problems in their economy, they're going to do fine. in fact, we should be careful what we wish for because as that consumer begins to spend money and becomes weltier you'll see a bigger and bigger role in the global economy. they're already influencing housing prices in new york. it's not so bad. >> we love having you here. come back soon. >> thank you very much. >> that does it for us right now. time for "squawk on the stree.". back in glblack. the dow, nasdaq, s&p returning to positive territory for july. on track to keep momentum going this morning thanks to good earnings news good morning. welcome to "squawk on the street." i'm carl quintanilla live at the nyse. melissa lee is off. so far futures shrugging off this bad number on jobless claims worse than expect edit. also a survey week for bls. we'll see what it means for the jobs number in a couple weeks. in europe back to talking about auctions. markets are higher but the

auctions okay in france. not so good in spain today. our road map today asks what are earnings telling us? ibm posts its fourth straight revenue miss blaming europe and lower hardware sales but still boosts the full year profit guidance. can global business be okay even as europe restructures. >> morgan stanley misses expectations. revenue declined in advisory equity trading and fixed income. it does hang on to the number one spot in underwriting ipos. of course the facebook ipo included in this quarter. >> shares of express scripts and walgreens sharply higher after striking a new agreement ending the long-running dispute between the two companies. futures though of course on the rise helped by some tech earnings news. shares of ibm rising in the premarket. the dow component raising its full year earnings outlook despite the fourth consecutive quarter that revenue missed. big blue says it now expects to earn at least 510 a share for 2012 compared with previous guidance of 5 a share. ebay up sharply after posting second quarter earnings of 56

cents a share beating the street by a penny with revenues up 23%. we'll talk exclusively with ebay ceo john done oh in the next hour. what is the takeaway on ibm? >> particularly on ibm it's going to be a little -- a lot of people were betting this was going to be a monster earnings shortfall and they extrapolated the revenues which everyone knew was going to be a little weak. there was a tremendous -- because people are so lost, carl, negative chart. now i would never mention charts but at the top of our show if i didn't say there was a vacuum among traders. they keep trying to figure out why a stock is going down and therefore they just sell it or short it. revenue is not that great. we knew it. earnings, 15 goes to 15.10. enough to keep the ball in the air. >> is that the common theme running through here, companies beating on the bottom line but missing on the top line? >> i think it's a prevalent theme. i think you'll periodically get something like this morning we

have two very much on our radar screen for "squawk on the street." union pacific and vf corp where i saw spectacular revenue growth. saw great revenue growth in wireless. that had been bad. want to call out that today's winner may be the most sub rosa winner i've seen in all time. apple. qualcomm talking about strong demand. skyworks strong demand. it's all about apple and q 4 iphone bill but if you mention apple you lose the business. >> you follow these conference calls closely. >> yes. >> what did we see in terms of commentary about europe? many people watching google tonight after the bell? it's not just currency translations given the weakness of the euro but also the business there. ebay has a lot of business over there but they seem to come through it okay. >> merchandise business in europe was very good for ebay. people expected horrible. honeywell okay. honeywell yesterday, dave says just five years of just flat line yet they said they can make some money. over and over i'm hearing the

following which is that we're not doing that well in europe but it's not enough to bring us down. ppg this morning taking some action getting rid of commodity chemicals going into proprietary. europe was not that great. i want to say coping. our companies are coping with europe. not a single thing good by the way. spanish bond yields up off the charts today. now we're back to 1996 levels. >> bad auction. it doesn't seem to be impacting our market as it might on other days because it is outweighed perhaps by what you're looking at which is technology earnings pretty good. >> ebay the mobile story is hard to overstate here. >> oh, man. >> looking at mobile transactions and ebay and pay pal doing twice what they did in 2011. think about how you shop. they don't care. agnostic as to whether there are sales or an auction company at this point. pay pal probably the largest business pretty soon. >> and growing very quickly. he did turn around the marketplace business. they had a nice revenue number there.

that looked like it was lost and it has come back. >> there was some bad research saying it was going to be a terrible number. that was just a classic shorts all over. one reason why the stock is reacting so well. don't forget this fulfillment business they have. they are amazon's biggest competitor in terms of being able to get stuff to you. ebay, remarkable company because if it was called pay pal would be even higher. interesting piece in the "new york times" today about square, another competitor. visa and mastercard, watch your flank. dealing with pay pal the retailers make more money. home depot was called out on multiple occasions that they liked dealing with pay pal. when you're at that register at home depot and i know you and i like to shop a lot, pay pal is the preferred way they want to -- >> you mentioned some of the credit card companies. amex not moving as much as some others today but slowing spending, right? even though the average customer had higher spending year over year, guggenheim today cuts to a neutral blaming some of the weaker spending trends. takes their price target down to 63.

>> great point. billables not accelerating but decelerating. but you always have to do a call on the credit losses. they're extraordinarily under control. we are a -- here i go. snap on tools tonight. repeat after me. we are a cash rich, confidence poor nation. >> still remember that. >> we listen to unemployment numbers today and say woe is me. then we look at american express credit loss and it's like wow. people have really got their problems under control in terms of personal debt. >> yeah. we've seen that with the other big credit card providers whether it be jp morgan or bank america, the other two largest players out there, capital one obviously very -- it's been a trend throughout. >> right. >> delinquencies continue to come down and the savings rate, there was a savings rate over the last few years. >> remember when that was a big crisis? >> that is no longer the crisis. now it's about personal income more than we get that in the right direction. >> delinquency was one five a year ago. one two. >> incredible. >> now granted they have a unique customer base. >> right.

>> but that's a good trend. >> they got their head slammed during the credit crunch and had very bad delinquencies. we started thinking maybe american express didn't know how to give their card to. their small business plan wasn't so good. by the way, capital one got a comment on this. gets slapped on the wrist by a consumer protection. wondering if that isn't one of the cost of doing businesses. when i used to speak with elizabeth warren, candidate, we always talked about capital one and whether that is just the way they're going to do business. >> it's good business. $150 million fine here or there. >> one of lee cooperman's best ideas yesterday. >> along with qualcomm which was just a blowout. it's so funny people do the wrong thing all the time. the headline comes out. qualcomm cuts forecast. qualcomm earnings business. qualcomm is all about the fact that they can't meet the demand. then the stock reverses. for a moment i heard someone say to me oh, that cooperman is washed up. >> cooperman washington d.c. up? cooperman? how about his performance?

how about the homework he does? he doesn't come up and say this is a ten bagger or this one is early -- or this one -- >> oh, was there someone else? >> bill ackerman yesterday did say that he believes that j.c. penney -- maybe 15 to 20 fold increase over time. >> how about 35 fold increase in keeping with the fact that they're a 31% turn. j.c. penney the gift that keeps on giving to target, walmart. many say the bank of america. the more i look at bb & t's number, bank of america the gift that's giving to regional banks. u.s. bancorp downgraded on valuation today. people are taking share for bank of america. i believe that seems to be the focus. people taking share from j.c. penney. so hey. you don't want someone -- one of the whales, sorry jp morgan to use that term. that is certainly in the past. when a whale is being swallowed by sharks it's tasty.

>> yeah. j.c. penney yesterday during delivering alpha said they can make 15 to 20 times as much in five, six, or seven times. 15 times your money. wow. also owns a lot of p & g that being 18% to 20% of his overall assets under management. >> i think mr. mcdonald the ceo, you know, he's not -- proctor has things they can do. he can do. >> yeah. >> ward says they're going to let him do it. >> stumbled on that very statement. >> i see procter & gamble. worst quarter j & j. stock on fire. why? because gorowsky and you know he is my new found hero. >> yes i am aware of that. >> you go through that conference call and you hear divestiture. that was my takeaway. divisions that don't hold up? boom. they're going. j & j is not done. >> all right. let's move on to morgan stanley this morning because those shares there are moving in a different direction than many of the others we were just speaking about. the investment bank says it earned 29 cents a share in the second quarter. that was below wall street

estimates. they had been about 23 cents a share. revenues were down in the quarter compared with one year ago. it does appear that, well, it was a little bit higher expenses but across the board, guys, it was more or less just not performance that was anticipated. we know it wasn't a great quarter but it seems to have been a perhaps worse than expected quarter when it comes to fixed income, currency, commodities. when it comes to debt, in particular. underwriting, core equities underwriting and really sales and trading is where they seem to just fall down on the job so to speak. >> the moody's downgrade which we all talked about, everyone knew. that does hurt. >> it did hurt. it was, again, i've underlined certain things here. like i want to take things out of my pocket but i have to go through my -- what do you have in there by the way? >> a really good piece. because they don't have it -- the 9:15 conference call i don't want to emphasize it until later. >> right. 6.3 billion with the total

additional collateral requirement of which 2.9 billion was called and post owned june 30th, 2012. their tax rate by the way was 24%. it wasn't a good quarter. just no way around it. they suffered from the same things we saw others. goldman did not have a great quarter in fixed income correspondency and commodities but this was a larger falloff than had been anticipated by many who followed the company and it is suffering, you see the stock, morgan stanley stock down 3% or 4% this morning though it always seems 3 or 4%. the conference call is beginning right now or just began. inour own mary thompson is also following this story for us. >> okay. by the way, you asked me about europe. they still have european exposure. they go through the european exposure at morgan stanley. nobody is making money in europe. johnson controls, i should mention when people talk about europe they've got european exposu exposure. stanley, black & decker, european exposure. those two companies were hurt. stanley turned out to be a short squeeze. johnson controls no short squeeze whatsoever. >> has the gulf between them

gotten stronger today? >> a good question. my producer danielle has been putting together these comparison charts between advisory revenues and underwriting because they do compete still. this is the investment bank which by the way for both of them doesn't really matter that much anymore. even morgan stanley. i'm not saying it's not important but you're talking about what, $884 million at the investment bank revenues versus 2.3 -- do we have those slides? there it is. carl, that's the advisory revenues over time. >> oh. >> and the green is obviously goldman. there is morgan. we can move on as well to equity underwriting and debt underwriting and give you a sense there as to what we're talking about. there is equity underwriting. morgan has the lead there. >> is that all facebook in that last bar? >> could be. there is debt underwriting revenues quarter to quarter. again you see that goldman did pull out in front. i think that's all we got. >> announcer: between these two. >> and over all investment banking. >> between morgan stanley and goldman. >> right. i just do those two because at the end of the day they do still

compete a great deal. they compete for talent and compete with each other in a lot of different ways. it's so much of this business it still says in trading is not about investment banking. sales and trading is the most important part. goldman is starting to change its business model and really is in a way, away from it to a certain extent. you got to hold a lot more capital against these businesses particularly fixed income made it a far less profitable business than it was. >> wells fargo. >> love that wells fargo. >> what's not to love? >> okay. >> jp morgan, i was tough on them but the losing season is over. it's a new season. you know how the all-star break the second half can make a big difference? jp morgan is definitely the standout versus these and wells fargo is just a money machine. >> one final thought on morgan stanley which is we always like to come back to this. its book value was $31 a share. >> $31. >> book value. >> yeah. i'm not sure we should even bother with it any longer. it just stopped. but i mean there -- at the

height -- cowan and company was sold for four times book. >> i know. >> i know it's a tiny little firm but gary will tell me what a trade, man. >> after speaking with -- >> traded for three times book. >> interesting where people are. yesterday u.s. attorney southern district of new york i'm wondering if we shouldn't develop some sort of ratio instead of the pe ratio. investigations to equities. because, you know, like hsbc. they're like off the charts investigations. >> they got a great investigations ratio. >> they do. we also want to measure subpoenas like, you know, the subpoena to trading ratio is just amazing with some of these guys. new way to look at it. >> someone has done it. >> i'll work on that. we'll try and get an index together for you if we can. >> the wire tap ratio is too unknown. >> you don't know. >> just fabulous. >> were you wearing a wire yesterday? >> i was wired. you know what? i was so glad that i was interviewing and i wasn't being interviewed. there was a moment where i'm saying, look. these big guys come in and, you

know, i find it unbelievable that gupta was in front of you and i found it unbelievable that raj rajaratnam -- these are big guys. he said you sound like the defense attorneys. >> you closed that shot before -- >> i got to tell you one of the things that is very clear is that he is more sophisticated the -- there was a really interesting twitter. twitter pretwitter was a word which is kind of like -- >> oh, yes. >> you don't really want to laugh. the audience was so -- wanted to laugh because obviously there is just, he has a great sense of humor but at the same time the humor was basically, guys, i got enough subpoenas for every one of you in this room and he comes armed with subpoenas and he, it's a grenade. he likes to use the term grenade. he can lob a grenade if he just mentions your name. he did point out one of my favorite lines, i was asking about the difference between when you go in and bust mafia guys and mexican drug cartel

guys versus -- he said the mafia guys and mexican cartel guys tend not to faint when the door is knocked. >> speaking of which if anyone missed the interview with jim cramer, take a listen. >> i know that you told me there are going to be a lot of people here from the hedge fund industry and other folks. i didn't quite appreciate how many people and so i just wanted to apologize in advance that i don't have enough subpoenas for all of you. >> that's it. that's the sense of humor. >> dark sense of humor. >> then of course he said he actually did -- i don't want to lose sight of the fact there is so much news this morning about the walgreens deal. ppg. >> we'll talk more about it. walgreens up sharply. finally settled with express scripts. we'll give you more in a moment. >> they're delivering alpha. >> yes. >> absolutely. as we did yesterday. meantime, coming up a "squawk on the street" ceo triple header on earnings. the consumer and the economy. live interviews with the ceos of

ebay, railroad giant union pacific, and vf corp the home of lee -- >> everybody you need to hear from. >> everyone. one more look at futures. trading higher after claims disappointed. a lot more "squawk on the street" live from post 9 in a moment.

big news today. walgreens and express scripts struck a pharmacy network agreement. walgreens will now be part of the largest network available

through express scripts effective september 15th. walgreens shares jumping 15%. express scripts over 5% on this news. is this putting some lid on this long running story? >> my hat is off to greg watson. he's been doing a series of deals and has been expanding his operation but everyone i know said, you know what? i don't want to touch this thing because of this spat between these two. he listened. he took the tough action. i know they were saying we're not giving away the store. greg watson, ceo of walgreen nice job. >> we don't know the terms and may never know but the expectation at least among a couple people i was able to call this morning was walgreens caved but we don't know and we won't know necessarily. now the other point that you have to keep in mind is if you were an express scripts customer and you couldn't use walgreens anymore and you went to cvs are you really going to be that quick to move back to walgreens? this is not something that is going to come back overnight. right? >> right.

