fact that 70% of companies are in fact beating earnings. i would say short term, you know, this is a buying opportunity. vx is coming in. >> thanks very much. that will do it for "power lunch." >> "street signs" begins now. will recession be here before the end of the year? some say it's what earnings now suggest. we're going to dig in to the real financial risk and what the numbers are actually saying. >> homes as havens. things are getting a little better in housing but is it for the wrong reasons? plus, why herb says you should be aware of the freshman ceo. and the big-time value investor doubled down on research in motion. that's right. you heard us. doubling down on rim. hello, everybody. catch mandy on "closing bell" today so here's your scoreboard. we're down eight mondays in a row now. the longest down monday streak in a decade.

do you need a silver lining? if so, up more than 100 points off the lows of today. still, even with that, all three major averages seeing the biggest intraday drops in a month. all three have now gone negative for the month of july. wiping out the gains from the 23rd or 23rd of the year? the month i guess, yeah. check in with bob pisani. this kind of summer. help me out with something else which is this. a couple of days, not saying everything was fantastic but didn't have the renewed fear. we go to bed last night. wake up. all of a sudden greece, spain back in the head loons. when's happened? >> i'll make it simple for you. if spain has to go far full-blown bailout, in addition to the banks, that means italy's in play and that means the europe breakup is much more likely. they have to give spain money without a full-scale bailout request and that's a tough, tough call. that's the problem right now. but meantime, look how the u.s.

is reacting. 10 to 1 declining to advancing stocks at the open and, well, just slowly gotten better. cut the loss in half. if you want to look at what's better here, materials, energy, financials. all of them were down almost 3% at the open. look at that. cut everything in half. u.s. market does get a little better. forced selling at the beginning. europeans had to sell some u.s. stocks. looking at open groups here, the gold stocks, no safe haven. the you're a gold guy, you pray for central bank intervention and nothing else to help gold stocks right now. all of them down 2% to 5%. finally, brian, in correction territory with a number of sectors. financiia financials. energy and tech on the edge of down 10%. brian? >> not the kind of monday we wanted but thank you very much, sir. this week one third of the

dow and about one fourth of the s&p 500 members release their earnings and we need the visibility, folks, because based on what we have seen so far some believe recession is on the way. let's discuss. joining us, drew cannateli and steve. all right, drew. the most read story on cnbc saying something to the effect of earnings are signaling recession in america. do you buy that? >> no. earnings are not signaling that but maybe revenue. the top line is suggesting something like that. but if you really look at some broader indexes, just look at composite leading indicators for the whole world now. okay? signaling a growth. okay? somewhere around 3%. nothing great. okay? but still signaling growth. we believe the growth is still intact. we're not recession territory yet but you might pay attention to what retail sales are saying to you. on a year over year basis. they're down about 4%.

it looks like a very sharp decline but a lot of -- three of the last four recessions predicted by retail sales growth, less than 3% year over year so you want to look for something -- >> yeah. you have to admit guidance is not good. analysts ratcheting back expectations. companies themselves walking wall street back. >> right. right. it's -- you're in a very, very slow growth environment and just tough and this is very consistent with the soft patch we hit this time last year. it looks very, very similar. although not as bad with the leading indicators. we are betting right now but you really should be watching the retail sales. we believe to tell you if we're going to slip in to a recession here. >> steve, what do you think? recession by this time next year, yes or no. >> i would say no. inventories near all-time low. employment, productivity near

all-time high. not a lot of excess labor to cut at this point. they're managing very, very conservatively. and as you can see in this earnings season given conservative guidance so those aren't the -- to get a recession, you have to give a big cutback in something and not a lot, you know, housing auto, all near all-time lows, maintenance levels. i don't think we get a big cutback and withdrew on that. i'd be more concerned, the market action is not great for thecyclicals. good to see one of them rallying. the cyclicals killed. looking at autos versus telecom, i think a 30% difference in the return. but even in the rally in july here, you've got telecom up 2, autos down 4. they's telling me it's really hard to stick with these cyclical stocks, you know, in the near term. i think there's too many

