electron. the other guy says, really? are you sure? and he says, yes, i'm absolutely positive. >> you have to read this. >> join us for the jobs report tomorrow. "squawk boon the streetboxon th. ♪ three is the magic number >> we have a trifecta of central banks cutting rates. i'm carl quintanilla with le maine lis is a lee. cramer and faber are off today. futures giving up gains. comments by mario draghi about growth over shadowing the rate cuts. strong data in the rate cuts. europe has to digest the headlines from the ecb press conference as we speak with most of the averages down except for the ftse.

>> a road map starting in china. a rate cut there. further easing by the bank of england. is this a sign the global economy is in even more trouble? >> u.s. data encurrentlying. layoffs are down. jobless claims at a six-week low. what does that mean for the jobs number in 24 hours? >> retailers report misses from cost costco, macy's, target, earnings season gets under way next week. >> apple may have a smaller tablet coming. the sub eight-inch tablet is in the works set to hit shelves in december. >> and joining us is a columnist with the wall street journal. dennis, berman. big shoes to fill. >> i'll try. >> "squawk" had hilsenwrath. talk about a news packed 48

hours today and tomorrow. if you wanted data that would be dollar positive, jobs market positive, we've got it a across the board today. >> the rate cuts from across the central banks suggest that things aren't as good as we want them to be. then we get to the topic they were discussing. does bad equal good and does that mean good things for the market? >> basically futures in european stocks falling into premarket data. at the news conference, mario draghi show sees a weakening of dprout in the euro area after the ecb cut to a record low .75. the deposit rate to zero. the bank of england boosting the bond buying program keeping the rate unchanged at .5%. and china cutting rates for the second time this year to 6%. the depot rate to 5%.

china came first. then there was -- which stole a lot of thunder from the boe. >> it did. second time in two months. last time was june 7. this caught people by surprise. we had the goldman sachs equity strategists from china on set last weekend. we asked specifically what other measures could china take. she said, well, they already cut rates. this caught people by surprise. >> after not cutting for four years and then cutting in june and july. obviously the hard landing argument. >> keep in mind calculus class in high school and college. you had an asimtote. >> check out the big brain. >> i love draghi saying these are temporary measures. we have seen central bank easing for almost five years now. i don't know what the definition

of temporary has become. >> we had a discussion earlier in the week about the euro. some argued that even with a cut would be euro positive. hasn't worked out that way. >> it's down by just about 1%. the old relationship has kicked in in that a cut equals pressure obviously on currencies. the interest rates are lower. the euro is trading now down toward the bottom end of the rei reins put in place. now flirting between 124 and lower. that will be an interesting one to watch in today's session. especially as we zbo go to the jobs report. strong employment data ahead of the key june jobs report. they hadded 176,000 jobs last night well above the forecast of 108,000. better than the revised total of 136,000 jobs reported for may. it's not just adp. claims are down to 374,000. that's versus estimates of 385

bringing into question the conversation we had. is bad good for the markets? so is good -- jobless claims -- bad for the markets because it takes off the table the possibility of qe 3? >> we have seen the feds set the table for perhaps doing more qe 3. in me this is a false bargain. i'm sure you feel similarly. at a certain point the economies have to grow naturally, organically. we see austerity in europe pinch the economies. we cannot have the fed lead us out of a recession. the economy itself has to grow. we're not seeing that effectively now. >> we'll talk about what today's data means for tomorrow. let's bring in our senior economics reporter steve liesman to talk jobs to the central banks. he's worked a long morning. good morning to you. >> good morning, carl. >> what's interesting today? >> putting together decent jobs reports is unique.

given the tenor of the data we have had. the terrible ism manufacturing data earlier in the week. certainly caught people's tension. it's been a while since we had two good reports together. you have jobless claims better than expected and the adp number. you will force economists to go back and say, you know what, my hundred thousand may be light. you may start to jump up or bump up the expectation in the 125 to 130 range. >> it sparks the same conversation. every four weeks, steve, somebody comes out and says, yes, but adp tends to overcount. is that valid this month? >> it's in and around the last several months, carl. i have to do the numbers again which i do before every jobs report after the adp number comes out. it's been in and around where the jobs number has been. plus, you have the household survey which bumped up last month. that will be another.

it's a tough one here. it's the better bet to bet on optimism here. some people have to think, you know, it e's the better first quarter, the fall off in the spring and maybe now things even out a little bit. >> june is a clean month in terms of weather effects and other seasonalities we have seen. >> i'm not hearing anything about weather this time around or issues. i think that's going to be a reason for people to say, the number we get in june tells us where we are. i don't think it's wrong to say, you know, we are growing around 2%, adding 125, 150,000 jobs. i maintained last month wasn't as bad as it appeared in that number. i didn't think it was as good as it appeared with the 200,000 numbers we had this year. >> steve, dennis berman here. we saw in the last report 60,000

net jobs add. >> right. >> it seems the expectations are lower. if we have a small one here it should be encouraging. >> i don't think anybody should be too encouraged. my take on this thing, and we talked about it all morning. the problem with the economy is not that it's about to go to recession. it's only a 2% economy. there is no way to get too excited about, think, either investing or the prospects for jobs or anything. we've got to break out of the 2% economy growth numbers here. we've got to do three, three and a half. we want to make progress is bring down the unemployment rate, put america to work. the thing that hurt the most was the loss of momentum. i felt like in the first part of the year we had momentum. i'm sure dennis talked to people and ceos. that momentum builds on itself. people get confident. maybe they stretch and go further than they were before.

growth begets growth. it's the lack of momentum in the economy that's discouraging to me. >> you make a good point. the central bankers around the world are agreeing with you. they say we don't like the 2% economy. we'll try to make it grow, but it's not happening. >> with tomorrow's numbers given what the ecb and china did today where the u.s. federal reserve will be. jon, your colleague thinks the bar is low. i think it's higher. if we get a 170, 180, 200,000 jobs tomorrow it will be hard. i don't think the federal reserve wants to do a big qe 3 program. they just extended twist through the end of the year so that may be a reason to pause in july, early august. >> thanks, steve. retailers out with the june same store sales numbers. some of the big names missed expectations. macy's, up 1.# # 2 instead of 1.9. full year earnings are below

forecast. target with 2.1. analysts were looking for 2.4 and costco, 3.0. and people were looking for 3.7. a lot of discussion about the warm winter. maybe people bought summer clothes early. with the exception of limited not many upside surprises. >> if you look at the below the headline numbers, for instance at the gap. basically missed by a tenth of a percent to the down side. if you look at where trfs weakness and strength that could cause concerns for the second quarter reporting season for a lot of retailers. they saw decent gains with north america, gap, banana republic and old navy. the biggest decline was international sales were down 14%. yet again we are hearing the notion that international sales, internationally, things are weak. here things are okay. that's just another example of that. >> one of the best performing stocks of the year. >> a turnaround story.

>> they have had a good run. if they have a small retreat here it's a relatively minor blip at least for that stock. >> the journal, interesting piece about best buy trying to create sleeker-looking stores modeled after the apple store almost. inevitably that leads to a discussion of whether or not it's too little, too late. >> i love the photo we had if you looked at that time ipad or print edition. you saw the guys sitting there at the service desk. it makes a good proposition potentially for people who want to come to best buy. the story points out the fallacy in that as a strategy which is that kind of talent gets expensive. low level guys selling printers and dvd players. you don't have to pay much. if you want something to put together a home network you have to pay them more. doing that at scale necessary for best buy, that's the tough one. >> they have also struggled with the mix. do you pay commission, straight

salary? which generate it is best sales and the best customer experience. it's tough against the online guys. >> if they can't deliver it's worse in terms of the consumer perception of best buy. if they can't deliver on the guys who are really skilled, if they can want get the talented people in there to be the genius bar equivalent they blew it. >> the percentage of people inside the stores who look at prices and shop online went from maybe 10 to 50% inside every best buy store. >> 15? >> no, 50. best buy is really amazon's showroom. >> they have a sign saying if we don't have it, go to our website and buy it later on. saying we know you are showrooming but make the final sale go to us, not somebody else. >> meantime let's talk about apple. published reports saying apple the preparing to introduce a new

tablet computer of eight inches which is smaller than the current ipad. apple suppliers are said to have been told to prepare for mass production of the new tablet come september. this seems to be an admission that perhaps there is a strong, robust market in the smaller end of the tablet size though steve jobs reportedly said on a conference call that a sub eight-inch tablet would be dead on arrival. >> google is showing it isn't. the main competition is the kindle fire. interesting to see how amazon will react to that. both the kindle fire and the nexus are proving jobs wrong that sub eight-inch could be successful. >> another story regarding apple is the uk patent suit. the judge basically said some of the htc phones do not infringe on apple phones. one is the slide to unlock.

they said, that's not necessarily a valid apple patent. the other is the functionality of touching the screen in two places at once to zoom out or make something else happen. it's a relative loss for apple though they have won on other grounds. >> windows technologies were first unveiled you thought how cool and unique they were. maybe thens i would have been infringement. now it's so common. >> the it's complicated but there will be a trial between apple and samsung that will try to put issues to the fore. it will be interesting to see the result. this is just commercial w warfather. >> -- war fare. it's really about the commercial advantage either side can have. >> imagine how fired up the engineering and legal departments must be. >> especially when you consider jobs said he would wage war

against android because they have basically stolen apple products. this is within the context of the market share take going on now. all these little battles add up. >> apple we saw on tuesday back above 600 for the first time since april. when we come back, we'll one of the cofounders of linkedin talking start-up and why he joined one particular website's board. one more look at futures as we digest three rate cuts from three different central banks around the world. tu futures are down though. ing to , the works fuel saver package could literally pay for itself. yes it's true. how is this possible? proper tire inflation, by using proper grades of oil, your car runs more efficiently, saves gas. you could be doing this right now? yes i could, mike. i'm slowing you down? yes you are. my bad. the works fuel saver package. just $29.95 or less after rebate. only at your ford dealer.

