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tv   Squawk on the Street  CNBC  August 19, 2013 9:00am-12:01pm EDT

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but you're -- >> no, the economy's getting better but we have to go through a period of adjustment. you're supposed to buy it but it's early to do that. >> all right. >> thank you. >> rough, rough coming back. but i'll see you tomorrow. >> great to have you back. >> thank you. >> good to see you. >> join us tomorrow. great to see you. "squawk on the street" begins now. good monday morning. hope it was a good weekend. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, good to see you. david faber is off. futures wobbly here, after the worst week for the year for the dow last week. news headed our way this week, including fed minutes, jackson hole, retail earning. ten-year yield looming large around 2.85 after hitting 2.86 intraday friday. road map begins with markets
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looking for a fresh start after ugly trading days last week. yields are rising as debate over who will be the next fed chair picks up steam. sax seeing more markdowns for women's shoes, handbags and menswear but it's not bad news for the consumer companies. jpmorgan upgrading dollar general. entell upgrade over at piper saying pcs are not down for the count yet. futures, as we said, slightly lower after the major indices posted the first back-to-back weekly losses in june. worst week for the dow this year, all going on amid encertaine encertainen certa uncertainty of the fed mens and jackson hole starting thursday, friday. how do you feel after last week? >> i work on charts every week. >> show it to them. >> too many look horrible. i mean, i've got to tell you, we're in a key moment here.
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industrials hanging by a thread. the real estate investment trusts terrible, carl. only group good, gold stocks. we don't want them as leadership. >> no. the miners, hated miners all year -- >> not going to lead us out of the wilderness. >> driven by what they said, the back half, the continue year, something else? >> the combination of retailers saying things aren't do and ten year saying things are good, rates have to go higher, has spooked people because, you know what? maybe rates are going up because of industrial demand. maybe going up because we saw in "usa today" affordability of home is is out of control. we need interest rates to stop going up if we stabilize. if we keep going up, we're not going to stabilize. >> we're not far from 3. >> where is the demand that has driven these? we're way out of whack with europe. i know, sure, some industries,
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auto industry's strong, but they could knock that over quickly. i don't see a lot of strength. i think that the rates have gotten away from the fundamentals. >> meantime, we've got a thousand people dead in egypt, and a lot of uncertainty of what's going to happen. >> horrible. >> the suez threatened by the turmoil over there. >> it's start to impact. downgrade of apache, 19% of oil from egypt. it's a stock show. the egyptian stuff is frightening. normally you expect a move to high quality, flee to safety by treasuries. i think this is an event i would have expected it normally. so many sellers in treasury, they're overwhelming flight to quality trade. >> august 2nd high? 3. -- 3%, maybe? dow down 2% last week. we're not -- i mean are we headed for ten, for five? >> no. the reason i say it's foal crumb
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week, the only ones that have taken out the lows are the real estate investment trusts and the average ones going down are yielding 3 to 3.5. so they don't have the floor that they used to it. if rates go to 3, i say any utility that has a 4.5, they're going to sell that. that's why rates have to stop. you're right, it's not dire. but we're not used to -- it's a different kind of market. when we go down 4, everybody says i remember when we used to go down 19. very scared. >> we still have not had four consecutive losing days this year. we've had three a few times. if today is down for the dow and s&p, that's four in a row, first for 2013. >> we're the most -- s&p charts that i look at, hand delivered for those who want to know what a boring weekend is, we are the most oversold of the year, you know, well, actually, again that june decline, neck and neck with that. i find that is, you look -- at&t
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right back to where it was, but looks like it could take out the low. at&t a big cap stock, yield more than 5%. verizon rolling over. the rolling over theme is very big. only stocks that bucked that thursday and friday besides golds were housing stocks. how do we explain that? down 30%? are they done? >> we might talk about this upgrade. >> the most significant upgrade. >> yes. >> really? >> that group has been so killed. if rates stabilize the fall could be good for home builders. >> wells points to a compelling valuation on phm. >> the greatest performing stock of the s&p last year and it's given up the dose. >> retailers, high-end retailers saks released result, deeper than expected loss after disappointing sales forces them to cut prices. sask bought by canada's hudson's
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bay. some said if the loss weren't as bad, there is still time on the go shop for better bid but was that's not going to happen. >> take advantage of it, take advantage of the weakness. in the saks store i don't know if you visited the zip code. >> has its own zip code. my wife has, but i may not. >> the zip code, i think right now it's one of those you get zillow, find out whether prices are dropping there, because i hate to see shoes doing badly in new york. i thought new york was one of the healthiest economies. >> comps 1.5 for same-store sales. they say the fiscal year end in february had an extra week, that skewed the calendar. without it comps choser to 4. >> that would be a decent number versus what we saw last week. walmart number, when you had macy's not great and walmart the next day, and nordstrom's, next day doing poorly, wow, high end,
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middle range, lower range all bad, you have to struggle. each time the stocks all got hit. so what point have we decided you know what? ross stores upgrade signify -- and the dollar general upgrade -- maybe they're the sign of the sell is overdone. >> dollar general, jpmorgan takes to overweight price target 64, talking about sustainable comps. they think management might buy back 20% of the float next year. >> this was not long go, go private, then public. these companies generate a huge amount of cash. when you go to the dollar store, i shop at dollar tree, they have good prices for candy -- sorry, i like candy. kids like candy, my father likes candy. >> jolly ranchers. >> absolutely. i find these are not what people think they are. a dollar store is not as bad, so to speak, and remember the food stamp trade is very big there.
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>> morgan stanley, overweight on ross. saying again, off-price retailers are outperform in an environment where the middle tier looks week. >> well, jcpenney, we felt as long as they were having sales that might be a place to have off-priced merchandise. ross stores is a great regional in a national chain and acted poorly. i thought the upgrade made sense if you think things are overly -- >> urban tonight. tomorrow, jcpenney, later target, lowes, aeo, abercrombie. >> i talked with my daughter, over dinner, the credit card bill, the urban buy, it's not going to hit this quarter. but they may be able to forecast better than expected quarter because of the buy. look at this panoply, home depot is my gut wrencher, that was up friday.
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home depot declined so much. home depot and lows will set the tone tomorrow's business. carl, we went from being -- thinking that retail is rosy target bumping up to 72, looked really good. home depot at 80. believing the consumer's been stopped here. i don't think the consumer has. but gasoline, you know during vacation, i paid $4.30 for gasoline. i had to think, geez, that's a lot. >> yeah. >> i didn't get to buy the convenience store candy that i wanted. >> what's puzzling, there are weird outliers look a coors, doing gang busters in europe, pretty well here, as the law of large numbers catches up with them over time. >> i thought nordstrom's might be good. the nordstrom's stores, they look great. i didn't see that coming. obviously for a coors, i would go with -- if you look at what happened with coach, that wasn't so hot. but coach has been missing the market.
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and i just find that coors thing is just one of those, it's as you used the word "outlier" that's how to describe that versus what else we've zbleen john idle, amazing operator. who delivers these to you? >> oswaldo. >> like the gimp that you have. >> saturday morning. i've got to tell you, when sitting around, carl, like i am, waiting for the week to begin, because you know how much we hate saturday and sunday, these are pleasure reading. a great thing for those of us who lead solitary quiet lives. this is my throw walden pond. >> party at jim's house. you look at them so others don't have to. >> take out, there's prax air, that's too high. >> you've written all over these. >> i'm concerned about proctor at 80. i wouldn't want to be them if i were ackman but i think he's a little stuck. >> whirlpool. >> that was going higher. look at real estate investment
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trusts, terrible. a lot of people laugh at and me and my chart obsession, i say, go pound sand, joker. >> coming up next -- >> conference. >> i'm not dead. >> what? >> i'm not dead. >> why one firm is saying the same thing about pcs, they're not dead yet. it has been nine years since google went public on this very day. the stock's up ten-fold from the ipo price. we'll talked to wired magazine steven levy who wrote the book on inner workings at google. a lot of news on the way. more "squawk on the street" live when we return. [ male announcer ] come to the lexus golden opportunity sales event and choose from one of five lexus hybrids
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♪ ♪ pcs are not going away any time soon, that's what pifer jaffray is saying. expects a moderate corporate refresh cycle driven by the end of support by windows xp next year along with the release of windows 8.1 in the fourth
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quarter. the company has long-term strategic issues. >> right. >> with the 4% dividend, they think downside's limited. >> it's been a buy if you collect the charts every time it got to 4%. there was a disc drive company i owned in the '80s, we named the cat comag. it was hit by a truck and it bounced. >> really? >> it bounced. he bounced. you're hopeful, but it was -- this piece is entitled, dead cat bounce. i always think of the cat. it didn't do well after the bounce. >> but that initial bounce was okay? >> initial bounce, hit by alcoa an 18-wheel -- an 18 wheeler, nine lives. >> pcs not going away soon. response on platforms like twitter, refresh cycle is called buying tablets. how exposed is intel to that.
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>> we'll know nor when hewlett-packard reports later this week. by the way, everyone's rooting for intel because stacey smith, a fellow who comes on tv is a good guy. you kind of hope, wow, this great inventor of product, this terrific company, can regain its luster. but, like oracle, microsoft, they're challenged. oracle not pcs but expensive software. intel, it's a good yield play. last time we had a yield play, it has held, interest rates weren't soaring like they are now. another play that works like intel if interest rates calm down. >> names like intel, ibm, right you, could argue is the most publicly flogged dow component of the year, a lot of people think it's dead money, short interest is up. >> yet this was warren buffett's foray into tech. he does few forays in into tech.
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apple last week, like the old days, apple up, everybody else going down. a replay, obviously carl icahn played a big role there, ibm doesn't seem to have -- it's as if people decided we're tired of buying earnings per share growth. looking at revenues. excensure peeked. again, i feel like i don't have a case to own ibm. i don't have a case. i want to have something. >> yeah. top of "usa today" interview between maria and john chambers. >> internet everywhere. >> laying off 4,000 workers last week, talking about in another era he called it lumpy. looking at challenging, uncertain global macro environment. >> i took that conference home again. a conspiracy theory. i think john chambers is an extremely nice man. not using that as being
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facetio facetious. he's a good man, good heart. the company's doing well. i think public spending was good. but it's hard to justify firing 4,000 people, which by the way he wanted to find another place. if things are really good, why not skew the outlook negative and just if you're one of the people say, he's worried? is this a conspiracy theory i have? i have to tell you fundamentals are too good. my travel trust does own it. it hung at 24. for me to think perhaps he was gloomy in order to be sympathetic, he feels their pain. >> interesting, interesting theory. when we come back, more with jim. his mad dash. one more look at futures. lea earnings today a slew of names, depots, dollar trees, sears, gaps. >> where i shop, is it right on the edge. >> "squawk on the street" from the nyic is straight ahead.
