jeb bush always talked, jeb bush that made the point, the milk metaphor, then we need to give them choice when it comes to he had evaluation and that's what we're about. >> thank you. >> thank you, guys. >> we'll be back on tuesday. i will enjoy the long weekend and hopefully you will, too. "squawk on the street" is next. >> good morning. it is show time. ben bernanke's speech set to begin in one hour. will he hint at additional stimulus and what's his read on where the economy is heading as we close out the month of august? good morning. welcome to "squawk on the street." we're live at the nyse, melissa lee, jim cramer, dave faber going to be back on tuesday. take a look ahead hitting at the top of 10 a.m., good action as people begin to make some bets, at least directionally. we should mention the dow is having the worst week in about

three months, in the red for the month of august by the slimmest of margins, down 7 points for the month. as for europe the euro having its highest level since mid-july. we'll keep an eye on that as we get head lines out of central banks over there. the road map, jackson hole, wyoming, bernanke headlines an hour from now and bring you those live and see how markets react to the long awaited speech. >> that's right. the ecb may give the power to grant bank licenses, another step towards a full blown banking union in europe and. >> mitt romney makes his case in tampa tellingers you don't have to feel guilty by firing barack obama but was he upstaged by clint eastwood? >> if you're waiting for an i phone 5, apple facing supply shortages from component makers. >> at 10 a.m. eastern time reserve chairman ben bernanke will give a much anticipated

speech on monetary policy as a fed symposium in jackson hole wyoming. they're watching to see if there will be clues as to whether more stimulus measures are on the way to give the economy a lift. this is what we have been waiting for for months. best advice i heard, if you're counting on him to say here is what we possibly could do, to listen to those choices in the order he gives them because back in 2010 as lou green points out qe3 was the first for example and november 3rd not long after that that's what we got and the s&p moved 100 points in that time. >> even though we look back in let spekt and talk about the sporns jackson hole had, it never necessarily fet like that on the day of and the same way bernanke and outlining some of the measures earlier this month and over time may have already stolen the thunder from jackson hole. if you look at the market activity you may think there had already been the jackson hole meeting. whether or not we get the

headlines people are looking for explicitly, karl, the action still may be supportive. >> deutsche bank out with a note saying they're looking for two things. one, his degree of confidence in the numbers we have gotten lately. we heard jim say the minutes are a little bit stale now because we have gotten good rebounds of things like housing, retail sales and jobs and number two, clues as to what the put option strike price is for the fed. what is the threshold on a number of those metrics for further policy? >> not that the fed guides its policy, karl, by what the s&p 500 is doing. >> and the point there appears to be at least some element of the fed that would like to target some things, policy related to certain metrics. does the chairman advocate that? >> exactly. this goes back to the charlie evans rule that he would like to see the fed say it was going to be accommodated until headline inflation hit 3% or the unemployment rate fell to 7%. people weighed whether that would be a good idea over time

but increasingly you're seeing gold man's saying a nominal gdp target so we'll go through that. >> going to be exciting. >> part of our countdown to fed chairman bernanke's speech, let's get to jackson hole where steve liesman is there with a special guest, the president of the san francisco federal reserve, steve. >> kelly, thanks very much. here from jackson hole with john williams, the president of the san francisco fed, a guy i knew when he was research director at the san francisco fed and, john, your first television interview. thank you for joining us. >> happy to be here. >> you have spoken quite a bit and said in several speeches that there is still more that the federal reserve can do to help the economy. skeptics say interest rates, 165 on the ten year, corporations borrowing at record low rates, mortgages in the 3.5% range. why would lower rates help the economy >> i think they help the economy in a number of ways and i think they have helped over the last few years quite a bit. one is lower cost of borrowing for people.

one sector of the economy that we're seeing start to recover, start to pick up is housing, and lower interest rates, lower mortgage rates clearly will stimulate the housing sector and maybe fuel a more rapid recovery in the sector which i think is an important part of the bigger picture of recovery. monetary

accommodation would be very useful to help boost the economy and feed the recovery along somewhat and help unemployment moving towards its goal over the next few years. i am concerned we could see stalling at the current high lev level. >> some folks have put forward the idea of a monthly or meeting to meeting idea. others a lump sum idea and also this communications. can you talk about those different concepts, which ones you favor. >> sure. in the past we have done the lump sum, the announcement of $600 billion of purchases over a fixed period of time. i think that worked well at that time. personally, i think we should be moving towards what we call an open ended approach basically saying instead of here is a certain amount over a certain period of time, that we will be purchasing assets at a certain rate. we expect to continue to do that

for some time. al loug us to adjust the rate at which we purchase and the amount at which we purchase based on the economic conditions, basic principle good monetary policy is you adjust policy based on what's happening in the economy and the outlook. the open ended approach allows you to do that better, i think. >> sounded like judging from the minutes you were pretty close to extending the target or the forecast period for low rates at the last meeting. what's your feeling about that? >> my own view on this is based on my outlook and perspective where the he economy is going. i don't think we would be raising rates until probably sometime in mid-2015. my own view is if that the -- i would be tolling communicate out further. right now we're in the late 2014. i think my view on the communication of the forward guidance of policy is really based on my view of where policy should be given appropriate policy for our goals. >> sure.

there has been a lot of problems, sounds like one of those things the weather, everybody talks about and nobody does anything about it. a lot of people don't like the calendar date. are you also considering whether or not there ought to be actual economic targets, 7% unemployment and 3% inflation? >> i think most people think a monetary policy should be responding to economic conditions and i would really favor an approach that allowed us to communicate say the lift off in terms of economic conditions rather than a calendar date. that's harder to do than to say in exactly what condition do you want to put on that in our communications is hard to come up with something which i think would be clear and effective. i still hope we can come up with ways to do that. i think president evans ideas are good ones in terms of this. we really to come to an agreement about how to do that most effectively. one of the issues is if you put out one number, the policy

depends on one number. i don't think that's an accurate representation of our policy, how we make policy. i really want our communication to more accurately represent how we think about policy, and help guide people in understanding what we're doing and why >> a lot of criticism out there among the general public about what the federal reserve is doing, that you're distorting interest rates and otherwise fueling a tinderbox that could create inflation. take the first part. what do you say to people that say, you know what, you have gone out well beyond your mandate, just not just in the fed funds rate but really working in the two- five and ten-year and distorting the market. >> i don't think we're distorting the market. i think we're doing monetary policy by slightly different means. as you know the short-term interest rate is essentially zero. normally we had move the fed funds rate and we can't do that. the mechanism is always that the

fed fund rate would move the other interest rates. by moving more directly i think we're doing what monetary policy always does but working in a world where the short-term is already at zero. i don't view this assist distorting markets or anything. i view this as doing monetary policy. >> the other criticism out there is you are really hurting savers at the expense of borrowers and what people really want to do is delever. >> i think fundamentally one of the things holding back the u.s. economy obviously after the housing crash and the financial crisis is the household sector is trying to reduce their debt loads and that's part of the process, driving things. i mean, in terms of savers and borrowers, i think that the best thing that can happen for both savers and borrowers is have a stronger economy, and if we can through our actions help stimulate growth, get the economy back to full employment sooner, a stronger economy is better for everybody.

i mean, my hope is that by taking the actions that we have been taking and helping get the economy going, we'll get back to normal interest rate sooner. if you think about what's happened in japan for the last 20 years, they have been in a situation of extremely low interest rates, deflation, and a pretty stagnant economy. that's the one thing i really want to avoid. >> tom williams, thank you for joining us. >> thank you. >> see you next time in san francisco hopefully. kelly and karl, back to you from jackson hole. >> steve, thanks very much for that. it is fascinating to hear john williams talking about how he would favor an open ended approach. it is something getting more attraction in policy circles. >> basically endorsing the measures evans has put out and he said interestingly he is concerned that we might be stalling out here at the levels of unemployment and would propose or be behind extending that forward guidance to mid-2015, and steve nailed him on a bunch of those things because those are exactly the kinds of things critics are complaining about now. >> he says absent further action

from the fed he would expect maybe 2% growth at best this year and next and the unemployment rate staying roughly where it is, 8.25% now and kind of the dove to hawk scheme of offense and not the most surprising commentary but nonetheless someone perceived as being close to the vest and bernanke may have sympathies with those views. >> we'll find out in 45 minutes. >> euro hitting eight week highs against the dollar and this after comments from an ecb executive board member strengthened market expectations the central bank will buy bonds to rescue spain and italy's borrowing costs. german officials do oppose such a plan. according to a published report, booid man has considered quitting in recent weeks but the government has persuaded him to stay on the job. we have seen some walking away disgruntled over the ecb strategy but others would argue

that opposition has kept the central bank from being able to stem the crisis. >> high profile political posturing some argue, was this a real -- was he really going to quit? is staying in the bank the reason he wants to help fight the proceed poetsd bond buying but it does add pressure on draghi. >> and to your point he has indicated he thinks he can be more effective in his role than not in the role and from a market point of view anyone that were to step up and take his spot wouldn't be any less hawkish. there wouldn't really be a change. >> comes on a morning with a lot of numbers, jobless rate in the eurozone matching the record high we saw in june. flat month on month and year-over-year up 2.2 points. >> this is what is so fascinating. you have a weak binch of data out of the eurozone over night. if you talk about the misery gauge, cpi rising, unemployment flat, german retail sales lower.

look at the data out of asia, weak, japan industrial production and korea industrial production and the euro is rallying because there are signs of progress out of the european central bank but we learned repeatedly every time you expect the ecb at the meeting next week to come out with big moves, big market gesture, they have failed to deliver. that i would argue is a bigger risk. >> the devil has been in the details with those guys. the pie in the sky stuff, the market loves, but the details are hard to write. you're right, somebody put it in perspective the number of slowing growth metrics we saw this week. you mentioned japan, consumer confidence here, brazil cutting rates again. not to mention the slower rate of improvement in various european economies. >> that's why it is important in half an hour's time we get the chicago pmi. we can talk to dan green house when he joins us. the regional pmis, there is sign of slowing given the production figures globally. it will be important for the

chicago pmi and the figures here next week to hold up. if they do that and consumer confidence is okay, will you see a better attitude in the market. >> the 15 minutes that begins a half hour from now is going to be packed. you will have chicago. will you have michigan consumer sentiment and then seconds after that the headlines from bernanke. it really is must-see tv this morning buckle up. >> fed chairman bernanke's jackson hole address not the only big story this morning. gop presidential nominee mitt romney gave a big speech of his own at the republican national convention but did clint eastwood steal the show? if you missed it, you have to see it. highlights next at squawk on the street. take one more look at futures ahead of the speech in jackson hole. back in a moment. at optionsxpress we create easy-to-use, powerful trading tools for all. like our all-in-one trade ticket. we put strategies, chains and positions all on one screen.

