europe is obviously a different matter. but in aggregate, yeah. >> peter, thank you very much for joining us today. >> my pleasure. >> have a great weekend. make sure you join us on monday. right now, it's time for "squawk on the street." nice, london calling for the olympic games to get under way in a matter of hours. good morning. welcome to "squawk on the street." i'm melissa lee alongside jim cramer and david faber live from the new york stock exchange. carl quintanilla in london as the games are getting set to get under way. carl, what's it look like over there? >> good morning, guys. we are here, we've made our way to our tv tower in olympic park in stratford. you can see olympic stadium over my shoulder on the left-hand side. on the right, you see the arselor, the tall overlook. the headline in "the daily tell

graph," let's get the party started. a few hours from opening ceremony. 1 billion people expected to watch. 4 billion people estimated over the course of the games. there's roughly three-quarters of humanity. a lot of coverage coming up today, including coach "k" of men's basketball. the head of bmw north america, ludwig willisch and brian roberts will join us. london's spent $14 billion on these games. kind of controversial when gdp is falling. barclays and london whale are household words. but the stock market of ever summer games' host country since seoul has outperformed the world index in the 12 months after the games. so you can bet a lot of londoners are hoping that happens in the coming year. see you in a few minutes. >> let's take a look at how we're setting up for the u.s. trading session. gdp putting a little bit of a

bid in the markets here. green arrows across the board. the dow holding on to adding 36 points at the open. s&p looking at about 6. as for the picture in europe, seeing positive reaction over there on the back of those gdp numbers. the cac up by 1.25%. and the dax is up by .3%. roadmap starts with the economy. gdp expanding at a 1.5% rate in q2. the question this morning is, does this number push the fed closer to more stimulus? >> and facebook flop. its first earnings report as a company disappoints investors. revenue growth decelerated and no guidance. stock hitting new lows. >> we heard this same story from amazon before. spending continuing to outstrip revenue growth. but this time, amazon's forecast seeing an operating loss for the third quarter. the stock staged a remarkable turnaround in the after-hours session. trades higher this morning.

>> and is the momentum over at starbucks, you ask? it saw a slowdown in june that continues into july. those shares down about 10% this morning. >> second-quarter gdp showing the weakest pace of growth since q3 of last year. tempered by a slowdown in consumer spending. first-quarter gdp was revised upward to 2% growth. everybody's taking a look at every single data point through the prism of, does this move the fed any closer to any sort of easing? does it move them move at the next meeting in september? what's the time line? >> this is one where congress should be doing something. i think ben bernanke, as much as i think you want to -- you put your faith in it, there's nothing you can do. this is not as bad a number as some were looking for. there's no panic here. it's just kind of ho-hum growth. if you want jobs created, it's not going to be ben bernanke. interest rates are so low, they're giving money away if you

don't need money. i'm saying, we could talk about this gdp number. but we are in the grips of an incredible earnings period that is not being determined by what the fed is doing. >> credible earnings period? >> individual companies are reacting to this world in a way -- like dow chemical yesterday, a complete freak-out. then you have a company like a ppg who says things are fine. back and forth within the industry, starbucks was perhaps the most downbeat i've heard them about the united states. they say, we're talking about moderate growth. retail is -- something happened in this country retail in june. and i think that that is more important than the actual gdp number. >> martin franklin was on earlier this week, so many of their brand names people would know. he pointed out, slowdown in june. as for this gdp report, they went back with revisions to

2009. and actually showed that growth was better than we thought. fourth quarter of 2011, by the way, went to 3%. now shows growth of 4.1%. second-quarter's growth rate doubled from 2011. >> should that make us feel better or feel like we're coming off -- >> these revisions, at least underscore how difficult it is to gauge economic output and conduct monetary policy in real time. >> why do we talk about it? if they're that off -- >> yeah, what's the point of 1.5%? what does that tell us -- >> may be revised one way or the other. >> i feel like basically just saying, okay, you know what, it's football training camp, i'm revising because the giants did not win the super bowl. they didn't. turns out to me the niners got in the super bowl and they won everything. that shows me the irrelevance of -- versus what martin

franklin is saying and what howard schultz is saying. these guys have numbers. howard schultz has numbers about how many venti cappuccinos i've had today. >> how many have you had? >> i haven't had one. >> you're not clearly as robust -- >> i'm attributing it to that. if i have coffee past 7:15, i'm not going to go to bed tonight without the aid of pharmaceutical aid. >> that's what happens when you get older. >> i've always had trouble sleeping. >> you? that's shocking to me. >> i was tweeting at 4:00 a.m. >> we'll move on to the corporate earnings. but 1.5% growth at the end of the day, whether you believe it or not -- >> doesn't give you much to go on at this point. >> but it's funny. it isn't like you're going to see a play like i hear on a lot of other show that is this is going to spike romney, spike obama -- >> no.

it's sort of a -- >> it's like -- >> it's friday. >> what's not this morning, facebook shares set to open at all-time lows. its first earnings report as a social company, reporting second-quarter operating profits in line with estimates but continuing slowdown in revenue growth. facebook did not issue any guidance either. but on the company's conference call, ceo mark zuckerberg said mobile is a huge opportunity for facebook, which doesn't exactly make investors feel any better. when they're not getting any guidance as to future financial forecasts. i would think it would be largely disappointing to any investors who have been waiting for some sort of catalyst from the earnings report, not getting any and bumping up against a huge number of shares outstanding that will come to market wh it expiren it expires >> this was a conference call if like many others. we've heard you. you know mobile is the issue, so we're going to address mobile head-on. by the time i finished, i was

like, this is a good infomercial for mobile. where was billy mays? i know he's passed away. but billy mays would have been on the call. they were saying basically, look, mobile is sham-wow. it was a big ad for mobile. billy mays was necessary to get facebook up to $26. this was a conference call where i said, wow, you know, this is a company that didn't really see mobile coming. at one point in the conference call, it was like, we have a whole new business model, we're checking it out. google in its first public quarter showed year-over-year revenue growth of 104%. that was a deceleration of 200% from the year before. but deceleration, facebook is just -- >> 32% revenue growth in the quarter versus 45% from the first quarter. >> think about that. and, remember, google was 104% and google was a $33 billion

company when it came public. you saw a rapid acceleration. here we're seeing deceleration. and i find it quizzical. >> it's interesting how wall street has largely remained at facebook's side through all of this. you take a cursory look at the various analysts that have come out, sterne agee saying the long-term opportunity remains intact. evercorp saying it's a start to keep the price target at 34 bucks a share. piper says it's time to own. and yet the stock here -- we should note in the after-hours session, we're watching the stock on "fast money," in the first hour after reporting, the first half hour into the conference call, the stock trade one full day's worth of volume in the after-hours session in the matter of an hour or so. >> do you think there's too much around this name for investors? if you say, here's a company, not going to tell you the name,

here's its growth rate and where it's being valued right now, would you end up at this price? >> it would be dramatically lower. >> it would? you think -- >> it's very expensive. very expensive stock. versus using google -- >> it's rowing at a very strong rate. i understand that rate of growth is decelerating. >> but the growth of mobile is happening so aggressively that they didn't see it. i'm just going to tell you, they're visionaries. they didn't see it. >> that's the thing. how could you not anticipate that the ramp to mobile would be that fast? what happened where they didn't think that it would be that fast where monthly active users would go up 67% for mobile and you had no idea that it was going -- that transition was going to be this quick? >> with the exception of steve jobs, i think most people didn't see it. >> yeah? >> yeah. i think it was so sudden, the adoption was so incredible that even a facebook, as brilliant a company as they may be, didn't see the switch from dumb phones to smartphone -- nokia being a classic example. this is direct reaction to the

iphone and to the android and how you look at it. and the user is not as engaged on the mobile as they are on the desktop. you go to the desktop, look it over. mobile, you're in and out. apropos of all the analysts who stuck by it. what company did people stick by till the very end? and i realized it was zynga which turned out to be a very tale for -- >> zynga's only been a public company for nine months. >> well, i think it's a good -- >> it's crazy. >> it's the analog. by the way, on facebook's conference call, what did they say? they took it to zynga. look, facebook's a real company. it's making real revenues. it's got these new initiatives that are making $1 million a day. but, remember, google is doing, say, $11 billion a quarter.

so if you do the math, google's doing $44 billion a year. if this initiative which their saying is so important, which is the sponsored story news feed, $1 million a day versus $1 billion a day is a different story. it's much better to do $1 billion a day than -- >> we did say when the stock began its immediate retreat from $38 as a public company, that we would look at this first quarter report as a key barometer to understand what was going on. i think we can now clearly say that $38 may have been a bit over -- >> google's not doing $1 billion. but they're doing so much better -- the takeaway of this conference call was that you want to own google because they've done a lot of things right. and if google hadn't got involved in that free speech thing with china, i know you did the china special -- >> yeah. >> people would embrace that kind of closed notion of the communists, they could do even better. >> and you're being sarcastic, by the way. >> yes, i am.

because the chinese are communist. it's a dictatorship. >> google at least spoke up briefly. but your point is what? that they could be doing better if they were doing more business in china in a serious way? >> i would say how well google is doing without china, whereas -- starbucks, what was the great call-out? china. yum! it's china. google does not call out china in their conference call. >> maybe it was the best thing to happened to them in a way. >> i urge people to go listen to facebook's conference call. it is other worldly. we know your probably was with mobile adoption -- and what about the rest of the business? didn't really come up. >> let's talk about amazon because that's in stark contrast in some ways despite what is a lack of profitability ch reporting second-quarter results slilgtly below estimates, 29% jump in retailer. they saw a rise in profit margins due to some of the growth of its new businesses.

amazon forecasting an operating loss for the current quarter as it spends on digital content -- i thought margins were compressing. >> because the third party, margins go um dramatically. they're just facilitating with these warehouses. >> here's a company that continues to invest. we talked about it where people simply have faith in management, for the right reasons because they have delivered for many, many years. they could turn a switch, it would seem, and deliver a lot of profitability. we're seeing the stock up because of that incredible rise in revenues. >> and margin is one of the things people have been worried about. the amount it takes to ship to you -- they fear it taking a beating. that dropped dramatically. and that turns out to be -- all these warehouses they're putting everywhere is making it so that the shipping costs are cheaper because they're closer to you. i loved this conference call because they say, wall street, we have to deal with you, i know. let me just explain the way

business works -- and wall street keeps saying, how about taxes? will you give us a break, 50% of the people already pay taxes. >> doesn't seem to be an issue any longer to the extent it once was. they're happy to put warehouses wherever -- >> same day dlaifr elivery is go be the next key driver. >> same day, though? >> they did throw a little cold water on the same day and said, it's not working yet. this is a conference call that says, here's the deal, we're a business, if you weren't public, you would invest a lot. so we're just going to act like a private company. and it is being rewarded in premarket trading. people like a company that says, we're not going to play by your rules. >> that's been the case for quite some time. >> and i like it. >> that's because of the ceo. >> bezos is a genius. >> and so many people can connect with this company in a real way because they buy things and see firsthand how ubiquitous it is and how well-run it is.

