tv Squawk on the Street CNBC August 8, 2012 9:00am-12:00pm EDT
oneback that you love? >> hmm i mean, i liked discover the last three years. they're filling a void. i would say, to leave anyone with -- what deutsche bank did last week is going to set the standard for the industry. >> okay. thank you. "squawk on the street" begins right now. the band back together. melissa lee, jim cramer, david faber. good morning to you. take a look at futures. we continue to wrestle with some critical levels here. s&p around 1500. the nasdaq is at 3,000. joe, of course, mentioned the some of the pressure that we may get from mcdonald's on the dow. europe a little bit more pressure, after a few good days. stemming from a bit of negative
outlook on the s&p based on greece. >> this road map this morning takes us back to cramer's market. >> plenty of macro worries. priceline said that europe is weak and is going to get worst. >> big day here for retail results. ralph lauren's forecast is more consecutive. >> and starbucks switching its credit card payment to square. as we mentioned, futures are signalling right now a lower open. paring a three-day rally on wall street. the s&p trading close to postfinancial crisis highs. s&p closed above 1400.
jim, we have been talking to so many strategists, these are great things, we're climbing the proverbial wall of worry. that bodes well for us. who cares about europe? >> one of the funny things about europe is that if you look at the averages in europe, and you forget about the dollar, they got some bull markets going on over there. it's kind of inconceivable. some people only speak about bonds. average there, say, next year is going to be better. today is a setback. i also know that we got a bunch of earnings here in the united states. i'm going to focus on priceline, because they said europe is terrible. so, i can't be sane as others, the idea that europe isn't doing as badly as we thought is starting to seep into thinking.
that's so you feel less dire every day. >> and yet, in some ways you look back on this earnings seasons and it's surprising the significant impact that it has had on so many companies. again, today, not mcdonald's and priceline. we talked a lot about them. we talked them through this earnings season. >> macy's. i mean macy's has been going down. at 35. macy's, buying back the heck out of the stock during that period. soed ya stream is terrific. i'm only presenting a balanced view. i don't like a market where the transports didn't confirm because i'm old-fashioned like that. >> so, the past few days, has this all been about jackson hole? >> we got through the big, bad
events, ebc, we got through the labor department report. we had the euro seemed to have been basing. when i looked at the fact that really, italy was only 3% for the year, spain down badly, but spain is in a great depression, france up, uk up, germany up. stockholm, up. netherlands, up. if you're as gloomy as the bond market says then you kind of overdoing it. >> usually the bond guys get it right more than the stock guys. that's the only thing that i would caution. >> they usually get it right first. >> they have been right for a long time. the earnings there, the preferred. i look at the preferred, i want to say, that the rally wasn't a big jo. i don't think our rally was just done on thin air. >> but in order for the rally to be confirmed and to move higher,
do we need to see a rotation out of the sectors that have led us, the defensive sectors, telcoms of the world, consumer. >> the last two days have been violently terrible for them. clorox, i thought that it was a decent quarter, just hammered. some romney feeling, not going to do that well. therefore, obama rolls back the tax, fabulous taxation dividends. but i think the violent nature of the correction against the defensives actually bodes pretty well. we had cyclicals doing well. morgan stanley, not bad. the reation was vicious. is it over? i don't know.
even they nixed verizon at the end. >> a high multiple stock, given its growth prospects. >> speaking of some of those defensive names, two more names getting hit by the economic slowdown in europe, mcdonald's, thanks to weakness in germany and priceline topping profit estimates for the second quarter, but saying weakening conditions in europe could hurt current growth in stocks. what do you want to start with? >> i want to start with your interview thompson, mcdonald's. the man wasn't talking about short-term results. he was talking about building a longer-term prospect. the yield will be 3.3 or 3.4. i think your interview, what it said was, listen, we're in a rebuilding year, down 17% for the year, but the stock is
selling at 14 times earnings. and i took heart from the fact that i didn't think that short-term, things were any good. i'm quite surprised that the estimates were as high as they were. >> there were a lot of chatter that it's not all macro. we have seen what yum has done in japan. >> before i left, spoke with the ceo of chipotle and i had the awe daisty to ask, from 12 to 18, to taco bell, which is up 15%. which he had in a very polite way remind me, can, hipotle, do want to grab a date -- >> diplomatic. i was conscience of the fact that it's not doing that well.
it has been up strongly the last few days. as was starbucks and priceline. maybe they're all rolling back. >> in terms of priceline, though, we were not just from priceline but orbitz worldwide. priceline has a much better read on europe. 60% of their bookings come from europe. they say things are going to continue to deteriorate, you never want to hear as an investor. >> it's so interesting. they do a lot of stuff with the airlines. one thing that happened to the airlines, they have cut back on the number of flights, there's been price wars. so it's not like priceline has been a terrific way to be able to fly. because you don't have enough seats available for them to do it. david, i want to point out, while we're talking about,
hewlett-pa hewlett-packard increased -- >> i'm actually in the process of trying to communicate while we also do this. >> i hait doesn't fit the new bearish. >> there's a key exit, the head of enterprise services is leaving the company. they have announced some organizational changes as well. we do want to bring you up to date. they are also looking for a buck a share for the third quarter. previous estimates have been 34. >> these dow 100s stocks, are every bit as jarring as the t.j. knight capital fiasco. people will say today, i'm perfectly willing to be in stocks and you know -- >> why is it just as jarring
because priceline didn't deliver so the stock is being taken down? it had a software glitch which caused all sort of canceled trades. >> i would never think that priceline should be where it is. what happens is, i think that people are kind of -- it's all part and parcel with the notion with equities as kind of a not great class of places to put your money. bonds being, you know, we all laugh at bonds. no demand. >> it's been a 20-year trade. but we also warned people to watch out for duration risk. but, you know, when you add it up, it's $2 trillion that has come out of equities. i mean, it's an enormous amount of money and it's reflective of the fear of equities for many reasons. in terms of all of these trades and everything else. but it's larger than that.
>> let's talk about the retailers. we got some big numbers out from the sector. macy's reporting an increase. ralph lauren posting higher quarterly results. now, jim, some might say that decision to scale back in china might be actually a good one? >> i think it would be okay if they didn't have double-digit wholesale declines in europe. i think, also, fossil, rat of lauren right now, cramer used the same word fossil in the same sentence as ralph lauren. now, i want to said ralph lauren is an amazingly well-run
company. the china card hasn't been a good one to play as late. coach wasn't too bad. we're all caught up with, what do we do with these stocks? what we have to shoot -- they learn to shoot first and ask questions later. >> any signs that macy's continues to benefit from the penney's -- >> keep on giving? >> yeah. >> look, i think macy's had a huge amount of revenues. home depot and lowe's competed with sears for ages. jc penney's still alive. >> how many shares are is it lose something? we're talking about macy's. we're going to hear august 11th from johnson. >> 34% through the turn.
macy's, macy's bought 3.4% ahead. macy's bought back a lot of stock. and terry was on the show, saying, hey, look things are good. people pretty much ignored him. i like his comments. >> they're very optimistic. so optimistic on the call said that he's entering a fall season with optimism about the about to grow sales and capture markets. also, mentioned the holiday season, they're talking about the thanksgiving parade in august. they're already talking about thanksgiving. of course, black friday and the beginning of the holiday shopping season. >> i liked everything that he had to say. i think he's a little bit defensive on the stock. he's buying back stock, i think that matters. priceline is very european. mcdonald's, again, i didn't like the number.
i thought that the stock was too high. i do see that there is a trade going on, again, which is -- after a few days of where the domestic security really didn't matter, i suddenly believe, watch first jenergy of all companies. i think that will be okay. multiple downgrade. it will be okay. >> hp, headlines that we're reviewing, it does appear that the restructuring program as well, they're restructuring the pretax charge. because more people are actually accepting early retirement. they're saying early retirements is a bit more than anticipated. that's an increase from the previous estimate of a billion. >> not revenue? >> right. but that was expected. but perhaps rolled out over more time. so it's a bigger number earlier
and to come back to the headline, the market cares about, they do increase their outlook in the quarter. >> all right. still to come on this wednesday -- a big day on the "squawk on the street," we're going to talk ceo of starbucks and one of the creators of twitter with their new partnership and how it will change the way you pay for your morning latte. one of the man in charge of policing wall. >>, bruce karpati, talking about regulating the financial world and a lot more. some weakness after the open after a few good days. we'll watch these levels when "squawk on the street" continues. erage, tdd#: 1-800-345-2550 i saw the trend. tdd#: 1-800-345-2550 it looked really strong. tdd#: 1-800-345-2550 and i jumped right on it. tdd#: 1-800-345-2550 since i've switched to charles schwab... tdd#: 1-800-345-2550 ...i've been finding opportunities like this tdd#: 1-800-345-2550 a lot more easily. tdd#: 1-800-345-2550 like today, tdd#: 1-800-345-2550 i was using their streetsmart edge trading platform tdd#: 1-800-345-2550 and i saw a double bottom form.
tdd#: 1-800-345-2550 so i called one of their trading specialists tdd#: 1-800-345-2550 and i bounced a few ideas off of him. tdd#: 1-800-345-2550 they're always there for me. tdd#: 1-800-345-2550 and i've got tools that let me customize my charts tdd#: 1-800-345-2550 and search for patterns as they happen. tdd#: 1-800-345-2550 plus webinars, live workshops, research. tdd#: 1-800-345-2550 whatever i need. tdd#: 1-800-345-2550 so when that double bottom showed up, tdd#: 1-800-345-2550 i was ready to make my move. tdd#: 1-800-345-2550 all for $8.95 a trade. tdd#: 1-800-345-2550 can you believe it? tdd#: 1-800-345-2550 i love it when you talk chart patterns. tdd#: 1-800-345-2550 open an account and trade up to 6 months commission free tdd#: 1-800-345-2550 online equity trading with a $50,000 deposit. tdd#: 1-800-345-2550 call 1-877-656-8765 tdd#: 1-800-345-2550 and a trading specialist will tdd#: 1-800-345-2550 help you get started today.
