>> i'll be here. i love to talk about china. >> favorite topic. thank you for being here. make sure you join us tomorrow. "squawk on the street" begins right now. good morning. welcome to "squawk on the street." i'm along i'm jim cramer and brian sullivan. carl kin nilla covers the olympics. what a night last night. wow. >> absolutely, melissa. talking about shaking off some of the early disappointments. good news for phelps who now the most decorated olympian in olympics history. the women gymnasts winning gold for the first time in 16 years. and men's basketball absolutely trouncing tunisia. we'll talk to a great haitian

triple jumper, but most importantly, he was mark zuckerberg's college roommate. the 14th person in the world to have ever been on facebook back when it was a college. he lived in strauss hall. >> a couple famous people lived in emerson tlou obviously many of poorer. >> what a group. carl, we look forward to that, and much more from the olympic games. meantime how are we setting up in the united states on the u.s. futures?

we do have a 1% gain. our road map meantime starts with the waiting game today. the question, will it or won't it deliver or hint at monetary sim lulls? could the stronger than expected adp number foreshadow a better number on friday? google delays its release of nexus q. is this a win for apple which continues its streak of gains. and is wall street going antisocial? electronics arts say social is slowing, but mobile is where it is at. so much to talk about today. but we have to start off with the markets. july going to the bulls. the dow and s&p 500 down 1% for the month. the economy and jobs still on the radar this morning. the laide employment report from adp, showing that the private sector added a better than expected number. the watch is on to see if the fed statement will point the way toward further monetary stimulus. in terms of the adp results,

we're getting sort of a bid on the futures. the bright spot is the addition by the large companies. those company with his more than 500 jobs. they added the bulk, 23,000 versus no growth in the prior months of 2012. we've not had a lot of growth at that level. i talk to paychecks all the time. they don't have the growth, but there's a farce cal trade going on. every piece of data that's gone on, i hear the same thing, it's just not weak enough, which is great. you need strong data fo friday. we can't be so bipolar to say, wow, i really need data today and good data on friday. >> as if the fomc has not already pretty much decided what it's going to do. >> amazing data yet showed 245 the market's up 60% since mber 16th when the zero

interest rate policy began. 913 trading days in that time. almost half the s&p's gain was done on just 29 of thoughts 13 days, and those were fed days. the market tracks higher on fed days. we're up 20 of the last 29 fed days since december 2008. >> the great peter lynch magellan fund, fidelity always said you have ton an investor, because there's only a few days where the gains are made. that piece of data is so compelling why people have to stay the course, despite the coaches, despite the starbucks, despite the nice systems, or the facebook. you can't just retreat, because the dade comes and there's all the gains. >> the contestant on wall street at this point is for the fed to do nothing. morgan stanley said there's only a 20% probability of action today, and they say it's more

likely to act in december, which is in further off. but they also put together this interesting chart. it essentially shows to your data, brian, i see your data with -- >> are you going to raise on the river? >> i'm putting in all in. >> online poker, they solved the national debt -- >> your buddy. >> i have no buddies. >> p.e.s tend to go up right after fed, qe 1, qe-2, i -- are you saying the morphine wears off, and it wears off quicker, because you get a higher tolerance for the stuff. >> the mark on meth. >> the drug edition. >> bonds are offering you no return, and every time the fed

comes out and reiterates no return, you can look at an asset and say, you know what? this is a comparative game that we're playing. the u.s. treasury is not going to raise its coupon, reaffirmation. >> and to that point, the winners on the dow on the month of july were those companies. walmart 6.7. at&t, merck procter & gamble, the top five performing stocks on the dow all dividend-paying stocks. >> when you look at the earnings, people saw pfizer and merck better than expected. they're not done by great revenue growth, by great cost controls. i thought one of the funniest calls was deutsche bank going from sell to hold. walmart, saying it's time. it's time. after the run. it's time now. it's time now. >> this is the moment to load up on wall matt. not when it was at 58 and "new york times" was telling you that

the team was going to jail. no, now, now is the time. >> bill gross yesterday saying the cult of eciquity is dying, d we had jeremy siegel on our show yesterday, and he said you need to pay up for valuation, because the cost of capital requires that. do you agree or disagree? >> i've been in this game forever. the cult of equity died in 2002. i've been speaking to a smaller audience for a full decade. if there's a cult, i think it's been de-brainwashed a long time ago, which periodically the cult recent rex itself, and then we discover that they made you realize what a silly game. this trade's been going on forever, as someone who's made his life in equity. the consult died a long time

ago. it has a real jim jones/drank the kool-aid kind of thing. people said they could make the quarter. dunn and brad yesterday, huge can't make the quarter, suddenly the thin nature of the market surfaces. private equity, buyout rumors also on the front burner. it is serving dr it's up about 12% right now. reports of private equity is aiming to buy the company tgp, bain capital among to be the few firmings. this is a very large-cap company. we're talking $8 billion. >> the cerners of the world, viewed as being the -- the unhs and humanas, aetna not included, becton dickinson is down today, and suddenly they float this

rumor and everyone goes nuts for it. i have friends who i know are saying lab corp are worth 100. so are you bats these rumors down at this point? >> i just don't want people to get hurt on rumors. >> do we see a gdx, quest diagnostics go up in sympathy? >> they've not had blowout earnings. it is up three. >> the same company in that space. >> this is a thin market. i don't think people realize how thin it is. on a when is per of, hey, bain, what are they going to come out and say they're not doing it? bain secretly won by someone december untrue that. as soon as you hear that, that's a romney play, but how dangerous it is, you come in now, you don't know anything. if you know something, you'll get prosecuted.

there's the dichotomy. >> if el know something, watch out for pry. >> hey, you want to know who is making the money online socially. it's full tilt poker. i don't know, i don't bet online. i don't bet off-line. >> i don't trust electronic card dealing. i said to see the card there. >> when you go to the las vegas sands casino in beth help, p.a.? -- >> go to the riverboats basically every state seems to have a casino. i was driving in northern michigan, passed it at 11:00 on thursday night. casino. there's casinos everywhere. it's not just bethlehem anymore. >> i'm going there friday. >> to get your gaming fix. getting back to the volume point, that's a good point in this kind of summer markets we had. we have seen recently in recent

sessions some of the lightest volume days in across equities in general, and that's why we see on the back of these earnings, such whipsaw movements. it's exacerbated by this light volume. >> i'm so glad you brought this up. i have people i know contacts in the industry of apparel that says this coach is way overdone. it was just this air pocket. panera, air pocket. >> perfect word, air pocket. >> these brokerage firms are reluctant to sell short, they don't want on principal -- that's the term for it, of being ability to buy stock. they're all worried about the capital. the last thing they said to do is a 46 bid for coach. >> some have said, and this is, you know, that mario drawighi ce out with such comments that you wanted to provide a backstop to prevent thinks light volume days from whipping the market sharply

lower. so you provide this sort of backstop. >> we used to thing that greenspan played the market. >> who knows units when the market was getting killed. after october 30th he said no cuts. october 8th, midday he reverses a dramatic decline in the market. and every since october 8th of 1998, i had, okay, the fed watches the tape. meantime time warner being on the street with second quarter earning. meantime dom cast, the parent of this company, second quarter results exceeding forecast helped by an increase in internet and phone customers. cnbc is a unit. time warn 52-week highs on this stock, which has been up 41%. >> operating cash flow has exploded, again parent company. there are a huge number of business ads, which is something

i didn't expect. that's very interesting. you mentioned the large-cap countries, wait a second you could argue -- i all these domestic security plays. you don't see anything -- >> there's no europe, no china, just here in the united states, what's going on here, stemming the decline in video subscribers here for the seventh consecutive, so these are great little data points for this company in order to build on the gains it's seen so far. >> i think people like cable. >> you're right. >> we're in this period where we're talking about cable cutting, cord cutting. >> which doesn't jibe with the trend the last few years of the bigger and bigger tv. that's what i don't understand. people talk about the depth of television, we'll be out of a job, that everything is moving to the web, but at the same time the growth in 50 and 60, 40-inch -- >> did you see the costco

numbers today? >> has skyrocketed. >> 70-inch tvs, they're like a buck 99 now. >> i prefer to watch "mad money" on a 60-inch high-def panel, rather than on a mac book air or 11-inch. people will still plug in. with the quality of that xfinity, who can -- >> you're kissing some numbers today. >> wow, that's about out of the height of radio shack. best buy -- >> though citi removed cablevision for the top picks live. basically they had beaten the market. they still like it. jeffries initiated comcast with a buy yesterday. >> jeffries, is comcast the parents? >> not of jeffries. not yet. >> i come back to this costco number only because costco is

this hybrid of expensive -- it's a -- you know the parking lot costcos, there's a lot of bmws there, costco is part of the value trend. when i saw the plus five, plus eight when you back out gasoline, people are value conscious, they're not going to lose that. we've all been trained suddenly to be value conscious, and maybe that's hurting the accessory business, coach, maybe starbucks is losing share to dunkin' donuts. i paid 5.40 to nigh venti, and $2 for my extra large -- >> you know, pay a dollar and get any size of mcdonald's i'm not promoting mcdonald's, but it's probably as much of a threat. >> how much calories do you think the egg mcmuffin is? >> 200? >> it's pretty good, like in the 300s. remember buffalo wild wings doesn't want the calorie count

up there? panera as a 417 calorie asian chicken -- >> you still like panera. >> i was there this weekend. i like it very much. electronics arts one of the world as largest game -- saying it's slowing, but mobile gaming is picking up. the mobile revenue was $69 million in the first fiscal quarter, we should note we are going to be speaking with the ceo of ea later on. >> this may be the quarter where they stem some losses. this is the quarter that they're 3.3 billion. this was arrived at, because ea's market cap as increased, but what i thought was so interesting, one of the things they cited was, wait a second, i knew the subtext was zynga has been dissing up, but -- on the electronics call, the ea call, they say growth is slowing down in social, big pickup in mobile.

we know mobile is problematic for facebook. i thought testify devastating, the company thatible foible calls out as being the big beneficiary, ea, does not call out facebook as being anything other than social. facebook, zynga had said the rules, ea points out they haven't seen any benefits. once again, facebook in the cross hairs of every single person. they need people putting out a resaying we're not going to take advantage, the stock is too lo low. that could stem the tide that and the fact that the bell rings at 4:00. >> but there's an after-hour session. >> true, but i find most of the declining facebook occurring during the hours of the market. >> ea's board affirmed a buyback authorization, and stevele and needham out with some confidence. the atlanta panel theory, right?