>> your script is there now. you get your lipitor or whatever, statin thing, at cvs maybe keep it there. we'll see the month to month. >> my travel trust owns cvs, put out a note saying customers walked across the street. it is six months. you're not necessarily going to walk back. i do want to point out that both these operators are pretty good. are they home depot and lowe's? lowe's not as good as home depot but a lot of retailers out there carl are just shocking people being so good. i want to point out that everyone is so quick to downgrade them. yesterday tiffany upgraded by goldman. i like the retail group. i like it. and i think the stocks aren't expensive and that is the group that's hanging in the balance right now. now that copper has been tipped to the upside. i look for retail as a surprise to the positive for back to school. >> and when it comes to walgreens of course shareholders are still trying to digest the decision to spend $6.7 billion for 45% stake in alliance foods

the rest to be purchased in a number of years. it was a stock and cash bill. 4 billion in cash. 2.7 billion in stocks so that helps a little bit with stock up. but that is something else they're all sort of still not that happy about when it comes to walgreens. you saw cvs shares are down. but medco is coming up too with them and the fact is, i mean they're one company now, express and medco. this is a big deal for walgreens. >> 15 ceos reacting to the pressure. chuck didn't need to react at all but is the ceo of ppg. this commodity business is keeping my prices local. i like the fact that ceos are taking their hand, the hand they've been dealt, and augmenting something dave cody said on honeywell which is you can use, alibi europe or take action and bring out shareholder value. >> interesting. yes. decisive moves on both fronts in the past few days. >> yes. >> when we come back we'll get cramer's mad dash ahead of the opening bell and find out what he thinks about stom of the stocks that might move today. one more look at futures.

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transform your investing with the e-trade 360 investing dashboard. four minutes and change till the opening bell. let's get cramer's mad dash ahead of the market open. good news. probably not as good as melanox is going to move. >> a big data company based in israel. they have the right chips that go with romly the intel chip. here you're talking about a 40% move. i like ways to win. you got mellanox and five below

in ipo. it's not arctic camp here but a place that is five times what a dollar store is and i love to shop there. >> talk about, this is a big day to play. what is the story? >> they have -- if you want to do cloud you need their chip technology. if you want to do big data, their chip technology. if you go to one of these big data farms you can see a lot of mellanox tech. if intel wanted to be in this business they could. they chose not to. their romly chip which was on fire yesterday is complementary to mellanox. when a stock is up 40% it says the analysts have no idea what they're doing. this was one of the strongest five companies in the first half of the year and will be in the second half. >> five below, fender, is any kind of increased ipo activity, repairing the facebook damage? >> well, fred thompson the other day said there really wasn't that much damage. i personally think that five below is the beginning of another wave of kind of exciting

but actually sustainable ipos because five below has a business model that's going regional and national. the old zany brainy guys out of philly. i like them. it's not just because they're out of philly. >> i like the arctic below camping gear. it's a good one. the opening bell a few moments away. get ready for more "squawk on the street" and another big day of trading.

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trade commission-free for 60 days, and we'll throw in up to $600 when you open an account. as the opening bell on this thursday morning after a nice couple days of gains. although the market has not done well the last couple times that number has been posted. it's about a half hour away. here at the big board, the developer of a treatment for cancer sell braigt its latest listing on the nyse market. at the nasdaq five below, a teen retailer that offers items for $5 and below. get it? celebrating its ipo today. and there is still more to come. >> we are in a moment where i think they're trying to make

good. they've got some deals that could be very interesting right now and i always look at the data because i try to come up with a positive thesis. morgan stanley trading down very badly. but on the idea that maybe there is some ipo and m & a whether georgia gulf, ppg, walgreen. there is m & a. there are some ipos. you're just still going to -- >> yeah. it's -- there is a beat. there is a beat. but you've got to really pound. >> oh, you mean like paddles, clear? >> we're almost there. yeah. maybe a little cpr. then they come around and then there is something going on. >> they're not just getting up off the ground or running a marathon. >> so gsms icu? >> meanwhile we have not talked to young yet, a slight miss. talk about china. food costs rising. wage inflation. same store sales up ten. used to be up nearly 20. >> it's true.

i think yum -- this is a china play. you hate to see gross margins ever go down. novak, to bet against him is a mistake. but at the same time i always want to see china being up, up, up. honeywell was the first company that told me that this quarter was not so bad for china. maybe a little bit of an increase. we need to hear more than that, carl. when they're eating less fried chicken, when general chao tso kind is beat iing colonel sande it's like the old regime just to keep in mind. colonel sanders trumping general tso over there for a while. >> by the way, vf corp, what do they do as a call out? international. europe. i mean, anyone who's been conversant with them, the madison avenue of berlin. >> right. >> you get in a line to go to their north base. just pointing out something positive there. >> europe was up 16 after up 13

in q1. >> an acceleration. >> asia up 20 after 19 in q1. >> and not helped by the weather. just strong sales. by the way, margins good. eric weisman one of my heroes during this period. i have to tell you when i hear someone say europe is a reason why things are good, i begin to try to figure out what the heck, germany is so strong. >> any number of people we had yesterday delivering alpha from all sorts of areas, whether a ruben or a paulson, or hedge fund managers and credit. everybody talked about europe. i'd say largely fell on the side of they'll figure it out, keep going. although ruben and i don't know if steve liesman will have this later did pause quite a bit on that question and did seem very concerned. more so than perhaps even paulson. ruben kind of came back. >> oh, yeah. then his comments on fiscal cliff were chilling almost. >> yeah. you heard that time and again. more so than you might have anticipated that if we can just

figure things out politically and really deal with this and remove this cloud, i won't say that other word that we hear so often that starts with un because i'm so sick of it that we will see real progress not just in our markets but in our economy. >> which treasury secretary or ex-treasury secretary made you feel more glum? that was a good takeaway. >> so interesting i thought. >> i know. >> and willing to speak their minds. >> yeah. >> which is you're not accustomed to because usually when you interview them they're in office. >> delivering hemlock. >> i should point out j.c. penney shares were up rather sharply still 3.5%. they started up 4% to 5%. >> a ten bagger. >> i don't know if we have the comments from yesterday or not. >> a hard time because of his 29% turn-around metric. >> mr. johnson. >> mr. johnson. i, look, i like apple. i know a lot of people are saying, wait a second. that was mickey drexler behind the apple stores.

i like ackerman's bullishness in the sense he has conviction. i think proctor can work. proctor is an under valued company. >> then europe, the company that has virtually no exposure to europe which is verizon which i have not seen yet today. have you? >> yeah. take a look at it. it looks fine. we'll go over a little more detail in a minute. >> you know, nothing -- yeah. nothing great. listen, the key thing for verizon i'll share now is this company was trading at 16 times earnings when there was only 50% penetration in the wireless market in the united states. now we're at a hundred percent. and it trades at 17 times earnings. why? you know why. because it's domestic and it has a great yield. >> exactly right. by the way, sprint which is now my favorite for those who don't want income continues to creep up. i think one reason, verizon wireless, the margins went higher. remember everyone was so worried. well i sell a lot of i-phones

and don't make a lot of money. verizon wireless a star. that means buy some sprint. >> surprise of the morning nokia. 4 million sold in the quarter. a little more cash on hand than people thought. even though wider than expected loss. >> up 12%. again, maybe there is a pole snokia. >> by the way, nearly is more of an nearly in terms of the spelling issue. some sort of sodoku thing. i feel very strongly that the over all arching theme of tech, of industrial, is auto is good. aerospace is good. and cell phones are good. listen to sky works. what a call. talking about multiple year smart phones. maybe it's time to get a smart phone. >> i'm working on that.

cutting edge. >> did you hear, speaking of stock advice he said research in motion should have spent more time worried about the iphone as much as hedge funds should be worried about trying not to go to the line. >> the line. >> the franchise risk from the u.s. attorney calling you is even worse than the franchise risk for owning nokia and research in motion. >> bob pisani is on the floor watching what's moving. >> good morning. i'll stick my neck out and talk about what i think are the two major earnings trends we're seeing. it is a little early. there are only a hundred companies in the s&p 500 that reported so far. we're dealing with 20% of the base. two things really jump out at me right now. first is what i'm calling the great shrinking revenue game. where are the revenues? look at the numbers. again, only 1/5 of the companies have been reporting here. 66% of those reported have beat on earnings. that's better than the historical norm. it's about 62%. so far so good. wait a minute. only 42% are beating on revenues and look at how they're beating.

those who are beating -- the companies on average, the average company is beating by 6.4% on the bottom line on earnings. all right. but they're missing revenues. the average company report is missing revenues by 1 poun 6%. that's a serious disconnect. if you want a good example look at ibms numbers. earnings on ibm year over year up 13%. what's the top line? barely 1% when you adjust for the currency. that's a very good example here. that is the number one trenld. there is another trend that i'm seeing. it's a little bit of a small one. stocks that disappoint provide mediocre guidance but still trade up. look at qualcomm. that's a good example. they provide a downbeat revenue guidance. they miss. all right. they're talking up the fourth quarter. everybody is talking up the fourth quarter because the country's salvation depends on the fourth quarter at least as far as earnings go. stanley black & decker did the same thing. ericsson basically did the same thing. emc did the same thing. i think the expectations have been very, very low for this

quarter. they're actually going to be flat to negative overall. as long as you don't have the worst case scenario, i think some of these stocks trade up as a result of that. the other thing that was interesting is and i think you mentioned this, jim, about young as a china play and a company that's always represented a china play, what is interesting here is that 50% of the revenues come from china here and it's not like their sales are declining. the sales in china actually went up 10%. but number one sales a year ago were up 20%. so we're seeing a deceleration in sales growth. number two apparently inflation was a major problem here. not just on food but actually on the labor costs for them. this china labor cost story has been a major problem for a long time. that issue has been floating around here. i just got back from botswana. i'm working on a diamond story for cnbc. everywhere i went in botswana, there was one company that stuck out. kentucky friday chicken was everywhere. it was the only company that was a fast food franchise that was

internationally recognizable in botswana. i don't know what they're doing but they seem to control a good part of central africa. back to you, jim. >> bob, that's interesting. i know it's debeers and kentucky fried chicken the tale of two cities there. low priced chicken. >> spent a lot of time at both. >> botswana. fascinating place. i am hearing unbelievable things about that special already perculating within the building. let's head to the bond pits. rick santelli in chicago. >> boy, lots and lots to talk about. we'll go pretty fast here. if you look at a june 1st start to ten year you can see that lately we've just hunkered down but near record low territory. yields up just a bit on the ten year as it pops its head above 1.5%. if you look at the year to date with spanish tenure yes it's over 7%. yes their auctions didn't go great and yes the germans are going to have votes regarding exactly how spain's obligations for money are going to be handled with regard to whether they stand up for those or not. that will be interesting.

