>> interesting. >> we have something very exciting going on, you can join us on our first google hang out. make sure you join us tomorrow, go to google plus to do it, "squawk on the street" begins right now. ♪ good wednesday morning, welcome to "squawk on the street," i'm melissa lee, we're live from the new york stock exchange. want to see how we're setting up for the morning. take a look at u.s. futures here, a couple pieces of data driving. empire state manufacturing index, that contracted for july, so we're seeing a biens downward here in futures. for the picture over in europe, we have red arrows across the board but just fractional losses at this point. >> so for the second day in a row, we lead with good news in retail, target raising it's

outlook for the year. stocks near a five-year high. >> then there is staples with an earnings miss, negative comps, and a steep decline in computer sales, stocks down by about 10%. >> deere cutting it's outlook but with decent results in the u.s. what's the impact of the drought on farmer's willingness to buy equipment. >> and where are so many positions completely -- it may hint that some of the selling is driven by redemption pressure. >> target, profits up $1.12 a share. it says it's boosting it's guidance by a nickel. jim, the retail story continues, and if you think it's about a weak consumer, these winners keep coming along that make you think it's about execution. >> target had a difficult period, they were getting food

in the stores, they have two things going for them. the stores look great. secondly, let's not forget, jc penney, a lot of people got excited, there's a lot of opinions of dollars up for grab. when you have 20% comp store down, target is going to pick those up. i remain convinced that jc penney will not break out of the tail spin any time soon and i remain convinced that target is a value place for people who want to step up to the plate and spend more. >> it's amazing to look at target's run up 26% in the last year and the evaluation is low. and it's lower than walmart. is there rotation going on as people are seeing walmart at a richer valuation, closer to historical highs. that was a point being made by bernstein that perhaps the best days for walmart are over and it

is truly a defensive play. are we continuing to see gains -- >> walmart had an unbelievable run. it had a small cap run, a multiple year catch up. they do look very good and they have done a lot of things right. we have seen a resurgence, nordstroms with a good quarter, and we see have notes. gap did well, tjx did well. i think when you look at these, and the conclusion i have, is there is a tremendous resurgence in the consumer. anyone that doubts this most go over to the home depot kal. they have double digit gains in a lot of category that's have to do with you spending more on your house, target, macy's, these can't be wrong. >> but if you're a fund manager

and you want to rotate if that occurs and you think walmart is getting rich, and you wanted to stay exposed, would you even do that or do you just stay with walmart because it has so much momentum. do you move to target? >> i think walmart the run really just started, i think target is cheap. we'll go back to what i used to look at this group as having which was tremendous multiple growth and expansion. we have been in a period where campbell's has a high mobile. maybe it's time to return to the executers. i don't know anyone in the industry that has not been amazed at terry lundgren. i had steven on last night for saks, i went over guidance with him, spent a lot of time on it, sacks is doing well and in jewelry by the way.

we thought that category was over because of tiffany. they're not executing. >> fashion cycle has been pretty good this year. 100 days from today, black friday, believe it or not. i know, we're going to start talking about that a lot more. >> i think that what has happened is there is a res resurgen resurgence. women's clothes. >> are women less conservative? >> you have to be colorful and exciting. >> david knows -- >> maybe that's why. >> maybe it's fifty shades of that story. >> you had to go there? five minutes in. >> he is 25. >> so exciting in so many ways. >> he is 53 years old. he is doing that p 90 x. like paul ryan. that's unbelievable.

>> what's his perform like? what's his performance like? >> we also have fund managing, you're right. >> he's married, but he is spending a lot of time staying in shape. staying fit, like you. >> i work very hard at being fit, but at the same time i tend to be far more conservative. >> i can't believe he found a way to hold that. >> conservative -- >> i talk abercrombie and fitch. now we have empirical evidence. >> she's not buying office goods. >> i know, i know. >> high end leather? >> could be. coach is not doing good. >> but i like the boot line, that could be in play right here. >> we have a lot of stuff to get through -- >> all right, you want to move

on to staples? >> yeah, sorry, but it we have business news to talk about. pre market, office supply retailer says it earned 18 cents a share in the last quarter. they attributing it to baek demand. the company cutting it's profit in sales forecast. the troubling thing is there had been improving trends and now they say they're weakening and european trends weakening as well. they were planning on cutting a bunch of jobs, but still, the picture is getting worse is what we're hearing. >> a double digit decline. i'm tired of belly aching this industry. if you want to see this industry in action, watch dunder fifflin. they're always willing to blaming it on something. go to costco. you will see office flies and

they sell them cheaply. i think these people have been costcoed. >> or amazoned? >> or amazoned. this big box idea is not working. okay, i'm not saying it's best buy or radio shack. i'm not going to go with that circuit city rap that i know you talk about it. >> you talk about it and then you guess. >> i will say that these places have become nondestination places and the belly aching -- take a walk. office depot, office max, best buy, sisht city. don't they sound align. >> just to play the other side of this, could this be an infraction point? finally the ceo said we're going to look at drastic changes to improve results. all it would take is for a player to leave this industry

and then you would have the impact that best buy had when circuit city went out of business. >> that lasted five minutes. >> yes, but it made for a nice turn around in the stock. >> i think it's always a fire drill here, they're always -- this time we mean business. this time we're getting -- >> wait until windows eight. >> absolutely. this is like a sports franchise. this time we're going into the free agency. this time we're spending, and then you start the season and it's the same team. >> but, on u.s. comps down 2%. office depot down four last quarter. one of the few that office max outpaced staples in north america because i guess they have a decent mexico business. >> they need jc penney to go into the office supply business. note to ron johnson. you to start losing money in the

office supply business to augment the other things you're not doing. >> just to clarify, you have lumped best buy, radio shack, and sisht city, you lumped them and made a comparison to staples, you're not saying they're another radio shack. >> no, but when you're trying to allocate capital, we talk about target, walmart, costco, limiting, a tjx, ross stores, these are winners. why would you be in these? are you catching the falling knife? you know what cutco is? the unbelievably good door to door selling of knives? look into it, it last forever, kids sell it, it is for real. it's -- you never had a kid knock on your door and say -- >> nobody knocks on doors any

more. >> i have seen the sharpening trucks come down. you bring your knives out on to the street. >> yeah. >> a little neighborhood knife fight, and you get them sharpened. >> are you sharp -- >> i don't know where i fit in the jet sharks. >> you're a jet all the way then. >> deere did miss earningings as well today as we said the the top. they posted profited of $1.98. sales fell short of expectations. companies lowering the four year outlook. as we were saying, it smells like a hedge gone bad and inordinate impact. >> we heard currency impact. we have not heard double digit percent currency impact. >> i'm tired of deere screwing up too, i know i'm doing a

little complaining. deere failed to execute. when you read their presentation. it's different from holding up the new york post. this is the third quarter presentation. it reads like the olympics. who hurt them? kaz -- they found places to crew up that we didn't know existed. >> are you stallin? >> did you know he coined the term american exceptionalism. as for the ukraine being the bred basket. that is true to an extend.

>> you said greatest -- >> it's the bred toss, right? >> i just think the conference call, by the way is always hard. when you listen to them and they just hate themselves. there is a self hatred there. they need medication. >> your real concern is margins are beinged and it's for costs that are not exacted for. >> costs are always going up. this company should be blowing the doors off. it's going to bring caterpillar down, it just has a -- caterpillar is doing so much better than deere. >> the other thing they say, and today is a full day coverage on the drought, is that it could positively influence the outlook as it spotlights a need for the highly productive agricultural

equipment. there are so many analyst on the street, jpmorgan, that downgraded deere in a say the crops are so badly damaged that farmers are going to be more conservative and hold back for the next year. this flies in the face of that. we don't know what's going to happen. >> they're buying seeds. that's why the monsanto -- people say fertilizer is good, but this monsanto is the way -- >> these super seeds that cost more by the way, so farmers with more money in their pocket will they get a combine or whatever they use on the farm or super seed that's will protect the next crop against the drought? >> one of the things i heard -- my old deere tractor just keeps going. >> of course but understand. >> monsanto, deere.

i don't mean to slide deere, but i think you're right. the farmers want to combat drought, and that is the high end seeds. and dupont. >> we'll talk about it all day long today. let's get breaking news from santelli in chicago. >> july industrial production rose more than i was expecting up .6. at 79 .3. that is lofty. 78.3 was lofty and you will have to go back to '08 to find a higher utilization rate, and one other point we want to make about 15 minutes ago we had treasury ternational capital flows. it was positive and it's always two months in the rears, it was on the light side, especially when you look at net that does not include bills, it was a shade under 10 billion, very

light. >> thanks, rick. when we come back, no ipo blews for annie's shares have more than doubled since march. how is the drought going to affect the company? we have empire, the first sub zero print on pem pyre since october, and cpi relatively benign as well. [ male announcer ] how do you trade? with scottrader streaming quotes,