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last night at the republican national convention mitt romney accepted his party's nomination for president of the united states and took aim at president obama's economic stewardship and urged americans to vote for change in the white house. eamon javers is in washington with the highlights. >> it was an enthusiastic and sometimes emotional mitt romney that took the stage and faced two major tasks. one was introducing himself on the biggest stage of all before millions of americans who hadn't been tuning into the political campaign so far this season and

the second is convincing americans that maybe voted for barack obama that it is okay to move on. >> i wish president obama had succeeded because i want america to succeed. his promises gave way to disappointment and decision. this isn't something we have to accept. >> he also made the distinction between obama's soaring rhetoric and his more workman like approach to the job. >> president obama promised to begin to slow the rise of the oceans. and to heal the planet. my promise is to help you and your family. >> then there was this, clint eastwood, the hollywood actor took the stage. it was a rambling and at times bizarre address before the rnc. the audience in the room seemed to eat up parts of the speech. clint eastwood spent much of the address talking to an empty

chair and an invisible barack obama. >> what do you want me to tell romney? i can't tell him to do that. can't do that to himself. >> carl, it was a very strange moment from clint eastwood and all of the analysis inside the room said he spoke without tele prompter and definitely went off script and message and the romney campaign put out a statement about clint eastwood saying just can't judge clint eastwood by the same political metrics we judge other political speakers at the convention. very strange moment and then romney took the stage and turned the evening around. >> yeah, i think ann romney was on morning shows and said he is a unique guy and did a unique thing and not all of us were aware what the plan would be for him. >> i have never seen a moment like that. it is one of those moments where you're watching at such a scripted event as a republican convention or a democratic convention and you don't see

people go off the rail like that. you're watching it and cringing and it was fascinating television and not sure that it did what republicans wanted it to do, though. >> right. so that leaves us with charlotte, eamon. some are saying romney didn't put a lot of policy on the bone last night which potentially leaves the democrats with room to work. >> he doesn't have a whole lot of policy he can offer, either. this would be a president going into a second term where he would be constrained and likely still have a republican majority in the house of representatives and constrained by politics as to what he can do. both sides will be talking in high level abstractions but what the democrats can do is go after the same independent voters and the folk that is voted for obama in '08 and the same group romney was appealing to in the sound bite you just saw and try to pull them back in and say you supported us in '08 and here is why you can do that again in 2012 even though unemployment is very, very high. that's the sale he has to make. >> all right.

thanks a lot, eamon. coming up on the program will ben bernanke ride the qe3? his jackson hole speech is less than an hour away. we'll count down to the big event and what's at stake in the economy and your portfolio. at optionsxpress we're all about options trading. we create easy to use, powerful trading tools for all. look at these streaming charts! they're totally customizable and they let you visualize what might happen next. that's genius! strategies, chains, positions. we put 'em all on one screen!

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take control of your retirement today. ♪ ♪ welcome back. here are the stories we're squawking about ahead of the opening bell. a japanese court ruled samsung has not violated an apple patent that allows for transferring of media content between mobile devices.

the decision comes one week after apple's $1 billion legal victory over samsung in the u.s. they say the focus model is on track to become this year's best-selling car beating out the toyota corolla and shares of splunk are soaring premarket. posting better than expected second quarter results and raising full year guidance and the ceo will be on a guest on squawk on the street at 11:10 eastern. ahead of a long weekend, the bulls, the bears and bernanke. we'll get you the message live and before that the opening bell when we come back. [ male announcer ] let's level the playing field.

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points. >> set mondays buy fridays. doing okay. >> meanwhile as we await the opening bell, take a look at the s&p 500 at the top of the screen. regional management celebrating its 25th anniversary, over at the nasdaq tennis channel and wilson ringing the bell at arthur ashe stadium. sad news about andy roddick, despite having been a champion, born in the wrong decade, kelly. >> it was his birthday yesterday which he shared with warren buffett and he is also an omaha, nebraska, native. >> almost as many money, i think, too. in the meantime we mentioned apple this morning. keep an eye on ford as well. this is overlooked but the ford focus is on track to become the best-selling auto of the year for 2012, surpassing the perennial favorite the corolla. we have had a lot of news about

ford regarding various debt instruments and ma law by's future and that might be watch today as well. >> we think back to the days of 2008 and 2009, would you have guessed in four years or three, four years time that ford would be the number one selling car here in the u.s.? certainly speaks to the shifts we have seen more broadly in auto manufacturing strength. by the way, i did drive a ford focus in my day. >> really? >> i hear they're nice. >> it is tough for a tall family, but, yeah. >> let's see, zynga another one to watch, two more executives gone. seems like every day there is another high profile detection or resignation. this time the vice president of marketing and the game network studio vice president and the chief creative left and the coo left this month and $2.86 as the storms continue to swirl. >> you never want to bet on a company when you see defects at the top like that. >> barclays doing interesting revisions to the roe targets.

>> this caught my attention. incoming ceo anthony jenkins saying what he expects is return on equity targets to be for the bank in the years ahead, not necessarily sticking to what was previously 13 to 15% target but instead just saying he expects and hopes it will be higher than the bank's cost of equity which is around 11, 11.5% range and this keys off what kbw was saying the other day, pointing out roe for banks in the second quarter fell to 12.6%. that am ko pairs to the 14 to 21% range that predominated on average since 1992. we're seeing a resetting of expectations and the reality of what banks are able to earn. >> looks like jenkins will issue a turn around plan in the first quarter of next year, three to five-year plan before it is fully implemented and that's a long-term story. even though they still want to be a universal bank which is important to note. facebook is adding to its losses here this morning, a report out of bmo, interesting piper came out yesterday with recommendation on the stock, put a $41 target on it.

today it is bmo with an under perform. the title of the report, two negative channel checks for every positive. 18.52 is close to the lowest we have seen since it went public a few months ago. >> and a wide decisiispersion o analyst stocks and often they are struggling to fundamentally value and that's the case here. >> 18.45 the prior all time low so a nickel above that. 18.45 is the new all time low as we continue to see it down 3% plus. oil and gas as we end the week that isaac hit, a lot of discussion about the fact a lot of the refineries and oil operations did not suffer major damage. voe layer owe and anadarko two of the companies saying they did not sustain lasting disruptions. crude has been buffeted all around by various inventory numbers, 96.38, 94 and change yesterday. >> are you fors about whether

the gov would do and we are seeing gas prices for labor day among the highest if not the highest ever heading into this important driving weekend and weather that has more of an impact on consumer confidence and spending. i think the american consumer saw this. >> guess what the top down performer is. >> for the month? let's see. >> sysco. >> is it? >> yeah, 18% move. >> 18% move. >> followed by home depot, bank of america, utx, and kraft and then you look at the big losers for the dow for the month, coke, hewlett-packard, intel, verizon and boeing and coke and verizon might suggest more defensive names. >> you have cisco out performing and the tech coms lagging and trying to tease out the signal

from that noise. good luck. >> good morning, bob. >> so it is time right now to mr. bernanke to name the policy tools a little bit more. i know everybody has given up on the idea he will layout qe3. remember, he is going to layout the whole history of quantitative easing, how it worked, what he liked and not liked about it and people brought up to me the old 2010 speech, the one that moved the world where he signalled purchases of long-term securities, a famous line in there taking a day or so for everybody to figure out he is talking about qe2. remember the market took off from there. maybe more clearly laying out the policy tools including the forward guidance or anything else he wants to will nullify a lot of traders concerned about this. other than that most of the guys want a lot more clarity on the economic outlook. in fact, that may not real market moving news today when he starts talking about where he sees the economy going and hopefully he will get that in and it won't be just a flat discussion.

about this vooed man flap i wanted get to, the sense i get calling around watching with the euro watchers is this is a big flap over nothing right now, the important thing is mr. draghi has successfully split the germans. that is a huge policy move for them. that is really going to help at this point. i don't think it is going to matter that much in the long run. i think spain might delay asking for aid a little bit until it calms down. that may not short-term effect. eventually they will ask for aid. most people seem to believe that. on this whole issue of condition alitie, how about starting the bond buying program with a country we have a deal with like portugal? we have a deal with portugal. there is conditionality. portugal would be a good choice to start the bond buying program. why does it have to start with spain? i think that will be very likely. elsewhere, let's talk about stock moving news, the gold miners, the south african gold

miners are down again. you talk about platinum has spread to south african gold mines and strikers are down -- two miners down. we have south africa gold fields down 5%, and the strike on the last two days. that's affecting things. guys, back to you. >> all right. thank you very much, bob. let's get to phil this morning. what do you got? >> as expected american airlines, amr, and u.s. airways have entered into a non-disclosure agreement. this essentially means that the two companies will be sharing sensitive financial data and other information between the two companies and proprietary information and they're going to start looking at whether or not there is a possibility of a merger. keep in mind this was expected because amr said a few weeks ago we're going to extend ndas to a number of airlines including u.s. airways. in reality it was all about u.s. airways. this does not mean that we see a

merger or merger announcement imminent. it does mean, however, we're going to enter into a period, guys, i suspect probably a couple of months, two to three months of quiet if you will where these sides will be sharing information and at the end of that i think that's when we find out whether or not they can make a deal or whether or not something is going to have to happen in a hostile fashion which is not unlikely because i think you have got two companies, two managements here that both want to run an airline. the question is do you have enough cash to do two things. one, pay off the debt that will have to go away and, two, take care of the bond holders for the particular airline that's going to be bought out. again, nda being signed between u.s. airways and american. >> phil, is it fair to say the unions are mostly behind it and does that help? >> yeah. i think so. i think for the most part the unions are behind it, karl, if they can get their fair chunk of change. you know how this works. under the proposal they signed

at least initially, the american unions have signed initially with u.s. airways and they think there is a framework for a deal. now, keep in mind americans still need to work out a deal with its pilots. they have done the flight attendants. they have done the mechanics, the transport workers and now they have to work something out with the pilots. there is a hearing next week, a decision due by the bankruptcy judge where he will once again consider whether or not to kick out the

almost 100% about what's going on in europe and the fact that the ecb may have been able to come close to cobbling together at least a minor rescue mission. >> is it? i wonder, we heard steve talking to john williams and talking about open ended comments and similar comments from the fed numbers and do you think that's partly responsible here? >> i think it is a possibility. frankly, most of the folks down here on the floor think that you're not going to get a direct

proposal out of bernanke today. you are probably going to get him reviewing the cues he has done in the operation twist, defending them to some degree, talking about what they did, how they weren't all based on moving commodities, and then perhaps scolding the people in washington for not bringing any fiscal effort into things and then finally saying we still have some other arrows in the quiver, this, this, this and this but we're not going to use them yet. we have to see how things work out in europe and how unemployment begins to respond and that i think the market will take somewhat negatively and then come back and say we still have them on hold, that will be all right. >> this range between 13.98, 14, 15, 19 whatever, still the trading range? >> yeah, i think so. we were happy they held the support level yesterday. only by a penny, but they managed to hold it, and i think

they feel things are okay here. you know, we spoke two weeks ago about the feel that traders have anchored themselves around this 1,400 area, big positions in both puts and calls trying to milk some rate of return out of it. this is a critical area. i think this will be quite -- if bernanke doesn't say anything too big there will be a lot of empty chairs in wall street later today. >> thanks. see you later. chicago pmi after the break. don't go away.

