dell's second quarter profits fell 18%. but still managed to beat forecasts. revenue missed the market and the company warns of further declines in the third quarter. dell also cut its full year earnings outlook saying pc distributors are holding back on buying new machines waiting for the launch of windows 8 this fall. dell shares falling in after-hours trading. jury will begin deliberations in the patent infringement case between apple and samsung. closing arguments tuesday, apple's lawyer said samsung took shortcuts by copying designs and apple's smartphones after realizing it couldn't keep up. samsung countered telling the jury a verdict in favor of apple would hurt competition and reduce choices for consumers. apple shares losing some ground yesterday after becoming the most valuable stock of all time on monday. after a nearly 20-year wait, russia is now the newest member of the wto. steve? >> the republican national convention is just days away. mother nature may be stopping

by. forecasters say tropical storm isaac is moving west toward the caribbean on a track that could take it to florida early next week. the gop convention is being held in tampa. isaac is expected to become a hurricane by friday but it's still too early to gauge whether it will head to the sunshine state or turn north into the open atlantic. we'll get a complete forecast from the weather channel in a few minutes. let's check on markets this minute. becky -- >> i want to welcome you both. >> good to be here. >> we have a lot to talk about. >> we just lost the board there. down five points or something? >> yeah, it's looking flat. yesterday you saw the market was down by 68 points. you saw a big swing through the course of the day. >> like a 1% swing, right? >> yeah. at one point it looked -- we were is the sitting a five-year highs before the market gave back a lot of the gains. >> let's take a look at oil, which is another big story out there. brent is off a little this morning. wti crude $96. all of that up over concerns of

iran. that's going to be a figure factor in the economy in the months ahead. i saw a piece that says consumers haven't seen the worst when it comes to gasoline prices because they follow what happens in oil by a few months. the ten-year note was up in the 180. look, guys. >> just below that. >> when i left it was 0.150 and the whole operation -- >> it was below on 0.150 on some of those days. now 1.8 -- >> was it you, becky? you can't keep it under control here? >> wasn't me. >> a question we'll talk to david from morgan stanley, is that an issue for the fed. the dollar, another interesting story out there. 1.24, almost 1.25 on the euro. >> the euro has bounced back. >> can whoa talk about this? everybody i talk to says the euro will be weaker. the ecb is about to embark on a

series of policies that should weaken the euro. we're for parody between rates in the ecb and fed. possible bond purchasing, all of these thing to make the euro weaker. when there's additional noise about these things that should weaken the euro, the euro strengthens. >> unless you see a situation where greece falls out of the euro. then they step in and save the rest of the countries that need some of the -- some of the work. if you get rid of greece, does the euro look stronger overall? >> absolutely, absolutely. >> there's still a -- >> if you think about parody between the fed and ecb being at zero, that should tend to weaken the currency. unless, of course, the fed pivots even further and ends up doing more qe and then it's not so much. >> probably the top of the near-term range for what the euro -- >> okay. >> it's made such a quick move. 1.22, 1.23, the people we're talking to these days think that's where it is. we'll probably get selling into

it at these levels and selling into any significant rally we've seen. it's been a quick move to 1.24. >> ubs has a forecast 1.15 by year end. some guys talk about parody, you know, between the euro -- >> that would be something to see. >> but it's more than just a market forecast. it's also sort of a policy forecast that one of the things that europe needs to heal, not alone, but one of the things it needs is to weaken the euro. also the idea -- two reasons it makes sense. strength. in germany. the other thing is when you go into exports, promote exports, you promote competitive businesses. businesses that compete globally. that should help restructuring long term. of course, all of that said, the euro does what? >> yesterday was a significant move. i think the euro was up 1% yesterday, which is a massive move in currency market.

you don't generally see moves of 1%. in either direction. >> it will be interesting to follow. early september we're coming up with big dates. the meeting of the ecb. other stuff that comes on the 12th of december that matter. the euro dollar, it did weaken -- is that a one-year chart there? >> yeah. going back to september of last year. >> the lead story focusing on how angela merkel has her hands full. she has the biggest decision she's faced to this point in her leadership is what's going to happen, what do you do with greece? that's a decision that probably probably won't come for the next few weeks but one she'll eventually have to make. >> her stress factor is only going up, right? i mean, when she's trying to decide between what's best for the eurozone and then her own, you know, politics and her own country is very difficult decisions. >> they're not divorced, right? they're one in the same.

she has to bring political support along with her -- >> otherwise -- >> to get to the right policy, right? so, i actually think she's done a decent job. the only problem is that it's all been too slow. the stuff they're talking about now for the ecb, this bond purchase -- what i'm also hearing is spain is expected to ask for rescue funds. there's a game of chicken going on. but that spain will ask for an efs program and ultimately that will cause the ecb to come in and buy -- >> is it going to happen before jackson hole next week or draghi comes? >> no. because i think the timing of events that the ecb staff will -- well, the staff right now, as i understand, is putting together the documents about how they're going to buy the bonds. there's a big debate to that. capital rate? do they target a spread? do they buy just spanish? do they buy everything? do they now have to buy italian -- i'm sorry, irish and portuguese bonds -- >> right. >> so that's part of it. >> they do that. and then the ecb meets. i think there will be a decision

out of that. that's early september, as i understand it. >> the response has been slow but at least it seems as though it's become a little more credible, from a market standpoint. since draghi made his big impassioned speech they're going to do whatever it takes, the stock market has certainly picked up since then, right? it's at a 12-year high. the s&p is at a four-year -- >> let me challenge you. i want to challenge you on that. it is progress until it isn't, right? >> but i think right now they're buying it. right now they're buying it. >> right now. but i want to ask, scott, do you think it's the better part of prudence or valor to take that position, that the ecb will, a, do what it says, follow through and ultimately meet market expectations to come in in a big way? >> it's a tough call. i think, though, the market is trying to convince itself that this time it's different, right? this time draghi is actually going to follow up words with action. not to mention the fact that the stock market has gone up because of this thought that the global

central bacnks are going to com to the rescue. >> let's be clear. the better trade has been to sell the top and buy the gloom. when it gets -- eurozone is going to fall apart. that's when you step in. they come up with a solution, the solution is short -- >> i don't think anybody thinks it's going to be a slow and steady path from here. it's going to be rocky no matter what happens. let's bring in kelly evans, she's on the continent and she can tell us everything happening from that side of the bond. >> beck y it's interesting. i've been listening to this conversation. steve's absolutely right. it's those dates in september people are worried about. there has been a broadly supportive tone to the extent people think all of those measures are falling into place, that the ecb will discuss this next scheme, that at the same time spain and italy will accept they have to go hat in hand and ask for a bailout in order for that to happen. nevertheless, what's happening in markets today as we are reminded about asia, japan

reported a large drop in exports, that was weighing on shares. down 0.8% on europe stoxx 600. they added 15% over the last six weeks so a lot of people were saying it was time for a pause. take a look at what's happened across europe. red arrows across the board. xetra dax is down 0.8%. ftse lower by a percent. hang sang and nikkei in the red as digesting that data reminds people to look at the numbers. tomorrow the flash pmi figures out of china will be a good gauge to see if we've seen a bottom to the weakness in asia or not. take a look at the bond space. even though we've seen a little risk-off attitude across equities, there are still prices bid up in spain and italy. those yields falling 6.2%, 5.2% respective respectively. portugal, that was below. france benefiting as well. across the board we're seeing yields coming in.

at the same time germany, another two-year auction with a negative yield. a reminder of the extraordinary circumstances that we're living in. and, by the way, i want to draw your attention to what's happening in commodities. platinum, an example of the rising, maybe not the most encouraging reasons, 1.519, as a anglo american said they receive wage demands. gold is up a little bit. crude and euro/dollar are lower. you can see a mixed message on the risk front. crude is lower. euro/dollar is lower. stoxx are lower. but yet a better tone out of bond markets. with futures barely pointed to edge higher from here, there's clearly a little more downside risk than what we've seen in the last few trading sessions. >> see you again tomorrow. thanks much. in the meantime, that pull back for u.s. equities market after reaching 4 1/2 year highs, joining us to talk more about it is kevin, head of fixed income for raymond james.

kevin, you are of the school that steve was just mentioning, the idea that we may have some fixes in sight but you don't think it will be clear sailing from here. >> you guys pretty much had it right. while it's very positive that the ecb is talking about buying bond of member nations, is greece worth eight basis points in a yield we saw yesterday, i think when you step back and look at the ecb's proposal, it's -- while fine, you know, how has it done for this country? the biggest economy on the planet with the fed buying bonds for the last three years. while optimism can be shared, i think it's premature to think we're going to drive interest rates, as steve was saying, from about 150 to 180 and think everything is okay. i'm still in the camp we're in an oversold condition in the ten-year. any time we hit 185 it's a strong buy signal.

economies of the u.s. and eurozone and the world, for that matter, are in a slow crawl upward. it will take a little while. buyers at 185 to 160, which is likely to be the trend for the next six months. >> 185 to 160 for the next six months. what do you expect to hear from the fed, not only today when we get the fmoc minutes -- let's focus on that. you get them at 2:00, you look through them and a little bit of a mess because a lot of the members of the board disagree, based on what we've been hearing from them over the last few days. do you take a look at this and because we've seen new information that's shown signs of improvement in the economy? >> the big debate is about qe3 and whether that should happen or not. i think what we'll get out of the fed minutes is that some conditions, while they think they're improving, there's still a long way to go and the fed is clearly divided on whether further easing is required or not. i think beyond the minutes, the

end of the month meeting in jackson hole, next employment report in the first week of september is key for the fed, in my opinion, in items of you've got 16 3shg you got downward revisions in the previous month. if you get it up near 200,000 in private payrolls specifically, you might see the fed take pause and just continue to do what they're doing with the twist. something short of that, something less than 100,000 or so is really going to put pressure on the fed to take action after the september meeting. >> what about 125 to 150, that could be more likely. what does that do to the fed? >> yeah. i still think it keeps the fed somewhere in the middle of what they're doing now. clearly some more distension as to where they should be. they'll probably continue the twist and layoff going into qe3. i think for the fed to feel good about doing qe3, have you to see something around the 100 or below 100 on this next payrolls number. >> kevin, thank you very much. good talking to you. >> thank you. coming up, a new all-time

low. not for a stock but for congress. john harwood breaks down the latest nbc/wall street journal poll. it could be mother nature that steals the show in tampa next week. james bullard will be our guest host tomorrow. ♪ why not take a day to explore your own backyard? with two times the points on travel, you may find yourself asking why not, a lot. chase sapphire preferred. there's more to enjoy.

