quarterly profit. revenue rose 45% but missed estimates. they were driven mostly by groupon goods that sells discounted items like jewelry and appliances. sales rose just 2% sequentially. groupon says demand for daily deals slowed due to weak european -- due to the european economy as consumers shy away from discretionary spending. shares of groupon, fallen to an all-time low, and if you are andrew mason, when you got the phone call from google, saying we'll pay you $6 billion for this company, it made a lot of sense then and now it makes even more sense. let's talk about some other things. boston fed says 78 prime money market funds took support from sponsor firms between 2007 and 2011, without help at least 21 funds would have actually broken the buck with net asset value falling below $1 a share. you remember when we had that

time of the break of the buck back in the crisis, that was it. it could provide new ammunition for mary schahapiro trying to introduce reforms. and russell wasen dorve sr., founder and ceo of peregrine financial has been indicted on 31 kounds 3 31 counts of lying to regulators, this a little after a month when he attempted to commit suicide. he faces up to 155 years in prison, joe. i don't know what to say. lying is a bad thing. >> well, we will never run out of stuff for "american greed." good for us, but bad for people that get bilked. >> right. very bad. >> i'm excited -- we'll do home depot. excited to have you come over. >> i'm going to walk. walk and talk.

>> one of your great strengths, i can talk to you about groupon and have you had experience with groupon, right? you have -- >> i have been on groupon, bought from groupon, written about groupon. >> but you've gotten stuff in your e-mail thing. >> yes, i have. >> and it says this is the deal, and you said like that deal. >> i like that deal. >> give me whatever it is you have at a discount and you've done it. >> i have done it. >> what i don't understand, how -- what i don't understand is the stock has dropped to $5 billion, market capital. >> i think it's lower than that. >> 4.8. >> that was before -- >> oh, wait. wait. at 6:00 it will be lower than that. at 7.5, 4.8. >> drop it down another 20% is what you have to do. >> the yearly high 31. and i quickly deduce you could multiply that by five, that 4.5 billion, and that was -- doesn't

seem like -- it was a $20 billion company? was there a reason to think it was worth $20 billion? can we learn anything from this? >> i always said that. i came on here -- i came on here as a guest i think when this was all going on. >> anthony mason, cbs like anch anchorman. >> andrew mason. >> oh, that's an entirely different person. oh, okay. never mind. >> the only good news. >> i have to go to home depot. >> if groupon issues groupons for its shares. >> that's an idea. >> they should have when it was $25. results from home depot. they earned $1.01 for the second quarter, 4 cents above estimates. sales of 20.6 billion, slightly short of the 20.7 billion consensus estimates. at home depot. also raised its 2012 earnings to

2.95 a share, and that isn't just a raise above the company's own forecast. it's above street estimates, that could help. it has been one of the best performing stocks. >> you know who likes this stock in particular? >> who does? >> paul ryan. >> paul ryan owns home depot. >> paul ryan owns home depot. i went through some of his filings last night. >> how many shares? >> that i don't know. it's limited between 1,000 to 15,000. he doesn't own a lot. >> does he own a round lot? even 100 shares? i bet he doesn't. one thing i don't need to see are his income tax returns. >> you will probably see two years of them probably. >> i don't care, unless -- you know what would be interesting. if you are a guy who is in the house and you've got -- some of these guys, like biden is interesting. where did he get -- he has a huge multimillion house. he has always been a public

servant. where -- i guess maybe his wife. she's a doctor. i don't think you will see a lot of interesting stuff. >> he also likes berkshire. he owns -- >> does he own a fraction of a "b" share. >> likes nike. >> he's a public servant. >> you mentioned his work yesterday. >> p90x. i think we should do it together. >> do you think we should do it together? really? >> potentially. at least we could get the host of p90x to come on and give us a lesson. how about that? >> thank you for the music. ♪ i want to get physical let's get into physical ♪ ♪ let me hear your body talk. >> you would replace one of your pilates class to do this with me? >> pilates or yoga. >> have you seen him with the rolled up yoga thing when he

comes in in the morning. >> i can't even touch my toes. >> all right. >> i wish i could touch my toes. >> it's easy. raise your leg like that. look, i can touch them all day long. it's easy. 3 cents above estimates. we'll see what home depot does this morning. an indication, 52. can't tell. >> 52 to 54. great stock. for anyone that's owned it over the past year. i did see something, andrew. i thought about it. you wear on me sometimes. i was at home thinking about how much times you use the word extremist yesterday. >> i don't think i used extremist. >> it was such an easy -- extremist too. it was such an easy word to use. today in the journal it says ryan has crossed the aisle many, many times. i was just wondering, would you ever use that word for president

obama? is it just tainted with right wing -- >> no, no, no. >> i don't think -- >> left-wing extremists are trying to help people. right-wing extremists, wingnuts, wackos, fascists, and left-wing extremists are compassionate, right? >> don't right-wing extremists want to starve everyone, get greedy. >> left-wing extremists want to save the world. you can't call president obama, to someone on the right, the biggest extremist. >> you can make the argument he's an extremist, but statically what i was saying yesterday, nate silver who does this blog that looks statistically at how people vote on things, suggests he was truly the most extreme of those that had been nominated to be part of a ticket. just playing the numbers. we can have nate on one day.

>> do you remember that quality individual, you guys picked for the last election for vice president? >> who are you referring to? >> any recollection of the last election? >> who are those guys? >> the previous, not the last one. the one before that. >> you guys nominated. >> john kerry's running mate? remember with the vetting process, everything you did there, and picked on the best guy you could find to run under john kerry. >> why are you looking at me like you picked him. >> let's go to europe. >> john edwards. you came up with john edwards, and then mccain came up with sarah palin, so let's go ahead. >> john edwards, as you know, had very good hair. time for the global markets. kelly evans in the land of the olympics still. standing in london. a great picture, i don't know where i saw it, in "the wall street journal," fantastic, of the day after. >> like a hangover sort of. a lot of -- >> how is the hangover, kelly?

>> you know, andrew, not too bad yet, markets are holding up okay. people still have that kind of buzzy, happy feeling. i would say give it another week or two, and things will be back. give it a week or two and worse weather. also an unusually good spell of weather the entire period and then things will be back to normal. i'm happy to jump into the political chat here and give you a brief sense of what's going on in terms of the european picture overnight. largely positive one, as i mentioned, advances outpacing decliners, usually saying it the other way around. about 7-3 here. up half a percent of the stock, this comes amitt a rath of gdp figures that showed for germany and france better than expected, but still in germany case weakened. and the gdp figure for the eurozone down .2% on the quarter. market shrugging off. green arrows behind me, anywhere in the range of half a percent to almost a percent for major

borses. and the dax adding nearly a percent. come off a little bit now. ftse, a stock adding some support is standard charter as the bank is in talks with regulators in new york. over potential sentiment related to accusations that hid payments that it dealt with iran, this ahead of a hearing tomorrow which could determine whether it loses its new york state banking license. investors are positively rewarding the news, thinking it will reward the outcome. and also other european banks, could mean this was a bit more of a day of relief from the large sell-off we have seen the past couple of weeks. bonds markets real quick. spain italy, key levels to watch, both below the levels we've seen in the last couple of weeks, indicating some support here, 6.829 for spain, 5.77 for

italy. greece managed to issue t-bills, charging 4.5% for three months. and that compares with swiss, issuing negative rates. euro dollar and commodities before i hahn it back to you. commodities, start with the first kind of supporting the risk move. up a third a percent, quarter a percent. euro dollar up .2%. and a little bit of weakness after the german sentiment index worst than expected. but market seems to be consistent, handing off with a relatively positive tone this morning. >> kiel evaiden kelly evans, th very much. now we're joined by senior economists and managing director and my yoga partner, michelle gerrard. >> are you a yoga partner? >> i think she does yoga but i don't do yoga, and dick kowey, who sometimes talks hooey, but we like him nonetheless.

>> oh, no. >> many months i would call him hooey, and you made your joke. >> i did. >> yeah. >> you don't want to go there this morning. michelle, i can just say take it away. >> what shall we -- >> what do you want to talk about? corn. >> we can talk about corn. >> just wrote about food. >> so much to talk about in the rising price of corn and the inflation of food, prices people may pay at the grocery store. the story may be a bit overblown. the truth of the matter what may happen in the interim, in the nearer term, you may actually get more cattle, because so much more expensive to keep them, feed them, more cattle being brought to slaughter and more beef and prices may actually in the very near term, have downward pressure surprisingly. even still, a year out when the higher corn prices might hit, we think it probably leads to a 4% increase in food prices.

only half% to 1% on inflation. not as big of a risk as people worried about. >> still buying cows? >> i'm still in the market for cows. >> cows and guns. >> you know, when i bought them it was cheaper. >> you don't even need the cows if you have the guns now. >> i don't think -- >> i think this is off the table. >> especially after son of sam cried gun violence, remember? >> that is true. but a number of incidents. >> but those were whacko people, not the guns themselves. >> i have views on that, but weren't not going to get into it. >> could have brought a machete and still -- >> that's true too. dick, you think we've turned a corner in terms of the markets and the economy? >> i think we're in a sustainable economic expansion, and what's turned upon is there was a fear we were already recession, remember that? already recession? that story has faded, and one of

the consequences is that an awful really bright well-paid people on wall street were short the market and short a lot of risk and forced to cover because their forecast was wrong. we did not roll into vehicle. the economy is not accelerated. it has not broken down into recession. >> what is your call on europe? the past two or three weeks, have not said a word, because there a sense that draghi is something something behind the scenes and we hope we will hear about a magic possession and plan. will we see a magic possession and plan? >> i have a basic principle. if you see a rational man or woman driving a sports car straight at a brick wall, they will either turn left or turn right. europe came very close to a total financial meltdown and one afternoon they said i guess we'll have to be just a little

flexible, otherwise we're going to blow this thing to smithereens. they haven't fixed the problem but what draghi did, he created a path for financial support for the peripherals, should you want to take it you have to give up your sovereignty if you are spain, ask daddy for money, but it's going to be available, should do you it that's different than people saying there's no way to help given the situation. >> this is one of the things we've talked about in the past. it has to get so bad, they have to actually look and see sort of the abyss before you get people coming together and doing the things. as you said, spain is going to have to give up sovereignty and germany has to assume cost. but when you look at the alternatives and see what the market really forces their hand, you get the progress you need to getting the resolution. >> they have not explained to the german people, they already

have the risk. >> exactly. >> already going to lose money on greece, no matter what happens. >> we have ali rand coming on the show for the commission, i think 8:30 this morning. one of the questions i want to ask him, why should we be convinced that post labor day you will come up with a plan. you said would you come up with the plan i can't remember how long this has been going on, 2 1/2 years. why now? >> it's the european plan to have a plan to have a plan to have a plan. that's just kind of the way they operate over there. >> you don't think all of a sudden this will be an issue again? >> of course it will be an issue again. the question, are we going to nl total financial meltdown or have continuing financial crisis? the good news, is it's just a tot continuing financial crisis. you have to set really low expectations for european policymakers and in some cases

