with joe kernen and michelle caruso-cabrera. becky will join us from sun valley along with three very special guests. we talked about them before, warren buffett, alan simpson, and erskine bowles. you don't want to miss it. in the meantime let's bring you up to speed and prepare you for the day ahead with what's going on in the news overnight. spain announcing a $79.9 billion austerity plan, including tax hikes and spending cuts. the spanish government is removing public sector christmas bonus and reviewing retirement pengs as well. in other news, jpmorgan set to report quarterly results friday morning. and the street already buzzing about what we're likely to hear. today's wall street journal reporting millions of dollars of clawbacks from executives who ran the chief investment office could be announced. paper announcing jpmorgan losses will come to $5 billion for q2

and future losses will be less than $1 billion. we told you last week it would be between $4 and $6 billion, so i think we got it right there in the middle. bank executives set to have struck a balance between wrapping up the situation quickly and taking larger losses, moving slower in hopes of cutting those losses. the agriculture department will update monthly crop production and yield estimates coming at 8:30 a.m. eastern time this morning. corn and soy are expected to be in the worse shape since 1988. prices have been jumping amid a severe drought. we talked about it yesterday and talk about it more today. michelle has corporate headlines. >> look at that corn number. bankrupt american airlines parent amr says it will press ahead with evaluating potential mergers and reach out to interested parties. the move could satisfy some creditors less than impressed with stand-alone structure plan. they are considering five airlines.

gold corp cutting full year production guidance. change to reduce output at mine in ontario and expected lower production at mine in mexico in the second half of the year. sharing falling on the news in after hours. lower than 3% in the premarket. joe? >> thank you. could we talk about jokers at american airlines? or you want to do news? >> what happened? >> sorry. i got frustrated. >> with what? >> i wrote a column yesterday -- >> yeah, yeah. >> taking tom horton and american airlines to task for the fact they wouldn't even begin to have a conversation with anybody, including us airways, who they should be merging with, not that great for customers but they only have other options. i write this column. what do they do? >> i don't know. >> five hours after i write the column because they're getting calls inundated from unions, everyone is upset, horton trying to walk off with management for millions of dollars and now they sit around and say, well, we're

open to lots of mergers, we would love to talk to these people, including virgin america, which is losing their shirt, by the way. in the list of airlines we just read, which is the list they're bandying about to anybody who will listen, there's not one person on that list other than us airways they'll merge with and that's what will happen. in any sense, i'm in a little bit of a tiff. >> panties bunching up. >> i'm frustrated that it would take -- i don't want to suggest it would take a column to get them to actually move -- >> it seems like a rapid turn-around from a column. four, five hours -- >> no, i mean, it took -- >> they did it that quickly? >> they didn't do anything quickly. they always said they would explore options but to sort of rush out there immediately, the second there was anybody questioning whether they were actually going to do this, to actually do it, seemed a little hasty. >> i don't understand. there is a creditors committee, right? >> yes. >> i mean, ultimately, they're

deciding, right? the ceo of amr in theory cannot do this on his own, right? >> yes, except management always has control. >> not in bankruptcy. i mean, gm sure didn't. >> but that's a different -- that's when the government gets involved. >> circuit city, they tried to buy in bankruptcy and creditors, see you later, sister, we're going to liquidation. i mean, it's always creditors committee that decides, right? >> ultimately. but in this case the management has had a huge hand and sway over what's been happening. >> i thought you were mad because you tried to upgrade and there were seats left, but -- >> not after that column, i'll never get an upgrade again even though i'm a gold or special -- >> super duper platinum -- >> i've just been downgraded, i'm sure about that. >> i wasn't sure of all the things you were just talking about. i have to go back and read the column. i only read "science times," i told you that.

