don't dismiss. that is a much broader look. it moves up not only on a revision but the actual number moved up to over 3.6 million. the marketplace was not as great as one would think. the market and maybe taking up the slack in equities is where this dynamic, up about the same. 40 plus in the dow. interest rates aren't much changed either. remember, you're looking at six, seven-week highs in yields. the most important issue today, european central banks met. and the bank of england i'm flied for weeks they were going to stop quantitative easing. not the case. they added more money in. as our last guest on "squawk" talked about more quantitative easing, more potential inflation down the road. back to you, mark. >> thank you, rick santelli. let's see how this is shaking out premarket. got all the reporters standing by. we begin with cool breeze here at the big board. >> this morning for stock market, it's all about retail sales. here's the story. very mixed picture in general more missed expectations for

july retail sales than beat expectations. in fact, a number of them significantly missed. however, there were some very interesting bright spots. for example, kohl's and chico's did positive comps. and macy's, jp penny guided higher. a little bit of a surprise. downside, double digit decline in sales. abercrombie, 20% decline. american eagle, saks, double digit decline. cost cutting and inventory reduction story as opposed to revenue growth. number two, demand remains poor. but inventtory levels are starting to get lighter and that's a good side. this was widely discussed this morning. cash for clunkers might be a problem for retailers. if you're making a $400 a month car payment that's an issue. that means you have less discretionary spending. tradertalk.cnbc.com. brian shactman, how are we at the nasdaq?

>> better than yesterday. pretty weak. good at the open. cisco reported earnings, good on the top and bottom. cautious moving forward on marg margin. john chambers, ceo, will talk about that. con cast beat on the top and bottom the taxation helped them out. the most important one is they want to charge for online content across the board in 2010. the "wall street journal" is only one that doesn't at the moment. myspace write down hurt their losses. coinstar, they have those red box video retailers, kiosks for $1. 20th century fox wants to withhold releasing some of their titles for a while. they're getting a push back because it's getting movies out cheaper and the movie companies aren't making as much money. they were hurt on their earnings, down 31%. but that is the issue there.

staples, conviction buy list at goldman sachs. up 5.1%. i want to talk about the retail picture. costco a little worse than expected on the comps. zoomie's was down 20. that's decent news. let's go down to the nymex where we have bertha coombs. >> thank you. we have a mixed situation here in the energy market. we've seen oil weighed down by the stronger dollar. the dollar turning around and getting stronger on the back of that surprise move by the bank of england to issue more quantitative easing. if you look at the rest of the energy products, they're trading to the upside. big gulf coast, off the coast, that's support that gas. get the natgas out at 10:30. interesting what the strong dollar, gold would be down but gold back above 970.4

some folks are worried about u4 inflation and looking at maybe 4 they would rather have hard currency rather than fiat money. back to you. >> appreciate it. most asian markets rallied overnight. nikkei up 3.3%. hang seng and hong kong up 2%. australia, up 1 1/2%. in shanghai, as you saw, down. that was a drop of just over 2%. martin baccardax is joining us in london. good morning, martin. >> hey, erin, how are you doing? we're doing okay. we had two that you have been referencing, that is giving the market a pop. particularly the ftse. i want to check the numbers but i think that's an intraday high for 2009. what's driving it, as you might have anticipated, the banks are getting a nice bid this afternoon from quantitative easing from the bank of england

to 235 billion in sterling. whether or not it was a surprise, they've been going around the united kingdom explaining what it means. that for me was a clear indication the bank was at least contemplating its engine tension. that's what they did. basic resources, utilities, europe is down but not by much. let me see if i can grab a ten-year yield chart. 3.75%. guilted rally quite strongly off the back of that. one thing i will say though, erin and mark, and i respectfully disagree with rick santelli. we have one long-term example in japan no, inflation. two short-term in the united states, inflation not a concern at all. >> okey-dokey. i'm down here on the floor with warren, the hardest working man on the floor. cnbc contributor, he has so many he had -- his business card is this big. good morning, warren. what do you think of this

market? >> i tell you, you used the word last time i was on with you, resiliency. it's holding true today if look at the retail numbers were mixed. jobless numb bess were okay but still not great. yet you have the financials now all climbing. everything that looked bad that you didn't want to own is all going through the roof. it looks like the banking index and financials are going to pull this market up once again today. >> the big question is, is it too late to get on board? >> i'll tell you, every day you go up a little farther you get more and more dangerous to jump in here. i've been expecting a pullback but i've been run over the last week and a half waiting for that to happen. you can't fight the momentum. you have to wait and see the clear indication that things are going to level out and roll over before you jump in. might be a tiny bit of upside left here. >> tiny bit? >> tiny bit. >> fair -- >> look how far we've come in such a short period of time. >> i agree. up -- >> the industry is 40%, 50%. >> 2800 dow points?

>> yeah. >> all right. thank you very much, warren. >> my pleasure. >> back up stairs to erin. >> thank you. up next, cisco systems, chairman and ceo john chambers is going to join us to talk about revenue this quarter is going to call 15%. where are we in this economy right now? plus, the faber report, david mulling media earnings. and the ceo of gold field, one of his favorite stocks. that stock, mark, is up about 26% this year. sounds like something mark would like.

all right. cisco systems was better than petted in terms of the bottom line for the quarter. profits were down. the forecast is getting a lot of attention this morning ability revenue dropping about 15% this quarter. ceo john chambers said on the company's conference call the fourth quarter could prove to be the tipping point. what does he mean? cisco shares will open lower this morning. who knows where they'll close. let's get more on this story. john chambers, cisco chairman and ceo. john, always good to see you. >> erin, it's a pleasure again. how will you doing? >> i'm doing well. i'm excited to have you on because you've been honest with us about where you stand and where you saw weakness in this stark downturn well before lehman brothers. you said this could be a tipping point. obviously you still got declines in a lot of places. so what do you mean by tipping

point? >> sure. erin if you watch what occurred during our q-3 when i came on you all's show last quarter i said for the first time there is stability in our orders. if this continues, this could be the bottom. we would want to watch it for a while. the next thing we would watch is our first upward movement. that clearly happened during q-4. for the first time from looking at q-3 to q-4 we saw normal order activity. it was up about 10% from q-3 to q-4, which is what normally occurs during a normal gdp growth time period. we've been through the first three quarters in fiscal year '09, down about 10% every quarter versus what our order rates would normally be sequentially. too early to say if it's a definite tipping point but very possible. we'll look back and say the bottom was hit during q-3 and looked up during q-4. i would like to see more data before i state that.

