the next five years, five to ten years, china five years from now is not the china it is today. >> okay, jay. thanks for being with us. we'll take that to the bank. make sure you join us tomorrow. "squawk on the street" begins right now. ♪ luck be a lady tonight today is 7/11 and the bulls could use some luck as the stock market looks to end a four-session losing streak. good morning. welcome to "squawk on the street" melissa lee with jim cramer and david faber live from the new york stock exchange. let's look at the futures. we are setting up for a higher open at least for the s&p and dow, where we see the four-session losing streak. the nasdaq looking to lose 2 1/2 at the open. a lot of headlines in europe with the german ten-year auction yielding the lowest yield on record over there. we are seeing red arrows pretty much across the board, except for spain,e ibex 35 is trading higher today. our roadmap starts with our four-session losing streak and warnings on slowing china and

u.s. growth continue to weigh here. latest forecast reduction is coming from commons, number bree and hh craig. and the "journal" reporting the former head of the cio office may see a clawback along with others in the london office, as much as $5 billion in losses. we'll talk the scandal and the outcome. and yahoo may be close to naming a new ceo. the board meets today with shareholders meeting tomorrow. who will it be and can he or she turn it around? the s&p 500, for instance, looking to snap a four-session losing streak, sparked by worries of how the sluggish global economy would impact profits. companies from amd, as we talked about yesterday, to commons, have been cutting earnings forecasts due to slowing command in china. this morning, add burberry to the mix, citing a slowdown in

economic sales because of the china slowdown. while this is not a surprise, it is another thing to see it tangibly in results. >> look, i'm wearing my burberry tie. >> i love when you go to the pocket and pull some paper out. it's always good. what have you got? >> i still see more growth, but listen to the trajectory of burberry sales. 21% two quarters ago, 15% last quarter, and then 11%. obviously, they still have a lot of things going. they're using the china card, saying they're going from 63 stores to 100. i do think this is an incredibly well-managed company, so i am blaming not the company but the environment, just like cummins. >> ah. and cummins is interesting, because it wasn't just china, it was all of our worries it was u.s., the truck market here as well as power generation equipment, and then it was china, india and brazil as well. >> yeah. bic. they left off the "r" for savings. i very strongly have to -- i spend a lot of time on the

271-word release by cummins, which knocked this market down. and i think people at home may not understand this. cummins is probably our finest technological manufacturer, other than intel, and they can make the engines that do stop pollution from diesel. they're the biggest threat, by the way, to natural gas engines in terms of cleanliness. >> right. >> so again -- >> also a reflection of the industrial economy. >> yes! >> the more we look, i guess cummins, ingersoll-rand gets thrown in there. there are a number of these that are tells. >> and it's important to recognize this is a company that is beating navistar, so again, this is not a share-take issue. i mean, look, we could come out and say the american consumer's really hurting because i saw jcpenney's numbers and i would tell you reflection on absolutely nothing other than how poorly jcpenney's is executing its "plan." >> to your point, i wonder how far they are along through that. >> we should have a meter in the corner of our screen along with the stock price. >> why don't we get ron johnson

on to talk about it. >> he's got to come on. he's a natural at this point. >> looking at jcpenney shares. but back -- >> wow. >> hold on just a second! this is the north-facing everest here. >> that's the cliff. >> and this is where a lot of the climbers on the way down -- >> they die. >> -- have been hurt after 2:00 p. p.m., and here's where you're asphyxiated if you're a shareholder. >> or get frostbite. back to cummins and the industrial economy and what we're seeing in terms of china. they're trying to stimulate growth franticly now. >> any way they can. >> any way they can. >> they're using malcolm x strategy. >> more money, we'll try it, see if it happens. it's not just the high end, though, tipified by burberry. you're talking 300 million people who are in the middle class. now, it's not our middle class -- >> they're growing to 400. >> they are spending money and seem to have pulled back from doing that we'll talk about that in a bit. that has broad ramifications. it is the number two party in the world. >> i know, and the communist party is clearly using a by any means necessary strategy -- that's the malcolm x.

but look at indra. she came out and said listen, you still have to be there. pepsi has to be there. general mills has to be there. i'm not giving up on that economy, but i do, i mention that 6% number yesterday and you guys had your eyes rolled. >> well -- >> that's a bad number. >> well, that's well below consensus out there. there's consensus of 7.8% for gdp growth. >> i don't think they can hit that. >> also the numbers, we have an issue with the numbers themselves, which is how much can be believed or can't be believed. >> you don't trust the communists? did you ever read "investia provia" growing up? >> i never read provda or isvestia. are either of them still around? >> you obviously never saw "red dawn." >> i saw the movie "reds." >> that was too communist. >> that was too communist? lenin's nephew -- >> great nephew?

>> yeah. >> hey, vlad was, i guess, a serious killer. >> back to cummins and ramifications there, because in terms of the industrial complex, we've already seen caterpillar beaten up. if things are bad for cummins, they're even worse for navistar, one would imagine, terrible for pacar, a major buyer for cummins engines. it goes wide and far as far as ramifications. >> they've been doing great work on "street signs" as far as how bad cummins is doing. they're the biggest buyer of engines of navistar is cummins. look, again, the big issue with cummins is that they were building a -- we have had weakness. alcoa signaled in yesterday's call the weakness, and yet, cummins opened up. do not miss the opportunity to sell some of these industrials when they open up, because there's a lot of craziness involved with s&p futures taking everything up, and cummins was up $1.75 at one point. that's crazy! >> what's going to turn us at this point? we look at this market --

>> i'll tell you. >> a day like yesterday was potentially worrisome. we were hanging in there and gave it up at the end of the day, in particular in light of what we're mentioning. what's going to turn us? >> i think it's a wholesale shift in what you own. look, cummins will be selling right now, it could earn 9 bucks, okay? so you say, all right, it's $75, i can take a stab at it, but in the end, why do we need to touch this when i can own at&t? and i'm telling you, this is the wholesale shift that i'm seeing. >> right. >> that's been going on for a while, by the way. >> half of the dow was up nicely for most of the day yesterday, but it was the half that is, you know, the head in the sand pfizer half. pfizer can be, again, david -- >> the key to this market. >> -- the key to this market. >> not a chance, man! oh, i kill for those days. >> let me give you my philosophy in a nutshell. even the sun sets in paradise. adam levine, the song "pay phone." you might want to listen. >> your references are just getting more and more obscure. >> that's obscure? >> for someone as old as me. >> come on, we're on tv right

now! >> i'm impressed by your reach. >> even the sun sets in paradise. >> if you were a fan, you would know adam levine, a fine nbc show. >> i am familiar -- >> it's my second favorite show after "whitney." >> i actually had gone to summer camp with him. actually, he's much younger than i. >> we have a lot of ground to cover this morning. >> yeah, we do. jpmorgan set to claw back millions in stock from executives involved in the multibillion dollar trading loss announced in may. that's according to the "wall street journal," which says the clawback plans could be announced as soon as friday when jpmorgan is set to issue quarterly earnings. in an exclusive interview on june 13th, mary thompson asked jpmorgan chase ceo jamie dimon about the possibility of clawbacks. >> obviously, the people directly involved, there's some people indirectly involved and we'll think that through. it's going to set precedence for the company. there's a rights thing to do and a wrong thing to do. we're going to do the right thing when we figure out what it is. we're not going to do the blood-thirsty thing, the thing that makes the press feel great. we're going to do the right thing for the company and the

people, all things considered. >> i think the really great follow-up question mary asked is could your pay be clawed back? and he answered something to the effect of it is up to the board. and nowhere in any of these write-through about who can get clawed back is jamie dimon mentioned, and i'm wondering if jamie dimon needs to have pay clawback for this to be resolved in the shareholders' mind? >> i think he does. >> you do? >> yes, i do. look, the top -- one of the things we learned from barclays -- boy, the chairman was really pantsed in front of that committee, the operative word they might be using in london. you know, david, there is a buck that stops at the top, and the top is not the woman, it's not anna and it's not the cfo. it's captain ahab! >> just leading the boat. >> yes. >> no, that's a fair point and i'll leave it to the board to make that judgment. i can certainly understand the argument for why you'd want to see some of his compensation clawed back. >> is that the kind of board

that would take action? >> i don't know. >> is it chesapeake's board? >> well, chesapeake's board now -- >> holy cow, it's like a star chamber now! >> they've got moses. >> moses supposes going to do a clawback. >> moses supposes is not roses, what i understand. back to the jpmorgan clawback situation. what i find interesting in part as well, though, is the compensation that was paid to the people in this unit previously, because they were supposed to be conservatively managing a portfolio of, it was $200 billion, now it's $300 billion. depending on whose reporting you believe, it may have had returns of 3% off at times. why were they paying people $14 million a year to manage a $200 billion portfolio to the tune of a 2.5% return, which is by the way what they were supposed to be doing, but why is that a high-skills job? >> well, because in hedge funds, you get 2% to sit on your capital or lose your money. i think the answer is, is that

maybe jamie dimon wanted to keep these people from going to a hedge fund. >> they were supposed to be clearly hedging the rest of -- hedging the company's overall exposure to a certain extent. that's the way they were using this. it's overflow deposits they couldn't actually put out in terms of lending. there's a number of questions, but i understand why they'd want to claw back here. i think it's a good thing, i just don't understand the compensation being so high in the first place. and yes, i get compensation is ridiculously high on wall street. >> it is ridiculously high on wall street, but dimon first was going to get a big bonus. this is of barclays. then that went -- boy, the brits are really good at clawing back. the british government -- >> very effective. they do it immediately. >> very effective, and they do it shame -- they love shame! >> well, and as well, mervin king basically said you can't work here anymore and dimon said, okay, i guess i have to resign. one day he was staying, the next day he was leaving. so, it's a little bit of a different system in terms of the regulators, so it's not as much give-and-take. >> no. >> it seems like there's a lot of give. >> in interview mary did about a month ago, also, dimon had

indicated that they wouldn't necessarily disclose if a clawback actually happened. so, i think it'd be interesting if they actually say who got clawed back and how much got clawback. on friday, it seems like a slight change compared to that interview he did a month ago. >> one of the things that i think people forget, and i always -- because i happen to have worked at goldman sachs, was a hedge fund manager. these people are very rich, okay? they are very rich. they tend to have gigantic municipal bond portfolios. they could live off the income of those. never, ever forget that this is one year of compensation, and the compensation is so crazy -- >> well -- >> that unless they went to atlantic city or perhaps vegas and put it all on red and it came up black, these guys are rich and they can handle a clawback. >> drew in 2011 got $15.5 million, including a $7.5 million stock award and she's getting, or she's due $14.7 million in a termination agreement. >> wow. >> leaving, she's getting $15

million. >> that's a lot of money. >> we'll hear from jpmorgan on friday and we'll start to learn details about the trade themselves, according to the "wall street journal." i've heard things as well in my reporting in terms of what went wrong or what went right, but we should get a lot more transparency on it. and the "journal" says it's about a $5 billion number. >> that's important. >> in the story. >> because the "times" was using the potential $9 billion. >> right that was inaccurate that was based on -- >> you're calling it inaccurate? >> i guess it was leading in that they were citing a study that the bank had done some time ago as to what the far end of losses could be. >> right. >> won't people be excited that it's $5 billion? >> i don't know if the market's really thinking it would have been $9 billion. $5 billion's a pretty bad number. >> it is. >> i think that's kind of baked in. . awful, but everybody knows it's awful. >> and they'll beat themselves up more. i'm sure dimon will show contrition again. >> more self-flagellation.

>> and then they'll want to move on. they'll probably be profitable. we'll see what the rest of the bank looks like, how they're doing on mortgage rates and credit cards and more reflections of the economy when we talk to jpmorgan, not to mention the investment banking -- >> i want to hear about libor. have you seen the article that all of the municipalities out there, all of the class-action suits, all the ambulance chasers lining up to sue. >> good luck. baltimore will get $4,224 when this class-action suit is done. >> listen, you look at the putback issue and i heard the same thing as far as the mortgage securitizations, putback issue and whether or not the buyers of those securitizations had a claim. many people said no, and yet, look what the number is for b of a. look at what jpmorgan has -- >> fingerprints. there were fingerprints, david! >> they were way down there. >> there were fingerprints on that! >> there is no facts. >> this is not a "law & order: criminal intent" -- >> it is very hard to prove. >> it can prove harm. >> that said, would you be shocked to see a multibillion dollar settlement here?