you have the xbox you want to play madden. >> you want a huge giant screen. >> not sell coins to cows or whatever you do on some of the social games. >> never pay for a coin ever. is the worst over for electronics arts? we're talking to the chief operating officer, another look at futures as we are preparing for this first trading session, a gain on the dow about 60 points here. much more live from post 9 when we come right back. looking for a better place to put your cash? 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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the motto means faster, higher, stronger. that brings us to this squawk on the tweet, looking ahead to a new month. what motto would you give this market for august? tweet us, and we'll air your responses throughout the morning. it doesn't have to be in latin, by the way, in case you didn't study latin in school. >> i think the motto is i want to go long phelps, short newm t newmont. >> phelps has discovered more gold. >> i think we're discovering the pow irof the good and bad side of social media.

some of the athletes should probably have a handler that. >> not a lot of love for the twitter. i'm saying when you host "morning joe" you get some interesting tweets. >> i've never had a negative tweet. >> ever, no, me neither. >> later today i'll send you one. all right, coming up next, cram cramer's mad dash, plus more from carl at the olympics. coming up, he's contending for gold, but samyr lane has another accidents, the roommate for mark zuckerberg at harvard. find out what it was like for facebook member number 14.

and we are glad you're watching. we are just minutes away from the opening bell. time for jim cramer's "mad dash." get off the step ladder so i can think. one more horrendous, horrible quarter. young is still there as chairwoman, you've got a company that did say no to maybe an ephemeral bid, but i'm starting to wonder, this is how rendous herb alive, for all the problems that herb greenberg said, is

doing better than avon. >> is avon's model or any model like that in trouble. >> tupperware has done good number. herb alive did have good numbers. herb greenberg is say those numbers could go away. >> i don't know why avon didn't say yes to any bid. >> it was much smaller. maybe avon's didn't believe it was an genuine offer. thi used to be one of the great companies. it's just going away. it has a kodak feel to it. they didn't earn the dividend. they obviously are troubled at the top. the new management has come in. >> a lot of competition. >> i do not want to speculate in avon. a lot of people think a takeover could occur. i want to say the fundamentals are so bad -- people say

there's -- stop betting on stocks that you don't know anything about. where the fundamentals are going down -- >> unless your brother is a banker, by the way, preet on line 1. let 'go to the open bell. you're watching "squawk on the street." while some fiber ads use super models,

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there we go, first trading session of the month. vringo, sell britting the recent merger with innovate. a provider of intellectual property serious. celgene does the honors at the nasdaq. green arrows across the board here, a big decline for shares of mastercard down about 3%. eps beat, revenue came in a bit light. they get half the revenues from overseas. >> have i that did good. i wouldn't be surprised, i think that mastercard is really well run. i wouldn't be surprised if the

thing doesn't come back from the dead. celgene, interesting, talking about back from the dead, that stock has been a monster performer since the quarter. >> yeah, definitely. facebook this is worth noting a fresh low on shares of facebook. 21.28 is that fresh low, down by almost 2%. >> may be too early. >> zynga is down to 2.92, jim. too early for that, too. >> groupon. i think it is too early to guy groupon. >> yelp, by the way, its earnings after the close, that is higher by 2.2%. >> there you go. could be making a stand. >> continue to lump yelp in. >> they're all very different. >> groupon requires an action. yelp is passive. i don't know if that's good or bad. i'm down here, i search for restaurants or bars, depending on the time of day, it's passive. >> i use yelp when i'm on the

road, looking for a place to stop to get something to eat. however, that does not qualify as an endorsement of the stock, but yelp and linkedin -- yelp less of a loser, how about that? >> less of a loser? >> is facebook down more since we started the discussion? >> facebook is still down exactly where it was. >> this is like a land speed record, because the market is doing well. >> look at burger king. we're going to watch that someone. same-store sales. eps in line. revenue ka in a bit light. they had alexandered that menu, added things like smoothies, fraps and wraps. as it game same-store sales growth, remember what we saw, mcdonald's. some people are wondering if they actually gained share from mcdonald's. they're also making good pros.

>> lab corporate has said there's no nothing of such bioplans action not in discussion of any firms. >> how dare they? >> lab corp is out, throwing wears on the story, the rumor about a potential, saying there's no knowledge of any bioplan, and i'm going to suggest if the ceo does not have any knowledge of a buyout plan, it doesn't mean there isn't one, but it's a lot less likely. they could be building up a hoard to make a bid. >> this is another way to lose money. >> it's still up 3.5%. it's amazing that the gains didn't just evaporate. i6r7b8g9s to say bush but again, the reporter, how would they know that if there hasn't even been discussions. they would have to have the word of one of the bankers involved. >> buy mastercard down 12, don't buy lab corp up 12.

you have to understand that people are floating rumors to get out of bad stocks. that's what they do. the obgl, bag 'em, got 'em, liquidate them. . since the death of apple? not. amazing. >> yeah. >> facebook trying to make a stand here, 21.16. do i here 21.15. reverse auction. >> 21.12 is the new low. new low after new low here. >> also a fantastic album by rush. >> which? >> 2012. >> nerd alert. sore. >> faber never has that kind of insight. >> he really doesn't. >> you could trade off for that -- >> he's in line for rush tickets. that's why he's here. he's playing iing dungeons and

dragons. good morning, bob. >> i came in this morning, checked the world indices and china was up almost 1%. i was rather shocked to see that. the manufacturing data continued to show slow declines. i called around, because this is the beshowing for china in a month. the indexes are at multiyear lows. there's rumors that they're preparing some very about stimulus programs. parent some of the regional governments, and this is reported in requests the telegraph ygs in london overnight are preparing very big programs, and submitting plans to the government. so apparently something is under way. the railroads are also preparing to more stimulus programs as well. so i think that's very noteworthy. as far as the federal reserve, i tooled a lot of people yesterday most people believe the fed is going to begin -- or restart their mortgage bond buying program as well as push out the

rate hike to 2015. now they're talking about earliest would be 2014 before they raised interest rates. as far as the ecb, there is no consensus, it's all over the place, but most seem to think that draghi will signal they'll begin buying spanish debt through the esf. that seems to be the minimal they can do. just on the earnings, we're nearing the end here, past two thirds of the earnings report. the one thing i want to know is housing has been a strange numbers. the home builders have reported excellent numbers, but the building material companies are not. they're a better leading indicator of housing than the home building companies. they are leading, because they get the orders first. today we saw some disappointments from martin marietta, a by on the light side. owens-corning a bit on the light side. we saw it from arms tron and

masco the other day. some of the other ones, the building material companies were not. i would follow the building material companies at this point. mastercard, again amazing numbers. there's a simple osteogill on the credit card use is expanding all around the world, even though masterward was light on revenues. you see the numbers, purchase volume up 13.5%, that's truly remarkable. some of the other numbers out there, processed transactions, the numbers of transactions globally up 29%? those are amazing numbers. the u.s. was lower. globally was a lot higher, but that makes sense around the world. other people are continuing to use these masterbers. 67% beating on earnings, only 40% beading on revenues. that story continues. revenues disappointing this

quarter. >> rick santelli. hi, rick. >> good morning, jim. a lot of people talking about china, mostly in the context, as bob pointed out action there may be more pushing on the way, but i find the currency side fascinating. if you look at a chart starting in early april, the dollar has moving higher, but if you look at the last several sessions,i reversed down in a rather substantial fashion. whether it's due to corn or exports, or the export economy tries to get a stimulus push, there will be more contentious issues that will ultimately revolve around currencies, export and trade. if you look at the ten-year note yield, it popped over 150, okay, several basis points, but it was for a huge reason. we saw adp. believe me that wasn't a huge amount of jobs. it took a while, but equities did push to the up side, and

interest rates did as well. if you look at europe, the bund once again looks like it's aiming towards 140. the highest since the 116 basis point low close a couple weeks ago, this is telling us that drawing drawing -- draghi is making a difference. will mario draghi deliver? i think we're going to brian sullivan. >> we certainly are, rick. thank you very much. let's check out the latest moves. for that we go to sharon epperson. >> good morning, brian. traders here don't seem like they believe mario draghi may come through. we've seen gold sell out near the lows of the session, right now under $1600 an ounce. whether they're anticipating disappointment from draghi or from the fed, it looks like all eyes are definitely, of course, what's going to happen in washington and what will happen

with the ecb. we are looking at a gold price that seems to be fluctuating in various directions. that's what traders are watching in the gold pit, and in the oil pit as well, but they're also waiting for the number to come out for the energy department for the weekly supply figures. last night we got a big shopper from the industry group, showing that supplies for crude oil dropped by 12 million barrels in the past week. some traders and analysts are say that had to be an aberration, but we'll wait to see what the energy department numbers show. they're also watching the futures as well as the retail price. we've seen it top $3.50 a gallon for the national after, so let's see if we continue to see the price at the pump go up. melissa, back to you. >> thank you so much. sharon epperson. >> i want to look at comcast again, obviously our parent

company. basically saying this, nbc will be break-even on the olympics. this el previously forecast a $200 million loss. they're saying ads are running about 100 million above plan, so comcast with good news. and nbc saying we're going to break even. so better than expected olympic news related to nbc. >> that's a new high, by the way, new high on shares of comcast, which has already had a monster run. a lot of media stocks, not to knock comcast at all -- why are you knocking comcast? >> i am not. >> a lot of the media stocks have done very nice this year. again, jim, a lot of these companies are mostly u.s. revenues, so it falls into that theme once again. >> always good to call out disney is espn, as a big driver, not just the theme marks or abc. >> what are they getting, a

southbound-fee -- it's by far the highest on cable. when you pay your cable bill, the biggest slice goes to espn, almost not double the next highest, but getting darn close. espn is a cash cow for disney, correct? >> yes. >> >> there's multiple es opinions channels. that's always a windfall. >> i'm waiting for espn future, which broadcasts games that are not yet played. >> it's future games. in the international galactic championship -- >> what are you, from kirby's fourth world or something? >> there's continuing themes. >> radio shack is up 13%. radio shack, don't see any news, except for at least five executives bought stock yesterday. just checked it out. go figure. >> too early, right, jill? >> those guys obviously think it's not too early.

discovery is supposed to be a disappointment, down to your point, this is a group that does well. stealth housing place, i don't want to get rid of time warner. coming up next, history being made at the olympics. carl will join us live from london on the new milestones. let's look at this morning's early movers. [ male announcer ] it's a golden opportunity...