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how should you invest ahead of friday's jobs report? let's bring in barry james. what stood out to me in the notes is you say we have a window for a good rally in stocks. what's the catalyst for the window? how long is the window and what shuts the window? >> well, there are a couple of things. one is a little bit of relief around the world with some cuts in interest rates globally. that's positive. you've got the fed ex tending operation twist where they will buy another $200 billion or so

long-term bonds. that's what we have seen in the past with quantitative easing has been positive for the stock market. we see the market itself is starting to move higher after the lows we reached in may, we see that most stocks are above the long-term moving average. and the markets are above the 50-day moving average. those are indications that we are moving forward. we see that sentiment is starting to shift a little bit. it had gotten very negative. most people were selling equity funds and buying bond funds. i don't know that it's completely changed but the sentiment among investors and traders started to improve a little bit which gives us this window. lastly the things we look at internally within the market itself. our indicators show the risk levels are getting lower even as the market has been rising in june. >> hi, barry. it seems these are signs of weakness in the economy overall. not just in the u.s. but across the globe. if we see weakening in china in particular how is that a

positive for stocks overall? >> in the end, it won't be. we think this is probably a temporary rally, not a permanent one. often in the summer of a presidential election you get a rally in stocks. one of the things we are emphasizing more domestic-oriented companies or those that import. that's definitely one side of it. we think in the end it will slow the economy. one out of every two since 45 have seen a recession. we don't think we are in a permanently good scenario but a temporary reprieve could run for months. >> we talk about the markets grinding higher in the wake of significantly weakening data. the ism is one big example. do you think that's all about the hopes for the fed to come forward with some new accommodation? is there more optimism about europe? how would you explain it?

>> i have to leave it to the experts. it's a healthy sign for the market to rally in the face of bad news. we look back to where the market was pulling back in march, april, may time frame, in there. there was lots of good economic news. now we are getting bad economic news. that's a healthy sign for the market that it's looking past this -- what it sees today to perhaps a bit of a pick-up in the economy later in the year. we don't see it as a permanent scenario in terms of jobs, housing in europe. but if you can take this window, we think it's good. the general said don't get stuck on stupid. we think that's what you have to be in the marketplace. you have to have flexibility. we have been 40% or so in stocks back in the april/may timeframe. we have been moving up to about 55%. so we are increasing equity

levels to try to take advantage of what we hope is a nice rally. >> got it, barry. thanks for your time. barry james, james advantage. coming up, apple returns to the 600 level. did you miss a buying opportunity? find out why one apple buyer will add to his position. 123.87 as we see the futures picture sink a bit. more "squawk on the street" ahead. es, any way you want. fully customize it for your trading process -- from thought to trade, on every screen. and all in real time. which makes it just like having your own trading floor, right at your fingertips. [ rodger ] at scottrade, seven dollar trades are just the start. try our easy-to-use scottrader streaming quotes. it's another reason more investors are saying... [ all ] i'm with scottrade. it's another reason more investors are saying... if you made a list of countries from around the world... ...with the best math scores.

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we point it out on a day we are indicated to open lower right now. >> draghi answering questions saying they didn't discuss nonstandard measures as the market began to fragment. investors feel the discussion happens. his point is not yet. >> i love nonstandard measures. i don't know what the esfsf and the esm, those seem like standard measures to me. >> also commenting on the libor affair at barclay's. it was considered fair and pivotal and it wasn't fair. that's the headline from draghi. apple is working on a smaller tablet for the end of the year. to distinguish that from the original, what should apple name the new, smaller ipad? tweet us and we'll get your responses throughout the

morning. >> minipad. >> nanopad. >> after they went with the s, the naming got nonstandard. when we come back, the opening bell and expectations from tomorrow's jobs number.

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and we'll throw in up to $600 when you open an account. >> announcer: opening bell is sponsored by td ameritrade. >> all right. you're watching cnbc's "squawk on the street" live from the financial capital of the world. hope you had a terrific fourth of july. it's been a busy time at work for those who are working today. we have three central banks who have cut rates. a bunch of jobs data in the u.s. most of it good. it all leads up to tomorrow's trading which will bring the jobs number estimate at 90 k. that will be revised higher after adp this morning. >> interesting to note the reaction in the markets. initially the china rate cut we had a positive bid to the oil picture. that dissipated as the ecb news came in and people realized maybe cutting -- maybe things are that bad. >> it seems china, just a few

moments ago, china's cut was seen as a last resort. [ bell ringing ] >> there's the opening bell for trading. [ applause ] >> indeed. the opening bell, a look at the s&p 500 at the top of the screen. at the top of the big board synergy resources celebrating its anniversary. on the nasdaq, georgetown university wall street alielian. futures were squirrely. we were positive and negative. people watching the euro. some watching the aussie dollar as well at a two-month high. >> really? that's very surprising to me considering that you have a bid away from risk assets and risk currencies one would think. that's another story. we are watching the euro down. pretty much at morning lows now. 1.2382. we are watching the retailers. macy's surprisingly coming out

missing the same store sales for june. 1.2 versus 1.9 e mstimate. the range is below analyst consensus but they are eking out a slagt gain by six cents a share, a quarter of a percent at this point. >> tjx were looking at 47 to 50. now 52 to 553. street at 51. not bad news. they were at 2.27 and 2.37. now looking at 2.39. interesting that bifurcation in retail, dennis. >> right. >> why is walmart doing relatively well from a stock standpoint or as another big discounter like costco missed for three straight quarters. costco has a rich customer base. we heard discussions that walmart is taking some share among middle class, upper class consumers. >> we are still seeing the

retail stocks do well. they have been on a long run. it will be interesting to see if we see a slowdown in china as the central bank is expecting. whether the consumer, whether the luxury stock wills continue. it's been an impressive run in weak economic conditions. >> as for the china related u.s. equities we saw sales of yum brands under pressure after we heard disappointing data out of nike for instance about china sales. there are big movers within the retail story. the limited brands coming in 7%. just whalloped estimates of 2.4%. showing a sharp gain today. the 7% jump in june is on top of a 12% jump the prior year. stringing together nice gains year on year. if you look at shares of walgreen, that's worth watching. on the heels of the alliance foods acquisition walgreen is

posting disappointing same store sales. the biggest drop in 2012. down 10%. down 15% on the pharmacy side. perhaps some of it was expected. it's been one that suffered under the cbs express scrip agreement. >> i didn't think that alliance made sense. we don't see a lot of companies pushing internationally. we see a lot of small retail outlets pushing to run operations in multiple countries like that seems difficult for a company like walgreen. >> it does. let's check in with mary thompson on the floor with what's moving this morning. good morning. >> hey there, melissa. a weaker open. the dow lost 72 points. s&p off 5.75. no surprises. as you pointed out the one surprise is we are seeing strength in retailers. overall june same store sales were disappointing.

what's the concern? all the actions by the central banks around the world could be seen as half full, half empty. traders see it as the glass is hatch half empty. there is concern about continued weakness despite cuts in interest rates and added stimulus measures by the bank of england. mario draghi added to that pointing out that heightened uncertainty is weighing on sentiment and confidence in the euro zone. a weak picture as a result here on wall street. we are watching the picture. there is a strong correlation between the s&p 500 and the euro's performance. with the euro dropping to a one-month low that could mean an end to what we have seen as a three-day winning streak for the s&p 500. it's down just about five points. as we mentioned on a quiet day of trading the retailers are in focus. the june same store sales numbers are weak. a couple we pointed out. costco, target, both with weaker than expected june same store

sales. also weak were wet seal and buckle. buckle reported the first decline in same store sales in two and a half years. wet seal's same store sales down as well. nordstrom's same store sales up a healthy 8.1%. we are watching auto nation. no surprise in the wake of the strong sales numbers that were reported by the nation's automakers for the month of june. auto nation is reporting the new vehicle sales were up 38% last month. its stock responding to that as well. the dow is off lows of the session down 59 a points now. melissa, back to you. >> thank you, mary. let's check in with rick santelli of the cme group in chicago. good morning. >> good morning, melissa lee. as bankers jockey around rates and i'm not talking about barclay's. the other bankers playing with rates. whether you look at the uk, ecb, little things going on. that reserve 25 basis points ecb

took away. the rumble down here is maybe the hedge fund financing will be less than yesterday. that could be part of the reason you are seei ining markets move. 24-hour charts of the fixed income market have been stalwart since insolvency will keep things weak. and the 24-hour chart of the german tens, the uk tens and they are all basically the same. yeah, there was volatility, but not much movement net-net. a couple basis points lower. the next chart is where you see the action. of course ecb's moves are doing the same thing the fed moves did to the dollar. their currency weakens. you can see we are just a nick away from levels we have seen this year about a month ago. beyond that these could be the lowest levels since 2010 if this continues. it's still a 123 handle. it's not horrible.

hey, we're paying less for our commodities and they will pay more in europe. carl, back to you. >> rick santelli in chicago. as rick alluded, weekly jobless claims dropping. the 374 is the biggest decline in six weeks as we count down to friday's jobs number. here's ward mccarthy from jeffrey's. good morning to you. >> good morning. >> everybody knows adp can be squirrely. when you couple it with claims are you going to bring up your estimate of 95? >> well, right now i don't think so. we use three inputs into the model that we don't have all of the pieces to yet in addition to the adp. both of the ism surveys and of course the nmi is the more important of the two. 85% of the labor force is involved in some type of service sector activity. we may do it. the risk is for a number that's marginally higher than we have.

we'll plug the numbers into the model before we make a final decision. >> what does it do to the notion that economic activity has been decelerating? we have a lot of data point that is went into that. adp is a fly in that poiointmen. what do you make of it? >> we have gone through cycles in the recovery that began three years ago now. we have always come out of it. part of the reason we slowed down in the first place was gasoline prices shot up early in the year. now they have come down to palatable levels. we'll continue to muddle through. we have grown at an average 2.4% during the recovery. we have also grown an average of 2.4% over the past 20 years. i don't think there is a reason to push the panic button. we all would be happier if we could get faster growth. >> in terms of the recession risk though you say tax hikes aren't extended by the end of

the year recession is a clear outcome. is there anything that could be done ahead of that to prevent that scenario from happening? >> it's all in the hands of the politicians. in an election year that's a dangerous place to be. if they were to extend the tax cuts during the summer we'd be okay. we'd continue to move along with trend growth as slow as it may be. we'd continue to muddle along. if they wait until the lame duck session after the election i think that could take a big bite out of q-4. it will make it difficult for businesses to make either investment decisions or hiring decisions. >> what's your worst case scenario -- >> it's a big problem. >> what's your worst case scenario for growth in q-4 if they don't extend. >> it's got maybe a 1% handle if they don't extend the tax cuts in a timely fashion. >> we better get ready for that. i'll bet you a dollar they are not trying to get a deal on tax breaks any time before december

31 all the 11:59 p.m., if that. >> a lot of discussion that the supreme court decision hardened positions on the hill. it's going to make the fall more difficult. thanks for your time. we'll see what tomorrow brings. >> my pleasure. >> meantime moody's and standard & poor's lowering outlooks on barclay's from negative to stable. all happening one day after barclay's outgoing ceo bob diamond was grilled by lawmakers in the uk. kelly evans was working yesterday. she probably watched the entire thing and will bring us up to speed on what you might have missed over the holiday. good morning. >> good morning. those are the fireworks that i prefer. frankly there are more going on today inside, behind me in parliament where about four hours ago the parliament began debating whether or not to pursue a political or judicial inquiry into libor and banking culture. most like when we get the vote later on, hopefully not much after 5:00, about 5:15 local time here we'll know how we

proceed and it will probably happen in a parliamentary way. that's what the conservatives want. the labor party would prefer a judicial inquiry that takes longer, that may have more teeth to it probably doesn't have the votes to make it happen. the future of one of the most important financial benchmarks in the world is at stake here. also at stake, of course, are political careers. that's the focus in the uk as regulators, after hearing from bob diamond yesterday, or politicians rather, have questions about how many people throughout government were aware barclay's may have been submitting lower libor submissions than it was borrowing at. here's what diamond said about his interactions particularly with tucker. >> the note from mr. tucker says he felt your libor returns could be lower, doesn't it? >> he felt our libor rates relative to the other 15 posters. >> could be relatively low.