>> you're being cautious. i think you've been clear on what you just said there. but how much of a potential uptick or how much of any stability that you are seeing is coming from real economic stability as opposed to government stimulus stability? >> well, really if i can break your question into several pieces, erin. we're moving into 40 new mark marketed a jay sense smarket adjacent so we're moving from video to flip camera that i talked about the last time to what we're doing in new emerging markets, to the data center, spark connective community. we're starting to see good growth in those areas. secondly, it's probably monetary policy that is having a good balancing effect both here in the u.s. and around the world and you saw what the bank of england's signal was today to continue that focus. the stimulus package is just starting to hit here in the u.s. so far, it's been mainly transfer payments, a little bit of infrastructure payments, and as infrastructure starts to take off we'll probably get our fair

share of activity. our federal business, for example, was up 17% year over year. >> i see a lot of criticism in the media about your management structure. people -- you've created a lot of committees and everything. and critics are saying that it's making your company less responsive to changing markets. care to respond to that? >> oh, mark, you're giving me the soft spot down the middle of the plate. we change the counsels and boards back in 2001. it resulted in an organization structure that i think will be the model for businesses going forward. in fact, most of the articles written on this have been extremely positive in terms of the structure, the innovation. you talk to ge or walmart or jpmorgan chase, they get it, they know where we're going with this structure. and companies have never moved on more than one or two major products or new areas a year and been successful. and yet we're going to move on

every two dozen. i'd like the give and take, mark. controversial two or three years ago, it's working very well. >> according to the article in the "wall street journal" which you may have not seen on the north coast. >> i get it. >> on page b-1, hp beat you to market and remained ahead of you in the market for months because of your cumbersome committee system of response. >> well, mark, i didn't draw that correlation from the article. let me take a step back. >> 2007, hp started promoting a warranty for its switches under cisco's new structure, decision about how to respond was delayed as it worked its way through multiple committee, et cetera, et cetera, and cisco didn't match hp until this april. >> mark, first of all, we've done very well versus hp. our switching margins have been very, very solid. our routing margins have been solid. we'll probably gain market share in the next one of two quarters. we're doing very well in switching in the data center.

if you watch how we responded to a number of good competitors in switching, we've done very well in our channels. actually most of our competitors are following our strategy. stay tuned, mark. i'm looking forward to a healthy give and take on that topic. >> all right. now, you said on the conference call you will soon expand the number of new businesses cisco is targeting to 50. >> over time, yes. >> you know, some might look at that and say, gee, you know, they're heading down the road of becoming the general motors of tech, not focused enough, too diffuse. >> ouch, general motors. >> one of the problems with general motors is they had too many marks. >> mark, i realize today you're going to challenge me a little bit. this will be fun. if you've watched what we've done in all of these markets, they tied together. what we're doing with smart connective communities, in

korea, $700 million community for cisco and it's doing good. we're doing everything from intelligent traffic to energy to security, et cetera, within that. it ties to our smart connected buildings approach. it ties to what we're doing in the consumer. it ties to what we're doing in the search provider. so all of these actually tie and help each other still along this long. i think when you vnd i have this give and take over the next probably several years, we'll look back and see these counsels are probably what froek us abay from our peers. we're the only high-tech company that's been successful of moving outside of two or three products and become the number one player. we've done that in over a dozen. i think we stand to chance to do it with several dozen more. >> one company i keep hearing a lot about, john, is hp, that they sort of -- were not doing so well but now they're a real competitor to you. a lot of investors, they want to get a sense of how concerned you are about hp coming on your turf. >> well if you look at where we're headed, erin, we're

probably going on to a lot of our turf from the consumer market to service providers, all of the way into the data center. i think it speaks to the role the network is playing. the network is a platform for innovation, collaboration and execution. so i think you're going to see a number of our peers perhaps come further into our traditional area than we would have liked. but at the same time, you're seeing us be aggressive in the data center versus hp and other key players. if you haven't got good big competitors coming at you you're probably not in the right market. the good news is we're in a lot of markets with a lot of great competitors. that's why, erin, i feel comfortable with the long-term 12%, to 17% growth for our business. this was a step in the right direction. >> bottom line, where are the lion's share of that come from, from the u.s. or from china? >> well, the majority of the growth, as you look forward, about 50% of our current business is in the u.s. i think if you look at total global markets for us and other high-tech companies, the vast

majority of growth will come from outside the u.s. we are positioned well in the u.s., both service providers, enterprise, commercial, small business and consumer but we're also positioned around the world in india, china, mexico, et cetera, very well. so i like our balance, i like our hand, erin if i think this quarter was a good step in the right correction. >> all right. mark haines is looking forward to many years. >> it will be fun, mark. erin, good to talk to you again. >> good to see you, john. >> made me sound like a terrier who won't let go of the bone. >> it's your job, mark. it's a compliment. up next, the faber report, starring the man named as the sexiest business reporter. >> oh, yes. >> by "business insider." david pouring overcome cast and directv results. >> and later, your cnbc edge, hang tight through the correction, there will be a rally on the other side of the rainbow. ♪ ♪

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you're watching cnbc's "squawk on the street."? >> catchy tune. let's take a look at media this morning. we got earnings from a number of the larger player, both those who distribute programming and ? those who create programming. let's start off with comcast, the largest cable company in the country. reporting what were numbers that are being cheered by investors. you can see the bid ask right now is quite wide.

expect that the stock will open higher. that based on the free cash flow numbers. eps, net income, all up nicely. but the beat, the real beat is there. i know it says flat for free cash flow at $1.2 billion but that was not expected. the company was not expected to generate nearly that much free cash flow for this quarter. and the result or i should say the reason is because capital expenditures were down 14% to $1.1 billion for, again, the quarter. the call is going on the right now. comcast ceo brian roberts saying a number of things. none of which are -- we'll try and get you more information on that capex number in particular. but you know, they upgraded a lot of the plan already. digital and everything else. and a lot of investors obviously are going to be focused on whether, in fact, that will increase a lot. he believes it will only increase modestly in the second half. but we'll still be below, and pardon my back here because i want to read this headline.

still be below what it was in fiscal year 2008. that's the reason for cash flow. comcast was quite strong. that and bliusiness is good. as for business being good, dire directv had another strong quarter. the stock doesn't look to be doing too much this morning. and, of course, remember, this company is in transition of ownership if you will, at this point. and then conceivably could become a takeover target in the not too distant future once that transition, remember, from liberty to direct in a sense being free of liberty, if you will. and john malone who won't have the way to block the deal any longer. eps and net income, and revenue for directv. 15 years, 24.2 million customers it has in u.s., latin america and new mexico. been around quite some time. the future will be the key for

investors in terms of once the deal is done, the separation from liberty, what happens there. you know what? i'm out of time to tell you about news corp. perhaps we'll leave that one for later. mr. haines, back to you. >> thank you, mr. faber. the final countdown to the opening bell coming right up.

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for 30 days plus get $100 cash when you open an account. you're watching cnbc's "squawk on the street." we are live from the financial capital of the world. the opening bell is going to ring in 25 seconds. welcome back. time for the countdown. the fooutures finished the electronic session 15 minutes ago at plus 420. that's good for maybe 30, 40 points on the dow. and largely because the jobless claims number was a little better than expected. the jobs picture still not good. a little better than expected. here at the big board,

greatbatch. ticker gb. oh, they make components for medical devices. great name for a cookie company. >> yeah. >> and at the nasdaq, avago technologies, ticker abg. analog, semiconductor devices, celebrating a listing today. >> let's get to our market reporters. obviously not fully open. we're down, we're up one point. bob pisani, take it away. >> what you want to do is talk about retailers. concentrate on the financials quickly. out liar financials, cits, aigs, freddie macs, fannie maes, all over the world. the crowd here, they're waiting for cit and freddie. very mixed picture. in general, more companies missed expectations than beat expectations. that's according to ken perkins. that's a little bit of a disappointment.