uncertainties. >> so steve, i don't have to look at a caterpillar down 22% over 3 months saying this bodes ill for industrial america? that's how i'm looking at it right now. >> that's a stock we like. we would not buy it ahead of earnings on wednesday. i think it's nice to rally here and people got to wait to see what -- they're going to guide down. caterpillar's as much a china story as it is a u.s. story. we think china's soft landing. bad news of china is out. the authorities are on it. when china starts to pick up in the second half, caterpillar's going to take off. the stock's been pounded and early here to -- if you want to put money to work and advising people to do, we sort of wait for lower levels here. i think the markets in the beginning of another pullback. we had a nice little run off the lows here about 8% and i think now we're probably in a little

bit of a pullback mode for a few weeks. >> before you go, give the viewers one or two picks, investment ideas that they can profit from for the rest of the year. >> well, steve's going to love this. my first pick is svaax. the fed rated strategic value funded. you like it? >> i love it. it's defensive sector. >> yeah. and then for somebody that likes an etf doing something similar and not actively managed is the dvy. it's dividend play, again. that's where we are seeing a value and we think buying in here at these levels does make sense but you also want to make sure you're still diversified across the board and good entry point for gold and commodities. >> it was a pleasure. i like the guest to recommend the product of another guest's firm. >> don't you love it? >> herb is sitting here grinding the teeth. happy monday, herb. down eight mondays in a row.

didn't like what they had to say necessarily. >> no, no, no. it's okay and revenues and recommending etfs. why not -- >> dividend-paying etfs. amazing rally of corporate bonds we have seen this year. >> by the way, there's more than the dvy. there's others. >> we talk macro market. very big picture stuff. now a small to mid cap stock. we talked about before, a battleground name, virnetx. >> little in the way of revenue. no profits. 13 employees. investors bet on a bunch of patents to control secure communication. the bulls believe it could be the next qualcomm. a few years ago the company won a pat ebt case against microsoft prompting it to sue apple and cisco but as with any patent

story, it's never as clear cut as it may seem. the stock tumbled friday on a negative twist to the apple complaint and gets to a hidden risk and that is that ceo larson controls 18.8% of the shares and most pledged against some kind of an obligation. company hasn't provided any additional detail but here whees you need to know. with pledge shares there's a risk of margin calls if the stock is below a certain level and that sounds familiar, that's what happened to green mountain coffee recently. i have more on this. right now cnbc.com and i want you to know this morning i spoke with ceo larson very briefly. he picked up the phone. the company didn't return my calls in a week or two and i asked him, is there anything about the pledge shares you want to talk about? call me before i go on air. let me know. i have not heard of them. everybody thinks they know what will happen. they have some intellectual property but whether's the

value? that's where the bulls and bears are fighting. >> to be fair, not the only company in a middle of what does that patent be worth, right, story. >> so many. >> right? eastman kodak. >> they lost in their apple suit. >> it is a name that -- well, anyway. they were put in a lot of hope on that patent. put it that way. all right. a market flash now with brian shactman. >> thank you very much. lululemon. still a positive year up about 25%. up 2.5% and right near the highs of the session. so, down dog. back to you. >> like the yoga preference there. thank you very much. on deck, general motors and ford's rough road. both either at the 52-week lows or dog gone close. is it an overreaction to europe or a real sign of trouble? honey, i shrank the iphone. the big change to make the iphone incompatible with all of

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speaking of stuff with engines, we have a double disaster deyour today. gm at an all-time low since it reipo'd. ford at the lowest level in more than a year. look at that r. the autos a

fresh sign the economy is hitting the skids or really all about europe? joining us now are auto analyst at citi and ceo of edmonds.com. you liked both of the names. do you still recommend investors buy gm and ford? is the selloff an overreaction? >> it is. in the short term, europe is a problem but the companies are fundamentally different and seen u.s. auto sales slow down for a month we think there's good news ahead in terms of significant outperformance in pick chup trucks and fresh product cycle of both companies. europe is an issue. earnings estimates are coming down but the valuations we think reflect it. the balance sheet will absorb this and the tougher europe gets, the more likely the industry could be to tackle the over capacity issue of europe. >> do you believe that investors overreacted to an obviously slowing europe and maybe not to the extent they have wiped out the market caps on ford and gm?