>> you go to amazon and you buy. you go to facebook, you look at your friends, maybe a red hot chili pepper ad. i know you like them. it takes you to a t-shirt site and you say, geez, i mistakenly clicked on an ad. i won't let that happen again, a la zynga. >> that can't happen to me, because i have a blackberry. >> is that why apple bought authentic, in order to be able to get you? >> yes, apple buying authentic was a little -- very, very small. but a public company, nonetheless and a nice premium. $8 a share for auth. >> what time is it? we haven't mentioned spain. holy cow. >> record unemployment rate in spain. >> it's all right. europe's in the olympics right now. merkel's on the phone. >> let's touch on starbucks before we move on. shares are down sharply, pre-market. coffee chain missing on both

revenues. starbucks also cutting guidance for the current quarter citing weak consumer spending in europe, higher commodity costs as well. starbucks plans to open 1,200 new stores in fiscal 2013. it's a commentary from the cfo that was a little bit troubling. slowdown in june that seemed to be persisting in the month of july. he said it was a broad-based overarching change in customer behavior although they're confident they will be able to navigate this. this is the first miss, by the way, send the quarter ending december 2008. that was when the u.s. was in a recession and when starbucks was in the midst of its own turnaround. a beleaguered time for the company and we're back to that sort of earnings report. >> a very tough conference call. what happened at a certain point in the call was that howard schultz came back after people were saying, look, what happened in june? june sounded like it fell off a cliff? and turns out july's bad, too. and at one point, schultz gets on the call and he goes, whoa,

let's rewind the last five minutes. what we're saying is normally we would kill for the 7% comp in 41 years. and this is just moderate. and then he said this thing that took my breath away. he said, i speak to a lot of companies. and they all experience very similar to june other than whole foods, called out. my takeaway from the starbucks call was, go buy some whole foods. >> right. >> simplistic. >> and so many company that is rely on consumer spending -- >> what could the catalyst be at this point? >> and europe, talking about a replay of how they overexpanded in america and they have to cut back. one thing i would -- that i like about howard schultz, he is impeccably honest about the problems going wrong here. it took my breath away that he has to deal with the turnaround in europe, a dramatic expansion in china from 600 stores to plus 1,000 in a very short period of

time. and then this u.s. sudden slowdown which they did not see coming. they addressed the fact that they didn't. it was a little devastating, frankly. coming up, reaction from the obama administration to this morning's gdp report. we'll talk with alan krueger. let's take another look at futures heading into this friday open. the dow looking to add about 62 right here at the open. stay tuned.

this will be a historic new low for shares of facebook. $22.60 down. and take a look at the others. they're all trading lower this morning. >> when you look at the performance of zynga, groupon and facebook in particular, those who said it's a social media bubble. was it a bubble? >> i think that it's not a bubble. i think that it's something that they have to figure out how to make money with. and i think that charles sandberg said something interesting on the call saying it's a new kind of marketing. i don't think they know what the third medium is. they're going to do a lot of missionary selling locally. it's going to cost a fortune to boost their sales. coming up next, get ready for cramer's mad dash. let's take a look at future this

is morning. we are looking at a higher one although we are awaiting anxiously how facebook will open. stay tuned. ♪ [ male announcer ] this is our beach. ♪ this is our pool. ♪ our fireworks. ♪ and our slip and slide. you have your idea of summer fun, and we have ours. now during the summer event get an exceptionally engineered mercedes-benz for an exceptional price. but hurry, this offer ends july 31st.

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gilead to me looks like a re-vamped, recharged biotech and maybe the acquisition -- >> we forget that that acquisition where they paid $11 billion for a company with 90 employees, incredible premium, that was awe dishes. >> yes. >> and that's something you do not see from big pharma, which is watching -- wants to keep taking the small bets. >> exactly. and this company has better-than-expected earnings. and it has hope on a horrible disease. and i have to tell you this, this and amgen doing remarkable work. ovarian cancer, a new kind of staten for people who didn't take the old ones. these biotech companies are back. turns out that everyone's very excited about them. and celgene the other day reported better-than-expected -- >> enormous market cap biotechs. these are the big guys.

. we have a lot more stocks to watch after that opening bell. it's just three minutes away. stay with us. [ male announcer ] let's level the playing field.

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and the last trading session of the week begins. here at the big board, cohen and steers. over at the nasdaq, onboard. the big focus here, facebook hitting a fresh low in the session. $23.10 is the low in facebook. it looks like it's even challenging that at this point. >> may be too early to buy facebook. a la zynga and groupon. >> again, sarcasm. from cramer. >> i'm struggling -- that quarter, it took me an hour and a half to read the conference call because you really want to understand the news feed issue and understand their new initiatives.

i came away thinking, this could be a great product if you're a restaurant chain. maybe you want to get your word out. but at the same time, i expected more. others expected -- we all expected more. the analysts acted as if they didn't expect more. what are they afraid of? what do they fear? >> we should note, take a look at the bottom of your screen here, there's a report coming out from reuters that merkel and hollande so that they are determined to do what they can to safeguard the euro. so joining in the comment from ecb president mario draghi yesterday which ignite that had rally, we see this report coming out. in terms of the reaction here, not much in ways of the euro. we saw that huge reaction in the euro yesterday of a 1% gain. up by about .3% at this point. not a robust reaction to this headline that is coming out from reuters. >> gold has been a decent tale. gold is going up on this.

david, you don't want to hear this. smarter people who have really hated europe are saying, look, it's going to be bad still. it's not -- but that we may have hit a naydear in terms of the idea that there's discord among the major country, that they're coming out of the discord. >> it gets a little bit better from here n terms of a coordinaterd response that does something as opposed to to spewing out meaningless words. >> and the situation's not good. italy has to raise a lot of money. the unemployment in spain is terrible. but it's an important first step towards solving something that is clearly not done going down. >> no, it's not. it's going to take years to solve. if you had a modicum of growth outside of germany, that would be helpful, too. >> very true. am i putting too positive a spin on the idea -- >> no, people are divided on europe in terms of which way it's going to go.

it's unclear at this stage what that's going to be and what it's going to look like. but you and i both know we're going to sit here yet another day with very different headlines that are going to take our market down. >> when you have a spain, these are exactly the numbers that frankly delano roosevelt inherited. these are the numbers, the 1932-'33 employment situation in the depression. it took world war ii. >> you have to remember, sometimes things are not apples to apples. they have a better -- babs back to facebook, by the way. we know a lock-up is coming up. but there are a lot of investors who got in early who are well under water -- >> zynga had a chance to sell the insiders, right? >> yeah. >> did they take advantage of that? >> pell, pink took advantage of the ability to sell shares.

he sold them at a much higher price, a tranche of shares -- he's done really well. its shareholders, on the other hand, very different story. >> maybe he'll buy a team, if he gets a team -- you buy a team. >> is that what you do? >> yeah, like the vikings or -- >> if you're a hedge fund manager or a private equity guy. >> you buy a team. >> in the meantime, it's interesting. there could be more supply from -- let me say a couple of things positive about facebook. okay? >> again -- >> almost 1 billion users. >> oh, that was the same number as when they went public. >> almost 1 billion users. they make money. they're not at a loss. >> it's an incredible growth company. come on. >> it was the expectation, though, of this company to do better. and that's what you see reflected in the stock and in

the price going from $38 up to $45. and straight down now to $23. >> contrast amazon. one company has gross margins going higher because there's such demand for the product. another has gross margins going lower because they're going to convince you on a one-to-one basis why you should advertise with us and why you should use these new products. there are a lot of people who are afraid we don't advertise on facebook for fear of losing the 18-year-olds who look at facebook constantly. but this engagement on mobile is not as good as the engagement on desktop. it is a business. it's just maybe shouldn't be valued here. how about that? >> even here? even here? >> $22? >> yeah. >> no. >> you mentioned the lock-up, how big are these lock-ups? 1 billion to 2 billion shares over the next two months. another 9% will come available in october.

another 49% in december. this is a wall of shares -- >> 2 billion outstanding total -- >> it doesn't -- if you add up the total, it won't reflect the total number of shares outstanding because some people hold them -- >> growth stock guys will come in at a certain point because they -- again, there's 900 billion -- they're signing people up. it's a tough call f. you like this company, you should like google a lot more. was that a fa teescetious quest? >> yes. sarca sarcasm. >> somebody's going to say, this is a great call in the future because every kid in the world is on it -- it's a great call in the future if they can figure it out. >> the opposite is coinstar, a great call on the past maybe with its dvd business. redbox revenues have decelerated. that's the bulk of their revenues. that stream has decelerated up

29% in the quarter. >> isn't that something? reed hastings may have seen the peak in dvds and maybe coinstar seeing the peak in dvds. >> yeah. >> i'm not going to rent "taken" again for this weekend. i've seen it many times. but i always rent "taken" when i see a redbox. >> you love liam neeson. bob pisani, what's moving? >> i was out with friends talking about the stock market last night. whenever i start talking about the stock market, my friends look at me sympathetically like i have a skin disease or something like that. and it's like, sorry, bob, must be depressing doing this all day long. and i said, are you kidding, we're having a great year. the s&p is up 8.1% for seven months of the year.

that's the best first seven months we've had since 2009. before that, you have to go back to 2003. so far, we're having a great year and nobody believes it. i think part of the problem is everybody's underperforming. i call hedge funds, they're all miserable because they think the central bankers intervene too much. macro makes it impossible to pick stocks on a disable, too much gyrations in the market. i look at some mutual fund number this is morning. and the mutual funds seem to have a real problem. jpmorgan had in your opinions out, the average big cap mutual fund is underperforming the s&p 500 by 111 basis points. we're up 8%, remember. underperforming by 111. that's big. that's a lot. that's statistically significant. according to jpmorgan, 32% of all the big cap mutual funds are underperforming the s&p by more than 250 basis points. good hechs. somebody's got it wrong. what happened, remember that big swoon down in april and may, the markets dropped, everybody got short. they're still short.