>> yep. >> why on page two of your note to this committee yesterday did you say you don't believe you received an instruction? >> i didn't believe it was an instruction. >> what was it? a nod and a wink? >> all right. bob diamond may have lost his job in the wake of this. barclays slapped with huge settlements. i'm sorry for the sirens. downgraded by ratings firms. but investors see some value here. nevertheless we had crispin odie buying into barclays calling it the cheapest bank in the world. he made money in 2009 on this as well. investors may be unsettledly the prospect of a political inquiry weighing over shares of barclays and other banks likely to be named in settlements going forward. at least some see a value

opportunity here. >> thank you, kelly evans, joining us from london today. interesting discussion is what bob diamond now and when. >> yeah. >> saying he only discovered the depth of the problem a month ago where the information goes back -- >> years and millions of dollars spent investigating the thing, and he had no idea. >> astounding to me. every moment we give the benefit of the doubt to wall street or elected leaders around the world they seem to disapoint us. >> you had a great tweet on tuesday listing the number of banks that had some sort of scandal or other over the past couple of years that are still operating. >> incredible. ubs, jpm, rbs, the vatican bank, all the spanish banks. softgen had its own trading scandal. one or two of the leading top ten banks in the world where you cannot say they have been hit by a scandal or a serious hit on their reputation. >> apple working on a smaller

tablet that could hit store shelves by the end of the year to distinguish it from the original what should they name the smaller ipad? tweet us. we have your answers coming up. as we look at the early movers on this thursday on wall street. >> what do you want? >> water, water. >> announcer: this summer, you will need it. why not carry it in style? here's your chance to win a water bottle signed by the "squawk on the street" gang. just nail the number. if you can guess this friday's nonfarm jobs number it's all yours. tweet us your guess at cnbc squawk st. use the hash tag nail the number. oh, yeah. you have to be at least 18 years of age, too. sorry, kid. for the official rules and details, go to sots. cnbc.com.

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♪ shiny happy people >> welcome back. i'm brian shactman. the ecb rate cut, draghi headlines having an impact on the dollar and commodities. look at crude. headed to 89 at one point. now 87. we have the inventory numbers at 11:00 a.m. eastern time. we'll have it live. want to compare to brent. off the highs you might ask why. a lot of labor problems in the oil industry in norway. major oil exporter stat oil will do a controlled shut down. could affect 1.2 million barrels a day by mid july. off the lows on gold. but the stronger dollar. some talking about a need for nations to sell gold to raise cash putting selling pressure across the board.

silver is the biggest loser so far. commodities in general, the dollar is moving it all in. with euro dollar under 124 we could see pressure for a while. back to you. >> thank you, brian. covering the oil markets for us. interesting story before the holiday involving manchester united. dennis, as a guy who covered banking, m & a ipos this must be interesting to you. >> if you read through the documents it's basically a ransom note to man-u fans saying if we don't raise the money perhaps we won't be as competitive as we need to be. there are conditions to buy the stock. one is the glazer family which bought the company in a leveraged deal sapping the team of value, the family will keep control of the manchester united structure. for every share you buy as a regular investor the glazers get ten votes. yes, we'll take your money. but you have no say over what we

do and we'll try to work our way out of a bad deal struck ten years ago. >> google, viacom, newscorp. >> the interesting thing is these companies like manchester united are emotional companies. people have strong feelings for the soccer club. that's why i almost find it exploitive. base acally saying to the fans either help us or out we'll be in a bad spot. >> does it say much that there were plans to do this in asia and it's now u.s. is that a victory for us? >> it's a victory for our relatively lax corporate governance standards which allow dual share listings like that. you can't do it in the uk. harder in asia. they come here because we are a safe harbor that allows people to sell stock and keep control. i don't know if that's a plus or minus. >> there was a 1 billion ipo in singapore. >> the expectation is 500 million. >> it's a severe ratcheting

down. >> yeah. >> they need to get money into the till. they had only 50 million in cash. >> they're desperate? >> not necessarily desperate, but they are not in the strongest position. >> they need to free up cash for better players. >> right. and manchester united states sd a successful club. they have been hit by the indignity of manchester city, the cross-town rival doing so well in international competition. >> we'll see what happens. squawk on the tweet this thursday. apple is working on a smaller tablet that could hit shelves by the end of the year. we're asking you to distinguish it from the original. what should apple name the new, smaller ipad? david writes, the ipod biggie. ralph writes, the iwill sue you. and brian writes, the overkill. jim tweets, don't we already have a small ipad? it's called the iphone. at some point they will all bleed together. >> yes. >> still to come, one of

linkedin's cofounders on the social media landscape extending his reach into the space. one more look at this morning's s&p 500 losers. by the way, almost all of the top ten gainers on the s&p today are retailers. back in a moment. ♪

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dow down 73. not what you would expect when three big central banks are cutting rates. only a few stocks are positive. among them, mcdonald's, alcoa, home depot. the rest at this stage are negative. of course leading up to tomorrow's big jobs number 8:30 a.m. eastern time. >> meantime let's hit some of the morning stocks to watch. auto nation reporting new vehicle sales increasing 38% in june compared to the same month last year. regal entertainment. blackstone upgraded to outperform. the stock is up barely higher. for more go to sots.cnbc.com. >> interesting reaction from the market to good labor data. my favorite tidbit was in adp which was up 176, well above expectations. financial services jobs up 11-k.

the joke's on twitter. they were all libor compliance officers. >> we have seen more than any part of these banks we have seen compliance jobs get added. that's where the growth is. >> not always in new york. >> no. if you want to work in a bank you should probably get a law degree with an emphasis on looking over traders' shoulders which doesn't sound exciting in the end, does it? >> right. the banks across the board are trading sharply lower. look at jpmorgan, down by 3%. not quite at that low hit before jamie diamond hit the hill to testify. we are seeing in particular, the european banks get hit heavily off the back of the libor price fixing scandal and investigation going on. ubs is down 3.7%. rbs down # 5% at this hour. really sharp. >> that, to me, is the next story. kelly alluded to it earlier. which banks will be hit next? we know ubs is among them and

jpm mentioned it was under investigation, too. the real issue is the civil suits. if someone can come up with a clever legal theory to say i have been harmed by libor manipulation and you owe me money, someone will do it. >> there will be a class action. because there will be more on one. >> that will be the biggest hit to the banks coming forward. >> come back. >> when we come back, ism services, a big number. don't go away. here's one you may not have thought of -- fidelity. now you don't have to go to a bank to get the things you want from a bank, like no-fee atms, all over the world. free checkwriting and mobile deposits. now depositing a check is as easy as taking a picture. free online bill payments. a highly acclaimed credit card with 2% cash back into your fidelity account. open a fidelity cash management account today and discover another reason serious investors are choosing fidelity.

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welcome back to "squawk box." another ism that's disappointing. the bigger part of the economy, 52.1 is the number. we are looking for 53 to 53.1. our last look unrevised at 53.7. let's say which year we have to go back to find the lower number. # 52.1, 52.1. still haven't found one. 52.1. well, i found one. january of 2010. looks like january 2010 defined a lower number. though adp was better than expected a whopping 176,000, we

are now look at the service sector giving us a shot of what the ism manufacturing looked like. the difference, of course, we are still above 50. that's a positive. carl quintanilla, back to you. >> all right, rick santelli. interesting number on the ism number. the road map for the next hour this morning, three is the magic number on the back of china's surprise rate cut coupled with one from the ecb. tomorrow's job number loomed and earnings season gets set to begin. what's next for the markets? we'll talk to a fund manager next. >> the major retailers reporting largely disappointing sales numbers for june. macy's and costco missed expectations. with e eel pick the winners and losers for the back to school season. >> and apple after they crossed the key level over the weekend. the rumor mill heats up over the long awaited ipad mini, if that's what they call it. back to the heels of central

banks overseas. better than expected employment data at home. how should you be investing now as global growth fears head back to the forefront? president and portfolio manager of the permanent portfolio funds joins us from san francisco. good morning, michael. >> good morning, carl. >> interesting mix. it felt coordinated this morning although likely wasn't. the jobs number, you couldn't ask for better data. what's the net effect at least on your thesis for the rest of the year? >> the net effect is mixed. it's a miracle ro cosm of what's gone on. the jobs number today, the adp number was great. followed up by the ism number which wasn't good and rick's number on the service sector that he just produced in the low 50s. you have mixed economic signals. our view is that we probably have a slowing economy. driven more by uncertainty

related to the election and fiscal and tax policy as people get closer to the election they don't want to make decisions. they put off big business activities until there is more certainty with respect to what's going on there. we see a slow down coming the second half of the year. probably not enough to be a recession. hopefully enough pent-up demand and activity to begin to e sum growth in 2013. >> we have china cutting rates for the second time in two months after a four-year absence on that front. you still think a slow down in asia is beg overstated? >> there is a slow down but it's temporary at this point. in our view. so it bears watching obviously. we're big believers in the global growth story. it does impact our overall macro model, if you will. but at this point it's too early to say the chinese economy is going to crash and go into recession. i think some of that news has

been overstated at this point, yes. >> michael, if we are expecting a slow down here in the united states in the second half and we are, as you mentioned facing a couple of headwinds, major ones in the second half of the year, why are you confident? it seems to be a theme but if we are headed far slow down won't the stocks slow as well? >> we are long-term investors. the short term doesn't concern us as much as the long term. it's a winner long term. u.s. stocks best positioned to take advantage of that are those leveraged to growth that have significant growth rates. with the uncertainty in the states that's where we think growth will be. defensive sectors stayed

oriented toward the growth view. >> as a long term investor which stocks are u.s. growth oriented stocks? you have added to positions as you have seen a pull back. they use these dips as buying opportunities. >> in the last couple of months there have been interesting opportunities. energy and raw materials. very beaten down to some degree, especially commodities. we think long term there will be growth there. a lot of negative is priced in. i still like u.s. international, manufacturing, illinois toolworks for example. in the transportation area, federal express, we think, is a great long-term growth story. >> have you added to your position in the past couple of months, mike snl that's the question here. >> without getting into specific trading decisions, yes. these are areas we like long term and focused on. >> okay.

if you think energy and industrials and those leveraged to international growth are still good areas it must have been a painful q-2 for you. >> we are longer term investors. it wasn't a great quarter, no. >> at some point, what is the bar to get you to make the defensive turn the way so many people did into utilities, telecom over the past three months? >> i don't think there is a bar there. at this point if you look at some of the stocks they run up quite a bit. consumer staples, utilities, those things. if you weren't there several months ago you probably missed it at this point. our view is that in the longer term the real growth is not probably there. the growth rates aren't as high. the growth, we think, is more foreign international base with u.s. companies. >> going against the grain. talk to you next time. thanks a lot. >> thanks.