we did see some very interesting trends here. kohl's and chico's was positive. nordstrom loss but -- in sales but it's much better than expected. there is earnings trend improvement story that's going on, which is why you're i don't guess to see some companies open up. macy macy's, gap, jcpenney, all raised guidance. some companies continue to report. abercrombie down 28%. american eagle, saks, all double digit decline. number one, still a story about cost cutting and. inventory reduction. still, number two, the demand still remains poor but inventory level are getting leaner and we're hear that consistently. finally, unusual amount of comments from trader rs about the cash for clunkers program and the extent it might compete with retailers. $400 for a car payment every month, less discretionary

income. tradertalk.cnbc.com. how are we at the nasdaq? >> just a smidge below 2,000. by the way, ipo the biggest nasdaq ipo of the year, 356 million. start trading at 10:40 a.m. eastern time. i'll have much more on the company next half hour. cisco, you maerd from john chambers on their earnings. listen, this is the step in the right direction. they are cautious about what they had to say about margins. down half a percent. google up just about two bucks. and we have a situation with apple. research in motion had a strong day yesterday. still going .4 of 1 m% to the upside. comcast strong on the top and bottom line. earnings up 4.7%. they were definitely helped by taxation. and finally, newscorp., took a writedown or my space but up right now. they want to charge for all

online content. we do have breaking news. i want to go to mary thompson at the breaking news desk. >> thanks, brian. on the s.e.c. is going to be settling civil fraud charges with hank greenberg who is the former chairman of aig. this according to the "wall street journal." cnbc has called in to mr. greenberg's lawyers. they have not yet been returned. keep in mind that mr. greenberg was involved with a reassurance deal in 2000 that eventually led to his ouster at aig in the wake of this, a number of executives at the company that was on the other side of this deal, a unit of berkshire hathaway, ended up going to jail. under the terms of the settlement, greenberg will pay the s.e.c. $15 million to settle past accounting issues. also, aig's former cfo howard smith is going to pay $1.5 million in a settlement. the "wall street journal" saying an official s.e.c. announcement is expected as early as today. a call to the s.e.c. earlier today, agency responding in a no

comment to cnbc. but again, former aig ceo ken greenberg settling with the s.e.c. over civil fraud issues that occurred back in 2000 or 2001. back to you. >> i'll take it from here at the nymex, mary. we're watching mixed trade in the energy trading. and we are seeing oil lower, although it's very interesting thing to watch in terms of the split between brent and nymex crude. the present, the spread has now widened to nearly $4, with present hitting a new high for the year earlier today. part of that is fundamentals. in the north sea, there is a bit of outage there because of maintenance. so that's what's supporting that. oil this morning in front of the contract is lower because the dollar has gotten a bit stronger that morning after the move from the bank of england issuing more quantitative easing. if you look out to the curb you

still do see a little bit more support towards the back end of the curve. and when you look at the products today, heating oil continues to be higher because, again, the heating oil situation in terms of production is lower. we did see a surprise draw. natural gas inventories are due out in about an hour ago. we are expecting to see bills of around 60 billion cubic feet. rick santelli, over to you in chicago. >> thank you. indeed the dollar index, you throw a bunch of currencies in an index, a third of a percent higher. smart bounce but a bounce none the less. look at the components. we are making a little progress against a wide array of the major currency of the industrial trading partners. up against the swiss a bit, the euro a bit, the pound more than a bit. we're up a nice helping against the yen. which begs the question, as the bank of england is embarking on more asset purchases, is this going to result in inflation? a lot of the debate is if you

look towards japan in the last t decade, it didn't. but they're not a consumption economy. they're an export economy. the u.s., we're all basing talked about pisani. the recovery is going to be inherently anchored to consumption. that's a key difference. open for debate. interest rates just a bit higher. but it's not the direction. it's where they're sitting higher. six-week highs. mark, back to you. >> rick santelli, the market is higher after the slow. dow is up 41 points. joining us in the cnbc edge partner and portfolio manager, and some of the dividend kelly, chief market strategist, jpmorgan fund. i'll begin with sarat, are you bullish? >> i am. i think those who stayed invested have done well. they are going to be definitely potholes. the train hasn't left the station. i think what you're going to see over the next three to five months is digesting these earnings, stocks are going to start going up but there's going to be opportunities.

it's no longer sector play, it's going to be stock specific. >> the train hasn't left the station? >> nope. >> we're 2700 points up from the bottom. >> yes. and i think the opportunity -- >> that's a long station. >> well if you look at the train ride from last october, you're still below where you were. and i think the opportunity going forward in the next two or three years is going to be much better. >> what about you, david kelly, do you share that same optimism? >> yeah, i do. my en, a lot of people are talking about how this is going to be a slower than average expansion. it's going to be a slower than average expansion from a big recession. but big recessions tend to have bigger bounces. the only two post-war recession which didn't really comparable were '75 and it is 82. it grew 7% in the first year of the expansion after that. i don't think we're going to get 7% but if we got 4% from fourth quarter this year to fourth your next year, that should lead to a big bounce in earnings. i agree with sethi, just to get

back to where we were in october 2007. >> but why -- why are we going back to where we were at the peak? i mean, fair discussion, yeah, we have a long way to go to get there. but why should we assume that's where we're going? fueled by leverage and unsustainable consumer spending, wasn't it? >> no. there was leverage in the financial sector but as for unsustainable consumer spending, we had a very irresponsible blow-up in subprime landing. but i don't think consumer spending apart from that is unsustainable. we're seeing a huge amount of mortgage refinancing. sure, consumers have got too much debt but that's kind of the american way. i do expect consumer spending will grow slower than the rest of the economy. i don't want to over state this. if you just get inventories, housing, and auto sales back to just average levels, that adds 4% to gdp growth right there. >> doesn't get you back to 2007.

>> well, i think you can certainly get back to 2007 earnings level. and if you do that, pe ratio in the summer of 2007, above average. but even if it took you five years to get there, we don't have to get there overnight. five years to get there, you will get double digit returns over the next five years. >> i think one of the important points is i don't think you need to get back to that amount of the s&p but you need to be in the right stocks. and i think that's going to be much better than saying i just want to be in the market. because the market is going to be completely different. you know, i disagree a little bit because i think consumers are go to get hurt. >> the nasdaq is not back where it was. the nikkei in japan is half where it was. i'm not saying we're going to go the same way. but we had a bubble. >> you're right. financials are not going to be 25% of the market and energy is not going to be 15% of the market and retail is not going to be the leader. you're going to have stocks that are going to be specific whether it's in the industrial sector or consumer staple sector.

you really have to be careful in picking your where you want to place your bets and not just say i want to be with the market because i don't think the market per se is going to come back to where it was in the levels. but stocks and being in the right area and avoiding the areas such as, i think, retail and autos, which have had such a big run. but i don't think that's sustainability because gdp growth is going to be 1% to 2%, not 3% to 4%. >> one of your favorites is ecolab, ticker ecl. david kelly, you got any bright ideas? >> we're going see strong growth in that when this thing turns around. in jengeneral, i like technolog. i think the main thing is investors, this economy will turn around. it will probably grow a little bit more stronger once it starts growing. >> david kelly, sarat sethi, thank you very much. up next, stock is up 13% since the bottom. and the company is one of jim

cramer's favorites. ceo of gold field joining us next live from johannesburg. and later, the ceo of vertex pharmaceuticals is sitting down with mike huckman about the hepatitis c drug. that's up 25% in the past three months.