look at corn charts. my goodness. we're up about 8 cents in december corn right now in the 790s. it was close to $8. september traded over $8. rain in the midwest just didn't cover enough areas. let's look at some major stories. european money funds are being restricted. obviously. there is money showing up everywhere. we talked about negative rates. some of the big names like goldman and what not are restricting it for obvious reasons. another big story. on the financial times website and reuters picked up the chinese are going to be buying some of gms under funded pension positions. and many illiquid private equity funds. the amount 1.5 to 2 billion. the story was not -- ft tried to get one of the investment advisers on the deal to confirm it. they said it is a discreet transaction. china under funded, gm. this could be a big story to pay attention to. back to you guys. >> man, that's terrific. i got to tell you china's

tentacles are everywhere. still remains the sub story of everything. look, geo political tension. let's go to sharon epperson at the nymex. >> geo political concerns, currency moves, and it is weather impacting commodities across the board here this morning, jim. we are looking at higher prices for oil. the traders here in the auction pit fired up because we are looking at the war premium certainly, the political premium driving up oil prices. we have the killing in syria of the defense minister, the brother-in-law of a key official as well. and also this week we have a tax on israeli tourists in bulgaria and of course there are those that are assuming there may be some iranian component involved in this. we do not know that for sure but again tensions rising in the middle east. that is what is driving in large part the rise and it includes oil prices up about 8% or so in the past week's time. we're continuing to watch the technical levels in the crude oil market and also looking at what's happening in terms of the dollar because the moves in the

dollar to a two-week low earlier this morning definitely helping the commodity complex including the metals. we'll continue to watch that and keep your eye on natural gas. we'll have the number at 10:30 eastern time. back to you. >> all right. thanks very much, sharon epperson. want to get to the faber report if we can. revisit one of the bigger stories of the morning that being that resolution of a long running dispute over seven months between walgreens and express scripts. of course express scripts remember also now medco. they bought that company, concluded that deal not long ago. the largest fund and benefits manager out there. walgreens shares up 11% on news that yes if you're an express scripts or medco customer you are now going to be able to go back to your walgreens locally and get your prescriptions filled. this has hurt walgreens significantly. take a look. we have it for you at the com sales for walgreens pharmacy and you'll see what we are talking about. look at that. >> wow. >> yeah. that's just traffic in the store. and of course pharmacies at the back of the store.

got to buy all the stuff on the way. >> they had to do it. >> of course the question, what i'm hearing, they're not going to tell us the terms, jim, but what i'm hearing is that express at least to the extent it is discussing it at all with some of its shareholders is saying, we got the better of them. that we, you know, got what we wanted and it may be that they got the terms they originally offered. i don't know specifically at this point but one would imagine given how much walgreens suffered and the fact that express didn't and has only gotten a lot larger since with the acquisition of medco that its negotiating position has if anything only increased in terms of leverage. >> how powerful is express scripts that walgreens so big had to bow down? >> and listen, it's helping walgreens. no doubt about it. it's hurting cvs. but those who think somehow that walgreens is getting a good deal here and may be disappointed if and when we sort of learn more about what the deal itself was. by the way, talking about deals, of course, walgreens shareholders still upset about the alliance boots deal to a certain extent. it did have a stock component

earlier. you know, i wanted to look at the press release and finally got to it. it was a fixed ratio. they're not going to benefit from the increase in the stock price right now because they agreed to a fixed ratio in that deal which was one of the larger deals we've seen this year. just wanted to mention that one. real quickly on j.c. penney, shares of which are up, i did want to share an exchange yesterday with one of its largest shareholders and of course board member bill ackman who is responsible really for putting in new management at the company. this position has cost his fund 9% since february. here's what he had to say. >> what the company has not done a great job at is really the pr, messaging, setting appropriate investment expectations. >> really? 43-19 is a pr problem? >> absolutely. here are the facts. we bought the stock originally at 25. we anounlsed ron at 30. ron gave a presentation on the future of j.c. penney. it went to 43. he reported a quarter and it went to 20.

>> already. well, there it is. $20.70 up 5%. >> i don't know what to say. i don't know. >> he's rendered you speechless? >> just, i don't think that strategy is working all that well. who am i to say? i only shop there or used to shop tlnchts he points out comparisons will get better you start lapg the first quarter and real estate is still extraordinarily cheap. they are generating a billion dollars in cash flow, can meet their cap x needs and this thing will start to show a lot of positive leverage. >> even as he was speaking ron johnson was talking about changing the way they advertised, doing away with some of the sleek ads, giving a bear hug to middle america as he put it. so it's going to involve a shift in strategy, too. >> that goldman sachs ad campaign, they used that box up there. >> yeah. deutsche bank. >> look, i think it's up. this is why target has been sensational. it's why five below has been

interesting. j.c. penney the gift that keeps on giving. i hope they get it together again. bill's had some hits. i do think proctor very -- either way you could win a lot of ways. let's see what happens. i'm not willing to -- i'm suspending judgment of j.c. penney at 20. maybe there is something there. >> okay. >> all right. speaking of five below we'll keep our eyes open and see how it opens late other than this morning over at the nasdaq. take a brief look at what's happening over at the nasdaq. where five below for the moment is unchanged. when we come back ebay one of today's big earnings winners. we'll have an exclusive interview with the ceo john donahoe in the next hour. as we go to break some of the early movers.

tech is going to drive the early action with ibm more than 4% despite the top line miss. ebay up almost 9%. stock was at a five-year high back in june. qualcomm as well up almost 4%. would you argue that tech is the

most exciting trend right now? >> i think that semiconductors, very exciting. sky works solutions up about 10%. fox conis their number one customer, code for apple. they're talking about tremendous opportunities looking ahead we see our target continues to expand many years to come. the smart firm revolution. carl, big data. we know that from emc vm ware. cloud. we hear that over and over again. got to have cloud. that's what i hope meyer does for yahoo. and cell phones, more powerful cell phones. what is sky works saying? it's people watching homeland and people watching mad men on their cell phone. i'm not kidding. and all nominated for -- >> congratulations to mad men. 17 nominations. we're talking like "la law" numbers here. >> and breaking bad. i've often been confused with

jessie not mr. white. >> i've got to watch that show. i've never seen it. >> will you focus? >> i know. >> you don't shop. you don't watch. >> i do. i've gotten behind. >> all right. >> watch phineas. >> i love that show. >> please don't watch with your kids. i tried it. dumbest thing i've ever done. >> holy cow. >> any kids even 30 years old don't watch it with them. >> that is pornography. you know, if i want pornography i know it when i see it. >> exactly. just like justice brennan. >> i think it was potter stewart. >> dow is up almost 39 points. a lot more "squawk on the street" still ahead. +g#a#a#a#a#a'9#a+=#a#a#a#a#a#a+a

good morning. within technology we have a new master migrating to mobile. it is the ceo of ebay john donahoe who will join us in the next hour of the program

exclusively on cnbc. union pacific has had its best quarter ever despite a 17% decline in coal volumes. its ceo will also join us live. carl, we have to talk more about morgan stanley. where next? back to you. >> see you in a few moments. meantime six in 60. six stocks in 60 seconds. freeport numbers not so good. >> the copper breaking out here. it's true. the cash flow is great. don't write off freeport. >> auto nation -- >> automotive remains strong in this country. 14 to 14.4 million build. good for jobs. >> potash downgraded to market perform. >> everyone wants to ride out these fertilizers. does anyone notice corn? it ain't done. you need lot of the fertilizer. >> qwest diagnostics. >> interesting. blaming a weaker economy on not taking blood tests? >> unh better than expected numbers. >> ratio really good. i like that group. >> u.s. bancorp with some time here now downgraded. >> this thing is unstoppable. what can i say? these guys know how to bank.

they are the wells fargo for midwest. i want them here in the east. they really do a good job. >> all right. with that, more on those. sot.cnbc.com. tonight snap on? >> snap on. i've been taking credit for this line about cash rich confidence poor. i may have to admit the snap on ceo is the guy who gave it to me. listen, you know, it's literally just one of these cases where i am going to give it back to him. part of the semiconductor group people don't like. i think moshe can deliver and i don't want to write that group off either. >> see you tonight jim. >> thank you. >> housing and philly fed numbers after the break. tween lt numbers... ...and listening to your instincthe duff & phelps finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services.

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o0 between black and white answers... ...and 1,000 shades of grey duff & phelps finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services. welcome back to "squawk on the street." we have june leading indicators down more than expected. down 0.3. last month a slight positive revision from up 0.3 to up 0.4. the big number july philly fed. coming off minus 16.6 the worst since august 11. it improved but not enough. down 12.9. down 12.9. of course this would be the

lowest raefd the year if you took out last month's which we haven't. back to back negatives on philly fed. now david faber. your turn. >> all right. thank you very much. well as you just heard that double dose of economic data out. now to steve liesman, our senior economics reporter. see what his instant analysis is. >> i think it's actually a little worse from an expectation standpoint than maybe rick pointed out because i saw a lot of guys on the street. the guys that i followed were like minus four, minus five. it came in at minus 12.9. almost all the components were negative. except for the prices component. prices paid was positive. prices received was positive as well. but the number of employees is negative. the average employee work week was negative. so this is not a good number and it doesn't bode well for the next ism report which is the way everybody cares about this number.

one of the things bothering the economy according to many experts has been europe and the knock on effect. yesterday we talked to two former treasury secretaries hank paulson and robert ruben about the effect of europe on the u.s. eeky and how they can work their way out of their problems. >> the immediate issue are the three crises they're facing right now. the fiscal crisis, growth crisis, and banking crisis. the problem is the longer they wait the deeper the hole gets the harder it is to get confidence. the harder it is to deal with substance problems. it comes down to the political difficulties and will. i personally think the political leaders of europe have been behind the curve from minute one until the present day. >> your thoughts on europe and whether or not it could have and should have learned the lesson that we learned early on in our financial crisis. >> i think europe is totally different than ours. you have 17 different political systems. they've got this unsustainable monetary union. they've got fiscal problems for a number of the countries that are unsustainable.

they're totally wedded to preserving the monetary union. there is going to be financial stress in europe because you're seeing this huge collision between politics and the markets. politicians have done much more than a lot of us expected they could do as quickly as they've done but it is not enough for the markets. you've got to stabilize the banks. you can't have a big systemic bank failure and you can't have a messy sovereign bankruptcy or exit from the monetary union. >> i think they probably will find a sustainable state while they work at the long-term problems but the longer they muddle through i think the lower their odds become because i think it becomes far more difficult. >> and they went on to say that they think it will stay together but that the politicians have to make some real choices in the coming months. >> steve, i was in the audience and i was struck, though,

because everybody -- paulson was quicker to that answer. i think it'll stay together. ruben really took his time. and he seemed much more hesitant about really committing to the idea that it would stay together. don't you agree? >> i agree, david. i think that is a good observation especially if you think about even just the cadence. you know, i asked ruben point blank on that score and he was a little bit cagey about it. i think if you listen to what he said earlier that's the reason. he thinks they have very serious and hard work to do. he said something else that we didn't play there, david. he said that european leaders have made the exact right decision for the problem they had six months ago. and that's been a big part of the problem. are you guys going to talk about the housing numbers coming up? i just want to be clear. >> yaecheah. let's go to diana olick for more on that. >> this is another big negative simon. home sales down 5.4% month to month to 4.73 million units. this is a big disappointment. the street expected an uptick. this is something we have been

predicting. why? because this market has been running on distress supplies of short sales and foreclosures. that supply is running out. out west sales down 6.9% month to month but in the zero to $is 00,000 range out west sales down 36% from a year ago. that's your foreclosures and short sales coming off this market and that is reflected in the median home price. realtors saying it's up 7.9% from a year ago. to $189,400. no home prices are not up 7.9%. for the third month in a row they are telling us this is a change in the mix of homes that are selling. the bottom part of the market is dropping out and more homes are selling in the upper tier but just not enough. that is why we see the 5.4% drop. >> a little economics here, if there is a lack of supply of something then the price should go up. so i'm just wondering if it's all -- >> not in this situation. >> why wouldn't the price of something for which there is less demand or there is less

supply than demand requires, why wouldn't it go up? >> reporter: because what you're talking about here is investors buying in bulk and getting deals on these low end prices. when they don't have something to buy we've been told investors are sitting and waiting to jump on the one foreclosure. are those prices coming up on the very low end a little bit? sure they are. but not overall because we're looking at the difference in what homes are selling for and you can see it also in investors. >> that would also seem to bring in more supply to the market wouldn't it if prices are a little higher? wouldn't that seem to bring more supply to the market? >> reporter: you would think that the banks would be putting out more supply of these reos, these distressed properties. i asked the realtors that this morning. they had no answer as to why but did say there is one issue going on with titles. that is a big drop. a cancellation in contract. 15% on foreclosures. this is something they hadn't seen before. they thought that when a foreclosure deal is done it's not like a short sale. it happens much easier. now it's not happening because

of title issues. the losses being filed. >> i don't know if it's a macro negative or macro positive in the following sense. probably the single bright spot in the economy these days and i don't know if this is telling me housing is worse than we thought it was or better than we thought it was because of the lack of supply? >> i don't think you can make it that simple, steve. >> okay. >> i think you have to say what's happening is you've seen one part of the market drop out foreclosures and short sales. we need more supply because investors have been driving this market. they've dropped from a third of the market to 25% of the market. we need to get the first-time home buyers in. they're at 32% now and should be 40 to 45%. when we talk about an overall recovery in this housing market it's what we've been saying. we need the organic buyers back. >> diana and steve thanks to you both. funny. judging from the panelists yesterday i had delivering alpha on real estate john gray who runs real estate at blackstone, barry stern of starwood are moving aggressively into buying individual housing units.