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tomorrow. >> yes. >> jpmorgan says? >> buy it. this stock has been cruising and therefore maybe it has a heel problem this is without a doubt one of the gutsiest calls i've ever seen. get in front of -- they're saying it's gross margins doing well -- after this run, up 155% a year, jpmorgan better know what it's doing because that is not what i was thinking would happen to best buy. >> looking at gross margins, arguing that discounting is -- that tide has ebbed? >> maybe best buy's last mand standing. am amazon, paying sales tax. the great equalizer. >> talked about that in its gestation period and maybe the consumer is starting to notice. >> best buy, different products come in. my take is that this was left for dead here. this is the hewlett-packard play. left for dead, too many people shorting it. after the run, a gutsy call. >> one to watch, especially after what others have said about electronics, costco comes
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to mind. >> right. >> zillow, meantime, not only the secondary offering but buying street easy, which anybody in new york will know about. >> yeah. street easy, i felt the best. how's zillow for new york? i say, i prefer street easy. people say how much is my house worth? it's a smart move, 50 million in cash but offering 2.5 million shares. a monster short position. stock up 215%. shorts have cover on this. people were short it because it went in an environment, toll brothers, and horton, have been going down, why would you want to own a company that basically is a website that tells you how much your house might be worth and whether you should be a buyer? covering on the 2.5 million very interesting to watch. >> interesting. a lot of critics, skeptics wondering where profitability is in on a large scale for these guys. >> right.
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are they yelp? a remarkable stock. are they pandora? or are they -- maybe groupon. groupon did bounce back. this is such a powerful move that certain point you have to say to yourself, geez, even if it's a great company, is it worth this? >> all right. interesting. we'll keep an eye on that. a big story today. bulls are saying good riddance to the worst week for the dow so far this year. new week means new opportunities. opening bell a few moments away.
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[ male announcer ] time and sales data. split-second stats. [ indistinct shouting ] ♪ it's so close to the options floor... [ indistinct shouting, bell dinging ]'ll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪ you're watching cnbc's "squawk on the street." the opening bell set to ring in a couple of minutes. as we've said already, coming off the worst week of the year for the dow. lofs loss of 344 points. s&p down 2%. we've not had four consecutive losing sessions all year. futures, if the market trades the way the futures suggest,
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this might be the day. >> yeah. we had some players in that dow. exon, i know there's a positive comment, exon will increase dividend. exxon rolled over last week. intel wouldn't be at 4% without the rollover. last week had this kind of inev inev vittibility feel. no one was here, carl. geez. this whole peierce has been characterized by the fewest playerize can recall. after the big run you think people coming in, buying stocks. don't see it. >> we had discussions last week about fixed income, for instance, and the ten-year, and dan fuss says it's very thin. hard to take real lessons home because there's few people buying and selling. >> trades like a small cap stock. trades like you have to get a broker on the phone to sell a million treasuries. >> do you know a guy?
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>> you come in and watch it. i've been watching tlt. it's just -- holy cow, tlt is trading as if it were tesla! tlt, good symbol for tesla, maybe. >> talk about tesla and the hyperloop in a bit. declines in indonesia, jakarta, thailand off 3%, rupee versus the dollar. foreign capital worried about rising rates, too, not just us. >> the gigantic sell-offs before, i thought people would stabilize, mexico started rolling over. hot money went back in, hot money coming out. bric is hurting us. brazil, russia, russia rolling over. china, who knows? i've got to tell you, i don't like india at all. india's got the worst combo, stagnation. >> with all of that, here's the opening bell in a few seconds. busy week, not just of retail
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earnings, but the fed minutes on wednesday, jim, are going to be die seconded. >> i've done a lot of work on the fed minutes in the last five years, what they mean. careful at 2:00. you might want the other side of the trade after first 20 minutes of trading. that's better than going with the trend. >> big board, american corporate partners, a nonprofit, assisting veterans in their transition from armed services to civilian workforce. huge issue. >> yes. >> for this country. over at the nasdaq, zillow celebrating its announcement to acquire street easy, real estate website in new york city. of course, you mentioned also the 2.5 million secondary. >> right. look, the hottest stocks when they issue stock, you think is it peaking? you've got to be skeptical. i happen to like management of zillow very much. feisty guys. put them on "mad money." at the same time, how do you not take profits up 200%? what are you thinking, guys? this is the tesla, netflix
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issue. what point is it not prude tonight let it run? >> speaking of stocks that have been on a run or players on a run. icahn ups its stake in chesapeake. >> magic touch. >> from 8.98 to 9.98. >> funny. one of the highest quality companies in the industry, southwest, swn, got a downgrade today from bmo. look, chesapeake can be on the rebound. a stat oil sale of properties in norway and you know, in the -- over in europe, let's say. and then buying power. maybe somebody thinks they'll bias sets in chesapeake. i don't think that's the case. mcclellan was a controversial figure. icahn, whatever he does now, he could buy pretty much anything and then people who would follow. really is that moment, carl, that he's got that midas touch right now. >> to move a name as large as
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apple the way he did last week, amazing. >> amazing. >> apache, we didn't go into the depths of the ground grade. >> coming off of egypt, 19% of the oil. well-run company that has been in a tremendous downturn. look, do you sell it here? i've got to tell you, you must follow egypt more closely than oil, right now, with apache. if this thing -- look, the united states, everybody seems to be caught in a rock and a hard place here. >> absolutely. >> obviously the situation is far more unstable than almost every other one of these situations, libya even before. our allies are all -- no one knows where to come down. i don't know, is it worth the risk to buy apache when you've got high-quality oils coming down. >> eu foreign ministers holding emergency meeting to discuss. we give a billion in aid, they give almost $6 billion in
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grachbts a grachbts a grants and loans to egypt. it's all under review. >> minute-to-minute story. >> jpmorgan, i'm surprises, down a percent and a half almost. this "new york times" piece about wlohether or not they hir children of chinese officials. >> there's been no actual charges, s.e.c. looking into it. everybody skittish. bank group hanging on the edge. let's wait for a charge here. my charitable trust owns it. i don't want to say you're guilty until proven innocence. another good story how much jpmorgan may owe or needs to reserve. legal issues take a life for their own and never seem to finish. still in the hangover period. the law firms had a publicly traded stock, we'd be all over it. >> seeing decent green arrows on retail names. dollar general, 2% move. >> buyback is serious.
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>> jcpenney, best buy, family dollar, sears. >> sears reports this week. stock down too much. chatter continues to be just as ackman wanted to blowout -- wanted to stop -- you get rid of olman, maybe it would stabilize. the board have given ackman a way to get out but it's not a way to dump stock a lot. and i think that's terrific. you mentioned apple and what that will do to sentiment. 506, at least a directional continuation of last week's move. getting above 465 key. getting five was key. >> the charters are saying, almost uniformly, big, big move up ahead. the fundamental people who have a price target of 500, what are they going to do tonight? i'm raising my price target to x? when you get overrun price targets you have analysts saying -- they have to raise
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their price target, the price target's been taken out. i don't think apple's done yet. >> speaking of price targets, citi, writes about year-end, keeps objective of 1615, remains au unchanged as his target of 1825. we have seen some strategists chase the market and up their target for year-end. not tobias. >> a dicey moment. those who traded in the '80s and '90s, when everybody leaves you can play havoc if you're a bear, and there's not a lot of other players on the other side. it's a thin moment. getting into work, so people who know not from new york, i'm into work in 20 minutes, it's usually an hour, where is anybody? >> get into any restaurant in the city. reservations not a problem. never a problem for you. >> please! that is so untrue! they have no idea who i am in
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brooklyn. hot restaurants, little guys, attack take a number. >> bob pisani, he's on the floor. >> i had a seat, i could sit down in the subway at 7:00 a.m. on the 2 line. you never see that. penn station on 34th treat street. it's august. rates up, stocks down. one of the reasons the rates are up, they put out monthly statement. remember the ecb bent over backwards with forward commitment saying we're going to keep rates low. guess what? he says we're not guaranteeing that, rates may have to rise if greater inflation pressures emerge. what inflation pressures? he fell the need to say that. one reason rates are up. speculation, larry summers, of course has a better chance. some believe he'd be more aggressive with the pace of fed tapering and that's another reason rates are under pressure. look around at the markets. banks under pressure. you know about the jpmorgan
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story. regulators probing practices and hiring practices in china. u.s. banks under a little bit of pressure. european bank are having a tougher time. nice to see home builders finding a level. maybe because of the wells fargo upgraded. remember jim talking about this in may? i noted that we were at almost two times forward earnings for the home builders. that almost never happens. so pulte, what, 24 in may? now it's like 16. so now you've got down from almost 1.8 to 1.2 forward earnings. everybody will talk about the threat of retail earnings this week. only onies a care about home debow and lowes. so far, so far it's been good overall. a lot of expectations. cabinets, appliances, kitchen items, really going to do well.
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we've seen good numbers from lumber liquidators, store gains. i think 1% in north america. whirlpool okay. everybody saying good news from home depot and lowes. the same problem with the home builders in may, valuations are stretched here. almost 20, 21 times forward earnings for both companies. up 75 to 80% since the beginning of 2012 and the home improvement story starts. they're not quite -- they're not momentum stocks but they might as well be. my point is, any disappointment from them, even on guidance, is going to result in some kind of move from the weak hands getting out. bear that in mind. risk to the downside. jim, you were mentioning exxon. exxon mobil is down 18 of the last 19 trading sessions. ever since their report came out, i think august 1st, we knee the story, what they said, they can't really grow any more.
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they're having trouble replacing all of the oil they're losing. i think they lose 6% of their supply a year. that's the downside of big oil. back to you. >> bob, that's some statistic, 18 of the last 19. pulte home trading 23, 24, he questioned it. great job, bob. let's shift to bonds and the dollar. rick santelli at cme group in chicago. go ahead. >> thanks, jim. debate why interest rates are going up but no debate as to whether they're going up. they are. if you look at two-day chart, you can clearly see, we don't back up much, very sticky. looking at month-to-date, huge momentum here that's renews last several sessions. and obviously comp going back to the last several days of july 20 11. look at bund chart, it's comping back to march. the pattern especially considering extra horse power in europe may be one of the reasons
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we're seeing selling here as well. we want to of course monitor the differential between the two ten-year rates. here's chart we don't show very often. here's five-year. if you look at it, it's from mid-june. you can see that it has not taken out its 161 high for the move spike that was like a lot of spikes the day after the fourth of july that friday. that employment day. but that's 161. currently at 159. you want to watch the entire curve if that five-year starts to intraday and especially close above 161. hey, let's really look long distance, the indian continue-year. 9.25, haven't been since '08. look at dollar versus rupee, everybody's talking about emerging markets, 63 and change is a record level. and not in the favor of the rupee. the last charts, just generic dollar index. might be doing better against the rupee. but you can clearly see, it's
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struggling to get its sea legs here around the 82 handle. carl, back to you. >> rick, thank you. rick santelli. kelly evans here at post nine looking at isn't we're wrestling with, how to measure housing affordability. >> the marriage of what rick was talking about, we get a ton of housing data in what is a quiet week. a lot will focus on july, new home sales, existing home sales. backup in interest rates has happened since. even is happening over the weekend. we touched 2.87% on continue-year significant. jim, you know this. it's what dig nates where the 30-year mortgage rate is heading. just making the point that housing affordability, given increase in prices and in rates, is at a four-year low. still affordable by historical standards. markets where that is slipping. the best cure for higher prices is higher prices.