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that is good news for some companies. they really benefit when prices go up. africa's second lashlgest producer of gold reported a quarterly loss this morning. production was higher than the previous quarter. let's find out what happened and where gold is headed. stock is up 25% this year and it is getting a bit of a pop today. up nearly a percent. joining us from johannesburg to discuss the company's earnings is nick holland, ceo. let's start with the main question that so many of our viewers have looking at gold at

968 an ounce right near that 1,000 mark and an all-time high. people don't seem to be that worried about inflation. do you think gold prices could stay where they are or even move higher? >> well, certainly one of the things that i've seen talking to investors around the world, is that gold is now emerging again as an investment class and a lot of portfolios or fund managers. and investment demand is certainly going to drive the gold price. and i would say that gold has a good underpin, at least of $900 an ounce. and could certainly go a lot higher than that. and with potentially inflation fears around the corner, the economy has tried to reinflate their way out of debt. i think the potential for a high of gold prices is certainly there. >> so, you have the potential for a much higher gold price. investment's already, what, 60% of demand overall for gold around the world. and what it sounds like you're

saying is even now when equity markets have started to recover, you are seeing investment managers trying to increase their allocation to the metal? >> well, yes. in fact, investment demands in gold is less than 50% now. it's probably around about 30% or 40%. and that, i think, will rise over time. and equal at least jewelry demand as more fund managers take up gold. and if you look at the etf, for example, you know, the etf when it was launched, they put it together and thought that 500 tons of gold would be a good solvent. we're nearly four times that now and it's increasing. i think that gives you evidence of the trend of demand that's increasing. >> i'm glad you mentioned those etfs, mr. holland. is it not possible that those etfs are distorting the market and that the price of gold is, in part, a liquidity bubble much

like we saw in oil a year ago? >> well, again, i think it depends whether you believe that the investment managers are going to buy more. and if you look at their funds, ran about half a percent of total funds in management, are invested in gold. so we're very low at the moment. and, yes, there might be some sellers but there could well be more buyers than sellers going forth. >> what is the supply situation look like? i assume with prices at this level, lower yielding properties become profitable. are we going to experience a surge in supply? >> not at all. one of the things you are seeing is that supply is declining every year. it was around about a 3% reduction in 2009. i expect you'll see a similar reduction this year. that's because in the days when the gold price was much lower,

there was a big cutback in exploration budgets. as you know, there's a effect on exploration and it's going to take years to get effect more ra exploration to get back up where it needs to be. new mines is more expensive. servicing is more difficult. it's going to be under pressure over the next few years. >> thank you very much, nick holland. we appreciate you taking the time. mark, i want to say because you did have different numbers on investment. 59% of demand of gold being investment. it's interesting -- >> he said it was below 50%. that's obviously what he is saying. but it wound indicate a lot more possible growth. coming up, retailers reporting damp -- the same as moist? >> moist, damp, i think damp is a little wetter than moist. but i'm not sure. >> moist sounds worse. >> yes.

>> moist same-store sales. >> sounds moldy. >> going to come out of the cave to talk about those numbers. we'll go inside in a moment. but first, stocks on the move, including american express and wendy's. you're watching "squawk on the street." thththththththththththth

good morning. welcome to "squawk on the street." i'm matt nesto with stock tons move. did you see amex in the dow? the stock is up nicely after they said their write-offs in july were 9.2%. that is an improvement from a 10% write-off level they posted a month ago. in fact, it's the first time in 18 months that they've seen some improvement. the ceo saying there, look, it is better than expected. we're please with that. the he reality, it's still h historically high numbers. we talked about aig and tin surers going crazy. bond insurers are flying here

today. both nbi and amback is up 20%. their numbers and forecasters still murky and cautious but wall street is looking for little things like smaller set i side, et cetera, to help that one out. unilever up very strong today, up ten-month high. volume growth was good. margins look to be improving in the second haft of the year. and if you look at the retailer, mark, i'm showing 29 to 35 in the retail index. higher here today being led by macy's and limited and the gap. back to you. >> thank you, matt. stay right there, we're going to talk retailers posting the lower sales for july. this is a key back to school shopping season. so inguide the numbers. what it means for the health of the sector. chuck, analyst with jpmorgan and, of course, el nesto grande sticking around. is back to school a bust? >> it's really too early to

read. you're only ten days into the back to school period. and there is a tax holiday shift that moved sales out of july and into august. we'll get a better sense of that. jcpenney did call it out this morning off to a positive start. we'll know over the next month. we think it will be softer year over year. >> what's going on with these numbers we're seeing? >> i mean, generally speaking, consumer continues to be retrenched on employment as we know is really high. you have certain retailers like kohl's showing the first positive comp in the department store in quite some time. nordstrom down 7%. much better than planned. retail becomes a relative game and relative expectations by and large, the numbers are better. more important than that, etf upside out of macy's was very impressive. we think the same will happen at nordstrom, kohl's raise today, jcpenney's raised today. that's what's moving the stocks today. >> matt nesto, it also appears, maybe this is a headline flow,

there's been more expension. and we know family dollar and dollar general has been expanding. but jcpenney, for example, big splash in mid down manhattan. >> we talked yesterday about plaids and trends and that is going to speak to inventory. these companies are dealing with lean inventories. if you look at the trendy retailers, the trendiest of the trendy, abercrombie, with huge comparable declines sort of expectations and yet both are trading higher here today. that makes me scratch my head, chuck. what's going on there? >> great question. brian covers those for us. on your inventory point, inventories are going to continue to be lean. a lot of customers are going to want to shop late. probably makes sense for some customers to shop early to get those products because inventories are going to be very lean. >> what do you say about operating leverage, chuck?

that seems to be the macro theme for the market and it's going to be anybody dealing with lean inventories and cutbacks is going to be in a position to have disproportionate gains with a slight uptick in sales. >> great point. it's historically been 3% to 5% and now looking at flat 1% retailers negative, negative 1, negative 2. that's a huge upside driver. retailers with big four operation, kohl's, target, jcpenney comes to mind. sourcing cost on apparel are dropping in the fall. they will fall greater in the first half of next year. big upside from that. >> thanks very much. chuck, matt, thank you for taking your time on those retailers. claims, mark, claims numbers adding to the jobs picture. we've been focusing on that four-week average where that base is the best we were since the end of january. >> looks negative here. all right. the morning's claims number

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fha director james lockhart will depart his jobs at month's end. edward demarco will be acting director until a pearl nent replacement will be named. "wall street journal" reports former aig ceo greenberg will settle by paying $15 million. dow component american express is up about 5% after it was upgraded to a buy rating at citi group. that's cnbc.com news now. i'm courtney reagan. live from the financial capital of the world, here we go, second hour, "squawk on the street." i'm mark haines. indices are swinging between positive and negative territory. american express leading the dow

higher. verizon, pulling it lower. over on nasdaq, activision up 6%. aig, mbia, cit, those are the overall leaders on the s&p. all of them are about 20% higher. erin? >> you mentioned some of the financials, the out liars, 20% highers. we're going to talking about retail, but what about those out liars? >> here's the thing. talking about retailers, the financials first. listen, aig, freddie mac, and fannie mae were up big yesterday. up again today. what do they have in common? don't tell me, oh, aig has an earnings report. got a new ceo. duh, that's insulting. what these companies have in common. put up the financials here. go back to that guidance on the retailers. what they have in common is there's some questions about thp stability of their portfolio. my opinion, and nobody has said i'm an idiot yet, is that some big fund yesterday decided to cover their short positions in

these companies because they felt that there was going to be some improvement in their portfolio. deterioration they saw in portfolio is somehow stopping or improving. that's the only thing that ties them together. everything else is nonsenseical. that's my theory about why they're moving up. don't tell me about the earnings report for aig. please. ridiculous. and maybe it will have some good news in it, but there's something bigger going on. now can we talk about retail? we do what erin wants to do here. >> mark ended on financials. i was trying to slide? >> the high points because that's what mark does best. okay. the important thing is, the underlying trends here are certainly still trading weak. in between that, there are some important companies that have been raising their guidance. here's companies that did it. the reason aeropostale is down, it was lower than expected.

the end at cost cutting game and improvement on the top line and we still aren't see that. maybe back to school sales will help. labor day is way the heck out of there. we're in september. tax-free holidays are going on in august. the south has a lot of them. that may be a big help. we don't know. it's too early to tell. but, i see incremental improvement in the earnings picture. that's good news. >> incremental is something that -- >> i don't know. i don't know how much this cash floor clunkers thing, rebecca jarvis and i were talking about it. it was an issue for her. it makes sense to me that at the margins, it would be competition for retailers. >> with the margin, yes. all right. thanks very much, bob pisani. now let's get to brian shactman at the nasdaq today. you're looking at a major ipo. david faber has been talking about a bunch of those in the pipeline. i don't know how to pronounce it, i must admit.

