting is fascinating, and today, there is a article about the take of sony and whether it marks a change in tone, and it is harsh. >> i did tweet something that he is upping the rhetoric there and calling something after earth, and white house down, and the the ishtar and one of the tweets said call it fishtar. >> in the meantime, how much are the home prices falling or rising in your neck of the woods? we will talk to robert shiller of the case-shiller index which had good numbers again, and we will hear what he has to say about those that were released in the hour earlier. and futures okay. the opening bell is in 11:30. so don't go away. we route your order to up to 75 market centers
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let's get back to the key housing data out this morning and the latest s&p case-shiller showing a gain higher than the last seven years for the composites. we are joined by robert shiller and glad to have you back. >> thank you. >> stellar numbers and atlanta is 20.1, and las vegas is 23, and phoenix is 20 and san francisco is 24. you want to get the bubble question out of the way early? >> yes, the bubble cities, and the cities that bubbled in the past are bubbling again.
so to me, it seems partly psychological and they have seen it before and they are ready for it again. >> is it going to work this time is the follow on that? is this being driven in any way by regular home buyers and people like you and me and first time home buyers or is this institutional? >> well, it is both but the new thinghe institutional side. because the institutional investors had tough time making money and they learned about mobili mobility. it is right now going up. and for a flipper who can get out in a year, it seems to be a fairly safe bet. >> robert, a little bit of difference or the differentiation here, and the release mentions that the eastern sun belt cities like miami and tampa are lagging behind the western counter parts? >> well, the really big cities,
yeah, they are the notably san francisco which is going bananas, and all right. it is psychology and i can't explain it entirely, but it seems like california has h historically been the most bubbly state in the country and it continues. >> robert, what is your take on the mortgage rates and in is backward looking and big move up, and what is it going to do to the housing market? >> well, the mortgage rates set record lows last fall shortly after qe3 was announced a and that created and part of the impetus for this. people are influenced by the record low. they don't want noisz that. that is part of the thing that is temporarying, because the interest rates are up so much. i still think that people are thinking of going higher, so it is a positive force right now. >> and robert, i want to go back to the point of the bubble cities being bubbly again, because there is something different going on.
you, yourself, mentioned san francisco and if anything, you can point to the strong conmy in the area for it doing well as opposed to some traditionally, you know, bubble or sentiment-driven behavior. >> well, anything and when you look at the outliers, it is probably an outlier, because of multiple causes and so san francisco is not going to be easily explained, but i keep thinking that san francisco is just trying to bubble up. back in 2009 when the first time home buyer tax credit was put in place, san francisco was the city that responded the most. i just get it when i get there, because i have a feeling they have high expectations, and maybe the other factors are a part of it, too. i'm sure. >> robert, some of the cities that did not perform as well, and of course, new york where we all live up 3.3%, and washington up 6.5, and cleveland up 3.4.
do you see the underperforming cities catching up or by the time they do that, the market will have passed them by? >> well, talking about cleveland or maybe detroit, they are different circumstances. they nef really had the big bubble. but the bubble psychology infiltrates there a little bit and pushing prices up there. but i don't expect the big things to happen in those places, because it never did happen. >> and robert, i want to quickly ask you sh, which is more overvalued today if we could use that language to describe it, real estate in some of the markets or the stock market? ? well shg >> well, for a short term investor, it is the market, because it is somewhat uniform across so many cities, it is probably going to go for another year. the stock market is anybody's
guess. but the stock market remains a good long-term investment. i would not go all in one or all in the other. >> great. robe robert, it is a great refort. and a everybody should take a look at it and thank you for your time as always. >> my pleasure. >> robert shiller of the kay schiller index. we have a lot of winners and losers to go through, and we will talk about it as the opening bell is just four minutes away. carpools...
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and trade with papermoney to test-drive the market. ♪ all on thinkorswim. from td ameritrade. you are watching cnbc's "squawk on the street" live from the financial cap ital of world and the opening bell is set to ring in less than a minute's time. busy session. got some green arrow s s in asi for once after the nikkei's repeated tumblings that led to weak futures for us, and that is the pattern. >> and injection into the fed as well. >> and we will talk about the meeting today and tomorrow and the earning stream continues, and the discussion about summers and yellen continues, and the president in chattanooga today and getting a tour of an amazon distribution center, and we know that amazon is adding jobs in the country, an apparently going
to make a proposal on the co corporate taxes that you will hear a lot about this afternoon. but in advance of that, let's look at the opening bell here at the new york stock exchange, and the s&p at the top of the the screen. at the tom, camden property trust, and celebrating the 20th anniversary listing, and over at the nasdaq, the medical device company sunshine heart doing the honors. speaking of listings, the new york stock exchange does beat the street today, leading transfers in the first half, 72 ipos globally around the world, and raising $29 billion and just to twist the knife with regards to the nasdaq, oracle rings the closing bell tonight, and the biggest transfer of one company to the other on the public exchange. >> yes, they have made a lot of that one, and perhaps rightly so, but it was a large transfer. we look like we are opening
positively at least at this early point of the s, and p and up one quart of one percent. and other earners, sprint reported earnings and this is not the old sprint, but the new sprint 80% owned by softbank, a japanese company. but some perhaps, a lot of the subscribers lost as they completed the transition away from the old system, and remember still dealing with the legacy of one of the worst deals of all time and that being the merger of sprint and nextel. and yet the ebitda was better than expect and the service return was better, and the wire line revenue declined, but improved at least in terls of the lack of a decline there. sprint right now is in restructure mode bringing in a lot of capital and trying to desperately to compete with the likes of verizon, at&t and
somewhat resurgent t mobile, and they have a much deeper balance sheet to do that with the stock up 2%. >> and we look at the financials on the spdr and they have been down in 4 of the 5 sexes in t-- sessions in terms of the barometer, and they have done a massive write off, and they have released the details of the prospect prospectus, but they were trading down overseas in the range of 7%, and they say it could dilute the book value of 14%. we are seeing this kind of behavior from the european banks whether it is barclays or deutsche bank with a huge production in the balance sheet, and so that the deleveraging phenomena is up with thing weighing on the sector on this side of the pond. >> well, it is raising capital largely to meet the capital
requirements and acknowledging the reality that the assets on the balance sheet are not worth what they have said and they can start to take the marks which results in the m&a and you will see a lot of the bankers going over there, and the blackstones of the world looking to pick them off, because they are in a position to sell the assets that they were unwilling to recognize that they were deteriorating in value a little bit. >> yes, the ice is melting. a wepd are hearing that the street analysts and the strategists who are hearing from the clients who want to find a way to go long europe. somehow, how can i get exposed to europe in the long term. >> and at time when we talk about whether europe is turning in the macro sense, and before there were signs of the call, people wanted to be opportunistic, and the managers of the hedge funds and that kind of thing said they did not want to get back in, but maybe signs. >> and herb life, and yeah, you and i are thinking alike. >> 7% move. >> yes. >> after they blanked it. >> we hit stereo. >> jinx, and raised the forecast and by the way can accord goes,
and sun trust 65 to 72, and so the street wants to see it with the seven handle. >> can you say pain if you are bill ackman, and 20 million shares short. you can do the math there, and that is $80 million today, and that is all losing now. well above where the short took place. this is without these continued rumors of could they borrow money, and will they borrow significant money to institute a large one-time and perhaps dutch tender for 30% of the company. we don't know. we would do that for your reported earnings if you do it at all, carl, but the numbers are strong enough to put the stock over 60. >> a lot of enema jokes on the street. you can't say herb life without
enema. and today, the charitable trust indigo partners will no longer hold a stock in the company, and beautiful chart as the airlines have done all week, but citi cuts to the neutral and 37 on the price target, and maybe a little bit of a turn. we have seen a turn in the transports in large, but maybe the airlines are beginning to have to struggle to set some new highs. >> exactly. you mentioned a term that is another space which is to watch the financials which are up, and the transports as well. we have been hearing the talk on whether the july rally is losing steam or the chart is tired and today is important in that regard. >> we want to mention jpmorgan and get that on the record, because they are paying $410 million to settle the electricity market probe. they had alleged manipulative bidding strategies and results in a civil penalty and discourse $20 million in unjust profits and no admission of guilt, and the stock is not a huge mover,
but they have it behind them and a lot of the bulls will be happy about it. bob pisani has more. >> and hospitals are moving up after community health, and hca and the stocks are having a good morning morning, but the metals are crushed again. this is a problem will, and aluminum and zinc is down and copper down again, and this is on the slowing global demand, and of course, potash is getting crushed. i have struggled all morning to explain it to people, but the concept of the russian potash maker backing out of the cartel surprised everybody. think opec. a small group of companies essentially control the world's potash supply. i did some research here, and the top six potash producers control 80% of the potash in the world. the top four producers belong to what is called marketing organizations and qaa them whatever you want, but they negotiate the prices, and it is
like opec so the supply is high so they can control the contracts as well. suddenly, people are, you know, quotas and people are cheating and somebody is fed up and decides to back out. it is like somebody said, like saudi arabia backing out of opec and what would happen if that happened? is well, one of the big producers decided to set their own price and do whatever they want, and you think that the prices would drop, and that is part of the concern. there are all estimates that the potash estimates could drop 25%. that is why you are seeing this particular decline. i am glad it is happening, because it highlights the fact that a small group of companies essentially control the world's supply. this is part of the problem with having marketing organizations, consortiums or cartels or whatever you want to call them, this is highlighting the problem with the way that the world is going now. and new york stock exchange, bittersweet day, and probably the last day for an earning
report, and good one. doing out on a high note. they wanted to know when the i.c.e. deal would end, but by august s.e.c. will have a ruling, and by september, we will have the deal closing. in europe, you know, kate mentioned barclays are down, and they were down yesterday. they unveiled a higher capital hike than anticipated and the talk was $5 or $6 billion, but it went down on speculation that it could be higher. we had some positive comments of good year beat on the top and the bottom line and the important thing is that earnings still coming in line with that roughly 5% increase that we are expecting for the second quarter. nobody likes it. we are still getting the numbers. back to you. >> bob pisani, and thank you so much for that and we go uptown and check in with sema.