they can barely make it to your low expectations. >> let's bring it home again. six months ago, barron's had to cover for 16,000. what's your call at the end of the year, with the new optimism, if i can call it that? >> my guess, somewhat higher, but not a lot. i do think -- >> not a lot higher of where we are today? >> yes. i expect congress will cut a deal on the fiscal cliff. instead of taking us over the cliff. they want to have their holiday, christmas, honna caw. let's cut a deal. i think we have long-term fiscal problems, but i do think when the senate passed the bill, just the democrats, would with only a 20% marginal top rate, these guys are thinking about compromise, plus the 3.8% from the obama care. that's totally different than obama's own pro posal for 44%,

dividend tax rates. these guys thinking about compromise at this stage. >> we got to run, give me a number, real quick. >> i think it's totally dependent on the election outcome also. that makes it very difficult, and like dick said, i think they'll end up kicking the can. >> if you get obama again, you get what? >> i think the markets will like a romney victory, which will set us on a better trajectory going into the new year. >> even a woman. women are not his strong suit. >> i wasn't being political as much as i'm speaking about the market's reaction to it. my political opinions may or may not agree with that but i'm covering myself by putting -- >> capital friendly under romney, capital hostile under obama perfectly rational for the markets. >> exactly. >> this is just a coincidence. can you get a camera going here? do you see what it is?

little euro signs and a little can, and a guy that looks a lot like ali rand. >> is he kicking the can? >> want to buy this? >> no. >> okay. i thought i would offer it. >> i don't buy euros, i'm sorry. in any form. >> we have a groupon for that as well. we're going to thank michelle. appreciate it. dick, can you touch your toes? >> sure. hey, i'm from wall street, you ask me a question, my answer is yes. >> enough said. >> touche. >> coming up -- somebody is going to drop the "f" bomb after this commercial break. yes, the "f" bomb, and nothing you can do about it. really? who is going to do it? i'm just reading. plus wall street's take on home depot's quarterly takes, and what the numbers tell us about consumer confidence, housing, and the broader markets. you're reading that. ♪

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welcome back to "squawk" this morning. futures right there. dow looks like it will open 34 points higher right now. nasdaq would open higher as well, as would the s & p 500. a fun little new story this morning. miriam webster, the dictionary company, unveiling 100 new words

to the collegiate dictionary. some words we throw around on a daily basis, like -- this has been added to the dictionary, systemic risk, junior wateunder relates to mornings, tipping point, and toxic risk. other words added are man cave, energy drink, thinking of red bull. sexting. >> i do know what that is. scared of that. >> bucket list added. >> i know that. >> and f-bomb. f-bomb made it in. and if you have other words that should we added to the dictionary, tweet u us @squawkcnbc. what else is on your list? >> i'm afraid to go there. my daughter and son have come up with this horrible word, d-a-f-u-g. if you don't understand

something, you say dafug. i think it stands for wtf. i hate it. >> what about fricking? >> that is used a lot. >> people know exactly what that is. and f-ing, and i've named richard bernstein, doesn't have a middle name. >> and sometimes they say f-ing and spell it e-f-f-i-n-g. ten years from now it may be in the dictionary. >> home depot, four cents above estimates, raised it's outlook for the year. brian is a manager for oppenheimer and company. i'm seeing initially, the beat, the earnings per share beat due to some stock buy backs, not necessarily a bad thing. reduces outstanding shares, allows you to post higher earnings per share. is that how they beat with a

light revenue number? >> the real beat is expense controls. look at the income statement, the expense year over year, actually down, which means very encouraging. it says as sales gradually improve at home depot, they are controlling costs very well. the real key. they are say this saw is a hold i had report. a lot of concern lately amongst inver investors, given the weather and such, a significant lowdown in jailsales and that w comfort investors as they look at results from home depot today. >> what do you mean? weather so good early that they had a boungs in things that people needed the previous quarter, or it's too hot for people to get up and drive to home depot? >> boe both of those factors.

a mild winter pulled forward demand. people working in yards earlier, remodeling projects earlier, and conversely, like you said, over the last several weeks or so, we had drought conditions across much of the united states and that hurt planting as well as overall home improvement activity. >> we have praises of frank blake. i look at the stock, and it had -- it did seem a little directional, down in the 20s and here it is. i would say you can't really answer that, but he's done a check of a job on the stock price. we have to run. you agree with that? >> i think frank has done a phenomenal job. this company today, and i've said this a while. i've followed home depot a number of years. >> got to go. >> it's better run today than it's ever been run. >> thank you, brian. proe appreciate that. ever. we'll be back with a lot more in a moment. [ male announcer ] when a major hospital wanted to provide better employee benefits while balancing the company's bottom line, their very first word was...

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good morning. welcome back to "squawk box" on cnbc. i'm joe kernen with andrew ross westgate sorkin. >> that was after -- >> i wonder if his ears are burning, george p. >> he's got a big future. >> becky off today, back soon. welcome back to "skwauks box." headlines this morning, walmart gotten chinese government approval to raise its stake in a

chinese e-commerce company. you think there was any -- to get the approval. >> are you talking about sheldon adeleson. >> something going on there too? >> did you not see? a huge story. >> looking at his representative. >> you know who is going there today. >> who? >> to the sands. this gentleman. >> oh, paul ryan going to -- >> las vegas. >> they are in -- a whole what's going on in china here it is. scrutiny for casino moguls frant man in china. >> in macau. >> sheldon. knew what was going on. >> the way it works in macau, there are these meddle men that spend people to -- >> that's what you do. >> when in rome, i know. let's go back. even -- okay, yeah, yeah, yeah. chinese approval. walmart to rays its stake, it

becomes a controlling shareholder after a length y anty trust review. china become the world's largest e-commerce by 2015. home depot as you heard, earned $1.01 per share. 4 cents above estimates. raised earnings guidance, slightly short of consensus. still can't tell where it will trade today. and find out which companies today are drawing the interest of wall street's biggest investors. time for quarterly 13f filings. control yourself that will be happening today. detailing the holdings of those investors later on today. it's capable. >> capable. palpable. >> the guy at the gas station, isn't today 13f today. exacta mundo, my friend, and we did a high five. i didn't know. did you know? you probably did know, because

you are a nerd? >> i only know because there is this calendar i go to. >> because you go to that calendar every day speaks to the type of nerdy financial person. >> can i tell you hower inny i really must be? >> i don't know if you want to. >> i almost added it to my outlook calendar. >> so it will come up. >> is that investor calendar? i get a couple of them. >> street insider or something like that. futures right now, do look up. dow looks like it will be 36 highers, & p and nasdaq up higher as well. quick look at oil. how gas prices are faring. wti crude. 93.14 right about now. >> i don't reallian this. does gas really seem like it's worth $93 per barrel with a slow

global economy? is it iran? qe3? can you explain it? >> no, i can't explain it. >> the guys in the opec country are happy, laughing at us. trump will be on later. those guys love to stick it. just as high where they don't cause slackening in demand, but high as they can squeeze every last dime out of the west. i don't like that. to do god knows what with the money. you know those guys? you know. >> say no more. >> okay. >> a quick look at the ten-year right now. glad that i locked in that mortgage rate a little bit earlier. up to 1.669%. remember, barry earlier this week suggested that this will turn around the opposite way. >> mortgage on the original property or the one next door? >> this is on the manse out in the hamptons and then there is the other one in sun valley that i have to work on. >> you joke about it, that's

fine. >> and i'm trying to figure out -- may have to get a separate construction loan for the one in aspen. a lot going on. and the boat -- let's not even go there. >> okay. >> let's get to the futures pits. kevin ferry joins us from the cme. you really had fun. went off, you had santelli's job, had the numbers and said a lot of things. is what you were seeing that day, that trend continued? >> i think it will roll out slowly over time. it will take -- it's always going to be popping up like every few weeks or something. >> go back, tell us, summarize what you were talking about for people who weren't watching, if there was anyone not watching so they know what's going on? >> i think at the time, we were just talking about the fact that they are moving forward with both more legal subpoenas for banks involved and the libor

cartel and more importantly, the bba moving forward with reconstructing how they will do it. two things happening at once. both outcomes up in the air. so, you know, it's a good analo analogy, talk about oil, talk about the cartel where people like to cheat. people see the fixing of those prices every day, but the libor seems to get a lot more hype. people on the inside has known it's been going on for years. >> eventually we might have a different system. >> absolutely. reboot some type of new system and that's -- is having an effect on the old system. >> what do you -- what shall we ask ali rand today? >> when they are going to get their act together. >> he says they have the point he wants to make, that's one of them. >> right. right. so i guess that's where i was going to go with the market.

if you saw -- this is important. because the objective of the futures for thus summer, and they were higher than may. if you sold in may, you made a mistake. if you sold in may and went away, and then you've really missed the entire move in the middle of the year, i think that those are important, because it was europe, the consistent drum beat of why people are telling us to get out. get out of market. a huge mistake and i think now we've come and taken out the may highs here, we're moving our stocks way up. and the s & p, the point i was going to make, some volatility will come back in the market. >> all right. thanks, we'll see you later. >> all right, bye. >> a quick piece of relatively sad news. helen gurley brown passed away. she was long-time editor of cosmnd author of "sex

and the single girl" published in 1962. i wonder what she would think of the phrase texting. she made numerous appearances on "the tonight show with johnny carson." one of her famous phrases, good girls go to heaven, bad girls go everywhere. >> god bless her soul. i think of the covers of coss month ever happen to pass one and kind of just read what's inside that magazine, sometimes as a guy, and it's like -- it changed. >> revolutionized the entire industry. >> when you were young, would you read "penthouse" letters. >> oh, my god. are you talking about "penthouse on the air? >> when i was 14. did you know there were 32 different ways to do some of this stuff? >> i'm trying to learn. >> every month there was 32 different ways to do something else. and it was like oh, my god.

they are talking about this. i don't know it was directly helen that revolutionized that, but it's an uncomfortable -- that's not a men's magazine to rell pick up casually and start going through. >> but it's interesting. interesting reading. the producers are telling us we have to get no a commercial immediately. comments, questions, anything you see on a squawk" shoot us an e-mail. coming up, crunched by currencies, the companies most impacted by f x volatilitvolati. that and a lot more, after the break. u 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. to dream. to create. to work. if you're going to do something. make it matter.