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welcome back to "squawk." take a look at fair value, implied open. a mixed market if it were to open at this hour. s&p giving back a little bit. the dow would be marginally higher. tropical storm isaac could make its way to the gop convention next week. uninvited guest. let's get the forecast and the storm track from the weather channel's alex wallace. good morning. >> good morning to you. indeed, tropical storm isaac, a lot of folks watching this very closely, as they should be. here it is, the very latest from the national hurricane center. 45-mile-an-hour sustained wind moving to the west pretty quickly at 18 miles per hour.

let's get in closer. right now, just east of the leeward islands, look at this ball of convection that's flared up over the last six to eight hours or so. that going to be moving its way on through. we're already starting to feel some of the impacts there on the islands from some of the outer bands, some showers moving in. it will become a bit more intense as that big blob moves through. gustier winds and heavier rains will be moving through the area. where is it heading? there's the general path, off towards the west and then as we work our way through the weekend, maybe turning a little more towards the north and west here. by the time we get into early next week, notice who is in that cone, that would be florida. so, these are some areas that certainly need to be mindful of this. florida, parts of the southeast coast, are you in that sort of aware category, being aware where isaac is over the coming days. now, in the meantime, what we're dealing with in the u.s., well, eastern third of the country,

fairly quiet conditions. along the southeast coast is where we'll find showers and storms. lovely day in new york city, 82 degrees, sunshine. middle of the country, dry. a few isolated storms in the upper midwest. a check on the west. west coast looking fantastic from seattle down to l.a. it will be warm, though. 91 for you in sacramento, where we do find our rain issues, that's parts of the four corners. shower and thunderstorm activity from vegas down to even the phoenix area. the good news, though, the rain and the clouds will help to keep the temps down just a bit. back to you. >> thanks very much. the results of the latest nbc/wall street journal poll are out. romney says gaining ground. that's not what i saw. joining us, let's get the real skinny on this, cnbc's chief washington correspondent, john harwood. interesting numbers there on ryan as well. >> absolutely. what we've seen is all year long we've had a very stable

presidential race with obama holding a small lead. this poll shows accumulating advantages for the president. first of all, let's look at the top line. obama holds his lead at 48/44. it was 49/43 last month. this is well within the margin of error. we have a new player in the races, paul ryan the vice presidential choice of mitt romney. how has his introduction been? his image is 33% favorable, 32% unfavorable, muddied by all of the controversy about the ryan budget and the partisan attacks from democrats. that's what polarization does for you. now, the question on the ryan budget is, whose issue is it? if you consider the medicare issue, the one democrats have been focusing on, so far we still have a couple months to go in the campaign. but so far democrats are owning that issue. 50% of americans, registered voters in this survey, say they agree with president obama on medicare. 34% say they agree with mitt romney. when we tested the impact of

that shift in medicare toward a premium support plan, voucher plan, and that indicates that mitt romney's got some challenges. trying to win that issue and also get the campaign dialogue, guys, back to the economy, which has been his whole card all along in this election. we've seen mitt romney is accumulating damage to his personal issue from the millions and millions of dollars of attack ads that president obama and his allies have been airing against him. mitt romney's personal image is under water one week before his convention in tampa. >> go ahead. >> i was going to ask john about details of the poll here. surprised to see obama leading among men 18 to 49, among swing voters. i thought men was his problem. >> men is his problem but younger voters are an asset for him. he doesn't do as well, and mitt romney is leading among all seniors and among older men in particular. what we saw in the poll -- you have a tremendous bifurcation.

obama has overwhelming majority with african-american voters, hispanic voters, of particular concern to republicans, and women. mitt romney has lead with whites and men. the republican pollster on our nbc/wall street polling team says romney needs to win whites by 17% to 20% to win the election. that's his challenge, is to get that number up over the next couple of months. >> if romney has challenges on the issue of medicare, how does he get away from that? i mean, he's going to be linked to the ryan budget and ryan stance on medicare as long as this race goes on, isn't he? >> yes. but they have a couple arguments. first of all, they've been placing before the public the argument that president obama cut 34ed care for the health care program. the health care program is not popular, our poll shows.

it's not hugely unpopular, but not popular. that's one argument they can make. the other argument is to plan for the broader public concern of debt, deficit and spending. say changing the program, by the way we want to change it, we're protecting it and saving it for the long term. it's not an easy sell but not impossible and they have some time. >> john, there is an article that -- an op-ed piece in today's wall street journal where austin goolsbee says a lot of the people are interested in getting the budget under control. he says some pollsters he's talked to, when he -- when the pollsters go and talk to people about things like bowles/simpson, the general public thinks that's some sort of a stomach condition. is this something that sells? is this actually something that can motivate the general population when it comes to a major election? >> no. i mean, the general concern about spending's out of control, debt and deficit out of control, yes. the specifics of bowles/simpson?

no. the heart of it is we need a bipartisan compromise, which involves cuts in domestic spending, cuts in entitlement spending and some tax increase. that makes it hard because republicans resist tax increases and some democrats resist entitlement cuts. this is a concern, in particular, among a lot of elites, among a lot of people on wall street, a lot of people in washington. when we saw the senate gang of six tried to build a coalition for this, it falls apart pretty quickly under partisan cross-fire. if there was overwhelming public demand for it, that wouldn't happen. >> john, how significant is this -- from a national standpoint, what's going on with the aiken controversy? >> i've been impressed by the resilience of -- >> the latter? >> yes. >> resisting karl rove, mitch

mcconnell, mitt romney, on everybody calling on him to get out. look, i don't think it's impossible that he could still win that race in missouri. he damages the republican image nationwide, that's why they want him to get out. missouri is a culturally conservative state. you know, he did his apology video. the question is, does he have money to contest a campaign. he could still get out of the race and somebody else could come forward but as of now, this is a very difficult situation for republicans, that hurts them as they try to narrow the gap among women voters, that democrats have opened up and can expect to rely on in swing states, virginia, colorado, others that where both sides are contesting. >> it's interesting. john, thanks for joining us this morning. if they get to a point where the akin battle gives them the senate nod, would republicans be

forced to support him in the last month or so? it will be interesting to watch. when we come back, we'll dig deeper into dell and a big lineup at 7 a.m. eastern time. mario gabelli on stocks and his opinion on facebook. ron baron says he sees more opportunities than money and that hasn't happened in a long time. boone pickens on all the sabre rattling in iran. take a look at yesterday's winners and losers. ♪ ♪ i can do anything ♪ i can do anything today ♪ i can go anywhere ♪ i can go anywhere today ♪ la la la la la la la [ male announcer ] dow solutions

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good morning. welcome back to "squawk box" on cnbc. i'm becky quick along with steve liesman and scott wapner. joe and andrew are off on vacation today. a lot of news and in our headlines, take a look at home builder toll brothers. that stock has more than doubled over the last year and adding to the gains this morning. toll reported quarterly profit of 36 cent a share, twice what wall street was expecting. it also says it's seeing the most sustained demand for its homes in over five years. the stock right now at 32.25. we'll be getting our first economic report of the week this morning when national association of realtors with existing home sales for july at 10 eastern time. they are looking for an annual rate of 4.5 million. and heineken is one step

closer to taking over asian pacific breweries, the company that makes tiger beer. heineken has bought nearly 2.7% additional stake in the company, lifting its share to 12.2%. it's still putting together a deal to buy 40% of held by singapo singapore. >> have you tried tiger beer? >> i don't think so. >> tiger in your tank. >> i might have had a lot at one time. >> let's check on markets this morning. futures are above fair value. now still above. just a bit stronger. we were down around 2.0. and fair value -- >> it's flat. >> this is why joe makes fun of this. i agree with him, in this case. the dow jones 0.9%. more interesting is oil, which was up on fears about iran and then it's down on euro skepticism, i guess is the best way to put it. 114. it's up just a little from where it was.

wti at $96, still holding onto gains from the last year. ten-year now just 1.79. the dollar was around 1.2425 to the euro and a little stronger against -- it's unchanged against the yen right now. let's take a look at gold. that has rallied recently. right, scott? it's been bullish for the gold -- >> it's come back around 1616 -- >> on fed hopes. >> maybe ecb hopes as well. dell beat street estimates with its latest quarterly earnings but its forecast for current quarter and fiscal year prompted an after-hour selloff. joining us from chicago, analyst from morning star, michael hull. >> morning. >> this is like we've gotten all earning season, the outlook was pretty lousy. do you find any positives in here at all? >> i think it is something we've seen for several companies this

quarter. the positives take away from this is what's going on with dell in a bigger picture. it's really about the transition away from pc technologies to enterprise technologies and solutions. while total revenue is down 8%, they still had 6% growth on the enterprise size. that's what we're fixating on. >> where would you put the transformation right now? how far through the process would you say that michael dell has guided this company? >> we're several years into a decade-long transition. a long and expensive road ahead. to give you some context, there's about a third of the revenue from enterprise solutions and about half of their nongap gross profit. >> so, a decade's long process. should anybody buy the stock at this point, then? >> i think what we've seen over the last couple quarters is a pull-back. we believe in what's going on here. we believe there's a lot of upside to the fair value of $18 per share. >> what do you glean from this

as we expect hp today with earnings, right? where would you say -- i mean, meg whitman is in the process of doing her own transition. >> absolutely. hp has a lot of other non-pc stuff. that headwind will be real, painful for them, but with hp we're looking at what will happen with the printing side. this they turned around the services side at all and how is their enterprise hardware business moving ahead? >> where would you say they are? should people buy hp at this point? i mean, it's had, as you see, into the summer it's had a pretty big pull back even though it's up as of late. >> definitely a big pull back, but hp is a situation where the investors have completely lost faith in the company. had lost faith in the previous management regime, so they set such a low bartha even just kind of getting their ducks back in a row and having decent execution, even if they're in very challenged market, that will be a lot of upside for investors

there. >> thanks. after the bell, dow component hp expected to roll out its results. >> if you have any comment or questions about anything you see on "squawk," e-mail us sidewalkbox @cnbc.com. still to come, s&p is raising the chances for the u.s. dipping into a recession. will the nation go over the fiscal cliff? that is the question we'll be asking next. 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