materials, industrials, big short positions still in there. but the market turned around very quickly in june. i think a lot of people got caught flatfooted. that's probably where the sort of the underperformance has come. regardless, everybody's frustrated. most of the public think the stock market is having a terrible year. it's not. no wonder everybody's in a bad mood right now. let's talk a little bit about what's going on. the catalyst for the next rally is that short. the materials and industrials remain heavily, heavily shorted on the street. and yesterday i noted all throughout the day, there was no tremendous big rally in the materials and industrials. that tells me there was not a lot of short coffering going on. there's your basis for your next rally. the ecb meeting is next thursday. the big news will be around draghi. the expectations are a lot higher. the hollande/merkel comments are interesting. but i don't think they advance the argument much. the basic feeling is they'll do another ltro and liberalize the

collateral terms. that's brought up the most this morning. other than that, did you notice the real estate companies that made comment this is morning? real estate is continuing to improve. d.r. horton, orders up 25%. taubman came out, rents increasing, leasing is strong, bankruptcies at record lows. then we had weyerhaeuser, seeing signs of a rebound in the u.s. housing market. here's one of the very, very few bright spots in the u.s. economy. jim, back to you. >> and goldman had very good comments about housing being strong. europe, germany's up 11% going in if you have euro. there are markets that are strong that we think are being torn asunder. let's shift to bonds and the dollar. rick santelli at the cme group in chicago. rick? >> thanks, jim. the joke on the floor is how do you make a 1.5% gdp look good? well, you lead into it discussing which side of 1% it's going to be on.

everything is relative. and indeed the market is acting as though that number is positive and against expectations, we can make that argument. against history, against where we need growth to be, it falls way short. now, how did the market respond? if you look a couple of day chart of tens, you can see they've been advancing. the printing press scenario put into effect by mario draghi is having a near-term effect. look at a one-week chart. we closed last week at 1.46. currently at 1.48. up two basis points on the week. now look at the bund overseas. right at the epicenter of where the recent news is. it closed at 1.16 last week. it's at 1.37 now. a month larger move. and if you look at the spread between the two, you can see, it settled a 29 difference in favor of our ten-year last friday. today, it is at 10 basis points. we continue to monitor this to

see if the fixed income markets, once deemed safe harbors, are going through a metamorphosis that will last. jim, back to you. >> i've been waiting for these bond yields to go higher. no one knows this stuff like you do, rick. let's check out the latest moves in energy and metals and go to courtney reagan at the nymex. >> one trader said to me this morning, it's going to be a quiet day. but if you look at the intraday chart of gold, i think it's anything but quiet. decent moves already. gold hitting near session highs. we were treated only to move back up again tracing the movement in the euro from some of those comment that is we heard out of europe as well. we're still above $1,600 but in somewhat of a range, albeit the higher end of a range. one trader says $1,640 is the next level we want to look to. seven-week highs for the precious metal. if you look at crude oil, we are just barely positive right now. push and pull right around that

$90 a barrel mark. and choppy trade again there today. we'll see what happens as we move forward. back to you. >> thank you so much, courtney reagan. coming up, carl quintanilla in london at the olympics. >> welcome to canary wharf, home to some of the biggest banks in the world. this is one churchill place, home of barclays, which just reported monster earnings. when we come back, complete coverage of the olympic games from one of the banking capitals of the world, when "squawk on the street" continues. you know what i love about this country?

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live from the london olympics, it's carl quintanilla. >> welcome back to london and "squawk on the street" where we are live at the london olympics, a few hours ahead of opening ceremony tonight. usa men's basketball going to be a huge event coached by coach mike krzyzewski, perhaps the most accomplished men's basketball coach in history. four ncaa titles at duke, a gold medal as an assistant with the dream team in barcelona in '92. but a well-known author and speaker on management. we caught up with him yesterday

at the ribbon-cutting of a new fitness training facility here in london and talked a lot about some of the failures in leadership, whether it be at banks or in government around the world and talked specifically about what reforms need to happen as a country in the united states. take a listen. do you have a level of frustration or optimism about some of the reforms we need to handle as a country? >> well, i would hope that our leadership works together where it's not just bipartisan type of approach, but it's -- i think the people deserve teamwork from all parties. we're no longer just a two-party system in our country. and it's a time for everybody to come together. usually a country comes really together when they're at war. and we have been at war although our country doesn't realize it

as much, in iraq and afghanistan. but there's a war against the economy. of what's happening. and we should come together as much as possible to find solutions where we can provide jobs, opportunities for the people of our country so that they can succeed. >> and it just strikes me after hearing what ceos of eden and bng have told you about their willingness to invest. the degree to which they're willing to enter any kind of m&a bin held hostage by policy in this country. interesting to hear the coach reflect on that in the framework of a war, right, where you expect crises to be fixed, except when not everyone agrees there is, in fact, a war going on. >> remarkable interview, carl, because i always hope that we'll interview someone in washington who says exactly what coach "k"

said. and you find yourself thinking, geez, coach "k" offers a solution. would he go to washington and talk because no one does not revere -- sorry about the doue negative -- coach "k." >> his point on war overall -- go ahead, carl. >> i was going to say. we'll have more with coach "k" coming up in the 11:00 a.m. or not, talking about whether now is a tough time to be the ceo and whether it's a failure of leadership or something else. but whenever he speaks about being in a position of power and wielding power, you have to listen. he's an incredibly accomplished and very, very bright person. not to mention a great coach. >> is he ever. >> great, carl. see you later on. that brings us to this morning's "squawk on the tweet" question. we're asking you, our viewers, as awls of the markets, investing in this market is like competing in, blaing, at the

olympics because of blank? so seems confusing. like competing in gymnastics because you have to jump through hoops. tweet us, @cnbcsquawkst. minutes away from breaking news on consumer sentiment. much more "squawk on the street" straight ahead. coming up, cramer has stocks to critique. and he has just seconds to do it. find out if he can, when "squawk on the street" returns. here's one you may not have thought of -- fidelity. now you don't have to go to a bank to get the things you want from a bank, like no-fee atms, all over the world. free checkwriting and mobile deposits. now depositing a check is as easy as taking a picture. free online bill payments. a highly acclaimed credit card with 2% cash back into your fidelity account. open a fidelity cash management account today

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now for "six in 60," six stocks, 60 seconds. we'll start off with dow chemical. >> morgan stanley downgrades it. >> something they don't like here. >> most negative conference call of the quarter. >> that's helpful, thanks, morgan.

netgear. >> what does this mean for cicso? every business seems to be faltering of their competitors. >> deckers? >> short squeeze and comes right back down. i say ugg. >> print, we talked about ate lot yesterday. great quarter. upgraded at ubs. >> analyst dragged kicking and screaming. it's a fabulous situation. >> look at that move. 27% in two days. exxonmobil downgraded at ubs. >> they spent a fortune on natural gas. they won't put up natural gas tanks at their gas stations. they can change their fortunes but they want to defend gasoline. >> kolgate upgraded. >> facebook trying to hold the line at 23. >> people are very excited to have the momentum. go to 23.

people are struggling very hard if you bought a 38. i think some big institutions are doing that. trying to make a stand. maybe a line in the sand. >> let's go over to rick santelli who's got breaking news on consumer sentiment. rick? >> well, of course we're waiting for it. 72.3 is better than expectations. this is a final read for the month of july. how does it stack up? to give you some perspective, the high watermark for the year was in may at 79.3. that was the highest level going back to the fall of '07. but this definitely stacks in to a lot of reads that we've had. it's about the third strongest of the year. and, of course, this is july. but it is better than expected. and we'll see whether that ten-year tests a 1.50 yield because it's still a bit below that now. david faber, back to you. >> thank you, mr. santelli. imagine that, testing a 1.50

yield is a possibility. what's coming up on "mad money" tonight? >> six flags had a good june. trying to battle the notion that howard schultz is saying that june was bad all over. people are going to theme parks. they're loving it. >> excellent. >> i also want to point out that i'm going to be on the hunt for company that is didn't see july be bad because of what rick santelli just said. if consumer confidence is going up, perhaps the whole foods is doing -- that's more of a beacon than a starbucks. starbucks was a quizzical conference call. >> got it. >> and obviously facebook and then versus amazon, amazon is saying, this is just fabulous. too much demand is a nice problem. >> it's a big problem. high-class problem. >> yes, it is. >> jim, have a great weekend. see you tonight on "mad money." >> thank you very much. your mets are coming back. >> oh -- got a lot more "squawk on the street" ahead. we're keeping an eye on facebook. #a#a#a#a#a#a'9#a+=#a#a#a#a#a +g#a

good morning. welcome to the second hour of "squawk on the street." let's get to the roadmap for

this hour. second-quarter gdp shows a slowdown in growth but comes in better than some economists expected. we'll talk with alan krueger. and facebook, starbucks and amazon are up. we'll take a deeper look at playing the earnings hat trick. >> and tobias levkovich with where he thinks things are headed next. >> and carl quintanilla in london. the opening ceremony of the 2012 london olympics. let's get back to carl. what a day, carl. >> it is going to be quite a day, simon, and quite a night here. seven years of planning all coming to a big climax tonight with the opening ceremony a few hours away. i wish you were here to help us get a little less lost around town. the torch finally making its way to the heart of london after traveling some 8,000 miles. the duke and duchess of cambridge yesterday welcoming it to buckingham palace. david cameron and his wife taking it to parliament square. it is now at city hall on the

thames where we will next see it lit when it lights the caldron at olympic stadium tonight. of course, the big story here, at least this morning, has largely been about politics. mitt romney being basically torn apart by the london press after telling brian williams when asked if he thinks the olympics are going to be okay. quote, it's hard to know just how well it will turn out. says there were some disconcerting stories about some of the security personnel shortfalls here in the city. david cameron and most of london took umbrage with that saying, it's easy to hold the games in the middle of nowhere. >> there's a guy called mitt romney who wants to know whether or not we're ready. he wants to know whether we're ready. are we ready? are we ready? yes, we are!

>> mitt romney was on the "today" show and told matt lauer it does look like london is ready. london's spent some $14 billion on these games. controversial because of the gdp number that is came out this week, still double-digit unemployment. but obviously a lot of people hoping the third-quarter gdp numbers will be boosted by all the spending that's happening in and around these games. a lot more from london much later on this morning. but for now, back to you. >> carl, look forward to it. let's check in with rick santelli at the cme group for an update on consumer sentiment. rick? >> thank you, melissa lee. when we look at the university of michigan, we have a preliminary read and a final read. i mix my metaphors. i want to make something clear. only final reads, 72.3 is the lowest read for 2012. you have to go back to december of last year to find a lower read if you don't, of course, include the preliminaries mid month. back to you. >> thank you very much, rick santelli.

now let's take a quick check on shares of facebook after the social network reported drastic slowdown in revenue growth in its inaugural earnings release. the stock this morning plunging to fresh record lows. $22.91 where it's trading right now. down by 14.5%. michael pactor maintains an outperform rating on the stock but lowered the price target to $35 a share from $44 a share. michael, great to have you with us. >> thanks, melissa. >> in terms of the question of monetizing mobile, did you get a sufficient answer from the conference call? did you get a clear path as to how this company is going to do that and by when? >> yeah, i think that they actually were pretty arctticula about how sponsored stories are working and they talked very clearly about how they've increased the frequency of those and how rates are going up for those. that's going to be the primary mechanism. obviously they're going to look for other ways to monetize mobile. it looks to me like a ton of their growth is going to come

from mobile. they threw out the number 5 billion smartphones in the next several years. obviously that's a huge opportunity for them. that's more people connected by phone than are connected to the internet. so i'm not really that pessimistic about it. i don't really care if mobile monetizes at a lower rate if in fact they get a lot more users spending a lot more minutes. that's more opportunity to -- >> you're counting on volume basically. you're saying that mobile is going to be a tremendous opportunity but it could be one of the greatest headwinds when it comes to facebook's growth? >> well, it's a headwind only if you see it -- mobile as a substitute for desktop. obviously if everybody stops going on facebook on their desktop and shifts to mobile, you'll see remps decline. i don't think that's what we're talking about. we're going to see desktop remain relatively stable. i think the growth is going to come from mobile. that's incremental revenue. i don't see that as a headwind as all. >> they are capturing users on mobile.