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week back on "squawk." currency volatility has had an

impact on many companies. this is a conversation we've had before. wolfgang coaster of the software company fireof fire apps joins . he advises company on how to manage this risk. what are you telling them right now? >> understand your currency issues, number one. >> how many companies don't? >> do they understand it accurately and timely? a large percentage still don't. what is remarkable about this, most people think that, hmm, how many currency purses can they have? the typical multinational has 200 to 400 different currencies impacting them. it's a tough job to do. >> what are you telling them? to hedge their risks? >> first,an the exposure and when they do, then look at their operations, see what they can do

internally to rut the risk, and then go to manage that risk. >> what are you worried about most right now? >> the euro. >> the euro across the board. number one. >> number two is china, really, it will be unpegged, the largest growth areas, a slowdown in the economy, unpegging the bandwidth, so that's an unexpected impact on these corporate earnings. >> will the hong kong -- we had a well known -- >> bill ikeman, talk btd that as a trade. china slowed down or something, so it wasn't necessary. wouldn't for a lot of retail companies, that have a huge impact if that were finally unpegged from the -- will it happen? >> that's the question there obviously. it will be more unpegged. at the end of the day, china will be the one most unpegged against the u.s. dollar. right now, the play of is there

a natural way to offset your risk of china versus hong kong, but really all about china. >> when people ask that, what do you say? >> i say focus on china. look at understanding your exposure, be prepared. right now, people are saying it's pegged. >> some are saying it's not even undervalued anymore. still undervalued? >> tough to say. no matter what happens, as long as you get revenues out of china, everything is great. we'll keep making more money, even if it unpegs. that's not the fact anymore. you have to think about, what does that do to my top line? >> do you get less business? do you wish there were 19 different currencies? >> you miss the cope x. transfer may come back. wrr be ready. >> we'll see if they say september 12th out of germany. next september, german elections, merkel is the last

standing chancellor or head of a state that was under the euro that's still standing? and if she -- in my opinion, elects to stick with the euro, she will be leaving as well. >> merkel and obama, we'll see if both of them make it. >> it won't be good for him in the euro goes bust prior. >> thank you for coming in. an interesting conversation. >> coming up, the youngest person in history to create nuclear fusion. why one teenager decided to forgo college, and he now intend to cure cancer instead. opportunities more easily. tdd#: 1-800-345-2550 i can even access it from the cloud and trade on any computer. tdd#: 1-800-345-2550 and with schwab mobile, tdd#: 1-800-345-2550 i can focus on trading anyplace, anytime... tdd#: 1-800-345-2550 until i choose to focus on something else. tdd#: 1-800-345-2550 trade at charles schwab for $8.95 a trade. tdd#: 1-800-345-2550 open an account and trade up to tdd#: 1-800-345-2550 6 months commission-free online equity trading

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tonight, the conclusion of cnbc's "20 under 20," transforming tomorrow, the moment of truth. which of the finalist also win a $100,000 surprise in support of billionaire investor peter thiel, one of these exceptionally talented teenager was taylor wilson, became the youngest person in history to create nuclear fusion. >> it's not enough for me to figure out the questions of the universe. it's solving the problems that we face and i've become really good at it. >> my mom passed away of cancer, and that's when he really got interested in, you know, he said he was going to find a cure for cancer someday. >> this represents a system that, for less than $100,000,

something you can wheel in the hospital room replaces multimillion-dollar warehouse sized facilities and these produce the isotopes used to treat or diagnose cancer. if you're teaching graduate students why are you going to college? i'm a social person so college is something i haven't completely written off. >> i think college was always a big goal of his. he had some picked out and wanted to go but at some point in the last couple years tyler evolved above that. >> taylor wilson looks like a young steve jobs almost. >> or bill gates. >> nuclear physicist, and oh, now a thiel fellow as well, joins us live from reno, nevada. great to see you. >> hey, guys. >> i have some interest. i wondered how you'd go from nuclear fusion to cancer, but you're talking about using radio

isotopes in some way to cure cancer so you're not a molecular biologist, you're looking at a way of doing it almost in a conventional way with some type of radiation? >> yeah, well i mean that's one of my many projects but basically the idea is that nuclear radiation is an incredibly powerful thing, and it's very targeted, and so if you can take a very specialized form of this nuclear radiation and basically attach it to an ant b antibody, like the missile, i have the warhead and smashes cancer and selectively and doesn't kill the surrounding tissue. >> which antigen to use to make the antibody because you don't know what's going to knock out cancer and stay knocked out. >> yes, so there's a class of molecular biologists that have found these antibodies and i provide them with this radioisotope they tag to them and it kills the cancer cell.

the thing about my device, one of the devices i created it's extremely small, incredibly compact, costs less than $100,000, and it does what these multimillion-dollar facilities used to be required to do. >> when did you start reading, taylor? >> i don't know when i started reading. you'd have to ask my parents. >> probably 3 or 4 or something, wasn't it ? >> i don't know, i don't know. yeah, i've been into science like all my life so reading kind of led into that. >> that was just a tool -- how did you, what did you use to create fusion, and did all of your neighbors move far, far away? >> yeah, the neighbors i think were a little scared at first but i think i calmed their fears. so i did that, you know, i started working on that when i was probably about 11 or 12 years old. >> yeah, we all did, but how did you actually succeed with fusion? >> yeah, definitely so basically i take deuterium, a heavy

isotope and slam it very hard. >> how? how did you make a cyclotron. >> i basically have electrodes that have different potential on them, charged up to very high voltages and that accelerating drad yent accelerates the deuterium atoms at high speeds. >> not the way i would have done it but certainly a viable it's technically a controlled substance by the federal government, you can't export it but it's not that controlled like the plutonium or uranium i play around with. >> did you see pons or fleischmann passed away and i was brought back to what that would have done for us if it had been possible. it's not possible is it, cold fusion? >> no, cold fusion, and that's obviously been a debacle for many years now and the debate behind it is whether or not you could basically take something at room temperature and squeeze the deuterium in a metal labis.

the energy they saw in the experiments was purely electrochemical -- >> where are you right now? can you get over here? >> he's in nevada. >> i'm in nevada. >> shoot. come and -- how old are you again? are you 15 yet? >> no, i just turned 18. >> oh, 18, sorry, you were 14 when you did the fusion. >> we got to get to you new york, we got to get you on the set. he's going to be here for two hours minimum. >> what college could you -- are you interviewing colleges? i don't think a lot of them really, they need to get better boards to, they need to apply to you and they better have good letters about what they want to do. >> that was the joke of my friends, they should apply to me. no, it's funny, because i was, you know, teaching graduate students and the question came up, are you really going to go get an undergrad degree at college? >> we might need you to go into politics, after you cure cancer, cure our deficit woes.

>> i don't know about that, it's a mess. >> taylor, thank you and we hope to see you again. >> definitely guys. >> that was fantastic. >> unbelievable. don't miss the "20 under 20" finale tonight at 10:00 p.m. eastern. >> cool documentary and he was amazing. still to come, wilbur ross in the house for the next two hours, starting at 7:00 a.m. eastern time. [ male announcer ] when this hotel added aflac

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traveling the world for business opportunity. wilbur ross raises the stakes for investors, he's our guest host this morning. and mitt romney's vp pick paul ryan energizing the debate on america's fiscal future. >> what we need to do is to have the kind of policies that get

people from welfare back to work in the lives of social efficiency and dignity. >> reaction from donald trump as the race for the white house heats up. gauging the mood for america's small business owners, bill dunkelberg, chief economist of the national federation of independent business joins us. the second hour of "squawk" is right now. ♪ good morning and welcome to "squawk box" here on cnbc. you're listening to a little bit of metric. i don't know metric. >> really good. >> i'm andrew ross sorkin along with joe kernen who knows his music just about better than anybody else. becky is off this week and she'll be back shortly. foot you t futures looking up, dow about 28 points, s&p 500 a little over 4

points. the headline this is morning, we'll be getting key economic data later today, if we could, some readings this morning, including july retail sales which come out at 8:30 a.m. eastern with economists looking for an increase of 0.2% following a half percent rise in june. at the same time the july producer price index is seen rising 0.3%, coming after june's increase of 0.1%. investigators are unable to enter the area at a california chevron refinery, where that fire broke out last week. the fire shut down a significant portion of california's gasoline production and sent black smoke spewing into the air. officials are saying they may be able to go in later this week, we'll find out what that means, joe. paul ryan hitting the campaign trail running, he'll be attending a victory event at lakewood high school in lakewood, colorado. eamon javers is in lakewood and

joins us with more. i was watching your report yesterday, eamon. the one thing i was interested in was yesterday was the crowds and a lot of our shots of the vice presidential candidate you couldn't see him because there were so many people. now that's typical in the first week after someone's picked but is the energy as palpable as it looks? >> yeah, we're in lakewood, colorado, today, at lakewood high school. we were in des moines yesterday with paul ryan at the iowa state fair and as paul ryan came in, he came in through the gate at the iowa state fair, there was a crush of not only reporters but also attendees at the event who wanted to talk to him. that was a really powerful energetic moment and when you saw that crowd building waiting for paul ryan all through the morning hours, it just got to be thousands and thousands of people there at the iowa state fair but paul ryan opened up his

remarks on the national campaign stage, this was his first full day yesterday, campaigning by himself, and he opened up to a really tough moment here, where there were some hecklers who actually tried to storm the stage as he was speaking. take a look at this moment here. >> president obama has given us four years of trillion-dollar plus deficits. he is making matters worse, and he is spending our children into a diminished future. we don't have to stand for that. we're not going to stand for that and on november the 6th we're going to change that. >> reporter: so you can see, what happened after paul ryan, a couple folks tried to actually storm the stage, state troopers hauled them out of the way. you can kind of see it in some of the video and the crowd got rough. there were protesters in the crowd, there were altercations. i wasn't there to see it personally so i can't tell you exactly what happened but the accounts that i've read suggest that it did become a bit of a

tussle in the crowd there so it was a sort of welcome to the nfl moment for paul ryan on the national stage. he was able to stay on message there and stick to the talking points and that's what you have to do as a national politician is be able to stick on message, to ignore the hecklers, to acknowledge it with some humor, and move on, and paul ryan was able to do that yesterday. we'll see what happens today here in lakewood. he's going to begin his second full day of campaigning on his own for the romney ticket here in lakewood, colorado, later on this morning, guys. >> it's really stupid because it's going to be quid pro quo and so you have the occupy wall street types on one side and tea party sympathizers will go do that to biden and obama. where does it get you? you can't hear. it's a spectacle. we should be talking about the way to fix a lot of the things in this country, and it's just so stupid and it just is really irritating. that's why there's altercations, people want to hear what he has to say, they'd probably like to just smack those people, right?