>> all eyes on tech, and they are reporting upbeat reports and strong sales of their drug. and market cap is set to be reported tonight by amgen. and there is a 5% drop in quarterly earnings, and talk chips. and san disk after it was downgraded to neutral. and micron tech reported the first profitable quarter in over a year, and represents the closing of lp acquisition to occur on july 31st, tokyo tile, and they are a plyer supplier o apple. this is to make other companies like qualcomm and broadcom more competitive. and in the technical levels facebook breaking shares and so is apple for the key level that
technicians watch. david, back to you. >> thank you, seema mody. >> yesterday was a merger, and to day we may get a deal, and we said it is yesterday and that is the take under as well by $3.8 billion and 7. -- something when you see have community health is bought out by hma. now whether 70% of the shareholders will agree is a consideration here as hma fights for its life in terms of the board of directors because as we have reported many times, and there is a solicitation under way to replace the board. as for the deal call it worth 13.80, and maybe more, and shares of community health are not up that much more this morning, and so right around there. and there is a cdr, and there is something worth maybe the dollar that you could one day be worth. and you see the hca shareholders with a combined 16% of the company, and you need a 70% vote
from the shareholders to approve the transaction. and the company is saying, why a take under? we well, this is why. 8.3 times of the multiple or the cash flow ending june 30th which is higher than the tan nent deal for vanguard and unintended stock prices are bust, and we did well and expect it to close in the first quarter of 2014, and of course, along with this, hma reported a dreadful potential quarter and really a warning and they didn't give us a full numbers, but well below the quarter ending june 30th, and expected and lowered guidance for the full year. so here you say with hma reporting lousy results and signing up a deal that is under the market value with community health which is by all accounts getting a deal that is creative to the tune of 15% or 20% depending what the analysts are reading. what does fwlenview which owns
18% of hma and community health, and what does the manager of glenview say? i am going the look over the details of the transaction and read all of the tok you mentation they will make availab available. i want to understand the earnings and what is going on in the country, but larry says that the need of the change at hma continues, and this is maybe getting to 51.7%, and who knows this week or early next week to turn the board over. nothing says they can't turn the board over, even though the new board is beholden to a definitive agreement signed with community by the old board. we will see what happens here. the key consideration is that will glenview support this or not. if you were to walk away and the
board is stepping because we won the consent if that were to happen and we don't approve this deal, then hma shares will fall, and what is the community going to do? well, community health, i'm watching now is down. it was up yesterday on the report of the potential deal. all right. if we have the time quickly to dell -- do i have permission to do dell? okay. thank you, chip. we have not heard from the special committee yet. the vote is supposed to be by friday and what do you say? 13.75 if you change the voting standard and we are waiting for the answers. here are the scenarios in no particular order that may play out in the next 24 hours. you could get michael dell and silver lake to up the honor and they say best and final and best and final and michael dell said it in e-mails and letters, but the special committee is trying, and saying, hey, if you raise another 20 cents we will change the voting standard and maybe,
maybe they are almost caving for ten cents, but i don't think so. not at this point. but if you get the raise, they change the voting standard and they will give you a new record date and call it august 10th, and you hold the meeting september 10th. another scenario, michael dell and silver lake says we will stick with 13.75, and get rid of the conditions, and we don't need it, and for that the special committee will give them a new record date, august 10th, and that is a shift in the base, but it duds noes not mean it wo deliver the vote or the special committee comes out to say we are not giving you a recommendation on that and they pull back to 13.65 and we hold the vote friday. that is where we stand on dell. we shall see. >> i will tell you that august 2nd is the meeting there, and the deadline for time warner cbs now as they reset their deadline. so friday is going to be interest interesting. >> i mean, i wonder as well about the focus that should be right now if you are dell on
strategy, because david, how much longer does this get dragged out? split is a distraction for the customers and even else. and a pricey fight with carl icahn would be more of a distraction. talking about icahn, a big holder of herbalife, and we have scott walker back at hq with more on that. >> yes, thank you. you were talking about herbalife and the stock move after the big earnings beat yesterday, and bill ackman is striking back with the release i have here raising serious questions in his words about the second quarter earnings, and ackman is questioning the weak reported second quarter operating income growth saying that despite 18% growth in q2 net sales compared to the same period a year ago that the most important measure of the core earnings power of the company, net operating income grew only by 3%. he goes on the cite the weak implied third quarter operating income growth as well and
raising questions as well about the independent auditor, and you know all about the situation with kpmg and now it is price waterhouse coopers, and he is wondering why price waterhouse coopers did not review the 10q that was filed yesterday for their earnings. this comes ahead of the conference call at 11:00 a.m. eastern time, but a number of serious questions and a five-page press release here raising questions about the distributors that have left, and the impact that it is having on the company, and you guys have been faulk about the significant loss at least on paper that ackman has seen thus far in billion dollar short position, and he is down $70 or $80 million on that position, so after the big beat yesterday, and the company reported that 1.41 a share which is well ahead of expectations. and ackman out with this paper this morning trying to strike back ahead of the conference call this morning.
we will have more of course as that conference call begins later. guys. >> all right. we will see if he gets anywhere with that response, scott. thank you, scott wapner back at hq talking herbalife. we go to rick santelli. >> well, good morning, carl. we did have pretty good housing data, but the rates are moving down. if you look at at the two-day chart, it is a better view, and what is the tight range of the technicians looking at first ott two-day fed meeting in front of a lot of data coming. 261 on top, and 257 on bottom and the two-day chart reveals that we are coming down to test it, and even though we are moving down on the yields on good data, and yesterday's close represented the highest yield close since july 10th, and open up the chart of the one-year between 10 and 5-year yields and known as the fight as you see on the one-year chart. we are 120 and that happens to
be the widest spread and the steepest it has been in two yea years. now, switch gears a little bit and there has been a lot of corporate issuance with prominent names like ib, many, and american express, but it is slowing down a little bit today and many of that takes the buying of the hedges pushing the yields down, but if you look at the charts, it is the investment grade etf or bar cli's one-month investment spread, you could see that they are back in vogue again. not so much the high yield, but the investment grade certainly is. the last chart, the dollar index. we are now hovering at the lowest level on a closing basis since june 19th on the dollar index as we continue to monitor the very tight relationship, an ping-ponging back and forth between the yen, the euro, and the dollar. back to you. >> thank you, rick. we will talk to you soon. coming up, discovery communication's president is going to join us. not only has he been delivering
good news for the investors, but the network owned by oprah winfrey is positive. we will talk more about that when "squawk on the street" comes back. [ male announcer ] this is kevin. to prove to you that aleve is the better choice for him, he's agreed to give it up. that's today? [ male announcer ] we'll be with him all day as he goes back to taking tylenol. i was okay, but after lunch my knee started to hurt again. and now i've got to take more pills. ♪ yup. another pill stop. can i get my aleve back yet? ♪ for my pain, i want my aleve. ♪ [ male announcer ] look for the easy-open red arthritis cap.
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>> shares of coach down this morning following the q2 profits that were short of consensus. we go to analyst over at agi, and good morning to you. >> good morning. >> and some of the shareholders are tired of the results and seeing the shares falling on the days they post. were you impressed with a minus 1.7 in the u.s.? >> no, we rweren't. we were expecting a positive comp in line, so a negative 1.7 was a disappointment, and more important the company for the guidance for the fiscal year did not assume any improvement, and assuming negative comp for the next four quarters. >> where do you believe that the problem truly lies? people are talking about the turmoil in the management, and obviously some execution, and market share losses to kors and what is problem one? >> well, first and foremost the
market share is concern because they own 20 to 25% share domestically, and that share is up for grabs as you see kate spade and tori burch and others grab for it. as you see the leading margins, as competition heats up, what happens to the margins, and if they have to come down over time. >> and ike. do you see the business in secular decline? >> no, they are trying to transform into a global lifestyle brand, but the key is that it won't happen overnight and you are seeing the results in this quarter, and it is a 12 to 24-month process, and it is going to take time, and the meantime, the stock is trading large cap to discount peers, and with a great yield on the portfolio, so you are getting a great value while you are waiting for it flux. >> and we are watching the moves of the shares down almost 9%.