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what extent can the market keep going forward? what extent, jim, when you look at builders -- and they've said they're not aggressive when it comes to building out becauses they they want to make sure prices don't collapse, are they shooting themselves in the foot here? >> a lot of people -- i haven't been in the real estate market, i'm not allowed to own stocks, people try to figure out lock-in rates. another stage to the buy. not only are these houses not affordable, but also multiple buyers. put a place up in some parts of new york city and ten people show up and want to buy. and then you say, do i go and pay extra fee to lock in rates? the whole process has gotten -- gone from being hey i've got to buy a house to being should i buy a house? >> which explains, i don't know you if you saw this goldman study, half of the homes sold last year were in cash. >> right. >> ridiculous number. >> it is. >> methodology was questioned.
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it's a lion's share of markets. >> you don't mind seeing that when the cycle's getting going and investors -- but you want to see the hand-off happen. when credit scores are high and people helping the loans refinancing activity are starting to pare down operations or lay people off. the usa today piece focuses on 5% level as well if that's where the 30-year mortgage rate is heading next year. i wonder, keep an eye on the mortgage on wednesday, how much of a hit are we seeing from higher rates here? still up by historical standards. >> my question for you, some say jackson hole, it's like a bunch of howling wolves without the alpha dog present. you get that many central bankers in one place, you get news. >> i hope it's the latter. i hope there is something substantive that comes out of the meetings even if it's a sense as to who people don't want to see as the next fed chairman. a lot of talk back and forth
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between would they previous summers or yellen? people who are going to be there are going to be missing the presence of the officials who had been in the past. >> i agree. remember, there is one group left, the auto group. what about the possibility they -- a great article saying running full tilt, but there is a relationship between interest rates and auto. >> exactly. what's interesting as well, though we have people pointing out that factories, car factories, are operating at highest capacity in years, jpmorgan, just last week, making the point a lot of the manufacturing data is kind of soft. industrial production, for example, headline figure has not been great. it's barely growing at all. goes back to housing question, how much of this is bouncing off the lows as opposed to getting back to the point it's powering, driving the recovery forward. >> when home depot reports, i think one of the things frank has done well at beginning of
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the conference call, trace out house, his word gospel. he was not bullish. >> i remember that. >> he started getting more and he will be just -- he's not jackson hole, but if. >> should he go to jackson hole? >> less than 24 hours away. we'll look forward to depot's numbers. into when we come back, sizzling demand for tesla's model-s. a closer look who is buying the electric car which i've never driven. >> fabulous. >> how the purchasing trend compares with ore luxury brands? as we go to break, dow off 11 point. take a look at early movers. [ male announcer ] come to the golden opportunity sales event to experience the precision handling of the lexus performance vehicles,
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after hitting a fresh nine-week high earlier in the session. gold now under 1370 an ounce. it's had a strong run over the last several sessions. a lot has to do with traders focuses on what's happening in the middle east. seeing fresh inflows into the largest gold exchange-traded funds, that's supportive. and continuing to watch open interest as well. take a look at what's happened over the last week to goal and silver and of course equities. we've seen a lot of investors wanting to be in precious metals. money managers raised bullish bets on gold and see if that continues this week. watching oil. brent crude in particular, it continues to hole tonight its gains of 110 a barrel. concern about unrest in egypt. also seeing in terms of the supply picture from libya with exports at lowest several since 2011. >> thank you. nine years ago today, google went public at 85 a share, since
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then the stock is up more than 900%. only 9 s&p stocks have outperformed google since 2004. that brings us to the squawk on the tweet. google's ipo anniversary. how will they celebrate? tweet us. interested in way stocks outperformed. >> yes. >> priceline, monster beverage, apple, regeneron, netflix, capital oil. >> marsalis, i think one of the two of them will fly to mars and then come back. probably -- maybe they have a tra transponder. >> don't joke. >> with those guys, no. >> at any rate, that's our squawk on the tweet question. let us know what you think. dow's off eight points. what's next on "squawk on the street." >> coming up -- take a ride with us down stock
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♪ let's get jim's 6 in 60, 6 stocks in 60 seconds. >> downgraded to sell at ubs. stocks don't come in. they're expensive. >> foot locker reports later. >> another one, very similar to best buy. citi says buy ahead. i'd like to see the quarter -- >> fox sports one launched. >> i've got to tell you, disney's going down. maybe this is an opportunity to buy disney off of this. >> blackberry, what are they saying? >> more issues about the demand here. people are buying it on spec hoping someone will buy them, i don't know. another negative. >> jeffries starts lumber liquidators. >> the company's so hot. no one wants to get in front of
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it. buy. >> stifel cuts. >> stat oil's on the prowl. they want to buy someone. they did a big equity offering last week, they're not bought or they wouldn't be doing a big equity offer. >> what's on "mad" tonight. >> a company that became public, we had tom pike on, i invited him on for "mad money." this is a company that does the medical tests, when you want a drug in the process. many drug companies are trying to get you drugs. it's the fda's been very bullish on new drugs. let's hear whether that's another -- we've got to have that prop. you mentioned reaga ee regenero >> the other thing we need is for rates to stop climbing. >> they have to. i can't look at tlt. i had off friday. all i did was -- i want to look at the blt when i'm working not the tlt! >> in advance of, say, post-labor day, still in that no
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man's zone, low volume. >> i think we are, yeah. the last week -- i'm working last week between before labor day and thinking, maybe i do it in a swimsuit. that would be something horrible, wouldn't it? >> we'll hold you to that perhaps depending on the ratings. see you tonight, 6:00 and 11:00. welcome back. >> good to be back. simon hobbs here. >> you have to hold it to everybody. guys, in the next hour, find out what warren buffett said to brian moynihan last week. whether now it's the time to double down on housing stocks and the real cost of the hyper hoop whether to be built on the west coast. a look at hour two. farmers presents: fifteen seconds of smart.
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♪ welcome back to "squawk on the street." the debate, who will lead the federal reserve next. >> lagging luxury, saks is out with its quarterly report one day earlier than expected, and it missed expectations. is the consumer tapped out.
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elon musk says the hyperloop will cost $6 billion. someone is crying foul over that estimate. >> meeting between bank of america and oracle of omaha, warren buffett. we start with the markets today which are mixed in early trading after the worst week for the dow this year. last week. as we count down to jackson hole and all of that could mean for central banking, how to position your portfolio? president and cio of castle mark management. and also chief market strategist. welcome to the program. >> i think many of us are really in awe of the moves that we've seen now on market interest rates with the ten-year yield now up 120 basis points in three months. a lot of us are trying to work out what that means for equities. what is the view? >> i think it's a very, very bullish event for equities.
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rates, substantially lower than this, reflective of a very weak xwh economy and uncertainty in global financial markets. the fact we're back towards the correct real interest rate environment suggests to us that we're still on path to having a wonderful cyclical recovery although it's very slow and although it's not typical, this recovery still on pace to ultimately get where we need to be which is going to give confidence back to the financial markets and stocks. >> you see that creates a problem for us, bob. deutsche bank puts it over night, a collision between the markets and central bankers. deutsche bank says this rapid rise of rates is an indication we're beginning to factor in very strong pickups in growth at a time when central banks have told us they're going to keep interest rates low for longer. so something's going to have to give. isn't it, bob, at some point? >> i think something is giving. i think what you're seeing is a
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reflection of the concerns associated with the reduction in the asset purchases. now that doesn't necessarily mean that the central banks are going to raise rates. you're going to see rates rice as there's less buyers. but that's not going to be the central banks raising rates. they're going to keep interest rates low. i mean they're going to keep the federal reserve -- the fed funds rate between 0 and a quarter% for a couple years going out. that doesn't necessarily have an impact on the overall market. you're going to see interest rates rise because -- >> are you sure. >> -- there's fewer buyers. >> are you sure? the -- we're not focused on europe, but they've said you know that promise we gave you to keep rates lower in europe for longer? well, that might not hold true. you start changing personality as the fed you get a similar sort of story. >> if you get larry summers, i don't see it happening. i see the recovery picking up
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traction but i don't see it gaining that kind of traction where the federal reserve has to raise interest rates. if they have to raise interest rates investors will get nervous. it's a great thing to be happening because it's telling you the economy's back on track and stocks are making more money. companies are making more money and stock price is going to rise. >> that's true but at the same time, people have said the move higher in the ten-year partly reflects a larry summers at the helm of the fed, was not what you want to see if they're moving higher on better data, fine. do you think it's fair people expect summers to be more hawkish, expecting him to be leading the central bank at all? >> there's too much time spent thinking about individuals and people and not enough timing looking at how markets have recovered and where the economy in the united states is, inflation, powerful drivers. it's important that of credible fed governor takes ebb, fed chair takes over. but the difference between them
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is just not that critical. we're going to have sufficient liquidity to keep the economy growing in the was that will help stocks and bonds ultimately find their correct level valuation. and for stocks, that's quite a bit higher than where they are today. >> in the meantime, i mean, what is -- how do you position for jackson hole? is it -- i mean the minutes are going to be all that we get this week. jackson hole, if they signal a september taper, i guess that's -- talk me through what people should be aware of now. >> right. bring it on. i'll contend that the whole c concept of tapering is 85% or more valued in the market given the current pullback. absolutely. you announce tapering or some form in the next two, three weeks the market will have maybe one last little pause, and then we're on to what a celebration this is that the economy can out in grow without the effects of a dramatic fed intervention, which has been over five years in
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coming. this is going to be a big celebration, whether it takes place in the fourth quarter or next year, be prepared for it because it's big for stocks. >> is he right, bob? >> i believe that the market is going to take -- see a nice pop but it's not completely factored in as much as i think jerry says it is. i don't believe that that's really been sort of discounted in stock prices. i think you're going to see a little bit of sell-off heading into the fed meeting. i don't care what they say in jackson hole because i know they're going to start to this tapering but the market will get nervous. interest rates will rise up to 3%, maybe 3 and a quarter by the end of the year. that's going to give weak toneso stock prices. the fed has to step out, bernanke is moving off from the federal reserve and so he wants to get this process started, as a short-term investor be careful between now and labor day. if there's any kind of weakness,
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after labor day you're going to see the stock prices rise but see weakness heading into the fed meeting and that's going to be your opportunity to step in. >> it's been a long time coming. guys, it's a fascinating week. thank you. have a great week, guys. >> saks releasing its second quarter results earlier than scheduled reporting a deeper than expected loss after disappointing sales shoes and handbags forced the retailer to cut prices. courtney reagan, good morning. >> good morning. retailers keeping us on our toes this summer. high end department store saks releasing earnings a day early. a loss of ten cents, worse than the expected eight cents light. same-store sales did improve for the 14th straight quarter with a gain of 1.5%. san lifts forecasted 3.9%
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improvement. sales and gross margin negatively impacted by the delayed start by the saks choosing to its annual end of spring clearance sale. the new york city flagship store comps better than the aggregate for the quarter. analysts estimate the flagship makes up 20% of saks' total sale. saks no longer giving guidance after announcing weeks ago it would abchoired by hudson bay company for $2.9 billion in cash. there's a 40-guy go shop period for saks to solicit alternative proposals. the company does not expect a better off. deutsche bank says the fact that $16 is near the low end of what we consider a price, we think it will fuel speculation of a stronger bid emerging in coming weeks. saks did not blame a weak consumer for sales. it sort of took it to its own hands saying we messed up the timing of the sales. >> great point.