>> reporter: yes. it was kind of an ugly moment but we're talking to some of the campaign officials on the campaign plane yesterday on the flight between des moines and here in colorado and they were sort of dismissive and they kind of brushed it off and said that happens, these are democratic activists. you kind of expect that, actually, at the iowa state fair. that soap box venue at the iowa state fair has a history of hecklers attacking some of the candidates, and so you go in there with your eyes open, and that was actually where mitt romney responding to a couple of hecklers a little while ago made his famous remark about corporations are people. he got pushed a little bit off message by some of the heckling that he was facing at that same soap box venue at the iowa state fair so this is the kind of thing that you expect when you go there and paul ryan handled it fairly deftly. state troopers had to haul a woman away, some accounts that

she was kicking and screaming as they hauled her away, an ugly moment. he was able to deal with it, process it, acknowledge it and move on. that's the skill you have to have on the national stage and this say congressman who has never run for nationalice before, so this is going to be a big stretch for paul ryan to step up to this level of scrutiny. you saw him in the middle of the media scrum yesterday. he's used to walking down the halls of congress by himself. >> he's cut his teeth with the withering questioning on "squawk box" again and again and again, guest host. >> knows how to deal with difficult questions. >> reporter: you guys know him better than anybody. >> we do. there's nothing he's seen that he's not ready for. i will tell you that we have opposing sides on all of these issues and i've watched him with some admiration just being able to stay totally, i've never seen him sort of taking anything personally or get ruffled by something. kind of rolls off his back, one

of the things they probably were thinking of when they picked him. >> that's one of the pieces of his reputation, this is a guy who is able to disagree but disagree in a friendly and polite way. he doesn't have a reputation for bending. he'll be friendly with you if he disagrees with you but won't bend. i chucked to senator chuck grassley of iowa yesterday he said one of his favorite things about paul ryan, a guy able to go toe to toe with the president of the united states in closed door meetings and call the president out when he disagreed with him so that's something that republicans really like about paul ryan. >> that's easily available on youtube that obama care six-minute rundown, which is something to behold. thank you, eamon, we appreciate it. restructuring legend wilbur ross is here and goes all over the place in search of opportunity, back from a fresh trip to greece, joins us for the next two hours. wilbur, it's been probably, has it been six months since i've seen you? >> a few months, maybe three or four.

>> three or four months, and it's great at this point in time just to hear where you are on things like housing and europe and everything else. in looking at some of the things you said in the preinterview, we were hoping maybe the continent was improving a little. in your view as far as greece goes we don't know how bad it actually is? >> i think the continent in general is improving quite a bit. the french gdp figures that were just released for the second quarter were not bad at all. germany was a little bit better than expected, and those are two very big engines. greece is obviously very small, less than 2% of europe, but my take of it, from a trip there, it's really worse than i had felt that it was. >> greece? >> greece. >> what'd you see? >> makeshift mosques being put up in the streets in athens by some of these illegal immigrants. there are apparently half a million albanian muslims who are

illegal immigrants there, and they naturally want to practice their faith, so they're kind of constructing mosques in the street. >> you were prowling around in athens or what? looking for a deal? >> i don't like to call it prowling. >> looking for a deal, did you pick anything up? >> no. >> because the falling knife hams not fhas not finished falling? >> hasn't started falling. they announced they were going to do privatization. they were going to take private 32 pieces of real estate, of which 28 they're going to lease back. that's not really the privatization. that gives you a little pop in the front, and now for years and years, you pay rent. >> is this all business? i mean were you going to which island? >> i went to a friend of mine has a little island. >> has an island? >> yes, yes. number of the shipowners have islands. >> there's a lot of islands. he doesn't own roads or anything, does he? >> no.

the other thing that i noticed is that some of the local politicians are starting to play the ethnic card on germany. there's obviously a lot of resentment in greece to what happened in world war ii and some of the local pop tigs pol are piling in it's not just the eu, it's the germans being mean. >> are they using the nazi word? has it gone that bad yesterday? >> i haven't heard the nazi word but my greek isn't that good, so i don't know. >> you don't know, so that's interesting. so it's actually getting personal between greece and germany at this point. >> at least some of the local politicians. i haven't heard it from the national politicians and the other part, there's almost a feeling of resignation both among the sort of people on the street and the wealthy people that eventually greece doesn't stay in the eu. >> is that your bet now, now that you've been there on the ground? >> i've been in favor of greece going out. frankly, both from the greek

point of view and from the eu point of view. from the eu point of view, i think there are enough firewalls that have been built up particularly now that mario draghi is now really acting like the lender of last resort but i don't think it would be that traumatic anymore. most of the indebtedness of greece is official debt, no longer private debt so you don't have the domino problem. >> we'll come back to us because you said positive things initially about france looking backwards. looking forwards i bet you're worried with 75% of the wealth tax in hollande and the moves he's making. >> even worse with the 75% on the high bracket people he did away with one of the good reforms that sarkozy put in, namely sarkozy to encourage people to work more than 35 hours, said your overtime would be tax free. he repealed that. well that's a middle class tax increase. it's the last thing france

needs. >> wilbur, we'll sneak in a quick break. coming up next the stage is set for a fight in stockton, california, accusing kalpers of getting preferential treatment. >> the donald is ready to play a big role at the republican national convention to try to get some clues to the big surprise. comments? questions? send them to @squawkcnbc on twitter. follow the show and look for updates from andrew, becky, joe and the "squawk" staff. "squawk box" on cnbc and on twitter.

i'm sorry. >> checking the futures right now, there it is, up about 26 points. we did lose some ground yesterday on a percentage basis, that would be a very small number for the dow jones, maybe we won't look at that. there's a battle brewing? >> there is a battle brewing, happening in stockton, california's bankruptcy filing, the city says it can't pay its bills. this is not funny but joe w giving me a hard time before. something happened on the set during a break, this is not a scripted show but when there are skrip scripts and i somehow manage to erase the entire script. >> the entire show.

>> the entire show gone. >> we have to ad lib. >> we have to ad lib which could be tough for us. talking about stockton, two of its bond insurers say that stockton hasn't cut its fiscal fat to meet obligations and dominic frederico is the ceo of guaranty and wilbur ross owns more than 30% of his stocks. what is the problem? >> people make promises and commit funding they don't understand, what are the ramifications out in the future and they run short and now it appears in isolated cases like stockton they want to look to the bond market to take the majority of loss. >> you don't want to take the hit? >> well not take the hit but understand the relationship we have with municipalities, people look at it as credit insurance. honestly our product is very different so first and foremost, unlike most insurance, the buyer of the insurance gets a benefit they want. in other words, we save them financing costs from the first

of the initial bond. you have a life policy, auto policy, unless you have a plan you're not going to get a benefit. number two you already are investment grade when we decide to ensure you so it's not really a credit issue. it's really about getting you access to the market and providing liquidity on those securities when they're in the market so they can trade, that allows you more access, more opportunity. we're really a door opener, we act as their partner and share the same on the financing cost to turn around based on fiscal mismanagement, oh, you've got to shoaler it the majority of the burden and in stockton's case trying to push most of the concessions to the bondholders doesn't make a whole lot of sense. >> why did you ensure them in the first place? >> to time their investment grade, they came to us with a promise to pay, they said could you help us provide this insurance, we get access to the market, it saved them when you think about the implied return costs are for money and the

pension plan about $100,000. we saved them another $1 million on the interest rate. >> tell me what this means, what this situation means to the cities and municipalities thinking about filing for bankruptcy and how it's going to work. >> well i think they're going to find out that it's not easy and it's not quick and it's not painless. chapter 11 is not -- >> you're thinking to jump into bankruptcy they are quicker than otherwise. >> i think they're thinking it's an easy solution to their problem. politicians like to put off problems to the next week, next month, next year. >> businesses do it all the time, right? >> businesses do it all the time and 90% of the time the guy who took the company in is not running it when it comes back out and i think the same thing is going to start happening with municipalities. i don't think voters are going to be very happy to have local elected officials admit they are

so incapable of running things that they had to seek court protection. >> if i'm a municipality and i come to you today, how do you think about -- do you think about this differently than you did five, ten years ago? >> absolutely. everything evolves in all businesses, let alone ours. >> right now given all the pressures, what are you looking for? >> well, for instance, typically you look for those issues that have some sort of a dedicated revenue source backing it up. >> right. >> so revenue bonds, special facilities, general obligations with an unlimited tax bracket party. obviously in stockton's case this is a general fund, so it's an unsecured obligation, so it does make it unique. one thing i'd like to do is, this is not happening in every location. we have and insured 11,000 unique municipal risks. we actually have potential, as we evaluate credit risk to pay a

claim on 11 of them. we're currently paying claims on three of them out of 1,000. by and large municipalities act responsibly and do what they do relatively to balance a budget. >> in most states, what is on the books in most states in terms of changing existing retirement plans. is every state different? are you guys going to ploy a cadre of employees that need to go state by state to see whether you can change state by state benefits? >> we do have a cadre of lawyers. >> i know, sounds like a great business. how many states have laws that unequivocally say you can only change on new employees? >> we go backwards so you have a number of states, ruffly about a third that prohibit municipalities from going bankrupt. another number of states, probably another third that restrict the individual municipali municipality's ability to go bankrupt without going through a state -- >> so we're already guaranteed,

that would be a law that you get around that before you -- >> pensions are state by state, so in california, there is a law that says they're guaranteed to pay the obligation of the pension, but it doesn't specify the amount, so you really have to break it down. california is unique. when you go for bankruptcy, you're now into the federal law, and there was a ruling by a judge klein last week that said the federal law will trump the state law and therefore make that clause open as any other contracts open in a federal bankruptcy. this will play it out but as wilbur said over a number of years. >> dominic, thank you for coming in. we want to have you back. coming up a check on the state of small business plus what will donald trump's role be at the republican convention? we will find out, hopefully, and ask him about romney's pick of paul ryan as a running mate.

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now the answer to today's aflac trivia question, which state is nicknamed "land of lincoln"? the answer, illinois. >> aflac. >> we're back, the price of oil slightly higher ahead of retail sales data which we'll get in a bit. gdp number out of france and germany was a bit better than expected earlier this morning, helped steady prices. however fear of a possible confrontation with iran still looms over the markets. americans are carrying more credit card debt than a year ago. credit reporting agency transunion says the average credit card debt per borrower in the u.s. is just under $5,000, about 6% more than a year earlier. the card balances coincide with the 4% increase in the number of new cards issues to consumers in the second quarter. despite the increase in the debt, apparently late payments

are staying at the same level. i can't tell if this is good or bad news. >> credit availability is good. you don't know whether may maybe is available now. >> hard to make heads or tails. >> if you have any comments or questions about anything you see here on "squawk box," e-mail us at squawk@cnbc.com, and also if you are a twit, you can follow us on twitter @squawkcnbc is our handle. i'm over 100 people but i'm not a big tweeter. >> you have a lot of followers. >> yeah but i don't, i don't know. i don't want to push myself on it. still to come this morning, donald trump's reaction to romney's selection of paul ryan as a running mate. up next, why small business is worried about the economy. nfib chief economist bill dunkelberg is here with fresh data and a mustache. we'll speak to him after the break.