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welcome back. futures barely budged. yesterday it looked like we were sitting at new 4 1/2 year highs

until the end of the day when you dow was down 6 point. right n rig right. joining us now, david greenlaw, morgan stanley fixed income economist. you gave in your report what i think is the single best reason for the fed not to act. if you say in your forecast, qe is not a factor in our forecast, the fed is on heightened alert, but our economic outlook is to be meaningful impacted one way or another. if there's no impact from qe, why do it? >> so, we actually do think they'll execute on qe but probably not until after the election. >> right. >> it won't change our forecast in a meaningful way for 2013. i think the case for qe is -- comes down simply a case of, should we do something or nothing? if you're underperforming on your dual objective, if the

economy is sluggish, then the case becomes stronger for doing something and they don't have a lot of great options at this point. >> why would i as a central banker take on, $500 billion, $600 billion, a tril dollars of additional credit risk in the economy and what am i going to get for it? ten basis points if i'm lucky? >> i think ten-year yields go up -- >> up? fantastic. >> probably get a little pop in the stock market. you might get a little bit of a drop in the dollar. you might get some modest improvement in financial conditions but some of the academic work on qe suggests -- the most recent academic work suggests the impact is fleeting. maybe as little as a couple weeks' impact on thing like the stock market, the dollar and financial -- >> if you had even said in in report, i'm upgrading my forecast by a quarter point on gdp, downgrading my unemployment -- or upgrading unemployment forecast by 0.2

because of qe, i could be on board. >> remember how they execute qe, they'll probably execute it by merely canceling the sales of short-term securities they're doing now. under twists they're buying a long of longer term securities. to do qe versus twist, you just cancel the sales that are offsetting the impact of those -- >> but they're also probably going to purchase mortgages, right? >> yes, they could add mortgages. >> we did our fed survey and the market's telling us, 20 bips, 20 basis points at the most from a fed qe. that's not the average. i think the average is 10 or 12. >> minute coming out today. we'll be looking to see what they say about the policy options in front of them. bernanke specified four policy options, qe, changing communications, cutting interest rate on reserves and some sort of funding for lending program along the lines of what the boe is doing. it will be interesting to see what the minutes say about those options. >> what role does the rising stock market play, and europe

now play on the fed's way of thinking? does it take in some respects the fed off the hook in having to do something? >> it does. i think the odds of fed action are declining because of the reasons you mentioned, as well as the fact that since the last fmoc meeting on august 1st, there have been three important data points in the u.s. that have helped push up tracking estimates for u.s. gdp. at the time of the august 1st meeting, we were looking for third quarter gdp of 1.2%. with the employment report we got a couple days after that meeting with foreign trade number, we got the following week and retail sales number we got last week, we're now up to 1.8. 1.8 isn't very good but it's better than 1.2. at least that momentum has shifted -- >> we're going the other way. >> can we just say s&p -- i think we were reading something s&p thinks a recession is more likely. you would disagree with that? >> there are all sorts of ricks out there to push us into recession. the two obvious are europe and the fiscal cliff. if you believe the political

dynamics are shifting and we're more likely to go over the fiscal cliff f we clearly go over the fiscal cliff wield absolutely be in recession. >> that's a good segue because that's the next topic. it was supposed to be the first one. there is something where you say it could have a substantial effect on gdp. >> sure. the starting point for the magnitude of the fiscal cliff is five point of gdp. you can do some sophisticated multiplier analysis on that or go back to the last most relevant comparison, which in 1969, when president johnson raised taxes to pay for the vietnam war, the economy was very strong at the beginning of 1969. >> hot. >> 4%, 5% gdp growth at the beginning of the year. at the end of the year we were in recession. that was a fiscal contraction of three point. we're talking a contraction of five points. >> let's be clear, something congress could do that have woo have a massive effect on gdp and something the fed could do that would have minimal or no effect

on gdp. >> that's why you hear from most fed officials, this is not a monday tear policy problem. we'll try to address it to the extent we can. but there's really a need for fiscal solution here, addressing the short-term fiscal cliff and getting the long-term budget balanced into a more sustainable scenario. >> do you get the same positive effects out of a resolution to the fiscal cliff as you would a negative, right? you would have to suffer this decline in gdp. what happens if it -- >> sure. >> and then what do you get? >> a resolution of the fiscal cliff, addressing the fiscal cliff, doesn't put us in a much better place than where we are now. it just averts disaster. >> unless you assume the fiscal cliff is holding back business investment -- >> which -- >> which it is. >> definitely. >> that's not what i would call a fiscal cliff. that would be more addressing the longer term situation. this is the notion of economic uncertainty, economic policy uncertainty -- >> holding off. >> hats off to "squawk box."

the first time i heard steve davis from the university of chicago talk about his economic policy on certainty index was three or four months ago on "squawk." >> we had him on. >> i think we used his chart in almost every single publication we've done from u.s. and europe. >> there are some fed officials that think if you can get the uncertainty out of the way from the fiscal cliff and a little qe, what they're looking for is the virtuous circumstancele and that could finally get us going into investment, leads to jobs, jobs lead to spending, which leads to growth. >> after the election there will be another attempt to address the longer term situations. >> does it happen in september? >> no qe in september. >> after the election? >> after the election. >> thanks for coming in. i guess i'm going to read the last bit here. tomorrow we tap into the "squawk" reserve. st. louis fed president james bullard, he'll be on the set for two hours. tomorrow starting at 7 a.m. eastern time. let's get a quick look at the trading day ahead.

for that we head to the cme group in chicago. ira harris is standing by. we had this nice run, a little pull back yesterday. we're virtually flat right now. where do we go today? >> probably sideways. there's not going to be much. you were having this great discussion with david greenlaw, which was great. we're going to wait for jackson hole. anybody who thinks bernanke is going to give you something in jackson hole believes in jonestown drinks kool-aid. bernanke is not going to move here. i think it goes back to chuck schumer throwing down the gauntlet at bernanke when he said you're the only game in town, get to work. i think bernanke's view is, huh-uh, we've done what we can, it's time for congress to get up off their butts and make a real initiative. we're not going to keel bap bai you out. my finger is pointed at you. >> what's overdone more, the

buying in the stock market or selling in the treasury market? >> oh, that's a great -- the treasury market selling is not overdone. in fact, i think there's a very good relationship there. and i look at it -- you know, let's look back -- i heard your earlier conversation when i was driving in this morning about the euro and where we're at. if you go back, and let's take that ditty, which i personally can't stand but the market loves it, sell in may, go away. we're at the highs of may 1st in the equity market. bond are right there. i think the ten-year future price was 13210 on may 1st the same time s&p was 1405, 1408. the interesting thing is -- we'll come back to the euro currency. the euro currency on that date was 132. that's missing in the action here for the risk-on algorithm. i think ten-year is priced right here. when i say that, it's so impossible, and i know steve will disagree, it's impossible

to price treasury debt as it is european debt because when you have central banks so involved in the markets, you can't really tell me what the price of any real debt is. we're guessing all the time. i would say, though, that probably about right here, based on where the value of the s&ps are. >> yra, thanks. enjoy the trading day. yra harris. up next, we'll go over to the chairs with other stories grabbing our attention today. in the next hour we have former general t.a.r.p. inspector joining us on set. we're counting down to the policy conference that has big implications for the u.s. economy. before the fed heads gather in jackson hole next week, we'll talk jobs, economy and europe with st. louis fed president jim bullard. he'll be our guest host tomorrow from 7 a.m. to 9 a.m. eastern. [ male announcer ] when this hotel added aflac

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welcome back, everybody. we are looking at things that caught our attention in the papers today. if you haven't seen tom friedman's column in "the times" today, check it out. if you didn't see him yesterday on our air and haven't read the column, make sure you make time for it. his point is we need a conservative party. he said the ryan nomination ensures we'll have a real debate when it comes to serious issues for the budget. he thinks that funny because the bar for the campaign is so low that trying to get anybody to talk about serious issues is -- >> he sounded pretty exasperated yesterday. >> i had an interesting analysis of the election that, it has nothing do with big issues, it has to do with very, very micro targeted stuff in zip codes where they're going to be targeted like three voters that are going to turn the election

in swing states. no big social security debate, no big deficit debate. it's about some swing voters in some zip codes in ohio or florida. >> that says voters still do not want to confront the most serious of issues that face this country, i think, right? they're not willing to go out and make that huge leap and say you know what, social security and all these entitlements, they do need to be reformed. >> it's been something you've seen a lot of different people who have tried to get a serious discussion going in the american public, people who have been trying to create a real conversation about a serious problem and you wonder if it can take hold. >> i was looking at this headline of the "usa today" money section, do big investors hate social media. it's plating off of peter teel, the biggest angel investor of facebook setting this huge chunk of stock. he still sits on the board, really raising the issue of --

by the way, he's not the on bly big investor who sold out of these stocks. jim cramer had this great -- call it a rant, whatever you want to call it, impassioned commentary if you will on peter thiel and the situation over at facebook but really raises the issue of whether these companies are, quote unquote, investable. their business models are yet to be proven. you're betting so far on the future, even more than the early stages of the dot-com bubble. >> i have a buy so i can't comment on it, i bought half the opening, right around there. i figure i want to own the eyeball, i want to own people's interest in this thing and

they'll figure it out later at what i think is less than half of the ipo price. >> i know that joe is on vacation but apparently his hair is not. there's a new twitter account created yesterday that's called joe kernen's hair. it's not joe but this is someone who is pretending he's joe's hair, sending things in and it's kind of cracking me up. he's funny, he's been up today. he said who gave sorkin the day off? that kid is going to have it when i get back. and they're tossing soft balls to john harwood. he's kind of funny. >> just what we need. it's not like there's enough stuff coming in. >> we got to go. >> when we come back, another two powerful hours of "squawk box." mario gabelli giving us his