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they're not looking -- did you hear weather? >> i did not. i did not see weather. they're not doing an analyst call either, because saks, we know, is going to be acquired unless something big changes by hudson bay. no weather, no consumer blaming saying these is the facts, this is what happened, we delayed the sale and it hurt us in the end. >> markets have lost 2% in just the last couple of days. home builders in particular, though, gaining ground. index has risen 5%. we'll try to figure out what happens behind that move and which home builders might be best for your money, coming up. the start-up cooking up big buzz. millions of dollars, and your dinner at the same time. ceo will join us live. weekdays are for rising to the challenge. they're the days to take care of business. when possibilities become reality. with centurylink as your trusted partner, our visionary cloud infrastructure
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violence is continuing in egypt this week with more than 800 dead. >> good morning. it's been a tough morning here in egypt. violence again this time in the sinai peninsula after a convoy, two mini buses, to be specific, filled with at least 28 police conscripts was ambushed, and then militant gunmen asked them to step down, they were executed with machine guns. that come on the back of violence just overnight after a prison transporter ensued in
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so type of chaos. prison break attempt and that led to security forces killing 36 of the supporters of the ousted president mohamed morsi. again, a violent 12 hours in this country. and raising the stakes in the conversation about u.s. financial assistance to the egyptian military. the national security council spokeswoman making it clear that all forms of assistance are under review. that is going to be weakened by the fact that you have the oil-rich gulf countries like saudi arabia in a package pledging $12 billion, that's going to reduce the lieverage that the united states has. seen your eu official making it clear in discussions to happen on wednesday, an arms embargo could be on the table for the egyptian government. a lot of developments when it comes to egyptian stock market. just slightly trading to the
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downside in the developments today down a tenth of one percent, following losses yesterday of 3.9%. keep in mind, this is still an emerging market, still some level of foreign investor interest. but right now a lot are taking a wait and see attitude. in terms of the suez canal, all operating normally, and no reports of disruption. >> good to note. crude down a nickel right now. thank you for that, yousef gamal el-din. dominic. >> watching shares of zillow, the real estate website has announced a secondary stock off off offering, 2. 5 billion sold. in addition pre-ipo owners will sell 2.5 million shares. separately, zillow's buying new york city focused website street easy for $50 million, so for those who live in the tri-state area looking to get more information on real estate, that
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could be a key here, zillow trying to get more of a foothold in new york city. so again, watch those zillow shares, trading down on the heels of the secondary stock offering. kelly, back over to you. stick with the housing theme now. home builder stocks bucking the sell-off on an increasing confidence data. pulte getting upgrade from wells fargo. a home builder analyst and dan oppenheim is here with us as well, analyst with credit suisse. good morning. >> good morning. >> jack, want to start with you. here's "usa today" wallets hit by home prices. talked about this last hour. are they wrong affordability's starting to wane. >> it's waning off of multigenerational highs in affordability. combination of low prices and rates. we think it's 30% cheaper to own a home than rent on a monthly basis. rising rates chipping into that.
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we've got a ways to go. that band is 15% plus or minus in a normal period. still a ways to go. >> what is driving rebound we've seen in the last couple of sessions with a lot of the home builders as the broader market's weakening and as the ten-year's been backing up. >> i think we are seeing some people thinking through some of the rubble. a major sell-off since may made in the move in the continue-year and stocks aren't expensive. people's numbers have been reset. part of the challenge is in the second quarter results builders misses the order number on the consensus numbers. now they're not expensive and the nhb number showing strong growth, trajectory on new home sales permits and start data. recovery's in play. i think it's a question of slow and how steep we go. >> before we bring dan in, the great math you've been doing, look back an average income of
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$50,000, what it would have bought you then, what it buys you now. you've got to get to 6 or 7% mortgage rates before you get rid of the spread. my question would be, the advantage of buying now, has the psychology changed due to unemployment situation, due to the fact that you had a brutal housing crash? for any given income, people are less willing at the margin to buy property? >> you know, i still think people would rather own than rent and rather live in a house than apartment. >> you're my generation might. younger people, unemployment is higher may not. >> the challenge is kids coming out of school, we've written on this, kids have more debt at higher coupon than any generation. student debts number two behind mortgage debt. with government caps on subsidies you're coming out of school 100,000 in debt, it's 8%, 9% money. it's more you know private college tuitions up 75% in
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continue years. these are natural headwinds that have to affect sentiment. we've been so low, we're running 500,000 new home sales a year, our peak was 1.3 million. we're onwhere we were in prior peaks but the headwind of mortgage finance availability with that carry of student debt will hurt the first-time home buyer. we've seen public builders move up. most that missed order numbers were entry level builders. trade-up builders did better on the order side. entry level, yeah, i think you're going to see a less robust pool in coming years than our generation. >> dan, just curious as well, talk about, first what we saw over the last couple of sessions, who in the home builder group do you like here? >> i think we like some of the ones where there's less exposure to the move in rates. wci communities, they had 44% of the buyers last year paying cash for homes, or toll brothers,
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standard pacific, so key thing is higher price point, less of the first-time buyer exposure. >> especially when we talk about valuation, there's a lot of focus on this group as being expensive and reflecting optimism. are you worried about evaluation or who is less exposed here to what happens happened with the ten-year? >> i think the stocks are at a pullback to this point. not concerned about the valuation but there is moan tum in the group. the stocks have done well as there's been short covering after positive data on the group in terms of the home builder confidence after order trends were weaker there. have the benefit of strong data plus the short covering which helped stocks. we think that has we go through the fall season when we get to a typical stronger time of year for stocks, we'll see more interest in people looking ahead to the spring season which should be strong ones again. >> were you surprised by that --
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i was shocked despite higher rates and a softening, labor in buyer trends, and the move in consumer confidence, home builders see the world three rose-colored glasses in. >> yes. in terms of that data, in terms of it showing better traffic and better sales activity, despite the move in rates, that's -- we're seeing right now on the ground is a slight pause which we expect when rates go up by 100 basis points over a short time period, it has to have some impact. it's a question of how long that pause lasts. we think it will be a modest pause but that it will be back in terms of strong traffic in the fall and then next spring. but, yes, we were surprised to see the data points indicate the trends were strengthening in the face of the higher rates. >> in a word, top picks in the sector? >> tmhc, toll brothers. i agree with dan, higher priced point, trade-up buyer and have
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to be land heavy. land prices are going up. you have to have land inventory. >> twice as quickly, that's going to have an impact as well. thank you for your thoughts as we continue to keep an eye on the builders. when we come back, the brooklyn startup that could make your trips to the grocery store to the past. blue apron cooking up millions in funding. the ceo will join us next. many investors buying tesla stock. who is buying the cars? we'll tell you who, how much they make and how old they are in a moment. i hav
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blue apron, a company that delivers recipe and ingredients need for each meal. delivering 100,000 meals a month to 80% of the country and secured a round of funding of $5 million last week. matt salsburg the found somewhere ceo of blue apron and joins us here at post nine. congratulations on the series. 100,000 meals, that's a lot. >> yeah. we're proud of it. we're only a year old. >> based here in the northeast. but expanding to the west coast.
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80% of the country seems like a lot of real estate to deliver. how much of a challenge is that. >> the logistics are the most difficult part of our business. but you know we do it. that's what we do. we're fundamentally a food business and operations business. >> walk me through what i get. there's a subscription required, right. >> subscription but it's flexible. and there's no commitment whatsoever. you can cancel anytime. the way the business works every week we send you a menu. and you can choose to to receive if you want. if you were trafing you can skip. we can send you the ingredients. >> you don't overbuy. paying a premium? >> it's cheaper than you get on your own at grocery store. we have a team of food sourcing experts in house out navigating markets for seasonably available fresh food and since we buy in bulk we can negotiate with the food suppliers in away you can't at the grocery store. >> pricing? >> so it's $9.99 per person per
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meal and that includes everything, including delivery, tax, all of the recipes and food. >> i think it's a great idea. i'm look at what you've brought in here. a bag of kale, tomato, onion, leek. some codfish. so there's fish that you add. >> yeah. >> 9.99, that seems like a lot of money to some. >> if you went out and went to the supermarket and tried to re-create meals that we create -- this is just an example of some things in the box, you know you cannot do it on your own for the prices that are required. we include high-end meats, high-end fish, specially fresh pastas from supplier whose make it fresh for us. quite a good deal. >> a lot of competitors in your space. i think one of your former business partners is competing with you. the big news in retail now that is amazon is going into the food space. how do you -- how do you rank their viability, freshness?
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i mean are they in direct competition to you, do you think. >> amazon fresh, probably not. the retail business of food is the biggest retail opportunity out there today that has no e-commerce penetration in the grand scheme of things. if you look at it, all of us are competing against white space. the traditional way that people get their foods which are grocery stores, takeout, et cetera. and so there's so much opportunity there, we don't think it's competition. not to mention the fact it's a different experience than what amazon fresh has. people who go to amazon fresh are looking for unlimited choice, get whatever you want like a grocery store experience. with us there's an element of content enable flood it. we're picking great recipes and designing them and sourcing specialty items and intelligently designing your meal for you so you can eat better and fresher for less money. >> what's the most popular recipe? >> actually, we can't say what the most popular recipe is because every week we create new recipes. so we don't have like -- you don't go to the website and
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order anything you want on a repeat basis. we have a test kitchen team and the chef creates them every week from scratch, six new ones. >> how are they delivered? it's not u.p.s. or fedex. >> we use different delivery companies. we don't have our own fleet of trucks which amazon fresh might have, which is part of the reason the cost structure is better. we deliver in boxes like this with insulation, biodegradable insulation made from recyclable materials. and we gel pack. so when you receive it home -- >> how long will i have to wait for it to arrive. >> we package with gel packs, it's designed to stay cole and fresh on your stoop until you get home. >> you're in a competitive space, no question. interesting model. thank you. thank you for coming in. >> thanks for having me. blue apron. >> an interesting meeting of the minds.
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one hour into trading. 7:30 on the west coast. 10:30 wall street. zillow making movings monday. the company buying street easy for $50 million in cash. zillow said it reached a record 61 million unique users in july. that's a 66% increase
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year-over-year. linked in going for a younger crowd. high school students, the company lowering its age limit to 14 years old. launching university pages to help students look into different colleges. visit the pages to see where alumni are working, ask questions of the school, students and staff. steve jobs pioneered new technology but couldn't conquer the box office. "jobs," terrible showing earnings under $7 million, finishing seventh. "the butler" top spot making $25 million. president obama in washington after a vacation at martha's vineyard. he's got his work cut out for him. egypt, regulation and funding the government. john harwood joins us with the latest. what's top priority? >> top priority for the president that is meeting with financial regular laters. he returned from martha's vineyard to a vacation buffeted
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by the conflict in egypt and other things that are pressing on a national security basis, more revelations about the nsa as well. he's got a very economic, heavy agenda as he comes to back to washington. congress is still out. he meets with the whole array across the government of regulators about trying to keep pace with implementation of dodd/frank, only 40% of the regulations are done. volcker rule is most important, trying to get that done by the end of the year. the president has also got speeches in upstate new york to press his agenda for a middle out economy. that is not likely to go too far with republicans but he's trying to soften up the ground for the fiscal debates this fall. the president has the selection of ben bernanke's successor on his plate now. aides say that won't come until the fall. larry summers is a leading contender, so is janet yellen and there may be dark horses as
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well. the president is focused on economic issues to the ex ten he's not distracted by egypt and he's hoping that congress will notice, as they're back home at their town meetings, kelly. >> john, a lot of attention around the world gathered by the fact we are reporting as a network larry summers has i think 2 out of 3 chance of getting a job. can you help us with that? >> reporter: i don't think we should apply too much precision to that 2 out of 3. that was my reporting based on an assessment from a -- someone close to the obama team who is well informed about the situation. but the people who have core knowledge about what the president's going to do are very small number of people. and most people on the outside, including my source, are reading tea leaves, talking to friends, trying to figure out what's going on and they can draw conclusions but there's no guarantee that reflects what the president's thinking. >> all right. john harwood with the latest on the fed race.