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some of the storying we're talking about, inflation data coming in lower than expected. the core rate up only 1%. mortgage apps fell last week mainly due due to a decline in activity, and plans for a mobile payment network. it will involve walmart, target, seven-11 and others. >> the man behind "the black swan" wrote "why it is not a good idea to be in the

investment industry." so succeeding in today's industry is less about hard work and more about luck. that brings us to this morning's squawk, what should all of the people that thought they go into finance do, and why? if you had to do it all over again, jim, what would you do? >> not goldman, in particular, but i would say that i think finance remains a way for people without a lot of money to make a lot of money. i understand that it's not satisfying. i don't know if people like it as much, but when you're a kid that didn't have a lot of money like me, it's just a way to go. and i think people seem to forget and the criticisms that not everybody has money. >> some people graduate with a ton of student debt. my decision was driven by the

fact that i had to make a payment on debt. >> i had mastercards from all kinds of banks. and then you go to goldman sachs and pay them down. is that so bad? >> buying khakis every day. >> i never wanted today be poor again, ilied in the back of my car, i had a pistol, a bottle of jack daniels, and i didn't want to go back to that. >> you a harvard degree too. >> tell that to the sheriff when they pick you up for a robbery that's not you, and you say you went to harvard and you're living in your card. are you like roosevelt or something? when you're down and out in the

this country there's no safety net. >> okay, coming up next, a stock worthy of your attention, we have it for you in cramer's mad dash. negative futures here at the home. more "squawk on the street" straight ahead. 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 and narrow down to exactly those stocks you want to follow. i'm mark allen of fidelity investments. the expert strategies feature is one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account. [ male announcer ] when a major hospital

wanted to provide better employee benefits while balancing the company's bottom line, their very first word was... [ to the tune of "lullaby and good night" ] ♪ af-lac ♪ aflac [ male announcer ] find out more at... [ duck ] aflac! [ male announcer ] ...forbusiness.com. [ yawning sound ] ♪ five and a half minutes until the bell on this wednesday, let's get gym's made dar. the war between apple and google

continues, but google stock is on a tear, four and a half year high. >> it has been great. a stealth rally. you know what's funly about google and apple, they are so much less expensive than other stocks we talk about like coca-cola, google is cheaper, apple is cheaper than pepsico, but no one is talking about it, it's got social and cloud, the holy trinity in business. >> and we're watching them add the bricks to that house almost daily. >> you take it -- they have zagat -- you go to professionals, see what they say, and then the amateurs, and then you book your restaurant. i've been doing it but i needed the professionals.

now i get it. this company is brilliant, and they almost bought groupon, but it turned out to be too early. we have the lock up expiration. >> 271 million shares as of this week. >> there's a lot of people saying this will be too heavily shorted. >> before you go on, that's a look at the floor here, the women's gold winning u.s. rowing team will be winning the bell. we'll talk to them in about 15 minutes. >> i love that story, just fabulous, this will be very exciting. can't wait to talk to them. s&p upgraded to a buy saying they don't think the lock up expectation will be a big deal. >> it is missionary work. they have to explain to

everitizer how they can increase the return on investment. >> we'll talk more names and the opening bell and get those women rowers when "squawk on the street" comes back.

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there you have it the opening pell. take a look at that podium. wow do those gold medals bling. over at the nasdaq, the general of india celebrating his country's independence day. an importance day in india today. a look at the big movers that we have in today's session. let's take a look at target, higher right now. this is a fresh high on target, it's at least a 52-week high. it's up by 1.5% for the session. >> we mentioned apple in the break. ups just now, the winners, i don't want to be too glib, but the winners in this period are extraordina extraordinary, they don't seem to be constrained by ranges. i used to look at the charts,

target blowing through ranges, google blowing through ranges. >> we're going to continue to talk about business news, but they were holding their medals up to the crowd, we'll get a closer look in a minute, but incredible story, undefeated since 2006. first rowing team in history to get back to back golds. so we're going to talk to them about where they find some of their motivation, have you ever tried rowing? >> no. >> that's as close as i have been. >> everyone up in boston, you can go see the unbelievable teams on a beautiful day in october. >> jim, you said at the top of the show, target, home depot, macy's can't all be wrong. and then you look at abercrombie.

>> i was debating that just now. i would tell you there are too many guys doing too much overall sales. when i hear home depot talking about something over and over again, that we're a individualing part of the gdp pie, he switched that and said he thinks we are a growing piece. i know about nordstroms. people are having more kids. i think people are going on in this country in retail that says you're too negative, people. >> at the same time all of these example rg companies managing to take share. wouldn't that lift all votes more so than lift up -- if jc penney -- they're taking shares from jc penney, oklahoma depot

is taking shares from lowes. >> but they say things are better. joness saying things are better, vf saying things are better. i think the suppliers are telling you the tale, saying listen, we're trying to keep up with the demand. oklahoma depots inventories were very low. this was the first time they're saying we're having more people buying $900 items. i'm thinking that stock has been at the same price however and that is changing. >> household formation -- >> i think it's going back to the older level, i think warren buffett is going to be right. >> a lot of companies feeling

the pain from deere. >> they always yell at me when i call them cat tractor. they should not be going down, the overlap is smaller, it's a great opportunity, caterpillar. >> and today, a big note saying retail sales numbers have been good, probably not going to happen in september. i still think it will happen in the first quarter of next year. does that matter to a market? >> firms keep talking about this stuff, we keep talking about this stuff, and the companies are not talking about it. if you get a company like saks -- >> you don't think so? >> everyone is trying to pin it

on bernanke, pin it on corporate profits, they have been unbelievable. the money that these companies are making and returning sho sha -- to shareholders has been incredible. >> i don't think we want to overstate. current america is very strong for a variety of reasons. again rated a lot of cash, incredibly low balancing costs, whether you're an a credit, a b, or down the road. it's not as if growth is off the charts. >> but cash is? balance sheets are? david, you were talking that yesterday, rates are so low they can buy back stock against the dividend. this is stuff that we're not trading economies here or jobless claiming or the new york empire number or the philly fed index. we're trading stocks.

we're investing in companies, and google is not constrained by the four walls of the financial canvas. he said like this. >> yeah. >> bob pisani is on the floor, finally done flirting with the u.s. rowing team. >> come on, they're just lovely and they're big unlike the gymnastic girls yesterday, gabby is five feet tall, and these girls are six feet tall. enough about that, i looked at the economic numbers this morning, i was surprised cp sierks i is so tame. i think we should see inflation and housing and we're not. i guess people are buying foreclosed units for rentals an i guess that's good news on a

certain level. did you see china and hong kong down another 1% overnight. no talk of stimulus. if you don't think k talk of stimulus vote move the markets, you're not paying attention. did you see what happened in india? they're up overnight? why? great economic news? no, they had cpi number that's came in very tame, that is their cover to engage in stimulus. so the market moved up on hopes of stimtlaus india moved down, talk moves the markets like that. finally i want to talk about two examples of weakness europe. deere and abercrombie. sales growth was 14%? wait a minute, that was half of the numbers that most people talked to. and the weakness in europe was

sited. they maintain their full year's sales outlook. and they lowered it for europe and asia. this is a big international company. melissa had a great comment. sam allen talking about the drought, it could help our outlook? he went even further than that. he said higher commodity prices are result in robust field activity. i think a lot of people will challenge him on that. abercrombie had trouble in europe as well. >> we know that abercrombie is good. everybody gets angry when stocks go up. time to go to rick santelli in chicago. >> the euro card as you see

slipping a bitting with something to pay attention as the deafening silence out of europe will run it's course, but the currency seems to be coming off of better levels and maybe we'll test the lower end. now, if you look at interest rates, look at them quickly, we're comping further back in time. a five year chart, the highest yield going back to the 29th of may. if you look at tens and 30s, they moved back to the 24th as we spend time above 1.75 in a ten year. it's not unique to this side of the pond if you hop across the pond you could see that in europe, the boom, that really has not kept up, but it still moving higher, and it's coming back to early july, and even

though we had mixed and better data, there was a huge revision we didn't point out until last month all the way back down to .1. >> let's check in with bertha coombs. >> hey, wti weaker this morning. the expectation about an hour when we get the eia number is for a draw down between 1 to 2 billion. there was a 2 million barrel draw. we're watching gold flat today as well. both increased their bets on the gld, sorros dutching some of the high nors even as others liquidated their positions in that etf completely. >> thanks very much.

we have been talking about this, and these filings are don't, don't read too much into them, but they're six weeks old and we know hedge funds can move very quickly. it gives an interesting read of the thought process of some of the managers we like to follow. interesting how many of those managers seem to own the same stocks, and is that begs the question how will they differentiate their performance. another name that has come to the floor over the last day in terms of reporting is is paulson and company. it's down to 21 billion after two years of poor performance. and that continues this year, and mr. paulson moved more aggress e greszively into gold and the gold related issues.