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the fed waiting game. what the central bank may reveal in its latest meeting. >> risky business. meet the man the government put in charge of the biggest bailout in history. >> and oil shock. an in-depth look at the situation in iran and what it's doing to oil prices. >> where is this company?

where are they? i don't know. >> the second hour of "squawk box" starts right now. >> good morning and welcome to "squawk box" on cnbc. take a look at the markets right now. s&p has been at that four-year high. nasdaq as a 12-year high. right now looks like we're going to open to the down side. the dow would open down 7 points, s&p down 3.9. the latest on the fomc minutes out at 2:00 p.m. global economic weakness evidence and the latest trade figures from japan. its exports fell 8.1% in july, much larger than forecast, driven by a 20% drop to exports to europe.

exports to china, japan's largest trading partner, fell 11.9%. foxconn has cut overtime and improved safety conditions and hired new workers, making the majority of apples ipads and iphones. >> way to go. you kept a straight face throughout that whole thing. let's take another look at scott over there. we were playing "the judge" music over there. he kept a straight face for that whole read. now i'm going to keep a straight face as we go to our economic correspondent for "the national journal." greg, you we going to get more hints of quantitative easing in thements today? >> i think we will. this will be one of the more

interesting sets of minutes in a long time. on august 1 the tone of the statement changed significantly. a lot of us were wondering is this the meeting where they'll pull the trigger and do a qe3. they did not pull the trigger but i thought that statement was elf, elf weighted toward a strong bias to acting. >> i think you had one too many heavilies in there, greg. >> i thought when eththey shift to closely monitored -- and we have the all-star man in here, mario gabelli, dr. love they call you -- >> whenever you want. >> just ament. jim, more hints of qe today? >> i think we'll see more hints of a committee divided. clearly we have a committee where you have a large chunk, a faction that thinks there's not much more the fed can do without enormous risk so it's not worth doing and we'll see how

ascendant the other faction is, which says they have to do something and do is soon. >> have you heard in the comments from fed officials anybody come forward and say we must have qe and qe is going to be a great thing for the economy and it's going to really help bring down unemployment? i have not heard the boosters on the qe side really, whatever you call, rattling their sabres or pumping their pom-pom, whatever you want to call it. >> no. bernanke said there's no pana a panacea. there's lots of other things they'd like to see, fiscal policy. you have a patient close to death in front of you, you are don't say i washhe hadn't gone sky diving yesterday, you do what you can. the fed will do what it can do and qe3 will help. why has the stock market rallied

on the expectation of qe3. real people believe it will actually help. >> i think the market rally has been more about the european central bank doing something. there was a couple-week span where bernanke made qe noises and the market had a little pop and draghi came in shortly thereafter with we will do what it takes and there was a serious move by the market. >> i'll concede it was probably more ecb than fed but they're both in there. qe3's previous quantitative easing has helped markets and seemed to have helped the economy. you can trace the short-lived improvements to the business cycle and employment and so forth to action by the fed. i can't think of a good reason why it wouldn't help more. would it helpless than the last time? perhaps but that's not a good reason not to act or if you have the tools or mandate not to do so. >> mario, i know you're saying it's bottoms up, not top down,

but watching the markets, is qe3 propelling the market? and if they don't do anything, what happens to the market? >> at the moment we have ten days till jackson hole. tampa is in between that and then after that you have the dynamics of the next meeting in charlotte. so how much is the market going to worry about the next three or four weeks? if i look at it over the next three or four years, what's propelling the market? is it a vision of earnings or just a flow of funds? i'm going to camp short run it was a flow of fund, that is moving money from let's say europe to america, buying big-cap companies that have a staying power cash flow and saying, okay, i've got to get out of the euro, i want a safe haven, i want to buy big cap plus, structural dynamics of the market where they move money out of active markets in the u.s.

and coming back to the u.s., reallocation of capital. >> chase for performance helping the market as well? >> no, i don't think so. if i look at it over the next three, four years, what drives the market, scott? earnings and it's a multiple. it's a function of interest rates and psychology. interest rates tied into inflation. it's not clear sailing. clearly the market while it doesn't have a margin of safety, it looks cheap relative to alternatives. i am bottoms up and every day we're excited about finding new ideas. whether it's natural gas and the u.s. seeking independence on a global basis and obviously the clouds are there. >> i want to bring jim back in this conversation. jim, let's talk about some of the risks to the market here. greg was suggesting that the

market is really anticipating quantitative easing here. but let's also talk about the risks to the fed here. is there enough benefit to the action of purchasing additional -- of increasing the size of the fed's balance sheet for the gain that they would get in the economy? >> well, this is the trick, right? we're sort of in the deep space portion of monetary policy here, not very well charted, we don't really know exactly what's going to happen. greg's right, i think the studies would suggest there would be some bump from qe3. the question is how much and is that worth the risk of expanding your balance sheet even more and maybe the biggest risk of showing, if they do pull the trigger on qe3 and not much happens that they're pretty much out of ammo. that's the big consideration that not a lot of people talk about is that the fed wants to still be seen as having power over that second part of its mandate, which is the unemployment rate. if it's shown to be relatively power l

powerless, that would be a very bad thing for the psychology of the market long run. >> i don't think the market necessarily cares whether qe3 works or not. i don't think that's much of an issue. it just wants to know qe3 is there. it's getting a little bit of medicine to feel better. the market's been up because it thinks qe3 is coming. i don't think it's gotten to the point that it even cares as to whether it works or not. >> i have trouble figuring out why that will be. this will be the second -- i can't even keep track of operation twist to do something funky to try to get things going. we've had markets rally on that. if you think that the fed was impotent they would say fool me once shame on me, fool me twice no way. the economy has responded. it has not responded as much as

it would have if it were in the normal parts of space and it could still cut short-term interest rates as much and it hasn't as much as it would if we didn't have all these other headwinds going on, high oil prices or problems in you're but it did respond. it's better than nothing. to skimjim's point the fed is ad nothing will happen, i agree that's always an issue. what's the difference of being powerless or pretending you have power and not using it? >> because the weakest man is the one who's throwing the punch. we got to leave it there, guys. greg ip and we're going to ask gabelli because i have something about europe. >> you just want to focus on europe today, draghi. >> yes. but have i an investment question for you. >> only one? >> i think it's a big one. we're going to spend some time on this one.

>> a big single investment question, i want to hear it. >> we have more with mario. he is our guest host for the rest of the show. up next, he was in charge of overseeing the biggest bailout in history. squawk is back right after this break.

welcome back, everybody. the big question is did the government turn its back on main street in the wake of the financial crisis on wall street? joining us to talk about his new book is former t.a.r.p. inspector general neil barofsky. neil is here with us on set today. thank you for coming in. >> thanks for having me. >> the title itself catches a lot of attention. but then the things you say are more attention drawing. you said while you were working

with tarp, you saw the deference to the interest of the largest banks was ideologically engrained at the treasury and their primary concern was for the wall street power houses, not for the taxpayer footing the bill for the bailouts. why do you say that? i was. >> a federal prosecutor for eight years before i got down to washington. almost from the first day that i got there, i started looking at the bailout. my job was to try to put the right protections in, put some transparency, look for loopholes, different ways that banks or others could criminally profit off the bailout as well as to erase fraud and abuse. as i started identifying problems, conflicts of interest, the response i would get was always the same which was the sense that, sure, there might be issues here but we don't need to worry about it because we can trust the banks, they would never risk their reputation by

taking care of these problems. there was a level of deference to the banks. it extended over the years as to whether it was to help programs, the investment program. again and again it was always from the perspective of wall street, never from the perspective of the other people who were supposed to be helped by this program. >> the problem is if you look at t.a.r.p. it's cost about $60 billion so far. that money was not money that came from the big banks. it was aig and automakers. the banks have paid back its loans so wall street made good on its side of the bargain. >> if the only reason for the t.a.r.p. was to break even for the banks -- >> it wasn't break even, there's been $20 million in profit.

it's part of the automakers and what happened at gm. >> it's not an automaker. >> it's not a wall street bank either. >> hold on. you said in the book i guess the message was simple, treasury's desperate attempt to bail out wall street was setting the country up for potentially c catastrophic losses. do you concede those never happened? >> they're also the losses we're looking at in the future. let mewer initial question. >> i asked you a question about t.a.r.p. are you willing to succeed the losses never happened? >> i never said t.a.r.p. was going to cause catastrophic losses. >> was t.a.r.p. a success? >> no. it was a failure. it was supposed to do more than shovel money into the beanks.

it was supposed to help main street -- let me finish the answer. preserving homeownership was a fundamental reason of why tarp gets passed. the housing policy -- it was stated it was to help up to 4 million people. it doesn't that. >> there's 50 billion for housing, 300 billion for the banks. let me ask you a question. >> i stated before most people that t.a.r.p. along with other programs were instrumental in helping -- >> how was it abandoning main street, which is the subtitle of your book, if tarp helped to avert financial collapse. >> t.a.r.p. was supposed to do more than avert a financial collapse. it was supposed to bring the level of the economy -- look at

the economy. look at the housing problems in our country that continued. t.a.r.p. was supposed to address those housing problems. t.a.r.p. doesn't get through congress but for the promise to preserve homeownership. it was supposed to do that. it was supposed to help up to 4 million people stay in their homes through mortgage modifications. we're at about 20% of that number. >> some of the problems have been that it was only for people who stopped paying their mortgages. it wasn't targeted towards people who were continuing to pay but maybe needed some help and maybe needed to get access to refinancing. there have been a lot of issues where people who need the most have not been able to get access to it. what i'm not convinced of is the idea of -- bankers will tell you if they could find people they thought would pay them back, they would be more than willing to give them money because they're not making money they keep at the federal reserve. that's a fear factor for the banks. they're worried about getting those banks back.