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consumer conference and when the conference board for the month of july due out any second. it is at a 5 1/2-year high and the last read was 81.4, and as i tap dance here a little bit we are coming in at a point where the equities are strong for a two-day meeting and 80.3. 80.3 on the july conference board confidence read and that is a little built of a retracement, and the 81.4 that stood at a 5 1/2-year high was upgraded to 82.1 which still comps back to 87.3 for january
of '08, but we did die grez-- digress a little bit, but still at lofty levels. kelly, all yours. >> okay, rick. the fed and gdp and unemployment data are all in focus, and when we bring in john from ole bbermr asset managers. the markets are seeming to take a step forward here, but what is your view of the data? >> there is economic data to be on the lookout for and it matters if you are a short term speculator or long-term inves r investor. here we will be talking to potential environment where the fed is going to be tapering over the next, well, between now and mid 2014 like they said. so that could bring some market volatility and uncertainty, and, you know, kind of a shift in sentiment. that is what i am looking out for here. >> and that is one reason that
people have said here that the july rally may be fading and there could be some turbulence ahead in the market, and john, we will hear from the president leader later today under the guise of corporate tax reform, and could there be more fiscal stimulus taken out of what the fed does if it does taper? >> well, that is a good question. we have had almost five years of zero rates. and we've had t.a.r.p. and we've had quantitative easing and n b numerous forms of stimulus and we could get if from the congress i suppose, but the appetite is low in the political sphere these days, and it is not clear that the stimulus would do anythi anything. you look at the labor markets and the ratios like the employment to total population, and it has not improved since the crisis in 2008 and it is not clear if the stimulus would do anything, and in my opinion, we need the markets to adjust to
more of a market-based economy inste of one that is reliant on the continuous government stimulus which the markets are accustomed to. >> john, that said, can you help me out that why should the market expect that we would get tapering from september when the employment report that we will get on friday, the expectation is that it is below where we have been on the six-month average, and tomorrow's gdp figure is likely to be horrible and annuallized at a 1%? >> well, that is good question, simon. i think that the reason is that the fed needs to get off of the program of quantitative easing, because it is not clear it has improved. after five years the markets have improve and the market psychology and that is the original intent of quantitative easing and we are there. home equi improved and mission accomplished and as we transition to a new fed chairmanship, the existing fed is going to want to get the new
chairman on a path at least to more certainty and more clarity. >> but that is a huge area of massive uncertainty, isn't it? because it is not just when they start to taper, but it is it is the speed at which they taper and that is clearly who takes us into the chairman's role at the end of january and you have a president who is suggesting that, well, by not saying that ben bernanke has done a good job suggest ing th suggesting that there should be a different tack from the new chairman of the fed and there is a lot of uncertainty there, isn't there? >> yes, there is indeed a lot of uncertainty, and the fed is in a difficult position here, and the market markets and the economy have become conditioned to the stimulus, and subsidies of various kinds and so it is not easy and i expect the volatility in the markets going forward and we transition into a new path. >> let's bring in ward mccarthy with jefferies and co, and we have this fed meeting kick off
and we will get the decision tomorrow, but people are shifting the focus to ept is. what do you expect out of this meeting? >> well, i don't think that we should expect much out of this e meeting. it is going to be uneventful, and what is also innocuous the le leave the rate and the balance sheet and the guidance unchanged probably even though there is a small probability to lower the unemployment threshold from 6.5 to 6%. but you don't want to create any unse uncertainty that ben bernanke can't clarify in a press conference after the meet iing. so, i think that it is again, pr pretty unventful. >> are they having a press conference this time around? >> no, there is no press conference they 'mat i'm aware >> not until september. >> right. your colleague says the fed should and will taper the purchases. do you share that view? >> well, they have already told that they are going to tape ter
purchases. and the question right now is when does it begin. they are not going to begin tomorrow in my opinion. i think that there is a relatively small possibility to start in september, and it is more likely to be a q4 event only because they are not going to know a lot about q3 until the fourth quarter of this year, and as we were discussing earlier, growth from q4 of last year and q1 and 2 of this year were quite subst substandard. >> john, briefly, what are you doing over at obermeyer if the path is choppier and trickier for the stocks going forward from here? >> right. so a lot of the liquidity has been funneling into the u.s. stocks, kelly. you know, the u.s. markets generally up 40% over a two-year period cumulative, and we are not seeing the value there when we see the company, and we are retaining the allocation to the emerging market stocks so they
have been overlooked significantly over the last two years, and yes, slowing there, but fundamentally the economies are healthy and sound and growing and in good fiscal sh e shape. so, you know, i think that you want to maintain the diversification within your port foal owe which is what we continue to do. >> and we will leave it there with john and ward this morning as the fed kicks off the two-day policy meeting. thank you you, gentlemen. >> let's send it over to josh lipton for the morning market flash. >> well, the earnings did drop, but there is exi pishgs items with sales climbing from 2% to 4.5 billion, and the revenues increase mostly due to higher demand in north america. looking ahead, the full expects the revenues to be in line with 2012, and cmi is up 2.5%. carl, back to you. >> thank you, josh.
squawk on the tweet in morning sci-fi sharknado is the tv movie that it was so bad that it was good. the council of economic advisers say there is something worse than "sharknado." >> i am thinking of the sci-fi movie that i saw where you have a tornado to bring the sharks and land on people's heads, and if we cross the debt limit, it will be worse for the financial sector. >> that is classic. fill this the blank, the only thing worse for the economy than a sharknado would be -- blank. it is nice to have a ceo culturally worth it dr. krueger. >> that is part of the point to show that he is culturally wit. >> man of the people. and speaking of the sharks, a bad time to be a seal, but it is a good time to be a discovery communications, and shark week which starts this weekend is in
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charges of this manipulation in the markets, and it is an action that stems between 2010 and 2012 they connived to jack up the prices in the midwest and california for more favorable rates for it. in a statement, jpmorgannea neir denied for the confirmed the allegations and was pleased to have it back and it is not going to have a impact on the earnings, because it is in reserve for it. and the power plants came from the acquisition of bear stearns in 2008. it is only the latest in the string of ill fated moves for commodities for jpmorgan that took it on in the bear deal, and then added to it in 2010 with a large part of the commodities business including oil trading and metal trading and additional p power assets. despite the victories like the 2012 sun philly deal that helped with a struggling bizs on on the east coast, they have been
saddled with reg ulatory headwinds as well. friday, the company announced it would sell off some of the business after a scandal at a competing metal business, goldman sachs, and concerns of regulatory crackdowns of the banks owning commodities. it is too early to tell the impact, but jpmorgan is selling on the dip as it were without realizing the potential it once imagined for the large commodities powerhouse. >> yes, the stock is not moving a lot on the news, but it has definitely among the chatter today, kate. thank you, kate kelly. discovery communications ceo david zaslow is standing by, and we will talk to him about the quart quarter. and david murdoch's wife has just hired a new divorce attorney, and he is speaking out. we will see what he has to say about the split after the break. [ male announcer ] come to the golden opportunity sales event
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rupert murdoch's estranged wife is hiring an divorce attorney, and carl has more. >> well, carl, she is bringing in the big guns. cnbc has confirmed that wendy murdoch has hired super lawyer william zebel to represent her. he is one of the top trust estate attorneys in the country and helped to settle a lot of high profile divorces including jack welch and howard stern. and wendi believes it will be an amicable divorce, and that is important, because zabel likes to do it quietly without a lot of litigation.
they did have a pre-nup and post-nup and it leaves wendi $20 million and that is going to surprise a lot of people with his wealth being estimated to $3 billion. the first is child support and custody for the two young daughters, grace and chloe ", and the co-op in new york property that is valued $90 million, and two homes in california and a home in beijing and a property in london and the yacht, the 180-foot haut called the "rose hearty" and it is going to be interesting if any of the properties are held in both of their names. the big issue is the trust, the family trust that controls news corp. through the shares. rupert's four children will hold the trust after his death, and grace and chloe will have an economic interest only 1/6 even.
and they will protect whether provisions of disillusion and even if rupert has other kids. the attorneys did not call back for comment, but this is a story that we will be following for a while. back to you. >> yes. big money is at stake, robert. okay. over the simon and kelly on the floor, guys. >> she manages to keep the yacht club. up next the fed's taper fan is not yet baked into the market, and what does that mean for your mo knee? steve liesman is going to be here with the cnbc fed survey. >> yes, and coach shares bagged this morning. look at the shares down 8.5 and 9%, and coach is lagging the other luxury names, and losing the grounds to the likes of kors and tiffany. we are see how you should navigate that sector when we come back. ] it's time. time to have new experiences with a familiar keyboard. to update our status without opening an app. to have all our messages in one place.