>> no. >> no. patent's 2016. >> are there reserves set aside for this? are there libor reserves? >> no, there are not. putback reserves, litigation reserves. >> that's the question. >> there are no libor reserves. i can tell you that right now. maybe they're building right now, but there aren't any. >> none. >> that would be my concern. let's move on to yahoo! its board is meeting today to discuss the search for a permanent ceo, although it's not known if an announcement will be made today. interim ceo ross levinsohn is said to be the leading candidate for the job. cnbc and yahoo have a business alliance to share and co-produce editorial content. >> i'm a big levinsohn fan, always been. >> way back when. >> started thestreet.com when i was 68. i've got to tell you, this guy is the real deal. again, we obviously have a deal with him, but i think he'll be good. >> you do? >> i think he'll break the company up in a way that will produce some returns, and i think that he is has had a handle on the web, which has been lacking. >> he's done a lot as interim

ceo. he resolved the proxy battle with dan lobe, he had a deal in may to sell the stake with ali baba and then the patent infringement lawsuit. he got a lot done in the past month and he's the goldilocks scanned date. he's been there two years, long enough to know the business, but not long enough to be an insider. >> and some of the names wanted about in the press were not particularly inspiring. people you would expect, but have been around for a long time. >> this guy is youthful in thinking but is a grown-up, and that's one of the reasons why i've felt his strength. >> meanwhile, in terms of the stock, take a look. it's been dead money now for quite some time. >> at $15 forever. >> geez. >> they are monetizing the ali baba stake, but not in the fashion they wanted to, but they will use that money to potentially shrink the cap, and we'll see what else comes with it. >> one of the greatest trades during this year is to sell kohl's, the 15 strike against yahoo. >> yeah. >> it has been one of the great annuity streams, and i think that that could finally change and you don't want to be short

those. all right, coming up next, goldman sachs has been in existence for 143 years. find out who is suggesting it may be time for the wall street firm to close up shop. >> oh, please! oh, please. >> who gets the building if they do that? >> nice digs, right? >> i really like that building. >> we could move in. >> that was over $2 billion. let's take another look at futures here. s&p and dow looking to break that losing streak. much more "squawk on the street," straight ahead. d. i don't spend money on gasoline. i don't have to use gas. i am probably going to the gas station

about once a month. drive around town all the time doing errands and never ever have to fill up gas in the city. i very rarely put gas in my chevy volt. last time i was at a gas station was about...i would say... two months ago. the last time i went to the gas station must have been about three months ago. i go to the gas station such a small amount that i forget how to put gas in my car. ♪

♪ ♪ here's a question, would you do your online banking through facebook? australia's commonwealth bank is planning to launch a facebook application that would allow its customers to make payments and other online banking transactions via the social network. so, that brings us to the "squawk on the tweet." we're asking, what is the worst thing that could happen if you did your banking through facebook? tweet us @cnbcsquawkst. you just did the cyber espionage documentary. i did a cyber security documentary. this frightens me. >> listen, the people i spoke to would advise you, not on camera, but some of them will not do any banking online, which is a little frightening, but there are other things you can do to protect yourself. i'm not sure getting further out there in that way is a good idea if you are concerned about security. >> right. >> the backbone of this, and you can see it on a salesforce.com,

is a salesforce.com piece of software. and australia, this commonwealth, was the pioneer to use it. >> oh, interesting. >> so, i think that rather than think this is commonwealth -- this is going to be everybody. commonwealth is basically one of the most forward technologically banks. there may be security issues, but commonwealth is the template. it's a salesforce.com product. >> so you think jpmorgan may be next, or bank of america or wells foro? >> well, these people want deposits. you need deposits. anything that can give you -- why did capital one buy ing online? they want deposits. >> good point there. good point there. coming up next, getting a head start on the trading day by following cramer. he is on deck with his "mad dash." take a look at futures one more time on this wednesday morning, and we are looking about the same. dow looking at about 8 at the open. more "squawk on the street" straight ahead. between listening to the numbers... ...and listening to your instinct duff & phelps finds

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all all right, we're about 5 1/2 minutes from the opening bell. time for cramer's "mad dash" ahead of the market open. going to tv land. >> yes. hhgregg. this had been what we thought was a new retailer to amazon nation and it looks like nobody is. they say tvs are the problem. they call it video. you can see this is down more than any other stock in premarket data. david, if you're a banker and richard schultz comes to you, the best buy guy, saying listen, i want to take this company over, i'm tired of the

shenanigans, would you point out, we can't do this kind of deal, one of the best players just blew up? >> you look at the peer group and wonder to some extent. but the financials are the financials. he's going to roll in his equity. the question is could they borrow enough? it's still generating cash, best buy, but the question is, is ebitda coming down? clearly, it may be, and therefore, can he support a significant debt load? >> see, to me -- >> not great to be putting a significant debt load on a company that's in decline. >> thank you. because the big issue for me is a lot of eyes are speculating on best buy here. they're buying the calls, thinking it's an any day thing. yet, this operator, which a lot of people feel is without a doubt the finest hard goods and appliances -- >> why is that, jim? >> because they're the regional, national player. everywhere they go, they've been taking a lot of share. yet, they're cutting back on advertising. while we remain disappointed in our video results, tvs remain one of the worst things in the world to sell. costco's got those 70-inch tvs. they're just incredibly cheap. this is a football category. be careful, corning --

>> is it just a reflection of what's a seminole change in the ability of any of these companies to really be able to win in the amazon world that we're in? >> of course! you go here and look at the model numbers, then you go to amazon and buy it. it comes to your house and you don't get a hernia! >> what could be worse than that? >> smith corona, do you know what they sold? >> yes. >> typewriters, and they were king! they were king of the typewriter business! who would ever attack? no one could come in. and then, boom -- >> of course, there was a company named ibm that made a lot of them that successfully transitioned. >> but they transitioned. >> hardest thing to do in america. >> what are they going to transition into, fashion retail? make a deal with neiman marcus? no, target did that and that exploded that stock, upwards. >> talking about stocks, we're about 3 1/2 minutes from the opening bell. we're going to be more -- we're going to be back with a lot more "squawk on the street" right after this. nce initiative...

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day of losses for the s&p 500 yesterday. will we beat that today? here we go. at the big board, mrc global for the energy industry, celebrating its recent ipo. at the nasdaq, counterpath, a provider of ip software products, celebrating its listing today. you know what came out this morning, jim, the crop report. and the number of bushels to be exported for calendar year or marketing year 2012-2013 for corn and soybean is slashed and we're seeing the fertilizers premarket trade higher. we'll see if they open higher. and they are open higher. >> i think there is discounting here. i think we kind of felt this would happen. i know there are a lot of people freaking out. i watched some gentleman this morning on tv talking about how this is going to kill the earnings of a lot of different companies and hurt the consumer. may i point out that a lot of these companies that are pepsi, routinely hedges. they never want to leave anything to chance.

>> right. >> you don't get the big benefit on the down side, don't get it on the up side in terms of getting hurt. >> but for meat producers, it's a different story, paying much more in feed costs. the likes of a tyson, smithfield, they're feeling it. >> commodities players. again, i don't want to -- you've got to understand, for people at home, oil and gas, the oil, oil, oil, far more important to your chain of what you pay than you realize. >> right. >> and i am not going to minimize the fact that it's been for 20 years we haven't had -- well, actually, 1998. we haven't had this bad a crop. but it's not over until it's over. thank you. and i also believe that we can overblow anything to the negative. i don't want to overblow -- >> your point is we had the ceo of general mills here yesterday -- >> right. >> who didn't seem as concerned about what you would imagine would be a significant input cost, that being grains and corns and that nature, because energy for example. >> yeah, energy! >> and so many other commodity prices are coming down, and perhaps we overlook that when it

comes to some of these corporations. >> let's not forget, this number came out pretty much exactly what i was thinking, i talked about yesterday. so it's not like -- >> well, mr. beaks gave you the crop report. >> well, duke and duke. >> talking with a smile, by the way. >> yeah, beaks -- >> sorry. when i hear crops report -- >> haven't you people heard of coasters? again, like a cummins yesterday, alcoa. the market can be so stupid! i mean, alcoa yesterday told you that truck sales are going to be horrible. the market is slow to digest news, and i will tell you that john deere has had a remarkable run betting on this number, and i don't think -- i think johnny come lately's coming now and taking up, and that may be a mistake. i'm a little more critical of this idea. i thought it was in line. >> it was in line. >> yes. in line bad. >> yes, yes, yes. >> in line bad. >> caterpillar is trading down by 0.25%. look at the space. some fell yesterday on the back of the cummins news, the likes

of textron and caterpillar, all turning slightly lower, but it's something to watch as these worries continue to percolate out there. >> nothing worse than this vacuum right now. we don't know what caterpillar's going to say. the stock has just been crushed here. >> right. >> at the same time, the variability of caterpillar's earnings -- and the earnings do have a similar profile from cummins -- could be so great that this may be a strategy where you actually want to do a call strategy at the end of the quarter. >> ah. >> i tend -- i watch your show, obviously, and i just think that right now the risk-reward in cat is ten, it's ten points. if cat gets it right. and i can't think of a reason how cat can get it right. >> right. >> but they are a great manufacturer, and you enter know what they're doing. i don't want to bet with it. joy global was soft and we know that joy is a very good analog, a big acquisition in bucyrus. i don't like the sector. i want to bet against the industrials, but at a certain point, they get discounted ahead of the quarter. i don't think yet, though. >> right. we should point out financials

not seeing much activity at all. jpmorgan shares let's call it flat to up a tiny bit after these reports about clawbacks, perhaps that the loss at the cio will be roughly $5 billion. that stock at $34 and let's call it 31 cents right there. we'll know more in a couple days from jpmorgan, and we'll start to get all the results from the financials. notice rim shares are up by 1.78%. they had been down sharply yesterday as the annual meeting rolled along, even though in the early going, the stock had been up. >> right. it was a pretty disappointing annual meeting, i would manniim, for a lot of shareholders out there. >> i took it off my screen. >> oh, it's permanently banned? >> there's no more reason to talk about it. >> i get that. >> look, i'll talk about aqua america every day. >> which, by the way, has had a stellar run. >> yes, it has. >> a fresh 52-week high today. we talked to nick benedictus on "fast money." >> it's the water company i grew up and darn good tasting water.

>> but now they pipe water to the shale, the marcellus shale, and that is the growth business for aqua america. >> and may i point out that one of cummins' biggest businesses was providing engines to trucking companies that move sand and water to fracking, and that business is down dramatically. but read "the philadelphia inquirer," "the sun," and you will not believe how marcellus shale drilling has just dropped off a cliff because of natural gas. >> right. finally, i want to mention the latest content distribution dispute. we talked about it yesterday, directv and viacom. if you are a directv subscriber, you're not getting your "spongebob" right now, if you want it. they have pulled their programming from directv over a fee dispute, what else? >> who wins in these, david? in the history of who wins. >> yeah. well, you know what, i think we've got kayla tausche at sun valley, where all the media moguls like to congregate at the annual allen & company congress. if you caught up with felipe,

i'd love to hear what he had to say. >> reporter: we did. we tried to catch up with ceo white for directv. not the same for the ceo of viacom, this morning making a statement about where they currently stand after the blackout that happened at midnight last night. listen to what he had to say. >> in the seven years since we've last did a directv deal, we have successfully and peacefully concluded affiliate agreements with every single other distributor in the united states. so, we're prepared to move forward. it's unfortunate that for the first time consumers are not able to enjoy our channels. >> reporter: you're not thinking of unbundling at all? >> i don't want to negotiate in public. it's unfortunate, as i said. the record speaks for itself. >> reporter: of course, he doesn't want to negotiate in public, but he will be vis-a-vis with mike white this week at sun

valley. he is one of the highest paid ceos in the world. we'll hope he'll be able to come to a deal here. that affects 20 million subscribers. 26 channels of viacom's that run on directv. and of course, the last content dispute for viacom was with time warner in 2008. they were able to resolve those issues before any dark channels happened, but david, doesn't look like that's the case this time. we'll give you more updates throughout the week if they come to a deal. >> all right. thanks, kay layt we'll get more from kayla out there as well. these things can turn very nasty. i always go back to charlie erringon at dish, who when he was running viacom's network, his home phone number, that was not -- they were not happy about that. >> they said give mel a buzz. >> that's terrible. >> give him a piece of your mind. >> you want it up, call mel at home. i had dinner with the two of them once and they were resolving it, joking about it. it was years later. >> mark white goes for beard pepsi executive. not a harsh guy, a real

team-builder. >> he is a monster, but it is interesting, because they are not -- and you know, charlie ergon will pick a fight with anybody. this is different. >> white's a peace-maker. >> see how it works out. >> not a peace-maker like our friend the colt .45, peace-maker. >> got it. >> let's check in with brian stackman on t shackman. brian. >> we were mostly higher for the premarket. the s&p is down only one point, down 24 in the dow, which is close to the lows of the session. 2:00 p.m. eastern, we get the fed minutes and we'll see all the people that are harpening for qe-3. we'll get more insight into how likely that is in august. asia was mixed overnight with japan lagging just a bit. also mixed picture in europe with spain and the dax out-performing last check in the green. keeping a focus on ag chemicals and fertilizers, right? we had the report where the soybeans, corn, wheat, projections for yield all down. those stocks are all to the up side, potash,ing rum and cf what

i was looking at. and going from the farms to high fashion, if you saw the results from burberry, they talked a lot about china, they're still growing there, but the growth is slowing. atlantic equities came out and said keep an eye on coach, ralph lauren and tiffany to see if there's any impact, if at all. it has been muted. goldman sachs removing burberry from its conviction buy list. so, keep an eye on those stocks today on the high-end fashion side. a chinese university comes out monday saying there are bad additives in their baby form layt monday, tuesday, the stock sells out 6%. then they say we read the report wrong, it's not bad. so the stock made it back today. they came out and said better current values list for mjn. they like the stock. they say 60%-plus margins are sustainable. gold is slightly lower, but gold corps is much lower. and if you look at the rest of the gold stocks, some were up, some were down, but gold corps clearly underperforming.

