bank ceos, should they be on the boards? you were one of them? >> i thought it was good being on the board of the fed. i thought it was important. they need to be on the board. >> please come back. it has been a pleasure. >> it has been a great two hours of news making. make sure you join us tomorrow. "squawk on the street" begins now. >> welcome to squawk on the street, live on the new york stock exchange. let's take a look at futures and how we are setting up. tlooe consecutive days. as for europe, spanish and

italian remain elevated. our road map this morn ing morns full year guidance. >> will that be enough to upset what was a rare miss by one. they have gotten a downgrade this morning. telling cnbc this morning that investment banking should be completely separated from commercial banking. what is behind this major change of heart. we have got all the details. >> beating the street.

>> all are open for businesses. >> this was a remarkable quarter. i think you're right. the stocks, they have come down a great deal. very tough cycle. we're expecting monster shortfalls to see the best quarter ever and recognize that they are doing so well in a variety of markets. plus let's not forget, oil at 90

tlrs is exactly where they make the most money. this is hard to be as bullish as he was for me because he is talking about a turn coming in 2013 in major markets, but he has been right so far. it's difficult to say he's too bullish. >> what about you? >> caterpillar is down great deal. he is skirting europe. >> if you read behind the lines

or between the lines, that is something where there are a lot of interesting details. i took down the top end of the revenue guidance. the. >> that had strengthened greatly since the prior time they gave the forecast. they beat the second quarter by 26 cents. >> they thought there would be a second half term and that was clearly wrong. but they are talking about trends that are very strong. they did specifically call out weakness in china. but they are taking share and killing everybody. >> is it american pride?

caterpillar, people are paying up for it. people were taking their cue from air bus and other machinery kpaeps from around the world. boeing blow out. >> this after lock heed martin. defense seems to be holding up more than what investors have anticipated. they reaffirm their guidance. 600 commercial planes this year. also got a lot of airline earnings which came in better or in line.

>> the last man standing was air bus. when this moment is clear, it is a company that is having, as boeing did have, a real hard time making a flight. these american companies are hit or miss. i go back over the terrible ups call. you just wanted to feel so badly about america. we should be feeling badly about asia. boeing is a defense story. they are making money but they did not dwell on the cliff.

good quarter. >> they are defense companies. >> one would expect that see questions trags takes effect. >> drop of 500 billion defense spending. >> it will not happen. on the other hand, you feel like if i want to play the chicken way, the military, i will go back to boeing. they are saying listen, we are not as sensitive to the shorter term cycle. >> >> now it's no longer

inverted. >> it's a complete and total mess. does this help a market that has seen -- i don't like to do the dow. >> i think it does. >> markable quarter. the cuts are starting to work. complete completely it was the wrong day because of spain. today not the wrong day because of europe. we will play catch up with the ones that did and the ones that caught the rally. >> let's follow the miss. >> that was below forecast revenues.

out there for the top line. that's expected to launch in october. reporting record sales of 17 million. the ipad is still -- the iphone is what? almost 50%. but the ipad is moving up. clearly they did not meet them. the idea being that people loved the product so much that they want to wait for the next one. they are raep with what they have got. >> they didn't want to buy. >> europe's specific call. before i go the positives, rememb remember -- 35% of the business is europe. they are caging. and because they did not want to say the date of when the new iphone comes out you ended up with this -- this is going to be

the pause that represses -- >> the pause before the pause? >> yes. >> you listen to the company. it happened to be better than everybody other company. >> the numbers are still stunning. and of course the multiple on this company's stock is still stunningly low many would argue. but it doesn't really move that much. i don't know. do we have to sit there and wait and see how the iphone 5 does two quarters from now? >> the troubling thing is they took down september and gross margin guidance to the lowest since 2008.

the margins were good. more ipads means lower margins. the pause either before the pause that refreshes i don't know what the heck this is. and almost everybody on the street is willing to look through and say you know what? we're going to keep on believing in apple. does that drobl you? we have had this mess and everybody is going say not a big deal. >> tell the truth. is this samsung taking share? apple's products are really expensive in a worldwide slow down. >> an droid is a real competitor. >> the galaxy may be feigning

share. >> when you go back over the att call and the verizon call, people want apple. >> if this were a high stock, if this were cisco in 2,000. i would say, you know what? yerve is going past the graveyard. this was a horrible miss. to get off this stock right here will probably turn out to be a mistake for 2013. he is not bluffing and this is

not a two two six thing. >> the large e product psychle in the history of mankind is coming and you will want to own apple. >> then you still have $117 billion in cash, which i always find worth mentioning. >> if spain had that balance sheet, we would be out of that. mankind called. you are talking about the pully. the wedge. >> they were not product cycles. >> no. >> let's go back to this one. here we are talking about what is needed in spain.

you know what they need? what would they need? >> they need apple to buy their sovereign debt. >> they need 170 million and they need it now. >> i was watching these ecb guys. it was almost other worldly. we have got time. our credibility is at stake. you clown. you are destroying the world's -- you are a moron. you idiot. i threw a towel at the guy. i'm not even dignifying by mentioning his name. it does not deserve being mentioned. anything banking in europe, sold to you. sold!

>> i think what we should probably do is go and split up investment banking and banking. have banks be deposit takers, commercial loans and real estate lines. have banks that will not risk the taxpayer. >> thats. it will not be too big to fail. he said everything should be on the bleed including hedges. >> i find myself agape. >> there was too little transparency at his bank?

>> i don't think we have heard anything similar to this. i have not seen interview or mention of this. it does seem to be a significant change from the man who really helped put together the modern financial super market. but in particular helped take down. >> there it is. i find it pretty surprising. >> there it was. i heard him give the super market speech. and it was, okay, listen, we're going to to dominate the world. it is impossible?

>> it is not impossible. it could happen. >> it may happen by darwinian logic. what is the market cap at morgan stanley? left behind? >> investment banking has been difficult. >> it's not just about the capital that you have to hold against your fixed income operations. so yes, your point but still. >> are you going use the word hypocrite? >> i would like to understand how his thinking has evolved. >> remember that interview in the new york city a couple years ago. recognized that it -- there was a shake conspiracyian conversion here.

>> this is a different -- this is a different thing all together. >> i don't want to sit here and say listen. what the heck are you thinking, thanks for nothing. >> which banks would feel the biggest impact? if this were to happen, which banks would feel the most impact? >> this is about j.p. morgan. >> coming up here, a squawk on the street ceo triple header. let's have another look at the futures here. we are looking to break the

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>> the u.s. farment of agriculture releasing its latest report. a look nz the numbers. jane? >> hi. we have got the latest number.

here is the good news. unchanged overall. noi let's look at beef. the most interesting story is beef. the usda has lowered beef inflation expectations because cattle ranchers are slaughtering a lot of cattle now because they can't afford to feed them. prices are expected to bounce higher. look at buffalo wild wings. you heard about them yesterday. if this drought is as historic as expected, i found one farmer in iowa who doesn't think the sky is falling -- yet. he has not lost hope yet.

>> until we get a combine in the field, we cannot tell you exactly what is out there. it could be a good crop if we get rain. >> rain is expected. >> at most that will impact food prices 1%. they say look at other things like energy costs. those things they claim have more of an impact. >> hear what cramer has to say about one symptom in particular. updates looking like. as we head to the open. more stock on the street. between black and white answers...

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>> about four minutes from the opening bell. it's time for cramer's mad dash ahead of that bell. >> we bumped in with sheik and good times. i think this company has hit a wall. i didn't think it would be down 16. but they are talking about profitability being up. >> it's more about disappointing. i think they are just mad at them in terms of credibility

issues. will they really make the 70 million sub ad? >> nbc yes, netflix no. . ♪ during the golden opportunity sales event, get great values on some of our newest models. this is the pursuit of perfection.