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part is due from europe and suggestions that policy is really on the move if he was really threatening to quit. >> it is a reminder this whole week has been about bernanke and about draghi, and whether draghi's appearance and non-appearance and even though the ecb didn't come after all still helping to drive the narrative. that was stanley fisher there with the chairman. >> let's get to chicago. jim aye you are row with chicago. >> slightly disappointing. this is the weird number. when it comes 15 minutes before an event you have to be silly to trade on this and then have the chairman say something in 15 minutes that could send the market in your face. this is the reported number but it won'ting really picked apart and decided how it fits into the equation until next week after we digest the chairman's remarks. this is a slightly weaker than expected number. >> thank you very much. not the last data point we'll get today. wall street and the world focused on what is going to come out of jackson hole in a few

moments. joining us with their thoughts, dan green house is chief global strategist with bitg and some of the headlines being written suggest the market's up because they believe bernanke will say something big. do you agree? >> no. we were talking off air, i didn't hear if he said it on air. i think i am going to subscribe to the argument the idea that wedeman would be on the verge of resigning suggests the ecb is closer to a support package than we thought and that would be supportive. >> the suggestion is he would have, quote, lost the lit call argument and taken his marbles and gone home. >> for lack of a better word. >> david, does that explain why we're seeing triple digit rally? >> yeah, absolutely, i think it does. i think what you're seeing now is the market is focused on europe, focused on draghi and the ecb meeting and i don't think anybody anticipates

anything new out of bernanke today. it is all about europe. that's been driving the market for several quarters now really and we want to see something happen over there that gives us confidence that they're heading in the right direction. >> so the general conventional wisdom is he is not going to announce anything new, dan. does the 53 pmi add credence to that argument? >> i don't think so. it is something kelly and i were talking about quite recently with respect to the regional manufacturing indices. the new orders components have been really weakening and the headline numbers have been weakening. i don't know that today's number really changes anything in front of the ism. clearly this is a macro driven and central bank driven market right now to the extent anybody is even around. i would remind people that monday, tuesday and wednesday of this week successively saw moves of less than 1%. there is not much going on. it is hard to read really anything into the action. >> extremely low volume. i am looking back through the chicago report to see what the new orders are doing. it is interesting to look at the weakness there and the original u.s. indexes and the data out of

japan and asia over night which the market is completely striking off and following the cues. >> our clients are focused on weakness in the eurozone, potential qe in the united states. we're ignoring obviously or at least subordinating to some degree problems in china, brazil, ind which has an extraordinary amount of problems, problems in russia, and there is issues all over the world right now and i think to some degree we're subordinating it to the power of central banks and i don't know if we're entering some other sort of downturn here that central banks are really ready for it. the retort does not reflect the reality. >> stanley fisher was walking alongside ben bernanke. >> yes, who people don't know is the godfather to a lot of these central bankers. >> so buy red and sell the green somewhere south of 1420. do you see that strategy changing in a marked way as we

get jackson hole and move into september? >> unfortunately, carl, i don't. i think the market will continue to be volatile. there are too many macro fears out there. for long-term investors there is a lot of value in economically sensitive stocks. you mentioned cisco was the best performing in the dow this month. you know why? they raised their dividend and met earnings and the guidance was fairly accommodated, so companies are doing what investors want. they're returning capital to shoe shareholders and a lot of that is getting left behind with what's going on at the fed and macro issues and we think ultimately companies like cisco doing the right things for the shareholders will reward investors. >> if i can jump in quick, i don't necessarily disagree with david. my personal positioning is for income return or capital return. i have been talking a lot about that as a structural strategy. let's be clear. at least this year the names that litter the top performing stocks are not really the at&t,

i am sorry, altria type names. they're higher data names, ex paid a the home builders, series is one of the top performing names, trip advisor was one of the top names. they're not known for returning capital to shareholders and yet having the best year. >> do we expect a rotation into those names? how many times have we heard people talking about it is the dividend players you want to be exposed to now? >> what we have seen over the last month as the risk entree has taken old, you have seen a shift out of those into the most sick likely sensitive members. >> is qe3 or anything i hear from bernanke, do we already see that move in august? has it actually already happened? >> it depends how you want to build the model. with respect to the treasury market, a lot of people talk about qe lowering interest rates and in reality what we have seen is qe and monetary easing has boosted interest rates.

if you build it appropriately i would argue a 40% chance built into the treasury market and something similar in the equity market although i will defer on that question. i think what you're seeing akin to the ltro rally last year is the idea perhaps the ecb will be more involved and conversations with our clients reflect the view europe and the ecb is a car more consequence to positioning. >> unfortunately it is not up to the ecb. there is certain judges in germany that might have something to say about it. >> fair to say. >> going to be an important day to watch. you have the german constitutional court ruling, the dutch elections, the ecb outlining the view and if you look at the calendar in september, it is filled with this. >> what strikes me, they're all binary. they are romney or obama. there is the court voting up or down. i mean, i just don't know how you position ahead of some of these things, especially given that we have 67 days until election day. >> welcome to my world, carl.

very difficult to position in front of this and i know you are tired of hearing this, you have to have a long-term focus. if i am investing in a company, i am investing in the growth of that company's earnings or cash flow. over time that's what i want to receive. whether that is dividends, capital appreciation, i should be indifferent to that. ultimately company that is are fundamentally strong and over time can grow earnings and deliver some return to the investor is what i want to own and unfortunately that hasn't been the best strategy lately but we do know over time that's how to invest so you kind of have to put some of this macro issue, some of the trading stuff out of your mind and focus on company that is can deliver earnings and cash flow growth over time which will ultimately reward the shareholder. >> all right. thank you both very much for your time. up next we'll bring you the l t last key economic report.

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this is the cme floor in chicago waiting on the confidence numbers. wednesday the number was bad. i am hearing 74.3. can you confirm that? we were looking for 73.6. i am hearing it is slightly better than expected which is a good thing but over the last two weeks the employment numbers have been bad.

when you look at the number which is okay and this number which is good, net net not a bad day for data. you can't trade in front with bernanke up in five minutes. >> when we come back, the speech wall street has been waiting for, bernanke in jackson hole in a moment. at optionsxpress we create easy-to-use, powerful trading tools for all. like our all-in-one trade ticket. we put strategies, chains and positions all on one screen. start trading today with optionsxpress by charles schwab. of the most highly recommended bed in america. the tempur-pedic ergo system. treat yourself to the ultimate sleep experience and save up to $400 during the tempur ergo savings event. plus visit tempurpedic.com for full details on our 0% apr financing with up to five years to pay. don't wait. the tempur ergo savings event ends october 14th. and five-year special financing ends september 5th. visit tempurpedic.com now. tempur-pedic. have been bad. in america.

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responsibility. what's your policy?

if you have paid any attention to financial or business news the last three months you heard a discussion about this very day. moments away from the fed chairman's speech in jackson hole, wyoming, the actual title of the speech is monetary policy since the crisis which suggests it will discuss some of the lessons learned over the past few years. in the meantime the dow is up almost 100 points. some people argue it is because they hope bernanke will say something about policy but also coincides with news on the ecb that also suggests maybe policy there is moving and in the words of our cash this rally this morning has been manufactured in europe. >> indeed. expectations are very low as to what bernanke will deliver of substance within the next few seconds. that is why it is important. potentially you could really he could have chose really shift the market now. >> we're looking for discussion of unconventional policies,

targeting policies to various targets regarding economic data, and any illustration of how he feels about the economic data as it has improved over the past few weeks. let's get to steve liesman with some of the headlines in jackson hole. >> carl, thanks very much. fed chairman ben bernanke in his speech this morning is going to make a case for using non-traditional policies without, however, explicitly promising it. he says we should not rule out the further use of non-traditional policies. he repeats the fed will act to promote growth as needed. he goes through a cost benefit analysis of using these policies and says the costs of the policies appear to be manageable. economic headwinds, zero interest rates, the overall slow growth environment argue for keeping rates lower for longer. research, he says, shows that the programs have been effective. remember we told you that key in on how he makes the case for

this and says the effect of significantly lowering yields for long-term treasuries, corporate bonds and mortgage-backed securities. research also shows the asset purchases have helped lower stock prices and the economy and fight deflation. unconventional policies, he does acknowledge, are more difficult to apply. he says significantly here the bar is higher for using these policies. it is also hard to estimate the overall effect of these policies on the economy but points out that monetary policy cannot replace broader economic policies, a nod towards what he believes is from washington and the congress and the president, but he says despite all of those problems with non-traditional policies, we need to sort of not lose sight of the daunting economic challenges the economy faces, labor market stag nation, he says, creates enormous suffering and wastes human talent and has the potential to wreak structural damage on the economy for many years. he also adds that the odds are

strong that from the non-traditional policies taxpayers will make money. overall, guys, he is making a strong case for the use of non-traditional policies, talks about all the potential costs and says they're manageable and seems to suggest the benefits are higher but he isn't specifically saying it is going to happen in september. he wouldn't do that here. carl. >> steve, thank you so much. steve liesman in jackson hole and we'll hear for from you later on today and the a few seconds ago ben bernanke saying non-traditional policy measures have been and still are effective and says the negative effects of the policies are still manageable and the market reaction, dow lost i would say 30 or 10 points. we were up almost 100 currently up 69. let's bring in allen lance and hank smith, good to have both of you. big morning. thanks for coming in, allen. sounds a lot lot like the letter he sent to isa a few days ago and saying there is scope and too make sense if the situation proposed itself. anything new that you're seeing? >> not really, carl.

i think even the markets, they expected this and it is a situation where the doors will be left open and the public will have until segment and our economy is actually showing some progress. i think it is more let's see what europe does and let's see if they start implementing some of the things they're talking about and that might be what they wait for more than anything else really. >> to me this is hugely disappointing. the last set of minutes we had and i paraphrase, the majority of voting members thought that action should come unless there was a spike in the data. i paraphrase. effectively that's what they're saying. he suggests it might be simply an extension of the promise to keep interest rates low from 2014 to the middle of 2015 or whatever and rather than asset purchases which if i heard what steve said correctly, the bar is higher for. >> well, really, i think what his speech should be is monetary policy has worked and now it is time for better fiscal policy

and he really should start getting a little bit more political. he has begun to do that but how much more can we ask for monetary policy? it is extraordinarily accommodative and will be for several years out and what we really need is better fiscal policy and the markets know it and i think the markets are anticipating that and not anticipating the fiscal cliff. we don't think that will occur. i think it is time for the fed to get a little bit more, a little bit more vocal. >> hank, we saw bob corker criticizing the fed and bernanke and some suggesting bernanke should turn the tables and point the finger back at congress and say the fiscal cliff and these other concerns are the reason for some of the under performance we have seen lately. do you agree? >> absolutely. the fed and ben bernanke have been the heroes here. all the critics have to ask themselves, if the fed did not

do the extraordinary job and utilize all of the various techniques, where would we be? the great recession probably would have been a depression. >> and yet it would appear, allen, that he believes that coming to the market maybe in september and saying i will keep these rates lower for longer is a gift. what does it actually achieve? >> i think it basically gives us the chance to continue to -- our anemic recovery as far as that goes. i mean, need some positive force. the unintended consequences of qe3 is too much. >> i find that statement, we're going to keep rates low extremely low, beyond 2014, if that's what they do say in september as a result of that, i find that deeply depressing. if i look at draghi in europe at the ecb, he is making promises, i will do everything that is

necessar necessary. ben bernanke is kind of oh, well, we'll keep doing this. there is no confidence. there is no assertion that life will be better. >> it is hard, simon. in the united states we're doing much better than europe. europe is going through what we did four years ago. it is a situation where the qe3, the unintended consequences i think would be disastrous. even though the market would like it, it is almost like five years ago when everybody w was enthugsd about housing and the monthly mortgage and didn't care about the value of the house. i think with he have run into that problem. >> to your point, i would argue draghi has a different mission. he is trying to keep his currency from going away and maybe you have to be more subtle than they're being in europe. >> i think they have done what they can and outreaching is too much. i think if problems in europe continue and you don't see progress, then you might see something more substantial, but otherwise i think it is a

situation where that's all you're going to see. >> hank, how important is the jobs' report next week? >> i think it is every jobs 'report is very important. i would add to simon's point that what it provides is certainty. we have monetary certainty. we have fiscal uncertainty. we need more certainty with regard to fiscal policy. >> just to defend my point, then, the certainty is that the assessment of the central bank is that things are so bad they're going to keep rates lower for longer. i don't actually see that. i see positive things to say to the market. i don't think it helps. i really don't. >> what we need is a moment that we had back in the early 90s with reagan and voelker where reagan gave voelker that allowed them to raise rates to choke ip flagsary expectations while reagan unleashed better fiscal policy, lower taxes, lower regulation, and increased spending. we need the same type of

combination here, better fiscal policy that will allow the fed to start coming off of this extraordinary easy accommodative stance that they're in. >> at the same time just to your point, what the fed is effectively doing is keeping it in the market and saying everything that bernanke has said and signaled is consistent with this idea and the second conditions warrant are worsened just a little bit more than they are now. >> there are many people that have mortgage backed securities on the assumption they would start buying them, too, and they are disappointing those people in the market, are they not? >> definitely. the fiscal side you won't see until after the election anyway. >> does this lead you to any trade that's much different? the dow is clearly losing its gain here. the dollar is up a little bit. does this change your portfolio at all or is this a complete snooze? >> no, it doesn't and i think it reinforces the fact you need a

balanced approach between owning some of the defensive instead s haddies, and you can't go 100% in either direction. you really need the balance and, oh, by the way, it certainly helps to have a big dividend thrown in there now and that's going to be a play that continues for several years as long as we have this super low interest rate environment, the big dividend payers are going to be a place you can hide. >> yeah. hence cisco, the best dow stock of the month with that dividend that got people's attention. allen and hank, thanks, guys. >> sure. >> appreciate that. >> we'll focus on the treasury market next, the ten-year holding instead and i the five-year yield is edging up i am told since the fed chairman made that statement in jackson hole or at least released to the press. how should you play fixed income? we'll sit down with one of the top ranked rate strategists next on cnbc.