blackstone has bought some 2,000 at this point the idea being creating a portfolio and making money potentially by renting them out. we'll see whether that has any impact overall. let's get to morgan stanley now. for a second quarter, numbers were not good and the stock is down rather sharply. even for morgan stanley. jeff harte principal equity research, a buy rating on the stock. $22 price target over 12 months. they seem to have missed particularly in sales and trading, fixed income, currency, commodities. any sense after listening to the calls of what happened? >> very tough quart other than trading. down 70%. i think we were probably one of the more conservative on the street and that was a lot lower than we were looking for. the moody's downgrade has had an impact and they talked a little bit about that on the call. i think the good news is they say it's getting better not that the actual downgrade happened but a few weeks of indecision before the downgrade weighed on activity levels. but, you know, ultimately if

that was way down now how confident can we be it's not weighing on them going forward? it was good to hear that. that was a partial answer. even including that it seemed like a pretty tough trading corner. the other thing they talked about on the call was a bit of a strategic shift. and moving away from the higher risk weighted trading businesses. that's kind of a shift from trying to gain trading especially fixed income trading revenue market share over the last couple years. they're saying the right things about focusing on return and getting out of the higher risk, higher risk weighted businesses but the trouble i have there, i want to do more work on it, but typically your higher risk taking businesses are the more profitable business and the more client demanded business. sometimes those can be the harder ones to walk away from as you're actually trying to expand revenue share. >> you know, there was an interesting comment from the cfo on the call. she said bankers spend time answering client questions about the downgrade rather than on new

business. did you find that surprising and perhaps disturbing? >> no, no. not really. i think anyone that would be looking at kind of entering some kind of transaction with morgan stanley was probably worried about that. and a lot of times on investment banking deals the bank winds up providing some financing or underwriting. i mean, you want a stable counterparty on the other end. there's a lot of indecision there. i'm not surprised employees across morgan stanley had to spend a lot of time talking to clients and kind of holding their hands through it and, you know, it's something they had to do but certainly not a good revenue generating activity. so yeah. employees being busy doing that as opposed to trying to generate more revenues probably hurt the quarter as well. >> exactly. why is the fixed income revenue down so substantially, down 17% far worse than it appears? >> you know, part of it is moody's. i mean, they specifically say, you know, $225 million revenue impact. the things harder to assess

though is especially in june when they were looking at being downgraded to lower levels than their peers to what extent were counterparties just not willing to enter into a new transaction with them and kind of wait to see how it played out? so i think moody's definitely had a part in that but i think it is also interesting their value at risk was up sequentially in the quarter which suggests they were more willing to kind of use their balance sheet in an environment where pretty much all risk assets are selling off. that's typically a bad time to be committing capital. >> yeah. they may have had bad days there in terms of trading. you know, listen. this thing has a back value of 31 bucks a share. a market cap of only $26 billion. and a different environment of course one could imagine morgan stanley disappearing into the arms of a larger financial institution. i guess those days are over though isn't it? they'll just have to figure it out. >> well, for now those days are over. i mean, historically once a cycle turns the wrong way there is no bias.

and then all of a sudden when things get good again nobody can get investment banking trading fast enough. i wouldn't be so sure if we get into a better market kind of demand for a franchise like this wouldn't increase. in the meantime it is a matter of they've done the conversion for smith barney's. we should start to see some of the cost efficiencies show up there. we need to see those show up there. they've got to kind of keep plugging along. the end the day certainly on the investment banking side morgan stanley is still one of the top franchises out there. i think if the environment gets better they're going to do better and so we can get any kind of environmental tail winds it's going to be a great thing to own a stock here. the trouble is as we've seen the last couple years it's tough to say exactly when that is going to happen. i think investors are getting a little tired of trying to play that macro game. >> yeah. indeed they seem to be. jeff hart, sandler o'neill thanks for joining us. >> a live shot for five below as we await the stock to begin

trading priced at the high end of the range which was $17. 15 to 17 was the range which is already raised from the previous range of 12 to 14. teen retailer offers merchandise priced at $5 or less. when it starts to trade we'll bring that to you. in the meantime heading to break take a look at several key pieces of loik memorabilia and what they ended up going for on ebay. first up the london 2012 olympic torch and uniform sold for $76,875 bucks. next the 1988 olympic games sole gold winner's medal $12,999. athens, 2004, a paralympic gold medal $7s 995. 1948 london olympic relay torch retailed at $7,784. finally the centennial torch in athens $3,495. we're telling you this because we're sitting down with ebay's president and ceo john donahoe in an interview talking about

the good earnings of last night and how the company as jim said earlier might be called pay pal. i'm freaking out man. why? i thought jill was your soul mate. no, no it's her dad. the general's your soul mate? dude what? no, no, no. he's, he's on my back about providing for his little girl. hey don't worry. e-trade's got a killer investing dashboard. everything is on one page, your investments, quotes, research... it's like the buffet last night. whatever helps you understand man. i'm watching you. oh yeah? well i'm watching you, watching him. [ male announcer ] try the e-trade 360 investing dashboard. well i'm watching you, watching him. you want to save money on car insurance? no problem. you want to save money on rv insurance? no problem. you want to save money on motorcycle insurance? no problem. you want to find a place to park all these things? fuggedaboud it. this is new york. hey little guy, wake up!

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stand back. seriously? [ male announcer ] citibank mobile check deposit. easier banking. every step of the way. check out shares of ebay up more than 8% this morning after beating earnings by a penny. strengthened the pay pal unit driving stronger than expected numbers. stock already previously up by 33% for the year. five-year high in june. john donahoe joins us this morning with color on the

earnings along with our very own john core. if you could talk a little bit more about the mobile phenomenon which is driving transactions to a degree i just wonder if you think the street is even -- has their arms around what's happening in mobile transactions. >> i don't actually because i think the -- i think it's very hard to under estimate the impact of the mobile revolution. you know, we made a very big bet on mobile three or four years ago and it's really paying off. what is happening is these devices are becoming the central control system over our lives. if you think about your life or i know how i use it and that is now bleeding into how people shop and pay. so 90 million people have now downloaded the ebay mobile and we'll do over $10 billion of volume on our mobile apps this year. so kinds of things are happening. we're selling a woman's handbag every 30 seconds. so, you know, women are shopping while they're standing in line at a starbucks or we're selling

8,000 cars a week on mobile devices, 340,000 car parts. people working on their cars are using their mobile device to order the item right there. >> yeah. you talked about since the numbers came out the percentage of products that are new as opposed to auction. it's very large and growing i am assuming. i wonder if you think there needs to be some sort of corporate rebranding to keep, convince people that you're no longer just an online auction house. >> well, exactly. the new ebay is here. and you saw ebay was showing accelerating growth rates, new user growth rates. ebay is now 80% new items. 70% fixed price. it's a fun, convenient, trusted market place where you can still get a great deal. we did. we did our first tv campaign last q4 that we've done in three or four years and the theme was buy it new, buy it now on ebay and you'll see us continue to

really invest in marketing. the fact that the new ebay is here. and consumers are responding. our growth rates are expanding each quarter and people who haven't used ebay in a while or haven't used it are coming. they like it. that is driving the accelerated growth rates for the core ebay business. >> john, it's john fort. you talked about this on the call. i hope you can put more detail on exactly how mobile is changing the commerce game. i think it's more extensive than people have realized. you mentioned that mobile is even influencing web purchases and that mobile users are three to four times more valuable than people who purchase on the web alone. so can you tell us what's the demographic of the user who is primarily buying on mobile and how is mobile influencing the normal web purchasing process? >> here's how we're thinking about it, john. last year in their $10 trillion of retail transactions in the united states, that's not just

web. that's all retail transactions. over half of them, the consumer accessed the web at some point in their shopping experience. think about your own shopping. doing a search, you know, at home. you may figure out what you want to buy. you may look at product reviews. you may compare prices. you may -- and increasingly that's happening on a mobile device. in your home, in your -- on the sidewalk and in the store. and so what we see is our consumers are engaging with our product at home, at work, on the sidewalks and stores. sometimes they buy it on the mobile device. other times they don't. and the demographics, interesting. it started out with obviously the early smart phone users. because today almost everybody's got a smart phone we see people cross the board demographically using our mobile applications. and they're using them in ways that even i wouldn't have guessed two or three years ago. so i think we'll see continued

usage of the mobile device playing a critical role in how consumers shop and pay. what's interesting is in payments. we've talked about this before. i think the notion of your physical wallet is going to be an arcane notion three years from now just as using a physical newspaper is -- seems funny today. i think increasingly what we see that explosion in pay pal mobile payments now $10 billion is just evidence that increasingly people will be using their mobile phone to pay as well as to buy. >> let me ask you specifically about that. and pay pal is of course now your biggest business. today you're announcing you've done the deal with 16 large u.s. retailers to start using your technology there. at a time when you've also bought this start up card 10. >> card io. >> okay. what is the proposition there to customers? this is about using the camera on your phone in the future to do what? >> well, what card io enables us

to do, enables the consumer to do, is by the end of the year you'll be able to take out your physical wallet, take a picture of your driver's license and a credit card or all of your credit cards and debit cards and you'll have created a pay pal account and all of those cards will be in your pay pal digital wallet in the cloud. and so it's just a simple way to upload all of the cards you have -- your credit cards, debit cards, loyalty cards, any other thing you want up into the pay pal digital wallet which is secure in the cloud. then you can access that at any retailer or through any mobile device. any internet connected device in any setting. so we believe it'll help us drive the ubiquity of pay pal's digital wallet. >> it might surprise people then given that that you have such an aggressive share buy back. obviously that is partly why the earnings per share has been flattered for the quarter. $355 million. if you have such great plans you might have thought that you'd use that money to invest further down the line if what clearly is

a new form of transaction. >> well, we are investing. you know, we have a very attractive business. we generate almost $3 billion of cash a year. and we are -- our first goal with that is to invest in organic growth and we may, you know, made 15, 16 acquisitions last year. but our share buyback is real simple. we have a long-term policy of offsetting employee equity dilution through a share buyback. that is part of a very consistent long-term program. but we believe in our future and we're investing in our future. >> john, it's john fort. had a question about europe. you mention ted it on the call a macro pressure that kind of slowed down growth a little bit in pay pal. can you talk to us about what impact europe is having both the macro softness and then what's happening on the mobile side specifically in europe? i know you've got strength in the uk for instance that might

be offsetting that. >> well, what's interesting is, yes. europe is obviously the economic softness and some economic uncertainty going forward. what's interesting in our ebay business is we had strong double digit growth throughout europe and what's happening i think is as europeans want to stretch their euro, they're increasingly coming online. many of them for the first time. and they're finding ebay a source of great deals to use their -- stretch their euro. so our ebay business had actually a pretty strong second quarter in europe. mobile usage in europe is actually fairly consistent with around the world. smart phone penetration differs. it's furthest ahead in the uk, germany is about two years behind in smart phone penetration but you look at the slope of the curves of our mobile commerce and mobile payments growth across europe the slopes are all very similar. it's just driven by a function of a smart phone penetration. so even in the face of economic

uncertainty in europe, the mobile revolution and the bet we made on mobile is paying off. >> john, people have a lot of worries about the u.s. consumer where income is having a hard time keeping up even with low inflation. are there any metrics that point to the willingness to open a wallet whether it's the difference between an auction item or a new item or an average ticket amount, that kind of thing? >> well, you know, here's what we're seeing. i think the thing that's having the positive impact in our business. which is four years ago the only way you could access ebay or pay pal was when you were setting at your desk top or you had your lap top open in front of you. that may be what, two, three, four hours a day. today with your mobile device you can access our products. ebay and pay pal seven days a week 24 hours a day. and that's true for others as well. and so i think consumers what we see, what is i think driving the strong 15% to 20% organic growth in our business is people can

