unemployment rate there is below the national average, creating jobs, a lot related to the revival of the auto industry, i think that's the key state. >> mark zandi. thank you you both for being here. we had a fun two hours. good tuesday morning, welcome to "squawk on the street". live from the new york stock exchange. carlos is back tomorrow. let's look how we're set up in the united states. no economic release expected today. we see green arrows across the board. the s&p looking at about 8. as for the picture in europe. a well received spanish bond auction. it sent the euro near a two week high against the u.s. dollar and saw big inroads in italy and france. we start off with best buy. the steep stock market continues

there with a third straight quarter driven by declining tvs and notebooks and suspending its buyback and guidance the rest of the year. very different story for urban outfitters. is it time to take profits on this turnaround story. cramer gives us his take. and peter thiel sells a large stake in facebook. and eclipsing microsoft for the crown, apple, if we don't adjust for inflation. second quarter results reporting its eighth same sales store declined in nine quarters and they're giving a cash flow forecast the rest of the year. they're basically saying we have a new ceo coming in town and we will take the guidance away. >> we could be talking about

radio shack, circuit city. you take a look at what they're selling not good. consumer l, cell phone, bad, notebooks bad. i don't know what else there is. magic jack? honestly, i don't see a lot positive here. schultz wanted to get involved, wanted to do something. they should give him the company, sold to you, 23 bucks. >> i will try to find a little silver lining, i guess. comp store sales fell 6%. hold on. that was a smaller drop than they had in the fiscal first quarter. >> so best buy is good. >> i'll lose money on everything i sell and make it up in volume. >> they don't have volume either. >> they have taken the shares,

buy high, stock buying low? >> i guess so. $19.28 on average is what they bought the stock at during the second quarter. >> terrific. good investing. >> it's interesting what you said about free cash flow. for a private equity buyer, that's the number one concern they have. almost like they're dangling that out there, don't you think, jim, we still have a free cash flow for interested bidders. >> they had a huge amount of revenues. what we have seen over and over again, everybody owns their lunch. you want to buy a tv, go to costco, 70 inchers cheap. want l, go to amazon. want to go to cell phone. my verizon store is packed and go to the second and third verizon store and sends me to at&t and i end up buying sprint. >> they did see growth in mobile but they're seeing smaller margins in mobile. for every area they had an

offset. they had strong growth in tablets, mobile phones, appliances and e-readers more than offset by declines in digital tvs and notebooks. they're driven by computing, mobile, and tvs. it's hard to pick a silver lining out here. we are entering a seasonal strong period for best buy. that's the hope. >> radio shack has many a seasonally strong periods. people get angry when i say, how can you relate it to circuit city and radio shack? when you go there, they have similar items. >> the two have been trading pretty much in tandem. if there is hope for best buy, if somebody like schultz comes in, if the talks break down between the board for radio and best buy, the hope is gone for radio shack. it's amazing how the store is similar between the two stores. >> spain and italy can come

back. > here's my question on best buy. david einhorn had a note on best buy saying, i don't think people are showrooming, looking at best buy and buying on amazon.com or walmart or costco. he thinks the problem with best buy, there's no must have item to bring people into the stores. >> blame it on the products they sell. we have heard that from many analysts as well, long said it is much less than what people perceive it to be, it this is product psych many. there hasn't been -- the 3 d tvs. >> remember when everybody could afford a tv? >> and the 3d tv would spur sales and that was a flash in the pan. we saw stocks rise and then immediately fall that it was too expensive to buy and people weren't gravitating to wearing

glasses at home. >> when you look where amazon does well, it's wheneverry category. amazon remains a tax haven for many people. m they bring it to your house, really an extraordinary thing, remember, if it's big and you have to take it to your house -- >> shlep it. >> i don't want to buy a hand truck although i have one if you need one. >> i do think best buy is in secular decline and people who try to get ahead of secular decline conditions always think there is some value and i don't see it. >> international growth was down 8.2%. they say was driven by lower growth and consumer spending in china. there aren't many strong spots in this quarter and we see the resulting 9.7% decline in free market. >> we had phenomenal numbers for retailers ex-jc penney. there have been so many

retailers who have done well. why do you look at the worst of the segment of retail. >> let's talk about an upbeat story in retail. this morning, urban outfitters surging. a stronger than expected second quarter. it sees gradual improvement in its business along with a further tightening of store anniversary. funny how many people believe in the store. the stock was at a two year low last fall. this is a turnaround in a short amount of time. some analysts are big fans of this turnaround story and some sitting on the fence and want to believe it but don't see it yet. >> a lot of people felt it was the end of urban and the founder comes in and does a great thing. i was blown away, three people, back to double digit gains, anthropology flat. i recall when g.a.p. had that first quarter, turning when

murphy had come in and people dissed it. g.a.p. is bad. they have the wrong goods and g.a.p. has been remarkable. i think urban being back. urban was one of the great growth stories. it could be back again. >> a couple of upgrades from hold to sell. >> because everyone hated it so much. that's the march tour buy. these guys can't go from sell to buy without looking like wow, what a clown i am. when i go to their stores, i feel they're very invigorated. they're doing quite well. >> when you go to the stores, do you buy anything at urban outfitters or anthropology? you do? for your daughter or yourself? >> for my daughters, i bought them gift certificates in the last three months and free people has a buzz about it zblooinchtsd refreshed

merchandise and i went to urban in brooklyn, really nice selection, fresh feel. >> amazing this man gets any amount of work done given the shopping you do. >> he doesn't sleep. >> that's work. i wish they were open 24 hours. >> i loved your discussion on facebook at the end of "squawk bo box". i said to jim, i thought you would be in a better mood given eagles beat patriots last night. >> michael vick, his ribs are -- has baby back tweet ribs, that guy. >> capital markets raise iing tr forecast on urban. >> when i see that move, it means the institutions are saying, shorts are saying you have to cover. institutions saying i need to get in. such a thin market for everything these days, in order to get a million shares for urban outfitters, you have to take it to 40, where i think the stock is going.

>> the short by the way, surprising, 6.9% short. >> what's the short story? you have to term n. term looks for real. >> let's talk about facebook. peter thiel sold 20 million shares. his share was planned prior to the ipo. he told 20 milli$20 million wor shares and still owns 5.6 million shares and made more than $1 billion from this investment in the company. no one's crying for him. it does beg the question even though it's pre-planned. we did ask julia, i asked julia on "fast money" when this news was crossing if peter thiel could have decided to opt out of the sale of the shares if the stock were doing better and you can. >> you can cancel these plans.

i'm familiar with these plans. the board should have gone to thiel and said, listen, as a -- we know there's an exception where you can go in and say, listen, i'm not selling it here. i would have thought zuckerberg would have pressured him and say, listen, this is really souring, and even business and customers turning away from us. this is a bad move. anything goes with the rich. if you're rich and in the valley, you're not bound by any rules. it's not illegal. there's some things not illegal that are also bad. this is bad. >> if the cfo is making rounds on wall street, talking to institutional investors around the period of lock-up expiration, trying to persuade them to hold on and not give up on the shares and you have peter thiel turning around, it's a pre-planned sell, the business model is you get out and made your money and move on.

business is not good. >> billionaire, rich or unhappy, their own fault. my great great-uncle, vladimir lennon made that quote. i will point out when you have billions of dollars, you can take a hit if cheryl sandberg calls you one of the grownups, say, listen, peter, you made billions of dollars. would you mind selling later and not now. he said, listen, i agree to sell before hand. that's even worse if you agreed to sell in may, he did realize that transfer to mobile is not working. sometimes, there's what i call decorum. this violates decorum. i have not been gandhi all my life. i had a point thomas jefferson and i had nothing in common. i think this behavior is outrageous. he's rich. i like peter very much. wow, the rich are capable of doing a lot of things a lot of other people wished they could do. >> can we make the argument perhaps we're reading too much

into this. for one, a pre-planned sale. you have to cash in on your investment and make the next investment. that this is model of venture capital and private equity. the partners did the same thing, distributed shares on lock-up expiration, their business model. they also have a responsibility to their own shareholders and maybe we're making too much of it. >> i can think of a million s why you shouldn't do this. i have another offsetting reason. this has been a complete disaster. it would have been great to see peter thiel buy a million more shares and go to his people and say, you know what, this is a great opportunity. it turns out to be a great opportunity to sell. we bought it at this this this and the answer is we feel like chumps. there's this chump factor the individual has been faced with, whether it be prices crazier, couldn't sell at the opening.

the chump factor is so great, you wish roger goodell, nfl commissioner, says, you know what, it's about the fans n. the fans are completely turned off. we have 900 million fans in facebook and a lot of investors. peter, why don't you hold back and say, i have to do what's right for my investors. you made billions for your investors. why don't you show faith in us. it's not faith to show this amount. there will be a million reasons why i am wrong today, by rich people who have great lawyers. don't care. >> i'm still concerned about the fact facebook is trading 41 times forward earnings. >> what's google trading at? half of that? >> let me find out. >> 16 forward. >> you have to be fat on the edge. >> apple. >> apple could trade, would that shock you? not to me. i lived through the dotcom era. some would say i participated aggressively in the dotcom era.

did not sell street.com when it was at 63, 64, when the lock-up ended. you know why? it would have shown such horrible faith. i lost tens of millions of dollars by showing good faith. tens of millions. i'm not as rich as peter thiel. i decided tens of millions bad. maybe i'm the chump, too, i felt geez, people got crushed in this deal. i'm not going to take out tens of millions. i should have, would have gottenion like 17th house thiel has or i have. >> you could have owned the eagles. >> well, i looked at buying the phillies at one point. i didn't sell the stock oh i couldn't buy the phillies. >> let's talk about am. it is now the biggest u.s. company ever in terms of market cap valued at $23.5 billion eclipses microsoft at 1618$1618 billion set in 1999.

if you adjust for inflation, microsoft is tops. and apple has been fueled by speculation over the new iphone expected next month. apple shares at these levels are expected to open above the all time high, setting a new high at the open here. in terms of microsoft adjusted for inflation, it is a lot. >> microsoft was worth $850 billion in today a's dollars? it a $50 billion. >> when the justice department comes in, it's read by joel klein and decideses to make it so microsoft is not that powerful, the justice department at that time, maybe not now, was very smart, understood what had to happen. steve ballmer did not necessarily cooperate to say the least with the government. that's what happens when you were that big. i think apple, almost as if the big institution says this is a very inexpensive stock, it has mobile, has social, has clown.