mobile is up 66% at over 1 billion active users. at a time when mobile is changing, i think this is something people are missing. one of the reasons they can't migrate display ads over is because handsets are small. but if you look at apple's leadership within hardware, it's about bigger iphones and smaller ipads. the handset that people will be using in the future may well be bigger than it is now. and they're spending $400 million just in the quarter to develop apps that can be used on those new mobile systems. this is surely still an option for the future. >> absolutely, simon. i think that the big tger the screen, the more flexible they are in delivering advertising. that should be a positive. one of the points they made was that mobile has driven usage up 20%. we did a survey in the u.s. -- we had 51% of facebook users access on mobile. but it's only 17% of the minutes that they spend. so we're not seeing this massive

shift from desktop to mobile. it's incremental. again, i think you have to keep in mind, if it's incremental and the screen sizes are getting bigger, that's more effective advertising. this is not a revenue story. the story yesterday was about spending and about margin compression because they're investing in the future. i can't question their decision to spend a lot of money to drive growth even faster. but it makes that magic earnings number that justifies that $38 share price more elusive. they're not going to make a dollar a share in the near term. it's just not going to happen. we were talking about them making $2 by 2015. it's unclear if they can get there because they intend to spent a lot of money compressing margin. >> thanks for your time, michael. second-quarter gdp came in at 1.5%, in line with consensus. the first quarter was revised to 2%. the economy has grown for 12

consecutive quarters, though the gains have been mild by historical standards. here first on cnbc is dr. alan krueger, chairman of president obama's council of economic advisers. we're growing but doing so at a rate in the post-war period that is slower than typical of the average recovery. why is that and is there any chance that will change? >> well, if you go back to the causes of this recession, they are different than past recessions we've had. much deeper recession, the financial crisis was the most severe we've had since the great depression. that has been a headwind for growth, families were saddled with a lot of debt. that has constrained consumption. on top of that, we overbuilt housing. one of the brighter signs is that the housing market seems to be turning around in a lot of parts of the country. but there were a lot of problems that had built up over a period of decades that the economy needed to overcome.

and the fact that we have been expanding now for 12 quarters is a sign that we're on a better path than we had been on. but clearly, there's plenty more work to be done. >> a great deal of work to be done. i want to direct you to the consumption side of things. personal consumption, 1.5% in the quarter, the slowest level since the second quarter of 2011. anecdotally, we've heard from a lot of companies that things slowed down markedly in june, for example. is the administration concerned the consumer has backed away? >> the economy has been facing a lot of headwinds, problems in europe affect our markets. one of the reasons why the president has been fighting for an extension of the middle class tax cuts is to give middle class families more security going forward, more confidence going forward. the senate passed that extension this week. the typical middle class family would get a $2,200 tax cut as a result. and it's important for the house

to continue these tax cuts. it's something we can all agree on. and that would provide a good deal of confidence going forward. >> dr. krueger, something bigger is happening here. and it points to the president as commander in chief and his ability to lead the nation. what we lack here -- and you said it -- is confidence and, therefore, demand in the economy. why is it that the president with all his skills of oratory and all the federal spending we have is unable to convince the american people that tomorrow will be better than today? that's the nub of what's going on here. why? >> i think the american people recognize that the economy had been underperforming for quite some time, even before the president came to office, we were not creating enough jobs. even before the recession, the recovery earlier in the 2000s was the only one where lower share of the population was employed at the end of the recovery than at the beginning. so the problems that the company

is facing -- >> dr. krueger, forgive me, sir. >> a number of things to put us on a much better path than we had been on. >> i'm really disappoint that had so much of the interview that you give us is about looking backwards when i'm asking you about the future and whether it is possible -- and it may not be possible to do. but can you lay out a vision that people can buy into, not about middle class tax cuts, but something bigger about where the country is going? >> well, simon, that's an excellent question. and the president has laid out such a vision. he's laid out a vision of growth coming from the middle class on out, not top down driven by the hope that tax cuts for the most advantage will lead to growth. we saw that didn't work. approach, balance between cutting spending and raising additional revenue and maintaining our investments in critical things like education, infrastructure, innovation. i think that's a vision that people can relate to. it's a vision that i think would help the economy continue to dig our way out of this deep crisis

that started in 2008. >> dr. krueger, we have to leave it there. thanks for your time. >> thank you. >> alan krueger, council of economic advisers chairman. >> up 68 points on the dow. let's get a market flash from seema back at h.q. >> good morning. take a look at authentec. what does the company do? they specialize in fingerprint sen source and mobile security products. with more consumers using their mobile device to shop and pay bills, that's a high demand for mobile security. back to you. >> thanks, seema. coming up next, more from carl in london at the olympics. >> london is receiving a lot of special guests for these olympic games. but it's also the temporary home of some mega yachts. this is the "octopus" owned by the co-founder of microsoft, paul allen.

414 feet long, the tenth largest in the world. two helicopters, a pool, two submarines, a staff of 60 and room for 32 guests. it is an absolutely massive boat docked in the south dock here at canary wharf. a lot more "squawk on the street" is back after a break. [ to the tune of "lullaby and good night" ] ♪ af-lac ♪ aflac [ male announcer ] find out more at... [ duck ] aflac! [ male announcer ] ...forbusiness.com. [ yawning sound ] the heart of every innovation. wow. that feels really good! and now, sleep number introduces our new memory foam series-the only memory foam beds with exclusive dual-air technology that adjusts on each side. memory foam just found its better half. sleep number. enjoy introductory savings of $500. and two free coolfit pillows! plus, free shipping through saturday. only at the sleep number store,

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welcome back to olympic park

in london on this friday morning. just a few hours away from opening ceremony. i'm carl quintanilla along with a longtime native of london. she's lived here for all of about two months. kelly evans hosts "worldwide exchange" for cnbc and is going to be helping me cover the games. >> great to have you guys here. what do you think so far? >> still finding our way around downtown. but i'm interested in your perspective. the planning was all starting to gel in the final weeks and months. how does it feel -- is london prepared to deliver? >> so far, because aif hi've ha travel back and forth into the belly of the best, i'm using the tube system. it hasn't been too bad. i read that traffic in this week is down something like 13% year-on-year. all the worngs about how terrible it's going to be has worked. it's made it easier to get around. >> we heard from mitt romney,

some of the comments he made yesterday to brian williams about stories that are real, right? the personnel shortage from the private contractor with security was a real issue. the military, the question now is, have they stepped up at all? >> and politicians, of course, doing what they do best. boris johnson -- mitt romney was talking about concerns that have been in the media for weeks. boris johnson comes out at this huge concert in hyde park, takes mitt romney's comments and says, let's show mitt romney that we're ready for it, bring it on, london can handle this, we're ready for the world's attention. it was just so funny. it's what you would expect. they really have capitalized on it, unfortunately, if your mitt romney. >> i was at a press briefing this week where a member of the ioc said maybe for the first time ever, london deliver what they said they were going to deliver. we were talking about some of the strategies of making it fee london. >> they've gotten people involved. they had this morning the bell

ringing, which was coordinated at 8:12, 12 hours before the opening ceremony tonight. all the big bells around big ben were supposed to take part in this. people are kind of getting into the spirit and so we've seen perhaps despite all the whining and hand-wringing and security problems here and there, people pretty much coming together in support of the games. >> plus, there are some inherent challenges in putting together a games in an old urban infrastructure like london's, right? >> yes. that's the real question going forward. we're in east london, an area that needed a lot of redevelopment, a lot of infrastructure work. as i look behind me to the brand-new westfield mall and the shots behind us, a lot of this is going to stay after the games. the real questions are, how much of it is used? a lot of it will go. they've tried to make permanent the structures that need to be here. >> gdp, we just got this week, worse than expected for the uk. but payback in the third quarter

because of spending related to these games? >> that's the hope. when you're out around town, keep that in mind. the one worry, though, when you talked to real estate brokers, when you talk to some of the retailers saying they're worried that so many people have left or worrying it might be a ear nightmare, that they're not going to get the boost expected. when i talked to the ceo of baa which operates heathrow airport, i said what kind of crazy influx are you getting for the games, he said, our traffic numbers aren't going to be that much higher. >> do you think london whale, barclays put a stain on these games or not? >> i don't know. certainly lloyd's has been the banking sponsor of this particular event. they probably would have gotten more pushback if they had really been in the news lately. but over here, there's not a lot of public love for the bankers. for everything that london's reputation has been helped with the jubilee and the olympics,

it's not been helped by the banking scandals and the news. >> we can't wait to see the ceremony later on. simon, we wish you were here. we don't pass a single corner where i don't wonder if you've been there before. >> i actually wish i was there, to be honest with you. it's going to be great. 5,500 hours of coverage on the nbc networks. guys, we'll catch up with you a little bit later in the program. for the moment, we need to focus on some of the earnings we've had overnight. amazon reporting a rise in profit margins. heavy spending on warehouses could mean a loss in the future. so as the online retailers battle against apple rages on, we look at what's next for jeff bezos & co. can starbucks bounce back? that's next on "squawk on the street." organic artichokes, oc lettuce, organic kale... does your cauliflower have a big carbon footprint? not at all.