access, they can shop, pay at any time. so while retail growth rates are struggling, e commerce growth rates, whether through mobile or on the web, are still in the double digit range and so i think there is a shift of people using whether a mobile device or a lap top, they're shopping more online because they can access online easily now seven days a week 24 hours a day. they can get what they want when they want it and how they want it. >> john, david faber. give our viewers who care about google a little heads up. i'm curious. you guys have always been one of the biggest buyers of search on google. i assume that is still the case. what did you see over the quarter? did you increase your volumes at all, pricing? can you give us any insight there? >> no. you know, i think our -- we have a strong marketing budget where we invest on behalf of our sellers on the ebay business. and our marketing investment in aggregate has been consistent over the last several quarters. what you have seen, however, is

we, as i said earlier, were investing in a little more in brands, a little bit more in getting the message out to new users that the new ebay is here. try us. buy it new. buy it now. so our shift has been slightly away from some of the internet marketing. we still do it. we calculate where there is strong return on investment and buy over 20 million key words a month. >> a lot. >> we're a big buyer. it's done by machine language. we didn't see any real material changes from that investment in the quarter and we're blessed with over 70% of our traffic is organic. so our investment in internet marketing is, you know, the minority of what we do and how we get our traffic to our site. >> john, great conversation. good to have you with us today. >> thank you. nice to be here. >> our thanks to john fort as well with john donahoe. >> we talk so often about mobile. it's extremely rare that people are able to grow the business without a deg redation in the

price of the margin which is really rare. that transition for him is a phenomenon. >> they've managed transitions well there and turning around that market place business. international is a larger component of overall sales in than it is domestic. it's been the case for sometime. j.c. penney shares are up over 7%. so perhaps bill ackman getting a few believers there when he talks about a 15 to 20 bagger. over six to seven years from our interview with him late yesterday at the delivering alpha conference. worth a mention given that performance we're seeing this morning. >> north america's largest railway union pacific has had its best quarter ever. its president and ceo will join us next. rding to ford, the works fuel saver package could literally pay for itself. jim twitchel is this true? yes it's true. how is this possible? proper tire inflation, by using proper grades of oil, your car runs more efficiently, saves gas. you could be doing this right now? yes i could, mike. i'm slowing you down? yes you are. my bad. the works fuel saver package.

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welcome back to "squawk on the street." i'm sharon epperson at the nymex with breaking news from the u.s. department of energy on natural gas storage levels. natural gas supplies rose by 28 billion cubic feet in the last week. and this was basically in line with consensus estimates but it was still enough to drive a brief spike in natural gas prices to above the $3 mark.

once again this is the third time this month we have seen natural gas futures above $3. and we are looking at injections that are smaller and smaller. given the extreme heat that we're seeing across the country. keep in mind though as well there is still a record level of natural gas in storage. still about 15% to 20% above historical averages for this time of year. so we still have plenty of natural gas but the fact that we're looking at these smaller injections and continue to see extreme heat, that continues to drive natural gas prices and we are looking at natural gas just a tad below that $3 mark right now. back to you. >> and we'll talk to union pacific about those matters in a few moments' time. we learned something very important in europe today. documents filed with the german parliament for them to vote of course to pass through the deal with spain indicate that actually the rest of europe has done the deal with madrid under which the efsf will put aside money potentially to buy spanish bonds in the secondary or indeed the primary market. it's not the deal they have at the moment but they're clearly heading toward it.

should have been euro positive but the euro is still trading in negative territory. our guest joins from us bk asset management in new york. you might have thought the euro would rally on this. >> it rallied for about an hour and then the whole euphoria died out. the germans came out, the finance minister came out and said that still they think that the spanish sovereign is going to be ultimately responsible for this bank they're trying to give up through the esm and that really disappointed the market. i think the story in europe right now continues to be this incredible divide between northern european credit which is essentially free and southern european credit which costs 6% to 7%. it is an untenable situation. that's why i think the pressure on the euro remains. i was, on friday i thought it was a good opportunity to short at 123. i think it's still a pretty good level but at this point if you want to wait until 123.50 to short the euro with a 125 stop and target around 121.50 it is still a very good trade. the path of least resistance is still the down side and the

longer-term trend still to the down side because they haven't been able to resolve these problems in the eurozone going forward. >> what do you think the magnitude of the move will be say to the end of the year in your mind's eye? >> well, calling for really like 115, 1/10 of the euro. if there is complete disappointment then sort of a serious risk of fracture. the problem is the european authorities are waiting for the crisis to happen before they come together and create some kind of serious, dramatic move. until that point happens, we very much are going to be drifting to the down side because the markets are just not going to accept the current position. it is too untenable for them to go forward. >> thanks for the advice. good to see you. for more currency trades be sure to catch money in motion currency trading tomorrow at 5:30 eastern and if you want more education about currencies go to currency class at money in motion.cnbc.com. >> we'll be talking to the union pacific president and ceo jack koraleski in a first on cnbc interview on the back of the company's earnings.

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is. back to our earnings onslaught this time talking verizon the mobile carrier giant reporting earnings results this morning posting an increase in both quarterly profit and revenue shares though as you can see down about 84 cents. almost 2% to 45.05. we have a senior analyst at wells fargo securities joining

us this morning. we were talking about what could there have been in the quarter, jennifer, that would force a selloff but after leading the dow for most of a year you wouldn't be too surprised. >> exactly. it is a very not surprising quarter. very good wireless margins. 49% really the record results. international is a little weak but expected and they actually beat the street in earnings. but given the run it's had as i mentioned i don't think it's surprising to give a little bit back. >> so better than expected as well? >> very good. over 800,000 post pay ads which is probably three times anyone else reports even at&t. >> how do ebitda margins look? >> very good. missed a little on revenue but that was international. ebitda margins beat us on a consolidated basis and certainly on both sides. wire line was about 20 basis points above our estimate at 23.1%. wireless again 49%. >> you mentioned the move the stock has had. it has been quite significant in

part because it has a largely domestic business. the dividend is strong. when there was 50% wireless penetration years ago this thing traded at 17 -- 16 times. now it's at 17 times. >> right. >> is it expensive? >> i don't think so, david. if you look at certainly the yield has helped. you look at the spread versus the ten year. it's been very similar. but also i think beyond all that wireless pricing is in repair. that means margins in repair. that's good for the whole industry and most especially verizon. >> so it is first out of the gate. what does it mean for some of the other companies that are going to report? >> at&t next week, we expect solid margins from them as well. i think healthy wireless margins you have to mention is the iphone waiting game. upgrade rates were lower. we expect to see that second to third quarter because we all expect a big hit in the fourth quarter. i think sprint, you know, i mentioned pricing being stable there. they are the most vulnerable in the opposite scenario. that is very good for sprint. >> we talk a lot about the subsidies excuse me in terms of what they paid.

exceeding cap x for these operators. >> yes. >> where are we in terms of the power play? is there a pushback? you mentioned the longer cycle. that hems. but is apple still ruling the day? >> i think apple is the winner here. i think what at&t and verizon are doing is changing what they can, upgrade rates, changing upgrade policies. upgrade fees. it's not great for the consumer but they're pushing the points they can control. >> yeah. there was a notion not too long ago that they found their fire. right? they found their ability to push back. are you saying that's limited even if they find the will? >> you know, i think you need nokia or who knows about r.i.m. but someone else to come along. i don't think they're holding out hope for that. i do think they're saying -- with all the things predicted with sysco's reports and what not they're saying you have to pay the pipe supplier. that's my gut. >> we're not talking about bad revenue growth. >> right. >> i just wonder. back to the multiple and your expectations of growth, what can you really expect from this company in terms of its ability

to move that needle? it's not going to get a higher multiple is it? >> today they react, you know, reemphasized or reiterated double digit earnings growth. that is very good for ar buck. unheard of in many years. >> haven't heard that in a while. i don't know if there are regional bell operating companies anymore. >> yes. i have to use that acronym still. >> we talked about sprint. some of the preferred with cramer over the past couple days. has that story impressed you more than the verizon story? >> we like both. sprint is my more beta centric story but we've liked sprint for a long time. i do think there is not many to david's point earlier that you're going to double your money. sprint is the one to watch in that regard. >> leveraged both ways. >> both ways. >> jennifer, thanks for coming in. >> thank you. >> ahead on the program union pacific posted a second quarter profit to top the street's estimates. we'll go straight to the source and get a read on the transports next with its president and ceo. stay with us. i don't spend money on gasoline.

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we're watching shares of union pacific the largest publicly held railroad in the united states trading at all-time high. after reporting second quarter earnings that were actually a record for the company. here on a first on cnbc interview fresh off the conference call is jack koraleski president and ceo of union pacific. good morning. >> good morning, sir. >> so you've got a record result on almost every metric for the quarter despite the facts that your biggest segment, coal, the biggest freight department is down 17% because of what is happening to natural gas. how did you manage to achieve that? >> the benefits of our franchise give us the capability of having access into the new shale place so we're moving a lot of crude oil, frak sand and pipe. our automotive business is very strong right at the moment. we provide great service for our intermodal business so are growing on intermodal business as well. we're seeing some activity in

the housing market generate some lumber business for us. so the good news was able to offset the bad news for us in the second quarter. >> what sort of visibility do you have moving forward on for example coal and the substitution with natural gas or the degree to which you might be helped by the hot summer? there is also a note out by jp morgan that says you have leverage to powder river basin coal which is actually a better substitute potentially for natural gas. further down the value chain. >> you know, i think if you look at our coal franchise right at the moment the fact that if natural gas prices are so low if you have the opportunity to be burning natural gas right now you are so as the summer continues to get hot we're seeing our coal business get stronger and stronger. that's going to provide a benefit for us in the second half of the year. >> what about the fuel surcharges? because obviously for a lot of quarter you were able to maintain those even though the price that you were paying presumably fell. i imagine that is a wonderful effect that could fall out of

the figures is that right? >> you know, there is a little bit of that fuel surcharge opportunity in the second quarter. it was about a 1% of our revenue growth overall in the second quarter because of the lag effects but right at the moment fuel is actually starting to go up again so we'll actually have a payback here probably in the third quarter as we look at it. . >> your operating ratio for the quarter was 67% i believe an all time quarterly best. you know, can you keep it there or even increase it from here? >> you know, our goal, our long-term guidance toss have an operating ratio between 65 and 67% by the time we get to 2015. we announced this year we will be sub 70 for the first time in our company's history and we're going to keep that focus on operating ratio. when we get to those levels we'll continue to focus on doing even better than that. >> brought back a decent amount of stock $415 million. why did you choose to do that?

>> you know, we look at a very balanced approach in terms of what do we do with excess cash. we reinvest in the railroad and reward shareholders either with stock buybacks or dividends. kind of a balanced approach. we're continuing down that path. >> if we were to use you, sir, as a thermometer on the health of the economy as you are so large what would you be able to tell us? what can you see on economic activity coast to coast that perhaps people watching you are not aware of? >> you know, i think if we look at us as a barometer you have to be careful because we are now moving things like oil and things that aren't necessarily economically oriented but if you look at the basics of our business, look at the fact that housing starts are improving, you look at our lumber business, our rock business, our stone business, cement, all of those kinds of things improving, automobile sales, it tells you that the economy is continuing on a slow growth trajectory and that's what we really see for the balance of the year. >> so you've seen nothing even toward the end of june or as

we've gotten the economic figures that certainly have worried many nothing to indicate there has been a significant slowdown? >> we don't see a significant slowdown. we think the progress is a little bit of a saw tooth kind of improvement but the overall trend continues to be on an upward trend and it's a slow, consistent kind of improvement for auns certainly we're enthusiastic about seeing the housing starts numbers for june and what that might tell us about the rest of the year. >> right. congratulations on the results. thank you very much for joining us. it's nice to see you. jack koraleski union pacific president and ceo. shares trading at an all time high. >> all right. as we gear up to november, the candidate's tv campaign ads are heating up as well amidst the battleground or in the battleground states. we'll show you the latest and greatest after this break and don't forget we're still waiting for five below retailer to open right here. it has not yet but we are awaiting that. >> it is taking a long time. >> it is. w york state.