>> hard to say they have overreacted. earnings estimates are coming down. we believe far, far worse scenarios are priced in to europe. ford made money in europe in six of eight years there. much like you saw here in the u.s., will go up in europe and that could mean higher long-term profit margins. the fact that the companies earn near record margins on a $14 million sales level is something nobody thought the industry could do five years ago. and then in five years, it could be a bit of a blessing in disguise. >> all right. let's go to that. jeremy, talk about america for a second. right? you heard him talk about the 14 million number. kind of being seen as a line in the sand for auto sales this year. do you believe we are still on pace to sell 14 million units this year? >> well, i think that's really the key question because for the last few months we have seen mixed indicators and car sales

keep reporting pretty good numbers. generally 14 or above. hitting 14 again in july. but when you kind of peel a little bit deeper, there's a series of one-time events i think helped to buoy those numbers. earlier this year, the weather. seen a real opening up in terms of credit. for a lot of people who couldn't get a credit loan, loans are available. that's created nice demand in the marketplace and we have seen the japanese really regain their footing. they're the only car company that is are seeing sales increases really in july over june. the question is are these things going to continue and what's the impact going to be for the balance of the year? weee a slowdown hitting the marketplace. >> you do? >> yeah. >> based on traffic to the site, what are you looking senate. >> when we do d the forecast last year, we were cautious and the beginning of the year ahead of the forecast. baked in to the forecast last year. we see the fundamentals slows

down and i think the ability of car sale it is kind of defie gravity are limited. i don't think that they're going to collapse but i don't think we continue to see sales even at the 14 million level. we' see some slowdowns from that point. >> is the worst behind gm? >> it's hard to tell in europe. probably it is not. i think north america's a very bright outlook as gm launching their higher margin full sized pickup trucks and suvs. as i mentioned before, more demand and people expect right now so i think north america, no. europe hard to tell. south america they have been turning the corner so perhaps we have seen the worst there. >> yeah, getting a headline right now of dow jones crossing in the segment that chrysler weighing a plan to invest $198 million in a detroit factory so i guess, jeremy, last comment to you, if you're sergio and seeing disaster ahead, i'm not sure tow plan to invest $189 million in a

factory. >> i think chrysler's one of the real bright points in terms of the u.s. auto recovery. they were down almost in half and bouncing back nicely and obviously adding capacity to try to keep up with the demand. looking at the overall market, i think republicanty of reasons to be cautious. >> all right. guys, thank you very much. all right. well outside of the world of business, there are two other big stories taking the headlines today. the suspect in the aurora movie massacre with the first court appearance and ncaa handing down the punishment to penn state. it's an unprecedented series of penalties for penn state for covering up the sex abuse allegations against jerry sandusky. all right. here's the rundown for penn state. $60 million fine. all the wins from 1998 to 2011 will be wiped out. this knocks paterno from the spot of major college football's winningest coach by did way. a ban on all post-season play

and a loss of ten scholarships a year for four years and five years probation. any current players can transfer and compete at another school and over the weekend the statue of coach joe paterno is removed from outside the football stadium at penn state. now the latest on the colorado movie shootings. james hall ms in court this morning. the 24-year-old arrested after opening fire in a packed theater. at least 12 people were killed. dozens more injured. prosecutors considering pursuing the death penalty case against him. you could see that he had dyed his hair red and he looked sedated. odd appearance from james holmes. still to come, the bear case for sears. plus, should you stay away from stocks with a rookie ceo? herb will make that case. turning dough in to millions. how a twist of fate turned a

farm stand item in to a worldwide snack sensation. i always like talking about worldwide snack sensations. "street signs" back after the break. [ male announcer ] how do you trade? with scottrader streaming quotes, any way you want. fully customize it for your trading process --