>> evago. >> listen, you talk about out liars, erin. here's a situation where this company, talk a little bit about what it does, but it initially was going to ipo for $400 million last august. now, $650 million ipo. you take out immediameade johns spinoff, biggest ipo of the year and it got more money than it would have a year ago. price the high end of the range. did 7 more million shares than expected. so start trading at 10:40 a.m. eastern time. based in singapore and california. semiconductor infrastructure company. it's global. it's wireless. and people are very bullish on names like this. so if they can raise 250 million more than that i could a year ago, that's good news. >> what about your retail name friends 12k3w4r you've had two very good conversations on retail so i don't want to be redundant. i want to point out something like zumiez and it's eye popping

when you have a company down comp is down 17% and stock is down 9%. expectation was it was going to be down 20%. you have to analyze the expectations and what we're looking at trading rather than investing. it's pretty amazing that it popped that much. it's off the ties on just 3% better than expected. it's still down 17%. >> all right. thanks very much to you, brian shactman. let's go to the breaking news desk. i believe rebecca jarvis is there. >> we are getting reports the ftc issued a final rule to prohibit market manipulation in the oil industry. the ftc says that the rule will take effect on november 4th. and that violators will face fines of up to $1 million a day. erin, we will continue to report on this as we get more information. back over to you. >> thank you very much, rebecca. now let's get to rick at the cme on what's going on. rick? >> we were all watching intently because a lot of the funds were e-mailing me half hour ago that

it would be releasing something on oil manipulation. so this is more defining side versus actual what the findings are on all of those hearings. a lot of people took their orders out. they didn't want to be blind sighted. in terms of what we're left with after this morning's better than expected drop on initial, but a fairly large drop in continuing claims. interest rates are a bit higher. it's unusual, erin, because we see equities have lost a lot of steam. and yet today, you're not seeing that intraday trading relationship where they buy treasuries. and the dollar, having a bounce. it's about time. >> thank you, rick santelli. jobless claims coming in lower than analysts expected. but the adp report came in weaker than economists were expecting yesterday. so we're still balancing. it's still unclear what we can expect when we get tomorrow's big jobs number from the goldman. let's get some answers. joining us now is jim paulson, chief investment officer wells

capital management. marty, what do you look for tomorrow? >> i'm looking for a down 375,000 or so, give or take 20,000. we saw a decent adp number. seen some pretty steady improvement in the initial claims numbers. again, this morning as well. so i think we're going to be on an improving track. i would be very surprised if we caught a number like we did a couple months ago at 3.25. >> improving in that we're not getting bad fast? >> things are still declining until job market but nowhere near as fast as they were. first quarter average was 691,000 per month. you know, that's -- that's a free-fall. we're not there anymore. >> paulson, what about you? >> i guess i don't have a hard and fast testament for the number tomorrow, mark. i guess i think it comes in around consensus. the thing that i see in the job

market, i guess, is that the initial claims coming off pretty readily off 100,000 from the highs and challenger layoff announcement almost back to the precrisis levels, what we have, i think, is job layoffs or losses have stopped. what hasn't yet kicked in is new job creation. and it will be interesting to look, i think, in the detail of the report tomorrow to see if there's evidence of that starting to kick in. not just the sensational layoffs but actual new job creations. >> might we get a replay of the recovery in the earlier part of this decade when everyone was complaining that it was a jobless recovery? is that possible again? >> well, i think it's certainly possible. the last time in 1991, it took almost two years before we reached our prior peak in employment. and in 2001 it was over three years before we reached the prior peak. so, you know, if you're talking about when do we actually see

jobs growth of greater than, you know, than the prior peak, you know, we could be looking years out. >> go ahead, jim. >> mark, i was going to say i don't disagree with marty. i would point out this, though. i think one of the reasons that we've had sort of these jobless recoveries is because productivity has been so much higher. and in this recession, it's been almost off the charts higher, which kind of suggests it's going to stay higher as we go into recovery. that in essence is a job killer is another way to look at that. but those that do have a job, there's higher real wages that -- higher real compensation that comes from that. and that's sort of the offset that did occur, for example, in the last recession we had even though we had a slow job recovery we had higher real income growth for that recovery. i think some of that may be an offset again in this recovery. >> well, this is, i believe, the second -- we are entering the

second full business cycle since the millennium. and if you -- if you buy that at the millennium because y2k, et cetera, it took a leap forward, then it would make sense that indeed this recovery and the previous recovery would look a little different than the pre-2000 recovery. final word from you, marty. open field here for investors? do you think we're okay? >> the economy is going to rebound. i think we're going to be out of this recession momentarily. but it's going to be a subpar growth, i'm afraid. and so i think that, you know, as far as investors are concerned, it's going to take a while before we reach prior peaks. >> all right. gentlemen, jim paulson, marty, thank you both very much for sharing your thoughts. up next, the ceo of

pharmaceuticals with our own mike huckman. talking about quarterly results, hepatitis c drug trial data. and then the senior analyst with kelly blue book who thinks auto sales will drop out like a bad transmission as soon as clunker cash runs out. plus, jim cramer's been asking where the little guy, the retail investor is hiding. our task force will find out and see when he or she plans to join the party.

street." i'm matt nesto. allstate traded down 3%. came in with strocker than expected results. helped by vary yabl lifestyle on the prudential side. investment gains but the market is a little bit nervous about the run up we have seen in the financials. a little bit soft here today. we are seeing aig go enthusiasm but they're both weaking here today. alexander real estate, the reits are leading within the financial industry group level. they beat on the trailing quarter and their full-year also gets raised. occupancy, 94%. and their rent, also went higher. the hottest retailer in the world today? home shopping network. yeah. up 30%. only one estimate out there but they blew it out. stock at 11-month high. correction score, always a good

business to be in, prison business. very strong. 7% higher. beat by two cents. all kinds of different metrics and how you calculate prison paying and state, et cetera, look positive. mark, back to you. >> thank you, matt nesto. even though several analysts this morning are raising their price targets on shares of vertex pharma, stock trading lower on the back of the company reporting a bigger than expected loss. cnbc's pharma reporter mike huckman back at hq with another first right here on cnbc. michael? >> good morning. despite the stock reaction, vertex pharmaceutical is less of an earnings story and more of a drug development story. drug for hepatitis c. what's referred to is the silent epidemic because the symptoms are sneaky and this disease is little talked about ppt joining me live from boston for a cnbc exclusive and in his first interview with taking the helm with the company is chairman and ceo matthew emmens. good morning. and thank you for joining us.

