valuable company. it's official. they passed microsoft's mark set during the dot-com boom in 1999. however for the home gamers out there doing the math if you adjust for inflation microsoft still is the record holder. apples gains have bern fueled over speculation over the new iphone expected next month. apple closed at 664.15 giving it a market cap of 623.5 billion dollars with a b. closing arguments are set today in the patent dispute between apple and samsung. apple accuses samsung copying the design of the i pony and ipad. samsung says apple infringed on its keypad technology. the ceos have talked but nothing has been resolved. check out shares of facebook. the stock managed to gain some ground yesterday after briefly dropping below 19 bucks a share but that was before the big news after the bell and it was a shocker.

in an sec filing released late yesterday revealed facebook's earliest investor sold the majority of his stake in the company of a sale that was planned before facebook's ipo. he sold 21.million shares last week after the ipo lockup expired. he also distributed another 2.2 million shares to investors. thiel still holds 5.6 million shares between last week and the sale of the shares prior to facebook's ipo. he made about a billion bucks. you can see it right here. not a good sign if you are a facebook shareholder that peter has decided that he's not playing along any more. >> they said this was a sale that was land before the ipo but if you watch what happened and you knew what a critical time this was for the company you know how employees have been nervous, zuckerberg has had to come in and cheer them up, don't focus on the short term.

this is your long term game. >> he planned to do it the whole time. >> right. look i can understand as an investor i want to make sure i lock in some of these paper prochts that have been disappearing before my eyes since the stock went public. i get that. at the same time as a board member, early investor, if you have long term faith in this country why do it in such a public manner and a time that's so critical for the company. >> maybe i don't under, if you were going make a decision like that pre-ipo. >> why was it not in the prospe prospectus. you wonder if there's different rules. >> my other question had the stock gone $80 would he have sold? there was a distinction or a difference. if you're marc zuckerberg how unhappy censor

>> are you willing to kick the guy off your board? he still owns 5 million. >> $112 million. >> look at a situation like that. you're saying he's a leader important the company because you put him on the board not a message you want to stoirnd employees or other shareholders. >> well, crazy little story. >> facebook's ipo one of the biggest stories of 2012. after those 90 days the value of the company has been cut in half. so we're wondering this morning what your thoughts are about facebook stocks. we want to know the good, the bad, the ugly. if you're a buyer or facebook believer would you buy the stock at this level or how low would it have to go before you think there's value. tweet us @squawknbc. someone wrote in i don't think facebook went wrong in any way. i think society goes bad. a fad like myspace and

eventually instagram will follow. >> if you're instagram remember when they sold their company a billion dollars. it was $300 million in cash the rest in stock. >> we're going to be monitoring twitter all morning long. talking about mover your tweets throughout the show. facebook phenomenon someone wrote in. phenomenally bad for the stock market or you got another one that comes in, facebook did not go wrong, merely they were too highly valued at $100 billion. the true value is prevailing. again we would love to hear your thoughts on this because announcement about thiel selling the majority of his shares has people talking. >> i saw an analyst said that now shares could be worth as low as$12. >> did you see henry blodgett wrote something.

here's my message to facebook employees right now. don't sweat it right now, here's why your stock may go lower but, you know, laid out the valuations for why amazon has the valuation it has, why other companies are not trading at nearly the levels and i forget what he pointed out but the pe ratio still is richly valued when you compare it up against a number of other companies. >> there are talent retention issues. people have been paid with stock option with strike prices where we're close today if not higher. there's some new cool start up in silicon valley. >> blodgett did say zuckerberg is a visionary and somebody you have follow. he did not count him down by any stretch but said just a warning your shares could go lower before they go higher. let's get a check on the overall markets. yesterday we did see that start and the monday was once again lower but barely.

the stocks were down just barely budging lower. it was down by 3.5 points for the dow. this morning you see a slight indication higher. people are waiting to see what happens with the ecb. there's been rumors floating around and putting pressure on the currency markets. why don't we call-up the oil market. take a look at those oil board. we could see some movement on that. wti is up about 60 cents to 96.57. the ten year note at this point is yielding 1.811%. that's an unchanged at this point but, again, 1.8%. well above where we had been a few weeks ago. dollar is where you've seen some action this morning. a lot of this because of rumors sir can you late what the ecb will or won't do. hard to say at this point. these european rumors will start popping up. the dollar is lower against the euro. euro is back up at 1.2411.

the dollar/yen, dollar lower against the yen at 79.36. gold price with all of this are slightly higher up by 4.70. 1,627.70 an ounce. it turns out our famed investors george soros is a man u fan. he took a share of facebook. took a stake in that. >> along with steve cohen. they are watching this right now. if they are watching peter thiel get out they are thinking -- >> what in the world. >> different basis too. >> from when he invested when thiel first came in? he made a ton of money doing this. you can understand this as an investor. as a director and somebody seen as a leader for the company you question the move. back to soros. he took a nearly 2% steak in the man chester united. this is not soros' first flirtation with soccer. he previously considered a take over of italian club as roma

before taking a pass. right now let's get to the global markets report. kelly evans is standing by in london. kelly we're turning back our attention to what's happening in europe. waiting for any news from the continent. >> good morning. it's another wreak where a lot of europe driven headlines. all that's happening is europe remains risk supportive. ahead of these meeting s betwee jere germany france and england. europe stoxx 600 is up .30% and up 15% over the last few weeks. closer look at some of the bourses here. spain up .2%.

swiss markets up about .1%. xetra dax doing well. ftse 100 adding .33%, broadly positive across the board. bond markets is where we've seen the pressure points all summer and place to watch as we figure out whether the ecb will move forward like a scheme where they would buy unlimited amounts of debt for spain and italy. take a look what's happened here. prices for spain and italy rising, yields sinking. spain was at 6.24% early. well below levels we saw just a couple of weeks ago when it was in the 7s. italy is down just under 5.7%. investors rotating out of france and germany where the yields are 2.125% respectively. euro dollar it's rallied up 1.24 punch through that level, 1.2421 up .6%.

now not the ecb meeting to watch on september 6, we'll hear from mario draghi from jackson hole on september 1st. ben bernanke's feature at jackson hole is the one to watch on august 31st. i wonder if draghi steals the spotlight, september 1st the day investors will listen to him to figure out what if anything the european central bank will do when it comes to buying both spanish and italian debt and more peripheral debt going forward. >> that's the question. bernanke for the fundraiser time in his life may get overshadowed at jackson hole but you're right september 1st is the date to watch. thank you very much. we'll talk to you again tomorrow morning. >> thanks. >> right now let's turn back to the markets here in the united states. alec young is joining us. we have seen a big run but you think there could be a little bit more room to run at this point >> we do, becky. as far as the s&p 500 on august

1st we raised our year end the ash get to 14040 to 1410. in a year we think the s&p can get to 1500. we think the draghi road map is a credible one. there's political hurdles we have to clear. we'll have some choppiness. but overall we see european sovereign stress fading a little bit from that fever pitch that we saw in the spring and early summer. as far as earnings weakness goes if you look at the top down view from strategists they are already hair cutting earnings going forward. no surprise toni that earnings may not grow as quickly as the consensus expects in the next few quarters. value accelerations are low. the fiscal cliff will get compromised away. the elections could break more favorably than people expect. all these things we can receive these macro risks can drive pe action. with a little pe expansion we think the market can get up to

1500. >> let's go back to two points you made. one the election can break more favorably than people are expecting. explain that. you also said you think that this road map that track draghi has laid out is a credible one. >> that was a big part of it. we did it on august 1st so that was before the big move, before the good payroll report. but certainly draghi was a big part it. >> if you're expecting that this is a valid road map that he said that they will step in and you're putting your faith in that at this point my guess is if more european chaos rises you're a buyer of the markets on that news and i guess my other question is what would happen -- what would it take four to change your mine on that whole european scenario. >> up guys are simplifying the road map.

it's a nice one-two punch. we won't see any subordination of private-sector bond holdings to the ebc. if they do start buying that limited the effectiveness of their buying in the past. draghi used to work at goldman sachs. the markets like the fact he's got a lot less of a tin ear to the market than his predecessor. we'll continue to watch it. as long as his framework stays in place. we have political hurdles with germany. they think they are manageable. as long as the framework stays in place we'll continue to view sovereign as a bullish thing as the risk doesn't disappear but recedes a little bit. >> tell me what you thought about election. you said it could break more favorably than people are expecting. >> the set up going into the election is good. people expect an obama re-election. no one is willing to price in a romney win. if obama wins it's in the market. romney win that's the upside.

republicans taking the senate is possible. no one is willing to price it in. if we have a status quo with democrats holding the senate, republicans holding the house the markets don't get hurt. if republicans take the senate that's upside. market is pricing in more democratic strength. if that's challenged in any way stocks go higher. >> lead story in "wall street journal" akin his bid for the senate seat in missouri has thrown a lot into question that so many people have been outraged by his comments. the entire senate could be likely to go back to the democrats and have them maintain control. you're not worried about that. >> i think that's clearly in the news. sounds like a three or four day story so they are focusing on that angle. there are other people in the political world that are looking at all the senatorial races.

>> the drama is building at best buy. what will the electronics retailer tell investors about the future and how is the very public private struggle going impact the bottom line? we'll talk to an analyst about that. and a fuel lineup to tackle. a lot of stuff. we got duelling guest hosts. mark zandi. and john fund. we're talk to donald trump this morning. pimco's mohamed el-erian and tom friedman. you don't want to miss a minute of "squawk" this morning. ♪ aflac [ male announcer ] find out more at... [ duck ] aflac! [ male announcer ] ...forbusiness.com. [ yawning sound ]