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so anyway, i've been to a lot of places. you know, i've helped a lot of people save a lot of money. but today...( sfx: loud noise of large metal object hitting the ground) things have been a little strange. (sfx: sound of piano smashing) roadrunner: meep meep. meep meep? (sfx: loud thud sound) what a strange place. geico®. fifteen minutes could save you fifteen percent or more on car insurance. it's beautiful part of the

country. >> yeah. >> harbor -- all right. well, the bears are all over this market and one of them apparently a big fan of sears. 200-pound baby bear walked in to a sears mall near pittsburgh. it was tranquilized and taken out. not taken out but like removed from the sears. wall street bears by the way out for sears today. year to date the stock up 55%. and you heard tyler and i having a nice conversation of how beautiful the upper peninsula of michigan is. >> we'll be up there together. auntie annny's a staple in many mall food courts and tonight on "how i made my millions" find out how a twist of fate turned it in to a worldwide snack sensation. the soft pretzels. here's a sneak peek. >> that is an auntie anne's

pretz pretzel. >> this is auntie anne. her husband jonas helped develop the recipe. they knew it was delicious but never expected the public's insatiable appetite for it. >> it was a surprise for us to go from one market stand. >> we made a loan from my dad for $6,000. and i thought i was signing my life away. >> they made pretty good pizza but their pretzels -- >> the pretzels were a pain to me. they're not good. >> they were yellow. they were bad tasting. >> i told him i'm not going to sell them anymore. just pizza and ice cream. and he said before you give up, let's try something. so he comes back and adds some ingredients to the existing mix that we had. we opened the oven door and it was like, they look different. >> all right. tyler here now. we are done talking about vacation plans. that is a heck of a story. >> they started with nothing. no experience. the husband was going to go in

to the counseling business. she was doing something else. they begin going to fairs and sort of food courts. food stands on the weekends and they realized they had a hit and several hundred million dollars later they're -- she's now sold the business but continues to go check in. amazing, brian, as you certainly know, how many of these stories for "how i made my millions" come out of food, drink. the potato chips or top pot doughnuts. >> good, by the way. >> hint water. pretty good, weren't they? >> keep the box away. >> little babies. >> you don't feel so bad about it. it was fantastic. they say you can't make money in food or restaurants. "how i made my millions" over the years disproven this. >> we had coconut water. we have done makers mark bourbon. one of my favorites, by the way. quite a story for annie and her family and you can catch it all tonight at 9:00 on cnbc.

>> 9:00. "how i made my millions." thank you very much. up next, we'll find out why in the world anybody would want to double down on rimm shares. and possibilities of an i headache. a change that apple could be making to the iphone has some people, well, a bit annoyed. "street signs" will b back in a moment. verage just crossed above the 20. tdd# 1-800-345-2550 we're hitting new highs. tdd# 1-800-345-2550 the spx is on my radar. tdd# 1-800-345-2550 and i'm on top of it all with charles schwab. tdd# 1-800-345-2550 tdd# 1-800-345-2550 i use streetsmart edge and its tools like... tdd# 1-800-345-2550 screener plus. tdd# 1-800-345-2550 i can custom build my own screens tdd# 1-800-345-2550 or use predefined ones to help me find tdd# 1-800-345-2550 possible trading opportunities quickly. tdd# 1-800-345-2550 i can also bounce my ideas off their trading specialists - tdd# 1-800-345-2550 on the phone or face-to-face. tdd# 1-800-345-2550 and i can trade wherever i want, whenever i want. tdd# 1-800-345-2550 tdd# 1-800-345-2550 the kicker?