>> before break let's quickly take a check on shares of walmart hitting a new high today. 70.94 is the fresh 52-week high hit intraday on walmart. they come out with earnings. not same store sales but it is a favorite. it's had a tremendous run this year. >> want to keep an eye on currencies, specifically the doll dollar. seeing its biggest gain since it rose 1.8%. we are not far from that. that's a major move for the dollar today. >> absolutely. apple around 5.99 after crossing the key 600 mark since april 27. as rumors swirl about the next generation imac, the mini and more with apple stay on top of the pricing power game? the shareholder's take is next.

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of capital advisers and portfolio manager. his firm owns 37 shares of apple, one of the largest holdings in his fund. great to speak with you. >> good morning. >> you anticipate the iphone 5 to be one of the biggest smart phone upgrades ever. when you look at apple and the shortening pipeline jobs laid out in front of it. when do you start getting concerned? it's a huge launch and the ipad is coming out in the fall apple is facing the most competition it's faced in its lifetime. >> the gross margins, do they deteriorate? we haven't seen it. the competition is still chasing them. a new product category like the itv, we don't think it works. we'll be concerned if we see that rolling out. they need to focus on the product categories. there is enormous growth opportunity in the categories

and they will capitalize on it. >> what market would the smaller ipad be aimed at? would you envision a price point close to the 199 that the nexus will go for? >> it will be a little bit higher than that. one of the things we have said for a long time this is a two-horse race between google and apple. google is trying to find the angle and lower price point. apple will come down and match it. what i think is interesting is where the product could have success as an international markets. if you look at china this will be an enormous growth market for the iphone going forward. the tablet will be there. if you look at china the price points are between 100 and 299 for smart phones. you will see price points coming down for the iphone and maybe a mini tablet. apple will have considerably success in international markets like that. >> a smaller, cheaper ipad, channing, certainly poses a threat to google and a kindle fire, et cetera. could it also cannibalize sales

of the regular ipad? >> it could. the concern we have and what we'll look closely at is we want to see the margins in the high 30s. we think components, we want to look at the components, see the cost of the components. we'll probably see a less expensive screen. if they can maintain the margins similar to the ipad we're not going to be worried. it increase it is market. one of the interesting things happening with am and the ipad is that it's beginning to broaden. you are seeing sales in schools, to the military, government. key going forward to enterprise. >> speaking of the enterprise a lot of discussion with rimm having troubles. if i run an i.t. department am i thinking differently? how big of a threat is windows 8? i have heard, one, that it could draw people back to office and windows. the other that it's so revolutionary, at least for microsoft that it might turn off

those who stuck by microsoft over the years. >> right. it's a big deal for us. a big enough deal we took a small position in microsoft. the next battlefield is enterprise. microsoft has lost the consumer. so the next battle will be enterprise with the tablet. they have a product. they can finally integrate their product offering through a number of devices. this is what they built the business model on for years. we think microsoft can have success in that space. keep in mind forester research estimates 375 million tablets sold annually by 2016. so this is a big space. apple sold -- probably 60 million tablet this is year. that's half of the market. even if apple can maintain the 50% market share they can be saling 180 million tablets per year by that time. that's 30% growth in that category. keep in mind the stock is selling at 12.75 times consensus

earning which is a discount to the market. add in 117 in cash. it's selling right above 10. it doesn't make sense. the stock will go much higher in the coming years. >> you say investors should use weakness to buy apple shares. what, in your view is weakness from where we are so far? >> we could get back down to 550. a lot of influences are holding the stock down. we had the concern with the carriers. they will extend the replacement cycle and add a key. the market cap is an issue for investors. 560 billion. there's concern about the weakening global economy. all of this could factor in, create volatility in the near term. investors need to take advantage. this stock is easily a $750, $700 stock 12 months from now.

>> you said down to 550 could happen. especially as we have, we are nout in a seasonally weak quarter for apple. not much in terms of expectations for second quarter numbers. >> everyone will focus on the christmas selling season. the new iphone 5 with lte technology, with siri upgrades, with the apple maps, with the navigation, we think this is going to be a homerun for apple. that quarter will be enormous. a lot of demand will be pushed back into the quarter as a lot of consumers wait for the new product. >> all right, channing. good to speak with you. >> thank you very much. >> channing smith of capitol advisers. >> interesting story in the journal about companies that actually produce maps, real road maps you would have in your glove box. >> who buys a map a? >> can you imagine the month they are having? >> imagine the family vacations when your mom or dad would map out with a marker? >> amazing. the euro, you saw the chart falling to a new five-week low

on the back of the move. remember, it wasn't long ago we got to 1.26 and quickly back to 1.23. we saw the bank act today. just off session lowses, dow is down 76. s&p continues to play the game of 1370 which was the demarcation line between bulls and bears for a long time. >> right. >> we are in that general territory again. >> and energy stocks are leading the way lower. the xle down as we have a pullback now in wti. we are at 8688. well above levels we saw last week, still taking down energy shares over the course of the last couple of weeks. >> major retailers out with the june same store sales numbers. most coming in below estimates. we'll pick apart the winners -- and there were some. and the losers as we gear up for, believe it or not, back to school which isn't far away.

>> what do you want? >> glass of water. >> water, water. >> this summer you will need it so carry it in style. win a water bottle signed by the "squawk on the street" gang. just nail the number. if you can guess this friday's nonfarm jobs number it's all yours. tweet us your guess at cnbc squawk st. don't forget to use # nail the number. you have to be at least 18 years of age, too. sorry, kid. for all the official rules and details go to sots.cnbc.com. you have until 9:00 a.m. friday morning. >> hey, mikey. got to go to the bathroom? >> now's your chance. we'll be right back. a living, breathing intelligence helping business, do more business. in here, opportunities are created and protected. gonna need more wool!

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so why do banks do it ? hello ? hello ?! if your bank doesn't let you talk to a real person 24/7, you need an ally. hello ? ally bank. no nonsense. just people sense. we have been monitoring shares of jpmorgan since the open. now close to session lows down

by 4.25%. down almost 5% at one point this morning. it along with european banks named as potential targets of a libor investigation are trading lower sharply. ubs down 4%. rbs down 4.7. deutsche bank down 5% on top of barclays moved lower still down 1.# 5%. jpmorgan shares close to session low this is morning. >> nothing substantiated about whether or not they would be in the club. >> exactly. >> couple worries about how big the trading loss will be this year with the libor news and banks are feeling pressure. jpmorgan in particular. >> the first at home hiv test made by orasure technologies. the in-home test will be sold online and in stores allowing americans to learn in the privacy of their home whether or not they are infected. joining us is the president and ceo of the company douglas

michaels. good to have you here. congratulations. the stock is at a # 52-week high. more about the product. the numbers of americans this could potentially benefit is amazing. >> thanks for having me on the show today. absolutely. this is a very exciting approval for orasure. it's great for the company and for public health. there are approximately 1.2 million individuals infected with hiv here in the united states. it is estimated up to 20% of them don't know their status. this product represents another way for people to learn their hiv status in the comfort and privacy of their home. >> the fact that the test is there would lower the likelihood they would pass it along. someone who is positive lowers that chance by 96%. >> absolutely. great public health benefit if people know their hiv status. that's whether they are tested in a clinic or take the test at home. we estimate for every million people that buy this product at retail and test themselves, we'll eliminate -- identify at

least 5,000 new hiv infections and eliminate more than 700 additional transmissions of hiv. >> how much does it cost for the consumer and how accurate is it? >> it's highly accurate. this is the same test that's been use bid physicians for ten years. we sold over 25 million devices in public health and hospitals, doctors' offices. consumers can use it with a high degree of confidence. it's not perfect like any diagnostic. so a positive test needs to be confirmed. that's well explained in the labeling and has been verified through clinical studies. you asked about costs. we indicated before it will sell for somewhat less than $60. we sell the professional version of the product, this device here, the exact same product that will be in an over-the-counter kit. we sell it into the professional market around $17.50. it will be more than that but less than $60 at retail. >> want to demo how it works?

>> it is a simple oral swab. swab the upper and lower gum. after you have collected the sample, insert the device into this developer vilal. the product is accessed through this drawer. it's the same stick and tube sold into the professional market. once the package is opened the consumer puts the little vial here, swabs their gum and inserts the device into the package. noints later they have a -- 20 minutes later they have a result. >> how do you market this? is it sensitive? who is the target market? >> the product will be made available at retail and retail pharmacies. walgreen, cvs, rite-aid, walmart. we'll have broad distribution. we'll communicate directly with consumers. we'll use all sorts of media, whether it's digital, social media. we'll do traditional advertising.

the retailers will promote this heavily, too. they will promote it through the direction circulars that go out every week in weekly newspapers and things like that. they will promote it in store. >> in terms of applications for other tests for other diseases, he hep-c is in the pipeline? >> absolutely. we have the test on the same platform. it's a 20-minute test. we haven't made a decision yet to make it available over-the-counter. we have done market research that says there could be consumer interest, but we haven't done the quantitative work to determine whether it's a market opportunity. we'll do it now that we have identified a path to obtain fda approval for a self-test for infectious disease. >> you have sold 25 million to doctors and homts. projections on how many you could sell? >> we haven't put forward sales projections yet. obviously it depends on the response that we see from consumers once the product is available. we anticipate having the product available at retail on retail

shelves in early october. as we develop experience with this, as we get the messaging out there and see how consumers respond we'll be in a better position to give sales projections. >> interesting stuff. thank you for coming in. >> thank you for having me. exciting time. >> let's go to courtney reagan for a market flash. >> look at netflix shares intraday. really popping here. subscribers have watched 1 billion hours of streaming video online last month. that's 38 hours per streaming subscriber. that's a lot of tv and movies. shares, as you can see are really surging. they have fallen a long way from the high. remember a year ago it was at 305 dollar as share. we are 72% lower. today it is one of the winners. back to you. >> thanks. crude is topping $88 a barrel. not quite. $87.16 at last check. while gold continues to climb higher this morning, how should