you're pieing paulson, not buying, if you're an investor were very into gold. >> yes, he increased by about 4 million shares. he increased in novagold, which has been a treadful, dreadful position. if you take a look at the performance of the gold fund specifically, you would have been way better off putting money into the gld. the gld is up 2%. >> the life cycle of hedge funds is an interesting thing to watch. as i watched him get it so right, and then in the following years, 21 billion is mostly his money. he lost a lot in the market and

he probably lost more overall than he has made. we saw the same thing overtime whether it be a julian robinson and all of those funds, but when he got his biggest, he lost the most. there is only one investor from the people i have spoken to that ran the numbers that stays stronger, it is simons and srgs oros. >> and paulson dissolved his position completely in about a dozen stocks, which seemed unusual. >> i don't know about redemptions at this point or how many are left. we should also point out that mr. soros is not picking the stocks any more. 16 billion is managed outside. we're talking about dozens of managers making decisions. it's not like george is picking

stocks. >> performance all over the place. he has more employees at the foundation than the hedge fund. >> let's talk to carl. >> fresh to the oling bell, and just back from the olympics, honored to have the four u.s. rowing gold medalist with us, congratulations, guys, welcome to the big board. good to have you. we were saying you're sort of in a whirlwind wondering where you are in time and space. and since you have defended gold, how does this compare to number one? to the first one? >> it's -- i mean, it keeps building and billing and building. we're just proud to represent women in supports and we're proud that it's a team sport and we handled the stress.

on race day we nailed it and it felt great to share it with everybody. >> the women pulled it out across the board in all sports. >> yeah, go women, right? my question is, when it burns, right? when you're burning and you have 500 meters left, what do you tell yourself in your head? >> you just close your eyes and go. that's actually when we do our best is when it starts hurting and the pressure is on. you just don't think about it and you just go on auto pilot, and that's how we pulled out so many winds. >> and your strategy has been to just go bpedal to the metal, sfligt. >> -- right? >> yes, and it helps to think about the other women in your

boat and hold up they're hurting and how far you've come. >> you've been undefeated since 2006, where do you keep the motivation to keep winning over and over. >> we're ar very competitive, so whether we keep rowing, or i have a degree in economics, so it's a dream to be here, we'll keep pushing. >> last bit of advice for anyone who rows,. >> put your blade in the water. >> blade in, that's what they heard. >> thank you. thank you. >> use your legs and use your core. put your blade in. all good advice. . the author of "the black swan"

saying you should not go into a career in finance. and sheer a look at today's early movers. mamama

walk on the tweet on this wednesday. taking aim at wall street and warning future talents to stay out of the industry. what should all of those people, who thought they would go into finance, do for a living, and why? >> one writes panning for gold? finance from the enforcing side. and olympics, the alternative to racking up debt and not worrying about paying it back. not bad. could probably use people that

wanted to go to gold man instead and want to make the world a better place. >> you want to work for the southern district of new york, and this it became something -- the top ten students want to work for pesomeone else. >> the most frightening thing is to go against the discuss district attorney because they have unlimited power and you don't. >> a 55 point range, the second narrowest range this year. we have only gone 150 points interday since monday of last week. >> carl, you tweeted that you're tired of daying -- what's your game plan? >> your tweets have been so extraordinary about capturing this moment, you have to follow carl. >> a lot more "squawk on the street" in a moment.

coming up, we love numbers, and so does cramer.

♪ simon is here to bring us up to speed at what's coming up at 10:00. >> yes, where next can you make money? you could have doubled your money in gap this year. ann any's is trading at nose bleed levels and we be talk about the brought in 2012. is it bad weather or climate change? let's get 199660, starbucks leads the way. >> people are trying to get back on the growth horse. they have european problems, i

would not make the big move yet. have we mentioned this before? agnico? >> this yeezed to be the best one. they're calling for down numbers in 2014, very scary. >> five be low? >> this will be a new retail growth name. >> chipotle, this is opposite. someone saying machine, it's too early. rbc lowering numbers on del? >> what can i say? >> and fed ex? >> i need this because transports have to confirm. bob pisani doing great. >> this is the natural gas revolution, these are the guys that can benefit, they take the engines.

the drought, the worldwide drought. >> which we're talking about all day long. >> all day. >> thanks, jim. when we come back, feelingings on home builder sentiment. look at that charge. stocks for your portfolio? 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 and narrow down to exactly those stocks you want to follow. i'm mark allen of fidelity investments. the expert strategies feature is one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account. and i'm here to tell homeowners that are 62 and older about a great way to live a better retirement. it's called a reverse mortgage. [ male announcer ] call right now to receive your free dvd and booklet with no obligation. it answers questions like how a reverse mortgage works,

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. welcome back to "squawk on the street." we have breaking news from the national home builders association. the index for august rose two points that beat estimates of a small drop preponderate the national association sentiment now stands at 3750 and is the line between negative and positive. of the index components, buyer traffic rose three points. sales expectations rose one point, but a at their highest levels in five years. confidence rose the most in the midwest. it was down nine points in the mideast. and weekly mortgage applicationings fell.

thank you, let's get the road map for the next tower. target beating expectations and abercrombie beating expectations. we'll tell you how to play the sector. >> samsung is geared up for an unveil today, but it one name getting left in the dust? annie's ceo will join us in an interview in moments. target trading at new highs after better than expected earnings. they're also upping their outlook. we have patrick with us. a $69 price target from hymn. good to have you with us, dana, what are they doing right, and are they doing it better than

everyone necessary their space? >> they're gaping traffic. the collaborations they put in place on the aparole side, on the discretionary side, they're one of the most exciting discounters out there with the neimen mar discuss collaboration coming up. >> did you say cheaper than walmart at this stage. >> in terms of multiple, yeah. >> does that make sense, dana? >> yes, part of it came from a lower tax rate. you want to see the continuation of margin growth as you get better sales. >> patrick, shrinking portfolio. more expenses for bad credit. reason for worry there, to take any of the luster off the numbers at all? >> no, no, i don't think so, they're managing their credit portfolio very well, they have nice returns there. the receivables is shrinking and smaller than it was, but that

was all planned. so i think it was a really good print. yes, some of that came from a a lower than expected tax rate. some of that from lower net interest. i think they're doing a great job balancing traffic and profits. they're adding food into the stores with this program. good is lower margin, but they doing a great job balancing profitability and margins as well. >> patrick, do you refer walmart or target? i'm asking because there are questions about the run. walmart is trading at a ratio of 14.2 times which is close to it's peak achieved during the recession of about 16 plus, should we be concerned about valuation for that reason? go into a target? >> i prefer target quite a bit to walmart here. there is about a point

difference in the forward multiples between the two companies. i don't think it's warranted. and with target, the in your opinions are being depressed by their canada investments. they're going into canada next year. and there's a lot of start up costs. the discrepancy is wider and i think target has a more dynamic, attractive fundamental outlook. >> it doesn't take us r very far over the next 12 months. >> no, but that is my price target. i have been pointing out when i previewed the numbers, i thought it was a conservative price target. so i will be reviewing that today after the call. the call is at 10:30. >> dana, where are we on the retail sector? i'm slightly confused. today, the cost of living was unchanged. apparently companies don't have

pricing -- the retail figures were good for the first time in seven years. components of it rose in july, but in three months prior to that we've been in contraction. sop where are we in consumer spending and retail sales. >> i think overall in terms of consumer spending, we have seen a more more cautious outlook. the month of july was better than month of june because the comparisons got easier. i think as we move forward, companies are taking a cautious stance on inventory. they will play the holiday season for profits give than the sales picture may be more cloudy with challenges out there more than we've had in the past two years. >> you could have doubled your money in gap in the last year,

what is your big bet now? >> target has been a top pick for me. i still like it here and i like it even more after this morning, i'm liking kohls here, that's one of my picks, dsw which reports next wednesday morning. i like dollar store and family dollar. i don't know if i have anything that will double, but -- >> that brings to mind, dana, we're going into back to school in -- i'm sorry, black friday is in 100 days from now, what is the most under valued and the richest bargain in the space right now. >> that's funny, questions about what's been thrown out, baby with the bath water, it could be names like guess with big european exposure, that's one people have not been looking at lately. it's tiffany giveen that last quarter sales were not so great.

a slow tourist environment, and what's happening in the department store space, is the improvement in kohls going to continue. those are some of the names not talked about as much. >> would you touch coach? >> yes, i was just visiting with them yesterday, and the international business is going to grow overtime. we'll see that take on more p m prominence in asia. valuations are appealing now and it will be able to work through the issues of getting back those coupons and the outlet sales. >> it's a discount retailer in the united states. it's margins are compressed. not about china and luxury goods. >> the outlet business is 50% of sales. margins there are good. they have seen a lot of growth, and one of the things we will see from this overtime, is as we see them expand overseas,

margins in japan are some of their highest margins. >> thanks for that, interesting and fascinating space. >> let's get a news update with courtney now. >> look at facebook, we're seeing a little pop up here. they could be placing the ads in the news feeds. the nonmonotiization of -- of a has been hard for some people. who is suffering the most in this drought? take the privileged investing tools of wall street and make them simple, intuitive, and available to all. distill all that data. make information instinctual, visual. introducing trade architect, td ameritrade's empowering web-based trading platform.