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welcome back to "squawk

box." in the headline this is morning the german economy expanded by 0.3% during the second quarter while the french economy was flat. both reports were better than expect economists said but warned that the news in the future for quarters come up is likely to be more gloomy. one german company that's pa lirnt i doing fine is porsche, the carmaker says july sales were up 16% over a year ago and it's expecting solid growth this year despite economic uncertainty. and qualcomm could be seeing some benefits from microsoft's upcoming release of windows 8. the company is providing chips to dell and samsung for devices running windows rt. the version of windows 8, which was designed for smartphones and tablet computers. the national federation of independent businesses is out with its read on how small businesses are feeling about the economy. we've got a rare in studio appearance, bill dunkelberg, chief economist for the nfib is here with some new numbers.

i can't tell if i think these numbers are good or bad. why don't you tell them to us and we can talk about it. >> i think they're probably bad if you look at how well the index, which is a composite of ten questions, how well that index has done since the beginning of the expansion in june of '09, we've averaged 90 for the index. now we're at 91.2. >> it gave up 0.2%. >> yes. from june. >> you say that's less than expected given what you said was the scotus decision in the supreme court and president obama's campaign to raise taxes. >> we take a random sample every month and mail on the 1st and 10th of the month and get the duplicates out. by the end of the month all of our interviews are really in so those two events weren't embodied in the june numbers, down three points, a bad decline in the index so we thought if people really were unhappy with

scotus or the current campaign on raising tax rates that the index would fall further but didn't do too bad. >> have you polled your group to figure out what the breakdown is on party lines? >> no, we don't do that. >> i'd just be curious, no, just to see how it relates to these issues in terms of optimism. >> sure. >> the biggest single issue they're worried about right now? >> the biggest single issue continues to be taxes. 21% said that was their most important business challenge right now, 21% also said unreasonable regulations and red tape, 20% said weak sales. now that's still pretty high historically but down from the 33% claiming that as their problem in 2010 so it's improved but not very much. >> we did a story on credit cards. what's the story in terms of credit for small businesses. >> credit not a problem. >> not a problem. >> we asked him about their credit needs over the last few

months, we had 31% said all of my needs were satisfied, 7% campaigned a little, the lowest that's ever been is 4% back in 2000, and two-thirds basically said who needs a loan? what am i going to do with the money? things are terrible. more firms expect the economy to get worse than better, more expect sales to go down than go up. what am i going to do with the money that would allow me to repay a loan. nobody wants a loan. >> wilbur, do you have a question? you're making a face. >> i was curious to see how many of your small businesses are using mobile payment systems, square, the various innovations rather than credit cards. >> that i don't have good answer for. lot of them use standard business credit cards. they use them like most consumers do, pay the balances every month so it's not really a source of credit. it's just a convenience for them to use, and so i'm sure square and some of those are starting to show up now as new options but right now it's a pretty

small penetration as far as we can tell. >> do you hear anything about this conversation about taxing retail online? this is the big amazon story. this has been a big small business issue. >> sure, and we're going to have to resolve it one way or another. it certainly gives -- >> seems like we are getting closer. >> we are getting closer. i suspect we'll end up taxing everybody the same way which is probably what we ought to be doing. it's a shame to give somebody a tax advantage because they happen to be able to use the internet and be located in a low tax state but we've done things like that, that's why we did the credit cards many years ago, remember decades ago some states had high rate ceilings, other states didn't. >> north dakota. >> north dakota did well with that. so those things, market forces will even those out, we like to see markets in competition. >> we've been talking to wilbur all morning. is there any impact in the

slowdown in europe on their businesses in any way? >> not that we know. bunch of small businesses sell imports, so that's very important, not very many exports, they're too small, although a number of our manufacturers are in the supply chain of the big companies that are doing the exporting. our manufacturing owners are probably the most optimistic of the membership that we have, and of course probably the most pessimistic are the construction firms because nothing's happening there. >> the housing story is not there. bill, thank you for coming on this morning. >> my pleasure. >> appreciate it very much. i think it is me. might be you. i don't know. >> it says andrew. you didn't erase this one. >> the script is back. coming up, back in april he called the timing of the ryan plan "catastrophic," saying it would be the biggest reason why the republicans would lose the election if they lost. well, paul ryan is now mitt romney's running mate and we're going to see how the donald

feels about this now. when we return. would you mind if i go ahead of you? instead we had someone go ahead of him and win fifty thousand dollars. congratulations you are our one millionth customer. people don't like to miss out on money that should have been theirs. that's why at ally we have the raise your rate 2-year cd. you can get a one-time rate increase if our two-year rate goes up. if your bank makes you miss out, you need an ally. ally bank. no nonsense. just people sense. okay, here's the plan.

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forward, not his. >> he got zero. >> it is catastrophic what he does. if they lose it will be the single biggest reason why the republicans lost, the ryan plan. >> that was donald trump right here on "squawk box" back in april w his reaction of paul ryan's budget plan. the man he scolded is on the romney ticket and donald does support that move. he also has some special things planned for the gop convention. joining us on the "squawk" u.s. in line, donald trump, chairman and president of the trump organization. we had, donald, it's good to, i don't hear you yet but will be good to hear you. >> good morning, good morning. >> it's good to hear you. >> thank you for such a nice start, i appreciate that. >> ryan was on later that day and he is a very earnest, sincere man, and he said that we need to start telling americans the truth, but i got to admit, when you were talking about

that, i see what your point is and i commend him for his stance on a lot of issues but i also worry because i'm so cynical about politics that when you tell the truth a lot of times you don't get into office to do the good things that you're planning to do. >> right. >> the dissemblors and promisers that don't want to take any punch away from the punch bowl that don't want to take back any of these promises that we've made that we can't afford to keep, obviously. we know from our unfunded liabilities we can't afford to pay up on a lot of these things, and yet they all look you straight in the eye and say we're going to still do it. i see what you're saying, but have you changed your opinion on any of those things? >> joe, it was a bold pick and it really energized the republican party. i'm seeing people that are absolutely energized and it was a courageous pick in a certain way. he had to, you know, do something and something was done, whether or not it was a great pick or not, we're going

to find out in about 90 days. but it's going to be interesting. now, i did hear and speak with ryan on, you know, the purpose of all of this, and his opinion is he had to get the dialogue going because it is dialogue and you have to get it going and as wilbur knows better than anybody when you start a negotiation you start from a certain point. and he has gotten the dialogue going. people are going to be talking about it. now the republicans have a tough task, because they're going to have to convince people that what they're saying is for the good of all, and for the good of the country, and for the good of individuals, who will really take their individualism and vote for themselves over the country, and that's going to be the problem. so we'll see what happens. it's a very, very courageous pick, as to whether or not it's going to be a winning pick, we're going to find out, with you but the republicans are energized like i haven't seen them so it will be very interesting. >> people immediately said it's no longer a referendum on obama,

it's now a choice between two different futures. we should welcome that right there, because to just say all right, we just got to get rid of this guy and without any other plan, that's not a good way to approach an election. cynically, a lot of times that might be a more effective way of getting where you want to be, but if the ends don't justify the means no, one wants an election like that. you want a choice and you want two clear-cut choices about where this country wants to be taken. one thing i thought of, donald, was that after the financial crisis, and after what we've seen in europe, and after really the rise of the tea party and these guys that get put into office that don't care if they get reelected and the debt situation and guys like david walker, it is front and center now. are people ready to take their medicine, is my question. maybe this is the election where we finally realize we don't want

to go the way of greece and europe and we need to bite the bullet. is that possible? >> well the problem is, when you're talking about medicare and medicaid and social security, you've got to be very careful because people are going to go with themselves before they're going with the country and you see that in polls, where the most conservative, the most america-loving people are 78% in favor of leave my medicare alone and that's a very risky policy, there's no question about it. at the same time it's going to be a huge issue, something has to be done, and i think the republicans are going to have to handle it brilliantly, if they don't hand tell brilliantly and correctly, it's going to be tough. it was going to be a referendum on the lousy job that obama was doing. >> that would have worked. they're going to demagogue, the left is going to demagogue, they're doing it already. >> they're doing it strongly and

boldly. i don't blame them for doing it. >> it's dirty -- it doesn't affect anyone who is 55 or older. there is a lot of -- and something has to be done. what? go ahead. >> my real quick question for donald is this, is he the ultimate marketer and so the question is -- >> would you market this? >> how do you market it? how do you frame up this issue? peggy noonan was on this week, over the weekend and she said you need to somehow frame the issue as we're trying to save it, as opposed to take it away from you, but if you had a slogan, donald, or you were advising them, what would you be telling them? >> well the first thing i would have done and the reason you put up that clip and what i meant by that clip is i would have maybe done some of the things they did but i would have done it after the election, not before the election. i thought the timing was inappropriate and i'm not going to be changing my mind on that. now that it's done and now that mitt -- >> that suggests it's hard to market this. >> you're going to have to really market what that plan is and that plan is a positive

thing for the country, but it's a hard one to market. you're going to have to say that medicare, medicaid, social security, all of this is going to be much stronger at the end. it doesn't affect people over 55, and even if you're 23 years old, you have the right to stay on medicare if you're 23. now, these things are going to have to come out and unfortunately you talk about demagogue, they're demagoguing to a point where it's almost like medicare, everything is going to be taken away from you, you'll be destroyed and live in the streets, that's hard to counter but the republicans are going to have to counter it. the sad thing is i don't think this had to be such a big issue prior to the election, and we really had, i really feel we had a very strong thing going, but in the end, this could be better, because you are putting it up. you are putting up a very, very important list of ingredients. we'll see what happens. it's going to be not easy, but we'll see what happens. >> donald, isn't it the truth that the younger people are

never going to get all those benefits anyway because the system is busted. if you're 22 years old now, by the time you get to where you need those, they aren't going to be there. at least this way there will be a path there will be substantial things there and we'll be dealing in the real world, not in the world of unphiladelphiaable promises. >> that's right, they say that medicare is gone and bankrupt and out of business within seven or eight years. the fact is that people aren't going to believe that. they'll sit down and vote something or they'll put money in and i think that sell is just not going to be the conclusive sell. the real thing is you're going to have to talk about the over 55 and it's going to have to be sold, because i know people that don't know that at all. they just hear the horror stories and the democrats are really going all-out to say that if you end up with these two folks you're going to end up in the street and that's not the way it's going to be in fact it's probably going to be better and you'll have a stronger system. >> not end up in the street,

you'll end up in a wheelchair headed over a very big cliff is with the guy that looks like from central casting looks like paul ryan. can you tell us what you're doing at the convention? >> they've asked me to speak and also asked me to do something else and that something else is going to be really big, it's going to be amazing, and in fact, it will sort of, something's going to take place today and it's going to be really something special so i look forward to doing it. >> oh, what a tease, donald. >> i know. i would tell you guys my favorite people in the world. i will be telling you at the right point or at least you'll be seeing it. it's something i think going to be very exciting and very big. >> what time today, donald? >> i'm doing some shooting today, and i'm doing some other things today. >> shooting as in filming or shooting as in shooting? >> you'll see the end result in a couple of weeks and i think the end result is going to be amazing. >> shooting as in filming?