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my brother doesn't look like a heart attack patient. i'm on a bayer aspirin regimen. [ male announcer ] be sure to talk to your doctor before you begin an aspirin regimen. i'm a fighter and now i don't have that fear. take a look at the dow heat map here. it looks like about a third of the dow jones industrial average in the red. bank of america continues by down half a person. it was the worst performing stock in the dow in the month of july, down 10% in that month alone. time to head over to carl at the olympics? london. >> hey, melissa, what an evening of coverage last night.

it does seems the united states is beginning to find its sea legs. men's basketball, the only undwighted team in their group, women's soccer first-ever 3-0 talk. this morning all the time is about michael phelps winning a silver and gold last night. as you probably know, he is now the most decorated olympian of all time. three more finals to go. get this, guys, he has more medals than entrepreneur, ecuador, malaysia, saudi arabia, and ghana have in history combined. the debate today is largely about whether michael phelps is in fact the greatest olympian ever. the head of 2012 sebastian coe said it's a pretty good haul, but who is the greatest? in my opinion probably not. talks about jesse owens and nadia com nic

nadia. coming up we'll meet samyr laine, a freshman-year roommate of mark zuckerberg. jim, i loved your tweet last night when you said, look, facebook stock going down oh, the market's closed. that was nice. i feel it will bet terrific to know whether this gentleman would ever think that. contrary, he was facebook user number 14, so he was in on this venture early. >> user number 14. as he says, they played a lot of playstation back in the day. he says none of them slept much, but zuckerberg slept the least. now we all know why. he's a great kid, has a pretty

good shot next week. we'll talk to samyr. >> and back in the day wasn't that long ago. carl, see you a bit later on. time for squawk on the tweet. the mo mott ov the olympic games is citius, altius, and fortius. >> gary tweets hope, worry, tentativeness. cynthia, why, when and how. those are pretty good ones. taking a check once more on the markets, as we're waiting for the fomc decision. will they tweet the language, exceptionally low rates until 2015? we'll see the markets are higher by about a third of a percent. much more "squawk on the street" straight ahead.

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let's find out what's coming up. >> we're going to ask the ceo of electronics why they're giving away that are towards game. was it all a big con? overhyped? we'll be talking to the guy who used to share a college room with mark zuckerberg, who is now competing in the olympics. very interesting. second hour of "squawk on the street." back to you. time for six in 60. let's start with bp. >> look, this company, i can't think of a reason to own it, the

growth is slowing, totally executing poorly. i agree the downgrade is right. >> j.c. penney. >> deutsche bank actually uses the language i have using for singe that and facebook. they say it's too early, and i agree. >> qualcomm or broad chrome. >> i like broad com more. merrill lynch? merrill taking a whack at tech data. >> it's a giant super market. if tech data is saying things are bad, you have to be careful. coach is the magic gone? >> i think that coach will make a stand here. you know, everybody said that gps would be dead, garmin would be toast. they're not. >> they come right back. >> that's six in 60. by the way, guys, just got a note.

there's stocks moving on no new. you've got a number of big names rising, so we'll get more on this. >> lot of rumors, too. be careful out there. >> got to find out more. so with that, i believe we're going to go to a quick break -- no, "mad money" what's going on? i'm just a fill-in. >> great news there, cash flow is fabulous. >> crown castle is doing well, too. >> i like this, because you always came about amazon, and i think kimco is doing well. >> this is an interesting name. i'm curious about retail space. k-mart caused them a lot of problems. >> you calm in, because you and i debated. >> we did. >> and he's terrific. i think it will be a fun show. >> lease rates, at what point do tenants have the right to get out. i know you love federal realty. >> numbers were good. >> you say he's the best of

these operators. >> bankable. >> dominion, the power company, those are the safest names of all? >> yes. domestic security. >> do do you think we see rotation, look at the adp numbers into more higher risk stock? >> it could. i think people are circling back to the ag stocks. in the send i feel safest in domestic. one of the stocks i was looking at, bg, big soybean producer, no news, up 4%, a big move. is this a corn trade. >> soy and corn, yes, i think soy is breaking out. i think corn goes to $10. terrible for the american consumer, fabulous for these guys. >> early this year, i'm talking about january, maybe february, i said what's the best trade you got? he said, go long soybeans.

he knows who he is. >> soy could break out here. >> hell of a call so far. >> so i did get hurt, but it came right back. >> soybean, there you go. and very healthy too as well. a short break. more "squawk on the street." simon is coming after the break. people with a machine. what ? customers didn't like it. so why do banks do it ? hello ? hello ?! if your bank doesn't let you talk to a real person 24/7, you need an ally. hello ? ally bank. no nonsense. just people sense. with the fidelity stock screener, you can try strategies from independent experts and see what criteria they use. such as a 5% yield on dividend-paying stocks.

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we had come back. the survey says 49.8 on ism. the first bilow-50 read since july of '09. construction spending, a june number was up. and last month was ramped up significantly. good news on construction spending. if you look at the eurozone pmis 11 straight months of

contraction, and that inclusion germany and france, the stronger economies in europe. back to you. all right. thank you very much, rick santelli. here at the open, there having some trading problems. brian alluded to it before. but there's more than a dozen stocks that were affected by this? >> i guess the question is what exactly happened? they're trying to resolve it this. there was an influx of orders on a number of different stocks. this may have been related to algorithms that come into buy and sell stocks. a number of stocks gyrated, several were halted, remain halted. they're considering reopening some stocks, and conducting essentially a new auction at the open. i guess the question is, what is exactly what happened? it seems to be an issue about order routing. that's what they're trying to figure out.

>> still under investigation. in terms of the stocks, are these stocks that will likely be in people's portfolios? >> n.u.s. is one of them. it was still halted, so there's a couple things. i think ford had some unusual gyrations. but kind of looks to me like it's an algorithm that came in, with orders to buy and sell stocks, that was an unusually strong amount of orders. the question is, are those legitimate orders that come? is that a legitimate algorithm or a problem with it or not? >> this is a point at which they come into their own, because they're able to sit with other parties and discuss what is a fair price. >> that's exactly what's going on. urchltsds they're still orders, but it sounds like what you're reporting is they may have all

come in at the same time. >> an unusually large volume of buy and sell orders which came in right at the open. >> this will be one of those situations, when all is said and done, the next dialogue will be further evidence that these doggone machines are ruins the game for everybody else. >> certainly that's the way the system operates right now. i think it would be hard to open a lot of these stocks. i think you have people here that saw the problem. literally as i was standing here. suddenly people started huddling around. to your point, it certainly is good on days like that. >> is it possible to fire or suspend a computer program. >> i wonder if the programs will fire themselves eventually. >> you mentioned ford is one of those stocks, had about a 20 cent gyration on the day. >> that doesn't happen --

>> right now it looks like it's settling down. all these stocks have resumed. >> rook shack, a number going wild. >> pier one, a number had unusual gyrations. >> no statements so far. >> nothing. they're still trying to resolve. as you heard moments ago, the ism numbers are out. let's bring in steve liesman. also want your take on the big fed decision later on, but start with ism. >> thanks for that extra time. 49.8, 49.7 the prior month, is a number associated with coming

out or big in a recession. i think the worst number is the new orders number, just 48. again we've been there outside of a recession, but typically it's a number -- employment calling, subindex falling to 52. there's no positive news of momentum in this number. the better number is the construction number. up 0.7. the public sector, as you might expect, unchanged with a big decline in educational spending. the jobs, the adp number better than expected. this ism number worse than expected. i'm led to believe, by the way, the fed will have the ism service numbers released to the public on friday, we'll have it today. i think jim o'sullivan described it best. the data has been weak enough to

bring the fed closer to action, but perhaps not weak enough to bring the fed to actual action to date. the best expectations are for the federal reserve to make noises about further liquidity injections and probably do so in september, if all of the data confirms the need for the economy to have additional stimulus. steve, thank for that. we previous it. steve liesman back at headquarters. we do have breaking -- time to hid the road map. gm out in just a moment. >> meanwhile, facebook shares, another fresh low. what's the read-through first, and the anger that surrounds now the social media sell-off. that's next. speaking the facebook, our own carl quintanilla caught up with triple jumper samyr laine. you won't want to miss what he had to say about mark. >> speaking of london 2012,

let's check in with carl quintanilla with the olympic coverage, day 5 and it just gets better. >> watching that ism number, certainly the number 49 no good, but number 19 pretty good for michael phelps, according to the times today the greatest olympians with more medals than any olympian in history winning the silver last night and the gold. the medal board looks like this u.s. back in the lead, 25, china 23, france 11, simon, i know you're keeping watch on great britain, which today was keep calm and carry on. earlier this morning, when this numb went to press, they did not have a gold. simon, i do now with a gold from the women's pair rowing. it was interesting, in the journal, the first line about the medals drought was this is getting awkward, but you now have a gold for team gb, and

bores johnson said we were showing politeness in not hoarding the medals, so maybe they're on their way just a bit. >> it was interesting watching phelps on primetime last night. we spoke yesterday about the need in swimming, the only sport where you actually have to punch the plate at the end. you see him 200 meters butterfly coming to the end. he's clearly ahead, but he just doesn't punch it out far enough. exactly the sort of thing we were talking about eddy, a huge disappointment. the king of rings is how they're putting it here on the new york post today. >> he would have gotten gold in that fly if not for south africa just out-touching him by 0.05. down about 9%, 8%, i should

say. no apparent news here. we're looking into this story, but it's an unusual market move we wanted to bring, especially in light of the problems that seems to be going on at the new york stock exchange. we'll keep you updated on that story. meantime general motors out with its sales numbers. phil lebeau has the vice president of sales, curt mcneil. take it away. >> curt, i'm looking at the number, a declines of 6.4, but you seem to be fairly optimistic when you look at the overall sales for the month, correct? >> we said our fleet business was going to be down. it was down 15%. as you dig in, it's interesting, because our government business was actually up over 100%, and our commercial business was up

41%. so it was a very planned reduction in our rental business. >> when you have retail sales down 3%, there's a lot of speculation that perhaps the consumer is taking a pause, and we might see that reflegted with auto sales. when you look at transaction prices, traffic in the showroom, uses your pulse of the consumer? >> we definitely continue to see head winds, phil. however, housing has given you some positive signs both on starts and on pricing. we did see a recent positive blip in consumer confidence. fuel prices are in a pretty good place today, and automotive credit continues to be good. so while there are head winds, we do see some positives there that we think will continue to lead to some slow gradual growth for the industry. >> kurt, what are the head winds

specifically? are we talking about overall lack of confidence in the economy? what concerns you the most right now? >> well, the jobs data is tough. manufacturing indexes are not positive, but there are other factors we do think is positive. we think the positives outweight the negatives. >> and transaction prices relative to may into june, trending higher? >> actually that's a real good story. as we maintain a disciplined approach, phil, our a telephone ps are up month over month and spend is down. >> and that's reflective of the entire industry, we should add. the volt, you sold just over 1800 for the month, just over 10,000 now for the year. do you hit 20,000 by the end of the year, or is that too optimistic?