they lowered their 2013 production guidance, and clearly, yesterday, if you recall, gold stocks were up early and faded late. keep an eye if that is a trend. we'll see again. finally, abercrombie & fitch. >> and chuck who runs goldcorp is great, but it's impossible to mine gold. i tell people, buy the gld, do not buy the individual companies. burberrys, yesterday, bf corps, they were screaming, showing you how inconsistent the market is. ralph lauren, very similar product profile to burberry, so be careful out there. you have a lot of spikes and the spikes are meaningless because they're driven by hope, and then you get reality. not so good. historic low yields on the historic bund auction. rick santelli at the cme group in chicago. >> it is amazing. once again, beauty, or in this

case, value is in the eye of the investor. and we can talk about all the issues with a german balance sheet or we can talk about all the indebted issues in countries like the u.s., but it doesn't change the fact capital has to go somewhere. 1.31, historic low yield at an auction, but don't confuse that as you look at this 24-hour chart in the lows for bunds, because their historic low yield was the same as in the u.s. june 1st, when we had our 69,000 employment report and they had a closing historic low yield of 1.12. you can see the 24-hour chart of our 10s. we keep bouncing off of 1.50, a handful of basis points away from, starting in mid-may, the same reference point on june 1st, 1.45. but i can't show you a chart of some of the swiss securities because our systems have an issue with some of these negative yields. but in switzerland, if you were to look at a two-year note, it's currently minus 36 basis points, the most minus it's been.

it's been playing around and flirting under zero basis points since august of last year. and their curve is negative yields out to the five-year! boy, certain countries will try to do anything to keep investors from liking their flavor, but sometimes, investors show up anyway. melissa lee, jim, back to you. >> thank you, rick santelli. all right, another concern here in the market, some of these medicaid insurers, especially after the wellpoint/amerigroup deal. goldman sachs saying they expect more consolidation in the industry in order to get at this dual-eligible market, those who are eligible for medicaid as well as medicare, and they're saying these medicaid insurers have the best chances but you need deep pockets in order to do that, and that will push them to link up with bigger insurers out there. there are price targets on sentine as well as molina. we saw those both rise in the back of that deal. today they are up once again on this goldman note. >> they have become great traders. it's so funny, these are the big movers. these have historically been

just companies that kind of went up over time. i think that people also have to remember, these are employment plays. a lot of these companies need growth. >> that's true. >> in employment in order to give a sustained pattern, not just the medical loss ratio and not just the idea of consolidation, and we don't see that. i have been focused on etna not moving. i regard that more of a gdp play, and it worries me that this gdp is not growing in this country. >> the amerigroup deal, of course, a few days away. people did note yesterday when some of the documentation came out that it had an interesting provision, where if there was another bidder that came in within 30 days, the termination fee for the deal actually would be about 1.6%, versus what was a 3% payment. and so, that had some people speculating perhaps that it hadn't actually been shopped and thinking, perhaps, is it possible there could be another bid? highly, highly unlikely. >> is it -- >> no, it's unlikely, but it was an interesting provision to note. not a go shop, per se, but at

least something that says if somebody else comes in we're not going to keep the bars up that high to a competitive bid. but it's hard to imagine there would be. etna's the only name i think i've heard out there even possibly interested. >> the reason -- >> again, i haven't heard this in a real way. i'm not reporting this as m&a news. >> no, but that's why etna must be down. it's been weak during the period where unh went up. the whole group went up and etna's not. this must be the rumor and i think it's a shot at them. >> i was a little encouraged yesterday. we'll see. again, most people expect nothing will occur there, and obviously, wellpoint will close that deal. >> apple's another one to watch. ubs initiating apple with a buy rating. normally, we don't necessarily care about initiations, except this one was done by steve m melanovic. >> i was at his summer house in 1986 -- >> in business for a while. >> even covering energy -- >> clean tech and now ubs and

hardware. >> he was also running about westport, a big mover of natural gas engines. i like that a lot. i go back yesterday and talk about einhorn, saying it's an undervalued stock. it has held up relatively well versus other stocks. by the way, google, there is negative commentary coming out from bernstein will possible forex issues. when you hear foreign exchange, which cummins also cited, you think so what, it's a great growth company. well, if foreign exchange is that powerful, imagine who else could be crushed, and google does good european business. >> exactly. it does. coming up, facebook meets online banking. an australian financial firm is trying to make it a reality. what's the worst thing that could happen if you did your banking via facebook? tweet us, let us know. got your answers coming up. as we head to break, look at the early movers on wall street. a & f up 4.5%. stay tuned. ttd#: 1-800-345-2550

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♪ ♪ ah, yes, adam levine, okay. >> keeps happening. >> all right. time now for "squawk on the tweet." as we mentioned, australia's commonwealth bank is planning to launch a facebook application that would allow its customers to make payments and other banking transactions via the social network. so, this morning we're asking you, what's the worst thing that could happen if you did your banking through facebook? bernie tweets, "my friends will find out how broke i am." chris tweets, "my money could end up in facebook's stock." ooh. james tweets, "my bank would charge me a monthly fee for not defriending me." and darryl tweets "banking on facebook, number one issue, 3,500 people like your payroll deposit, especially bill, whom you owe 50 bucks to." all right, i like them. i like them. >> look, i still believe that when you get -- i question why

do you need a credit card? why can't you deal directly with your card? >> everything be a debit or -- >> yeah. on your phone. think about this middle man. what does visa really provide? what does mastercard provide? wouldn't the retailers like to deal directly with you and your phone? >> what about your credit? you're saying your transactions could be changed, but not the -- you'd still have credit. >> the issue is lending. you want to lend, but i think for debit card -- why do i need a debit card when i can go right in my phone, go right to jcpenney and buy a pair of khakis -- i never buy a pair of khakis again at jcpenney! >> by the way, never say never. >> you're right. >> you said earlier, it's not over until it's over. >> you only live twice! >> jcpenney, by, another low. >> i forgot to buy my venetian blinds there. >> but you're talking about transactions that are occurring. when we were in new orleans, we talked to the ceo of visa.

[ everyone talking at once ] you'll be able to hold it in front of anything and buy it. >> but they charge a lot. visa charges a lot. american express is a love stock. i just think this is something worth watching, is the idea that mobile payment directly from citigroup, right to, maybe right to -- >> but they're still going to rely -- except it's visa -- it's still the mastercards, visas and american express that are innovating and going to try to disintermediate or be in the middle of that transaction. >> i don't disagree, but i think the retailers are doing everything they can to be able to -- >> what about paypal? >> paypal comes underneath ebay, my charitable trust owns the stock. it comes underneath the mastercard and visa. it saves more money, and i think that once again, retailers are trying to save any way they can. the home depot rollout of paypal nationally is very powerful. and i think when you shop at home depot, david, you know -- do you ever shop anywhere, for heaven's sake? were you at tractor supply this weekend like i was? there is a western feel going on

there. >> i make it my business to avoid shopping of any kind. >> wow. >> i make it my business to shop every day. >> he makes up for you. >> yes. >> i make up for the whole gdp! >> and me and carl. >> president obama's very lucky that i'm shopping. and i do think home depot's rollout of ebay's paypal is the precursor to a true -- >> you're a true american, cramer. much more "squawk on the street" straight ahead. ♪ coming up, how are you keeping cool this summer? well, no matter what you're doing, there's nothing cooler than six stocks in 60 seconds, and cramer's got them, when "squawk on the street" returns.

♪ gearing up on long bribes. stop it already! simon hobbs has got what's coming up in the next hour. simon? >> yeah, good morning to you, david. have you noticed that facebook stock is up 16% so far this month? in the next hour of the program, if you're not already a subject in the kingdom of zuckerberg, we're going to talk about whether now is a good time to buy the stock. also, "fortune" columnist bethany mclain will be here to argue that goldman sachs should simply be shut down.

and we're also going to have a romney surrogate on the program. of course, today's the day that the gop will attempt to vote down obama care. what would romney put in its place? back to you guys. >> all good questions. we'll see you then, simon. let's get to "six in 60." six stocks, 60 seconds. start off with ibm. >> this stock has been rolling over and suddenly ubs comes out with a mutual. couldn't be a worse time because a lot of people think this is breaking down badly. >> waste management is next. >> this is morgan stanley fundamentals. be careful selling it with a 4% yield. they're doing a good job. too negative. >> b hnk php billiton, credit s goes buy to hold. >> you don't want to own a minute wall company if china's slowing. >> big company. tencore. stick with it. >> they said it would be great. fourth quarter going to be great, yet people are selling anyway. >> staples buy to a hold at bern

steib. >> when you see these, you have to be careful. they're basically saying this industry is just not -- >> throwing in the towel. good-bye. >> exactly right. not unlike the phillies, who are probably going to get home field advantage for the series because of last night. >> yeah, that's going to happen. gilliard sciences, finish this off. >> be careful. glaxo has a competitive drug for aids research and that's why that stock is getting hammered. >> what's on "mad money" tonight? >> this is tipco, a software play for the cloud. the cloud has been clouded lately and let's see if we can get clear skies for the clouds. >> love that you were able to say that so well. >> thank you very much! >> you're very welcome. jim, see you tomorrow morning. >> okay, partner. >> see you at 6:00 and 11:00, "mad money." more "squawk on the street" is coming up, including bethany mcclain from "vanity fair" telling us -- >> and happy anniversary for the show! >> that's right, one year. "squawk on the street" is coming back after this.

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i don't spend money on gasoline. i don't have to use gas. i am probably going to the gas station about once a month. drive around town all the time doing errands

and never ever have to fill up gas in the city. i very rarely put gas in my chevy volt. last time i was at a gas station was about...i would say... two months ago. the last time i went to the gas station must have been about three months ago. i go to the gas station such a small amount that i forget how to put gas in my car. ♪ wholesale trade up 0.3, exactly as expected. last month originally released up 0.6%, now up 0.5%. this is at a time when we saw the trade balance come in a little bit less than 50 billion at 47.7, and interest rates,

well, in the short maturity like five-year, hover in record territory, at least on a closing basis, and other maturities getting very close. yields in europe following the same procedure. dollar under a little pressure as the euro has a very light rebound. back to you, melissa lee. >> thank you very much, rick santelli. good morning. welcome to the second hour of "squawk on the street." let's get to the roadmap for this hour. after a botched ipo and big slump following its debut in may, facebook is on the rebound, shares jumping 18% in just the past month. we will discuss playing facebook's stealth rally with an analyst who has a $40 price target on the stock. and after 143 years in business, is it finally time to forever close the secretive doors of goldman sachs? we'll talk to the woman who says it just might be right for goldman to shut down shop forever. and almost two weeks after the supreme court ruled president obama's health reform law to be constitutional, today, house republican leaders have scheduled a vote to repeal the overhaul. we'll talk with a policy adviser

to gop presidential candidate mitt romney. brokerage firm pfg best filing for chapter 7 bankruptcy late yesterday afternoon, and just a day after regulators allege the firm misstated more than $200 million, or basically lost $200 million in customer account money. cnbc's bertha coombs has the latest on this still-developing scandal. >> big scandal. peregrine financial failed to liquidate under chapter 7 bankruptcy late last night, claiming between $500 million and $1 billion in assets and between $100 million and $500 million in liabilities. that came after the sftc sued the firm following the discovery of founder and ceo russell wasendorf sr. slumped in his car outside of the offices in iowa, having attempted suicide. police say he left a note in the vehicle admitting to discrepancies in the accounts of peregrine financial. just as pfg faced a deadline to give the futures industry self

regulating authority direct access to its bank accounts. as eventually as june 29th, the firm claimed to have $225 million in those accounts in paper filings. in its chapter 7 filing, pfg listed between 10,000 and 25,000 creditors. some $200 million of customer funds is unknown, according to the complaint filed against the firm yesterday. jefferies, which had a clearing relationship with the firm, say it's completed the liquidation of all pfg positions, did so yesterday with the exception of a small canadian account. no funds missing there, according to canadian officials. jefferies says until regulators direct disbursement, the cash of approximately $125 million, will remain in fully segregated accounts. jefferies says it will not incur any losses as a result of the liquidation and it has no other investment in pfg accounts or assets. david, they were facing new regulations in the wake of mf global, but as recently as the first quarter, the nfa had