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. welcome back, everybody. u.s. equity futures are slightly higher. dow futures up about ten points,

s&p up. the roads and skies will be more crowded during the upcoming labor day. 33 million americans will be driving or flying over this holiday. that's up 2.9% from last year and largest number since 2008. aaa say it's encouraging. that brings us to our national forecast. from the weather channel's alex wallace. alex what can you tell us about what to expect today and maybe into this weekend too. >> you know, we're actually looking pretty good today across a good chunk of the nation. a few spots where it will be iffy. eastern part of the carolina into florida, wet weather. wet weather in dallas a few showers. in terms of the rest of the nation pretty quiet in the northeast, lovely day in new york city. 84 and partly sunny skies. there's that wet weather

throughout the southeast coast. middle of the country, upper midwest towards the western lakes a fantastic day in chicago. sunshine and temperatures will be in the 70s. there's that risk for some rain in the southern plains and texas. western half of the country mostly dry on the west coast from seattle town to l.a. mainly the interior where we could see a few isolated showers and storm but that will be very much sort of a hit or miss situation. as we head through the week this is what we're looking at. big dip in the jet stream. that's going to allow for some cooler air to remain in place around the great lakes. flow of moisture in the southwest as well as here into florida. what we'll find here across the northeast and great lakes region comfortable conditions. almost fall like in many areas here. enjoyable rest of the week. farther south this is where things will remain wet into florida and throughout the four corners, monsoon in place. showers and storms. good news is that will keep the temperatures down just a bit. quick check on tropics. we have a tropical depression

that's number nine. still sitting east of the leeward islands by 700 miles. this is something we're watching very closely because as we work our way through the rest of the this week and into weekend getting closer and closer to the u.s. by sunday we're talking about potentially impacting cuba and early next week we may be talking about this thing impacting parts of the southeast. still plenty of time to watch it but we now have a newly issued tropical depression number nine. guys, back to you. >> alex thank you very much. we'll talk to you again tomorrow. >> all right. >> absolutely. best buy scheduled to report second quarter earnings later this morning. we'll be talking about those numbers but joining us now for a preview is an analyst for citi and thank you for joining us this morning. i would say the earnings are important but weave a new ceo. we have this take over, nontake over, i don't know what to call it any more. how much do you care about the numbers or are you more focused on other issues this morning? >> everything comes into play

today. the fundamentals of the story are absolutely still very important and what we're looking to hear from best buy today is an update on tv sales and computer sales and how the retail store is doing. it's been three months since we last heard from them and yes there are all these other events going on especially with the naming of the new ceo that we'll be very interested in hearing about. all three come in to play, the fundamental, the new ceo and also whether the company is an lbo target or not. >> give me a snapshot of what you're suspeexpecting. >> we expect comps to be down 3.5%. our eps number is 34 cents, a couple of pennies ahead of the street. there's a wide range on teeth right now. we expect gross margin pressure as prices continue to come down and be very competitive in the

consumer electronics space. >> your gamble on the takeover since that's what's moving the stock one way or another. >> yesterday we had news that dick schultze was retreating a little bit from his position and had said know the due diligence at best buy or doing due diligence. we had a low probability on the takeover happening about six weeks ago when dick schultze actually put his bid in place for the bid. we put a 50% probability on that. i think there's still a chance that something could happen, but it's obviously in flux right now. >> does he come back? does he try to bring it directly to the shareholders. can he start a group without their permission. >> that's right. those questions are still up in the air. the big question is can he get the financial backing without being able to take a look at the

books and that's been the big question. >> your quick take on the ceo? hospitality guy. what does he know about retail? >> we don't know too much about him. he hasn't had that much retail experience. more on the media side. fresh set of eyes. new blood to the company. he could have some big ideas. it's yet to be seen. usually when a new ceo does take over it's usually about six months before we hear what their plan is. >> is the suggestion if there's a new ceo there's no chance that t the company wants to be taken over? is this off the table? >> best buy is a very good lbo candidate. fits the criteria, depressed march beginnings, good cash flow. >> but potentially declining business. >> potentially declining business. and so it's hard to say. there may be somebody out there that has a great idea on,000 reduce their box size which has been a problem.

how to becomecompetitive with amazon. there's ways to fix the business but are there any ideas currently out there. >> kate, before we let you go the new iran phone will co-- ip will come out this business. what will that could to their business? >> any new product launch is beneficial for these retailers. we've seen a benefit to comps over time because of new launches. the iphone 5 should be no different. >> thanks kate for joining us this morning. >> still to come we'll talk more about the rodney dangerfield rally that gets no respect. kevin ferry will give us a low down on the markets. then a peak into the future. how about cars that communicate with each other to try to avoid accidents. believe it or not the technology is here and it's being tested. transportation secretary ray

lahood talks to us first on cnbc about the road to the future. and as we head to the break take a look at yesterday's winners and losers. okay, here's the plan. you have a plan? first we're gonna check our bags for free, thanks to our explorer card. then, the united club. my mother was so wrong about you. next, we get priority boarding on our flight i booked with miles. all because of the card. and me. okay, what's the plan? plan? mm-hmm. we're on vacation. this is no plan.

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joe is off this week on vacation. in our headlines facebook director peter thiel sold more than 20 million shares in the company in a sale that was planned before may's initial public offering. he still holds some shares but only 5.6 million shares. he's dumped the majority of shares he's held. many consumers are making their auto loan payments on time. a third of 1% of loans 60 days overdue during the second quarter. lowest level since transunion started to keep track. siemens may cut thousands of jobs. the company is considering that move in response to a weakening economy. the final decision could come in october or november. a siemens spokesman wouldn't comment any further. >> let's get a quick check on markets. got some futures right now that are going to come flying across the screen in a second. dow looks like it will open up 15 points higher. nasdaq opens five points higher.

s&p 500 would open up higher as well. quick look at the oil boards. wti crude, $96.67. >> they did settle a little higher. data comes out later. that contract expires too. >> and how about t bills? what do you think of that? >> 1.819. yield is rising once again. that's an incredible story to watch over the last three or four weeks. >> quick look at the dollar. >> dollar has been weaker this morning. there was no movement originally on this but all of a sudden you started to see things happening but in large part because of what happened just some rumors coming out of the ecb. that's what's been affecting things alligator through the morning. right now they do see that the euro is stronger bens the dollar. all the way back up to 1.2421. dollar versus the yen unchanged at 79.40.

gold is something watch. >> buy gold or buy cows. that's what joe says. we don't do a cow board but we could. >> meat prices have been coming down because of the drought and corn prices and hay prices have been taking cows to slaughter a lot sooner which is putting pressure on meat prices. >> we have a guest on the set who just slipped in here without anybody seeing you. it was really actual lly quite well done. we have a question for viewers and this gentleman. does the fed have any bullets left. larry goodman is joining us now. he's the former u.s. treasury advisor. we welcome him to the set. while we were talking you just moseyed on in. what do you think will happen? what will the minutes show? >> the minutes are important because monetary policy is more important than ever for financial markets. the fed needs to do something.

>> you say they need to do something. what is it they need to do? >> they really need to explore a new extraordinary approach to monetary policy. and that is getting the financial system moving again. shadow banking system is going nowhere fast. the regulatory banking system is going nowhere fast. the fed only controls 15% of the money in the u.s. economy. so the fed needs to pull a different playbook page from a new playbook to evaluate how to get the banking system moving again. >> you've heard those around this table that say a they are out of bullets and b done too much. >> right. >> you say i must be wrong. >> i say that they need to continue to focus on the objective of keeping inflation low and trying to get the economy moving. they are out of bullets in terms of the traditional policies that

they have been pursuing, namely quantitative easing and maturity extension. on the maturity extension front they will run out of short term bills. so the operation twist is going to need to come to an end at which point in time the fed will need to explore another option. whether or not that's going to mean an additional round of quantitative easing is a completely different question. >> why not wind things down. >> the fed has to start winding it down and as soon as they provide with us a glide path in terms of exactly how they will wine it down the better off we'll all be. >> it sound to me if we have the glide path today it would not be good for you. >> the glide path would be good because the monetary base and the size of the fed's balance sheet would have a lot more certainty. there's a tremendous amount of uncertainty based upon the infusions of liquidity into the economy. and the operation twist.

so there's just a tremendous amount of uncertainty and that's why these minutes matter. the fed says they are ready for some extraordinary operations. well that's what they pointed to in the august 1st release, thathy tinutes are important. >> some people think these minutes will be dated because since the meeting we have seen an improvement in some of the fundamentals that we watched, the economic numbers here in the united states and if that's the case, if things are improving slightly they say they are ready to step in, maybe the economic improvements we've seen put them back on hold. >> that's exactly right. frankly when you look at the inflation numbers it not only suggests the fed may be out of bullets but bumping up against an inflation threshold. core cpi is 2.1% contemporary on year which is right on that 2% margin. ability to infuse more money into economy is limited. extraordinary measure i'm talking about is to create more certainty so banks have an

ability to extend credit again. >> i'm confused. part of me is hearing you and thinking you're suggesting we need more stimulus and part of me is hearing or thinking that you're saying that what we really need to do is pull back and have a glide path and that unto itself creates certainty and that may be a stimulus. am i not -- i feel like i'm not understanding. >> i'm confuse toad. >> wh >> there's notorious amount of liquidity that's been provided through the expansion. that only controls 15% of the money in circulation. that's all the fed can control. what the fed needs to do is provide a very clear and concise glide path for how they are going stabilize the size of the balance sheet and youly reduce the size of the fed's balance sheet. >> could they reduce today? >> they could not reduce today but what they can do today is

provide a very clear trajectory. a lot of uncertainty in the u.s. economy. there's uncertainty is your rourn -- surrounding the fiscal situation. 85% of money in the u.s. economy that the fed does not control. what we've done, center for financial stability is create our own money supply statistics. in the old days you look at money supply. what we're doing is looking at broad money supply that includes the entire banking system and also includes shadow banking. shadow banking got us into this mess. what we're doing is evaluating how that is changing over time. >> how much of the shadow banking system is left at this time since 2008? >> there's a surprising amount in the shadow banking system that still does exist. the key issue is to create growth in lending, deposits on banks balance sheets are swollen. there has not been a sympathetic

view to loan. no one is lending. commercial paper is going nowhere fast. no flow into money markets because people are perplexed about trulgs in money markets. what the fed needs to do is engage the private-sector, provide certainty, u.s. government treasury needs to provide certainty with respect to the path for a budget and that will help create more certainty. >> less likely we'll learn too much from these minutes. my question is what we might learn in the next week or two in jackson hole where you have bernanke and everybody getting together. is there anything you expect we'll hear in >> i expect that we will see the chairman hit a shot right down the middle of the fairway, which is providing enough that the fed will have flexibility from vied addition enamel stimulus,

probably not before the election but perhaps at the december meeting. there's a shot right down the fairway, a little bit for everybody. the speeches that will be important is president truchea's speech. >> i should also say that thursday on "squawk box" we got a very special guest host, st. louis fed president james bullard will join us for two hours starting at 7:00 a.m. eastern time. the economy, qe, the markets and much more only here on "squawk". if you got comments, questions about anything you see here on "squawk," shoot us an earn mail @squawkcnbc.com. the question of the morning what do you think of facebook's stock performance. would you be a buyer? we're getting a flood of tweets. we'll pick them out and read them in the chairs in just a moment. [ male announcer ] drive a car filled with

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welcome back, everybody. u.s. equity futures at this hour up by just about ten points for those dow futures. s&p futures up by two points. again not major moves. in fact that is the understatement of the century. we saw the dow move by 3.5 points lower. i want does confirm that trend of mondays being lower but,

again, you got to take that with a massive grain of salt. dow down only about 3.5 points, slightly higher today. we're waiting for news out of europe. that's what's been driving things at least in southeast currency markets this morning. >> i'll keep a salt shaker on the set. citigroup is rejects calls for big banks to be split up. he made those comments last month after his appearance on cnbc opinion sandy wile made his comment that banks should be broken up. it caught us by surprise in a very big way. in an interview, he said citi is back to the basics of banking. citi has sold most of the units from the 1998 merger of citi group and travellers. citi is now set to garner its business from emerging markets.