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♪ an hour into trading. here are the stories we are

squawking about. 10:30 on wall street. signs of slowing growth at the ism nonmanufacturing index coming in at 52.1, the lowest since january 2010 down from 53.7 in may. mcdonald's is the biggest gainer on the dow up a percent. the average rate on the 30-year fixed mortgage fell to a new record. now at 3.62% according to freddie mac. >> just reading here goldman is upping the forecast for jobs from 75 to 125. >> wow. >> based on the numbers we got together. >> from way below now to way above. >> way above consensus. we'll see. june's monthly sales numbers from the major retailers largely disappointing as consumers reined in spending. >> expectations for june same store sales were low. many retailers missed the marks. according to thomson reuters it was a 0.1% gain for june. that's it.

retailers and analysts describe a number of reasons including sluggish economic conditions, storms in the southeast and scorching temperatures keeping shoppers home. while some are concerned about a slowing high end consumer nordstrom and saks didn't take the hit. 8% for nordstrom. 6% for saks. off price retailers tjx and roth continued their strong trend. ross stores up six based on gross margin performance in both may and june. tjx increases guidance for the second quarter and the full year. tjx trading at record highs. the limited a continued outperformer gaining 7% on higher merchandise margins. thanks to a boost from the victoria's secret stores. it was the semi annual sale that always helps. macy's, kohl's, target and

costco all missing expectations. costco with a negative impact from the timing of the fourth of july holiday. it was captured in last year's june comps but not this year. kohls and target said comp sales were impacted by hurricane debby in the south. back to school kicks into high gear at the end of the month. we'll see what happens but i'm sure retailers aren't excited about what they have seen for june. >> thank you very much. let's dig deeper into the june same store sales numbers. teley advisory group joins us uh now. dana, what are the upside and downside surprises? >> the stand outs are the off pricers with tjx and ross with the same comps similar to last month also. they just continue to gain share and take traffic. i have to say limited continues to be a positive surprise. that victoria's secret comp up

11% was impressive. they were up 2% with the semi annual sales last year than this year in the month of july. that was impressive, too. we know accessories are working. if you take out international of gap, overall you have the 5th positive month in a row of comps being positive. >> dana, we were aghast at the limited numbers today. somebody wrote victoria's secret has had seven plus comps for 30 months. is that possible? if so, how? >> it is a strong number overall. i have to check to see if it is 30 months like that. what's driving victoria's secret are two things. number one, the continuous flow of new product launches at competitive prices. number two is the pink category. the pink category has expanded from beyond intimate apparel to leungwear, too. it's younger and newer. >> when you take a look and see a costco miss and a target miss

do you add them together and think walmart is taking share and that's why the stock is at a fresh high? >> that could be part of it. the big companies, costco, macy's, target, kohl's all missed. that was disappointing and drove the average comp number down with walmart getting 2.6% increase last quarter suggesting that there could be opportunity for them to continue to gain share. >> what do you think specifically is going on at costco? a lot of discussion about when they raise the membership fee it was a tough decision for the company. maybe people said, you know what, i'm going to walk. maybe it's a simple zero sum game between them and walmart. >> overall don't forget it was the timing of the july 4th holiday. it's estimated that a hundred basis points of comp was impacted by the shift of the july 4th holiday. if that was going back on the number you would have had an in oy line number. let's see what happens next month. >> what do you make of the argument that we have seen a lot of weather excuses today.

not just companies but other third party analyst. to what degree did people shop for summer stuff earlier because it was warm? >> i think that definitely happened. the clearance events, inventory came in clear. the fact that it's warmer they cleared out goods potentially earlier than expected. we are going into july with an easier compare. if it stays this hot it will make the back-to-school merchandise better be priced competitively to move it. >> how concerned are you or should we be about retailers with international exposure, what we heard from nike, gap international sales would make one pause, i would think, about whether or not other retailers exposed internationally would be able to meet estimates for the second quarter. >> international is a concern. i just came back from london last night. basically what we have been seeing there is definitely more cautious with greater sales there. one of the analysts came back from china. more promotional than you would

have expected. international is a cause for concern. we are watching carefully. >> what are the retailers you are concerned about? >> overall the top ones of concern, watch names like warneco given their exposure to the southern european countries. watch some of the other names like nike. what they said about international is something to watch going forward to see if it settles out. one of the elements should be a good business in the uk, at least in this current quarter given the olympics is going on. italy, greece, spain. big exposure to that is a cause for concern. >> finally, dana, your list of the top three or four favorite names, has it changed much recently? what are they? >> overall, i like american eagle for the upcoming back to school season. their ability to gain share is definitely there with the improvement and product we have seen. limited will continue to perform well given that they are

dominant in the space and they continue to take share. what we are seeing from macy's, they are a good holiday name and they will be competitive this holiday season. certainly what we just saw from nordstrom with eights for the full line stores and the rack are well positioned. >> good to speak with you. >> thank you. >> dana telsey. >> central banks looking to boost liquidity, so what's next for energy and metals? we have the commodity trade in a moment. yep. the longer you stay with us, the more you save. and when you switch from another company to us, we even reward you for the time you spent there. genius. yeah, genius. you guys must have your own loyalty program, right? well, we have something. show her, tom. huh? you should see november! oh, yeah? giving you more. now that's progressive. call or click today.

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fidelity's etf market tracker shows you the big picture on how different asset classes are performing, and it lets you go in for a closer look at areas within a class or sector that may be bucking a larger trend. i'm stephen hett of fidelity investments. the etf market tracker is one more innovative reason serious investors are choosing fidelity. get 200 free trades today and explore your next investing idea. corn and wheat prices continue to serve. grain prices rising to highs not seen since the food crisis. we are talking 2007, 2008 levels. the central bank moves this morning putting a bid under gold as well. it's relatively flat at the moment. down 12 bucks. the ceo of bull & bear partners

joins us from chicago. good morning. >> good morning. >> let's talk gold. surprising or not that it's down in the wake of some of the decisions today? >> i think i'm surprised that it's holding steady. look for it to start picking up though. when you have a concerted effort around the world by central bankers to debase currency and inflate, which is what this is about, carl. gold is one of the commodities you have to be in. silver and copper are other metals i would look at. look for the markets to catch a bit. look for a floor under them. >> speaking of floors, i wonder if you think the 79, 78 on crude will be the low for the year. >> i think it could maybe dip down to 75. at 75 dollars a barrel it starts to hurt our friends. we are talking about those in the middle east pumping oil when we ask them to. look for 75 to be one of the areas where you see support where you see oil outputs cut off.

remember, anything under 75 barrels of oil, you will hear the saudis complain a little bit. we don't want that. >> it's interesting, too, on tuesday to get geopolitical headlines in the mix talking about the strait of hormuz. it's hard to tell, jack, if that's the last we'll hear of it for a while. probably not. >> we took some of the war premium out. it started when we took a round off the swift system, when they could no longer get paid. that's playing into this. that's come out. the fears, slash, war premium is out of the market. now it's a question of fundamentals. oil at 80 a barrel is bullish for global growth. keep that in mind. >> at the same time, jack, food inflation, corn and wheat highest levels since 2007, 2008. what are the trades that traders are putting on now? >> they are starting to buy commodities across the board. we have central banks trying to be half pregnant. they are printing money. they want to create a stimulus, but they are not doing it the way they should.

we want to see inflation targets out. reserves on interests that's being kept internally at banks at zero. we need to really make the effort to get all the cash being sat on right now by corporations and banks out into the system. that's really the only way to do it. we have swallowed the red pill already. it was the red or blue pill. it was inflate or grow. we have swallowed the inflation pill. we need to maintain that path now, unfortunately. >> nice "the matrix" reference. we know kung fu. overall in the markets you had a headline from europe. do you think there could be more to come on it? there are multiple expansion possibilities depending on how the election goes? >> absolutely. the 12 or 13 multiple is priced for bad news. i kept saying there would be a floor in the market. one reason i was on the show saying we are a headline away from a 50-point rally on the s&p. if we get a pendulum swing

toward a romney victory of any kind then look for the expansion of multiples to take us to a 17, maybe 18. that's a 17, 1800 s&p, an all-time high. that's basically right where barini and some of the greatest minds in the world are talking about. >> we'll see, jack. thanks for joining us. we'll talk to you later. >> thank you. >> back now to courtney for a quick market flash. >> thank you, melissa. let's look at shares of yelp up 8% now. we are getting a report from the street.com that's reporting that apple could be integrating the yelp technology into the map application and the new ios-6. if it happens it is expected yelp would see an increase in users because you could go to yelp without opening the separate app. the market agrees and shares are up in a nice rally today. up now almost 9%. carl? >> thank you very much. still to come in the highly

competitive tech world's race for innovation among the cloud and mobility, what's coming next for ibm? it looks to remain relevant and we'll talk to the head of software research in a few minutes. first rick santelli is working on the next hour of "squawk on the street." what's coming up? >> today's wall street journal, cities consider seizing mortgages, eminent domain. bank of england suggests barc y barclays plays with libor but when central banks lower rates and it hurts people on social security, that's a different story. you really need a pair of cheap sunglasses when you look at this stuff and you can't go, like, why is it wrong for one side but not the other? maybe there should be a class action suit against central banks. we'll talk about that and much more at top of the hour. [ male announcer ] summer is here. and so too is the summer event.