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just as important a priority for the president. interesting meeting of the minds, warren buffett sitting down with bank of america's ceo brian moynihan in omaha. kayla tausche has details. >> reporter: major shareholders meet with the company's ceo but when that shareholder's warren buffett and ceo is brian moynihan, people start talking. the dinner i'm told took place august 6th in omaha at happy hollow club where warren buffett is a member. people briefed on the dinner say buffett treated on his club account and thanked moynihan for doubling his money in the last two year. the profit buffett spoke of $5.27 billion. not bad for putting $5 billion into b of a august 2011. $300 million annual dividend and gets to buy several b of a shares over the ten years and half of what they're trading for. unclear what the two discussed a possible buffett exit.
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it's advantageous to the companies so they can stop paying that hefty dividend for b of a, of course, $300 million annually. buffett did praise moynihan's turnaround efforts and expressed bullishness in the banking sector, specifically deposit-heavy institutions bike bank of america. buffett bulking up bank investments in wells fargo and u.s. bank. interesting to see what form he says b of a shareholder, what everyone is talking about, how buffett is thinking about potentially monetizing that stake. >> i heard the takeaway line where moynihan thanks him for dinner and warren buffett thanked him for doubling his stake. >> people who were not at the dinner that anecdote is folk lure. buffett did thank moynihan for the profit, but i am also told there was no question over who would pay for the check because buffett was treating at a club where he was a member and everything's automatically charged to the account.
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who knows for sure, but of course a good and tidy profit of $5.27 billion so far for buffett. >> good folk lore, thank you. a massive wildfire in idaho is spreading, growing to more than 126,000 acres. threatening more than 10,000 homes in sun valley area. miguel almaguer joins us with more in haley, idaho. good morning. >> reporter: good morning. yeah, this fire's a massive blaze. it's over 100,000 acres, it's aggressive. it's aggressively moving through so many of the area because it's so bone dry here. some 5,000 homes in this area are threatened by the blaze. unbelievably despite the size of the fire, which is bigger than the city of denver, not only one home has been destroyed. so many homes have been untouched by this blaze. the fire's about a mile away from three different communities. it's a fast moving fire because it's fueling -- burning through bone dry brush. the blaze is a tricky one for firefighters. some 1200 firefighters are on
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the ground here. adding more resources every day. here at this command post, they are coming in and out of the area 24 hours a day, doing what they can to beat back the flames. losing this firefight, it's been burning for 12 day, sparked by lightning. today moving towards more properties. >> miguel almaguer, thanks very much. elon musk saying this hyperloop would cost $6 billion but of course some experts are saying, please, that's just a pipe dream. just how much would this new mode of transportation really cost? the answer when we come back. ♪
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ask your doctor and visit for safety information and a free one-month trial. welcome back. demand for the tesla model s has been super strong. the question, who exactly is buying this car? phil lebeau joins us in chicago
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with details on this one. >> we get this question all the time, in fact, it's probably every week that i have somebody say to me, who is buying the tesla model s? we worked the folks at edmonds who reviewed vehicle registration data. the profile in terms of over the last year, from june of 2012 through june of 2013 the typical tesla model s buying, in terms of the sweet spot for the age category, 35 to 54. 57% of the buyers falling within that age group. male, 83%. and 56.5% of the tesla model s buyers have annual income of greater than $150,000. the tesla model s has a younger, richer profile in terms of buyers compared to high-end luxury cars. 77.3% of the model s buyers make at least $100,000. that's higher than competing bmw and mercedes models. what does it resemble in terms of high-end luxury cars.
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the porsche, model s sales are similar in terms of percentages when you look at types of buyers, average income, male versus female. very similar to the porscha. upper end luxury sales up 16.7% this year, double what the averages of 8.5% increase. because there are so many comparisons done between the model s and the chevy volt and the nissan leap, we thought we'd take a look at how many buyers, percentage wise, have income greater than 150,000. no surprise freedom nance of buyers going to the model sp the volt and leaf over 30% for the shchevy volt. shares of tesla, what they've done, trade in the range of 144 and 154, the thing to keep in mind is that for tesla, they're increasing production and they are also increasing the price of the model s because the demand is there. this is not a case where like
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the volt and the leaf they had to cut prices. the prices are staying even increasing from the model s. back to you. >> you know what's interesting? that's what i would expect, right? i would think that people buying this tesla are obviously people who can afford it. i guess the question becomes, does that limit tesla's market? >> good question. we'll find out with the model x. that goes down market in terms of the price point and type of person that tesla is trying to win over. keep in mind, there was an entry-level model s that was going to start you know in the upper 50s, maybe around 60,000. they took that off the market because they were not seeing enough demand there. so clearly that high-end luxury buyer was there, and is still there. that middle market, upper middle market that was soft. and that's why they got rid of that. we'll see how they do with the model x in the next year and a half. >> fascinating numbers. thank you so much. s. turning to another elon musk
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pet project the hyperloop. critics claiming the hoop of the hyperloop between san francisco and los angeles would be greater than the $6 billion claimed by the tesla ceo. "new york times" columnist nick builten wrote about the project and its hidden cost. good to have you. good morning. >> thank you. >> you talked to a lot of economyists, physicists. this $6 billion price tag, that is impossible. >> people are saying it is. the bay ridge cost $6.3 million. the peep i spoke to said it would $100 billion for the hyperloop. >> $100 million, part involving not just infrastructure of the transportation system itself, but the land. i mean, you -- >> the landmass. >> 1100 pieces of land to get access to. >> it's 7 million -- $7 billion just for the landmass. so a lot of people are saying how can the hyperloop actually cost $6 billion when the landmass costs $7 billion?
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>> nick, what's interesting, though, people are able to put an estimate to this. i figured we were at the point of it being vague and pie in the sky you couldn't quantify that. >> experts are saying that elon musk is being disingenuous with the pricing and takes attacks at california high speed rail which costs $68 billion saying it's overpriced. no one's going to argue with na. to say he could build something faster, betterer and so on for $6 billion i don't think is fair. one of the exexperts said the pipeline for oil will cost $5 billion a mile. how does he expect to bill this thing that's 400 miles long that costs $6 billion? >> more than that, nick, i'm not an engineer, i'm the son of an engineer the idea you could have bullets with people in them, that are propelled through a
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translucent pipe at the speed 30% faster than a cruising 747 boeing to me seems incredible you could contain those forces anywhere in the first place and shoot it above people's heads at that speed and velocity. it's almost incredible, isn't it. >> yeah. one thing -- you have a group of critics saying it's impossible, based on the pricing and so on, and even some of the physics. and what you have are supporters that say its elon musk, he built space-x, tesla. why is he saying he can do is for $6 billion when in reality there's not a single economist on earth agreeing with him as far as the price goes. >> what's your take? you point out past successes, people have sole him short, at their own expense. are people underestimating him still? >> if steve jobs said he wanted to build a car he would have built the best car but he never
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did. it's once thing to say you're going to do something and completely different when you do it. if he wanted to stop space-x and tesla and built the tranhe would be able to do. pi done think he could do for $6 billion. but he done want to do it. when he released the white paper, the design of the project, i think a lot of it, this thing was picked up by every press outlet from here to kingdom come. a lot of it sounds like a pr play. >> we talk about tesla all the time. we often mention it's a bigger phenomenon out west especially the valley than here on the east coast. is there a lot of goodwill towards musk in getting this thing done? >> yeah, there is. it's amazing, comments on the column i wrote about this got hundreds of comments and people saying, look this is elon musk, he did this and that, no one's going to disagree. a question that people have especially in the media is, it doesn't seem like a pr play. and especially when you look at
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numbers and start dissecting how it could be close to possible to do there is. one expert i spoke to said, how does he expect to bill this thing for $6 billion? it's 400 miles long where you have the bay bridge, which is .3 of a mile long which cost $6.4 billion. >> the most important question, nick, whether or not you, nick bilton willing to get on the maiden voyage. >> not unless they had a bathroom and had clothes that would stay on at 800 miles an hour. >> thanks four your time. good to talk to you. >> yahoo! ceo marissa mayer made headlines after posing upside down for a full page spread in vogue magazine. what does it take to get one of the top ceos in tech to sit down for a profile and photo shoot? we'll ask the writer of the piece in a few minutes.
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let's get to the cme group
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in chicago, rick santelli with the santelli exchange. >> emerging markets is a big topic today. everybody including myself talking about how the rupee against the dollar, off 11 or 12% this year, the currency at historic low versus the greenback and if you look at the sun sector stock markets had fairly large drops. what's going on? over the weekend trying to read as much as i could i was drawn to the last quarterly report outlast week. comes out of recorders and the last time was basically april, and from the european vantage point, the survey was very revealing, the survey about the emerging markets. basically a couple of highlights, when they talked about corporate deterioration, liquidity for some of the securities markets, 66% were worried versus 30% in april. if we look at re-fi risk, 29%
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were a bit more concerned, considering it was 8% last time. what is there to be learned here? when we think of quantitative easing, we always think about an interaction between japan, china, the u.s., europe, but we forget about this giant river of liquidity that flooded the emerging markets when quantitative easing was more envogue before in determined the benefits, economies of scale were working in the other direction and of course this kwi liquidity creates a condition many can get funding where more would be available. sounds like a lot of companies in europe and the u.s. economy as well, and that's the point of this. the lessons to be learned aren't to look at the emerging markets and say, wow, this sector is bad or is this sector is good. the real issue is what's making it bad or good and how you use it for the investing more domestically. i think there is a lot of companies. look at the big news. look at tesla.