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shares of discovery communications down and the giant missing expectations a little bit and rising expenses weighing on the profits, but one area own, oprah winfrey's network has turned a profit sooner than expected. we are joined by david zaslov. let me start with the guidance because a couple of the investors that i spoke with noted that the outlook came down a little bit and why is that the case? >> well sh, first fx for the ye
against us about $60 million, and we made an acquisition of sbs $1.8 billion and closed lat later. that cost us $15 to $20 million and despite that we kept the low end of the guidance, but we dropped the high end a little bit and that is all. >> not a bad operating, but it is about taking in this timing of the revenue? >> yes, the facts of timing and the business is performing well. we have had great growth here in the u.s. we grew advertising 10%. >> i saw that. 10% is above what people expected and give us a take where the advertising is from what you are seeing? >> we finished the up front and saw mid- to high single-digit growth which is good and volume increase, and scatter remains strong. so despite the fact that the u.s. from the economy perspective is still not very strong, the advertising market remains strong, and for us in particular, because we have been growing market share with the channels, and discovery is strong, and tlc, and animal
planet, and own. and so it is helping us here in the u.s. with the market share, and also a big lifter for us international internationally. >> you mentioned sbs and we have talked about how inquiztily you are david at a time when other firms are afraid. is europe as attractive to you this year as the year before? >> well, the interesting thing is that we look at western europe, and we see it as the new emerging market. western europe as a whole is as big or bigger than the u.s., but gestationally for tv, there is still some growth. we are growing a little better than 20% for two consecutive years in western europe while there is most of the countries in recession. so, because we can use the content throughout all of western europe and we have a lot of the channels, we have been able to find real growth, and the two pieces that we have added to that is that we acquired a 20% interest in eurosport, and for us that is a little bit of a departure, but exciting one, and we have a right to take control of that in
a year. and then we bought sbs which is a group of broadcast and cable networks in norway, denmark and finland and sweden and if you go there we are the equivalent of nbc and cbs combined. and really it is a driver for us to get more, and get more of our exposure outside of the u.s. we are now about 40% international and making more money outside of the u.s. with the international cable business than any other media company, and that is where i am spending my time and where the growth is going to continue to come from. >> you are not worried about europe's economy, and what is this continued recession in most of western europe. >> no question that western europe is struggling. we see it in italy where the advertise ing is down 10%, and in france and the uk is struggling and a lot of the western europe is tough, but having said that, we are launching channels and growing the market share in western
europe, and we look at it on the inverse basis. if we could grow 20-plus percent in western europe when the almost entire region is in recession, the plan is not that if it turns, but when it turns, we think it is a real propulsion for us. >> and i hope that you don't mind a little of the industry questions, because you are coming out when it is hopper versus fox, and networks versus areo, and longer term can the case law keep up with the technology and how is the consumer impacted over the next three or four years? >> well, case law is tough to predict. the way we look at it is that there has never been a better time to be in the media b business, because there is more and more people who want to own content, and provide it to consumers and more and more technology companies who want to figure out how the ma nnipulate the content. it starts with great content is now the center. and you know, for us, we have the traditional cable channels here in the u.s., and now we have amazon and netflix, and
capable operators wanting to compete with them as well az-tv everywhere. any time somebody wants to pay more for content, we have more. >> and you have not done tv everywhere and not signed on yet. why not? >> well, we believe there is significant value in owning the content, and the ability to see one of the 14 channels or any of the shows when a consumer wants to, that is additional value and we are waiting to cut the right deal with the cable operators and we will. we are getting close. >> and to carl's point the big picture, which is years down the road potentially, but your kids who are older than my kids who are older than his kids, but -- >> does that mean my kids are the oldest. >> yes, and you are the oldest and i'm second oldest, but they are not going the watch cable television, and that is done. and we can all agree on, that right? >> i don't agree. >> you don't agree that none of the kids are going to -- they are going to watch on the broadband. >> no, i dot no ingagree.
>> why not. >> despite an anecdotally and more people are consuming content on more platforms, but we a acquired the larngest streaming business rev 3, because the people that are consuming the content is changing, but having said, that people are watching more tv right now in the u.s. than they ever have, and that is number one. number two is that as you go outside of the u.s., as you go into brazil, only 26% of brazil has cable tv at this time, and two years ago it was 20, and in mexico it was 40, and in russia 35, and in india, it is very low. so in a lot of the markets around the world, they are five or ten years behind the u.s. >> and i will bring the broadband pipe into the homes and forget about the cable, and it is a broadband product. >> well, television is a linear process. >> well, whether it is through the broadband or wire, they want the content.
it is not that the conflicting data is that people want to watch television, and they want to sit in the living room with their friends and when we did wallenda which got 13 million viewers on discovery and started out with 6 million and then it had 8 million by the seventh million because people were on twitter and facebook and in the old days people would maybe make a phone call. >> are you watching this? >> yes, and there is something communal about it. as much as people like the netflix to go home on the weekend and watch an entire series, that is very much individual. the majority of the content is when people watch "ho noo -- "honey boo boo" to breakfast the next day, they want to see what everybody else is seeing. >> there is a communal feature. >> and you did it to me. and you think that you will be doing that years from now and that the business won't change substanti substantially that you will be
negotiating differently the broadband plan as opposed to the good old fashioned what you have been doing getting paid for whatever you are for the different channels. >> the way that you deliver the kcon tent is irrelevant to us. we own the content. >> yeah, but the economic model could change. >> well, the economic model of the channels that people watch with brands they are comfortable with and people watch six to eight channels, and they say animal planet or own or discovery channel whatever it is, that is not going to change the list. >> and you mentioned communal and people wondered if channel 2 would be channel 2, because big dispute between cbs and time warner. is the future of the transmission fee going to be different in 2015 than it is toda today? >> this big fight of the pipe versus the kcontent and who is
going to be be the winner? ten years ago the question was the pipe, the broadband provider and five years the over the top provider, but if you look at the history of it in almost every case, the great content has won. so what happens in that squabble in the end, content, and we are being paid more for the kconten and bigger and better content is more valuable on the cable channels and to read hastings on netflix, and more valuable around the world, so our focus is how to make the 14 channels better. you take a channel like own. it didn't exist four years ago, and oprah and i sit down and we say, we can do this. four years later, with a lot of investment, and we invested $500 million, and today, it is the number one or two network in america for after can american women, and the top 20 channel. it goes to the point that if you put great content on with great personalities that we believe
you could still attract an audience. top 20 network that didn't exist. >> nobody is going to launch a new network in the traditional way? >> so many oprahs to go around. >> and i would start the broadband. >> okay. thank you. >> i have one. >> and we launch eed destinatio america this year, and very new network and we also launched velocity in the male space, so we believe that the channels matter, but channels are made up of shows. if the world changes and people start to want to consume just shows, which i don't see happening in the next couple of years, but maybe eventually it does, but if we had more great shows that people care about, and great kascharacter, then we will have a lot of value. >> you will figure out how to get paid for it. >> and internationally, you cross borders better than nobody else. we are out of toime, david. >> and there is so much more the ask about sinclair and albrecht. >> and david zaslow s the ceo of discovery. and even with the disappointing results from
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welcome back to "squawk on the street." closing arguments in the fabrice tourre trial to dday. we go the manhattan and mary thompson. >> the trial against former goldman sachs trader fabrice to tourre, and the closing argument hammered a wway that he is misleading, and intentionally misled investors into making them believe that john paulson
had a long call on abbacus, and martin says to follow the documents, because they don't lie. he is showing them that tourre who knew that one of the investors who ended up losing hundreds of millions of dollars on the bet had thought that paulson was long this investor and not just short. paulson of course made $1 billion on this. so he is taking matthew martin's, through the jury through the e-mails that shows that they were concerned about the paul ssonpaulson's position never tried to clear it up and said it is a fraud over several months. and matthew martin is saying that tourre is the only person who knew the truth, but he would not tell the truth. these closing arguments from the s.e.c. are expected to go another half an hour, and then a
break and the defense will close for 2 1/2 hours and the s.e.c. comes back for another 30 minutes. the jury could be instructed and start deliberating today, but again, the closing arguments will continue through the afternoon, and we will be back with an afternoon. simon, back to you. >> mary, safe to assume that the defense team is fairly confident at this stage given that yesterday they decided not to call any witnesses, and in most of the newspapers this morning that is the conclusion? >> i think it is true. what they felt is that when fabrice tourre was on the stand, he made a convincing argument to his innocence. and the judge said that after this, the jury may not want to hear from anybody else, and this may be the end of it, and so the defense decided to cut the list short claiming that the defendant made a very good case for himself last week. simon. >> yes, thank you, mary.
in the meantime, steve liesman is here with the results of the exclusively cnbc fed survey of where the respondents believe that the interest rates are headed. and hint, up, up, away, and inevitably, steve? >> yes, that is right, simon. hang around, because i have something for you at the end of this, because one of the data points get to the conversation that you and i have had for several weeks running whether or not the tape ser built into the market. this is what the expectation is for from the fed survey. on top the june survey and on bottom is the july survey, and when does it start? we had it in december and now it is october if it does come upper hoo. and october is the new tapering and came back by a couple of months. how much taper? $19 billion is the number. and how about when they will finally stop qe? it had been in june and now it is actually ahead in july, and just the a.j., but around the summer of 2014. when will they finally raise the interest rates, second quarter of 2015, and in the june survey,
no change here. i want to get to what simon is talking about and the expectation of interest rates on the 10-year yield and you can see here, it is up, up, up and away here, and 2.1% in april when things were not looking so great, and 2.11 and 2.73, and all of this is following the commentary by fed chair ben bernanke. and how about when we look into next year with 53.1%, and by summer, and this time next year, we will be topping 3%. i want to show you what our respondents and 50 respondents and half of them economists and other strategists and fund managers and what they think about the stock market and what has been happening with the s survey for the whole time is that the guys have been chasing the market higher. they have not had it right. the expectation for december of 2013, and 16.55 and 16.91 is december right where we are right now, and the s&p was 1695
just where we were just, and so forecasting right and no growth, and how about next year, the s&p for next year, you can see it 17.51, a not much change, and about 4% higher. they are not upbeat this group on stocks. one more thing that i want to take a look at is how much of the taper is built into the market? this group says about 70% of the price of the taper is built into the price of mortgages and treasuries about 66%, and then equities a little bit lower. so what that tells you is that the market believes that there is room here for the prices of all three of these assets to adjust when the taper timely happens and the most in equities and the least in mortgages. simon, we have been talking about this for a while, and we will have more results at 1:00 on cnbc. >> so 43% of the economists
believe it is not built into the market? >> well, that not quite. when it comes to stocks that is 42% of the tape ser not built into the market, and that is not percentage of economists, they say that the average, the tape ser built in 58% of it to equity price. so still more to be built in. >> so to the argument or to the discussion that on the ish ssue that you and i keep having when they announce the taper the market will fall in my view. >> there would be more room to fall if indeed that would be correct. i think that ultimately a lot of it is baked in, and there is still more for the market to fall is the view there, simon. >> all right. thank you, steve. >> you notice, simon, when the information is in your favor, i do not shy from presenting it. >> no, you are a decent upstanding colleague and friend, steve liesman. steve liesman back at hq and more from the fed survey right here on cnbc.