>> it's in the range, phil. like you said, we think we had a pretty good volt month. it was our second best ever since the launch, so we're optimistic, absolutely. >> kurt mcneil, vp of sales for general motors joining us from the headquarters in detroit. there you have it, melissa and i'ming. overall not that good, but for the industry, if they can trend over 14 million, i think most people will say they're moving in the right direction. hang on a minute, phil, isn't the expectation they will hold up 14 million light sales? i thought we had a powerful dynamic, the subprime borrowers have had access to credit that's not been available since the recession. i thought that was going to be the booming story here, not that they would asan antonio sales in negative. chrysler sales are up, what, 13% here? >> you're correct, but don't build too much into subprime.

that is still overall a smaller xhuvg of the overall business. it helps, but it's not a huge factor. >> okay. phil, thank you very much for the latest. did you want to touch on the volatility? >> yes, just to update you on a story, bob pisani is gathering information, looking for an official statement, but as we understand it, right at the open there was some unusual trading, very whippy trading in a short list of stocks. it could be a problem with an algorithm, problem with some buy/sell orders. at this point all of those stocks have resumed trading. we've heard that it is a problem stemming from night capital. that's why we mention it, we haven't confirmed it.

>> that's just the talk. >> we've heard it -- that's why we mention it, it's moving the stock already. >> are you able to help us here? >> just talking to a number of officials, art and a number of other people, let's look at the volume here. right now, this normal time on the floor of the new york stock exchange we should be doing 100 million. 364 million, something is a little strange here. an aggressive algorithm came in at the open. this may have been an error. we don't know. it's not necessarily something to do with the new york stock exchange, but the orders that came in to buy and sell. you put up knight, it's not clear that knight had anything to do with it, maybe somebody was using knight's pipes. we don't know that, either.

all we know is the trail that's been left. there were a number of stocks immediately halted. to the nyse's credit, immediately a swarm of people, as i was doing my hit at 9:30, they halted things immediately and said something weird is going on here, on the nyse, at least watching on the floor, it looks lining they did their job form the question is, did this program that came through, was it accurately done or some kind of mistake, some kind of algo gone wild to use an overworked trade. >> which is why we have trading limits. >> and these stocks were halted immediately, and then reopened them, using the standard method. >> and most of them have come back down to what i call normal, because i don't know what normal is, but radio shack was up 13% earlier, it's up less than 5% now, abercrombie & fitch, up about a percent and a half, so maybe it's working its way through the system. >> once the stocks reopened and

everyone saw it was an aggressive program, correctly or incorrectly that got through the system, things started stabilizing, so there's some post mortem going on here. >> but let's be clear once again on knight. i want to make extra-clear. we have seen an outside move, now down close to 11%. >> we have no idea whether there was any issue. >> but their name is -- to melissa's point, the name and reaction in the stock going around is the reason we bring it up. nothing is confirmed. >> our colleagues back at headquarters have been in contact with knight. they say the algorithms are working fine now. >> the emphasis "now." >> we'll keep you all updated on that, and bob, hope to check in once again. >> now close to 400 million

shares, but this is a very strange number. 400 million you can do at 2:00 in the afternoon on a day like today. you would do it at 2:00. we're now approaches it at, you know, 10:15. >> summer august day of the fomc meeting -- >> i don't remember when i last saw that. >> that's how unusual it is. we're going to talk to electronics arts in the show, the anger surrounding social media, but up next back to carl kin nilla live from the 2012 olympic games in london. when samyr laine was at harvard, he didn't know his roommate mark zuckerberg would eventually create facebook, but zuckerberg wouldn't know that samir would eis a samyr would compete for the gold. including the gs and is.

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welcome back to "squawk on the street." this is herb greenberg. this machines gone wild in the market is still working its way through the system. it's interesting. there's a lot of talk about knight securities. we've talked to traders who say they havesh did you tom joyce the ceo of knight tells scott wapner, he has no comment on anything yet regarding the trading. it's just such a wide number of so many stocks. dole, juniper, corning,

molycorp. it's just dozens of stocks, but trying to get an explanation, all you need to find from everybody, as bob pisani as mentioned, it's algos, algos, algos, algorithms in the market. >> and melissa said the name being associated, but nothing confirmed, is knight capital group. to highlight the point, all we have is chatter, but knight capital group in fact is down 11.5%. what have you heard about that? >> well, again when you talk to traders and they say they receive messages from knight, talking about, you know, technical issues, but we can't get that confirmed from knight, even though you talk to people who are clients of knight, but we're trying for double, triple confirmation here before we come with anything specification. >> thank you, herb. >> crazy. why would it materially impact the stock, though?

why, even if there was a probeen with that, would that materially impact the stock? >> because they might be liable for losses. >> that large? >> sell first, ask questions later. that's the mantra of the stock market. >> you get the theory on these machines gone wild theme, but at least we can take comfort in this, it appears the large order or orders that were put in that were maybe misrouted were buy orders. if they were sell orders, i'll bet you knight capital shares would be down more. >> okay. let's check in with carl once again at the olympics. carl? >> this story here in london, when mark zuckerberg was busy creating the biggest social network in history, his roommate wasn't just sitting around, but training to be on haiti's team. i spoke to samyr about his time

in harvard, and his famous roommate. what is it about strauss hall, olympians a one side, business phenoms on the other. coincidence or something larger? >> i think it's coincidence, but part of the reason you go to harvard, right? you meet people like that, and why al gore, tommy lee jones and others were roommates. it's pretty funny. >> member number 14 of facebook. >> yeah, yeah. >> what's it like as seeing it as a global phenomenon? >> you know what? it's almost as surreal as the opening ceremonies were last night, when you hear about mark as "time" person of theier and 9 million users, and where that came from. you really realize how big the sort of scope that the social network has, and he has, and

helping people connect and stay in touch. >> reporter: do you remember conversations where you said this could one day be big? i want yeah. yeah. when he finished his sophomore year, he sent it to me, said this is what i've been working on, try it out, let me know what you think. i jumped on it. you never really see what it's become, though i'm sure mark did. >> you said you played a lot of playstation. >> we did. we did. >> reporter: you said none of us got as little sleep as mark, and now we can see why. >> that's true. maybe it's back i went to sleep earlier, maybe not as early as i should have, especially freshman year, about you for mark, a lot of time, he was coding late or doing mom work late, because he was coding earlier. >> reporter: you want to walk me through the physics of this event? >> definitely. i'm coming full speed. >> reporter: how many paces? >> about 16 steps, 16 full

running strides. when i hit the board, it's full speed. >> reporter: the moment you know the jump, how good it is, is back here? >> it really is. you can have a bad home and good step, about you when you you get to the step phase and the pit, you don't want to look down, but it's really in your peripheral. >> that is why you see sometimes ute hit and celebrate instantly. you know -- you know you've got it going. when you get this close to the bit, it can be a bad third phase, but you know i'm close to the pit. it doesn't matter how ugly my third phase is, i've got it going. >> reporter: fascinating event. he is born and raised in new york, playing for haiti, because his parents are haitian.

if he medals, it will by haiti's first since 1948. when his career is over, he has a law degree from george does that town, even a job offer from a big law firm in the next year, but right now trying to see where his olympic career takes him. he did carry the flag for haiti at the open ceremony on friday fight. incredible story, guys. >> what is amazing, the more you dig into it, is a series of thousands of great story, because they are all national champions. i appreciate you've got the zuckerberg connection here, but time and time again, look at the kids can the gymnastics. >> even without the zuckerberg connection, it will be a remarkable store. >> what's the atmosphere like? >> the power of these games. you never think you're going to get sucked in, but they are all so compelling. by the time the games begin, you cannot turn it off.

that probably explains the ratings. >> will we have a deep expose into badminton-gate, accusations that both south korea -- they were trying to throw the match, because they didn't want to be first in the pool, because they would have to play the unstoppable chinese team? a little scandal too, what is it, a pitch? >> eight players have obviously now been disciplined. you know it's bad when you have a scandal in ladies ease badmint badminton. still not clear to me, brian, why throwing the match would give you a better draw, but we're trying to work all that out. >> but in a context in this actually volunteers left the stadium in tears, because it was against the general feel it wasn't the olympics, this is an out-lier on what still continues to be surely a great games, carl. >> yes, absolutely. go team gb.

>> yeah, we have the cricket test, i'll tell you about it later. we're obviously all over the volume tile trading story that's literally erupted in the last 27 minutes as we started trade down here. plenty more "squawk on the street" still ahead. have you got olympic fever? how would i like to win this official backpack, signed by the "squawk on the street" gang? all you have to do is nail the number. if you can get this friday nonfarm jobs number, it's yours. tweet your guess, and the hashtack nail the number. you have to be at least 18 years old to enter. for all the officials yew, go to sots.cnbc.com. you have until 8:29 a.m. this morning. good luck. tdd# 1-800-345-2550 let's talk about fees.