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♪ a tothe drought in the midw is the worst that some have ever seen. we have the weather change looking at the drought's historical significance. and from a heat standpoint, it's been a heck of a year. >> this year's drought has been truly incredible. coming up,ly take a look at how we got here in the first place. >> first we have to show you where we stan right now and if there's any hope into the harvest season. right now 51% of the corn crop

is in poor to very poor condition. and we have been hearing about the price of feed, that has sored, and many farmers trying to make the tough choice of selling off your herds. everywhere you see that orange and brown, that's the drought, everyone reporting that the area in drought and looking at the dry conditions. that covers about 63%. the discharger shaped are the exceptional or extreme drought and that covers 24% of the united states. the big question is, where do we go from here? there is the map of the current situation. now i'm going to show you what it looks like as far as the forecast going through the next few months into october. where you see the green is where we expect rainfall to help. that's fooe any objection into denver. great news because we had such a

potential wildfire season so far. and then across parts of the out east. unfortunately the area in brown is where we expect the persistent drought and that is much of the extremely hard hit areas. this is one for the record books. >> when you take a look at how this all panned out. you look at this dominant high pressure that just persisted over the center of the country and all of the problem producing and cattle producing states have been hit by extreme heat. we're sucking out all of that moisture out of our moisture, into the atmosphere, and we have such dry soil here. take, for instance, a state like illinois. the areas highlighted in red and the darkest red, these are exstream and exceptional droughts, the highest you can get. there are four categories, and

check out the latest numbers. 94% of this state is considered to be in severe drought, and 81 spkt considered to be in extreme drought, and it's no wonder such a big corn and bean producing state is doing so poorly with these numbers. you go back to the dust bowl, nearly 80% of this country are considered do be in a drought. where does 2012 come into the mix? number five of all time. we expect it to be number four or number three until the end of the year to give you some perspective of how bad it has been. it has been devastating. >> nose are sobering statistics and great information on a dynamic that will affect the economy in a big way. >> as if the drought in the midwest were not bad enough, china's corn output is expected

to fall lower as well because of a best infestation. 10% of the crop has been attacked by the army worm caterpillar. >> i do think that is speeded up film though. >> i would guess that it is. >> it is definitely speeded up. >> my question is whether it's bad weather or evidence of climate change. and i'm not sure if we're there yet. the 1930s were the dust boll era. >> yeah, anybody who is not a believer would say that our time sample is very small, it's tough to say. >> the projections are poorer if you feed in the data from this summer. >> yeah, it would be like a tv rating, a small sample. we should note by the way, the

nbc family of networks is going to bring you continuing coverage throughout the day about the drought. it is today at 1:30 p.m. western time. and the tablet war is heating up once again, but is one about to become the odd man out? trade? with scottrader streaming quotes, any way you want. fully customize it for your trading process -- from thought to trade, on every screen. and all in real time. which makes it just like having your own trading floor, right at your fingertips. [ rodger ] at scottrade, seven dollar trades are just the start. try our easy-to-use scottrader streaming quotes. it's another reason more investors are saying... [ all ] i'm with scottrade.

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♪ welcome back to "squawk on the street," i'm courtney reagan, look at companies that compete with deere. cat bill lar, and joe global. we have been talking about the impact of the drought on sales. some think could continue to impact seas for farmer into the spring. >> thank you, courtney. new tablets this year heating up

the tech battlefield, and who will fall first is becoming clearer to some. see if you can spot the one that is the odd man out that could get squeezed out, we have a reporter from the "wall street journal." you say that the nook is the clear odd man out, that's unusual considering they're 27% of the market. >> barnes and noble is 2727% of the e book market, but the nook is also very popular among critics, and you see we have all of the biggest tech companies verses a tiny book seller. and it will be hard for them to compete. >> what's your prediction for what happens to the nook. >> the best thing for barnes and noble from the people i have

been talking to is, if, you know one company perhaps takes over the software side of the nook, and partners with them to continue to produce the device, without them having to subsidize the bookstore. >> you're saying these other hardware makers are really taking on a challenge. who would be the producer? >> we already have microsoft saying they will provide 300 million to barnes and noble from the nook, but the deal has not closed, and it's very unclear how that deal will manifest itself if it does close because microsoft recently introduced the surface tablet. so it's unclear where the nook

would fit in. >> let's bring in brian, he is cnet editor at large. what is your feeling about the nook going away or are there enough people who love it to keep it around? >> the nook is in difficulty not because there is anything wrong with the product, but because it doesn't represent an eco system of anywhere near the weight of the apple products, the pending microsoft product, and this group of android devices. they all convince the user that they a tablet in the first place. i would not try to unseat apple if i was a competitor. i would try to go after the people that don't have a fab let

at all. >>. brian, at the top of the hour, on a scale of one to ten, how excited are you? >> about a seven, samsung is the best most successful of the android products. apple doesn't have that issue. they have a very clear, straightforward argument. so they have suffered from fractionalization blur if you want to call it that. s samsung as done as well as anybody. >> do you agree with that? >> yeah, i don't follow samsung, but it's considered to be a pretty high quality contender in

this and definitely one of the biggest companies. and i agree with not necessarily trying to go after apple because apple is going to dominate a huge portion of this tablet market. >> marianne, i want to ask you what you think the impact will be, the nook was a lifeline for barnes and noble. what would happen to them if the nook should go away? >> it's hard to say what, you know, what capacity that going away would take. barnes and noble could continue to sell ebooks which is important, and the nook is important to being able to sell ebooks, but the bookstores are the only profitable part of their company right now. so maybe there is more value in that than people are giving them

credit for. >> brian, i want to change the subject and talk about rim and nokia. the press today says next week they will start shipping new devices for the telecom carriers to inspect. nokia is not denying in three weeks type, in the launch of the iphone, it will come through with a nokia phone. of the two companies, which is more likely to rebound? >> i have to go with nokia because they're tied to a fresh and promises, not a guarantee, but promising platform that dies into windows 8, surface, and window's rt. there's a lot of pictures that are positive to strong. on the rim side there is not

that many bright spots for what they can offer that is differentiated. >> thank you for your time. >> thank you. >> ahead in the program, shares of annies more than doubles since the company actually priced it's stock four or five months ago. what about the impact of the drought?

an hour into trading. it is 7:29 on the west coast. the home builders sentiment index rises to the highest level since march of 2007. staples is the biggest loser this morning down 14%. on weaker than expected quarterly results. and google hitting a new 52-week high, it's been as high as $674 a session. i have news on inventory, let's send it over to bertha coombs. >> one of the things weighing on them is the wti report. we had been anticipating the third week of draw downs when it

came to crude stocks. that's why you see a difference in the way they're trading compared brent today which is just a little higher. gasoline did comply with what we were expecting. here are the numbers now, we're sawing a bigger draw down than the estimates. the crude stocks down 3.7 million barrels. gasoline down even more. as far as refinery utilization pretty much looks like flat there and in cushings we saw a bill. it's off of it's lows, but not a huge movement. gasoline continues to move forward. back to you guys at the nyse.

>> thank you. we're keeping it track, a shareholder meeting today. activist investor has been lawning a heated campaign with the company's management. david, what is the latest because the stock has been climbing. >> yeah, it indicating he won a board seat. looks like they will seat a new board member associated with slate. he was looking for the influence approximaty advisory firm that suggested that they install two of the four nominees, but now it looks like one, so not a complete victory, and as you said this has been a nasty fight between management and icon. last year they kept him out and he is still willing to go to the mat and force a approximaproxy .

they're long, contentious, and expensive. >> did you see he has giving his son $3 billion? >> yes, after he returned to another slice of money, returned 96% return on that slice of money, then he got $3 billion. >> he is only in his 30s. will he be an investor in the same way? >> i think he is walking in his father's ways, but let's hope he doesn't go anywhere, we need him. let's go back to courtney reagan. >> thank you, shares of jd jdjds jds uniphase. they had better than expected earnings today and we're up almost 10 fkt for the equipment maker. there are some fears in a demand could pull back in the fall, so

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high commodity costs due to the drought of 2012 is driving up food prices. annies is a natural and organic food group. since march, they have doubled in value and they have falled about 12% since a high in april. joining us is the ceo of annie's. he is in boston where he has just presented at a conference. welcome to the program, nice to see you again. >> it has been a phenomenal run since the pricing at 19 and

obviously where you're trading now, a lot of expectations in investors, what did you tell the conference about growth? >> annie's is very well positioned for where the consumer is going. moms and dads interested in health year, cleaner, food for their families, and annie's has been doing that for 20 years. the business has been growing roughly 20%, and we're optimistic about the future and we've been talking about that and the growth of natural organic here in the united states. >> do you feel the pressure at 50 times earnings? can you keep the growth up? >> i focus on running the business and continuing to say authentic to the core value that got annie's here which is focussing on environmental and social responsibility and making

products that consumers are passionate about and love. and my opinion is the growth and expectations will all be met if we do a good job with that. and so far, consumers continue to move toward products like anni annie's. >> you're aware there is nervousness about the insider selling, $125 million without since the ipo which is about a fifth of your marketization, and your chairwoman was at jpmorgan for 16 years, maybe she knows something we don't, put it in context first if you would. >> i would be happy to do that. solera capital is the selling shareholder, they have been an investor for over fen years. they're a longstanding loyal