immediately after the break, and maybe now, but certainly coach is having a really poor day today getting a sale relay and the comps are falling below estimates and are they sharing the estimates to peers like tori burch and michael kors. we are joined now with the president of the s, we are tail advisers, and thank you for join joining us. there is a problem with coach. the north american sales, stacy are down 1.7% on a like for like basis and the commentary is that they are losing market share on the expensive handbags and would you agree with that? >> e r the comps were down 2% and the commentary on the call is that we are not expecting for anything better into fiscal 2014, and so they are still expecting the kcomps to maintai negative. the issue here is that they are trying to be a lifestyle brand and so they are going to go into footwork, and more apparel and lower margin here, and certainly
the guidance is below the street even though the expectations are out today and they are losing market share to michael kors and tori burch. >> for all of the talk about china, remember that coach has 3 3.5 times more outlets in america, and 444 they announce ed today. james, let's talking about the staff that is moving. we knew that the creative director was going to leave the company, and now we learn that the head of coach's north american business and the operations chief are also leavi leaving. did you expect that? there is some commentary that maybe it is inevitable as they were seen as successors to the long term ceo. >> well, it is inevitable that you would see the management change within coach given victor lewis is moving into the ceo slot in january. he is clearly going to want to bring in his own team, and they are in a transition mode with a new creative director and management. and was stated earlier and we
have written in ww, d they are moving toward a lifestyle brand and that requires a completely different set of skills both on the design and the management side. >> james, more than any other trade publication, you are as plugged into this industry as it is possible to be, and what would that industry say to people on the stock market? would they say they can turn this thing around? >> well, it is still the two-ton gorilla in the sector. they are facing increased competition from kors, tori b r burch and kate spade, but it still has huge brand equity to build upon, and huge explosive growth overseas and in categories like feetweootwear a watches, and the men's category is up 50%. so this is still a growth potential company going through some wobbles. >> stacy, shouldn't this brand focus on going brand equity,
because it is at a high. and the issue for coach is to make sure it is still relevant with consumers. >> yes, you are right, and that have very true, and some of the good news today is that if you look at the handbag category with coach, they own 25% of the market and that is hard to top yourself, so you do have to branch out which they are doing into other categories and that is good news and they are slowing square footage particularly in north america and that is coming and the street expected after a long time coming. i think that there is still opportunity with coach in china. everybody is talking about the anti-corruption campaign and that hits the higher end brands with coach is a more aspirational brand and not related to the corruption very high end, so i think that for the middle-class emerging c consumer that brand has a lot of opportunity there. >> stacy, is it true that you almost wore a kors' dress to this appearance? >> well, i did, but it is not helpful here, and not constructive, but i think that's -- >> well, it is --
>> that is a share loss story. >> and stacy, before we let you go, is this a buying opportunity for coach or not? where does it leave the shareholders now. >> well, there is a lot of transition risk here, and as discussed and the entire management team is leaving from design on down, and so you have to the wait and see here, and there is opportunities in china, but north america, and i think it is a big question mark here and the bulk of the business. >> okay. >> it is good to see you both, and stacy woodlet is there from the s, we are tail, and nice to see you there from woman's wear daily. and two of the stars of "housewives of new jersey "are charged under an indictment. find out how many years they could spend behind bars while they enter the courthouse. and filmmaker spike lee will join us here to talk about his kick starter campaign to talk about his new movie. you don't want to miss it. (announcer) scottrade knows our clients trade
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cents. getting a boost here from lower raw material prices, company also seeing signs of volumes stabilizing in europe. gt up more than 9% right now. carl, back to you. >> that's a big move. moves a lot generally, but that's a big one today. let's get to the cme group in chicago. rick santelli with "the santelli exchange." >> a couple things have occurred today that gave me the idea for this exchange. the first is, and i really look forward to these, one of steve liesman's surveys. i think surveys are key. gives you an idea of what people in the marketplace or economists in the strategizing or analyzing business, what they think. if you know what they think, especially if you're an investor, that is a very useful tool. another issue today was the release of the conference board consumer confidence. obviously, it is a form of a survey. but there are dangers to this form of thinking.
consider this, if we look at some of the biggest issues that have made our country and many countries better over the last hundred years, most of those improvements, whether it's civil rights or who can vote, have been minority opinions. so if just a thumbs up vote or a survey were taken, some of these issue would say have never changed or given such a nice tailwind to the benefits of a grand society like the united states or much of europe. i mean, there's a lot of countries that enjoy freedom. but yet if you look at what happened in the arab spring a couple years ago, especially in egypt, just because you have democratic elections doesn't mean it's going to turn out perfect. there's a big difference between giving up individual rights in a democratic scenario pretty much like a survey, kind of crowd notions, crowd issues, versus, well, look it up. if you talk about surveys and you talk about crowd issues or
crowd rules, you'll see some that say mob. you will see a lot that talk about social media. if you want to know the way a group is going to vote, all these are very important. if you are looking to see who the next fed chairman may be, maybe it will be enlightening to get opinions. however, if this is taken to the political level, and we know it is, many times the crowd becomes too enamored with a special form of government and what you end up with is a real mismatch of the proper course of action. there are a lot of things that this country may need to improve that aren't going to be the majority opinion. that's why we have a democratic republic where you vote in people to go to washington to represent you, but they don't poll you on every issue. if we all had survey says buttons over everything, i think things like speed limit, drinking, drugs would all change. especially social issues. but in the end the danger is you overlook the tough love tasks and i think we're in a tough
love environment. simon, back to you. >> thank you very much. rick santelli live from chicago. two of the stars of "the real housewives of new jersey" are being charged with fraud. they've just left the courthouse. andrea day is live for cnbc in newark. andrea? >> yeah, simon. this is the reality they wish would just go away. you're watching the scene, the mob scene right outside the courthouse. a lot of pushing and shoving. somewhere inside that mob scene, you will find teresa and joe. their attorneys are trying to get across the street here. it looks like over to a parking lot. this has been a serious mob scene all morning, even in the courtroom it was completely packed. the two -- i want to show you some video we shot early this morning when the two bravo stars were on their way into the courthouse. again, it was a mob scene. lots of pushing and shoving, cameras everywhere. looked like a relative kind of swatting cameras out of the way. i want to read you -- here is
their big problem. they're accused of pumping up income to get loans before the reality show began, then hiding how well they were doing once they started making money. teresa releasing a statement late last night. i want to read it to you. she says today is the most difficult day for our family. i support joe and, as a wonderful husband and father, i know he wants only the best for our lovely daughters and me. i am committed to my family and intend to maintain our lives in the best way possible, which includes continuing my career. as a result, i am hopeful that we can resolve this matter with the government as quickly as possible. and she has a lot to resolve. she according to the indictment a year before the show debuted, they submitted fraudulent mortgage and loan applications. teresa allegedly claiming she was an executive assistant submitting fake w-2s and pay stubs. back to us live. i don't know if you can see this mob scene still outside the courthouse. this was just a scene inside the
court, a hearing just to discuss bail. they are facing a lot of serious charges. it looks like potentially 50 years behind bars if convicted on all charges. i'll send it back to you. >> wow. wow. reality bites. andrea, thank you very much for that. more from the courthouse throughout the day on cnbc. meantime, tweet time. allen kruger remarking that the battle over the debt limit, the potential debt limit battle, would be worse than a sharknado. so we're asking you this morning, the only thing worse for the economy than a sharknado would be what? your fishy responses after the break. i've been doing a few things for a while that i really love-- tdd#: 1-800-345-2550
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meantime, dow hanging on to a 19 hount ga point gain. we mentioned some of the big movers, coach, goodyear. >> we are moving some momentum about 90 minutes into the trading session now. >> that's right. if you're just joining us, by the way, we will talk europe in a few moments. here is what you missed earlier on. >> welcome to "squawk on the street." here is what's happened so far. >> we had a great performance first of all from all of our businesses. if we look at the wealth management division, strong net new money growth of $13 billion in total for the quarter, $36 billion for the half, up 50% year over year. >> we should get our rates down to mid 20s at the highest and then let people invest to make money and create a return which creates jobs and makes the economy much more efficient rather than having people invest to avoid taxes. >> i wonder if coach's luxury enough to some extent. i find it interesting they're
spinning off their more luxury business. you want to be that super high end name or the name that's a little more sort of mass market. >> the cities that bubbled in the past are bubbling again. it seems partly psychological. they've seen it before, they're ready for it again. >> we need markets to adjust to more of a market-based economy instead of one that's reliant on continuous government stimulus. >> despite the fact that the u.s. from the economy perspective is still not very strong, the advertising market remains strong, and for us in particular because we've been growing market share with our channels. good tuesday morning. we're live at post 9 at the new york stock exchange watching the dow lose a little steam. we're up 40 points, now up 15. s&p is up 3 at 1688 and the
nasdaq is up 17. shares of generac rallies. they beat expects. they did warn that it will be tough to match last year's sales which were much higher after major weather disruptions like hurricane sandy. herbalife getting a nice bump. they raised its yearly earnings forecast. >> let's go et to the road map. another grand par begin in the works. president obama has a new offer, corporate tax cuts for more stimulus. we break down what it could mean for markets. according to saudi arabia's prince, north american shale oil is a major threat to gulf oil production. we'll tell you what it means for the future of the middle east. and he will do whatever it takes to fix your business, even putting hits own cash on the line. the latest show from cnbc prime called, the profit premieres tonight. want to talk about that grand bargain for middle class
jobs the president is going to propose today. want to bring in cnbc contributor dan greenhouse with btig. >> good morning. >> let's put aside sort of the political uncertainties about whether or not republicans would go along. how much low hanging fruit is there in lowering the corporate tax rate? >> there's a fair amount of low hanging fruit, but i think the most important point here with respect to the corporate tax rate or at least in the context of this discussion, the tax repay triation push is you're talking about a very small group of companies. i'm not saying whether i'm for or against the idea, at least not right now, but the last time we did this tax repatriation, 15 funds accounted for half. in the context of what's going on here, this isn't -- to some degree it's not a broad-based policy. it's really very specific in nature. >> let's pretend for a moment those 15 companies did bring
some money stateside. does it go to cap ex, buybacks, or dividends? >> it goes to buybacks and dividends. to be clear why really care. i think if the idea is to bring money back home at a favorable tax rate, it should to some degree be up to the companies to do whatever they want to do with it. i think the idea that somehow dividends and stock buybacks which ultimately boost the stock market all else equal is something that shouldn't be encouraged is something i disagree with, but i think the experience we have certainly with the most recent tax repatriation holiday is it doesn't go to cap ex or hiring. aggregate demand is what matters in that regard, not in this particular instance, tax policy. >> dan, you just said it. if demand is what matters. if we want the economy to do better, if companies take this back as a form of engineering, it's not something most americans should cheer, is it? >> gets back to the point i said before, you had 15 companies
accounting for virtually half of repatrioted profits. those are names you know. johnson and johnson, coca-cola. they're in people's 401(k)s and investment portfolios. to the extent it boosts the stont, it has a beneficial effect more generally. it's not the same thing as some other policies being approved, but a higher stock market is better than a lower stock market. >> goldman sachs had a note out yesterday. took a look at the decline, the 100 basis point decline in s&p roe since q1 of 2012. of the 100 basis points, 59 of due to higher taxes. is corporate america being overtaxed right now or is the level of taxation hurting profits, hurting return on equi equity? >> well, i haven't seen the report and i'm not going to comment. i will say david is a pretty smart dude so i will go with what he has to say, but i'm someone who believes all else
equal, higher taxes are worse than lower taxes. so the extent we have raised taxes generally in the economy over the past couple years, certainly this year in particular, that's had a detrimental effect on economic output. it's not inhibited revenue collection. revenues are running high with respect to what we saw last year and so to the extent you're the president and you said raising taxes is going to boost revenue collection, he's been right in that regard. >> yeah. we'll see what he says. jean sperling has been doing a conference call this morning. dan, thanks for lending your insight. >> thank you. >> dan greenhouse over at btig. >> in case you missed it last hour the ceo of discovery communications was here live. he talked about the ever changing landscape of how we watch television. take a listen. >> we certainly see that people are consuming more content on different platforms. we acquired the largest streaming business in the u.s. rev3.