>> yes. >> are you sure you're going to be comfortable in front of a camera? there must be some reason you're never in front of a camera for your appearance on "squawk box." >> joe, you were on "apprentice" and always said from the beginning it was going to be a big hit and who would have known you were right so we're very happy. did you a great job on the show, by the way. >> thank you, the camera loves you as well. so i'm trying to figure out what this could be, and i'm excited about it. >> i really can't say, joe, but it's going to be something that will be sort of amazing, i think. it's going to be rather shocking and rather true, in fact, completely true, and i think it will have an impact. >> will this be a big expose? >> well it will be something that you're going to see -- wilbur, you're going to love it. i know wilbur for many years, he's a great guy and he will love it. >> how about chris christie giving the speech? >> it's a great choice. he's done a great job. i have a lot of property in new jersey. he's done a great job, taxes are

starting to come down in new jersey. chris is a fantastic guy, and i think that he will do an amazing job. he is so perfect to make that speech, and i hope he doesn't hold back, because there's nobody like chris, and i don't think he'll hold back. i hope they don't ask him to hold back. we want to get the real chris. he'll do a great job. >> the next three months are going to be, you want to live in interesting times. i'm think being the gop convention, thinking about the democratic convention, isn't it bank america? they're not going to call it that in charlotte? >> it's in charlotte, north carolina, and they're taking a lot of heat over picking a place called bank america. >> here we are back at the beep convention -- no. >> they made a mistake and i'm sure they won't get criticized for that. >> and there's a gay marriage thing that didn't go well in north carolina, too, i think, that they got to -- i don't know. >> i own property in north carolina, and i will tell you, it's an amazing state.

it's a great state and you know, they picked a very good place but the bank of america name probably isn't too appropriate. it will be interesting how much they build up the name of the arena. >> donald, thank you, we'll be looking for what time today, you didn't tell us. >> don't even think about it. >> we're not going to see it for a couple of weeks. >> you won't see it for a little while. don't even think about it, joseph. >> call me before you tell anyone else. >> i will talk to you next tuesday. so long. >> see you next tuesday. coming up, stocks you need to watch in the next hour, larry lindsey is our guest. plus disruptor zocdoc. "squawk box" will be back after a quick break. "squawk box" wants to hang out with you. we're hosting a google plus hangout with author ben mezrick and andrew ross sorkin. here's how you can take part. first go to cnbc's google plus page and add us to your circles. each day we'll be soliciting

your questions, ask ben about his books or andrew about the show. if we pick your shoquestion you get an invite to hang out august 15th with ben and andrew after "squawk box." submit your questions to twitter @squawkcnbc, #squawkhang out. it's your chance to talk live to "squawk" and one of the most interesting author of our time. come, hang out with us, stay connected with "squawk box" on google plus, and on twitter. [ mom ] thanks for picking us up, sweetie.

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♪ you know, if you weren't screwing around talking, you would have seen like the one walrus was listening to the guitar that started this great cover. this is johnny cash with "personal jesus." have you heard this? it's haunting. he's gone now. have you seen "walk the line"? >> i have. can we do "squawk" from an aquarium? >> we have done that already. >> i know. since i've been here. >> we've done that at the atlanta aquarium with ken lanagain to. >> you didn't know -- >> so we can do this live.

i remember when you were in atlanta and i also remembered when you worked at different stadiums. >> why were you watching? you should have been writing your column, reading your talking notes. >> stocks to watch, something. >> the concept of "squawk box" underwater is interesting as well. z>> earning 34 cents a share, michael kors, revenue raising fiscal year forecast. groupon eight cents well above estimates and the stock is indicated lower. >> 20% lower. >> even though it's down at seven and agrium, the "wall street journal" reports that jana partners taken a little less than 5% stake in this canadian fertilizer producer. coming up we've got a big interview, the man pulling the purse strings in europe, you want to know what's going to

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thinks europe is in much worse shape than the markets realize. >> it's almost a feeling of resignation both sort of people on the street and the wealthy people that eventually greece doesn't stay in the eu. >> we'll ask european commission vice president olli rehn if the eu can be saved and how far officials are willing to go to keep the eu from falling off the cliff. romney's choice of putting paul ryan on the presidential campaign. larry lindsey will tell us what impact ryan brings to the gop ticket. and breaking data on the inflation and consumer, producer prices and retail sales hit the tape at 8:30 a.m. eastern. the third hour of "squawk box" begins right now. ♪

>> i like this. welcome back to "squawk box" here on cnbc. this is an indy band from the '90s and a new band called yuck. >> your brain is like a human jukebox. >> thank you, thank you. welcome back to "squawk box." the network of cnbc and our business, well, we're first worldwide. i'm joe kernen in business news, along with andrew ross sorkin. becky is not here, and we tried to get, you know, someone similar and we ended up with wilbur ross, who it's the first thing you said when you sat down, it's tough to replace becky. >> it really is. >> but in the looks department let's just forget that right away but in other ways you can at least try. >> well that's true but i can't go on maternity leave. >> but she's not, she's on

vacation and with her baby. not a baby anymore. >> nope. >> he's cute. wilbur ross with us. u.s. equity futures are looking for a little bit of a comeback from yesterday, up about 33 points on the session. >> we'll be getting key economic readings this morning, among them july retail sales will be coming out at 8:30 a.m. eastern with the commerce looking for an increase of 0.2%, following a 0.5% decline in june. the producer price index is seeing a rise of 0.3% after previous 0.1%. home depot reporting earnings of $1.01 per share for the second quarter, four cents above estimates. sales slightly short of the $27 billion consensus. home depot raised its 2012 earnings guidance to $2.95 per share, that's three cents above

estimates. global comparable store sales up 2.1%, u.s. comps increased 2.6%. earlier we spoke to oppenheimer's brian nagel about the quarter. >> the market will look and say this is a solid report. lot of concerns out there lately amongst investors that given the weather and such that you were going to see a significant slowdown in sales. sales did slow down a bit from q1 to q2 but not dramatically so. that's going to comfort investors as they look at these results from home depot today. >> a global headline this a.m., the german economy expanded by 0.3% in the second quarter while the french economy was flat. both reports were better than expected, economists say, that's the good news but warn that the news in future quarters is likely to be more gloomy. in the next half hour we'll talk about this and a lot more with european commission vice chairman olli rehn about how to

restart growth in europe and we'll get ideas about where things really stand. we've been talking to wilbur all morning about his trip to greece. president obama and gop vice presidential candidate paul ryan are campaigning in the battleground state of iowa, and that was yesterday, and romney's vp choice bringing economic and fiscal issues to the forefront of the debate. joining us now is larry lindsey, president and ceo of the lindsey group and former national economic council director under president george w. bush. how are you doing, larry? >> i'm doing great, how are you this morning? >> i'm all right. we have a history together, and i remember things, i remember things that you say and i understand you. you are, you have a business now and you have democrats and republicans as clients, so you're very guarded sometimes, but you didn't like mitt romney for some reason. do you like him more, now that he picked -- and you're a republican. you like him more, now that he picked paul ryan, or less?

>> well, i'm going to use something in washington which is not answer the question you asked but answer the question i want to answer. >> as i said we've had a history. i need to ask you, just because i'm going to cut to the chase because i know you and i know how you think. so you're not going to answer it but take a shot at whatever you want to say. >> okay. first of all i think it's mostly a governing decision. the last time we had an executive design piece of legislation get through the congress, it was 2003, which was medicare part d, and we basically have an empty suit problem in the executive ever since. if you look at the stimulus bill, it was written by the house appropriations committee in the various appropriators, the obama care bill was written by four different senate committees and stapled together at 3:00 in the morning in harry

reid's office, things pencilled in the margin. the bank regulatory bill dodd-frank was entirely written in the congress, so we really have had the lack of executive leadership, and power has moved out of the white house. now, i think that's a bad thing and i think the results suggest that's a bad thing and what i think this selection of ryan mean we have a really substantive guy who could be sitting in the white house so i think policy design and substance moved back from the legislature to the executive, if romney and ryan win. >> and larry, this brings us back to the thing that we've been talking about that everybody's been talking about, and that is that you need to get elected to do the things that you're proposing to do. and to do some of these things,

i keep coming back and what i think republicans have to think about is the second bush presidency, when he said "i have some capital and i plan to spend it on social security, and you got absolutely nothing done in the second term. he had republicans in both houses, i think, and couldn't do anything with social security, and social security is nothing compared to what we need to do for medicare. >> right and second terms are never good so -- >> but people don't want to give up anything, larry. the aarp, you think older people are more conservative, they're going to run ads that basically back the president's position on medicare that we don't do anything, i guess they're cutting $700 billion for obama care but they want to run away from reforming it or taking away from people. >> joe, you mentioned our history and the first conversation we had on this, the

reason that i thought that romney was not the right choice to win, i called him a low beta candidate, very predictable and when the oppositions, a low candidate against an incumbent they have a respectable showing but tend to lose narrowly. i think what romney did on the election front was, if i can use the business term, raise the beta on the republican ticket, and he may have raised it enough to actually create the possibility that he is going to win. now, as you say, there are certainly risks to that. that's the nature of beta after all. >> yes. >> they could lose. but now i think they at least have a shot of winning. the one thing that i think the conventional wisdom may have wrong is that all of the talk about the fiscal and economic problems we have is going to hurt ryan, i think quite the opposite. if you think about the president's strategy, it was to

talk about everything but the fiscal and economic problems, right? we had gay marriage, we had citizenship for the children of illegal immigrants, and if you go right back, there was one, i would call it secondary issue after another thrown out there. he's in iowa today throwing money at buying pork, for example, right? that's the kind of thing incumbents do and that's why they have an advantage. >> so great, larry. >> every day that the media is talking about the fiscal problems and the economic problems, it helps the republicans, and so from romney's point of view, i hope they would keep talking about them. >> that is a true use of pork. i didn't think about it at that time. it's actually being used to buy the pork, the pork, right? >> the pork is being used to buy pork, yes. >> i mean that is, i didn't think about how that plays into it. so you know, in investment terms