investor. and really remaining authentic to the core values that we stand for. so the ipo allowed them to monetize a little of their investment. they continue to be very optimistic and bullish about the business. they still own about 38% of the company and are excited about our future prospects. >> i want to talk to you about future products, specifically the pizza effort, how su that going in rbc says it's ahead of schedule. >> yes, we're very pleased with the response that mainstream retailers gave to our mad with organic pizza products. this quarter, shipping into really high quality head quarters is about a quarter ahead. and these rehail tailers are

excit excited. >> how much will you make because of the pizza coming in earlier than expected. >> i wouldn't say it will have a material impact on our quarter. it will still be relatively small. it's a new initiative that will continue to bind in importance. it will begin to impact fiscal '14. >> and apparently you have a pipeline coming out into the pri spring, is there one product you think will move the needle. >> well, we probably won't move our needle a lot. we don't have a lot of time, but we are excited about them, their extensions and existing snack categories, and some of the categories that we're not in right now. we know the products are fantastic and the customers will love them. >> john, we're trying to take

stock of the drought. walk us through the process of how you're hedged. should we expect higher prices are smaller product sizes in the next quarter or next year? how will that impact be felt? >> we don't see that at this point. we are mostly brought out on our key commodities for the rest of this year. so most of the wheat that we buy comes from the upper midwest and canada, and the areas and growers that we buy from have had very strong harvest, so we have not seen any material impact yet. i think it's reasonable to expect there will be little higher commodity prices next year, our brand is very strongly positioned. if we need to take prices to mitigate or off set those we will, but we will never dumb down our products and companien the quality.

we'll stay foe cushioned on really high quality stuff. >> there has been talk about super seeds developed to be drought resistance. where do you stand on that using wheat or worn that had a made if ied se-- modified seed? >> we have a strong opinion against using genetically altered seeds. we will work with farmers and harvest crops or beganically the way they should be harvested. that's what the brand stands for. >> does it make it more difficult to dhaechbd if there is so much denetically --

genetically modified krobs arou -- crops around. >> yes, and there has been a lot written about that. we work with farmers that stay focused on making sure their seeds are clear. we pay a premium for these ingredients to make sure that we're tracking them, and the brand stands for a premium and high quality and our consumers expect us to do that. >> it's been good to talk to you, i understand we had technical difficultiedifficultik you for bearing that and hanging in there with us. >> we are outside the big unveil in lincoln center. >> that's right, it's the samsung galaxy 7.

this has a stylus s-pen. it has an e rationer for artist and doctors and lawyers. so we know that samsung is already eating into apple's markets share for smart phones, that's exactly what they want to do when it comes to tablets. they need to make it clear this is their own thing. they showed it off already in the winter of this year in barcelona, and since then it's coming out and their saying it's more powerful, it's a ten inch tablet. we don't have pricing yet but we know three have been preorders overseas. we think it will be more competitive with the ipad than the indle fi kindle fire.

>> thanks for that. >> an eraser reminds me of etch-a-sketch, do you remember that? >> yes. >> did you grow up on that as well? >> yes. they're still a big seller. >> it figured into the primary campaign. >> all right, hedge funds and vailing their latest holdings last night. kate kelly has the round up. >> a couple themes are emerging. the ones we like to watch for interesting ideas. for starters, soros and sac have bought into facebook. sac, the $14 billion fund company run by stevie cohen reduced two other key positions this last quarter, gold and

cisco. cohen was a believer in gold for well over a year, but it's now off it's highs from last year and he apparently saw an opportunity to exit thousand he still has some exposure. dan loeb du-- lobe dusted off h activist cap. he sold holders in goldman sachs, an interesting move in a time for the banking industry. finally, notable moves by john paulson, still one of the biggest money managers, although operating at abruptly half of what he had a year ago when he had about $38 billion after tough set backs in the market. paulson added shares of jpmorgan

preponderate it lead to a nearly $6 billion loss for them. unlike stevie cohen, paulson moved toward gold adding to his long-standing holdings even though it's seen a drop. he is consistent for his support in the this one. not only has it been a big piece for some time now, his investors can buy into the funds through government rather than through dollars. >> it >> is it the same as consistently losing? >> in his case, yes. >> that has been discussed for quite awhile now simon, they have fairly strict policies, they have a sixth month notification and notice process. when i talked to investors, they said listen why would be wail out at this difficult time,

let's give them a chance to recover some of our money and his, and see if better markets prevail. >> thank you, that comes back to your point that the it's a very advantageous positions to be in. >> when you look at the longer term track records of hedge funds over five or seven years and how the investors did and the manager. there is not always great symmerty between the two. and that fund, that fee structure, is still maintained for some reason. 12k3w4r may >> maybe it's investing in the same assets. we're continuing our coverage of the worst drought in a long time.

could special seeds help? also ahead, rick santelli, live all that top of the hour.

i'm jane wells in nevada. your family started farming on this land 130 years ago. you said you always wanted to have a job that kept you up at night, do you have one this year? >> more so than in years past. farmers always realize is the weather is out of our control. we can't do anything about the weather. the things we can control is what we have to be concerned with and not let the weather break our optimism. >> one of the things you can control are your seeds. you use the latest ones. they cost a whole lot of money. are they worth it this year? >> i absolutely believe so.

the technology we have in the field today with the conditions we went through this year is amazing what production we do have out there. we did lose some production. you can't completely protect against drought. i believe that technology we have in the field this year brought us through this drought better than we otherwise would have been. >> any concerns about safety? some people are concerned about these seeds. >> i've seen what -- we're able to produce more yield from a smaller resource base. that's good for consumers and farmers. i believe in our regulatory structure. it's good for us and for consumers. >> are you pulling back any capital expenditures because of the drought? >> not at this point. capital expenditures in our operation are something we look over a many year time frame. we don't make day-to-day capital decisions in that manner. >> are you buying anything this year? >> we'll wait and see just like we do every year. >> are you holding back selling

anymore corn in order to meet your contract? >> that's something we're doing right now. any activity i'm doing selling is futures market on paper. >> you sold a bunch already at $5. >> sold like we always do. mitigate some risk. didn't plan for a drought. we've got it. now we'll try to change plans. >> what's the biggest thing you learned this year? >> always be optimistic. >> farmers are never optimistic. >> it rings true this year. we have to be optimistic. if you have a positive attitude, we can make it through anything. >> melissa back to you? >> thank you. final thoughts on the market after this.

get to squawk on the tweet on this wednesday. the man behind the term black swan out with a new paper taking aim on wall street. what should people who thought they would go into finance do for a living and why? start training for rio 2016. you'll be more successful. simon may do that sometime soon. >> may be training tonight. >> go into politics. get paid to accomplish nothing. that's common theme in the

tweets. james says stop complaining, grab a nerd and create the next boom. >> i'm speechless. >> that's good advice too. >> they say hacking is the next big thing. maybe that is too. what's coming up on "fast" tonight? >> marc faber will give us his outlook and also what the ryan nomination could mean for the ticket and for the markets and then ceo of immunity, this is part of our next big bang series. a major development in mobile cybersecurity you'll want to hear about not just for your own device but the company that is bought next. >> you'll have time to dissect what cisco says after the bell. the quarter is more back end loaded and aggressive pricing possibility for a downside. >> we'll keep you all posted on what's being said on that. >> we'll see you tonight. simon, see you in a half hour to

talk about payroll numbers out of the u.k. and whether or not there was an olympic effect. did you see they will? surprisingly bullish? >> i thought it was obvious if you got the olympics in town it would create employment but what do i know? >> you know lots. >> i don't know anything. you were there. it was all army people. >> we'll see you guys later. if you're just joining us, this is what you missed earlier on this morning. >> welcome to hour three of "squawk on the street." here's what's happening so far. >> even though the global economy has changed, i feel like young people are still full of this incredible ambition and they want to take these risks and they want to go live in these exotic locales and do it all. >> the conclusion that i have is that it is on the sync with what's going on is there is a tremendous resurgence in the consumer. anyone who doubts this must go over the home depot call. they gained double digit gains in many different categories with having more to spend on

your house. 19% decline. they find places. >> the ukraine to be fair is also potentially the bread basket of europe. >> are you stallen? geez. >> take a look at that podium. >> whatever we're going to do after this, whether we're going to keep rowing or i have a degree on economics so it's good to be here on the flar, we'll keep pushing ourselves and see where we can go. we'll all be successful. >> a solid growth environment. business is growing roughly 20% over the last five quarters or so. we're very optimistic about the futures so we've been talking about that and growth of organic here in the united states. >> good morning. live here at post nine at the new york stock exchange.