>> do you want a story that makes you feel old this morning? even you, andrew. this is a story that will make you feel old. ready? >> not so much. >> this is something we think about every year. the college class of 2016 how do they see life, what do they think about things that affect businesses and economies down the road. those answers and many other are part of this. among other things college freshmen don't use radios for maybe in the car. they do watch tv but not on television sets. these are people watching over computers. they just expect women will be appointed to top corporate positions and they wonder why this trend took so long. they watched hillary clinton today. if you say the words twilight zone most think of vampires. twilight vampire movie series not the classic rod sterling television series.

>> now i'm officially old. >> i shocked. they don't know what radios are. >> we had some interns that made me feel old. >> yes. time marches on. when we come back this morning we'll head over to chairs and get your tweets. remember the question of the day what do you think about facebook's stock performance at this point? would you be a buyer and the big question here is would you be a buyer after watching peter thiel the original investor dump most of thinks shares. >> don't know what people think peter thiel just did. >> he's on the board of directors. tdd#: 1-800-345-2550 when i'm trading, i'm so into it,

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let's get your tweets this morning. the question of the day what do you think of facebook stock performance? you know what i should be looking at this camera except there's no teleprompter on this camera, even though we don't really have a scripted program of course. we are getting a flood of tweets. we asked this question this morning about what you should be doing about facebook, and we thought we'd read some of the tweets and some of the answers, so here's one. "lots of people visiting the site but few took the ads seriously. ads in facebook simply doesn't work that well." another person wrote in "ipo was priced wrong but it was hard to know with all the hype, not cnbc type" we thank you for that, by the way, "just stock hype like that follows apple."

another says "fb did not go wrong. merely they were highly valued at $100 billion, for the company they are, the true value is prevailing." >> if you're an early investor you can understand that but if you're a director which makes you a leader, at the same time telling the employees to stand pat with this, have faith in the long haul, terrible timing. i can't believe the signal thiel is sending to everybody else. >> what do you think the conversation is between zuck and thiel? >> strained. >> do you think he's been bracing for this? >> it's a bizarre conversation. maybe they knew this ahead of time, maybe they didn't. thiel apparently planned it before the ipo but i don't know who he had to tell the company. >> i don't know what the disclosure rules would have been related to this.

employees don't get to start cashing out i believe until november so there's a long time to sort of -- >> wait in line. >> feel the pain, exactly. >> see what happens with this. got a lot of other stories we've been looking at. one thing we haven't mentioned, comedian phyllis diller passing away just yesterday, born in 1917. she was a wonderful woman who had so many bright moments and so many sayings. i was reading through some of her sayings. of her kids, tranquillizers work only if you keep them away from children. i do jordyner in three steps, i serve the food, i clear the table then i bury the dead. woman ahead of her time. >> i have a question for you, a story broke after our show ended but during "squawk on the street" yesterday and this is the augusta story and you are a businesswoman unto yourself. >> i'm not a golfer and that

probably rules me out from being a great commenter on these things. i was never all that bothered by that. i follow the game of golf figured this was a long time coming and there was a piece yesterday that we talked about this yesterday morning and then yesterday i think it was on "business insider" i don't know if it was blodget who wrote it but somehow wrote how this is something you might have expected to see coming after ibm had jenny remeti who came in. lot of people said hold on, the last three ceos of ibm have been made members of augusta. ibm is a huge sponsor of the masters. she wasn't pushing it. you wouldn't expect her to be one of the first two because that would look like they were caving to this. this is probably something a long time coming for the club and wasn't surprised to me it. >> condoleezza rice and d darla moore.

nik ko nike has a new $300 shoe. are you going to spend 300 on this in. >> no way. i admire it and if you're interested in it, kyle, there's some cars that need washing and lawns that need to be mowed but 300 bucks is pricey for a pair of stinky sneakers. >> i don't know. >> would you buy it for yourself or the boys? >> no. i remember, i don't know if it was my barmitzvah or something i got a pair of air jordans which were like $100 and that was crazy at the time. >> with inflation it's probably not too far off. >> that was an outrageous thing to do but it was interesting nonetheless. as we move through the papers if we could, warren buffett moving raises red flag, story in the "wall street journal" today, came off the 13f from last week and relates to this idea that he has now canceled the cds

contract with the lehman brothers estate. >> done back in 2007. >> on municipal debt. sounds like he's now in the m meredith whitney camp. >> or the camp of people who -- sally tweeted overnight maybe it's no longer a big, easy pitch. that might be a fair assessment, no municipality is going to go into bankruptcy again. clearly we've seen the trend has changed. >> we got through a lot of story this is morning. >> we did. i like that. coming up, we have a full line-up to tackle, market and economic issues heading in for a big day, we've got duelling guest hosts, mark zandi, former economic adviser to john mccain's presidential campaign and john fund, and don trump, mohamed el erian and "new york times'" thomas friedman. [ male announcer ] when this hotel added aflac

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it's a "squawk" double play. >> you're out of here. >> what do you mean? >> you can't throw an umpire out of the game. >> you're right, you're out of here! >> double guest hosts, mark zandi and john fund here and on the road. an on the room game changer. phil lebeau hops into the driver's seat into the future and what technology could be on its way inside your next car. plus donald trump is here. he's sounding off on the next big business opportunity and the presidential election. the second hour of "squawk box" begins right now. ♪ money, money, money, money

>> i love that song. good morning and welcome to "squawk box" i'm andrew ross sorkin along with becky quick. joe kernen is off this week. take a look at the futures, they're up this morning, not by much but a little bit, dow looks like it's up about 12 points, nasdaq 3.5 points and the s&p 500 close to two points there. let's get you caught up on some of the morning headlines. we're awaiting the latest quarterly numbers from best buy. investors will be watching those numbers closely given declining sales, management changes and yes the controversy surrounding founder richard schulze buyout proposal. computermaker dell and software company intuit release their numbers. and urban outfitters earned 42 cents a share in the latest quarter, nine cents above estimates with its sales rising as well, becky. we've been talking about

facebook's peter thiel selling the majority of his shares, the sale was planned before facebook's ipo. thiel is a board member, he sold 20.1 million shares after the ipo lockup period expired and distributed another 2.2 million shares to investors. he still holds a stake but only 5.6 million shares. at this point he has seen a massive, massive payout, and i think he's seen something like $1 billion that have come in as profits on this, he was one of the very early investors. as we were just saying between the sales and the sale of shares before the ipo he made about $1 billion combined. we've been getting tweets all morning long asking if you would be a buyer of facebook on this point and what do you think of thiel's actions here as a director selling this, maybe not as a surprise as an early investor to lock in some massive increases he's seen along the way but as a board member it doesn't speak to a huge amount of faith in where the company is headed down the road.

"no way, facebook will end up being 13.8 by the end of the year." another "facebook didn't go wrong, investors did when they bought the stock. the biz model is as is, will not last long." we'd love to know what you think of the stock's performance, would you be a buyer and more importantly what do you think of peter thiel's decision to sell, does that give you confidence or not in the company at this point. tweet us your thoughts thoughts, @squawkcnbc. mark zandi is the chief economist of moody's analytics and author of "ending the great recession and beginning a new american century" and john fund columnist at national review "who's counting? how fraudsters and bureaucrats put your votes at risk." >> both red covers. >> great to have both of you here today. >> red attracts attention, you

know that when you drive a car. >> and both wearing red ties. >> this is my standard tie, tv tie. we like that. actually i was running around looking for it before i was coming yesterday, couldn't find it. >> lucky you found it. z>> panicked. >> i'd like to get your assessment of where the economy stands today and also how that will affect the election. right now how do you shape things up after what we've been seeing the last couple of weeks? a few better skiigns on the economy. >> i think the economy is growing 2, 2.5%, gdp, the value of all things we produce so that would be consistent with 150,000 jobs per month which is okay. it's an economy that's growing but not good enough because we have 8.3% unemployment and 2 million jobs a year isn't going to bring down the unemployment rate. we're not moving along fast enough. >> this may be one of the only

areas you agree, you think 2, 2.5% muddling along. >> if we're lucky. i think it will be 2.2 or 2.3. we have the danger of a new normal which is stagnation, that's what they called it in the '70s. we've had unemployment above 8% for seven months. this is america. we are staring at a new future and it looks like europe. i was recently in europe. i think we're going to have bad luck this fall in europe. the germans have reached the end of their rope in terms of what they're willing to do to bail out greece and the other countries. i think we'll see some minnie crisis in europe this fall that will unsettle markets in this country. the biggest problem we have right now is economic uncertainty. this administration inherited a bad situation. i give them that, but they have exacerbated the economic uncertainty now for four years. people don't know what the future is in terms of health care costs and don't know what the future is in terms of

environmental regulation, tax policy, we've heard about the fiscal cliff. congress and the white house are responsible for that. we'll see the largest tax increase in american history if nothing happens, capital taxes, dividend taxes, everything else. the economic uncertainty is bringing us all down and i think it's leading to a giant cloud cover over the economy. >> his book is going to be very pessimistic. >> we hear the issue of the uncertainty all the time and we also by the way were expecting the summer with the economy as tough as it was to be kind of in terms of people's forecasts going forward not so great and yet the stock market has done -- explain what the stock market has done over the last three months. >> two things, one is and i agree here with mark, american business has become much more efficient. one of the reasons they d hire people now is because they've increased productivity and increased automation and a lot of things but secondly the fed. look, we have interest rates at zero right now.

unprecedented to have interest rates zero for this long and the fed basically saying we're not going to raise interest rates until 2015. that is artificial steroids for the stock market. if you had had normal interest rates the last three and a half years do you think the stock market would be where it is now? i don't think so. the fed plays a big role in that. >> the nun one reason is american businesses are as profitable as they've ever been. if you look at profit margins you can go back to world war 2, they've never been as wide. >> stock prices unto themselves are forecasting the future. it's not just a backwards looking item here. we're talking 12 months out people are expecting these companies. when you talk about the fiscal cliff, we talk about the problems in europe, i'm curious in trying to understand whether we think that investors are already pricing that in or missed something completely this summer. >> i think this fall because of europe is going to be no agreement in congress and the white house under the fiscal cliff before the election, i think this fall you'll see equities start to fall.