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syou know, i've helped a lot off people save a lot of money. but today...( lou large metal object hitting the ground) things have been a little strange. (sfx: sound of piano smashing) roadrunner: meep meep. meep meep? (sfx: loud thud sound) what a strange place. geico®. fifteen minutes could save you fifteen percent or more on car insurance. sgro welcome bulk to "squawk on the street." i'm sharon emsore son with breaking news from the energy

department on oil supplies. we have a rally under way in the oil market that's gaining steam after a much bigger than expected decline in crude oil supplies in the past week. supplies were down by 6.5 million barrels for crude. we saw a decline in gasoline supplies of 2.2 million barrels, and a decline in distillate fuel supplies of 1 million barrels. the declines were not expected but the api numbers did show a drop. we also saw a big drop in the trade data in crude supplies, add the api reported that it had a lot to do with a big drop in crude imports. the really is under way not only in the wti contract, they have dropped by this much, but also in brent crude, brent crude up by more than a dollar. big surprise for this

fundamental data, traders still waiting for the fed and ecb, but this is new toss give momentum. back to you guys. sharon, thank you very much. let's head to chicago for more on the markets' latest move. richard l. chillsen is at the cme group. we're seeing a big move in some of the ag names. corn has been skyrocketing the last few weeks, what is your take on where we go commoditywise. >> as a sector, i'm going to break it down. let's start with the ags first, i think the market is a bit high here. we know obviously they have been dramatically reduced. we know the rally started around 580. any rally above $8 is a spot to take a profit. the market is down a bit early.

we know the large specs and everyone is long this market. so i think you're vulnerable if you're long. so watch out for the ag names. maybe going to the crude oil, we saw a bigger draw today. the way i'm playing crude right now, though, is the wti versus the brent. if you want exposure to geopolitical attention -- you have to go long the brent. the spread historically has been trading between 10 and 22. i think it widens out and could be a bit of an opportunity there for you. >> rich, thank very much. we're now an hour and four minutes into trade. we've had some technical issues, still trying to grapple with what went on. bob, where are we? >> just to recap, a huge amount of orders right at the open.

it caused a lot of stock toss gyrate. we had about 20 halted. they have now reopened. what they're trying to do now is figure out exactly what happened. there very clearly was an enormous order to come in, mostly to buy stocks, probably an algorithm. what's not clear is whether there was erroneous or not. the volume is what's making people suspicious, and a lot of people do think it may have been erroneous. at this time of the day normally we would be doing about floor volume at the nyse. we're at numbers almost 2 1/2 times normal volume. not a formal statement from the new york stock exchange, but there's -- >> it may have nothing to do with them, of course. >> >> it probably does not. a massive amount of orders came in. literally as i was standic here everybody started yelling and screaming, but some of them had unusual gyrations in very short

periods of time, so it looks like the people standing here, the systems did work -- >> and this is just -- to dwell on that to a moment, this is a very important story, but the sim are resilient. where we are at the moment is a good place. >> and you'll hear arguments this is why you need humans watching this. people were around crowds saying this is wrong. >> but it would be the automatic stocks that came in. >> i'll tell you what it looks like to me. i've been on the floor 15 years watching this. it looks like a five-day program computed in five minutes. i don't know that for sure, but the evidence that i've seen in my eyes indicate something went wrong, so it could be something as simple, instead of something having an ago rim that says buy general motors -- instead of

saying bid, it says buy general motors, and it kept buying and buying. >> right. >> that's what it looks like to me. >> that's what i've heard from traders as well in terms of what it looks like at this point. knight trading has peared some of its losses, even though the role is uncertain at this point, it is connected to this episode in some way. >> by rumor, by rumor. >> exactly. we don't know whether there was in this issue over there. we don't know whether somebody was using their pipes. we don't know exactly. it does look like something was strange, some unusual program that executed rapidly. >> according to a spokeswoman for knight capital, they're looking into the stock swings. so knight is now at least somewhat addressing it correctly. bob, thank you very much. electronic arts reporting

its first quarter guidance. the stock is up. we're going to go straight to the sort and sit down with peter moore about ea, why they're giving away "star wars," the most expensively developed game ever, for free. that's a first on cnbc interview. stay with us.

i have three daughters and my son, and then i have eleven grandkids. right when you see them, they're yours, it's like, ah, it's part of me. it's me again. now that i'm retiring they all have plans for me. i'm excited.

glue shares of electronics arts are on the rise as it reported a narrower loss than expected by the street. ea also, of course, making an

announcement on pricing moving forward. joining us on a "squawk on the street" interview is electronics art peter moore. good morning. thank you for joining us. >> my pleasure. why do you announce today rather than charging $60 for the first month and $15 for each month afterwards, you're going to give it away for free. what does that do for the business and the industry? >> it grus the business. the idea of giving away play for free is the trend we're seeing, the premium trend bringing more and more people in to play games. starting this fall we'll have two ways to play, either at a

subscription level. or you can come in and use microtransactions to mov your way through the game. >> is that an admission that you need a completely different way to monetize it? >> i think what it is is looking at the future of what gaming is all about, how do we bring more and more gamers goo the world. they were saying -- we do exit interviews, and 40% said if there was no subscription, they would play it every single day. that's what we're providing. >> but peter, there are so many options right now, how do you get the gamers, if they're playing every day, to actually spend the money to compensate for all the other revenue ush giving up? >> we're less than a million

subscribers. if we can get 2 to 3 million playing the game, you start to transition from getting your money up-front to an apu, that is the long-term growth plan. >> i'm really sorry to pursue this point, sir, you have a million, you're talking about by doing this to get to 2 to 3 million. you have to sell a lot of stuff online to make up for that $60 usually for the first month. that's a lot of microtrgss. >> absolutely. if you can microtransact your way through the game, we build stories to stay in the game for months, if not years, on a long-term basis the model works. >> social has slowed down.

have you made investments in social. is it worth it to invest more money in social? and how rapidly is that platform slowing? >> certainly you're right, the growth is slowing down, but obviously as a major player, if not the major player in social mobile free to play, we're not diversified than maybe some other people in the sector. let me use a topical example. we're competing in a dedarth loan. if one thing doesn't grow as quickly as we would have hoped, we movie smartphones, tablets, consoles, pcs, browser-based games. others may have just hit a wall, we're much more diversified. >> but peter, zynga's recent disappointments calls into question the entire social space and raises questions whether this space is major slow in growth and major limitations.

how are those results and these trends impacting the way you invest? social? >> we're investing in brands in social. that's the difference. the sim social, for example, 10 million act i have been users, sim city social, going back so sim social, we've seen 50 million on net revenue on that title alone. it's about deploying great brands, having less games, but and quite from a inkly not just throwing mud against the wall and hoping it sticks. we have the port for the i don't brands that consumers recognize around the world. >> mr. moore, thank you for joining us. we should note, of course, the half 500 million share buyback that you've also announced, the c.o.o. of electronics arguments. mr. moor. big news coming out of the hedge fund world.

"new york times" reporting that louis bacon is returns $2 billion to investors in his moore global investment fund. that's a quarter of the money he manages there. mr. bacon saying -- citing 18 months of what le called disappointing investment returns, and a particularly tough second quarter, when his main fund was down over 3%. in a letter to his shoulders according to "new york times" or his clients, he wrote -- i am more comfortable taken down the size of the funds than increasings size of the positions. he will still continue to manage about $6 billion, but again louis bacon running 2 billion to his clients. back to you, melissa. >> thanks for which that, mary. at the bottom of the screen, nikt is telling cnbc is they're looking interest the trades at the beinning. we'll have much more when we

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we're tracking social media stocks after yesterday's selloff of facebook and other issues within the sector. has wall street turned anti-social? and should investors do the same? joining me now, colin sebastian, senior analyst at rw bed. good morning to you. let's get to it then. there's a lot of anger out there clearly at the moment. people are making comparisons with what happened in 2000, there's a view that the social media stocks perhaps were overhyped by wall street. arguably, some would accuse business media of overhyping it. they'll say the companies are immature in their ability to actually change the advertising industry or grow their revenues and at the same time some of the founders have been greedy in the degree too much they attempted

to take money off the table. does that stick with you? >> i think a lot of those are fair points, i think the bigger picture is that companies like facebook and zynga have amassed a large number of users, i think the original valuations of the companies were based on the number of people actively using the platforms. now that they're public companies, the attention shifts to monetization of those users and both of those companies with in awkward phases of their life cycle in terms of increasing monetization. >> colin, there's a tendency of investors to want to put things in bavskets. a company like yelp, what's your opinion of a true cohort like yelp? >> yelp has unique content on its site. it's got its own unique user base. the company needs to be looked within the confines of its vertical. facebook is a platform.

platform is attempting to change the display advertising market. that's a very different value proposition. facebook generate about $3 peruser in profits today. google generate more than $20 peruser. that's the opportunity for facebook. you know, yelp is something that's very different. >> let me just come back on the broader point there. and what you said about the transition between before you come to market and when you actually go to market. before you're valued on the number of users, afterwards you're valued on the monetization. did anybody tell everybody that actually as you cross that line, inevitably your stock is going to fall hugely and therefore, if you invest in it, as it crosses that line, you will lose a lot of money? >> well, it's a good question. i think the reality is, that valuations of these companies, social media companies, internet companies, requires some foresight, some forecasting. and a lot of the monetization

depends on facebook's ability to generate higher roi for advertisers and more engagement for users, that's somewhat speculative. and given the botched ipo of facebook, investors don't have much tolerance to wait and see. so the stock is in a penalty box. you have issues surrounding the lock-up and in fact the company didn't provide financial guidance, these are overhangs now. the company is a show-me story. >> in general, not necessarily related to facebook. we know the issues there. do you believe that people were hoodwinked through the process? i'm not apportioning blame to anybody in particular. but could you understand the anger and say -- yes, i can see where that comes from, and this is why i think it happened? >> well i can certainly sturn the frustration given the stock performance. i don't think that hoodwinked is probably an accurate term. i think facebook laid out its forecasts to the underwriters

and investors and you know, to be fair, out of the first quarter, out of the gate, it appears they met that forecast. >> okay, colin. good to talk to you, thank you very much for spending the time. colin sebastian joining us from robert baird. breaking news on autos, let's go 0 phil lebeau. >> toyota reporting increase of 6.1% for july. a huge number compared to the other automaker, that's a comparison of july of last year when the company was still being impacted by supply shortages because of the earthquake and tsunami. still, 26.1% is the month of july for toyota. guys, back to you. let's not forget that it's a fed day. more on that and the rest of the day's trading. the dow up 39 points after the break. is now within your grasp with the e-trade 360 investing dashboard. e-trade 360 is the world's first investing homepage that shows you where all your investments are and what they're doing