>> it's great to be here. thank you for having me. >> sure. while you're going to have some data at a scientific conference coming up, your key test results really aren't coming out until sometime in the first half of next year. but for those who aren't familiar with hepatitis c, would you please explain the scope of this problem and why new drugs like yours are so needed? >> yeah, mike, it's the giant wave or it's a tsunami. basically we estimate there's at least 170 million people in the world with this disorder. last 20 or 30 years, it eventually takes your liver. it can kill you or cause cancer or cirrhosis. it's the baby boomer generation. it's going to happen and it's going to cost the world a lot of money and it's going to cost a lot of people pain in their life. >> and the drugs that are out there now, correct me if i'm wrong, make a lot of people feel very sick and they only work in a small percentage of pafshts, right? >> that's true, it is a small percentage. you take them for a year. you don't feel good. you feel like you have the flu. for the outcome that you have,

many patients are withholding and wait for better drugs. >> schering-plough, which as you know, is soon going to be a part of merck, has recently made bullish statements about the safety and efficacy of this drug that is also in late-stage. development. are you and your partner johnson & johnson really or a fight? >> well, we'll see. the phase three data has yet to come. but in our phase two data we showed we work about half the time and worked very well in patients that failed the current therapy. in fact, we worked in about half of them. so they have hope now where they had no hope. the treatment is abysmal in terms of results. so our drug works very fast. half year versus a year. we get good efficacy with it. we'll see in the phase three trials if that holds. we're optimistic. >> sounds like you are. bernstein biotech analyst sought with a research note to clients this morning saying that he thinks you could price your drug

at $40,000 per treatment course. that this could be a $2 billion to $3 billion a year product. is he in the ballpark? >> i wouldn't comment on our side. we don't price until we release. but i would say that the metrics that he's useing are interesting because what you're seeing is a cost to society and ultimately to the government of the united states will be huge with hepatitis c. we think in this country alone there's 300,000 people that have failed therapy, that have no hope now. and you know, there could be a million more waiting out there for this. so if you look at that as liver failure, hospitalization, death, liver transplant, whatever we do could be a bargain for the patient, for the government, and for the other payers. >> mr. emmens, at a time when so many small biotechs are going broke or almost broke, you reported after the closing bell yesterday you ended the second quarter with more than $3.25 billion in cash. you expect more than $100

million to come into your bank account soon. how is it that you've been able to amass that kind of cash and are you simply stockpiling it so you can afford the drug launch, assuming it happens? >> i can just say that the investor confidence in the company has grown very measurably over the last year. over the last 20 years. it's the science, mike. we have great science. we've been cutting edge on this. we are going to bring products to the market that help pafshts in way where they don't have help. it makes the company just right for the right time, no matter what happens with health care changes in washington and in this country, it's going to be best to treat the patients with disorders where they otherwise have no hope. and could die. and that's where we are. we think we have the best agents. and we're not just about that anymore. we have cystic fibrosis coming. and we'll be putting some new drugs in the clinic this year that are pretty exciting, also.

>> lastly, i used to ask this question of your predecessor all the time, and i always used to get the same answer. but now that the company is under new management, vertex' name is always on the short list of usual suspects of takeout targets. might you sell the company even though your market cap now is over $6 billion? >> well, mike, the company is not for sale. i will tell you that i am here to build a world class pharmaceutical company. i can't look in the face and see another company that has the prospects that vertex has to become the next gilead. that's what i'm excited about. you know, mike, we don't have anything to do with selling the company. it's going to be the shareholders' perception of the value. we have several shots on gold. we'll know a lot by this time next year in terms of four or five good products. and we'll see if they are, in fact, products. >> bold statement there's. thanks again, matthew emmens. for more, check out the blog, follow me on twitter at

mhuckman. >> thank you very much, mike huckman. the market is lower largely because of the telecom stock. up next, once again, the faber report. and an amazing sighting that has something to do with a celebrity and david faber. he is a celebrity in his own right. a different sort of celebrity. and later, hedging against the weak dollar with our adviser network. it's the chevy open house. and now, with the cash for clunkers program, a great deal gets even better. let us recycle your older vehicle, and you could qualify for an additional $3500 or $4500 cash back... on top of all other offers.. on a new, more fuel efficient chevy. your chevy dealer has more eligible models to choose from - more than ford, toyota, or honda. so save gas... and money... now during the chevy open house. go to chevy.com for details. right now 1.2 million people are on sprint mobile broadband.

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you're watching cnbc's "squawk on the street," live from the financial capital of the world. >> before david gets to the latest installment of the faber report we wanted to bring something to your attention. celebrity shia labeouf, he was spotted with an arm full of papers and guess what else. look at that david. it was a great read, obviously, the book. it was called "and then the roof caved in." if you aren't familiar with it, it is book of david faber. it's the best-seller and

published. he wrote about it in cass you didn't know. and by the way, david, shia labeouf is going to be in the remake of wall street. >> i've always thought he showed a significant intelligence on the screen. and now i understand why. >> now you know he prepares for his movie roles well. doing his work. >> very smart man. >> maybe you should get him on your next blurb. >> thanks for doing that, shia. erin, want to talk briefly about aig who has had a strange couple of days in trading. trading straight up. in fact, any number of our viewers, i'm sure, noticed yesterday, the stock was up over 60%. this morning it's been up as much as 18%. it is now, as you see, still up significantly. percentage wise, though, not up as much. 70% in the last two days.

doesn't appear to be news related. plenty going on. ben taking over from liddy on august 109. earnings coming out, or lack of earnings coming out tomorrow. no conference call, by the way. best i can tell, this is simply a short squeeze going on. yesterday the borrower and aig worse than dramatically i'm being told by a number of people who had been short to stock or wanted to short the stock. went from what we call a negative 45% rebate to negative 75%, meaning if you want to borrow the stock you have to give as a rebate 75% of the value. r. per year. most people don't short the stock the entire year. but you get the point. now this is no borrow at all apparently today in terms of stock. a lot of recalls going on. so why this short squeeze is being engineered, i can't tell you. but it is having that affect that you're watching right there on the screen. these things typically do play out over a couple of days. we'll see where aig returns to

once this short squeeze ends. but given the huge rebate on the borrow, the lack of stock at all now apparently to borrow recalls going on in terms of people taking it off to borrow. that's what's happening with aig. i wanted to let people know. remember, they have 670 million shares outstanding, i believe. check when you count the government's ownership. so you can figure out the market value on aig. remember that tomorrow when we see just how good or bad things are at this company. erin, back to you. >> thank you, david. the dollar is looking stronger this morning the next guest says we're in three to five years of dollar weakness. take that premise, then how do you invest? he has ideas. let's go to our network. frank, looking at that three- to five-year horizon, what do you do? >> deja vu all over again. as you know, over the last nine years the dollar has developed

50% of the value. investors are looking to diversify. they seek to do this in deposits. they want to build a diversified portfolio to hedge against the global risk of dollar depreciation. >> okay. so are there -- i mean, any stock plays in particular or what? >> i think there's a number of different ones. if you want to play in the short term, which we don't recommend, etf, low price broker and great way to do it. in the long run, using deposits. norwegian chrome or the australian dollar and building a portfolio around it makes the most sense. norway is the story you don't think about on a day-to-day basis. they are cheap. they are the third largest oil producer in the world. >> yeah. >> third largest exporter. solid economy. uniquely in this world, they have almost a 10% budget surplus in over 10% trade surplus. something you don't see everything. >> no. >> get a country like that, gives you but verse indication which allow use to benefit over

the next three of five years. >> i was just there. pretty darn expensive place to buy anything. i mean, i think what, the economists who said out of the big mac index it was the most expensive place in the world? but i clearly, norway and austral australia, commodity plays there. you also mention emerging markets are the way to hedge on this dollar play. >> something is more speculative than merging markets. brazil, russia, india and china looks like an interesting place. it's not something for somebody doesn't want to take too much risk. it's a great three- to five-year play. >> one final question. looking over the longer term, you said be careful short term. there's etfs. if you want to do this and look at a five-year trade, what would that be. >> build a diversified portfolio and currency deposits. you can do it with a single trade and diversify arocross th globe. or look at the brazil, russia, india, and china.