>> europe is less of a risk than it was six months ago today, a year ago, two year ago. >> they haven't cleaned up a lot but the expectation is -- >> in september greece hits the fan again, spain may hit the fan again. we have a crisis coming. >> there will be ebbs and flows in europe but look at what they've done, particularly european central bank enormous progress in addressing the crisis there and they have all kinds of mechanisms in place to address the crisis and most important thing every time we have a financial problem in europe, policymakers respond. they have shown a commitment to keeping it all together. >> the responses have been not nearly, short term, not nearly -- >> not true. they've agreed to pay european banking regulation that's a big thing. >> i come down on your side, i believe draghi might come through but i think you might see a lot of up and down. >> almost by definition because

they can't generate the political will to do the things they need to do without the financial market turmoil. we'll have turmoil but each round it's becoming less of an issue. look at spreads, cds, equity prices with each round of panic in europe the impacts on the market are less significant. >> you have a lot less uncertainty of what happens not only with the election, how they get to end game in europe, how we deal with the fiscal cliff. do you think we go off the edge in january and see this tax increase come in that john's talking about? >> no, i think they'll address the ifisical cliff. it makes no sense to go over the cliff, republican or democrat. >> will they address it before december 31st. >> no, they're not. >> that leads to uncertainty and turmo turmoil. >> there's much less uncertainty today than a year ago and think back almost four years ago at the end of the bush administration, beginning of the obama administration, that's uncertainty. this is nothing compared to that and the key to the uncertainty

is sort of the general collective psyche so the impact on the economy is magnified today because everyone is so nervous, in more normal times these things we wouldn't be talking about europe if we hadn't gone through what we had gone through. >> bottom line if you're an employer today would you hire someone full time with benefits, no. that's why we have $2 trillion to $3 trillion of capital sitting on the side lines. people are not hiring full time people with benefits, part-time, temp, automating, doing everything possible because they don't want to expand because they're uncertain about the future. >> i've made this argument multiple times on this program, as long as there's not demand, people will not hire, but if you owned a business and there was demand for your product and the people that you currently had on staff could not fulfill that demand, you would go hire another full time employee. >> the biggest growth industry in america is temps. >> temps. >> you better believe it i would hire temps.

>> there is consumer demand, investment is growing 4%, 5%, housing is going from big negative to now positive, so there is demand. and i think the key, sort of the key dynamic coming out of a recession is that we get to a point in the business cycle where it's businesses that have to take a leap of faith. listen, i can't continue to grow my earnings by cutting costs, i can't continue to grow my earnings unless i look for revenue opportunity so i have to take a chance, take a leap of faith and that's when the business cycle goes from recovery to expansion and we kick into a higher mode. >> aetna bought coventry yesterday. that's a bet on, that's a $5.7 billion on obama care and talk about certainty or uncertainty, there's a clear view -- >> the ceo said it's not one way or the other. >> i disagree and there's a number of the other deals out there. if he really thought romney was

going to win you have to imagine he would have waited for romney to win and could have bought coventry for a lot less. >> if he didn't think medicaid would be ex-paneleded he wouldn't do this. that's my point of uncertainty, uncertainty with regard to health care i agree that created a lot of uncertainty but it is much less today than a year ago and certainly years ago when obama care was passed. we're getting clarity on this and the health care industry has bought into it. you can see it in the m&a activity. >> john do you think uncertainty is worse or certainty even if it's something the business community doesn't want. more clarity, turns out this is the way we're going, the democrats take the white house, and the senate and we don't know what happens in the house. >> a lot of people worry the new normal will become the permanent normal. year ago we thought we were in recovery, the summer of recovery, remember that whole obama-biden tour. year ago we thought we were out of the woods. now we know we're still

wandering around in the thickets. we are not producing enough jobs for the normal increase in population and the labor force. we are in complete stagnation when it comes to jobs which is what people most worry about, and yes you can point to individual deals, people betting on the future, but look at everything that's happening with coal, everything that's happening with carbon, everything that's happening with environmental regulation. all of this is going to be entrenched and frankly it's a quite radical proposition. california is moving towards i think driving all of its manufacturing out of the state, california is one-eighth of the economy. this uncertainty is a cloud cover, a dampener on a lot of other economic activity. you can point to exceptions but there's $2 trillion to $3 trillion sitting not playing in the game. >> we're recruiting 150k a month. that's not stagnation. we're not growing fast enough. >> how many jobs to meet the

normal growth in labor population. >> 125k. >> i call that within the margin of error on stagnation. stagnation is we're not growing. >> the music is playing us out. you guys are sticking around the next two hours. lot to talk about. coming up next, cars that talk to each other, cnbc's phil lebeau is in ann arbor with a preview. is it you who isng talk to us or the cars? >> referee: the cars are not actually talking andrew to us in terms of saying hello but we are going to be talking about that. there are more than 5 million accidents every year here in the united states and researchers is ai a lot of those could be prevented with cars talking to each other. we'll have the story and the secretary of transportation first on cnbc, when "squawk box" returns. coming up, politics and business collide. billionaire and real estate mogul donald trump joins us after the break. find us online, you'll also find us in person,

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that "knight rider" music is for the next seg mgt. what if there was a technology that could prevent four out of five traffic accidents? what if i told you the accidents would be prevented by cars talking to each other? no, this is not the jetsons and it is not "knight rider." there is no kit involved from what we understand.

this is phil lebeau's story for us. >> referee: good morning, andrew, we're here in ann arbor, michigan, on the university of michigan campus, where there's the beginning of a study going on for the next year with 2,800 vehicles literally talking to each other, going to be constantly sending out and receiving signals as people real world people driving around every day volunteers who agreed to put these devices on their vehicles. the idea is to better track what happens before accidents, during accidents, these vehicles will be sending information to each other and in some cases alerting drivers of possible collisions and accidents, hopefully preventing some accidents. more than 32,000 people were killed in auto accidents in 2010 here in the united states, 2.2 million people injured in accidents and how many are there? 5.4 million vehicle crashes in the united states in 2010 and the department of transportation along with researchers here at the university of michigan

believe it could prevent four out of every five accidents potentially. talk with the secretary of transportation ray lahood who joins us first on cnbc. you've had a chance to look at some of the reserve and technology in these vehicles. how confident are you this is not just a pilot project here, there's real world applications we could see in a year or two? >> this is a big deal. this is a huge announcement, it's a huge opportunity to really use the next generation of safety technology to save injuries and save lives, and when the study's complete a year from now, we will be able to say pretty definitively that this technology can be used in automobiles and lots of injuries and lots of lives will be saved. >> the key is this is real world. this is day in, day out. you've got about 360 of these vehicles where drivers will be alerted and potentially accidents could be avoided so now you can say we know how it

works in the real world. >> these are real cars manufactured right here in our country and real people who have volunteered and will be a part of this study for the next year, and have the opportunity to see if this technology really works. if vehicles talking to one another through technology that hopefully will send a signal to them that they need to avoid an accident or avoid an opportunity to stay away from another car, and a year from now we will know a lot more about how we're going to save injuries and lives. >> there's a component where it's not just vehicling talking to each other but vehicles talking to infrastructure and potentially being alerted to pedestrians as well. pedestrian safety is getting to be a bigger issue, cyclists, people crossing streets. do you believe we're on the cusp of potentially cutting back on those injuries? >> i don't think there's any question about that. we will be able to save injuries

and save lives and as you said, people are cycling more, obviously people are walking around their communities more and this technology will alert drivers to pedestrians and also alert them to possible accidents that may be at an intersection or in the street. >> as long as we're talking technology you've had a chance to go for a ride in the google car. what's it like? people see this and say is it really driving itself? >> it is driving itself, and it obviously is technology that's been developed by people that want to take cars to another level, to a level that will allow you to program a car to go a certain distance or a certain place, and it's quite revolutionary and the people that have developed this i believe are the henry fords of our generation. >> but are you comfortable with the idea that yeah you get in a

car and you don't have to be the driver. the car can be the driver. >> i think our concerns around the google car are, always our concerns will be safety and making sure that, as they develop the google car, as they develop this kind of technology for driverless automobiles, that they are the safest they can possibly be. i.e., that's what we're doing here with real people and real cars, that will talk to one another and save injuries and save lives. >> ray lahood, joining us first on cnbc here in ann arbor, michigan. the study is going on for one year and at the end we'll have a sense whether or not this technology can be implemented widespread across the country. >> phil, before you go, john fund has a question, if you could. >> mr. secretary, you were early out of the gate expressing concerns about people being irresponsible using texting and cell phones in cars and i'm unhappy there's google cars out

there, the personal responsibility enters into this. do we have real numbers as to how many accidents now are caused not by alcohol but by texting and cell phones, and what exactly is the administration doing and what are the states doing to try to bring changes in that so we don't even have to worry about google cars reaching the market for a while? >> well, thanks for asking about distracted driving. three and a half years ago nobody was talking about it. because of our campaign and the campaign of many other people, when we started only 18 states that passed laws, today 39 states have passed laws. congress added some additional money in the transportation bill that was passed, but this is an epidemic, because we all have these texting devices and cell phones and we know if we use them behind the wheel of a car it will be dangerous. it is dangerous. and so we're going to continue the drumbeat of telling people, put these devices in the glove compartment, when you're driving a car. you can't drive safely if you

have a texting device or a cell phone and you're trying to drive a car. it just is not safe, and we're going to continue to work on this. it's very important. 3,000 lives were lost two years ago as a result of distracted driving. that's 3,000 too many. >> as a parent you want technology that prevents those devices from being used in the car, too, so your kids can't do it. mr. secretary thank you very much, we appreciate it and phil thank you. >> thank you. coming up, why you could be paying a little more when you plan your next trip and then, the donald will talk politics and the markets and don't forget to tweet us your thoughts on facebook, if you haven't sent them in yet, here is the question, what do you think of facebook's stock performance? would you be a buyer and what do you think about peter thiel's decision to sell? we want to share your thoughts throughout the show here on "squawk." time for today's aflac

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now the answer to today's aflac trivia question. whose earnings increased from $150,000 for "pulp fiction" to $3.5 million from "get shorty" to "7 million for "broken arrow"? the answer, john travolta's. >> aflac. welcome back, everybody. southwest airlines is leading the latest attempt by u.s. airlines to raise fares to cover the cost of the rising cost of fuel. southwest raised fares on short routes by $10 round trip and several other airlines were quick to match the increase. southwest carries more passengers within the united states than any other airline, it carries a lot of influence in the air fare sales. when it leads in the price hike attempt others usually follow. it's interesting to see southwest rise. they are very interesting keeping the lowest fares, one of

the only carriers that doesn't charge you for baggage that's brought on but with the fuel prices going up they find the need to come up with some extra revenue. when we come back, billionaire donald trump getting ready for the republican national convention. he is apparently going to have some sort of a role, we're going to find out what he will reveal about that right after this. and don't forget the question of the day, what do you think of facebook's stock performance? would you be a buyer? what do you think about peter thiel selling a majority of his shares? go ahead and send us your thoughts, we want to hear from you, we'll share your tweets throughout the show. "squawk" will be right back. ♪