it's an opportunity and become a stock people say until this has a higher multiple than proctor & gamble or colgate, i will keep buying. >> the multiple is roughly 15. >> these are companies that may not have -- i'm read iing isaacson's book. candidly i skimmed it. i'm going back. why? i have to know more about why this company -- it was not doing as well when the book first came out. now, i'm going over every page to realize this guy set up a multi-year course. i know he was trying to work on cars that could drive on water when he died, had he not died, i think we would be filling up with fujii, not pac. >> people talk about a lot of numbers, this and that. microsoft at its peak is different than apple.

i believe the peak was 55. north of 50. apple's value is is different at a time it is reaching its market cap peak. a different story here. comparisons are far and few between. >> definitely. a lot of people -- let's use the old rule i did at my old hedge fund. divide apple by 10. look at that run apple's had, gone from 50 to 67. no one would think a thing. that 670 handle, it is mesmerizing to people, they think it's moved too much. google has the same problem. retail investors faced with two things, a stock they can buy one share of and a stock they can buy all they want, facebook, and there's some sellers. >> facebook is still trading at 2.5 times the multiple of google. >> what's their multiple strategy versus google. google is so fabulous to use on my apple iphone. facebook, i don't know, i can't see it. i have 2020 when i have my contacts in. >> that's the problem. >> shares trading at 52 week

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as we mentioned one of facebook's earlier directors sold $20 million of facebook

according to a filing with sec that also says the sale was planned before the ipo in may. that brings us to the question facebook director peter thiel unloading shares on the social network is like blank. we will have your responses throughout the show. >> like facebook. >> good line. >> i was going to say let them eat -- because i was a french scholar at one time. >> you can reach me on friendster at -- >> my space is good. >> what did belichick say? i don't do that in my face thing? the playoffs! the playoffs! >> and one stock in particular, he will name the name. more "squawk" on the streets straight' head. [ male announcer ] when a major hospital

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looks like a solid open here. let's get cramer's "mad dash" ahead of the tape. >> a terrific position in the ft, reminiscent what we had. sandy came out and said the idea of the supermarket was wrong and talking about why it makes so much sense to stay the way citigroup is and this is becoming the emerging market's

bank, half of the business comes from overseas and in the doldrum. i thought he made a case for leave i leaving citi bank intact. >> he made the comparison to orange groves in india. citigroup is poised to take advantage not just on citi but a lot of banks. >> in egypt, it was a frightening time, right before the fall. i was looking around for familiar figures, citigroup. there it is. mexico, there it is, citigroup. i find the citigroup worldwide business is a good thing. i don't know whether sandy realizes it, it's ain't worth breaking up. banks started rallying yesterday. i know people were saying throw all the bums out, divide the stock in 10s and three. it ain't that easy. sometimes people running the banks aren't necessarily incompetent fools and breaking

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we are off to the races for this tuesday session. at the big board, celebrating the launch of the global etf. you see the sea of green here on the s&p heat map at cnbc headquarters. we do see a lot of green. green arrows for banks. ibm and microsoft apple. and an all time high out of the gate. >> we are indeed on higher ground and i prefer the red hot chili peppers to stevie wonder. we are on higher ground. nothing can stop this market. my daughter bought an r aratf

t-shirt off facebook. >> she's the one. she regrets it ever since. led by companies cyclical. you have nordstrom, a company -- erin burnett used to put on "street signs." you say industrial, they must be doing terribly. not. that's a very welcome sign. some companies we're see doing well are supposed to be companies we wrote off. it turned out to be a mistake to write them off. >> speaking about write-off, shares of groupon, hitting a new low, $4.34. barkley is cutting it down to an underweight, finally throwing in the to well on this one. and the rating was cut on groupon on friday. >> i don't know if you got the laser hammer removal this morning on daily deal. i just got my daily deal. look at this, up to 93% off laser hair removal and a waxing.

when they wax you, brian, what does that include? is that like 40-year-old virgin when they wax you? just asking. >> you rendered him speechless. >> for six hair removals. they must know their target audience. i will get laser hair removal on my -- shoot, it was done already. a waxing. >> i will move past that waxing thing because i was already given the business about chest hair on "morning joe" yesterday. best buy is down over 9%. >> maybe too early to get in best buy. a lot of stocks, too early to get into. >> sarcasm alert. >> and on twitter, they're saying, i thought he liked best buy. and he's using a new target and maybe we'll warm up to it. the same stocks that did badly continue to do badly. i was looking at stocks like or capital, they creep up everyday. a good enough quarter, people

are saying, let's go back and look at some of these companies pretty good. seasonally, tech stocks do pretty good after labor day. reassuring. >> speaking of oracle, pretty n incredible. the nasdaq 100 is up 6.2% to date. >> thank you, apple. >> apple is 19% of it. they're still 4/5. not all apple. >> have you checked the bull market in europe? >> the last i checked, 21 companies in the nasdaq 100 that have done better than am this year. >> i want to focus on rimm, groupon. doesn't matter. >> geez, herbal life greenberg made a lot of good points. that box of wine herb ordered, i'm telling you, set me back four bucks.

>> that was the most you ever paid for wine. have you ever had funderberg wine? at the fourth bottle, people don't know the dirs. >> know the difference. >> up a percentage point, very strong for the euro. in the carbons markets, 1% move a huge move. asset supported, equity supported for the u.s. stock market. that was a good sign. >> this was supposed to be when spanish yields were supposed to fly up. we were all worried about spain, a very inexpensive rate. greece was supposed to be defaulting. funny, when it's bad in europe, we sit talking about entrepreneur when we're living in -- talking about europe, when we're living in madrid and pointing out about rome. little stocks like gm. remember gm? they can go up. i was looking at ford and

thinking, you know what, ford has a lot of european business. you will be looking at it and saying, why didn't i buy it at 9. >> we are seeing levels on gold we haven't seen in about 2 1/2 months. >> i love gold. >> i will see your non-equity asset class. i can see this. live cattle futures up 3% and feeder cattle up but not as much. >> i will call you with silver. >> live cattle is birth to 800 pounds. feeder cattle closer to when you actually slaughter and consume the cattle. the company trades back here, dari darling international. my dad is in this business and works for darling. when corn prices go up, ranchers change their feed from corn to ground up animal meal, pointing that out. cattle is up. that drought is trickling

through everything. >> when we thunder, who happen to be from child of fine touch, you can get 2,000 pounds of meat when you slaughter a cow. >> 2,000 pounds. doesn't a cow weigh 2,000 pounds. >> if you're really ebb in a ja you can eat the -- that's german for bad parts of the cow. do we short tyson off that or buy it? they have to -- buffalo wild wings, what do we do to these companies? eventually, it esupesup -- its o them. i keep thinking it will be squeez squeezed. it hasn't happened. >> we asked on "street signs" and said their input costs are up but people are drinking more. liquor tabs are higher making up the spread. >> been and foreman, not just

because they used it to brush your teeth, these companies are on fire because they've been able to integrate vertically. del frisco, a lot of people recommended that. >> that place is packed seven days a week, del frisco. the stock, just pay them $140 for dinner for two. >> we will check on bob pisani on the floor waiting for us to get there. >> look who's here. our friend, our buddy. he doesn't come down much. he can't say anything because he's going to talk to you guys! i don't want to drag you over here. the boys are all coming over. why don't you go over there, sit next to the anchors and we'll talk about what's going on in the market because we're at four euro highs. let's not get decimalitis. we're essentially at four year highs. dollar at a seven week low. rick and i just comparing notes. euro seven week high.

gold a 3 1/2 month high. the source of this rally and contentment is the european central bank. ever since august 2nd the ecb meeting met, the markets calmed down and rallied. up 4%. spain is up almost 11% since august 2nd. italy up 10%. the market is anticipating something. they're anticipating the ecb will be doing something. targeting yield targets for bonds of euro companies. this was out over the weekend. if rates go beyond certain targets, ecb will step in and buy the debt. rick and i were talking about the daily telegraph article. they talked about the german ecb board member very powerful on the ecb is now backing this idea. that would be a huge move forward and real addition to this overall story. if that were to happen, this would be a done deal. this friday, the spanish cabinet

meeting is happening, a regularly scheduled meeting, but everybody is expecting they may turn and round and make a request for aid beyond that allocated for spanish banks. that will be the next big data point this friday. > meanwhile, panic in hedge fund, because of this rally. hedge funds are dramatically under-performing, not just july, august, the whole year now, getting rather serious. talked to barkley hedge this morning, only 11% of long short equity hedge funds they cover are outperforming the s&p 500 this year. 11%. that's a stunningly big underperformance. if we continue to get fairly smooth waters the next few weeks, we will enter september with a lot of hedge fund traders looking at serious underperformance, that means

chase i chasing performance. watch for breakouts. did you see bank of america? 822, the highest level since may. citigroup breaking out, over $30, a 10 month high. jim, who would have thought about a potential breakout in banks in august. back to you. >> pretty amazing. the banks have had -- are having a second day of outperforms. that jpmorgan call yesterday about raising numbers was ignored by a lot of people and hedge funds under-performing are looking for a place to go. we have rick santelli here. rick, can you take it over? >> absolutely. interest rates are up again and even though the market is relatively quiet, we're approaching the 180 mark. this would be, as we open the chart up, a fresh high going back to may. look at boons, hovering close to the 155 level but been there done that last week, but still a

significant area. dollar index under pressure but a strength story bob is talking about. we constantly have left jab right jab, are they going to target rates or control rates. yesterday, pritchard in the d telegraph reversed the story back to originally reversed over the weekend. talk about gold, look at this chart back to may, the way it's been coiling, to the up side, 10 week high. what's going on in the middle east? in part about europe. europe doesn't fit what's going on with gold. we'll continue to monitor it, but especially fundamentals from an economic standpoint. back to you guys. >> a really nice man. rick, it's great to see you. sometimes people don't understand off-camera, i saw him

this morning, my god, it's rick santelli. we have a decent market here. i know i see things. i want to point out, everyday there's a day to get in. i had bob in. the stock had a couple days run. that's cool because someone saying onex will have an opportunity to bring in a new drug. and merrill lynch's drug coming back. there are opportunities to get in. >> you have to look for them. they are out there. complete the following sentence. facebook director peter thiel selling the majority of his shares in the social network is like -- blank. we have your answers straight ahead.

