ed, final thought? >> watch out boeing. that strong dollar will hurt sales and push it over to airbus. >> that gives us about ten seconds to say that will do it for "power lunch," mandy. >> indeed. "street signs squts beginning right now. and welcome to "street signs." i'm brian sullivan. you saw mandy. the president drawing a line in the tax sand saying that right now is the time to end the bush tax cuts for people making more than $250,000. gene sperling is here to defend the proposal. netflix ceo telling the world about the company's big june on facebook. good for shareholders maybe who saw it but was it bad for fair disclosure rules? herb says, yeah. is he right? we'll debate. plus, a special report on china speeding up the effort to steal our business secrets. and the sunshine stock

that's doubled over the past year. hello, everybody. you remember that old song i don't like mondays? today it could have been sung by the dow jones industrial average because we are now down for the sixth straight monday. how's that for some trivia for you? both the dow and s&p down for the third straight day, as well. first time in over a month. the nasdaq also gotten the week off to a negative start putting the five-week winning streak in immediate jeopardy. your top story, president obama calling on congress today to extend tax cuts for everybody making less than $250,000 a year. bring in the man helping craft the president's economic plan, gene sperling is assistant to the president for economic policy. mr. sperling, thank you for coming on cnbc. >> thank you. >> why, again, the push? some calling it a purely political move. why the push now on the tax hike for those making more than $250,000? >> well, the president's message

very clear it's strong benefits for the middle class and our economy, for three reasons. number one, to the degree that there's bit of economic uncertainty in thethe economy, s would extend tax relief to the 98% of hard working americans who most rely on that tax relief. secondly, we know that it is working americans who are living paycheck to paycheck who are most likely to put the money in the economy and third and the president made it forcely today. this is an area to agree. we understand there's a major debate in the country and election of tax cuts for the most fortunate to be extended or asking those who are most well off to contribute to broad based deficit reduction. but while that may be solved in the election what we could agree on right now is we should be extending tax relief to 98% of americans, 97% of small business owners making $250,000 and

under. that's common sense. it's good for middle class families and the right thing for the economy. we could do it right now. >> i noticed you called them i think hard working or working americans and not suggesting people making over $250,000 aren't hard working? we hear the term fortunate a lot, right? you don't think they lucked in to the money. >> no. i believe that we are a society in which we honor success and we honor those who have been able to be successful and do well. but we do have a progressive tax system and when we have to come together for -- to bring down the deficit after the worst financial crisis since the 1930s we wanted to do it in a way with shared sacrifice. we have medicare savings. savings from agriculture subsidies and we also believe that part of the savings should come from asking those who are the most well off in our economy to contribute, as well. that's part of having a sense of

shared sacrifice and all in this together. >> that's fair enough and makes a strong political statement and not about deficits because the money expected to be raised about 80 billion a year plus some deficit debt savings, 95 billion a year is a fraction of a percentage of the fraction. about nine days of operating income for the u.s. federal government and can't be about deficits. where does the other trillion plus come from? >> it absolutely is about deficits and if you're going to have a package of balanced debt reduction more than $4 trillion you can't look at each trillion saying that doesn't matter. tough look at the overall components. the president's put forward a balanced deficit reduction plan. he's already passed a trillion dollars in spending cuts already. but he does believe that over a trillion of that should come from revenues on those who are well off. that's a part of the package and

the reason it's so important is that it strengthens our ability to call for shared sacrifice, shared contribution of everyone else which is very difficult to do if you start off by saying that those who make the most in our economy don't have to contribute at all. >> i couldn't agree with you more. it is a hard discussion, mr. sperli sperling, but because on an annual basis this is less than 10%, some would say less than 5% of our annual deficit, doesn't the president have an obligation to open the dialogue to the american people saying this is 5%. where's the other 95% of the annual deficit reduction going to come from? >> your premises is unfortunately not right. the president put forward the most detailed deficit reduction proposal of anyone in the political system right now. it is well over 4 trillion. brings the deficit down to under 3% and stabilize the debt. we have told -- we have put that