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now, five right now are in the red. one of the biggest gainers here on the dow, ibm with a gain of $1, that's .5% higher on big blue. let's head over to seema mody for a quick market check. >> q logic down sharply on disappointed earnings, missing street estimates on its top and bottom line. net profit dropping 43% on higher expenses. the stock is down sharply, down better than 20%. but market cap just under $1 billion. simon, over to you. >> shares of starbucks have been a great investment over the last year, up about 30%. but they've been hit hard this morning after last night the earnings fell short of what the street was expecting. the coffee giant lowering its outlook, missing by two cents on earnings per share. the revenue shy of what people hoped for. managing director and senior restaurant analyst at lazard capital markets joins us now. good morning to you. >> good morning. >> what's the analysis of what's

gone wrong here and what it means for holding the stock? >> same-store sales moderated and they echoed that several times throughout the call. yet the costs looked like they weren't able to be restrained in the near term. they're committed to pull back some costs and controlling that better in a more moderate, topline environment. they lowered their guidance basically to 15% to 20%. the street was looking for 20%. i think they're being conservative to start off their fiscal year, which ends september 2013. this is the first time that they gave that guidance and they historically have been conservative at the onset. >> you've reduced your price target from $69 to $64 in the wake of what's happened overnight. but that's still 22% upside from here. why should people buy the stock? why will it outperform in your view? >> i think people will have increased confidence as the year progresses. certainly they missed earnings after reaffirming guidance as early as a month ago. i think that with two weeks left

in the quarter, that hits their credibility. so i think they have to display over the next couple of quarters regaining that credibility and also substantiating that they're still seeing moderate, mid single-digit same-store sales. on a relative basis, that's strong. they're not having competitive pressure and not seeing a dramatic slowdown. the fundamentals in their business are strong. china, the consumer groups all growing over 30%, all higher margin. >> let's talk about the consumer products group. that is seen as a catalyst for starbucks going forward. what did you see in terms of momentum in that consumer products group, specifically in june when they saw the customer traffic slow down and in july when they saw that slowdown persist? >> well, they saw over 30% growth in that category. and we're forecasting that to continue basically through fy '13. they have a lot of new products out there. they made some acquisitions. evolution fresh will be a big driver. the refreshers certainly in the

news, pretty prevalent these days. those are the growth drivers right now. the k-cups, their own instant product via, they have a lot of new news to drive that exterior channel. their own retail stores will benefit on a same-store sales front from that. good times are ahead. >> at the same time, matt, the optics of this quarter is that it is the first miss since the quarter ending december 2008, when the u.s. faced recession and when starbucks was in the midst of a turnaround. probably trading at a higher multiple in terms of 25 times forward earnings. where does the stock stand now compared to then? i think that's a way investors are taking a look at the stock. the stock has been a momentum stock this year. it's trading at a decent multiple. it's not cheap. and we're back in terms of the miss and the miss on earnings and execution that we saw back during the recession. >> that's a great context to put it in. and i think the same-store sales are substantially stronger.

seeing 5% traffic that they just ended with. their guidance implies 3% to 5% traffic with 2% price. they're mentioning closing selectively some stores in the uk. they're not talking about a closure of 9% to 10% on a global basis like they did back then. the outlook is not as dire as it was back then. actually they're accelerating growth. you're going to see a tremendous amount of growth. 250 stores in china, 1,200 stores next year. they were talking about contracting growth in that context. so i do think it sets up and augers for a better multiple than it did in those times. certainly the stock traded down to single digits at one time. we're not going back to those days. >> six buys in the sector, pane panera, mcdonald's. what's your favor stock. >> we like panera and starbucks, we thought the comps would be the strongest there. we were surprised by the mismanagement of what seems to be the cost in the last two weeks as they couldn't really offset the moderating same-store sales. continue to like panera.

it should trade up to $185. as we said, you've highlighted our stock price, immriz good upside with starbucks also. >> matt, good to see you. have a great weekend. >> thank you. coming up, we'll have a lot more from the olympics with carl and we'll send it over to carl to tell us what's coming up. >> we've made our way to the top of our tv tower here at olympic park. directly behind us, olympic village where the athletes stay, the apartments. some might say dormitories. this blue bridge is where the athletes have to cross in order to come into olympic park, in some cases, to work out or even get to events. we'll talk a lot more about the games and even some of the betting behind the games when "squawk on the street" comes right back. railway, the first trade route to the west, the greatest empires. then, some said, we lost our edge. well today, there's a new new york state. one that's working to attract businesses and create jobs.

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one hour into trading. here are the stories we're squawking about. merck after their second-quarter results beat the street thanks to sales of its diabetes medicines. costco and walmart in the green trading at all-time highs. and expedia the biggest gainer on the s&p, up more than 20% after it easily beat expectations for its second quarter thanks to strong hotel bookings. halfway through the campaign to win the white house. joining us now is tobias levkovich with citi. interesting analysis as to

historical how important it is if you're invested in the market, that actually the challenger wins. >> the challenger is better for equity markets in the year after the election, historically. we went back to about 1900 and looked at different elections and seen when the incumbent won the challen and when the challenger won. the first year after, challengers tend to almost by 2 1/2 to 1 tend to be better for markets than the incumbents. >> 8% gain in the s&p following that type of result. >> right. >> do you know why that would be? do you have analysis? >> i think there's a perception, at least, that republicans tend to be more pro-business. but even that doesn't really show up. because it could be the democrat. i think it's the sense that there's a change in place, there's going to be improvement to what was before. you have to look at what the economic backdrop was. it's not as simple as saying, the new guy's better. >> you actually figure in who

controls the house and the senate, what party controls congress in relationship to who won the election -- >> we didn't do it for this analysis. the reason we didn't was if you think about 100 years or so, 25 elections, four instances of this, five instance of that, with full control or not or split government. and what's the economic backdrop? that left us with too much leeway to wiggle out a particular political perspective. and i think people do massage the numbers. we didn't want that. we wanted it to be fairly nonpartisan. >> 1,425 is the target for year end on the s&p. you think we have 4% or 5% upside from here. rather concerned, you didn't get the memo from your colleagues in europe who believe there's a 90% chance that greece is going to be ejected from the eurozone. >> right. we did see that memo. i think what's interesting is that most investors already

believe that as a likely outcome. how it gets done and a lack of a chaotic unraveling in europe is the key issue. we just don't see credit spreads widening out the way they do before -- even the cdss on sovereign credit aren't having the same impact. look at portugal, for example. >> do we get to 1,425 if we have a greek exit and italy and spain will likely have a bailout by the endf th year? are those factored into this 1,425? >>. >> yes, but in a different way. to capture not just european sovereign debt concerns, we look at things like the equity preliminary premium, our various models on sentiment. and we were in panic over the last seven weeks. that gives us a 90% probability of a gain six months later by year end. we look at the risk premium being at a 30-year high, capturing a lot of this.

what we actually look for in markets is what are the conditional probabilities? what probability are we like le to see markets move up or down? we're not necessarily convinced we know the future in terms of specific catalysts. >> what's your feeling? do you feel we're basing here -- what does next year look like to you? >> next year's a lot more challenging. that's the critical issue. 2013 is very dependent upon what we do on the fiscal cliff in the u.s. if we were -- this is my words and the cbo's words -- if we see the fiscal cliff not be resolved and we get a combined impact of about 4% of gdp, there's a high probability of a recession in the u.s. that's where has 70% -- >> it's not going to happen. surely they will sort it out. >> we are of the belief that they will sort a good chunk of it out. >> then do we base -- >> we think we're in a trading market. we traded up. got nervous back in march,

april, we suggested be more cautious. at the end of june, we said, get in here. as the market continues to rally, we could have another hiccup later this year around the elections, around concerns regarding this. i talked to somebody in washington yesterday looking at a cnn article that discussed eight different ways in which we could get literally 269/269 on the electoral college vote. what do you do then? there are scenarios out there of difficulty in markets. that may show up again in november. >> if one believes that we are to get to 1,425 on the s&p 500, is it through the rally that we've seen in dividend-paying stocks, which are trading at a premium to the rest of the market or do we need to see a rotation out of them? >> dividends have always been an important part of stocks. we really forgot that in the late 1990s when it was all about the tech stocks. half the return in stocks over the last 100 years have come

from dividends. and you have baby boomers who need income. when you look at the s&p 100 yielding 2.8%, 2.9% versus the ten-year treasury at 1.40, maybe they should trade at a premium. this idea of just because the valuation is lower, we should buy one or the other -- i used to buy cyclicals. you sold them at low p/es. never bought them at low p/es. that's not generally a good signal. >> thanks so much. shares of amazon up about 6% after the second-quarter report. the online retailer reporting earnings fell 96%, $7 million, or a cent a share. joining us now is colin gilles. he has a hold rating on amazon and a $220 price target. great to have you with us. why has the belief in amazon changed? in past quarters we heard about the company spending, spending,

spending for the future in order to build up their fulfillment centers and investors were always worried that they were spending too much. and all of a sudden we hear the same story this quarter and the stock is higher. >> yeah. from where we sit, we see slower revenue growth. we see a company that made one cent, they generate less than a penny on every dollar of revenue that they earn. trading at 230 times earnings and it's forecasting an operating loss for the next quarter. and it's like, hey, let's bid up shares. doesn't make a lot of sense. but the reality is that both side case is in effect. they're taking over most of commerce and they're going to be building more fulfillment centers and that's going to be a positive sign for the back half of the year. but you have to be concerned about the fact that the current results showed a slowdown particularly in europe. >> particularly in europe. and also are we seeing also what so many other retailers have seen and what starbucks pointed out on its conference call, that

is, that there's market change in the consumer in the month of june that persisted through july? >> they have the tailwinds of e-commerce constantly pushing them. we've been saying they've gotten to the scale and size that the macro headwinds are starting to impact them and starting to balance out a little bit of that push that they're getting from e-commerce. the thing to remember is that when you're dealing with amazon, they're going to start to get more and more competition for the higher-margin digital goods. if they're left stuck with just the physical delivery of goods, that's the business that's always going to have shipping losses. these investments are never going to wind down. and the fact of the matter is, even if you put a mature margin on them, let's say 3%, 4% or 5%, it's still a very expensive stock. >> so let's just deal with some of the other stuff that's going on. we're not going to get same-day delivery. they've poured cold water on that. but "the journal" is reporting

they are testing the possibility of a smartphone with asian suppliers to compete with the iphone. is that a positive or is a negative for amazon if eventually they do make that announcement of an iphone-like device? >> simon, it's a great question. and we'll have to see the quality of it. but my take is, amazon is a mediocre hardware maker. this is not their core competency. the kindle fire, i like it. but it's not nearly as good a product as the nexus 7 tablet that's out. whatever they produce, it's not going to be an iphone 5 competitor. nowhere near. it would be a low-cost competitor and something that they will subsidize so that it will be a front door for people to consume and shop. it's going to take a lot of expense for them to get this out into the marketplace. we'll see if it pays off. >> why is it a hold in your view, colin? is it primarily because of the valuation at this point? and what valuation would get you off the sidelines? >> sure. there's multiple things. first off, it's a black box.

the company is very limiting in the disclosures that they give you. we have no idea how many kindles have been sold. we have no idea the economics of the kindles or how many prime members are out there or the economics of their digital music. other companies, their competitors disclose this. amazon does not. the second point is it's a chart-topping valuation. 230 times our earnings. and the third bit is they are not leading in the digital delivery of goods. they're the leader in books, but they're lagging in music and movies. >> colin, we'll leave it there. thanks for your time. always good to see you. >> thank you. up next on the program, how you could win big at this year's olympics. you won't get a goldman. but you might be able to get some cold, hard cash. we're back after the break.

