becky is off this week but i promise she will be back next week. let's get you up to speed on what's going on overnight in the headlines and what's happening today. walmart reporting second quarter results this morning. analysts are looking for the retail giant to earn $1.17 per share on revenue of $800.8 million. those numbers are expected out around 7:00 a.m. jobless claims could set the market tone at 8:30 a.m. economists are forecasting 365,000 claims for the first time jobless benefits, a slight increase by the way that would be from last week. and the first lockup period for facebook shares, they are ending today. making 271 million shares owned by early investors and employees available to trade. of course it's now been 91 days since the may 18th debut. one of the most highly-anticipated off erosion in history and shares of facebook which debuted at $38, dare i said, they are now stand at roughly $21, mr. kernen.

and i don't know, we have henry blodgett on later. he called that muppet bait. >> he did. we're seeing analyst, i don't know where they were during the ipo but they say $13. things like that. we also talked about that everyone knows the end of the lockup is coming so that, i think it's interesting some of the smart money even though the lockup was coming they made their moves already to get into it knowing -- >> talking about george soros. and steve cohen. >> that's not information that's not available torch when a lockup end. in wouldn't expect it at that point all of a sudden. we'll see. but they bought before the lockup ended. i want to talk to you -- >> yes. >> when you get over here. lately, you've been walking and we've been talking. we got a lot to -- i want to talk about apple. >> i want to talk about apple. >> i'm worried about apple.

>> did you see the john corzine piece, a separate issue. >> is that in your paper. >> front page of the "new york times". no criminal charges again john corzine. so there's a lot of news this morning. >> let's talk about apple. >> we will. >> you want to talk about cisco first. >> let meadow cisco. ate stock that was almost $30 in the last 18 months or so. followed pretty closely. and chamb and chambers said a couple of disappointing things and company lost its weight. it will be up today but still only back to 18. closed at 17.35. up a dollar. company is taking advantage of a slow summer afternoon. made a splash with its fiscal fourth quarter results. it earned a 56% jump in profits. and revenue was up 4%. both above expectations. announced a 75% boost to, of its

dividend to 14 cents a share. so let's see. that will be -- it's yield is 1.8% yield or now. so that does take it up to where somewhat attractive in terms of acyield stock and more mature company. it just started paying a dividend last year and ceo john chambers talked about the dividend hike on the "closing bell". >> once you start adding dividends our thoughts would be you continue to increase them over time. in terms of tax policy it absolutely has an effect on how much the dividends would be but it also has to affect how much you invest in this country otherwise. >> it was 8 cents now 14 cents per quarter. had been 32 cents a year. so four times 14. so that's 66 cents. something like that. 66 cents on $18. so that is going to be not bad for a tech stock. company also says that u.s. orders picked up at the end of the quarter.

big companies are buying once again. cautions that europe is still weak and europe could remain that way. we'll talk to an analyst in a few minute. here's the story. let's see what our, what we have to say about it. >> this is the big story. >> then let's talk about it. >> this is an important -- this is really important for apple. >> so for those viewers who don't know what we're talking about apple is looking to conquer the next frontier, the company in talks with major cable operators about letting customers use a new set top box for television and other content. this comes from the "wall street journal," on the front page this morning. apple doesn't yet have any deals with cable operators but talks are seen as a way for april told get into the living room. consumers would have to buy a box rather than rent one from a cable company like many people do with their dvrs. tivo and samsung are already in this business but have not made serious inroads. the question, the killer question is how do you marry

that with content and that's -- >> and the question this may be it. content providers are thinking fool me once, i saw what happened in music. and i'm on to you. i see what you can do to an industry and i'm going to protect myself. so, we're going to see, you know, tim cook is a talented executive but there aren't too many steve jobs around. you know, this is a big deal for apple in terms of tv and if they don't do this correctly i think it could affect whether this become as trillion dollar company or whether it has trouble staying at 600 billion which is already a lot. they got a box already that's $99. you can get the internet on but no cable channels. so this new one would be a box that normally cost $10 to $15 which goes for hundreds and hundreds of dollars but why

would cable companies allow april told have that -- why let apple do it. maybe they will go the route now like they did with the iphone with verizon and at&t where they tell people look you sell our hardware and software you can make money from providing all this but let us in the door. i wouldn't let apple in the door. >> the argument is exactly the argument you made about phones which is at&t's business skyrocketed as a function of the iphone. the question is if you're comcast which owns nbc universal, cablevision or time warner -- i wish becky was here. tim cook met with the ceo of time warner cable. >> i saw that. i wonder where that went. i wish, you know, can we call brian roberts and maybe get a phoner. >> call him. >> and see what he's thinking about whether you -- >> the other thing -- >> let them in the door. >> there was a suggestion. we rent this dvr.

>> rent six ever them. >> for all over the house. >> okay. the suggestion was that cable companies don't make a lot of money off those box which i was surprised by. i thought that had to be a profit center. >> it's what you're buying on the box. >> the argument would be if you don't have to sell the boxes ordeal with these boxes, and you don't have to maintain them if it's apple's problem maybe that's a benefit to the company. the distinction that was also noted in the "wall street journal" piece about the argument that apple wants the cable companies to have to service the boxes, which i'm sure unto itself -- >> maybe i'm wrong about whether it's that important for apple. >> imagine -- >> tv is a commoditized thing. look at the olympics. people like big tvs. >> whatever apple does would be trying to create a pricing system. apple has been about simple. so, i don't know how far the

cable companies really want to go with that. >> all right. tim cook is a talented executive. how many steve jobs are there in the history of the world? so this would be a time, because if you read, i think tim cook's comment we got this thing and we figure it will lead to somewhere but we're not sure where. i don't know. >> steve jobs used to call at it hobby. he said that he was on the cusp of figure out tv. >> oh, my god. wish he was here. >> let's check on the markets this morning. what happened yesterday? we were up two the day before. and we're down seven when it was all said and done yesterday. we're indicated up nine this morning and yet people would argue with me that these are called dog days. anyway that's what's happening on a day on a percentage basis. it's less than one, it's less

than a ten of a percent. oil continues to be problematic for both people on the road and for maybe politicians. we'll see. i paid almost 4.10. i'm a stucker. i do put full premium in my car. >> full premium? >> i go as far as i can. i don't even know -- i may be a stucker. i don't know -- i want octane. >> you have -- >> i have a car -- i want it to be okay. let's see the ten year note which got as high as -- it's raising some eyebrows. we got that handle on there. 1.809. that's going to be psychologically interesting when we hit 2%. time for the global markets report. kelly evans is standing by in london this morning. i saw her earlier talking about stan chart.

boy the regulators here, panties are all in a bunch on this guy. i saw carl evans say finally we have a regulator that doesn't take six years to do something and the fsa should stop wringing their hands and give the guy some credit. i don't know how to see this thing. are you talking about this state regulator we got. >> we've been talking about state regulators. interesting to hear the rhetoric from uk analysts who think it's a lot of the u.s. going after uk banks and going after the london culture. but in fact that's died down a little bit as standard chart as come out of headlines. their shares have respond relatively well. yesterday we saw them up in the range of 4% to 5%. pretty mixed picture here. decliners and advancers roughly split and leaves us flat on the europe stoxx 600.

look what's happening across the board. weaker tone in asia, that's a theme of late. the hang seng down yesterday. one of its worst days since july. nikkei is doing better on hopes that yen will boost export growth. footprint so 100 down .2%. we got figures finally starting to show us what did happen during the olympics in terms of the retail sales story. much stronger than expected. compared with expectations for flat to negative read. june figure is importantly revised from .1 to .8. there wasn't any impact from the olympics seen the august figures could be even more positive but we'll wait and see. xetra dax is up on that. ftse 100 down. you have to wonder if market participants are walking back expectations of qe. bond wall very mixed picture. flip over to currencies that

will give you a sense of the euro/dollar. aussie/dollar down .2%. euro/dollar weaker, down .2. the question is whether that's becoming structural trade instead of one that's indicative of risk off, joe. >> kelly, thank you. i liked that. i like tension between, you know, banks over there and our regulators over here. it's august. fun to have something going on. >> competitive regulation. that's what people are saying. if we have a global regulatory war maybe that's not the worst thing in the world. >> marvin king always popping off about something. the other king, real king -- >> what does that mean? >> so the real king, it's the 35th anniversary of his death today, kelly. we're all -- >> it is. >> we're all shook up.

we're all shook up. >> yeah, you are. >> he had a lot to do -- he inspired the beatles too. you think your colleagues over there think all modern music started in liverpool. but exactly we had dillon here. >> i did go to see abby road. >> i have a picture of the four of us walking across four people in our family. our arms are synchronized and a black cab waiting for us to cross the street. people are there to set up and take that shot. you didn't get a shot? >> traffic in that area is crazy. i didn't get out of the car. but i saw it. i waved. >> the ugly american, drives by, it's over there. okay. all right. thanks, kelly. >> did you read henry blodgett's thing on apple? >> i did. i was just on the web and for some reason somebody came up on youtube said i was the 1 hundred

thousandth viewer of youtube and i was eligible for a free ipad. just now. while the show was going on. so i'm clicking through the things and then it's asking me for everything including my address and home phone number and date of birth. >> it's too good to be true. >> probably is. anybody knows what something is called rewardzoneusa.com. something very bad is happening. >> anybody calls on phone with a cruise, just hang up. >> i tell them to take my name off the list. let's talk about the markets if we could. if anybody does know about rewardzoneusa. >> just the idea of a free ipad has you all a flutter snichs hundredth thousandth person on their site. we're awaiting results from walmart and jobless claims and housing starts at 8:30 a.m.

eastern opinion. tim freeman is principle of derivative sales. good morning to you, sir. we are sort of in the dog days, i think. but unlike joe biden, four times four -- 56. i was doing it on tv but there are people calling me joe biden. it's the 20th century, isn't it? did you hear about that yesterday indon't mess with me i'll put you back in chains. did you see palin, you got to pick hilary. i love it. >> so tim, figure out what will happen this week. forget what will happen next week or possibly the week after. what will happen the day after labor day? >> day after labor day? one thing i did want to talk about this morning we need to look at long term trends given the volumes and everything that's not going on in the marketplace. we can't discern anything. the market is up a couple of handles, down a couple of

handles, it means next to nothing. the big trend i've been watching are ones if we look at the term structure of vix future contract and what's powerful is shorter data vix contracts are significantly lower than longer data vix contracts fun look at price returns when we're looking at that dynamic they are very powerfully biassed to the upside. we didn't see a spike in vix yesterday. >> explain that. >> basically the forward market is saying risk right now is very low. dealing with a spot index of less than 15%. we're dealing with 26 or so percent for first quarter of 2013. so basically we're not seeing excessive risk around the election s. >> are you surprised there's not more volatility given this fiscal cliff issue is a comment. the election is coming.