out in detail, a balanced approach of significant spending cuts and entitlement savings, as well. we believe in putting the plan together we can afford to extend the tax cuts for 98% of americans. some of them are feeling economic uncertainty now and the president's saying that we might have some big debates over how much to extend tax cuts for the well off. he obviously doesn't support that but right now before the election we can provide certainty to 98% of americans, the typical family who relies on $2,200 of tax relief. provide them certainty that the tax cuts will be there and something that republicans and democrats agree on so let's do that part now and we have an election to help decide the part we disan i gree on. >> what's the estimates deficit for next year for fiscal 2013? >> we start to come under a trillion dollars and we are on the way to actually cutting the deficit in half over five years. the president was hoping to do

that over four years but the important thing is to bring the deficit below 3% of gdp. not to bore some of your listeners but the important thing is that it stabilizes our debt, it makes sure that our debt as a -- deficits of a percentage of the income and the debt of a percentage of income is under control and coming down and we believe do that without sacrificing investments in our future, tax relief for middle class families and require tough choices and everybody. >> so we made -- >> most well off to contribute. >> may be able to get under a trillion dollars in deficit over the next couple of fiscal years. correct? >> well, the important thing is to look at -- yes. absolutely. >> how much will the tax hike on the top 2% bring in per year according to your estimates, gene? >> we believe that over the ten-year period which is the budget -- >> next year, how much? >> i would say that it will be averages around $100 billion a

year. so i would say -- excuse me. i would say that starts off around 70 billion or 80 billion and then becomes 100 billion. over a ten-year window, you have as you heard others trying to talk about a plan over $4 trillion that brings the debt in a manageable path, this trillion or for our proposal of trillion and a half of revenue is a critical component you cannot ask whether any single component is enough to bring the deficit down. we need savings and tax reform and savings particularly from those who make the most and are doing the best in our economy. all of that has to be part of it. >> i'm certainly not suggesting it is not an important component. it's 100 billion. you described 10% of the deficit. i don't think it's unfair for me or for our viewers to get an answer from the white house about where the other 90% is going to come from.

>> well -- >> we also know this. >> first off, a lot of the deficit -- i'm explaining. the deficit is going down because the economy is recovering. we are doing less of the emergency measures that we had to do. that's going to bring the deficit down from what was once 9% of the economy to we believe under 3% of the economy. so that's on the path in addition we have put a trillion dollars, it's already been signed in to law of spending savings. we proposed $600 billion or more of entitlement savings. we have savings of reducing the ending the afghanistan and iraq involvement. all of those together with the revenue adds to up over $4 trillion and adds more and more deficit reduction as time goes by. for example, our entitlements in health care savings like the revenue savings increase over time and therefore are part of a package that brings down the deficit, reduces the debt, there's less interest cost. all of that is in our package. it's in our budget.

you can get it on our website. anyone can look at it. that's part of the package. and but as we said today what's important today is we make a commitment to extend middle class tax relief and send a signal to make some hard choices and including that average of 100 billion a year on high income tax relief is something we can afford and that we can afford to go back to where tax rates were in the clinton administration as part of an overall balanced budget plan and we know from the past that that is the type of -- >> yep. very -- >> that's been consistent with robust job growth and strong small business expansion. >> very quickly, though, we agree that growth is the answer, right? you said it. we need growth. we need gdp 4% or greater to really then -- that would really eat in to the deficit. on a more fiscally sound footing

from a federal level so with this tax hike if it goes through, are we guaranteeing greater than 4% growth coming forward? bottom up growth is what he's calling for, will this guarantee greater than 4% growth? >> well, i'm not going to make those type of guarantees or predictions but i'll tell you the following. i think that the right combination of policies for the country right now are thing that is are strong for job creation now. things like the president's housing refinance bill. the small business tax cuts proposed. and giving americans the certainty their tax cuts will be there. that will take hold and keeping our commitment to a long-term deficit reduction gives confidence to investors, job creativers that america is going to handle the long-term debt and

deficit challenges. >> thank you for your time. >> thank you. >> let's get reaction now. jimmy joining us, also a cnbc contributor. you obviously heard the interview. listen. gene has a tough job. i appreciate him coming on cnbc and extented the deficit debate to ten years. i was trying to make the point that, you know, we can raise taxes on upper 250-plus people and not do a whole lot and when do we get the honest dialogue of where the other money comes from? >> yeah, listen. i like gene a lot. i think he's in a tough situation. let's remember that those revenue numbers he was giving, they made similar forecasts about the clinton tax hikes and analysis found they brought in a third of the revenue they predicted because guess what? people's behavior changed. look for a tax avoidance strategy. but i thought it was interesting