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take control of your portfolio today. trade commission-free for 60 days, and we'll throw in up to $600 when you open an account. >> celebrating an ipo. the treem project providing education programs for children in the dominican republic. as interesting that apple is only impacting the nasdaq. >> you can see what happens when wireless spending is up.

being able to make 4g transition happening right now. >> it is. earnings yesterday. >> good numbers. >> remember we saw the slaughter of the acquisition? juniper largely reversing those losses. >> a have and have not situation is developing here. down ji can'tically because of chipotle. you have a lot of shorts going

to after the comps. because i got to tell you, chicken prices have tubled. and a lot of it is bigger chickens. >> yeah. >> eat more chicken. >> they can't even walk, the poor chickens. they make them so big that they can't stand on their legs. >> you're a peta guy? >> they can't even stand up. they have t-- they are one big giant breast. >> isn't that good? >> that's from a woody allen movie. >> just as important is aluminum for example. what goes into the can.

>> it is a very mp story and one we are watching closely, it's not always a clear connection. >> i like the fact that they were more eastern europe than western europe for you to lay out. that was a good quarter here. >> i do want to mention if i can, hopefully you can follow me back. a very disappointing quarter. you see it there. they revised their 2012 outlook. they lowered their guidance. they believe sit the right action to take in a challenging market. as low as lower commercial and

higher medical cost. they saw an uptick. they do believe the trend will be in our range. >> hideous. hid yoes. >> it used to be within the realm of market caps. right now it is down by 23.5%. >> a surprise loss is a loss of 21 cents. suspending tifd end. not the last time we down fwraded. is it a -- >> still too early.

>> a fabulous experience of sitting there. the chloric took two phone calls. >> it was a rather seminole moment in retail. >> i wondered when you bring up that name. >> there we go, david. >> it's credit default swaps that are getting more expensive. continues to be poking around on. trying to get some interest.

>> it's a company that is in decline. >> earlier this week, he comes out today and says i'm raising my price target. you know what that's called? >> wasting time? >> exactly. >> i want to point out, i know you got to talk to the chairman. it could be up by as much as 40%. it's basically an organic supplement and food store.

they basically go in areas that are too small. we will learn more about the company. europe higher despite the uk. you have talked about three stocks. >> their profits were down. a look inside the number. the average airlines talk about

it. u.s. airways tripling the year-over-year profits. they took a $561 million charge because of fuel hedges. you x that out they did well. but you can't ignore it. take a look at the rest of the segment. all getting hit because of that well point guidance. >> obviously when the supreme court made its ruling, these stocks jumped clearly bad. >> leading over to a lot of over names. >> thanks, some traders are wondering if there is a little bit of interest rate die v-- we have seen a lot of press on

this. how some of the programs may be tweaked a little bit. more leverage. that's the positive answer. you can see how interest rates move. but not to the same magnitude. and there in lies the interest. by about 30 basis points. the speed at which this correction has occurred is testify knitly meaningful for a variety of reasons. not the least of which is we assume that interest rates are going to remain low.

maybe that is not true. third straight quarter of negative growth. that is one quarter away from a depression and beyond a recession but those are old school. nobody pays attention to that. maybe i do. back to you. >> you know, rick, i mean, you know, the five to ten and the 30 are all new lows, too. we should point that out. >> the fixed income markets, traders will scrutinize anything that has that range movement. it's actually a very good trade.

>> jubilee. >> it's a metals. prices are right around 1600. the first time we have been involved. the 1600 level about two week's time. we did have the commentary coming out talking about the fact that they could get a banking license. that is is what they would like to see. that is definitely scoring buying in the metals market. that's also providing some of the buying opportunities. we are looking at momentum in silver, copper, platinum. all of them higher on the

session in terms of the oil market, we will have that oil inventory down. the u.s. contract below the $90 barrel level. they have been under severe pressure. we learned that demand for gasoline is down 4% versus a year ago. >> het's take a look at netflix. >> worries about their ability.

whether there is a credible gap here. they certainly didn't come in where near adding to the pace that seems to be where investors are saying okay, we're getting out today in terms of hitting that number. they have -- let's take a look. we have a couple of things. talking $24 million domestic streaming. coming down the way it is supposed to in their plan. >> since that posting. >> they are moving aggressively and internationally. there is a chorus -- >> europe is going to save them.

>> if you were to stop spending all this money, you would generate free cash flow enormously. this is a big con ttent buyer. 24 plus million subscribers is not -- not insignificant. >> how about the deal? >> hbo is their main competitor. they are trying to come up with original programming in netflix. >> by the end of the day this is very important buyer content. they have 24 million subscribers

and it is still going up. >> can spain and italy save netflix? >> i don't know. >> and london is going to to hurt it. >> olympics. >> come on. >> you see what they say? it's hard to get people to pay in latin america? i have never seen so many holes in the story. i use exit love it. >> breaking bad. i just started getting into that one. >> what season? >> season one. >> it gets more violent. >> all right. i'm bracing myself. coming up, an explousive. take a look at this morning.

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>> now is the time for the "squawk on the street" olympic torch check. >> we release video of the flame being carried on a train being carried from wimbldon. >> people were watching a typical london double decker bus doing push ups. >> it was part of an art

installation. it took david's assistant to customize a double decker to have arms and lifts to do the push ups. tune in every day. there he is. carl is going to have full coverage bringing us up to date on all the latest developments. >> we should point out, natural groeshers. >> miniwhole foods. >> right. >> that was sort of towards the high end of the range. looking to raise about $115 million. repay debt, working capital. not bad. >> people love food and that's

good for you. there it is. >> as you mentioned, the stock opened higher. given your competitors like fresh market and whole foods are trading at forward multiples in the high 30s. >> we definitely thought this was a good time to come to market. >> you plan to open four more stores. how about beyond that. what about same store sales projections. >> our projection is in the mid single digits.

and over the next year we will open 12 stores and then the next, between 24 and 100 stores. >> to you continue to see them spending as strongly as they have in the past onnor fwanic foods which are often at a premium to regular grocery items? >> they have through the first nine months of this year and i believe the awareness is increasing and they will continue to realize the value that natural and organic gives them in their diet. >> is there pressure along the chain? do they get absorbed at the manufacturer level or your level? >> they get absorbed along the

entire chain. not just at our level. you definitely see the higher fuel costs out there. that has an effect. >> thanks a lot. >> the ceo just opened here on the new york stock exchange. coming up next, six in 60. betwee numbers... ...and listening to your instinct duff & phelps finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services. riding the dog like it's a small horse is frowned upon in this establishment! luckily though, ya know, i conceal this bad boy underneath my blanket just so i can get on e-trade. check my investment portfolio, research stocks... wait, why are you taking... oh, i see...solitary. just a man and his thoughts. and a smartphone... with an e-trade app.

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>> time for six in 60 seconds. you love the rails. >> lost in the shuffle. every line doing great except for coal. >> they had a strong quarter. >> this is again one of the companies that tells you -- altara is the right product for wireless. >> dominos got an upgrade. >> better late than never. i think the stock goes higher. >> regions financial. >> you should buy the regionals. i can give you one. >> lumberly kwi day tors. >> this is a pure play on

housing. >> breaking news on home sales coming up. stay with us.