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all right. welcome back. as we said, mandy cohosting "closing bell." meantime, we have herb here on "street talk." let's talk about rimm. a name our viewers know we talk about extensively. a guy, well-known value investor in canada on the board of the company doubling down on rimm. >> of fairfax. interesting because, you know, he bought in to overstock.com a number of years ago before it fell down and then bought some more. i think he likes to go after companies -- i don't know this far fact -- with huge short positions. he doesn't like short sellers. they went after his company. so i think that's that going on. is rimm a value play? we'll see. they get caught at times. >> from 5.1% to to 9.9%me.

we now know who's buying the stock. wet seal. you don't often see a company use the word terminated with the ceo. usually they retired, chose to pursue other opportunities. not here. not here. >> this was not a good thing. the c eo is fired. when's interesting is been there only since january of 2011 so whatever happened in that span of time, you know, you have the business -- >> stock tanked over that period of time. >> yeah. so obviously, the stock tanked and if you look at the sales growth and the earnings growth, everything tanked. but was there anything else? you want to know what made them come through the termination issue. >> there's lawsuits against the company. those were filed before she became ceo. >> absolutely. >> but there's a lot of stuff in other words going on with wet seal aside from the ceo being terminated. >> came from american eagle

outfitters. >> it is a small cap but it was a billion dollar company. >> a battleground stock. >> cablevision. merrill lynch liking cablevision, upgrading the stock to a buy from an underperform. raising the target to 18 bucks. they still see about $3.50 of n upside. >> i look at the sales and earnings growth and look at the trend. they got to be counting on this being a trough because the trend is not cablevision's friend. even cash flow, a big thing for cable companies, you know, free cash flow is like eking it out but as an optimum subscriber, i hope everything goes well. >> usually here we talk about stocks big time moving. a name i plucked it out, it's not really moving today, kennametal but a huge piece in "barren's" about kennametal. making of specialty metals.

quoted a fund manager saying, yeah, the stk's crushed and more of a believer now than ev. i wonder if you had a chance to read the piece. >> i didn't have a chance to look at the piece. real quickly, trend against it. this is where money managers make their money with a great call like this. >> if. the trend is this. >> yeah. >> they had one or two fund managers saying the bottom is reached. >> right. >> let's move on. rail america it is on the move because it's caught. the stock is at about that mark, not a lot of arbitrage play there. up 10% in the market today. the otter tail valley railroad. going to minnesota. >> you know, i have to tell you something. when i was in minnesota, i covered the short lines. i didn't know there were short lines. i covered sioux. i didn't know there were any others to be bought. >> now they combine them.

genesee wyoming and -- >> not a short line. >> they have also got rail america has pretty significant operations in chile. >> really? sigh with some of the copper mines and commodity mines down there and could be an international play for genesee and wyoming and do you view it as an economically bullish sign or a things are going to get worse let's do a deal to hunker down? >> an opportunistic sign. >> well said, sir. we may soon find out if the most devout apple iphone fan would be irate. i can't go on. the iphone 5 may ditch the current connecting plug. >> no. don't do it. don't do it. >> flat one with a smaller 19-pin model to free up more room in the phone for longer battery life, whatever. but it may also drive people insane who have bought many of the current lines. our technology reporter jon fortt is looking in to this.

all right. jon, the apple community is willing to take on a lot. right? any change they make, they go with it. but if you're like i am and 72 different chargers, connectors, whatever, and they swap it out, it's some point will people say enough is enough or can they do whatever they want? >> reporter: what will you switch to? blackberry? maybe. >> zing! >> reporter: the chances look very good, brian, that the next iphone will have a new dock and that means probably all those car chargers, speaker systems and others will need an update. i'm not in the camp to think it causes majors problems and sort of a good thing. for one, some accessories still work with an adapter and really good technical reasons why the dock would have to change anyway. come back here with me and take a look. here's the pin right here. i've got it up here on this screen. zoom in a little bit. it's 30 of them.