something in europe is coming. >> what tissue everybody will start to talk about it's not just an executive branch issue. this is an executive and legislative branch issue. both parties need to come to the table and reallyize they have a problem to be solved. >> how much do you care about walmart at 7:00 today? how much do you care about the jobless -- >> we care about cisco and jobless claims. we care about walmart to the extent that it's showing the recovery is at least not abated. we're in a slow growth period right now. investors have accepted that the the volatility markets are telling us that. it's the trend of being forced into equities and declines that i speak with continue to be biassed to the long side. they are incredibly frustrated. if i was an investors i would significantly look at bank earnings down the road because trading volumes are low. >> when you say bank earnings. >> j.p. morgan, bank of america.

i would be leery. trading revenues down the road are an issue. as we look at financial regulatory reform that's happening and will be implemented taking away significant profit streams that they are experiencing right now. the other thing i would point out is vix did not spike on this huge treasury trade off yesterday. that's pretty significant. usually when we start to get concerns that qe will be pushed off toni extent the equity market has reacted pretty negatively. >> qe is not coming down. now the bet is no. >> it seems it. the fixed income investors we traded with yesterday have been talking to significantly see it's shifting that view and very positive the equity market didn't trade off on that yesterday. >> thanks for wake up early. >> coming up a one time king of tech tries to recapture some of its mojo. will it take more than a dividend boost to get investors

back into cisco. is the stock a buy right now? elvis presley died 35 years ago today. since then king has only grown stain tur and in terms of dollars and big business. we'll talk to a member of his inner circle about the elvis legacy. king felix is perfect. seattle mariners, felix hernandez strikes out 12 and pitches the 23rd, only the 23rd perfect game in baseball history and the first in seattle's history. stay right there. more squawk next. ♪ [ male announcer ] aggressive styling. a more fuel-efficient turbocharged engine. and a completely redesigned interior. the 2012 c-class with over 2,000 refinements. it's amazing...inside and out. ♪ join mercedes-benz usa on facebook

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cisco beat fourth quarter estimates and raised its dividend by 75% to 14ense a share but warns about continuing weakness in europe. joining us from the new york stock exchange is brian white an analyst for topeka capital markets. we alluded to it earlier, long history of watching cisco and in the last what is it, would you say, brian, the 24 months that sort of uninterrupted spurt of better than expected news ended for some reason and chambers became down beat. have we now hit an inflection point? >> if you look what's happened over the last 24 months, cisco

came out of the downturn gang busters. they were blowing through numbers as recovery in the switch sean router market and then they got hit with public spending started to slow. cisco does about 20% business in public spending. they were very early to sound the siren on that. i think what you saw last night is just steadier trends. i certainly wouldn't say we're off to the races. inline outlook. europe will get worse. they did see some stabilization in the u.s. enterprise market so that was encouraging. >> $92 billion company. one of the first companies ever to be a $600 billion company. so i remember it in terms of stock price at $80 after it split a bunch of times. came all the way down after the bubble in the late '90s and into i think single digits but got back to 30 or 35 a couple of years ago. now back in the teens. any reason to think it's going back to 30 any time soon.

>> you know, if things start to stabilize over the next 12 to 18 months it cab mid-30 or mid-20 type stock. i want trades at six times earnings, x cash. increase dividend 75% last night so they have a 3.23% dividend yield. that's very attractive. and they are a company that's probably going to grow top line 5% to 7% and eps targeting 7% to 9%. they are tapping into a value investor base that maybe they haven't been able into the past. i think the valuation right now is very, very attractive and even on a price to tangible book more attractive than at the bottom of the downturn in 2009. it's got that on its side. the dividend was a big plus and women will like that. >> they tried to do that it looks like. tried to make a statement with the 75% boost and that brings it to a, you know, a competitive

level with lot of much older and companies that aren't growing nearly as fast as cisco. what's your five year compound growth rate for earnings per share at cisco? >> you know they talk about 7% to 9%. that's very reasonable. could be a little bit higher. >> and supposed to earn a 1.92 next year. so that's really not that expensive, is it, 3% yield and just barely in double digits in terms of price to earnings and then growing at near double triple digits. >> exactly right. we've cut the buy. got so much cash. they tapped into new market the silver market in 2009. they are a networking player. that's what we know about cisco. >> great, brian. chambers is happening. he's a smart guy.

thanks brian. see you later. >> before we go. this is the scam. can you see this on your camera. >> you're a stucker. >> thank you. looks like youtube. i want says thank you in the youtube logo. congratulations. your today's 100th visitor. i get a free iphone. hundred thousandth. i'm a stucker. >> i have never seen you so excited. you haven't prepared for an interview or read henry blodgett's analysis on apple. . >> coming up america runs on dunkin'. we got the ceo. you know what's complicated? shipping. shipping's complicated. not really. with priority mail flat rate boxes from the postal service shipping's easy. if it fits, it ships anywhere in

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. good morning, welcome back to "squawk box" here on cnbc. i'm joe kernen along with andrew ross sorkin. just get away. >> i'm not there any more. >> you're not getting a free ipad. you can't accept it anyway. >> if i was the hunt dreadth thousandth visitor. >> no. >> why not? worth $500 or something. >> you can't accept things. when you signed on to be journalist here you signed away those rights. >> die take a vow of poverty. >> in headlines this morning -- you know that. retailers sears is reporting a

second quarter loss of 76 cents a share. revenue was slightly short of what analysts were looking for at 9.5 billion. bankruptcy judge denied a request by american airlines parent company amr to cancel a contract it has with its pilots. american sought that move as it works its way out of bankruptcy. who are they merging with. u.s. air eventually. unless you live in michigan you should probably get up and go to work today that's where a $337 million winning powerball ticket was sold yesterday. no details on the winner just yet. >> get that money from goldman sachs? >> yeah. the check they wrote for you to go easy on them. that's fine. >> that's fine. >> where else would we get that supplemental income. that's horrible thing to even imply. that's devious. >> let's talk about the world markets this morning. take a look at futures as we

speak. >> trying to catch my breath. >> they believed ones to do it. dow looks like it would open six points higher. nasdaq open four points higher. s&p 500 higher as well. oil boards, up to 94.29. how toes that equate, joe, when you do the premium stuff? what's the -- >> don't know. i'm getting some stuff, people on twitter. octane doesn't matter unless you're using your car for drag racing. 87 is fine. >> go to the cheap stuff. >> don't know the premium for between, 94. but it's over $4. in chicago i think and in los angeles it's already been well above that in different parts -- all depends on refining and crack spread. >> i want to get to our guest. the ten year note real quick if we could.

there it is. 1.8. keeps going up. still remarkably low historically. anyway let's get to our guest. one of our favorites and it's about to become a lot quicker for you to run on dunkin'. the company is launching its mobile app so you can get your fix faster. so before we even talk about the food and talk about the consumer, do you have some news this morning, you're launching an app. what does it mean it? comes, i should say, dare i say a week after starbucks teamed up with square. everybody is trying to figure out how to do electronic payments. others are getting together.

what your guys doing >> at 2:00 we launched this new app. i'm very excited about it. it's an app that means that want you can go into our stores and as you say pay even quicker with a dunkin' card. you can buy the card. it can be a virtual card. >> you won't even say their name? >>, i can't. and then -- >> baltimore coffee. >> and then i think the real difference is that so many of our guests are loyal and they want to give people dunkin' products. you can do it by text or e-mail or facebook. i think this will get a lot of play. i tried this many times during testing. it works great. you can scene it to people all over the country. so i think this will build our loyalty but so easy to use.

on top of that the restauranter can go around new york and find the closest did you thi esst du. we found a store by using tap. we have the nutritional information on there. we got so very good low-fat products, andrew. >> the question that i have about all of these apps, all these stores are building their own app, individual apps, what i thought dare i say starbucks, what i thought was interesting about square, square will be used broadly across different stores and retailers, et cetera. ultimately, two, three, four, fire years out do you think that individual companies like a dunkin' will be signing on to an

electronic payment system. >> it will change very quickly and lots of moves in one direction or another direction. you'll have both. i think you'll have consolidated vendors and individual apps like ours. i think the future of this is going to be extraordinary. i think things like voice recognition, ordering on apps will be tremendous on whether you can do thant a consolidated form is the real question. >> for a retailer like dunkin' to build its own app not cheap. there is technology behind your stores but this is a whole new kind of avenue for you. >> we use some of the best experts out, there people like digital test. one of the benefits we've got particularly as we grow some of these stores we got very significant advertising fund. and our franchisees are right behind us. so i think we have the resources

to keep developing this. >> let's talk about the consumer and dunkin'. one of the few growth stories in the food world. >> we have a jewel growth story because we're not even 50% built out in the u.s.. the economic of our new stores in the west are very attractive. then as international, we're in the process of growing. our guidance this year is that we'll open over 600 new stores globally. so growth is very important to us. >> will this market be -- >> biggest market is here and internationally it's korea. we got over 1100 bass kkin robb in japan. growth all over the world. >> you don't have to feel like a one percenter. six words to describe what you

want to pay $4. you can feel like a normal working man. you can buy a medium sized drink. your marketing guy here with you? >> my excellent -- >> just want to run a couple of things by. "squawk" runs on dunkin'. work with me. the real "morning joe" runs on dunkin'. i wrote those down four. run those two things by him. think about it. >> i think it's a brilliant idea. other people have done this. they get sponsored and money comes rolling in here. >> we like to consider ourselves pioneers. we should be working on something special. >> you got some ideas on,000 structure this. >> we can talk about it. >> new york mayor bloomberg your medium sized coffee is bigger than 16 ounces. >> yes. we don't think is this way to tackle obesity. we're working with the mayor. >> how big is a large drink?

is there sugar in it? >> you can't get an iced coffee, am i wrong, a 16 ounce iced coffee that doesn't havasu gar in it. >> this is what's very difficult about these regulations is that it covers tea and coffee. >> you're kidding. >> yeah. and what it also does it means that in our system we actually ask someone like you and drew you want sugar in or sweetener in, a customer service so covered by telegraph recognition whereas -- >> you can serve to it me. >> can't serve to it me. >> if i go across the street i can buy the same -- >> exactly. buy a 32 ounce. >> welcome to the nanny state and the problems from it. and this is the guy you love. >> i've tried to see mr. bloomberg but we had a very good meeting with the health department. we went to the public hearing. we're going back to talk to them again. clearly they are on a path of

trying to implement this. we're going influence them that it is ridiculous to exclude convenience stores and ridiculous to have coffee and tea. >> you can't smoke a cigarette in times square because it might dilute the bus fumes. >> did you see michelle obama on thing "tonight show" with gaby. mcdonald's -- >> she yells. it was funny. they were laughing. >> a little truth. it bothers me that -- >> michelle obama was excited about gaby eating a mcmuffin. >> mcdonald's san american company. i don't think the president and first lady should be disparaging mcdonald's products. i don't think. >> we believe we should give people the choice. >> in moderation. >> most of our stores around the country, we have a big sign that says be smart.