>> there was a tremendous tightening of credit. when treasury stated they were going to use this money to put capital injections into the banks, they said they were doing so for the purposes the banks would turn around and lend that money to the economy. that was the stated goal, the rationization, the justification. this was not a popular bill. certain promises had to be made -- >> there were no promises inhe bill -- >> though the banks will say they are lend ing. >> do you say the government should have gone back on its contract there? >> the banks will say they are lend ing. >> look at what the goals of the bill were. you're providing a boost to the economy, it was certainly in the bill. and the contract with the banks, there should have been incentives or requirements build into those contracts. instead what you had on the first page was this generic idea that the bank was going to help restore credit but there was nothing in the program to mack

that happen. these were a series of policy decisions. the justification of distrust, that if you give the money to the bank that they're going to do so. >> first of all, there's a contradiction that people pointed out in your book. one is that you say treasury didn't listen to you when you were making suggestions about how to improve the program. at the same time i think the book says you were instrumental in the success t.a.r.p. had. >> that's a sort of silly thing to say, actually. the treasury did refuse to listen to us but we were able to work around a lot of things. for example, we were able to work with congress and the federal reserve to limit impact -- >> it was a comment in the "new york times" about your book. >> i think that review has been taken down by a number of different thing, including the colombian journalism review. but going back to your question,

there were -- the other thing that we did aside from that program was to have a big criminal presence and to chase -- >> and what did you find? >> can i answer a question? to chase potential criminals from coming and trying to steal from the program, something that we were successful and even secretary geithner acknowledged that we were successful. that was my job, to try to prevent people from stealing from t.a.r.p. >> you're right, there was money put back to the federal reserve that the banks were afraid to lend out. how involved should and could the federal government have been? do you tell them anybody who walks in needs to get it? my guess is from what i've heard from people at treasury, you weren't concerned with how involved you are with the capital system if you start telling them who to lend money to. how do you walk that line? how do you get involved and make

them loan the money without taking over the the entire capitalist system? >> i would say two things. first of all, this is what treasury promised, that the money would be used to come back and -- at that point there's an obligation to do something to accomplish that goal. when the money went to the big bank, they could have done an invei incenti incentive. that would be a way to use a carrot instead of a stick. this is part of the responsibility of good government. if you're going to have a policy, you need to have mechanisms to accomplish that policy, not blind trust. the other thing they could have done is insist on more transparency on what the banks were doing with the money. >> what would have happened if

main street had not been bailed out? >> there are some benefits to main street. the auto bailout benefited main street -- >> the specific bank bailout. >> it would have had a devastating impact in the entire country. people wouldn't have been able to get cash out of the atms. my point is the bailout doesn't happen unless the treasury -- >> but isn't it possible that the situation was so fluid and was so dire that the banks at the end of the dave needed to hold on to perhaps more money than they initial live thought they might otherwise have to? perhaps initially they thought we will be able to lend out some of this money. but the financial crisis was a lot worse than a lot of people thought it should be. >> i think potentially. the facts are that the

government at the time that they were saying this was going to be a lending program had real reservations about how helpful this would be and how they would bible able to put the money in stock. so, again, it's a question of being straight forward and honest with the american people. that has little to do with -- >> next time? >> banks are not too big to fail so we're going to have to bail them out again. >> time now for today's aflac trivia question: what is america's leading dairy state? w isn't major medical enough? huh! no! who's gonna help cover the holes in their plans? aflac! quack! like medical bills they don't pay for? aflac! or help pay the mortgage? quack! or child care? quack! aflaaac!

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welcome back to "squawk box." let's take a look at some of the stocks on the move in today's trading. dell is under pressure despite beating expectations with its latest quarterly earnings. of concern for the investors, forecast for the current quarter and a year short of expectations. williams sonoma raises its forecast. and the home builder toll brothers says it's seeing the best sustained demand in five

years, though people continue to display caution. >> we'll be watching all morning to see if wapner can make it through his reads. you're such a pro, you're such a pro. >> our next guest has been working hard to push the u.s. away from its dependence on foreign oil. boone pickens is the pounder of bp oil. it's great to have you on set here. >> thank you. >> i'm trying to go back through and figure out has it been four years now that you've been talking about the pickens plan? >> it was july the 8th last month, four years ago last month. so i'm four years, starting on five. >> i hear it gets a lot of play at times and then i don't know why there's never any policy action that -- >> i'm not a very good salesman. no, it's a tough problem. it's a tough problem and it's one that presidents going back for at least four, five presidents have been trying to tackle. >> i think what you see, the

leadership doesn't understand because when you look around the united states, the states that are doing well are those that are in the oil and gas -- they have oil and gas reserves. north dakota, texas, oklahoma, go through the list. pennsylvania. they're all doing very well. and, i don't know, i think politicians are afraid of talking about energy. they just don't want to do it. and but then you look around the world and the countries that own their own resources are doing well. we can do the same thing in the united states. you can build right now on the cheapest energy in the united states, you can build your economy kmi back on cheap energy. >> boone, give us one thing be we could do tomorrow if congress and the president would just come together that would make this country better when it comes to energy? give us the one thing. >> you see, i've almost given up

on congress doing anything. >> you're not the only one. >> i gave a very simple plan, get the heavy duty trucks -- that's 3 million barrels a day if you took the 8 million trucks. people say, no, no, we don't want that. >> put 3 million in context. what is that relative? >> 4.5 million is what we import daily from opec. sfwlp so three quarters of our import? >> no, no, our imports are about 9 million. >> let's assume there's a deficit, we transfer the -- you not only create the jobs in the bachen area that boone highlighted, manned day that american heavy truck is? >> you have mandate, they up up

and run. i would say give them a tax credit of 24,000 on the difference between a natural gas truck and a diesel truck and then pay for it with the user pay, just like a toll road. if you use it, you pay for it. and then there's no cost to taxpayers. well, no, no, that's not -- you're subsidizing now. i said, okay, well, forget it. it's going to happen anyway. it is happening right now. you're saving $2 a gallon on the fuel. >> given what the tax structure is on diesel versus natural gas, you are saving that. as long as you leave that economic safety net there, the payback is obvious you can't do solar. >> they won't work. >> so you have natural gas as a logical alternative.

>> aren't you going to get another great opportunity as oil heads near $100, gasoline prices continue to go up almost day to day? >> i was on here i think july 12th was the last time i've been here. and at that time i said you're going to see oil at 115, we're there. i said by the end of the year you'll see wti, $4. and, yes, as the price goes up, ear going to have opportunity to do it. >> but that says a lot about our political system, right? they'll listen to i december when the price of oil is at 100 and people are paying more than $4 at the pump. when it not an economy and it no big problem the u.s., you keep

oil at that price so you have a structured, accelerated way of doing what boone is talking about. >> you've been critical of the obama administration for not having a plan. have we been any closer to seeing a plan sp. >> have you seen a plan? they made a little problems and terms of -- >> i take you back to -- they get up there and they did nothing. >> well, they shifted the corn from ethanol. >> i told president bush you're going to go out as the ethanol

president. >> when we look at natural gas, you don't think to see a huge spike any time soon? >> no. >> the prices have been unbelievably low. >> you make a lot of horn. you can make money at 4. >> of course. >> of course it's going to be better at 2 or 3. aren't going to get a little higher number. the bp capital, you've moved more of best best towards oil company because you think that's where the price differences are going to be. ? yes, absolutely. there's going to be a fabulous opportunity for natural gas but we're not there yet. >> are you saying $4 a gallon for natural gas? >> look at the futures market. >> there have been other people like wilbur ross who have followed suit and said they think it going to happen eventually, too. if you had to put your finger on

it, how far down the road before we actually see much higher prices? >> much higher? 5, 6? >> yeah. >> i think i'll see $6. >> it just takes that long for us to use more of the natural reserve funds? >> if they had the right leadership, they would talk about demand. we have created supply in that industry. now we're talking about exporting natural gas. give me a break. export clean cheap -- >> caller: import start dirty. right. >> jenn: that's the theks thing we could do? i think you create more people

against you when you start talking about we want to go light duty or something else. let them mark it, dictate the whole thing. just give it the boost -- >> but do you guy bye what mario's saying, that you have to have a floor to the price of gas? >> no, no, but that's an element that could support the class a -- let the infrastructure grow that allows it to work with the diesel engine. >> not the diesel engine? >> no, with the natural gas engine. >> if i have a trucker out there with a hundred trucks, he's going to roll that thing five years. he's going to take out 20% of year. he'll replace them with natural gas. the infrastructure will keep up. don't worry about that. somebody told me the government has got to build the

infrastructure. i said, oh, my god, i said don't even consider the government building anything. >> but it is a chicken or egg, right? why would i as a trucker buy the national guard gas engines if i fill them up. >> they know. pilot flier is they're putting them in with clean energy foods. but to answer your question, though,ioners and not know when they're going to actual it. they want that $2 a gallon cheap and they'll find -- >> they'll figure out a way? >> that's right. >> i want to get to two more topics. what do you think about the situation with iran? there will be a bombing of the nuclear capabilities of iran? will something happen? >> now, you don't think i'm an expert on that subject so i'm going to give you a guy on the street's opinion. >> okay, guy on street with a lot of experience in the oil

industry. >> well, if they bomb iran, you're going to have a spike up in oil price, there's no question about that, just because they bombed iran. not because you're going to have a shortage of oil immediately. but i think the israelis going to have too do something about obama does not want that to happen. >> you don't think so? >> i don't think he wants the price of oil the -- at 130 a barrel. >> the other side is tapping the spr reserves. >> the reserves it -- that's totally a political move.