♪ starbucks is moving closer to a cashless world. the big coffee company partnering with mobile payment square, customers will be able to order by simply saying their name. that brings us to this morning's squawk on the tweet. what other places would you want to skip long lines and cash registers and why? tweet us. we'll air your responses throughout the morning. >> jim? >> i use this paypal at home
depot. they want you to do it, this is also, a big break versus visa and mastercard. i like everything that's involved with payments ahead of time. i learned from my kids. because i'm way too old to understand this stuff. >> brings to mind, we had ebay on the show not too long ago, they said the notion of carrying a wallet with money around is going to seem as antiquated as reading a newspaper. the death of cash. >> i think the web is so much more powerful, still today, than people realize. facebook has obscured. groupon, another decline. these are aberrations. >> all right, straight ahead -- the head start you need from the opening bell. cramer's back. he's got his mad dash. a look at futures here, can we make a run back at 14000 today.
we're going to lose it. more "squawk on the street" ahead. [ male announcer ] we've been through waterbeds, latex beds, and now beds infused with gel? but through all the fads, 6 million people have found their best night's sleep on something else. ask me about my tempur-pedic. ask me how fast i fall asleep. ask me about staying asleep. [ male announcer ] so next time you hear that gel is the answer to sleeping hot, know that tempur-pedic beds have been proven in independent tests to sleep cooler than the leading gel beds. just ask me.
the stock ran up about 12% ahead. the theme parks are great. the capitals expenditures is about to come down very big here. lot of cash flow coming in. some people are concerned that the buyback wasn't as strong this quarter. espn, there was a timing issue, but it was fantastic. the movie schedule is good. the theme parks are the star here. a bunch of new rides, really exciting stuff, if the stock gets hit, we have much lower basis, if this stock gets hit, i'm calling it a gift. because this was a great quarter by bob iger. i think that they're set up for a gigantic second half of the year. theme parks by the way, cedar fair said some really good things. six flags have been strong. >> comcast and universal? >> universal has been incredibly strong. universal, i'm glad that you mentioned that.
universal has been best in show. it's been amazing. and unless you got that pass, like we had a chance to go on those rides because they had it close, it's a two-hour right. >> the character of dupont is changing a little bit. >> dupont is becoming, coleman continues to make this company less cyclical, less about health, more about food. getting rid of this coating business for a much higher price. dupont when the smoke clears isn't going to be a chemical company, carl, it's not going to be a chemical company, it's going be a company about solutions. what dupont is about, okay, listen, we want to feed the world. we want to make chemicals that nobody else has and we want to be in health care and those are all growth areas. anything that's just literally not high propriety chemicals.
>> people are saying that the new paint trade is s&p, 1475. ten year back to 2% and no one is well positioned for that, do you think that's true? >> yeah, i want to come back to kimberly clark, maybe the best quarter that i have seen from them in ages. it's a vicious rotation. this is not like the united states tonight. where it's win-win. all right. >> you mean women's beach volleyball. >> it's a little like men's, which i'm still stunned by. >> unbelievable. lot more cramer, david and melissa, a and a big day of trading kicking off in just a moment. don't go away. individualizing your sleepr,
is at the heart of every innovation. with the sleep number bed, it's not about soft or firm. it's about support where you find it most comfortable. the magic of this bed is that you're sleeping on something that conforms to your individual shape. wow! that feels really good. you can adjust it to whatever your needs are. take it up one notch. my sleep number is 50. i'm a 45. and now, for those interested in trying memory foam, sleep number introduces our new memory foam series-the only beds that combine cradling memory foam with the amazing dual-air adjustability of the sleep number bed. the memory foam bed that's perfect for couples. so whatever you feel like, sleep number's going to provide it for you. memory foam just found its better half. sleep number. hurry in now and enjoy introductory savings of $500 on our most luxurious memory foam bed set, and two free coolfit pillows! plus, a special financing offer. final days! ends august 15th. only at one of our 400 sleep number stores, where
queen mattresses start at just $699. take the privileged investing tools of wall street and make them simple, intuitive, and available to all. distill all that data. make information instinctual, visual. introducing trade architect, td ameritrade's empowering web-based trading platform. take control of your portfolio today. trade commission-free for 60 days, and we'll throw in up to $600 when you open an account. all right, as we get set for a wednesday morning, continue to wrestle with some key critical
levels. most importantly, s&p around 1400 and we'll see if we hold it or punch through this morning. you're watching cnbc's "squawk on the street." opening bell set to ring in a minute's time. betts buy, we have been wondering, all week, jim, we vrnt gotten your take on schultz's plan to buy this company. some clarity on his "vision." >> cutting prices, that's the big plan? that's the big plan? wow. never thought of that. >> secular decline. >> never thought of that. the stock had a little bit toward it yesterday. not nearly the 24, $25 that may offer. of course, it wasn't there that long time a. >> why bother? why don't put your money where your mouth is, and say, listen, do that. i know they've got goldman
involved. it's not like that they have guys, done by joe blow capital. >> goldman is on the other side. >> i mean, to me best buy -- >> there are no buyers for the company. >> well, i just think that in the end, any lift you go. on twitter, jim cramer, lot of employers are saying, what do i do? i say steve miller is in charge here. take your money and run here. don't be a joker or a midnight smoker here. >> not that steve miller. by the way, the there's the opening bell. s&p at the op of your screen. the big board team vogue magazine one of david's favorites, celebrating back to school saturday. >> brutal. >> teen vogue, that's really david's favorite. >> encouraging shoppers to shop
this weekend. the owner of outback celebrating its ipo. celebrating the way to put it, guys? you raise the range and then you fall short. >> there are a lot of companies that become public during this period and other than yelp, there's not been at lot of delivery here. >> prices are at 11. >> price is at 11. >> the range was 10 to 13. if you take a look at first-day performance it fell flat. it's up 6%. it hasn't been easy even though it's the biggest week for ipos since facebook. >> i think we're in a period where facebook is not done hurting people. i still that facebook, groupon and zynga, on the ipo market ux it's not going to be tempting. >> the ipos that are doing well
has to do with organic food space. it will maintain 80%. it will spin off the remaining 80% of its products the soy and almond drinks, the dairy products, that's the organic division. >> the ceo was on "mad money." brought me a little samples of everything. i got a vegan daughter, okay, and that's not -- by the way, vegetarian vegan when you go back to college campuses, you'll be surprised how many there. >> speaking of organic, the biggest gainer on the s&p, dean's food is up 4 bucks. 30% gain. >> it was a heavily shorted stock because of the price of corn because they make milk. this is milk, people notice that
it's a commodity. they have been able to get a higher price point. i urge people to take a look at soy and almond aisle of their milk. >> it's e nor us now. they have all varieties. i mean, it's insane. >> their pudding is delicious. >> pudding? >> pudding. by the way, they have done studies of thermo nuclear war discharge and the stuff is still good. the price, the expiration date, it's like october 2019. >> i still love chocolate milk. good, old-fashioned chocolate milk. >> it's going to be healthy. nothing wrong with being healthy. >> david is healthy. >> i am. i am healthy. i'm swimming a lot. 10,000 meters a week. the company felt obligated to include its updated guidance for this quarter, the result of
putting this press release out about the departure of its senior executive because their in a quiet period. nonetheless the quarter is over. they know the numbers. so now we know the numbers as well. nongap. but nothing beyond that. don't read beyond that. they felt that obligation. they're in the quiet period. we'll hear from the company on the 22nd. remember, 27,000 layoffs, it does appear that it's moving at a faster pace, the restructuring if you want to call it, layoffs, because more people are taking early retirement. they're saying, i'll take that bid. the company has also increased the charges that it will take as a result of all of those layoffs. >> right. >> i think that if they can fix that balance sheet, that has been the hidden achilles heel of hewlett packard. >> can i mention lamar
advertising. the latest craze, an outdoor advertising company, that i have said that they're considering, or trying to put in motion a plan to become a -- they own a lot of real estate. >> that's impressive. >> the tax ratings are very favorable. >> take a look at the fallout from priceline. orbitz worldwide is also done, down by 17%. also citing global economic uncertainties. similar to what we heard from priceline and the entire sector, in fact, is heading lower. expedia -- >> expedia is a lot of corporate business. expedia has replaced a lot of the travel departments in the corporate world.
and it's rather remarkable to see. you book yourself. you get the lowest price and expedia is working. >> and you know. of course, you also run -- >> i was at my inn checking in people. we have a lot of expedia. it continues to be a corporate inn and expedia, you come in the morning and you fire up the checkerboard and you see all of the rooms that expedia booked, you cut a check to expedia, they pay you. the skipping factor -- people who skip out. >> they just left without paying. >> can you believe it? can you believe it? >> that's terrible. awful. >> michael haily is in there making poached eggs. >> and they run out of you. >> not anymore, because expedia. >> expedia has changed my life. >> i want to see a picture of
you with that bellhop hat? >> it's remarkable when you take those bags up two, three floors and you keep waiting and waiting. i tell you what, i don't think i have gotten more than $8 in tips. people are cheap. >> in total in. >> yes. the bagses are heavier. i'm 30 years older than anybody. anyway, it's an issue. >> we got a lot more moving now. let's get over to mary thompson on the floor. mary? >> hey there, david. we could have a reality show with cramer and inn. that's what i'm thinking about right now. a weaker opening with a broad-based decline. it's weighing on the markets today. some news from europe, disappointing news on germany imports and exports for the month of july. the bank of england suggesting that no added stimulus is coming any time soon.
and it's lowering its outlook on growth for two years now. it put pressure on the euro and in turn it's putting pressure on the u.s. markets today. the s&p 500, breaking above the 1400 level today. i asked traders what is going to take it to keep it above 1400? they want to see confirmation from the transports. you guys mentioned dean foods. one other stock that we're watching today. macy's raising its outlook for the full year. guys, back to you? >> all right, thank you very much, mary thompson. >> all right, let's shift to bonds. and the dollar, rick santelli is in chicago. go ahead, rick. >> well, thanks, jim. you know, not a lot of talk on this morning's productivity
number. throughout the rest of the day, there will be one common theme addressing second-quarter preliminary productivity being up a whopping 1.6 and that is simply it's not a good thing if you're looking to decrease the ranks of the unemployed. considering demand and uncertainty, i'm sure that ceos are going to be trying to drip and drain and squeeze every ounce out of cost out of their business and this isn't good for near, mid-term hiring. if you look at the charts, i picked the five year, the five-year wasn't very much affected by today's date. in a couple of months, it e's a the widest comp since we closed at 70 basis points. if you look at the boona two-day chart, it's backing up pretty quickly here. it's really leading the way the bund. look at this yield curve year to
date. mr. draghi accomplished something, he scared everybody out of the short term yield. let's check out the latest news on energy. >> lot of turmoil and big gains, too. oil prices are near the highest levels that we have seen since may and we are also looking at oil prices that are extending the gains after that rally we saw yesterday. a number of supply issues coming out of the north sea, with scheduled maintenance levels. we told you all yesterday, keeping you up to date on the aftermath of shef rchevron, tha reverberating throughout the gasoline market. but the big story is going to come at 10:30 when we get that supply data from the energy department, we're expecting to see a decline in crude and in
gas line supplies according to analysts. we'll bring you that data live at 10:30. >> thank you very much, sharon. some other news out of liberty media. they keep it simple at liberty. as you well know, following this company, easy to follow this company, jim, when it comes to liberty. very simple. let's get to it today. the news on liberty media today is that it will be splitting in two assets-backed company, one being the starz network. won by the former hbo exec. >> the guy was brilliant. >> he was. >> he is brilliant >> greg mcfaye, and also there's the doctor himself, talking about malone and they make it very difficult to follow.
what's going on here there's going to be a split of starz and liberty media, liberty media, the mean asset is 46% stake of sirius. you're going to have that out there as well. barnes and noble preferred. that's what's out there when it comes to liberty media. they're hoping to get it done towards the end of to year. we don't know how much, we know that it's going to be a billion dollars in debt. analyst from barclays said, they believe a reverse mortgage trust transaction involving that stake in sirius. but, it would be more difficult to set up now, as a result of -- it would will be entity in the
process of -- >> he's not going to challenge him? >> at the end of the day, it's not unclear what liberty is planning on doing with its stake in sirius. we heard yesterday from the company itself, which reported pretty good names. if you're actually splitting those two assets right now does it make it difficult to do a stake in sirius? we should point out by the way, liberty is also splitting one of its other companies into two qvc. >> who can handle this stuff? >> and the venture portfolio -- there it is. linta. well, they make it hard for a reason. but you know what, the stocks have actually done pretty well. i'll leave it there. >> you need a scorecard. >> doesn't mean that someone will try to buy liberty.