that he brought up bowles-simpson because there was a tax reform plan completely the opposite. this is the president's own commission. >> simpson-bowles was ignored. >> it was ignored. it was ignored by the president who commissioned it. >> i found that interesting, as well. one of the concerns of raising -- to your point of estimates is you have a couple and you probably know the folks in d.c. right? maybe she's a doctor, he's a teacher. whatever it might be. you know? the income is skewed to one of the spouses. factoring in higher taxes on estate level, federal taxes, child care costs, there's a great incentive for people to drop out. >> drop out? listen. that family that you talked about, the house might be $100,000 underwater, as well, for all we know. what i was saying is bowles-simpson would have raised tax revenue but not marginally tax ratds but getting rid of breaks and loopholes and one of

the advantages of the u.s. economy is the low marginal tax rates. it lowered the tax rates significantly and getting rid of the tax breaks. that's not what the president is proposing. i think you are going in the wrong direction. >> we have the leave it there. i was tough with gene about the -- we always say hard working americans or the middle class. most millionaires are self made. i'm sure they've busted their butts to get there and using terms like fortunate is disingenuous. most people made it themselves. >> hey, they're not all bruce wayne mill theirs. >> thank you very much, buddy. let's get a market flash from jackie. >> thanks, brian. this on the back of a favorable court ruling against a counterfeiter and more interesting than that, this company is run by robert para

making a $350 million bid for the memphis grizzlies and it may be up today but take a look at the three-month chart, down more than 50%. brian, back over to you. >> an herb favorite. thank you very much. on deck, the bulls may be back in the streets of pamplona but the bears running this market. we have got a big week ahead an giving you that and the best strategies to avoid getting gored by the headlines. >> later on, herb breaking down by social media is making it harder for investors to get the information they need from corporate america. does the scc need to get with the times? rs. this summer put your family in an exceptionally engineered mercedes-benz now for an exceptional price during the summer event. but hurry, this offer ends july 31st. ttd#: 1-800-345-2550 let's talk about market volatility.

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all all right. because you clicked, here are the top ten stocks you clicked over the last week. big shocker there, folks. apple number one. bank of america one of the best performers in the dow this year. facebook. jpm, right? the dow industrials. that's the diamond i suppose. rounding out the other top five? citigroup, ge, ford, that's got to be the s&p 500 spyr as a click and arena pharmaceuticals. full of buzz after the fda approved the weight loss drug. the best performer in the most clicked group up 16% over the last week. are you set for a summer slowdown and the news cycle? get real.

it is a busy day so far and we have got an even busier week on tap and it all starts after the bell today. in fact, here's the calendar. look what's coming the week to keep us working. alcoa with the numbers tonight. a great indicator of global demand. tomorrow, rim. new ceo is sure to be taking some heat. on wednesday, the fed releases minutes of the latest meeting. are they closer to qe3. on thursday, the labor department out with the weekly jobless claims number and on friday it is all about jpmorgan chase. they release the first quarterly race since announcing that trading loss. has it grown to even more than they first said? we should find out. either way, no summer slowdown here. with all of that on the whorizo could investors be pumped or panicked? joining us is two guests.

jason, you heard our calendar. which of those events or none of the above and something else is number one on your investment radar right now? >> our primary focus is economic cycle is or round of information this week is a little bit slow is earnings season. we want to see whether there's a follow-through in to earnings from the economic data we have been seeing which is considerably weaker than this year. we think we are in the midst of a summer slowdown as you alluded to and had the past two years in a row this being the -- >> yeah. and then, jason, we have rallied in the fall. do you expect the same situation this year, buy now for maybe an october move higher? >> we think we're in about an annual cycle on this and makes some sense. what it is is we're getting to periods and people think it's going back towards normal growth and then all of a sudden you end