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>> welcome back to squawk on the street. june, new home sales. down 8.4%. seasonally adjusted annuallized clip of 350,000. we are expecting a number north of 370,000. but really what made it a bit worse was last month was revised higher. exaggerating the drop town to the current level of 350,000. you know, our last look at the april number was 343,000. so this doesn't stand out with regard to a range but it really is a bit of a reversal.

melissa lee, back to you. >> thank you. let's get more reaction to the new home sales data. >> we have been hearing a lot of talk about demand being pulled forward. when we look at this other. not closing. these are folks who walked in in june. we are not looking that far back up. prices are actually down from 242,000. how much? >> a lot of new construction competes directly with the distress market because some is relatively new construction.

it's far better than the existing. the builders have been very bullish of late. this will be a wake up call as we head forward into the fall and see where the numbers go. >> thanks a lot. reality check for the home builders. more than 2% declines right now. in the meantime, let's get to the road map. should you be buying on the dip, we have a shareholder. >> and aol reporting a strong gain in income. there was just a sign of encouraging things to come.

sources down with aol ceo we will sit down with the ceo in just a few. . >> making headlines. after calling for a break up of the big banks. what does the ceo have to say to that? >> back to the big disappointment on the street. eric jackson is a long timeshare holder. great to have you with us. >> good to be here. >> you standby your longer term call of 1650 a share. you still say it's possible to trade down. do you think we see the $500 sooner? >> i think it will happen gradually. we don't really have any new

news other than the possibility of more rumors about a specific date what people forget that we have seen this movie before. this happened last october. it dropped initially. >> i'm glad you mentioned that. that was the last time we saw apple miss. a 16% drop ahead of the iphone 4s refresh. this time ashd we are hearing a shout out. a tip towards the weakness in europe. there are more competitors out there. it has in fact taken share according to the recent data. how confident are you that it's

not a macro issue here and not a competition issue. that it's only because people are waiting? >> i think there are two things driving the iphone myths. even germany was really sluggish. we tint have that before. that will continue to be a factor forward forward. there is something to the whole idea. last year it was the one quarter before that release data. i don't think this is good or bad. it's a reality. i don't think it will cause apple to rush out new phones. but that is what drove them. >> you have a lot of big houses

that are bulling down their price targets today on the basis of the margin expectations. they are falling and indicating that they will fall because of the new products that come in in the fourth quarter. the question is, for them, do the margins rebound or do you have average selling prices that are lower longer term? they will look at that as a buying point in the faith. >> let's talk about gross margins, okay? they have been doing 45% margins. that is phenomenal and really unprecedented for a hardware software manufacturer. back in the hay day of research in motion, people used to bow down to rim for doing high 30s.

they are going to -- that will compress margins. it's a question of a trade off. do you want the increased earnings that will come from that selling into china and india and a little bit of a crimp on the margin side. >> if any other company on earth gave you this incredibly bad guidance, we would be selling it. >> i think it does. wall street loves the guy, jim. the jury is still out on cook because they have not seen him

perform. nobody is steve jobs. he doesn't have to be steve jobs. he just has to be the best tim cook that he can be. he has fwot a fabulous team around him. i think they are itching to show the world that they are going to to continue to rub this pipeline of amazing new products for years to come. >> can the european companies, can they afford subsidies the way the american companies can? >> no. but obviously that's one of the concerns is will the -- will the europeans what they are doing over there give att and verizon more confidence to negotiate. att and verizon combine -- 58% of their smart phones that they sold were iphone.

>> it's all about siri in the united states. the second largest market is china. siri doesn't speak mandarin. but in the new upgrade it will. surely that is a major selling point for advancing sales against samsung in china in the fourth quarter. that's a huge issue, isn't it? >> it is huge. nobody here in north america is talking about that at all. how do you want to. it is texting or doing that on a

blackberry doesn't work. the way that most people do it is with a stylus. but that has problems. there is no social stigma attached to that. i think siri is going be very big for them. >> when i hear that, i wonder, siri can barely understand fwlish. can it understand a language where there are actual tones. >> i couldn't get her to shut up last night. >> i wouldn't know.

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>> you're looking at a live shot of capital hill where they are questioning treasury secretary tim geithner. that began a very short time ago. we caught up with geithner moments ago and asked him about

something we heard. splitting up commercial and investment banking. >> sandy wild said that he thinks the big banks should be broken up. he is one of the architects of the super market concept. >> he got in there. >> can i make one point about what is going to on here. >> while we wait -- >> we have been waiting. apparently he lost his mic. >> one of the key question s s.

>> this could be a huge issue. a huge issue. >> let's bring in. >> i had a chance to speak to mr. geithner this morning for this hearing we are seeing live right now. he was clearly focused on getting into that hearing and what his testimony was going to be on libor. inside the hearing, democrats are already reacting to what sandy had to say on "squawk box" this morning. >> the statement made earlier today by sandy, the former ceo

of city bank. and he said earlier this morn ing what we probably should do is go and split up investment banking from banking. have banks be deposit takers, have banks make commercial and real estate loans. have banks do something that is not going to risk the taxpayer dollars. that's not too big to fail. >> interestingly, i talked to one republican member of congress. surprising to me to hear he told

me that he thinks the comments are a game changer in the debate about big banks. >> all right. this story is clearly taking on a life of its own. >> you have to identify where the risk is. and it's not necessarily in investment banking. what did we learn from jp mor fwan? in the backbone of the bank which would remain in retail bank. it would still be involved in the massive derivatives which remain. that split is overly simplistic. they did not see what was really

going on. or fully understand it. if you were to split it i would go with the commercial bank so to speak. but it does go to the basic issue of risk taking. >> if you take on balance sheet, off balance sheet, bear stearns was levered 40 times. you know? >> every animal is out of the barn. >> that is going to the end of the day. that is the hammer of taking significant risks. >> let's move on with aol. releasing second quarter results. the company reporting a strong surge in operating income for the first time in over four years. a good sign of things to come. well, let's ask the man in

charge. tim, always nice to have you. you see an increase of 2%. while it was a good quarter, when are you going to start to catch up? >> first, thanks for having us on. >> i think we basically been restructu restructuring around verticalizing the products and teams. and number two is being really focused. things like video and premium formats and local are growing quickly and we think those will be the growth engines for the

future in advertising. >> what is your outlook for advertising going forward both in the u.s. and in europe? >> at a macro level, consumer usage is well ahead for digital. i would expect a tail wind behind digital advertising overall. i think on a back crow level, people in europe are very nervous. to move twrards digital quickly. i think you're seeing that from some of the ruls. our results, basically they're not where we want them to be. points to the fact that advertisers are interested.

those two markets will be strong. i think there is a larger agsalization coming up as more people have to move to digital. >> tim, aol has had a good year. the sale to microsoft. you won a big proxy fight but will are still those focused on patch. high cost businessed model. and a terrible return on investment. what do you say saying close it down and return the cash to us. >> for around $150,000, we're able to service a local town and community that has $900 million in spending up to $20 million.

in terms of media spending. for those to have the largest scale digital platform. opportunities, opportunities. other people don't see them. it's a big investment for us. we believe strongly we understand the dynamics in the market. i think we have a new product coming up. commerce relating activities. we are still excited about patch. zee to 50 million dollars in two years. it's a high growth potential. >> tim, you just mentioned commerce related activities.

on the earnings call this morning you said you were about to announce two commerce related ventures for aol. >> even on the national base, we think advertising is a great opportunity both locally and nationally for us. the other areas that we are looking at are peer to peer commerce and also on the transactional side. we have had a great partnership. >> how do we fuel the overall strength.

>> as to what motivates you. you are happier with the way things are. if youed is to an average person in the street, if you were worth $500 million, $600 million. >> i think, first and foremost, life is not about how much you are worth. it's about what you do. from a standpoint of my passion point and the people i work with, mentioned the rest of the executive team overall. we're passionate about what we're doing. i think it's a strong opportunity in the future when you look at where the world is going.

>> i think we all see a very significant we want our shareholders to make money. you see a very motivated group of people. >> so that's a huge inspiration to me. >> we will be checking in with you to see how the turn around goes from time to time.