signed off on the company's audits that still maintained it had $225 million, even though they say this fraud apparently began as early as 2010. >> yeah, another hit to confidence in a lot of ways, bertha. i mean, clearly much smaller than some of the other scandals that we have followed closely when it comes to the fund management business, but nonetheless, still asking that question, where did the money actually go? we don't know yet, do we? >> we don't. we don't know where it went and we don't know, you know, how they could have, in a sense, kept going this long. it's been nine months since the collapse of mf global, and a lot of folks say we've been getting assurances from regulators that they're on the case. to some extent, they brought this forward, but really under some very tragic circumstances. >> yeah. all right, bertha coombs, thank you. well, media moguls are meeting in sun valley, idaho, for the annual media and tech conference. if there was one reporter to send to root out the big guns, it's our own kayla tausche, and

she joins us live. hi, taye la. >> reporter: simon, you're too good to me, but earlier, we did bring you the latest in the carriage wars. the other big elephant in the room here at the 30th annual allen & company media conference is yahoo! of course, executives here have seen many iterations of the company, including many former executives who are in tow this week. of course, with an all-important board meeting this afternoon, one of the main topics at that meeting will be the status of the ceo, interim ceo ross levinsohn clearly leading the pack, but a decision may be announced at tomorrow's shareholder meeting. we've been talking to some of the moguls here and ran into former yahoo ceo terry semel who was known for making a failed bid to take over google in the early 2000s. he says for shareholders in joo, it may be a bumpy road coming up in the near term. >> nothing's going to change overnight, but i think it's a company with great assets and

some really good people and great financial capabilities. so, i wish them nothing but the best of luck. >> reporter: now, semel said to us earlier that he believes the board will do the right thing and he also believes ross levinsohn, former global head of media at the company, is a great guy. of course, it is the 30th year for allen & company. we've seen grizzled veterans who have been here for all three decades and also some relative newcomers here taking roll of those that we've seen so far. rupert murdoch told us he had nothing new to say on whether he would be also ceo of the new publishing company. we saw sheryl sandberg, who declined to comment on any mobile traction at facebook. we saw joel klein, also formerly leading the management and standards committee at news corp., doing the inquiry into phone-hacking. disney's bob iger, also a grizzled vet here at sun valley, warren buffett, who we'll hear more from later this week, as well as jack, the ceo of time warner. we'll have a lot more on deals, on how thesing moeg yuls are viewing the macroeconomy and what they see as the most innovative sectors, when our

coverage continues throughout the week. back to you. >> all right, kayla. i've sat in the same spot you're in right now many years ago. you look better than i did. >> reporter: it's not too bad, it st? >> no, it's not. >> reporter: i think some would disagree. >> well, you're very kind. this conference was known years ago, and of course, you cover m&a, for being a place where you might see some deals born, most notab notably, disney's cap cities acquisition many, many years ago. any talk at all about that anymore, given, of course, what is an extraordinarily lackluster m&a environment, particularly for media deals? >> reporter: no, we have talked to a lot of these executives about whether they feel the climate is right. of course, we know it's a low interest rate environment. they do say that if you look outside of europe, there is a climate for making deals. we did talk to bob iger yesterday. he said his best sun valley was at cap cities and negotiated the disney deal in that year. of course, a lot of deals going on. one we could expect maybe, les

moonves of cbs negotiating a deal for cbs outdoor, which we know to be on the block. also, activision, whether they will be selling that stake. both bobby codic and the new interim ceo at avendee expected to be here, as well as the chairman. a lot could be borne out of this, it's just whether the climate is right and how they feel when they wake up in the morning, as you know. >> after that rafting trip and everything else. kayla, great having you there. we'll check in with you later. >> it's a tough agenda. have you gone rafting with the moguls? >> you know, i didn't. i opened up sun valley for us and then the next year they didn't want me actually in there. i was there a couple years. >> why was that? >> they try to keep the reporters to a certain extent away from everybody, to the extent they can. but we'll see. you managed to catch up with people. >> still, kayla got a comment from viacom -- >> right. >> sure. that's still an ability. >> absolutely. coming up next, getting in on the facebook rally. shares were up sharply in the past month.

find out why one analyst sees it hitting $40, back above the ipo price. much more "squawk on the street" straight ahead. but they can be really well thexpensive.ted a puppy, so to save money i just found them a possum. dad, i think he's dead. probably just playin' possum.

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♪ ♪ welcome back to "squawk on the street." i'm bertha coombs at the market desk, and we are watching

goldcorp this morning, the company cutting its 2012 production forecast due to operational problems at its red lake mine in ontario and its pan mosquitoo mine in mexico. the stock off over 8% here this morning. credit suisse and rbc cut their price targets on the stock coming into the open. melissa? >> all right, thank you very much, bertha coombs. facebook shares making an about-face over the past 30 days, out-performing not just the broader tech sector, but big names like amazon and apple. is this turn-around sustainable? victor anthony's a senior analyst at topeka capital markets with a buy rating on facebook and a $40 price target. good to have you with us, victor. >> thank you. >> we should keep in mind that the performance of facebook out of the gate was terrible, so this turn-around, that's all in context here. at the same time, in terms of the earnings, the earnings are coming up on july 26th. what do you expect and what are you looking for? because that seems like that would be the next catalyst for this rally. >> yeah, it is the next catalyst, and i expect the company to beat current street estimates. when the underwriters came out

with estimates, i think the estimates were largely beatable. they're calling for a 19-point deceleration in the second quarter, advertising revenues, and i think that's an estimate that's largely beatable. i am calling for $1.2 billion in revenues and 10 cents in eps and i think they easily beat those numbers in the second quarter. >> they will. and of course, the other issue investors are worried about is the lock-up expiration. >> right. >> that would be a major headwind when that expires and whether or not options are going to be exercised. what are you anticipating at that point? do you think people will be sellers of the stock? >> the lock-up is technical rather than fundamental. studies have proven that the market tends to absorb lock-ups, so i'm not too concerned. i think the lock-up ultimately gives all the shares when they come up lock-ups. >> on that subject, how do you know what the fundamental value of facebook is, when most of it is based on where we are three years down the line? it's not a play about now, is it? i mean, let's say, for example,

we get to your price target. what price earnings would we be trading? >> well, i do have a $40 price target on the stock for 2013. >> right. >> and that's based on a 20 times multiple to my 2014 ebitda estimates, which i think is a reasonable multiple given the fact that ebitda is growing at a plus-20% rate over the next several years. so, i think there is valuation support for the stock at a $40 level. right now the stock is somewhat stuck in the middle of the range, the bottom around $25 to the high at around $42. somewhat stuck in a range. i think when the company reports, you're likely to see the stock move up beyond this range. >> all right, so you're out with a number that's above the street, i guess, in terms of revenues and earnings for this quarter that's going to be reported, why? what are you seeing that others are not? >> my numbers are above the street for revenues, below the street 10 cents eps on -- below the street for eps. so, i do see a lot more monetization potential i think in the u.s. than where the street has estimated.

i do see, what i've looked at from my competitors, i see greater monetization potential in europe as well as other areas around the globe. so, that's what's driving my estimate. >> although you must see a lot more expenses -- >> a lot more in the second quarter largely due to the fact that they're a new public company and i was a little more conservative on the expense line than i think my competitors were. so, that's where i stand. >> probably trade off the revenue number, though, if it's a revenue beat more than the eps number, do you think? >> it will trade off the revenue number and the engagement metrics. you'll see a lot of focus on the engagement. mobile will also be a hot focal point, which i'm not too concerned about. i think ultimately, the company will find a way to monetize mobile. >> we focus a great deal, with the power zuckerberg has, about whether or not he'll use that to profit maximize and generate earnings streams further down the line and sacrifice for that. what we haven't really talked about is whether in the chase for cool, he might actually put the company in a dangerous

situation, and i ask the question because there is talk they may be doing a deal on banking, where they're going to start mixing social networking and banking. now, all the work that david has done and indeed that melissa has done on security issues within the internet, that's quite a challenging position to be in, isn't it? >> i haven't heard that one in particular, but i think facebook, my conversations with the company over the past month, i think they are primarily concerned with the user experience on a platform, and so that's paramount to them and i think that's the avenue they will go down. >> are your estimates based on those conversations that you've had with them? were those private conversations? >> well, my estimates are based on conversations with the company, based on my own due diligence with outside third parties, my own due diligence in terms of what the company has released publicly, in terms of their filings. so it's a combination of everything put together. >> i wasn't aware facebook was able to comment on what -- >> well, i assume investor relations and -- >> investor relations, correct. so they came off the restriction

about several weeks ago. >> okay. >> and i might add they have been quite vocal off the restriction, which is why you've seen the stock out-perform. >> what are they saying when you say vocal? >> they came out with a joint study on more ad effectiveness. they've leaked several stories, i think -- >> how do you interpret a story that was co-sponsored by facebook about facebook? >> yeah, that's a legitimate concern. >> i mean, what kind of data is that? >> yeah, but i mean, that is a legitimate concern and it's one of the things i did flag. it was a joint study. but still, i think the results point to the fact that monetization is improving and advertisers will, as long as they figure out how to use the platform, they will come back. you've seen ford, you've seen coca-cola support the platform from an advertising perspective. you've seen news that gm is planning to come back. if i do add, last time i was here, i said that i thought gm would come back to the platform and i think it is. >> it's interesting that the onus is put externally on other

people to -- you must come and understand our business. come back and give us money. >> the advertisers have to figure it out. why isn't it facebook trying to figure it out for the advertisers to attract that money? >> that's an excellent point and i think they've heard that point loud and clearly, and i think they are working with advertisers. it's a new platform. you have to learn how to use it, how to monetize the platform better, both facebook and the advertisers. and they're all working with the advertisers in terms of how to drive engagement and how to drive ad effectiveness. >> and there's a deal with yahoo, of course, which may help them do that. i think it's an interpretation of content deal. >> yeah, the deal with yahoo, i'm not too bulled up about these relationships with internet-based companies. i haven't seen them become effective over the past several years, the ones i have seen, so i'm not too bulled up over that. >> interesting. >> that relationship was more about them settling the pattern litigation they had with yahoo, which i think is a positive, because it would have distracted management from the overall goal of driving engagement on the platform. >> particularly for yahoo! >> victor, thank you. >> thank you very much. >> victor anthony of topeka. governor romney vowing that if elected president on his first day on the job, he will

act to repeal president obama's health care law. the house is set for a symbolic vote today on that very overhaul. up next, we're going straight to the source amid the romney camp and sitting down with governor romney's policy adviser. join us for that interview, next on cnbc. [ male announcer ] this is sheldon, whose long dy setting up the news starts with arthritis pain and a choice. take tylenol or take aleve, the #1 recommended pain reliever by orthopedic doctors. just two aleve can keep pain away all day. back to the news.