up with weakness where the policymakers have to come back in, restimulate the economy to get us back on track offsetting deleveraging. this is an ongoing cycle and happening until we get the debts under control. >> mark, do you agree with that? you probably heard our discussion with gene sperling about growth. stocks will go up when the economy grows. when's that going to be? >> i believe that we are going to see more growth in the fourth quarter of this year. we're going to muddle through the summer months in particular in this third quarter. we certainly don't see the growth like we saw in q1 and q2 reflected the volatility that my clients and investors have gotten used to so i'm preparing my clients, i'm suggesting to them better to prepare than repair when it comes to the portfolios and with a host of tax policies, presidential election coming up, we have got a lot to deal with. >> i'm sure some of your kleins are in that fortunate group of

slacking off plus $250,000 workers. right? and then i would imagine they're concerned about taxes, fiscal cliff and everything else. what are they saying to you when they call? are you playing dr. phil financially? >> i am. very good point. in fact, i'm telling my clients, you will be -- if you're patient, your patience will be rewarded. i'm suggesting they prepare by having their core strategy in place and also their satellite strategy enabling them to be very, very tactical to take advantage. it's okay to be in cash as long as you're ready to move tactically. >> cash is so boring! is there anything that's relatively staff and provides a good, relative return these days? >> sure. this is the perspective of where we're coming from. same time, the other thing advising clients is to take some risk because cash is giving you nothing. what you need to do is take some

smart risks and things are better risks, whether high yield bonds, high quality dividend paying equities, options where you are a called portfolios with calls against the equities, global bonds. multiple different ways to take risk in an intelligent way, get good returns and not expose yourself to the risk of full-blown equities. >> i agree with you. the problem is with everything going on, with europe, with china, with the brick nations, how do you define high quality? i don't know what high quality is these days. >> look. stocks, high quality is what i see is a very simple definition. it's based on companies that have above average internal rates of capital and lower than average beverage. that way when the economy cycles, their businesses don't cycle as much. the stocks don't cycle as much. the dividend stays in place. they're capable of delivering a competitive return in a slower,

more volatile environment and arguably as good as or better than a typical equity. >> i'm advising my clients to look at equity that is have pe ratios of 15 or les and i'm also reminding them that they need high dividend paying stocks and high def depend growth paying equities and fixed income, i like diversification among the class as much as investment grade, corporate bonds, investment grade and high yield and i believe there are certain country bonds, sovereign debt to pursue. >> gentlemen both, thank you. >> thank you. >> thank you. just ahead -- i got a double play. thank you, inflation. just ahead, my beloved virginia last year's top state for business and scott cohn is live from a top secret location. who will be this year's winner? and the heat wave is finally broken but the danger is nowhere

near over in the midwest. the new threat for america's farm land when "street signs" returns. l night-vision goggles, like in a special ops mission? you'd spot movement, gather intelligence with minimal collateral damage. but rather than neutralizing enemies in their sleep, you'd be targeting stocks to trade. well, that's what trade architect's heat maps do. they make you a trading assassin. trade architect. td ameritrade's empowering web-based trading platform. trade commission-free for 60 days, and we'll throw in up to $600 when you open an account.

it is stock-tology time.

maybe 50% more decliners than n inclin incliners. new highs, 149, only 16 new lows surprisingly. nasdaq, about the same. not quite as spread but similar. well, cnbc is grading the states once again. for the sixth year in a row, it is our exclusive ranlging of the top states for business. the study always gets people talking, especially state governors. cnbc's senior correspondent is live in this year's top state. he's there. i promise. now, he was standing in a vineyard earlier. this welcomes like it might be housing some oak aged wine but i'm going to assume that this is not california, scott. >> reporter: oh, i'm not going to tell you. i wasn't going to tell you what's in the barrels because i want people to be watching. you have to watch all day, today and tomorrow, rolling out

america's top states for business. i'll tell you it smells really nice in here. you know, every year we do this and millions of you each year have gone to top states.cnbc.com to see where your state ranks. i could spend a year listening to governors weigh in on why their state should be number one and we formalized it and asked them to send in videos and i want to show some of what they said. it doesn't count toward the rankings. it's interesting. virginia's governor hoping to log a top state's first becoming a back to back winner. >> while we have worked to help the private sector grow, we have also made the public sector smaller and more efficient with government reforms. >> i think oregon's well poised to be a leader, a nationally if not globally in a sustainable clean economy. >> ow litigation climate is sane