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forget whether you like the car. forget whether you think battery time has come or gone. look at how many cars they sell and look at the capitalization and stocks and look further, i love when phil is looking at the characteristics and one i look at is who trades these shares? young people, more from the standpoint of i am a natural guy, i want the earth to be treated well. i get all of that. that's kind of the same thing with emerging markets, that the litmus test isn't necessarily the balance sheet. we need to get it back there. before we can, they'll have to deal with all the issues we send or in this case that we are taking away. these current account deficits are going to get dicey to finance and that's the issue we really should be talking about. back to you. >> thanks a lot, rick. >> india getting a lot of attention speaking of that. it is tweet time. nine years ago today tech giant
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. let's get to squawk on the tweet. nine years ago today google went public at $85 a share. since then the stock is up more than 900%. only 9 smp names out performed google since 2004. brings us to squawk on the tweet, the ipo anniversary. how will sergei and larry celebrate? dee writes maybe they will go out and do evil, a play on the corporate motto. a secret plan to buy apple? that would be big news. search for a way to build the hyperloop before elan musk does and emily writes by posing for vogue's october cover. as we know, that's been taken. >> the cover, it is not the cover, marissa mayer is in the september issue of vogue. >> upside down. >> upside down on a chair as you point out on friday. >> a white plastic chair. >> that was a half eye roll. >> i was conflicted. i didn't know whether i liked
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her more for doing it or appalled. i have no idea. >> i am not sure what the stock has done today. they did appoint their interim chairman that had been interim chairman for several months as the permanent chair so a little more stability in the management structure obviously. >> i think alba ba is talking to the hong kong exchanges about ipo as well. >> and jacob weisberg who interviewed for the profile will join us in a couple minutes. >> in the meantime we continue to watch the dow very flat directionally overall even though some of the components are up and down, we do continue to see a split i think on housing names and retail names. lennar is a big loser but earlier penny and others that were going to report are on the upside. >> do you know that that means? it is a stock picker's market. >> have you heard about correlation breaking down? >> no. there is one more headline about this. the rest of the market today. >> and the journal finally gets around to it. >> leads with it. i am worried. >> because you think it is -- >> could be a sign we'll see
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correlation go right back up. >> the hindenburg signal when the correlations go to extremes. >> we did trigger five hindenburgs in the last couple weeks and that was right around the time markets were topping. >> volume. >> major caveat. >> we'll talk europe in a few moments. >> problems in italy. problems in greece. >> all right. that's nothing new either. if you're joining us here is what you missed earlier on. >> welcome to "squawk on the street." sheer what's happened so far. >> how do you ultimately judge whether hiring a child of a government official breaks the law? >> we're really talking about issue that is get to the guts of fcpa analysis. >> my outlook for '141 positive. think about 1995. the fed tightened incredibly aggressively in '94 and the stock market went up 37% in '95. once you get past this turning point the outlook is pretty
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good. we just have to get through it. >> too many of them just look horrible. i mean, i have to tell you, we're in a very key focal moment here. the industrials hang by a thread. real estate investment trust terrible. the only hanging in, really that was good, the gold stocks. you don't want them as leadership. >> no. the minors, they hated miners all year long. >> it is all of the wilderness. >> when you look at the builders and they have said they're not being aggressive when it comes to building out because they want to make sure prices don't collapse. are they shooting themselves in the foot here? >> recovery still in play. i think it is just a question of slope and how steep we go. >> a little surprised to the data points indicate the trend for actually strengthening in the face of the higher rates.
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>> we're live at post nine of the new york stock exchange on a day where the dow is not doing a whole lot directionally and a lot of movers internally. take a look at intel. a nice bounce today, piper upgrades to neutral saying that pcs are not going away any time soon. they expect a modest refresh in the corporate pc buying cycle beginning in april of 2014. dollar general rallying, jpmorgan ups the discount retailer to overweight saying they're set up to deliver sustainable earnings growth. >> to the road map for this hour. it is a big week for fed watchers and the jackson hole conference kicks off and there is definitely going to be active debate over the stimulus and the next fed chairman. we'll take a look at the headlines and tell you what to expect. also, yahoo! ceo marissa mayer making headlines for up close in the latest issue of vogue.
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we'll talk about how he got her to sit down for a full page spread. has it been nine years already? google sit brighting the anniversary of the ipo and taking a look at where the company is going next. investors looking ahead it on wednesday when minutes from the fed's july meeting will be released giving clues on the plans for tapering. this week is the fed's annual policy retreat in jackson hole, wyoming. here so show you the insight, the chief economist at wells fargo. good morning. >> good morning. >> prosecute sylvia, first you, are the fed minutes going to be a big deal and we are by the way getting closer to september. >> i think it is september meeting that is really key. september 18th we have got perhaps a press conference in which chairman bernanke will give us some clarity as a follow-up to those minutes and i think this way these minutes are
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probably on the side. as far as kansas city goes, there are a couple of interesting sessions that will be interesting to follow up some of the discussions from those sessions but i don't think anything right now is going to impact monetary policy perceptions of a tapering of a modest size. >> you know, janet yellen will probably be one of the most high profile central bankers at the conference not just with the speculation of her taking over but a lot of the high profile central bankers around the world are sitting this out. do you expect people to read between the lines of what she says, what she doesn't say, body language, is it going to be that important? >> any time you get a number of central bankers and a number of financial journalists in the same place, we are going to hear a lot of what all of them think. frankly, i don't think we'll learn a whole lot from the jackson hole symposium this year. i think the minutes will be more interesting. i think the fed is really only going to give broad outlines of
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how it expects to implement the tapering. frankly, i don't think they will taper in september. i think it is too early. the whole concept of tapering is predicated on the idea that we'll have stronger growth in the second half of the year and frankly we just won't have enough information. we won't even see q3 gdp until the end of october, and that's when i think it is more likely for them to take the tapering action although they will have to schedule a press conference for the after the october fomc meeting. >> you sound like bullar d saying we don't have enough date a what is it going to be like and does the fed telegraph what we thought things over and we're not going to move in september after all? >> well, they haven't signaled -- they have never signaled we would see tapering in september. the message consistently is that is data dependent. we know when the fed expects it to end. that's the middle of 2014. and if the fed were to make the
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decision in late october and begin to reduce the size of the purchases by 10 billion per month beginning in november, they would be done by the middle of 2014. i don't think they want to rush this. >> john, at the same time the fact that we have seen this move high inner the ten year yield would suggest that people see better growth out there. if the data starts to come in weak, do you think we can hold at these levels? >> oh, sure. just building upon ward's comment, it is interesting that when the fed talks about being data dependent, the economic numbers on their own really doesn't suggest that they should be tapering. inflation is still very modest, growth probably the second half of the year, tending towards more 2%, but the unemployment rate is still over 7. it is interesting the rhetoric we hear from the if he had in terms of chairman bernanke and others is that while tapering may begin and start as early as september, but the data dependent numbers don't really support that.
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i would suspect once again if the fed were to begin and the economy were to weaken or early next year, the tapering would be pulled back a little bit. >> just in a word is he right on another point about adding the press conference to every fed meeting simply to give them the flexibility and the october meeting being a key example of that? >> i think he got it right. it is more the tradition of other central banks that you do have a press conference after each one of these meetings because i think it is so important in between meetings that as the data develops, the market wants better guidance. >> interesting. >> kelly will not rest until there is a presser after every meeting. >> we don't see enough of them already. >> i know. i know. >> john, ward, thank you for your time this morning. >> thank you. >> meantime egyptian judiciary officials say former president haas any mubarak could be freed this week amid continuing violence that left 800 dead.
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g youssef is live with the latest. >> the roller coaster just keeps going if you want to call it that. the defense lawyer of former president hosni mubarak saying the release of his client may be imminent, within 48 hours is what he is saying, that is fareed deep, and he explains a bunch of administrative procedures need to be dealt with and he is free to go. it is not that easy. as much as the former president was tried and sentenced for not protecting protesters during the ousting in 2011, he was sentenced to life in prison, that is pending a retrial. in the space between we understand from judicial officials he could be freed, but given what's happening on the ground in egypt we spoke about the violence earlier and the cyanide that killed 25 security
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officers and the violence that yesterday killed 36 supporters of mohamed morsi, that would inflame an existing plil call impasse that probably the military can ill afford. the experts i am talking to don't think it will happen. >> youssef, the key issue really seems to be u.s. military aid to egypt. no movements on that front over the past week or so. what happens now? >> reporter: okay. that conversation will continue. it is $1.3 billion in financial assistance to the egyptian military specifically, $250 million go in the form of economic assistance. we understand from the national security council spokeswoman all fornlz of assistance are under review. now comments again from saudi arab arabia, the foreign minister, this just in, saying any nation threatening egypt or trying to stop assistance, that saudi arabia would effectively step in
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and will provide, quote, a helping hand to egypt and that makes it much more complicated because even if you were to cut off assistance, be it eu or the united states or anybody else, you have the oil rich gulf with saudi arabia ready to step? >> you say that would seem to give the u.s. flexibility if there was a sense the aid pulled back in order to make a point would then be supported by perhaps saudi arabia coming in. i know we have to let you go. we'll have more from youssef as we follow the latest. >> yahoo! ceo marissa mayer making headlines after the full page spread in vogue magazine. what does it take to get one of the top ceos to do that kind of interview? we'll talk to the man that wrote the story. rick santelli is watching the markets today. >> there is a lot of veterans on this trading floor and watching interest rates for many presidential administrations. they have seen a lot. we're going to talk about why
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they think the sovereigns is going up. is it a good story? is it a bad story? is it a combination of many stories? if you want to know the story, tune in in about 10 minutes. eare to make their money do more. (ann) to help me plan my next move, i take scottrade's free, in-branch seminars... plus, their live webinars. i use daily market commentary to improve my strategy. and my local scottrade office guides my learning every step of the way. because they know i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade... ranked "highest in customer loyalty for brokerage and investment companies."
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even mark zuckerberg's page can be vulnerable. a security expert hacked in frustrated the company ignored
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warnings about a security glitch and julia has more from los angeles. >> he sure got his attention. i just got off the phone with him and he explained what happened. when facebook ignored his warnings, he hacked into mark zuckerberg's page to post on his wall writing sorry for breaking your privacy, no other choice to make after all the reports i sent to facebook. he documented the hacking process in a video he posted on his blog starting with the warnings he gave facebook about the hack. he was looking to be rewarded as part of facebook's bug bounty program which pays security researchers at least $500 for each critical bug they report. facebook security wrote back saying, quote, i am sorry, this is not a bug. it turned out to be a bug and his page has been restored and the account was temporarily disabled, and he was not compensated because posting to the wall broke facebook's rules and he tells us the page has
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been restored and facebook told him it hopes he will continue to work with the company to find vulnerabilities. facebook shares are untouched by the news moving higher on a stock upgrade by ever core partners and they upgraded the stock to $45. although the steps he took were unusual, the process of flagging a bug is not. facebook and zuckerberg are lucky that he wasn't looking -- was just looking for compensation and not out to do any harm to the company. >> well, for being a good samaritan he has a funny way of showing it. that's for sure. thank you so much. while jennifer lawrence may be on the cover of the september issue of vogue, the talk of the town has been the article profiling marissa mayer. it hits news stands nationwide tomorrow and the man that interviewed the ceo is jacob weisberg, chairman and editor in chief of slate and a vogue contributor. jacob joins us on the "newsline." great to talk to you. >> caller: good morning.