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♪ ♪ baby, break down, go ahead and give it to me ♪ ♪ break down, honey, take me through the night ♪ welcome back to "squawk on the street." we're watching shares of google under a bit of pressure. bernstein taking a look at google's earnings next week on the 19th is when they're set to report. says that they see a potential material miss from the firm. they see them reporting $7.83 billion in revenue after traffic acquisition costs. they say that costs rose sharply during the last quarter. they're also not sure if others are including the motorola mobility business in there, and they think there's also an fx headwind that may not be factored in as well. back to you at the nyc.

republicans are set to vote on repealing president obama's affordable care act. romney's health care adviser is with us. nice to have you with us. what would a president romney do, then, in terms of addressing what is still a health care affordability crisis, let's call it, in this country? >> yeah, well, thanks for having me on. and it's clear that there are some real problems in our health care system. the first thing that president romney would do would be to repeal this health care law, which is extremely problematic, extremely costly, would lead employers to drop coverage and is not going to help solve the problems in our health care system. so the house is going to vote today. i suspect this might not get us the repeal we need, but governor romney, if president, would pursue it. and when he gets the repeal, he will then follow up with a series of market-based reforms to try and fix our health care system. he will try to improve state and individual flexibility, he will retain safeguards for those who

need them, and he has specific policies, like unshackling health savings accounts, like allowing people to purchase insurance across state lines and also allow tort reform, which could save $50 billion in our system over ten years. >> you know, much will have been made, of course, of the fact that the health care law as it currently stands in this country is very similar to a law that governor romney championed and passed in massachusetts when he was the state's governor, including an individual mandate. why has the governor strayed so far from what would have been, at least seemingly at that point, something he supported, since it seems to be reflected in the national law? >> yeah, well i've got to say, i reject this notion that they're the same. there may be some surface similarities, but there are some really severe and serious differences. the romney law was 70 pages long. the obama law is 2,700 pages long. romney wasn't trying to impose this on all 50 states. he didn't raise taxes 20 times. he didn't cut medicare $500 billion without shoring up the program's long-term financing.

so, there's some really significant differences and i think it's simplistic to just say they're the same. >> tevia, i think one of the key differences people might want to hear is how the bills are -- or how the law was financed versus how this law is going to be financed on the federal level. what are the differences there? and did governor romney have to raise taxes in order to finance it in massachusetts? >> yeah, well, this law is the latest ebo score has it around $1.8 trillion, so almost $2 trillion, and the way you pay for that -- it purports to be budget-neutral, but many analysts think that's not going to happen. but the way you pay for it is through taxes and paul ryan has talked about 20 taxes in the obama law as well as, i said there's about $500 billion in cuts in medicare without shoring up the program's long-term financing. so, there's medicare cuts, there's a lot of new taxes on small manufacturers of devices and on insurance plans and on

insurance themselves. so there's a lot of taxes and that's the way to pay for it. governor romney's plan did not raise taxes. and so, that's a huge difference and really important. i'm glad you pointed that out, melissa. >> so, to be clear, as we look at what you're actually going to bring to the table, there has to be surely some rationing in the system. we cannot afford the health care system that we have at the moment. in what way do you ration? and i know there was a suggestion from the obama camp that you were proposing some sort of voucher for medicare, for example. i mean, how does the rationing occur? what is the honest position moving forward? >> well, there's a number of ways of going about it, making sure that the right number of people get the health care that they night. what you're referring to is medicare premium support, which is a system that will help promote medicare's long-term financial viability. anybody who says they want to keep medicare as it is now is not telling you the truth, because medicare is not sustainable. the medicare annual deficit is

greater than the deficit in greece and we all know what's happening there. so we need to shore up medicare's long-term financing. obviously, the obama administration did not do that by cutting medicare -- >> please, please, carry on and explain, rather than going back and knocking obama care, which we all know about, please explain how you ration. how do you ration that? they get a voucher, do they? does it keep up with the cost of health care? how does it work? >> look, with respect to premium support, that is the idea is that individuals would get money to pay for insurance plans, insurers are then in charge of making sure the plans work and there's some economic rationality to it. but broader, beyond the people who are in the medicare system, i think you need to have more market-based systems. and so, allowing people to purchase across state lines, that's a reform that cbo has estimated would reduce costs. and so, you reduce costs by letting market mechanisms go into effect, and that helps bring about better health care for everybody. >> it's still not enough rationing overall, though, is it? we still have -- we have a huge, gaping hole and we still haven't

actually approached the point at which we indicate to people how they will be denied moving forward, and that's the debate we need to have, surely. >> look, we spend about 17% of our gdp, almost 18% of our gdp on health care. that's a lot more than our friendly allies in western europe, in japan and israel. and so, we do have a different approach to health care in this country. we do try to provide more health care. and i don't necessarily have a problem with that. the thing is, how do you provide that money efficiently? and to get more value-based assumptions built into health care. so individuals are making decisions based on what is the most value-laden plan, the most value-plaiden procedure. that's the best way to go about it. that brings down costs. you need to get the power of consumerism, which has brought down costs for all sorts of devices and all sorts of goods, and improve quality at the same time. that has not been a value in health care for too long, and governor romney would like to unshackle the power of consumerism. >> you know, do you think this issue still has currency with

voters? in some ways, people assume at this point, given we've heard from the supreme court, that people have moved on, accepting the fact that this will be the law of the land. we've started to see in our own markets, for example, companies make decisions, do deals, saying all right, we're here to stay. you know, is this going to have currency for the governor, in your opinion, in terms of something that will resonate with voters from here on? >> well, absolutely. you mentioned the supreme court and what chief justice roberts' decision did was he put the obama health care law squarely in the political realm. he said it's not up to the courts anymore. we're not going to judge on the wisdom of the law. so, let's let the voters decide on the wisdom of the law. the law has been consistently unpopular. it's got a lot of flaws that i mentioned earlier a couple times. so i think that this does resonate and i think the house vote is to say that now that the law is squarely in the political realm, let's have a political discussion about it. >> right. all right, mr. troy, we're going to leave it there. appreciate your time. thank you. >> thanks for having me.

>> you're welcome. tevi troy. let's go to sharon epperson at the nymex, get -- i know we've got some data coming out, sharon. data coming out in a few seconds, david, as oil prices are on the rise here. hopes of qe-3 may be partly the reason that we're seeing this. we are looking at supplies that are down much more sharply than anticipated. oil supplies falling in the last week, according to the energy department, by 4.7 million barrels. oil supplies down by 4.7 million barrels. also, gasoline supplies rising more than expected, up by 2.8 million barrels. gasoline supplies up by 2.8 million barrels. and distillates were up 3.4 million barrels. that's rising by 3.4 million barrels in the last week. the reaction is muted by the bigger than expected increase in refined fuels and bigger drawdown in food supplies, but we are seeing oil prices, brent

crude above $9. >> and a nice day for the energy stocks as well, taking their cue from these prices. sharon, thank you very much. should goldman sachs go the way of the sign daughter? bethany mclean makes the case for shutting down the wall street firm. that's next. ♪ ♪ 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.™ ♪ this dream

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good morning, if you're just joined us, these good morning, if you're just joined us, these are the stories we're squawking about this wednesday morning.

the usda is getting more aggressive in reducing its u.s. corn yield forecast by 12% due to the drought across the midwest. corn prices surging again today in response. shares of teen retailer abercrombie&fitch spiking after the company may be planning a massive share buyback. and wholesale inventories rising just 0.3% in the month of may, david. thank you, simon. well, just hours after duke energy merged with progressive, its board sacked the ceo, william johnson. he was replaced by jim rogers, chairman of the company. now the energy giant is defending its decisions. >> it became obvious to our board that the leadership style, they felt his style was autocratic and discouraged different points of view.

>> jeff seinfeld is a senior associate dean at the school of management and also a cnbc contributor. always good to see you, jeff. in my experience, and it's pretty long in terms of covering deals, i don't recall one in which we watched a board, a newly constituted board, by the way, just at the outset of the merger, get rid of the ceo who was promised a job. have you seen anything like that? >> i've never seen anything like this. you know, we could talk about bits and pieces of the surprises in the merrill lynch/bank of america deal, which are a bad analogy here. we could take a look at how perhaps poor fritz henderson, remember back at gm, was given all these reassurances when we had a ceo, ed whitacre, step in, and clearly wanted the job for himself and eventually took it, but those weren't this kind of a merger scenario or certainly there was just confused succession issues. in this case, it is unusual, but i do think there's a good argument, there is something different than a power grab here. in fact, i found very persuasive the testimony -- >> why? what did you find persuasive

about it, jeff? you know what was it that resonated with you? >> well, and apparently, i'm not alone. looks like the analyst community and the stock market has supported it, david. but it is that he's joined other boards that he wasn't allowed to join before. he was going through, jim rogers, as the theoretically outbound ceo, had apparently every intention of retiring. he took the retirement package, he moved into this nonexecutive chairmanship role. and then of course, joined these other boards, which now he has to quit. under his sworn testimony and the other testimony so far, is he knew nothing of this until he was brought into it by the lead director of tuesday of last week. and as you start to take a look at what mr. johnson did, who, yeah, admittedly has a prominent reputation in this industry of leading, you know, progress energy, there are a lot of problems, problems largely with this christa railroad facility, which was a nuclear facility in florida, closed for 2009.

a lot of disclosure issues which are now public about the delamination of the concrete and this or that, but the board only now is learning that i think they're feeling somewhat misled about the insurance to back up this nuclear reactor's problem. and more than anything else, we learned in this testimony yesterday that the board was presented with one option, which was we want to restart it and not retire it the way the community and regulators and the board thought should be explored. is this autocratic high-handed style was alarming. and frankly, i hear from insiders that he never even went around on one-on-one meetings to court this board. >> right. well, that may have been a mistake. >> do you think johnson concealed information? i'm just, i'm wondering the extent to which you think that the board was misled, given what you've heard. >> well, i don't think there's anything which was in terms of -- you look at how the analysts are responding now and what the board's telling us. this deal is still a deal that should have gone through. the synergy is overwhelming. the north carolina state employment situation should be

reassured through all this in terms of keeping charlotte and raleigh fully stocked with employees. but the concern here is that there certainly looked like there was misleading reassurances about insurance backup and just as high-handed leadership style, which wasn't just cascading down the firm. but even in dealing with the board, not that you have to be solicit, as the ceo works for the board and not vice versa, but in this case, you know, here, this is a board that's maybe too large, 17 directors. he needed to get to know them. none of these board members, by the way, were cronies of jim rogers. i think only one had been on the synergy board. >> but it's hard to imagine that his own board, let's assume progress had stayed independent, would have gotten rid of him even with the same problems, is it? >> well, you know, it could be that most people on that board perhaps were in favor of this merger beyond the synergies, perhaps many of them thought it was time for a change. we do hear from two dissident directors from progress, but they were not directors that were invited to stay on the board, and they say hey, if we

knew that johnson wouldn't have stayed on, we wouldn't have voted for the deal that suspects that their lack of objectivity that it was the personality of johnson that mattered more to them than the strategic synergy of the deal to start with, so you wonder about those two publicly outspoken dissident directors. but that seems to be the issue here, is that if a board decides they've lost confidence in somebody, and we can talk about mark hurd or other situations, such as hp and things -- when are you supposed to do it? they had enough information now to worry them. and surely, jim rogers could imagine how this was going to get spun and it is not a pleasant role to be in. if he were to step back in, say the way steve jobs took the job away from gill emilio and perhaps apple quite benefited from that -- >> yeah. >> -- is that you do this carefully, you do this staging. i mean, this is the kind of thing that happened this swif y swiftly, because clearly, it was the board and not jim rogers on the campaign it was too easy -- >> no, true, and it was the board, of course, getting together for basically probably

its first time as a unified board. jeff, we've got to leave it there. appreciate it. jeff sonnenfeld. >> thank you. let's check with bertha coombs for "market flash." >> after a second-quarter sales came in below expectations, ativan falls. the company citing a slower spending environment at the telecoms. year to date, shares are already down 30% or so for adtran. not a pretty looking chart. back to you guys. >> thank you, bertha. up next on the program, should goldman sachs simply shut itself down? the stock is down 30% over the past year, maybe due to transparency. who knows? certainly, shareholders may not be happy with the returns they're getting. we'll have "vanity fair" contributing editor bethany mclean next on the program, who says just turn the lights out at goldman.

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some things remain the same and goldman sachs is one of them, an institution that continually draws heat, whether envied or despised. now that it's down 30% over the past year, our next guest says investors should basically just shut it down. bethany mclean is a contributing editor with "vanity fair," a reuters columnist and a cnbc contributor. bethany, nice to see you on the program. the basic argument here seems to be that the goldman sachs valuation is now so low, you're ignoring the product of its 32,000 employees, saying just throw in the towel. >> well, i'm not sure i went that far. i definitely raised the question, saying is this what the vote that the market is rendering, and you look at how shockingly cheap goldman sachs is, not just relative to its book value, but also relative to it's got a really liquid balance sheet, a lot of cash-like assets

and low debt relative to that, and the market is basically saying we're not sure we're going to value the ongoing earnings of this business. and it's just really interesting to me, because everybody thinks that the big banks, goldman included, got away with murder during the financial crisis, but you look at what the market is saying, and they haven't gotten away with much at all. >> yeah, but let me -- in fairness, you make the point yourself in the article, bank of america traded about 60% of book, citigroup just over 50%. so, shouldn't they be first in line for your wrath? >> true. and like i said, i don't think i went that far in the story. i raised the question about what the market is saying about goldman, but this is an institution with a long history of making money. i think it's too soon to count them out. the interesting thing about goldman, though, versus a bank of america or a citi, those institutions could break themselves up into their component pieces and there's an argument they could be worth more that way, and that's what the market wants them to do, and the there are investors agitating

for that. for goldman, i don't think that's a solution. it's hard to argue it's worth more in pieces. it doesn't have the traditional banking pieces of these firms and even its banking business is valuable because it's part of goldman sachs and wouldn't be as valuable on a stand-alone basis. so the good and bad news for goldman is that they don't necessarily have this alternative of breaking up in order to give value to shareholders. >> but that's only helpful, bethany, if we actually believe that citi and/or bank of america or any of the other banking peers out there will actually break up. is that what you believe is the case? >> i'm not sure they will. i'm not sure they will break up. i think there are investors agitating for that. it's too soon to say that's going to happen. but here's the other difference between citi and bank of america and goldman, citi and bank of america, their balance sheets aren't as liquid as goldman and they're not all marked to market. so there is more wiggle room and the market could be questioning the value of their assets. goldman is a mark-to-market firm, so it's a little clearer to see the market questioning