welcome back to "squawk on the street," live from london. just a few hours before opening ceremony here at olympic park. one of the big pastimes of the olympic games is not just the games themselves but also the betting that goes on around athletes, around countries, around the medal count. here's one of the ballots from one of the betting parlors here in london. 11,000 bets total. you can bet not just on the athletes, of course, but also on these things they call prop bets. is it going to rain tonight? will the flame burn out? all sorts of different things regarding the entire course of the games. we went to the parlor and caught up with jessica bridge, the head of olympic betting. >> the best bet is on what hat the queen will wear. we love her majesty the queen. we always have a bet on what color hat she'll wear.

we're betting 3 to 1 she wears a blue hat. cream/white is in there 8 to 1. or red at 11 to 1. or maybe all three at 33 to 1. it's an outsider. but she might surprise us. hopefully it's not going to rain at the opening ceremony. the sun is finally shining here on us in london. but if it's raining, it's 4 to 1 that it does. 2 to 1 that it doesn't. and we have to light the caldron tonight. 25 to 1 that the rain puts the olympic flame out and rains on our parade. >> 50 to 1 that it's going to rain every day. some of my favorites here, though, 33 to 1 that boris johnson, the mayor of london, will set his hair on fire using the olympic torch. 7 to 2 that the olympic village where the athletes stay will run out of condoms. and 50 to 1 that there would be

a greek exit. but recently the odds have come down so much, it's roughly 3 to 1 that greece will exit the jurnz. eurozone. they had to suspend betting on that prop bet. doesn't involve the olympics but a lot of people trying to determine the future, especially about the next 17 days. >> wow. i'm rather taken by the 3 to 1 that the queen will wear a blue hat. are members of the royal household excluded from betting or could she send one of the servants down to put on the numbers because she knows what color hat she's going to wear? >> you know the rules better than i do, simon. >> do we know who's going to light ultimately the flame? there was a lot of speculation. one of the traders asked me here, do you know who's going to light the flame? and i was like, i don't know. sit david beckham? >> one of the best-kept secrets in the world right now. there are rumors that sir paul mccartney may sing. but absolutely nobody knows how

or who is that caldron going to be lit. >> my money would be on the children. they actually won the olympics, if you remember, by saying it would be an olympics that would inspire youngsters to achieve what they could in life. i'd look for some juveniles, frankly, to be lighting the flame. >> i'm going to the betting parlor with that. >> and the hat. >> if the mayor lights his hair on fire, there's going to be a big payoff. >> that's true. way to put it in perspective, david. carl, see you later. >> okay. coming up, we'll get the gop response to today's gdp numbers. but first, rick santelli, what are you working on for the next hour of "squawk on the street"? >> well, talking about gdp, talking about europe and the microphone this week. but also talking about spain. we have a couple of volunteers, one, two, three, four -- four people. in spain, 24.6 unemployment.

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welcome back to "squawk on the street." watching shares of sprint. they continue to move higher. remember we had that strong shares on thursday. sprint getting notice to buy noting a significant increase in the firm's outlook for firm's ownings over the next three years. jim cramer also last night praising the stock on "mad money." you can take a look at that. take a look at the chart, up 100%. melissa and simon? >> thanks so much. we should note telecom, very good level. so, again, this plays in the preference of the dividends markets. investor favorites in this group. >> at&t has moved up sharply. not an incredible amount of growth. at&t had a fine quarter.

to melissa's point, largely domestic dividend paying. as for sprint, as we said many times yesterday it was a defining quarter in terms of a real turnaround with the company. that's what the shareholders seem to look at when they look at sprint. that's the first time in a very long time. >> this is a surprising sector p best day in july, the s&p retail index. in fact, a lot of retailers have stealthily moved up big time in the past month or so. month to date, autonation is up 13.5%. urban outfitters up 12%, limited up 10%, gap up 9%. a lot of things in the retail sector that we hadn't been paying attention to. >> there's another big move today, down on the yields in spain. it is significant, but potentially that both angela merkel and the french president

francois hollalanhollande said would do what they can. it's significant partly because there's a report in the newspaper in france today that there may be a plan that is being concocted between the various elements of europe, the politicians, the ecb, that might emerge, the paper says, within days, if not weeks. so you have seen the yields moving down again today, and it's interesting that actually the comments that we got from hollande is all the parts of europe should operate within the realm of their own competenciei which translates basically into a correlation. >> a quick check on facebook. $23 a shafrmt it's taking along with it the recent social ipos. if you look at the slco, that

hit a fresh low at $12 it's important to point out that linkedin is successful. it has maintained that level and, in fact, done very well in stark contrast, of course, to zynga and groupon. >> why do you think it is? >> they've monetized. >> it's very robust at this point. a lot of people like that read. >> all of them today trading as a group. >> don't forget olympic games officially begin tonight. tell us, investing in this market is like competing in blank at the olympics because blank. tweet us. we've got your responses after the break. [ male announcer ] how do you trade? with scottrader streaming quotes, any way you want. fully customize it for your trading process -- from thought to trade, on every screen.

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let's get to it. the olympic games kicking off on the east coast at 7:30 tonight eastern. so this morning we're asking you as athletes of the math as you are tell us. investing in this market is like

competing in blank at the olympics because blank. it's like competing in a track race, you go around in circles and end up in the same place. it it's like swimming and if you stop moving you drown. it's like competing in boxing because you get the heck out of you. not all of the time. >> it just feels that way. >> boxing is what we will be broadcasting here on cnbc here, of course, over the next couple of weeks in the evening. >> yeah. from 5:00 to 11:00 we'll turn to boxing. that's why "fast money" will be on hiatus. >> if you've got five and a half thousand of olympic sports, something has to give. >> it's once every four years. it's an exciting time. >> what do you do in the evenings? sit and watch boxing? >> i'm going to sit and read charts like cramer does?

>> really. >> no. i'm sure i'll find something to do. the nasdaq is up more than a percent as well. sort of snuck up on us. we have microsoft up more than a percent. dell is posting nice games. semiconductor across the board, great as well. >> dave, thank you very much. >> have a great weekend. the third hour of "squawk on the street." here's what you missed so far. >> well to hour three of "squawk on the street." here's what's happening so far. >> we are a financial institution, these are financial products, and these are our customers. why shouldn't we provide those products to our customers? >> up 1.5, a bit better than expected but better than i expected. >> the growth of mobil is happening so aggressively that they didn't see it. i'll tell you, they're a

visionary. they didn't see it. >> how could they not -- >> there were a lot of problems that had built up over a period of decades that the economy needed to overcome and the fact that we have been expanding that for 12 quarters is a sign we're on a better path than we have been on, but clearly there's plenty more work to be done. >> if we see the fiscal cliff, you know, not be resolved and we get the combined impact of 4% of gdp, there's a high problabilit of a recession in the u.s. >> good morning. welcome to third hour of "squawk on the street" coming to you live from post nine and olympic park in london where carl quintanilla is keeping up with all the news coming out of the games. carl. >> hey, guys. i want to give you a tour of where we are. we haven't set up a stage physically where we're located in olympic park. you see olympic stadium over my shoulder. the orbit. there's a pan of the area behind us. you can also see over here the

bridge leading from olympic village where the athletes stay and where they cross over into the park itself. you can actually see a cafe where they're all situated right now. a lot of them are in lockdown because of the ceremony happening in just a few hours' time and security really is starting to tighten up in the hours in advance of that. speaking of the ceremony, a lot of secrecy surrounding it. about a billion people expected to watch. 20% chance of rain. and actually some tickets, according to the olympics website, are still available, guys, for 2,012 pounds. that equates to about 3,1$3,100. ceremonies, 7:30 p.m., 6:30 central on nbc. we'll see you guys in a few minutes. >> carl, look forward to it. meantime, let's take a look at the markets. posting a 1% gain along with the nasdaq. the nasdaq strongly up about

0.8%. dr pepper, snapple trading at an all-time high. starbucks continuing to fall. the stock is the biggest decliner after the coffee company issued a weak forecast. here we go. here's our roadmap for the next half hour. wall street doesn't like facebook. today that's clear. disappoints investors. find out if it's time for you to defriend the stock. then we're jurs hours away from the opening ceremonies in the city of london. we'll see how even people's homes are being used as part of that london security plan. and german chancellor angela merkel and france president francois hollande. it's one reason why we're up triple digits. what might happen in europe and

over the weekend in 30 minutes. then the ceo of m.w. north america will join us live from olympic park in london to talk about its role in the games and the stakes of the luxury vehicle market. there are record sales for many of the german automakers. let's get right to it. facebook earnings results, disappointing invests today. the stock down 14%. clearly it's lost now about a third of its value. joining us on set is victor. >> good morning. >> are you disappointed? >> no. eps was in line. facebook need dodd two things. and third, was to produce guidants and they failed to do that. i think the stock is reacting to that as well as stepped up

invest meants over the next quarters. >> the fact of the matter is a lot of companies don't actually issue guidants. google is one in the same space. are we making too much of that? is it also because they are not really outlining a convincing plan, at least convincing in the eyes of the investors to actually achieve the goals they set out for themselves when it comes to mon ticing mobile? >> it's different for them. >> because of that they need to provide guidants? >> yes. they need to reassure invests, give them some sort of plan on how they plan to monetize the platform in a significant way over the next several years. the best way to do that is produce financial guidants. they have the numbers in the house. they might as well release them to the street. >> what if they're not good. >> they're trading as if they're not good. >> i think they're trading on the fact that -- i think the reaction today is somewhat irrational, you know.

so if i were a long-term investor, this would be a prime opportunity for me to buy the stock. >> let's put that in context. the rationale today is not rational. would that suggest that the pryipry i pricing of facebook was not rational? >> i think it is. i think it's a proper value for the stock. i've i'm a believer in the platform. i think one of the biggest concerns is mobile modernization. i think it's come a long way in 2013. >> you're saying buy the stock. if you're saying upside -- >> if you're a long-term investor, you have a long-term view -- >> your 40 is a long-term price market. that's not that long. >> more like a year and a half. >> more like a year and half. >> 2013 is my price target. >> based on what? based on what given you don't

have guidants? >> based on my thorough analysis of facebook, of the company, of the documents that they have provided. >> how can you have -- with all due respect how can you have a thorough analysis. i appreciate you may be right on the price target. it's an act of faith but you can't have that when they don't know how they're going do i. they've got mobile growth and they're spending money to get there. >> there are a lot of assumption that need to be made in order for you to get to the price target. >> there's two points to that. when you forecast the company you look at the financials that they provide, you talk to suppliers, you talk to buyers, you talk to the industry, look to the competitors. that's the way to do a thorough analysis. look at what they talked about in terms of mobile modernization. they talkeden sp ee een about s ads. so that's significant because

they just really launched that platform several weeks ago on mobile. i see that ramping up significantly. it's significantly ahead of pandora, twitter and everyone else. >> on pricing power within that. >> yeah, yeah, you definitely saw an increase in cp m's, significantly the platform as well as pricing. so, you know, the fund menials, i think are pretty solid for facebook. >> victor, thank you very much for the analysis. have a great weekend. >> let's check in with gary kaminsky for his take on facebook. i'm really curious, gary, what you have to say? >> good morning from control room one. i love simon's questioning there. let me read something to you first. let me read you the definition of what it is. do you got it, guys? we don't have it so let's carry on. i wanted to read to you a definition of what due diligence

