10:30 crude anybody stories. i told you on monday this would be a data-packed week and this will be a data-packed day, so don't go away. for more on the adp employment report, let's get to our senior economics reporter steve liesman. >> the number coming in a bit hotter, a bit worse than economists expected. this is the adp report on private payrolls. mine with us 371,000. economists had expected 350,000. it's the best number we've had since october since the change here. 467,000 is the estimate for private and payroll losses -- private and government losses for the bls report which comes out this friday. let's look at the year over year -- maybe we're not going to look at that, but you have a sharp decline and pretty sharp improvement. this is -- we were doing 700,000

job losses at the worst level here in the month of march. looking at it by company size, small businesses 138 those, medium 160, and large businesses 74,000. the kind of industry. and what you see there is the goods producers still down again and they have been down for a very long time, but down less than they had been. the service sector lost 202,000 jobs. no one wants to say losing those jobs is a good thing, but compared to 700,000, viewers can make their own judgments. >> thank you, steve. our reporters as usual are ready to go. bob pisani at the big board, and robert. >> futures did drop a bit. drop losses greater than anticipated. we've got earnings, kind of a

mixed picture, procter & gamble did beat on the top line. greater cost cuts, but they were hurt by currency issues, price increases offsetting a decline in volume. q1 guidance a bit below consensus. kraft falls 1%, but their full-year guidance is also pretty good. a stronger dollar also hurt their global sales. oil driller transocean, a big issue here of course is poor demand for all of the big oil companies. this is also true with an oil rig company, their demands falling as well. brian schactman, how are we looking? >> the premarket indicator slightly higher, futures slightly lower, so open will probably be flat. ten-year deal with microsoft. it will pay yahoo! $50 million a

year. "new york post" saying that research in motion launching its cheapest blackberry, the gemini, you can get it for $48 at walmart or $189 at t mobile. it's up to the distributors to decide. cisco reports after the bell. i want to point out wynn resorts. there are reports that the ceo told 20% every his holdings. just take note of that. hopefully a great earnings report. they did very well with their guidance, and john mackey saying we're getting back to basics, going with healthy eating. ea sports, light on top, but strong on the bottom. garmin, the reason why they're up, their margins were incredible, over 50%, so up 21% in the premarket trade. let's see how the oil trade is with sharon epperson. >> i'll take it, brian.

we have mixed training with oil and gasoline both trading lower ahead of the weekly numbers. the institute -- the industry numbers, api reports pointed to a belgian crude, but bigger than expected draw in gasoline, so that's something folks will be watching for. gasoline has been something underpinning the market. gasoline prices have doubled here on the nymex since the beginning of the year, so that will be a big point of inflection today. the dollar weakness is certainly helping to keep oil prices -- rick santelli is standing by in chicago. rick, we got those good numbers on services out of the uk and the euro, really helping to keep the dollar weaker today. >> it seems as though all pressures from different economies, no matter how much better or worse you think they are, handy capping them, the

dollar seems to be under pressure, reversed some of the early gains, but the big news today is treasuries. $23 billion tens, and $15 billion 30s, grand total is $75 billion, $4 billion more than the last quarterly refunding, record size, and we are replacing a net number. that's $75 billion $14.1 billion in actual new money considering the falloff and the maturing issues. one last point to make quukly here, november we'll find out how many more tips are going to be auctioned. mark, back to you. >> thank you, rich. up next, the faber report. >> plus, before he testifies at the cftc hearing, a hedge fund manager, mike masters will join us on speculation in the oil market, and word on the street, buzz beyond, as we springboard from the adp numbers to friday's jobs reports. we'll be right back. when this shoe store added aflac

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you are looking at the plane now, mark, that's approaching the hangar. how many people were on that plane? we know at least three. there was a delegation. we know a few more. >> i'm told they're still on the plane. >> so we are waiting for former president bill clinton as well as the two journalists he

negotiated for their release to get off the plane. al gore we believe is there. >> why is this such a big production? >> i don't know why they are not -- >> i don't get this. anyway -- >> well, we'll no doubt find out more. >> i know after a long flight i like to hang around on the plane. >> exactly. so we'll update you as we get more and if there are any comments from the likes of either al gore, the journalists themselves or bill clinton. now let's get to david faber. david? >> here i am. thanks, erin. we have talked a great deal about the dearth of large or even small merger and acquisition deals, but we have seen over the last couple days is developments on existing stories. yesterday, of course, pepsi completed or at least -- they haven't completed the deal, but

announcing the deal, pepsi bottling group and pepsi america. and another update on the fertilizer issue. we're talking about cf, that increased its offer to terra. agrium has been try to go guy cf. terra has said no to cf. cf has succeedsfully said no to agriium for some time. nonetheless, cf seems to be emboldened and perhaps thinks it's got a real shot at buying terra. hence the company has increased its offer for that company to a fixed exchange ratio of 0.465 for its shares. the prior bid had been arranged between 0.41 and 0.45. the new offer values terra at about $37.20 or what we call

$3.7 billion worth of cf stock price. they also say that once we get together, if you allow us to, we will spend a billion in buying back stock, and they also will be giving cf or its terra shareholders what they call a contingent share that could be converted into common stock should the stock trade at more than $115 a share over a specified period so trying to increase value, conserve value, give future value, and get terra to the table in what has been, as i said, a three-way lockdown in terms of these three companies trying to consolidate the fertilizer industry. agriium, of course, failing completely thus far to get cf, and cf now making another run at terra. erin, we'll be talking more this morning about high-frequency

trading, that s.e.c. potential ban on flash trading. very interesting to note that goldman sachs had 46 separate days during the second quarter where it made more than $100 million in trading revenue, a record for that firm. back to you. >> all right. thanks very much to you, david. when oil hit $147 a barrel last july, most people said it wasn't a case of supply and demand, but there were people who said, well, truly that was a fundamental price. well, there are some people who are concerned about the speculative side of the story. the cftc is trying to find out why oil spikes. testifies at the hearing and joining us now is hedge funds manager mike masters. he was one of the first to sound the bell last year. we appreciate you teak the time. you're saying it was speculation that was responsible for the super-spike in oil prices? >> well, what we really

documented was the effect of what we call index speculators or passive index investors in the commodities market, putting money into these markets and then having an effect on the price. our data, which we derive from the cftc, the special index supplement showed over a five-year period of time money went from approximately $13 billion to, at the peak, when oil was 147, roughly $300 billion, and we feel like it had a large impact. >> mike, just before we ask the next questions, since the journalists are being met by their husbands and children, and they were in custody in north korea since march, so it has been a long time since they have been able to see their families. mike, the next question i have

an a hedge fund manager, were you short oil last summer? >> no, we don't trade commodity futures. we do trade fixed income futures, but not commodity futures. >> so, you know what puzzles me, is the government looked into this last year and told us it was not the result of speculation. why is it only now they are admitting that's what was going on? >> i think to a certain extent they may not have had all the facts last year. the record was put together very quickly. >> you know what, mike? i think you're letting them off too easily t doesn't take a rocket scientist to know that there's $300 billion in it the next year that there's perhaps a liquidity-driven bubble going on. are we still vulnerable to that?