under 300 calories. we give people the choice. we encourage people to work out. we're affiliated with sport. we think that's the way to tackle obesity. >> if we get to where you want to go, where the government is a single payer and provides all our health care then we do need to worry what our neighbor does. when it gets to be individual responsibility, if he wants to have a mcmuffin fine, it's not my problem because we haven't nationalized it. >> it already is our problem. >> it isn't. it's a small percentage. why? >> we're paying -- >> 1% of health care inflation is the emergency room. >> we're going -- >> 75% of people are already covered. 80% already have insurance opinion these are all straw men and these arguments. thank you. will you take it. >> i'll take this. >> you know, spice it up a little. >> john does great things. we'll take this. >> good luck with the app.

oil have to download ain't go dunkin' may want to do it. >> question or comments anything you see here, e-mail us at squawk@cnbc.com. the dog days of summer or calm before a big rally. we'll get the traders take from chicago. [ male announcer ] at scottrade, you won't just find us online, you'll also find us in person, with dedicated support teams at over 500 branches nationwide. so when you call or visit, you can ask for a name you know. because personal service starts with a real person. [ rodger ] at scottrade, seven dollar trades are just the start. our support teams are nearby, ready to help. it's no wonder so many investors are saying... [ all ] i'm with scottrade. >> question or comments anything press "0," i'm here. 'o

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all right. where are you going? >> i was -- >> weekly jobless claims. >> so, you were leaving the set. >> i was going to leave the set for a moment. >> for the ipad. >> there's new food. >> it's free you're out of here.

weekly jobless claims coming up at 8:30 a.m. eastern time. will the numbers move the needle. seriously go. joining us now, ira harris. 1.8. on a percentage basis it's small but people are looking at it and raising some eyebrows? >> we've climbed this great wall which has been good and you've seen it here and everyone doubted it. here we are. as we talked about last week this whole concept, we'll work around the margins to look for other areas of value that underperformed relative to what the equity markets and risk on, risk off. >> the wall street types have a lot of sayings, they have a saying for everything, sell in may and go away but we're waiting for a summer rally. how do you do both? which is true. summer rally or sell in may.

>> this is so silly because this year we were exactly where we were on may 1st. we got a little bit of everything. everybody should be happy. we put that one to bed for this summer. >> it's dangerous, a dull market is one that's scary to short and slowly been moving higher, right? >> but gold, if you look back to relative to where the equities were, if you use may 1st, gold as underperformed. one of those assets that could rise. there's other things that play, again, markets right now complacent. draghi bought this complacency. people going okay i know nobody will mess around with europe for the moment. that may change in ten minutes. but people are being forced back into the equity markets. >> thanks, ira. we'll see you later. >> andrew?

>> sir. yes, sir. i'm here. i'm here. >> let me read this. >> here. no. >> any assist. next >> has your name on it. >> i know. >> the king's lasting legacy 35 years after his death the icon lives on. still a big money maker. huge. we'll talk to a member of his inner circle. check out those back up dancers, more jailhouse "squawk" in a minute. >> you saw who was in there? ♪ enefits package... oahhh! [ male announcer ] it made a big splash with the employees. [ duck yelling ] [ male announcer ] find out more at... [ duck ] aflac! [ male announcer ] ...forbusiness.com. ♪ ha ha!

blue suede shoes. >> if you were watching yesterday our guest host best selling author ben mezrick was wearing blue suede shoes. don't know if there's connection to the vrls of the king's death. it was definitely very big, bold statement. ♪ don't step on my blue suede shoes ♪ >> are those todds? you're not wearing blue suede shoes? >> no, but a movie producer, author, even though you're a journalists, you can get away with it. >> i'm wearing brown shoes today. >> you haven't got the new ones

yet. >> i haven't worn them yet. >> he knew elvis. all this week the city of memphis is remembering the king during the annual elvis week. 50,000 to 60,000 fans will be on hand to mark the anniversary of his death. author of the popular book, "elvis my best man." good morning, great to see you. >> good morning, it's early in memphis for me. >> 35 years, i remember it like it was yesterday. you must remember like we all do when president kennedy was shot. where were you when you heard the news? >> of course i'm in radio and television in memphis, i was doing freelance work for a theme park and i was in their office and get a call from my morning guy, hey, george, bulletin came across that elvis passed away. i said i don't believe that because we had the rumors a couple weeks ago when he was in the hospital. i called graceland and vernon

presley's dad's girlfriend answered the phone. i said this is george klein. i said is it true? she said yeah you better get out here as fast as you can. i jumped in my car about 100 miles an hour to graceland, drove in, went to the house, everybody was in turmoil, mr. presley runs up, grabs me, "i lost my son, i lost my son" everyone crying, it's a sad scene. the doctor comes in, we gather around and said it's official, elvis passed away this afternoon. >> probably like it was yesterday for you. you knew him from early on. did you hang out with him in high school or just met him in the eighth grade? >> we met in the eighth grade. he moved up from tupelo, mississippi, to our high school in north memphis and as we got to senior high school i became class president and i produced the senior class talent show and he won that talent show.

i said maybe you guys got a chance. >> did you, was he just cool all the time? he was incredibly good looking, incredibly talented, sexy, what was it, all those things i guess, if you could put your finger on it, even in high school what could you tell? >> in high school he was different. we call it the velvet hammer in my book, "elvis my best man." he'd come to school, like jimmy dean collar turned up, blackberry pants with the stripe down the side or wear a sport coat, in a quiet way and with his guitar around school singing at lunch time but he was making a statement but in a nice way. >> and i guess you couldn't have told at that time the enduring quality and just, georgia, as a moneymaker, i don't know how you put your finger on what is so enduring about elvis but i think that's what they say about certain -- we got to go, george,

all women want to be with him and all men want to be him. george, we appreciate you getting up early this morning and you know, even on a business show, we're celebrating elvis' life, appreciate it. >> thank you very much, guys. coming up next, henry blodget making his way to the set from facebook and social networking to the big money issues at the center of decision 2012, all next on a big two hours of "squawk." [ male announ] to hold a patent that has changed the modern world... would define you as an innovator. to hold more than one patent of this caliber... would define you as a true leader. to hold over 80,000... well, that would make you... the creators of the 2012 mercedes-benz e-class... quite possibly the most advanced luxury sedan ever. ♪ join mercedes-benz usa on facebook for the best summer sweepstakes.

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money and politics at center stage. ceo henry blodget weighs in on the economy and the race for the white house. and meet one of the real

gordon geccos. >> greed, for lack of a better word, is good. >> asher eidlem eer edelman is . and get instant analysis you can only find here. the second hour of "squawk box" starts right now. ♪ money honey, money honey, money honey ♪ ♪ if you want to get along with me ♪ >> a little elvis this morning. welcome to "squawk box" on cnbc, i'm andrew ross sorkin along with joe kernen. becky quick is on vacation but i promise she will be back next week. investors are looking ahead to key economic reports, housing starts coming out at 8:30 a.m. eastern and at 10:00 eastern the widely anticipated philadelphia fed survey so keep your eyes on that. cisco systems also shares getting a big boost after the

company beat estimates with its latest quarterly earnings and boosted dividend by 75%. quarterly payout 14 cents per share from eight cents and cisco started paying a dividend blast this year. shares of facebook today the day the lockup on 271 million shares expires, allowing insiders to sell their stock for the first time. we've also got interesting news out this morning in the new york times reporting jon corzine may be off the hook criminally. prosecutors decided there will be no criminal charges and perhaps we can talk about that aany moment. getting you caught up on the futures across the board, green arrows up 18.22 if the dow opened up right now, nasdaq about 7 points higher and the s&p 500 would open up about 2 points higher. joe kernen that's not a bad way to start the morning. >> not bad and walmart is apparently just hitting right

now. the estimate for the company was it $1.17 in the current quarter. we are seeing, it looks like about $1.18, second quarter earnings per share $1.18 on revenue. the revenue number and henry blodget is here, but it's always a revenue number i like to talk about at walmart, $114.3 billion. $114.3, slightly below expectations, it was $115.7 was the estimate. the company sees third quarter of $1.04 to $1.09 and the estimate is $1.05. comp. stores rose u.s. 2.2% in the 13-week period, and then you've got all of the sam's club and other things that come along. i want to see a ten-year chart, too, because you can see finally, look at that, finally a move from 50, finally broke out

and i was talking about cisco, henry, you watched cisco a $600 billion company, still under 100. this finally broke out from where the multiple contracted as the earnings per share doubled every two or three years or four years, whatever it was, and it finally caught up with that 40 or 50 times earnings to where just from earnings power it started moving the stock. >> dead money for ten years. >> because of their multiple coming down. >> absolutely. >> it was trading at 40 or 50 times earnings back in the growth stock or the blue chip bubble back in the late '90s along with coke, general electric, so many companies, you can look at, where the earnings and revenue continued to go up, even home depot continued to go up but the stock didn't do anything for a long time. >> what was interesting is it didn't get smashed when the market crashed at all. the s&p was down almost 50%, walmart hanging in there but now it blasted off for the moon in the last 18 months. >> henry blodget is a writer for yahoo! finance and cnbc and

yahoo! recently you heard probably, have a business alliance. you're famous for so many things, we all remember, i was talking about the famous go-go days of the late '90s when the name henry blodget, that's how people remember you. now you've got a completely different second career that's going gangbusters and good to have you here today. >> great to be here, thank you. >> i was going to talk about walmart. i didn't know whether to take it, i don't want to take it to the bribery stuff, andrew, but you see all this stuff, if you're a shareholder and you wanted to really get a firm grasp, and let's just not even talk about more ralt or taking the high road or u.s. companies setting the standard for the world, but if you were just purely a corporate rater type share holder that only cares about returns and you were looking at money spent and money accrued, even the pr hit along with any fine that finally comes

from the way they did business in mexico with the stock at 74, you'd have to wonder, would you go back, would you change anything, even now, because when you're in rome -- >> are you asking him that question -- >> i'm saying the jenkins path saying it's morally ambiguous and the good that was done in mexico, for the country of mexico, which has its own problems with the way business is done down there, all the corruption, the more they're brought into where all these employees that they have now walmart, all the consumers that benefitted from walmart's pricing, all the local areas that have benefited from walmart being there. >> yep. >> would anything cause you to think maybe we need to change the fair practice law here and allow it to make it easier for companies to do business with local, with antiquated local norms? i'm just bringing it up to you.