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>> we talked about this on friday. if you wanted to create buzz, have you done it. i am most curious, can you walk me through the early negotiations what it was like getting her to agree to this and what expectations she had regarding photos, placement, the length of the story, and so on? >> i think vogue of the cultivating her for a long time, just over a year ago. for my part it was a matter of persuading vogue i wanted to do a substantive story about the business and less about her personal life, about the new baby, that's all in there, but meant to be a substantive piece and i think that's why they were willing to make her available. >> it is a highly entertaining read and anybody that knows her or meets her sort of sees herself in the story when she brings up terms like x axis and y axis in the midst of general
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conversations. you're not kidding when you say she is a geek. >> it is one of the things that surprised me a little bit and i thought really interesting about her. she really thinks like an engineer and i think that explains a lot of the success she had the yahoo! because it is really still an engineering culture and to relate to the technology and to think about product and technology terms, a real advantage over the previous ceos that yahoo! has churned through. >> at the same time i am wondering about her relationship with employees and how much she is respected and how much she is like there had and whether this photo shoot which as many credit igs pointed out shows her lounging in expensive clothes in the backseat of her home where she banned employees from working from home. there are a lot of things you would not like about this if you felt she was out of touch. is she out of touch. >> when you turn a company
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around the first thing you have to do is get people's attention internally and ex ternltly to signal the change and i would say the photograph that goes with the piece is terrific. it is an attention getter. it got the attention and people are reading about her and talking about substance of what she is doing. i think she also likes fashion and likes clothes and i think it was fun for her to do. internally, i think the facts speak for themselves. yahoo! is shipping so much more product of every kind, mobile apps, new designs for pages, new technology, so much more than it has done and the use of the products is vastly improved and i think that's what employers care about more than anything else is having yahoo! be a place that matters again in the technology world. >> what do you say to the skeptics that argue all she has done in their view is make a series of expensive acquisitions. is riding the tide of this ipo
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and other asian assets and nothing but partake in some of this high profile p.r.? >> i think in terms of the value of the stock that is probably right. it has gone up primarily reflecting the value, the increased value of the alba ba stake and yahoo! japan. i think they are case is it will take time to turn things around there. they have to focus on the kmer and focus on building product? a way they haven't and you don't get the financial benefit of doing that within three months or six months or a year. it is a multi-year project. i think she is making a good case they're executing well on the first part of it an whether the value will follow. that remains to be seen. >> jacob, everyone should read the piece if you haven't already. appreciate you coming to the phone today. >> thanks so much. >> jacob weisberg. what did you think of the piece? did you like it?
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>> i will have to go back. i looked through t it looks interesting. to see initially the reaction to it. i think as one said she appears to be a nerdy career obsessed barbie when is truly the life i always imagined for my dolls. so, anyway, certainly one people will be talking about all week. also this. happy anniversary google, nine years ago today google went public trading at $85 a share. you can see the huge run since the ipo, up 900% and up next a closer look at how far google has come and where it goes from here. back in two. she loves a lot of the same things you do. it's what you love about her. but your erectile dysfunction - that could be a question of blood flow.
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it is a big milestone for google. it was on this day nine years ago they started trading as a public company. $85 a share was the price. if you bought then you made a profit, the shares up over 900%. where does it go from here?
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steven levy is the author and a senior writer for wired. good to have you back. good morning. >> good to be back. thank you. >> do you remember where you were when they went public. >> i remember clearly. i was working for "newsweek" then and i had a big disagreement with the wall street editor. i thought it would be a good buy and he said he really didn't see the long-term business there, and since he has retracted his point of view there. it was a very tumultuous ipo and because google wound up taking on wall street and with a very controversial option system there and wall street actually found in its interest to sort of drive down google's price, and create some doubts about what it would be worth because of the way the auction worked. you could do better by getting other people not to bid there. the people at google felt cashiered a little even though it was ultimately a pretty
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successful ipo. probably got more than they would have gotten had they done a traditional ipo and they felt they would have got more. i remember interviewing eric schmidt about five or six months after the ipo and we were talking in a room. he had a poster commemorating the ipo and someone put a post it note on there and it said the shares went on of at 85 and successful, blah, blah, blah, and said should have been 135. it was interesting. that stood up there for six months. probably longer. >> we had a big discussion about the mechanics of the dutch auction earlier this morning which is fascinating. they went through a long period where people thought they were spending like sailors and sg&a was always the first thing you look at and i wonder if now you argue they had a bigger lead on the competitors than they have ever had. >> i would say so. there is still doubts about, and i think it is most recently hit a high a few months ago, and
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went down a little bit, still really soaring, but people are always worried about what happens when everything is totally moved to mobile there. mobile is hard toer sell advertising on there. google is ahead of everyone else in mobile and everyone is working hard to crack it, and google has a lot of good ideas how to crack it and one of them is to put everything on the glasses there, and that you can't avoid when it is right in your eyes. >> i am just curious as you were describing the ipo i couldn't help but think about facebook, at the time similarly there were questions about whether or not the up can was over valued at, fundamentally profitable, and then whether the ipo was priced too high for a while. did you think through -- to you see parallels as well between facebook and google's experience going public? >> there is a difference there because with facebook, facebook has a good business, but it has not come up with the perpetual motion machine that google has for its advertising, and in
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retrospect if you poured over the analytic when is both companies went public, you would see the google really did something that was almost unprecedented. they really figured out how to make mountains of money from the internet in a way where users would really actively participate and really like to participate. google said the ads should be worth as much as the organic search results and results prove that users respond to it that way. facebook still has to figure out how to make its stuff in the middle of the page, the ads that it puts in the stream as valuable as the stories you read about your friends, and it is working hard to do that and hasn't crossed the divide yesterday. >> an interesting day to mark that with the anniversary. always good to see you. see you next time. i want to stay with google's ipo for the squawk on the tweet. our question is on this anniversary how do sergei and larry celebrate? tweet us and we'll get your responses throughout the morning. storing sunshine in a bottle
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may sound crazy. the state of california thinks it could be big business. we'll explain in a couple of minutes. first, they're about to sound across europe. we'll get you details when we come back. don't go anywhere. a lot, didn? he sure did. that's why he had state farm life insurance. like you. so his family never has to worry, right? mr. goldman didn't have life insurance. why not? well, he's just a goldfish. ignore him. [ male announcer ] you've got questions. your state farm agent has answers. backed by the life insurance company millions of moms and dads already trust. we put the life back in life insurance. otherworldly things. but there are some things i've never seen before. this ge jet engine can understand 5,000 data samples per second. which is good for business. because planes use less fuel, spend less time on the ground and more time in the air. suddenly, faraway places don't seem so...far away.
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i see a lot of red on that. >> this is a very different day today. there is very clear profit taking at the periphery in
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particular of europe on the bond market asks equity markets. for three weeks we had gains and talking about stabilizing and you get this clamor of warnings and pessimism over europe, unempty at 12%, record bad debts and into it potent new news today. let me show you, for example, italy is down heavily. a lot of the italian financials had a bad day today. it is reported in the press that if the senate seeks to disbar sylvil and that raising the new election and can they carry through reforms at a time market rates are rising around the world. have a look where we are on the italian ten year and you see the way in which the yields have been moving higher in this environment you may have expected the ecb to come in and say don't worry, guys, we'll keep rates low. in fact, this he have done the opposite in the monthly report they came through and said and you can have a look at where we are on the rates in germany.
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they suggested that the ecb's guidance on interest rates is not an unconditional commitment partly because they believe their own economy is normalizing for the second half of the year into the fray you then have greece another bad day and those are down heavily and the guy in charge of the privatization authority kind of took a right with one of those he sold the business to and had to resign and that's the second in just a year. you will be aware privatizing assets in greece is central to what the imf is calling on them to do and way behind on those promises and that's partly why you have the fallout on the freak stock today. beginning of a new week and a different tenet in europe, guys. >> thank you so much, simon. as the dow wifrs with a narrow range. >> financials under pressure because of the investigation there and jpmorgan and if you look in the rest of the world at
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this problem, this tighter money is just causing tremendous problems again in emerging market countries. this is thailand. these are exchange traded funds. you can buy these, thailand, indiana a turkey, the philippines, no matter where you go generally they're weaker and concerns about money coming out of them, the fund flows here and let me put up chile. i will give you an example. this is etf. straight down. ever since the beginning of may when there were concerns and first discussions about the fed tapering and essentially straight down concerns about outflows there and slower global commodity markets overall. speaking of that. steel stocks under pressure and all ties into less investment overseas and even in the united states and the down side today and just because it is cheap it is not a buy. i was fascinated. somebody came out and said housing stocks are a buy and they came out and raised it up and the stock was up premarket.
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it is down here, and the point they make is the stocks are cheap now, about 1.25 times forward earnings. we talked about this in may. in may it was $24. we said they're almost two times forward earnings. it is very unusual. historically that doesn't happen. now it is down to 16. wells fargo appropriately points out this is a much better valuation. the lesson here is rising rates are trumping valuation cheapness for the time being, one day they will wake up and they'll be a buy again, just not today. finally, when is somebody going to say bonds are a buy? look at the lq d, the biggest corporate bond etf out there. it yields 4% now, 4%. look at the decline in the last month and a half. you can go out i am quite certain and buy intermediate grade corporates, good high grade corporates at 5%. i am waiting for somebody to come out and say they're starting to look attractive. haven't seen that yet.
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it will happen. back to you. >> bob, we'll keep our ears open. let's keep our eyes open what's happening in the bond market. to rick santelli in chicago. >> i like to talk rates and housing with rob. rob has been on the floor a couple of generations. as i look up at the board and see 287 yield in tens, or a 188 to 190 yield in boons, or in a perverse way over 9% in india, i run up against trying to explain it, and the conventional wisdom is if you are at the trough of the fed, if you're a believer, your argument is going to be, well, things are getting better, we have a stronger economy and india and emerging markets aside, this is a good thing. theres a lot of reasons people are selling treasuries. do you think that global strength and world economy is the lead factor? >> i think that is a partial fact and then also the fact that the fed wants to taper the taper tantrum and reduce their buying
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and all of this prior to that with the fed having rates there was so much leverage and over buying and reaching for yield which compressed the brick bonds, the treasury bonds and everything and ear starting to revert back to a different mean. 280 on historical businesses is an extremely low rate. not a livable interest rate. i think it is the beginning of reversion. >> if a bond guy came down and said, listen, this is a secret and i am telling you the true fair value of the treasury right now should be 3%, well, does that mean we can't see higher than 3% because of the compression that you just referred to and the distortion? i think that's the part impossible to understand. will we find a fair value or will we find a value trying to make fair the compression of the last five years? >> i agree. we can easily over shoot. given an insplags rate even at 1.5, 2%, we don't really believe the cpi numbers anyway but this
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is not necessarily that great of a rate. people are selling because they have to sell. the banks are holding tremendous large holdings of fixed rate loans and bonds that they own at very low prices and that because they're being held to maturity they're not reflecting it in the income statement. that's a problem. they need to right that a little bit. >> conventional wisdom disloorjs, don't worry about, these banks are going to make more money off the steeper curve. i interviewed the president of zion corp, and even though many of the regional banks have more of a loan portfolio that is floating, it isn't true with the too big to fail banks for the most part. >> i would agree. in fairness, the steeper yield curve will goes -- the higher margin that is will be helpful. eventually these bonds, if they own it, 160, 280, whatever, 100 basis points increase in rates, those are worth less and they'll have to move those to the income statement. >> almost out of time. do you believe anybody involved
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in the fomc committee goes to bed at night truly thinking we'll have a major deflationary episode any time soon in this country? >> i don't believe so. they just printed $4 trillion worth of free reserves and eventually that will flow into the economy one way or the other. certainly $4 trillion. >> well, guys, i see why rob has made it all these years. he makes sense. back to you. >> a lot of guys do on that floor, rick, thanks so much. how is this in california governor jerry brown pushing a plan that would bottle and store sunlight to use as solar power. next we talk to california officials to find out if this plan could really work. in today's markets, a lot can happen in a second. with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price -- maybe even better than you expected.