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balance sheet. and excess debt and inadequate saving are the top two issues on that agenda. >> adp reporting that private sector job growth grew by 163,000 in the month of july. >> the great peter lynch magellan fund, fidelity always said you have to be an investor in the end because there's only a few days every year that the gains are made. the rest of the time they're not. that piece of data is so compelling about why people just have to stay the course, despite the difficulties. >> zynga had said the rules, maybe they were being bent to help other companies. ea points out they haven't seen any benefits. so once again, facebook in the crosshairs of every single person. they need to have people put out a release saying we're not going to take advantage of the lockup. >> first trading session of the month begins. >> 49.8 on ism for july.

it's the second straight month below 50. while there are headwinds, we do see some positives there that we think will continue to lead to some slow gradual growth for the industry. good morning, and welcome to the third hour of "squawk on the street." we're live from post nine on the floor of the new york stock exchange and importantly, across the pond at the olympic games in london where carl quintanilla is keeping track of all the action. carl, over to you. >> hey, simon, i know you guys have a lot of stories to cover. a quick shot of olympic park on what is probably the nicest day weatherwise we've had so far in london and a very nice day for the american action, michael phelps the most decorated olympian ever. gymnasts, women gymnasts taking gold for the first time in 16 years. men's hoops are undefeated. women's soccer is off to a 3-0 start. we'll get you to all the events later this morning. the medal board looks pretty good, with the u.s. still in the

lead, great britain has a gold. and later in this hour, we'll meet a young 16-year-old athlete who's competing in women's table tennis, guys, but with two very key supporters. bill gates and warren buffett. she calls them uncle warren and uncle bill, very charming, we'll talk to her later on this hour. >> looking forward to it. thank you very much, carl. >> let's check where we are with the markets, the dow is up 40 points on what has been quite a tumultuous open the s&p is h the stock hasn't seen in almost four years, after the insurer swung back to profit with the help of high premiums and fewer disaster payouts. airline stocks, a big loser for the day. delta, united, continental, jetblue all getting hit during the course of today's session. all right. so let's get to the road map. for this hour here. and we're going to start off with the u.s. table tennis

prodigy and her powerful fans. meantime in terms of our next story, the european close of course coming up at 11:30 sharp. all european markets are waiting mario draghi and the ecb meeting tomorrow. what are we seeing in europe here? we'll have the close for new less than 30. and the one and only larry kudlow returns to talk in the next hour of "squawk on the street." >> with carl in london, that's what you call star-studded. we have to get back to one of our top stories all morning long. get more detail on the volatile trading we've seen, richard petto joins us here. rich, great to have you with us. what do you know at this point in terms of what happened and what connection, if any, there is with knight capital. >> melissa, we're hearing very much the same. that you've been reporting. that bob has been reporting that there was an issue with a an

outgo trade this morning. our trading desk got a call from one of our suppliers and they also mentioned knight. so i've talked to knight, they're just as you reported, they're looking into it. so not a lot of details right now. but you know, it appears like there was an algo error in the morning. >> no surprise here, rich in terms of the market reaction. knight capital was down as much as 11-plus%. in reality, what if any liability do they face, because i'm assuming that's why the stock is trading lower at this point. >> the belief that there could be. >> i think the impact on the stock is a bit impugn tiff. to determine liability, we don't know whether it was their fault. we don't know what losses could have been incurred or any direct liability that other people have that they could attribute to knight. so it is exactly as you put it

it's sell now and ask, get the details later. >> rich, it's bob pasani here, how are you? the nyc does have a new program today, i'm not sure this has anything to do with it but the retail liquidity program started today, this was designed to essentially i guess create a bit of a mini dart pool within the nyse and sort of draw some order flow away from the wholesalers like knight. i don't know if there's any relationship at all. we have no statement from the nyse. but the program started this morning. do you think there might be any relationship at all there? >> that's a good point, bob, we thought of that as well. we've got calls in to the nyse. they haven't responded yet. but you know, knight is a designated market maker on the nyse. so they would be able to respond to the rop, or put orders in. to make a connection right now between those two -- although it's a coincidence, but to make a connection would be just -- a guess. >> i'm trying to figure out the facts we have is that there was

massive volume at the open. i mean people started yelling and screaming within 30 seconds of the open. because some stocks did 30 days' volume in literally a couple of minutes. so something went wrong with the interface. some massive amounts of orders came through. i find it hard to believe that it was deliberate. either there was an erroneous order put in, of human error or perhaps a mechanical error or some problem with the interface perhaps between knight and the nyse. i'm trying to account for the fact that we did 300 million shares by 10:00 and we normally would do less than 100 million. >> i've heard the same as you. again, no direct details from knight. >> our markets are electronic and 99% of the time they operate flawlessly it appears over the last couple of months we've had few more of the flaws get into the market. >> what is, what is the broader context here? how often do we have errors or

mistakes like this in the market? and for those that are concerned more broadly about the stability of the financial system and the trading environment, what do you feel about the way in which it reacted today? >> well, you know, we, i think every day there's small, small issues in electronics in the market. you know, but not, not to the impact, not to the effect where you see in stock, price moves, you know, that are noticeable across a range of stocks. i think that's what, that's what got the markets scared. that's what has got the impact on knight's stock, being a market maker. >> before we get more details, the markets generally work you know, fantastically, we've had a string of issues. and i think this will bring more -- obviously there's going to be calls for more checks on

algos going forward. >> not only are we seeing you mentioned punitive selling when it comes to shares of knight. but in terms of shares of nyx, the new york stock exchange, that's down about 2.5%. is regulatory risk a weight on these stocks at this point? >> well, there's a lot of different issues on the regulatory front, melissa. you know, you hit a wide range. but in regards to you know, looking at the automation and the algorithms, i think we've got enough, we've had enough issues over the past you know, few months that i think the s.e.c. and the regulators are going to have to take a bit of a stand to try to bring some confidence back to the markets. instill the confidence back. >> the important thing to point out is despite the confusion at the open, something obviously went wrong with the program of some sort. immediately, it was flagged here and the market itself kept functioning, we didn't see any imminent moves there was weird

gyrations in these stocks and we will look into that. but the market functioned. >> rich rapetto of sandler o'neill joining us. and indeed, bob. >> let's bring our capital markets editor to gary ka mimsky with some thoughts on where we're trading or would you like to move to another subject? >> simon, we're looking into the issue as well. what i do want to talk about right now, simon, i know you read this book, this is an excellent business book, smarter than the street. we detail in here about one of the great strategies that tnk had. i'm going to toss it over there. was that we looked for change in management and that was a great compass in terms of trying to find new investment ideas. we were up at this hour yesterday, watching courtney's great interview with jcpenney chairman, ron johnson. i was reflecting back on cold winter day, january 25th, that was my birthday, that's why i knew the day. i want to play a clip when ron

johnson first came on cnbc to detail his strategy, let's check it out right now. >> let's say the pricing strategy announced today as a possible example. you wouldn't rule out the idea that six months from now, you come back, you revisit certain aspects of that and say, well this is working and this is not working. and as a result, we'll get a possibly have certain pricing strategies for certain skus and other force others? it would seem, given what you did at apple. that would probably be the blue print. >> well that's not going to happen. i just politely disagree. our pricing strategy is set for the long run. customers like and they know the right price. and so we believe pricing goods right. now we might have some merchandise that we change the price on make sure it's a point where i can mackize its velocity. but the fundamental pricing strategy being fair and square, of having a great everyday price, plus month-long value, that's going to happen forever. >> all right.

now here's the point, he politely disagreed. obviously we know what happened in the last eight months, the fact here is that there is lesson to be learned. i am not going to write a sequel to this book. if i did what i would say is forget when management comes in and there's changes at senior management. especially fitz a superstar celebrity ceo, you must make sure that they don't set the bar high. much more we talked about with facebook this past week. you've got to sort of under-promise and over-deliver. what he said back then in january is the reason why you see what you have with the stock today. set the bar very high, said right there, we're not going to have to revisit the strategy, it's set in stone. that was a mistake. take this not about jcpenney, but about future ceos that come on the air, come to companies, a lesson that i've now learned -- don't let them set the strategy in stone, it never works that way. >> all right. thank you very much. gary kaminsky. i want to check in with rick santelli at the santelli exchange at the cme group. >> a lot of topics and important

topics. ed demarco is the acting director of the fhfa, the federal housing finance agency and they are the conservator/regulator of the zombie gses, government-sponsored enterprises. yesterday, mr. ed demarco deemed by "the wall street journal" as a life-long bureaucrat, he makes a mark on history that i'll never forget. he basically said no to a huge amount of pressure to reduce princip principal as part of their modification programs. and the response by the treasury department and especially treasury secretary timothy geithner was rapid. but i tell you what, he's going to be under a lot of pressure and he redefines the notion that you can have independence, in an independent agency of the government. my hat is off to you, ed demarco, for doing what you did. second point today, in the papers, yesterday and today, mf

investors, yes, nine months ago, so let's see, nine months, a rebirth of optimism, for many of the investors. because the papers, many of the articles say they're going to get all of their money back. which was perfectly timed with the hearing in front of the senate ag, nutrition and forestry committee that's going on right now. talking to mr. defensele e gens what went wrong. and last but not least, the library of congress named a favorite book of mine as one of the 88 books that shaped america. and yes of course, i'm talking about ayn rand's "atlas shrugged." she started writing it in 1946. wasn't published until 1957. she had a person called the undertaker that was editing it on the fly. and that person happened to be yes, allen greenspan. and before it was called "atlas

shrugged" it had other titles, like "the strike" but they changed it. i advocate that everybody read the book. why? because you're leaving through it as i speak, back to you. mary tom shoon has a market flash. masterkard reporting better-than-expected earnings, but it's revenue came in light at 1.88 billion. there are concerns about growth in the purchase volumes for mastercard, they slowed to their lowest growth levels in five quarters. that's keeping some pressure on its stock today. you you can see it's down more than $8. simon, back to you. >> i'll take it. coming up next, the team table tennis phenom who hangs with warren buffett and bill gates in her spare time. born with.s something y