>> would it have impact at all because the spectators are going to say they're going to dump it and can get a hit on a shored hf terms basis. >> don't forget it with the bombing of iran. this is not for political reasons. >> how much of a difference in the price of oil if they tapped the sbr. >>. >> are we talking 5 bucks, $10 bucks, no beneficial? what is the right price of pooi absent the tension -- >> absent the political tension. >> the only place i see that is

in the brent north sea, not wti. again, we have the cheapest oil in the world here. it's 15% cheaper than brent norsi. incredible. natural gas is 75% cheaper than china, mideast, japan or wherever else. and gas line is cheaper than anyplace else. if i'm one of these politicians, i'd be saying we'll build on cheap energy in america. they won't say it. i don't get why they don't come out and tell the american people we have the cheapest energy in the world. >> bill, before we let you go, you're a member of augusta, aren't you? >> since 1983. >> what do you think about the move this past week to allow women into the club? >> i think it's fine with me.

and i was quoted i think "the wall street journal" this morning, i said "congratulations, we're glad to have you in. i hope you can accomplish what i did on number 11, which is i eagled it. >> you know the old story, play quickly and have fun. >> i did eeg the one at 11 when i was 78 years old. arnold palmer told me you had two good shots. i said no i didn't. i said i had a good drive and then i had the perfect shot. not good. >> virginia mrumetti? let me tell you the structure of

augusta national. i'm a member so i can't even recommend the question. >> but you can recommend the golf carts work, right? >> i can hem with dawn. >> it's always a pleasure to see you. and always come back. >> thank you, i look forward to coming back. >> facebook in the spotlight. and thiel's move next. whether it's supporting a delaware nonprofit that's providing training and employment opportunities, investing in the revitalization of a neighborhood in the bronx, or providing the financing to help a beloved san diego bakery expand, what's important to communities across the country is important to us. and we're proud to work with all of those who are creating a stronger future

for everyone.

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make it matter. i can't believe that anybody wonders why the individual investor doesn't run! i mean, wow, i would run. if i didn't sit here and work 20 hours a day, would i run. who is zuckerburg?

i don't know him. who was he? he worked very well with morgan stanley on the price. where is this company? where are they? i don't know. >> that was our friend and colleague jim cramer yesterday morning. our guest host this morning is one of wall street's most famed value investors, mario gam belly. it -- gam -- gabelli. >> a lot of directors don't own any stock. here's a guy who i read still has 200 millions worth. he's got skin in the game. what's wrong with that in. >> no problem that he's still on

the board? >> what's wrong with it? if a guy is smart and has value, the fact he still has $100 million worth of stock, he still has skin in the game. >> the timing, to do is when the stock has been so closely watched since it went public and since there's been so much pressure and you've had zuckerberg telling people have faith, see your way through it -- >> why not just resign. you've taken your profits -- >> why not just resign? >> maybe he will. the body is not buried yet. >> doesn't it say i no longer support the stock? >> not necessarily. i sell stock all the time in companies i happen to like. i have 1,700 clients and we have a mandate to earn a return.

i've got to harvest sometimes. that's part of the process of venture capitalism. >> but he has to -- >> it creates issues with guys that you just talked about and the whole transparency issue. can i not recommend a guy like me sitting on the board of a public company. i don't mind putting professionals on. some of them adopt that stockholm syndrome. they love the fee. i'm not going to defend him. it is what it is. >> also, in the next hour, squawk market master ron baron

joins us. we'll be right back. vamanos. vamanos. vamanos. gracias. gracias. gracias. ♪ trece horas en el carro sin parar y no traes musica. mira entra y comprame unas papitas. [ male announcer ] get up to 795 miles per tank in the 2013 passat tdi clean diesel. that's the power of german engineering. see your local dealer for special lease and finance rates during the autobahn for all event.

taking a look at sunrise senior. it's being bought by health care. 62.4% premium. >> ron baron of baron capital.

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billionaire investor ron r baron says get in the game. he's finding opportunities faster than he can raise capital. >> the economic plan mitt romney has would cut education investment by 20%. >> and jim cramer is fired up. >> what do you have to do to get fired in this country? >> find out what's driving him bonkers today? the third hour of "squawk box" starts right now. welcome back to "squawk box" here on cnbc, first in business worldwide. i'm becky quick along with steve liesman and scott wapner. joe and andrew are off this week. our guest host, mario gabelli,

chairman and ceo of gamco investors. s&p, dow jones and nasdaq a little bit below. let's get over to scott. >> the jury will begin deliberations today in a patent infringement case within apple and samsung. closing arguments tuesday, apple's lawyers said apple took shortcuts after it couldn't keep up. >> tropical storm isaac is moving west toward the caribbean and could take it to florida early next week the republicans kick off their national convention in just a few days. isaac expected to become a

hurricane by friday. it's still too early to gauge whether it will head to the sunshine state or turn north into the open atlantic. >> a key event for investors this morning. investors will be looking at hints that the fed might or might not engage in a third round of quantitative easing. >> scott, thank you. still managing to hold it through there through all that music. >> ron baron has said in the past this is one of the best opportunities he's ever seen in his lifetime when it comes to buying stock. right now the sheer numbers of opportunities out there has him a little over the moon. ron baron is the chairman and ceo of baron capital. he joins us right now, from the hamptons, i believe. right, ron? >> from easthampton. >> a smart guy in the summer. >> chairs in easthampton. mario and i have been friends

for over 40 years, since i started in business. >> that speaks well of you, ron. that speaks very well of you to stay friends with mario for 40 years. >> that means we can't be working anywhere else. we have to keep a job somewhere. but we have the passion of investing. >> that's absolutely right. >> mario is one of the most brilliant investors there is who i know. >> i followed you, ron. >> without him there would be no ebidta. he invented the term. also, he started off in busy guess two or three years ahead of me. when he did, he was trying to get a 10% return over inflation after taxes. i was trying to build on my money every couple years because i had to catch up to him. i was two or three years behind. he's a spectacular investor. so nice to see him. >> keep it up, ron. >> both of you are very optimistic when you look around at the stock market and look at the number of opportunities that are out there.

but, ron, you say when it comes to investing generally when you look around, you have more money than you have ideas but that's not the case right now. this time around there are so many ideas out there you can't even fund them all? >> that's right. the issue i think is that everyone is worried about the european fiscal crisis, they're worried about iran, they're worried about the fiscal cliff and they're not working on companies, they're not looking for investment opportunities. so the stock market is below the norm of how it's been valued for 200 years. 200 years is 15 1/2 times on average, 10 to 20 times normally and now it's a little bit less than 14 times. so people are so concerned that they give stocks a much lower valuation than they normally do. and the way we're going to come out of all this is by the governments, what they always do, they print money. and so they create inflation. and if you go back in your life

and think about what things have cost you over the years, whether it's tuition or whether it's your cars or even your house or your clothes or your meals or your gasoline, everything, and so everything goes up a lot in price overtime because there's a lot more money to buy the same amount of goods. if you go back and think about when i was in college my tuition was $3,500 in my last year. i think nursery school in new york in private school is almost $40,000 a year. not everyone pays that but if you can afford it, you pay it. a large percentage get tuition aid scholarships but things go up and up and up all the time. that's because there's more money and it doesn't grow quite as fast. >> two years ago you told us this was going to be one of the best investment opportunities of your career. that was about two years back? >> i'm fairly consistent for a long time. i think that two or three years

ago that's what i said, but i'm normally bullish but i was exceptionally bullish then. i think that what you have right now is that, you know, you just had an article, you've had articles being printed of late called the death of equity, you should never invest in equities again, the economy is going to grow 2% of year. when i started baron capital in 198 2, the stock market is now 13 times higher than it's been. that's 7.9% a year. if you go back 50 years, the stock market is 31 times higher, 31 times higher. the value of your money is down 90% since 1958 and it's down 95% since the 1940s. but if you think about the economy growing only 2%, the kennedy budget in 1960 was $92 billion. that's the whole budget.

the economy was $500 billion or $520 billion. you have the economy growing 30 some-odd times since 1960 and the stock market growing 31 times. the reason people say 2%, that's the real growth bu the nominal growth is what you're trying to keep up to and that's 6 or 7% a year. the way i see it, good analysts, people like mario, you should be able to find companies to do much better than the stock market. that's what we're all about. >> i want to ask you about one out there idea i just seem to be hearing more and more of. is it time to start thinking about a flyer on the european equities? >> we're aware of what's going on in the world, but we try to focus on areas that we have expertise on. so we try to look for opportunities that we know something about. everyone's trying to guess the time and market and trade news and i think that's a foolish

game. the stock market in the past 20 years is up 7.5% a year for 20 years and it's individual investors who invested make 3.5% a year. so they're 400 basis points less in the market. the reason is they're trying to trade news and they always get it right. not just individuals, nobody can get it right. >> that's a great point. they're packaging ideas, trying to trade the market, same as soy beans or corn. what's your best idea? come on, tee it up and i'll tee it up for you and, you know, give as you couple areas that you're actively investing in. >> so, for example, opportunities, one of the reasons we're looking -- so we find companies that are trying to solve problems, that are solve be problems. that's where often opportunities grow and become much larger are, if you have well-managed business, competitively advantaged. we're trying to create portfolios of fundamentals that

are not correlated with each other. for example, we're trying to find businesses that use less energy. electricity transmission is an idea to invest in. there is only one company. it's called itc holdings. it's a spin out from detroit edison. the concept is that the government found that they were underinvesting, electric utilities. it only represents 7% of revenues, they have 65% from generation. if they have inefficient generation, they need more transmission. the government gave them a special capital structure to encourage them to spin it out. this company is growing 17%, 18% a year because they invest more money in transmission so it's worked. they expect to double in size over the next year when they merge with entergy but then grow 17%, 18% a year for ten years.