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a new report out this morning showing apartment rentals accelerating showing the

largest quarterly increase since before the recession. diana has more on that. good morning. >> rental nation is heating up along with the thermometer this summer. vacancies fell 20 basis points to 4.7%. we have not seen that since the end of 2001. 25,000 you it ins absorbed which is a little less than q1 and still running very high and analysts say the slight slowdown is more about lack of supply than actual demand. landlords watches the 5% vacancy level as a major benchmark. vacancies have only gone below that level three times in the past 31 years. that's when rents of course tend to spike and they are. take a look at the numbers. asking rents up 1% and effective rents up 1.3% quarter to quarter. that's even faster than the growth we saw in q1. effective rents are what the landlords get when you factor in the incentives. the national effective rent level are well beyond the pre peek of $991 a month last teen

in the fall of '08. we're up at $1,041 a month. to the risks. while supply is still very low, we're seeing a lot of new construction. reece expects 70,000 apartment units to come online this year, double the rate of growth in 2012, and there is more coming in 2013, up to 200,000 more units and that's just apartments. don't forget the surge in single-family rentals. that has some analysts warning that some of the apartment reits may be over priced. we'll talk about that coming up on power lunch. melissa. >> diana, at what point do people actually start buying apartments instead of renting them at higher and higher rents? >> looking to the condo market, look, we have to see when that turn is, when people say, okay, i am ready to jump back in. yes, prices are very low. historic affordability. the tubl is tight credit and consumer sentiment and jobs of course. we'll watch the number tomorrow to see if we get any boost because it has to be a good jobs

number to get the housing market moving again and get the confidence to move back into buying. >> even as we have seen pretty encouraging numbers of new home sales and prices, diana, mortgage apps, seems like every other week they come in and throw cold water on it. >> very lackluster. we're hitting historic low levels every week, 10 out of the last 11 weeks seeing a new low and not seeing the purchase applications and re-fis are down because so many people already reif ied, and there is the under water issue. that's not forget with so many people under water it keeps them out of re if is and out of buying if they want to. >> tweet time as we mentioned apple is reportedly working on a smaller tablet that will hit the shelves by the end of the year which brings us to squawk on the tweet to distinguish it from the original what should she name the new smaller ipad. you can tweet us. we have some of your answers straight ahead. [ male announcer ] introducing a powerful weapon in your fight against bugs.

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smaller ipad? mark says they should call it the ifees as it pinches amazon and barnes & noble out of more market share. ryan writes the i puny and i fooled you, just an elaborate hoax to scare the competition. what if it came to that? they announce products they have no intention of building. >> or just leaked it, trial balloons in the press. oh, we changed our minds. >> psych. >> exactly. >> reports on tuesday that a third point has moved into chesapeake on the long side of it. it is the fourth biggest position according to sources over at reuters and of course this follows karl icon, an activist investor in chesapeake shares.

i talked to him monday and he says he is in chesapeake for the long-term, a stock essentially now owned by the shareholders and the new board changes and so he is in it to stay, at least for now. it is up by 2.8%. >> netflix watching closely the biggest gainer on the s&p, a huge move looking for reasons, reed hastings did write on his facebook page it would be the most watched channel ever forgiven metrics for certain months and largely a lot of people pointing to a short squeeze, look at skull candy today seeing strong upside action and the suspicion is maybe there are shorts doing cover. >> patriot cole is another and candidates and that stock is up by 28%. remember, the coal stocks have been obliterated gaining a little traction lately and so patriot up, 27%, shares short. so there you have it. squeeze. >> as for the broader indices, s&p and dow paired their gains by half right around the time

goldman upped the forecast for the jobs number. they were at 75 and went to 125, well above consensus anyway pointing largely to the employment component in the services index today, not too mention adp and claims. >> there goes the theory that what is bad for the market is good for the markets and that the first number more quickly qe3 will happen because if it is a rise or pairing of losses based on upping the forecast based on better outlook that throws that out the window. what's coming up on fast. >> we're trading ahead of the earnings start next week and also we have the top three shorts for the second half of the year brought to you by the only actively managed behratf. >> we'll see you tonight. in the meantime, what you may have missed earlier on this morning. >> welcome to hour three of "squawk on the street." here is what's happening so far.

>> they did cut rates apparently as expected and we're going to have that quarter point. >> there is two major factors that are depressing our market, i think 1,000,1,500 points. still is europe and what is worse is the fiscal cliff as it is coming forward and the obama ruling. >> e dp reporting the private sector jobs would grow by 176,000. >> we cannot have the fed lead us out of a recession. the economy itself has to grow and we're just not seeing that effectively right now. >> the percentage of people inside the stores and look at the prices and then shop online. i think it went up from 10 to 50%. >> 10 to 15 or 50. >> 5-0. we really are in a position where best buy is amazon's show room. >> a look at the s&p 500 at the top of the screen. where he see a slowdown

potential at this coming up the second half of the year and probably not enough to be a recession and hopefully enough pent-up demand and activity to begin a resumption of economic growth in 2013. >> keep in mind this stock is selling at 12.75 times consensus earning which is a discount to the market. you add in 117 in cash, it is selling right above 10. it just doesn't make sense, carl. this stock will go much higher probably in the coming years. we begin with breaking news this morning. oil inventory data to the nymex. brian. >> we have crude according to the eia down 4.3 million barrels, much more than expected flats. expected 2 million, api, american and we have gone from slightly negative to positive. down about 10 or 11 cents before the report and now up about 20 cents and going inside the numbers gasoline was a build of 200,000 barrels, a little more

than expected, and distill lates down 1.1 million which was more than expected. a bit of a mixed report. when it comes to crude, much bigger drawdown than expected, 4.3 million as opposed to the expectation of minus 2 million. >> thank you very much. get a chekt on the markets. dow looking to be down 31, s&p at 13.69 and nasdaq of course moderately higher, 3 points to 29.79 and retailers making up big numbers today, ross, limited and tjx higher and j.p. morgan, bank of america, the two biggest losers on the dow after mixed data from the u.s. and europe and both of those stocks are down sharply. get to the road map for thursday, better than expected economic data here in the states being over shadowed by a rate cut from china, from the ecb and the bank of england and we'll show you how to play it all

ahead tomorrow's big jobs number. the company helping to monetize the world of online advertising, the ceo of kwaud cast joins us and an inside look at what products ibm has coming down the pipeline. the head of the software research will give a preview and the co-founder of linked in conquering a new part of social media, how he is connecting the word of medicine and a lot more in the next hour. also joining me on set this hour our own john fort is in from the west coast and brought along great guests for us as well today and coming on a day when apple continues to make news and a lot of it under the radar and the $600 a share not under the radar. >> it is interesting. apple had been saying 7-inch tablets, no way, they won't work. more and more as i talk to them over the past few months the tone shifted a bit and i think tim cook might have even telegraphed that a couple months

ago at the conference when he said steve jobs was famous for reversing himself when the data showed that the market was moving in a different direction of the he would say no phone and then they would make a phone and maybe they do end upcoming out with this 7 to 8-inch tablet we hear so much about and they have been telegraphing that. maybe the stock is moving on that. also, we have seen dell moving on the integration and we have known about that for weeks. very interesting. >> how much of this talk do you think is being fed by the nexus and that was relatively well received. >> i think a lot of it is being fed by that. first we had the kindle fire and questions about whether that was taking away ipad share and turned out probably not so much and now the nexus 7. i saw david in the "new york times" saying this is a viable competitor for the ipad, so there is a question of whether apple needs to respond to that. market share wise i am not sure it is valid because none of these guys are making any money selling the 7-inch tablets.

the question is can apple with the supply chain strength figure out how to make money. we'll see. >> so much is going on in your beat, not just the facebook ipo, a little more than a month ago, and you have google making waves and waiting for windows 8 and apple is a story every day and we'll talk to the linked in co-founder later on. would you say it is more competitive as we go into the second half? >> it is enormously competitive and the second half is the time when we get the huge sales numbers from the likes of apple. it is when google steps up now with this tablet and amazon also. >> holidays. >> holidays. big data. holidays big for big data because of the marketing dollars that are spent and people want to allocate those in the best way possible. we'll be talking to comcast in just a few minutes. >> markets trading lower and despite the economic data head

of the jobs number our next guest is encouraging clients to take advantage of the pullback. scott, always good to see you. good morning. >> hi, carl. >> talk to where you think the ecp puts us, saying they did not discuss non-standard measures but sounds like you think that's going to change at some point in the second half. >> i do. i am not sure i really believe mr. drogy. i think there is plenty of conversations within the ecb about non-standard measures. i wouldn't surprise me at all to see them get much more involved as we move down the road because really what these things that they have been proposing to do and the things they have been doing, i see those really as band-aids that really just kick the can down the road and we are going to be revisiting this eurozone debt situation. i mean, for years to come. if you told me that five years from now we're still going to be talking about this, i completely agree with that. these are just kick the can down the road measures. they're not addressing the real problems.

the ecb will get much more involved. that's my feeling anyway. >> you think there will be more disappointing auctions in the second half. you look at only 2.5% growth in the states. why is your target not miserable,1,400 or 1450 year end. >> i think if valuations were high and we weren't going to continue to see all of this liquidity, i think we would have a different target. right now if you look at the 1400, 1450 target based on our earnings number, that puts the valuation 13.5, 14 pe range and historically that is low and way below where you typically see it about interest rates so low. i think we want to be constructive because we think that the economy here in the united states is going to be continuing to grow very modestly. global recovery is going to continue at a more modest pace. we're not going to see much inflation. we have a lot of liquidity

coming in here from all of these central banks. it is only going to be increased, so i think the chinese growth situation probably going to bottom out in the summer. i think only a moderate recession in europe and who knows, maybe next year at some point we flatten out there and all of those things i think are positives and things that would argue for the market to be a little higher, not a lot higher. >> you say some consumer discretionary, right? a little risk there. >> yes. >> it, materials, and you say wait for a pullback. >> for us, for our clients, and we want our clients of course we want them looking out over nine, 12, 18, 24 months and for most clients i mean the average in the stocks now in these more cyclically sensitive sectors, i think it is a good idea. on the pullback we had been expecting a pullback. we pulled back below 1,300. we were trying to pound the table with our clients, get some put some money to work here. do you have to put it all to work, no.

let's at least stick a toe in the water and put a third of what you want to eventually have in the market to work. i think most clients if you have any i understand could of long-term outlook i wouldn't hesitate to put a third of the money you intend to put in the stock market in now. i think we're going to be very volatile. we'll bang around in a pretty wide range, probably 150-point range the rest of the year in the s&p, so i think you're going to have opportunities, but i think you want to make sure you're set up to take advantage of the second leg up in the cyclical bull market which i think might have a couple years to run. >> scott, interesting. we'll talk to you later on. thanks for your time. the president is expected to make a statement in ohio in about half hour, examipected to discuss the decision. good morning, john. >> the campaign did not take the holiday off yesterday. neither of the candidates are taking the rest of the week off

either. yesterday mitt romney was at a fourth of july parade in new hampshire and took the opportunity to clear up a contradiction between the position of many conservatives and the position of his campaign. he said that the obama health care mandate unlike his in massachusetts was in fact a tax as ruled by the supreme court, not a mandate. that's an important message point for republicans and today president obama is going to hit back as he goes on a bus tour of ohio and pennsylvania. these target states, ohio has 18 electoral votes and pennsylvania has 20 electoral votes and the president will be touring around and courting working class votes and these are the bus tour messages. first of all, he will talk about that wto complaint against china which originated after the united states government aided the auto industry. china leveed dutied on american cars including some made in ohio. the president will talk about that. he is also going to label mitt romney as his campaign ads have done as the outsourcer in chief for his work at bain capital and also point as his campaign aides

have been doing to overseas bank accounts or investments that mitt romney has had, the trustee managing mitt romney's finances have said the swiss bank account the administration or the obama campaign points to has been closed but nevertheless the charges are going to keep flying back and forth as they go through the midwestern part of the united states key electoral targets, carl. >> interesting wrinkle amid the jobs numbers and moves today. thanks very much, john harwood in washington. to the cme group, rick santelli with the santelli exchange. good morning. >> good morning. i am going to be calm this morning. i really like the fourth of july. it put me in a mellow mood. i am not in a blind mood. do our leaders really think that we all have are cheap dark sunglasses on? i want to know. they certainly act as though they do. let's start at the beginning. i can't read very well with those sunglasses which is probably the problem. let's forget about legalities.