>> without question we're still vulnerable. the rules haven't been changed yet. one of the things we're going to talk about today, when we talk about mandatory clearing of derivatives is one of the reasons we need to do that is from a national security perspective. if the regulators can't see what's going on, then what's to prevent a rant of any other nation with, with potential driving up the price of crude or other commodities. >> in your opinion, is there a way to regulate this market to prevent this kind of thing from happening without stifling the free market forces. >> without question. what we're really arguing for is a return to the system that work for 60 or 70 years. it worked wonderfully for years and years, and it was only when water limited it through changes in legislation and through the modernization act that we got to

the point where we're at today. >> all right. thank you very much, mike masters. >> thank you. >> heartwarming scenes here of the reunion of these journalist with his their families. coming up later, michael cosgrove, the head of commodities and energy brokerage north america, or cfi group, he's going to refute mr. masters and his points. his take in our next hour. but first word on the street and buzz beyond, we're getting you ready for the opening bell, and as mark said, it could go either way. we'll be back. and you can see bill clinton getting off the plane, hugging his former vice president, and obviously al gore is the boss of the two women who were detained. he returns current tv. they were on a shoot for current

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we're back. we're live on the floor of the new york stock exchange with alan valdes from -- you never know they see days. >> you don't. >> people move around a lot. boy, this is a resilient market.

>> incredible. they tried to talk it down. even though the adp number was higher than expected, it's hanging in there nicely. >> so climb on board? >> i'll tell you, if you're not on board, you have to think seriously about getting on board. this market as room to go higher. a lot of traders are looking to get in. i think downturn will be shallow. so you probably could get in and feel safe right now. >> go back to the old buy the dips strategy? >> exactly. we really are. i'm see more and more of that. even though there's nothing good about 371,000, it still shows a slowing, which is good, and that's about the only thing good you can say about it. but it is a slowing, and i'm seeing traders really concerned, maybe i did miss this, maybe i should get back in, so i'm seeing that for the first time. >> we're up almost 3,000 dow points.

what part of the market looks best. >> overall you look at the whole market. hiss pretty widespread in all sectors. banking looks strong, see, look at everything right now. the market looks good. and usually i'm very skeptical, but up here, i'm telling you, it looks real strong the rest of the summer. this unemployment number, if it's really off the charts one way or another, it will move the market. that could be big. >> guys, i'm sorry to interrupt. we're going to take laura ling and euna lee are making some statements. let's listen. >> that we were going to a meeti meeting. we were taken to a location and when we walked in through the doors, we saw standing before us president bill clinton.

we were shocked, but we knew instantly in our hearts that the nightmare of our lives was finally coming to an end, and now we stand here home and free. euna and i would like to express our deepest gratitude to president clinton, and his wonderful, amazing, not-to-mention super-cool team, including john podesta, doug band, dustin cooper, dr. roger band, david straub, mingy kwan,

and the united states secret service, who traveled half the world and then some to secure our release. we would also like to thank president obama, secretary clinton, vice president gore, who we also call "al." the swedish ambassador matt foyer, kurt tong, linda mcfadden and the people at the u.s. state department who worked so hard to win the release of their fellow americans. steve binge and his crew, and andrew liverest and the dow company. i know i am forgetting a bunch of instrumental people right now, but forgive me if i'm a little incoherent. to our loved ones, friends, colleagues and to the complete strangers with the kindness of

hearts who showed us so much love and sent us so many positive thoughts and energy, we thank you. we could feel your love all the way in north korea. it is what kept us going in the darkest of hours. it is what sustained our faith that we would come home. the past 140 days have been the most difficult, heart-wrenching time of our lives. we are very grateful that we were granted amnesty by the government of north korea, and we are so happy to be home, and we are just so anxious right now to be able to spend some quiet, private time getting reacquainted with our families. thank you so much.

and on behalf of the staff and families of current tv, and my cofounder joel hyatt, we want to welcome laura and euna home. we want to thank president bill clinton for undertaking this mission and performing it so skillfully, and all the members of his team who played key roles in this. also, to president obama, laura mentioned this, but president obama and countless members of his administration have been deeply involved in this humanitarian effort, to secretary clinton and the members of the state department,

several of whom are here, they have really put their hearts in this. it speaks well of our country that when two american citizens are in harm's way that so many people would just put things aside and just go to work to make sure that this has had a happy ending, and we are so grateful to all of them. to the thousands upon thousands of people who have held laura and euna in their prayers, who are written letters, called, sent e-mails, we were very, very grateful. to steve binge and all the folks who have made the flight possible, we say a wort of thanks, deep thanks as well. this has been an ordeal for them, but i want you all to know, your families have been unbelievable, unbelievable

passionate, involved, committed, innovative. you'll hear a lot of stories, and they're looking forward to hearing a lot of stories from you, but euna, hanna has been a great girl, and laura, your mom has been making your special soup for two days, and to everybody who's played a part in this, and again a special thanks to president bill clinton, my partner and friend, so grateful, and ladies and gentlemen, thank you for coming out. we're going to let these families have a full and proper reunion now, but thank you for coming out. all right. it looks like, as you can see, you heard laura ling talking, al