30 little pins here. which you might not know is that each one of those little pins has a specific purpose. and so let's bring up the full screen and show you what some of those are. as a matter of fact, the ones to show you here are pins we don't need anymore. pins 8, 9 and 10 for the ipod photo and ipod color. those don't really exist anymore. and then a bunch of other pins in this, 11 to be precise are for firewire power. apple doesn't use firewire power anymore. how many do you have left? 19. just mentioned. you mentioned 19 the rumor going to. it could be that. so that brings us to this point here where we can say what you might end up with is fewer pins and a better situation where apple can as you said fit more components in there and lead to sturdier designs. >> i'm glad you mentioned firewire. maybe there's a great example there, jon.

listen, i had the old ipod, first generation. they took that away an switched. i had to. but now there's more mom and pops that have apple products than back then. you don't think -- sounds like you don't believe it matters for the company. >> well, i think what you get is a you get the two-year product cycles with apple's signs. you have the iphone 4, you have the 4s, most of the same accessories for them. now moving to aye phone 5. who knows what they'll call it? normally the early adopters moving to that. and then you're probably going to want new accessories anyway and could have an adapter to make it work with older equipment. >> hey, jon, what benefits from this? i don't feel i'm going to benefit as an apple user. >> best buy? >> well, you know, best buy certainly. logitech. the folks who are heavy in to apple accessories, a number of companies doing that.

at&t and carriers of being upsold accessories on top of the phones they're buying and apple if it's a hit because in the stores it sells accessories and if the 19-pin thing, if that's what it is, works out, they have a differentiator in the design, guys. >> we heard your phone. it's rimm online one. thanks very much. >> all right. up next, do companies lose their mojo when there are changes in the sea sweet? herb will look at that and high profile ceos in the first year on the job and how the stocks did. should you shy away from freshman ceos? we'll take a look.

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coming up at the top of the hour on the bell, the president of the san francisco fed warning the u.s. economy faces significant downside risks from the eurozone crisis. does the central bank need to act now to save the economy? bond king bill gross says real assets are a better bet than stocks right now. the ultimate bull/bear debate.

one strategist says the dow will hit 20,000. another says we're headed for 3,000. which will come first? that debate coming up again the top of the hour but first more "street signs." >> wow. that's a heck of a debate. that's a wide difference in estimates. all right. well, it was tough quarter for mcdonald's. earnings fell 4.5%. ceo jim skinner retired before the quarterly numbers came out. did he see the trouble ahead and maybe bag out? should you be weary of company with a freshman ceo? joining us peter beckfar and herb is also still here with us. peter, what say you? should you just avoid any company with a ceo with less than a year's tenure simply because, a, you don't know how they're going to do, b, you don't necessarily know often why the previous ceo left in. >> could be a variety of reasons that that ceo left an enthat's what we have to look at first. a mandated age requirement?

was it because of poor performance or speculate that maybe the ceo leaving thought maybe as good as it gets and maybe what the mcdonald's ceo thought. i'm a buyer if a new eco comes in after poor performance. in age requirement, maybe there's not much of a change and the third one, of course, be careful. >> peter, okay then. if you're a buyer after poor performance, do you care about the incoming ceo's resume? marissa meyer, not a ceo before. would you prefer that grey history and never in the c suite or somebody held the job at tw or three places? >> no. i mean, that's a good point. it is really more feel. obviously somebody like marissa with no ceo track record, it's a leap of faith. you can make a better assessment of that leap of faith rather than someone you never heard of. >> peter, this is herb. you know, getting out while the