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keep an eye on ticker symbol f-i-v-e, five below opening, not bad for a company that included

the number 12, bob pisani. >> 14 was the price talk. they priced it at $17. look at that, just opened at 26.05. this is a teen retailer. shout-out to gary. we'll have a bunch of other ones coming. palo alto networks pricing tonight. they raised the price range on that one. i know the market hasn't been hot since facebook, but this week getting some other ones. and fender tonight. >> and kayak which has been much troubled in trying to come to the market. >> yes. remember, those are the guys who founded orbitz as well as some of the other big online travel sites as well. we'll keep an eye on that. but that's a big pop. remember, tilly's also did very well. another teen retailer a few months ago. that's still trading above its ipo range. >> it's hard to concentrate with gary blowing kisses after that shout-out. when we come back, final thoughts on the markets. the dow is up 10. back after a break. mamama

campaign attack-hitting both presidential canned dates as we gear up politically for november. oun john harwood has been digging through some of the most recent tv ads. over to you. >> simon, i just wanted to give

you guys a little flavor of what's behind all the news coverage we've seen on the attacks on president obama for the economy, romney on bain capital. they're pounding these messages in a handful of swing states not including new york which is not a swing state. let's start first with the ads that president obama and democratic allies are running, trying to raise questions about whether mitt romney's done something shady in making money and pursuing his business at bain capital. let's start with these obama ads and democratic ads put together. >> makes you wonder if some years he paid any taxes at all. we don't know because romney has released just one full year of his tax returns. and won't release anything before 2010. >> you know what? i put out as much as we're going to put out. >> what is mitt romney hiding? >> mitt romney, the businessman. take a look at his record. romney bought companies, drowned them in debt. many went bankrupt. thousands of workers lost jobs, benefits and pensions. but for every company he drove

into the ground, romney averaged a $92 million profit. >> now, in just ten states, there's $21 million pounding that message with that scary, tinkly piano music. also the romney campaign attacks the obama campaign on the economy. here's a compilation of ads by romney, crossroads gps and by restore our future which are the super pacs attacking romney. >> when the president was elected, he talked about hope and change. whatever happened to hope and change? now it seems he's just coming right out of the box with these old-fashioned, negative ads. >> america's jobless rate just went up again. but after a record 40 straight months of unemployment over 8%, president obama insists -- >> the private sector is doing fine. >> the weakest job-adding quarter in two years. >> it wasn't supposed to be this way. over three years of crushing unemployment.

>> you may have noticed some of the footage from the most authoritative business news network there is in that last advertisement, simon, but it's an example of how tv ad makers nowadays are trying to use clips from people like us on television to buttress their own messages. and people in those swing states are getting it heavy duty right now. >> so do you get royalties from the gop or whoever it is from appearing in that? >> i got no royalties from the gop. i didn't get a membership card in the romney campaign, had nothing to do with it. in fact, they put this ad together while i was out hiking the palachin trail. nothing to do with it. i've been hearing from a lot of people who live in colorado, virginia and florida and the places where that ad is running. >> meanwhile, john, interesting poll in "the times," looking at what is essentially a very tight race. even month to month, it appears like there's one solid winner or loser. >> exactly. and the reason it's so close is that if you look at the throw weight behind these advertisements, i mentioned $21 million just this week in those

ten swing states, you've got a rough equivalent when you take the obama campaign is outspending the romney campaign. but when you add in what crossroads and restore our future has done, a little bit from the democratic group super pac priorities usa, those are sort of equivalent ammunitions and gunfire on both sides. >> all right. john, we'll leave it there. thank you very much, john harwood there in washington. carl, one last parting shot, daid saw the new "batman" movie last night. what's the villain called? >> bain. >> bain, yes. >> in comic books long before bain capital. >> there's a word in the english language, b-a-n-e, though. >> we'll see you later. simon, we'll see you in half an hour. here's what you might have missed if you're just tuning in. >> welcome to hour three of "squawk on the street." here's what's happening so far. >> if you don't fix the economy, if we pile on a trillion dollars of debt a year, you won't have a social agenda. if we don't fix this balance sheet of this nation, you cannot

have an income statement without a good balance sheet. >> it's fairly consensus that we bought them, and the question is what's going to happen next? we just kind of meander along here. are we going to continue with some of the momentum we're seeing in some of these markets? some of these markets are ripping. >> jobless claims moved up to 386,000 from an upwardly revised 350,000 up to 352,000. >> people are taking share from bank of america. i believe that seems to be the focus. people taking share from jc penney. hey, one of the whales, sorry jpmorgan to use that term, but when a whale is being swallowed by sharks, it's tasty! >> that is the opening bell on this thursday morning after a nice couple days of gains. >> existing home sales down 5.4% month to month in june to 4.37 million units. this is a big disappointment. >> the new ebay is here.

and you saw ebay showing accelerating growth rates, ex l accelerating new user growth rates. ebay is now 80% new items, 70% fixed price. it's a fun, convenient, trusted marketplace where you can still get a great deal. >> good thursday morning. welcome to the third hour of "squawk on the street." let's check on the markets. interesting day shaping up even though the dow hasn't done a whole not numerically, up 28, s&p up almost 5. above that 1374, 1375 level, nasdaq's positive. a bunch of economic indicators were weak. philly fed, home sales, l.e.i., offsetting that, good tech earnings from ebay, ibm and qualcomm. home builders, teen retailer five below spiking 50% on its first day of trading. stock priced at $17 a share, currently at $26 and change. home builders racking up some of the biggest losses today after sales of existing homes in june fell more than 5%. that's contradicting the rest of

the positive data we've seen out of housing recently. pulte, toll, kb and lennar. the company responsible for wrangler jeans. vf corp talking about asia today. we'll talk with the ceo live in just a moment, discuss the most recent quarter and what exactly is going on in asia. the former ceo of hp, carly fiorina here to talk all things tech to jim chano's shorting hp. and how he thinks the problems can be solved. and fab.com taking the world of online shopping by storm. the one-year-old company is now worth $600 million after its latest round of fund-raising. we'll find out what's next for this hot internet start-up when we talk to the ceo a little bit later this hour. first, though, we're going to start with "squawk on the beat." two household names going public tomorrow. and the price after the bell tonight. what can we expect from kayak and fender?

kayla tausch is back at hq with a preview. you're not calling this a deluge. >> i'm not. i think the market is still picky. we'll get to that later. the ipo market is thawing. you can say that after being frozen for about a month due to heavy volatility. likely some was facebook fallout. this week five ipos in total are trying to buck that trend, though i have to say they are getting mixed reviews. take a look at small-cap biotech company durata, they'll start trading today. preteen retailer five below surging after pricing at the high end of its range last night. certainly a different story there. and fender guitars will test the water for higher end consumer goods when it prices tonight. but it seems though the money is still hot for tech. palo alto networks which makes firewalls for thousands of enterprise customers, this week raised its price range to $38 to $40 a share which values the company over $2 billion if it raises money at the midpoint of that price range. travel website kayak software could seek a higher valuation

than it's stated now, and that's according to my sources. it's seeking to raise $82 million between $22 and $25 a share for about a billion valuation, but that's conservative based on underwriters' previous estimates. so we could get a higher price on that tonight. investors, though, do expect that tech will trade well based on cloud company service. up 33% since its june launch. but carl, even though this is the busiest ipo week since april, underwriters say the market's still picky. it's saying small-cap ipos appear to be working. russell up 8%. the market yet to be tested for large, critical-mass companies. we're still waiting on those, carl. but other household names like dell frisco's, the parent company of carl's jr. and manchester united all coming down the pike in the next few weeks. we should get more data points there. >> yeah, there's differential in size between five below and manchester united. we'll see how that does later on. thanks very much, kayla. gary kominski, anybody

surprised by five below may not have been watching earlier in the week. >> thank you for that. we did tell you monday this was going to be a sleeper ipo. why did i know? because it was the right-sized deal. they had the right type of institutional investors. which sort of goes back to facebook. i want to go back to a deal that was not obviously what people had anticipated because yesterday not a lot of conversation about facebook in the last couple of weeks. >> after delivering alpha conference, you mean? >> not on air and not in any of the panels, but chatting with a number of people delivering alpha, i was reminded that the facebook effect on retail continues to be there. and i was surprised because i had not had that conversation in the last several weeks. it sort of faded off, maybe people weren't that focused. but i will tell you that that was one of the sort of behind-the-scenes things. what it did to the retail public along with a number of other things continues to be a problem there. can we talk about delivering

alpha for a few minutes? i moderated this panel less than zero. we had a great discussion about interest rates. some think it's a boring conversation, but really it drives so much of what happens around here, around the capital markets. bruce richards, mark lazzeri, greg fleming were there. a couple interesting things that came out of that. number one, they all expect interest rates to be higher five years from now. the ten-year anywhere from 3% to 4%. but i thought mark lazri brought up a great point. if you look at risk-free rates around the world, it's interesting that investors want to have their -- they want to have their hedge funds deliver something like 10% or 12% returns. and when you think about what that is as a multiple of the risk-free rate, it's kind of crazy. because if you think it's like everybody wants to have returns. they don't want to take risk. but when you look at the risk-free rates, there's a huge disconnect. that was another one of those themes that i walked away from. >> before we continue on that

theme, get quick breaking news from scott cohn at hp news. >> that's right, kumar who was one of the key figures in the gallion case and star witness for the government has just been sentenced to two years' probation. he'll also pay a $25,000 fine and forfeit $2.5 million. he was a former senior partner at mckinsey, and he testified both against raj and his mentor, gupta. of course, both men were convicted in this sweeping insider trading probe. kumar pleaded guilty early on in 2010 to two counts of securities fraud and conspiracy. he could have faced up to 25 years in prison but avoids jail time as a result of what the government said was extraordinary cooperation. back to you. >> interesting. thank you very much, scott cohn back at hq. back to your point on yields, they say five years from now, rates higher. did they comment on your own thesis which is the rest of the year actually they might come down even more? >> well, i asked the question, okay, we all know what's happening. why do people keep buying the bonds?

why do they keep buying it? some of the central banks buying, yes, institutions are buying. a year ago if you thought rates were going up and you thought you were out of treasuries, obviously a bad thing. so the answer to that question is nobody disputed the fact that we may see a 1% ten-year. a lot of it's going to depend on what happens. again, the last thing -- i know we've got to go -- but the last thing about the election. nobody will come on camera and say what they think the impact of who will be elected as president will do in the market. but the amazing thing, i was just telling one of our producers off camera, somebody who's a widely known fund-raiser for the democrats in the industry had mentioned to me yesterday, well, you know, i think if romney gets elected, wow, it's going to be great for the stock market. great for the stock market. >> i have some ideas on who that might be but i won't say. my favorite line of the day was cooperman saying the ten-year is like stepping in front of a steamroller to pick up a dime. >> obviously you played it all morning when the attorney said, when the u.s. attorney said, i'm

sorry, i didn't know there were so many hedge fund managers here. i didn't bring enough subpoenas. i literally almost fell out of my seat at that point. >> awkward. >> it was great. >> it really was. let's hop over with the cme. today's santelli exchange. good morning, rick. >> reporter: good morning, carl. this is more of a retrospective on rates. you know, is this the new normal in interest rates, these low rates? some would sigh yes. some would say the anomaly really was the '70s and '80s. about two decades ago, i did a lot of business in the netherlands. the dutch have always been merchants. they've been her chanlmerchants throughout history, and they were always fascinated with interest rates. i can remember many discussions where they would show research literally going back to the 17th century about interest rates. and this was long before the crisis in low interest rates that at the time rates were higher, obviously, than they are now, but they said the long-term

average is much lower. so i did a little homework, and they were correct mostly but not as much as one would think. for example, in the u.s., bianco has a chart on his website, a couple of hundred years, i think 222 years. and the average is probably around 6.25. if you just look at my database on our ten-year from 1960 to present. so it's easy to do this, people. just put a one day in for your moving average and the number will be obviously the average. so the average for that period is around 6.75%. if you just isolated 1970 to 1990, realizing that the highest rates ever in the u.s. were around 1981, the ten-year was around, i don't know, close to 16%. the average for the '70s through the '90s is 9%. so even though there's a lot of correct assumptions that the '80s -- '70s and '80s were anomalies, the average is still much higher than people think. what is the point here? the point is, as we hover near 7% on the spanish ten-year, the world seems to think oh, my god, these are absolutely

unbelievable, unreal, we're never going to see or be able to deal with these rates. they're a lot more normal than many would think, and they underscore what i've been saying a long time, and i'm not alone. that the issues that plague us and spain and many countries isn't that we need a certain funding level. it's the fact that they're insolvent. insolvency is the point. back to you guys. >> well said, rick. talk to you in a little bit. rick santelli in chicago. straight ahead, vf corp, the company responsible for north face, wrangler jeans, vans trading sharply higher after reporting results this morning. some good trends out of europe and asia. we'll talk to the ceo about earnings, the retail environment and a lot more when we come back. i look at her, and i just want to give her everything. yeah, you -- you know, everything can cost upwards of...[ whistles ] i did not want to think about that. relax, relax, relax. look at me, look at me. three words, dad -- e-trade financial consultants. so i can just go talk to 'em? just walk right in and talk to 'em.