and reasonable. we are building infrastructure while other states are crumbling. >> i'm governor of the great state of iowa. my goal for iowa is 200,000 new jobs and raise family income by 25% over the next 5 years. >> reporter: governor bransted is burning up twitter today and people voting for iowa. none of this officially counts in the rankings. we look at hard data, ten categories and they are cost of doing business, workforce, quality of life, insfra structure and transportation, economy, education, technology and innovation, business friendliness, access to capital and cost of living. we want you to go to topstates.cnbc.com and read more. tell us what you think. next hour on "the closing bell" we'll give you your first diabolical hint as to the top state and tomorrow all day long

on cnbc we'll count down the top five america's top states for business. brian? >> you are a mystery wrapped in an enigma cloaked in a shroud of secrecy. where are you? >> reporter: barrels of something. >> are you going to tap those tomorrow? >> reporter: that's a good idea. just, you know, there's an s spigot. >> we look forward to it. thanks very much. the flat beer trade and the booey buy. it's china's explosive growth fueled by stolen secrets of american companies? david faber here with a special report.

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all all right. street talk time. walking you through the big stock stories of the day. since mandy is on "power lunch" it's double dude day. you're playing the role of me which means i'm mandy. >> no. you will -- i am not -- >> can i get -- >> you are not mandy in -- >> a foot and a half taller.

stock one, sirius xm higher. they're not seeing, herb, 1.6 million what they call full pay subs, not the freebies with the new cars. >> but look. the new car sales definitely having a good impact here. >> you want to keep it. it's gd. >> it is good. >> cnbc is on it. >> that's why we listen to it. but you have to wonder if mel, the ceo, low balling all along this. they have lower capital expe expendures. what do margins look like? going higher as the quarters going on. >> next, janus capital. downgraded from a buy to a hole. we were looking at the note today. interesting comments and not slamming the company necessarily. >> he says, look, this is the poster child for all things

equity fund, stock mutual funds. this is really important because what he's talking about is what we talk about with what's broken in the market. the retail investor gone somewhere else, not going in to the funds. obviously going in to etfs and not necessarily that. this is a significant note. not just about janus but the industry. >> river bed technology saying the company may come in at the lower end of the guidance and think the new products gaining traction. the ma ro environment hurts and down 50% over the past year. >> i have no xhentd. >> you are definitely not playing the role of me because i have a comment on everything. >> of course you do. >> beer. ubs cutting boston beer to a sell. their price target implies another 13% or so drop in sales. >> do you realize back in january i did an herb-alert on boston beer with the twisted tea saying they could not live by twisting tea alone? >> booming.

>> 103 up to 130 or thereabouts and now coming back down. this analyst has a 103 target on the thing but you know, it's interesting because the kraft beer market, not growing in the market. >> that's the argument. can't maintain the growth product of new products to slow down. not that many good ideas. >> it's what happens when you're an entrepreneur. only go so fay. >> the big stock of the day, bridgepoint education. >> they did not get the accreditation they thought from a western accreditation company. this is very important for a company like this because without accreditation for this college that they have, they can't -- they students can't get loans, federal student loans. >> that's the key. no accreditation, no credit. >> now they're going to appeal this decision and what's great about this story, remember, they went out four, five years ago, bought a little college in iowa. acredited by a different organization. based in san diego.

they got 180,000 online students with the computers. that's in the west, the accreditation company says, no way jose. >> important to watch. if they get the accreditation on the appeal, the stock should reverse that. correct? >> we'll see if they get it. i think most people thought they would get the accreditation because the accreditation companies are like the credit rating agencies. some people feel it's always an inside job. this is an accreditation company. >> fantastic. you're pretty fired up about something that netflix ceo hastings did and said we're doing great in streaming, killing it. you don't care what he said. you care where he said it. he said it on facebook. >> this was a story last thursday. netflix's stock rose 13% after hastings posted something on his personal facebook about record streaming data and he went on to say how more records would be broken. that got me to question, i wrote