so they raised the beta, seeking alpha, now we got to see whether they can deliver alpha. have i got that right? >> well, no, you know, i think honestly, i think the alpha is set in any election, and you know, the political science numbers say that it is and there's a disadvantage to the opposition party for running against an incumbent. >> right. >> so you have to grab beta in order to have a chance to win because you have alpha working against you. >> normally the incumbent has a big advantage in fund-raising, that's certainly dissipating this time. how do you equate that to your alpha and beta in our analog? >> well, two things have happened. remember, until i would say six months ago, the big assumption was obama would have a big advantage in fund-raising. his campaign was talking all year about the first billion-dollar campaign. well now both campaigns are

going to be probably close to $1 billion. i think it measures energy. i think republicans are certainly more motivated than democrats. the gallup poll finds a 12-point advantage of republican motivation, showing up in fund-raising and the fact that we've put public financing of elections behind, obama was the first guy to run for president and not take public financing, and so now that that glass ceiling has been broken, i think the money is just going to pour in, and that tends to work for the more motivated party. >> larry, real quick, in terms of paul ryan's budget which of course the democrats are saying is, as joe is giving me a hard time, the extreme on one side. >> they're extremists. >> no, but how far away can romney go from that, given the debate over what numbers are in there, and by the way, which is also to say the numbers in there

in terms of raising revenue are not raising revenue but in terms of how much money they get out of that compared to what obama is doing right now, larry. >> yeah, first of all, i was a bit surprised when governor romney put some distance between himself and the guy he just picked for vice president on the budget. i don't see any advantage in doing that. as far as the numbers go, i think that on the entitlement side, remember, we're running against 23% cut in benefits, if we do nothing, which is impolice i impolice italy what the president oproposed. i think ryan will point that out, protecting seniors completely now, and then gradually phasing in a reduction is a much more sensible way of going. on the tax side, basically

they've kicked the can on the details over to the ways and means committee, which is one problem with doing things in congress and you really can't score something until you do. i think they've got to be fairly drastic in broadening the base, if they're going to make the revenue targets that they have in mind and actually i think that's what republicans including ryan have in mind. >> larry lindsey, thanks for your time today. appreciate it. >> my pleasure. coming up, why america continues to lead the world in innovation, ro kanna, author of "entrepreneurtal nation" joins us next and government's read on inflation, producer price index and retail sales data hitting the tape at 8:30 a.m. eastern, we've got that and a lot more. still ahead on "squawk box," crafting the european recovery, olli rehn, vice president of the european commission, will be our

special guest. we'll ask him about the prospects of a greek exit and how far officials are willing to go to save the european union. keep watching "squawk box" on cnbc, first in business worldwide. 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. to dream. to create. to work. if you're going to do something. make it matter. [ engine revs, tires squeal ] [ male announcer ] more power. more style. more technology. less doors.

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welcome back to squ"squawk." joining us on the set is ro kanna, former deputy assistant secretary at the u.s. department of commerce, and he's got a new book out, author of "entrepreneurial nation: why manufacturing is still key to america's future." it is a good book. you're also a lawyer, i should say. >> i am, though i'm here -- >> we need to know that up front. >> also a big tech firm which is important because i was going to sort of take you back to the valley for a second and a quote from steve jobs before his death, there was a dinner that obama had, you probably read about this in walter isaacson's book and the president says to him, why can't we get all of the jobs shipped over to china to make the ipads to come home. he said "those jobs aren't

coming back. you s you say he's wrong. >> if we start with statistics we're neck and neck with china. we produce about 20% of the world's output and china produces 20%. i wouldn't say steve jobs is wrong. i'd say the question is what jobs have gone offshore and what jobs can we keep here and the argument that i make in the book is high-end manufacturing, things that are complex, we can still do here, and i profile 15 successful manufacturers that are doing that. >> if you are tim cook now running apple, is there a business case? is there a moral case? is there some other case that he should be bringing these jobs back now? >> i think you have to make the business case and the business case is, one, you can't separate design from production. you need the two to be integrated and that's why even a lot of prototype manufacturing for apple is in the united states. secondly, we have higher quality. we have more control over the

quality. third, we have access to the most skilled workforce, and fourth, you can put things in the market quicker, if you manufacture them here. >> go ahead, wilbur. >> the reality is that china is moving up the valuated chain. they've now got the world's biggest super computer, putting men out into space. i think all that you're really seeing is a difference in t trajecto trajectory. maybe we and they are doing the same share of world production but their trajectory on their part is up and ours is barely flat. >> you're absolutely right, the growth rate in china is higher than our rate and as a government on a bipartisan basis we need to have policies helping our manufacturers but the argument i make in the book we have one major advantage and that is our entrepreneurial culture, we're far more innovative as thinkers from the a is and blee line ssembly line o.

in china, people are cogs in a machine in a large assembly line and culture gives us a comparative advantage. >> 40% of the big venture capital backed tech startups have a foreign founder or co-founder, and current immigration policies discriminate against that, where educating engineers a s and scientists and deporting them and reimporting the products they make makes no sense. i didn't see in your book where you were pushing for a change in that. >> i couldn't agree with you more. my father was an immigrant to this country as an engineer, came to the university of michigan and a lot of silicon valley saw asians come and be founders and i think having high skilled immigrants come to this country to, who can create jobs is absolutely a good policy that people should come around. >> what should be the role of government as someone who has worked in washington, what do you think washington should be doing right now? >> we should get back to our founding principles.

paul ryan, i know you were talking about him in the show, he said let's reapply the founder a's principles. my question is what about alexander hamilton? you don't have to read the world is flat. read hamilton's report on manufacturing, 1791 and hamilton talks about standing up for fair trade, talks about the need for an educated workforce, talks about investment in infrastructure and talks about the right tax incentives and strategic incentives to help manufacturers. on this agenda we should be able to come together. >> if you're romney and you win on day one do you do as he says and call out china as a currency manipulator and go after them? >> first i hope the president still wins but my view is we have to call out china on a bipartisan basis. china is manipulating its currency, providing illegal export subsidies, encouraging intellectual property theft, like we did in the cold war, let's come together and call out china. it's not going to happen on a partisan basis. >> we have to run in a second.

if you were to give one, two, three, types of things where manufacturing comes back, they are what? >> medical equipment, we're strong when it comes to steel in this country, we're strong on any products that are customi d customized, appliances or fire suits, things that -- >> a chapter on vitamix, my favorite blender. do you own a vita? mix? >> i don't, do you? >> i don't but i want one. >> any time you have a fr frapucchino it's likely a vitamix. planes, wichita, kansas, if you go there almost every plane you fly on has a part made in wichita, kansas. >> and airbus started manufacturing in china. >> i'm not here with a

polyana-ish manner saying severing fine. let's separate the debate on health care. the question is what can we do to get the right tax incentives for manufacturers. >> one of the industries we can still manufacturer, medical devices? >> i don't think the obama care -- >> you called it that even though you're in the administration. >> i think the universal health care has, does not -- >> you're humoring me, ro. i no know that. >> you're aware that the big incentive for medical devices is ireland, not the united states, and it's partly -- >> going to get worse. >> -- because of the low tax rate and well educated workforce. this administration is granting waivers so high schools don't have to teach as much math and science. it's totally inconsistent with your manufacturing policy. >> ro was only in commerce.

>> i think the administration has emphasized stem education, vocational education, but my point is let's take the politics out of the manufacturing agenda. this is in the national interest just like it was to beat the soviet union, you need to compete with china after the election, let's get together and figure out what are the right tax incentives and what are the right steps. >> will you work with the administration to do that? >> i'll work with anyone. i think the president will win but whoever the administration is, let's work with them and come together on this agenda. >> ro, thank you. the book "entrepreneurial nation." >> thank you. coming up breaking news on the consumer and prices, we'll get retail sales and producer price numbers at 8:30, and plus he's on the front lines of the european commission, olli rehn, coming up. [ male announcer ] the markets keep moving.

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coming up our newsmaker of the morning, european commission vice president olli rehn is going to join us, and then breaking economic data, we're just minutes away from retail sales and producer price data, as we head to break, look at the u.s. equity futures. remember where they were. 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. then you can customize the strategies

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welcome back to "squawk box." we are just seconds away from retail sales numbers, and the producer price index. rick santelli is standing by at the cme in chicago and beth ann bovino, standard & poor's chief economist. rick santelli are you ready? we miss you, the numbers.

>> i'm ready, ready! july numbers for producer price index up 0. 3 on headline and up 0.4% when you strip out energy. definitely warmer than bernanke was looking for. if we look at year over year on headline up 0.05%. stripping out food and energy up 2.5%. let's look at retail sales for july up 0.8. this is a barn burner, that's a strong number. let's look at the internals, take out auto, still up 0.8%. take out autos and gasoline up 0.9. so it was a high side on the ppi for sure, also high side retail sales, i like retail sales number that's strong. it certainly goes against all the european data we've seen, whether it's blended or non-blended not looking good in europe at the moment, small business index i normally don't look at it but at 91.2, and this

was out earlier, that's the weakest of 2012, i think you go back to the fall of last year to find a lower number. what's the response of the marketplace? we just touched 1.70 in a ten-year, so we see rates responding and what really seems like a logical manner in a world that's filled withi illogic and the equity markets improved about 50% of their preopening gains in the futures markets, setting up for probably a pretty interesting equity opening. back to you. >> thanks, rick. just real quick, rick, i'm going to get to beth ann for more on the data but real quickly, rick, i haven't talked to you since romney picked paul ryan. my question is, let's say you got 46, 46, 47, 47, whatever, but that 6% to 8% in the middle, do they want to be told the truth about what needs to happen or would they rather not be told the truth about what needs to happen? is it a good move in your view

or was it something that could come back to haunt the republican? >> telling the truth always comes back to haunt you no matter what party you're in i guess. i think that should answer your question. i think we introduced something new into the campaign, math, and i'm hoping that it will displace some of the "we want to be europe" scenarios that are going on. i think it was a very interesting pick. i think it was the only pick that he could have. somebody needs to understand that when people tell you that the entitlement programs could go on as they are forever, they're not telling you the truth. >> but you get elected and then we can deal with it, kick the can four years later. >> hollande got elected in france. once again, i was really proud of the president, too. i have to tell you, i was very proud of the president, unlike in '08, i think he's being very straightforward, that his philosophy is exactly the