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all right. as mentioned, rick santelli made his way east, came down to join us here on set.

it's great to see you in person. there's a lot to talk about. we were just talking about the major breakout in the euro, 1% move in the u.s. dollar and breakout in gold we're seeing. >> the gold is fascinating. being a technician, i lake the way it popped out. most people i talked to on the telephones, working the phones on gold, they really think it's more of a middle east story but i think it's more of a technical story. i also think china is interesting. i don't know what everybody is hearing. the reverse repos, constantly getting the needle and injecting liquidity and small bursts of it and some debate what the real goal is. probably not liquidity as in easing, per se, but maybe stabilize short rates, money market rates. >> as usual, you bring to the party something i didn't know. a lot of people say china's done nothing and look at the stock market. don't you think gold has gone from a lot of we cans to stronger cans?

we're now about india and we had that monsoon and wedding season. i do find that gold is being put away still. it never broke down. snow no. it never broke down. to me, the story about gold is i don't think it will ever have that break where it's going to be gone, left field, we're not going to look at it anymore. i think it will always come back from the 1500s. i'm convinced, adjusted for inflation, the $870 high from 1981 is 22, 2300. i think we're going to click it off one of these days. >> and what i always tell people, what you see globally, you have to own gold. it's going to hold its value when everyone debases their curren currency, the way everyone feels this is way out of this. >> there's so many different segment segments why people are buying gold, not the least is they don't have confidence in some of the leaders around the gold. >> basic question, can gold rise if the dollar rises against the

euro? >> i think it can go through bounce, yes. i think there can be lots of correlations that get thrown under the bus. i think we're seeing some of those. how many would have suspected we'd have a stock market where it is and interest rates where they are. i find that fascinating, whether gold or stocks, is there some magic higher rates that will say party over for a while. >> i do think when peop people -- just to add to your gold, i don't like people to own the stocks, gold stocks because it's getting more and more expensive to find gold. they keep missing their quarters. do you have faith in it? some people don't have faith in the etf. >> when it comes to gold and gold mining companies, there's a whole business there i don't want to get involved in. maybe the management of the companies aren't good. two different animals. your other question -- what was the other -- >> etfs. i don't. i don't want to cast any negatives on etfs f. i personally think there are some

questions. how do i know there's enough gold in that garage to cover these contracts. >> you have labor in rest with these mines. look what's happening with peru, violence with the gold minors. a big new mine in peru. you have violence strikes. >> it is very tenuous. >> we have a lot of governments more socialistic than people remember. >> even more than us, huh! >> here we go. got to give you a jab! here we go. that's why i love him, man. what can i say. that's why i love you. >> sometimes holding the physical, jim holds a big chunk of the gld. but not necessarily take the physical but having gld, for liquidity reasons because you can sell it like that opposed to taking physical delivery. at the same time i wonder, it's a long term bet, why wouldn't we take delivery. >> i have largely retail

audience for "mad money." the best thing is own the gold bouillon, you can't keep it in your house, too dangerous, find a depository morning. and put it in wilmington trust. remember in 1984, our government confiscated gold. i don't mean to be anti-patriotic. for very wealthy people who watch this show gold is good and you can put it around the globe. i know it may sound like sacrilidge. it's what very rich people do and i won't tell you what they don't and not give you a bum steer. that's what they do. >> did chavez's gold boat ever make it? took all the physical gold back to venezuela? >> it was sitting deep in the water, all i know. >> remember when the communists seized all of spain's gold because they wanted -- the communists had a very good sense -- >> if things get bad enough, as interesting as gold is, you can take the gold, i'll take some soybeans. >> exactly. give me something to eat. always good to see you. >> thank you.

time now for "squawk" on the tweet. facebook director peter thiel has sold most of his shares. we are asking you, early investor and facebook director peter thiel unloading a majority of his shares in the social network is like blank. george tweets peter twooel unloading the majority of his shares in facebook is like someone selling you their ticket in the titanic. ralph tweets unloading 20 million shares like brutus stabbing caesar. very refined. clay tweet, like my parents ship meg away for not making straight as in first grade. as they should have threatened. >> i was threatened with that. >> they didn't go to jersey schools. >> it's like everybody else, take the money and run. >> no midnight talker. steve miller had tremendous sense when he came to equities.

>> i'm a big eagles fan and big miller fan. my kind of music. your chili peppers? >> why not? the younger people, you have to stay in touch with what they're doing. carly ray, if you're watch, i'm not busy this weekend. >> maybe? >> transcends. >> we have to take a break. this man is about to be the millionth customer. would you mind if i go ahead of you? instead we had someone go ahead of him and win fifty thousand dollars. congratulations you are our one millionth customer. people don't like to miss out on money that should have been theirs. that's why at ally we have the raise your rate 2-year cd.

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simon with a look at what's coming up. >> i can't get over the fact peter thiel has dumped $20 million of facebook. is the director of facebook saying this is as good as the stock now gets? we will talk about where we are at best buy. conference call on the way. will the founder come back in with that bid and be heard? abbey joseph cohen is on the show in the next hour. we will ask her if 1400 on the

s&p is a rally killer? back to you. >> simon, thank you very much. time now for jim cramer 6 in 60. sal saleses for.com. >> a lot of guys saying it is a great quarter ahead of thursday. i always find that confident. the price is big. >> people are trying to get back in this stock, i prefer under armour. this restaurant won't quit. i tell you, not an expensive stock. this was a mediocre quarter, the stock is starting to come back. amazing if it came out with that mood. >> you were tough yesterday? shorter? >> i went over the quarter. it's still -- it's home depot. they just won. >> where did you get those shoes? >> these are rockport shoes. i got them at the rockport outlet in flemington, dsw, designer, i once called a

discount shoe warehouse with a remarkable number. remember, retail, urban, design designer, hey, look man. what remarkable values. >> some of that money tonight. >> we're picking a quarterback tomorrow night for "mad money." this is from devon. it has been a very poor performer. capital trust owns it and find out why it's done so badly. at victim jamer on twitter, help me pick a quarterback for our fantasy team. no, it is not brady. it's a stock, please. i've been in undated with football players i was supposed to name as stocks on wednesday. >> how do you define a quarterback -- >> i want aaron rodgers. okay. some people drafting aaron rodgers in a high first round. i don't think he can repeat last year. i am looking for an aaron rodgers kind of name when it comes to quarterback for the name of money. >> tweet it in. >> @jim cramer.

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good tuesday morning. let's get to the road map for the next hour. getting hammered this morning. we'll talk to best buy's competition next. >> astounding news for facebook investor peter thiel unloading another 20 million shares at the end of last week. as the big guns clearly unload, we'll sit down with one analyst who advocated staying away from the ipo at the very beginning. it just can't gain respect. we're checking the technicals in a few minutes. from tech calls to fundamentals, we're looking at the broader u.s. market and china and none other than goldman sachs senior u.s. investment strategist, yes, abby joseph cohen will be on cnbc.

>> now the big story we're following this morning. the best buy conference call getting under way an hour ago and mary should know. how did it go? >> it was a tightly controlled lasting only 40 minutes. the firm faces circuit challenges with the new ceo and a couple positive trends on the horizon, he's optimistic, still uncertainty about the launching of new products in the second half. it's withdrawing his full year guidance to give incoming ceo the room he needs to make change changes. >> in take this action we are provide i providing hubert the flexibility to make decisions on these and important matters as he faces challenges ahead. >> among those challenges in the second half include the company pointing out no international

new revenue in gaming and computers and gross margin reinfor revenues expecting to stabilize will remain below last year's levels and could expect product releases and boost to sales and expenses should come in below plan. best buy's earnings came in well blow analyst's plans. adjusted earnings forecast missed by 11 cents for same sales stores or open more than a year declined the eighth quarter and i weakening domestically in gaming, imaging and notebook sales and a soft chinese consumer and domestic situations in europe hurting. and external elements hurting with more consumers buying online and the internal turmoil of the ceo and talking about the product. and hubert joly joins the

minnesota based firm next month. >> that is the point. what are they saying about schultz. he's be moaning the fact there was an abrupt public termination on talks. did they comment on that? >> no. they have nothing more to ad to that. it's in his court. nothing more to add. >> let's leave it there for the moment. let's bring in an analyst on this particular story. we're joined by analy analyst -- forgive me, we're joined now by bradley thomas, who joins us from key bank capital markets. bradley, welcome to the program. thank you for joining us on cnbc. i see from the notes you're disappointed across the board. your expectation weren't very high going into the quarter to begin with. >> that's right. we were concerned going into the quarter. obviously, this was a disappointing quarter for best buy. the concern we have going

forward is that there's still a huge portion of the year ahead of best buy and will do 50% of earnings in the fourth quarter. with a new ceo joining in september, we're not sure they can move the needle this year. >> so hubert, who's joining, what can he do to turn it around from your point of view. they're obviously making a huge deal of the fact they have a new ceo and of sooner. you were suggesting there wouldn't be a ceo possibly until the end of the year. are you comforted at least the man is in position? >> we're comforted they have a new executive in place. ultimately, best buy is a company stuck in the middle. they don't have service that's good enough to really differentiate them. we question whether consumers are willing to pay for good service. on the pricing side, we know they're being undercut by amazon. we think this is a company that needs to take bold actions while profitable and cash flow positive and we question whether or not they'll do those bold

actions. >> bradley, you sound very negative on the stock overall but you still have a hold rating. i look at your coverage, you have a lot of holds and buys on stocks, but no sells. if this is not a sell-rated stock in your universe, what would be. you're essentially saying undercut on price, take bold actions, no silver bullets, yes, we have a new ceo and don't know what this guy will do and might not know for another six months. >> that's a great question. ultima ultimately, as far as value stocks go, best buy has everything you're looking for on paper, extremely inexpensive, profitable in cash. they got over a billion in free cash flow. the stock is trading at 20% yield. this should look very attractive to private equity investors and think it could be a take-out candidate still. that being said -- >> sorry. what do we know about mr. joly,

he came from a private hospitality background. what else can he do besides sell the company to add 10 bucks a share to this company. if you were him, what's your move. >> we think the key is low prices. that's what helped them and that whittled away as amazon has grown. there's a lot said today about showrooming and very fee people look at the numbers. amazon has posted average revenue growth 7% each year in north america and over the last two years, amazon's north america growth has been over 40%. this is a company becoming a bigger threat, not a smaller threat. we think the key is about pricing. that will be painful in the short run but we think best buy has to do it.