gore, president clinton did not talk, and everybody wants to hear what he has to stay about the state of north koreaacy leader. there's a lot there that will happen. i wouldn't be surprised if they keep that classified. >> no, not everyone will hear that, but somebody in the cia and the white house will, i'm sure. here's the macro markets, celebrating the recent listings of the -- boy, what a houseful. macro shares major metro housing up. i don't know what that means, ticker umm, and make rho shares -- oi gets it. macro shares major metro housing down, ticker dmm on nyse. i guess those are some sort of etf-like vehicles, and you ought to check they out. r.r. donnelley, ticker rrd, a

printing services provider, celebrates its move to the nasdaq. let's get straight to our market reporters. we're up, down about 12. >> we saw futures week all morning as the adp report came in weaker than expected. and of course the big number's on friday. on earnings, a mixed run here. procter & gamble deep by a penny, but if you look at the volume, declined 4%. organic sales growth was also weak. their earnings guidance for the current quarter a bit below analyst expectations as well. here's what's important for kraft. they had a bit different situation. they had pretty good sales growth actually here, a bit better than expected. the full-year guidance as well, that stock is now opening just down 1%. transocean, which is an oil rig company essentially reporting what most of the big companies are reporting as well. poor demand causing revenues to drop 7.6%, their second quarter

earnings missed expectations as well. that stock is opening to the down side. brian, how are we looking at the nasdaq? >> actually they just moved something on me. we're pretty much flat. r.r. donnelley just trading on the nasdaq, starting in positive territory. they get the rest of the day off for clapping so long. microsoft and yahoo! the details from the search agreement. yahoo! gets $50 million a year for transition costs, according to "new york post," research in motion launching its cheapest blackberry ever today. a quick check on some of the bigger names, google, amazon down slightly. whole foods, comps were better than expected. also they're upping their guidance, jacques macke consolidating their efforts.

they were light on the top lines. 21.6%. denies down slightly. they did beat. jack-in-the-box not as good on the top line. they're up 2.9% the street likes it. 3com, by the way initiated a buy at goldman sachs. i do apologize, bertha. >> no problem. we have a mixed situation. brent is trading higher this morning on the back of strong numbers but we've got crude trading to the down side.

their report showed a drawdown in crude. gasoline has been one of the rallies points in this market. we've seen in fairly dodgy numbers when it comes to driver demand. the fact that these charge are doubling, it's something that regulators are looking at, both in washington at the cstc and over in london let's go over to chicago and rick santelli. >> thank you. homebase is very fluid. the analogy i'm setting up been and how treasuries play off of

that. but where you start, the net change makes a big difference. we're seeing a big of a drop-off in the equities, make it will cause most, but it's happening from a different left. instead they're moderating just a bit. we'll probably going to sell more tips why? we're light in that area. we'll find out the details in front of the next refunding, which is the november refunding. >> rick santelli, we have breaking news about toyota, i believe. phil "four on the floor" lebeau is standing by to give it to us. >> toyota president and chairman akiyo wrapped up talking at an

auto conference in traverse, michigan, fair -- a couple highlights from the speech. toyota still studies what it will do. they hope to make a decision he wants to see cars that are fun and exciting to drive. he says, we're going to fasttrack it. they're also looking at peak oil demand around the world, so they have to develop other fuel sources. he says there's a pure electric vehicle that will be launched in 2012, and the company -- this is the most interesting one, mark, the company is optimistic about launching hydrogen fuel vehicles in six years. the president is about to address the issue of these freed

journalists. let's listen in as he strides to -- i guess he was up there on the old junglegym, and is now coming into address us. here we go. >> good morning, everybody. i want to just make a brief comment about the fact that the two jung journalists, euna lee and laura ling, are safely back with their families. we are obviously extraordinarily relieved. i had an opportunity to speak with the families yesterday once we knew they were on the plane. the reunion that we've all seen on television i think is a sort of i want to thank president bill clinton. i had a chance to talk to him for the extraordinary humanitarian effort that resulted in the release of the

two journalists. i want to thank vice president al gore who worked tirelessly in order to achieve a positive outcome. i think that not only is this white house obviously extraordinarily happy, but all americans should be grateful to both former president clinton and vice president gore for their extraordinary work. my hope is that the families that have been reunited can enjoy the next several days and weeks understanding that because of the efforts of president clinton and gore, they are able to be with each other once again. we are very pleased with the outcome, and i'm hopeful that the families are going to be

able to get some good time together in the next few days. thank you very much. president obama making a brief statement about the freeing of the two journalists. he's on his way to indiana. we'll have much more, "squawk on the street" after the commercial break, dow down only 15 points. announcer: some people buy a car based on the deal they get. others buy the car of their dreams. during the lexus golden opportunity sales event, you can do both. it's an opportunity today. it's a lexus forever. special lease offers now available on the 2009 is 250. but i did. you need to talk to your doctor about aspirin. you need to be your own advocate.

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welcome back to "squawk on the street." i'm matt nesto, checking the markets with my magic hole ograph. dean foods down about 7%, one of the worst performers in the s&p 500 today. their second quarter in line on a per-share basis. the revenues a bit soft, but their third quarter forecast and full-year forecast, even though they tweaked it higher, is still lower than the street, and the sell siders are beating it up this morning. baker hughes, bob had mentioned some of the oil services names out there today, both weaker

here today, baker hughes down about 6% or 7%. the second quarter earnings five cents short. the dpee does say that the second quarter for them marked the bottom in north american profitability. there's always a caveat, isn't there? say that the second half of the international markets will be down due to concessions made earlier in the year. the stimulus darling, foster wheeler, is up 11%. the construction conglomerate coming in with a blowout quarter, makes you wonder if it's even comparable. the revenues in line, but the margins are improving, and the company's backlog is still steady at over $4 billion, which is essentially four quarters worth of work. lastly, anybody hear me say keep your eye on orbitz? its up over 125% in the past month. they're profitable.