is. do we have it, guys? we have it? it's a good thing i'm in the control room today. this is a legal definition of due diligence. research and analysis of a company or organization done in preparation for a business transaction as a corporate merger or purchase of securities. why is that important? well, there's a tremendous amount of frustration on investment bankers in terms of what's happened with facebook. the fact of the matter is i'm not lawyer but i know that there is no legal ramifications with the pricing of this deal. due diligence is such gray area that, in fact, you as the buyer of a security on an initial public offering, you're taking that risk. take a look. some of these names we just mentioned. take a look at how much money has been lost by investors on these four ipos. take a look at these numbers. blows your mind. 50 -- well, this was as of yesterday. if you update this for today, if

you have today's updated numbers from the facebook decline, 5-0. $50 billion has been taken oust one person's pocket and put in another person's pocket since the pricing of these ipos. three or four of those were lead managed by morgan stanley. why do i bring that up? gorman said when asked about es facebook and the ipo pricing seven days after the beginning of trading of facebook. let's play that, please. >> think this is a very -- this is a very complicated story. by the way, we're on day seven or eight of the story and i think stock was up 10% from its lows just today. so this is one of the most volatile openings to an ipo ever. >> all right, so melissa, what do i think about facebook? it's not seven or eight days before. you've had more than a month of trading. you've digested all this. you see how much money people have lost. if you feel like you want to punch a broker in the face, i

understand it. but, remember, due diligence says there's no legal issues in the case. it's buyer beware. that's unfortunately the case. >> i want to go to indicakate k. we've got breaking news. >> promotions and new roles for a number of executives and essentially what it's doing is setting all bit of a success race for jamie dimon. he said the responsible thing to do, of course, is to name the next generation of leadership which is one thing he's trying to do today. when i talked to him, i sought what are you thoughts for staying on. he said, i thoep be here many, many more years. i don't think of thises as a immediate secession thing. however, he said, age is factor. he wants to come up with a number of younger folks. he noted that he serves at the pleasure of the board and he said, quote, these jobs take

emotional and physical drains on people. i think the right thing is that hould go to people who can do the job for 10 or 15 years. so in so doing we talked about the press release and who he's putting in some of the key roles. matt zames, someone to keep an eye on. he's really risen like a rocket in the last year ore so. global co--head of fixed income. and then when the london whale flap situation occurred he was asked to take over the chief investment office role along with dan pinto who had seen the european operations with him for a number of years. so matt zames is 41 years old, regarded as a possible successor to jamie. mike cavanaugh, he's been promotes as well. he's someone that jamie thinks very highly of. so a number of interesting new faces aet the helm here, melissa, and think it will be

worth keeping an eye on. some of them have taken very big steps in a short period of time. the other thing is i talked to jamie about glass-steagall and others. more on that at fasttime. >> we're 100 points down on the dow. >> two biotech stocks on our radar, simon. good news for both firms. amarin corp and hor design f-- horizon pharma. they were hoping these drugs would get approved. you would see if you would have invested six months ago, you would be up substantially. melissa back to you. >> thanks, see ma. coming up next why the roof of your house or pafrpt building

could be part of naksal security plan, missiles and all. more details right after this. welcome to tower bridge road, one of the main thoroughfares in london that crosses the thames. there's the tower bridge behind me, big double-decker bus behind me. the tower london behind that and where traffic really isn't that bad. obviously a lot of concerns about congestion in london ahead of the opening ceremonies a few hours away. the games are 17 days long. we'll see if it gets worse in the first and second week. "squawk on the street" back in a minute. i don't have to use gas. i am probably going to the gas station about once a month. drive around town all the time doing errands and never ever have to fill up gas in the city. i very rarely put gas in my chevy volt. last time i was at a gas station was about...i would say... two months ago. the last time i went to the gas station must have been about three months ago. i go to the gas station such a small amount that i forget how to put gas in my car. ♪

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the street" from olympic park. our kelly erchls is here with me with more on the steps that london is taking. we're seeing a few more helicopters in the skies. >> yes, we just saw them behind us. there were women holding ak-47s. 18,000 military personnel on site around olympic village. amazingly enough that's twice as many as are on the ground in afghanistan. the london organizing committee has spent about $1.6 billion efforts. much of that going to the private security company g4s. that firm has been under heavy scrutiny since failing to provide the 10,000 they were

supposed to. can ceo says the firm takes full responsibility for the failure. nevertheless gfs with over 460,000 worldwide. one of the biggest employers, one of the large esst and the london stock change saw a loss. standard & poor'ses put them on notice for a down grade and g4s is currently bidding for nine prison contracts. they expect to lose 35 and 50 million pounds on this olympics contract as a result of the personnel shortfall and that's no small amount. it's 12%, of actually profit. the british defense deployed some 1,200 additional troops to the games. the cost will be covered by g4s. they're armed with automatic weapons and that's not something you typically see around the

city. you don't usually see london officers carrying arms. there are ground to air missiles, this despite objections from residents understandably concerned about missiles on the roof. organizers are hoping these extreme measures will deter any obstruction to the opening ceremonies tonight that seeing these, knowing they're around will keep people from trying to plan anything. >> just having to deal with the military at various checkpoints their attitude is amazingly positive. after having been thrown into a situation at the last minute. they're also in some cases training some personnel on how to look for some sort of device on a vehicle. clearly some of these cadets have not yet done that kind of thing. >> no. so they'll get that training out of it. perhaps you can point to it and there was something that came out of this longer term.

they're a little bit nervous. they feel pressure and know everyone's watching for any sort of mistake to rush to judgment. so they're under a lot of pressure here. they're under a lot of pressure tonight. >> the whole world is watching as a result. thank you very much, kelly. when we come back, the head of usa men's basketball team coach k calling on corporate america to fix what's broken. we'll tell you more after this short break. te. we built the first railway, the first trade route to the west, the greatest empires. then, some said, we lost our edge. well today, there's a new new york state. one that's working to attract businesses and create jobs. a place where innovation meets determination... and businesses lead the world. the new new york works for business. find out how it can work for yours at thenewny.com.

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welcome back to olympic park on this friday morning with "squawk on the street." i i'm carl quintanilla. one high light yesterday was meeting coach mike. widely known as a management and leadership guru and with so many

failures of leadership at banks and governments around the world in the past few years we asked him what's the lessons for ceos and managers in a post-lehman world. take a listen. >> last few months, banking, we're in a town that's known for banking, a lot of failures of leadership, let's say. has any of that formed your own view of management and leadership and what's happened in corporate america? >> i just think you're in a constantly changing environment, and leadership positions, you know, you know that old saying, don't fix it unless it's broke, is a naive way of looking at it. it's always being broken. the really good leaders are able to anticipate things before it gets broke. sometimes, though, the economy can break things in a manner that no one has ever seen and i think during those times the strong survive. you know, the strong companies,

the strong teams, the strong countries, the teams that are committed to finding a solution in the midst of a tough environment. and think our country's trying to do that. hopefully we can come together and help one another do that and not be isolated as one country. >> or one party. do you have laevl of frustration or optimism about about some of the reforms we need to handle as a country? >> well, i would hope that our leadership works together where it's not just bipartisan type of approach but it's -- i think the people deserve teamwork, you know, from all parties. you know, we're no longer just a two-party system in our country, and it's a time for everybody to come together. you know, usually a country

comes really together when we're at war. we have been at war, although our country doesn't realize it that much, in iraq and afghanistan. but there's a war against the economy, you know -- you know what i mean of what's happening, and we should come together as much as possible to find solutions where we can provide jobs, opportunities for the people of our country so that they can succeed. >> one last one. would you argue this is the toughest time to be ceo in this country? >> i think it's a really difficult time. i'm sure, you know, 70, 80 years ago was pretty tough. i mean part of leadership is, you know, looking at tough times, and this tough time is lasting a little -- is lasting longer, so i'm sure they're looking at short- and long-term

solutions to these problems, and hopefully we don't sacrifice something in the short term that might benefit us in the long term. but, you know, we have a great leadership in business and i'm sure they'll figure it out. >> coach k and men's bablt. they play france on sunday, melissa. one big point of debate has been which team is better, the '92 dream team or this team. the most coach k has said if flay today he'd pick the current team because the '92 team is 20 years older. >> thanks. in the meantime they're trading highs. we have the european close coming up next. over the south p. i got mine in iraq, 2003. usaa auto insurance is often handed down from generation to generation. because it offers a superior level of protection, and because usaa's commitment to serve the military, veterans and their families

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let's go to simon. >> so there you see europe shutting up shop for the week. it is a sea of green. spg important is happening in europe. this is the second day we've been through this. you need to pay attention to the news flow that's coming out. yesterday mario draghi said they're doing everything they need to do. today it's been echoed. they may be coming through with a cooperating plan between all elements within europe to essentiale

potentially buy italian and spanish debts. that they let the bailout funds which they have not been doing recently. so you've got some very, very strong price action now. look at this chart here. this is the spanish market, the ibex 30 market. the dow's up 1.25% on the week. those top blue chips in europe went up 2.6% and there you see the spanish market really rocking ahead at the end there with gain of now 5% for the end of the week. this is important price action potentially. it might just mean that people are nervous to be short of the market going into the weekend. but have a look at some of the issues. this is randomly. these are the top movements as we head into the weekend. look at barclays, the oil giant. nokia up almost 9%. you know it's so deeply ingrained in the debt cry circumstance also rising just over 5%. there are taxi protests on the

streets today. every day there's some sort of protest. what we have from reuters is the spanish government according to the report is talking about a 300 billion euro bailout and, in fact, the economy minister discussed that with the german finance minister on tuesday night. that's what reuters is reporting. they're talking about it behind the scenes and they're putting a 300 billion euro price tag on that. of course, on tuesday you had the yields on the spanish tenure at 7.6%. importantly since then, draghi has intervened verbally. you have the french and germans intervening verbally, and therefore you have this sharp reversal. i hate this screen. therefore you have that sharp reversal as you can see coming down on the yields there. so that's a huge move. this is at the short end. importantly. europe up around 7%. look how far down the yields

have come as a result of verbal intervention and perhaps placing a report there. who knows how it ended up there. you see the other rates. this is important. the other yields in spain are also falling. these are the prices rising here. that has been an important story during the course of the week. just before i leave you for the weekend, i want to talk about the fact that you can find growth in europe. there are corporates that can borough in europe quite happily and are making money around the world. like at the tire makers. michelin is up. and pirelli is focusing on it. the results today. at the premium end it's also making money. let me leave you with one more. we spoke about how luxury goods are troubled in china. it would appear that if you actually sell goods right at the top end of the market like louie

vuitton market. and, here they have 157 organic growth in china. this isn't tiffany. this isn't burberry. >> this is gucci just to put it -- i think most people don't know ppr. they know gucci. those at the top end are still making money. don't confuse it, as i said, with a tiffany or burberry which is still the middle market. >> completely understood. >> these are big moves. >> they are, they are. >> maybe something will happen over the weekend. important price action there. all right. let's check on gary kaminsky. >> hey, melissa.