the equity market is losing gains in wake of the speech of bernanke in jackson hole. we were up i think triple digits going into this mainly on europe but lost those gains. don't believe the hype was the message from credit suisse going into this. they were recommending people take a tactical short on treasuries.

let's bring in ira jersey, director of strategy at credit suisse. you haven't got the moves but you were kind of anticipating here. >> we didn't. the chairman clearly disappointed a little bit in that he didn't talk about a whole lot of new things that they might do. one of the policy changes, for example, we thought that the fed might be considering is an evans rule. basically saying we'll do potentially as purchases some point in the future and tie that to economic performance, and that was something that the treasury market was we think hoping for and pricing in and in the market sold off a bit in anticipation of that over the past couple of weeks and that didn't pan out. we're kind of unchanged on the day to a little bit better, certainly than before. we sold off into the 10:00 statement and now we're a basis point better than where we were at the open. >> we had ambiguity with the fed minutes last time that appeared

to be dovish and indicated that action would come, quote, soon. what do you think happens in september? just the extension of the promise on rates and where are we on asset purchases? >> our firm view is we're about 50/50 on whether or not the federal reserve will do another easing program of some unconventional sort. i think the chairman in his speech did layout the fact that he is dovish, he is concerned about the economy, but of course he was trying to be more balanced here and not precommit the federal reserve to any particular actions, soen enlisting three things he hopes housing, as well as the fiscal side and financial risks i take to mean is financial risk taking is not occurring for any variety of reasons but he goes onto say in the conclusion there is only two things the federal reserve cannot do and that is they can't control the fiscal side. they can't control financial risk taking so that's one thing why qe into mortgages we think

is still on the table. might not be september. the in ex to act if they're going to ease is likely to be something like purchasing mortgages. >> when he says that the bar is getting higher and that the results in policy have been far from satisfactory, i mean, i know it sounds like he is erring,erring on the side of doing more, not less but does that ring like an admission of fame you're, that maybe they haven't worked out the way he thought? >> i don't think it is admission of failure. it is disappointing in the historical context. at the same time one of your previous guests was measuring factually and what would have happened if they had not done these actions and most of us believe if they hadn't done them, the financial part of the crisis would have been much worse. part of the thing is now we're out of the financial part of the crisis and now we're in a confidence crisis in our view and that is how do we get risk taking to expand, particularly when you have an aging population and more people who want fixed income assets and

fixed income might be doing very well anyway even without some of the actions and certainly rates would be a little bit higher but you're talking about maybe 2 or 2.5% ten-year yields instead of 1.5%, so the federal reserve does have an effect but you still -- how does the federal reserve generate risk taking and that's something they can't do directly other than keep rates low. that's what monetary policy does. >> it is leading a horse to water in the true sense of that metaphor. >> that's right. >> let's talk about the rest of the committee at large. he is just the chairman. he is going to want to let the committee have their say. a lot of doves and hawks said their piece leading into this speech. is it clear to you which side gave him more of an earful if he has been moved either way? >> i don't think the chairman himself is moved. i think he is still dovish and would like to do more actions but which precise actions is clearly in doubt. inl that they are likely to

extend the language of how long they're going to keep rates low to mid-2015 or even longer but interestingly about that in our analysis we do a number of analyses using fixed income markets and the market is already pricing in that the fed is not going to hike until 2015 or 2016 already. it would almost be like the federal reserve following the market as opposed to the fed leading the market. >> ira, i wonder if the fed moves in the direction of open ended qe3, whether that is likely and the impact it would have across the curve. >> we think it would work. we do think that rates would go lower and if they did open end purchasing of agency mortgages, the spread between mortgage yields and treasury yield woos likely lighten and that's when you can potentially start to get more re-fis and put a little money at least at the margin back into consumer pockets in a mini re-fi wave. we think it would work. the structure of it would be important. do they give a hard target and say we're going to keep on buying mortgages and treasuries

until unemployment gets to 6.5 or 7% or do they leave it more vague? do they do hard targets and one of the things historically the fed hasn't wanted to do is tie its hands and i think the hawks, that's what they're worried about with the precommitments is their hands are tied. statement you can take back the commitments. i think the market would like that and i think risk assets in particular would like something like that. >> ira, if you talk to people that have the ear at the federal reserve and briefed in private by bernanke, they will always tell you he is not concerned about politics. there is a way to read what he is now saying behind closed doors, actually a very political statement, under fire from the republicans with mitt romney suggesting he would like bernanke actually head of the federal reserve in the future and certainly doesn't support qe3. this minor mea culpa is about in some way bridging that divide with the republicans saying i

know what qe3 hasn't delivered as much as we might have hoped or at least there were downsides to it. >> as the fed chairman, you go to capitol hill and you have to talk to other policy makers and you're part of -- he is part of the new fsoc, the financial stability oversight council. by definition he is part of the inside the beltway political establishment even if he tries not to be directly political on being conservative or liberal in any given moment. he saw us interact with everyone and therefore he has to as both a bank regulator and a monetary policy maker discuss things with politicians and if politicians make decisions based on the good of the country or for a variety of other reasons where as the chairman, you know, he works on his dual mandate and i think they have been pretty consistent in discussing the dual mandate and how it works, and he has been very honest.

look, monetary policy has its limits. he said it today in his speech. it can help housing. it can't help fiscal and it can't help financial risk taking. >> it is an important day for the markets and good to have you on the program. thank you for joining us from credit suisse. we should note the dow is now up 88 points. the losses that we incurred have been made up again. >> yeah. going to be volatile it feels like. we also have to point out the move in facebook, 18.42, close to a new low earlier this morning and b of a merrill taking the price target from 35 to 23 blaming a lot of these lockup expirations and the next one november 14th saying they do not see momentum buying until december. >> merrill unknown when the lockups expires. this is not new news exactly. >> they're maintaining their rating. >> the share performance means now that it continues to be weak that each new lockup period presents a new risk. it is not as if we have hit a

low comeback and people are feeling optimistic. >> they're also did i skrgestin news from the first. >> and check out the dollar post jackson hole. how should you play it? we'll talk currencies coming up next. now for a look at the reaction at fx markets just after we return. at u.s. trust, our expertise extends well beyond investment advice and research analysis. it includes proprietary offerings like our eldercare program, which helps provide for those who came before you. and our financial empowerment program, which helps prepare those who come next. resources like these have made us the number-one trust company. that's why generations of families have come to us to help build their own legacies. you walk into a conventional mattress store, it's really not about you. they say, "well, if you wanted a firm bed you can lie on one of those." we provide the exact individualization that your body needs. welcome to the sleep number store's biggest

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the collar index hitting a fresh session low here. let's get thoughts from nick brook, head of currency strategy at wells fargo. nick, what's going on with the dollar? >> incompetent what we saw is a little more caution from mr. bernanke and you see the costs of quantitative easing were manageable. i think the expectations had been scaled back hitting into today's speech. and the fact that he is at least kicked the idea of eventual easing in tact i think is probably why we're seeing slippage on the dollar. >> what's interesting, there is commentary this morning i believe from lloyd's where they talk about how more qe skoob positive for the dollar, it would support risk and yields would be higher and what's your

own view on that? >> i probably tend to say that i got with the traditional quantitative easing is bad for the dollar. we don't quite have the worst case scenario or tail wind they have in europe so i think the lid implications would be important. >> i will say we're looking at the euro at 126.19 and it is almost as if they're fighting to be weaker and i imagine in that case it will be other that is benefit. >> certainly like maybe currencies like the canadian dollar and the mexican peso getting some benefit from being attached to the u.s. which is still growing from an economic perspective. i also think the way to play this, the end point hasn't changed for the next four to eight weeks. the market still thinks we might get eventual federal reserve easing and although it will be messy perhaps mr. draghi's comments ever on the last several weeks we will get ecb action as well. with both of those i prefer to continue to buy the euro and foreign currencies as we move

toward that policy action. >> nick, where are expectations on what draghi will actually achieve? to my mind it is about whether the euro and about whether draghi can pull the rabbits confidently out of hats beginning next thursday. >> it is possible to get a replay of august and september. we were a little disappointed with mr. draghi not having immediate actions but afterwards thought we'll get bumpages and i think it is clear from the rhetoric and the recent dewelt peegs that the ecb will come through in bumps and if it is not september 6th then certainly by october after we get the german court ruling. >> i disagree very strongly and this is why i ask the question. i think it is absolutely clear there will not be bond purchases next thursday and unlikely to be bond purchases the month afterwards. that is because you see the standoff between, a, i standoff between draghi and the spanish where they say they will delay

and the news today the he had head of the bun das bank threatened to resign and another is suggesting that they're asking the italians and spanish to delay the requests for a bailout that pushes bond buying back towards the end of the year very importantly, nick. >> that's what makes the market. i would say the german politicians are still i think showing some kind of support for the ecb and i would agree with you with respect to september the 6th. i still think by october we will have a full policy proposal on the table and that in itself will be important. that means that were bontd market conditions to deteriorate and were they forced beyond their desires perhaps to seek assistance from the ecb, they would be ready to act. i do think that would be positive and i think that would be positive for the euro. >> nick, where does that leave the dollar at say year end? anything from bernanke today changed your view? >> no, not particularly. i mean, i do think we're still in the stages of a corrective

rally as far as the major currentries are concerned. we think the euro can get to 130, for example. the pound can probably get close to 160. i would like to distinguish between the short-term corrective rally in the euro. longer term we are still facing the issue of a european recession and also a very active monetary policy. as they are removed and we focus on the economic factors we think come late 2013 euro will be at 120 again. >> wow. 130 by year end potentially. thanks very much for your thoughts there. >> thank you. >> market as you can probably see has bounced back a bit, the dow now up 119. over at the journal tweeting looks like the market read all the way to the bottom of the speech and the last sentence does include these words, the federal reserve will provide additional policy accommodation as needed. >> this is not the first time we have seen this by the way, the knee jerk reaction one way and people read through and process it and think perhaps they would

take the other side. >> that's as needed, not soon. the minutes of the last meeting -- >> soon? >> as needed is open ended. >> simon, this is exactly the point. it is open ended. that's all you need is the sense the fed is in there ready to step in the second things weaken and if not that's why we're stuck in this range. either the ma being row data he can with aens and you price it moves or you take out the likelihood but keeps you range bound. >> we'll see. we'll get more market reaction after the break and talk about mitt romney's performance and clint eastwood performance at the rnc last night. >> we weren't always successful at bain but no one ever is in the real world of business. that's that this president doesn't seem to understand. business and growing jobs is about taking risks and sometimes failing and sometimes succeeding and always striving. as much advanced technology as the world around it. with the available lexus enform app suite, you can use opentable to make restaurant reservations. during the golden opportunity sales event,