want to check on the markets today. another thin range. dow down only 8. nasdaq up 8 as well. there's a lot going on underneath the surface. deere down sharply after the company's quarterly profit m missed expectations and deere cut the sales outlook for the rest of 2012. starbucks cites rapidly expanding consumer product business and one of the highest potential long-term growth stories in consumer goods. road map today goes like this. big numbers out of retail. some of the most anticipated companies still to come. we're going to wrap up all of the numbers and show you how to play the retail space. we'll travel to mississippi and look at the tragic events of the drought and how it's impacting trade all over the country and we look at mitt romney's plan to strengthen the middle class and fix the country's debt problem

and samsung hoping to shake up tablet wars with their new product being revealed in new york today. does it have hope of competing with the ipad? we'll give you a first look at the product plus much more coming up in the next hour. we'll start with retailers on target with big news after earnings numbers today. courtney reagan is back at hq with details of target's great quarter. >> very strong quarter for target. call it a bull's eye. high quality earnings report. look at the numbers. second quarter earnings of 1.12 bettering expectations by 11 cents. revenue also higher than analysts anticipated. same store sales, traffic and average ticket all improving. target increasing full-year gap earnings guidance by a dime. target's edition of fresh groceries and 5% cash back seems to have helped as retailer grasped for new ideas to boost

sales among its still cautiously spending consumer. in july the retailer opened its first three city target locations in seattle, l.a. and chicago. the ceo would say that target is pleased with the initial response and analysts want to know if the target locations will add sales or take sales from other stores. target also continuing with its expansion into canada and sees cost associated with entry to cut third quarter earnings by 14 cents a share. target shares trading at levels not seen since october 2007. for the last three months they have trailed competing big box retailer walmart which reports tomorrow. the target earnings calls under way. the analysts question and answer just now starting and target also one of the retailers that are part of this new merchant customer exchange announced today that it is working to develop mobile wallet technology to compete with what google

offers on android devices. >> hard to keep up with ways they are coming up with pay for things all over the world. >> that's incredible. courtney reagan back at hq. gary kaminsky is back. >> good to see you. good morning. how are you? >> good. i hear you're looking at some second market stuff which seems to be the undercurrent of so much that's happening in some of the social names. >> let me sort of frame this issue here, which is that everyone wants to know who is to blame for what's happened with publicly traded social media stocks. a lot of blame on investment bankers. a lot of blame on selling shareholders and blame on the media people saying that cnbc and other media outlets gave them an opportunity to talk about growth and hype there. i don't know who to blame. i have to make a point that in conversations with capital market executives on the sell side on wall street and

investment bankers there's a team that's building out there right now and that is that the blame is being focused on this idea that these were not ipos. because of fluid trading taking place on the second market, especially facebook, we have prices that we can show you where five transactions prior to ipo pricing took place. the five trades that took place in facebook on the second market if we can bring that graphic up there. you can see there was trades going back to december of 2011 right through the pricing of april of 2012 and pricing taking place in may so there was this established pricing that took place. now, i want to point out, zanga did not trade on the second market. pandora did not trade on the second market. there were trades in groupon. sou canceled and said linkedin has done well. there's a theme out there that if in fact you are trying to

price an ip on ao and you're ba you can't say to selling shareholders i think this is the value in best interest of everybody. you try to align with shareholders and participants on the buy side and what they told me and what they have been out there telling other banks that they pitch to, you have to understand what happened in social media is not our fault. it's a mea culpa in that selling shareholders would never have allowed us to try to sell these shares to the public at a price that was significantly below where these things had traded on the second market. we have a statement here. we reached out to the ceo. we asked do you feel that you had any essential role in terms of what'sappened to social med media? what they said is that second market never publishes transaction prices, valuation or any pricing information while

companies are transacted on our market and are private held. when dealing with buyers to determine the appropriate price of the secondary transactions, some of the factors both the companies, investors, analysts, similar to raising a primary round. second market never publishes transaction prices as we just said. here's the point. i still don't know the answer to that. i have to say that if you look at what they're saying how price discovery takes place or how it took place in many of those tra transactions, i would say that's a similar mechanism that takes place in that initial public offering. those out there in terms of syndicate, capital markets and bankers and traders who say that you have to understand that this was a separate situation that these were not truly initial public offerings but treated more like secondaries, i don't have an answer. i read what second market says and i can still sort of weigh

out both sides of that argument and especially with all of the stock that's going to come to hit the market in many of these names over the next several weeks. it's something to point out. these are being characterized as secondaries but they are more like follow on offerings with these prices. >> what i hear you saying although i understand you don't want to take sides but i hear you saying it's an efficient market and that some of the names that have had a lot of pain weren't there any way. >> it is an efficient market. it was an efficient market in the sense that price discovery was between consenting adults. institutional investors, hedge funds, family offices, high network individuanet worth individuals who said we're willing to pay this price. i would love to be in a meeting where selling shareholders said this is what we're willing to sell at and buyer said he want to sell here. i do come down on the side it would have been impossible to price a facebook ipo if the bank

wanted to at $18 a share given what had transpired. now, maybe it's a little bit crying over spilled milk here. i know we have to go. it's important to understand this is a theme that's building within the sell side of wall street in terms of what happened because everyone wants to know who to blame. >> excellent point. we'll come back in a few. good to have you back. over to cme, rick santelli with santelli exchange looking at economic data. we got a lot today. >> when i parse the data, i was drawn to my e-mails about revision we saw with industrial production. it ended up being 0.1. there's a bit of a conspiracy theory. most e-mails always seem to try to zero in on the fact that most revisions seem to take something away.

hence it's almost as though those data points get kind of a bye because you can't trade what you did 30 days ago. i went to look for august and what i found was a lot of revisions but somewhat mixed. the one that jumped out at me was retail sales. there was construction spending which was revised but to the upside, wholesale inventoriesieo the point is there have been things that bug the trade ertra. i see 289 yield on 30-year bond. that's pretty much exactly where we closed for 2011. i think that's a fascinating little bit of trivia there. if you look at a ten-year currently at 178, it's about ten basis points close toward the end of last year. yield curve implication there. we're all talking about drought on cnbc and that's a good thing.

remember, generically the drought is much tougher on farmers than consumers and i'll give you one example. i always found this interesting when i used to do more ag sales calls about 15, 20 years ago. if you take a loaf of bread for example, 2.5, 3% is the wheat. even if wheat doubles in price, it adds 3% to that loaf of bread and cereal is similar. another thing that's interesting. 80% of what we grow in agriculture in this country is done by 20% of the producers. corporate funding is huge. more than huge. the ethanol debate at the forefront, more i dig into this, the more i learn that it's not as simple as it appears. acres wouldn't be around if it wasn't for ethanol. usage is high but there's food stuff that's residual that goes back in. a great time to talk about it but there's a lot of pit falls

along the way trying to handicap ethanol and its effects both in and out of the corn market. >> 3% in a loaf of bread? that's amazing. i know you know all about ag. thank you so much, rick. rick santelli in chicago. come back to you in a bit. when we come back, we'll talk about the drought. obviously it hit the midwest the hardest. it's effects are being felt as far south as louisiana. we'll see how even the mighty mississippi is hurting after this break. i've got a nice long life ahead. big plans. so when i found out medicare doesn't pay all my medical expenses, i got a medicare supplement insurance plan. [ male announcer ] if you're eligible for medicare, you may know it only covers about 80% of your part b medical expenses. the rest is up to you. call and find out about an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company. like all standardized medicare supplement plans, it could save you thousands in out-of-pocket costs.

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in honor of drought day, we're looking at the mississippi river sitting at an all-time low impacting trade all along the river. john, good morning. >> good morning. we're aboard the u.s. army corps of engineer underwater vacuum cleaner sucking up sentiment from the riverbed trying to make the river deeper and so the current carries is it into the gulf of mexico. we've got a chart showing you that right now the river is about 10 to 12 feet deep lower than normal this time of year and given the huge flooding last year, it's actually a drop of about 57 feet from last year

from last year's floods and also it's near the low water level period of 1988 during that prolonged drought. what they're doing here is they're trying to make sure that the river channel is at least nine feet deep and 300 feet wide. this dredge can suck up about 3,500 square cubic yards of material an hour. 24 hours it will bury a football field under 15 feet of sand because the river is so low, a lot of barges have to lessen their loads by 25% so that they ride higher in the water reducing what's known as barge's drag meaning that tow boats are pushing barges with less cargo than usual but they are burning

the same amount of fuel and they have the same amount of man hours ha hours and that's driving up shipping costs that will get passed along to the consumer. this really is the giant super highway of the american midwest. $180 billion of goods up and down this river. 60% of u.s. grain is shipped on this river. 22% of oil and gas. 20% of coal. the building blocks of a lot of things we touch every day and the cost of shipping all that is going up. carl? >> john, that's amazing. nine feet deep. that's the depth of an average swimming pool. not a lot of water on which to carry all of those goods as you point out. john yang in mississippi. thank you so much. when we come back, mitt romney's policy director is live with us from romney campaign headquarters to discuss his plan to strengthen the midwest and we'll get you down to the close in europe not too long from now. back in a moment. [ male announcer ] when this hotel added aflac