>> matt, thank you very much. stocks trading slightly lower this morning. alan gale senior, investment strategist, for ridgeworth capital management, and david sarby, loomis sales. >> good morning, mark. >> i will start with alan. what do you think, onward and upward? too far too fast? what? >> we started increasing or equity exposure in the asset allocation funds in march. we're happy we did that. we do think the economy is bottoming in here and making what i would call a slow turn into the wind. i think it's the bears who will have to, i would expect testing through earnings season, but overall i think the momentum is

still higher. >> david, your view? >> sure. the s&p has retraced about 30% of the bear market, so there's more room to go. the opportunity to still buy solid franchises at about six times cash flow, which works out to about 13 to 14 times earnings. the one concern i have is about a month ago, 54% of individual investors said they were bearish. that's a great contrarian indicator to suggest that temporary correction had reach a bottom. not only only about 31% of investors say they're bearish. that gives me less optimism that stocks may fight a headwind in here before it finds higher ground over the balance of the year. >> alan, where are some -- if you were to put money to work right now, what specifically would you be buying? >> specifically in our ridgeworth large-cap funds,

we've been emphasizing technology all year. those have been strong companies with good cash flow, great balance sheets, low debt and very resilient business models. we continue to like technology, despite the run-up, because we think those factors will continue. the other approach or other emphasis we have is when both energy and materials, we think that's a good dollar hedge global expansion play, and we think that's a trade that's likely to have legs 'with go into 2010. >> what about you, david? >> erin, there's still time to play offense, but as long as there's sustainable cash flow behind a company. so technology looks still attractive on a valuation basis, names like harrys, playing some offense in consumer discretionary areas. a name we've had talked about in the past is fossil, and then on

the finance side, i think the asset managers look compelling, legg mason, which had a very good quarter and seeing a turnaround, represents good value on the asset management side. >> and what about, mark, remember when he mentioned spartan, and of course that's the mascot, right? would you still like that one, david? >> i think that stock has potential at well. it has the stigma of grocery store in michigan. who would want to own that, but it's more western michigan based, and i think that gives it a better opportunity, let auto reliance, terrific management, and they get good margin off their wholesale business. >> for a long time people were buying fixed income. is it time to get out of that? >> well, we've been moving out on the credit exposure trade, i guess, since early in the year, whether it's investment grade or what i would call the high

quality high yield spectrum. we see the ten-year note at about 375, i think we're going to be range-bound for a while while the fed keeps interest rates low, but overall, i think we're gradually shortening durations in here and keeping our credit exposure, because we think that's where the returns are going forward. >> okay. alan gale, david sowerby, thank you very much. value investors dreaming with us next. welcome to the now network. right now five co-workers are working from the road using a mifi, a mobile hotspot that provides up to five shared wifi connections. two are downloading the final final revised final presentation. - one just got an e-mail. - what?! - huh? - it's being revised again. the co-pilot is on mapquest. - ( rock music playing ) - and tom is streaming meeting psych-up music from meltedmetal.com. that's happening now with the new mifi from sprint,

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our nest guest says they could prove to be the best investments if you look years from now. investors might start thinking about serious inflation issues. good to have you with us, sir. >> nice to be here. le. >> no matter where you look

around the world, stocks have surged. do you still think if you look back at this time and go into stock exchange and real estate more specifically, you'll be glad? >> i think so. >> there's something like $21 million of new debt put out, the treasury has been pretty -- on pretty much worldwide. it's got to have its toll. not now, but two, three, four years out, maybe we'll see inflati inflation, and inflation is good for both stocks and for real estate over time. >> inflation, but 12-plus percent inflation still good? that would seem that would be much worse than better.

>> it's down to one billionth of purchasing power from is the 45 yet -- so markets do go up, and it's a good inflation hedge. >> the fed says it has an exit strategy, and a lot of it will be automatic. >> well, i think there are 30,000 feet jumping with a parachute. the fed has to wait until employment starts to come down. that's probably still likely to go up through mid-next year, and i think -- i don't see how they possibly could have an exit strategy at this point. >> so, in your opinion, this is not a bear market rally? >> no, i think we will see the markets go down some, certainly have the volatility, but all in all, i think we're in a market

that will go much higher over the next three to five years. >> obama administration's handling of the economy? give it a grade. >>. >> maybe a "b." but i think they have helped stem the real fear in financial stocks by their actions and the stress test, and i think once the financial stocks started to take off, the real fear that we would have no financial institutions worldwide was gone. i think that was probably one of the most important factors. of course, now we're starting to see the economy still going down, but at a much slower rate. >> in particular what would you buy? when you say buy stocks, buy real estate, can you get specific with names or countries or -- >> in this countriy i would buy oil, i'd buy natural resources, and i would buy the exploration

development, so buy, say, an apache, anadarko, names -- or a bhp, and i think people are going to buy houses, that's a great play on inflation. you would get about 4 to 1 on the leverage on the house over time. a lot of the fortunes made -- >> even if you put the 25% down. >> which is high. >> you also like a couple -- well, pretty big financials, pnc, wells fargo, jpmorgan. >> i think they're survivors. over time we'll see some pretty good results. they're starting to work through the worst of the bad debt, and there might be another year or year and a half of lackluster earnings, but we should see much higher earnings over time. financial stocks do go up with

inflation. >> thank you very much, david, always a pleasure to see you, david dreman, the original contrarian investor. moments ago, breaking economic data. ism services and factory orders. >> we'll go inside the numbers from pnc and kraft, and actually some interesting questions of kraft about health care reform anded food we eat.

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backed by 35 years of research and low glycemic index science nutrisystem d works. satisfaction guaranteed or your money back! new! nutrisystem d. lose weight. live better. call or click today. the u.s. economy lost 371,000 jobs last month according to the latest record from the adp, that was more than economists had been forecasting. merck and schering-plough will pay to settle class-action suits involving zetia and vytorin.

that's cnbc.com news now. i'm courtney reagan. welcome back to "squawk on the street." we have june factory orders up four-tenths. if you're going to have consumption and rebound in areas like manufacturing, you need factory orders. last month's slight revision not much. now, let's goo to more relevant july real time. if you look at the nonmanufacturing service sector, ism that's a disappointment. we move from 47 to 46.4. so from that regard you're down, 48.a was the expectations on the chicago trading floors. so i would have to think there's a balance there, maybe the ism is more important, because yields are moving down. let's look at the charts. neat things today the yields have moved down. one of the reasons? outside of the adp being a bit

of a disappointment, it's the next chart, s&ps, they're all watching the stocks, and the yields head a bit lower. that's a good day-trading strategy going on, but we hovered around 3 and 3.75, now the big chart, dollar index still under pressure, lowest levels, let's call it ten months plus -- mark, back to you. >> we just got rocked here. we were down like seven, eight, now down 77 points on the dow industrials. the nasdaq is even worse, 18 1/2 roughly. s&p pretty even with the dow, around 0.75 of 1% lower. erin? >> i'm here with mr. pisani. you are also focusing on a couple specific earnings story. >> i think the important thing

is the trend is very clear. we're still getting generally weak sales reports while beating on the bottom line prokt are and gamble did very very well beating on the bottom line, but organic growth was bad, volumes, which are the total amount of things you ship out, organic volume grouse was down 4%, and the guidance for the current quarter also was slightly below analyst expectations. same sit wakes with kraft, though they had slightly better numbers overall and actually did full-year guidance was a little above expectations, growth is still somewhat of the anemic side. this is right across the board, so in a completely different area, if you look at transocean, which provides the rigs for all the oil companies, rig growth, rig count was way down and that's a big problem action and they're having a problem with weak oil demand.