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about an hour into trading, some of the stories we're squawking about, all 30 dow components in the green. the biggest gainer intel up more than 2%. shares of facebook falling 3% to fresh record lows, the new all time low 18.23 and the university of michigan's consumer sentiment index coming in higher, the highest level since may. >> interesting data. >> very interesting data. very interesting as we pick up the comments we have had from ben bernanke.

we're an hour into trade, just over an hour into trade. let's head to chicago for more of the market's moves. what movement are you seeing there? what draws your attention? >> what movement are we seeing? >> yes, on the metals markets. where are we in the wake of bernanke? >> in the wake of this what we see here is probably the obvious little slight retrace as we have taken a little bit of the quantitative easing premium out of the market. however, really, on a fundamental scale very it is changed here. we still see this market moving higher in the months ahead and still see the same fundamental back drop of the prospects for quantitative easing at the next meeting and really across the board when we look at central banks and we see easing possibilities along the whole rung. >> isn't what's new in the last

half an hour, 35 minutes, the fact that the chairman of the federal reserve is saying he is mindful of the disadvantages of further qe and qe has not necessarily been the success we might have hoped it would have been in bringing unemployment down? isn't this a more negative assessment of where we might go on inflating the economy artificially and therefore at the margin no negative for gold? >> we actually see the fed still if you will wielding that stimulus stick. we realize it may not be right now and it certainly might not even be at the next fed meeting. there is certainly the possibility for that. it is the back drop. it is this back drop of debasing currencies and here in the u.s., in europe, potentially china that continues to score gold along with the same other fundamental factors we have been talking about for weeks on end. we have central banks as huge net buyers of gold and we have seen the speculative position at the same levels right now we saw

in late '08 and '09. we see the fundamental back drop propping up these prices, the three rungz if you will supporting gold and maybe not something to drive it higher like the qe at this moment in time but we certainly have the support below the market and as long as we have the prospects for that quantitative easing, as long as it doesn't come off the table, we believe gold will continue to move forward. >> that's the key question. does the gold rally continue? does it need to see policy announced before the rally can continue or is it just this ether that can -- can it feed on that because it has already had a nice move? >> certainly at some point in time if we go long enough and haven't seen in i action from the fed, certainly you will see some of that qe premium come out of the market, and i also understand your point. we have seen a pretty significant rally here, up 15 plus percent in silver, almost 10% in gold from the minutes from the low that is we had just prior to the minutes, so we have seen a significant rally. however, this is a seasonal time

for the metals markets, very few people are aware of. this is a period we come out of the summer doldrums and see the holiday season coming up and it is a demand driven market from here on into the end of the year. we believe this is going to drive prices moving forward as long as we don't take that qe off the table, as long as it remains a supportive factor. >> let me say one more thing as we say goodbye from europe today which is astounding, as the eurozone goes into recession clearly inflation rate has risen from 2.4 to 2.6% and that may be an oemen to the broader point you're making there. thank you very much for joining us, dave mooeger from the cme. >> weibernanke is reigniting a rally and let's get reaction on the floor of the exchange from

bob pisani. >> e-mails from people, what the heck is going on, up 100 and comes down to nothing and back to 100 points. why does this happen? i am going to tell you why it happens. nobody reads the speech when it comes out. all of the trading is done by programs, algorithm trading programs that are machine readers and look for key words. if you think he says accommodation four times you buy and zero times you don't and in the early minutes of trading that's actually what guides it. this was a speech in defense of policy accommodation, loose policy accommodation, so he didn't use a lot of words associated with qe3. that's why you get the sell off. then a few minutes later, guess what happens, human beings like me actually start reading the speech and they read the whole speech and i didn't finish reading it until 10:20, about 15 minutes ago and he ends with the following lines, here is what's important, why the market turned around. he comes out and says the federal reserve will provide

additional policy accommodation and the federal reserve will provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in the context of price stability. of course you heard this before. he said it before. he concluded with those particular lines. that's the whole thing. when people looked through it and said, okay, the bernanke put is still there, that's when the markets started turning around. he didn't do a lot of things about qe3, didn't talk about expanding the balance sheet or cutting interest rates on excess reserves and did say something and put this up before i go back. the forward guidance may have conveyed a greater willingness to maintain accommodation than private forecasts previously believed. you didn't believe us when we said we would keep rates this low. more in the next hour. back to you. >> thanks very much for that. >> last night mitt romney accepted his party's presidential nomination and made his case as a fix-it man who would lead the country to renewed prosperity.

>> the centerpiece of the president's entire re-election campaign is abeittacking succes. >> dan bartlett served as counselor to the president and white house communications director during the george w. bush administration and currently the president and ceo . i want to get your take on romney's speech and ryan and christy and the whole bit. it is unfair but this is what people are talking about. here is the post this morning, it is not romney, it is clint eastwood, the headline is feeling lucky, punk? if you were organizing this convention would you have let romney get upstaged like this? why did this happen? >> i have no idea how something like this happens. obviously when you have somebody like clint eastwood who is an

icon to so many americans and around the world, you're obviously very excited about having him come and speak at the convention and you obviously would hope it is one tightly controlled and scripted. i saw somebody compare it to the person at the rehearsal dinner and you're cringing in your napkin wondering what the next world is going to come out. that was wild. i could not believe it. whether it upstaged or not, in the scheme of things it was a very successful convention for mitt romney. the buildup with his wife ann romney to paul ryan the night before, in his speech you are trying to accomplish a couple of things and you have to really choose and they felt like more than anything else he had to be comfortable with the speech he was giving and i think he was last night. he wanted to share his biography and share his personal life as i thought he did effectively. it wasn't a memorable speech in the sense there were great lines that will be repeated throughout the fall campaign. he took on some of the direct attacks leveled by president obama, particularly by bain which i thought he did successfully, and i think some

of the people were wishing he would give more specificity on how he would fix the economy, and i think you're seeing some of that commentary today, but all in all this was a very successful convention. it was a very workman like speech that accomplished what i think everybody felt like mitt romney had to accomplish last night. you're right, the clint eastwood deal was just absolutely wild. >> and in fairness that will fade. we won't be talking about eastwood probably a week or two from now. you mentioned the defense of bain, and it is coming. he has this new website, sterling business career.com. a lot of people on the street wonder why that wasn't happening six months ago. was it wise to wait until people really were paying attention? >> you know, i think that's a fair criticism. i am not sure they would argue they haven't been pushing back, but i think they made the assessment that, look, when everybody tunes in in the fall after summer vacation we're going to put a full throated defense regarding his career at bain. i thought he did an effective job last night and i think

you're seeing the apparatus and all of those things that go with pushing back on that and make no mistake about it. next week's convention in charlotte is going to be all about tearing down mitt romney, his record, his vision, his plans, and i think particularly they will really go after plans. the democrats aren't going to sit up there and talk about the record of the last four years. they will put their own defense on the economic record for what it is and they're going to turn their sights on the republicans, on mitt romney, on the ryan budget. they'll go back to the medicare fight. i think the republicans will be ready for that but net-net i think what mitt romney and his team are hoping is that they build up a little bit of a protective inknock la active force coming out of this convention, the democrats coming next week and obama comes and so whatever bump he gets this week, center stage and after obama

that we have a dead heat going into the debates which will only be a couple weeks away. >> and that is where the real action will be a lot of people argue. your job at hill is to frame reality, right? they can be looked at through many different prisms. what if the next couple of jobs numbers are good? if you're in the meeting with the romney guys, how do you explain that? >> i think it is going to be trickier for president obama because they're not herald going 8.1 to 7.9. it is still going to be a bad situation. i think the opportunity for the romney campaign, still over 20 million americans still looking for work. i think the economic picture will be one and when the statistics come out and the reports come out, the public is still not going to feel those effects. this was the dilemma that bush 41 felt in 1992, even if there is a slight imperical change for the better in the numbers, the mood of the country is we're not

headed in the right direction from an economic perspective and it will play to romney's hands and even if there are improvements and talking about the economy and unemployment, it is a good day for the romney campaign. that's where president obama that wants to make this more about values and it is interesting is that the democrat will be running a values oriented campaign here because they will talk about fairness. they will talk about which plans will make it better or worse and who is up and who is down and the whole pitting groups against each other. any time there is an economic report coming out, even if it is a slight improvement, i think it is a good day for romney. >> well said, dan. great to talk to you. look forward to a lot more. >> all right. >> take care. >> very good day for travel as we head into the labor day weekend. what's the agenda look like from the major airport hubs and train stations? we're talking planes, trains, automobiles, all of that next. people with a machine.

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big news in the travel industry. looks like u.s. airways and american airlines are closer to doing a merger deal. the companies have signed a non-disclosure agreement and agreed to exchange confidential information and u.s. airways is trading higher. on that phil joins us now. this was some time coming and was clear will i resisting at some stage getting to where we now are. why do you think it is happening now? >> keep in mind tom horton wants to control the process and that's why he was resisting at first and when you talked about a possible merger with u.s. airways and the non-disclosure agreement was widely expected to happen at some point and i think what we're looking at now, simon, a couple of months where they're going to exchange information and u.s. airways and american and they're going to see if they can come to some kind of at least a framework for a possible merger. the big sticking point here is you have two management teams

that both want to run an airline. this is not a case in the past you had one airline buying out another airline and the airline being bought out and had a management team that didn't want to run the company and just wanted a bunch of cash to get out of the way. that's not the case here. i would not be surprised if at the end of this couple of months they don't come to an agreement and we look at one team making a hostile bid for the other. >> and of course our colleague and of course our colleague andrew ross sorkin identified that actually the kind of rewards that can be achieved by the management teams don't necessarily point to doing the deal, particularly at amr. >> right. they get money, a big chunk of money if they can bring the company out of bankruptcy and then maybe do a deal. the key is you have to bring them out of bankruptcy. if you're u.s. airways you want to do the deal in bankruptcy because you can get more favorable terms. that's one of the problems we're looking at between these two eventually hooking up. i think we're going to have a quiet couple of months. the at least you're not publicly going to hear much as they try to negotiate and see do we have the framework here?