kind of the ongoing value of the earnings streak. >> right. bethany, of course, they're never going to do that, right, distribute the cash, pay off the debt, i mean, never going to do it, but your point is well taken. the question i think many investors have is, okay, has it changed for good in terms of the value we're willing to record this firm because of regulatory risk, because it's a black box, because they pay themselves so much money and don't seem to have a great deal left over for us shareholders, or is it going to change again and goldman will become the goldman we knew from the 1990s, or let's call it the 2000s? >> that's precisely the question, and it's really interesting. there are some people who argue that the world has fundamentally changed with europe, japan and the u.s. entering this deleveraging phase where debt has to be reduced, that the phenomenal returns of the last couple of decades were primarily debt-driven and may be derivatives linked to debt, and that if you have this massive deleveraging in the developed world, plus these new regulations that limit the proprietary trading and proprietary investing that has

made goldman so much money -- >> come on, bethany, come on. this is one of the greatest franchises in the world, and if you were sitting there with lloyd blankfein, in an environment where most of your businesses have collapsed, certainly m&a has collapsed, investment banking is severely challenged, so oo and so forth, you have a choice. are you going to keep this worldwide itch structure that employs some of the brightest finds the world internationally as a fixed cost which broadly they are at this stage and take them through the recession and the revenue -- though the profits don't look so good, on the basis of when the world turns around, you're going to be back in there as number one in many of those markets, making a huge amount of money? if you believe what i just said -- and i believe it -- then goldman is a screaming buy. screaming buy! >> if you believe what you just said, and that's certainly an argument. that's certainly what goldman believes and that's certainly what some investors believe. and then goldman is a screaming buy. if, on the other hand, you think the world has fundamentally changed such that goldman's business model either needs to shrink or to reinvent itself to

deliver those returns, then you're not so sure. >> but if that's the case, then you believe we're in a worldwide depression permanently -- >> no, she's just saying -- not a depression. >> m&a's going to come back. >> you know what? if fixed income drove these results, as it did to a large extent for many, many years and was by far the most profitable segment, not to mention sort of lumping in derivatives there, i mean, bethany, if we are in a different world, deleveraging goes on for years, right? what, we had a 25-year bond market rally that's ended, we've levered up as a society enormously. [ everyone talking at once ] it is not as profitable. >> the product -- >> can i hear from her, please? >> let's be clear. even if that is the world, i'm not counting goldman sachs out. the last paragraph of my story points out that this is a firm that has found a place to make money over many years of its history. even if we are in that world, i'm still not counting goldman sachs out. i'm just saying they need to reinvent themselves in that case. >> but the by-product of that deleveraging is also that european banks, for example, are selling a huge amount of assets,

may be foresellers of those assets around the world very cheaply. goldman sachs could be picking up a lot of assets very cheaply at this stage and stage and it' the few international players capable of doing that. i think it puts it in poor position on just that argument alone, bethany. >> yes. i pointed out also in the piece the other silver lining in the scenario is that azure peen banks delever, companies in europe which traditionally have funded themselves through banks are going to have to turn to the capital markets. that, too, spells opportunities for firms like goldman. there's arguments on both sides. the piece is a lot less black and white. i raised the question about what the market is saying about the ongoing value of goldman. i'm a long way from saying they should go out of business. i'm pointing out the questions the market is raising about their valuation and asking why that is and what they might be able to do. >> let me check if david has further comments. >> it's called a tease. we like to do that in television. bethany knows. >> thank you for joining us.

>> here are the two sentences that are very important out of her article. market participants say goldman is no longer taking the risk the way it once did. but as soon as the cloud lifts normally i.e. the risk taking and megaprofits of the precrash years will return. >> what was interesting about goldman was that we're very explicit about deleveraging and derisking in advance of the european crisis. given the tentacles they had through that crisis, and we could debate what tentacles those were. a lot of them will be stocking up on the short side. it was very interesting they made that move. >> a great history of communicating within its ranks and moving to where the money is. no doubt about it. >> can i just add one more thing i think we're forgetting here? the finnish prime minister said the european crisis is the worst in two years. it may be actually that goldman is very well positioned. >> what is it with the finns? they are constantly pouring gasoline on a fire. >> we always focus on the germans as the ones paying the bills and most austere.

at the edge you have a smaller country quite austere and has a aaa rating and is absolutely adamant it will not be pulled down. it's a huge issue. we'll talk about it later. corn in case you happened to notice trading near a 13-month high on the back of this morning's uda crop report. jane wells takes us live to a farm in illinois for the latest from inside the ground amid the corn crop woes. ♪

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there's no doubt it's been a brutal, brutal summers for many farmers in the midwest. our very own jane wells joins us now from rockford, illinois, on a farm that was planning on a record corn crop. jane, over to you. >> reporter: simon, these corn stalks look so nice and healthy. you would think everything is fine. look at this ground. hard as a rock. even if they had rain now they probably couldn't save this thing. let's look at how corn is trading today on this news. the usda has significantly cut, of course, how much corn it expects. more than most expected it. it was hard to believe anyone was surprised but they were. 146 bushels an acre. a 20 butchel per acre drop in

one month. they predict demand will fall. here's why a lot of people think the number is going to fall further. right now is pollination time. the pollen comes off this. it goes down there. pollinates the ears of corn. there aren't any cobs down here right now. listen to this. >> this plant here is way behind. you can't -- there's the silks in here. you can't find evidence of an ear coming anywhere. >> jerry gulke wishes he could get 146 bushels an acre. he's praying for 100. >> now with the genetics, we were promised that these new genetics which are ten times the cost of a bag of seed corn than 30 years ago would probably withstand this heat. that jury is still out yet. we're going to find out from the genetics just how good they are and whether they're worth the cost we put into it. >> monsanto, still expecting the

third largest crop ever. expect more cattle to get slaughtered early because it costs too much to feed them. last i looked at feeder cattle prices were down. wheat prices are up. can't find hay anywhere. finally, guys, the big question. what's it going to do to farmland values which have defied real estate? in illinois they average $5,800 an acre. gulke says there's a farm down the road for sale. he wonders how much it's going to go for when the crop turns out to be zero. final thoughts for the hour straight ahead. 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.

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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. welcome to hour three of "squawk on the street." here's what's happening so far. >> any claw backs are definitely in order. i would be doing a thorough review. >> of the ceo as well, jamie dimon? >> absolutely. i know what i read in the papers. it appears he was part of the decision making. >> the amount of medicare we spended on the richest .01% of the population is a tiny amount of money. the amount of money we can gain by raising taxes on that .01% is

not a tiny amount of money because they're very, very rich. >> jc penney shares. >> just a second! this is the north face of everest. this is where a lot of the climbers on the way down have been hurt after 2:00 p.m. this is where you get as f asphyxiated if you're a shareholder. >> or frostbite. i understand they want to claw back. it's a good thing they will be conceivably clawing back. i don't understand the compensation being so high in the first place. i get compensation is ridiculous high on wall street. >> wholesale trade up .3, exactly as expected. >> we do have a different approach to health care in this country. we do try to provide more health care. i don't necessarily have a problem with that. the thing is how you provide that money efficiently. to get more value based assumptions built into health care so individuals are making decisions based on what is the most value laden plan, most value laden procedure.

that's the best way to go about it. that brings down costs. >> and it's just 11:00. welcome back on the east coast. welcome back to "squawk on the street." counting down three hours until we get the minutes from the federal reserve. a big conversation about qe. as we wait for that, see the markets are in negative territory. the stock level today, h.h. h.h shares sliding over 21% after the retailer cut its outlook for the fiscal year, 2013. for next year the company also forecasting same-store sales will fall even more than originally expected. h.h. gregg citing lower than expected sales in its video department as the key catalyst. and in sympathy, best buy shares have also been hit as well if we can take a look at those. down about 5% as we speak. there you go. directv's almost 20 billion subscribers have now lost access to 17 viacom networks including nickelodeon, mtv and comedy central. after the satellite broadcaster dropped the channel because of a

failure between the two companies to forge a new deal over carriage fees. we'll have more on that. we have spoken, of course, to viacom's ceo. the road map for this third hour, yahoo! board members meeting today amid the search for a new ceo. will they find their guy? will the new leader fend off rival threats from facebook and google? market is trading sideways ahead of the fed minutes later today after a four-day losing streak on the street. the usda saying today the midwest drought will dramatically lower soybean and corn yields for the year. we'll sit down with a commodity trader to see how he's playing the corn price surge. sun valley, idaho, media's biggest moguls are gathering. mark zuckerberg, you name it. kayla, what are you hearing? >> reporter: you could pretty much name anyone in the industry, melissa, and they've

ever been here, been before or have gotten an invite at some point. of course, in a conference that's known for forging deals there's one that's especially imminent. that's the standoff between viacom and directv of course at midnight last night. viacom's channels on directv going dark. directv saying the fees viacom asking for too expensive. a 30% increase in the prior deal. of course, this morning we spoke to viacom's ceo. he says he won't negotiate publicly but he does understand there's a problem. >> in the seven years since we last did a directv deal we have successfully and peacefully concluded affiliate agreements with every single other distributor in the united states. so we're prepared to move forward. it's unfortunate that for the first time consumers are not able to enjoy our channels. >> you're not thinking of unbundling at all? >> that's all i'll say at the moment. i don't want to negotiate in

public. it's unfortunate, as i said. the record speaks for itself. >> reporter: carriage wars aside, our conversations with some of the other media moguls were notably bearish. though they did mention that the deal climate hopefully was still ripe. we spoke to david zasloff, chief of discovery communications yesterday. here's his take. >> i think it is the right climate. companies have good balance sheets and plenty of money. it's the question of what are the right deals and right partners and right prices. we're seeing slowness around western europe. not on the advertising side. you can feel the economy is really beginning to struggle throughout most of western europe. >> reporter: so what started as a conference for media moguls 30 years ago now has really become a conference for agenda setting. of opinion making worldwide. and europe will be top of mind later this week when we will hopefully catch a sight of italy's prime minister, mario monte.

back to you. >> mario monte is at that conference. that is a first. what is the agenda for him to give attendees an outlook on the european economy and bailouts? >> reporter: ideally you would think that's what it is. we didn't see him yesterday. occasionally when you do see some of those big name guests they appear later in the week for the friday, saturday portion of the keynote. it slows down a little bit. you really get into the nitty-gritty of the macroeconomic stuff. today, white water rafting. last night was a barbecue. everyone's just getting settled in. you'll hit the heavy topics later in the week. we'll have more for you as that all coming to light. >> it's a little ironic, kayla, owe monte is there given so many media mogul's stocks are benefiting from the notion investors want to stay away from european expoegzed companies. and they're going to u.s. oriented companies like media stocks. >> reporter: yeah. and, melissa, yesterday we spoke to passport capital's john burbank, a guy who runs a hedge fund out of san francisco. he's a brand-new attendee here at sun valley. he said no comments from any of

the media companies this week would convince me to buy the stock or not buy the stock. i'm here to get a good macro picture and see where people are heading in a long-term strategic direction. that's become the focus of this conference. where are we heading? what happens next? that's why you see a lot of these guys coming to this conference. of course, i'm not sure it was supposed to get out that monte was attending. it may have been because his press schedule got out in europe. alas, we do know he is expected to attend. hopefully he'll show up. >> keep us plugged into what's happening there, kayla. we'll come back to you throughout the day. kayla tausche with some of the heavy hitters in media. let's stay with media and talk about yahoo!. the board is meeting today to discuss the stat tugs of its ongoing search for a ceo as the company gets ready to face shareholders tomorrow. will they find a replacement and what is next? brian weezer, senior research analyst at pivotal research group, good morning to you. >> thanks for having me on. >> the assumption has got to be surely ross leavenson, acting

ceo, is going to get the job. >> yes. i agree. it would be problematic if it weren't at this point given all the new hires he's brought aboard, all the uncertainty, delays it would add to improving the product, brand, et cetera for another year. >> where were you on the stock? it's a $19 price target you've got here. >> right. we have a buy. frankly we're fairly pessimistic about the underlying core business. we think the value lies in their agent assets. $11 in values there. another $2 of value in cash by the end of the year. really, it's not hard to get to $5 or $6 of value on the core underlying business even with flat growth. >> it's interesting the stock has gone nowhere on that chart there for a year. let me ask you about the asian asset sales. where are we on that? it was interesting there's unconfirmed reports in asia overnight that maybe baidu six month revenue has shot up.