>> $600 million in the bank. >> "squawk on the street." >> we just heard from tim armstrong. we will talk to panera's ceo. can they continue to grow its same store sales with a surge in commodity prices and therefore costs? stay with us. [ male announcer ] it's simple physics... a body at rest tends to stay at rest... while a body in motion tends to stay in motion. staying active can actually ease arthritis symptoms. but if you have arthritis, staying active can be difficult. prescription celebrex can help relieve arthritis pain so your body can stay in motion. because just one 200mg celebrex a day can provide 24 hour relief

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geico, see how much you could save. >> co--ceo, founder, executive chairman of panera bred. they said listen, pricing is very, very tough right now.

you don't want to pay up. >> there was just no doubt about it. you're not cutting price. you know it, jim. >> i know. ron knows i go there all the time. my daughters are vegetarians. ron, are people all worried about commodity costs. i have buffalo wild wings on

tonight. >> it's now moderating on a year-over-year basis. we don't believe inflation and commodity costs are fundamental to the story going forward. we have the capability to take price as appropriate. >> can you fwif us a picture of your commodity push pulls?

can you talk about coffee in the mix? the prices coming down will give us a little bit of lee way. >> we're bought out two to four quarters ahead generally. visibility about where inflation or deflation is headed. the important thing for us. we have the ability to adjust our prices. we just. our approach has been so powerful for us. we do not think it becomes a materi material. >> forward bought. we're in good shape. >> ron, the stock was down.

>> we have had a $600 million authorization in place now for several years. we brought back half of that. and you can continue to expect our board to be disciplined but to continue to activate that authorization. >> on the blended numbers that you have got, 4.8% franchise. how are we feeling about that between the two. the points that the company has been ahead of the franchisees. what i would say is it's probably indicative that we are doing a lot more of the testing. in some ways our hope and des

desire. >> whether it be the gloom in the headlines. trying to relate the company to panera. more importantly, the power of the brand is what amazes us. we have been opening with higher average unit volumes as we go. this quarter was a new high for us in average unit buy ins and the productivity of new stores. we think it speaks volumes. and the development

opportunities. >> what other question of buffalo wild wings the other day put up the calorie count. the 417 calories on the asian salad. what is it meant to have calorie count versus mayor bloomberg saying we have got to be really careful. mcdonald's saying that the egg mcmuffin is about 300. they're going to do things that are not in their interest. it doesn't make sense. when ever we have done it, it has worked well for us. it continues to work well for us. people move around the menu a

little bit but ultimately they have great trust in the menu. >> he is chairman and co-ceo of panera. remarkable quarter. great job. >> you saw the numbers flash across the screen. >> near the lows of the session. >> crude below $103 a barrel. we saw big increases in crude supplies, gasoline supplies. all well above what analysts had expected. and in terms of gasoline, much greater than what the api reported last evening. an increase of over 4 million barrels for gasoline supplies.

and keep your eye on the refineries. the run rates are spiking back up as well. we saw an increase of about 1%. that brings your fire and run rate close to 93%. much greater than what we normally see for this time of year. we are seeing the end of the summer driving season. that could be a factor as well that will continue to pressure gasoline prices. back to you. >> thank you. former citigroup making headlines this morning on cnbc after calling for the break up of the big banks. bank analyst will get his take on the comments next. [ male announcer ] when a major hospital

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>> big news this morning. sandy suggested that it was time to now separate the banks. go through it all over again. >> the banking system is really very, very important. i think that the problem that was created was created by too much concentration in investments in the banking system. way too much leverage. very little transparency with

lots of off balance sheet things that didn't really count. i think a lot of those things have to change. >> so, the question, should the investment banks be split from the commercial banks? jeff, just before we get into that, let's put this into context. this is a guy who drove banking. call it what you like. he changed the profile. >> there were a lot of people involved. certainly when he was at citigroup, he is the poster child to speak of the move to get rid of it. certainly the perception is he was one of the big people behind it and he was. >> what do you think of the call now? would it help to split investment from commercial banks? what would be the aim? >> i agree with a number of

things that he said. the problems we had really were from con trags of assets, overleverage, a lack of transparency. and i agree that a rule to the banking industry is a big part of why the global economy grew. i really don't see eye to eye with him there. i really think that's rooted in a misconception that dull equals safe. really triggered the financial crisis for the most part. it was a bubble. it was playing dull lending to making mortgage loans esentially with bad leverage to really kick problem in. i don't think that investment banks from banks really addresses the issues that need to be addressed. there is a potential to make things worse.

one of the things that contributed to the financial crisis was a regulatory patch work. you have regulatory arbitrage, having the company like aig, not a bank but insurance company is tied in as it was. as they are breaking things up, you run the risk of making this interconnected issue bigger and really freeing up from the light of regulation other players. >> inner connected is an important point to keep in mind. i do want to come back. city. >> brady: they did take enormous losses, that did come out of so-called investment banking. the creation of synthetic cdos. had nothing to do with being super or senior. >> city. >> brady: certainly had losses from that but it was not a merrill lynch type situation.

the bigger issue is they were holding mortgages on their balance sheet. they were one of the few investment holding banks that really got in trouble from holding mortgages as opposeded to spinning them out. but i mean, certainly some of the things that are being addressed need to be addressed. that's another way of saying not having too much leverage. better transparency in reporting i think is a good thing. but actually separating j.p. morgan's investment banking business from commercial banking business, i don't see how that helps us from avoiding risk, but b, if the rest of the world is not going that route, it makes the u.s. banks all the less competitive.

that's what drove a lot of the push into the investment banking or the arms of normal banks became multinational and fwloeblization really picked up. having the presence and some of the capital market expertise all over the country is something that corporations demand. if the u.s. banks can't deliver it, there will be banks in europe or asia that would love to deliver it. >> these comments, do they simply launch us into an intellectture discussion or do they actually gain traction? tuz it ignite a debate on whether or not we should reinact? >> it will certainly bring the debate up again but it is not a new debate. i think it is very unlikely from a practical standpoint that we go that right. it is just an intellectual exercise in my mind. >> great to speak with you jeff.

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and our mobile apps are the ultimate in wherever whenever investing. no matter what kind of investor you are, you'll find the technology to help you become a better one at e-trade. >> the big question mark is the politics. the politics in europe, the politics here. that's the cloud that has got all of us very, very concerned and worried. but having said that, we think we're going to get through all of that. in the end we see pretty good things coming through the rest of this year. >> that was caterpillar ceo today after the company posted quarterly profit that easily beat wall street expectations. it's always great to speak with you. has always been on the forefront

about commenting on the political landscape of things? do you agree that there was more fiscal clarity and would look e? >> i think caterpillar is much more leveraged to what's going on globally now that they are considered more of a mining play. so it's not just what's going on in the u.s. it's what's going on in china. it's what's going on in brazil. it's what's going on in europe. it's global economic play right now. >> and in terms of china and what you heard on the conference call, did you get answers? i know in your note in your flash note right after the earnings, a couple of your top questions for the conference call had to do with china and inventory there is. >> we're just heading into the conference call at 11:00 a.m. we hope to get clarity on what's going on with demand for construction equipment in china and also caterpillar -- if you look at the details and behind the numbers, their backlog declined 8% sequentially. inventories are rising.

backlog is declining sequentially. investors would be focused on those two things going into the conference call. >> can you help me out here? there seems to be a disconnect. the ceo says the good news is it doesn't feel like 2008, they're beating expectations, raising their profit forecasts for the year, the global economy is improving, they say. you have a price target that indicates 55% upside from here and yet the stock is down 20% over the last 12 months. why is there this disconnect between what the market is doing where you are and where he is? >> i think there's just a lot of uncertainty out there right now in terms of what is the global environment going to look like in 2013 and beyond. to your point, 2012 is sort of in the bag for caterpillar right now. and it's all about what's the long-term growth outlook for this company? we've heard a lot of noise out there about mining companies slowing their capex spending plans or cutting back on capex. and that impacts caterpillar

longer term. there's a lot of uncertainty. >> what do you know that you're able to maintain that price target that is 55% above where we are now? what are people missing? why should they buy? >> well, actually, i lowered my price target is few weeks ago. maybe you have an older number. my price target is $108. but still, significant upside from here. unless we think the world goes into a global recession, then demand for hard commodities will continue to rise. we may have cyclicality. we may have oversupply, undersupply. but as long as global gdp remains positive, the world will consume more hard commodities and that's our long-term thesis on caterpillar and why we have confidence in our target price, despite the current environment that we're in. >> all right. ann, i have one more question. i spoke to you last when you downgraded deer. and you mentioned that farmers are going to be pulling back on spending because they had a pretty good spending year the

year before. if a farming bill is impacpasse that going of any impact on deere? >> no. our biggest concern is that $7 corn is of no value to farmers if they have no corn. a wise old farmer told me that many years ago. our concern is while prices continue to go up for corn and beans, the lack of product, the lakt of yields out there and just forces farmers to take a backseat on capital spending, and they're going to wait and see how the crop looks next year instead of rushing out to spend money at the end of this year. we're concerned about the impact of the drought on capital spending by farmers. >> ann, going to leave it there. thanks for your time again. next on the program, we're going to pursue our quest of how do you monetize social media? foursquare co-founder and ceo dennis crowley will join us.