let's forget about jurisprudence. let's just look at life for a minute on the effect side and what i am getting at is if somebody robs you and punches you, you get a bruise. if the government seizes your property and you don't want them to, they punch you, you get a bruise. if barclays plays around with rates and it does something bad for you, they punch you, you get a bruise. it is the same thing when central bankers do it, isn't it? let's start at the beginning of the story. before we get to central bankers, today the journal was just magnificent. let's talk about cities. consider mortgages, eminent domain but it doesn't end there. looking at this story, it is really a doozy. we're talking about one of the people instrumental in coming up with all of these ideas to give people mortgages who really couldn't afford the property they were buying and he happens to be the ceo of of resolution partners, okay? graham williams. you can even though this is his

brain child, eminent domain, seizing property, so they can basically lower the principle and play around and all of this who is going to fund it and can one of the people that's helping him is roger altman. he was in administration. according to the article, he worked for the re-election of the president. none of that is connected, though, right and barclays grilled in parliament. this is a winner. i understand if barclays did something wrong and played around with rates. doesn't every central banker do that? as a matter of fact, there is one of the bank of he can gland who supposedly pressured them to do just what they're in trouble for to play around with rates. let me get this straight. if i am on fixed income and done all of my investing so i could live life, okay, central bankers lower rates down. a great article in business insider how it is catching up to social security and making the defr sit higher. why is it any different?

it really isn't. back to you. >> rick santelli in chicago. thanks so much. nice shades by the way. when we come back a new way for online advertisers to know and target their audience, the ceo of kwaud cast will join us to tell us how his company is making online ads a lot more powerful. ♪ [ male announcer ] this is our beach. ♪ this is our pool. ♪ our fireworks. ♪ and our slip and slide. you have your idea of summer fun, and we have ours. now during the summer event get an exceptionally engineered mercedes-benz for an exceptional price. but hurry, this offer ends july 31st. for an exceptional price. this is new york state. we built the first railway, the first trade route to the west, the greatest empires. then, some said, we lost our edge. well today, there's a new new york state.

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quantcast quantcast helps advertisering measure realtime web odd skpens allows more efficiency and targeting when it

comes to ads on the web. joining us is conrad feldman, ceo of quantcast. sorry. i can't say it. >> quantcast. >> thanks for being with us. i think your model is fascinating. i mean, you in essence take a look at a client's best audience, figure out what their behavior is like and then find millions of other people who act like that to deliver. how is it different from what was done in the past and why is it good for the web? >> historically advertising for magazines and television was bought and sold in aggregate which meant that everything had to work on average. one of the things we can do with digital media is create relative experiences for individuals and how effective searches both from the perspective of getting results that are useful to us and also for effective advertising. only 4% of our time is spent searching. what we do is help make the rest of online advertising equally relevant by using data to make

more effective realtime decisions that match up consumers with marketers who have offers that will be relevant to them. >> your reports are fascinating. you break down male versus female, ethnic information, and this isn't tied directly to individuals, so that's kind of a privacy benefit, but i am wondering, how do you know i am black? you see where i am surfing based on cookies but how can you tell that level of information about me? >> we don't. what we do is build statistical models that in aggregate provide a much finer level of resolution in terms of ad targeting, the old saying from john saying advertising is wasted, i just don't know which half. we can reduce the waste from 50% on more to a smaller number. it works by using data about media consumption habits and analyzing large amounts of the data to build statistical models of audiences and it is very effective for demographics, interests, even information about the types of businesses that are particularly interested in a given website's content.

>> and facebook, something i want to ask about, so stagts show that display ads are likely to overtake search by 2015. display ads, that's where facebook rules right now. how important is facebook as a part of this ecosystem that you're tracking and playing in? >> i think it is a very important part of the ecosystem. advertising dollars is over now over half a trillion dollars a year spent on advertising tend to follow where people spend their time, and of course people spend a lot of time on facebook. they are and will remain and probably grow in importance in terms of the display advertising market. it is a fragmented mark and there are millions of websites out of there that we will spend our time on and we feel it is important to make advertising more effective across the full range of media across the web. >> that's part of what i want to ask you about is mobile. your tracking doesn't work that well on mobile apps right now. facebook also struggling with that problem. how close are you to figuring out a way to bring your secret

sauce to mobile apps? >> right. so we started with mobile web. the web browser is the most commonly used app on mobile devices and the growth of apps is very significant and an important piece of how people consume media and of course the app providers want to monetize the apps with advertising so they can produce more great apps. it is something we're looking at intently and feel will be an important growth area for the industry and the company. >> how close? >> months away? >> months away. >> okay. conrad, thanks for being with us. >> my pleasure. thank you. >> thanks, john. counting it down to the close in europe happening not too long from now. we'll get the details on how the close may affect markets here at home when we come back from a short break. ly, countries took part in a science test. the top academic performers surprised some people. so did the country that came in 17th place. let's raise the bar and elevate our academic standards.

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beginning. we saw central bank activity where rates are a bit lower and maybe the ecb should have done 50. is our problem in this country and other countries and europe, is this something that will be fixed through lower rates. >> no. we could cut rates all the way to zero. >> in certain ways you could say they're already really negative rates. what do you think the answer is? >> innovation is always the key to economic prosperity. right now we have seen a dearth of any kind of innovation and coming on the heels of internet, personal computers, cell phone, it is really exacerbating the situation. we're really feeling the slowdown in innovation after a dramatic 20-year incredible growth and productivity gains. >> in the current regulatory world we live in, you talk about innovation. let's pretend the car didn't exist. i am going before congress and i am saying here is my idea, we're going to build these roads that

will be right next to sidewalks and people will ride their bikes next to them and i am going to get this thing on four wheels and put a combustionable thing like gasoline in the tank and we'll drive them 65 miles an hour to get people around. do you think the country would get off the ground in the current regulatory environment. be honest. >> no. >> there goes henry ford. see, don't you think that is the problem? the problem is you're right. we need growth. central bankers can't even spell growth. how do we get innovation back front and center? >> the first thing is the government has to get their policies to be ro growth. we want to limit the amount of restrictions. we want to limit the amount of taxation. we want research and development to be at a max and further more intellectual property rights have to be protected. if i do come up with a better mouse trap and something that's better, you have to protect me. you can't let every country in the world start copying my innovation and selling it at half the price or there is no

reason for innovation. >> when it comes to innovation and growth, i am right with you. now, here is what we have. we have regulations that really do make it difficult. my grandmother came over and opened a grocery store up and sold lunch meat and stuff and very little licensing. can't do athat anymore. you were saying the automatic car, you think it is a possibility. i don't disagree. let me rephrase. how much was the stimulus package, the original stimulus package? >> that's the interesting thing. the government, the stimulus package which looked a lot like the san diego fireworks, did you see the san diego fireworks yesterday. >> no. >> they blew off the entire arsenal of fireworks in 12 seconds. it is like our stimulus plan. obama administration spent a trillion dollars almost, rounding a little bit and it is all speculation, and we got very little of any economic growth from it because it all came so fast and so many crazy ways, so many different areas with no

cohesive coordinated effort. we spent money on solar. we spent money on gas. we spent money on wind. >> mist allocation of resources. >> no plan at all. >> one of the first patented on a car around the turn of the sent try, the last century. what do you think the chances are that the u.s. goes in recession. >> it is inevitable. no doubt about it. we're spending 1 plus trillion a year and the economy is a $14 trillion economy. it is 7% of the money we spend is coming from borrowing and from dollars that our government is not taking in. >> we'll have to pick this up on another day. thanks for being here. carl, back to you. >> thanks so much. europe's trading day about to come to a close. we'll get you that action live in three minutes after this break. don't go away. ♪ ♪

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news out of europe would be under stating it. not just the bank of england or the european central bank but the spanish auction and a lot more. our chief international correspondent will make sense of it all. >> i will try. drogy the big story of the morning. he said so many things ahead of the european central bank. i think what a lot of the market got focused on in europe is talking about the spreadening of the weakening and the unemployment picture and the labor picture and throughout most of the eurozone as opposed to just being limited to the southern part of the area and additionally enough comments to suggest that some of the non-traditional measures that the markets like so much like

the ltro, et cetera, not necessarily going to happen. you have shown over and over again and let's do it again, the move in the euro was breathtaking, going from 125 down to below 124. you can really see the impact here in most of the major markets, and look down towards the italian markets and you'll see really big decline there and even though they're off lows from what i can tell down only 2%. we have been talking about a 3% move. spain very close if you look to the left there, lower by nearly 3% and portugal getting hit hard. weakness across a lot of the eurozone. i want to show you the one week of the spanish ten-year and the italian ten year. spain borrowed money and cost them a lot more money and i want to look at this one week chart just flip between the two, spain and italy and you'll see the same pattern. remember, you saw this tremendous rally in the wake of the eu summit last week and we saw italian yields and spanish

yields drop markedly and a lot of people said when the bond market reacts so decisively and at least for a couple days in a row it was a very good sign. as of today all of those declines in yields gone for both spain and italy. once again, all the worries are back, carl. >> michelle, mark chandler at brown brothers pointing out something he thinks got lost in the news today, the acb capping the levels at which government guaranteed debt can be posted as collateral. >> that could be very significance, right? what could happen is a lot of banks could use that money to go to the ecb and bring in cash. little notice, still we have to see what kind of implications it will have. the one thing that would seem almost contradictory, loosened collateral rules in other parts of the market last week in order to help out the spanish banks, so we have to see what the impact is. yeah, absolutely, we'll take a closer look at that. >> to say the policies have been consistent would be misleading, i think, to a large degree. >> yeah. remember, what they're trying to