>> okay. let's talk about the fact that it is labor day weekend and a big travel weekend, if ill. >> yeah, and for the third time since the end of the recession we're seeing a new level, record level in terms of the number of people of the number of people who are traveling and for a lot of people the know cuss is on gas prices. the highest in the country, no surprise in hawaii at $4.32, the lowest in colorado. the national average of $3.82 is up a couple cents since a year ago. aaa expects 32 million people to travel at least 50 miles this weekend. most will be doing it by car. 2.9% more people will be traveling more this weekend versus last year and there's a noticeable increase in terms of the number of people that will be flying this weekend. 4% more according to aaa. the average airfare according to farecompare it's up 3% year over year and as we take a look at the airline index, a couple things to keep in mind. you are seeing fares generally hold up for the airline industry and that's one reasonable we've seen the airline index, you

know, not trade as low as some might expect as we head into a slow fall, but the other reason, simon, when you look at the possibility of consolidation, that's why investors are bidding these stocks up. >> and a further restriction on capacity to keep those prices higher. >> you bet. >> phil, it's good to talk to you. thank you for joining us. >> you bet. >> phil below lebeau for us on travel weekend. one company is tamaking the list for all your shopping needs.

consumer sentiment data out this morning showed a jump to a three-month high in august, still many consumers looking for deals as they expect wages to remain flat for some time, and for companies helping with that, business is booming. the world's largest online coupe been and deals marketplace and retailmenot.com has voucher codes in the uk. welcome, sir. >> good morning. >> tell me about retailmenot.com, an poly-based app that people can use to go online and find all their coupon codes in one place. >> we have an app for the

iphone, but the main source of our traffic today 80% of it just comes directly to the website. people can come in. they can find a coupon for stores like the gap, walmart, target and click on it and use it online. >> so, what's your business model, then? >> our business model is we receive a small commission for some of the sales we generate. >> what's interesting is this space is extremely crowded and there are a number of apps where you can scan a bar code and that will immediately generate the best deals in a particular area. why is it you think people will go to your website, use your information instead of just being able to kind of zip through some of the other providers out there? >> one of the things we have is skill. we have over 60,000 merchants on this site, almost any online store you'll find coupons for that store on our site. it's not a question of i wonder if they have that merchant or not. i mean, we have it. >> why is that? because it appears as though some of what you do is almost a social media element to it, people are uploading coupon codes and that's how it works?

>> it's a huge percentage of our coupons, 40%, almost half of the coupons on our site come from consumers who have taken the time out of their day to upload these specific coupons and share them with others. it's an amazing sort of social phenomenon. >> you don't get any money from that, do you? >> we do, actually. about half of those we get a small commission for. >> we're talking to a bunch of consumer products companies lately who are facing higher commodity costs, the drought, for instance, affecting companies like kraft, what have you, hormel, when pricing is pressured, right, do coupons, do they tend to issue more or less? what determines whether they put out more or less into the marketplace? >> a great question. companieies use different reaso to develop coupons. they've been around since the civil war and coca-cola was one of the first ones to use them, they use them for a bunch of reasons. typically they try to clear out merchandise that isn't working. a computer a year old. >> new products. >> to generate business to your point, it's labor day, let's get

people into the stores. >> are you in direct competition with grupo? >> no. we're almost 180 degrees from groupon, they do big discounts for small businesses irregularly, we're doing small discounts for big businesses every day. >> shark media, maybe another ipo to keep an eye on. ben bernanke putting a bid on the markets here, up 122 points on the dow, a lot of it still has to do with europe. we'll talk about both ahead on "squawk on the street. " it's already engrained in our dna. during the golden opportunity sales event, get great values on some of our newest models. this is the pursuit perfection.

want to thank kelly evans for joining us the whole week on set. safe travels back to europe. >> thanks for having me. i was here for the bernanke speech on a friday. no place i'd rather be. >> you are a true, true geek. >> you are not going back by lufthansa, are you? >> i will hopefully be avoiding that mess. >> come back soon, kelly. >> thanks for having me. >> simon will be here for european close and "power lunch" later today. >> a special edition of "power lunch" on bernanke day. in the meantime here's what you might have missed and there's a lot if you're just tuning in. >> welcome to hour three of "squawk on the street." here's what's happening so far --

>> when you tell regulators we're not going to do what you want, they have a habit of getting back at you. that's what's called xroneny capitalism, when the government says do this, you do it or we punish you. >> we have maintained the low interest rates. we have not begun the fiscal consolidation process, so i think that's really what the next step is going to be. in the back of everyone's mind i think everyone knows that's the only task that makes a hot of sense going forward. >> my view is that growth will without further policy action will stay around the current level, around 2% through the rest of the year. and just a little bit above that, maybe next year. so, without further accommodation, i see the unemployment rate basically staying where it is now, around 8.75 at least for another year and a half. >> given the weaker industrial production figures globally, it will be for the figures next week to hold up, if they do that if consumer confidence is okay, i think you'll see a much better

attitude in the market unless people start to price out qe. >> he's making a strong case for the use of nontraditional policies, talks about all the potential costs. he says they're manageable. seems to suggest the benefits are higher, but he isn't specifically saying that it's going to happen in september. he wouldn't do that here. good friday morning. live here at the new york stock exchange. the markets rallying on bernanke to the degree he said anything new. the headlines the markets should not rule out further use of nontraditional policies. the fed will act to promote growth as needed. the cost of nontraditional policies does appear manageable. the last five bernanke speeches the market has rallied up 154 points. we're almost there. intel's one of the biggest gainers on the dow and the s&p today after it's announced it's teaming up with idt. and then there's facebook, sliding to a new all-time low

following a flurry of cautious commentary this morning. bank of america slashing its price target from $35 down to $23 while bmo cut its target from $25 to $15. and the stock would only be attractive at the $16 level from another analyst. let's get to the roadmap. we'll get some reaction from bernan bernanke's speech, jackson hole, a former fed governor and see what he thinks of the remarks. and splunk had a blowout second quarter and the ceo will join us live and give his take on the quarter and see what the company has planned for the future. and two economists in the room with the fed chairen share their thoughts on his remarks. and mitt romney officially accepting the nomination for president as the rnc wraps up. now it's the democrats' turn, we'll get a preview of what's to come in charlotte next week. that's coming up in the next hour. first, though, the chairman ben bernanke defending easy

money policies saying qe has continued to be effective. for more reaction to bernanke and jackson hole, we're joined by cnbc contributor robert heller joins us this morning. robert, always good to have you. welcome back. >> good morning. >> just got a tweet from bill gross over at pimco who said it was clear to him at least that ber nanky is going to go out guns blazing his words with qe, might not happen today, but it's going to happen. is that a wise view? >> i doubt it. i don't think the federal reserve will take any action, certainly not until the fiscal cliff, the fiscal uncertainties are actually addressed. if they're not addressed and the economy falls off the cliff, yes, then you may get qe-3, but i don't see that happening before the election. >> all right. it sounds like you're saying it's really in congress' hands. >> absolutely. and, you know, the fiscal cliff

as it's known is essentially forcing congress' hands. the administration has to address the problem. otherwise you get the tax increases that will be there. you get the mandatory spending cuts. and that will be really detrimental for the u.s. economy. >> people are trying to parse through the speech. i want to read to you a brief sentence which some are calling at least one of the key paragraphs. the chairman references various studies considering the cumulative influence of all the fed's asset purchases, found total effects between 80 and 120 basis points on the ten-year treasury. these effects are economically meaningful. does that imply if they were meaningful that they're worth trying again? >> no. that doesn't follow. i think if you would keep doing the same policy over and over again, the additional effects will be less and less. the very first fed actions

taken, the purchases that they had right after the crisis of '07-'08, they were highly meaningful. the fed supplied liquidity and so on. after that, in my view at least, the effects have been tapering off and they're becoming smaller all the time. >> he tends to want to downplay the risks. i wonder if you're so negative on the prospect of more qe in the short term if you think the chairman should have had a broader discussion of the risks involved? he calls them manageable. do you think they're unmanageable? >> well, they're difficult to manage. and i think he will admit that, because nobody really has to do it beforehand. so, it's the first-time situation. first this one will happen as eventually interest rates will rise. there will be enormous losses on the balance sheet of the federal reserve. he says in his speech very quietly, well, it's more important to have the economy

performing well than to watch the balance sheet of the federal reserve and potential losses there. but, i would like to submit once you have losses of hundred billion dollars or more on the fed balance sheet, there will be a lot of people who will be screaming their heads off. >> if more policy, robert, is going to center around what happens in the halls of congress, and that is a terrifying thought, how does the market look at what the fed put option strike price is? i mean, people have said policies should be tied to some economic targets. it's awfully difficult to target what the democrats or the vote counters at heart. what to you signals more policy and what doesn't, then? >> well, i think you're absolutely right. the election outcome will be a key determinant of what is going to happen in the economy, and to put a strike price value, as you put it, on that outcome, that's,

well, it's essentially forecasting the future. difficult thing to do. i don't think there's anybody right now who would be certain as far as who is going to be the next president, romney or president obama. so, as long as that uncertainty prevails, i think it will be very, very difficult to nail down financial conditions for the future. >> yeah, yeah, i guess in that case we're going to be watching poll numbers and votes. >> absolutely. >> finally, before i let you go, robert, markets up 131. a debate this morning about whether that is tied to the bernanke speech or maybe more the news out of the ecb today and hopes for policy there. to what do you think the market is more closely tied? >> well, i was going to try to get away with saying, well, both of them are important. as i said before, the fed i don't think is going to be the big actor in the next 60 days. the fed will be on the sidelines. so, europe is an important consideration.

>> robert, appreciate you coming on, and your clarity of thought. good to talk to you again. >> thank you, carl. >> robert heller, joining us, talking somber nanky today. get to the capital markets editor, gary kaminski, some responses in this poll that he's taken earlier in the week about -- >> well, the timing is absolutely spectacular. just listening to that. as a reminder for those who might not have been paying attention earlier this week, carl, we asked you framing six possible topics that will be the focus of equity markets here in the united states the rest of the year when everybody comes back to work on tuesday. let's bring up those six topics, again, as a reminder. i'm going to give you the numbers and they're pretty interesting. please stay on this screen. make sure i do this right. we got 2.0 percent, nobody, zero, in terms of concerns about the volume and this kind of blew my mind, carl, was a pro forma measure, nobody, we've got a very significant amount of responses, nobody really even

focused on all at q-3 earnings, corporate revenue in america. so, where were the numbers? we just heard heller talking about the fed, he said he doesn't think the rest of the year the fed will have that much imprint in terms of the equity markets. 13% of the viewers agreed. and we talked a little bit about europe. 18% expected the ecb and concerns in terms of europe. so, carl, we've got two things left here, the u.s. elections and concerns about inflation. i'm going to flip it to you to take a guess. it was so overwhelming in terms of the 100 responses, what do you think our very smart viewership said they are thinking is the biggest -- >> you mean door number one. >> huh? >> door number one. >> you got it. 62% -- 62% -- believes what happens in the u.s. elections, take 7% back there, believe this will be the single biggest driving factor for u.s. equity markets and it was so overwhelming that it got me to

start thinking if i was going to run a portfolio and go to work on tuesday what i would do. i'll get to that in a second. you hear it constantly in the summer, this is the most important election in our lifetime, most important election going back to 1980, in terms of equity markets this sample sort of means it is. what does it mean in terms of investing? it means something. let's clear it out here. clear. sorry. if i had to take everything into consideration what we got from these responses, there's one good place to hide. and that is that the fed is going to basically continue to press on the gas when they need to, that the european problems will continue to be a concern, that while inflation concerns are out there, they're not going to be a predominant factor and that nobody's concerned about the lack of volume, what does it tell me i want to do? it tells me i want to be in the junk, jnk, etf, we can bring that up, hopefully. it basically says to me junk bonds will continue. there's no bubble in junk bonds.

you'll continue to get the returns. there we are. there you go. what it says to me this will continue to be an asset class in terms of absolute and relative performance, it's a good place to hide until we get to november the 6th. >> you liked this for a while. >> yeah. >> sounds like you like it a little bit more. >> i think when you take the consideration of those six factors and you put your portfolio manager hat on, you say this is exactly the way investors are going to look at the world, you've got to wait until november the 6th. i didn't know if you noticed my pants. >> i was going to bring it up. >> it's become a great topic of conversation and 90% of the guys here on the floor think these pants are great, so 90% love them. 10% don't. always got to have a little fun there. >> not even an undecided, an independent, a swing vote? >> you'll have to tell the viewers what you think afterwards. >> i think you already know. >> yeah, yeah, yeah! >> all right, thanks, that's fascinating stuff. let's get to kayla who is

not wearing pants like that back at hq with a market flash. >> i will cast my vote. i actually kind of like them. i think if you're ever going to get away with it it's on a summer day before labor day. we're watching the shares of first solar recovering a bit today. up about 4% after a steep slide yesterday on the back of reports that the company was slowing installation at a project out in arizona. but today a report from capital markets said they don't view it as a negative event. they think it's conservative and they think it's a good thing as far as managing cash flow. you can see the market believes in that thesis just a little bit, up about 4%, carl? >> all right, thank you very much, kayla. straight ahead, splunk trading near new highs, doubling its ipo price after a strong second quarter and strong guidance. can they keep it going? we'll talk to the ceo next.