so we've tripled our money in i guess the past five years and i think we're going to make eight times, four times at least, over the next ten. if they turn into an mlp over the next ten years, we'll make more money. real estate -- >> go ahead. >> real estate. when i have talked about prot t protecting against inflation, we're interested in real estate. a new idea for us is campus housing. competitively advantaged businesses, that's what we're looking for. vail, you have a mountain, only god can create mountains. american campus communities, what they do is they build college housing. so if you're a middle-class person like all of us and i guess i'm a little bit better than that, but if you're a regular person sending your son

or daughter to college and you see a ratty dorm and they live in a beautiful house all their lives, all of a sudden you look at the dorm and say i have to send my son or daughter there? no. there's going to be all this rebuilding. there's 5 million beds that have to be rebuilt. there's only one company with 60,000 beds and another one with 20,000 and our guy's able to finance because he's only in the stock market 4%, 5% yield, he develops to an 8% yield. when you deal with princeton, they're building for princeton's balance sheet and using it as a reference account but if you're building for state colleges and universities and you're getting an 80-year deal, an 80-year lease on land, nobody can build land exclusively, nobody can build on your campus except for you. therefore you're going to get these very high returns and share it with the university on which they're building.

and the universities have to do it. >> it's a great bunch of ideas you're finding and it's an exciting time. you see the people prices pay when they take over a company. we need more deals, more financial engineering. >> we have an investment -- we had an investment in merit group. we've had two deals this past month, merit group and pete's. that's managed care for medicaid. the stock was trading at $60 a share two weeks ago. our cost is probably 16. i know it's 16. and they were acquired at 92. 50% up from where it was last. pete's was trading and it was up 20% from where it was. so you're right, mario, there are deals that are taking place and they're big premiums. if you're a long-term investor

like we are and find businesses that are aattractively priced, that's the opportunity in which we find attractive to invest in. >> if you two would bear with us in a moment, we're going to slip to a quick commercial break and when we come back, we'll finish this conversation. >> we'll ask glenn hubbard why he thinks the gop economic plan is better than obama's. and james bullard on what we're liking to hear before next week's jackson hole summit. and thanks to our explorer card. then, the united club. my mother was so wrong about you. next, we get priority boarding

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welcome back to "squawk box." look at that percentage basis. >> did you take a shot of espresso? >> i did, i did. i'm on my third cup of coffee.

we're watching shares of american eagle. it registered a 9% increase in same-store sales. that's pretty decent, huh? come on, wake up, scottie! >> let's get back to ron baron. >> thanks for your patience in the break. guest host mario gabelli as well. what is a skilled and seasoned investors like you think when they look at facebook and social media in general? >> well, we'd actually been to visit facebook about, i don't know, a month ago, two months ago. i thought it was a neat place to visit. reminded me of disneyland with the little walk through the property. i thought it was a neat company. i thought they know more about everyone than anyone else can and i think ultimately it will be a successful business. we've been working on it. we haven't decided whether or

not we're going to invest in it but it is an attractive business in my opinion. >> what is your take, mario? >> we invest in what we know. we like to have a private market value. when we look at national fuel and gas we're buying significantly we can value for free. i can get almost 500 plus acres into marcellus for free, i know how to value that, i know how to do it. >> social media you can't value? >> no, it's not an expertise. we have guys in our firm, we let them figure it out. it's not my core competency. >> ron, just getting back to facebook -- >> by the way, facebook is not my core competency either. we have a few guys in our firm whose core competency it is and i trailed along with them on their meeting. and they're knowledgeable about it and my sense is that it's an

interesting business. i just don't know the values and -- but it sure is a lot better off looking at it now than it was when it first came public. >> is that the biggest issue, just trying to value what these companies are truly worth? it does remind us, does it not, of the early days of the tech bubble, right? so many bets were made on the future prospects of these businesses rather than the tried and true right now. >> well, you know, you do have a $5 billion plus revenue business and they are making 60% profit margins and you're putting a value on the company of $38 billion, $38 billion. so there is some semblance of there's a rationale. and the opportunities are to monetize all those people who are using it mobile, they haven't figured out how to display -- >> but, ron, that's no different than -- >> i'm not the expert. it's not an expertise of mine

but i do think they do know a great deal about more people than anyone else. that's the opportunity. >> but you go into the notion of a digital world, it started 12 years ago, allocating capital, you have a graveyard of companies that didn't make it and you also have success and you're creating jobs and great opportunities. over the next ten years this digital world is going to be very, very profitable for a lot of companies so you have to follow them and figure out which ones you want to own and how can they monetize it and what's your risk? it's not a complicated idea. >> for my idea, i'd rather own the railroad we have and have our cost be one third of where it is right now. or, you know, i'd rather invest in carlisle. had they go public. and mario own as principal interest in a mutual fund

management company, i do as well. and mutual fund management companies are typically valued for 12 times ebidta and five times revenues. carlyle when it went public, for that revenue of their multiples and ebidta. we thought it was worth 50 and we're pieing it at 22. >> ron, i know you said earlier that you don't trade the news and people can make a mistake and have i was earning -- >> do you have a broad call on investing? >> the broad call is housing, where we lost 40% of our jobs is now rebounding so housing is doing better.

energy, we talked about we're the low cost producers in the world of energy, which is true. and do we have a chance to become energy independent. that's interesting. we think overtime technology has made tremendous advances. warren buffett says the standard i living you is up 7 times. all the progress in the world has been made in 200 years. life expectancy in 1,900 was 30. now kids today will live to over 100. you're making tremendous advances in alzheimer's, liver, heart disease. we're trying to figure out ways to take advantage of it. the broad view is stocks are cheap and opportunities for

growth of big and balance sheets are wonderful and businesses have opportunities. >> when he started, a cab was $30,000, now it's $1 million. how do you have companies that have rue power and buy them at a reasonable price? you have the sun, the moon and the stars come together. >> and if you have -- one more thing. and if you have competitive advantage. like if you're driving a tax people want that. therefore you've got some prices power. but if you have a competitive advantage in your business and people want your service, you're going to be able to charge more

for it than otherwise. >> ron, it's great to speak with you as always. thanks so much. look forward to doing it again and enjoy what looks to be a beautiful morning there. >> get back on the phone and start finding new ideas. >> we got to have breakfast. >> thanks, ron. we'll have more with mario throughout the show. he's our guest host. and also defending ben bernanke's track record. she wou looking for a better place to put your cash? here's one you may not have thought of -- fidelity. now you don't have to go to a bank to get the things you want from a bank, like no-fee atms, all over the world. free checkwriting and mobile deposits.

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in communities across the country. whether it's supporting a delaware nonprofit that's providing training and employment opportunities, investing in the revitalization of a neighborhood in the bronx, or providing the financing to help a beloved san diego bakery expand, what's important to communities across the country is important to us. and we're proud to work with all of those who are creating a stronger future for everyone.

the drop was drriven by a decline in refinancing. average rates rose to 3.86%. when we return, we'll break down the romney economic plan with glenn hubbard. plus, your guide to the training day ahead. we'll head to chicago for the view from the futures desk. stick around. taurant reservatio. during the golden opportunity sales event, get great values on some of our newest models. this is the pur of perfection.

welcome back to "squawk." home builder toll brothers doubled wall street estimates, earnings of 36 cents a share for the second quarter, said it's seeing the most sustained demand for homes in five years. sunrise senior living is being bought by health care reit, a deal worth $145 million. intuit, the maker of popular quicken and turbo tax perhaps earned 3 cents a share, short of

estimates. it did announce a dividend hike. >> futures were flat before. let's look at where they are right now. do we have them? yes, we do. still flat. nasdaq just a little bit, s&p down a little bit according to the implied open. speaking of implied open, rick santelli joins us from the cme. i go away, take a little vacation, ten-year yield runs all the way up to 1.85. what's behind it? better growth prospects, more inflation? what's going on, rick? >> i wish i could tell you better growth prospects. there are definitely areas of u.s. economy that look like there's a pulse and maybe even better than a pulse. corporate balance sheets are

healthy but for my vantage point, i think the biggest issue is the ebb and flow of how we handicap the future via safe harbor and interest rates to some of these solvency problems in the world, specifically europe. i do think mario draghi may not be able to deliver but i think in the period he chose to pull out his verbal ba zook a couldn't have been better chosen with regard to the technicals of the market, the calendar, the chronology. i do think come about second or third week in september that this light volume reversal in traits hit its upper limit. >> you think the spanish bonds across the term structure are the ones that can suffer when mario doesn't deliver? >> i think like everything, the lawar you fought doesn't necessarily give you the knowledge you need to predict

future skirmishes. hedge fund guys aren't dumb guys for the most part. i don't think they're going to get trapped in the yield curve positions as easily the second time around. you have to monitor the index not only in spain but portugal and italy as well. >> rick, thanks for talks us today. >> mario gabelli is gamco inv t investment's ceo. what struck me on some of the stock names you put out there dow components like kraft and pfizer and including a big company like honeywell. what do you like about the big caps? >> we follow specific sectors and do research from small companies all the way up to large. when you look at an area like health and wellness, how do we

start doing things early in life to preclude diseases happening downstream. you also want a diagnostics. how do we buy organic food. what sectors are growing? you see things like yogurts with pro biotics, you see gluten-free, which are necessary so we're looking at those areas. three, four years ago we talked about irene roosevelt buying category. speet put herself in a category of $100 million category that's growing nicely on a global basis. she's taking the company, financial engineering, putting it together and now spinning it off.