remember yesterday we spend a lot of time about real investment trust and some of the banks today some of the banks and some of the reits are outperforming. there's two series about why suddenly reits are outperforming. one is the belief that the news is going to improve incrementally in the next two quarters. there's your big hope, but the more plausible story is that there is dramatic underinvestment in some of these sectors, including reits, by some big managers, and they need to start getting long, because the market is dragging. >> bob pisani, thank you. while bob was talking, you may have noticed we went down 80 points. brian, you saw the turndown there on the back of the headlines rick was sharing in

terms of specific names, though, i know it's yahoo! and microsoft that are yet again important to you. >> the ak filing came out about the search deal and some of the details are simple. ten-year deal, some exclusivity, yahoo! gets $50 million a year in transition costs, and they hire a couple of their employees, but the think about the stock prices, is the knee-jerk reaction, increasingly the street seems to like it. yahoo! up 1.3 2rs, so obviously the details are being digested favorably. >> brian, in terms of whole foods, karen finerman was tacking about, and it turns out she's right, but yet it's an expensive brand, more premium. do you see a sign of hope, or is it not that simp? >> in some ways it is that

simple. there's one things that people mike lost in the earnings report. year over year they made more money, and not many can say that. the second element is they upped their guidance. the one thing that didn't get in a lot of the earnings reporters is the ceo bay lisk saying in the "wall street journal" he wants to get back to healthy eating, maybe in the frenzy to grow they got away from the core mission. they're still down in terms of comps. they're getting back to the core mission, and i think that's something that's very encouraging, this on a day like today is a huge positive, up 20%. >> brian, thank you very much. thank you very much. this morning's realty check. the mortgage bankers association, reports applications filed last week rose, rose 4.4% compared to the

week before. but beware the numbers. total applications was up 18% last week versus the year-ago period. mortgage apps were boosted, as rates dropped to 5.17% last week. this is the lowest left since the first full week in july. this morning's adp number wake in weaker than expected. all the major averages to the down side this morning, though the adp number didn't rock the markets much. what can we expect for the rest of the week as we move up to that big employment report on friday? joining us now with our expert analysis, nicholas colis, chief economist. >> and brian westbury. brian. >> yes? >> what do you think? how will the data be this week?

>> you know, we've seen the data a little lackadaisical this week. that number is bounced around a lot. not always reflective. i think the ployment report will be much better than the consensus on friday. our number says down about 200,000. the reason for that is the continuing claims of unemployment insurance have fallen pretty sharply in the last few weeks. that tells us that the employment picture is beginning to improve and we think it will improve rapidly. >> couldn't it also mean that people are just dropping out of the system? >> there's actually been some good research on that, whether these benefits are actually running out. they're not. most of the benefits have been extended tremendously. that means, at least from my perspective, that's not what this indicates. this indicates that there's a pickup in hiring, and some of these people are finding jobs, which is good news. >> nicholas, what do you think? >> we would echo brian's

enthusiasm, and i think we can look forward to auto plants coming back online in the third quarter. >> any particular part of the market you want to be in? >> we would like the industrials. we think financials are also a good place to be, but overall, we then there's a positive tenor to the market and the economy and we're not particularly worried about the employment numbers at the end of the week to take us off the rails. >> what part of the market would you like to be in? >> i think we're in a v-shaped economy. that doesn't mean every number will go through the roof, but i like cyclicals, industrials, materials. firsttrust came out with a community bank etf. i like that sector of the economy as a recovery play.

>> so as an economist, you think we can have a decent recovery in an economy without the auto industry or housing? >> well, i think the auto industry and housing are going to come back. housing -- single-family starts are up four months in a row, 31% off their bottom. existing home sales, new hospital seams have turned around. prices will probably continue to f fall, but the rest of the country is actually beginning to see a pretty sharp recovery. i think that will characterize it is markets over the next 12 to 18 months. >> nicholas, you agree? >> i would basically agree. i would also add that i think inflation will be an important issue to the back half of the year. i think a deflationary scenario is basically off the table now,

and we'll move into an area where bonds will be at risk, but corporate earnings will be increasingly backed up by some modest price improvement. >> gentlemen, thank you very much. up next, inside the numbers from both p answers g and kraft. then the ceo of opentable joins us. and the flip side to mike masters' speculation argument. we have the rebuttal. if you're taking 8 extra-strength tylenol...

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out with their quarterly results. just when kraft foots better than expected, and procter & gamble. it was the fourth quarter down 18%, but they did hold firm to the full-year forecast. let's go inside the numbers. tim ramie is with us. and john pochet. tim, on kraft, how would you described it? better than expected? >> it was oon up side surprise.