>> and paul krugman. >> who's coming on at 8:30 a.m. eastern time. i know. it's going to be an interesting interview. don't cry just yet. >> i'm not going to cry. i have priors. i don't want to do anything that gets me, you know -- >> back in jail? >> -- back in touch with my -- i'm worried. a few other -- really, what gets me is when you try -- you have the miles, you're ready to do the upgrade, seats available. those aren't upgradable seats. i've looked at the seats. they're all the same. they're not different. they're not fatter, slimmer, wider. how do you decide whether it's a -- have you tried that? >> i have this problem all the time. >> you do? all right. >> don't you? >> yeah. >> are you -- did you ever say -- how are you getting to paris? >> on a plane. >> yeah. on a slow boat. >> i have kids. >> do you get to upgrade? >> can you upgrade? >> do you upgrade the kids? >> that's a rough one.

>> you live on the upper east side, do you. >> would you go in the front and leave kids in back with a nanny? >> no. the question is, do you upgrade the nannies? a few other stories -- >> geez. >> i'm going to work through this ppfg best collapsing after regulators accused of misappropriate operating funds for more than two years. filing for financial late yesterday. a suicide attempt by founder and chairman russell wassendorf outside the firm's cedar falls offices appears to are precipitated the crisis. i heard it involved a car. >> yep. >> do we know -- >> a pipe thing. >> was it? >> that's what they're reporting. it didn't wok out. remember we were talking about suicide --

>> it's sad when someone gets to that point. >> he was supposed to get married in august. >> just seems like there's so many ways, if you were -- if that's something you definitely want to do, you know, i figure i can find a way. if you definitely decide i'm doing this -- >> car is not it. >> g.w. -- i'm not suggesting anyone. pills i would not try. >> because? >> that's like owen wilson. what i'm saying is if you get to that point in life where you -- obviously you've had a lot of failure in your life or something -- or maybe you have depression or -- let's just drop it. you don't want to fail. >> no. >> anyway, u.s. cities are scrambling to deal with damages related to the libor scandal. front page story in today's "new york times" reports leaders in baltimore say the city's troubles were aggravated by bankers' manipulation of key interest rates linked to hundreds of millions of dollars the city borrowed, baltimore's been leading a battle in a manhattan federal court against

the banks that determine the interest rate. including massachusetts, nassau county, long island, and california public pension system are looking at whether they suffered similar losses and weighing legal action. we'll talk more about the libor scandal with former fdic chair sheila bair. the chair bair. but she isn't chair anymore. you knew that lawyers would be able to talk people into -- >> oh, right. >> that you would find a way to -- i remember when -- the guy that elizabeth warren's -- oh, he was -- >> the ambulance chaser. >> he had magnetic business cards as ambulances went by. call me, call me, call me. now he's in charge of the -- i mean, i -- >> they'll be running ads with 800 numbers for you to call. >> oh, yeah. definitely. >> except i think there's -- maybe i'm wrong on this. there's a mistaken belief that libor impacts a lot -- it does impact consumers but your

mortgage rate is the prime rate. your credit cards, prime rate. >> what they're saying here -- >> not to dismiss what's happening -- >> are they saying rates were too low and they got in trouble? >> pre-2008 when manipulation was more related to the setting of derivative swaps but i still -- >> increasingly it appears this has been going on for -- >> a very long time. what makes me laugh -- to your point -- >> they throw out the top and bottom on purpose because they know it's supposed to be -- >> exactly. >> they know -- i don't know if they know something's going on but they know outliars. >> come up with an average. when people wring their hands, what will we do without libor? there's treasuries. there's a million ways to -- >> there's other ways. let's check on the markets. futures are suggesting we'll see a positive open. or flat. s&p 500 higher by two. nasdaq higher by 1.5. dow jones higher by 22 points. price of oil is higher.