>> lots of interesting ideas there. frank trotter, as we said, from everbank direct. as you said, you can go online and look for all of those currencies. let's get straight to share epperson. sharon? >> natural gas is coming up quickly here. down almost 20 cents. 10 cents in the past minute or so. waiting for the number to come out. it is up 66 bcf. the rise in natural gas storage level was above expectations, which were basically in a range between 69 and 64. the number came in above 66. i'm with john woods now, veteran natural gas trader here at the nymex. a little bit of a surprise? >> definitely. we're expecting high 50s and we have this number. caught people by surprise. you see a big sell-off. >> the sell-off more on this number than another forecast lowering what the hurricane is going to look like. the government coming out, noaa saying it's going to be maybe at the most 11 storms this season. and only maybe one major

hurricane. >> that's true. i mean, you know, that's bit into the market. this wasn't. this caught a lot of people by surprise. it rearranged where we were trading. we shot up on monday 50 cents, up to 416 and change. and we just leveled off to around that $4 level. this puts us down below. we don't have any weather coupled with what they said about the storms. >> tell us how low you think we might go here. add to that there's skittishness in this market. the fcc and their and the oil market saying that as of december 4th, this rule will go into effect. fine people $1 million a day. it's not just affecting oil trading though. >> no. what we can do right here is basically mirror what we did last month where we get down to the low to mid 50s. stagnate there a little bit. maybe pop up. if we broke, get down to 3 1/4, which we did. this month and last month are basically the same accept for that run-up we had here. as far as people getting fined

$1 million a day, that's going to but a big impact on our market. you're going to be held accountable now for anything you do outside the lines. >> already seeing people maybe taking some positions off the table, or not yet? >> it's tough to say. that run-up we had on monday, possibly. it's difficult to say if they're taking them on or taking them out. what you're going to see are more people held accountable for what they're doing. >> i'm going to send it back to you at the nyse. next,with the vote in the senate set for today, senior analysts kelly blue book joins us ou on why auto sales could be set to literally plummet after the clunkers for cash is gone. market is down 36 points. and crude is down $1.23. undefeated professional boxer floyd "money" mayweather has the fastest hands boxing has ever seen. so i've come to this ring to see who's faster... on the internet. i'll be using the 3g at&t laptopconnect card. he won't. so i can browse the web faster,

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all right. here we go. let's look at the markets and the internals. dow down about 27 points. what is that? quarter of 1%? nasdaq getting hit much harder. telecom stocks, as i mentioned earlier, selling off a bit. s&p is in the middle. down about half of 1%. advance decline, we have the same situation today we had yesterday. we've got substantially more, 600 more losers than winners, but yet there is more up volume than down volume. nasdaq, almost 2-1

losers-winners. but as i mentioned, much more up volume than down volume. not sure what that means, to be honest with you. could be some big blocks skewing it. >> that's what he was talking about. when you look at the outlying financials. the fannie, freddie, aig, maybe that's what it was. and that would explain -- >> that could be what's skewing it. >> few names but not moving the overall. all right. the senate is expected to vote today to approve the $2 billion extension to keep cash for clunkers running longer. car companies said the program is drooifg up sales. announcing an increase in overtime. and phil lebeau has been talking about expected increases coming. they believe that after it drives up sales will plummet. there are so few numbers. let's go to irvine, california, where the analyst at kelly blue book which tracks the value of cars is going to give us that side of the story. alex, why do you think that sales will plummet? everyone has been making this case for, oh, these are buyers

that wouldn't have come in no matter what. and so this isn't stealing frl from the future. why do you disagree? >> that's exactly it. it's a little early to make the call but some of the data we've been analyzing currently and the anecdotal evidence we've received from some local dealers have suggested that there's really two types of buyers that are in the market. there's this theory that there's pent-up demand, buyers that were waiting in the wings, waiting for the right type of deal to come around. some of the deals have come to marketplace to take advantage of cash for clunkers. there's also the pull forward effect, pulling some of these consumers in from future periods. buyers that may not have been in the marketplace for three months, since months, in the future. so i think the outcome is going to occur once the cash for cluchkers money dries up is that this demand that was pulled for the from future periods is going to end up driving sales back down further than they would have without the stimulus to

take effect. >> when you mean further than they would have, let's just put the numbers out there. we are running at, what, 9 1/2 million cars sold a year. at the peak, we were at 17 1/2. ford is saying cash for clunkers is putting us somewhere 15, 16. when you say we're going back to where we were before, is that below the 9 1/2? >> again, it's hard to make the call but we're assuming we're probably going to end up back down below. maybe not below 9 1/2 million units per year but certainly below the 10 million units per year we've been seeing all year long. i know the data so far suggested that it looks like for july we were at a sales pace of 11 million plus units. and there's been some estimates out there suggesting that august is at the 13 million husband. as you said, other companies are saying -- other companies coming out and saying it's 15 million to 16 million plus. while this may be sustainable for the short term, i think once

the stimulus is gone, we're going to be right back where we started, if not below. >> should detroit not take this too seriously in terms of long term? >> exactly. i think one of the challenges these manufactures are going to have to face is as we've seen with chrysler where a lot of dealerships are running low on inventory, cobalt and some of these other models that are eligible for trade-in, as they ramp up production they're going to have to be careful of when they time it or cut off production because they're going to end up with excess inventory on dealer lots and force them to slash prices. >> we're running out of time. are we ever going to have a quote, unquote, normal automobile market again? consumers have been educated over the last few years to wait for really good deals. >> right. i think we'll get there at some point. there's still so much uneasiness with what's going on with the economy, apparently. i think we still may be some ways away from what we would consider a normal market. >> all right. >> thanks very much. appreciate you taking the time,

alec with kelley blue book. coming up, jim cramer asking where's the little guy? the retail investor. our task force will find out where they and all our cash are going and when. first, though, jim goldman will tell us what new tricks t-mobile has up its sleeve to catch verizon and at&t. we'll be back.

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we're back. t-mobile may have some new tricks up its sleeve to take on verizon and at&t. silicon valley bureau chief jim "gigabyte" goldman dials us in. >> good morning to you. this is shaping up to be a big

week for t-mobile and deutsche telecom. they could offer real competition to at&t and verizon in the united states. they held a splashy pr event in the skies in san francisco on wednesday complete with 100 sky divers and stunt jets heralding the release of the google android operating system, the new mytouch 3-g. this company this morning saying it has added 325,000 net customers during the second quarter. and t-mobile started the week by unveiling its latest blackberry offering. but now attention is clearly shifting toward what the new google phone can do for t-mobile and its customers. >> it's completely customizable to the user so it's 100% use, no two phones are alike. no matter what you love, what your passions, are that phone will reflect that about you. >> if anything, t-mobile's momentum intensifies with at&t

and verizon as it is going to do that. t-mobile is getting market share while sprint is losing it, despite sales of the pal mpre. it has competition among the carriers. >> the trend of q-2 is better than q-1. the trend is in the right direction. we can confirm our overall revised outlook and that's the good news. but there are also some challenges ahead of us. and the overall market crisis, i don't think is over yet. and we will have to continue to stay parton plus side and keep our efficiency measures intact and in place in order to reach our target. but we will. >> ren erkreneobermann appearin. a turn around is coming, he says, but it won't be in the third quarter. erin, back to you. >> thank you very much, jim goldman. now let's get a quick check on what's making news outside our world where we're down 17

points. alex witt is with us. good morning, alex. >> very good morning to you. thanks, erin. the senate is set to hold a confirmation point on sonia sotomayor with two more republicans expected to announce their support for her. first hispanic justice on the nation's highest court. a former louisiana congressman is facing more than 20 years in prison after being found guilty in a bribery and racketeering case. surveillance videos showing william jefferson moving briefcases in and out of the trunk of his car before federal agents raided his home. and there they found $90,000 stuffed in his freezer. new details are emerging at the gunman who killed three people and himself in a deadly shooting spree in a pennsylvania health club. sodini posted two youtube videos. he also kept an online journal detailing years of loneliness and frustration with dating. and an unruly sports fan pushed the limits at a baseball game.