>> netflix was a victim of starz. >> yes. >> hardball. hardball. >> very much. all right, we urge you out there to keep those tweets coming. mcdona starbucks moving closer to a cash le cashless system. by simply saying your names. so, what other places would you want to skip long lines and cash registers? tell us. ♪
this is new york state. we built the first railway, the first trade route to the west, the greatest empires. then, some said, we lost our edge. well today, there's a new new york state. one that's working to attract businesses and create jobs. a place where innovation meets determination... and businesses lead the world. the new new york works for business. find out how it can work for yours at thenewny.com. you have a plan? first we're gonna check our bags for free, thanks to our explorer card.
then, the united club. my mother was so wrong about you. next, we get priority boarding on our flight i booked with miles. all because of the card. and me. okay, what's the plan? plan? mm-hmm. we're on vacation. this is no plan. really? [ male announcer ] the united mileageplus explorer card. the mileage card with special perks on united. get it and you're in. it's something you're born with. and inspires the things you choose to do. you do what you do... because it matters. at hp we don't just believe in the power of technology. we believe in the power of people when technology works for you. to dream. to create.
cashless world. partnering with mobile payment start-up square, where else would you want to skip all of the long lines and all of the cash registers and why? so david tweets the pharmacy an ideal place for improved payments. reduce the spread of germs. not a bad idea. mark tweets, metro card machines in the morning. that's a good one. and dre writes, walmart, where else do you have so many employees and yet not many registers open? >> that's just, that's ridiculous. >> gregory writes, forgoting cash registers for a moment, how about airport security check points. not a bad idea. >> all right, we're keeping a close eye, the dow down, just 28. guys f we finish up today, it's four straight, we haven't done that since early june.
a little bit more than two months. >> this will be amazing. let's go back to disney, the stock is looking bad, the stock is down 11 cents. i look at the banks. the banks aren't bad. there are things to like here. i know google, it remains holy grail to me. going up. >> also take a look at r.i.m. it's popping here. talking about some of the options left open about the company. >> he said that the blackberry 10 operating system is looking better than expected. >> that will be interesting. if samsung goes r.i.m. will apple finally drop samsung and transition to intel. i don't know. how long will samsung be the
rival? when does apple say enough? >> we're going to be interviewing peter myselfic. we'll get to the bottom of this. all right, in the meantime, keep an eye on the markets today. lot more "squawk on the street" is still ahead. up next, we let cramer loose. what can we expect from the unchained market maestro? when "squawk on the street" returns. o spot. you have to dig a little. s tfr shows you the big picture on how different asset classes are performing, and it lets you go in for a closer look at areas within a class or sector that may be bucking a larger trend. i'm stephen hett of fidelity investments. the etf market tracker is one more innovative reason serious investors are choosing fidelity. get 200 free trades today and explore your next investing idea.
♪ time for 6 in 60 minutes. 6 stocks in 60 minutes with jim. mgn. >> morgan stanley said that there's a deceleration in las vegas. >> dupont, increase in dividend. >> i this is straight-up stock. i'm a buyer. >> groupon downgraded neutral. >> i admit myself that this is late downgrade. i don't know how much credence to put on it.
>> on soda stream. >> this may be the worst guidance that i have seen versus what they said versus what they did. >> a they got a big fox.com account. >> finally, windstream downgraded. >> they have to come on "mad money." because they used to. cash flow issue and overall thoughts? a couple of days this week. >> you know, look, i think there's an upward bias. i would see some profit-taking so i don't feel that this artificial. we should be backing and filling after this kind of run. but i don't like straight-up, i don't like straight-up because it makes it -- >> mad money tonight.
♪ welcome back to squawk on the there. on a wednesday morning. the road map for the next hour the golden arches losing a little of their luster in july as comps missed across the board. is jurp solely to blame? >> research in motion putting its fate in the hands of blackberry 10. but saying samsung could buy r.i.m. >> six new names going public and the facebook debacle finally behind us. we'll discuss the ipo market, next. joining us this morning,
rachel rothman talking mcd. rachel, good morning to you. >> good morning. thank you for having me. >> they already signaled that the month would be basically in line or worst than q2. this is all about macro? >> we think that what's bad for mcdonald's is probably bad for everyone else. after speaking with the company did some weakening in late july. so, we doe think that the market is getting more competitive for everybody. >> so, are customers being more disbersed or some sort of tradedown, some trade going on, what's behind this? >> i think, you're hitting on it. it's probably weak consumer sentiment, slow recovery in
jobs. people probably aren't eating out as much. i think that's pressuring sales. in response, lot of companies becoming focused on value messaging, couponing and discounting. >> people talk a lot about innovation and where the next leg of innovation is for this company? thompson coming in as ceo, widely credited for creating mccafe. what is next. are you getting a sense of what's in the pipeline? >> don thompson has been with mcdonald's a long time. he's a very seasoned leader and a great veteran of the company. if world becomes increasingly value focused in the back of the year, they'll step up their price points focus. we would remind everybody, if we're going into a discount war
where prices are exceptionally important, given where commodities are, it will be difficult for their competitors to hold the line on price. where price is key, mcdonald's does take share. >> all right, so rachael, if that's the case, what competitors do i want to look at? >> i guess i would highlight to me the decoupling that we have seen in the share price performance year to date is not likely to hold. what's bad for mcdonald's is probably for qsr in general. we have stocks up 25 .30% year to date, a sonic or a jack in the box, yum that's up in the mid-teens. mcdonald's is now down in mid-teens. we're set to hear from jack in the box and wendy's tomorrow. but, again, we haven't generally
seen decoupling like this last for very long. >> rachael? >> we're looking for signs of life in the segment overall because you believe it's an industry width problem, what's the one indicator that you would be looking at first? >> actually, check is critical. you only coupon or discount. if demand is weak. what we want to see not only is an inflection in traffic we want to see positive traffic and positive check. which means that consumers are willing to come to the restaurant and willing to buy products at a higher price or more products. unfortunately, we're not seeing that right now. >> for those who are still drawn in by the dividend, where's your target? where's your discipline on the stock price? are you a buyer at 85 the way
cramer is? >> absolutely. the last time we were on the show, mid-08s is great opportunity to buy here. highlighting mcdonald's correctly. we would expect the company to raise the dividend in september. around the third week of september. don't forget even when sales are under pressure, free cash flow does generally increase. we expect that cash flow to come back to shareholders in buybacks and dividends. 10% increase in the dividend overall. >> always good to see you, take care. >> thank you. priceline, forecast troubles ahead based on economic woes ahead. joining is managing director with piper gioffre, michael, what's your sense about the
company's sense of overly conservative at this point? >> i think it's overly conservative. i think they're not thrilled with the fact that the q2 numbers didn't come ahead of what they were expecting. but, you know, certainly the europe maco environment seems to be catching up with them. >> why do you have confidence on your rating on priceline? continuing deterioration, that's the company's word, in europe. 60% of its bookings come from europe. >> europe isn't a great place to be today. longer term, you want to have as much as exposure as possible to the international travel market. expedia is well positioned to that.
internationals just much earlier on in the transition from offline to online travel bookings. they're in a good spot long term. but europe, today, is a tough spot to be. >> mike, you said expedia, did you mean priceline. >> i did mean priceline. thank you. >> i just wanted to check. in terms of expedia, how does priceline stack up to expedia for expedia's quarter, we saw a different picture. >> yeah, that's a good question. i think when you look at expedia's numbers, they looked really strong and one thing that expedia didn't have that priceline does have kind of the luxury of the last couple of weeks of seeing how the end of july played out. and i think the bottom line is that probably we saw a little bit more of a deterioration at the end of july than what expedia saw when they were reporting their numbers and so, i think, you know, at this point, it's getting a little bit surprising that expedia is trading at a multiple that's a
premium on a p.e. basis to what expedia is trading at. >> finally, we got some more traffic numbers out of the airlines. united, continental. not good for the month. weakness out of dealt that. out of amr, any sign that's going to stabilize in the second half of the year? >> well, you know, i think it's a sign, those numbers and those numbers out of orbi 12 z are a sign that priceline is not alone here. we're definitely seeing some weakness across the industry. we do expect that europe is going to continue to weigh on things for the next several months at least. by the back half of the year, into next year, the comps start to get a bit easier and the numbers should look optically better. >> if europe is going to weigh on the sector for the next several months and your 12-month price target is 675 and your rating is overweight, why do you stick by this stock which is
much more impacted by this problem? why not switch to one that has less exposure? >> that's a great question. even when when we reduce our numbers for bookings growth for priceline internally and specifically in europe, we can get earnings growth that's greater than 20% for the next couple of years. i do think, again, even with a material reduction in our expectations around international and europe specifically, they're still outpacing their nearest competitor by 2 to 1. >> mike olson, thank you you for time. let's send it to brian sullivan. >> good morning, carl. take a look at r.l. i don't know if it's ralph lauren or ralph lauren. that stock is down fiscal first quarter. it did beat. the problem is guidance, a
concern about compression of margins. there's a problem with europe, southern europe, some declines in sales there for rl. so ralph lauren, down 2.5%. the guidance is the problem. and europe coming up in that 8 k a lot, guys. >> it's lauren, like the girl's name. >> like lauren bacall. >> exactly. thanks a lot, brian. when we come back -- the new ceo from fannie mae speaks out in an exclusive interview when we come right back. because it matters. at hp we don't just believe in the power of technology. we believe in the power of people when technology works for you. to dream.
housing department. even fannie mae's brand-new ceo said that he's not ready to say that housing is quite out of the woods yet. >> i think it's too early declare to a national housing recovery. a big part of what's driving our results have been home price improvement and we expect that prices have stabilize. but, you know, they can go up a little or down a little bit over the next couple months. we don't expect to see a huge m improvement. in the near term, we're not so sure. it's going to take some more data. >> last year, the conservative acting director, told the obama administration that fannie mae and freddie mac wouldn't participate in the principal reduction program, was that the right call? >> well, look, i think this is a topic that reasonable people can differ about it. i think it's a very complex
issue. we're comfortable where he came out. we believe that we have the tools here at fannie mae to help homeowners. to help people who are in distress. we're focused on that and we're doing our best to help those people. so, i think this is a complex topic. but we're comfortable where we are. >> he also said that he's comfortable with the lending standards. underwriting going on at fannie mae right now. lot of complaints out in the housing market from the realtors and builders that credit is simply too tight holding the housing recovery. but he said that things are right they need to be. now, also, he does have about 109,000 fore closed properties on the books at fannie mae, but they appear to be selling more of them than taking in each quarter. >> thank you, diana. when we come back -- from
the balanced beam to the beach volleyball court, there's no shortage of dra from the olympics. we'll get all of the highlights after this break. later, what does hourward schultz behind starbucks and the ceo of twitter, they're joining up to make your starbucks experience easy. that's later on "squawk on the street." first we're gonna check our bags for free, thanks to our explorer card. then, the united club. my mother was so wrong about you. next, we get priority boarding on our flight i booked with miles. all because of the card. and me. okay, what's the plan? plan? mm-hmm. we're on vacation. this is no plan. really? [ male announcer ] the united mileageplus explorer card. the mileage card with special perks on united. get it and you're in. with special perks on united. well another great thing about all this walking i've been doing is that it's given me time to reflect on some of life's biggest questions.