wti up 84 cents. brent is 98.9, gain much 92 cents. let's talk about the ten-year yield. 1.15%. the price of the ten-year this morning slightly lower. the dollar as we see all these announcements out of europe, the dollar is weaker across the board. the euro will cost you $1.2273. not appreciably different from yesterday. the price of gold at this hour, lower by $3.40. 15.70 per troy ounce. across the pond with the infamous global markets reports, kelly evans, standing by. >> hello. >> good morning to you. >> hello. i hope it's not infamous. markets taking a bit of a breather, that's how i would describe the action we're seeing. decliners outpacing by seven to three. kind of sitting around these

levels all morning. you can take a closer look at the mixed action we're seeing across the continent. spain in green, up 0.3%. ftse down more than 0.5%. extraordinary comments from mario monti saying everything from the fact italy might need bond market support, which is something other nations in the past have been reluctant to come outright and say, to italy at war of tax. but down about 0.6%. xetra dax trying to hold onto the gain. ftse 100 down 0.5%. some pressure from burberry. while you guys in the u.s. are familiar with the raincoats, the classic checked pattern, we may all know the brand well, they came in and said revenues were up 11% in the earliest quarter, shy of what the consensus was looking for. in asia in particular, market

slowdown in growth. quickly the narrative shifting to whether this is something about burberry specifically or about the strength of global demand more broadly, especially for the key luxury market. let's take a look although bond yields. interestingly enough, spain and italy showing a bit of relief on this front. if you can call it that with the ten-year in italy still although 5.907% and spain 6.775% this morning. both of these are ones to watch as they're searching for direction. going higher and lower, not seeing the pressure from yesterday but not relief either. france is 2.331% and germany, one to mention because, guys, they just auctioned off ten-year debt at a record low. the yield now in the market sitting at 1.3%. just a quick check of what's happening here across the oil market because brent crude is now up about 0.75%, despite statoil say norwegian production should be back online by the

weekend. crude getting a bid, nymex up 0.2%. the risk on mood we're seeing more broadly. euro/dollar is up about 0.2%. euro a little stronger against sterling. we should mention earlier in the trading session, sterling, the british currency, appreciated to a 3 1/2 year high against euro. whether that will provide any lift to the euro bloc as brits take their holiday and take advantage of the weaker currency remains to be seen. want to mention because you were just discussing libor, the next to appear before the treasury select committee hearing here in britain, the fourth involved so far. of course, the former chief operating officer at barclays. of course, libor, while you know you're trying to poo-poo is extremely important to corporate loans, not to mention they have a trillion dollar market in interest rate swaps. back to you. >> thank you so much, kelly. she was talking about what

they're doing in spain. what are they doing if spain? raising taxes and cutting spending. paul krugman is on later and i know he hates what they're doing in europe. perfect day to talk to him. >> he will have lots of views of what's going on. when is enough is enough is the big question. let's talk about other news. a third california city is seeking bankruptcy. this goes to all the issues we've been talking about. san bernardino, the city is about 210,000 residents, east of los angeles, filing a report by city staff saying the city faced an imminent financial crisis. >> it's by big city. >> that is a very, very big city. meantime, creditors of alabama's jefferson county say that county is too slow on a workout plan for ending its historic $4.23 billion bankruptcy. if jefferson county fails to meet a workout plan plan fixed by a federal judge, the u.s. biggest ever chapter 9 municipal bankruptcy could be dismissed. this is happening across the country. >> san bernardino is one of the

cities we talked about the other day with rick scott was on -- you know, he turned down the high-speed rail money from the federal government and they didn't. jerry brown is going ahead full force in one of the cities we said, you know, indio near palm springs and san bernardino, there may be a time when someone wants to go between those two cities. what if you go and you don't have high-speed rail to get there. california will take care of that and make sure -- every city should have a monorail. every city. have you seen the simpsons? sam is coming to town from the administrati administration, sam huckster -- >> i would like to take a monorail here every day. >> it's around the city. it's not here. every city needs a monorail. you have to have a raised -- what is it, a bond issuance and raise the money so you can -- >> the jefferson county thing is

amazing. they squandered $2 billion and then they go in, double down, borrow even more. >> did stockton every take money? >> i don't know. >> i don't know what happened with stockton. >> it's unfortunate for california. the last time i remember, it was orange county, right, that had to do with munis. >> it was the biggest municipal bankruptcy in history at one point, right? >> right. >> see, i see this and i see you're going to read about president obama and i see michelle -- i thought it was about michelle obama because it says you're reading it, michelle, president obama, but in fact it's not about -- >> look at directing -- who is directing the show today. that was a quick turn. wow. impressive. >> do you consider the metro system in washington to be a monorail or do you think we should build one in addition to? >> elevated with a view. >> some trains in d.c. are elevated. >> and they are kind of monorails. >> monorail-like. >> and a tube in london. it has a cool name. >> it does. >> in washington news, president