>> where are you on rid of schul schultz, the founder? the talks? do you think he can raise the funding? is it a serious offer, what sort of talks do you think he can come through with? >> we think dick schulze is committed to getting a leadership position at best buy and think he will continue to pursue actions. >> i'm sorry. with a bid? does he want to be the man in control or will he come through with the cash to get control. that's a different story if you're a shareholder. >> of course. we think the next steps are continued discussion with best buy's board. it's in their fiduciary duty to review any options. we expect that dialogue to continue and for two, we expect mr. schulze to take this to shareholders. he owns 25% of the company. if he can get one other

shareholder to back him in a proxy battle, he can get the opportunity to put a formal offer on the table. >> back to my original question about the rating on the stock, you almost got there. sounds like you have a hold on the stock because you believe it is a value play that private equity investor might be interested in. is that really the only reason why you hold the stock, the hope it will be taken out? >> exactly. we would avoid this unless you want a hail mary hope investment. >> it's speculative play? >> exactly. but it's out there. mr. schulze has said he's willing to pay 24 to 26 for this company. we could walk in any day and see an update the board is more seriously considering that offer. >> goes full circle. bradley, thank you for your time, joining us from key bank capital markets. facebook early investor peter thiel selling more than 90% of his original stake in the company. thiel still is one of the six

outside directors on facebook's eight member board. rich greenfield recommended investors not participate in facebook's ipo and concerns over facebook's profitability has increased significantly over the past few months. he join us now. your concerns have grown and we've gotten the quarter under the belt and adds to the concern. how concerning is this pre-planned sell? he is an early investor, has an obligation to sell at some point, decided before the ipo. are we make doing much of this? >> i'm not concerned about him selling. what concerns us is the actual growth trajectory of facebook. when we look at what we've seen in the last 91 day, since this company went olymppublic, the r challenge is how do they face consumers in a mobile world. you look at facebook pre-ipo or three months ago, you were looking at a company 9% of its users globally were mobile

onlies. that number has grown to 11% in three months. those mobile onlies, people who never touch the pc, that number is growing rapidly and putting the pressure on facebook to figure out what is it strategy for mobile? >> that said, rich, a lot of us are very concerned thiel has cashed out in this way. let's remind ourselves. he's already raised a billion. he has a billion from selling and selling a lot from the ipo, that he would continue to sell 20 million shares at this time, when presumably, he could have backed out of it. as a director of facebook's boards, is surely and indication to many people that the man does not believe that the shares are going higher from here. that is a very serious thing, is it not? >> mobile is a challenge. for every company on the web right now, you look at what facebook is doing. the ads, you look at ads online on the web, display banners, up on top, you don't really have to

look at them. when you have a mobile phone and facebook is putting ads for walmart and target and mcdonald's right in the middle of your news feed. you can't miss these ads, they're taking up the entire screen. the creativity is important. if you were just on the right side, you could avoid looking at it. now, there's any way to avoid looking at ads, you compare what facebook is doing compared to twitter, facebook is putting much bigger ads on the screen. >> you look at business models transitioning to mobile, and making money off of it. take a look at linkedin or mozilo, has a higher user rate. it enhances the experience. they're on there for a reason. or they have an actual network facebook is this news feed. you don't need to be on there. i'm wondering based on what you see is successful, based on facebook's model, what do you

say facebook may need to do to make that work? >> the first thing is figure out what is the optimal ad load. in order to drive earnings to beat revenue expectations, they are definitely putting a lot more advertising into the mobile news feed. i think brands are realizing, mobile news feed, you have to look at it, can't avoid it. we can buy at a cheaper price on mobile. a greater chance somebody clicks on the ad, visibly in the center and can't miss the ad and you have the benefit of so-called fat fingers accidentally hitting that ad you don't do that on a traditional pc or mac. facebook needs to see what is the ad load people can tolerate and making sure the ads are creatively good. when you see bad creative on a mobile phone, it is so noticeable and becoming increasingly annoying. that's a huge issue and they should be scaling back advertising rather than ramping

it up until the scale is fixed. >> the wealth destruction since facebook came to market is phenomenal. is there a point at which there is a fiduciary responsibility for the adults on the board, cheryl sandberg and darrell s d sandberg, to do something now in public or can they simply hide behind the fact zuckerberg has majority control. do they have a legal responsibility to attempt to assist what is going on here. >> we were not an underwriter, we're taking an independent review of this, can't talk to where they chose to price the ipo. when you looked at the valuation, definitely too expensive and too rich. looking back over the past few months, you're seeing the entire internet, not just the facebook, really being caught by the rapid shift to mobile. from that standpoint, it might mean taking a step back what is

the right way to approach mobile, even if that means disappointing investors, making the right long term decisions is critical for facebook over the next few years. >> rich greenfield, good to speak to you, btig. let's get a flash from kayla. >> we're watching ticker chg on the new york stock exchange with a deal from avid health for $650 million. won't be completed by 2012 but 2013 and a hugely popular market, gummy vitamins and you shouldn't take more than two a d day. simon. >> i'm so perky. the market melts up, at four year highs hovering there. we can't push convincingly past 1400. we will take a technical view of the markets and we will be

joined by abby from goldman sachs. 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. really? [ male announcer ] the united mileageplus explorer card. the mileage card with special perks on united. get it and you're in. with special perks on united. it's something you're born with. and inspires the things you choose to do. you do what you do... because it matters. at hp we don't just believe in the power of technology. we believe in the power of people when technology works for you. to dream. to create. to work. if you're going to do something. make it matter.

we may not all be on the watchtower but we can go on the flat panel in a second. as the dow and s&p hover near four year highs, what are the charts saying about the market?

a good time to take a look at technicals, and stocks and oil. for that, we're joined by katie stockton of mkm partner, managi managing director. good to see you in person. >> you, too. >> let's look at transport often viewed as a leading indicator. you have a lot of lines what does that tell you. >> it's broken out from a very bullish price pattern. we see this breakout in the last few days. the breakout targets the february-march highs just as the s&p 500 is testing its april high, we do expect the same from the transportation average. >> so this is a good sign? >> that's a good sign, that's a breakout. >> you want to do it relative i believe to the s&p 500? >> i do. let's compare the transportation index to the s&p 500. >> i think this is telling. we have a relative breakout. >> that's what you're talking

about sxw about. >> that's a relative 10 day average and we saw it for the transportation group. >> you're talking about it broke out here in march and we saw a little bit of gain. i'm not as good as cramer is on this thing. we saw a little bit of a gain -- never mind. laugh it up, simon, i'm just a fin-in on this show. he loves it. >> it's not as easy as it looks, is it? >> i didn't say it was easy. i'm a fill-in anchor. >> in terms of the breakout, this bodes well -- >> look at that! >> for performance. that should get us up to the feb-march highs for transportation average. >> now to fedex. we'll have better luck with this one. >> it's holding at the transportation average. it's obviously held support several times at its 200 day moving average. this time, we will see an advance from its consolidation phase and performance leading to the transportation. >> you see a bullish move for

fedex? >> i think so, early stages as we advance. >> last one, crude oil. >> crude oil. >> relative and important to the transportation indexes. i did see a fedex electric truck this morning on stone street. what is crude oil saying? >> still has strong momentum. i think it might stall in this 98 barr$98 per barrel area. >> this is key, right? >> that is key. it needs to get above that to target those highs. we're not quite there on crude oil. still has momentum but looking for consolidation, too. >> that was for simon. katie, thank you very much. glad that was over. next time, you. >> well done, katie, well done for managing through that distraction there. >> the skradistraction being -- >> i've been called worse than a distraction, much worse. >> you see the nasdaq 100 is trading at december 2000 levels as high as where we were in

december 2000. >> still in the index -- >> we can check back on that. nasdaq 100. we'll talk about the technicals. goldman sachs famed investment straig strategist, abby joseph cohen. you would describe her as a bullish analyst. ial need. and then, in one blinding blink of an eye, their tree had given its last. but with their raymond james financial advisor, they had prepared for even the unthinkable. and they danced. see what a raymond james advisor can do for you.

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oil commodities continuing higher. will that help in the emerging markets rally. we go to management founder of emerging money.com. always good to see you. >> good morning. >> and the little curl on your forehead. >> i can't control that. >> i couldn't help but notice. how much of the support we're seeing in this complex from that decline? >> i think the dixies moved yesterday below the 20 and 50 is very significant. everybody knows the story in

softs. and glencore is calling this drought season very similar or possibly worst than the dust bowl of 1930s. the key part of commodities index is what's going on in metals and mining space, outside of softs and oil we understand for supply reasons what they've done, you're not getting a lot of love. later this week, we're getting key data points and earnings. you can make a bit of a contrarian call and start to sell your softs and begin to move into the mining space. vhp tomorrow, full year earnings. they've already given you guidance. the numbers will be more-or-less in line. key is cap x and projects and iron hit 100 bucks, a scary place. iron ore is not firming up and others are. durables is one part of the space you should get reasonably

constructive on and will give people reason to support bombed out prices. >> at the same time, do you have to be a china bowl in order to get bullish in on iron-ore in metals. >> i think you do. there was data saying the best prices in 14 months. china is a major part of the ore story and housing markets is more of net tall story. sentiment on china has not gotten better. last night, there was repo activity people think they will be more subtly fine tuning their economy economy. china is mixed. a rotation we're seeing in more metals and mining plays can continue. >> tim, always good to see you. >> thanks. sorry about the hair. >> all about the hair. >> catch more every week night on tuesdays and "squawk" on

street. >> he waived it provocatively at you. >> i don't think he had any control and waived wivivevewave. >> who better to ask than go goldman's golden girl, abby joseph cohen. next on cnbc. with the fidelity stock screener, you can try strategies from independent experts and see what criteria they use. such as a 5% yield on dividend-paying stocks. then you can customize the strategies and narrow down to exactly those stocks you want to follow. i'm mark allen of fidelity investments. the expert strategies feature is one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account.