like, if you could save hundreds on car insurance by making one simple call, why wouldn't you make that call? see, the only thing i can think of is that you can't get any... bars. ah, that's better. it's a beautiful view. i wonder if i can see mt. rushmore from here. geico. fifteen minutes could save you fifteen percent or more on car insurance.
priceline the huge drop there, down about 100 bucks a share. look at orbitz worldwide, colling in, showing that profit fell. sales about $170 million. the ceo is talking about how there's a lot of uncertainty out there and that's impacting their business. expedia also down in sympathy. it's not just priceline. but expedia by association is getting it to, too. >> tough day for anyone who owns those names. finding the so-called 1%, want to pay more in taxes. our robert frank joins us now back at headquarters. are you absolutely sure about this in. >> that's what the survey showed. they polled people making $100,000 or more, or $400,000. thoseaking $100,000 supported tax increases, no big surprise
there because they wouldn't be affected by a tax increase making 250 or more. even people making 450 or more, support higher taxes nap's 1%. they support higher taxes on themselves. the harrison group asked the 1% which income group should have their taxes raised. it turned out, they said, themselves, most wanted to tax people making more than $500,000 more than a year. these wealthy 1% would support increase tax increase. the issue in washington whether to extend the tax increase for 1%. with that survey tells us that is the one-percenters they support it. if a majority of americans support taxing the top earners
and they sport taxing themselves, why is this being blocked in washington? that of course is a question we couldn't answer with this question. carl in. >> if you could answer that question, that would be a great question. i would like to see some of the methodology >> does the sample tend to side with one side or the other? >> well, this is consistent with two other surveys over the past years, that polled these high wealth groups. this is now the third survey that shows support among the 1% for taxing themselves. so i think there's credence here. >> as covering the wealthy as you have, do they as a group tend to respond to surveys with statistical integrity? i believe that this survey is accurate. what's on the table.
bewe also want cuts. they all want -- their okay with higher taxes as long as there are cuts on the other side. >> i would add as well, i have been in rooms with 50, to 1000 ceos and it is both. i will pay higher taxes if you can promise me that there will be discipline on the budget and other areas. >> problem solve. >> interesting stuff. very provocative. thank you, robert. >> thank you, carl. another action-filled day from london. beach volleyball, we're live in london, i don't know if we have time for all of the highlights. there were so many. >> it was a great, great 24 hours. medal count first, china edging out the united states in the total medal count.
great britain, their best olympic performance from 1908. german diver, now an internet sensation for the wrong reason, stephan feck, his dive, in the second round, garnered nothing but 0s from the judges because he landed on his back. he finished last. 157 points behind the second to last diver. let's watch it one more time. there's the 350. we're going to tease everybody. defending olympic weight lifter, from germany, was lucky to escape when he dropped, he fell awkwardly. barbell fell down on top of him. medical staff rushed to his aid. as you saw earlier, he walked away apparently fine.
american ally raisman winning the bronze on the balance beam after ten moments. the romanian competitor thought that she had come in third. but the u.s. coaches protest. after looking again, they agreed. it with us a tie. aly had a higher execution score, that broke the tie and she won the bronze. i think one of the most heartwarming of the entire olympics coming when australia's sally pearson won the gold in the 100-meter hurdles. so close, they had to wait to see the results. this is her reaction. look at her. oh, she was so happy. you know, at the olympics, you cheer for everybody, right? you're just so happy for the athletes regardless of the
country when they come from after seeing the reaction after so much hard work and time. see how close that finish is. wow, tonight, all-american final in beach volley when. april ross and jenny kessy in their first olympics play against two-time olympic champions misty may-treanor and kerri walsh-generalings. they're hoping for their third gold medal. bmx racing included for just the second time at these olympic games. carl? >> i love it. you got to give it to team gb who got so much grief early on for not getting, already their 22 golds at last good, they had one gold in 1996. this time, 22 golds.
>> they're so thrilled. the brits on the ground are so pleased. the whole experience. the golds and the whole process. >> thank you, michelle. >> all usa. >> all usa. >> absolutely. i like the outfits, too. straight ahead -- zillow is trading lower today. the company's ceo will join us after the break and what is ahead for this company. we're back after this. on the simple belief that bringing you better technology helps make you a better investor. with our revolutionary e-trade 360 dashboard you see exactly where your money is and what it's doing live. our e-trade pro platform offers powerful functionality that's still so usable you'll actually use it. and our mobile apps are the ultimate in wherever whenever investing. no matter what kind of investor you are, you'll find the technology to help you become a better one
want to check in on the state of housing. take a look at zillow, down about 4% and change. it reported record second-quarter results. here, first on cnbc spencer rascoff is the ceo of zillow. good morning. >> good morning. >> pretty solid quarter, to what degree do you think the company fell short. >> over the short run the stock price will do what it do. we thought that it was an excellent quarter. and most investors did, too. a clear beat on revenue. and most importantly, we tipped towards mobiles. more homes are viewed on a
mobile device than on a desk top. a year ago when went public, 63 homes are viewed every second. >> the whole story behind your rent business, i wonder how you're envisioning the market as we start to see housing recovery, are you going to be as aggressive in rent as you are on purchase if. >> we're investing very heavily in the rentals opportunity. this is a huge space. we acquired a company that requires software tools to the rental industry. we tend to exploit that advantage. we think there's an opportunity to create the definitive rentals place. we're well on our way. we think by using the renter's tool set, we can achieve the
rentals marketplace on zillow. >> spencer, we want to take a break right now. we want to get to the imex. some breaking news out of the energy market. sharon? >> near the highs of the session for the oil market as we wait for the the data come out of the energy sector. the energy department is now reporting that crude supplies fell last week by 3.7 million barrels. crude supplies fell by 3.7 million barrels. this is far greater than what analysts were anticipated. but it's not as great as the decline of 5 million barrels that was reported last evening. we're looking at a decline 1.8 million in barrels. now, we were expecting, according to analysts, an
increase in supplies. we're seeing this as a rally mode here for the energy markets. a very bullish report here from the energy department. again, carl, we're near the highs of the session right now. above $94 for wti. >> thank you very much, sharon. back to zillow, of course, spencer, broadly on the market, we can see other estimates of values in this country recovering, do you believe that's true? >> well, according to zillow data, housing has bottomed. we're finally at the bottom, at this point, though, it's local story. markets like phoenix, up 12%. miami, up 6%. compare that with atlanta, down 5%. it's a very local story at this point. based on the employment picture in these cities.
>> the rental market has been extremely strong in terms of how extreme renters, what are you projections onnen that. >> we said that we don't that we expect rentals to be a revenue generator in 2012 and 2013. we're building our own marketplace. so, we think it will be a large revenue contributor down the road. >> even if the rental market turns and we're seeing a rent come down, that doesn't make a difference, what's the driver in term of revenue generatogenerat? >> the strategy for us so provide the software tools to the renters and those listings appear on zillow and we create that marketplace where we have all of the listings. once we have millions of listings on zillow for rent then the revenues are met.
first, we need to create the marketplace. this is how we create marketplaces at zillow. for several years, we focused on creating liquidity in is the zillow marketplace. now we're doing the same with rental. >> reporter: yesterday, you filed a shelf registration for various purposes, is that a plan that you have at this point or something that you want to be access if and when you decide to do so? >> it's the latter. at this point, we filed a statement with the s.e.c., we haven't made any decisions on on whether or not to do a filing it. >> now decision on whether you would actually more shares. >> correct. >> you mentioned mobile at the top of the don ver sags. so many time someone from mobile will come on the show and discuss the challenges, the spread, between migration and
montization, how is that affecting your guys. >> for us, it's an easy answer. mobile user is three times more likely to contact a premiere act on zillow. the ad unit on mobile is a advantage for zillow. to contact a premiere agent, to the user that's great. that's a service. is that a reasonable asking price? questions that buyers want to can. being able to contact a real estate advertiser is a service not a nuance. >> so, why do the zynga and facebook of the world find it harder? >> they're the ones that the small screen present a challenge to them because the ad unit is
disruptive to the user's experience. if you're trying to play a game and you see a display ad, well that's a distraction. if you're using a web app to shop for a home for example, you see the ability to call a real estate agent, that's not a disruptive, that's a service. >> interesting. brave new world. spencer, appreciate you coming to the show. see you next time >> thank you. >> spencer rascoff of zillow. >> shares of hewlett-packard are up 2.5%. the company coming out with a dealt with an executive change in its enterprise business. within that as well was an increase in its guidance. it's been completed. but will be reported on august 22nd. the company is in a quiet period. as a result, to put this release out about a senior executive change, to increase that guidance, it was about 6 cents
above a share. they did move up their estimates of charges that the company will take as a result of the 27,000 employees. that will be leaving hewlett-packard. that was announced back in late may of the company. that significant down sizing more employees are choosing for early retirement thanes a pated when they first set the plan in motion. >> one curious thing about this guidance, they're not updating their full year even by the amount by which they increased third-quarter guidance. that leaves them to question what the fourth quarter will bring for hewlett-packard. >> all right, speaking of the stock market, let's go back to brian sullivan at hq. interesting story on memc electronic materials. sales dropped. look at the stock.
it's up 24%. because it was still better than many had expected. this is a company making specially semiconductors. they have been hit hard by less demand in semis. coming from the solar space. the question of bad news, not nearly as bad as some had thought. memc electronic materials there not giving guidance the rest of the year. that stock, having a pretty good day. back to you. >> thanks, brian. still to come -- starbucks and the founder of twitter, teaming up how you will be paying for your coffee. all of the details about their hot new mobile payment plan. w y. we built the first railway, the first trade route to the west, the greatest empires. then, some said, we lost our edge. well today, there's a new new york state.
one that's working to attract businesses and create jobs. a place where innovation meets determination... and businesses lead the world. the new new york works for business. find out how ican work for yours at thenewny.com. it's something you're born with. and inspires the things you choose to do. you do what you do... because it matters. at hp we don't just believe in the power of technology. we believe in the power of people when technology works for you. to dream. to create. to work. if you're going to do something. make it matter.