time has been kind to yahoo! on turmoil. maybe it's able to get more for those stakes because everybody else is doing so well on the other side of the world. >> a lot of the investors we talk to are enthusiastic about yahoo!'s position. that said, there's arguably more value by actually realizing some of it. some of these transactions are moving forward over the course of the next few months. they're going to get paid cash money, which will go to a buyback. all that's very supportive of the stock, at least, getting toward their price target. >> after levinsohn is named ceo, as the market expects -- even when there were incremental positive announcements such as the resolution of this patent litigation, the stock basically bumped up again 16, fell back down. what's going to move this thing? >> frankly, it's going to take a lot of luck. you know, they could have the most brilliant strategy. >> luck? >> yes. they could have the most brilliant strategy of figuring

out how to move the brand and the product forward. but i think they need secular change to occur. that's out of their control. they need regulation around data and privacy to become so powerful that marketers have no choice but to go back to using yahoo!. that could happen. it's not implausible. but i don't think that we're going to get a massive run beyond our price target. >> what about this deal -- what about this deal they've done with facebook? they've congratulated each other. where do they go now on the idea they're going to have an advertising and content sharing alliance? what does that do for yahoo!? >> you know, i don't know that it's going to be that meaningful for yahoo! at the end of the day. the vast majority of their revenue is going to come from selling premium inventory to big brands. and maintaining relationships. that's the one thing they do so uniquely well. when we talk to advertisers and marketers, it's the one thing that yahoo! still is uniquely well positioned for. so, you know, the relationship

with facebook is great to the extent it drives traffic. beyond that, it's not that important for the revenue growth. >> okay. brian, good to see you. thank you for your time. brian weiser joining us on yahoo!. we should mention cnbc and yahoo! have a business alliance to share and coproduce editorial content. to capital markets editor gary kaminsky has a mid-year update on munis. i'm guessing this is sparked by the san bernardino bankruptcy. >> among other things. this mario monty thing we talked to with kayla, i guarantee there's a bunch of people in germany that are not going to be happy when they hear the italian pm is off at that conference. >> they still don't control the europeandownon, you know. >> trust me. i don't think this is the best place for the italian pm to be right now given what's going on over there. let's talk about munis. i've been thinking about munis a lot during my team overseas. primarily because of the fact as it's been disclosed before i personally have a large muni

portfolio, managed portfolio. there was a great piece that came out written in barrons overnight. written by michael amiro. he writes an income investigationmeinvestment column. look at some of the sixth-month data on munis. interestingly, every state in the country has actually passed the 2013 budget. along with that, 29 states in fiscal 2012 will have revenues exceeding forecast, only seven below and four coming in below forecast. only the few bankruptcisies we've seen as you mentioned in california, melissa, you've essentially had .4% of the entire outstanding municipal bond market default. we know there was this high -- very high profile call. i guess at this point it's a year and a half back by meredith whitney. i've stayed on top of that for some time. we know what's happened with munis. i actually had felt coming into this year that the idea of having capital appreciation in a

municipal bond portfolio given where interest rates were should not have been something in consideration if you had a muni portfolio. you should have expected the triple tax free income but no more capital gains. i have to tell you i've been rethinking this thesis. if i'm right about the 10-year in the u.s., given that munis have continued to be a place to deliver the alpha as well as performance, i actually now think unless you believe, and i don't in the sense of spreads, i think that munis will once again be outperforming in terms of capital appreciation as well as total return. and as this piece pointed out here today, once again, quietly, munis continue to generate the alpha and continue to generate the total return performance, beating out almost every other asset class other than if you go back last year and look at what happened with treasuries. >> is that due partly to meredith whitney's call which depressed the market or just because the flight to safety? >> no. that was the performance in early 2011. meredith whitney's -- if you

look at the chart, the meredith whitney sort of impact and then the performance was the first part of 2011. what you've had now is in the search for yield, and really the fact that many people who had been scared out of this sector of the market have now come back. now it's really about total return. lack of other places to find yield. if i'm right about the 10-year, munis will actually give capital appreciation that i had not thought in the case of 2012. >> let's link in rick santelli in chicago. rick, what's on your mind? >> today for the exchange we're going to talk about audits. believe me, i've talked to more people about audits after the peregrine financial group issues. let's look at the players directly first. you have the exchange. they do audits. you have the nfa. they do audits. that's the national futures association. you have the cftc, the regulator. but they don't do audits, but they're a regulator. they set the rules and do spot

checking and a lot of communications with firms on a daily basis. how do you decide who audits you? it's based on designated self-regulatory organization. so in this case, if we look at pfg, nonclearing fcm. nonclearing futures merchant. what that means is the actual process of all the trade organization and clearing that goes on is outsourced, in this case to jeffries. now let's look at the audit cycle. i was amazed by this. but not necessarily in a bad way. but made me a bit sad in a way, but i understand why. you would think it would be done on a quarterly basis, but it's very expensive. remember, not everybody are crooks out there. okay? what you have is every 12 to 14 months either the nfa or the exchange is going to audit you. that in addition to your independent audit. so one suggestion right off the bat that i would have, according to many of the sources i've spoken to, it happens more by chance, but it does happen, is since this is a 12 to 14 month,

we'll call it annual, make sure that the independent audit works at a six month cycle. really you get two views a year. here's the problem. when you look at pfg respectively, how did they get caught? they got caught by electronic submissions. because there's a lot of doubt that their paperwork, their actually paperwork was actually accurate. much of it appears to have been fraudulent. but the electronic part gives me hope. it gives me hope. because it's very difficult to have fraudulent activity when you're requesting information by omny bous accounts held by places like jeffries or banks when it comes electronically. the electronic submission is the hope here. on the fraud scene, there's so many daily operations that have to be met with a futures clearing, merchant clearing and nonclearing there has to be more than one body in many of these shops if they get caught for fraud. that's the part we're still waiting to hear. back to you. >> doesn't that cut two ways as we saw with mf global and jon corzine with electronic transfer

that you can so rapidly move money regardless of what the audit said yesterday? if they decide to move without even, i think, talking to the cfo i think was one of the things we learned. you can move fast here. that's also the problem, isn't it? >> well, that's part of the solution. if you're getting things from a third party that are very difficult to duplicate in a fraudulent way, you can start to catch this stuff in monthly and quarterly increments. because 12 to 14 months is going to be a tough one. i think the calendar colluded with the fraud that seems to have occurred at pfg. >> for sure, rick. thank you very much. rick santelli. we'll come back to you in a bit. coming up next, on morgan stanley smith barney's chief investment officer thinks even if we get -- by the end of the summer, it won't help the lackluster economy. we'll discuss that right after this. tdd#: 1-800-345-2550

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growing concerns about the global economic charles ryan hart is deputy chief investment officer at morgan stanley. he joins us now. it won't do anything, i imagine. it won't really have an impact on rates at this point. >> that's a good point. it won't have that much of an impact on rates. also when it comes to policy it's not just what you do and how much you do. but the timing is very important. once you have sort of a self-reinforcing loop with growth slowing down pretty much everywhere around the world. in china, recession. in europe. three job reports in a row under

100,000 in the u.s. once you have a pretty well intrained pattern of deceleration you have to simply let it run its course. that being said, looser monetary policy once the slowdown does run its course will probably be beneficial and help on the back end. but by itself, it probably won't change things short term. >> is there something that the fed -- something really big that the fed can do that could change your mind? >> well, what has to happen is that confidence has to be restored. we need to -- when the minutes are released later today, of course we're expecting the fed will have rated lower the way the economy has performed since the release of their last minutes. we'll be looking to see how much consensus there was around twist and further efforts to do more. what has to happen is that confidence has to be restored so that -- and we would see that with firming of home prices and, perhaps, better stock market valuations, which would make ceos more confident to hire and

households more confident to spend. >> charles, you don't think that language from the fed or another easing round will build confidence in the market knowing that the fed is going to do their step-in, do anything that's needed in order to prop this economy up? doesn't that ingender some confidence on the part of corporate america even if it's just psychological? >> it could help a little bit. we don't think it'll help enough to actually change the contours and the trajectory of the economic landscape in the short term. the other thing, too, is that while we're talking about monetary policy, you know, if one were to make a list of many of the things that could take place to bolster confidence, monetary policy is probably closer to the bottom of that list than things that could happen on the fiscal side. >> help us trade the fomc minutes, charles. what are you looking for? what would be the surprise in the minutes in your view? >> well, what we're looking for is to get a better sense of how much willingness, how much of a consensus there was to move forward with an extension of operation twist.

and then also what kind of -- how far are we from gathering a consensus to do more with respect -- which would be qe. the fed needs to get an early august. of course, there's jackson hole in late august. those are two other opportunities where if growth disappoints they can do more. really, what we think could happen is not so much that it could revive the way that the economy is performing and therefore how that might transmit into asset prices, but how much it could provide a floor and a margin of safety from where we are right now. >> basically dissent would be negative in terms of prospects for qe and probably market negative as well? >> qe would be a bit of a -- qe would be -- would be -- would be a positive. because the economy -- >> right. i'm talking about the minutes. in the minutes, if there's dissension and disagreement about qe-3, that would mean qe-3 prospects are less likely and that would be negative for the markets? >> yes. that would suggest to us that the bar is higher for going

forward with qe if there's a lot of dissension. that being said, central banks around the world are doing a lot. we think the u.s. economy is muddling through and barring a shock it will continue to muddle through growing around 2% this year. that's why we're favoring u.s. equities. >> deputy chief investment officer at morgan stanley smith barney. we are counting down to the close. about seven minutes away. we'll bring you the closing action live when it happens. back right after this. ♪ 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 [ ann 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.™ ♪ this dream

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we're just gloes we're just gloes closing out on europe. that's where we are at the moment. obviously the fact that wall street is slightly lower has taken those european equities down. i want to pull away from that. i just want to come back a little bit and get a bit of perspective on where we are and ask the question, we are all bored with talking about europe. that's absolutely clear. but how has that now led us to a position where we are ignoring the huge dangers that are being presented? the finnish prime minister, fins and germans are the most important countries move forward on funding the rest of europe. the finnish prime minister

suggested europe is now in its most dangerous situation in two years. this is important from this man. because he is indicating that maybe the differences of opinions about how to sort out europe's problems may be a roadblock. everybody's assuming that europe will do whatever it has to do. he's saying that is not the case. you'll remember a few days ago there was a threat that finland actually might put out of the eurozone rather than go through euro bonds. in spain today you have the spanish prime minister breaking, for example, as he tries to deal with the market confidence issue. his promise there wouldn't be a rising v.a.t. he will have unemployment benefit cuts. there will be also cuts to civil service pays as they try and take 65 billion euros out of the budget to balance the situation there. you can say it's about trying to get with the european targets. actually, it's not. it's a dance with the markets on confidence moving forward. many people are talking about the need further down the line for the ecb to advance another

ltro to fund the spanish banks to buy the spanish debt. that's where we are at the moment. in the meantime i want to show you obviously where we are on the spanish yields which continue to come down. the point to actually the bigger issue may be a crisis we're not paying any attention to. let's have a look at where we are -- or not paying enough attention to. let's have a look at where we are on the german 10 year. today an average yield of 1.31%. that's the lowest ever. you have negative rates on certain parts of the curve. as rick said earlier, in switzerland, denmark. france we saw the other day. we know there's a divergence.ce. these extremes in europe, what exactly is that telling you about where they see the future moving forward? in the meantime the equities there, same as here, the equity market continues to do quite well in an environment where the bond yields are getting slapped over the month. look at this. european equity market is up now

5%. the divergence continues. melissa, my question would be are we ignoring what the politicians are telling us, that it is a very, very dangerous situation and the most dangerous now for two years? that's a guy who's right at the heart of it who's saying that. maybe it's political brinkmanship to get what he wants. >> you point out the market performance and how that diverges with what you're hearing from the finnish prime minister. also look at the euro against the u.s. dollar. it is sitting at two years low. that is also interesting to add to this conversation. let's head over to brian shactman on the floor of the stock exchange. >> hi, melissa. down 31. we're off the lows here. we've got traders making some jokes about their -- really just waiting for 2:00 p.m. eastern time. let's face it. when the fed minutes come out. that's the consensus down here. i want to go through a few things. sectorwise, energy is by far the strongest. off the highs. financials, you tillties also doing okay.