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she's also pals with warren buffett and bill gates. >> well first tell me about sunday and how it went. were you nervous? you were obviously happy with

the results, right? >> on sunday i played against world number two, and obviously he was the underdog in the match. going to the match i felt basically no pressure. was still a little bit nervous. but based on my experience for my first olympic match, i knew she would probably be really nervous, too, she's still human even though she's world champion. >> what did it mean to have uncle bill in the audience on sunday? >> i actually did not know he was there when i was playing. it was only after i stepped out and somebody asked me about it it. so it took me completely by surprise. i was really happy he was there. i'm so thankful. i know he's a really busy guy, so in order for him to watch me play, that's really something special. >> what's it been like to have the support from him and from warren? >> our meeting definitely happened by chance and it's been a stroke of luck. they definitely taught me how to be humble. they're so down to earth and i really respect that. >> do you remember that first birthday party or that first annual meeting that you went to? >> well it was uncle warren's

75th birthday party and as a gift, one of his friends decided to give him a table tennis lesson from a coach and this all thought it would be funny if there was this little girl who came along and i happened to be that little girl. >> the first time you played him did you go easy on him, or was the intent to crush him? >> the first time i played him, my parents told me about who uncle warren and who uncle bill were. but after i played them, i didn't know who they were yet. i just saw them as uncle warren and uncle bill. so on the way home, they told me who that uncle bill was bill gates and uncle warren as warren buffett. i thought they were just normal people. >> really quickly, uncle warren's game, what are his strengths and what are his weaknesses? >> his strengths is that he steps back from the table, he's a chopper. >> a chopper, what's that? >> basically someone who defends, they turn their topspin loops into underspin. so it's pretty rare and it's a little bit frustrating to play

against because they're usually really patient. >> what is his weakness? >> i don't know, i think he should just practice more. >> how about bill? >> i think he, he's pretty good, he's pretty fast. >> really? >> yeah. >> warren is eventually going to need someone to run the portfolio. would that interest you? >> a little too difficult right now. i'm only in high school. >> she's going to be a senior in high school so she's got some time to work for about that. she wants to go to princeton eventually. maybe cover business guys. since table tennis was introduced to the olympic games as a sport back in seoul in '88, china has won 20 of 24 golds. so it's their national sport. they have dominated. team usa is trying to work on getting the younger generation in. teens, juniors, cadets, trying to build some steam for the games in rio in four years, but what a story, and what great supporters to have in your corner, gates and buffett.

>> yeah, not bad. and carl, there are very few people you can pose the question, was it your intent to crush warren buffett. >> yeah. and i just love the idea of her being brought in as this little kid, right, who was going to somehow embarrass him. which she clearly did. interestingly, guys, the workout recommend minimum for table tennis is pretty intense, too. a lot of anaerobic exercise where you go really hard for ten or 15 seconds and then rest. >> i'm going to try that to improve my game, carl. we're counting down to the european close just a few minutes away. .. to experience the lexus performance line... including the gs and is. [ engines revving ] because control is the ultimate expression of power. [ revving continues ] ♪

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welcome back to "squawk on the street," i'm mary thom son with a market flash, we're looking at shares of interdigital, the company is saying it won a u.s. appeal in patent fight against nokia. the shares are up 20%, still a healthy 15% in trade today. this of course centers on a patent dispute over interdigital's 3g mobile handset patent. back to you. trading day in europe coming to a close, we've got the european close, as well as the details and the impact on the u.s. right after this people have doubts about taking aspirin for pain. but they haven't experienced extra strength bayer advanced aspirin. in fact, in a recent survey, 95% of people who tried it agreed that it relieved their headache fast.

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. minutes until the ourpen close, let's go to simon hobbs. >> we're entering a crucial stage now as to what's going to happen with the ecb meeting tomorrow. before that, i want to focus on the data that's coming through. around the world you've had the purchasing managers index, which is thousands of firms giving an indication as to where they are in manufacturing. and what you see here is not quite what i thought it would look like. as you fall below 50, you have a contraction in manufacturing, what we're seeing is that manufacturing is contracting in

germany and france and the united kingdom in fact now it's fat evident pace in three years, it is below this 50% line. so clearly, where you weren't going into recession, you now are and if you look broadly through the eurozone on the data, it's writ large that the eurozone which escaped recession is going to go back into it, all of these are below the 50 line. the one exception is ireland which is ticking up slightly. they may be coming out. but it's important to note i think where we are on those bigger issues. the bigger problems that you have with national budgets. in the meantime of course, we're very focused on the ecb meeting and the other thing that will happen tomorrow once the news conference is wrapped up is that importantly, the italian prime minister will go into a meeting with the spanish prime minister. will they ask as a result of that meeting, for formally for there to actually be now money from the safety net directly going in to buying their bonds from the esm and could that trigger then a reaction from the

ecb to also buy bonds in the secondary market? the safety net in the primary straight from governments and the secondary potentially from the ecb, this is the close around europe. >> the european markets are closing now. >> okay, let's just remember we're one week from draghi saying he would do whatever it takes to actually bolster the eurozone. i want to show you quickly where we are with mario monty, the italian prime minister on this tour. 's trying to persuade the north of europe. we only have a still of him with the british prime minister. trying to persuade the north of europe to come in with germany and better assist the south. in a news conference just wrapped up, he has said he does think there will be a banking license for the safety net further down the line. which means they have effectively unlimited funds because they can borrow from the ecb. but that's not where we are at the moment and the germans are pushing back, really staking out their case in advance of tomorrow's ecb meeting.

an interview with the bundesbank president done some time ago and published in english is suggesting that politicians are demanding too much of central bankers. the ecb should not overstep its mandate and the economics minister in germany has said today, that the finance minister and angela merkel all agreed there will be no banking license for the esm. so they're staking out their case quite clearly. as we head into the ecb meeting tomorrow. let's look at the price action we have on the markets, on this first week anniversary. of draghi saying the ecb would do all it can. "reuters" is reporting there will be no bold moves tomorrow and possibly not for weeks. this is the context in which the spanish and the italian markets in this week have rallied strongly as you can see. we were talking about it yesterday. today, they have fallen back as people become more concerned that you won't get bold moves tomorrow. and there are various ways of course that you can play that in the market. i would point out rexall, 14, 15

billion euros in market cap, a proxy in spain, has risen and fallen as people attempt to trade that general sentiment. one more stock to mention, that's nokia. which has had a phenomenal week. as people short cover around europe and that obviously was the response to what monti said. the short covering and the prospective buying on nokia have been absolutely phenomenal. at one point on a rumor denied as laughable by lenovo, the chinese maker of consumer electronics that actually it might buy nokia, we were up 15%, which meant at one point today, we were up 45% on nokia over the last week. clearly, as lenovo denies that there's any discussion there, the stock has fallen back. but still for the week, up 36%. an interesting trade there, melissa, back to you. >> i think the quote was something like it must be a

joke. the lenovo executive, about it was a joke. yeah. >> mind you, he's only the head of europe, middle east and africa. maybe others in other places? >> maybe there's a higher-up? >> you don't know. >> i doubt it. what a trade, 45% in one week? >> absolutely. thanks so much for that. we should note that we continue to follow the story about the volatile trading here at the open as we understand it. it is more than 100 stocks right now being reviewed by the new york stock exchange. a lot of them with some very, very unusual volume. when you take a look at compared to the past ten trading sessions, the average over the past ten trading sessions. some of the volume spikes were 1,000% or more of the average volume that we've seen over the past ten days. so bob joins us here now with a little bit more on the details. >> let's recap what happened. and i've been calling some desks to ask them what their comments are. number one, we saw massive mostly buy, but some sell orders come in at the open. unusual volume. magnitudes of what are normal

volume. immediately a number of stocks almost two dozen were halted. on an unusual volume moves. it's not clear if these orders were erroneous or not. it looks like some kind of program, perhaps an algorithm came in. but the size of the orders were so big that it, it indicates to me that somehow this was probably a mistake or a misrouting or mishandling. it may have been human error, it may have been a mechanical error or not. one other thing to note is that the new york stock exchange began a new program today, the retail liquidity program, designed to draw order flow to the new york stock exchange, essentially creating a dart pool here at the new york stock exchange. it's not clear if there's any relationship between that and the fact that there was some problems at the open. or perhaps, there was some problems with other people interacting. >> we're getting emails from our producers back at hq, an nyse source has told one of our producers is that it is definiteny not a problem at their end and their rp program is functioning as intended.

>> now that does not mean that there might not have been a problem with somebody accessing the rlp program. it might have been a problem on somebody else's end or perhaps orders that were intended to go to the rlp might have been misdirected somewhere by somebody else. again i'm simply pointing out that the program started today, and i'm not saying about the nyse. it may have been a problem elsewhere with somebody else. the facts indicate that there was a mistake made. this was not somebody just sending massive buy and sell orders that were part of some operation that was intended. this looks like a mistake. you don't get 300 million shares at 10:00 eastern time on a quiet summer day. you would normally get 80 million shares on the floor of the new york stock exchange. that's four times normal volume. >> it's a fact that knight trading stock continues to be under pressure. i'm not sure if we're able to look. >> down by 16.25%. this could be an all-time low for the company, $8.62 trading

now. it had hit lower in the session. as for some stocks that were impacted -- >> you could put up a simple one like wizard, this is very small little software company. they normally trade, i don't know, 100, 125,000 shares. that stock went from $4 at the open to $14 in seconds. they may have busted some of the trades here that went to $14. but then back to $4 again essentially. now that stock today is already doing north of probably 300,000 shares, almost three times normal volume and it's only 11:30 eastern. >> china core blood two volatility trading pauses were triggered in that one. core logic also triggered twice. moly corp. was another one that was triggered twice. the list goes on. >> the point here that's very interesting is something ed, i suspect this is erroneous, this is a mistake. but the system immediately reacted and i saw people screaming within 30 seconds of buying 30 at the open. that's something to point out.