getting is good is an interesting theme and this freshman ceo theme is actually a jim cramer theme. he's the guy that often says beaware of first years and he makes a very interesting point. i have to tell you there's no one size fits all. i went through a total list of changes and i went back two years because i wanted to see an extended performance on some of these but when you look at them and even the past year, you look at an ibm, you know, and you look at the change there and you see declining revenue growth. may not affect the stock because the company's an earnings per share story but you have a revenue growth per share story there. you look at caterpillar and we talked about in an earlier segment and the ceo took over as things turning and knew it to your point but then you look at a cummins really doing well and had the tail end of the truck cycle and the new ceo has a tough time. >> a lot of this is luck and

timing. jack welch ran ge up until the stock market fell apart and is that jeff immult's fault? no. it's state of the market. it doesn't matter who's ceo. the market will continue to decline. that's an important thing of investors to pay attention to. when's the state of that business? is it salvageable no matter who the ceo is? >> there are, again, companies where you see just the opposite. i look at a hershey. walmart. people forget about walmart. mastercard. new guys coming in and the company doing extraordinarily well. >> walmart does have -- >> they have issues but if you look at the numbers -- >> they have issues. take a look at the numbers. since the management change occurred. that's what i'm looking at is numbers. not the hype. not anything else. >> fair enough. herb and peter. thank you very much, gentlemen. >> thank you. coming up, larry kudlow just wrapping up an exclusive interview with mitt romney.

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well, just a few minutes ago larry kudlow caught up with mitt romney for an exclusive cnbc interview. larry kudlow joining us right now. i have a feeling the issue of taxes, wild guess that taxes might have come up. did they? what else did you guys talk about? >> yeah, they did. a couple times. one is about the fiscal cliff where the bush tax cuts get extended or another and another about romney's own plan. i asked him specifics to fix the economy. many of his supporters want him to give specifics on growth and came up with tax cuts there, too. i think we have a clip of a runway for tax cuts. do we? >> my plan is one to get a bit of a runway for policies to get the economy going and so when i say extend the current tax

setting, what i'm saying is don't raise taxes. keep the taxes in place that we have. and then i would like to reform our tax code by bringing the rates down across the board for everybody. also, limiting the deductions and exemptions so that highest income people continue to pay the share they're paying now. not looking for tax breaks for high income folks but more money kept in small business so it can hire more people and pay better wages. >> you know, i also asked him if he could be specific on a number of things and actually he boiled his 59-point program down in to 5 points, brian, which i thought was pretty good. energy, tax cuts, trade, a balanced budget and what i'm going to call education. he called it investing in human capital. a lot of romney's own supporters say you have to boil it down in to a couple of key points. i think he made some progress on that today. >> yeah. did you, larry, see the latest ad from the obama campaign? i saw it this morning.

it was basically talked about cayman islands, et cetera and the tag line we mitt romney is not part of the solution. he's part problem. >> yeah. you know, i have not seen that ad. but i -- >> i just saw it for the first time today. >> i asked romney if he felt he had -- succeeded and completed his defense of bain capital. and all of the charges against bain capital. and so he -- started to defend himself again and my own sense is that he still has more work to do that as unfair as those charges may be, president oba obama's attack has stung and was a little bit on the defensive there. >> all right. what about aurora and the gun control issue? obviously getting a lot of attention. i assume you talked about that. >> we did. right. at the top. and, you know, i asked him if the aurora tragedy -- lot of law enforce many people over the weekend, as you know, have said that we should have stricter limits about buying ammunition over the internet. and about these automatic guns. semiautomatic guns.

and romney -- didn't want to be too specific. he felt that you couldn't stop this no matter what. evil was going to be evil. in massachusetts, he signed the bill that banned seem write automatic rifles. i asked him how that worked for him. and he shied away from it. he said look, this was a bipartisan bill. that's the kind of thing that he liked to sign. he didn't really want to get dress -- address the issue of whether the ban worked in massachusetts or not. >> good topic of conversation. unfortunately horrific incident. thank you very much. we will look forward to the full interview tonight. you can see it, folks, tonight. very wide range in topics. gun control, taxes, bain. you won't want to miss it. 7:00 p.m. eastern on "the kudlow report with mitt romney. exclusive. other big investors are scooping up distressed properties to rent. there is now actually a shortage