this cell phone video shows oakland police asking the belligerent fan to leave the game. the guy refuses and taunts the officers so they tazed him. i don't know, guys. i don't think he's any worse than some of the yankees fans i've seen out there. we don't go tazing our guys. i'm just saying. >> no, there's a -- if they want to go during the bathroom during "god bless america." >> that is a problem. i haven't seen that at yankees stadium. a little taz happening. >> they do that. they threw a guy out because he had to go to the bathroom. >> oh. >> yes. during "god bless america." they threw him out. the police threw him out. and he collected a cool 20 grand when he sued them because you can't do that. >> as much as people say it's -- >> he had to go to the bathroom. all right. up next, our task force takes on where's the little guy. was the summer rally enough to grab the attention of retail investors with gobs of sideline

cash? but first -- oh, trish. >> oh, trish. >> prettier, like that lovely voice. cop v coming up at the top of the hour, a lot for you including a couple of major cnbc exclusives here. she's going to talking about her take on the economy and the markets. we're also going to talk live with mindy grossman, ceo of the home shopping network. we want to get her take on the american consumer. right now just exactly what is this retail outlook going to be. we have all that, plus the latest market news from right here on the floor of the new york stock exchange. we're tracking it all for you. it's all coming up on "the call" at the top of the hour. when i was told i had diabetes,

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many markets crediting the big guys for leaving this rally, not retail investors. let's take a listen to what our own jim cramer had to say on this topic. >> retail investors, home gamers have been tiptoeing back in. but you're not the marginal buyer. you vice president flooded thav the way the press is making it

out. mr. and mrs. joe are in. they're idiots. i will sell them. it's the pros who are doing the flooding. >> all right. let's get to our cnbc task force now and see what they think. neil hennessey, who has never been seen in the same place as dr. phil. and -- they've never been seen together -- and paul larson, equity strategist and editor of morning star's stock investor's monthly news letter. paul, what do you think, is cramer right, it's all the big boys? >> i think he's partly right. when you look at the day-to-day volume of trading, i think the institution -- the institutions are clearly driving the bus right now. but the retail investor is getting on the bus and is contributing new capital to the market. when you look at mutual fund flows to equity mutual funds, they've actually been positive the last couple months, every month since april. also when you look at popular retail brokages like e-trade and

ameritrade, they are gathering assets and seeing 20%, 30% in their trading. so the investor is definitely coming back into the market. >> what do you think? >> i think paul is to a certain extent right. what's happening there have been net flows in the equity funds. but 80% of the money that's going into mutual funds today approximately is going into bond funds. it's not going into the equity funds. if you look at what happened last week or a week ending july 29th, the amount of money that the institutions took out of the money market funds was huge inputted into the market simply because you're getting no yield in the money market funds. retail clearly is not in. mark, you know as well as i do, they won't be in until there's something that really excites them, like easy money to be made. >> this is the problem. once they get in, everybody's going to come on, prognosticators and say, contrairian indicator, retail

investor's in and the rally's over. the poor retail investor doesn't seem to be able to catch a break, paul. >> another headwind we're looking at is 401(k)s. a lot of retail investors, this is how they actually invest in the market is through their employer and their 401(k). roughly one in three companies in this country has actually cut or eliminated their 401(k) matching. so that is the major headwind for investors that are interested -- small investors who want to get into the market. >> that's a real interesting point that he raises, neil. that's a structural change. is there any analysis or anything that gives you a sense of how big that shift would be? i mean, everyone's betting on this retail money on the sidelines, but maybe it's not anywhere near as big a stash as people are betting. >> well, i mean you have savings rate going up. people are still contributing to their 401(k)s but not as heavily as they did in the past. people are still fearful of the market. we have seen it come off the bottom all the way from 6,600 back up to 9,200 and people say

it's going to pull back. the confidence is not there for people to invest money. that's why they're going to the bonds, which clearly is the wrong way to go, especially when you have interest rates as low as they possibly are now. i don't think they can get any lower than zero, but maybe i'm wrong. but the odds are they're going to be higher in the years to come and people are going to lose money in these bond funds and fixed income products. >> very quickly, neil, where's my money going to be treated best? >> i think long term consumer discretionary as we spoke before, mark, on the lower end, the walmarts, the rosses, rent-a-centers, companies like that. >> paul, same question. >> high quality, large cap. still focus on the assured survivors, companies on the high ground, i think. >> gentlemen, thank you very much. neil hennessey and paul larson. up next -- final check on the markets. not doing too badly. just can't seem to stay in positive territory. you really need it these days. how come? well if you're hurt and can't work it pays you cash...

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all right, mark, there was an ipo in china, first by a chinese brokerage in seven or

eight years, everbright securities, 1.6 billion. okay. we know there's been ipos coming. that in and of itself is not the headline. this is the headline when we talk about the sustainability of the weakty surge. the offering was 116 times oversubscribed. >> wow. >> right. in an online sale, the offline sale, okay, which was the in person, was 124 times oversubscribed. could be the most incredible company in the world, or -- >> sounds like a bubble. all right. that's it for today. thanks for watching. >> i will see this afternoon on "street signs." we have a great show for you. time for "the call." the federal trade commission has issued a final rule to combat oral market manipulation. it mandates a million dollar a day fine for violators of its new guidelines. shares of prudential financial are down about 3% today, even though its second quarter earnings came in above estimates and it raised the lower end of its full-year guidance.

noaa lowered its forecast for the current atlantic hurricane season. this cnbc.com news now. i'm courtney reagan. good morning. welcome to "the call." i'm trish reagan. we are lower despite the positive jobless data. we will talk about that coming up. plus, we will look at retailers. all about retail today. what is the back-to-school play? we have an interview with the head of the home shopping network. larry? >> thanks, trish. i'm larry kudlow. yes, the benign weekly jobs data could be an omen for tomorrow's monthly employment number. it certainly is a bull market recovery signal. we're going to be all over it tomorrow. we're also going to preview it for you today. >> and i'm melissa francis. in a cnbc exclusive. we will talk live with goldman sachs abby coleman. her big picture on the market and the economy. you don't want to miss that. this is "the call" on cnbc.

all right, stocks down just slightly now. getting the boost out of the gate from a sharp drop in weekly jobless claims. there's also a glimmer of hope in retail sales. more on that in a few minutes. but the rally sizzled, .2 on the dow, 9260 the last trade there. take a look at the s&p now. it is down about .4 of 1% below the nasdaq is down 2 1/3% there. trish, what is it looking like on the floor? >> hashgs it's not bad. we're down 20%. people are looking at the retail numbers. they are getting ready for tomorrow's big jobs report. in terms of the retail sector, we will talk about this a little more. basically we had a number of retailers come in and say, you know what, things will look better the second half of the year. that's a reason for optimism. that said, july wasn't pretty. overall, things were down about 5% for the month and really there was no place to hide. some of the teen retailers got hit the hardest. off more than 9% as