and then we look at where is industry going and how do they participate which lead you to companies like lance, which is add 65 million company with $20 stock, $1.3 billion market cap. then we look at pepsi and say if kraft works, basically you then go in and say, okay, will pepsi do that, what if they do that, what's the beverage business worth and so we find lots of ideas that way. another simple idea, aircraft. aging of the aircraft, you efficiency of the aircraft. will it -- will they reengine the 737 and then who benefit from that? and you look at china. will they build airports in the smaller cities? and they need 50 to 60 of these airports. >> i was on a united 757 that

looked like it was built in 1932. it's amazing how old some of these aircraft are. >> think about the aviation industry in this country. it goes back -- >> so honeywell you like? >> honeywell is going to earn $7 in three or four years, they're going to have $10 a share in cash and they do nothing. will the stock sell at 90? i make 50%. that's almost 12% a year with the dividend and the company has done a decent job of allocating cash flee flo and do i want to own that? you take a company like tyco. fire protection is a very important business. so financial engineering is alive and well. but going back to boone pickens, what we like to do is say if i want to own 100% of national fuel, 80 million shares at 50d

stock, $4 billion market cap, i can run that company, they have a wonderful utility that's not complicated to run in buffalo but i can convert the pipeline business to an m.o.p. they haven't done that. you're going to get an individual looking for a current return and their advisers are saying buy mlps to get the return. it's a little complicated but not overly complicated. the gas is 5.85. can they make money on that? those are the simple dynamics. george soros announced he about 80% of a football company called manu. my clients, you buy madison

square garden, the stock has doubled since it was spun off of cablevision, it's $38 and when i buy it i gets ricks and management for free and so i look at buying businesses -- for example, last night i went to a movie. for a good time call, for a good idea call us. at the moment you essentially can go in and buy a company like viacom and look at the fact that i'm buying paramount studios for free. that's how corporate america and private companies are looking at this. >> thank you. we'll have more with you coming up. >> up next, we'll talk to glenn

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next several days. >> we'll get to mario on that a little later. right now the romney campaign adviser gl er glenn hubbard say bernanke should get every consideration in 2013 when his term expires. glenn hubbard, dean of the columbia business school and former economic adviser under president bush. i heard you don't think the fed should be audited. it's interesting how controversial the fed is right now in the political campaign. >> it's certainly right that the fed is controversial. of course the fed is doing big things. of course the fed's books should be audited and they always have been. the fed should be accountable for its monetary policy. but a direct oversight by congress into the literal decisions of the fed is inconsistent with an independent central bank. >> and what about the issue of bern ski? do you think bernanke should be

seriously considered for a third term? >> that's obviously up to the president but it would strike me as unusual if he wasn't on the list. >> does that mean you've done a good job or bad job? >> i think the fed's innovativeness and response to the financial crisis was very good. on the other hand it has gone to the outer bounds with policies and in some cases politicized itself. on balance, i think it would be hard to criticize its balance. i think people are entitled to their own views. the fed is certainly very controversial and it has put itself in that lime light. there will be lots of differences in opinion. >> mr. hubbard, it says we're having you on to talk about the romney plan. can there be such a thing going forward as a romney plan?

didn't that all change the day that mitt romney chose paul ryan to be his running mate? aren't those two now linked forever up until the election on mr. ryan's budget? >> well, they're linked but with due respect, governor romney already had a tax and bunk plan and that will be the plan for the campaign. it is very similar in many respects to what congressman ryan has been say bug it is a tax plan, it is a budget plan, it is governor romney's plan. one difference in romney/ryan and obama, is there will be leadership from the white house. there will be a budget plan sent to congress. >> how are you? >> great. >> looking at the next four weeks, you've got the republicans and democrats come together, they're going o have platforms, we're going to talk about taxes and tax reform. does the celebs of ryan change

that dynamic with regards to a clear distinction between the role of government and the role of business and the role of the private sector? >> well, i think it clarifies what governor romney has been talking about. we need a government that is more responsible to the american people, it needs to be more smaller and focused and we need to say how we're going to pay for it. there will be a seb tral fork in the road here. do you want a big, high government and lower taxes? but how can you go to the american public and say we want to take away medicaid and without going and say reform taxes and raise tax rates, we have to cut costs and raise revenues. how do they win on that program? >> the program is veryle spelled out. it says we have to get back to previous levels of gdp. you mentioned medicaid.

governor romney said he would block the medicare program. without those changes, the programs will not be solvent going forward. >> there was a study down in the wall street journal that romney cannot get to where he wants to go with government spending and taxation without -- >> it's simply false without a matter of math. governor romney said we'll lower tax rate by 20% and broaden the base. if you lower the tax rates, you had some feedback because of behavior changes and faster growth but mofs of it would come

from brace broadening. the tax -- the base broadening. >> it seems like there's so much on the line for the economy, for the budget, that it's not really been a national discussion so far. >> we need to make it one. i think governor romney and paul ryan will do their hardest to make it one. it's up to voters to decide but issues about the economy in the short term, the size of the regulatory state and size of government, what kind of financial system we want. all of this is on the table to decide. >> there was an interesting story today about the mortgage interest deduction, that keeping it the way it is did not make

itself into the gop's platform for the convention. is that something in candidate romney's plan is on the table? >> well, governor romney said two things about his base broadening. he said, look, everything is on the table but whatever changes he makes would be progressive. that is the bulling of the adjustment will be on higher income people. so, yes, everything is on the table opinion. >> glenn, very quickly, though, the idea of how this works and how the math works, a lot of these we don't know pore sure what's going to happen. it hard to make promises on any of these things and there is a lot of concern that the middle class has borne the brunt of all of this to your point. i understand the broadening of the base,ment, i understand having everybody get some skin in the game but even when you have -- it's not going to be

able to come from the middle class, it's going to be have to are on the higher class. >> the tax increases on the rich are pretty small in bowles-simpson. >> it depends on how you do capital gains. >> let's do a arithmetic. i can't let that stand. it's $80 billion a year. if you want a bigger government, you're going to have to raise everybody's taxes. that is what voters. >> i you think the biggest issue is the entitlement program? >> we need to do more to reform

those programs to make sure that the people who need them get what they really need. >> glenn, let's continue this in some way. glenn, pods of 15 minutes each on the fiscal -- on the domestic economy. >> i think that's right. i think right now we haven't been there, mario, and that's the time we need to go. >> by the time the second or third debate come along, 40% of voters will have cast their votes. >> glenn is having the right discussion and that's what's critical for the country. >> 40% of the voters are independent and the question is how important are these issues in terms of division of this country and how do we go from a country of takers to makers. >> can we get like ten more stocks from mario in three minutes when we come back. >> always. >> we could have a jimmy cramer session. >> you're going to get to do just that because cramer is joining us in just a minute. yesterday on "sidewalk box" jim

sounded off on facebook. >> facebook, whatever they want, that's fine. they have got 900 million people. do them a favor and click on an ad. get the ad click up 50%. i may even buy a coin on zynga just to be able to say, you know what, not all is lost. >> up next we'll head down to the new york stock exchange and see what has jim fired up today. stick around, we'll be right back. at scottrade, you won't just find us online, you'll also find us in person, with dedicated support teams at over 500 branches nationwide. so when you call or visit, you can ask for a name you know. because personal service starts with a real person. [ rodger ] at scottrade, seven dollar trades are just the start. our support teams are nearby, ready to help. it's no wonder so many investors are saying... [ all ] i'm with scottrade. trick question. i love everything about this country! including prilosec otc. you know one pill each morning treats your frequent heartburn

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welcome back to "squawk box," let's get down to the new york stock exchange. jim cramer joining us. jim, an awful lot of people are talking about what you had to say yesterday about facebook. >> look, i don't fear facebook. i don't fear the people who run it. mark zuckerberg, he is the ceo. he's not acting very much like a ceo. peter teale, i know that mario, my good friend, said there's still a lot left but he is playing with the house's money. if the company is real auto worth $100 a share, like i thought it was at one point when i knew they were going to mobile and it was working, you don't want to see a guy like that, you just don't. >> what role do the private markets play in this, jim? i was going off on that a little bit yesterday. the whole thing was valued at $104 billion because the private

market dictated to some respect what morgan stanley and what facebook itself wthinking that company was worth, don't you think? >> the company missed numbers. they knew in may the company was not making the transition to mobile. we didn't know that. the biggest boys learned that right before the last week. was it inside information? no. we've learned that that's fine too. a lot of my anger has to do with the double standard. the numbers weren't there. by the way, the numbers were there coming into the year, which is why the valuations weren't outrageous, but the mobile -- the mobile migration isn't working. they just don't have a lot of revenues on mobile. i think very few people saw the mobile migration occur like it did, which is just with a lacrity. that's why, scott, they missed the numbers. when they were making the numbers, it's worth a lot. it's miss/make and that's just like any public company. >> look, ann winblad was on our show talking about sort of what you were saying yesterday that teale perhaps should leave the

board at this point. after a certain while, vcers shouldn't be on the board after a certain period of time. >> look, the company is out on the road show telling you the stock is extremely undervalued. on the conference call it's extremely undervalued. just step down from the board and then have a free fire sale if you want to. everything was legal but it really smelled bad. what i care about from the point of the individual investor, i don't care what's legal at times. i feel like thiel should have said i believe the company is worth a lot more or, yes, get off the board. but the outrage isn't there for most people and we have a lot of people saying it's fun, everything is fine. >> look forward to seeing you in a few. >> thank you. at bank of america, we're continuing to lend and invest in communities across the country. whether it's supporting a delaware nonprofit that's providing training and employment opportunities, investing in the revitalization of a neighborhood in the bronx,

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it is the stock of the day. retailer williams-sonoma beat on the top and bottom lines with the latest earnings report and also raised the outlook for the fiscal year and that is a pretty nice gain there. 9.33%. >> i can't believe we're at the end of the session. 1 quick thought from you before we get you go. >> corporate taxes are going down and that small domestic