>> local morays? >> he asked you, you're the guest host, we ask questions, you know. >> i think somebody has to be said if that is simply the way business is done, maybe there's something to that, in that environme environment, are they called bribes there, is that what it is? we don't even know what, the allegations sounded horrible in "the new york times" your newspaper. is that the way they're viewed there, i don't know. >> there's very few times when end justify the means, but i can come up with a few. i can. i can come up with -- >> i appreciate the point. >> waterboarding if you know a guy has a bomb somewhere -- >> now we're getting out -- >> i can see where you want to, or the other thing sub-saharan african nation run with dictators and you've got all of these vaccines that you want to bring to children there that can, cost three cents for a vaccine, could you vaccinate everyone in the entire country,

bill gates, but the guy is saying nothing can give in unless you give me a couple million dollars but there are times. >> this moral ambiguity -- >> it's killing me. >> it's a challenging issue. >> you're willing to accept a $600 ipad because you were the 100,000th user. >> i went to yotube actually. i don't know if you heard this. >> he missed the first half of the show because he thought he won a free ipad which would have been his seventh. >> i would have been the 100,000th visitor to youtube today and therefore had won an ipad. >> why is walmart down, it closed at $74.45, revenue number. >> expecting more? >> and then you look at the comp. store sales numbers, the

revenue view doesn't look bad for the year. there are so many metrics. no surprise in guidance for walmart is what one of the headlines is, that says maybe they were looking for, maybe they were perceived as being conservative and they're not seeing the company pick up the numbers, which might be disappointing. and you know what? run up to $75 a share. >> absolutely, a huge run, so why not come back though. >> the other thing i wanted to talk about, maybe we can delay talking about politics, is apple. we talked about that at length earlier today and you had some feelings about apple tv which i think is a huge story because that is the next thing they need to do, isn't it? >> it's potentially huge and everyone's been very focused on the idea that ap.logical come out with an actual tv, it's called a sheet of glass. >> you'll be able to say turn on? >> it's siri put on joe, let's see it, and that will happen. >> they would put me on because the other guy's name is charles.

>> that's right. >> so if you said joe it would probably come up because there was already a chuck scarborough. >> they've been talking about that in recent months, that's dropped off the face of the earth, nobody's heard anything about it, but the idea is apple is going to somehow come n disrupt the cable companies, build this great tv solution, always seemed challenging because of you guys, the cable companies, and so forth. consumers love the ease of tv so the news last night from the "wall street journal" was now apple wants to talk to the cable companies about being a part of the box. >> exactly. >> that could be profound because then consumers get their tv and also the apple functionality in the box. >> why am i disappointed it would be just a settop box run on normal tvs? everybody's excited about eventually having hardware from apple. >> this could go in the hardware. just a chip set and software so

an interface that would cross any set top box, cable provider, dish, all the networks and so forth. >> fool me once, the music industry got a taste of if you're asleep at the switch what apple will do to you. >> for apple to do this the apple way they have to disintermediate, they have to go to alacart pricing. with some of the other products people are trying to set it up so you get a certain number of channels but don't have to buy all of the channels. >> comcast is not going to lay down and say thank you, sir, may i have another, getting spanked. >> apple has come to the conclusion it needs the cable companies more than it thought to break into this. >> to share. >> exactly. cable companies have a big choke hold on pay tv but slowly getting disintermediateiated. lots of the viewing is through itunes and amazon and hulu and netflix, it's slowly working around them. if they could get a piece of

that revenue if it goes through our box, we get some money from that, that's attractive long-term. >> who got the best on the iphone, at&t or apple? who got the best of the other person or is it 50/50? >> apple was hurt by the fact it was a five-year deal. >> they got the best of apple on that? >> no, apple made piles and piles of money. >> it also made at&t a player. >> it was a good deal. >> it could be structured for both companies to benefit even in this case, too? >> even in this case. i'm not saying long-term apple wouldn't gain enough leverage ound the world but right now it's happening. >> henry you've recently written you think apple may onnen the downswing. maybe i was reading into this idea that the iphone today doesn't compare in your mind to what for example google and android are doing and what that ultimately means for the new iphone coming out in the fall and totally seemed unimpressive at least to you.

>> the picture of it, i have to say i was excited about the idea of the big samsung screen and i know it's the mcmansion of phones and all that, but it looked great. >> you think the iphone 5 will be a failure? >> no, i think it will be a huge product but i think the competitors have caught up. the iphone used to be a full year ahead of everybody else. now i think it's in the mix and if people are disappointed by that screen people may say the samsung galaxy x3 is just as good if not better. >> is this a reflection of tim cook running the company, management, what does this have to do with? >> it's possible this is the lack of steve jobs' influence. it's would too early. let's see the phone and see -- >> it's a compelling story, this is the biggest thing, finally the rubber meets the road. tim cook is a talented executive, we keep saying that but steve jobs was like, you saw what he was able to do. is this when we realize wow, we needed -- >> it's taken five years to catch up and whether steve was

there or not. >> but you said, in the book, he finally had it figured out. >> he said i finally got it figured out. >> now he's gone. >> the big issue for apple's margins, the iphone has been able to command the most profitable product in the world, single product. there's going to be pressure on that going forward so that's why this product has to be a blo blockbust blockbuster. >> you look at that $600 billion number never has been sustained by any company and sooner or later there will be a trillion-dollar company. >> apple is in a great position to do that, absolutely, many product lines are very strong. it's not expensive, you look at the stock and it's why when they whiffed the last quarter the stock didn't go down much because the valuations are reasonable. >> we used to not use trillions for unfunded promises with entitlements and we got through that number and use it ease yil n easily now. you can't go through trillion and conquer it easily. read this article about jon

corzine, interesting that he's apparently -- >> where is he? >> i don't know where he is but he's not on the show and he's not going to jail. >> promise this? >> that's what's in the article. comments, questions, shoot us an e-mail @squawkcnbc or squawk@cnbc.com. our quitter is @squawkcnbc. geoff lewis principal at founders fund is coming up right after the break. ♪

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the thiel fellowship searched wide for their "20 under 20" great show. our next guest sold his own startup and backing up best performing businesses in the tech space today, joining us on the set geoff lewis principal at founders fund and mentor for the founders institute as well as the thiel fellowship. thanks for coming on. >> thanks for having me. >> i don't know if you had a chance to see yesterday's show. we had ben mezrick and talked about the american dream and made a case the american dream is not dead. i think you have a different view on this. >> i don't think the american dream is dead but i certainly don't think the new american dream is silicon valley. i think the new american gold rush is what's happening in silicon valley right now where as a venture capitalist there

you see the region being flooded with people, new entrepreneurs starting mostly crap companies and vcs playing the momentum game trying to hope that the greater fool theory will end up playing out and our job at founder's fund is try and be responsible amidst the insanity, try and find the few good companies each year that will change the world, andrew. >> does that mean this is all going to end badly? >> i don't know how it's going to end. we try to find the truth with individual companies and for some people it ends badly, for some people very well. >> facebook, stock is obviously down. you've seen what's happened with zynga and groupon. that's the public market. how has it changed the way you're think being buying companies and investing in companies? >> it's had no impact for us because we're not playing the momentum game. we're looking for companies where there's a fundamental, technological and business model innovation that is enduring. we take a ten plus year time horizon on our investments and invest in companies with

long-term value is not concerned about what's happening in the public markets. >> remember we asked another guest what the next big thing is in social media and i was just thinking only people sitting around on your computers supposedly doing social things sooner or later don't you need to do something social instead of being on your computer? how many bells and whistles can you put on your computer? it's got to -- >> i think the question to ask is facebook the last social media company. i can't talk about facebook obviously, my colleague, peter thiel is on the board, but socially is largely played out, a good case can be made. >> people on that six hours a day, they should go out. >> can we talk about facebook generally, not inside information? >> not today. >> earnings don't look low, if anything they look a little high. >> that's short term momentum oriented view. >> peter is brilliant.

does he grouse around the office saying it's grossly undervalued and going to the moon or he's glad he took the money off the table. >> there's no grousing at founder's fund. we're too busy. >> i'll help you here, are you not looking at social stuff anymore? >> we are looking at social stuff occasionally so for us it's really about is there something fundamentally different, if it works can it unlock a huge market. there are probably opportunities in social. >> move on, andrew, geez. you look totally invested in this whole idea of social stuff. go out. >> i have a different question for you. i don't know if you read the article, i wrote a piece probably about a month ago quoting sean parker, founder's fund. >> yep. >> said he's an entrepreneur and the true entrepreneurs get out of the entrepreneur business and get into your business, the venture capital business andu

actually it's a sad state of affairs. i'm not looking at you directly. >> yes, you are. >> well you were an entrepreneur and now -- what do you make what have sean had to say? >> sean is far more accomplished than i am but the corollary to what sean said is that there are not enough vcs who are entrepreneurs. what we do at founder is want a team of vcs, went through the trenches and were entrepreneurs. it's great to be an entrepreneur if you're investing in entrepreneurs you should have been one. it's like being a football coach and never having played football and you have all of the finance type vc soz i'm happy with where i'm at right now. >> talk about what you said earlier, huge gold rush in silicon valley, most vcs are throwing money at anything. you're throwing money only at things that work. every vc says that. why is it the vcs behave like public market investors, a huge herd all go charging off the cliff at once and why is that

not going to happen this time? >> peter thiel always says the most contrarian thing is think for yourself. it's hard to do, we've managed to foster a culture at founder's fund where every individual partner, bruce, brian, peter, luke, sean, everyone is thinking for themselves making their own decisions, that's the culture of the fund and that stems from the paypal lineannual lineage of the fund. our irr plays out in the facts. >> do you remember, he said something, geoff, about taking all this data and somehow figuring out how to use it to make some money, i think was what she said. >> it was amorphous statement to me. >> give us something better. >> i think you can't pick themes. you have to look at each individual company and find the truth in that company. we don't try to pick themes. we learn about different spaces

when we see interest companies. >> we have to go. i'll ask one last thing, apple or google? >> absolutely apple. >> we'll leave it there. thank you for coming in this morning. the u.s. soccer team traveling south of the border and doing something they've never done before, details after the break. he was the basis for the gordon gekko character, there were a number. >> carl was. >> turning a keen eye to art, asher edelman will be with us. . time now for today's aflac trivia question, which decade is known as the golden age of television? the answer when cnbc's "squawk box" continues. aflac pays cas. aflac! ha! isn't major medical enough? huh! no! who's gonna help cover the holes in their plans? aflac! quack! like medical bills they don't pay for? aflac! or help pay the mortgage? quack! or child care? quack! aflaaac!

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now the answer to today's aflac trivia question. which decade is known as the golden age of television? the answer? the 1950s. >> aflac. it's a first for the u.s. men's national soccer team, they beat mexico in mexico, the

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elvis fans gathered to celebrate the 35th anniversary of the singer's death. elvis's ex-wife priscilla presley and daughter lisa marie gathered. this is so unfair. >> it is unfair. and henry's laughing at you, too. >> we have a lot more coming. >> we're always laughing. >> i can't keep a straight face. we'll see you after the break. >> azteca. genoa, they're easy. tdd#: 1-800-345-2550 and the streetsmart edge trading platform from charles schwab... tdd#: 1-800-345-2550 gives me tools that help me find opportunities more easily. tdd#: 1-800-345-2550 i can even access it from the cloud and trade on any computer. tdd#: 1-800-345-2550 and with schwab mobile, tdd#: 1-800-345-2550 i can focus on trading anyplace, anytime... tdd#: 1-800-345-2550 until i choose to focus on something else. tdd#: 1-800-345-2550 trade at charles schwab for $8.95 a trade. tdd#: 1-800-345-2550 open an account and trade up to tdd#: 1-800-345-2550 6 months commission-free online equity trading tdd#: 1-800-345-2550 with a $50,000 deposit. tdd#: 1-800-345-2550 call 1-800-836-8799.