i want to chat about europe in a second. i know you wanted to see the numbers. take a look at how much money. here we go. there you go. $50 billion. $57 billion taken out of investors' pockets transferred to the proceeds on the ipos. let's talk about europe. simon does such a great job every day detailing what's happening in europe. i know it's confusing. it's confusing to me, it's confusing to many, what days they move their markets. melissa, have you ever taken a train in europe? >> yes, i have. >> having recently take an train from florence to naples, i use this analogy. they've got coach, first class. the first class is really not first class but they have a reserved seat but they call it first class. you've got the trains. i think about the european trains. in the back of the train is spain, italy, greece, the southern european countries. up in the front there you've gotten the ecb, mario draghi, and a number of the other

politicians. but think about what actually drives that train. you now have confirmation after this week it's germany. germany is our locomotive and so while the ecb and yesterday obviously you saw what happened when draghi spoke. the rumors at 3:00 were that we were going to hear something out of merkel. today it's confirmed when merkel speaks, she's the front of that train, she's driving that train, and everything else behind that train -- you can leave flourns to try to get to naples but you're not leaving until they tell you to move. it's germany and merkel today. i think of the train. that's what you want to pay attention to. >> good points there, gary. >> you've got it. >> we turn to bob pisani. we see the markets here. up by more than 1%. the question still remains. that is even if something's done by the ecb, even if it has the support of germany and france, will it be enough?

probably not. >> it depends what they do. right now most of the trards i survey think ltro, another ltro is another choice to make. but there's a whole bunch of choices. one thing that shocks me since i got back from italy, the amount of pessimism is amazing. they think the stock market is in horrible shape but it's not. the s&p's about to break up. we're near a two-month high on the s&p 500. you think like the way people feel, we're down on the year and it's all horrible. i mentioned earlier, we're up 8%. people are shocked. this is one of the best seven months we've had in a long, long time. put up for how we're doing on the next year. put up the board and i'll show you. up 8%. the bottom line is what we want to see is this kind of movement.

nasdaq's up 12%. this is the best since 2009. you've got to go back to before that. 2003. we're having a great year. more importantly, the character of the market's been changing in the last few months. take a look what's happening. we had a move down in april and may. we hit the lows in the beginning of june. look at where the market leader has been in terms of asset class. commodities have far and away outperformed them. commodities is where things are. take a look at what else the market has been doing since june 1st here. everybody thinks europe's just falling aapartment europe has become a lot more stable in the last few months. here's your outlier, china. the chinese market has been horrible. other than that, we receive a lot more stability in europe as well in the last two months. take a look at the risk-on trade. everyone keeps saying risk-on,

risk-off. energy stocks have been the biggest performing sector. the aussie dollar, i haven't done every currency in the world, but it is probably the best performing currency in the world since the bottom at the end of may. the most distorted sectors have remained the most distorted sectors. materials and industrials. that's tremendous. it represents money that must come back into the market. >> at the same time you have such as the s&p telecom sector trading at the highest level since 2008. we have consumer staps. . >> you're right. telecom is holding up. stocks and dividends. there's definitely a defensive tone to the market. but my point is there's a pervasive piece mitt romney out

there that right now the numbers don't warrant. people may feel there's some imminent doom coming but the stock market even in europe right now is not doing it. >> euro has had a fantastic two days as well. we should note that as well. >> oh, yeah. >> let's settle in with rick and see what he's doing in chicago. rick, what's happening? >> i tell you, gang. i don't agree with anything you guys are saying. let's put a face on it chart-wise. for the week let's look at the ten-year fixed income for the u.s. we're up about 5 basis points. if you look at the bund overseas, it's up 25 basis points. briefly, briefly they were trading with a 140 handle. if we look at all the optimism, let's look at italy and spain. there were a lot of shorts in the market midweek. what we see is the italian paper on ten-year still hovering over 6% is down a whopping 25 basis

points and if we look at spain, yes, we're down 60. so in the end the microphone is an important tool, but it isn't going to change things like 24.6 unemployment in span and i doubt whether we're going to hear an program over the weekend and bob's right. the stock market moves up and down because there's a lot of liquidity in the world and it sounds like the ecb is going to prijt a whole lot more. >> thank you very much, rick santelli. again, markets are up by 1.1% and the nasdaq is higher by 1.2%. we did get a reading. gdp coming in at 1.5%. in line with the forecast. but slow during the first quarter. the economy is among the most important issues. so joining us now is republican supporter. johnson, a mitt senator, thanks for being with us. thanks for your time. we appreciate it. what the white house has said

this morning they emphasize, no surprise, it's the 12th straight quarter of positive growth and with what we've seen it's been better than expected and now it's up to congress to act. do you agree at least on the latter part of the assessment that now it's up to congress to act? the ball is in their court so to speak? >> first of all, the president should have been providing leadership in the last couple of years and he habls. this ishe economic recovery since world war ii. only 6.7% total gdp growth. under ronald reagan his first 12 was 17.7%. these are miserable economic growth numbers. the trend is the wrong way. it's because this president has taken his eye off the ball. he's held 117 fund-raisers and hasn't met with council for days. he's been taking his eye off the

ball. >> getting back to the original question, senator, do you agree at this point, in terms of looking forward, it's em pairive that's happened. between now and then when the president resumes his presidency or a new one gets elected it's up to congress at this point, the ball is in their court. >> listen. the house has passed measures to build the key stone exxon pipeline. they have been passing measures but senator harry reid has blocked all of these efforts. what they're doing is putting these pieces of legislation on the senate floor, things that have no chance of passing. no. we should be acting here in congress. one of the things we are actually doing is agreed to a

six-month continuing resolution so we take a shutdown off the table. i think that's incredibly important. i think the house next week will hopefully act as well as extend all the current tax rates for the year to bring back certainty of the economy because that's really what's happening. because of the lack of policy, because of the lack of leadership, there's such a lack of debs, that's what we need to restore to the american economy. that's what the house is trying to do. >> before we let you go, senator, with the events over the last 48 hours, do you think that mitt romney has the character and ability to represent the united states abroad? he quite clearly has offended the british. they're in an uproar about his talking about preparations of the games and he's had to walk back twice in interviews. has romney finally got it? >> i think everybody is making a mountain out of a molehill in

terms of those comments. listen. governor romney understands how to make the economy grow. that's what we need in washington. trust me. i tell you. what bringing attitude to the presidency saying let's make america open to business for business growth and diop creation. that would have a tremendous effect. so, no, i think governor mitt romney is the perfect person to become president and get our economy moving forward again. >> but do you admit there's a likability problem now both at home and abroad? >> listen. i've sad down and met in person with governor romney. he's a very personable individual. he understands, he's intellig t intelligent. he understands and would lead the country. he understands if we're going to have a secure america, we need a strong economy.

he's ready, willing, and able to lead this economy. >> senator, thank you for your time. >> let's go back to seema mody. >> one to watch, it's getting crushed on its dismal earnings report and guidants down 60%. down 60%. green dot trading. today 9 million shares have been traded at green dot. back to you. >> ahead, the ceo of bmw. he'll given us an update on the luxury vehicle market and how the business is contributing to this year's summer games. don't forget. the yik-off to the open ceremony, london 2012 tonight on nbc. you know what i love about this country?

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as the world around it. with the available lexus enform app suite, you can use opentable to make restaurant reservations. during the golden opportunity sales event, get great values on some of our newest models. this is the pursuit of perfection. coming up at the top of the hour on the halftime show. what does jamie dimon think of the break up the bank comment. she'll bring us the very latest. facebook, time to buy or bail. and a special post earnings edition of pops and drops. now let's head over to carl at olympic park in london. carl? >> thanks so much, scott. bmw is an official sponsor here at the olympic games in london. it's teamed up with team usa this year providing technologies to advanced performance and training to athletes.

they're making a big push to electric cars. ludwig willisch is joining us. the brand is near and dear to my heart having done a documentary. the engineers, incredible engineers. now they're putting some of the expertise to where athletes can actually improve. how does it work? >> we've been able to measure things they haven't been able to measure. we've talked to different governing bodies of the different sports. they say, why don't you start with long jump. we fured out a device that can actually measure velocity in a horizontal and vertical way. it tells an athlete after he's jumped where he so to say was off the optimum. this has never happened before, so to get realtime data just after the jump so they can

correct it right away rather than saying we'll try it again, try it again, maybe it's going to be better. you know exactly where you failed. and that's, i think -- the athletes really appreciate it. another sport is swimming where we, so to say, from our experience with the wind channel we could see what the optimal movement would be. believe it or not, there hasn't been any way of measuring the dolphin kick, what would be the optimum dolphin kick. >> of a swimmer. >> of a swimmer. we would have the ultimate movement and the measurement what's being captured shows exactly where the swimmer is off the optimum and tells the swimmer right away rather than have the coach yell at the swimmer when he's under water which obviously is not very efficient. >> yes. do it better but you can tell him how to do it better. >> yes. to the millimeter.

>> interesting. we've heard so many comments about demand, including in europe, which you used to run. any guidants on what it's going to look like in the second half? >> europe is still our biggest market in the world, but the u.s. is doing very well for us. we've had sort of a nice problem to have, a little bit of challenge as far as our supply is concerned, but we'll have a fantastic second half. u.s. has become for us an all-wheels drive market which is quite astonishing which ten years ago that wasn't the case. now 50% of bmws being sold in the u.s., that including california, new mexico, and all the states where you don't need all-wheel drive, at least not in the winter, that means that we really have huge rates in what we call the snow belt.

we're coming with the all-wheel drive model and we're looking forward to that. we have a new x car in the market very soon. so we're really looking forward to a second half. but i think it will be a special issue with bmw that we're doing well. >> most people know the x 3s, x 5s, x 6s are made in south carolina. any plans to take away or add to the united states? >> we're adding 7 million to the production line. by the way, we're the biggest ex-porter of the automobile in the usa. 70% of the production built in the usa is going abroad. we're adding the next production line to add another model to the spartanburg plant in south carolina so we'll have new jobs there as well. >> it's been great to see you. enjoy the ceremonies tonight.

>> i will. >> ludwig willisch. thank you. melissa? >> thanks, carl. more "squawk on the street" straight ahead. you want to save money on rv insurance? no problem. you want to save money on motorcycle insurance? no problem. you want to find a place to park all these things? fuggedaboud it. this is new york. hey little guy, wake up! aw, come off it mate! geico. saving people money on more than just car insurance.

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carl, you have a very important interview this afternoon with a very big boss. >> yes. >> the chairman and ceo of