because we do think the way people are consuming content is changing. people are watching more tv in the u.s. than they ever have. that's number one. number two is that as you go outside the u.s., you go into brazil, only 26% of brazil has cable tv at this time. and two years ago it was 20%. in mexico it's 40%. in russia it's 35%. in india it's also very low. and so in a lot of the markets around the world, they're five or ten years behind -- >> aren't they just doing to bring the broadband pipe into the homes and forget about the so-called cable. >> any kind of linear television service at all? >> the way people consume it whether they consume it on a cable wire or through a broadband wire, people are going to be consuming the best content. it's not clear by the data and there's a lot of conflicting data, that the way people want to watch television has changed that much. they still want to sit in their living room with their friends. when we did wallenda which got over 13 million viewers on
discovery, it started out with 6 million viewers. the third minute you had 8 million. by the seventh minute it had 12 million. it's because people were on twitter, they were on facebook. in the old days, people would maybe make a phone call. >> are you watching this? right? >> and there's something communal about it. as much as people like netflix and going home on a weekend and watching an entire series, that's very much more individual. the majority of content is -- people watch honey booboo on tlc and they want -- when they go to breakfast the next morning or when they go to lunch, they want to see what everyone is watching. >> you know what i thought was so interesting about that, carl, he said he doesn't think habits are changing that much. you asked him or i think it was david who said to him, our kids aren't going to watch cable, are they? and he said, yes, and when i look around the way my friends are watching television or aren't, so much of it does seem to be specific to shows they're watching over the internet. look at the success of chrome cast. i'm not sold. >> a, we live in a bubble.
people watch tv in so many different ways. i think his sense of how people watch television is probably better than yours or mine. what is stealing all the headlines is own going cash flow positive six months early making a lot of news about the turnaround of that network which some people had written off completely. >> skeptics, they looked at the early indications and said half a billion dollars, is it ever going to happen? and, yeah, absolutely. >> when we come back, this man will do whatever it takes to fix a failing business, including spending his own money. he's the profit, host of the newest show. marcus is here live to give us an inside look in just a moment. first though rick santelli, what are you watching today, rick? >> i'm watching the idea that we probably shouldn't have logic and taper ever in the same sentence. we're looking not only at our employment data coming down the pipe but we're also looking at europe's. we'll talk munis in the context
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>> we have a difference in fill loss si. i like the customer with me during the appraisal. i want the customer to know what i'm doing is fair. if i take them around the car and i point out the defects with the car or the imperfections with the car, you can get this replaced. then when i give them a number that's lower than what they originally thought it was going to be, their expectations are probably more in line. they're less surprised and they feel like you're hiding less. i would rather ask these questions with them. make sense? >> i like that. >> you, too? >> i would agree. >> live from post 9 is markly mow nlemonis. walk us through the general concept. you take a couple twists on that model. >> i put $2 million of my own money, not somebody else's money up, to go into the small struggling businesses and figure out if they're going to make it
or not. >> what defines struggling? how do you decide who is truly struggling? and to what degree -- do we see the success rate through the course of the season? >> struggling to me is the doors are going to close within a week and not that they're going to close within a year. over the course of the season you will see me get involved in a number of businesses. some work out, some don't. in one episode i lose $200,000 in the flash of a second. it's tough. >> you wi >> there's a sense if you're coming in you almost have this godfather look about you. is that your intention to scare these people straight. >> you know i'm not in charge of the marketing and i don't throw chairs. the reality is that these folks need hard decisions. and they're struggling to make the hard choices. i am going to make them for them. when i put money on the table, i'm in charge. and i don't think that's any different than any other business. >> there's a twwhole industry called private equity. >> that's right. >> you've been called the most
controversial man in ther v industry. it's widely known you don't care about being popular or making friends. when these entrepreneurs make mistakes, what's the typical mistake? what do they do wrong? >> the typical mistake is they don't understand their numbers. generally we see that they don't understand people but in in case they don't understand a balance sheet. when you ask them about margins or spreads they just look at you pretty glared over. >> do you ever wonder how these people got started with their own business in the first place? >> in most cases they're second generation businesses and that failure rate is about 70% of this country and we want to fix that. >> it's interesting because my guess would be when you go into a lot of these places, they're poorly run with labor costs and the first thick to go is employees. is that your experience 1234. >> i don't look at it that way. the first thing that needs to go is sometimes the owner. and in some cases you will get rid of the managers. i like focusing on the bottom up where the revenue is generated. it's easier for people to go and start cutting things and say
we're going to cut our way to a profit. that doesn't work. you have to sell things, you have to make gross, and then you make money. >> tell us about who starts off the season. >> the first episode is a company called car cash in new york city, west 55th. founded in 1977 by bruce baron. he dropped dead about a year and a half ago and left his two sons, john and andrew, with in business acumen and no money. as we sit here today the deal is closed and funded. that's one thing that's unique about our show is that we don't -- can't leave you hanging on whether the deal hand or not. as i sit here today, there are 19 new locations open. >> whoa. >> and there will be 70 by the end of the year. >> wow. >> we don't mess around. >> dr. lemonis in the house. you taped half the season. you will do more in the fall. >> we have taped season one. >> and you have to run your own business. >> i have 6,000 employees and an amazing business called camping world. it's been a tough balance.
i have lost my weekends, my nights, my love life, my friends. >> but you're a star. >> we have a good show. >> i was going to ask is it worth it, i guess the answer has to be yes? >> well, kelly, make no mistake about it, i am going to make money. in the first episode i think i'm going to make a lot of money so i didn't do this for fun. >> marcus, we can't wait. we'll see you tonight on tv. marcus lemonis. let's send it over to josh lipton with the dow now up ten. >> we are watching sprint here. company did reportedly lose more contract customers than forecast. as for better news, top line best estimates raisines guidanc for the year. they sold 70% of shares to softbank. oppenheimer is out with a note saying restructuring of the network and balance sheet remains on track. they do expect a few more messy quarters. the stock up about 2% right now.
kelly, back to you. >> all right. thank you, josh. blockbuster comments from a saudi prince who says north american shale oil is a threat to saudi oil production. what it could mean for the future of middle east policy when we come back. golden opportunity sales event and choose from one of five lexus hybrids that's right for you, including the lexus es and ct hybrids. ♪ this is the pursuit of perfection. ♪ a quarter million tweeters musicare tweeting.eamed. and 900 million dollars are changing hands online. that's why the internet needs a new kind of server. one that's 80% smaller. uses 89% less energy. and costs 77% less. it's called hp moonshot. and it's giving the internet the room it needs to grow. this ...is going to be big. it's time to build a better enterprise. together.