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welcome back to "squawk" on what's turning out to be a crazy thursday. walmart earning $1.18 per share for the second quarter, one cent above estimates with the retailer also rating its full, raising its full year guidance but revenue was short of consensus and the raised guidance short of street estimates as well. news on apple we've been talking about around the table, said to be talking with cable operators letting customers use an apple set top box for live tv content, despite the talks apple

doesn't appear to be close to any deals with cable companies says the "wall street journal" so keep an eye on the itv speculation. the winner of the $337 million powerball drawing last night is probably not you, joseph, or you, henry, or i apologize, but the winning ticket sold in michigan, there was one second place, $1 million winner sold here in new jersey, so -- >> you don't buy it. >> you don't buy a ticket? >> no. >> anybody in the family, producers around here? >> they do. >> there could be a winner in the building as we speak. >> it's a huge tax on the stupid. >> that is true, regressive, dare i say. >> the odds are so low it basically nobody actually wins. i know people do but i round it down to really nobody wins and if you're going to win the lottery, you better start checking for lumps because the chances are that you're going to get some horrific disease long before you win the lottery.

asher edelman is here, legendary banker, sandy weill said the nation's largest banks should be broken up. the man who worked with sandy, one of the world's leading corporate activists. i used to say asher edelman, 25 years ago, i think you may remember him now, we're going to talk about this as an inspiration from gordon gekko, that's not true, currently the ceo -- there are a lot of people that bandied the names out. you made a great point gekko went to jail, you never went to jail. ivan bosky went to jail, you disagreed off camera, the name of the book was "merger mania: arbitrage, wall street's best kept secret" but they pulled it because they found out he was sometimes there was a suitcase full of cash that he was giving to investment bankers under the

table and they would tell him what -- i could figure out some mergers if i was willing to do it that way. i don't know if he put that in the book, now we've got it straight. you're not ivan or gordon gekko. >> i'll never forget ivan bosky coming to me and saying are you going on vacation again? how do you manage to make a living doing that? i said i only want to be the second richest man in the world. >> behind him. >> you get it. >> i'm pretty slow. >> i don't think so. >> we also had -- >> sandy on. >> you had sandy and then jimmy dunn on and it was the same day son of sam was deploring gun violence and made the analogy sandy not liking big banks was like son of sam. >> not very. when sandy pulled to get rid of the old rules his idea was to create a big franchise over a bunch of financial institutions,

and combine them and get the benefits of a bunch of companies working together to sell financial products and keep costs down. i don't think sandy ever had in his mind to make his bank into a free money hedge fund which is really what happened. i think sandy was -- >> that's what happened, with zerp and everything else. >> with everything. back in the 1960s, when i first worked with sandy it was a different world, you had brokerage houses and they serviced clients. you had investment banks who took the risk of underwriting companies that were trying to grow or not to grow but to become public and you had banks who were responsible for gathering money and lending it out responsibly. >> would you say the end of glass-steagall caused the financial crisis? >> i think it was on the way, because you had your investment banks behaving no more as investment banks but also as free money hedge funds because they took accounts where they had free money and they operated

as very highly leveraged -- >> the reason i asked is when you think about the crisis and think about lehman, bear, aig, fannie, freddie, they had nothing to do with it, wamu or merrill, it's unclear that glass-steagall was the issue. >> no, the banks were leveraging 5,000 -- >> that won. >> if you take the derivatives in and nobody else could do that. they were not only leveraging 5,000:1 but leveraging on free money and guaranteed more or less by government whatever happened they'd be brought back to profitability and the government in fact brought them back to profitability. >> what's the answer? >> they're underwater still and the only real answer is to separate the investment side and the banking side. we have to go back to gathering funds, lending them out responsibly, that will help the economy a lot, and we have to stop free money as hedge funds. >> is that a safer system? the reason i ask -- >> is that a safer system, to the extent people talk about

safety and soundness. the reason i ask is you think the ultimate answer to the financial crisis was, we didn't want investment banks hanging out there by themselves with a very low cushion, capital cushion. we ended up banging them together with big banks making them bank holding companies and because that seemed to be the answer. i'm not saying it was the right answer but i'm saying that did seem to do something. >> i think we made three bank holding companies and that's after lehman was turned down but nobody was going to turn down goldman. they had too many people in government and of course they had to do morgan stanley et cetera. i don't think that's the issue. i think the issue is that you have to control the investment banks in terms of how much leverage they're allowed to put on. we have a higher derivatives world than in 2007 by about two-fold in total. you cannot tell me this is hedging. for example it isn't hedging to buy a stock at 100 and buy a put at 50, and effectively that's what they're doing. you've got to have controls on

that leverage. you have to have banks dealing as banks, and you have to have brokers or within the investment banks dealing as brokers but if they're using customer money, you have to have very strict controls on it, which we still don't. >> so you bring back glass-steagall, raise capital requirements. >> surely. >> anything else? >> well you bring back glass-steagall, raise capital requirements, you monitor the brokerage investment banking industry very carefully, and i think you'll have a fairly safe system. >> if you're right -- >> i am right. >> assuming you're right, why is jamie dimon so wrong then, if there's a business argument to be made beyond the regulatory argument, why are ceos in this job today not taking advantage of what you're talking about? >> first place it's a good game, jamie collects a lot of money for each year there are big earnings in the company. second place i think sandy let jamie go for just this reason, sandy's not a speculator and

dimon is. >> can we go back to gekko for a minute? >> no. >> very different, we showed the clip, famous iconic speech, greed is good, 1987. this is coming the up in the presidential election, in are mr's bam mitt romney's background, but is greed good? is what mitt romney did good for the economy? do we want more of that? >> it's neither good nor bad. i did that and made money for myself and from my partners and so on. it was fine. i don't think it hurt anyone, but on the other hand, it's not particularly good either. it's a method. >> are you confusing greed with a profit incentive, seriously? are you questioning whether the profit incentive has been a positive force for good over the years? >> when mitt romney was at bain, the whole idea was let's streamline the companies, move the jobs overseas. >> greed means you're taking more, greed is a totally different things than a profit

incentive. that's that he a low determinant, henry, you know that. >> gekko's point in the speech this is a fat, slow, lazy company. >> when company maximizes profits for shareholders would you call that greed? >> i think companies have three constituencies, shareholders interested in profits, customers interested in the quality of the products and they have all their employees. right now, our economy is not emphasizing employees enough. >> say employees were brought into stock ownership and options. >> not necessarily through stock. pay them more. corporations have highest profit margins in history. >> the marketplace determines where you pay and unfortunately that's why so many people are going offshore where people can be paid less. >> management determines that. and shareholders. >> gentlemen, you're both wrong. >> okay, tell us. >> the function is not streamlining companies. the function is refinancing companies, and here's how it works. you get control of a company or

you buy the whole company. you get your money out by selling bonds and selling preferreds and then you hope it does all right and of course you try to make sure it's run properly but it's not about streamlining companies. it's about financial engineering, to make a profit. it was not, when i did it, because you couldn't financially engineer it that way but now you can. >> how long is asher going to be here, i'm asking the producers? >> i'm supposed to be here for -- >> five more minute. well we want to you come back. is europe totally broke? >> europe's been broke for about four years. i wrote a paper called "greasing greece" about three years ago as i recall. europe as we do one simple solution, it's too late for europe. it's not for here. you have to combine fiscal spending with monetary policy. >> what does that mean? >> you go nowhere for a very long time continuing to contract

all spending. >> joseph, have at it. he said spending. >> we're at 25% of government spending, where should we go? >> start with some reality, okay? right now you have the fed lending theoretically lending between $3 trilln and $4 trillion to the treasury and the treasury is paying interest to the fed. now if you happen to cancel that debt out, which makes all the sense in the world because why should the american government lend to the american government, if you happen to cancel that debt out, you suddenly have a very different spectrum of what the debt situation is in america. for example, i think it makes no difference really if you can pull this economy out, how much you spend over the next two years to do it. we have gone up to $13 trillion to save for banks at the top, $13 trillion. had you spent $3 trillion or $2 trillion or $1 trillion, stimulating the economy and rebuilding the roads, have you

been on the roads out here? >> infrastructure. >> start with the infrastruct e infrastructure. >> we didn't do much. >> start with infrastructure. if you contract health care, think about it for a moment, don't think about whether it's good or it's bad. i can do that. think about what it means economically. it means economically something absurd because it's one of the -- >> if you slow down spending on health care? >> absolutely, it's the single largest industry i believe today in america. if you slow that down you're contracting the economy more. you cannot do that now. you've got to get it going, and then the tax dollars will help you cover the deficits. it will never be covered again otherwise, and it's the same thing in europe of course in europe it's quite a ridiculous situation because you have this contraction going on, which brings on more contraction, which keeps it, the smaller or the poorer countries unable to pay back the debt that they have accumulated and continue to accumulate, it makes no sense. >> what is the answer in europe? can they exist with this one

currency? >> you have to break the currencies up. >> you can't make a fiscal union? >> break the currencies up, either germany goes off or four or five other countries go up. >> can we go back to the u.s. for a second? i'm fascinated by this. you want to spend, what do you do with taxes then? >> raise taxes. >> it goes to the political campaign. >> whoever heard of a country with our wealth and our ability to help -- >> but you'd raise taxes across the board. >> no, i'd raise taxes on everyone over a quarter of a million dollars earnings. >> tho what, 100% marginal rate? >> 50%. >> that raises $1 trillion over the next ten years. >> cancel out the debt between the fed and the treasury. >> how do you do that? >> just cancel it. it's totally practical. we have $3 trillion to $4 trillion extra debt because the american government borrows from the american government. come on, man.

>> this is a very smart man and i want to point out he has made boatloads of money and a great business career. >> i wouldn't say boatloads. >> that's good. >> joe and i talk about this constantly, why would you argue that we need to raise the taxes if, as joe would argue it doesn't ultimately solve the problem? >> it does ultimately solve the problem, that's why i would argue with the bush tax cuts up until recently accounted for 75% of the deficit, i've done that work. should have brought it for you. >> right, but in general. >> i'm not an in general guy. >> there is n health care there's a way of letting health care grow obviously if money's not being spent effectively you don't want to have capital not being spent effectively and the question comes in, where do you get effective use of capital whether it's private or public sect sector. >> you have to stop the lobbying and big companies. paying for politicians to get into office. >> do you think the public

sector can effectively allocate capital? >> i think it can for the moment. i don't think it should for the long-term or shouldn't much. >> this is the mess we're in right now this is the answer. >> absolutely. >> not long-term? >> long-term there are certain things the government needs to do. look at our railroads, come on, look at our roads and schools. can you imagine a country as rich as america being about 50th in terms of the educational level in the world? >> these sound true on the face. >> they are true. >> and why? >> so if we triple the money and leave the teachers unions with their power? >> oh, teachers unions, come on. this is old stuff. >> we can't fire anyone. >> the unions are coming back. save wall street is a great movement. >> chris christie passed something with teachers -- >> isn't important to note we're in a very different situation than we were in 1980. >> sure. >> everyone wants to cut taxes look it was miraculous back then, the rates were vastly higher. >> we weren't at 18% interest rates.