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welcome back.

wanted to take a look at the shares of wellpoint. the company lowering its guidance, missing numbers, basically talking about cost trends driving a reduction in their full-year outlook. there was also a conference call. i was not on the call. i have spoken with a couple of people who were on it who said there seemed to be some descension between the company's ceo and cfo. one talking over the other. something else for you to keep in mind there. what is also interesting, of course, about this miss from wellpoint is they did a big deal to acquire amerigroup at a very aggressive price, only a couple of weeks ago. they also in june reiterated the quarter and yet they come out and miss. typically in insurance companies like this, you have a pretty good sense as to where you are on things. a number of investors wondering what went on there, whether there are differences between the ceo and the cfo.

they had a couple of of opportunities to warn in the past and this seemed to come up relatively quickly. there's a look again at those shares. having pressure across the board on a another group of hmos across the country. interesting when there's a conference call where everybody's not quite on the same page. >> more final thoughts next. we built the first railway and the first trade route to the west. we built the tallest skyscrapers, the greatest empires. we pushed the country forward. then, some said, we lost our edge. we couldn't match the pace of the new business world. well today, there's a new new york state. one that's working to attract businesses and create jobs. build energy highways and high-tech centers. nurture start-ups and small businesses. reduce tax burdens and provide the lowest middle class tax rate in 58 years.

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welcome to hour three of "squawk on the street." here's what's happening so far. >> there is going to be some kind of life out there, whatever the hell happens with the euro. i think there is probably, for investors with the limits view, seemingly, these days, that have the luxury of not worrying about next week, there's a lot of value around here. >> i think what we should probably do is go and split up investment banking from banking, have banks be deposit-takers, have banks make commercial loans and real estate loans, have banks do something that's not going to risk the taxpayer dollars. >> this is cat's time.

it is hard to be as bullish as he was, for me, because he's talking about a turn coming in 2013 in some major markets. but he's been right so far. it is so funny. you sit there, listen to the company -- it was a great conference call just in terms of just how much money they're really making. and you think, hey, you know what, this isn't that good. it happens to be better than every other company in the world. >> the opening bell just rang here at the big board. >> our results, although they're not where we want them to be right now, they're improving over time. we've had five quarters in a row of advertising growth which points to the fact that advertisers are interested in our products and services. >> and a very good morning to you. welcome to the third hour of "squawk on the street" this wednesday. let's have a check on the markets. we're losing the bid. we were up far higher than this at the open. down about 11 points on the s&p. that's turned negative now.

technology is weighing today, not the at least of apple in the wake of what they said last night. more on that imminently in the program. also ahead, citigroup ceo, calling for the break-up of the big banks today on cnbc saying investment banking should be separated from other banking. the banking stocks trading in the green except for bank of america. trip adviser is draking down the rest of the online travel stocks after reporting weak second-quarter reports. and several analysts cutting their price targets on that stock. expedia and priceline also sharply lower on that news. >> let's get to the roadmap for this wednesday. apple reporting a rare miss for its quarter causing a miss. should you be worried or should you buy on this weakness? then, the man responsible for one of the hottest social apps around, the ceo of foursquare, is checking in at post 9 to give

us on update on what's happening at the company. plus, more problems for netflix. uncertainties about subscriber growth pushing the stock far into the red today. we'll see if there's any upside left in the stock. and the drought in the midwest continuing to hurt farmers and raenchers, pushinging food prices higher. we'll talk to a congressman about how he hopes to get help. >> the big earnings story over the last 24 hours is apple. the stock down there just about 5%. but clearly hitting the rest of technology as well. with the iphone 5 due out later this year, does it matter really what they said last night about people holding back on buying the present model, the 4s? joining us now is tonny saginaki. i believe it's time for a small professional lap of honor. you saw this miss coming, to a certain extent. >> well, thank you. we did believe that expectations were not as low as they maybe

ought to be coming into this quarter. i think what wall street and professional investors are still getting used to is the pronounced cyclicality we're now seeing in apple's products. the iphone was a tremendous launch. this quarter, they 26 million units. apple missed it this time, for the most part. >> but isn't -- isn't one the mirror of the other? in other words, you have a bad quarter because the anticipation is that the products will be so good you're going to get a bumper quarter the following? isn't that where you are, in a sense this is the sign of the strength of innovation at apple to a certain extent, is it not? >> yes, it is. as you suggest it does even out in the wash. and the question is ultimately, is the secular story at apple any different today than it was yesterday or a week ago? and i would answer, no, that

this is still a company that's exposed to the fast-growing smartphone and tablet marketplaces, a company that has leadership positions and is well-poised to continue to capitalize on those marketplaces. so i think the fundamental story is unchanged. i think there's a little more uncertainty near term. and that's what you're seeing in the stock. investigators don't like uncertainty. we have some uncertainty coming out of apple earnings, not only about this past quarter, but about this current quarter. and i think that's why you're seeing the stock where it is today. >> why is there uncertainty further out? i guess the question really is, why are you so confident and why is wall street so confident that the drop-off in iphone 4s will in fact translate to pick up in the iphone 5? how do we know that europe, the macro problems there won't translate into lower sales for the iphone 5, then expected, or other factors out there -- competition from samsung's galaxy, for instance? >> right. we have some precedence.

when the iphone 4s came out, sales doubled from one quarter to the next. so we certainly expect a significant ramp. could it be a little less significant because of macroeconomic factors? of course it could. but i think macro affects everyone. i doesn't necessarily uniquely undermine apple's competitive position. with regard to your comment on competition from samsung, i think we're seeing some consolidation in the smartphone industry. we're seeing really pronounced winners and some really pronounced losers as well, most notably on the winner side are apple and samsung and android phones. on the losing side is r.i.m. and nokia. the eco system that apple has, the ios eco system, is reinforcing. once someone has an iphone, they have a high likelihood of repurchasing. and that circle becomes bigger and bigger over time. >> it is so difficult to find

growth in the market at the moment. apple again is nailing it to the wall. it clearly has growth. i'm going to ask you the other way around an your price target. why isn't your price target higher than $750? >> well, i think there is a marketplace reality. and the marketplace reality is that this is the largest market cap company in the world right now. and so there are questions about how big that company can become in terms of market capitalization and how broad that ownership can be to drive the stock higher. so i think on a growth-to-price earnings ratio, the stock is very, very inexpensive. that said, i think there are realities about being the largest cap stock in the marketplace. our analysis says that apple is saturated growth fund investors. they all own it and all have overweight positions. there are realities when you have a stock that is this large. that said, we think fundamentally, with a price target of $750, the stock is

very attractively valued for medium to longer-term investors. >> even though in a sense you're saying it's a victim of its own -- tony, nice to see you. thanks for the analysis. >> my pleasure. let's get to gary kaminsky now. what's your take on those comments from sammy wild this morning? an about-face, really. >> if that wasn't fascinating tv this morning, i don't know what it is. it was riveting. when i first heard him discuss those thoughts, i thought, really? but then you think about it, obviously anyone is entitled to have a change of opinion. but what i have to disagree with here is simple. it's not about glass steagall. if you want to get the investment banking structure back to where it was in the early days, it's simple, take away the permanent capital. when the investment banks went public, you changed the entire