obama will host democratic congressional leaders at the white house today. they'll discuss bush-era tax cuts and jobs initiatives. republican presidential candidate mitt romney will address the naacp convention today being held in houston. romney is hoping to sway some with his pro jobs message. unemployment among african-americans is disproportionately high at 14%. republican-led house will hold a vote to repeal president obama's health care law. gop lawmakers call it a stand against the largest tax hike in history. democrats are calling it a political tantrum. nothing's different in washington. coming up, yahoo! could be a step closer to picking a permanent ceo today. hold on to your hats and -- >> until next month? >> maybe. or next week. check your resumes. >> get your popcorn ready because it could happen today. don't change the dial. the all-star game played last night in kansas city. the national league shutting -- oh, good.

shutting out american league 8-0. >> 8-0? >> did joey votto, he was going to start. the most lopsided national league victory in history. i like it. it matters now because it has to do with who plays where. . the third largest of all time in playoffs. >> baseball. >> baseball, round, small. g to e numbers... ...and listening to your instinct. duff & phelps finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services. 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. one that's working to attract businesses and create jobs. a place where innovation meets determination... and businesses lead the world. the new new york works for business.

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welcome welcome back. alex wallace from the weather channel. >> good morning to you.

not a fun morning across parts of the south where we've got the rain that's ongoing out there. we're seeing weakening showers in place across north carolina between the groeeensboro charre charlotte. south florida very soggy. along the gulf coast of texas and into louisiana, showers and storms with that heavy downpours and quite a bit of lightning. it's the southern tier of the nation continuing to stay on the stormy side. northward that's where things will be pleasant. enjoying sunshine, seasonable temperatures. we'll find mostly 80s and 90s across some of these areas and back to the west, mostly staying dry in those spots. hot in some areas, particularly in the deserts where we'll find some 100s. focus no doubt with the rain along this boundary. moisture flowing northward. so that will keep the threat for rain around. that boundary is going nowhere, at least through the end of the week, so we'll keep things wet. in terms of the numbers, well, maybe 1 to 2, 3 inches of rain possible in some of these spots

from the lower mississippi valley, tennessee valley and back into the carolinas. wet times for the end of the week. back to you guys. >> thanks so much, alex. let's talk about yahoo! this morning. yahoo!'s board slated to meet today to meet the company's ongoing ceo search ahead of tomorrow's shareholder meeting. senior analyst jordan rohan is standing by on the "squawk" news line with the latest. let's talk about what it looks like. looses like ross levinson, current interim ceo will get to keep his job? >> well f you think about it, yahoo!'s had, i think, five ceos in the last five years. ross is doing a very good job getting things done with an organization that's gone through this much change and drama and trauma, if you will. i think it would be foolish for the board to conclude the board should change it up again and try to start anew. >> here's the question, jordan. ross is like, to me, like terry

semel, a media guy, advertising guy. that's what he does. he's not a tech guy. when people think about the companies that have succeeded in silicon valley, there has always went been pressure to have somebody who understands tech, think google, think -- all of the sites that actually worked had some kind of technology person behind them. >> well, the good news is is that ross realizes what yahoo!'s strengths and weaknesses are. if it's not working, why continue to try to do it? so, i view it a little differently. and i think ross does as well. which is, let's make this organization make more sense financially, more sense strategically. let's be a really good digital media company and perhaps the focus on becoming the best tech company in the world is not something yahoo! -- that is in the cards for yahoo!. i just think that an honest evaluation of yahoo!'s strengths and weaknesses is really what's been needed for several years. >> is there anybody that could