we're still waiting for blm to open for trade. $11 is where it's priced below its original range. in fact, the biggest ipo new issues since the facebook ipo. a state of the market here. jonathan, give us the context, though, the strongest week for ipos since facebook? how has the market been overall. >> the ipo market, not long ago, in mid-june, it looked like the ipo market was in real trouble for the summer. 0 for 4 in june. at the end of the month, there were four transactions priced. that continued through july. successful offerings in july. as you stated, this week there are five deals on the calendar. we got off to an okay start last night. >> in terms of how to judge the
success of these ipos post-facebook, they cut the number of shares that it's issuing, i mean, how can we start judging this new wave post-facebook. >> keep in mind, bloomin' brands, they increased the primary shares. it's increasing from the company's standpoint. you cut the number of shares being offered by the secondary the selling share holders. >> all right, in terms of looking out beyond this week in terms of the pipeline, are there particular sectors, it seems to be ck, bloomin' brands, restaurants, are there themes coming out post-facebook. >> the deals that have in most demand have been small growth
sectors. this really be the final week of inactivity. i think there may be one deal on the calendar next week until after labor day. at that point, with labor day on september 3rd, you won't see the ipo markets dpather steam until the middle of october again. i'm surprised how resilient the market has been. things looked so gloomy in june. they had the decent end of june, july and now august. we're encouraged by that. >> jonathan, we asked this question a lot, what kind of grade would you give the markets this time of the year? but, answer that we get a lot of time, you know what, it's probably a good thing that the market is not rewarding all new issues indiscriminately, they're separating them? >> i agree with that. if you had an opportunity to invest in every ipo you would have done very well this year.
the problem is, it's very difficult to figure out which deals are going to be successful and which are not. all in all, i would give a grade b, perhaps a b-minus to this year's crop of deals. it's dependent upon keeping volatility down. keeping the market strong for new issues. we're optimistic about how things will go post-labor day. >> bloomin' brands, owned by bain a private equity deal, an exit, a bit of an exit, and it's a d-leveraging exercise, mean that the equity sold it will pay down debt. the financial sponsor-led ipos, how is that going this year in terms of one class of ipos? >> we find it's very helpful to have a well-known financial sponsor in the transaction, backing the deal that puts a stamp of approval on the
company. investors respond well to a deal that's backed by private equity. particularly the well-known names of bain, apollo and others that are offering transactions in this marketplace. >> jonathan, thank you very much for your time. >> thank you, melissa. a quick update on standard chartered. >> thank you, carl. some federal and state regulators are sharply krit accusing new york's banking administrator to go public and take action over standard chartered, most important sources telling cnbc that he may have overstated the case and could diminish the fine paid by the bank. the office was given very little notice that lawsky would bo public. another regulator said that lawsky quote, hijacked a
multiyear investigation. lawsky's apparently was given the evidence as part of that cooperation. treasury department of foreign assets of control and the manhattan district attorney were involved in this investigation. lawsky didn't respond for request for comment. while the official said that the internal investigation turned up serious issues they're more complex than has portrayed. there's a major question over so-called u-turn transitions. here's the complexity, until recently such transactions were actually legal. another official said that settlements with banks, involved in behind the scenes investigations, were involved in
fines, going public, especially with charges that are difficult to prove in court could limit the leverage. lawsky coming forward on whether or not the charges are as colorful as lawsky laid them out. >> is the allegation, steve, that he saw this as a careermaker and as a result tried to grab this currency that everyone was working? on? >> that's a good question. comparisons to eliot spitzer have been made. they come in two different flavors. spitzer used some of what was going on for political gain. but spitzer walked into a place, where regulators were not. there was a vacuum there. in this case, it looked like regulators were there and lawsky has walked into the middle of that and there was intraage going on. >> some strong words there, steve. from the feds on this. wouldn't you agree?
>> it's not necessarily the feds, it could have been any number of regulators involved this. >> of course, excuse me. as if the story didn't have enough color already, thank you so much, steve. when we come back -- jaffray out this morning saying that samsung could step in and buy r.i.m. after the break, we'll talk to the man behind that call, peter misek. we had an important number today in terms of productivity and labor coasts we're going to dissect those. the good, the bad and the indifferent. we heard about more accommodation from charlie evans. we're going to talk about richard fisher's comments. and finally, we're going to talk about a very dark part of math, called tax math. all at the top of the hour. tdd#: 1-800-345-2550 you should've seen me today.
tdd#: 1-800-345-2550 when the spx crossed above its 50 day moving average, tdd#: 1-800-345-2550 i saw the trend. tdd#: 1-800-345-2550 it looked really strong. tdd#: 1-800-345-2550 and i jumped right on it. tdd#: 1-800-345-2550 since i've switched to charles schwab... tdd#: 1-800-345-2550 ...i've been finding opportunities like this tdd#: 1-800-345-2550 a lot more easily. tdd#: 1-800-345-2550 like today, tdd#: 1-800-345-2550 i was using their streetsmart edge trading platform tdd#: 1-800-345-2550 and i saw a double bottom form. tdd#: 1-800-345-2550 so i called one of their trading specialists tdd#: 1-800-345-2550 and i bounced a few ideas off of him. tdd#: 1-800-345-2550 they're always there for me. tdd#: 1-800-345-2550 and i've got tools that let me customize my charts tdd#: 1-800-345-2550 and search for patterns as they happen.
tdd#: 1-800-345-2550 plus webinars, live workshops, research. tdd#: 1-800-345-2550 whatever i need. tdd#: 1-800-345-2550 so when that double bottom showed up, tdd#: 1-800-345-2550 i was ready to make my move. tdd#: 1-800-345-2550 all for $8.95 a trade. tdd#: 1-800-345-2550 can you believe it? tdd#: 1-800-345-2550 i love it when you talk chart patterns. tdd#: 1-800-345-2550 open an account and trade up to 6 months commission free tdd#: 1-800-345-2550 online equity trading with a $50,000 deposit. tdd#: 1-800-345-2550 call 1-877-656-8765 tdd#: 1-800-345-2550 and a trading specialist will tdd#: 1-800-345-2550 help you get started today.
and currently at 11.76 a gain of about 7%. we'll keep an eye on this is one of the busiest weeks for ipos since facebook went public earlier this year. >> now let's move on to research in motion. it is surging this morning on a report from jefferies analyst suggesting samsung could be a potential candidate to purchase it. here now is the managing director and senior tech analyst at jefferies. peter, good to see you. where are you hearing this from? >> so, what we believe is going on is that samsung has been relying heavily on android. they've come to the conclusion that google is going to start competing with them. the nexus 7 tablet is a great example of that. i think they're struggling internally that they have to boost their software and part of that is an operating system. they can do an android variant, develop a new os or partner by rim. licensing is an option we've looked at. >> so basically rim's greatest hope at this point or for
investors, their standpoint, is that samsung faces more competition from google and is forced to do something? >> correct. samsung needs to take control of its own destiny in the medium to long-term. short term here they're killing it. it's them and apple. longer-term they know they have to get better at software. owning an os is a critical part of that. >> we keep looking for includes within rimm that they are open to something like this. no matter what jpmorgan is advising them to do. would they do it? >> i think they would embrace samsung with the biggest bear hug you've seen. >> really? they've been playing it coy up until now? >> i think the board was partially delusional earlier this year. they thought they could go head to head with apple and i think they had a mea culpa a few months later and they've come to the realization they can't do this alone. we've been trialing their new software and alpha units. frankly it's good but there's no way it's going to beat apple and frankly the best it's going to do is match android.
they need a partner big time. >> how big would this embrace be? just a hug or a hug with a big, old, wet, sloppy kiss? would it be up for sale or just a licensing? >> i suspect that rimm would prefer, and frankly for samsung, licensing you're getting the milk without buying the cow. licensing deal would probably make most sense for both parties. it puts momentum in an ecosystem and allows samsung to be very coy about its own strategy. it can place multiple bets, sign exclusive deals and frankly samsung can easily compete with rimm. that would be a nice way for them to get an os without having to spend a lot of money. >> put a price on it peter, where does it happen? >> well, licensing deal would probably have a 5% to 10% diluted impact. the shares would probably fall down to $5. is what our fargate is. an acquisition, frankly, would probably get a lot higher price. we would expect that price would be greater than $10. it really is become a binary outcome for rimm in that
strategic reviews coming to an end in the near term. >> bad news if it's licensing, good news if it's a buyout. you think somewhere around 10? >> correct. >> why wouldn't it be good at all for rim for it to reach a licensing agreement? isn't that better than where they stand right now? i understand that there is anticipation built into the market at this point. now with 10%, 6% gain of the stock. but why would it fall all the way down to five? isn't it better to have cash flow from samsung than not any deal at all? >> absolutely. if they don't do something it's possible rim could go to a zero. what we've done in our target price, we've evaluated all these scenarios and arrived at a $5 target price. yes, you're right, it is. wh they have to do is cut back significantly the workforce. we would expect 50% to 60 frs workforce reductions. they have to effectively get out of manufacturing. and that transition is very expensive, very difficult. evgs, revenue, everything would have to come down here and be reset. >> wow. we talked to apple yesterday
with you. we're talking rim, you're a busy man. appreciate you coming back. >> thanks for having me. >> meanwhile it's tweet time. starbucks moving closer to a cashless world. the big coffee company partnering with mobile payment start-up square and it means customers will eventually be able to order that cappuccino, charge it by simply saying their names. digging for change could soon become a thing of the past. that brings us to the squawk on the tweet. what other place would you want to stick long lines and cash registers and why? tweet us @cnbcsquawkst. +g#a#a#a#a#a'9#a+=#a#a#a#a#a#a9a
squawk on the tweet today, starbucks moving closer to a cashless world partnering with mobile start-up square. what other places would you want to skip the long lines and why? talk about an infinite number of possibilities. the dmv. duh! a great one. costco. love the prices and products, don't like the lines. something the company admits they need to work on. andre tweets theme parks, because i cannot wait to get a thrill after a bad day on the markets.
long lines at space mountain. >> that's true. that's true. unless you get the fast pass. >> that's another -- that's one of the plus of going to disney. markets seeing a couple bears here and most of the weakness in the dow is mcdonalds. >> it will be interesting to see whether or not, 1400 we closed above that for the first time since may 3rd. we quickly gave that up and seem to be bumping our heads against that level day after day. a decisive close. not just 1401. decisive close ave the 1400 level will be important psychologically to these markets. but we are seeing some turns. financials are looking a little better on the session and energy stocks, losses on those, weaker inventory reports. bullish for oil of course. >> we'll see you a little bit later. here's what you might have missed earlier on today. >> welcome to hour three of "squawk on the street." here's what's happening so far. >> every industry in the united states has had to do a lot to
increase productivity. and the financial industry is the last to get there. >> i think the fact that qe-3 is someone priced in suggests that there is downtime risk from here if the fed doesn't move. >> i think it's too early to declare a national housing recovery, and i think that, a big part of what's driving our results has been home price improvement. and we expect that prices have stabilized, but they could go up, they could go down a little over the coming months. >> i can't be as sanguine as others but i do think that the idea that europe is not doing as badly as we thought is starting to seep into thinking and that makes it so you feel less dire every day. there's a trade down from twelve to eight to taco bell which is up 15% of which he had the -- very polite way reminded me that the people who go to chipotle tend not to want to gravitate to
taco bell. natural food versus whatever. >> the opening bell. of course the s&p at the top of your screen. >> we tip towards mobile, more homes are viewed on zeile low on a mobile device than on a desk top. a year ago when we went public 21 homes were viewed every second on zillow on mobile, today it's 63 homes viewed every second. three times the mobile growth in just a year. >> good wednesday morning. live at post nine at the nyse. want to get a check on the markets as we continue to dance around some of the critical levels. the s&p just a touch below 1400. dow is down six, erasing some earlier losses. nasdaq down eight. on the earnings front, disney's net profit up nearly 24%. a record $1.83 billion, boosted by strong earnings from the parks and resorts, cable tv and of course the summer's block buster movie "the avengers." revenue short of the street's expectations. bloomin brands striking higher up more than 11%.