good morning. if you just joined us, we're one hour into trade. 7:30 on the west coast and 10:30 in the east coast. urban outfitters up 16% and defense companies, lockheed martin and authority ron grumman, new oo 52 week highs, groupon falls to a new all time low and barkleys grading it as an understated underweight. continuing to hold on to pre-crisis levels on the dow. what are the risks to this climb? abby joseph cohen is a senior

risk strategist for goldman sachs. nice to see you. >> good morning, nice to see you. >> over time, people will remember a lot of your bullish calls throughout. do you still remain a bull on this market? >> there's something of an urban myth we're always bullish and plenty of opportunities when we urged caution. this is one of those time s whie we're comfortable with the intermediate to long term outlook, we like many others are looking to the shorter term and have concerns about primarily the political situation, not just in the united states but, of course, in europe. what we see in our analytical work over the last several weeks is that that risk premium, there at fear factor has receded somewhat in the minds of many investors, however. >> why has it receded? what is the primary driver of that perceived risk factor? >> i think there are several things going on. first in europe, there seems to be more discussion along the

lines of what we might have expected. there seems to be an unwillingness to drive the situation to the cliff. people are hoping there will be a long term workout to the sovereign crisis and long term debt crisis. in the united states as your forecasting have clearly pointed out the economic data have looked somewhat brighter and gives investors a little more comfort. >> do you get suspicious after all these years of certain market levels? i'm thinking of s&p 500 1400 and in 1999, the end of the dotcom boon and then regained it and lost it during the financial crisis. do you think 1400 on the s&p is a rally killer? >> it certainly is a little spooky when you look just at the chart of prices. we think it's important to

recognize it's really the valuation that matters, not just the price but scaling the price of underlying earnings and gdp and economy, the valuation today on the s&p 500 1400 is more attractive than the prior two periods. pes per net are running 14 times earning opposed to 25 to 26 times earnings in some of those previous periods. >> they say what doesn't kill you makes you stronger. you were center stage as we came through 1999 and into the bursting of the dotcom bulb. wh -- bubble. what do you make of technology now when you see groupon and facebook dissolving in market capitalization almost on a daily basis. then you see apple surging forward at $620 billion. what do you think of technology? does it reminds you in parts of the bursting of the dotcom

bubble? >> let me remind you i'm not the technology analyst nor have i been cleared to talk about specific companies or specific stocks. >> you have a gut feeling. you know these markets inside out. you know them like the back of your hand. >> we see a very strong correlation in all sectors right now. in terms of relationship between underlying fundamentals, revenue growth and earnings growth of companies and how they're performing as stocks. it's true in technology and we see it in any number of other sectors, not just in the united states, we see this happening in other markets as well. >> abby, how do we get the individual investor back in the market? >> the individual obviously has been spooked by the equity market. one of the things we are concerned about is that there is the sense that the bond market is safe. clearly, the bond market overall has been a good place to be invested during this period of uncertainty. we also have to ask about the

valuation there. with yields as low as they are, particularly with a perceived very safe bonds, that is a concern to us. intermediate to long term, we think equities will actually generate better returns than fixed income. if you take a look, for example, at treasury tips are right now, the effective yields are negative, which means that the owner of those bonds is actually pay i paying the government for the privilege of holding the bonds. >> are people safe in munis? i ask the question because the front page of the journal's market section today deals with the fact warren buffet has ended a large waiver within the municipal bond market and raises a lot of questions perhaps it's not as safe as we assumed when berkshire hathaway is checking out in trades in that way. >> one of the things we have to recognize over the last several weeks and months, we have seen a sharp breakdown in correlation.

what does that mean? all asset classes and securities within an asset class were moving together. something we have seen clearly in the stock market and your coverage shows this very very well. different stocks are now moving in different directions. one of the things we're seeing as well in the fixed income market is that good investors, the ones who can do the analysis on underlying issuer and underwriter are making these distinctions between different securities. >> so in answer to my question, do you think we should be concerned within munis states or multip manipula municipalities won't be able to pay their bills? >> what i said was it depends who the issue r is. we think there are quite a few very good credits out there as very good credits in the corporate bond market. >> let me ask you about your most recent note being a senior

investment strategist writing an extensive note on energy in china. the headlines a lot of people familiar with the headlines coming out, but energy consumption being sustained, coal is number one and gas number twos and threes. how do you use this information from an investment standpoint? be long oil and net gas? >> we have been looking at energy and oil in that climate for several years. one of the things we think is critically important is recognize the role of advanced emerging economies, specifically china now the world's second largest economy but the world's largest user of energy and also the world's largest emitter of greenhouse gases. this has an impact on all of us as citizens. les also also an impact as to trade. we're seeing the following.

china has put in place a fairly industrial policy they recognize they cannot continue to rely as heavily as they have been on coal which is 70% of energy supply in china and we all know is one of the dirtiest ways to create energy. so what the chinese government is doing is to provide very significant subsidies for the development of alternative energy. so for example, we see that it is china, not the united states, which is investing more now in alternative energy sources, including those green renewable sources, and that's something i think represents a very kick challenge to the united states. keep in mind for example most of the patents for solar panels in this world were developed in the united states and yet china this is world's largest producer of solar panels. it's something we need to think about, as we consider how this economy in the united states will grow going forward. >> abby, a pleasure to speak with you, abby joseph cohen of

goldman sachs. let's get another hot market flash. >> this one's hot. it's gold. gold futures are up at their highest point since june 6th. gold stocks are going to be up in tandem with that. you look at this chart, barrett gold up better than 3%. gold corp up nearly 4% and new go gold, ngd up 6% since touching a five month lay may 16th. gold up 7.6%. the safe haven is here and gold stocks are looking good. the momentum play that can't be stopped. apple surpassing microsoft the largest company ever. are you still buying into the hype? uce, orgic kale... does your cauliflower have a big carbon footprint? not at all. that's great. melons!!! oh yeah!! well that was uncalled for.

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today and now valued at $630 billion, topping microsoft's peak market capitalization of it and if you adjust for inflation, it's not as impressive. robert w. bareard joins us now. thank you for joining us. good morning. >> thanks for having me. >> there's a lovely line in the "new york times" this morning that says if steve jobs was still alive, he could add up the values of microsoft, intel and google and still have more than $30 billion of daylight between that figure and market capitalization of apple. for that team, for those who have succeeded him in the business, this is a very important moment. >> i think that's right. apple's had a tremendous run, as we all know. the key to apple has been

innovation, whether iphone, ipod, ipad, whatever is next, probably i-tv and beyond that, that's what's key to apple to continue this run. as we all know, trees don't grow to the sky. at some point, the level of domination they have in the marketplace today probably isn't sustainable long term. >> history would suggest that's not. if we look back in particular at technology companies. what is really interesting, i can't think of any other point in history where so much money, so much value is dependent on the launch of one product. it is the iphone 5 we believe september 12. >> that's right. there's no question that apple has created this enormous ecosystem around it and benefitted entities well beyond itself across the technology and retail food chains. we expect that to continue with iphone5 we think without question will be a blockbuster

product for them. >> what a risk. how many hundreds of billions of dollars is resting whether or not the kids think it's cool? >> i don't know how you measure the hundreds of billions, it clearly is a big number. again, it will be imperative apple continues to innovate, not only with iphone5 but future iphones and other products around that. that's how you get to that trillion dollar market cap at some point. we all know the law of language numbers starts to work against you. innovation is the key. >> speaking of large numbers. in intratrading day, it hit a high of 684. i underlie speculation the stock could split so it can enter the dow jones industrial average. have you been hearing anything about that lately? >> i haven't heard anything new of real substance. tim cook addressed this i guess a couple of calls back. i think the indications were, from my understanding they probably weren't leaning in that

direction. that said, you talk about a trillion dollar market cap the easiest way to do it is a 10 for one split and might be $100 million in a year. i don't know they're heading to that direction at this point. not something we're counting on. >> quickly, if apple decides not to do a tv, the opposite side of simon's point, will that stock tank? >> that will be a challenge. the key to apple continuing to grow their opportunity marketplace is open up new opportunities. tv is one of those big ones i think could be significant, i think will be critical for that stock. >> you're cite conservative with the price target at $740 compared to others. >> i think that's right. we've done that deliberately. we're using a 13 multiple, giving no credit to the cash balance. i do think when all is said and done, there's a bias to the upside. multiple experience and opportunity but also in terms of up side to numbers as they delivery on these products. >> one point is undeniable, history in the making.

>> we want to point out apple's move basically erased all the gains on the session. basically almost flat. interesting day after reaching the market cap record. you can see the decline that happened in the past few moments. don't have any information that is causing this drop. something we're watching. >> will, thaw for your time. nice to see you. thank you. meantime, medical medical divide maker, medtro nic. we will speak to the ceo about ongoi ongoing health reform, rising competition and we have rick santelli coming up. we might be going on a field trip outside. do you have your permission slip, simon? >> i sign id ed it for him. doha. because it matters. at hp we don't just believe in the power of technology.

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welcome back to "squawk on the street." it has turned an interesting game of brinksmanship continuing to object to the terms of the deal. during a call with analysts that lasted more than an hour and a

half this morning, the ceo said his own colleague, largest shareholders in the swiss trading and mining company, won't allow him to overpay for the product which he offered to pay shares for each of its own. >> it was a premier. what one should not forget is that this was a highly negotiated deal. they negotiated a deal over a lengthy period of time. we at glencore were prepared to do the deal and pay equal a amount. >> a former coal trader that took glencore public last year did a slew of deals since then. including a planned acquisition of the canadian merchant viterra. the glencore chief, whose company already owns a third of

xstrata, wants the best of it so badly he agreed to let davis to run the company. the generosity of spirit may be evaporating with the arrival of qatar holding. it amassed nearly welfare% stake and demanding a richer premium of 3.2 glencore shares for the deal. sharp words for the motives he questioned. >> the question is what are they trying do? it is not one that held the stake and saying i don't like this deal and therefore i want to build up a nest egg to block this deal because i don't like it. >> unless a last-minute compromise can be fashioned this deal appears headed for likely failure at the back-to-back glencore investor votes just 2 1/2 weeks away. >> okay. thank you very much for that. speaking of giants, it is a big day here in new york.

we have rick santelli over from chicago to talk to us in person, to physically be here, welcome. >> it is wonderful to be here. i will tell you what, simon, i think that when we all talk about europe we talk about it every day. there is a sense the markets are in a certain mode and lack of confidence. people can't explain why stocks are going up for example. i think that a different way to look at it is -- i used to trade in times with volatility was crazy. i suspect that yeah, it is probably not a good idea to sell stocks when the world's watching liquidity but if you are in stocks you are trading. i think when september rolls around you are just going to have a lot of shock-type moves. >> you said to me in september you can get 500-point moves in the dow. >> i think it is possible. i think they will be fast. i think that's the issue. it is not so much to look at the trends and think listen, i don't want to be invested in stocks. i think that it is more about intestinal fortitude to ride out the roller coaster and i think europe will give as you roller coaster. >> what makes you think the

500-point moves were not seen in volatility? >> we are not although we see the vix curve, okay. we see the back months are higher in the back. >> it is higher but not to 5 500-point moves. we are talking 20s. >> this is a travesty. you are not going to believe what i'm going to say. i personally never looked at the vix as the cure for cancer. the way people do. it is just at the money volatility and it is a lagging, not a leaning. >> i was going to say more importantly is your assumption to that point that you don't believe central banks can sort out the problem. you don't believe that the ecb may about inform ring fence the problems of europe for investors here which if you look at that time way a lot of the markets are reacting in europe they would seem to suggest they do believe that the ecb -- >> that's why we are going to get a lot of volatility because in the end, everybody wants to grab confidence. we are always going to grab the straw confidence. we talked about this. there is going to be back and

forth. they are going to save it. at some point it is going to be big. >> fed minutes tomorrow at 2:00 m. eastern time. are you going to expect any surprises from ben bernanke and company? >> you know, i don't know if there will be surprises. they are going to hem and haw about what they will do with regard to quantitative easing. in the end, my call, they are not going to do anything before the election. they don't want to see a debate where ben bernanke is at the center of every question. >> let's take a break. >> "street signs." fantastic. >> you have dubious morals. >> that's true. how do you know which ones to follow? the equity summary score consolidates the ratings of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past. i'm howard spielberg of fidelity investments. the equity summary score is one more innovative reason serious investors are choosing fidelity. get 200 free trades today