a piece on cnbc.com. i talked about it here a little bit. whether he violated in the very least the spirit of reg fd. there was no scc filing. no press release. no nothing! just a personal facebook postings. and that gets to the issue. is social media selective disclosure. >> thus we'll bring in a guest on said issue because you are so fired up about it. that guest is hal scott, director of the committee of capital markets regulation. you can tell our friend heroin here is very upset about this and thinks maybe they skirted the spirit of regulation. >> if not the regulation itself. >> i was being nice. did they break any rules? >> i don't know because as herb pointed out we don't have any cleerp guidance of the scc. i think the more general question is to whether we should be making disclosures in social media and while facebook itself may be okay because it's so

widely subscribible to, you know, where do you draw the line in social media? i think we have to insist that it be a general press release or be on the corporate website. >> you know, hal, this is what's interesting. look. reed hastings, his personal facebook page. he has 200,000 followers. that's not -- >> what if you're not on facebook? >> there's rules and regulations and not talking about a corporate facebook page. we are talking about a personal page. could he have gotten caught up in the moment? who knows? i reached out the the company. but this is the issue as now we just sort of -- we keep sort of blurring lines and blurring lines an blurring lines. >> well, that's why i say i think we should be simple and clear about this. and the scc needs to give us guidance. >> how many years to do that? >> well, i can't speak to that. i don't think it's really that complicated because they have enunciated the principle it

should be a general distribution channel and if you think about it in those terms it seems to me it's pr news wire or the corporate website or an ak and about it. >> i guess you could make the other side of the argument, hal, which is that if a ceo says something at a conference, right, or at an event which you have to pay a ticket to get in to, which will eventually get picked up if it's significant by a pr news wire, a blog, cnbc, whatever it might be, do you think that's a violation? >> well, the violation is when you do it to a selective audience. this is what regulation fd trying to prevent basically because it felt that a selective disclosure would enable more insider trading and behind the regulation fd idea and private conference doesn't qualify in my view. you know, by the way, if you say something inadvertently which people can do at a private

conference or otherwise, regulation fd gives you 24 hours to do a general distribution to kind of remedy the defect. >> all right. fair point. the issue not going away thanks to twitter and pinterest. thank you. >> you're welcome. >> i don't think pinterest would qualify. up next, herb is till here and he's got a double disaster in engines and online jobs. plus, we're going to go to the farm to see why the break in the heat will not get any price breaks at the grocery store just yet. nouncer ] before you take it on your road trip... we take it on ours. this summer put your family in an exceptionally engineered mercedes-benz now for an exceptional price during the summer event. but hurry, this offer ends july 31st.

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the mercedes-benz summer event ends july 31st. investors gearing up for the start of earnings season. here we go. 4:00 p.m. eastern time. we'll be talking to alcoa's ceo as soon as the company's earnings are out in and reaction from him before he even speaks with the analysts on their conference call. also ahead, we get reaction from the president's call today for the bush tax cut extensions for middle income americans only. good idea or just poll tiblgs as usual? we'll have both sides of the story and more coming up.

mandy is here with me at the new york stock exchange. brian, thank you for sharing. >> always happy to share. i'm um here with herb. i appreciate it. you, sir, are no mandy. >> no. >> i am not -- neither of us. >> we're 350 pounds combined more and that's just me. double disaster. navistar down again. >> down again. look. >> why are you all over navistar? >> the company said it was introducing a new engine technology. gave little detail on calls to investors coming back today. obviously taking a close look at this. volume really strong. monster worldwide's the only one to talk about. if facebook starts a jobs board won't just impact linkedin but also monster worldwide. >> all right. very quickly. quest core farms soaring again. they have one drug. i guess preliminary estimates

look strong. the stock just soared over the past year. trying to find something under the radar names. >> lots of controversy around that name, yes. >> we're finally getting a break from the heat that's gripped much of the country. it is a brutal couple of weeks. i was in morn wisconsin where it topped 100 degrees. we broke records more than 2,000 records around the country. but for farmers in the heartland the danger is not over for their crops yet and they're desperate for rain. john yang is at a farm in southern illinois. john? >> reporter: brian, take a look at this cornfield. these corn plants should be about eight feet high right now. they barely come up to my waist. see the brown sort of seared leaves. this is the plants burning themselves out trying to produce something. and so far, this is about all they can produce. those that can, just little ears like this. very little pollination.

there's a soybean farmer around the corner that told me if it doesn't rain two inches a day for the next two weeks until the end of july his crop will be gone. this corn crop, the farmer here, says he hasn't seen a decent rain in three months. the yield is so low he says it may not be worth the fuel to harvest it. and that is showing up in the futures market. corn up 22% over the last 30 days. wheat up 32%. soybeans up 9%. a very tough summer for farmers. brian? >> yeah. certainly has been. john, stay cool. i'm sure we'll see you again. all right. coming up, economic espionage in cyberspace. we'll dig in to china's cu culpability in the theft of secrets from american companies. [ male announcer ] if you have to take care of legal matters. legalzoom has an easy and affordable option. you get quality services on your terms, with total customer support, backed by a 100% satisfaction guarantee.