notably in terms of laggards, materials, discretionary. also not on your screen is technology not far behind materials and discretionary. and two the discretionary point, take a look at some retailers. you have ralph lauren and coach which are definitely weak. maybe on the back of the burrbury disappoint and what they had to say about asia specifically china. also big box retailers struggling. macy's almost 3%. 2% for nordstrom. jc penny down another leg. home builders. i want to take a look at them. they are all weak. pulte, d.r. horton, kb homes. not one of these names is up less than 40% on the year. whether it's profit taking or some growth concerns, those are all down. the interesting dynamic is usually airlines and oil are tightly correlated. not today. oil is up. so are the airlines. we had us airways touching a 4 1/2 year high. all these names, delta, united

airways, jetblue up 2% or better. the energy around the possible merger with amr that maybe it's not a done deal for us airways, who knows, is creating some energy there. finally i want to look at the fertilizer stocks. jane wells is in illinois and santelli is going to talk about it in a minute. all the fertilizer stocks are catching a bid today on the back of that crop report. back to you. >> thank you, brian. gary kaminsky is up next. >> i want to point out trim tabs reported this morning that 10.9 billion went into equity mutual funds for the 11 days into july here. interestingly, that tops the entire month of june where $6.8 billion went into equity funds. that is normally considered a contrarian indicator. retail putting money into stocks. that being said, you listen to simon. you heard charlie reinhard. it's a very, very confusing time to put money into the markets. i did touch base with a perennial top 100 barrors

producer at morgan stanley who's given good advice to viewers of the networks over the years. i said what if i gave you $1 million today and wanted to invest it over a five-year time period? what would you do with that money? he made the point the high dividend paying stocks, boring but great performers over the last year and a half, continue to look at that sector. recognize until this election, until this u.s. political election is decided sometime in the fall, you will have these ebbs and flows. obama looks like he's going to win. the equity markets underperform. romney looks like he's going to win, equity markets do better. again, in terms of the earnings. you pointed out h.h. gregg, there's an example of a company coming out with bad earnings and the stock being impacted. there was an example last week or was it the week before when macy's came out, got bad guidance, the stock didn't react. take a look. watch the companies that give poor guidance and do not have the equities react to it. and lastly, shelley said think

about the summer of 2011. the concerns that we had a year ago. those would have been things like what was going to happen with the u.s. credit downgrade in terms of the treasury market. think about what happened with commodity prices. commodity prices have come down year over year. think about the concerns that are out there right now with a longer term perspective, not necessarily a bad time to put money into equities. but it is a dangerous time. and you have to think about three to five years, not the three to five weeks. >> one of the reasons why the equity market looks as good as it does, and you made this point twice earlier in the program in a different way, is because the defensive sectors have rallied. you're actually in a position now, target, walmart, you're actually in a position where you've driven the yields so far down, you're driving people in a flight to quality into elements of the equity market that they would not normally be for yield. >> again, those are the type of viewers that have bought the krafts, the verizons, the at&ts.

they have been supported by the yield. again, we just brought up the 10-year. unless you think there's going to be a massive move in interest rates, those will continue, despite the fact that many people come on and say that trade is over. that's been long in the tooth. the fact of the matter is that continues to be the place to hide. you just pointed out where the 10-year german bund is. you know what i think is going to happen with the u.s. treasury. that's the place in equities you can be safe. >> to rick santelli in chicago with the commodities update after this morning's crop report. rick? >> my guest is from future past. as i look at the markets live, corn is up 5 cents. well off its 7.48 highs after the report. beans up 13 cents. well off their highs. wheat up about 15.75 cents. you said something today. this report, as important as it may be, isn't your favorite report. tell me why. when is your next favorite report? >> next month it will be. the reason this report is a little bit different is this is

just a survey. basically a phone survey that they go out to the producers that are out here and ask them how things are going. so it's not -- >> versus? >> -- specific. going into the field. >> inspection report? >> yeah. that'll start to happen next month. you know, when we get a chance. crops aren't developed quite enough now to begin to do this type of account. >> what's the exact date for viewers, listeners. >> there can be a lot of variance. >> when's the next expected report. >> august 10th. >> what did this report, even though it's a survey versus inspection, what did you glean from this report specifically? >> one of the things we were surprised about is the usda lowered corn yield quite a bit more than we had expected. we were at 1.66 in june. >> that's bushels per acre. >> yes. we were looking for about 153, maybe 154 here today. they did come out with 146. they were pretty aggressive in cutting back that corn yield today. >> i know you say some farmers are expecting more.

the gulke farm, and i know jerry and ashley very well where jane wells is today, she made a comment jerry would be happy with 100 bushems. as you said this really varies. >> a great deal. there are certainly a lot of producers out here who are going to have a good crop. we're looking right now at maybe a 20% or 30% loss here. you're going to hear from the worst. >> purdue university did some great research. i urge viewers and listeners to go to their website on agriculture. they were talking that indiana, fifth largest state with corn production, at least a third of their crops beyond reproach. you said don't despair. you still think a lot of parts of the country we could see the corn crop still come through. explain. >> right now the next two to three weeks, extremely critical for this crop. and if we don't see the precipitation that we need in these next several weeks, this corn is going to fly. >> we're going to have to go quickly. most people think it's for food corn. really, animal feed, energy, we have the mandate no subsidies

for ethanol. we saw tyson downgraded by s&p due to livestock feedeed costs. something to pay attention to quickly? >> most definitely. the usda cut demand in here today. we are starting to see a rationing of demand because of these prices right now. >> they're getting rid of animals. price will go down on some of that meat now. it's going to go up later when we have to reflenish through the feed lots. back to you. >> thank you very much, rick santelli. straight ahead, president obama signing an executive order that could give the u.s. government complete control over the internet. we'll sort through the president's powers on the internet, next. st 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. find out how it can work for yours at thenewny.com.

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♪ ♪ all right. coming up in just a bit on halftime, making money off the spike in corn from ag companies to ferts. our traders are naming names to buy and short. barnes and noble shares rallying 30% in the last three months. sit really back from the brink? our exclusive serious continues. are ibm's earnings about to disappoint. cnbc's herb greenberg investigates that. see you at the top of the hour. some are happy. some are sad. groupon falling below $8 a share. the team is working behind the scenes to work out exactly what is going on here. we don't have any information at this stage. that's more than 60% down from the ipo price. i don't know whether it's material or just for color. kayla tausche tells us that andrew mason, the ceo of

groupon, was due at sun valley and hasn't turned up. that may be completely ir vel rant. trading at $7.74 at the moment. a new executive order from president obama laying out emergency government procedures is getting a lot of attention on the internet today. cnbc's eamon javers joining us in washington with the latest details on that. good morning to you. >> reporter: this is one of those government reports they put out on friday of a fourth of july weekend. that always makes people feel like maybe they were trying to bury this executive order. it's getting a lot of attention from critics who are concerned there's potential overreach here by the government in terms of potential control of the internet and all communications, technologies within the united states. here's what the executive order does. it's about emergency situations. and it's the sort of -- the government's break glass if necessary proposal here. it directs various government agencies to come up with a plan for a state of emergency in the country and what they would do to make sure that the government can communicate to the people,

to allies around the world, about whatever is going on in that emergency situation. take a look at this one section. this is the one that's got critics kind of concerned that there might be an overreach here. this is section 5.2 e of the executive order saying the secretary of homeland security shall satisfy priority communications requirements through the use of commercial government and privately owned communications resources when appropriate. now, the definition of appropriate would presumably be up to the government here. i've been talking to folks over at the white house, simon, today who emphasize that there is no new authority in here. this is not something that is extending the government's previous authority. it's just recodifying it, updating a 1984 executive order based on all the new technology that we now have out there. so obviously the white house minimizing this, saying there's nothing really new here, just updating the technology and some of the details of how agencies would plan for a communications

crisis, simon. >> okay, eamon. while we've got you with us, a few months ago you broke the story about the possibility that the monthly employment report might leak out of the labor department. i think we've got some more details on that as well. >> reporter: that's exactly right. the new detail here, the department of labor had hired san dee ya national labs, the agency that safeguards america's nuclear security. hires sandia national labs to look at the jobs report process, how they're releasing that information and come up with a security report. they based changes on the department of labor's jobs data procedures based on that report. they knew put that report out just yesterday. it's up on the department of labor's website. in there are a couple of very interesting details including the fact that the fbi was one of the agencies that initially alerted the department of labor to concerns that these jobs numbers may potentially leak out. nothing in there. it's a heavily redacted report. we can't see everything. but nothing in there shows that the jobs numbers have actually

leaked out. clearly a lot of concern on the part of the government. the fbi, sec, and department of labors that jobs data could leak out. that's what this whole push at the department of labor is to clamp down on security. >> i can understand the federal reserve. department of labor? they sit there with armed guards around them? >> they actually brought in sandia national lab security folks. interestingly enough, they were for lack of a better word, they were kind of spying on us, the reporters, back in july of 2011 as they released this. they were conducting radio frequency sweeps of the building to make sure that no radio signals about the jobs number were leaking out in advance of the official release time, which as you guys know is 8:30 in the morn ing. they're concerned the information could leak out through technological means, mostly. they're focused on the press which have access to the jobs number in advance. they're scrutinizing that area

and who has access to the numbers ahead of the 8:30. you could make a bunch of money if you knew that number ahead of time. >> i'd rather see a federal reserve judgment ahead of time if i was really looking to make money. >> the great thing about those fed funds rate changes is that they release those under a lockup procedure, too, over at the department of treasury. >> sure. >> we're in those lockup rooms. it's done on a fax machine. the fax machine is, like, from 1989. it's this old-fashioned technology. you're sitting there looking at this thing. this is like for ten seconds the most important fax machine in the world. kind of hilarious. >> god forbid a paper jam. >> the whole market could stumble. >> that's crazy. >> if we run out toner or something the market could crash. >> eamon javers there from washington. >> eye opening. next time they should take a picture of that fax machine and tweet it. i'd love to see it. >> probably security controlled. you can't take pictures of anything in washington. shares of groupon. a 52-week low.

all-time low, actually. down 6.4%. >> there is a report that has come out. apparently thestreet.com talking about concerns about the cash flow coming up. more of that after this. that seems to be the source of the downward movement. >> yes. details on that straight ahead. .

watching shares of groupon continuing to slide lower here. this is an all-time low.

seema? >> shares of groupon hitting an all-time low. there have been continued concerns about the financial health of the daily deal site. also concerns about if bankruptcy is in the forthcoming. some traders telling me perhaps investors trying to unload of risk on their portfolios. look at groupon in comparison to social media peers, definitely underperforming the pack. some news on july 2nd came out that groupon chairman says he plans to focus more on his investment firm and take a step back from groupon. since then shares have slid about 27%. that's, perhaps, one of the catalyst. shares of groupon down about 6.2%. definitely a lot of concern about the financial health of the firm going forward. >> all right. thank you so much. seema mody. >> i'm reading one of these negative reports that apparently

came out today. again, if you invested in this company in the ipo, melissa, you knew what the longer term outlook looked like in terms of cash flow and the amount of money that was going to be pumped into this business essentially to try to -- to try to validate the business model. this is nothing new. whether or not this thing is successful in the long term, you had to have known as an investor at the ipo that this is what this company was going to look like from a cash flow perspective. if you didn't, same hame on you final thoughts on the markets, next. t. laces? really? slip-on's the way to go. more people do that, security would be like -- there's no charge for the bag. thanks. i know a quiet little place where we can get some work done. there's a three-prong plug. i have club passes. [ male announcer ] get the mileage card with special perks on united, like a free checked bag, united club passes, and priority boarding. thanks. ♪ okay. what's your secret? [ male announcer ] the united mileageplus explorer card. get it and you're in. explorer card.

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thesquawk on squawk on the tweet. australia's commonwealth bank is planning to launch a facebook application that would allow its customers to make payments and other banking transactions via the social network. this morning we ask you what is the worst thing that could happen if you did your banking through facebook? j.r. tweets i'd make a great investment in pork bellies until to discover they are in farmville. dave tweets, my friend could like an overdraft in my checking account. south jax beach tweets i would like all deposits and report spouse withdrawals. lots of clever ones out there. takeaway time. rick santelli?

>> i still can't get over how negative some of these swiss rates have gotten. you're looking at a minus 34 basis points on 2-year. minus 24 basis points on 3-year. slightly negative on 5-year. bund auction record low. bund currently 1.27. i continue to see this huge appetite for quality collateral. and that becomes bunds, bonds, gilts, swiss paper. you could see that. one thing i also see, we learned yesterday when 59% of the 3-year went to primary dealers, primary dealers have a belly full of treasuries. they've gotten dramatically long in the last several quarters. i think we need to pay very close attention to that. >> all right. thank you, rick santelli. gary kaminsky, capital markets editor. >> on a lighter note it was pointed out in e-mail this morning, this is the one-year anniversary of the newly

relaurjed "squawk on the street." i want to say con garagelations to all. thanks so everybody in the control room. it is a great team. the viewers don't get to know them. they are an unbelievable team back there. i want to say thanks to all of them. >> they do all the hard workday in and day out. and they have to deal with us. >> they've got to deal with simon. congrats to all of you. >> on the subject of difficult, we're on day four -- wednesday. and you still haven't shaved your beard off. >> the the e-mails continue to come in. i would say about nine to one in favor of it. >> nine to one. i think those are sarcastic e-mails. >> nine to one. >> what have you got coming up on "fast"? >> david rosenberg, chief economist at gluskin sheff. retail channel check. we've heard a lot from retailers about weakness in china and europe. canter retail is going to give us their read on the channels and what they're seeing. >> i see you were describing the rest of the crew as now children of the corn. >> that's