>> what about on the p & g side, john. obviously a drop, but they maintained the full-year forecast. is it a sign of stability or weakness? >> stability. i think things are not trending wet for prokter, especially from an organic top-line standpoint. they indicated things have stopped getting worse, at least. they need to invest back in the business and that's what they're planning on doing. >> what about the pipeline? new products, things like that. i mean, if we've learned anything from the economy in the last decade it's that you can repackage old stuff or come up with new products and make a lot of money. are they putting more into r&d? >> i think they are. they're going to be launching more new products, and more importantly spending the money behind the new products. the big problems you run into, sometimes they launch the new

products, but consumers don't know about them, because the advertising investment isn't there. when prokter put downs the numbers for 2010, they basically said we need better invasion, we need to reach new consumers, and hopefully over the next couple quarters they can get the sales growing again. >> buy the stock? sell the stock? >> i'm in no hurry on this stock this week. longer term the business will be in good shape, but they have another couple tough quarters here. i think it looks somewhat attractive in the low 50s. >> tim, we want to get two more questions on kraft. i don't mean to take you about i surprise, but how much money do

we node how much -- >> you caught me at flat-footed on that. >> they have a foot in this game, they care, they don't want a big change in what people eat? >> well, i don't think that what people eat is necessarily decided in washington, but in the middle of the grocery story. kraft has the products that people are looking for, frozen pizza, kraft mac and cheese. those are the feeds of the day. >> i'm starting to get hungry. >> is this a long-term buy. >> i've had a sell on it for year, but i did go to a buy in may. this was evidence of the turnaround continuing, so yeah, i have a buy on it, a $33 price

target, and it's got a 4% dividend yield, so i feel good about that. >> your favorite, though, not to stray too far from the subject matter, your favorite is sara lee? >> it is right now. sara lee just has a lot of up side. it, like kraft, was out of favor for a long time, on my sell list for a long time, but they've accomplished a turnaround as well and are exposed to the currency turn. when you look at sara lee, something like 75% of the earnings are outside the u.s. that the really rock and roll when he wet today the fourth calendar quarter. >> in any one market that dominates that 70%. >> yeah, there's a huge netherlands coffee company, to put a fine point on it. >> i ask about the lobbies, because it is interesting to think about some of the big

shifts here, that we have seen an increase a a lot of health-related diseases, and some people are much more conspiracy theory about it, but an increase in big food, processed food, and the food companies spend a lot on lobbying, i'm not saying that's good or bat, but it's not gotten a lot of coverage. we talk about pharmaceutical companies, big food is a big lobby. >> absolutely. a quick programming note, in case you're wondering why you were looking at a picture of john chambers, we will have an interview with "just call me john." he'll join us tomorrow. much more right here on "squawk on the street." we begin at 9:00 a.m. eastern time. you better be here at 9:00. you might miss a lot.

>> the ceo of opentable, there have been several people who have come through this show and said opentable is their buy. we'll get more on that. and, mark, where can you find the best meat salad? what kind of meat? i guess it depends on what you're talking about. >> right now you're wandering around the australian outback, i guess. >> okay. we'll be right back.

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opentable out with earnings after the bell. they did come in about two cents better than anyone was looking for on the bottom line. it's an online restaurant reservation company. you can go online, make a reservation. it completed its ipo at the end of may. a lot of people like this name, but shares have come off their

highs. joining us now, the company's jeff jordan. he's here, president and ceo of opentable. thank you for being here. >> thank you for having me. >> you could be anywhere, right, in the country, you go online, and can make a reservation with any restaurant that is, quote/unquote, a member, right? >> that's correct. >> our model is we provide onloon reservations at reservation-taking restaurants. a restaurant that using opentable switches from their pen-and-paper book to our electronic reservation book, which means we computerize our anybody torrie and the way they run the front of their restaurant. once they have done that, we can offer their seat inventory to consumers on the website. right now we have over 11,000 restaurants signed up worldwide, so when you're looking for a reservation in, say, downtown new york, you can go online and search friday night at 7:00, and

we'll show you every open table restaurant that has availability that evening. >> do i pay for that? who pays you? >> the restaurant pays us. there's a free service to diners, so the two main revenue streams, one is a monthly subscription for our hardware/software bunning, and second a a performance-based fee for every signer we seat at the restaurant. >> so are you getting more -- restaurants are paying you. do you see any hesitancy on their part due to the economy, or is the fee so low you wouldn't see that reticence? >> our fees -- we deliver a very powerful return on investment to restaurants. the key to restaurant profitability is filling seats. we help restaurants fill seats. you know, that said, the economy is raeting some head winds in our business. overall total customer counts reservation-taking restaurants are down double digits and have

been down pretty much since last september. we feel the pinch as well, because when the restaurants have fewer customers, we in turn can see fewer diners. >> so how does the revenue breakdown go? it's pretty much 100% comes from the restaurant fees, you also get advertising? >> we have a bit of advertising, but the two main revenue streams are the prescription stream. >> all right. so from here what is your next big thing? your pecs big growth or next big problem? >> we're focused on two main growth areas. one in north america we have about 10,000 restaurants signed up, but we estimate it's we're only about a third penetrated. on the diner side in north america, we seat a lot -- you

know, over 30 millennium onpeople last year yet that's only 6% of the total. so we still have 70% of restaurants to penetrate and 94 of diners to penetrate. our company competition is the telephone. second main growth area is international. we're investing a lot to replicate our business model in the united kingdom, germany and japan. we think we have a ton of growth left in north america as well as a lot of international opportunities. >> jeffrey jordan, thank you very much for joining us. >> thank you for having us. and last hour mike at masters was on, talking about how speculation was to blame particularly for the super-spike in oil. we have a rebuttal, that's coming up next. you're walking "squawk on the street." down 83 for the dow. welcome to the now network. population: 49 million.

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we awaiting the numbers momentarily on the eia storage numbers. we're seeing a build on crude. that contrasts with what we saw yet when the industry numbers saw a drawdown of $1.5 million. we're watching the gasoline numbers. we saw a small draw of 200,000, at least the report here on the board. mark, these numbers more or less? line? >> it's in line with what the expectations were. we've had two weekly builds. i think we're in a trend. we'll go up to 62 to 72, so we

seem to be in this $10 range, and now, you know, the market is reflecting in bearishness due to the builds. >> some of these moments are accompanying what's going on in equities, that bullishness over the economic data. one of the things i find very interesting today is we got a bearish ism number here. there was a bullish ism number in britain, and we're seeing that dichotomy. >> here, the oil has been definitely following the equity market. today the equities are showing a bit of bearishness, so there will be some profit-taking along the way. >> i'm not sure why everybody is yelling here, but guys are getting excited. le cftc holding a hearing. last week that kind of coincided with lows and put pressure on the markets. >> what they want to do is limit

the side of the speculative contract side. that's definitely a bearish signal for our market. that's why last week we saw a huge sell-off, then the talks stalled for a while and saw the buying come back in. >> along that commentary. thank you, mark, so much for joining us. we saw a build here in crude. back to mark and erin. >> let's look at the market and its internals. the dow down 1%, 1% loss on the nasdaq, and 1% loss on the s&p, so we probably have quite a skew to the loser and the advance decline data. and on the nasdaq, a little more than 2.5 to 1 on the decline