company owns outbreak steak house and caraba's italian grill. big hour on "squawk on the street." first up, credit card company visa nearing yet another new all-time high. the company clocking in as the official sponsor of the 2012 london games. we'll be joined by the chairman and ceo joseph saunders to talk about all things london, global spending, state of the consumer and a lot more. cash is no longer king. mobile payment start up square announcing today it's going to team up with starbucks in a big push to bring mobile payments to the main stream. the two guys behind that deal, howard schultz, and square founder and twitter co-founder jack dorsey here live on set in just a few moments. plus it's the interview the hedge funds of the world might be a little nervous to hear. the s.e.c.'s co-chief of asset management enforcement joins us live to talk about how he's staying ahead of fraud and keeping institutional investors in line. speaking of which, gary kaminsky's here on set as well. he's going to bring us that
interview later on today. broader thoughts about stuff going on in the markets this morning? >> well, i think that what we talk about earlier this week, carl, this idea that you set yourself up last week for no negative surprises that come out of europe. again, with the thin markets. hate to say that cliche the trend is your friend but i think we've proved it out once again today that the trend right now is to continue to see the equity markets moving higher. >> i keep hearing you say it in my head after you said it on monday morning. >> and it seems to be that is what you typically get in the second -- the end of the month, in august, in the summertime, and it almost is irrelevant what the rest of the euro has done. want to ask a question, did you see -- >> i read some of what she told andrew and joe. sounds like it was a fiery interview. >> as always whenever miss whitney comes on air it's quite interesting. number one i do want to give meredith credit for one thing.
when she did appear on "60 minutes" almost a year and a half ago at this point one thing that is real positive is that by putting this out there in the public domain, municipalities did get serious about reform. so that has been a lot of positive developments in the municipalities trying to attack this big problem in terms of health care benefits and pension reform. but i've got to say this, when you are in london we had sammy wyle on the air, and i said we're that going to let people rewrite history. we're not going to let miss whitney rewrite history. when she came on "60 minutes" she made a bold prediction about the number of faults we ko see in the municipality bond market. we take a look at the track for the bond market over the last three years and we pointed out many times what the data has been in terms of default. she scared thousands of people out of owning municipal bonds. over the last year and a half it was a very good place for people that needed income, especially
tax free income, to be invested. you've got record highs in terms of prices, record lows in terms of yesterday, so this idea that she wants to rewrite history -- >> by saying -- >> she said if you listen to the full two hours. the full two hours of the interview, not just the snippet that "60 minutes" played where she made this prediction. she wasn't really making the prediction. i'm sorry, you know what? let's get "60 minutes" to release that whole two hours of footage. i'll watch everything and if i have to come back here and eat crow and basically tell you she wasn't making that prediction, i'll do it. so 60 minutes release that whole two hours. that had a dramatic impact on the investing public and a lot of that pain is still being felt. >> she also made headlines by saying she never advised clients on muni bonds whatsoever. >> i know that to be factually incorrect because many of her clients actively shorted the nub index as a result of this research call. again you can't rewrite history. i told the viewers i'm going to make certain that a lot of
people trying to rewrite history right now, not just her, i'm going to call them out. i'm going to call them out. >> it's a good one. >> speaking of calling out, bruce karpati will join us today. we're going to talk about what goes on with algorithms, what is the real role of enforcement in the hedge fund world. these are questions, as you pointed out there at the top, a lot of people out there that are actually trading don't want to hear. we're going to find out exactly what they're doing and who they're coming after. >> all right. meanwhile let's get to chicago and the cme. rick santelli with "the santelli exchange." good morning, rick. >> good morning. boy i'm going to have to talk really fast because i have a lot i want to talk about. productivity, second quarter preliminary. productivity is what makes this country great, what makes any country great. productivity is wonderful. but it does have a side bar and the side bar at this point in time we're living in, with all the uncertainty, is that it may mean less jobs. what it really may mean and this is important, we may have to for awhile recalibrate our levels of
what things like initial jobless claims mean. if we are looking at those numbers coming down and congesting let's say around a 350 to 360,000 mark productivity might change what that really means. second topic it's like a basketball game. the celtics versus the mavericks. we have dallas versus boston. we have richard fisher versus mr. rosengren. yesterday steve did a great job. and what did we learn? that mr. rosengren basically thinks we need unlimited fire power so we can get more hiring and a stronger economy. and what did mr. fisher basically say? well, all of that is true. but if the assumption is more is going to get you either of those two, then why is it that we have 1.5 trillion sitting on banks, private sector needs to do the rest. we have a giant grease trap of capital. and adding more to get stuck in that little "u" isn't going to help matters. just my opinion. the next one is really good.
i call it tax math. you know what? i'll tell you what benjamin franklin said something that's appropriate here. what he said, ask what sort of government they, his group of buddies, patriots, had set up. here was his answer. a republic, if you can keep it. why? because, a democracy, just majority rule, doesn't get the job done. some of the things that make our country great like civil rights, majority rule isn't the way to go. we're a republic. to that end, listen, whoever wants to pay more in taxes? i don't know anybody that wants to pay more in taxes. listen, okay, hey guys, first question, do you think $250,000 is the same as $3 million? >> no! >> all right. do you think the olympians who win gold medals and get paid $25,000 should pay a portion of that in taxes? >> no! >> no! >> all right. let's stop right there. because that latter issue is most revealing. because of course we love the olympics. we love nationalism. we love our athletes and we love
being competitive. but this is the reason we have a tax code that is horrible. because even though in our hearts we don't want to, we need to have adults in the room. whether it's a game show or whether you make 25 grand, making our country even more proud of you is still need to pay your taxes. which goes to the $250,000, adjusted gross income for a family. i heard the president say yesterday if you made $3 million, we're going to -- listen, talk about $3 million. or talk about $250,000 but they are not synonymous. and last but not least there's a study by ernst young prepared by you've seen on the screen that claims that a lot of businesses get caught up in this 1% or 2% so be careful, you might be crushing 700,000 jobs. back to you. >> good stuff. and i like the audience participation as well, rick. rick santelli in chicago. check back with you in a bit. want to get back to visa, the payment processing company, the official sponsor for the london games, has the only card that's
accepted in olympic park. trust me that's absolutely true. visa's had a stellar year. there's a look at the chart trading near multiyear highs. joe saunders is the chairman and ceo of visa, joins us live from london. joe, good morning, or good afternoon to you. good to have you. i want to get to the olympics. i want to talk about the global consumer. but the news of the day, of course, as you may have heard, starbucks and square partnering up. we're going to talk to howard schultz and jack dorsey in a moment. to what degree does this change the landscape for visa? do you see it as a positive or a negative? >> i definitely see it as a positive. square is enabling transactions to flow electronically. that's always good. it is easier to use and it expands the potential marketplace. i'm all for it. in fact, visa has a small investment in square. >> interesting. do you -- does it move the needle in terms of the narrative
of cash dying in any significant way? how big a deal should we be making of it today? well it's quite a big deal because it enables a small merchants and to utilize the electronic payment system without having to hook up into land lines to buy expensive terminals. it helps people in emerging economies. it's a great thing. and we're looking very much forward to what they do. >> the games have gone off practically without a hitch in london. visa incredible, i would say, just power in owning the games from a payment processing standpoint. has it paid off does it reaffirm your commitment to the olympics? talk about some of the benefits? >> well, remember, we've been doing this with the olympics since the 1980s.
and our relationship with the olympics during that period of time were what made visa what it is today. i don't -- i don't know if everyone in the audience remembers, but, of course, back then it was go to the olympics, but you better bring me visa because they don't take american express. >> i remember that. >> this is -- we didn't have much market share at the time. so, it certainly propelled us into a much different position. we're a global company right now and being associated with the olympics today is something that we're extraordinarily excited about. it's a -- it's a way to bring the global community together in a very, very positive way. and to be a part of that, particularly given who we are, is quite a wonderful thing. we have over 1,000 financial institutions around the world participating in the olympics in one way or another. either through issuing cards, or various promotions. this is something that started
out, i think, with four financial institutions in the 1980s, and now it's over 1,000. >> joe finally, we keep hearing from big global companies with a lot of exposure to the consumer who warn about a slowdown, at least in southern europe, and even northern europe and china. is your view that the consumer from a spending standpoint is going to make it through the back half of this year, what does next year look like? >> well, that's -- well, obviously, that's the question of the day. nothing extraordinary is going to happen either positively or frankly, i think, negatively. having said that, you need to understand that visa is part of an expanding electronic payment environment, and so some of our growth is predicated on more people using electronic pajts and more electronic payment outlets being available around
the world so we don't necessarily move in lock step with the economy. >> well, to hear you say nothing extraordinary is going to happen positive or negative might be a relief to those who were worried about something extraordinary happening on the negative. >> well i don't want to get too -- i don't want to get too locked into that explanation, but right now, things seem to be moving along at a -- at least in the united states, at a steady pace. it's hard for me to tell what's going on, in europe. you know that europe is not part of visa inc. it's part of visa europe. i mean we obviously have transactions that flow in and out of europe but that's a little tougher call for me. >> joe, always good to see you. congratulations on a great run, at least so far on the stock. and enjoy the rest of the games. hopefully make it to beach volleyball tonight. that would be my recommendation. >> i'm going to try to be there.
take care and have a great day. >> thanks. joe sounders of visa. want to send it back to hq for a market flash. >> this one goes to what you and joe were just talking about. right, payments? i want to look at veraphone. the ticker is pay. when you swipe a debit or credit card you probably are using a veriphone machine. their earnings are not out yet however ubs cut the company to a neutral. but said most of the catalyst may be gone from the stock and actually raised their price target. but maybe the stock is down because of that square starbucks deal you just talked about, carl. right? if mobile really, if cell phones are the future of payment, perhaps investors are concerned that the physical swiping is over. i don't know if you've ever used uber, i used uber for the first time last night. you can find a car service. i couldn't get a cab. boom, they charged my credit card directly on my smart phone, cash never exchanged, i never
pulled the card out, worked beautifully. >> it's really interesting chart given the news of the day. thanks a lot, brian. brian sullivan. speaking of which, we're going to talk to howard schultz, of course, jack dorsey in a moment. also the s.e.c.'s enforcer on "squawk on the street." the interview that has the hedge funds of the world a little eneasy. we'll be joined by bruce karpati a little later on. coming up, what does howard schultz, the man behind all things starbucks and jack dorsey, the creator of twitter have in common? they're joining up with a way to make your starbucks experience easier. that's right. now, there's an app for that as well. that's next on "squawk on the street." the plan. you have a plan? first we're gonna check our bags for free, thanks to our explorer card. then, the united club. my mother was so wrong about you. next, we get priority boarding
on our flight i booked with miles. all because of the card. and me. okay, what's the plan? plan? mm-hmm. we're on vacation. this is no plan. really? [ male announcer ] the united mileageplus explorer card. the mileage card with special perks on united. get it and you're in. with special perks on united. it's something you're born with. and inspires the things you choose to do. you do what you do... because it matters. at hp we don't just believe in the power of technology. we believe in the power of people when technology works for you. to dream. to create. to work. if you're going to do something. make it matter.