internal risk profile. when you use other people's money -- and that's what you do when you have permanent capital -- it changes everything. when the partners are at risk every day, i can tell you many of those things would not have happened in 2008 and won't happen again. you can split the banks, take away the permanent capital changes everything. >> so partners' capital were on the line, then you think that that would have the most effect? >> well, i'm sorry, i had a little bit of an ear problem. say again. >> you're saying if the partners of the firm had more capital on the line, they put their money where their mouth is, that would be the best taker-outer of risk out of the system, basically? >> absolutely. i know firsthand when i was a partner at cowen in the 1990s and our capital was at risk every day, decisions were made on the capital allocation of the business using partners' capital

as opposed to shareholder money, it completely changes everything. >> it's back to the old goldman sachs model, then -- >> well, the problem is -- and i think sandy alluded to this. the fact is these companies have gotten so global and so big that they need the permanent capital. but it's about the fact that investment banks using proprietary capital to -- by the way, anybody who's watching this right now who's in the business knows i know exactly what i'm saying here. put it back to partnership capital. you get rid of 99% of the problems that happened. won't happen again when your hasn't's at risk. >> bob diamond was very well incentivized for the long-term success of barclays. didn't work so well there, did it? >> say again, simon? >> bob diamond was well incentivized for the future of barclays and that didn't work so well, did it? >> no. but my point is if barclays was

a partnership and partners' capital was making the decisions every day, you could be certain when the partners' capital is risked, a lot of those things that happened, would not have happened. it's not about glass steagall or about banks being together. that created opportunity. the appetite for crazy, insatiable risk is about permanent capital and opm, other people's money. >> gary, thanks. >> i'm going to go change my fp. >> thanks, gary. let's go to rick and see what's going on in chicago. >> hi, i'm going to focus on something we've all heard maybe hundreds of times. and that is, fed programs, treasury programs, just the notion of stimulus and spending and all the money that has gone into trying to cure what now ails us before 2008 during and specifically after, well, it's that stimulus helps. if it wasn't for some of these programs, everything would have been much worse. well, there are now independent research papers being done,

studies being completed that say that isn't true, that it isn't true. no surprise to me. i've never believed it. but research is important. okay, so what we're going to do is, there's a group that started, i think, in 1980 called the hoisington management group, i believe they're out of austin, texas. the reason i like them and many people on the floor is, every quarter, they come up with a quarterly review and outlook. in the most current, they talk about this dynamic and they list three studies. and we're going to be having guests from these three independent studies. but basically the premise is this -- is deficit depending stimulative? i mean, everything goes back to that. and they argue that it isn't. now, let's do a quick trimer on the bonds. when you have indebtedness, higher percentages of debt to gdp, mostly you see revenues go down. when you have those two

conditions caused by excessive indebtedness, using more indebtedness to cure the hangover of debt just does not work. and they do some great studies on the panic of 1873, the crash in '29, 2008. but the one i found most fascinating was japan in 1989. no matter how much, quote, unquote, stimulus is put in, it doesn't have a stimulative effect. do you know what the affect is? think japan here. you get slow growth and low sxwrats as far as the eye can see. independent research, right at a time when we're talking about more fed programs. read it. hoisington.com. back to you. >> we'll check it out. rick santelli, thank you. coming up, the social app that made checking in the cool thing to do. foursquare's co-founder and ceo joins us to talk about now changes in the app and what the future holds for his company. back in a moment.

let's check in with eamon javers with the latest out of geithner's commentary on capitol hill. eamon? >> reporter: hi, melissa. tim geithner is getting tough questions up on capitol hill, particularly about what he knew about the libor manipulation and who exactly he notified about that situation, some members of congress incensed that he did not notify congress. geithner says he takes full responsibility for that. but let's listen to this exchange between geithner and the chairman of the committee about exactly who he notified.

take a listen. >> we took the initiative to bring those concerns to the attention of the broader u.s. regulatory -- >> and that included treasury and the justice department? >> i briefed the president's working group on financial markets. the members of that group included the cftc, the s.e.c. and the fed. >> how about the justice department? >> justice is not a member of that committee. let me ask you -- you were aware of the possibility of fraud? >> we were absolutely aware -- but the way this was designed created not just the incentive for banks to underreport but gave them the opportunity to underreport. and that was a problem. >> reporter: geithner was also asked about the possibility of reinstating glass/steagall, that coming in the wake of sandy weill's comments on cnbc earlier this morning. he was asked by a republican congressman, walter jones, whether or not congress should have a hearing on reinstating sncht ]

glass/steagall. geithner said, should we keep looking at what we could do to make the system safer, absolutely. but he defended the dodd/frank law saying the dodd/frank law needs more time to work. geithner not calling for a reinstatement of glass/steagall. that's what the administration has been saying. >> going back to the libor question, is geithner saying he knew there was general manipulation of libor, that he fed back into the u.s. regulatory system or is he contradicting what is in "the washington post" today? he's saying they knew specifically that barclays was manipulating, insiders told him that and they did or didn't pass that into the system and therefore, for possible prosecution of barclays from the d.o.j.? >> reporter: clearly, the new york fed knew fairly early on that there was manipulation by barclays. we saw in some of the documents that have already come out e-mails -- transcripts of phone conversations between an official at the new york fed and

an executive at barclays detailing exactly what barclays was doing. so the new york fed knew all along. but geithner is saying that some of his concerns were in the public domain. and he feels that he notified the appropriate authorities at the time. >> eamon, thank you very much. up next on the program, how the younger generation is fighting for a better economic future. and we're counting you down to the close in europe. we have now 9:49 to go.

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now to rick santelli in chicago on debt and the next generation. rick? >> yeah. i'll tell you, that's a big topic, coming from the father of three. a couple of months ago, i did a spot in the "santelli exchange" talking directly to young people. listen to a little portion of it. >> as a voting bloc, all of you people out there 27 or younger, i want you to understand the lay of the land.

your generation and the generations to follow you that aren't born yet are paying for a meal that previous generations like mine have eaten. we're sending you the check. wake up, young people. well, that was a couple of months ago. and even though i wasn't going to mention it, just a couple of weeks ago, the president took my line about giving the bill. but he didn't do it the same way. but anyway, welcome, charles kirk. why do i have charles kirk here today? a couple of months ago, you happened to catch that spot and did it affect you in any way? >> absolutely. i saw it. i was inspired. decided to take action. i got this group, turning point usa. we decided to take action and speak for our generation. >> you didn't start turning point in may. it had been going. but it gave you a little bit of horsepower. i want to know what you see going on that what you related to in what i see and why do you disagree with the powers that be that are talking directly to be. >> it's what you talked about in

the previous segment. we're going to have to pay it off. but they're talking about instant gratification. that's the biggest problem going on in this country right now. we have to pay for washington's bad mistakes. >> when somebody wants to hand you something -- and granted, they're not totally all in on forgiving student loans or changing principal on mortgages -- but they're working on it all the time. the closer the election gets, the more they're going to work on it. you think that's a disingenerous offer? >> i believe in merit. i believe america was built on the principles of working for what you get. we work for our family. i'm going to work myself through college. take minimal loans and make sure i graduate debt-free. >> let's say that you don't choose wisely, you choose a cruddy college, a cruddy curriculum and it's really expensive. when you get done, you have $200,000 worth of debt and you have no job. are you going to say, i want my money back?

is that something you could live with? whose fault is it. >> we can't really ask for our money back. government forgiveness is the biggest sham i've ever heard. we are still going to have to pay this debt back. >> your thoughts? >> you have to be responsible for your own debts because somebody's going to have to pay it back in the long run. nothing is free. >> yeah, you can give me a piece of paper that says my gej is paid for, but you can't just erase money. money has to come from somewhere. it doesn't come from nothing. >> hillary clinton once said, it's all about a village. and even though i can understand that community is important, what do people here think? do you want to work from a collective perspective or do you think when you get up every day, you want to be the best person you could be and that the country's better off for that? do you agree or disagree with that? >> i don't agree with hillary clinton's claims. i believe this country is about individualism and us being able to pursue happiness on our own.