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welcome back to "squawk box" this morning. in our headlines we're awaiting the latest electronics earnings from best buy, expected to report earnings of 31 cents a share for the second quarter, revenues of $10.6 billion. >> china's cnooc is a stock to watch. the oil producer trades in the u.s. under ceo ticker reported

first half profits that lagged on estimates. dreamworks signed a new five-year movie distribution agreement with 20th century fox, and fox will take the same 8% fee for each movie that paramount now receives, becky. >> thank you. time for donald trump joining us on the "squawk" news line. he is the chairman and president of the trump organization and donald, good morning to you. >> good morning. we have a big following on trump tuesday, i just saw numbers and i'm very impressed with you and with me. [ laughter ] those ratings really jump, i don't know, it must be you. >> well, no, it's definitely you. that's why we have you on every week. >> we have a lot of fun. >> we do. donald, i know you have the republican national convention coming up and you've been teasing about what might or might not be coming. i know you can't give it all away. could you give us a hint of what we expect to see? >> i start off the night before

in sarasota, florida, where i'm getting a great award from the republican group in florida and on monday night, something's going to happen, which i think is going to be terrific. i think it's going to be really terrific, and i think a lot of people are watching and i can't tell you what it is but you'll be seeing very shortly and for next trump tuesday we'll be able to discuss it in great detail. >> are you going to fire numb anybody? >> i don't want to say. >> a lot of people are thinking that's what's going to be. >> i didn't expect to you give it all away. we know we have you the following morning to wrap up on it. we're excited about that. >> you do, indeed. i will be with you at 7:30 next tuesday, no question about it. >> clarify something for me. i have been on vacation the last week and a half or so and i read some reports that you had a conversation with someone somewhere, where they brought up the idea that more women were in favor of obama and you had some thoughts on that and what i read

suggested that you thought women thought that because maybe they didn't know better, maybe they didn't know politics, why don't you tell me about what happened. >> i didn't say that. i said maybe they just don't know mitt romney very well. he's a very, very, very pro-woman person. he is a man who has just led an exemplary life in so many respects and women just don't know him and if they did get to know him, there would be no advantage whatsoever from obama. if they got to know mitt romney, there would be no advantage. he is a very, very terrific man in so many ways and especially when it comes to women, and i just think and what i said is i just don't think they got to know him or they know him well enough. now, we have really a long time before the election, a lot of things are going to be happening and i think one of the things that are going to happen is women will get to know him. >> donald, talking about women, todd aiken, i imagine you must have thoughts whether he should

stay in the party, step down, what should happen? >> well i thought it was terrible. i watched the statement and i thought it's inexcusable. i thought it was horribly -- i assume it was horribly crafted. i can't believe he's there in terms of mentality to make a statement like that, so i assume he just made a mistake in the way he said it, i assume, but maybe that's not the case. in any event it was a terrible mistake, bad for him and probably bad for some other people but certainly bad for him. as to whether or not he stays in, sounds like he's going to stay in and fight it out. >> should he? >> well that's up to him. should he? it's looking not so good for him. that was supposed to be an easy victory, they were up by about nine points in the polls and i haven't seen the new polls, it will be interesting to see the new polls when they come out but certainly it was a poorly crafted statement that he made. >> no impact on the party? >> does he believe that or is that what he really believes,

what he said or did he just say it incorrectly and if he said it incorre incorrectly he's just got to get out there and apologize in a better forum than he did. >> looking through what he said and i have a hard time trying to figure out how he just said something incorrectly with that. it came from a bizarre stance and i tried to figure out how he could have misspoken with that and how you could write that off as an innocent mistake. >> he's answered the question many times before so it seems a little bit unusual but it was, you know, i think, you know, i just don't know. i just don't know. perhaps he just answered it very, very incorrectly but doesn't seem that way so far. he's got to issue a very strong statement, what his real stance is and he's got to do it fast as to whether or not he stays in, it sounds to me like he's going to stay in. >> mr. trump, your trademark signature line is "you're fired," and i know you were an independent and george w. bush made you into a democrat and what was it about barack obama specifically that or his

administration that turned you into a republican? >> well, i just feel, and first of all, i am a republican, and you know, i'm pushing very hard for mitt romney as you know and i just feel that this country has lost so much of its mojo, i deal all over the world, i run a very big company and do business with people from many, many countries and they no longer respect us. it used to be our country was the king. we would be out there making great deals with so many different countries, and we were always the ones making the great deals. now you look at a country like colombia, they made $4 billion last year. you look at china, $350 billion to $375 billion. let's call it profit and that doesn't include the fact they're making our products and taking our jobs and so many other things. you look at what's going on with india and so many others. we're like a patsy. it's very foolish and i could use stronger words than that --

stupid. look at what's happening with opec and energy, nobody talks to them and with all of the power we have and you look at what's going on with our energy prices and by the way it's zooming up again and gasoline prices are going through the roof again, and i just look at the way the country is viewed from the rest of the world, and we are not viewed with respect, and that's very unfortunate for president obama, but lots of bad things are happening to our country. >> but i'm just curious, before barack obama, you were a democrat for so many years. why did you become a democrat? >> i was an independent. i was a democrat years ago, many years ago, and i also come from new york, which is largely democratic, and i've supported many democrats over the years, over the years i've supported many, many democrats, i have many friends as democrats, which i view is a positive, not a negative, because somehow there has to be a coalition formed here. you can't just have two sides. that's another thing when you talk about obama and by the way, as you know, i was never a huge

believer in what was going on with president bush, because he couldn't get coalitions. you had the republicans, you had the democrats and you never had deals, and what we have today is, i've never seen it like it is today. you have republicans, you have democrats, there's never a deal. congress doesn't even have to meet because they can't agree on anything. leader will bring these people together. now, we have our leader, it's president obama, and a leader will bring everybody together. nobody's come together and i mean you see that as well as anybody there is. i mean nobody, nobody is coming together. i don't know what's going to happen after the election. i hope after the election whoever wins is going to be able to bring people together, but certainly right now, and for the last two or three years, there's just been no togetherness and this country is suffering because of it. >> if you hope no matter who wins we come together, would you support obama if he wins

re-election, you'd say let's get behind -- >> whoever wins this election, something has to happen where people get behind the person and say let's go, we've got to put this country back together. our country is doing very, very poorly, and you look at other countries, how well, i mean you look at the wealth that china's been building up. look at the wealth these opec nations have been building, using us and others as the stupid ones, but you look at the kind of wealth, i go out, i travel and look at airports in certain countries. you go to qatar and different places, you look at airports that are, by the way, ten times bigger than what they need but the most magnificent places you have ever seen and laguardia, there's potholes in the runways, plateses are falling down. you go to newark and lax and kennedy airport, and we're like a third world country. we're falling apart. so whoever becomes president, we have to get behind somebody and there has to be a coalition. >> tom friedman has made some of the same points.

we'll be talking to him in a bit. can i ask but facebook? you've probably seen the story that peter thiel sold the majority of his shares. he was an early investor, makes sense to lock in some of the gains but also a board member and this is coming at a really sensitive time for the company. what do you think about a move like that in. >> i don't think it's good and i can imagine that zuckerberg is not exactly happy. i think it's terrible that so many of the people are selling and certainly if i were a buyer i wouldn't be very -- if i owned facebook i wouldn't be thrilled with the prospects. i look at it, it's not my world. i love real estate. we just got the opo, the old post office in washington, and that's what i really love talking about but frankly facebook is a total disaster, what's happened, and if i listened to my friends it seems to be a very hard advertising platform. so maybe now that it's down to 20 or so, people are going to start to buy but i think when the insiders start selling that's not a good sign so maybe

that means it's going down further. >> donald, thank you for your time today. we are looking forward to next monday and speaking to you on tuesday about the surprise you have coming up for us. >> very good, becky. so long. >> going to be a good sur prides. i'm curious what that is. coming up we'll continue talking about facebook, are you a friend of facebook? investors are going to be sounding off on the company's stock slide since the ipo, now the company's first big investor, peter thiel, has sold most of his stake. we've got your tweets and more when "squawk" returns. you do what you do... because it matters. at hp we don't just believe in the power of technology. we believe in the power of people when technology works for you. to dream. to create. to work. if you're going to do something. make it matter.

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it's the big headline of the morning, facebook's first big investor, peter thiel, selling a majority of his facebook shares, according to an sec filing the sale was planned before facebook's ipo. thiel, also a board member, sold 20.1 million shares last week after the ipo lockup period expired and distributed another 2.2 million shares to investors. thiel still holds 5.6 million shares but that's a small fraction of where he started, between these sales and the sale of shares prior to facebook's ipo, made about $1 billion. we've been getting tweets all morning about the stock and his decision, we've been asking you if you'd be a facebook buyer, we got this answer, "i wouldn't

touch any social media. advertisers will catch on soon that no one clicks, just like gm found out right before the ipo." another person saying "i will probably buy more fb shares after the november lockup expires and buy put spreaded before the lockup," which relates to employees not been allowed to sell. another tweeter -- not another tweeter -- me. i'm a tweeter, too. what do you think of the facebook stock performance? would you be a buyer and what does peter's decision say to shareholders? john fund has his own ideas. >> markets look at fundamentals and they look at symbolism. this is a deeply symbolic event. remember the movie "social network" the guy who discovers facebook in the movie and gives it its first venture capital is

peter thiel, so this is the guy at the beginning of facebook, and now i mean, does anyone really believe this was locked in before the ipo? i wonder that. >> you question that. >> and the bottom line is now the guy is selling 20 million shares, the guy who gave facebook life in part now bailing out? >> right. >> bad news. >> let's bring in, if we could, jay yarrow from "business insider." are you with us? >> yep, i'm here. >> give us your take on this. do you believe this decision has been made pre-ipo? >> i have no reason not to believe it. i don't think you come out and lie about something like that. if you get discovered you're lying it's terrible for you and the company so i would hope he's telling the truth in this case. >> i think both can be true. i think he could have planned it but it could have been accelerated, the decision could have been accelerated. that's all. >> jay, what do you think this means to the company, what does it mean in terms of -- what does it mean, if the decision was

made in may, pre-ipo, therefore if that is true does it say anything about his view about the future prospects of the company in. >> he made an investment in 2004. what was he going to do, hold onto these forever? would you prefer he waited until the stock was at 60 and jumped? this is the problem being a public company and having been an investor early on. it's always going to look kind of bad no matter when you sell. you're always going to hear critics saying i can't believe he's selling now. it's the trick about that. >> jay, this is a little different. i agree with you as an investor you want to lock up some profits and diversify, he's been setting on this for a long time but to unload the majority of your shares as soon as you're allowed to get out of it after all of the employees that are sitting there, all of the buyers on the ipo have watched that stock go from $38 to below $19, now, it speaks to a very strange timing

and a very delicate situation for the company, particularly one where mark zuckerberg has been trying to rally the troops saying hang in there. it's the timing of that specific nature that raises a lot of brows. >> if he said in may this is what i'm going to do, he wanted to get out of this, wanted to sell his shares, he wanted to cash in, you know, obviously the optics of it are bad but this is what he does, this is what a private investor who has been sitting on this for eight years i think it's okay. >> jay, two questions for you. one is do you think that this should have been disclosed pre-iop so if i was a pre-ipo investor, would i wanted to know this and how would it have impacted my decision to buy? >> he sold a billion shares early on and i don't know if you can say come out and say "i plan on selling later on as soon as the first lockup is ready" certainly he should have, if he's allowed to do that