if you still pay with cash or plastic, get with the program. the futures about cashless, cardless transactions. that's what several tech companies and retailers are betting on, including one you may have heard of called square. founded by the creator of twitter jack dorsey. it's got the attention of starbucks. joining us with that announcement, square founder jack dorsey and starbucks ceo howard schultz here with us. where did this all begin, howard? how important and how soon does it go live? >> this is a breakthrough deal for starbucks, square, and i
think most importantly the marketplace. in little over a year we've processed already 60 million transactions. the phone is clearly replacing many of our devices and becoming the primary device. as a result of that, we've been in conversation with most tech companies who've been trying to crack the code on how to monetize mobile payments. as soon as we met jack and square we realized there was an opportunity to significantly enhance the customer experience at starbucks, differentiate ourselves from everybody else in the retail business, and in addition to that, i think most importantly, provide tools and resources to other small businesses that could create job creation in america. it is a big deal. >> we were talking during the break about whether it's acredited to sales or earnings. i've got to imagine it takes efficiency to a standard deviation? >> i think since we've introduced mobile payment it has been to free up transactions. once we introduce this nationwide before the holiday season it will be a boost for starbucks. >> would you call starbucks your maiden, your anchor tenant so to
speak? >> absolutely. and we've always admired what howard and the starbucks team have done. they focused on putting the customer first. they focused on the experience. it's not just what they sell but how they sell it. and that's something we want to build into our technologies and give it to every single merchant. to start a business. and to grow their own business in a very compelling way. that allows them to focus on what matters most. >> talk to us about those who have no idea what exactly we mean and what technology is at play. how does it work? you go in and you're at the register where you would normally handle a $5 bill. instead you -- >> you can open the pay with square application. you see the starbucks card. it has a bar code on it. and you scan it in front of the bar code reader on the starbucks unter and it goes from your credit card that you linked previously. >> seamless for the customer. >> anyone who is paying from a credit card at this point on can use the square application and platform and this is going to be significantly enhancing. >> we solicited some questions
on twitter by the way. weird to have you looking at my page. and one of the key concerns is fears of being hacked. right? because we have seen breaches in security. it seems like every couple of months. how is that ameliorated? how is that made less likely? >> security is the most important. like every other financial institution it is our number one priority. we are audited. we have certification. but it's really around trust and giving people controls to provide their own security. one of the biggest things about mobile payments is the device never leaves your hand. it's not your credit card leaving your hand. but you're fully in control of the transaction and that's really meaningful and we can add more and more technology to make that even more secure. >> we've seen a seismic change in behavior not only at starbucks but in the entire market place as people are now using their phone as a primary device. i think at starbucks what we've seen in the last year is the trust people have in the brand and the experience has given them great confidence to be able to use mobile payment. this is only going to add to
that. >> do you have estimates on adoption rates? what percentage of consumers will use this in a year, in five years? >> right now, over 25% of our customer base is on or using the starbucks card. and so i think they're going to migrate off the card onto the square platform very quickly. >> i think it's going to move faster than anyone expects. i mean you see this transition to mobile being a device to pay. and this is bringing in the world in a major way. >> i remember a time when the criticism was starbucks was the line was too complicated, right? took too long to get a frappuccino. i would imagine this allows you a little more cushion to do things that might be a little more complex? >> absolutely. and i think not only does it go faster but as jack mentioned earlier i think the consumer feels that they're in control. they can take their phone, go to the scanner, have a relationship with the barista, talk to a friend, and i think people have the phone on them almost all the time. it's a seamless transaction.
>> one non-square starbucks question. you made some conversation this morning about twitter. we always have the conversation who should buy you and when. is it going to happen ever? >> you know for six years we have strived to be an independent company and we will be an independent company. and we believe in it. and it's always been that way. we want to build something that is sustainable. and that lasts. for a very, very long time. and there's a lot of amazing things going on with the technology, and the company, and we have people there who are just brilliant and we're going to be independent. >> all right. everybody has their price. doesn't change your mind? >> we have some major things we want to do and to do that we have to be independent. >> jack dorsey, howard schultz. pleasure to see both of you guys. >> thank you. >> meanwhile listen up, money managers we're going to talk to the s.e.c. next, talk about the top priorities that should be on your radar. compliance, conflicts of interest and a lot more with the s.e.c.'s chief of asset management.
just got the close in europe a couple of moments ago. shares inching lower today, falling back from more than four-month highs in the previous session. investors harboring even more doubt that eurozone policymakers were really any nearer to solving the region's debt crisis. the bank of england also cut its forecast for immediate yurm term economic growth worries that factors that have been weighing on the british economy may be more long lasting than originally thought. standard chartered clawing back some of those losses up more than 8% today topping the list of gainers in london the bank still reeling there those accusations by a new york regulator that it hid $250 billion in transactions tied to iran. rio tinto another big gainer up almost 2% after the miner said it would stick to its spending
plan for the year even with weaker prices dragging its first half profits down some 34%. meanwhile, here in the states the dow is up 28. want to bring in mary thompson with some news from the floor of the nyse as the dow continues to erase some losses. >> that's right, carl. seems like this summer rally that we had seen still has legs with the dow right now at the session highs. erasing earlier losses. moving to the upside, of course, is this european markets came off their lows of the session. still closing a little bit lower. but that along with the turnaround in the euro appear to be helping on the markets. of course the euro is tracked very closely to how the s&p 500 has performed. that has come off its lows, so, too, has the s&p 500 which as you note is right above that key 1400 mark. psychologically important level. coming into today's session i was asking some traders what are some of the things you want to see to make sure that the s&p stays above that 1400 level. they say a confirmation from the transports which are still lagging right now. and also to see treasury yields
stay above that 1.6% level on the ten-year because it would confirm that investors are continuing to move money out of bonds and into equities. where they're putting some money to work today right now. let's take a look at some of the dow movers. of course mcdonald's coming out with disappointing july same store sales. it's a drag on the sale. hewle hewlett-packard is giving it a left. a lot of weakness in consumer discretionary stocks today. a bit of a pullback in telecom as well. this is offsetting the strength we're seeing both in materials and consumer staples in today's session. and digging a little bit deeper into why we're seeing weakness in consumer discretionaries you can point to a lot of the travel agency stocks, notably priceline which had a very strong quarterly result but lowered its look for the year because of weakness in the european markets. and take a look at orbitz also coming in with earnings that were a penny shy of estimates but more importantly, this is -- the decline there, you see 25%, is its worst one-day performance in three years there. staples, though, getting a boost. consumer staples getting a boost
from dean foods. the milk company basically reported stronger than expected earnings but more importantly spinning off its organic foods unit, and that's giving a big lift to its stock up 36%. cvs caremark reporting better than expected results yesterday. before i leave you i also want to note we're keeping watch on "the new york times." all things "d" is reporting that the company is close to selling its about.com unit which has been a troubled unit for the company this price is set to be about $270 million below the $400 million plus that it paid for about.com back in 2005. again the dow is up 29. high for the day. >> all right, mary thanks so much. mary thompson here on the floor. rick santelli is on the floor in chicago. talking the economy and some markets with a guest. hey, rick. >> absolutely. jim bianco one of our favorites. we're going to talk about the economy as you pointed out, carl, but in the context of the federal reserve. listen there's the whole
mavericks, you know, basketball analo analogy. boston celtics, you have dallas and texas with regard to the maveri mavericks. we have fed governors, chairmans that seem to have not a lot of unanimous thought what do you think? >> i agree. i think that if you look at the 100 year history of the fed. they're 99 years old. there's probably been a wider -- has not been a wider discrepancy among opinion right now. you've got people like eric rosengren in boston and charlie fisher or charlie evans here in chicago which are very, very dovish and they really want a lot more quantitative easing. you've got people like minneapolis and fisher in dallas who are the opposite end of that spectrum and the fed has never seen this wide of a divergence -- >> if mr. bernanke really wanted to come up with qe-3, 4, we know he could do it. but what do you think would be the side bar to that if he did? >> i think he could do it tomorrow if he wanted to. he could get a majority opinion. what he doesn't want is four,
five, or maybe six fed presidents immediately run to you or to microphones and say this is a mistake. we shouldn't have done it. because it undermines the policy. i think that's what's holding them back. a strong, vocal minority of people that are dead-set against it. >> there's discussion going on these days that many of us were having awhile ago but now it's grown to big numbers. and that discussion is, from the fed's vantage point of these programs, is it synonymous to look at effects on the economy and effects on things like markets? >> yeah, i think they're two different things. i agree that the markets have been affected by the fed from quantitative easing, lowers interest rates, forces people out the risk curve. pushes up asset price. i get that it works. but the fed would want you it believe there's another half of it. that creates a wealth effect, pushes the economy higher, lowers unemployment. very little evidence that that's happening. these programs affect markets and all they find up doing is manipulate them. they change the price of markets, don't change the economy. in other words, may put markets at the wrong price. that's why we see all this
volatility, you know, normally we see 100 point moves in the market now we don't even notice anymore. and we're all hanging on every word of draghi and bernanke because we know how important they are to markets but not necessarily to the economy. >> i brought it up yesterday. you know, why don't more investors or maybe the media at large, you know, look at the economy up in the low teens and say wow, it's terrific, and my answer was because on june 1st, 4th and 5th it was down on the year. that was only 8 1/2 weeks ago. you and i always talk about we want to always remain objective. you just told me fed programs may have saved borrowers $200 billion. does that mean i need to rethink my position? >> no. people that borrow money might have saved about $200 billion because of lower fed interest rates, people who lend money, put money in money market funds or mission else wost them $400 billion. net-net these programs might be a net drag because they're costing the lenders, and people that put money in money market funds more than they're saving the borrow others on the other
side. >> i just want to ask you one question, what did you pay for gas in the midwest today? >> $4.55. near the all-time high. >> i think that needs to be discussed a bit more. back to you. >> well i hope that's not premium, too, rick. that's expensivexpensive. >> it was middle. he's an economist. middle. >> mid grade. >> thanks james, thanks rick. back to brian sullivan for hq for another market flash. >> last one i promise here carl. csc computer science corporation another little one of those situations where you saw profit drop fairly considerably but yet the stock is up. it is up 17%. new ceo taking over saying basically they're going to do a billion dollars in cost cutting over the next 18 months. so it's obviously a story where the number's not as bad as some had thought and analysts may be more optimistic about the cost cuts going forward. back to you. >> all right. see you in a little bit, brian. we've been telling you about him all morning long. he'll join us live, the s.e.c.'s chief of asset management
enforcement bruce karpati on post nine in just a moment. it's something you're born with. and inspires the things you choose to do. you do what you do... because it matters. at hp we don't just believe in the power of technology. we believe in the power of people when technology works for you. to dream. to create. to work. if you're going to do something.
make it matter. and i'm here to tell homeowners that are 62 and older about a great way to live a better retirement. it's called a reverse mortgage. [ male announcer ] call right now to receive your free dvd and booklet with no obligation. it answers questions like how a reverse mortgage works, how much you qualify for, the ways to receive your money, and more. plus, when you call now, you'll get this magnifier with l.e.d. light absolutely free. when you call the experts at one reverse mortgage today, you'll learn the benefits of a government-insured reverse mortgage. it will eliminate your monthly mortgage payments and give you tax-free cash from the equity in your home. and here's the best part -- you still own your home. take control of your retirement today. ♪ ♪
coming up at the top of the hour on the halftime show apple's juicy secrets. we'll reveal the great unknown about america's most valuable company and what it means for investors. and an electronic trading trail blazer admits the current market structure needs fixing. plus paying the price. who's winning and who's losing the mobile payments battle. tune in at the top of the hour.