take a look at markets. the dow up 136. took a while for the market to digest bernanke's speech in total, but in general we're keeping with the trend. every time bernanke has spoken at least for the past five times the dow has had a triple-digit rally and we're having one right now. the s&p getting close to the recent range at 1411. meantime splunk spiking almost 17% today. it's one of the top performing ipos of the year and its earnings results after the bell giving wall street something to be excited about. joining us this morning for a cnbc exclusive is godfrey

sullivan. welcome back, good to see you. >> good morning, carl, how are you? >> good. talk about coming on a week where "the new york times" puts a story about web services at various companies, about the cloud on the front page. you've been called the first pure play in big data. do you agree with that sentiment? >> yeah. we probably are the first mover in big data. anytime we can earn 400 new dismedi customers in a quarter, we're happy. >> everything we hear from the legacy venders is i.t. spending is stickier, denss are taking longer, it's a tough read in europe. are you seeing any of those things? >> europe was slower for us. our growth rate there was less than the company's growth rate overall, but our growth rate was 71%, license up 61%. record number of new customers and the like. so, when you have new software and innovation and the like going on, you get a shift of spending to your plate. so, you're pretty happy about that. >> is the pie getting bigger or are you actually taking some

share here? is that what's happening? >> we're creating a new category. we really don't take any money out of somebody else's mouth. we're really creating a new software category and we have to fight our way up the awareness level and earn our place on the cappex spend list, so that's probably the longest part of our sales cycle. >> when you say building awareness, who do you have to impress, i mean, on your list of clients, who are the biggest? who do you see the biggest growth coming from? >> if you go back a year, probably not very many global cios havered of splunk, now they probably heard of us but we still have a lot of work going from awareness to being inte e intimately aware of what we do to hiring us. >> there was a survey back in may, pacific crest cios 41% of respondents said they'd make an investment in big data this

year, leading some to say there's an accelerating adoption of big data. are we a quarter of the way through? >> we really focused on machine data which we think is the biggest and fastest-growing piece of the big data equation and machine data is what's generated by servers and networks and cell phones and website transactions, cell towers, you name it. it's the devices that have exploded in terms of data and that's what splunk really does is ingest and analyze the data and make it really easy for customers to get value out of it, so that's why we're enjoying the success we are. >> now we have something called the splunk storm. do you want to explain what it is? >> we just launched earlier this week splunk storm which is a first sas offering and it's targeted at developers. so, almost all developers now start their projects in the cloud at am zone or rack space and we want to be there with them so when they're budding their projects, they actually have splunk built in so that when they deploy they get the benefits knowing that we can

analyze all the data that's being generated by those applications. so, storm is really targeted at developers on the web and we got about 400 customers that participated with us in the beta project and so far, so good. three days live. >> yeah. yeah, just on the 28th. it sounds someone might want to argue you're beholden to what big corporations decide, but i'm guessing that to a large degree, what small businesses decide and how they manage to use the cloud to their advantage is going to play a big role in your future. >> yeah, small customers who are moving past infrastructure start their business in the cloud and we want to be there with them as well. but we also have for years had a free download of our product and customers all over the world can download splunk off our website, run it on prim and get value there. and a lot of businesses start with us with our free products and ultimately buy something. we're in 75 countries already which is really the result of the viral nature of our free product. >> yeah.

600 employees for you right now? >> yes, about 600. >> how fast is that growing? >> we grew about 200 from 250 to 450 last year, and this year from 450 to more like 700, so growing the employee base by about 50%. >> well, it's an amazing story and we continue to keep a close eye on you guys. thanks for coming in. >> thanks, carl. when we come back, the battle of the bulge is the battle of the big gulp, why large quantities of sugary drinks may soon be hard to find. and the close in europe, a pretty eventful day there, too, 8 1/2 minutes. back with that.

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york and now some cities in california. voters will weigh in on the state's first tax on the same types of beverages in november is no sugary drink safe? our jane wells is live in l.a. with that story, jane? >> carl, you know, mayor bloomberg wants to ban big sodas but if you ban them, you can't tax them. two california cities desperate for money want voters to approve taxing sugary drinks a penny an ounce, 7 1/2 cents for this all the way up to 64 cents, like a 50% tax. unless you buy diet soda, no tax. one city is richmond home to the disastrous chevron oil refinery fire, richmond has declared a fiscal emergency. the proposed tax would be charged to businesses, not consumers, so businesses would have to decide whether to pass the tax through or eat it or drink it in this case. the second city is struggling el mon monte, california, ranked ninth in the state in childhood obesity. of course, if businesses don't pass the tax through consumers have no incentive to stop drinking soda. >> people understand these types of taxes, and the impact that

they can have on a community, not only will hopefully it will reduce the consumption of these products, but it also hopefully increase some revenue, that the city will use for the benefit of the residents. >> we are hurting already. keep adding taxes and taxes. doesn't make sense. >> a couple dollars won't hurt. >> not really that big of a deal whatsoever the way i think about that. >> i mean, just a penny. >> i think there's no reason to be adding taxes to the soda, wow. you know, people need to drink, not just, you know, pay less, not pay more. >> the beverage industry is pretty fizzed up, reportedly spending $350,000 to defeat the tax in richmond and launching a measure to defeat the tax in el monte. the u.s. chamber of commerce has launched a campaign saying the american economy cannot recover until california does. >> california is struggling, badly. 2 million people out of work. huge deficits. >> the chamber accuses

politicians of hiding billions instead of creating jobs. however, the state says private sector job creation in california's on its fastest pace in a decade, outpacing the rest of the country. later on "street signs" carl, what store owners and danny glover think of the soda tax, back to you. >> you always got to take into consideration what danny glover has to say. are you going to drink that, by the way, jane? >> over the next week. here's my thing, though, if you go and say i'm going to get a soda and they just give you a cup to fill it up, you'll say, i'll take diet so you don't pay the tax and then you go over and put just regular cola in it. >> unbelievable. thanks so much. >> what about that? >> jane wells. a few minutes left in europe's trading day. ut this country? trick question. i love everything about this country! including prilosec otc. you know one pill each morning treats your frequent heartburn so you can enjoy all this great land of ours has to offer like demolition derbies. and drive thru weddings. so if you're one of those people who gets heartburn

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european markets are closing now. >> well, we got some green over there and a euro rally is, too, although not for the reasons you would expect. >> two things are very clear in europe, you are going to get bold action from the ecb but you're not going to get it on thursday. it will be a process, and it will be delayed. europe has rallied, it rallied right from the off today on european issues, because you have so many members now of the ecb that are coming out and talking about the prospect of bond buying and saying, well, it will be conditional, and one of the main regulators in europe is proposing that the ecb have sweeping powers to regulate the banks.

in other words, banking union is on its way to europe. so, we were up right from the open. making gains. if anything, bernanke here has been just a bit of noise along the way. it has taken london down, but the other markets have continued to rally after that. also in madrid today unfortunately they have announced the bad bank that is going to take the toxic assets away from the other players, so you've got a rally coming through on a lot of the spanish banks at the moment. it also opens the way now for madrid to get that $100 billion euros of aid to its banking system, that's different, of course, from the big sovereign bailout. other banks around europe have also done well credit by credit agricole in france as you can see. so, we're now trading to the end of the month in europe. it has been a phenomenal month, because draghi is promising to do all that he's required to save the euro. to italy and spain are up 8%, 9%. and here this turquoise line, the top 50 blue chips around

europe are up. the best part of 5%. and today have managed to make further gains having, of course, just fallen back recently. so, wait and see mode now until thursday. this, guys, is real interesting. the man at the helm of the bundesbank, refusing to be drawn on the yen weidmann has offered to resign over the past several weeks. it doesn't matter to americans if he goes. the ecb will do what the ecb will do. the fact that he might be -- might be -- resigning is an indication, "a," that he's losing the battle within the ecb to stop the bond buying. and if you're an american investor, you really simply want the contagion stopped and the bond buying from the ecb. the other thing that this is important is because it is reported in one of the italian newspapers that angela merkel to

try to stem the conflict within germany is asking italy and explain to delay their micti application for aid which would trigger the bond buying further down the line. you have to have the application for the bailout from the italians and the spanish in order to trigger the bond buying from the ecb further down the line. they've made that very clear, so this is a process, carl, it is not going to end now. i want to show you one last thing which is potentially concerning. this week spanish yields have blown out. and on this news i don't know when if it's because of the bad banks being announced in madrid, but you can see all the delay, of course, to the spanish bailout at the behest of merkel. we are now approaching 7% on the ten-year again despite all the good news that you see, despite the equity market rallying, those bonds are selling in madrid. back to you. >> all right, simon, see you in a little bit. doing "power lunch" today as well. simon hobbs. let's get a check on energy

and metals, courtney reagan is at the nymex court. >> hi, good afternoon or good morning again. we saw what happened in crude oil prices and traced equities. the initial drop-off on the headlines of the bernanke speech and when the traders took the time to read the speech, they went back up. and we're seeing traders settle into the positions into the long weekend after that much-anticipated speech and those headlines have now come across. we know exactly what ben bernanke is at least thinking today. again, capital partner and cnbc contributor john killdoff said that it's enough to support the commodities complex at least gold and oil for the time being. and speaking of gold, also we saw that selloff but, then, again tracing the euro and tracing equities and moving back as bernanke opens the door for further stimulus. the gold market, precious metals liking that. in fact, gold, silver, and platinum still on track to have their best month since january and that's all because of the

speculation leading up to today's speech just further supporting that. carl? >> courtney, thanks so much. let's bring in bob pisani with a look at what's moving here at post nine. >> i want to reiterate, people go crazy when the market goes up and down and then up, we get the v-shaped moves whenever the fed makes comments or a lot of people make comments. let me show you what happens here. i agree with simon's point, we were up. the moment the speech comes out and then it drops 100 point. then it drops 100 and it's down for 10, 12 minutes and then it bottoms at 10:15 and we're back up 100. why do you get the v-shaped patterns and what happens is nobody fully reads the speeches carefully in the beginning, they are scanning for key words or worse they have computers scanning for key words. and in this case there was not much qe-3 key words, expanding the balance sheet or cutting

interest rates on excess reserves, comments he would have used as a context of a qe-type discussion wasn't there. your first reaction is to sell, i think that's what happened. i think people read the speech, i took until 10:20 to finish the speech. it was fairly complicated. in the middle you have the statement that's buried. put up the statement. this is why i think the markets rallied. the cost of nontraditional rallies, shows that we should not further rule out federal policies. that's the bernanke put, there it is. and he concluded the fmoc statement, saying we stand ready to do things. it's there. the bernanke put's there but you had to real id very carefully and the whole point wasn't so much about it, but it's there. and that's why i think the markets turned around. he indicated, we're here, we're not going anywhere. let's look at etfs moving,