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getting some breaking news on morgan stanley after a pretty rough morning so far. our mary thompson has that. >> i just spoke with the company's cfo speaking about a disappointing quarter for morgan stanley, earnings and revenue missing. the quarter on a debt downgrade.

also weak results in fick during the quarter, a big impact there. porat said there was no negative impact for many of the problems linked to facebook on its client's activity. and also the company spoke about reducing risk-weighted assets. so i asked her, our colleague, kate kelly, reported about a possible sale in the commodities biz or whole sale interest in that business. porat said never say never, but the commodities business continues to be a core business and the firm repeated that it told cnbc before that that sale of the minority interest in that was not going to happen in the near -- was not in the planner as it stands. now, as far as the fixed-income performance, of course, it was impacted by a debt downgrade. porat repeating that the bank ebankers had to spend a lot of clients and other clients stood on the sideline impacting the businesses there. doesn't mean ma tthat the banke can't drum up new business, it's

just that that was their focus during the quarter. i asked her were there any big trading losses in there because of concerns about the weakness there? she said outright, no. there was a slight increase in the company's value at risk during the quarter. she said that reflected an expansion of its interest rate business which did very well during the quarter. and that, in turn, reflected an expansion of client-driven activity. also want to note that the company is considering the strategic alternatives for its global wealth management business in europe. now, this is part of an $80 billion international wealth management business. i tried to push her, are you considering a sale on that? what is the strategic a alternati alternatives? she declined to be any more specific. again, those are just additional details on what was, again, a tough quarter for morgan stanley from the company's cfo, ruth porat. back to you. >> mary, it's gary. if we could bring that chart up again, we showed fixed income down 50%. >> that's year over year, yes. >> year over year. and a friend pointed out to me that if you go back two years

ago, it's going to be down about 80%. >> mm-hmm. >> those numbers about two years ago. is this the level -- i mean, did you get any sense -- do you have any sense, is this the sort of new level? we're talking down 80% year over year. >> right, from two years ago. >> is this the sort of new run rate where fixed-income revenues are going to be? >> you know, i didn't ask her that question which, gary, is a very good question, something that i should have focused on. but i think what they might say is that last quarter was very difficult, impacted, of course, by uncertainty, prolonged uncertainty about when this debt downgrade was going to happen. they said that kept clients on the sidelines. i think they would hope that there would be an improvement and hopefully the fourth quarter depending on market conditions in this business. >> thanks so much, mary. >> that's why the whole issue about multiples and what are investors going to pay for these institutions continues to be so difficult because what are the numbers? what is the new run rate? is it this down 50% or down 80% like it was two years ago? nobody knows.

>> definitely in transition. meanwhile switching over to vf corp, responsible for jansport, north face, wrangler. shares sharply higher this morning on record second quarter earnings driven by outdoor, action sports business, strong international growth. the company also raising its full-year outlook. here, eric wiseman is the chairman and ceo and president of vf corp. eric, always good to have you on the program. good morning to you. >> thanks, carl. it's great to be back on your show. >> so we had some negative outlook from levi in europe, right? negative news out of nike in asia. you come in with sales that are up sequentially in both regions. what are you doing that they're not? what's going on? >> well, carl, we talk a lot about the strength of the vf portfolio and the diversity of our portfolio as being fundamental to understanding our corporation and how we get done what we do. and yes, we read this report today that our revenues in asia we expect for the year to be up

20%. china we expect to be up 25% or so. and in europe, we grew 13% in the first quarter, 16% in the second quarter. and we expect revenue growth low double digits for the year. the key to that is the number of brands we have and our ability to activate brands. we're not a company that has one or two brands. but we have many. and what happens with us is when we see a brand beginning to get traction in a market, we can distort the investment in that brand to fully capture the opportunity in that market. and that's what's driving our unique success. that and, of course, our great people on our platforms. >> still on the macro front, i'm looking at a headline out of dow jones. vf corp executives not getting gidly saying they're keenly aware of the many challenges posed by continuing slowdown and global economic conditions. can you at least characterize how you see a slowdown happening in either china or europe? >> well, it's true that we're not giddy. we've never been described as that.

we are seeing a slowdown in all the markets that we do business in. as i said, our growth rate of low double digits in europe this year is below where we've been. our growth rate of mid-20s in china will be below where we've been. there's absolutely been a pullback in consumer sentiment. within that, based on the strength of our portfolio and our economic strength, we're able to invest and gain share in those markets, and that's what we're doing very purposefully on a brand-by-brand and ma market-by-market observation. the market is correct, it's different than it was 12 months ago. >> turning to the u.s., we're not far from back-to-school. obviously the machinery's already firing up. any color on fall selling and what the back half of the year may look like? >> well, we're encouraged by the back half for us for fall in the u.s. market. we have no reports yet of sell-through, and that's what really matters to us is how are consumers going to react to the

brands in front of them. we'll learn a lot more about that in october when we finish the third quarter. but the u.s. market, like the other markets, is going to be a little tougher this year. we're calling for growth in this market of mid single digits this year which is also below where we've been. but we're thrilled that we can perform at that level. and with that level of performance, globally in the mix, we're really able to deliver earnings for our shareholders. >> yeah. finally, timberland. people seem to be want to be focusing on that and the integration into the overall family. how's it going? >> well, there's a lot of focus on timberland both from the investment community and from us. in fact, myself and my management team and our board of directors was up there monday and tuesday of this week. we're ten months into the ownership of the timberland and smart wool businesses. so it's still very early days. in 2011, that business contributed more to our shareholders than we thought. based on our current forecast, we think the same will be true in 2012. we have a lot of work to do ahead of us on both sides.

but we're very encouraged. so far every step along the way has been a little bit better than we thought. >> we'll talk about setting the tone for the group at large, eric. congratulations on the quarter and we look forward to seeing you in the coming quarters as well. >> carl, thank you very much. and thanks for having us on your show. >> eric wiseman of vf. back to rick santelli in chicago, talk regulation and how we might go about restoring investor confidence, rick. >> reporter: absolutely. my guest today is peter boggus. >> porter. >> reporter: what did i say? >> porter. >> reporter: if you go back through time, we've had a lot of hiccups. free markets aren't perfect all the time because they're not as free as they need to be all the time. hiccups whether it's the 30s or like the start in '07, but there is no form of any type of economic picture that works better. having said that, how will we get confidence back? this happened in the '30s.

how did they correct it? >> going back to the '20s, then the stock market rolled over. investor confidence -- just the general confidence creating the depression was enough, they pulled all their money out of the markets. they don't trust anybody. the banks, brokerage firms, paper getting printed all over the place. so the federal government came in, congress thinking that they can restore confidence by saying we're going to get these people. this is how you register your securities, for example. you register the exchanges, modulate, set up the s.e.c. and the investment act in 1940 put some steady rules. that's the background for the regulation that lasted for a good 50 years until some other things, sarbanes-oxley, maybe tweak it a little bit, but really nothing too dramatic. it took 50 years for the confidence to get back where mom and pop were back in the market, 85% of the market was -- had -- of the populous was in the market. start getting things like the dotcom, not a lot -- then you get the blowup of wall street in

'07. mom and pop pulled out. you could see it in mutual funds. >> reporter: these rules, even with amendments, some of the acts you talked about that created like the s.e.c. and many rules, how many pages were they? >> for instance, the securities exchange act in 1934 was 497 pages. and that's with amendments current to date. that's what i looked at yesterday. about 390 for the securities act in 1933. i don't remember the investment act in 1940. but they're small. they keep it simple. man on the street can pick it up. oh, they're going to do this for me. level the playing field. they're going to get it if i get screwed over. >> reporter: after the '80s and into the '90s with the big computer revolution that ended up in the tech wreck which wasn't necessarily a good thing, a couple of things happened. glass stiegel, second term in 1999. of course it took years until we noticed how bad removing some of those precautions really was going to turn out.

i guess you can't answer this, but my grandmother passed away in the '80s. she didn't do any bavnking, pai her water bill at city hall. especially considering five-year limitations, so we'll see all of this negativism come back again. that isn't going to help the public. >> no. and when you see things like different steps that at mf global. >> reporter: it continues. we need banks to behave better, but we also need to realize that we're all in this together. that guy was so excited by the hit, he dropped his breakfast. back to you. >> thank you very much, rick santelli. coming up, we'll talk to the head of greenberg capital about regulation. take one more look at five below. up almost 60% on its first day of trading. original range was 12 to 14, currently at 27.15, a sleeper as it's been called as a new wave of ipo kicks off. when we come back, we'll get the bells across europe, the close and the impact on our

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a lot of the data stateside today and earnings have drowned out the news out of europe. important auctions out of spain and france and retail sales out of the uk. simon hobbs going to wrap up the close here today. >> and still you have that disconnect in europe between the data, the crisis, the bond market and the equity market which actually -- it's actually doing quite well in europe.

we're at a seven-week high back up to the may level because of earnings. let's look at the map as we count you out and i'll run you through some of the earnings. it is interesting that you still have bios of those stocks. >> the european markets are closing now. >> so back up to the may highs, we've now had seven straight weeks of gains, if we're able to complete that tomorrow. these are the companies moving us forward. some of those arguably defensive in many cases, arguably not in others. the largest paint maker in the world came out with results today. herm hermes, aware of their luxury goods. remy is selling more cognac. and electrolux has been able to raise prices here in the united states. if you just tuned in, let's not forget what happened with nokia today. obviously it is a very beaten-down company. it's lost 60% of its value just

this year. but we do have a little spike coming through. it's up 12% at the close over in helsinki. the loss is less than expected. they've got half a billion euros more of cash in the bank than we thought. and they've sold 4 million windows smartphones, it's much less than everybody else, but that's just one more earnings point that came through today. the broader picture is obviously still fairly bad. in germany, still waiting for the parliament there to pass the spanish bailout of the banks. 100 billion euros which they'll sign off on tomorrow. what is interesting is that in preparation for this vote, and there you see the finance minister. the germans have published the deal that they've done with the spanish for everybody to see. and in that memorandum of understanding, there is a provision for the safety net to buy spanish bonds. it's not there now. it will be part of a separate deal, but it could be important moving forward. now, carl, importantly mentioned the way in which we've had these auctions in spain today between the 2s and 7s, i think there

were three that actually went down. the important takeaway here is that the yields are spiking not at the ten-year but nearer up the curve. and that is an issue because spain is funding not at the ten-year but at the shorter end of the curve. so look here. look at these yields here. between the three, the five and the ten. see how close they are now to 7%. that is a concern moving forward. in fact, the five-year today was at its highest yield ever. and you'll see, of course, that the ten-year has spiked above 7% on that track that i'm showing you there. at a time when you have this big divide between the north and the south, we mentioned it earlier in the program of europe. so the yields are spiking, and the pigs in the south of europe, they are falling in the north. and this is where we are on the ten-year in france at 2%. in fact, france today, as people search for yields, was able to auction five-year notes at 0.86%. that divide, if you say take a look at spain versus germany, looks like this.

this is the extra that investors demand to hold spanish debt over german debt. you'll see that it continues to rise now to a record. that spread is now at 5.79%. in essence, that benchmark, a huge amount, carl, about where we are in europe. back to you. >> thanks so much, simon hobbs. want to get to bob pisani, see what's moving on the big board. >> yeah, better tone to the market. i'll tell you what i like -- put up the sectors right now. remember people have been going gaga for dividend-paying stocks, telecom and health care, big pharma are big dividend payers. and tech which should be a market leader has been lagging. today that's inverting. boy do i like to see that because they're moving on earnings. big tech names have had good earnings. ibm boosted guidance, ebay. qualcomm frankly was a disappointment, downbeat guidance for the current quarter. hold on, put that back. fourth quarter was heavily

talked up. that's the important thing. the other major story going on is this big rally that we have been seeing. put up the brent chart for me right now because that's moving the stock market. we've seen a huge rally in brent and west texas. what, 20% in the last -- since the month began? we were at $90 on brent just a short while ago. now we're at $107. take a look at what that's doing to some of the big oil service names. we've had a great rally. and this has been a major part of the stock market move-up recently. neighb nabors, drillers, day rates are going up overall. that's helped in the moving up of brent crude and west texas. nice ipo pricing tonight. we talked about some of these names. but the hot one that everybody's talking about is palo alto networks, a network security company. the original price talk was well below 38 to 40. now they bumped it up. we'll see what happens on that. we told you earlier what's been going on with five below.