do. they're trying to keep the system alive and at the same time beat a lot of these countries into doing things they perceive to be fiscally correct or reforms they really want to see done and what they have done in the past and what they have seen and when they're too easy on them, none of the reforms get done. >> you don't tell the kid to clean their room, they may not clean their room. thanks. in the meantime mary thompson is here on the floor. she continues to whittle away at the losses. >> we have a mixed picture and at the open we had weakness across the board in the wake of all of those cuts in the ecb and raising concerns about further weakness in the global economy. take a look at the chart. one thing that gave a lift to the s&p and the dow as well with news coming out after the ism goldman sachs raising the forecast for the june jobs report, expecting 125,000 as opposed to earlier forecast of 75,000 citing a decent reading in the non-manufacturing ism report or excuse me in the

manufacturing report a couple of days ago. jobless claims today which were better than expected and some strong online job ads as well. the s&p has recovered. nevertheless we continue to see weakness in a number of sectors, most notably finance there under pressure today in today's session along with telecom energy, health care, and utilities and in fact the only sectors moving higher consumer discretionary stocks as well as tech which of course is giving a lift to the nasdaq which is up 6 points right now. as michelle was mentioning earlier, i should say, actually we want to move to financials right now and show you why they are weaker. keep in mind this is a group that is correlated most strongly with whatever happens in the eu or the european region, so when we see weakness there, we're seeing corresponding weakness in the u.s. banks as well. of course the euro has been the story we've been watching throughout the day in large part because the s&p has been correlated fairly strongly with the euro as well. we do want to point out one area of strength, that being home

builders. the homebuilding index at a four-year high and a number of factors at play. we have 30-year mortgages at record lows and interesting news am coming out about ent areal prices being their highest since 2007. i believe, of course, this suggesting at one point could make more sense for people to buy homes. we keep waiting for that. the home builders are stronger today. the retail results, retailers in general hire across the board although the picture is mixed. tjx and ross raising their outlook for of the second quarter. kohl's saying their results will come in at the low end and stronger results at the end of the month. that's giving a lift to its shares. the dow off 14 points, carl, back to you. >> thanks so much, mary. denmark central bank taking the unique step of cutting the deposit rate to negative.2% and assessing the impact of that. >> this is a really interesting development that is worth monitoring. denmark cutting the certificate of deposit rate to negative .2

from positive.05, the first central bank to charge a negative rate. we say in the cycle because in the past sweden used a negative interest rate and denmark concerned over the dainish khron. that's places where money will fled away from the euro. the danish central bank did cut the lending rate. this is something talked about in the united states and all around the world. should central banks charge a negative rate? all of these excess reserves are on the accounts of the banks, should the central bank pay them as we do here in the united states a quarter of a basis point to keep the money on deposit or should it charge them and could that lead to additional lending in the economy? i just want to point out here that at least one central bank decided we'll charge you if you don't invest your money. >> people point to contracting credit in the u.k., right, even

despite more and more qe from that bank and the old phrase you can lead a horse to water, steve, comes to mind. >> and you can't make them lend. right. two quick things here, carl. one is that there is concern about how this would distort lending if they were forced to lend otherwise they would be charged, and the second thing is money markets. this would really hurt the money markets which have already been hurt by very low interest rates. >> people looking for consistent returns there. might be disappointed. thank you. steve least man and want to bring in jeff cleveland joining us this morning as well to talk about what the ecb did today. jeff, you think ecb largely irrelevant at this point. >> i mean, the ecb made a couple of mistakes. 2008, the mistake of 2008 if you will and two more mistakes, hike in rates last year and worried about inflation and meanwhile the euro area economy is in absolute recession and i think they should be more focused on that and they have come around to that view a little more. i do want to point out the deposit rate cut is probably

more interesting than their actual policy rate. >> sure. >> if you this i about what the ecb is doing, it is a market maker of last resort. it is providing funds to the periphery and should be providing a place for core banks which are flooded with liquidity to deposit funds. by lowering this they're discouraging that in effect and telling the core banks go find somewhere else to deposit your money and i think you're seeing that reflected in two-year german boone yields and swiss bonds and certainly in denmark with all that's going on and i think you will see that in the euro dollar cross as well with the euro weakening. so in a sense central banks should provide a safe asset, a storage for deposit of safe assets and sort of removed that now, and i think they're pulling the rug out from underneath the short-term market in europe. i don't think this is going to work out for them the way they think it will. >> the intent it to get them to go out and lend but that's not guaranteed. they may just find another place to park it that does not involve lending per se.

on jobs tomorrow, goldman is already out this morning and looked at the ism service and jobs component and said it looks pretty good and couple it with adp and claims so they're taking their number from 75 to 125. are you feeling any better about the number we're going to get tomorrow? >> certainly we're feeling better on two uncounts. we're seeing claims versus a year ago are still lower on the four-week moving average which is great. the adp report is showing private payroll growth. we're talking about a difference between let's say 150 on jobs and 100, and we know that error bar on tomorrow's report is plus or minus 100. i don't think it is anything to get too excited about. it is better than the alternative which was everyone expecting weaker jobs figures but it is not great, and i don't think it is going to cause the fed to shift their thinking at all. maybe it buys a little bit more time ahead of additional easing. >> jeff, john fork here. we about how asia plays in all of this. i know there have been some asian politicians concerned about the impact on asia's exports to europe.

how should we look at asian growth and the export issues as far as how asia plays and whether this gets better or worse for europe? >> i think we're going to see at the slowing we have seen a slowing in general and look at global trade barometers and i think that will continue and because i don't see anything that happened today or even last week in europe that's going to solve that. europe is still a pretty big share of world gdp although it is diminishing over time but it will have an impact on asia and u.s. i think that's the story behind earlier in the we're, the ism manufacturing index taking a hit and that's looking on orders and export order. europe is a problem. it will continue to be in a recession. that will have global ripple effects and nothing that's been done this morning solves that in my opinion. >> jeff cleveland in los angeles. thanks so much. we'll talk to you next time. >> talk to you again, carl. >> straight ahead an inside look at what big blue has coming down the pipeline and talk to david mcqueeny who will join us live in just a moment. this man is about to be the millionth customer.

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work. you're looking at a live shot of ohio where the president is expected to speak any moment on the planned complaint against chien can ato the world trade organization. the president will discuss china's new duties on some american made cars and suvs and including the high made jeep wrangler and talk about a battle ground state. he will talk for about 20 minutes and do local interviews after the speech and if he makes any groundbreaking headlines we'll bring it to you as it happens. computer giant ibm has been growing gang buster and the engine behind that is software. we have the guy who runs software research for ibm david mcqueeney here. thanks for being with us. >> my pleasure. thank you. >> want to talk about ibm's profit life blood which is software and analytics. you have talked about big data as being a new central resource. what do you mean by that? >> what we mean by that is if you think about a natural resource, you this i about

minerals in the ground or oil or different specialty gases that can be used in different manufacturing processing. they're all around us in the environment. they're things waiting for us to exploit. in most big enterprises whether it is private enterprise or in a government agency, there is typically a mountain of data, typically unstructured data that contains potential insights about how to serve their clients better, how to engage with citizens better and make the processes run more efficiently and takes a certain amount of computing power to analyze that data to pull out those insights and use those insights to make the enterprise work fmore efficiently. we think of it as a natural resource that can be extract and had refined and turned into something powerful. >> we have the tools to frac and get the value all of that data finally. i see the value for ibm because you're selling those tools. how much economic value has been hidden in this data that can now

be extracted? we could use a boost. we could use natural resources. how big a lift could this be? >> it could be a big lift. the typical agency process and the government are typical process in the business never works perfect efficiency. i am sure we'll never get to perfect efficiency. there are so many insights hidden in data. let me give you a couple of examples. we did a project with a hospital that took care of premature infants and instead of coming in once an hour and writing down a few numbers, if we capture all of the reading that is come from all the medical instruments, if you were in intensive care and see all the different instruments flashing all the time, most of the data wasn't being captured. by capturing that and analyzing it and looking at it from maybe five or six different points of view, we were able to help the physicians spot an infection 12 to 24 hours earlier than they may have spotted it which let them start a course of treatment that let them save the lives of a lot of infants. that's one example. maybe it is not a monetary value but it is a precious value in

terms of life. >> more than monetary value there. tell me, you used to focus on governments and for ibm and the governing business and you were cto for that business. what are governments still spending money on in this public sector environment that's so depressed and what should they be spending money on? >> the government agencies have a real challenge right now. their budgets are being constricted. they're being pressed to do more with fewer resources, whether that is people or capital equipment or operational resources and so for years the government agencies have worked under fairly strict financial rules in terms of keeping an investment in one agency and the return in that same agency and the two agencies found a way to cooperate where one would benefit more than the other. it was hard for them to execute that because of the way money was very carefully managed and measured. again, that came from a good place in terms of driving accountability and what it missed was treating the government as a large enterprise and the optimum performance of the large enterprise might have different roles being played by

different agencies. so what we see now are federal agencies naming one of their peer agencies as an executive agent meaning they're responsible for some kind of business process or technology infrastructure on behalf of other agencies. >> they're getting more efficient in that sense. >> they absolutely know they need to get more efficient. they have a lot of good models from the private sector that have been hard to implement in government and now they're starting to realize that they really need to take these steps and in fact congress is probably going to have to help the federal agencies by evolving some of the legislation that governs how these things are done. >> don't tell me that. lay people are still trying to get their heads around the cloud, right? they maybe figured out nano. mobile of course is a mystery to the biggest companies in the world. what's the most interesting thing you think is going on right now in software? as simply as you can put it. >> the most interesting thing going on right now in software is this idea that we can assemble component pa parts of a

business process or the government may call it a mission process without having to recode it from scratch every time. this has been the holy grail of the software business for a long time, to capture best practices in i number of different business processes and be able to compose them and deploy them quickly and very easily, so a lot of the work that went on around application architecture, service oriented architecture, the work that goes on in cloud computing to provide a uniform hosting environment that's very inexpensive to run and all of these are the technology elements that let us get to this vision of software as this very flexible set of best practices that could be composed almost in realtime as new problems come to a business or come to a government agency. >> thanks so much. we'll have to leave it there. interesting stuff. >> david mcqueeney joining us from ibm. want to send it back. >> kohl's. we have a lot of retailers in focus on same-store sales day but take a look at shares of kohl's. they're really surging, one of the leaders in the s&p 500 and

despite the fact they report negative sales of 4.2%, worse than the 3.2% expected. the ceo is making comments saying he has seen improved sales towards the end of june and looks like that's what investors are buying into at this point. back to you. >> thanks very much. when we come back, he helped create linkedin and connect employers with job seekers and he is helping doctors share knowledge and help patients and we'll talk to him about his new efforts in social networking right after this break. ttd#: 1-800-345-2550 ttd#: 1-800-345-2550 let's talk about market volatility.

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