>> i would urge young people to go to what website? >> turningpointusa.net. we're going to be a big force in this election. >> there's always two sides to every story. this is a sigh that i haven't been very aware of but it seems to be growing. back to you. >> thanks for that story, rick santelli. stay tuned. the european close is up next. expression of power -- control. ♪ during the golden opportunity sales event, get great values on some of our newest models. this is the pursuit of perfection. use the points we earn with our citi thankyou card for a relaxing vacation. ♪ sometimes, we go for a ride in the park. maybe do a little sightseeing. or, get some fresh air. but this summer, we used our thank youpoints to just hang out with a few friends in london. [ male announcer ] the citi thankyou visa card.

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seconds away from the european close. let's bring in simon. >> a very interesting day in europe, indeed. very interesting. could be the beginning of something big. let's look at the close. >> the european markets are closing now. >> just before we go any further, everybody's going to be focused on london on friday with the opening ceremony of the london games. the uk contracted 4.7% in the quarter, the third consecutive quarter of contraction. terrible weather hitting construction and the public holidays for the queen's silver jubilee. they're in their second recession following the 2008 crisis. also business sentiment, very low, at a two-year low in germany. let's move on with the action. and the action is mainly green, as you can see. i want to introduce you to one of the ecb council members that could be a revolutionary. he could change the way which europe does what it does. this is the head of the austrian

central bank, ewald nowotny. he said the idea of making the stabilization fund, the new esm, a bank and giving it a banking license is, in his view, a possibility. it has some positive elements to it. that's important because if the new safety net has a banking license, if it starts buying sovereign debt in the market for spain and italy and supporting them, which legally it's allowed to do, it can repsych that will debt out the back door with the ecb. the ecb, fresh liquidity. it will pass back that sovereign debt. now, for a long time, we thought that that wasn't a possibility. mario draghi say that was not in the cards at the beginning of july. but over the weekend, draghi also said there were no taboos. maybe the ecb is shifting on this. one thing is for sure. people are desperate for the ecb to come in and contain some of that spreading contagion in europe. so today, whether it's true or

not, whether it will happen or not, the market is running with it. so remember on friday we started blowing out the short and the yields rising rapidly in italy and spain? today, it's bought us a little bit of respite. the yields coming down. that is on the two-year. still incredibly elevated at 6.5%, give or take. but they come back down, the directional move. huge inflation rates at the short end of the italian bond market. but owe see a little bit of respite coming through. in the course of the session today, you saw green scattered around europe, it's lifted the banks. some of those weaker banks, some of the banks that are a barometer of health within europe, for instance, kbs in belgium, has risen substantially. others have fallen back, importantly the italian ones, as the yields coming back slightly at the end. societe generale was up higher than that.

one more bank in europe. have you noticed what's happened to deutsche bank recently? last night, it rushed out its results ahead of schedule. this bank -- and i need to change colors for this -- importantly has lost 18% of its value in the last month. it's going to come through with earnings that are about half a billion euros below expectations, it said last night, four minutes before the close of the frankfurt session because of its costs. a lot of them here in new york and otherwise in london. and the euro's been falling away. the cost space is rising. they have huge legal issues on both sides of the atlantic. and arguably, it is one of the least well-capitalized banks in the world. maybe some of the best-run operations in the world but the at least capitalized. and that is a phenomenal move. down 18% in one month on germany's biggest bank. >> and i've been noticing this decline, particularly this week in light of the short sell bands we're seeing in spain for a

month and in italy for one week. and wondering when those bans were put in place whether or not there would be an impact on banks in the eurozone but outside of those countries if they see pressure -- if you take a look at that last leg lower, you can see that perhaps it is feeling some pressure. >> i'm not sure. those are central questions. also worth noting, you're changing your view with that negative outlook on germany, the possibility that it might have to get more in other areas. and you also have your own funding problems within germany as they federalize the debt there locally. a lot going on. >> let's check in with brian actman now. he's here on the floor with more on what is moving right now at the close in europe. >> pretty interesting when you think about the day. you have the dow up about .3%, driven higher by caterpillar and boeing. and you have the nasdaq down about .5%, dragged down by apple. so you really need to look at the s. it's more accurate, sort

of encapslation of what's going on today, down about .25%. that's really where the market seems to be today. also from a sector perspective, just take a look at the breakdown, telecom, financials at the top. you have technology, of course, with apple at the bottom with energy and consumer discretionary. so mixed in terms of how you view risk here. the new home sales number, obviously homebuilders are down today. but want to take a look at the itb, the dow jones home construction etf. you can see on this chart after this run-up earlier in the year, we are having a pause here in this housing rally. is this a one-off in this report? maybe we have to re-evaluate. coming reports will dictate the determination there. courtney reagan talked a lot about tobacco yesterday. alte altria reported. volumes are challenging in tobacco. pricing trumps that.

not the case with lorillard. pepsi is up about a percent. they talked about forex and everything else. the bottom line is they were saved by latin america. latin america, very strong and weaker than expected, north america. natural grocers seemed to go almost perfectly in terms of an ipo. everyone got what they wanted. a price at the high end of $15. opened sharply higher, it's up about 20% now and trading in a very consistent range on high volume, melissa. so pretty good ipo. and you have whole foods after the close today. i'm not teasing ahead to anything. but john mackey used to talk a ton and he got himself in some trouble. he'll be on "squawk box" tomorrow. i'm very interested to hear his take on the whole space and the general economy because we don't hear from him very much anymore. >> that is true. thank you, brian. we'll talk about that as well. gary kaminsky, of course, is up next.

who will you have next with you, gary? >> i promised us on friday we weren't going to talk about regulation anymore. but remember that -- the expert network, i want to remind viewers, let's play a clip of john kanukin, let's take a listen to that clip when he joined us a couple of years back. >> i have a fast network of people, mostly value-added resellers who i built this network over 11, 12 years since i've been in business, who keep me abreast of changes, production level changes, or design wins. >> i'm sure viewers will remember this gentleman was steadfast in saying that this

was all a set-up and that he would never, ever agree that he did anything wrong, that the expert networks was in fact independent research. i asked him to differentiate between what is good research, good channel checks and bad channel checks. i don't know what was in this guy's head. the fact here is that if, in fact, these channel checks are going to be deemed insider trading, this is what i'm going to have to say. i know from personal experience there's got to be at least 50 other situations out there where people are doing reportedly channel checks and selling thats a independent research. is this the beginning now of a new wave of attacks in this space? i guess we'll all have to follow. but i will tell you, if you reflect back to november 2010, there was no way anybody thought this guy would ever cave in. >> briefly, how do you feel about that? >> that he caved? >> no, that they might be

changing the framework in which people are able to operate. >> if they can differentiate, if the regulators have been able to find a way to differentiate between good channel checks and bad channel checks, i think that's great for the investing public. it will give some confidence where there's been such a lack of confidence. i was reading a piece on "forbes" about this. they said it best -- this gentleman would have been a better tv reality star than a network expert analyst. i think that sums it up. >> and in fairness, he was under a huge amount of pressure, whether for good or bad. let's take a break. more "squawk on the street" next. the first trade route to the west, the greatest empires. then, some said, we lost our edge. well today, there's a new new york state. one that's working to attract businesses and create jobs. a place where innovation meets determination... and businesses lead the world.