>> exactly. >> you have nothing you can do monetarily, we're at zero. >> explain that to joe we're in a different environment and requires a different solution. >> i understand what happened back in the 1980s. >> he doesn't want to accept it. >> i will never accept it. >> i think you might have a democratic house this time, we'll see and i'm not particularly a democrat, i just don't like what's happening. >> that's what bremer predicted in 2010 for the house race. >> that was 2010. we now have occupy which call save wall street, we have unions coming back. >> occupy wall street on any given sunday there's more people in one football stadium than every demonstration occupy wall street had. >> it's not about where they are. >> they were the same anti-globalization people, the guy on the cover of "the post" with the blood all over of him had been in and out of mental hospitals, had problems since 11 years old and that was your

posterchild. >> is rothco that line across the middle of a canvas, is that worth $43 million? >> i don't know what's worth what, but think about looking into that picture and then think about it. >> it's a line, my daughter, i put something on one of the things in the carnival that spins around and i can make something. >> whatever you do, i'm going to market it. >> this is the guy. asher edelman, unbelievable. come back and guest host. it would be a lot of fun. >> was the campbell's can, is that really worth that much? was warhol a great artist? >> i didn't buy a lot of andy. he was a friend of mine. >> was he a great artist? >> there's a whole thing going on out there which is different than you normally think about it, and that is if my friend has one and the museum has one, and someone comes into my house -- >> i want one. >> i want them to see one. >> is art a bubble? >> we have to go.

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walmart just out with earnings, $1.18 per share. beat consensus by a penny but revenues came in short, entirely due to currency impact.

let's bring in david strasser, analyst for janney capital. happy? unhappy? is it the guidance on revenue issue? >> i think the revenue issue is all about fx, it was about $2.2 billion if you add that back in, 115.7 with the street. the u.s. beat revenue and that's probably the most important part of this engine anyway. >> david, what happened to walmart stock? it was dead money for ten years, suddenly a year and a half ago it blasted off, 50 to 75, what happened and can that continue going forward? >> it will continue. i think it became part of that defense, part of that search for yields, search for dividends at the time i think it was a 2.5 yield, circling around 2 after the move up, and i think the biggest thing from a stock standpoint today, cutting capex internationally. people wanted that for a long time and they're getting more

religion around returns and that's the biggest story out of today the u.s. continues to strengthen and get better and that they're cutting the capex internationally. >> david, have you changed your target on the stock now? >> i'm in the mid-70s. we have to go through the numbers. we're reacting quickly here to get on, so we have to take a deeper look at it but we're comfortable here owning the stock and what's a tough environment. >> is there anything you've seen that makes you uncomfortable? >> not really, no. cutting growth in china and brazil, those are things we've been harping on them for a long time and i think it's great. one of the most interesting, the one thing i would say they talked about how pronounced the payroll cycle is not only in the u.s. but globally and that's from a macro standpoint you have to keep in mind, in their mind that's the liquid of their customer. >> david, thank you for joining us. appreciate your time. i want to get on to talk about what would happen if we canceled the debt we owed to

ourselves. that's the only way to do what he wants to us do. >> alan greenspan. >> it's not possible to do that. everybody would like to -- right? >> well the other -- >> anyway, coming up, but we have to have someone on. reaction to romney's running mate pick from former governor -- you might want to leave the set, henry, new hampshire governor john sununu. he'll take you on and it won't be pretty. tdd#: 1-800-345-2550 when i'm trading, i'm so into it,

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guest host henry blodget critical of in are mr's economic plan. he'll go head to head with former new hampshire governor and romney campaign adviser john sununu. municipalities finding creative ways to avoid fiscal disaster, alexandra lebenthal, what is best for your port foal yoel. >> breaking economic data. >> hello! >> weekly jobless claims and housing starts hit the tape at 8:30 a.m. eastern. the third hour of "squawk box" begins right now. ♪ have you seen my hands, just look and shake ♪ ♪ and the song keeps on beating, dropping the needle again ♪ welcome back to "squawk box," first in business world i would, i'm joe kernen along with

andrew ross sorkin. becky is off this week. guest host is henry blodget, ceo and editor-in-chief of "business insider." checking u.s. equity futures, no the a lot is happening, dow up about 8 points, single-digit moves the last two sessions and that comes after one of the i think was it the lowest volume week of the year last year. >> yep. >> possible some of that could change this morning. we're going to be getting key economic data releases later. jobless claims could set the market tone at 8:30 a.m. eastern. economists forecast 365,000 claims for the first time for first time jobless benefits, that would be a slight increase from last week and we'll get housing start numbers as well. economists expecting a decline of half a percent for the july number. let's talk about some earnings news this morning, we talked about it in the last hour, walmart earning $1.18 per share for the second quarter, one cent above estimates. revenue did fall short of consensus and the raised

guidance is largely short of street estimates as well. the company points out without the currency impact, sales would have matched estimates. we spoke to retail analyst david strausser a few minutes ago about the company's report. >> i think the biggest thing from a stock point is cutting capex internationally. people wanted that for a long time and getting more and more religion out of returns. the biggest story out of today the u.s. continues to strengthen and get better and they're cutting capex internationally. >> shares of facebook today this is the day the lockup on 271 million shares does expire, that allows insiders to sell their stock for the very first time and questions about whether goldman sachs and some of the other big investors might do that. microsoft apparently a big investor but not selling their stock from what we understand. governor romney's five-step economic recovery plan is back in the spotlight with president obama calling it fairy dust. joining us with more on this, former new hampshire governor

john sununu, senior adviser to the romney presidential campaign, governor, good to see you >> nice to be here. happy thursday. >> where are you? >> i'm in new hampshire. where i belong. >> how quickly can you get down here? i've got a couple of individuals in here today that they're almost gleeful in ganging up on me. we just had asher edelman. >> there's a lot of folks in the business community that are -- >> we'll bring soledad o'brien and the three of them can have at it. i've heard the romney tax plan and i think this needs to be addressed, does it really enrich even further the 1% and further hurt the middle class? >> look, the romney tax plan makes a firm commitment that the upper 20% will pay the same percentage of the total revenues as they are now. number two, it cuts taxes for the middle class, and number three, it provides incentives

for investment to get this country moving but the most important thing about the romney package is a smart, intelligent, rather than slightly backward view that the obama administration has towards energy. coal, oil and natural gas are the mainstay of american energy for the next generation, whether president obama keeps giving money to his cronies for solar and wind or not. we've got to take a recognition that what we've done to those three mainstays over the last four years has been part of the reason, if not the big part of the reason why our recovery has gone nowhere. >> governor, how would he do -- you just heard it, 20% and you know what the top 20 pay. it's a progressive tax code, you'd agree it's a progressive tax code. did you know part of the provision in the tax code, keep 20% at least at the level they're paying right now? >> at the percentage, at the same percentage of the total

revenue that's coming in now. >> you didn't tell me that. >> how do you do -- >> he wants to know how you do that? >> how do you do that without ballooning the deficit. but cutting -- >> you do that by addressing some of the loopholes everyone accuses and rightly so the upper income people of taking advantage. >> no, he told me it's the middle class people that take advantage of the deductions. >> disproportionately. >> sure the midical class does all the municipal bond stuff. i don't know if that's where they'll go but that's certainly one item that's on the table. there are tons of items to be on the table. stop demagoguing this issue and understand what america needs is to stop condemning success. why in god's name with a publ h publisher of a magazine that reports to be pro-business condemn success? >> no one is saying that, certainly not me. one specific question, governor, seems to me mitt romney's plan is designed under the theory that the problem in the economy is a lack of investment, no one

has any incentive, too many regulations that kind of thing when it seems to me that the real problem in the economy is that the middle class is broke, so encouraging investment when you have cisco, apple, they have so much cash, they don't know what to do with it, they're giving a dividend, do we really need to encourage investment at this point? >> yeah, you've got more cash in the private sector in business than you've ever had before, and the reason the cash is sitting there is they are scared to death of this insane administration that condemns everything they do and slaps a regulation on them every time they turn around, slows down the permitting process, and makes it a penalty of taxes every time they succeed. they're waiting to see the results of this election. obama wins, investment goes offshore. romney wins, the investment stays here.

>> governor, they're effectively waiting for something called demand and the question therefore is how do you spur demand? >> you spur demand by creating jobs, and these folks have not bought machinery, they have not invested in new hires. you will not get demand until you have new hires, and those new hires have to come from people investing in their business. i talked to dozens of people who would like to be hiring right now, and because of obama care, the fear of regulation, and uncertainty about this election, they're waiting. there is tons of waiting going on to create jobs to make sure that obama is gone, and that's what is happening today. >> so governor, right now, our corporations have the highest profit margins in history. is that bad? are y >> are you condemning that? >> no, i think that's great, they have the flexibility to invest in they want to. >> they don't because obama scared them. don't you understand? >> i run a business, obama is

not scary to me. i'm not saying i'm happy paying higher taxes, regulation is a problem, don't like that but i'll tell you why we aren't investing more although we are hiring more people is that the economy is weak. the reason it is weak is because of demand, the middle class is broke. >> because they're jobless. >> it's not a question of getting more cash to investors. >> chicken and egg, chicken and egg. >> you're not listening, the middle class is jobless. >> you're right, governor, there are no jobs, therefore the middle class is having a much harder time, but now they're going to go back and say the reason it's 8.3% is because of the depth of the 2008 financial crisis, not because of what we've seen since then, and i mean all i had to do is look at what's happening in california right now. it's the third worst state to do aboutis in, an 11% unemployment rate there. you're seeing tech companies outsource workers. you can see it happen with states, and people move out of

state, well en masse, when it's the federal government they move offshore to hire other people. why are we at 8.3%? why are we still at 8.3%, 41 months into this presidency? >> because with he had 30 years building up a huge amount of set, i'm blaming both sides. it's not bush. 30 years. >> you're not saying it has anything to do with what's happened for the past 41 months and other people would say it is obama. you spend the first year and a half passing health care and not working on the economy? >> obama's made mistakes no, question about that. >> let me explain the facts of life to the gentlemen. talk to the medical equipment industry that has a huge tax on it from obama care. they're waiting to see whether they stay up here in new england or they leave. 17,000 jobs involved in that. talk to the folks in the small businesses that instead of hiring today, if they have any