originally 12 to 14. priced at 17, opened at $26.05. and you see it, carl, trading right at the highs right now. $27. $12 to $14 a new days ago. $27 right now. back to you. >> thanks so much, bob. interesting to watch. meantime, mervin king, the governor of the bank of england testified this week that barclays board was in denial over regulators' lack of confidence and barclays management. is it time to take a closer look at the actions of the board? former hp ceo carly fiorina addressed that question in her latest cnbc column. she joins us from washington. carly, always good to see you. good morning. >> great to be with you. thanks for having me. >> here's what you write, we must finally draw the curtain on what remains one of the least transparent and accountable institutions and that is the board of directors. you reflect upon it, there really hasn't been a whole lot done in terms of the missteps they've made. >> you know, those of us who support the free enterprise system, and i certainly do, have to also have the courage to

point out its failings. and we've just had way too many examples of where boards of directors have failed to do their job. so what i'm basically arguing for in this column is that we now start to really look carefully at the processes that a board uses. who's on the board? how do they spend their time? how do they make sure they're talking about the right issues? the truth is the board of directors is a very opaque institution today. it's not very accountable. and we need to start really asking boards, demanding that boards be more transparent about how they spend their time, what they spend their time on, and holding them accountable for massive business failures. >> do you believe that any kind of different activity by the barclays board would have contempt libor from becoming the scandal that it is? >> well, what i would like to know and what shareholders never know is what the boards were actually talking about. were boards talking about the fact that regulators lacked confidence? was there any discussion in the

barclays boardroom or any other boardroom, for that matter? was there any discussion about the issue around libor? certainly it was something that was on the front pages of "the wall street journal," among other newspapers. so did they talk about it? did they question the ceo? that's what i would like to know. and if the board wasn't engaged in that conversation, why not? >> i have to understand what you said. you wanted to have a taping of every time a board member speaks? how would you know if the barclays board was -- if they had that discussion? i mean, how do you enforce something like that? >> well, as i say in my column, of course, a board has to be very careful about not revealing confidential or competitive information. but what a board could do -- and i lay out five very specific things that a board can do -- what a board could do and what shareholders could demand is lay out what they spend their time on. lay out how they determine whether they're spending their

time on the right things. how much time do they spend talking about strategic issues? how much time do they spend discussing risk factors which have to be laid out in an s-1 on a regular basis? and shareholders should be asking, what do you spend your time on? how do you guarantee that you're governing effectively? in other words, a board's processes need to be subject to examination and how a board spends its time should be reported out on a regular basis. >> yeah. i want to get your take on something regarding hp, which happened yesterday at our delivering alpha conference. well h well-known hedge fund manager talked to maria why he's shorting hp as one of his best ideas. take a listen. >> how low can hp go, do you think? what kind of a move are you expecting? >> we'll wait and see. i mean, if they're burning the amount of cash that i think they will, it's going to get more and more problematic. you know their big product

lines, pcs and printers as well as some software services. but they're in declining businesses. >> they're in declining businesses. he called it the ultimate value trap, carly. what do you think? >> well, i have said on your show among others that certainly hp's cash drain is a problem. i think the management at hp would acknowledge that. i think the management at hp would acknowledge that their businesses aren't earning ha they should. the problem that hp has -- again, i've said this before -- is that the new businesses that they've spent a lot of money to acquire, for example, autonomy, those aren't yet growing or producing. and meanwhile, their major businesses like printing and pcs, aren't earning what they should. if you look at the printer business, for example, when i left hp, it was earning 17 points of margin. it's now back down to 8, way back where it was in the late '90s. the difference in those two margins is all in supplies. and unless the company is able to invest sufficiently in r&d, believe it or not, supplies are

patent intensive and marketing to expand the uses of printing at a time when a lot of folks are printing less, you're not going to get those kinds of margins again. the pc business can be a good business, earning three or four points but not if they are no longer innovating and don't have any way to get into where the pc business is going. so i think everyone would agree hp is in a tough spot right now. and the difficulty is that hp as a company has been majoring in cost cutting for many, many years now. where are they going to find the resources to invest in r&d and marketing which is vital to grow a technology business? that's, i think, the great difficulty, and they're hemorrhaging cash. there's no question. >> would love to get your take on yahoo! too. no time today but next time. always good to see you. >> nice to see you. straight ahead, why regulation on wall street is broken and how we can fix it. back after a short break.

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want to bring in gary looking at some of the latest developments related to pfg. >> thanks, carl. as we pointed out last week, there's this whole issue about should regulators have people that worked in the industry be part of the process. i want to get right to it. david greeneberg, you've reached out to me, sent me a whole series of e-mails. you're a professional. you worked in the industry. >> yes. >> you were a former governor of

the nymex. you had a longstanding operation in terms of being a major trader in the business. tell me point blank, you are one of the people that has reached out to the cftc on numerous occasions right after the mf situation. what has been the impact? what has been the results? what have you heard back after you reached out to them? >> we've always had a little small talk back and forth. and it was after the mf global and actually when the world was being strangled at $114 oil that i reached out. i said, listen. i teach. i lecture. i can tell you how to fix this problem. just give me 10, 15 minutes down in washington. i will come down to washington. my dime. not a problem. basically i got rebuffed. >> you were first told that they would be willing to meet with you. i have the e-mails here. i have read the e-mails. they said that's great. we'd love to sit down with you, and you never had the meeting. >> i even told them, there might be certain senators and major corporations that don't want me to meet with you because of what i understand and how i can explain it to you in a way that could help the markets and

actually could help the people at mf. >> i have to ask you this because we did have this conversation on air again last week. >> yes. >> you worked in the business. what was the compensation? what kind of money did you make when you worked in your business over at the nymex? >> as a trader, local trader, i did very well. >> i'm not asking you w-2 compensation statement was, but what kind of money did you make? >> we made enormous amount of money in a very short amount of time trading. and then when i retired, i went into teaching and lecturing because i wanted to -- it was my way of giving back and helping out. >> okay. so if somebody from the nfa is watching this segment right now and they said we have an application process, we bring people in, you've got the industry experience, we pay for a job like that, $65,000, $70,000 a year. are you going to tell me that you're going to accept a job like that, go work for the nfa and try to help them uncover some of these things? >> yes because not only is it a challenge for me but it's my way of giving back to an organization as far as wall street that did very well for me and many of my friends.

>> i said i have these e-mails here. right after the mf situation, you specifically cited where you thought they had to look at mf. >> yes. >> give me an example of what you told them to do after the mf crisis began. >> well, at the time, chilten was speaking at the law school about his book. i made sure i went to the law school and cornered him. >> what law school? >> new york law school, just in the midst as everything was happening. and there were traders that were locked out. the cftc was putting more risk into the market by having these traders locked out. i basically told him, listen. first of all, there are certain things that are not at risk that you guys are saying that are. and we had a quick conversation about that. i also told him which part of mf to look at. >> when you say which part, did you give them specific names of specific people in risk management areas they should speak to? >> i gave them a name in risk management where they should actually look into because this was the time -- i told them don't bother with corzine. he's not going to tell you anything. these people are going to talk.

>> did they speak to anybody specifically that you put them in touch with? >> no. from what i understand, they never called the risk department. >> if you were working at the cftc and you had gone out and you had been there, what would you have been able to do differently that somebody who's working there right now who didn't have industry experience, how could you have prevented it given the fact that you've worked in the futures industry? what could you have done differently? >> you need to ask more questions and the right questions. >> what is the right question? >> the right question is why are we sending anything to a p.o. box in this day and age? as small as the p.o. box concept might be, it was a major flag. anybody can really manipulate certain situations and statements to make it look good. but you always have to go that extra distance. i banged my head against the wall when the cftc came to the exchange because they blew so many cases because they never asked the right people the right questions and never thought out of the box. >> let me ask you. so you truly believe there are people like yourself who are

willing to work for the regulatory agencies to try to help create a better atmosphere of regulation to help and protect the consumers? you believe there are truly numerous people like yourself who want to do this? >> there are not only people like myself but there are people that worked within the exchange and compliance that offered and got turned down, too. >> all right. david, thanks very much. you know, carl, it's important that we point this out. again, we did reach out to the cftc to give them specific comments about these e-mails. we did show them. this is what they said. there is a general prohibition against accepting voluntary services. however, there are instances where we have had unpaid consultant and student interns. if your guests would like to contact us to discuss what's happened to him or discuss please do so in writing to the cftc. obviously he's not a student intern. he has written to them. i have seen and read these e-mails. i don't know what the answer is here. we want to say we contacted the

cftc. this is what they had to say. i have come down on the side of david in the sense that i do believe we need to have people from the industry in these regulatory bodies to understand what is happening. >> discouraging but it's interesting to see people like you doing what you're doing. >> yes. >> well, we're happy to help. it's interesting times. >> thanks for coming in. >> thank you. when we come back, one of the hottest new internet start-ups around, fab.com, transforming the way you shop. the company also just raised $100 million in funding, putting its valuation at $600 million after one year. we'll talk to the ceo after a break. [ male announcer ] when a major hospital

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fab.com, one of the hottest new online shopping sites for the way it's transforming how people shop online. if you need more proof, the company just secured another round of funding of $105 million. jason goldberg is the company's co-founder and ceo who joins us here at post nine. good to see you. congratulations. >> thank you very much. >> it's getting a lot of attention. i saw one post today that described your ambitions as besosian, if that's a word. talk about how difficult the funding was to get, the back story behind that. >> a year ago we didn't even exist. we launched the website in june last year. 5 million members selling in 20 different countries. we'll do around $150 million in sales this year. it's been an enormous ride. you know, in terms of financing, we looked at is we have large ambitions. we want to build a global brand we think that fab can be the brand synonymous with design for years and years to come.

we think the market for design is huge. we looked at some offline comparables and ten companies we looked at out of $50 billion in sales that we're disrupting. we've had a lot of folks give us funds. a lot of folks buying into our story. we just say we're at the beginning of a very exciting journey. >> the story changed from the inception, right? not a lot of companies have the guts to make a turn like that. can you just talk about what that was like? >> yeah, you know, two years ago we started a social network. and it was targeting the gay community. it was a big market. a lot of discretionary spending. built some pretty amazing products. and after a year we scrapped it all and decided to pursue this. it really came down to myself, my co-founder. we said what is the one thing that we're the most passionate about and we think we can be the best in the world at? it took us a second to say design. we noticed before fab, there was no one website synonymous with design. we've taken a highly fragmented market of tens of thousands of suppliers around the world making great stuff and put it all together in one place.

>> so was that shift seen by venture capital as a liability or as a plus? >> you know, i think as a plus. i think too many companies don't know their one thing, the one thing they can be the best at, and they don't find that one thing and kind of keep iterating. you can have the best product in the world, but if you don't have a user base, no one really cares about it. you can't iterate your way to a business model. we said let's scrap the whole thing and do something we felt we could be the best at. it's amazing to see what it's turned into. >> let's talk what you do with the cash. you've talked a lot about investing in europe which seems to fly in the face of some macro worries. tough call? >> look, the european consumer is still moving from offline to online. the european consumer still has interest in the products we're selling. we see it as a booming market for what fab is selling around the globe. we sell everyday design objects. it's stuff that people can pick up literally every single day. it's all categories, all price

points. about 55% of the products are home products. we also sell a lot of art, jewelry. but it's stuff that people need in their everyday lives. in terms of markets, we were very quick to go to europe. for a company that's, you know, only a year old, we went to europe in february. we're now selling in 20 countries. 18 countries in the eu. you know, europe's going to be about 20% of our sales this year. we think we can grow a very large business up there. >> you're the best dressed man on this set, that's for sure. jason, congratulations on the money. and we'll be looking forward to seeing how the growth story turns out. >> thank you. we're just getting started. thanks. >> jason goldberg, fab.com. final thoughts on today's market action after this break. don't go away.

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geico, see how much you could save. welcome back. we're going to close the show here on the floor and after that interview talking about people who retire from the business want to go back and help police the business. >> right. >> it goes back to a long-running debate you've had. >> i know this is the case and i know there are a lot of people out there like david. i want to read one e-mail we received. as a former managing director, i'd work for free to bust fellow corrupt colleagues. i'd even pay the s.e.c. to work for them, no joke. i'm not going to say who it is. i know there are a lot of people out there. it's about time the cftc, nfa

and other people who are supposed to be protecting the consumers bring in people that are retired from the industry. this bureaucracy about having the insiders only be the people there, it doesn't work. it doesn't work. it's about time for change. >> you don't want to have that discussion again. >> no. other things to talk about. yep. meanwhile, with a minute left until high noon, let's get to santelli. what are you going to watch in the afternoon, rick? >> reporter: nonfinancials. we're going to watch things like corn, soybeans, live cattle, hogs and hopefully we're showing some charts. an amazing run. you know, we're well over 16 bucks on soybeans. the september corn contract traded above $8. we've never traded above $8. if you're looking at what's going on with new cop, it sold for a whisker under $8. live hogs and dalgcattle on thed side, if you look at the one-year char,