definitely. >> my other question relates and i don't know if you know the answer and i sure don't, this sale is part of what's called a 10b51, it's a planned sale. could, if he planned for it back in may, watched the shares drop and said actually i'm not going to go ahead with this planned sale? does anybody know that answer? >> i don't know. >> jay? >> i don't know the answer to that either unfortunately. >> that's the thing that i wonder about and the last piece of this is whether you think zuckerberg, the employees, i mean you cover this tech world and tech companies. >> sure. >> are you worried about retention issues in terms of key employees at facebook watching the stock drop saying you know what? these options i have are not worth what i thought they were. there's a cool startup down the street courting me, maybe i should run over there. >> certainly, that's a big risk for facebook but even if the stock had done well that was going to be a risk for them. okay the stock's done really well, time to cash out, leave

and go on to the next thing. that's been a risk from day one. i said that the day that the ipo came out. you set this bar incredibly high with this high valuation and for it to sort of accelerate and get higher is going to make it harder to attract employees. this has always been an issue for vem. >> jay yarow, appreciate your insight. >> thank you. still to come, mohamed el erian talking markets and earnings from best buy. "squawk" will be back after a quick break. tomorrow, "squawk box" has you covered on the markets, politics, and energy. ron baron of baron capital, glenn hubbard, and t. boone pickens, founder of bp capital and neil barovsky, don't miss "squawk box" tomorrow at 6:00 a.m. eastern. in our dna.d during the golden opportunity sales event, get great values on some of our newest models.

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we're pack. we tush it mark zandi and john fund, columnist at "the national review." john a question that becky had talked about during a commercial break and people didn't get to see, talking about a horse race in florida and some of the states in terms of how this election is going to play out and how much of a horse race it really is right now. >> well, first thing, pollsters will tell you starting around labor day they make a shift in how they conduct their polls. they no longer ask registered voters what their opinion is of the race, they ask likely

voters, they have a screen, ten questions, to try to figure out whether you're likely to vote because if you ask people, are you going to vote for president? everyone says yes. they may have the best of intentions but it doesn't happen. usually what happens on labor day you get a better sense of whether the polls are real. likely voters are what we're worried about. the swing state polls are fine but the margin of error is bigger because the sample is smaller. i look at the macro polls, national polls, i look at the average of all the polls and what they show is this is a tight race. either candidate can win it and it shows obama probably ahead of romney in most of the polls but here's the fundamental question. an incumbent president is 100% name i.d., 100% have an opinion about him even if it's meh. obama has been below 50% on two fundamental questions in the national polls for two and a half years. one, do you think he deserves re-election, two, do you approve of his job performance? with the exception of the one week where osama bin laden was killed he has been below 50%.

historically what we learn from that is this incumbent presidents who are below 50% almost everyone else is either going to stay home or vote for your opponent. so 50% is a very important benchmark for an incumbent president. presidents above that, bill clinton, named richard nixon, named ronald reagan win. presidents bow low that, george h.w. bush, jimmy carter, lose. presidents at 50%, the right number, george w. bush win 58% of the vote. obama is below 50% at 47, 46, dangerous territory for the incumbent. >> stick around, we have more in a minute. "squawk" will be right back. coming up, squawk market master, pimco's mohamed el erian talks markets and 8:30, author thomas friedman is our special guest, "squawk box" returns after a quick break.

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>> we'll ask him about romney's choice of running mate, market uncertainty and the impact of facebook's ipo on the individual investor. the "squawk" newsmaker of the morning. new york times pulitzer winning columnist thomas friedman joins us. ♪ r-o-c-k in the usa, r-o-c-k in the usa, rockin' in the usa ♪ welcome back to "squawk box" here on cnbc, first in business world wild. i'm andrew ross sorkin along with becky quick. joe kernen is off this week. our guest hosts all morning, mark zandi, chief economist at moody's analytics and john fund, columnist at "the national review." look at future this is morning, green arrows across the board, not huge news but the dow looks like it would open up 16 points higher, nasdaq five points higher and s&p 500 about 2.5 points higher.

we've been talking about facebook all morning, the shares to watch, the stock managed to gain some ground yesterday after briefly dropping below $19 a share but that was before the big news after the bell and in an sec filing released late yesterday it was revealed facebook's earlier investor peter thiel sold the majority of his stake in a sale that was planned before facebook's ipo, thiel is also a board member sold 20.1 million shards last week after the ipo lockup period expired and distributed another 2.2 to investors. between last week's sale and the sale prior to facebook's ipo, thiel made about $1 billion on all of this. we've been asking for your comments on facebook all morning, tweet us @squawkcnbc is the handle. couple of quick notes, the employee lockup doesn't happen until november so some people frustrated on that score, also we talked in the last hour about whether peter thiel who planned

the sale pre-ipo could have actually canceled that sale and in fact he could have, had he disclosed it so clearly he made the affirmative decision at some level to pursue this deal. john, you want to make a quick comment? >> yes. peter thiel is a brilliant investor and that's one of the reasons this made news. i think of course he planned this back in may, but the size of it might have been adjusted over time. in other words, he could have planned a smaller sale in may than he ultimately planned now. that's what people are wondering about and why this makes news because this is the man who gave life to facebook. >> absolutely. talk about other quick headline this is morning. quickly best buy out with earnings, and the numbers are worse than had been anticipated. the company was expected to earn 31 cents a share, it's now saying it came in with earnings of 4 cents a share on a diluted basis. if you look adjusted nongaap earnings of 20 cents a share, well below what the street had been anticipating.

revenue came in light, expectation was for $10.62 billion, revenue came in at $10.55 billion. so again this is more bad news for best buy after watching some of the issues we've been taking a look at this, you can see that stock is down by more than 7.7%. the company says at this point, it expects annual free cash flow of 1.25 billion to 1.5 billion. it is suspending earnings guidance so you have to wonder exactly what this company can see how far out it will go at this point. they do say that the u.s. big box square footage was reduced 4% year over year, digging through quickly to see if i see more comments from the company. we knew the news about the board of directors appointing hubert jolie joly as the new ceo. this stock is going to trade down another 8.5% so keep an eye through the premarket. we'll keep looking through some

of the numbers on it and talk to an analyst coming up in a few minutes. let's also get you through other headlines, closing arguments are set for today in the patent dispute between apple and samsung.ap.al cueses samsun the design and features of the iphone and ipad. samsung says apple infringed on its key wireless technology. the ceos talked, at the request of the judge. authorities outside baltimore said a train carrying coal derailed and two people were killed. cars fell from a bridge just before midnight in elicott city, maryland. the two people who were killed on the tracks at the time of the incident. some of the train cars crushed parked vehicles in a nearby county-owned lot. crews are working to clean up the coal that spilled from the csx train. it's unclear what caused the crash and that is a sad story,

more than a mishap, it looks like a true tragedy, and we'll bring you more news as that continues to roll in. our next guest is a squawk icon and rebel as well as a squawk market mast we are more than $1.3 trillion in assets under management. joining us from newport beach at the crack of dawn out there is mohamed el erian, pimco's ceo and co-cio. mohamed, great to see you this morning. >> thank you, andrew. >> let's talk about paul ryan if we could. he seems to be taking your phrase and using it. is he using it properly? i saw him say we're here in the new normal. >> yes and no. he said this is not the new normal. it is a new normal, unemployment is too high, growth has been too sluggish. where he is right, he said it's due to misguided policies. i expect his definition of misguided are very different from my definition. we view it much more as a policy response that has been too

cyclical, too partial, and too short term. so that's the key thing, andrew, i think, is to focus on what he said at the end of that speech. he said if we're not careful, for the first time in a very long time, our children's generation will be worse off than ours and that is a key issue that hopefully the politicians will focus on. >> mohamed, normally we talk about macro issues. i want to get your thoughts on the micro issue this morning, facebook, peter thiel's decision and also what this means for shareholders at large. >> here i'm with jay. i've been listening to the discussion all morning. he was an early investor. which you expect an early investor to exit. ipos do three things, allow early investors to monetize their innovation and risk taking. second they allow companies to raise permanent capital to expand and third they give a signal to companies as to how they are doing.

we shouldn't be that surprised. i wouldn't read as much into it as -- >> we are? >> -- some of you have. that's what early investors do. ipos allow them to monetize their innovation and risk taking. >> mohamed, it's mark zandi. if i told you that gdp would grow 2.5% next year in 2013, 3% in 2014, 4% in 2015, would that be consistent with your new normal definition of new normal or is that something better than that? >> it's somewhat better, mark because it's going up. our concern is that the longer it takes for the politicians to respond, the more the problems become embedded in the structure of the economy. you see this on the unemployment side. you see it in terms of the duration of unemployment, the long-term and youth unemployment. these are issues when the unemployed become unemployable. so i would say to you it's

slightly on the positive side of the new normal, but the signal to the politicians is, you know what? you've got to act because our problems are getting embedded in the structure of the economy. >> right, one other question just changing subject is a litt bit. there was a lot of chatter over the weekend about the ecb targeting sovereign yields, coming in and buying as much as they needed to buy to keep yields below a certain level. i'm curious, what is your take on that? is there any merit to that? do you think they go down the path and would it be a good idea? >> we discussed this at length at our investment committee and our european team looks at it. we suspect, we do not know, we suspect this is one of the options capping yields, one of the options the ecb issing looing at. we do not think it's likely to materialize because it's an open-ended commitment. remember ecb can say like they did for ltro one and two, we will intervene up to a certain amount on our balance sheet. the minute they target a yield

level, they are saying basically it's unlimited intervention and we don't think the ecb is there. it is one of the options the ecb is looking at but we do not believe it's likely to materialize. >> alexander hamilton did this, came in and said he was going to buy treasury debt at par no matter the price, if it fell below par he would buy treasury debt. as soon as he made that commitment and it was clear he was going to keep that commitment treasury debt remained at par. so it could be the ecb if they made that strong statement, strong commitment they wouldn't have to do so much. >> remember that commitment has to be accompanied by conditionality. they have to be sure the periphery is going to behave in a more responsible manner. secondly it has to be agreed to by the creditor countries especially germany and third subordination issue. investors are worried about being insubordinated by the ecb. these are technically complex issues and that's why we think

it's being discussed but don't think they resolve this in the next couple of weeks. >> john fund is here as well, mohamed. >> thanks, mr. el erian, something like half or more of the unemployed have been out of work seven, eight, nine months or even more. now in europe we've seen this long-term unemployment plement for a long time, people losing skills, people not having social skills anymore. what is the future of the united states if we have this large body of long-term unemployed people we don't put back into the workforce? is this likely to keep going and become embedded in our country? >> that's why we call it an unemployment crisis and not an unemployment problem. the worse thing that can happen to the innovation of this country is to have structural unemployment embedded in the system. it's not too late to turn the corner, but this requires retooling, labor retraining and