>> we didn't see anything necessarily in the barter averages, everything seemed to be smooth and fine and orderly. at the same time, bob, it gets to the issue of market confidence and how the retail investor might feel out there seeing this happen again, just because as rick ripetto had mentioned of sandler o'neill. this has been a string of glitches that add up in the psyche of the individual investor. >> once this is investigated, i will bet you this is likely some kind of software glitch. this is a problem with the interaction of somebody outside the nyse with the nyse systems and my, from sitting here on the floor all indications i had is that the nyse systems worked fine. everything functioned as it should. but there's a problem with somebody interacting from the outside. >> if it is a problem with knight capital and clearly we've seen the move on the stock there, it would be deeply ironic given that the ceo of knight capital was particularly in his aggressive in his criticism of nasdaq over facebook.

he was very, very -- he took no prisoners on that particular interview. >> he put his boot to the throat of bob rightfield. >> we still don't know what the source is here, what the problem is, but i am almost sure that this is a software problem, it's a problem interacting with somebody from another, from swb outside the nyse. and it indicates that this is a very imperfect system. i've seen things go down in all avenues. >> if you look for example on the way in which the swiss are attempting when they announce their loss and attempt to get it back from nasdaq over facebook, the huge sums involved. surely there comes a point at which you say it's actually economic to have mistakes in this way. do you have to alter the way in which you operate as a market maker or as a -- because the sums can be so large because we trade so respectapidly. >> i i think the question, should we go back to a strict open outcry system -- >> that's not going to happen. >> that's my answer, that's not

going to happen. all we can do is improve the quality of the systems themselves. we need to spend more money and time to improve transmission and connectivity. >> who bears that cost? it is the firms, right? i mean -- >> ultimately we do, the people who buy and trade stocks, ultimately. >> so we do? >> what about rhythmic traders? >> they are people who put together buy and sell programs. ultimately anyone you can argue that we should have taxes on trading. for example. there have been proposals made and they're discussing this in europe. >> which i believe the transition tax comes into a transaction tax goes into effect today. >> i don't know about today. >> that's what i read earlier. >> it's been debated in europe. the argument has been it will draw trading to other parts of the world where there is no tax. but somebody has to make sure the systems operate. and make sure the quality of the systems are as high as possible. >> let's look at the chart once

again of knight capital. this stock is hitting a new low here, 760 was the new low, hit just moments ago. pressing into the stock really hard, remember rick ripetto at a loss of 10%. the reaction in the stock is punitive. now down 23%. >> i think he said more, he said it was overdone. it was a punitive reaction. >> overly punitive. >> overly punitive, exactly. a story we continue to follow. so bob, keep us posted. let's go back to mary thompson at market headquarters. >> short circuit of the battery maker, energizer, the share down 9%. their revenues and earnings came in shy of analysts' estimates. two problems for the company, less shelf space at walmart. second problem, increased competition in its personal care business. where it sells razors. procter & gamble is an issue there still the company did back full-year outlook. nevertheless shares or investors are backing out of the stock, down 9%. simon and melissa, back to you.

>> we're up 31 points on the dow at the moment. up next, we head back to the olympic park in london for the latest on what's happening at the games. and an update on the ever-changing medal count. it's something you're born with. and inspires the things you choose to do. you do what you do... because it matters. at hp we don't just believe in the power of technology. we believe in the power of people when technology works for you.

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to answer that question. forget qe3, the original bond vigilante on why the fed is out of bullets. and calling it quits, why hedge fund pioneer continue to bail on the markets. now to carl, back over in london. thanks so much, scott. there was no more, there's no event more global than the olympics. and so it's entirely fitting that we brought in our chief international correspondent, michelle caruso cabrera, to london even as i go home to try to get back in time for jobs friday. welcome to london, michelle. >> great to be here. >> i know you're going to have a lot of fun over the next 10 or 14 days. first impression? >> how important the private sector is, how important corporate involvement is, not just for money, but as for know-how, to make something as phenomly as large and difficult

to make the olympics happen. we'll discuss it more as we see the private sector come together with the public-sector event. >> it was almost the inverse in beijing, had you a large state apparatus. and we'll see what sochi does. all the reports are that putin is building out things they don't need from a legacy standpoint. but in london they had to be a little more frugal on that front. >> one of the stadiums is going to be deconstruct and taken away, so it doesn't become what we saw in beijing and like what's happened in athens in a sad way. >> the gdp and resources are a platform for jealousies and competitions? >> the global economy plays out in the olympics, in a really stark and obvious way. we've seen the chinese very dominant and we've seen a lot of snarky, downright negative comments about chinese players, suspicions after the girl won the gold medal in such a grand style the, the ioc came out and said we've tested her, she's

clean. i think you see a lot of je jealousy among athletes who see state-sponsored sports from a state that right now has unlimited resources not just when it comes to money, but also to people as well. you see it play out with china. the inverse is greece. the greek athletes that have almost nothing, greek house that has only one week in existence rather than the full length of the olympics. >> you've been there and -- >> we went to greek house today. it's a little bit sad. >> right. empty seats have been a controversy. dying down a bit. but you think there's a market lesson in there? >> well empty seats has been an issue at every single olympics i've seen. i think here it's a big issue because the london press is vicious in a way that a lot of the press in the world is not. they put everybody else to shame. and but i think it's a market solution, there's going to be a market -- i think this goes away within two olympics. somebody is going to come through with some know-how. you're leaving? >> yes, i am. >> i wanted to give you some parting gifts. >> okay. >> the brits, what strikes me

about the brits is they're so proud of the union jack, their flag, they will put it on nearly everything. i wanted to give you some stuff to remember london. here's a puppy dog. >> nice. >> to match your puppy dog with a british flag. >> in honor of lucky. >> and in tv we need makeup. this is makeup removers, wrapped in a union jack. >> i'm going to use these in about 14 minutes. >> these -- i know you're going to wear to the office -- these are beautiful. >> oh, nice. can i just give these to simon instead? simon you'll wear these, right? >> and then -- the piece' de' resistance is a snuggy with the british flag, carl. >> god save the queen, simon you are going to look great in this. >> i think you should leave the snuggie for michelle, because it looks like the weather may get

worse. that dog there is about the size of your own dog, lucky? very much a city dog. >> lucky might be threatened. >> we're looking forward to having you back, carl for jobs friday. good job there. it will be interesting to see michelle's take, i tell you why the british are so worried about empty seats, because they think they paid for the olympics and they wanted to watch them, too. but, i'll leave you to delve into that, michelle. hey, guys -- have a safe journey back. >> see you friday. >> thanks, guys. straight ahead, larry kudlow makes his triumphant return to post nine after this chances are, you're not made of money, so don't overpay for motorcycle insurance.

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. all right. got lots to talk about with the one and only larry kudlow of the kudlow report. from the fed to lack of growth. and a big win in testimony tx for the tea party. let's start with the fed since that's on the docket for today, 2:15. >> i guess, i don't know what they're going to do. everybody -- >> does it matter?

>> sees them pushing towards ease, it will either come sooner or later. they're targeting the lousy economy. i think it's a waste of money. i think since qe 1, that worked. qe 2, did not work. operation twist did not work. this is not going to work. putting another $500 billion, stored as excess reserves on top of 1.5 trillion, makes no sense to me whatsoever and the interest rate he cans will be tiny. what we're suffering through, besides a decline in capital goods orders, and profits, both of which worry me a lot about the economy, we're suffering through fiscal shock. we're suffering through tax shock. we're suffering through all the uncertainties coming out of this craziness in washington, d.c. so businesses don't want to hire. they don't want to invest long-term. those are the questions. i thought bernanke had that right when he testified, but now he's swinging back into qe 3. i just think it's not going to

work. >> hold on larry, breaking news, we want to check in with bob pasani. knight capital, stocks at seven-year lows. >> flood watches from dow jones regarding this strange stock trading. software problem being investigated at knight capital. according to a source, second headline from dow jones, knight software problem seen driving erroneous stock trades. this has been around all morning. we haven't had any confirmation directly from knight. only that they're looking into that we've asked for some comment, but so far, haven't gotten that. the important thing this morning, we saw massive amount of buy and sell orders come into the floor of the new york stock exchange, flee to four times normal over the first few minutes. the market has reopened. while the broader indices didn't have any major gyrations, a number of individual stocks had rather serious moves. and very, very big volumes. some of them did 0 dois' volume 30 days' of volume in a few

minutes. they're investigating whether it's a software glitch or human error. right now a lot of people just -- >> to be clear on what that dow jones flash says, it says that as i read it, there is speculation in the market that it might be a knight capital software problem. no more than that, which is effectively what we've been saying all morning. i'm not sure that that actually is a smoking gun, is it? >> no, it doesn't particularly add to the story. what we need to do get a statement definitively from knight or the new york stock exchange about what exactly happened. right now we just don't know. all the facts we have is that massive order flow came in right at the open. much more than normal. it does not appear to be deliberate or i can't understand why anyone would deliberately flood the system with orders. it seems to be an error and the question is, what exactly is the source of the error. >> bob, just to add on to that dow jones headline, dow jones is reporting that the company said it asked reporters to route away

because of the decline inches. fresh seven-year lows on heavy volume. go if that's confirmed, it will be confirmed from knight or talking to a client of knight who has been told that by them. if that would be confirmed. that would be an indication that there is some kind of issue with the software potentially, if that was confirmed. >> bob, thank you. >> larry, we've cut you off in your prime due to the pressure of news, which seems grossly unfair. forgive us, sir. >> all i'm saying is on the fed, it's not going to work. it's just pouring more excess reserves, that will not be used. one thing they could do is stop paying interest on these these excess reserves. >> that would mess up the money markets, surely. >> it would reduce money market yields, but it might push some of that money out into loans. i don't know. i feel again -- the tax hike threat in washington is the single biggest deterrent and also a lack of global confidence. and one last thing.

politically, we talk politics here sometimes. ted cruz, the tea party lawyer in texas, scored a major upset against the establishment figure, dewhurst. for those who follow the presidential race, most people do, this tea party renaissance is going to be very important. and it's underreported in the newspapers. it's going to be a major force. >> larry, we have to leave it there. 7:00 every weekday night, the kudlow report. the doyenne of business broadcasting. mamama

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for a great retirement plan with low cost investments. ♪ . the important take-away from this morning's trade, according to our next guest is that we averted this morning a flash crash here at the floor of the new york stock exchange. artcashen joins us from ubs. you believe that the systems dealt with what happened consistently and importantly. >> i think this, when the volatility spiked in all of those stocks, it was spiking in many of the options in those stocks. when they got out of line and halted trading, it prevented there being a