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for everyone. welcome to hour three of "squawk on the street." >> when you have your first investor and a guy that's on the board dumping that many shares, not exactly a boost of confidence. freaky move. >> he planned to do it the whole time. >> unemployment above 8% now for what 42 months. this sun acceptable. this is america. >> best buy out with earnings. the numbers are worse than had been anticipated. >> where do you come down on this? >> i say likes. >> i can -- 50%.

i may buy a coin on zinga to say not all is last. i don't know what else is there. magic jack? i don't know. i mean, honestly, there -- i don't see a lot of positive here. if schultz wanted to get involved and do something, they should give him the company. 23 bucks. >> off to the races for this tuesday's session. >> how many would have suspect we had would have a stock market where it is and have interest rates where they are. and i'm finding that fascinating because whether it is gold or stock, there's some magic higher rate that's going to say party over for a while. >> what we see in our analytical work over the last several weeks is that that risk premium, fear factor, has received it somewhat in the minds of many investors. >> good morning. we are live here at the new york stock exchange.

let's get you caught up on the markets here. the dow close to 4 1/2 year highs. up by 47 points. 13,319. s&p 500 finding strength in particular from the financials. seeing big percentage gains pretty much across board with citi shares higher by 3.25%. nasdaq helped by apple which turned into the red after hitting a fresh intraday high in today's session. urban outfitters best performing stock on the s&p today by a wide margin after reporting better than expected second quarter results. sales gaining through all the main brands. groupon deep in the red once again. bringing its weekly loss to more than 18%. the stock getting downgraded to under yaegt from overweight today at barclays. facebook investor and director peter thiel dumping the majority now of his shares in the social networking giant. is it a sign you should dump the stock as well? plus, what's facebook's decline

mean for for it more broadly? hopes for the likes of pininterest, twitter may have already been dashed. and medtronic getting a boost after reports investors' sales of the products, the company's ceo will join us in an exclusive interview to talk about what's ahead for that business. then, barnes & noble, "fifty shades of gray". the race of the tablets. all that and more coming in this our of "squawk on the street." >> we start with squawk on the beat. best buy down sharply after second-quarter profit falls s 9. hitting a 52-week low. bouncinging off the low. mary thompson is here with the highlights. >> on the short 40-minimum call this morning, the firm's interim ceo suspending earning guidance

on the firm's stock buyback program gives incoming ceo what's needed to handle the significant challenges facing the big box electronics retailer. turnaround specialist will join the firm next month. as it continues to struggle with an uncertain consumer demand following sales at an ongoing corporate soap opera. brian dunn left abruptly following questions of his personal conduct. former chairman dick schultz is talking on and off again of talking taking the firm private. he thought the latest requested for his potential bid. on the call, side stepping a question about the talks between the two sides. >> one thing i -- what's out there in the public marketplace is -- you know, proposal still stands. you know, we feel it is up to dick to respond from there. >> as for the second half of the year, best buy up on the challenges including a lack of improvement in international revenue. weak domestic demand for computers and gaming and gross

margins likely to fall below last year's levels. on the plus side, though, best buy points out new product releases in tablets, phones, gaming could boost sales while selling and general administrative expenses. should come in below planned. best buy's adjusted earnings coming in 11 cents below analysts' plans at 20 cents a share. declined for the eighth quarter in nine. impacting last quarter's results, domestic weakness in gaming digital imaging and notebook sales overseas results were impacted by soft chinese consumer as well as competition in europe. simon, back to you. >> thank you very much, mary. astonishment this morning. early investor and indeed current facebook director peter tiel unloaded now a majority of his stake in the social network ring giant. what should chefors take away fromis actions of the end of last week. selling another 20 million shares. michael, good morning. thank you for joining us on the program. >> good morning.

thanks for having me. >> it is less than a month since you actually reduced your price target on facebook from $44 to $35. peter thiel obviously knows something you don't. friday or thereabouts, an average of $19.73. if he's a director of facebook and he's selling out at $19.73, i have trouble believing at your price target of $35. >> well, he certainly is sending a signal that he has a lack of commitment to the stock. and you are right. he started with 44 million shares and left with fewer than 6 million. he's -- he's divested over a billion dollars of facebook stock. i'm surprised he hasn't resigned from the board if he has that little commitment to the company. he's clearly profited to the tune of $900 million or more. any investor who thinks that facebook is a sinking ship with what they feel and say is the rats are jumping off the sinking ship, time for me to get off as well. i actually don't think that he's

an evil guy. i think he's like every other investor. you can't make a profit if you don't sell stock. i think he's -- can't believe that he hit this giant home run in his career. and he's taking advantage of it to the max. >> michael, he's not like every other investor. he's an insider who knows that business inside out. he's not like other investors. and that's why -- >> you are right. you are absolutely right. i think he has a weak defense he filed the plan two days after the ipo because he always could have pulled the plans as he saw the stock decline. i think that this guy saw his payday and he chose to exit, exploit his payday, move on. i'm not sure that he k anything more than any of the other insiders and none of whom apparently sold significant amounts of stock. but i think you are right. i think that does suggest that when the final lockup in november happens, a lot of people are going to sell. i think that investors are

probably going to choose to stay on the sidelines until all the dust settles from that second lockup expiration in november. >> i agree the second big lockup. this is a massive lockup. more than a billion shares could potentially come to market. at the same time, how many fresh new ideas have there been where early investors held on to the stakes well post the ipo day? isn't that sort of their way of doing business? they invest early on but can't tie up all your capital. put tonight the next big investment. >> well, i think what this whole exercise tells us is that the -- early investors drove the entire process. and i mean, they set this up so they can exit. these lockups were actually kind of unusual thattes enry every share in the company except for strict stock given to executives was free to trade as of six months after the deal. that was set up. that was by design. that wasn't an accident. early investors said that we got in and in fields case, six, seven, eight years ago, we want our money now. and, again, that's -- that's capitalism and their right to

sell. simon, you are right. he had better information than you and i have. i hope that he didn't act on that because conceivably that's something you are not supposed to do. >> i want to go back to a comment you made about thiel being on the board. you have been a major proponent of this stock for a while. are you calling for thiel to resign from the board? you said i don't think he should have been on the board if -- are you now calling him to resign from this board immediately given the fact he made this decision? >> yeah. actually i am. i think this 2% interest in a company doesn't automatically grant someone a right toeat on the board. i think that a 15% ownership stake in the company does. right now if -- share holders were to vote, that guy would not get re-elected. i think he's already shown that he doesn't have a commitment for the company that he had when they went public. so, yeah, i think he should resign. >> let me just -- go further down that line of thought, if i may.

do you ever catch yourself off guard in a less serious moment wondering if, in fact, it was a confidence trick? poe tenfully this stock by peter thiel and you obviously -- you foe that wouldn't be possible. >> i don't understand what you mean bay confidence trick. >> do you think people were confident to buy facebook at an artificially high price by the system, by the way it worked, by the way it traded, on such little float in the secondary market? do you think people were tricked by what went on? if peter thiel has done knock that environment. >> i think that had facebook been at 45 today, we wouldn't be having this conversation. >> but it is not, is it? >> understood. >> it is halved in value. >> simon, i think it is half the value because of lack of visibility in the company's revenues and spending. so people don't understand how this company makes money. management mass than been particularly forthcoming with

their plans for spending, they told us they will spend money. between don't understand what their earnings potential is and the lack of transparency causes sellers to sell and causes buyers to stay on the sidelines. that's really the problem here. the problem is not that facebook is a bad company. the problem is we don't understand how much they are going to earn and when. >> michael, i have -- >> until management gives us that we can't buy the stock. i get that. >> i have a quick housekeeping question for you. that is -- it has to do with timing. he filed -- filed a pre-plan sale shortly after the ipo. you said two days. was this -- filing made with the se sxr therefore, everybody knew about -- we all knew that this shares could potentially be sold. do you know about a pre-planned sale? >> melissa, i'm a lawyer but i'm not an sec lawyer. i actually don't know when it has to be made public. it probably was discoverable. i don't think any of us knew about it. i didn't know about it until yesterday. >> bass -- the fact that seems to be a major issue.

if you had known this was filed with the sec, would you have set a 35 -- you had a priced higher 359. would you have set that price target -- >> truthfully, yes, yes, yes, i would have. had i known, yes, i would have. honestly, i think that all the guys who are early investors in the company are trying to figure out when they can monetize. i don't think that thiel is interested in a long-term investment in facebook. he made his money. 500,000 turned into a billion. he made his money. because i don't think he has a long-term commitment he probably should step aside from the board. >> okay. michael, goods to talk to you. thank you for sharing your analysis. >> thank you. >> gary kaminski said that's the point you made repeatedly. >> yes. >> that's what they do. however -- >> what's this? >> is that your new animation? >> i didn't even know about that. is that a surprise? >> i didn't know about -- i don't know about a lot of things on this show. >> first of all, i planned to come mere and talk about junk

bonds. we are going to put an toned facebook now and i promise i'm not going to talk about it after today again. let's just go through a couple of things. venture capitalists, business model, monetize on ipos. when you choose to stay on the board of a company and to be a board of director member, that puts a different onus on you to maintain a commitment to have a significant position in the company. so this is a different scenario. >> other -- i mean -- i'm just asking -- no, from a house -- when you take a look at other companies' board of directors do they have a significant financial investment -- >> the question i want to see is management committed to the shares. >> like two weeks ago. >> right. >> this situation, given the scenario that happened, we know and let's stop -- stop trying to make this thing something that it is not. it has been a show since may. this has been -- i'm sorry.

this has been a disaster since the first day that the three of us were sitting at the nasdaq and if you remember we saw the allocations. you remember we saw those allocations and we saw what had happened. you got a scenario from the day one where these things happened. thiel had a commitment to the share holders and to stay with this stock. 10-b-1 could have been a amended or changed. he made a decision, live with it and move on. what happens next? you guys have not sat in a meeting of a portfolio management team that bought this stock. if the portfolio management team bought the stock in the high 20s they saw this news come out last night. this is what happened. he said were you aware of in. same question you asked. were you aware of it? answer is no, i was not aware of this. they will now be deciding, given the new information, if they are going to sell the position. do it today, they are going to probably decide the next couple of days that have you the emotional side here and the fundamental side here. but this continues.