to the middle east this morning, supporters of deposed egyptian president mohamed morsi calling for a million person march today to protest against military rule. it's coming after dozens were killed in clash was the military over the weekend. i want to bring in yusef yousef who is in egypt with us. >> it's been another violent 24 hours. the extent of the 24 hours is much less than the carnage that happened over the weekend. some of that violence happened on the sinai peninsula. no reports of any shipping activity being impacted so far. key event of the day, the visit
of foreign policy adviser from the se connectic-- eu katherine. she saw morsi yesterday. the former president has been held incommunicado since july 3rd. the egyptian presidency made it clear late yesterday that he was not a political prisoner and he would be tried in a regular court of law. you mentioned the marches planned for today. the supporters of the ousted press are calling for his reinstatement and as well there have been warnings now from the u.s. embassy in anticipation of possible escalation and violence later on today. they sent out an emergency message and also closed the embassy early. now, of course, the political impasse between supporters of the president and the remainder of the political spectrum is going to drive a lot of the discussion in u.s. government
circles about financial assistance to the egyptian military to the tune of some $1.3 billion. and despite those uncertainties though, the market, the egyptian stocks exchange, the benchmark closed higher today in trade although some of the etfs tracking that index in the u.s., also the market vectors, egypt vft are not following suit. they're trading to the downside. keep a close eye on the situation. the tensions are still very real. carl? >> yousef, thank you very much. trouble as well for the kingdom of saudi arabia. yesterday the prince wrote an unprecedented letter to the country's oil minister warning the nation's future is in jeopardy if it refuses to diversify from oil. the kingdom's largest threat, a huge surge in natural gas production from the united states. our next guest agrees with the prince. joining us is helene kroft. >> thank you for having me. >> there are a lot of people co
prince. >> i think he has some real kerns. saudi arabia is so dependent on crude oil receipts to finance their budget. since the arab spring, saudi spending demands have grown considerably. the saudi oil minister talks about $100 being the ideal price to balance the budget. big growth in north american oil production potentially does impact their revenue and ability to set a floor through opec. >> as much as they might like to diversify, oil is what they do. what kind of options do they have especially to replace something at all approaching this scale? >> the saudi government has really been, you know, ahead of this issue. they've really focused on the education of saudis. young saudis, 65% of the saudi population sunday the age of 30. they have been focusing on studies in science, technology, trying to change their skill set
so there are more economic opportunities. they vice president been taking this lying down. but the big challenge really is north american production if it does potentially eat into saudi's revenue stream they could be facing social challenges absolutely. >> not the first time we've heard sort of this kind of tone from an opec member. we have heard there have been some infighting as the u.s. gets a little head of steam for energy. what is their next big strategic move? >> certainly they have to watch north american production. it has grown by over 1 million barrels this year. but, you know, at barclays we look at 2020 and we say the united states is still going to be a net importer. we still think we'll be importing 5 million to 6 million barrels a day. the u.s. will still be dependent on stability in the middle east, keeping opec supplies stable, and also watching bhaps what ha in iraq. if you look at what happens to
the scenario for a low price environment going forward, it's based on the growth of iraqi production. there are real kerns about the security situation there. opec may not be in the dire straits everyone is predicting. >> that's what's been so interesting. at a time when everything is talking about the u.s. boom in producti production, we have prices climbing, not falling, and a lot of attributed to what's happening day to day in the middle east. that's why some people are surprised to see -- i guess skeptical that the saudi kansas city and will move very quickly on this to diversify away from oil. >> absolutely. again, the iea said 45% of new production growth between now and 2035 is supposed to come from iraq. iraq is facing a very challenging security environment. other big middle eastern producers could see significant geopolitical threats like libya is another big country we're watching. so, again, given the importance of the middle east to the production story and given the political volatility there, we
think there is significant pressure on prices from geopolitics going forward. we're not going to be able to get away from that. >> would you expect them to put even former caps on production and to what degree can they enforce those among their members? >> that's a great question. what you want to watch for is if we saw prices slip significantly below $100 a barrel, because right now in the saudi oil minister says $100, we think if you look at defense spending and social expenditure that is probably what they need to balance budgets. if we get into a situation where we see prices falling significantly north of $100, we think saudi arabia will be under pressure to firm up prices. so that's the environment you want to look for for a potential output cut. >> all right. >> but we're not there yet. >> okay. thank you very much for your thoughts on that this morning. carl, just to underscore the violence she's talking about across iraq, more than 4,000 people have been killed in bombings and shootings, 900 in july alone.
an al qaeda group just taking responsibility for some of the attacks that occurred over the weekend. >> by the way, make sure you tune in tomorrow. our lineup of guests is incredible. first off filmmaker spike lee here live at post 9. you may have heard about his latest business venture using kick starter to fund his latest project. we'll talk to him about that. soccer legend pele is here live talking about one of his latest endorsement deals right here tomorrow on "squawk on the street." make sure you tune in starting at 9:00 a.m. eastern time. both huge, huge -- >> pele? >> i know. the bell is about to sound across europe in a minute and a half. we'll get the details with simon. talk about our afternoon session. dow is up 22. both huge, huge -- i've been doing a few things for a while that i really love-- tdd#: 1-800-345-2550
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you know what time it is. here is simon hobbs with a look at the trading session across europe as we close. >> europe is closing for the session and for the second week we've had a major piece of data that indicates europe could be emerging from recession. last week it was the purchasing managers index. today it was a broad based jump in the economic sentiment survey. spain's contraction in the second quarter was just 0.1%. we learned unemployment there is still at 25%. we're keeping an eye on the italian supreme court. between now and thursday it will rule whether sylvio berlusconi needs to go to jail for tax evasion and be barred from
public office. if it votes that way, that could cause serious problems for the italian coalition. we will keep an eye on that through the week. at the corporate level, chrysler here in the united states warned because of the cost of the jeep recall and also because it's not making the sort of sales it anticipated. so many of its launches are in the back half of the year. warning there, down 4%. the banks are a key focus in europe. kelly was you canning about the $9 billion rights issue for barclays. deutsche bank's results disappointed. their legal costs are ballooning, and bp also disappointed today. profits down more than expected around the world, and at the same time they are -- remember, it's now three years since they managed to stop the oil spill in the gulf of mexico. they are increasing their provisions for paying the
victims of the spill. victims that are receiving money that the ceo believes, he believes may not be justified. last week they tried to stop it in court. today he's increased the provisions to over $42 billion. this is what bill dudley had to say. >> appealed what we think is a real misinterpretation of an agreement we made last year to compensate legitimate victims of the spill. we remain committed to compensating victims of the spill, but not the way it's being interpreted and we are vigorously, vigorously opposing that. >> we've got an ecb meeting on thursday, guys, which given the strong data probably means they'll hold firm where they are. >> bank of england as well this week. >> of course. >> and earnings central? >> you mean the earnings squad. >> this afternoon, yes. on street signs. do please watch. tell your friends. >> the day is not done yet. thanks, simon. let's get to bob pisani. >> look at the dow. i don't know what's going on but
every day for seven or eight days we close within a couple points of 1550 and we're doing it again. this number is like either side of that is where we've been for seven, eight, i think this is the ninth trading session. complete turmoil in potash stocks. you can see what's happened to these potash prices. they have simply collapsed, the stock prices. let me show you what's going on. i don't think it's too strong a word to call it a cartel here. 80% of the supply is controlled by the top six producers, okay? the top four producers belong to two marketing organizations, call it whatever you want, that negotiate prices and contracts. you might say to yourself isn't it -- isn't that price fixing? and isn't it illegal in some countries? and it sounds that way to me and
should be but it turns out it's hard to enforce national laws on price fixing and things like that in international markets. you can't do it. take a look at, for example, some other ones. you have euro colley pulling out. it's like saudi arabia pulling out of opec. other conditions control other parts of the world market. it's like iron ore. a few big companies control most of the iron ore in the world. they're all trading down today primarily because commodities are still in a rout. look at the big commodities today, nickel, aluminum, copper, base metals all down again today. near multimonth lows, all of them. this is largely on concerns about slow growth in china and the dollar a little stronger today. that generally doesn't hurt. you get the point about what's going on in the global commodities markets. elsewhere in the united states, auto parts are up today. i think this is largely because goodyear had an excellent earnings report. goodyear is up, trw is up.