of foreclosures in some markets for sale. to talk to that issue, james brightonstein. i hope i got this right. ceo of land smith. somebody's name i know well, diana olick. diana, thank you. i will ask you first, diana, how many markets are we seeing a shortage of foreclosures in? >> well, we are actually eating them in the markets where we saw the biggest distress. that is out in phoenix and parts of california. you see supplies so low there we are there are investors waiting for the next foreclosure to hit the market. i would be interested to find out what kind of competition are you seeing out there? you are putting the money out there to see foreclosures and are you seeing competition to the point pricing out some of these you want to invest in. >> that's a good question. thanks for inviting me. we were heavily into phoenix. two years ago.

we have been in california for a similar time. those markets are heating up and it -- in those markets depends on relationships. how many channels can you access the market through. and -- part of our recent merger, we have developed more markets. we are now in eight states and we see a shift more to the east. states like north carolina, georgia, michigan, florida. >> does that mean, james, the opportunities that you guys had in california and some of these other markets are gone? >> i would say that there's more inventory that will start the flow back. we believe that in a diversified portfolio. we are still buying in phoenix. you can selectively find homes that you can fix and rent for 10% current return. it is a lot harder and -- frankly, east of the mississippi, there's a lot more opportunity. >> we heard you sold some of the distressed properties you bought a couple of years ago. are you selling these to real homeowne homeowners?

are you selling them to other investors that are looking for that yield? >> part of our -- we have a house-to-home program we buy homes, fix them up and then rent them to people with the intention that with help and with credit counseling, intention they eventually become owners, but the majority of our portfolio we sold to a large fund that's aggregating them to put them into one of the first receive its in the country. >> when you see east of the mississippi, can you be more specific? you mentioned north carolina. are you talking about, you know, bellville, illinois? are you talking about parts of new jersey because the northeast has been pretty late to the party. >> i was specifically talking about charlotte, north carolina. we just bought a bunch of houses there. the -- fully loaded return is around 11% without any leverage. these are 10 to 15 years. >> 11% return with a buy and rent or buy and sell? >> we totally do buy and -- buy and hold. we are believers in the long run. >> or what other cities might

you be looking at? do you not want to give that away fear others will step in? >> it is a little bit -- pardon me? kind hear. >> did you atlanta is a big one right now. i mean, know a lot of investors are headed there. we talked to a lot folks going into the atlanta market because there's so much supply there this will get those properties at that really bargain basement price that you are not getting out west. >> yeah. we are just opening up a new office in atlanta but we actually think detroit has just a ton of opportunity. you couldn't find a 12 to 15 cap return on a fully renovated house that you buy for $40,000. >> you have to find somebody to rent that $40,000 house from you. are there enough new people moving in or enough people that need place to live that even with a $10,000 house in detroit, you can make money on it? >> you can make money because in the right neighborhoods, if you are on the west side, you are putting together fully renovated

properties that look nice, deansent skooms. $700, $800 month rent. that's a ton of return. >> it is. hey, good stuff. we learn ad lot today. james brightonstein, thanks. diana olick, thank you very much. all right. next -- my favorite story of the day. a chance to get your hands on a rare ferrari or four. i take insulin,

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brian shactman at the market. taking a look at shares of apple. trading. estimates of 1035 a share. there are 41 analysts on this stock. a lot of options traders, brian, say that -- they are looking at maybe a 5.5% move in either direction after earnings come out. >> big one tomorrow. thanks very much, sir. all right. beautiful story the end the hour. four rare ferraris are set to be auctioned off next month in santa monica, california. rare machines could bring in 20 million or more. they belong to sherman wolf, a boston entrepreneur, who passed away earlier this year. rarest car from the collection, 1960 ferrari 250 long wheel base gto spider. only one of nine ever built. could go for $79 million. three other awesome cars as well.