>> is it material for legal action? is that information -- >> can you sue based on the information? again, i'm not a securities lawyer. but it continues the path of what's happened with this company since the first day they started trading. >> i would like to know how public that filing was? as a shareholder i would have wanted to know that. if an analyst is -- follow the stocks since the ipo, before the ipo, telling us he was not aware of it, it is -- i mean, isn't it material at a board, sitting board -- i know. let me finish mint. sitting board member sold a majority stake. >> correct. >> here is my only question. i have a question for you. if you owned this stock and heard what they said here, major promoter of the name, he said he should did should resign and zuckerberg does not force him out what does that say -- >> thiel wants to stay on the board -- >> he should have resigned

first. >> no. that would send a really bad signal. if you have a board member -- then selling. >> it would send his own stake lower. >> no more. i will not talk about-face book again. >> we have a spree special edition of the santelli exchange. rick santelli is in new york. >> hello. yes. it is me. i am reading "the new york times." it happens to be yesterday's "new york times." and the story i keep reading over and over and over, cautious moves on foreclosures and hauntping obama. the more i read it the more i just keep scratching my head about the revisionism in looking back on how it all transpired. you know, you have to go back in time. you know, whether it was t.a.r.p. and then in that february period, everything in '09, t.a.r.p., recovery, stimulus. housing modifications. and all i can say after reading this article is if would haves, could have, are rewards i think

the current administration would be covered in medals. that's what i think. it is interesting. because pretty much the story goes they should have done more. you know what. when we were living through it, the issue was than directly about housing. it was about jobs. it was always about jobs. jobs, jobs. what happened? big programs that many have been waiting generations to put through and that's where they were concentrating on. there is one part of this article i enjoyed. it says that the bottom on the second page, that a diatribe by some person named rick santelli -- actually one fact in it at least in my interpretation. the other thing, this is good news. the epa is now putting out for 30-day comment, dropping the ethanol mandate. that's wonderful news. i think especially this year, worst drought in 50 years, this can be a positive step. i urge all those involved in the process to get involved. back to you. >> you know, the difference is in chicago the traders there are used to you. here -- they are not quite sure

what to -- >> that's all right. keep everybody on their toe. >> good to see you. up next, ceo of medtronic will be with us to talk about medtronic's latest quarter. [ cellphone rings ] the wife. hey, babe. got the jetta. i wiped the floor with the guy! not really. i would've been fine with 0% for 36 months, but i demanded 60. no...i didn't do that. it was like taking candy from a baby. you're a grown man. alright, see you at home. [ male announcer ] the volkswagen autobahn for all event... we good? we're good. [ male announcer ] at 0% apr for 60 months, no one needs to know how easy it was to get your new volkswagen. thatth the power of german engineering.

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52-week high intraday. joining us is the ceo, omar ishrak. chairman and ceo of medtronic. mr. ishrak, great to have you with us great to be here. thanks. >> what the analysts liked about your quarter is there are signs of stabilization in that it looked like according to the numbers you took market shares seeing you saw 3% drop in u.s. related sales versus overall market drop of 4%. how are you taking that share and are you waiting for the economy as the major driver for expansion in this particular market? >> no. i think that -- to large degree, our new products which we launched over the past year or so, are beginning to have an impact. and -- they are being valued by the marketplace. our product, proven reliability with over ten years of data. and 500,000 with defeat urs like shock protection features is having a -- good impact.

we are see something share gives as a result of that. >> so in terms of stabilization, is that for now? are you actually see thing market turn? are we at an influx point? >> to a large degree, the market is -- drop that it had last year. we have been kind of predict thing a little bit, built into the models the last couple of months. that's playing out. now, you know, going forward, we expect to remain at this level. and -- and sort of around flat. we expect to gain some level of share in this marketplace. >> right. in terms of gain -- continue to gain share there is a report this morning about your competitors saying that -- heart devices found in in the study to have installation failures. is this your opportunity to further gain share? >> well, look, you know, we like to win on the basis of our own products. like i said, the sprint product which is an icd product, with its years of proven reliability, ten years of reliability with data and market surveillance

over that period, i think that -- we will -- will give us an advantage. but interest isn't about our own products and we have to deliver with those. >> mr. ishrak, i'm sure you are watching the discussion over medicare to an even greater extent than we are. we don't know what mitt romney would do if he wins the presidential election in trying deal with public finances. you will note paul ryan's attempt to cap medicare through some voucher system or at least try to curtail the expansion. if the united states goes down, has to go down that sort of , for the sake of its public finances, how would that affect your business longer term? the heart devices you made and spinal devices that you make, would they be put out of the reach, do you think, of a lot of americans or would they still fall on this side of the threshold? >> well, look, i think some of these devices are lifesaving technologies. to the degree that people need them will get them.

exact financing method is, we don't know yet. we are focused on a number of things. we want to make sure all the products we have have value in the eyes of our customers. if that's present, and the device is of clinical value as well they will be used. they are lifesaving devices. we have to prove economic value of the devices over the long term for patients and focused in doing that. >> talking about costs and potential head winds, mr. ishrak, excise tax in 2013, there will be an excise tax of 2.3%. strikers announced layoffs ahead of this. how will this impact your company? do you see pass thing cost on to consumers? >> well, for a start we modeled it to our business. and we are expecting it as a -- like you said. we have lots of pressures that come our way. and you know, this is one of them we have to manage. to the degree that we pass it to consumers depends the market dynamics and you know, we will see how it goes. right now we modeled it.

into our -- bus plans going forward. >> so you will -- you will eat the tax at this point? >> well, at this point we are -- planning to absorb to it some degree and see how the market plays out mr. ishrak, thanks for joining us and we appreciate your time. omar ishrak, chairman and ceo of medtronic. straight ahead, counting down to the close in europe. five minutes on to go. catch all the action after this. born with. and inspires the things you choose to do. you do what you do... because it matters. at hp we don't just believe in the power of technology. we believe in the power of people when technology works for you. to dream. to create. to work. if you're going to do something. make it matter. wanted to provide better employee benefits while balancing the company's bottom line,

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welcome back to "squawk on the street." shares of netflix rising on the back of an upgrade from david miller. shares are up on caris 2%. consensus estimates are no only draconian but also based on emotions rather than close analysis. let's's now rating the stock average from below average. for average doing pretty well today. >> thanks for that. european closes up next. stay tuned. sometimes investing opportunities are hard to spot. you have to dig a little. fidelity's etf market tracker shows you the big picture on how different asset classes are performing, and it lets you go in for a closer look at areas within a class or sector that may be bucking a larger trend. i'm stephen hett of fidelity investments. the etf market tracker is one more innovative reason serious investors are choosing fidelity. get 200 free trades today and explore your next investing idea.

simon, we go to you. >> we are extending gains towards the end of the european session. take a look. >> european markets are closing. >> i think it is significant, okay. low volumes, exaggerated moves. it is all good. i get it. some of those banks in spain and -- actually, the banks in france and germany have surged towards the end of the session. deutsche bank up about 4%. really interesting to see what is happening at the moment. the way in which the -- let me just -- hey, the one thing that you got to look out for here is whether -- spain and italy ask for help from the ecb. if they ask for some sort of bailout, then the ecb can come in and buy its bonds. that and greece, which we start talking about tomorrow, when people start going to greece,

that's what you should be focused on. what the market is trading on at the moment is stuff you should already know. when the daily telegraph in the uk confirms, for example, what was reported, actually technicians within the ecb are looking at the possible built of targeting italian spanish yields and head of market operations is talking to the 17 national banks, we know that's happening because we were told that on august 2. when you have, for example, most prominent german member of the ecb saying that as far as he was concerned, he was throwing his weight behind the purchase of ital wran and spanish debt because the kur currency can only be stable in the future existence is not in doubt. that's almost word for word what mario said in that news conference on the 27nd of sxaug said he had the full support of the entire council in making that statement. so people are not listening to what he has already said. this is not new information. he says he would try to get a

consensus within the ecb and precisely what he attempting to do. it is moving the markets. let's have a look at where we are on the italian yields and you can see, again, that the spanish yields are falling. in other words, the bond market there is rising. let's have a lack at where we are on the german side of things. there you will see that the german bonds are falling. therefore,ing the yields are rising. we continue to this intervention. trying to do a deal. ecb may not vote for the bond buying. italians and spanish may not go for the bailouts. but the rest of it, guys, we already know it is really not you. let's have a look at where we are in italy and see some of those big -- smaller financials actually moving substantially again today. you see exaggerated moves on bpms stock. they have been beaten down. other financials around europe moving today -- low volume, therefore, extended moves

potentially. maybe not as significant as if it was happening in september. rick santelli says we could go 500 minutes on lower to do next month. you can see the other financials, ing, aegon made gains. >> thank you. let's check with sharon epperson. big news with oil and gold today. >> big moves across the board. commodities. since i have been back from vacation it is amazing to see every commodity nearly on the upside in this session. part of it as was mentioned verbal intervention. i love that phrase. that's what traders are talking about. the words from german political leaders looking at the small consensus, possible eurozone bailout plan. that's something that's helping to lift commodities across the board whether we are talking about oil, three-month high or gold at a three-month high. weaker dollar. lifting the prices. there's some commodities truly in a breakout stage here. technically. silver, what's happened there. definitely a technical breakout

looking at at that commodity and what has taken commodities higher the last several months, bull run in the grains. that continues today with soybeans at a new record, melissa. simon, back to you. >> thank you very much. let's bring in bob pisani to talk about more breakouts on the market this tuesday. >> we are here so it is a good time to summarize where the markets are. maybe a little bit about where we are going now. key point is the breakouts. let me show you where we are. four-year highs on the s&p 500, but lot of people haven't noticed nasdaq 100, 11 1/2-year high. fraction of what the historic high is. we know that. back to 2000, though, to see numbers like that. there is near 4 1/2 year high on the dow. breakout has been since august 1. since the ecb meeting august 2. here's what calmed everything down. since then the s&p has been up almost 4% and it has been led by what want to call the risk sectors, tech, financials, energy, materials, forward darlings, the -- safer names, particularly high dividend

paying, have since fallen back. that's very important. that's true also of health care stocks. also high dividend payers. also underperforming as financials now come to the floor since that ecb meeting. certain cynicism about this rally in certain quarters. some of the people have argued this is just a mega-cap rally. that's not exactly the case of what has been going on. put this up. biggest of the big cap stocks, which is the s&p 100 you want to look at, are only up 3% since that -- since te cb meeting august 2. s&p 500, broader large cap sector surngs 3.6%. not quite true. this is a mega-cap rally. however, this is the thing that bugs me about the rally. it is true that it is fairly narrow. it is still largely large stocks. take a look at what's been going on since then here. the underperformers and the important thing is that the dow transports, mid caps, and the small caps, aren't really close to breaking out new highs. you would like to see some kind of confirmation here with these