requires movement on other policy fronts. it's a long-term problem you want to avoid. the longer you wait the harder it is to solve. >> mohamed, i know you can't speak for bill gross but i have a question for you. he made some comments that a lot of people, gotten a lot of play and gotten some people say confused. he said the cult of stocks, the cult of equity is dead. does that mean that the stock market and the stock market rally is dead? >> okay t does not mean that. he stressed the cult, okay, and people lost sight of the word the cult. what is the cult of equities and the cult of investment? one is to assume returns that can serve you, in fact a lot of people think of the markets replacing hard work. that's not going to happen anymore. expected returns are going to be lower going forward, unfortunately. why? because we've borrowed returns from the future. two, the cult assumes certain correlations among asset classes and we are seeing correlations change so the message from bill,

and has been a consistent message from pimco, hey, investors, first expected returns sufrl nunfortunately is going to be lower and be much more agile, much more global in the way you invest. >> what do you think stock returns are long run over the next five, ten years? >> so we are thinking 4% to 6% on the equity side, we're thinking 3% on a fixed income side, and then look to compliment and supplement this with alpha generation, and more responsive risk management and asset allocation. that is the challenge for investors and that is key for investors to be much more agile in the way they think about generating return in this very fluid global environment. >> if you're a pension fund manager that is not a good number to hear. what is therefore the answer? >> the answer is whether we like it or not, certain promises that were made in the past are going to be very hard to sustain.

that's the reality. >> there is an article in today it's "wall street journal" about warren buffett's decision to cancel cds on municipal debt, he bought it from the lehman estate prior to its bankruptcy. what do you make of that? >> i haven't seen the article. more generally and we had that discussion in our investment committee yesterday with our municipal team, people have got to realize there's a whole range of municipals from high quality gos to really low quality citis et cetera and investors have to realize this is a differentiated asset class and has to be navigated carefully. >> mohamed, thank you for joining thus morning. >> thank you. >> i would say you're getting up early but you get up early every single morning. there he goes. when we come back we'll talk more about best buy's reporting earnings, came in below the street's expectations, the stock has been getting hit pretty hard, down by more than 9%.

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there had been bad news but this came as a surprise to the street, not only coming in with numbers worse than expectations but suspending guidance for the rest of the year, what does that tell you? >> another signal the company is in transition, a lot of decisions to be made. the company appointed a new ceo yesterday and potential founder takeover in the background as well, between structural issues going on in the consumer electronics retail industry as well as internal issues it's clearly a company in transition.

>> what is the longer term and why are you more worried long-term? >> i really don't see a lot of ways for this company to turn itself around. what we've found in the consumer electronics industry, no matter what level of service the company provides, the consumers always flock to the lowest cost provider and right now best buy can't compete as it's currently structured with the amazons of the world. we're also seeing that vendors like apple and microsoft are becoming a lot less dependent on best buy as a distribution channel and i don't think that's going to change. lastly, the service business that best buy has always touted as its key differentiator that can be replicated by its peers. i think we're in a downward spiral in terms of margins and don't see any way for the company to get on a positive margin expansion trend going forward. >> what's the best case scenario for the can. ? >> best case close between 30% and 40% of the stores, reinvest the savings becoming more competitive in terms of pricing with amazon, invest in a better

online experience and better in store experience now. >> even with the stock down another 9% or 10% today you would not be a buyer? >> no, i'm going to reevaluate my estimates based on today's results but i'd expect downside to my estimates right now. >> okay, so at this point you are still very concerned based on what you see here? >> i haven't seen a tangible plan to turn around the business from the management team and we'll hear more on the conference call this morning but still don't see a lot of exit strategies for this company. >> do you think if richard schulze was in charge we'd have a different story? >> i don't think so either. this is schulze, anderson, they built the 50,000 square foot lots that are unproductive, they lost quite a bit to digital distribution, dvds, cds, video games is all going digital, left the stores quite unproductive, anything they put in there is lower turning lower margin items and unless they start rotating quickly in a smaller locations and closing stores it's not going to be pretty long-term for

this company. >> do you see a path for a takeover in any shape or form? >> schulze has to go hostile if it's going to happen and more than $24 to $26 per share to happen. there are shareholders who think they stuck it out long enough and want a higher return and so it's going to take more than what is on the table. >> do you think he has the financing and does he go hostile? >> i doubt it at this point. i haven't heard a lot of stories of private equity backers. >> r.j., thank you very much for joining us this morning. >> thank you. still ahead, we want to hear from you, our twitter question of the day, what do you think of facebook stock performance, would you be a buyer and what do you make of peter thiel's decision to sell, tweet u us, @squawkcnbc. and "new york times" columnist tom friedman will join us at 8:30 a.m. eastern, why our educational system is failing to produce workers with the skills that we need.

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welcome back to "squawk box." we haven't talked about unemployment yet mark. i want to know what you think the unemployment rate is going to be by election time and i want to know 12 months out, does it matter who the president is at all? what is the best case you could see for the unemployment improving under either president? >> okay, election day we'll be over 8%, maybe 8.1, 8 if we're lucky. >> you can look out that far? >> i can look out as far as you'd like, 12 months, you know, i think it will be below 8% regardless of who is president. the key is nailing down some of the fiscal issues on the other side of the election, the fiscal

cliff, the treasury debt ceiling, it would be nice if we got clarity about long run fiscal policy as well and there's a fighting chance we'll do it regardless of who wins the election. >> mohamed used the phrase "the new normal." what is your view? go out three years. >> i think he's wrong. >> what is the new normal we're living in in terms of the unemployment picture or employment picture looks like in this country in. >> i think he's wrong. i think we're way down by some of these broad macro economic issues, what's going on in europe and our fiscal situation but underneath that the fundamentals of the economy, business balance sheets, household balance sheets, we've come a long way and it's in good shape. >> do you see a day living in a 6% unemployment world? >> absolutely, a couple, three years to get there but we'll get there. >> do you think he's wrong with the stock returns, too? >> i think is hhe is because if told me that would be the growth in profits of american companies

over the next ten years i'm on board with that because profit margins are not going to get any wider so profits will grow at the rate of growth of the economy. these companies in the stock market are globally oriented, benefits from growth overseas. >> where do you come down on that, john? >> with the right policies we can be back to 6% unemployment. we have the wrong policies, the new normal becomes the permanent normal. bottom line, what bush did in his last couple years, what obama has done, hasn't worked. and remember, the first bailouts, the if, stimulus was under bush, so we have two administrations that have basically pursued i think misguided policies. we have to get back to fundamentals, lower taxes on capital. canada just lowered its corporate taxes to 15%. if we don't change current policy, we're going to go to 40% taxes on capital in this country. >> i strongly disagree with

that. >> canada isn't the world leader now? >> that the policies of the last four years have failed, that's just in my view, wrong. look where we were four years ago, and look where we are today. >> this is the worst recovery since the great depression. >> because we had the worst recession ever since the great depression of the 1930s. that's what you have to put it in the context of. we created 4 million jobs over the course of the last 2 1/2 years. that's a significant success given where we've been. >> is there anybody out there watching in this audience who thinks the last four years have been a success? please tweet or call in. >> we'll leave it there. let us know who you think just won that debate, we'll continue that after the break. >> unfair, he gets the last word? >> no, the audience gets the last word. >> we'll be joined by tom friedman of "the new york times" with us to talk about his new book, right after the break.

can

. welcome back to "squawk box" this morning. let's look at stocks on the move in today's trading, best buy shares taking a hit after the company's quarterly earnings came in at 20 cents per share,

excluding certain items, that was 11 cents below estimates, best buy same-store sales fell for the eighth time in nine quarters, also suspending future earnings guidance, we've also got another retailer with opposite fortune this is morning, urban outfitters beating estimates by nine cents in its latest quarter reporting 42 cents per share in profit and also expects continued gradual improvement in sales as the year goes on. two small companies combining in a stock for stock merger of equals, dex one getting together with supermedia, both providers of yellow page services. whatever happened to the yellow pages? both have been transitioning from traditional paper to digital market services over the past few years. "new york times" columnist tom friedman talks to a five-part formula to keep america on top no matter what challenges the country might face. is he the author of the book "that used to be us: how america

fell behind in the world it invented and how we can come back" a book he coauthored with michael mandelbaum. it's now out in paper. great to see you. >> great to be with you, becky. >> when we were speaking with donald trump he brought up the idea that america is falling behind and you can see it when you go to another country, and see their airports and come back here and fly in at laguardia, something you've been pointing out along the way, too, and this book does that. the question is how do we turn things around? >> it's true you fly from singapore or hong kong to lax it's like flying from the jetsons to the flintstones. and you can't possibly miss it. our book is really about fundamentals. our view is we didn't just get into this quickly, we're not going to get out of it quickly. we got into this because we got away from what has been our long-term formula for success, and it is five parts, educate our people up to and beyond whatever the level of technology is so they can get the most out

of it, have the world's best infrastructure so business and commerce can really be enabled, have the world's most open immigration policies so we can attract the first round intellectual draft choices and most energetic people from around the world to come here and start 40% of the four-tune 500 companies, either first or second generation immigrants, have the best rules and regulations that incentivize risk taking and prevent recklessness and the most government funded research to push out the boundaries of science and technology so entrepreneurs can take advantage of them. that's been our fom lafrmula fo success. we've gotten away from them in the last 20 years. mohamed el erian likes to say we started to buy our growth with massive credit at the household and federal level at a time when the world was getting flat, others could compete bet we are us and we got to get back to basics. there is no one stop short term cure. >> this is something that went wrong over a number of years, and as you point out, this is not something that could be fixed in the short term but tom,

people look at the election and try to figure out if this is an election that's seriously going to be a major change, a major choice, and if you have to take your formula and match it up against these two politicians, where do you come down in this election? >> oh i'd say yikes! if i have to do that. you know, becky, i agree with mark zandi said, underlying our economy is dynamic. you can't put this economy down. >> tom is voting for me. >> i just see it, mark, when i travel around the country, i did a book on energy a couple years ago, and i was always struck, you know, i'd give talks about energy and afterwards i'd be inundated with energy entrepreneurs and innovators come up with their business cards, "i've got a duck that pedals a wheel, methane, fires a turbine" crazy stuff but it tells you the country is still