opposite of that radical from wisconsin. >> extremist. >> mr. ryan. >> extremist. >> and i think that's good. >> extremist. >> government is going to fix everything or we pull ourselves up by the boot straps and let individuals fix things. that's really what it's about and it's right out there for everybody to see, president said ryan's exactly the opposite of his philosophy. and i think he is. >> even hollande is not an extremist, because when you're on the left, you're not an extremist because you're still trying to help people but when you're on the right you're an extremist because you want grandma off the cliff. >> let's be fair here, too, this is be fair tuesday, isn't it? >> yes. >> we only had one party, the last, the republican president the last couple of years between t.a.r.p. and prescription drugs and then the current guy on deficits so all of these campaign commercials, scott cohn said the spending goes back to '09, listen, i don't care who

did it. all answer i know is it's got to stop. i don't care to put labels on it and ryan certainly seems to be thinking about what i think about most, and that is grandkids. that's it. >> beth ann -- can you get back to retail sales now and ppi or talk about anything you want to. >> i'll try. i was interested, i liked the "be fair tuesday." i'm wondering about hugging on fridays or something, but yeah, i like that little riff there. in terms of the ppi numbers, the producer price index came in line with what we were expecting 0.3%, largely because i thought food prices were going to be coming up because of the drought in the midwest, pushing those prices up higher, very surprised to see the prices strong. i thought the global slowdown would pull down demand and

prices, but the retail sales were really strong, the 0.8% bump up in the july numbers, this comes after three straight months of decline so certainly we were i guess we were a little tired of keeping our pocket books shut and we got out there and spent more but that was a real good nun. >> are we in a 2% world or 1.5% or 2.5% world in terms of gdp? is this a 2% world you're feeling? >> that driving number does suggest something closer, 2% or even a bit higher but remember we do have a lot of head winds facing our way. we have the fiscal cliff that is going to get a lot of headline news, going to push up worries about are we expecting to see the tax credits going away next year, expect to see the bush tax cuts expiring? all of the factors will keep people from saying we need to save more and spend less and that could push that gdp down later this year. >> beth ann thank you and rick santelli thanks. see you later. you know, he does that on the

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welcome back to "squawk box." countries are fighting for their own survival and the european union is trying to keep the currency bloc together, we've been talking all morning with wilbur ross who just came back from greece. now we go across the pond to see olli rehn, vice president of the european commission and commissioner for the economic and monetary affairs of the euro and has a plan to build what could be called the european monetary union 2.0. good morning, great to have you on the show this morning. >> good morning. >> i don't know if you can see this, you may not be able to but joe kernen, who is to my right, is wearing a tie this morning, i don't know if we can get it, which has a little man kicking a can down -- i don't know if he's just kicking lots of cans with little euros around, it's a great little tie and some people

would say it's emblematic of the problem in europe. you suggest that we may finally get a plan this fall that fixes all of this. is that going to solve it or is that just going to be another can kick? >> in fact, referring to your tie or your colleague's tie, i think it proves that europe has a great sense of irony that the tie reminds me of some works of the great belgian artist rene margrita. in fact we are working very hard in order to overcome the sovereign debt crisis and indeed the plan to rebuild the economic monetary union and that's to reform and reinforce the very foundations of the euro and the eurozone.

in the course of the coming fall, in fact in october and already prior to that, there will be a legislative proposal concerning a eurozone supervisor of banks and financial institutions in the eurozone. >> mr. rehn, help us analyze what mario draghi said two weeks ago. there's some people who said that his comments and whatever's going on behind the scenes is a very big deal. there are others who suggested that this, again, was just another kick of the can. how do you see it? >> to my mind, mario draghi was very clear and he clarified the context of decision-making in the european central bank. of course, the ecb and mario draghi speak for himself, themselves and for himself, but to my mind, it is clear that both the european union and i dare to say the ecb are ready to

take action once certain conditions are met, and if there is a request by some members to go into a primary market purchasers program. >> you just referred to the key part, which is that someone's got to ask, and my question politically is, whether you think that ask is really coming. >> that's something that the country is concerned, all the countries who reflect this have to decide themselves to, i can just say that the european commission under the euro group stands ready to take action if needed and for instance, concerning spain, we have already started the implementation of the banking sector program, and we will in

parallel of course be prepared for any further action if that is needed. >> why is it so essential to keep greece in the monetary union? >> the euro is irreversible and it is essential that we will maintain the unity of the euro. of course, it will depend on the greek people and the greek leaders now to meet the conditions and they have to start with further actions in line with the memorandum that has been agreed between greece and the european union and the imf. >> sure, but with the economy there shrinking and 6.2% in the recent report and now being in their fifth year of recession, is it realistic that they can, in fact, reduce the primary deficit?

>> greece has already been able to take quite substantial action in fiscal policy and structural reforms, and for instance, both labor costs and inflation have come down recently, quite substantially, so the rebalancing is going on in greece. i know it is very hard and often painful for greek citizens, but it is a necessary rebalancing, as greece wants to stay in the euro. >> mr. rehn, one of the comments we were talking about earlier today with wilbur ross, who was just in europe, was this idea of such animosity between the greeks and frankly the germans, and the political dynamic in germany, and i'm hoping you can speak to the issue of what is happening behind the scenes in germany to get them on board with whatever your 2.0 plan

ultimately looks like. >> of course, it is for germany to speak for itself, but i can say that i have full trust on german people and political leaders that they are fully committed to the euro. >> mr. rehn, why do you have that sense? >> in germany, there is a very strong european vocation as we say and that also implies a very strong commitment to the euro, which is the most significant political project of the european union, and we know that by experience now we know that in order to make the euro survive and succeed, you have to rebuild the foundations over the eurozone business making institutions, and this essentially implies rebuilding the euro to an economic monetary

union 2.0. >> right. >> and that requires also very difficult political discussions and decisions in all member states of the eurozone. >> when you think about the next dominos in this, and you think about spain and then i think you think about italy, politically, how difficult is it going to be for spain to actually make the ask, to say we need to be bailed out? >> i would not like to talk about dominos. i think football or soccer is a more popular and significant game in europe, and you may recall that both spain and italy played in the final of euro 2012. i would not want to speculate about any immediate action. i just say that in case there is a request, both the euro area summit of your area, member states and the european central bank have regularly indicated their willingness to use the

available instruments and from the side of the commission be ready to do our part with concerns especially the design and monitoring of political conditions in terms of fiscal policy and structural reforms. >> how concerned are you that mr. monti's term expires in just a few months, and he will very likely be succeeded by a normal political leader, maybe even berlusconi coming back. what are the implications of that for structural reform in italy? >> this is certainly a very relevant question, but at the same time, it is as well certainly in the realm of democratic politics, and we respect the democratic prerogatives of the italian people as well as of all other member states. prime minister monti has taken

very significant action in order to reinforce structural reforms, for instance the labor market reform is very substantial and will, in time, will in due course help to restore and improve the economic competitiveness of italy. it's very important that italy will continue with its stable fiscal path and at the same time take growth enhancing structural reforms in order to improve the competitiveness of the italian economy, which has been the achilles heel of the country. >> one final question, if we had you back and we were having this conversation let's say in october or november, what do you imagine is going to happen between now and then? >> i would expect that we will have concluded the first stage of the banking sector program of

spain, of restructuring and recapitalization of the spanish banking sector. we have on the table a very bold and substantial legislative proposal on a eurozone supervisory mechanism and a lively and substantive debate on how to rebuild the economic and monetarien yoo. >> mr. rehn we will continue that debate hopefully before that and see how things turn out. thank you for joining us this morning. >> thank you very much. >> you have to admire mr. rehn, when you hear you could ask him about how many different countries, what about italy, what about france and each time he has to say we respect the individual democratic process and yet you're trying to keep them all in some type of union, monetarily, monetarily. yet you see it illustrates the problem not having a fiscal

union all the time. i'd give up if i were him. >> that's the inherent contradiction. >> you see how they have to -- even when draghi was talking. >> if we could get ali on the set would you be willing to give him your time? >> i would be willing to give him my time. it's not their fault they have to kick the can. by definition they have to because of all the disparate things going on. i feel bad. >> at least they're initiating action. >> yes. >> coming up, stocks on the move ahead of the opening bell. we'll head down to the new york stock exchange, next. this is stacy from springfield. oh whoa. hello? yes. i didn't realize i'd be talking to an actual person. you don't need to press "0," i'm here. reach a person, not a prompt whenever you call chase sapphire. get two times the points on dining in restaurants

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welcome back to "squawk." down to the new york stock exchange to see the squawk t"sq the street" gang. home depot, groupon. take it from there. what are you looking at? >> i think that online retailing, so to speak, is not working. groupon has really become to me, discussing this with david earlier, passe from the get-go. home depot, just remarkable. they keep putting up fantastic

numbers. you've got to applaud management. they're making more with less. they don't have the most unbelievable revenue numbers. at the same time, i think revenues are getting overrated. >> we have the old penguins today, i think, on groupon. three or more downgrades we decided, maybe four. we had so much consolidation. i think we go with three now. we've got that. >> solet security. any firm you can find. you can throw in there. there has been so much consolidation. how about coors? it's that colorado spring water that makes it just taste so crisp and clear, right? >> after the merger, they're selling more handbags. footware. accessories. this number, we're getting comp numbers that frankly are just blowout. especially for older stores. china just getting awareness. it makes me feel like what really did happen with coach, joe? did coach just blow it? coors is a gorgeous number. the shorts are going to stramabstracramble

today. >> i had the early call on coach long ago, david. it's not prada. that's one of the things i know. coach i couldn't come home on a holiday with a coach bag. i'm not really sure why. didn't have the ca-- >> i was at the coach men's store this weekend. >> of course you were. >> new jersey shore outlets. it just wasn't my cup of tea. >> did you guys see the 14-year-old that did nuclear fusion? did you see him on earlier? 20 under 20 tonight. a 14-year-old kid that did nuclear fusion in his house with duteriom and an electrostatic continuum that allowed him to actually do fusion. he's on that show tonight. i'm teasing that show. >> i boiled water last night. >> did he have a flux capacitor? >> i asked him about ponds and fleischmann. he did not have a flux capacitor. he's going to be on that show tonight. 20 under 20. unbelievable. he's smarter than you, cramer. >> no kidding.

look, i know how to shop. >> all right. >> we're going to see you in a few minutes. looking forward to "squawk on the street." when we come back, parting shots from our guest host, wilbur ross. tomorrow our guest host is going to be ben mezrich. also a google hangout with him after the show. sometimes investing opportunities are hard to spot. you have to dig a little. fidelity's etf market tracker shows you the big picture on how different asset classes are performing,

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stom of the day, dow component, home depot. raised its full year forecast. stay tuned to watch cramer talk about this on "squawk on the street." frank blake. thank you, wilbur, for being here today. we appreciate it. we'll see what happens. you'll be back before the election or not? >> i hope so. >> i hope so, too. we'll talk more about what happened here. we didn't get to talk housing very much. although it's not great but it's bouncing off the bottom. >> starting to level out. that's a good sign. >> anything you're buying at all? >> more