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on the presidential campaign trail, both sides sparring over their economic agenda trying to target middle class voters across major swing states. we have the policy director for the romney camp from headquarters in boston. thank you for joining us. a lot of discussion is about evolution of the governor's policy solutions with representative ryan on the ticket. when we talk about the middle class, what are we talking about specifically? are you unrolling anything new? >> we're talking about a plan to create 12 million new jobs for hard working americans. it's a plan that couldn't be more different from the devastating economic record the president has had for the last four years. it's a plan that will get us energy independent, plan that gives americans skills they need to succeed in the modern economy

and perhaps most importantly a plan that cuts the deficit. >> would you characterize it in a plan that enlarges the safety net or makes things more stable for the average american household or fairy dust where we cut taxes on the rich and hope it trickles down. >> it appears the obama campaign has devolved into a campaign of division and rage. what this campaign is about is how to grow the economy for the middle class but also ensure there's a safety net so that when americans need it, it will be there for them. mitt romney and paul ryan are there for that. any statement other than that is simply a lie. >> i know a lot of the discussion since saturday morning of course has been about ryan, his platform and the degree to which there is space between the governor and the congressman. what parts of congressman ryan's plan the governor will adopt. you write the policy. are you mining through the path for prosperity? have you decided on things that you will make part of the

overall ticket platform? >> this is governor romney's campaign. he's the top of the ticket. he's the man running for president. this is governor romney's plan. obviously there are a number of similarities between governor romney's plan and the plan that congressman ryan championed when he was in the house writing the budget this year. the reality is that any differences there may be between governor romney's plan and house republican budget are dwarfed by the differences between governor romney and congressman ryan's approach. we've seen soaring deficit and soaring debt and you've got more americans unemployed today than when barack obama took office. the contrast between the romney/ryan ticket and what president obama is offering could not be more stark. >> let's talk specifically about some medicare cuts. you guys have been aggressive in trying to target the president saying that those medicare cuts he's using to fund obama care, that's the wrong way to handle those cuts. ryan said he would keep the cuts

but use them for different reasons. governor said he would restore them but hasn't explained how. any clarity there? >> we have to make sure that we ensure that medicare is there for seniors today and that it is strengthened for seniors tomorrow and that's what the plan will do. we have to repeal obama care and devastating $716 billion worth of cuts to medicare to pay for obama care. governor romney committed to restoring those cuts. that's going to be a big part of our plan going forward to ensure that seniors have the program they've come to rely on. president obama has decimated the program. it will potentially result in millions of seniors losing the coverage that they like and more than that, many seniors will see up to $3,700 in benefit cuts because of the obama cuts to medicare. again, the contrast between the ryan/romney approach and the obama approach could not be more stark. >> just on a personal note, so much has been written in the past couple of days about how

the congressman has put meat on the bones of the romney campaign because he's been much more specific in policy and i think you would agree than the governor has been since the primaries. do you take that as a personal affront as the man responsible for writing the policy on paper? >> you know, i think governor romney from day one of his candidacy has produced the most detailed, most specific policy agenda of any recent presidential candidate. we're just absolutely delighted to have congressman ryan as part of the ticket. we believe that he adds such a tremendous amount of intellectual and policy depth to our campaign. i'm excited. i know governor romney is excited and our campaign is excited to go out there and spread our message of building a stronger middle class and ensuring we get this economy back on track. >> it's great to have you. hope you'll come back as the debate heats up over the next few weeks and months. >> happy to. thanks for having me. >> bells are about to sound across europe as they close out

their trading session. we'll look into details on trading there and some of the interesting economic data points we've gotten out of the u.k. and the impact on the u.s. in just a moment. (phone ringing) good afternoon. chase sapphire. (push button tone) 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.

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interesting day in europe. we had a few countries off for holiday but got some jobless claims falling in the u.k. and for that we go to simon hobbs. >> i was trying to think what the dog days of summer and dogs of summer would be in europe.

what would it be in spanish? i don't know. i don't know what i just said. >> this is the close. >> the european markets are closing now. >> it's dog days of summer. volumes are low. not a huge amount of movement in europe. one trend i would pick up for you apart from the jobs data which carl mentions is the way in which some mining giants and steel makers have been hit today. there is a lot of concern in europe about china. it often reflects first in those global mining plays. all in london in negative territory. a brazilian exporter of iron orr suggested that golden years of china driving growth in that sector are now over. you have seen prices at their lowest prices for three years. so some of those steel makers,

these are global miners in april names that you'll be aware from middle family and negative territory and all down. that's the major move that you can see across the markets in europe today. i must mention nokia because the ceo indicated by not denying what is going on that they will launch their new phone, the new windows 8 phone three weeks from day. therefore we assume in advance of the iphone. we're off the highs but one of the main movers today. nokia up 3% as you can see. just before i leave you, let me show you what's happening on the bond markets. we've had a sell-off in bonds here pushing treasury yields higher. it's also true at the core european level. the yields on ten-year, that's a horrible line. the yields on ten-year as you can see has popped up above 1.5%.

now people would say go long off the bund because you'll come back. there will be trouble ahead. be aware that yields are rising and they are falling on the periphery which is the converse of what we saw through the crisis so you see in spain yields for the week are elevated. i can see that. 6.67. don't write to me or call me. let's look at italy. there you can see that we are lower. 5.77. that's the fields coming down. next week, we'll be talking about europe again because greek prime minister is going to meet merkel next thursday and the market is sensitive to the greek situation. you saw weakness at the end of the session here yesterday because of the report from the financial times he would seek to delay the austerity by two years and that would require 20 billion euros to plug the gap.

>> i just tweeted your phone number. i hope you don't mind. >> don't call me and tell me i do the european close badly because it upsets me. >> let's get to rick santelli in chicago who has a take on europe this morning. rick? >> you know, i like the take simon had. let's build upon that. i know this sounds simplistic but where we end a year is hugely important in so many ways. we talked moments ago if you look at year-to-date of tens, we are ten basis points lower. on 30-year we're unchanged on the year. here's what's fascinating. simon pointed out that yields have been moving up in europe on the bune. wh when they talk about keeping

rates where they are for years at least what part of rates they can affect and for how long, these pits do nothing. a short rate bit is going to be out of business not that that matters, matters to these people but the point is when it comes to european markets there's a lot of yield curve arbitrage that goes on. traders have to make dough. every job has a value or they close or leave like in this pit but it's important for the rest of the year interest rates are going to be important but relative relationships to each other, whether it's finland, spain, or of course europe and u.s., it's going to be hugely important and if you're a trader, pay attention. >> rick, thank you very much. rick santelli in chicago. bob pisani is here at post nine with another single point day so far. >> i'm a little encouraged by the housing commentary this morning out of the national association of home builders. unfortunately it's not getting a

lot of traction in the market. we've had housing stocks move up in anticipation of a bit of recovery. this morning comments indicating the market sentiment continuing to improve here. here's the problem i have. the stock market isn't responding to it. you can see the major names down here. some of them near 52-week highs. we're not getting a lot of traction out of that news. it moved up into it as we got nhp numbers and they sold out just afterwards. here's what's bothering home buyers. nhp had the comment of listing things that they are really worried about right now. the inventory is high of distressed properties. that's not surprising. inaccurate appraisal values. this is a real concern. i'm the son of a home builder. my wife has been realtor for 25 years. i grew up in this business. this is major problem with appraiser values coming in well below where people think they are worth and there's credit issues for buyers and builders as well. a recovery but a modest one and not a lot of inflation in

housing going on. we saw that with numbers. let's talk about machinery. there's a lot of debate about deer this morning. there's not a lot of agreement. deere came out with disappointing results. lowered estimates for the rest of the year. deere, caterpillar, not the same space with caterpillar more construction machinery but cnh global also a competitor. all to the downside. these are the most important issues for them right now. there's a very strong argument on the street that actually the drought is going to help machinery sales. higher crop prices number one. number two, it's been noted this morning south america's plantings are going to increase and brazil will increase to make up for the deficit. crop insurance claims are going to be huge this year and analysts think that will be a positive factor and there's expectations and there was talk about this this morning with deere, near record plantings expected and deere referenced

that fact. droughts do not necessarily improve people's sentiment overall. there's been a couple comments this morning so s&p had a comment out this morning. we think these uncertainties about the drought will make farmers more conservative in their spending. the street doesn't completely agree on this. i would say right now the bulls are trying to push things further. here's the basic issue with deere and the whole problem with the business that's tied to the agriculture industry. three-quarters of their sales are in agriculture. not construction. construction is a tiny part of overall business. they are tied to global agricultural market. these mature markets, canada and u.s., 75% of their revenues. ese mature markets are a lot slower right now. harder to sell into them. brazil becoming a mature market. emerging market, china and india, are out there in theory. they are great opportunities but they have been slow to develop and fairly expensive to actually

get into. this is the big picture concern about how much further you can go with a company like deere. i think it's a very interesting question about whether droughts actually going to help sales or not. my sense is that it is not a positive in the short-term. >> then you have to worry about them getting effects right which was also a factor. >> we've seen that a lot with a number of temperatures. . >> gary is up next looking at the soaring levels of insider selling. >> you gave it away. i was just setting out a blast e-mail to everybody in my address book of simon's cell phone number. only joking. don't worry about that. we talk about one of the questions out there in terms of the social media stocks, who is to blame and another great question is what will happen with the stock market in the fall? i don't have an answer to that. we used to pay attention to insider buying and selling. you always expect insider selling for the reason that a lot of executives are compensated in stock and they get options and exercise it.