side. >> mike masters is testifying today on limiting in markets and the role of speculation in the dramatic spike in particular we saw last summer. our guest now says that banning speculators is a mistake and would result in higher energy prices. micha michael, i wanted to start off with a sound bite from mike masters from last hour. here's what he said. >> our data which we drive from the cftc, the special index supplement showed over a five-year period of time money went from approximately $13 billion to at the peak when oil was 147 and we feel like that had a large impact. >> that statement did a

point, $13 billion, and as prices surged, it became $300 billion. he says that in and of it/is a reason to blame speculators. what do you say? >> i think he states a fact and then expresses an opinion. the fact is there was a large inflow of money into commodity indexes last year. the speculation is one caused the other. a lot of ice cream is sold in new york in the summertime, but i think armed with that fact we don't round up all the mr. softy trucks to solve global warming. it's important we let the statistics speak for themselves, and to date, nothing has been done to show in causality. >> you need a study to tell you that that creates a liquidity-driven bubble?

that's common sense, mike. >> well, i think that if it's -- i think that it's certainly appeals to our sense of, you know, of what's taken place. however, these things should be evident in the facts. while a lot of money has gone into commodities, no one has been able to show a study that shows any degree of causality. >> it's a coincidence? >> i won't say it's a coincidence, but i would say if it's a fact, that it should be provable in the statistics. >> but isn't it -- i guess i'm having the same issue mark is. you go from 13 billion, then 300 billion and prices surge, it's because more money went into the market. you're saying that's true, but you're saying we don't know why the money went in.

>> i think there are a number of ways to look at it. certainly it's very appealing to think that speculators have driven energy prices up, but i think the actual -- again, i come back to the statistical analysis, and frankly there is no -- nothing has been shown to demonstrate any degree of causality. >> maybe it was, you know, people like mark haines is not a speculator, but the price is going up, he could buy a exchange-traded fund, with not malintent, but -- there was an inflow of money. >> i think it had an effect on the market. i think that the identifying large speculators as a cause for the increase, however, is

doubtful. in fact, i think it's misguided. >> let's talk about the circle of life, if you will. what role, what beneficial role do speculators play? >> speculators allow hedge -- basically speculators willingly assume risk from hedgers. if we remove them, we're leaving hedgers to basically look to off-load risk to each other, and i think that creates far more -- that creates a wider more volatile market and in general a bias toward higher prices. >> would you agree that the market needs more regulation and more transparency? >> absolutely. >> all right, i guess we got to the point. yes, we did. thank you very much. taking on flash trading, we'll be talking about it or later today with the head of the

s.e.c. up next, we'll find out whether regulation would matter there at all. plus, rebecca jarvis goes back to school. >> hey, mark, back to school where thrifty is the new cool. we will tell you which retailers are dressed to win and the number one item they were pushing when we come back. mors are turning to fidelity for a smarter way to trade online. only fidelity lets you back-test your strategies against an entire portfolio of stocks. plus you'll get advanced, customizable trading platforms. and you get the kind of execution you'd expect from fidelity... ...with a dedicated specialist to talk about even your most complex trades. they'll even help expedite the account transfer process. trade like a pro. trade with fidelity. announcer: some people buy a car based on the deal they get.

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at no direct cost to the company... it was a perfect fit. find out more at aflac!... ...forbusiness.com from what your tonight will want to wear, when it's time to ditch the swim trunks and head back to school. you know, whoever can turn teenagers into a profit center for the family that has them

will make a fortune. rebecca jarvis naming names. >> all retailers are up against a very tough back to school season with the average family expected to spend about 8% less, but teenagers are facing a double whammy. teen unemployment has nearly tripled the national average. their capacity at the same time is still growing. >> unlike other parts of retail, where we've seen some capacity shaking out over the last 6 to 12 months, you havely the teen area is still seeing capacity increasing. there's a lot of new concepts growing, and unfortunately i think that will be offset by weak demand. >> he says two things will drive sales, value, promotion and newness. he thinks one retailer's position for area oy postal, and gap as a contrarian play, and

hot topic which will benefit from the "twilight" movies. and with so much of the retail landscape decimated over the last year, piper jaffray's jeff klein felter says the winners will continue grabbing share. >> at this point it's about gaining share for various brands and retailers. there's been a lot of consolidation, so there's opportunities to grow through c this, but it's about a delicate balance between price and differentiation. >> kleinfelter says american eagle outfitters, which has been realigned and improved some of is pricing, and abercrombie & fitch whose holste hole i siste is hollister brand is well situationed. what do you think is the hottest

item, the one big push that they're betting people will get hooked on? >> for teens. >> yes. >> that's a tough one, because as mark says, they're always so fickle. is it electronics? >> we're going to stay away from that, on that one it's more simple. they're pushing plaid, was denim tends to be more expensive. >> no way. >> they're betting on it, and i had a handful of analysts tell me with a straight face that plaid could make or break all these retailers in the season ahead. >> i'll believe that one when i see it. >> well, you might. >> i think the experts are wrong on that one. thank you, r.j. >> thanks, mark. let's get back to the brain at hq. he likes plaid. >> you know, i'm long a lot of plaid. so i'm happy to hear that.

if you're at home, get the plaid out of the closet. we want to update people on a couple stories. if you'll recall, i'm sure there's been a run-up in anticipate of the deal and when the deal was actually announced, a lot of investors in the stock, which by the way has changed hands enortherliously over the last week or two, over 30% of the share base i believe has changed, if not more. they were upset with the deal. there was no billion dollar up-front payment, for example, as had been the case in a deal that was potentially on the table a year ago, but yahoo! is up today. why? late yesterday a filing from the company gave a bit more detail surrounding the search agreement that's been reached by the two companies, of course, subject to antitrust review which could le long and arduous. nonetheless, what was in there that is encouraging yahoo!