extra demand, they're willing to pay time and a half or double time to keep the workers they have on there so they don't have to add any new health insurance package. >> governor, for every person like you that says they're not affected, every small business we have guys sitting at these tables constantly and you see them saying i'm not going to do anything, i'm not going to do anything. we had people in wisconsin when we were out there the other day, three or four guys later in the day, not on this show, i'm at this level s o of employees, no going any higher. to have the profit margins and all the cash, it's chicken egg. why is demand weak? >> it is a huge something. uncertainty about the growth rate of the economy but again that's because the middle class is loaded up with debt and we have the unemployment rate. yes it's chicken and egg. >> go ahead. >> actually you're wrong. the middle class is increasing their savings rate over the last 24 months. they've increased their savings

rate which means they're not spending and the reason they're not spending, they are scared of this president. you do not understand what this president has done by frightening people about success, and it is, in my opinion, the worst thing that we could have had in this country. you have young folks coming out of college who are 50% underemployed or underemployed or unemployed. that is frightening to them. you've got young kids listening to a president condemning success and demonizing the rich for the success they have. that's so anti-american, i can't tell you. >> governor, real quick because we've got to run, under the romney tax plan, at least how the tax policy center has scored it, there would be $900 billion less in revenue by 2015. >> that was the one -- >> can you cut $900 billion and what is the effect on the economy by doing that? >> look, that's the study that was written by the former staffer of president obama,

isn't it? what they did is that they made assumptions that are not included in the romney tax plan, and in the romney growth plan. >> say it's half of that. say you reduce revenues by $500 billion. can you cut $500 billion from the budget today and what happens? >> if you get 4% growth in 12 million new jobs which we expect to get, then you can, and that's the key to it. go with a growth economy, not a pandering economy. >> governor, we can always use some of that trillion that we make on obama care by insuring 30 more people. the trillion we're going to make from doing that we could use some of that. >> look, we've had an administration that truly believes government is the solution. you've got a candidate, mitt romney, and a vice presidential candidate, paul ryan, that understand the values that come from incentivizing people and businesses.

that's the difference. people have to make a choice. >> we appreciate it. henry, i don't think you really built that business. >> not alone. >> you had security, you had rule of law. >> investment capital. >> employees. >> let's let the government do rule of law, build roads and defend the country but not tell me not to drink a big gulp. >> i'm with you on that. on that note, coming up, we'll talk about municipalities, coming up with, they are coming up with creative ways to avoid the fiscal disaster, we'll talk to muni bond specialist alexandra lebenthal. and jobless claims and housing starts numbers due at 8:30 eastern. check out the "squawk box" market indicator as we head to a break. ♪ ♪ three, six, nine ♪ the goose drank wine ♪ the monkey chew tobacco on the streetcar line ♪ ♪

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welcome back to "squawk box." the futures right now indicated up about eight points. we lost, what'd we lose? three yesterday or something, and we were up two the day before. best buy founder richard schultz is urging the company's board to move forward on his $24 to $26 a

share buyout proposal, sent a letter asking permission to form a buyout group and conduct basic due diligence, remains deeply concerned about the company's direction. i think he ought to stick with coffee, i don't know, what does he know about electronics, andrew? wouldn't that be too much on his plate, the schultz character? go ahead. >> ha, ha, ha, howard shuchultz. this is starbucks, best buy. >> never mind, all right, never mind. >> they may sell square at best buy. >> we don't buy starbucks. you know what coffee we love. >> "squawk" runs on dunkin', they give it to you in a box. >> there were people thinking i was begging him to advertise. we report on companies. we don't do that. >> get to the news. >> you really thought i wanted him to, they really thought i wanted. you just want free coffee. >> no, just doughnuts. municipalities coming up with creative ways for solving financial problems the threat of

default's rise. joining us is alexander lebenthal, and we're thrilled to have her with us this morning. how bad is it? there's sort of two schools of thoughts in muni land right now. you hear about different municipalities that are defaulting, we talk about it in the news, but on a relative basis it's still -- >> on a relative basis it's still quite small. there was a fed report that just came out that said the defaults are much, much higher than people see normally from what moody's reports and actually the reports show that it's still 4% only of defaults and those are unrated bonds, which are industrial development agency bonds which for the most part of corporate bonds that are able to issue as municipalities, they're health care and housing issues. we're still looking at all investment grade bonds generally as being very minor on the realm of defaults. >> we tease this segment as

something that municipalities are doing something pretty interesting. let's talk about what's going on in michigan, if you explain it to the audience it is pretty cool. >> it is pretty cool. i was reading "my bond buyer" which so many read on a daily basis and thought wow, this is the story. >> tell the viewers about the story. >> okay, so oakland county, michigan, is buying pontiac, the city of pontiac, michigan's sewer system, $58 million worth of bonds, wiping out pontiac's deficit and they are going to then take other cities and towns within oakland county and use that sewer system for the whole county, so it's actually a way of a larger entity of the county or maybe the state saying here is a town, a city that's going through great difficulty, and we're going to find a way to work that out rather than seeing the town go into default on its own. >> very cool. >> i totally follow the idea

it's low default rate, everything else, unrated bonds very different. is it possible though that we're coming into a period where the default rate will go sky high in part of what joe has been talking about, the pension problem, the joan problem, a huge disparity between what public sector workers make and retire on versus what private sector workers make. are we going to go into a period over the next ten years where you have thousands of municipalities that are in trouble in. >> i don't think you're going to see that and i've been very vocal about that. you raise an interesting point which is the disparity between workers and california in and of itself is a great example of that. there's an article in the "wall street journal" that talked about the silicon valley people and then you've got people who are out of work and you've got towns like san bernardino, et cetera, that are going through difficulties, and certainly facebook in and of itself is supposed to be about 1% of the state's budget in terms of the tax windfall and now we're not sure what's going to happen with

that. i still think what you're seeing is important, whether it's this creative way oakland county and ponti pontiac, michigan, are working out their situation or municipalities sitting down with pensions and saying we've got to do something. scranton, pennsylvania s , is a example where they didn't do that and they've been shut out of the market. everybody said not my problem, the market said we're not going to buy your paper >> what is the best paper if you were going out to buy something? what is the best rate you can get in a municipality that's not going bankrupt? >> so if you want to go out 30 years, which a lot of people don't want to do because they're saying okay, rates have to go up at some point in the future, but if you go out 30 years you can get close to 5%, let's say for 0.4, 0.7%, from a general obligation, i can nt' give yo g that's off the general municipal scale. you want to look at where municipals are trading as a

percentage of treasuries because if you can get more than 100%, you can, and in fact probably the best area right now is in -- >> what do you mean? >> take a treasury bond yielding 3% and you can get a municipal yielding 3.5% in that same maturity, and you're not even factoring in the taxes you'd pay on the treasury bond, then the municipal bond, even if you are an investor that's in zero tax bracket. >> alexandria, i don't know which of the bills introduced by the obama administration, one they knew it had no chance of passing but they love putting these things up and one was they were going to get rid of muni bond interest, where you didn't have to pay taxes on it because someone in the administration hadn't really considered that that might affect the borrowing costs of municipalities. the minute, they weren't, there's a lot that don't know a lot about economics but someone alerted them that might be a problem for the cash-strapped municipalities but now we're

hearing about possibly it happens again, right? is that one of the deductions that would be disallowed if we decide to lower the overall rate but get rid of all deductions? wou what would that do? >> it doesn't make sense t hurts municipalities. >> they need that lower? >> they do, that's why municipalities have a lower rate of borrowing f it cost them the same as it cost a corporate issuer, they would have a higher cost of borrowing that gets passed on. i remember sitting at the dinner table when i was a wee child talking about the threat to tax exemption and this comes up periodically. >> which bill was it, it was about a year and a half ago? is it the jobs act? >> no, it was less than that. it was probably about six months ago. >> they realized. >> i will tell you everything is on the table this year. you had build america bonds

which were taxable. it's up to the governors and mayors saying you can't do this to us. >> we have to have you back. i want to talk about the hedging and some of the deals being made between municipalities and folks like goldman. >> yes, very interesting topic. love to. >> coming up breaking data, the claims number also, some real estate stuff, we'll get weekly jobless claims and housing starts at 8:30 a.m. eastern. i'm only in my 60's...

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welcome back to "squawk box." we're just seconds away from jobless claims and housing start numbers. we have two individuals standing by, rick santelli and jim yuiorio. >> okay, let's play it off, 361 last week, that now moved to 364 and that was revised up to the 366,000. continuing claims were revised just a smidge basically just shy of 3.34 million, and then the new number dropped it down to 3.3 million, if we look at housing starts more important number maybe, 746,000 seasonally adjusted annualized rate. last month, revised down a bit 754 so we're looking down around 1% would be my guess of building permits, 812,000, now that

number is really a big jump from last month's 760, wow, that's close to -- i see it, 6.8% jump on permits, so that's very interesting, at least a glimpse of what may be coming down the pike. interest rates, well they've been moving up, on the high side. europe might be kind of dormant in terms of news, maybe that's part of it. some people say that the fed isn't painting in more qe. i don't know. i think it's the logistics of positions waiting for jackson hole, see if there will be more sprinkling from the gods of the fed and we still have very important data left with philly fed, the equity markets have improved, up 26 pre-opening dow futures, back to you guys. >> okay, jim yuiorio, director of tjm institutional services, and rick, you're there, too. we did hit 1.8 today. i don't know, every time we see it, it shouldn't but i go, wow,

1.8. it's still under 2%, right, though, jim, but is it the way the direction is moving? >> no doubt it's a dramatic move. >> really? >> well, yeah, from where we were to where we are now, this is two weeks of whatever's causing this move in my -- >> it's not agdp number. >> no, think of how crowded the bond trade was over the last several years, when it corrects, it corrects. we don't really need a reason for it. the thing i find the most interesting we see a dramatic move, people getting out of the bonds and the stock market has had eight straight days of narrow ranges, trying to grind out a game but not being successful, because the bond trade was crowded, the stock trade isn't that crowded. the question becomes is there something that's going to change this and maybe it will be the bond just works through whatever they need to work out and i think that's probably what it's going to be. three different people i talked to said a boring overnight. boring overnight, yeah, spain needed emergency bailout, that's

ho-hum, a sad commentary. i debate whether or not there is or is not qe3 is immaterial, the point is if asset prices deteriorate or economic conditions we get bad numbers qe is there if we need it. i still think you have a put in the stock market. >> hey, rick, are bundes moving up ten-year? >> it's more of a global than it is an economic u.s. centric issue. to put this in perspective, we are seven, eight basis points under where we settled last year in a ten-year, which was around 188 a1.88, the 30 year bond was around 2.90. in my opinion even though the u.s. outcorrected europe there's very little doubt in my mind and we talked about it almost a