stocks hitting new highs and the sectors hitting new highs, really not having that right now. in a sense it is a bit of a nonconfirmation. let's move on. here's the banks. i'm surprised to see this because it is a lot of sin sis billion banks and ability to generates profits in the fourth quarter. where there is a high expectation they will do well. look at this. four-year high in wells fargo. three and four-month highs on the big banks now. that's the biggest story of the day. that's got a lot of commentary. take a look today. all of them are you 2%. big question is can we get loan growth in the third and fourth quarter? i don't know the answer to that. but i could tell you right no a lot of people think the numbers may be doing a little better than anticipated. remember, 20% increase in earnings suspected for the financials in the fourth quarter. that is a huge barrier to overcome for analysts right now. people are going to argue that number has to come down. well, i don't know what's going on. people are buying stocks like it is not coming down right now in the banks. >> good point. thanks for that. let's send it to the dynamic

duo. rick santelli and gary kaminski, both on the floor. >> this is a real, real treat. at this time every day i'm normally watching at the desk what rick about to say. rick, just yesterday had you one of those really compelling interviews. had you the attorney who is leading a lot of the mf global litigation. he made really good points in terms of this thing is not going to go away. it may not be in the media, back in chicago, this continues to be a story every day. does it not? >> absolutely. the gentleman you are referring to, the attorney, james, represents thousands of mf customers. yes, i think his last comment on the air was he said i'm going to reach out to 50 a zbs arougs ri country and show them how they can go after this case. he fwoonts see criminal prosecutions. the top of his list, broke laws, is obviously senator, ex-senator, ex-governor, jon

corzine. >> you understand what happens in terms of the futures of the commodity trading much better than i do. money in these accounts, that the clients would utilize in as collateral to trade futures, trade commodities, in their minds, was this money like in a safe deposit box? was this cash that they were holding in the form of a tea bill with other cash-like instrument? was that to what was a safe deposit box n. >> see, this is a weird one because i think there are some that believe that in this giant bowl of spa gety called segregated funds, they believe that there's a strand with their name on it. you know, it is a lot more like -- social security. you know, you pay in but is there an account you can go online and check with regard to your money? so no. but i think that most traders i deal with insiders, the floor traders, they understand that the funds are not sacrocinct.

they are supposed to do it in a way that's very low risk and liquid. they put out the excess and every morning they pull it back in. >> that's why i get -- we are not attorneys and not going to try to pretend we are attorneys but that's why so many people think there was fraud and there was criminal activity here. let me ask you the last question here. i know -- i hear from so many people in chicago that you see every day. there has to be -- this is a touch touchy subject. there has to be some belief politics play as role here and what happened with mf 37 when you go to bed at night, do you think that politics is involved in what may ultimately happen with the resolution of this issue? >> gary, unfortunately i think that politics now plays a role in absolutely everything. top to bottom. i think in this instance, i made ten phone calls to guys that were ex-mf customers. what do you want me to say about mf? what sticks in your mind? automatic ten said the same thing. they want to see jon corzine in jail. not my words.

their words. does that answer your question? >> that answers the question. when you hear it from rick, as i heard, i hear it every day, you hear it the way it is. rick, thanks. i'm going to be in chicago and have good fun. >> september, big fun. >> melissa and simon, back to you. i want to mention that with some research out today, goldman sachs, talking about many of the hedge funds underperforming s&p 500 dramatically. david kostin will be joining us and will be talking specifically the hedge funds that are underperforming, what will they try to do to catch up the rest of the year? programming tease note there. >> interesting. gary, for the moment, and rick, thank you very much. let's go to market flash. >> simon, we are looking at insurer financial ticker gmw. shares rising nearly 3.5%. dow joins reporting the company is working behind the scenes to find a new ceo and implement strategic alternatives and that investors are piling in ahead of

a potential news announcement. on that we should note this is genworth's 12th time higher in 13 days. >> straight ahead, facebook taking one hit after another. find out how the dismal performance can be keeping the start-ups from going public. that story next. hi. i'm henry winkler.

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♪ coming up at the top of the hour, did peter thiel sell out facebook by cashing? weighing in on that and much more. the facebook blame game. private markets leading smaller investors holding the bag? we will talk to the man who predicted the market rally back in january. now back to simon. we will see new 15 minutes. >> thank you very much for that. in the meantime, let's talk more about-face book. the stock slide is bad for investors. but it could be even worse for the brutal world of social media. julia boorstin is live in l.a. with more on that tuesday morning. hi, julia. >> hello to you, simon. start-ups that once was the next facebook now see facebook and what happened with the stock as a cautionary tale and are trying to avoid that fate.

right now the bar for going public is much higher. >> very, very different. people want to see what's your real value and how you are going to generate cash for the long term. what area are your competitive advantages and what will you do for me as a shareholder. >> two of the largest private social players, twitter and living social, say they don't plan ipos any time soon. instead they are relying on financing and living social's case, backing from amazon. more start-ups are thinking about selling. microsoft, oracle and sales force have all been buying up social tools. facebook, groupon and zynga's declines are pushing back plans by six months and also depressing valuations by about 20% to 30%. now it is not all bad news. renaissance ipo research says the ipos that have met that higher bar and gone public since facebook's ipo have had an average return of 18%.

that includes palo alto. so far we haven't seen signs of facebook's debacid he boebacled. second quarter, the number of early stage deals reached the highest number we have seen since 2001. so we will have to see if those numbers hold into the third quarter. back over to you. >> all right. julia boorstin, thank you for that report. coming up next, barnes & noble getting a boost from "fifty shades of gray." revenue still flat. book retailer stand a chance? ultra competitive tablet wars. we will talk about that after this. you want to save money on car insurance? no problem. you want to save money on rv insurance? no problem. you want to save money on motorcycle insurance? no problem. you want to find a place to park all these things? fuggedaboud it.

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barnes & noble's fiscal narrowed. the "fifty shades of grey" trilogy. sales of the nook hit a snag earlier this month barnes & noble announced it was cutting the price for the less expensive

nook model to undercut kindle. rumors of the smaller ipad continue to intensify. where do we stand on the tablet wars at this point? guys, great to have you with us. of course, when you take a look at barnes & noble's quarter the device sales were down because of lower average selling prices and production issues surrounding the glow light. fwher tom bark on a new round of nooks to come out ahead of the holiday season. scott, do they have a chance at this point of actually competing? they are nice and small and they are much less expensive. >> that's the thing. their calling card before was less expensive and nice and small. and the tablet landscape shifted. we are looking at smaller tablets all over the place less expensive. that will be a hard thing for them to compete on between rumors after smaller ipad and whether that does emerge this fall. have you also got google's nexus 7. you have new kindle tablets that

should be on their way. and i think that, you know, ecosystem for their bookstore may be the strongest selling point and maybe that's why the partnership working with microsoft investments may not be such a bad idea because in the long run, hardware will be a very difficult play. windows 8 tablets included. there will be a lot of stuff coming out this holiday season. >> may not be such a bad idea but, mine, when you read in the press release what they said about this, it was very vague they continue to work on this partnership that was announced at the end of april and really no specifics out of it. months later with device sales falling, you would think that there would be something hooked up by now. >> i know. microsoft very many was a great shot in the arm. stock has come down since then. valuation of the current barnes & noble so far below where microsoft invested. right now medtronicivity self is a huge question mark in the tablet market. it is not really successful at all. competing in mobile devices. of course, launch in the service tablet and a matter of months.

how that actually squares with the nook environment and the -- nook needs is really unclear. i think we have to give some credit to barnes & noble. they have somewhat turned themselves into a consumer electronics company. it is just so hard, so, so hard, when you are competing against apple and google and amazon, these are the best capitalized and most advanced driven companies on earth. >> to that point, scott, has the journal points out this morning, this deal with microsoft to inject $300 million and take share of the -- of the nook corporation and the -- education operation, and then take that around the world, that would imply actually a valuation on the stock of around $30 a share which is -- not where we are. so -- what's that mean in -- important that deal? >> well, i think it is something -- >> sure. >> i think it is something, you know, again, it is a little bit of companies positioning themselves against each other. and it is really hard to tell where that is going to go.

nook bus is going to take -- go over to britain soon and i think that, you know, lot of areas that they could develop. there are people that bought into the nook ecosystem. barnes & noble's ecosystem. yes, there are tablets that have been really high quality but, you know, i agree that on the points thai think it is just going to be hard to compete with expectation, i think maybe the reason the sales declined is also there have been so much talk about tablets to come that the average consumer kind wants to see what is coming around the bend. and -- you know, the fact that there's barnes & noble nook software that runs on other tablets means you can make a lateral move to another piece of hardware. >> that's the next point i want to ask you about, dennis. that is can barnes & noble continue to see the big increase they have seen in digital content and discontinue the nook? let's say the nook went away. >> well, that gives them a lot less leverage in the marketplace. they have hundreds and hundreds of stores around the country.

and it is very expensive to operate them. you have to get something out of that fiscal infrastructure. i think we are -- sort of in a very interesting point here. let's not forget apple has an antitrust suit filed against it. and as well as publishers for what the government claims manipulating the price of e-books. apple itself, if there is a seven-inch ipad, it is going to be in a nice spot to take away share from the nook. and we should see over time -- i expect that the nook market share to really kind of come down because people will reading more on the ipads. phones themselves are getting bigger screens. go on the subway in new york city. they are flipping through their phones and reading books and other materials. it is very tough for the nook right now. >> it almost sounds like you are saying barnes & noble is limited number of years ahead of it. >> here is one optimistic possibility. which is that -- there might be a distinct market for a reader-only tablet.

there are so many distractions, nexus or ipad. people might actually want kind of a closed space where they can do reading and not be distracted by all the videos and games and so on. then again, over time you have to think that's a relatively small market. it is remarkable. ten years for barnes & noble being the great monopoly -- >> i'm trying to think what sort of person would -- please keep it really simple so i'm not distracted. >> school market, for kids, maybe you only want to give them something they can read their textbooks and assignments as opposed to e-mail. >> sure. >> that's a very -- that's, as you mentioned, a very limited market. >> it is now the great road kill of our time. it is amazing. >> great quote. leave it there. thank you. >> keep the tweets coming we found out last night in a regulatory filing peter thiel sole 20 million more of his shares in facebook following the first lockup expiration at tend of last week. now that peter thiel, who is

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this is the pursuit of perfection. peter thiel selling most of his stake in the social network last week following the first lockup expiration. we ask you, facebook director peter thiel unloading a majority of his shares in the social network is like -- >> get this. >> it is like sitting on an airplane and watching the pilot walk down thehe ire wearing a parachute. that's a good one. robert tweets -- it is like