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coming up on the "halftime" show, sheila bar ir, we'll get her thoughts on the idea of banks breaking up. and we'll talk the flip side of ford. hammered by europe. see you in a bit. netflix's second-quarter earnings beat the street. but the weak forecast is causing the stock today to plummet. it's hitting a fresh 52-week low here on a decline. let's bring in our analyst at stern agee.

does the company have a credibility problem now? we had reed hastings making a posting on facebook that caused the stock to rise about 18% on those comments. those online hours viewed did not translate into subscribers. and then in talking about future guidance, they were making reference to the olympics and how that was going to be a headwind. the olympics, we knew, were going to happen at this time for years at this point. >> right. well, it's more than just a credibility issue. i think it's about structural problem the company is facing, which is, as we all know, their content costs continue to rise. and, in fact, the more usage we have and what reed hastings talked about was a billion hours in the month of june, which implied about a 28% increase in usage, versus last year. and so the more usage you have, the more content guys are going to ask them -- they'll raise

prices. at a time when the company really has no ability to raise prices itself for its customers, its costs are rising and it's also investing heavily in international, which means that 2013 and maybe 2014, we won't really see much profitability. and so people are losing patience. investors are losing patience with the company. and so you have more than just credibility issues. you have structural problems as well. >> at this point, does the company have enough cash in order to get it through to that time? it is spending much more. it will have to spend more on content in order to keep people continuing to use the service, particularly streaming. and they're spending a lot internationally at this point. to get into market where is we're not frankly sure what the return is going to be, given what's going on around the world, particularly europe. >> yeah, i think, again, if they get any more aggressive than they already are internationally, you'll have to raise some money. i think as of right now, with the way they're doing it,

they've become profitable and then reinvest those profits internationally. near term, at least, i don't see a balance sheet problem here. but we won't see any real cash flow for quite some time because they continue to reinvest in international business. >> how relevant or important is it to that structural question that rupert murdoch's hbo refused to sign a deal with hastings, which i think he'd raised in a letter that he would do a deal to get whatever series they have, that's now not going to netflix. is that important of terms of what content players will be saying to him further down the line? >> absolutely. i think what netflix is trying to say is that they would partner -- that they are actually part of the solution. but i don't think many other companies are looking at them as necessarily part of the solution. they feel like netflix perhaps cannibalizes. so they definitely have that problem. and, again, going back to what i said earlier, which is you have

rising costs of content without really the ability to raise prices for your customers. so, yeah, that again speaks to that same structural problem. >> but if somebody out there is holding shares of netflix, you would, i assume given your neutral rating, are recommending that they continue to hold, despite the headwinds that you outlined? >> we want to stay away from the stock. it's going to be roung-bound and hard to make money. we think it's going to stay in that $60 to $80 range, depending on the outlook of the company in the coming quarters. if you look at this company just purely from a domestic standpoint, i think they'll make something like four bucks a share. but they'll plow all of those profits back into international. so there is some value there if you own the stock. but i think because it's going to be range-bound, in our opinion, we prefer to stay on the sidelines and recommend basically staying away from the stock. >> thanks for your time.

up next on the program, foursquare's co-founder and ceo dennis crowley will join us live to talk about how they are attempting to better monetize social media. stay with us. mamama

with more than 20 million members worldwide and over 2 billion check-ins, foursquare is rolling out a program to monetize its service. how much revenue will it generate? let's check in with dennis crowley, ceo and co-founder of foursquare. julia boorstin also joins us from los angeles. dennis, you checked into the new york stock exchange today. >> yeah, i did. as soon as i got here. >> want to talk to you about the trajectory of the company so far, the number of members as just groan exponentially. at this point in time, do you -- first of all, is your number one goal just increasing the number of members and revenue is a second thought? >> no. for us, it's always been about building the best products for users. on top of that, since we started the company, we've been building this merchant platform. it's been fantastic because a lot of users are signing up for

foursquare to take advantage of a lot of deals in the system. for merchants, it's working well to drive new users and existing users back to those businesses. as much as it's about starting to experiment with revenue, the primary goal is making good product that is people get excited about. >> julia? >> i wouldn't downplay this news today. this is your first real move into generating significant revenue and your first-ever ad product. you had a $600 million valuation when you raised $50 million last summer. how fast do you have to ramp revenue to justify that valuation? >> yeah. to be honest, we're not thinking about it that way. we look at it and say, we have about 1 million merchants using the platform right now. we've been very successful at helping people find places and helps those places connect with these people. it seems like the right time, these tools are effective that we can start charging merchants for using them. >> how does it work in practice?

>> we launch add tool called local updates allowing merchants to send out messages about the things going on at their businesses. we launched today promoted updates, allowing merchants to pay to promote certain types of updates. we've chosen about 20 people to pilot the program. we're learning how users adopt to it, learning how merchants get value out of it. but it's really about being able to help connect to businesses with the people they think -- >> it's a push. it arrives without them inviting it in. >> i'm sorry. within the app, we have a feature called explore. it's a recommendation engine. users use it all the time to find out what they should do tonight or a couple of hours from now. and the promoted updates show up in that tab. >> and you collect revenue from these partners? >> yes, yes. we're doing it on a cost-per-action basis. >> every time that restaurant gets pushed to a user -- >> it's not per impression. it's how yursz interact with that contact.

people can see the content, they can unlock a special, they can check in at a place. a lot of these things we're experimenting with to see what's most effective. >> your 20 million users have grown accustomed to using foursquare without paid promotions. how do you avoid alienating them and growing your revenue? >> people are signing up because they want to take advantage of the specials. we did an amazing program with american express where people are saving money all over the country. people are getting free stuff all over the country. people are asking for these specials. this is just a way to get users and merchants more engaged and more connected with one another. >> it seems to me that "travel & leisure," people are moving into areas with which they're not familiar, they might want to connect with businesses or people in that area with which they're not familiar. there's a huge eco system

building up of people trying to sell things to the hotel chains. and everybody's trying to do deals. can you get critical mass in this area, or as facebook goes more mobile and everybody else goes more mobile, does it basically disintegrate amongst you all? >> travel is just one part of it. it's helping people in familiar neighborhoods. it's helping people in their back yards, in the communities that they're already familiar with. we're getting really good at doing that. as much as it's going to be great tor helping people connect when they land in paris or in chicago for the first time, we're building stuff that's fantastic for helping people in san francisco and new york the places where they know well. focus is not on ipo. it's about building amazing products and this is enabling us to take it to the next level. >> dennis, great to have you. >> thanks so much. >> you, too, julia. up next, the very latest

from the olympic village in london. we're counting down to friday's opening ceremony and final thoughts on today's market action. the dow up 45. but the s&p and the nasdaq in negative territory. at liberty mutual, we know how much you count on your car, and how much the people in your life count on you. that's why we offer accident forgiveness, where your price won't increase due to your first accident.

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as you see there, carl has, in fact, landed in london for coverage of the olympics. he sends in this picture with the cnbc senior production coordinator, samantha right. that's the backside of our studio overlooking the olympic village. >> and notice the sun is shining, the weather has broken for the olympics in london. thank god. >> take a look at this one. he's also sending along this picture showing how london thought of everything for the olympic village, including a dog relief area. >> and for french dogs as well. >> and don't forget, carl will be broadcasting live from the olympics in london starting on friday. we will see him then. in the meantime, takeaway time for today, rick santelli, what's on your radar? >> well, i think after novotny's comments about 3:00 in the morn eastern time talking about very leverages to programs, once again, this is a time-buying issue.

these things don't happen in an easy fashion. there's a lot of work that needs to be done and red tape. but if you look at the following charts, simon, you can see that everybody's talking about the spanish debt, italian debt, how everything came off. and it did on the intraday. but opening it up on the five-year and see how few 7% handles we've had, really drives home the point that we have a lingering issue in europe that isn't going away. and corn and beans are up big today after especially the beans touching limit down yesterday. so the progress on grains marches to higher prices. >> interesting. rick, thank you very much. gary, what's your takeaway? >> we chatted today about 2008, sandy weill on the network early this morning, melissa is a long island girl. >> i am. >> melissa, i don't know if you saw it. lloyd harbor, joe gregory, has put his compound on the msharke for sale, $22 million.