month ago, three weeks ago that the bunde yields reversed before the treasury yields did. that's important to pay attention to. as far as qe and interest rates who can tell? it's like being lost in the middle of the night with no gps with regard to treasuries. it's hard to tell what's affecting what when the treasury and the fed, fed in particular, they own so many, they've taken all, a lot of float out of the treasury market so you know, when i heard jim talk about these correction it's hard to say how they're going to behave. >> rick, did you hear asher edelman? his idea is we could free up a lot of money to spend on infrastructure if we just were to forgive the money that we owe ourselves, the trillions of dollars that the fed has issued and then bought if we just were to just sort of say that doesn't exist, that would solve all of our problems and we could just build a lot of roads and high

speed rails. is that legal? what is the drawback to doing that? i got some debt i'd like to just forget about. >> once again, it's another one of these litmus tests of how we need to bean part of d.c. into the center of orlando, because they're in fantasy land! forget about it. i'm not going to discuss it. it's ridiculous. >> take that a step further and forgive everybody's debt. why not stop there? >> believe me, jim, be quiet! you'll give him more ideas for crying out loud! >> it would solve europe before the end of the show, it's 8:35. >> we could solve it all if they give it to rick and i and you, too, joe. >> look at chicago, one of the brokest areas of the country, a posterchild for how government involvement makes the sink hole half way to what, the center of the earth! and they're talking about the same thing as california. trying to take over these houses

that are foreclosed, you know, more brainy ideas. you look at michigan, illinois, you look at how much the government is involved in people's lives, in engineering and union deals, with no oversight. boy, it worked out so well! >> to bring it back to reality, though, there is no doubt there's huge structural problems at every level of government and every level of society, so we're not going to make these huge, when we get these numbers today and see things are getting a little bit better, we're not going to make the huge jumps in the economy until we change the structural problems. we can debate all day but nothing will change other than the best we can accomplish is a sluggish and slightly positive recovery which is exactly where we are. >> why don't we do it with greece, because it's not that much money, it's like delaware or something, you know, and let's just try it, wipe it all clean, we'll start with greece and see if anything bad happens and then they can start brand

new. >> what could possibly go wrong? i'm in. >> that was where it all started and civilization started there kind of. why don't we do that, rick? can we at least forgive athens' debt? >> well, you know what? when you bring it up that way, all's i can see is whether you want termites or put big leaves over private parts, neither one really changes the dynamics of what's underneath. >> that's probably a problem, it's still there, isn't it? >> we joke about it but -- >> athens isn't going to pay back the debt anyway. >> dave, can we start with -- >> you can't do it. >> we can't do it? >> we have to. we have to forgive greece's debt because they're not going to pay us. >> we should spend to build the roads. >> we can't forgive the debt, sorry. >> all right, i thought that both these guys, you don't want to -- >> i agree with a lot of what he said. >> the first part of it is we owe trillions of dollars.

we have to get rid of that before we can spend more. that was the whole first part if we get rid of that we can spend more. >> i don't think that was what he was saying. >> that's not whey heard. >> that was the trillions it shall zplsh when we come back -- >> that was the trillions hanging over all our decisions now, if my grandmother had testicles she'd be my grandfather. rick, and jim thank you. >> my wife says if my grandma had wheels she'd been a car but i haven't heard the other one. >> i softened it up. you didn't want me to say testicles but i made it fewer friendly, cable friendly. >> announcer: this squawkward moment has been brought to you by joe kernen. >> okay. coming up, we've got more from our guest host business insider ceo and editor-in-chief henry blodget, and several retailers out with earnings, up next we'll take a closer look at some stocks to watch. are you suffering from

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. all right, welcome backo "squawk box." sears among our stocks to watch today, company lost 86 cents a share in the second quarter, inline with estimates but did report improved profit margins thanks to lower costs. shares of coinstar and electronic arts are higher on a published report that both are considering selling themselves to private equity firms. >> yes. >> you saw that? >> i did see it and known a little bit about potentially something happening but i'm not sure. >> the "new york post" is scooping us on this, andrew? >> the electronic arts thing may or may not happen. may or may not happen. >> coinstar is in talks with an

unnamed firm. >> that story is going to take a long time to play out if it ever plays out at all. i'm not sure i'd get too excited just yet, so there. >> okay. more now from our guest host, henry blodget, ceo and editor in jeff of "in business." pass me the "new york times" jon corzine, i want to get your views on this side right up here, jon corzine, "no criminal case is likely in loss at corzine firm." could still be an s.e.c. case, could be civil cases but no criminal charges. your take, sir? >> it is not a crime to fly your company into a mountain. it is a disaster. it may be completely incompetent, and reckless, but don't forget, that in this environment, where everybody wants to see wall street ceos go to jail, everybody punished. >> doesn't everyone want to see

everyone go to jail? >> there's tremendous animosity. this is a career moment for a prosecutor. if they can make that case, if they can find crime, they will prosecute it, and i actually think that the real reason that you're not seeing corzine prosecuted, they said i hate to say it, but we don't see any crime and by the way we should all be totally grateful for that, because that means our prosecutors have integrity, they are enforcing the law, they're not abusing their power and throwing people in jail, just because it would be politically popular, which it would be. >> talking about abuse of power, front page of the "wall street journal," let's get another one up here, bank deal rankles regulators. you saw what happened with standard charter, do you have views on that? >> i think we have a problem with the regulatory system in that we had so many different units that can all look at corporations, any one of them can decide that's it, it's my turn in the spotlight. again if there's wrongdoing there and there may well have been here, i haven't looked at the facts closely, glad we got a lot of cops on the beat.

the problem for companies is that here you are trying to follow the rules and suddenly one prosecutor or regulator comes in with a creative interpretation of something, not saying that's what happened in this case, it may be egregious, and you're hosed. >> we really should get everyone on the same page on this when you're doing it to a british bank, if you slap a tariff on a foreign company you know some other industry might try to do it to one of our industries. so i think rightly so some of the british banks don't know who they're dealing with, are they dealing with a state agency, the fha, who are they dealing with. people are saying the $340 million was a low number to accept, too. that seems like a big number. >> very big number especially that fast. >> only on a relative basis. >> remember in "the journal"

piece they started out $250 billion and finally discovered it was maybe $300 million and standard charter. did you think this was, carl levin immediately said finally a regulator that doesn't take all day to do something before he xwets a pou gets a pound of flesh. >> i think they should have done it in a coordinated fashion. i never like when people go out -- we talked about this, i think when ags go out, i want nobody who is in this type of office to be able to actually become an elected official. there should be a four or five or six-year buffer. how do you think about regulators today, regulators on overseeing wall street, given your history? >> i think a lot of the rules need to be clarified. this is the problem. i think a lot of people are trying to play by the rules and people get in trouble for being too close to the line.

the problem is the lines get moved sometimes. >> you lived on wall street. do you think whether it's libor or standard charter, what have you, there is this sense in the public conscience, zeitgeist, maybe not everyone is a bad apple, but there's something in the water, there's a problem. do you think there's a problem or not? >> you've got the most aggressive, talented, ambitious people in the world, fighting for an edge every minute of the day, and the problem is that we have tried in a lot of our laws to specify to the letter what you can do, so immediately an ambitious person will get right up next to that line. we could explore a more symbolic approach or back approach to say you've got to be fair and when something is completely unfair like some of the allegations in the libor situation, people can look at that say it's grossly unfair. if it wasn't specifically against the law, it should have been. >> henry is sticking around. >> did you know that is a really

gold, yiddish expression? >> what was that? >> the one about the grandmother and the grandfather? it's a yiddish classic [ speaking in yiddish ] i'll give it to you if you want to use it, but it is very, very old and it translates to exactly what i said. >> i don't know what kind of mishigas you're talking about now. >> do we have time to talk about the economy again? >> we have a little bit more time to talk about it. >> as opposed to what joe thinks. >> i'm a soup spoon stirring it up. coming up, we'll head to the new york stock exchange for the latest buzz on wall street. we'll get jim cramer's take on walmart, sears and this morning's data point. ready or not, the stock of the day is coming up, you're watching "squawk box" on cnbc.

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welcome back. let 'see the "squawk on the street" gang at the new york stock exchange. jim cramer, who is the gang for the moment.

>> gang of one. >> jim, you look tense. what's going on? >> i'm trying to figure out whether i have to do it in yiddish or english. i have to switch back and forth. >> that's a classic. andrew -- you know who taught me those terms? ted david. >> ted david. >> he taught me both of those. >> i found today eye-opening, because we talked about mother's genitals and yiddish. we were i was going to talk unemployment claims, but we can go anywhere you you want. >> let's talk about walmart and sears. >> extraser i think told the story right earlier when he was on your show. sears we expected absolutely nothing and got a little better than nothing this is a tale of expectations action knolls of actual business. >> go ahead, an drun. >> you can go ahead. >> so walmart has had an amazing

run. is that going to continue? >> i thought your question was the best in the morning. good to see you. it's like it suddenly exploded. i think a lot of it is domestic security. here's a company that ended up at the bottom, buying back a huge amount of shares, then boosting the dividend and finally coming on strong when mike duke's strategies really kicked in. the stores look really good. i think this is one of those where give me a big-cap company that doesn't have any european exposure to speak of. voila, we have walmart. >> are there some maccia very wellian shareholders out there that say, all right, it was worth it in mexico? >> look, i thought it was a great piece of reporting if it had been done five years ago. it turns out -- you guys just talked about prosecutors.

again henry is right. you can't indict the guys for screwing up. the laws are not good. they're all written by lobbyists. this case, walmart, again the laws, they just don't get you where you want to be if you're a prosecutor. it was old news. everybody was gone. it makes it feel like a gigantic shortplay, and they're still cover. >> cramer, real empiric, corzine? >> he'll be a hedge fund manager and co-host at some other network within a few weeks. >> that's his comment for the morning. we'll take it. >> i take issue with that. we're going to get him, right here. >> i debated saying that, but i just felt that in the end, it's just too out of control if that crams. cramer, we'll see you in a few minutes. coming up, final thoughts from our guest host henry blodgett.

tomorrow on "squawk box," guest host paul o'neill. not the yankee, the former treasury secretary. he'll join us for two hours to talk jobs, europe and the fed's next move. our american made series continues with the ceo of bo jangles. you won't believe the size sand wish they are whipping up. how do you know which ones to follow? the equity summary score consolidates the ratings of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past. i'm howard spielberg of fidelity investments. the equity summary score is one more innovative reason serious investors are choosing fidelity. get 200 free trades today and explore your next investing idea.

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stock of the day is walmart. the retailer earned $1.18. raised its yearly forecast, but not as much as maybe people had hopes. let's get in -- you wanted one more thing to say. right? the politics -- >> the business is not uncertain or you're not doing anything -- >> there is a mime offered in washington business people are uncertain about policies. >> you're saying it's about

demand. >> it has nothing to do with it. >> you're saying it's demand. >> it is. there are three things you need. you need the seed, the good product and a very strong customer base to buy that. if you don't have that, it fails. >> what do we have right now? free money. private equity, what don't we have? we don't have the customers. that's the problem. >> they're worried about losing jobs. >> no, they're not. they are still choosing not to hire. why not? because they don't think there's demand to support it, and they think that six months down the road after hiring, they will have to fire those folks. that's not