you always expect even in march of 2009, you would expect more selling than buying in the open market. that's a caveat i want to make that point. look at the numbers that came out of trend tabs for the data that ended the week of august 7th. take a look at the numbers. you basically had insider selling of $2.7 billions in two weeks ending august 7th. insider buying at 170 million. selling in the latest two-week period topped 1.7 billion of all of june and approached 2.3 billion in july. what's the point here? this is a very indicative statement by the insiders that are saying we're not going to wait around to see what happens in europe. we're not going to wait to see what happens with the fiscal cliff. we're not going to wait around to see what happens with the election. the fact is if we're going to diversify our portfolios, we'll do it right now. it's very surprising when you look at that data to see this type of ratio buys to sells at this point in the summertime. if in fact seasonality holds

true, you would expect that type of selling pattern maybe in september into october. i don't know what it means for the fall if people are trying to exit these positions early but if you want an overall sentiment in terms of the market, it's not a good sign. >> interesting. there's been so much discussion about lockup expirations at facebook and so forth and s&p tried to argue don't worry about it. shares have fallen so much it's unlikely anyone will want to unload at these prices. >> i will tell you. i was just having a conversation off camera with scotty over here because here's the point. just because a stock is down, just because a stock is down, doesn't mean an insider is not going to sell it. i'll tell you why. go back to pre-2008. there used to be an opinion and i dealt with plenty of executives, you own the stock and watch it go from 40 to 20. i'll wait. if you did that in 2008, you paid a handsome price for that. i disagree completely with s&p. i think you wake up tomorrow morning. if you have restricted stock and that stock is free to sell, the

only thing that matters is where is that stock trading today. not where it was a month ago. the only thing you look at is what is that asset as percentage of my portfolio today, this morning, and nothing else should be relevant so i disagree completely with s&p. >> you have to worry about capital gains and future of that tax and election and polls and it's a complicated picture. >> only thing that's relevant if you wake up a restricted stock tomorrow that's not restricted is would i buy those shares at that price in the open market today? if the answer is no, you sell. >> gary, thanks. great discussion. get over to courtney reagan across the room with the market flash. >> look at shares of priceline. up by more than $9 at this point. we saw the spokesperson jump off a cliff seven months ago and he's back tomorrow. he's being resurrected as the priceline negotiator. we'll see a new commercial

tomorrow online and on tv. carl, back to you. >> there was a concern for the street as to whether or not he would come back. >> he's coming back. there's a whole story line. it will be an interesting one to watch. >> fabulous. thanks. straight ahead, the first look at samsung's newest tablet. does it stand a chance against the ipad? we'll break down the newest player in the tablet wars in just a moment. tdd#: 1-800-345-2550 when i'm trading, i'm so into it, tdd#: 1-800-345-2550 hours can go by before i realize tdd#: 1-800-345-2550 that i haven't even looked away from my screen. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 that kind of focus... tdd#: 1-800-345-2550 that's what i have when i trade. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 and the streetsmart edge trading platform from charles schwab... tdd#: 1-800-345-2550 ...helps me keep an eye on what's really important to me. tdd#: 1-800-345-2550 it's packed with tools that help me work my strategies, tdd#: 1-800-345-2550 spot patterns and find opportunities more easily. tdd#: 1-800-345-2550 then, when i'm ready... act decisively. tdd#: 1-800-345-2550 i can even access it from the cloud and trade on any computer. tdd#: 1-800-345-2550 with the exact same tools, the exact same way.

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coming up at the top of the hour at halftime, he has over two decades of tech investing experience and was one of twitter's earliest investors. bill gurley is our special guest weighing in on the facebook lockup, dismal stock performance to smartphone wars. how can you make money if the fed fails to act? we'll see you in 15 minutes. samsung is revealing the newest version of galaxy note tablet today in new york. >> reporter: behold. the samsung galaxy note 10.1. this the new galaxy tablet along the lines of galaxy smartphone that's been a success for them. they are emphasizing creativity when it comes to this tablet.

not productivity but creativity. they have the clothes designer and movie director talking about how this is for content creation and not just content consumption. the pen comes out of the bottom here. they want you to real again create on this. take notes. draw and such. we know that adobe is one of their partners so there is a creative suite so you can use applications like photo shop for pictures, movies, drawings and such and they emphasize education and commerce if you wanted to take this into your coffee shop and use it for e-commerce. customers could sign with a pen. this is called the s pen. they say it's more reactive and precise than ever before. we're waiting on a launch price and details such as date. we know that preorders are already starting to come in overseas. >> hold it up quick so i can get a better look at this. it's a mirrored front.

someone told me a certain reporter was able to check her makeup in the mirror right before they hit. that kind of thing? >> i don't know who would do that. it's shiny enough to make sure that your hair doesn't look really terrible. it's hot out here. didn't want to look like a drown rat. i do that with the ipad2. >> in a tough space natalie morris in new york. thank you for that. when we come back, we'll meet the young entrepreneur who is revolutionizing the world of education through social networking and he has millions of dollars in funding through some of the biggest names on wall street. he'll join us live on set after this break. [ male announcer ] when a major hospital wanted to provide better employee benefits while balancing the company's bottom line, their very first word was... [ to the tune of "lullaby and good night" ] ♪ af-lac ♪ aflac [ male announcer ] find out more at... [ duck ] aflac! [ male announcer ] ...forbusiness.com. [ yawning sound ] with such power, even chuck norris could respect it.

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when students head back to college this month, the classes may get more social. joe aims to build the largest learning platform in the world. over 600 universities including

harvard an princeton have developed the platform so far. you and your co-founders dropped out of the university of pennsylvania to start lore. dropping out of penn is a good career move. where were you? how did this begin and how did it tie to your decision to leave school? >> i wanted to learn how to start a business. i learned a lot there about that but there was a lot more to do by doing it. i also realized that we're at a moment in time where the way we learn and our education system is going to change dramatically and we had a chance to dive in and do it. >> the tool works like how? how would a student interface with this? >> imagine you're in a class in philosophy and we turn that class into a community online. almost like a facebook for your class. teacher gets the tools she needs to manage the class. grading tool, calendaring, syllabus, well designed tools and social networking. >> are universities trying to do

this on their own or is this something they can only outsource to you? >> this is an area dominated by companies like black board. we go directly to the educator and let them adopt it on their own without the school's permission. >> you've been on a hiring binge. staff of 15 or so at this point. how big is that going to get? >> we're trying to double. we're looking for the best engineers and designers and marketers that we can find. >> are they coming mostly from banks from directly out of mba programs? >> a lot of technical people from big companies and out of school. we hire a lot of people from out of school. >> how do you compete with someone from google? >> our mission is to attract people based on our mission but not pay but we want to build a big business and there's an opportunity to get in at the ground floor. >> how big can we get? >> one of the biggest companies

around. if we achieve our goals. >> over the next five years, ten years? >> we're going for it. >> you got peter on your side. angel investor. recent funding of six. >> $5 million was the last round. >> how do you approach giving away that equity? how much money do you need? is this a matter of trying to get big fast? >> the idea is you trade a bit of your company in return for more growth. that's the idea. so for us it was obvious choice especially because the investors we have got. lead investors is social capital partnership which was started by some guys with really great experience with early stage companies like facebook and they are extremely helpful besides for the money. >> i'm assuming the strategic brilliance insight and thiel

used lore to teach the class. it's hard to go wrong with him on your side. obviously we'll be keeping our eye on lore and you. >> professors can sign up for the service for their fall classes now and bring their class for free. >> thank you for coming in. fascinating stuff. joe cohen, ceo and co-founder of lur lore. a new paper warning future financial talent to stay out of the investment industry. the paper talks about wall street being less about hard work and more of a game of luck. what should those who thought they would go into financing do and why? we'll read some of your answers in just a moment.

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the man behind the term black swan is out with a new paper taking aim at wall street and warning future talents to stay out of the business. we're asking you what should those people who are thinking about going into finance do for a living and why. sean writes i would join m.i.t.'s blackjack team.

>> spend their day on facebook clicking on things. i like the one on facebook. let's get to rick santelli. a take away on this wednesday with markets at some seriously unchanged levels here today. >> very serious unchanged levels. i will tell you this. there's a lot of italian songs written about love. very few of them have a chorus that refers to covered bonds. there's a lot of love today. unicredit. it has had issues lately. they had the first covered bond deal by an italian bank all year and it went well. it was oversubscribed to. just under 50%. i read between 40% and 45%. investors outside of italy. that's a really good thing. i don't know if it continues or they just got in that lull but i will tell you this, we talked to mark at southwest securities and

talked about how ridiculous it is with the buying sovereign paper, this goes the other way and this is a positive. >> rick, stocks are obviously just off a point. i got to ask you about the ten year and 180 level. how important is it and how much is being driven by data we have been given over the last few days? >> i watched the data points every day and i watch how markets react. there is a little of that. data has been mostly mixed. i think what's going on here is a bit of a flight to safety and catalyst was europe kind of the quiet period. i think it will lend credibility to this sell-off. i don't think the buying days are over. where do i think resistance is? i would say closer to 2% but i still think there's going to be issues like possible defaults and certain paper and certain countries down the road and you're going to get shocks that push rates down dramatically and push equities down dramatically. silver dollar qio