>> okay scott, thanks so much for that. meantime, insider trading, bribery, derivatives manipulation. the u.s. securities and exchange commission has a tough job on their hands tracking down erroneous activity on wall street. gary kaminsky here on post nine with a very special guest. >> let's get right into it bruce. bruce karpati joining us. viewers have been watching tv, algorithms, high frequency trading, dark pools. i know these are policy issues in the sense that make them exist but your job is to enforce them. is this something that's front and center in terms of the enforcement decision? is the division trying to attack where these are being used incorrectly? >> well, carl, gary, happy to be here today. you know, dark pools, algorithms, those are policy matters. in enforcement, we're charged with investor protection. so when it comes to electronic trading, when there are issues, when there's rules violated we're going to pursue them. in the last year we've seen cases against axon rosenberg,
these are all times where we're going to act. and further to that point we have a market abuse unit that is focused on these units in particular. >> would you say that this is, i mean obviously there's tremendous amount of areas that you're focused on. you say this is the top priority right now given what many people think is out there in terms of abuses in the system? is this a top area that you're looking at? >> certainly as an enforcement division this is one of the key areas. >> let's talk about enforcing madoff. obviously years ago but a lot of people wonder what are you doing differently today in the enforcement division, the asset management division would have been responsible for overseeing what would have been an investment advisory business. what are you doing differently today that would make it much more probable that we would not see another madoff surprise the way we did. >> well, under chairman shapiro, under director of enforcement, a former federal prosecutor, we've
become more aggressive, executed a number of reforms. one was creation of the specialized units. we'rabilitying pro-actively. for example our aberrational performance inquiry, we're looking at suspicious performance across the street and identifying those advise remembers that have unusual performance in other markers of fraud, and in that situation we've charged several investment advisers, hedge fund advisers and that's ongoing. >> just so the viewers understand you're actually getting monthly performance data and where you're seeing monthly performance data that doesn't make sense given what the overall markets might be doing at the time. you're essentially using that data to then go and investigate further? >> exactly. we don't really reveal our sources in terms of how we get our information. but we're using our market experts, our enhanced expertise through the reforms that were executed a number of years ago. >> a number of people on this set have said over the last several months that one of the issues in terms of enforcement, regulation, is that you need more money. you need congress to give you
more money. if you woke up tomorrow, and your budget was essentially tripled by congress, what would the enforcement division be doing differently that they're not doing now if you had more money? and talk about experts, the type of people many viewers think would make sense for you to bring in to try to help do your job. >> certainly as you well recognize, these are incredibly complex markets. that we're dealing with. and one of the enhanced initiatives across enforcement, across the commission, is bringing in industry experts. and i know you've mentioned this on your show before, one of the things we've done is brought in a former hedge fund manager. a former private equity analyst. head execution trader from an investment bank. and it's due diligence person. all these people are on investigations, working on our initiatives, really enhancing our efforts. and with that, you know, we need more resources to keep that expertise. >> so you could put to bed this myth that former people worked in the industry, you cannot be competitive financially for bringing these people on board to try to help enforcement.
you are in fact atracting these type of people? >> we're certainly attracting them. some of the best and brightest are working at the commission. >> i think one perception among the retail investor is say there's a charge from the s.e.c., it's often a penalty, is a penalty, it's paid, it's a fine, it goes away. is there less tolerance for that now? >> i certainly think in this era, under the leadership we have, there's less tolerance for getting monetary relief but not only that, we're borrowing people from the industry are we're taking away their licenses, we're getting investors back their money. that's important. and in addition to that we're working with the criminal authorities to make sure they're well prepared in their cases. >> how is the sensitivity? you sort of hinted at this. but the sensitivity toward a whistle-blower who could have given you an earlier sign on something like madoff? how has that changed? >> i certainly think we're very receptive to whistleblowers. one of the reforms that was instituted was creation of the office of the whistle-blower. we also centralized tips and
complaints at the commission so they come in to a centralized place and we've become much more aggressive in terms of looking at what whistle-blowers have to say. >> our colleague rick santelli had e-mailed me earlier today and there is somewhat of a perception out there that sometimes politics plays in to this idea of what cases are brought and what cases might not be. could you talk to that at all? does politics play in any role in the type of cases that you are bringing, try to bring on a daily basis? >> absolutely t. we go to where the evidence lies. and whether it's senior ranking officials at the largest companies, you know, to low ponzi schemers, we'll go anywhere where the evidence is, politics does not play a role. >> you know, bruce give me a sense, you do this, i think the viewers need to understand the commitment that a lot of people that work behind the scenes, in these regulatory roles, why do you do what you do? why do you stay doing it? and what do you want the viewers here to take away from this appearance today, in terms of what you're trying to do on
their behalf, in this role? >> well, you know, investor protection is really our greatest mission. and so we have people in the rule-making divisions, people in enforcement. people on the exam side. we're all have that central goal of investor protection. and so we in the asset management unit that are focused on investment advisers, we're looking pro-actively to get the misconduct earlier so investors aren't impacted. and so that's what we do, day in, day out. >> is there a sense -- is there a sense that the more enforcement actions that you bring, the actual number, do you think that that will sort of be the sort of score card to say whether you've done a good job or is it the size of the entities that are being involved? is it quantity or size of the potential enforcement action? >> as we talked about earlier the complexity of the markets has made it so that we pursue complex cases, and so it's the complexity, it's the quality of the cases, along with the numbers. soond there's a variety of factors. but we've brought a record number of enforcement actions
last year. i think 735 in total involving every aspect including a record number of cases involving investment advisers. and so under mary shapiro, under rob kusami that's going to fin. on the foremonth you have many hard working individuals, in enforcement, on the exam side, doing this job, day and night. >> you know it's interesting, 75 35, you don't hear about all 735, so that's probably somewhat surprising. >> i'm sure years ago if we had this conversation the challenge would have been keeping up with humankind's ability to try to cheat. but it's all about technology now. and i got to imagine your emphasis is just as much on i.t. as it is the complexity of an instrument, yeah? >> certainly i agree with that. in terms of industry experts we're also enhancing our technology. so that means, you know, the latest technology when it comes to understanding the algorithms, we're creating quantitative units to look at algorithms.
and you have those operating across the country. >> fantastic stuff. >> and i'm glad we're able to bring this interview because i know bruce, we spent some time and he is a person who is out there i know in his heart he's out there protecting all of you every day. >> wrubruce, thanks very much f coming in. bruce karpati. the s.e.c. retail space this morning, macy's and ralph lauren. going some opposite directions this morning. what are the best ways to play those names? we'll talk some retail with the dow up 22. okay, here's the plan. you have a plan? first we're gonna check our bags for free, thanks to our explorer card. then, the united club. my mother was so wrong about you. next, we get priority boarding on our flight i booked with miles. all because of the card. and me. okay, what's the plan? plan? mm-hmm. we're on vacation. this is no plan. really? [ male announcer ] the united
whose outlook reflected more global concerns. joining us liz dunn is consumer sector senior analyst. thanks for joining us. >> thanks for having me. >> really does seem like a tale of two cities here. let's start with macy's not only margins up, comps were good, they raised their guidance. why the outperformance? >> i think macy's has a number of strategies that are working to its benefit. they've got a magic selling initiative, my macy's which is a couple years old. millennial initiative as wells omni channel. they're working hard to stay ahead of the customer, figure out what's next and meet those needs. i think for those reasons they're taking share. >> and taking share from who specifically? we had a discussion this morning as to whether or not jcpenney is the gift that keeps on giving. >> well, not for me it's not. but i think that -- i think that they are taking a little bit of share from pennies. they have noted that in the stores where they are co-located
with pennies they are seeing outperformance. they haven't given a magnitude there. kohl's has had a tough go of it as well. other department stores are undercomping in that moderate to better department store range. are undercomping macy's so i think it's a broad away of retailers they're taking share from. >> some of the headlines from the call suggest they are extremely confident in the quality of back to school. are you in that camp, too? you know, i think they're being -- they're hedging a little bit. they're talking about a third quarter comp that's below the rate of fourth quarter. so they're guiding for the back half to be in line with the first half but third quarter should be below that. so doesn't suggest to me a whole lot of bullishness about back to school. they said it's too early to say what the fall trend is but they feel really confident in their ability for the full back half to drive a comp in line with performance. >> good to know. pivot to ralph lauren. why the divergence there? is this because it is a more
global kind of story? >> it's really the global story playing out there. they talked about currency head winds. that's what's behind their weak guidance. they got it to sales down and margins down for that second quarter. so that's the issue there. they also saw slowing in their retail stores. comp, the comp came in at 1%. 3% on a currency basis. that was disappointing below where they wanted it to be. that will continue to be head winds, and they're repositioning asia. they don't have a strong chinese customer yet. there are a number of factors there. >> and so your favorite names overall in the space, given everything we just talked about with these two. >> i continue to like macy's. i think it's the safest place to be in the consumer space. i also like coach. it sold off a little bit on earnings but i still think phenomenal long-term story with more exposure to asia, less exposure to europe, and the hand bag sector continues to be strong. >> very good stuff.
liz thanks so much. good to see you as always. >> thanks for having me. >> from macquarie talking some retail today. we just spoke with howard schultz of starbucks and jack dorsey of square. they told us about the push to mobile. specifically starbucks teaming up with square in a new partnership that means the customers will eventually be able to order coffee simply by saying their names. so what other places would you want to skip long lines and cash registers and why? that's our twitter question today. tweet us @cnbcsquawkst and we'll get your responses. we believe the more you know, the better you trade. so we have ongoing webinars and interactive learning, plus, in-branch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more. [ rodger ] at scottrade, seven dollar trades are just the start. our teams have the information you want when you need it. it's another reason more investors are saying... [ ] i'm with scottrade.