surprise us? is there a surprise candidate on the list we could learn about? >> you never want to say never because this is yahoo! anything can happen and often has. but there are many that come to my mind. i know the search, if you will, has been going on for years and years and years, if you think about how many ceos there were. i'm not so sure carol barts was number one on the list when she was named ceo. when you go back to that and say there are a lot of people that have had a look at this opportunity, the tough part about the yahoo! job is it requires a full reorganization, may require taking the company private. have you to deal with external forces like soft bank and alibaba, groups that are unpredictable. >> in terms of whoever gets this job, their next big push, the thing they need to do, they have to -- they have to figure out what they're ultimately going to do with asia and how that will work out, right? >> right. i think yeah can hao japan is

further along being evolved than people appreciate right now. i think we could see some announcements related to the progress they're making in selling that stake over the course of the next couple of months. >> where are you on the stock? >> i love the stock because a company in this much transition, still produces this amount of cash flow, could be a situation where you really see upside. >> we're at 15.82, what's your target? >> $21 target. i think you can get there fairly short order. >> on operations or get there because they take the company private or somebody -- what's the calculus? >> a slight improvement, things going a little better on the operating side. and then some rationalization of the assets. remember, they're in there buying back their shares today. when they get -- >> jordan, that narrative, all the supporters of the stock have been given that narrative when you look at the chart three or four years now. it's finally going to happen?

>> it depends how much you believe in the senior leadership. i tend to believe this guy ross levinsohn will get it right and has appropriate expect takings. if you're trying to be the biggest tech company and outsocial facebook and outsearch google, it's not going to work. yahoo! i believe, will do some smart deals, renegotiate the microsoft contract for search, help get -- get help from some of google's assets to sell some remanent inventory and stop trying to be the number one in the ad network space. some things that really make sense and drive margins up to 50% or more. >> thank you for joining us, appreciate it. a reminder cnbc and yahoo! have a business alliance to produce editorial content. coming up, a picture from the futures pit in chicago. i have never -- >> never seen the picture? >> no. i've never -- when i sold commodities, $3, $2, want $7 or 8. tdd#: 1-800-345-2550

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♪ ♪ good morning. welcome back to "squawk box" here on cnbc. i'm joe kernen along with andrew ross sorkin and michele caruso carrara. becky is off because involved with cnbc issues. >> of course. >> she's not out there just with her baby and her youthless husband executive producer of the show. just joking. she'll join us from sun valley tomorrow along with three special guests.

we called and called and called a bunch of important people. we were finally left with these three guys. this is the best we could do. warren buffett, alan simpson and erskine bowles. >> where did you pick them up? >> the guys that were way down on the list, but they were the ones -- of course they said yes. >> what do they know anything about? >> exactly. very special "squawk box." we're calling it "searching for solutions." everything needs a name. keeping america great. no, "searching for solutions: avoiding the fiscal cliff." we need to get a voice overfor that. i can do the voice over. >> you'll do it yourself? >> i can do it on a wednesday but i don't think i can do the music. i need some really important -- >> dramatic. >> yes, dramatic, important music like we use when we do election coverage. ♪ >> no, no, that's too --

>> that's -- there's like space odyssey. >> that is star wars -- no, the penguins music. that's right. >> i thought it was star wars? when the stormtroopers come in. >> who wrote this? who came up with this name? i've got to know. who did? oops. >> oh, becky came up with it. >> never mind. >> it's a great name. >> i thought it was a producer. keep going. making headlines, fitch affirming aaa credit rating on the united states and maintaining a negative outlook. the firm cites a diversified and wealthy economy undermined by the government's inability to agree on deficit reduction measures. what you're alluding to with that great title. i like it now. china vehicle sales raising 9 .9 % this month. automakers ship nearly 1.6 million passenger cars, trucks and buss in china. >> that's a big number but not as big as it used to be. >> and the buses aren't taking

any people to those empty apartment buildings, no. those are -- >> those wind mills that connect to nothing and provide energy to -- >> or stadiums where no sports are played. >> right. i love keynesian spending. futures suggesting a slightly positive opening. s&p 500 higher by a little more than three and the nasdaq higher by four. wti higher by 93 cents i a gain of more than 1%. brent higher than 1%, 98.88, below 100 bucks. the ten-year yield, 1.51, and 1.52, slight selling in the ten-year this morning. as for the dollar, weaker across the board. you're going to -- 1.2279 for euro. spain coming out raising the v.a.t. tax, and agreeing to