just alive from the bottom up, full of people who just didn't get the word that china is going to eat our breakfast or germany is going to eat our lunch and i go back to my room at the end of the day and empty my pockets of business cards. rock stars get keys, i get business cards but they're exciting and what they tell you is the dynamism here. becky if we got three grand bargains out of this election, one grand bargain that says we'll have a short term investment in infrastructure, paired with a long-term fiscal rebalancing, one on natural gas exploitation that says we're going to take advantage of this incredible bounty but we're going to do it in an environmentally safe and sustainable way and one on immigration, that says we are going to have immigration reform that's going to deal in a fair and humane way with the illegal migrants here but also open up our country to the immigration talent and energetic people out there that we need, i give me those three bargains and you will see a melt up in the stock market i think like nobody has seen. the country is poised for that

but right now our politics is holding us back. it's like we're the children of permanently divorcing parents right now, sort of the political level, the political environment is i think a real downer for a lot of people, and they are holding back. you give me those three bargains, we'll take off. >> tom we have two guest hosts who want to jump in on the conversation, mark is here and john fund is here, guys, jump in. >> tom, i agree with your educational system has to get up to speed, but i worry about our university system. we have this enormous infrastructure in bricks and mortar and tenured faculty but technology which you have written compelling about is marching forward. i think we have a higher education bubble. tuition has gone out of sight and no matter how many federal loans we have to students, people are graduating with all this debt. do you see a future where digital learning and university learning, mit, harvard, stanford k take the best teachers, best classes and make them available on the internet? do we really need this much

infrastructure in bricks and mortar, higher education in the future? >> john that's a very good point. couple months ago i wrote about quicera, started by a couple of stanford professors who had a million kids in their classroom. this is about globalization that people don't understand. i think the biggest thing happening on the planet today is the merger of globalization and the information technology revolution and it's driving everything. so on the downside or on the challenging side really is the fact that it makes every job the level of education you need for every good job today, whether it's machine tooling or programming, has gone up, and that is a real challenge. on the other side, as you point out, john, this same platform, though, is going to allow access to the best education in the world through technology for more and more people to get upskilled and i think in the

middle of that is the traditional platform, this university system which charges you $40,000 to $50,000 for the best schools of the year to get an education, they are going to be squeezed. one of the things i would have loved to have seen in this campaign is that for both candidates to be competing for, i will guarantee that in four years, more americans will get post secondary education. not by just tossing around money but by whatever enabling policies i can put in place, because one thing we know for sure, unemployment today for people with four years of college education is 4.1%. that's basically no unemployment. >> tom, it's mark zandi. is there a country or two or around the globe that you think we can learn from that's doing it right along your fundamentals? >> mark, one of the things we point out in this book is that the most important thing to do every day, whether in your job or my job is wake up every morning and ask a question, what

world am i living in and what are the biggest trends in that world and the world we're living in is a world in which globalization and the information technology revolution have merged together in a way that we've gone from basically a connected world to a hyperconnected world, and when you go from connected to hyperconnected it's like the whole global curve, if the whole world was a single math class the whole global curve just rose because every employer as you all know has access to more above average software, automation, robotics, cheap labor and cheap genius in a hyperconnected world than ever before and therefore the central socioeconomic point of this world is that average is over, average is officially over. if all you'll ever do is all you ever done, you, me, all of us have got to find our extra. the countries, to go to your question mark that i think wake up every day and ask that question, at the top of that list is, are the hong kongs and the singapores, and they are not waking up, you know, having food

fights over ridiculous things. >> they're also not bastians of democracy. can you do that in today's times, given the constraints, the austerity, what we've been through the last few years, can you do that in a democracy? >> oh, yeah, i definitely think you can. i think we're the anti-democratic side, once they decide what world they're living in, they can force the policies down but in terms of, there's no reason we couldn't be doing it. why do we have to have this dumb as we want to be campaign that we're having right now. >> that is absolutely true. >> what i love about you, tom, you're always optimistic and my question about washington right now is, no matter who wins the presidency, do you have optimism that all of this sort of polarized world that we're living in is going to somehow fade away and that we're going to actually be able to get stuff done in the next four years? >> well, you know, i do try to be optimistic. it's the minnesota thing in me, but i will tell you that when you watch what's going on in the political system we have right

now and the hyperpolarization, you really wonder, you know, what will allow it to heal itself, and what i fear is that what we're basically doing right now, andrew, is we're kind of taunting in the sort of backyard basketball sense, we're taunting the two most powerful and emotionless forces on the plantet, the market and mother nature, at the same time. we're basically saying to both of them, what you got, baby? show me what you got. because we're going to have our little food fight here for three, six months, maybe another, what you got?! one day we're going to wake up and they're going to show us what they got. we say in the book, you know, i may have said this on your show before, if you jump off the top of an 80 story floors for 79 floors you can think you're flying. it's the sudden stop at the end, it's the sudden stop at the end tells you, you are not flying and what this book is about is basically how to prevent that. >> tom, if you're not thrilled

with the candidates you're looking at in this election, what is the best hope to get us on a quicker path towards doing this, just in terms of what you think is going to happen in november, the fiscal cliff that's coming, what is our best hope right now? >> well, i really -- look, we have the candidates. we're the voters, we're entitled to demand more and better from both sides. my only hope and it's a fear at the same time, becky, is that the market basically is not going to stand for this indefinitely. and it's going to send certain signals that you hope both sides will draw the conclusion from, it's a presidential campaign was a terrible thing to waste and that's what it feels like we're doing right now. >> how do we make it focused, make it smarter, make it look like the issues, that has to come from the people. >> exactly, we are the ones who elect them and right now, everyone's so obviously caught up in their own personal issues and challenges right now.

you just wish, look in our book we called for third party. what would a third party candidate be talking about, it's not going to happen, so you have to hope the two of them come but they'd be talking about the the right energy policy and right immigration policy, the right balance between s term fiscal restructuring and long-term fiscal rebalancing. we're only going to get a deal if the republican party becomes a center right party again and the democratic party is a central left party. you're only going to get a compromise that is sustainable and optimal, not suboptimal, if it's forged at the center, and i do despair over where the political system is today, that it's going to prevent that. >> tom, we want to thank you very much for coming on the show, we always love having you around "squawk" and by the way we should mention again the book that's written by both tom and his coauthor mike mandelbaum "that used to be us" out on paperback. talk to you again soon. coming up, more from mark

zandi and john fund and don't miss "squawk box" tomorrow, a special extended interview with legendary investor and squawk market master ron baron, joining us tomorrow at 8:00 a.m. eastern and on thursday, st. louis fed president jim bullard will join us ahead of the conference of central bankers in jackson hole.

welcome back to "squawk" this morning. we've been asking you to share your thoughts in the perform absence of facebook stock and let's get to some of your tweets this morning. "sharing opinions of fais pook using twitter is a show of its growing obsolescence." mark your kids are using this less? >> he are this, 18, 19, 20, that's what they're telling me. >> "buy facebook at this price,

no way. at this pace down i could wait to buy the whole company on ebay by christmas." another one says "facebook is a hold until the unemployment rate drops, then sell, sell, sell." of course you can keep the tweets coming this morning, love to know what people think of peter thiel's decision to sell and what that means for the stock going forward. becky? when we come back we'll have more of your tweets on the performance of facebook stock, plus we're going to head down to the new york stock exchange to get jim cramer's take on best buy, a lot more including talking to our guest host about lockhart making comments saying monetary policy is not a cure-all for the economy. we'll have more when "squawk box" comes right back. cused. tdd#: 1-800-345-2550 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...

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i need your view. i'm hoping for insiders to buy. come on. there isn't anything about

facebook that hasn't been done in the right fashion. they get away with everything. nothing happens here they say, wait a second, guys! where are the brokers saying this isn't right. >> is thiel dumping here? you need to see it buy before you get rid of the stock. >> what about directors? >> i'm a director of street.com. i do it way in advance. this is not the way i play it. this made me furious. i like theil very much. sure, he was always going to sell. like he expected it. like i came to you yesterday, thiel is selling 20 mill. where is the outrage about this? how much money do they have to lose you here? sn>> do they have a voice in th conversation?

should they be able -- >> everyone has a voice in this. everyone comes down on you when you do insider selling. don't you think i know it. everybody has an excuse for behavior i have seen in the last year. it's outrageous. i can't wonder why the individual investor didn't run. if i didn't work 20 hours a day, i would run. >> if you were mark zuckerberg, would you fire the ceo who immigration it? >> who is mark zuckerberg? where was he? he worked on the price. where is this company? where are they? i don't know. >> what would make you feel better? >> how about insider buying? i love the fact everyone expects insiders to sell. when i was running street.com, if i saw insiders sell, if i did, i would say we ought to

fire this guy. i don't want zuckerberg fired because he's the founder of the company. of course, he sold 20 mil. that's fine. this is unbelievable. >> would you get thiel off the board? he still has 5 million shares. >> i'm sure everybody checked off on it. i don't know. i guess they can do whatever the heck they want. nasdaq can do whatever they want. everybody is still around, morgan stanley, everybody is around. what do you have to do to get fired in this country. maybe that's what you need. >> unless they're on line one, it doesn't matter. a brother-in-law? is there anybody out there says, hey, listen, maybe that's wrong. cramer says someone should be indicted. i picked up the papers and thiel, maybe this is a mistake. maybe he's buying stock. facebook, it's whatever they wa want, that's fine. they can do whatever they want because they have 900 million people. it's fabulous. >> you will be the voice of

reason today. >> i will do them a big favor and click on an ad. it will click up 50%. i might buy a coin on zynga just to say, you know what, not all is lost. anything goes! >> i have a feeling we will hear a lot more coming up in just a few minutes. >> the conscience of the small investor, jim cramer, we will see you on "squawk on the street" in a few moments. >> when we come back, final thoughts on our guest hosts. stick around. "squawk" will be right back.

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street was looking for, 34 cents, same-store sales down for the eighth time. now suspending future earnings guidance saying it's too unclear what will happen in the second half of the year. investors don't like to see that and why that stock is down another 10% today. let's get some info from our guest host, mark zande and the columnist from the international review. we have the election coming up quickly and one quick take away how you think things will go down in november. why don't we start things off. >> an incumbent president has to run on his record. barack obama has disappointed a lot of people. we had great hopes and expectations for him. "newsweek"'s cover story put it best. where's the beef. it's not been delivered. >> 150 k jobs per month between now and the election, unemployment doesn't go higher, stays where it is, stock market hangs in at highs.

house prices continue to remain stable, i think the president has the economy at his back, particularly in the swing states, you look at ohio, virginia, iowa, colorado, those economies are doing better than the national average. >> 150,000, that's lower than you used to be looking for, isn't it? >> yeah. i was expecting it to accelerate closer to 200 k. i think we will get there on the other side of the election in the fiscal. >> this side of the election is after people vote. >> all we need is 150 thousand will keep unemployment where it is and the stock market where it is? unemployment above 8%. originally people had said there's no way you can get re-elected with that number. >> snow no incumbent president has ever won with this high a number ever. >> we have an election model, base it on economics, unemployment voting patterns. been running it a number of years. it's very close. the state it boils down to is ohio. that is the key state. if the economy h