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and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present. coming up, the fed, china and earnings. don't let the unknowns keep you out of the market. plus a big call from jp morgan on gold demand. 900% in just nine years, a stellar track record but is the multi-year run done? a big halftime debate is next. >> looking forward to t thank you very much. organic, all natural, these aren't just buzzwords for the foods you eat. they're also for the products you use to clean up your home.
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the question, how can businesses go green and make green? live in new york with a look at how they might pull this off. >> i am not sure the last time you walked down the cleaning products aisle, it has certainly been awhile for me. will you notice here that there are a lot more green products on the shelves than there were before, and there are a lot of brands in fact including these in their product lines now. you may have also noticed that their prices are higher than the traditional cleaning prices. that leaves a lot of consumers wondering if they should be paying more for the items and how effective they are, if they clean as well and if in fact the products are all natural. despite these consumer concerns have you the major players out there including them in their lines and to keep competitive. companies like clorox, colgate, and they all have a variety and it is because the market is estimated to be a $640 million market. that was in 2011. they say it doubled from the year before.
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for clorox they say their ingredient comes from plants and does in fact disinfect and dissolve dirt and oil as well as the traditional products. part of the story is not just about what's inside the bottle, it is also about what's outside in the packaging. proctor and gamble is talking about being a sustainable company and saying the long-term vision is renewable packaging and for plants and reducing toxic emissions at the plants. it is not just about the product, it is about the company and the carbon footprint they put out there. when you try to put a price on that, the value of it for some consumers is pretty substantial. >> that's right. jackie, i know we'll find out more about how to potentially run or turn around one of these businesses with marcus tomorrow night on the profit. we'll have more on that. jackie deangeles of how you can take advantage of that. >> very nice. speaking of green energy, california is proposing an increase in renewable energy
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storage since sun and wind flower fluctuates so much, they want to bottle it for later use and put it on the grid 6789 we'll bring in the commissioner from the ka l call energy commission. good to have you on the program. >> pleasure to be here. >> walk us through the cost involved in putting these together and what you would have in reserve so to speak if in fact you needed it. >> well, as you know, governor brown has long been interested in clean energy and this is an opportunity. i think we have the moment in california where we're ready to really pursue all options. renewable energy obviously make as lot of news nationwide. electricity is a difficult kmod it i and traditionally been difficult to store. energy storage turns out is a key enabler to enable the modern grid to function reliably and increasingly we're seeing cost effectively. >> is the storage issue, is that because battery technology has
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not been as rapid in terms of improvement as some have hoped? >> there are a variety of technologies that qualify. you have pumped hydro electricity where you take energy from a low place or water from a low place and pump it up to a high place to be used as traditional hydro later. you have compressed energy storage, compressed air energy storage which is increasingly becoming ready for primetime in addition to a variety of battery technologies and fly wheel technology and it depends somewhat on what the particular needs of the grid actually are at any particular location at any particular moment, and so it is a relative will i complex field, but it is actually showing a lot of promise as the generation technologies become more and more diverse and intermittent and they all need to be coordinated in a way that makes sense and improves and enhances the reliability of the grid and doesn't require us to go out and build lots of new power plants if we don't actually need them. >> andrew, that's what a lot of
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people will focus on is this issue of if california is now legislating this and wants there to be a way to bottle sunlight so to speak, how will you do it in a way that doesn't generate waste in the area where is we have seen renewables from the government being too involved? >> that's a great question. this is certainly an area where the private sector and the government and the utilities have been working together and need to continue to work together to figure out the optimal solutions. the california energy commission has over the last decade or so funded a wide variety of rd projects and i think as they move towards kpleshlization we're seeing the fruits of that research investment. the plan is really under -- it is in evolution. we're going to see winners emerge and we're going to see the marketplace work out what the optimal solutions are and i think it is the way they ought to work. >> interesting. i am reading here according to
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the target in terms of what you want to have storage of is up to 1.3 gigawatts by 2020. that's enough to power more than a million homes. how feasible is that? >> well, it is interesting databased on a decision or actually a ruling, a propose although that came from the public utilities commission, our sister agency, and it is generating a lot of discussion and i think very valuable discussion and it will be modified over time and end up in a certain place where the utilities will likely have to go out and pro cure a certain amount of energy starj, whether it is 1300 megawatts or another number remains to be seen. the model is to start with a certain level now, 1300 meg watts rather would be a significant percentage of the existing market for energy storage globally. it is not a trivial number. still it would be spread across a variety of technologies and in many geographical locations across a number of utilities and
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would produce a lot of experience that would enable these individual technologies to improve and the winners to emerge and which the most cost effective and appropriate technologies actually are. we're trying to do it here in california to demonstrate it can be done and to be a leader in this climate realm, you know. fundamentally this is about reducing the carbon footprint of the electricity grid. our goal is to have that -- have carbon reduced by 80% from 1990 levels by 2050. we have time. that's not that nearby, but lifetime likely. it will be here before you know it. >> you will have a lot of other states watching. thank you so much. >> thank you for having me. a pleasure. >> new research showing that one of the country's most competitive real estate markets is starting to cool off, and by the way it is in california. the ceo of red fin will join us with the details. right now, 7 is being streamed. a quarter million tweeters are tweeting.
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and 900 million dollars are changing hands online. that's why hp built a new kind of server. one that's 80% smaller. uses 89% less energy. and costs 77% less. it's called hp moonshot. and it's giving the internet the room it needs to grow. this&is gonna be big. hp moonshot. it's time to build a better enterprise. together.
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sa. we're watching shares of energy producer apache. stifle nicklaus cut the rating to a hold rating mostly based on concerns about exposure to the unrest in egypt. egypt accounts for 19% of apa e apache's production and a quarter of the cash flow and the unrest raises risk of reduction going forward. the shares taking a hit on that news. >> they are.
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thanks very much for that. turning to confidence among u.s. home builders which is flying high, the demand could drive sales growth further. the request is he whether optimism will translate into sales quickly enough. get a front line perspective from the ceo of red fin, the online real estate brokerage. good morning. >> good morning. >> i guess we'll start with that question. first of all, which is last week the national association of home builders comes out and says the builder confidence hit an eight year high despite higher rates and higher prices. are you seeing any slowing in traffic, any denting of confidence? >> we did over the past four or five weeks as interest rates rose, but now just in the past ten days it increased again. i think buyers were initially shocked by the interest rate increase and some rushed into deals and others stepped back and now they have gotten used to it and the concern is rates will only go higher, so i think we will continue to see strong demand through the rest of the fall. >> what about the communities that have really benefitted from
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the rebound in real estate to this point? i think there are a couple in particular you singled out as places despite what you were just talking about are seeing that rebound slow? >> we are seeing some slowing, especially in places like phoenix or las vegas where prices have increased very fast. over the past year prices have just gone up at an unstainal rate. we think it is a healthy sign the market is slowing. if you look at 10, 20, 30 years of history, home prices never increased 10 to 20% year-over-year. what we saw in the spring and summer was really scary. we don't like to see that year-over-year because we just don't think it can keep up. we were glad to see some of that slowing. probably in march or february we saw bidding wars in 75, even 80% of the deals we did and now that's down to the low 60s. clearly demand is starting to sag and inventory is coming up. the market is getting better
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balance. >> interesting. those are iend of scary numbers. you know those don't last forever. how much of activity is being led by buyers with cash and buyers, for whatever reason, not getting a mortgage at all and how much do you think is done by normal home buyers so to speak? >> actually, real normal home buyers were intimidated the most by the rate increase, so in the spring we actually saw some of our cash investors stepping back because they didn't want to compete with people who were using the easy money to buy a house at a price that really didn't make sense and now the cash investors are coming back again now that interest rates have increased, they're more competitive because their money really matters more. so the cash investors are probably accounting for a third of the transactions. i would say it is not as much wall street money as we saw at the end of 2012 where we saw buyers buying in bulk, and it is more on share investors that have cash and sometimes from the retirement accounts they're using to buy a property they
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believe they can rent out. >> glen, just a word about los angeles here. what's going on and how telling is the transition in the community that you are seeing in los angeles for what's happening in the real estate market nationally? >> things happen in california, first, especially in l.a. for the first time in two years we had three or four offers going under contract uncontested in the past few weekends. normally we see 5, 10, 20 or 30 competing offers and over the past month we really saw that cool down. some buyers were getting fatigued and saying i've had it with the bidding wars and some of the smart money wasn't willing to compete and prices in some neighborhoods increased 20 to 25%. now things cooled a little bit. the same happened in orange county which was extremely competitive. there was a huge inventory crunch. we are now talking to buyers who will planning to list in september and october and normally we pack it in for the year. we expect to see inventory
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increase year-over-year beginning in september/october. i think even in southern california. the market is rebalancing and it is a place that has been absolutely crazy. >> and a place to watch as a gauge for what happens across the rest of the usa. thank you for your time this morning. >> thanks for having me. >> tweet time. nine years ago today google went public and since that time the stock is up 900%. the squawk on the tweet question on this anniversary how will sergei and larry celebrate? tweet us. your answers are now. weekdays are for rising to the challenge. they're the days to take care of business. when possibilities become reality. with centurylink as your trusted partner, our visionary cloud infrastructure and global broadband network free you to focus on what matters.
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with custom communications solutions and responsive, dedicated support, we constantly evolve to meet your needs. every day of the week. centurylink® your link to what's next. stock is up 900%. to make their money do more. (ann) to help me plan my next move, i take scottrade's free, in-branch seminars... plus, their live webinars. i use daily market commentary to improve my strategy. and my local scottrade office guides my learning every step of the way. because they know i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade... ranked "highest in customer loyalty for brokerage and investment companies."
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and this is my home team. this is my large lecture hall. this is my professor. and also my coach. this is my booster club. this is the guy who's graduating ready for a great career in technology. [ male announcer ] in 2012, 90% of devry university grads actively seeking employment had careers in their field in 6 months. join the 90%. learn how at
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squawk on the tweet. nine years ago today google went public at $85 a share. we asked you to you do sergey and larry celebrate. writing on top of a real large pile of money and one of our favorites celebrate by clinicing the google glass together. isn't that sweet. >> wouldn't it be great to get the parody accounts today with the people they're parodying. >> that would be nice but not going to happen. >> or keep the anonymous online. >> that's probably a better idea.
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you are looking at financials and probably will be all afternoon. >> yes, and you have to watch the 2.9% and the bar keeps moving higher and stocks okay. down only 12 points. >> dollar general with the upgrade over at jpmorgan. let's get over to headquarters. brian sullivan today and the halftime. >> good afternoon here and good morning out west. welcome to the halftime report. i am prooin and i am in for scott. here is where we stand. not huge moves as you may expect on a slow august day. dow is up and nasdaq continues to be the out performer as it has been all year. hoor is what we're following. golden opportunity, maybe, gold starting to regain some of its luster and a top


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