shareholders? microsoft will be hiring 400 yahoo! employees as part of the deal. that will help cover costs in gidget the partnership started. listen agreement as well, elemented nonexclusive patent cross-license, a number of things in there that are simply helping yahoo! shareholders feel like, you know what? maybe we did get more last week when we were feeling like we got less than what we thought we would get. so you can see microsoft, what it is doing this morning as well. there's a longer or shorter whatever than, one-month. we want to come back to cf and the fertilizer wars. earlier i gave you some of the rundowns of the increased offer. 3.7 billion unsolicited bit from cf. i failed to mention a couple interesting parts of t first of all, cf scott and antitrust

already on this. so if terra were to actually say, we like it, they could get the deal done quickly. how quickly is a matter of some discussion. could it be as soon as a month? will it take three months? but the point is -- the key stock here, of course, is terra up over 5% this morning, but an interesting component was cf's inclusion of what we'll call a reverse cvr. they're going to give their own shareholders 5 million new shares kind of interesting. why would you do that? one reason is you're probably not going to have an actual shareholders vote on this deal. if terra were to engage, because we think it will get turned down, maybe this is one way of keeping those shareholders happy. we'll see, no word, no talks at this point, simply a higher bid.

erin, back to you. >> thank you, david. up next, it's cross hairs on flash trading. will it really level the playing field? or is it another case of government gone wild? >> but first e.o. trish. >> hey, good morning mark, good morning, erin. we have a lot on "the call." first we'll be talking live with jim lents. toyota is saying it will come out with more artable cars. this is a first on cnbc for you. it looks like the senate will extend that cash for flu clunkers. we'll be talking live with the head of the automobile dealers association. plus back to school is around the corner. coming up, what do you do as an investor? we've got it for you, plus the latest market news, only on "the call" at the top of the hour.

now to a controversial form of trading. senator chuck schumer saying the s.e. kre has assured him the

practice of flash trading will be banned, but the s.e.c. says we'll look into it, but no decisions have been made. anyway, let's get to our flash trade task force with their insights. capital markets research and advisory firm follow high frequency trading. and, yes, there's a difference between high frequency and flash trading. adam and dave is here. adam, is there any way to explain to a layman what flash trading is? >> essentially it's when an order comes into the market and it's exposed to the crowd. the crowd has the right but not necessarily the obligation to execute against it. >> don't all orders get exposed to the market? >> what happens is that this order is aggressively priced. and let's say nasdaq has that order. and they can't execute it. then before they route it to the new york stock exchange or to another competing venue, they'll

expose it to their crowd. but by lawyer prior to the introduction of flash order, they would have had to immediately send it to that competing exchange. >> so flash orders allowed this f. to hold them for a moment? >> yes. >> and we mean what is this. >> 30, 40, 50 millie seconds. it's less than a second. >> and that will make a difference? >> what could happen is that let's say nasdaq gets that order, exposes it to the crowd and because now that crowd is automated and high speed, it's faster at sending that order to the next exchange than the exchange itself, they could actually beat the investors to that bid or offer. >> so is there -- sometimes we oversimplify, bru on a basic level it seems that anybody getting information ahead of anybody else is against what markets and u.s. markets and trarps pa

transparencies stand for. >> it put the individual investor on the same playing field. but the problem is when they send these flash orders, these high frequency computer, they actually tie in together. so they can do one of two things. if they get a bid, they can hit the bid before it goes to the market or they could do another thing. after seeing a bunch of flash orders, they can go out and rip the stock. so other people are seeing this, mom and pop aren't seeing this, so these people are the three biggest venues. is this a lot of information that they're getting that no one else is seeing. >> so do we just say this isn't somebody neb was really talking about, it comes out as a huge percentage of volume, trades executed, should we just ban it, nobody gets anything before anybody snels. >> i think one of the problems is that the s.e.c. approves the functionality at the exchange level very quickly and without a lot of public comment.

so evening what the s.e.c. commissioner is trying to do is say let's look at this more closely, let's hear from a wide range of market participants about -- >> why did they approve it the first time, though? >> it was kind of grandfathered in because of previous functionality. >> here people used to yell back in the old days before there were computers. you'd yell out different prices. some would be high, low, to try to find the right place. essentially in the electronic form of finding price, right? >> exactly. and what's interesting is that it existed here and then because of the modernization of the markets and how quickly things trade now, it was abolished. and now as of late over the last couple of months, the exchanges have brought it back with the exception of the new york stock exchange. so it's interesting that there have always been practices where orders were exposed to people that didn't necessarily have the

obligation to execute against it. so because we're in a high speed market, they're able to take advantage of that. >> david? >> who is the winner, who is the loosers? are a lot of black box funds doing this kind of stuff and if it is banned, will they find themselves unable to generate the profits they had in the past? >> well, yes, i think it will affect their profits somewhat, but the loser is the mom and pop, the individual investor statist sitting on the offer and a million trades can trade at 8:01 and they're not get the bill. plus on top 6 that, when you you incorporate the high frequency trading, these guys are storing all the data. they're storing this, so they're seeing a bunch of bids before neb else. and they can go out and rip the stock when everyone else is leak why did this stock just gap up leak that. >> i'm sorry to cut you off, we got to go.

we'll be right back with a final word. ♪ (tucci) more bars in more places. at&t. the best coverage worldwide.

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you know about the calling going on in the outback. complicated issue. i made a dead pan skroek about the prime minister of australia and about the wild camels. we would like to invite of the prime minister to come on. i know mark is -- >> this one is crying. >> we would like to invite him on to talk about that but also about the australian economy at any time. >> yes vrks a great day. save a camel. good morning. welcome to "the call." i am trish regan. 90 minutes in to trading here at the new york stock exchange, a down day overall with the dow off now 83 points on the heels of that ism number. we'll talk about that. plus, just exactly what is the retail play? ahead of the back it school shopping season. we will discuss. good morning, larry. >> i'm larry kudlow. looks like the senate will extend the cash for on clunkers program. we'll talk live with the head of the national automobile dealers association.

we can guess he's happy and guess what? i am now in favor of cash if clunkers. i've changed my view. >> it's going to be a crazy show. the head of toyota usa jim lentz will join us live. the company announcing it will build and affordable sports car within the nest couple of years. this is "the call" on cnbc. stocks moving low other some weaker than expected economic data. job losses in the private sector fell in july. and ism nonmanufacturing index came in weak than expected. all that weighing on the market. the dow down 82 points. almost a full percentage point. the s&p trading the down side also. it's down about the same, we're below