punishment for the little guy in spain when it comes to their bank bailouts that's going to happen over there. a lot of news in europe today. the price of gold at this hour, lower by $4.50, 1575. joining us, scott bower, senior market strategist. we haven't talked about, i wanted to with my co-anchors, we were happy about the futures yesterday, weren't we, early on? >> a little bit. >> up 70 points for a while. i said we had a couple of bad days and maybe, you know, we don't know how it will close but looked good at the open. what happened? we lost another 90 points yesterday, right? >> you know what, it's all complacency. even though we're entering earning season now, we saul alocoa the other day, it is complacency. there is overriding feeling on the trading floor that we are stuck in this range through this

earnings cycle. so, let's call it 1310, 1305 to the bottom and what we saw on the top last friday, 1360 to the top. other than that, even with fed minutes coming out later today, there is nothing that they can say today, short of saying we're going to institute qe3 tomorrow, that's going to make any difference to this marketplace. i mean, ten-year like you mentioned, it's already up 1.5. what are they going to do there? complacency on the floor right now, which you -- >> scott, one thing i know, and i saw someone writing about, it mark -- i don't know who it was, but recently, is it true to never short a dull market? is-t is true to never short a dull market. >> exactly. what i -- >> well, you're kind -- sorry. before i interrupted you unceremonious unceremoniously. fine. go ahead. i'm the interviewer. >> come on, joe. >> go ahead, fine. you got -- you know, take your three minutes. i'm just going to sit here.

go ahead. >> perfect. i appreciate that. look at the vix, last week we hit down almost to 17. now we're trading in the 18 range. that tells me, that tells me right there and should tell you and everybody else right there about the complacency in the marketplace. usually that signals going up in the market. we are at the lows in the vix. there's no fear out there whatsoever. when i'm telling you is this earning season is probably going to be a bit disappointing. that's already built into the marketplace. that's why i think we have some major psychological support. just about 20, 30 points lower than here, but going into the fall, going into the elections, going into the fall earning season, we're probably going to see this market rocket higher. >> so you were leading -- you were leading to where i was -- so, you didn't just -- you didn't change your tune after you heard what i said. >> nope. not at all i was leaning into it with the vix. >> you were headed there? i knew you were headed that way,

i was just trying to hurry up a little. >> it did take a long time. it's cable. >> think if it was a half hour show, an hour show, we would have had three breaks between when you started and -- we would have an aarp ad, a couple of -- >> viagra ad. >> funny how her mind immediately -- immediately -- that's the last -- >> we have a male audience of a certain age. >> this "squawk moment has been brought to you by -- >> michelle caruso-cabrera. >> see where i go? hair. scott, thank you. are you smiling? are we leaving you smiling? >> got a great day ahead of me. >> you do? okay. >> look at him. >> boring complacent day. corn, corn, unbelievable. >> you've got comments, questions about scott bower, blue pills or anything else you see here on "squawk," shoot us an e-mail -- >> are they blue?

what are they shaped like? do you get that redness where you look out -- >> i'm unaware. >> your heart beat faster. coming up, crazy story at duke energy involving the board's ceo jim rogers and an unusual management shuffle. first, happy birthday chicago, an outrageous sweet treat for its 75th birthday. >> looks delicious. >> i like that. eli's cheesecake company celebrating the event with a 1,000-pound birthday cake. the public will be able to indulge their sweet tooth with a free slice during the cake-cutting ceremony at a taste of chicago this weekend. ♪ ♪ i want to go ♪ i want to win [ breathes deeply ] ♪ this is where the dream begins ♪ ♪ i want to grow ♪ i want to try ♪ i can almost touch the sky [ male announcer ] even the planet has an olympic dream. dow is proud to support that dream

by helping provide greener, more sustainable solutions from the olympic village to the stadium. solutionism. the new optimism.™