and dana holdings also strong today. i think it's not too strong to call this a cartel, and i hope there's a lot of people looking into the nature of some of these commodity organizations around the world. guys, back to you. >> they certainly have to after this one. thank you very much, bob. let's get to rick santelli in chicago with a look at the fed, unemployment, and muni bonds. hey, rick. >> absolutely. thank you, kelly. i'd like to welcome our guest from southwest securities my man, mark grant. welcome, mark. >> hey, rick. thank you, sir. >> i like watching the news and staying very contemporary especially when i have guest that is can do it on the fly like yourself. just saw a headline, peugot will have the french government guarantee $7 billion, 9.2 billion euros of its bonds. does it ever end? what are your thoughts on that and all these guarantees, all these countries buying other countries' bonds. so far it seems as though it's all holding together. your thoughts? >> yeah, rick. the german election is september
22nd. i can virtually assure you for the next six weeks between now and then, whatever amount of money it takes, whatever france has to do to guarantee a corporation, anything, everything, the world will be quiet, and then after that, which i view as a drop dead date, everything is going to change. >> all right. you know, when i look at the world, i think about something, let's look at interest rate difficult ren shalls. it keeps a true amount of pricing in the marketplace. but when you have japan, the sumpl, and europe basically controlling interest rates and to some extent controlling currencies, where is the solid base of pricing and relative vault in in world? any one of those countries has a hiccup what happens? >> well, rick, everything is
supported by the actions of the central banks as you point the out very correctly. in japan, the ecb, bank of england, and our fed. we have a very false market which is buoyed by this tremendous amount of money that's been created by nothing, checks for free, and if there's any crack at all anyplace in the world, you're going to see a tailspin that's going to be very unpleasant to be on the plane for that ride. >> many of us, including yourself, art cashin, myself, talk about it's more than that. do you think even with the logic of that distorting the taper, it's a subsidy. i don't care logic or no logic, any form of removal is going to give us more hiccups. agree or disagree? >> no, i totally agree. as a matter of fact, the real number with the rollovers and so
forth is about $100 billion a month. also the treasury came out and said that they're going to be cutting the amount of money that they're going to require so that means the fed is even going to be buying a bigger percentage, and it's, as i said a very false market created by all this free money. >> well, mark, i'm going to have to cut you short. thanks for taking the time today. back to the studio. >> anytime, rick. >> thank you so much. big news this morning, jpmorgan agreeing to pay $410 million to settle allegations of manipulating the power market in california and michigan. jpmorgan did not admit or deny any wrongdoing. our kate kelly is live back at hq is more on that. >> thanks so much. i'm here with federal energy regulatory commission john we willinghoff who was kind enough to give us his first interview. chairman, thank you for joining us. >> good morning, kate. >> good morning. this is the largest ever settlement for energy market abuse. i'm curious, how did things get
so screwed up at jpmorgan? >> well, it was a series of events in california and michigan about 12 different acts of manipulation we specifically found in the settlement that we issued this morning. i think it was a minor matter though in the context of some of the largers events that took place, for example, in the early 2000s with enron. this is really only about 1% of that event. >> well, given that you mention enron, i-going to ask, you have recently come down on a number of banks, deutsche bank, barclays which is fighting your proposed settlement and jpmorgan. why is it that energy market abuse is still happening? >> well, it's happening at a very low level. we want to make sure that people understand this. again, what happened today with jpmorgan was only about 1% of what happened with enron and all the other entities back in the early 2000s. what we're seeing here is ferc ramping up our enforcement
ability. we're able to do that in a way the markets can stay fair and open and transparent for consumers. >> did it take a while to ramp up? it has been since 2005 it's been eight years and we've seen a rash of cases in the last two, but perhaps a little bit of a quieter period in the interim. why was that? >> it was because of the ramp up. number one, we had to get the personnel on board and number two, we had to start doing the analysis and this analysis would have to go in depth in what's happening in the markets to determine the manipulation screams. now we're fully functional. we have a full complement and a full team, and we're ready to ensure these markets can be fair and open and transparent for consumers. >> okay. final question, mr. chairman. the federal reserve must soon decide whether or not to keep banks -- to allow them to keep their physical commodities assets. john mo jpmorgan is selling off theirs but others are holding on to them. when the fed asks you for your
input, what will you advise? >> we welcome anybody in the markets that want to play fairly. whether it be banks or traditional utilities or other traders, we do not restrict anybody. we just want to make sure they play by the rules. >> thank you so much, chairman wellinghoff and congratulations on the settlement today. >> thank you. >> carl, back to you. >> thank you. homeowners listen up. our next guest will help you redesign your home from start to finish all at the click of a button. we'll tell you how it works when "squawk on the street" comes back. in today's markets, a lot can happen in a second. with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price -- maybe even better than you expected. it's all part of our goal to execute your trade in one second. >> thank you so much, chairman we'll tell you how it works when our one-second trade execution is one more innovative reason
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the new blackberry q10. it's time. coming up next, after a pretty quiet july, a volume pit about to return with a vens jens. week? a man whose fund was up 34% last year tells us how he's playing the housing rebound now. plus, ag stocks getting killed. so why is one of our traders getting in? we've got a big debate coming up, carl. see new 15. >> sounds good. let's go to another scott, scott cohn with breaking news. >> the plot thickens in the sac investigation. the preet bharara and the s.e.c. filing complaints against sandeep aggarwal as someone who tipped richard lee who pleaded guilty last week right before
the criminal charges were unveiled against sac capital. this allegedly involved inside information passed onto lee about negotiations between yahoo! and microsoft back in twin 2009. you remember those negotiations that ultimately did not go anywhere but allegedly allowed sac to tried on this inside information and reap lots and lots of profits. another name unveiled in the case but in this case sandeep aagerwal is not pleading guilty. he's due in court later today. >> he was not named in the indictment read last week. >> right. and in richard lee's guilty plea, he admitted to trading on inside information that he got both from an analyst as well as a corp rot insider and this apparently according to the s.e.c.'s press release on this, this apparently now names the analyst that was the tipper of the inside information richard lee traded on.
>> we'll see if he's fighting those charges. scott co-hone with tkcohn with . major companies have plenty of releases on tap. we've learned that's whapi eed with case and schiller home prices. >> and facebook gets a lot of attention relative to the number 38. >> ip ovenlt price. >> the price at which it went public. it's almost within $1 of $38 which will make news if it gets anywhere close. case shiller from may showing an increase in home prices but homeowners are not just investing in buying new real estate, they're renovating homes very already have. the ral cost finder allows users to track the kofs of renovations done by their neighbors. spending is increasing. we have the co-founder and ceo of houzz. i think we're going to do this on the phone. good to talk to you. >> good to talk to you, too.
>> walk me through the real cost finder. what information can i find out? if my neighbor just remodeled their kitchen, how close to the actual value can i get? >> it's very, very close because we have the largest survey conducted and people contributed everything they could about every single room in the house and outside of the house, the exterior, too. so you can actually search for specific rooms and get the exact information from your neighbors. >> interesting. just really quickly here, adi, any privacy worries. i'm not sure i want the whole neighborhood to know i dropped 20 grabbed nd on a bathroom. what kind of protection does a client have? >> we're not pointing to specific people. we're giving you the averages from the modest budget to the top spending, but the fact that
it's in your neighborhood and is specifying the products for every single room, it allows you to plan better. the number one thing we hear from homeowners is it's so difficult to set and stay on a budget. 41% of the people who took our survey complained about it. and the professional architects and contractors are complaining, too that the homeowners don't know what to expect. we wanted to empower the people to plan better. >> do you really help people save money though or does this kind of look over your shoulder aspect to remodeling make people spend more just by keeping up with their neighbor? >> i think they're being able to make better decisions this way. to know which areas they should spend more on and what to expect. it helps to communicate better with the professionals and really set the expectation and plan better because planning is
very, very important if you want to stay on a budget. and so knowing what to expect in your area is very important. >> okay. >> adi, i know the tv devils sometimes work against us. we look forward to seeing you live and on camera next time. >> me too, thank you. >> another huge day for earnings. major companies like bp, coach, and more reporting this morning. stay tuned for more. our earnings squad will join us next to break down the biggest headliners. "squawk on the street" continues over this. [ agent smith ] i've found software that intrigues me. it appears it's an agent of good. earnings. [ agent smith ] ge software connects patients to nurses to the right machines while dramatically reducing waiting time. [ telephone ringing ] now a waiting room is just a room. [ static warbles ]
welcome to the earnings squad. we have silenced over there the "fast money" guys. they were having too much fun. they'll be right up top of the hour. we dissect the earnings story everybody is talking about and we try to help you trade the stories you may have missed. i'm tyler mathisen. maybe you knew that, maybe you didn't. you would not confuse me with melissa lee. i'm joined by regulars herb greenberg and josh lip thantonl. let's tell you we have 60% of the s&p 500 companies reporting so far. 67% have beaten their eps targets as established by wall street sue what mis. 9% have met estimates. 23% have come in below forecasts. that's where we stant now. let's start with one, herb,
goodyear and tire. 52-week high. you have been following this story. look at the spike there. good numbers here. >> sales growth continues to slow but not as much as in the past. more than doctor mo-- profits wy robust helped by operations. better input costs. tire volumes in the u.s. down but, josh, in some emerging markets -- in emerging markets actually and in europe the tire volumes are rising. so better tires, that, of course, is up for -- >> the mix of tires was better and that's why they made more profit in the u.s. >> product mix was a big part of the story. >> what stood out here to me in this one was some signs that their europe business wasn't as bad as a lot of people thought. >> that's right. that keeps with the trend we've been seeing across the board on a lot of companies. >> let's move on to gene rac.
filed stronger than expected second quarter. net shares of generac, another 52-week high. >> they design and make generators. storms are good news for them. lifts its sales guidance. we had the ceo on cnbc this morning. he was saying in part this is an under penetration story. only 3% of american households have the product. also when you talked about this company, herb knows, it's talked about big corporations might see this as maybe an attractive acquisition target. >> i think what's also interesting is this is a good quarter when you didn't have any storm activity, anything really good that would cause people to leap and buy. i think what the ceo told us on squawk box this morning was that it was effectively the market is so potentially broad people are getting it around their heads you may want to have some kind of stand-by generator there. >> and last year the big storms, especially sandy, hit major population centers in the east. lots of areas were without power
for weeks if not longer than that. and so that would create some more demand. >> let's not forget with new housing coming on stronger, this is an amenity that can be added to a new house as housing -- new home sales rise. >> let's move on to 3-d systems. this is a case in my view of one where it's shoot first, ask questions later. this was a company that is being -- missed its earnings estimate but revenue way, way up, and profits higher than they were a year ago. they're investing in their business and yet the market penalizes them. >> investing in the business is what you wouldn't typically penalize. they increased their r & d by a substantial amount and that's what i think -- they had a 60% backlog. what was it? a 60% increase in their backlog. these 3-d printer, i don't know how they do it, but they're selling more. >> we have to run. thank you for leading me through
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getting closer and closer to 38. within $1 of its ipo price. apple having its best month since -- >> february 2012. >> it's up 13%. almost back to $460. let's get to headquarters, scott wapner and the "fast money" halftime. guys, thanks. welcome to the halftime show. four hours to go until the close. right on the wall is where we stand on the street. it's green arrows across the board. here is what we're following on "the half." the mortgage master. a man whose fund was up 34% last year shares his best ideas on how to make money in the housing trade right now. planning profiv profits? ag stocks are getting ripped so why is one of our traders getting in. our big story, volatility, it's been absent from the market this is month. the dow's