because courtney had an important point on gold and silv silver. this is a light volume day, it's very, very noticeable. people have been buying these kind of precious commodities, again. there's been a lot of shorting of the s&p 500 this week. it's funny to watch the short etfs get the volume. people are selling the ultrashort etfs that they had bought in anticipation that there would be some disappointment from bernanke here. finally in terms of sectors the only thing i'm seeing a lot of movement are banks, oddly enough. the financial etf discussion very good volume today. i think what's interesting, too, there's a belief that the entire ecb staff is in frankfurt this weekend working on the bond-buying program. i agree they're working on it but i'm rather shocked the markets are up on the hope that something would actually be announced very soon. i think the market setting itself up for a little bit of a disappointment here because it's not imminent they'll have policy announcement on it. just a warning from weidmann

basically says give us a little more time and i think spain will put off making an imminent announcement for aid right now. >> yeah, like multiple tea leaves to read. >> this is a really tough one. my bet is they'll have the announcement to come and they'll do it with portugal, they'll announce a bond-buying program or if spain is not ready or they can't get conditionality, we've already got it, portugal has agreed to certain conditions they can start a modest bond-buying program and that's the way it works. they're sitting there, they've got a deal. >> thanks, bob pisani. gary is here, got a take not only on the fed but on the facebook, too, right? >> we'll get to that in a second. but listening to courtney, listening to bob, looking at some of the inflation-linked securities and etfs and the inflation survey we did, only 7% thought it was a concern. one area that seems really ripe for a massive collision later

this fall is this idea that bernanke says the following -- inflation has remained at 2% despite repeated warnings that excessive policy accommodation would ignite inflation. and this seems to really be one of these areas where if you have to sort of predict where are we going to see some sort of massive disagreement come in fall, i think that's it. because he seems to be really digging his heels in and truly believes that all of thekwan quantitative easing has had minimal impact. you and i know there are many people that manage huge amounts of bond portfolios that simply disagree. >> we may be here for a long time. >> we may start to hear again as evidenced by what happened in the last month in terms of gold and silver that those are in control of markets, and bernanke likes to think he does, but he doesn't. he can control certain aspects but not the total market. i'm going to be keeping my eyes

come back next tuesday on what the inflation trade is saying. i think that is something that everyone's going to focus on. he's completely dug his heels in. on facebook you talked about this research, back in montreal, bmo, i wanted to mention that i had heard earlier this morning there was a lot of stock for sale premarket and i think that had a lot to do with the idea of being august 31, people that had maybe held the position throughout the month and finally threw in the towel. they want to come in next week and off the sheet as they say in the industry and get rid of it. >> window undressing. >> window undressing. we may see some today. i sit here, carl, and i get the immediate e-mails. shelly bergman has joined us before from morgan stanley and reminded me that we're very bullish. he said we're in the bottom of the third, top of the fourth, in terms of the bernanke rally, but the equity markets will continue to move higher. thank you, shelly, for the words of wisdom. there are a lot of beautifuls

who think it's the beginning of a massive fall foilup. >> and if bernanke is the starting pitcher, we'll see if he's relieved any time soon as well. >> good analogy. coming back, we'll get more reaction from jackson hole. [ male announcer ] drive a car filled with as much advanced technology as the world around it. with the available lexus enform app suite, you can use opentable to make restaurant reservations. during the golden opportunity sales event, get great values on some of our newest models. this is the pur of perfection.

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report" finally bernanke speaks. what did he say, though? street seems to think qe-3 is coming but is it right? we'll go behind the headlines with mohamed el erian. another day, another all-time low for facebook. can you make any money off of this stock? and is today's bounce just a blip? why one top technical strategist says markets are in for a multimonth drop from here. carl, back to you. >> okay, michelle, see you in a few moments. bernanke did finish up his remarks in jackson hole a little while ago, and our steve liesman is live with first reaction from people in the room. steve, good morning. >> reporter: we're just discussing right now what it is we heard and how markets reacted. let me start with mickey levy from bank of america, thank you for joining us and diane swank from messero financial. it seems it's the go-ahead signal for additional quantitative easing. was that your take?

>> no, not really. it was a well bansed speech, i liked the way bernanke talked about the cost and the benefit of more easing. particularly when he mentioned some of the headwinds facing the economy, fiscal policy and there are uncertainties, uncertainties in financial markets stemming from europe and the housing. these are factors that are beyond the scope of monetary policy. did mention limitations, so i think it was a vel craft well c an even handed speech and does not give the market any indication on what the fed may do or the timing of that. >> is that your take, too? >> no, actually, i kind of disagree with you, mickey. >> i'll step away. >> we can find it out. we do it much more genteelly than in the political arena. what was important to me in terms of what he said there's a cost -- the benefits far outweigh the costs, so you had to acknowledge the costs and he did say, listen, we're ready to do more. he said, listen, the economy's

not done. it's not done anything and not come down. we've not grown fast enough and if it continues to do this, it's not satisfactory. even though he really did as you pointed out say, listen, guys, in washington, figure yourself out, get rid of the fiscal cliff. get the medium-term deficit reduction. i think he also laid out the idea the long-term issue of putting out late 2014 that markets should listen to that, that policy could be more accommodative for longer than people think. >> i'm a little bit more in your camp and that's why we'll give mickey more time. the idea that he said the costs are manageable. >> yes. >> and he spent a lot of time, mickey, saying it has been and will be effective. the nontraditional policies, so, i mean, we know he's not going to say explicitly we're doing "x" amount of qe on september 13th. but we're trying to read the tea leaves and one had "q" on it, the other one had "e" on it. >> i think you're both making very good points. diane, i agree with you.

but i think some of your comments are based on what bernanke and the fed have already told us, and so if you read literally what he said today, i think it was very, very even handed. i think the issue going forward is the fed has already led us down the path to thinking they're going to do more if the economy deteriorates and they may well. but in terms of the speech today, i don't think it broke any new ground. >> when i read the back of the speech first, i thought it was very even handed. it's when i got into the meat of the speech and looking at things, that's what i thought he was giving us. we'll run out a little bit of time, diane. do you have a probability that you're placing on quantitative easing on september 13th? >> probably 50/50, maybe a little less than that. october, september -- >> that's almost agreeing with mickey, when you say 50/50. >> yes. i don't think it's guaranteed, but i think it's coming. >> you may win here today, levy.

go ahead. >> the timing, whether it's september or october, i'm not sure the timing matters all that much but i do think it's coming. >> do you want to put probabilities? >> i won't put probabilities on it, but i'll ask a critical issue. if bernanke is right on the nonmonetary headwinds that i completely agree with, if they do more, will it help, and is it the proper role? >> i think that's the debate going on inside. >> right. >> and i have to say the estimates that i've seen for how much "x" amount of qe's going to help gdp or unemployment are de minimis, they're very small. >> they're very small. and keep in mind, there's already a trillion and a half dollars of excess reserves in the banking system, bond yields are exceedingly low. how's another going to help? and bernanke did say the impact of qe-2 was much less than the impact of qe-1. >> and he said the bar is higher, so that's another thing. i don't know, maybe mickey changed my mind. we'll go back inside and hear

more, mickey levy and diane swank. back to you. >> that was some smart television, steve, even though the scenery behind you guys is trying to steal the show. very nice stuff. thanks a lot, steve liesman in jackson hole. numbmeantime, mitt romney at the republican nomination for the rnc as the democrats get ready for charlotte next week. john harwood has made his way to charlotte, has the reaction to romney and i imagine eastwood, too. morning, john. >> reporter: yes, exactly, carl, the scenery stole the show from romney, too. you can see the democrats getting their convention arena together for the three-day session they have next week where barack obama will accept the nomination. mitt romney did that last night, preceded unfortunately for mitt romney by that disaster of a clint eastwood appearance at the top of the hour which i think must have left many voters scratching their heads. it certainly did republican strategists in that arena that i

talked to afterwards, they wouldn't figure out what was going on. but when you get to mitt romney's speech, it was one of the best of his career. his delivery was solid. he slowed his pacing down. he showed some emotion. three main parts, one was policy, that was the shortest part. another part was trying to humanize him with stories about his parents and his family, especially to reach out to women voters, and the third part was trying to give permission to voters who had voted for barack obama in 2008 still like him that it's okay to -- what he called turn the page and go with somebody new in 2012. here's mitt romney. >> i wish president obama had succeeded because i want america to succeed. but his promises gave way to disappointments and division. this isn't something we have to accept. now is the moment when we can do something. and with your help we will do something. >> reporter: and, of course, that is the key for mitt romney, the people that he needs to get

over the top in the swing states that he needs to win the election are people who did vote for president obama in 2008. he needs to try to take those people who already have a stake in the obama presidency, appeal to them, in sadness rather than anger and try to get them to switch sides. >> good analysis, john, look forward to hearing what you have to say in charlotte all next week as well. >> reporter: you bet. >> john harwood in north carolina. when we come back, he's helped you play the market all week long and now art cashin will lead your portfolio into the holiday weekend.

well, he helped us navigate the market all week and now he's getting us to the weekend, he's good at that, art cashin join us on set. your note this morning was written early and predicted not only the bernanke selloff but the subsequent rally. >> yes. >> what gave you that confidence? >> well, you know, i kind of laid out what i thought his speech would be and it was almost as if he read the format because he really followed it. i felt that the market wanted to believe, this is a little bit of a peter pan market, and they really wanted to believe. while i do think that the bulk of this rally came out of europe and remains there, they want to believe he's at the ready. and i think he may have viewed some of what he said knowing that there's progress being made in europe and he didn't want to

interfere. >> yeah, one notion that was just raised a few minutes ago that his discussion of manageable inflation might have been an attempt to give the ecb some political cover to do their thing next week. make sense to you? >> yes, it does to some degree. he really went through an assessment of what they did. the fact that it was manageable. very interestingly he several times noted that the difficulty, the unemployment stagnation, et cetera, were not structural, and that's key. because if they were structural, it wouldn't make any difference what he did. but since they are not, he leaves the door open that maybe i can fix this. >> all that said, gold has crept up to thehest level since april 2nd. is that -- i mean, the market's one thing. are metals saying that the likelihood is even more pronounced that they do something in the medium term? >> i think. and viewers should clearly understand that the vast majority of what we're seeing across asset classes here is

short covers and, you know, people say there's a risk. holy smoke, we're going to be closed monday, what if something happens in europe and i'm not ready for it? so they're reducing their risk and covering their shorts. and the other thing is you noted earlier today that we've had some terrific fridays, friday is the best week for the market and friday before a three-day weekend has about a 70% bias to the upside, so we're fulfilling everything. >> it makes you feel for those, i notice the ultrashort is one of the few high-volume etfs negative for today. some really did want to sell off and they were told there was a good likelihood the market would sell off. how do you reassure them today? >> well, you don't. that's a very chancy bet, and, you know, they took it. if pbernanke had tripped and fallen into the podium, something might have happened. but they got it on two fronts. they got reasonably good news or hopeful news out of europe and then again the door left open by bernanke and it's not a pleasant day to be short anything.

>> the next 67 days are going to be tough, right? election day is a binary event and it's just a hard trade until then. >> and its importance is being built up by the minute. how many times do you hear people say the most important election of our lifetime. not mine, of course, but -- >> you've had a few good ones. >> i've had a few. but, yeah, you know, they're drumming up the importance and i'm sure you're going to see people do election-day packages. you're going to have brokers recommendiou w be in these kind of stocks or in those on the other side. >> great weekend, art. >> i will. the ice cubes don't have a chance. >> they never do. >> well, not on a three-day weekend. >> we'll close it out after a break. polar shifts will reverse the earth's gravitational pull and hurtle us all into space. which would render retirement planning unnecessary. but say the sun rises on december 22nd, and you still need to retire. td ameritrade's investment consultants can help you build a plan that fits your life.

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