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high anxiety in central china. an hour into the stunt, he slipped and fell. amazingly enough, though, he walked away with only a few

scratches. scary stuff. staying in china now. is a big part of that country's success coming down to stealing secrets from american companies? some experts say yes. as you will see tonight in a new investigation special, much of it is going undetected. david faber is here with us as well as fbi director for counter intelligence frank kagluzi. >> thanks, brian. yeah. this is, obviously a very significant problem. and want to -- ask our guest, i guess, as well, you know, a lot of people believe that this let has advanced over the last five years. and many people in corporate america we spoke to, for example, for our program tonight indicate that there does seem to have been a shift in terms of state sponsored activity primarily from china but not solely from china at trying to get the secrets of american corporations. has that been your experience, formally at the fbi in your current position as well? >> yeah. i'm currently the assistant director for the fbi's

counterintelligence program and in that program we are in the spy catching business. and i'm sad to report that business is booming. ing in fact, over the last four years, the number of fbi economic espionage related arrests doubled. the number of indictments has risen fivefold. number of convictions has risen eightfold. just this year, we are into double digit arrests for economic espionage and surpassed last year's numbers. this is not just a threat come on the horizon. it is a threat that arrived. >> you mentioned an interesting one. tonight on cnbc we focus almost solely on cyber espionage. there is a physical aspect to this. that's what you are referring to. for first time in quite some time we have been making arrests. dhinies nationals are working for u.s. corporations who are arrested here on thinking primarily at the dupont case, for example. that was a watershed, wasn't it. >> dupont case stands out because it is the first tomb we have actually applied the trade secrets act to a state-sponsored

chinese corporation. so we are charging for the first time a chinese corporation for -- engaging in state-sponsored economic espionage. that's a first for us we know, frank, that so many chinese corporations are either partially or entirely owned by the state. so is it a fair assumption that if we see this high-level cyber terror, cyber theft, whatever juan to call it, that there is -- in some ways a -- chinese government involvement in -- trying to be soft here on china. but -- is the government involved? >> well, i'm here to tell you that across our case load, we are seeing a variety of countries engage in what we call state sponsored espionage. their foreign intelligence service is behind it. it is dangerous to see just what country because what we are seeing in the fbi's case load is that even sometimes our allies, when it is in their economic interest, we will engage in

economic espionage. it is cheaper these days to steal u.s. technology than it is for a country to research and develop it themselves. >> it has been cheaper to steal it and to develop it. this makes it's easier. david, what in your report was the scariest and most unusual and most bizarre thing that you encountered? >> you know, we -- very few people want to speak publicly about this. many people at organizations at companies that have been hacked and breached and significant data has been sold, don't want go on camera. i did get one, security professional, of a very well known telecommunications company and who went on and had told me that the chinese were in their network for what he believes was ten years. i'm going leave that -- >> ten years. >> ten years. >> in their computer system. >> correct. >> before being detect. >> they had been detected but they were there and they don't believe they ever actually got rid of it. once you have an advanced persistent threat, we go into detail mitt about it, once the chinese are there in your

network, you don't know where they have gone. that's part of the problem. lot of companies don't really know how to detect it and don't know what has been taken or where they actually are. >> david, thank you very much. frank, thank you, sir. >> don't you miss the premiere of "cyber espionage the chinese threat." 9:00 p.m. eastern time. let's get a quick check on the markets. you know, as we noted earlier i didn't know this until just -- did you know this, david, six mondays in a row we have been down? >> no, i didn't until you just told me. >> i didn't know it until my producers told me. up next, the ultimate bacon burger. we end the show on a delicious note. ♪

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