that. anyway, it's been an eventful day. we appreciate you joining us rm tomorrow we've got the great jack welch to come in. he may need to come in and talk to you about the whole mitt romney thing. >> to me? >> yeah. >> to me? what about becky? >> he likes becky. make sure to join us on "squawk on the street" next. good morning. welcome to "squawk on the street." i'm melissa lee along with carl quintanilla. let's get you started. it looks like another drift lower. keep in mind we saw lower fractions. that's what i mean by drift when i say drift lower. take a look at the action over in europe. stocks continue to move further away from 14-month highs. the concern today that perhaps spain will not, in fact, seek a bailout.

so our roadmap this morning starts with yet another warning from fedex, the shipping giant blaming a slow global economy. but is this a macroissue or consumers no longer paying extra for express service. >> apple did it. expectations still high as preorders for the iphone 5 cross 2 million. >> prices on "squawk box" this morning, speaking of which, what was up with oil's mysterious decline yesterday and is it bad for confidence. >> ford is being called the most important model in decades for that company. we're going to be hearing from the ceo alan mulally. fedex states the q1 results are

below its own exec sagss saying weak global conditions damped growth. my big question today, jim, was when was the last time you paid extra to get it overnight or in two days? >> amazon seems to have -- where else is everywhere. amazon is the one that makes me want to get it right away. now, fedex made a major expansion overseas and their infrastructure is set up for rapid growth overseas. so they just -- it costs too much for them. this statement today, to me it seemed like -- hey, guys, didn't you hear a couple weeks ago that things were bad? i guess you didn't because you took our stock to 90. that was a mistake. now we're taking our own stock down. i think fed ex is trying very hard to beat their numbers next time. >> but is it a stock like amazon

that really has great deal of deep belief from investors and therefore doesn't seem to suffer even when it disappointed? >> it always catches a bid. why is that when they're telling us point blank people in a slower economy is not willing to pay premium prices. their prices per package internationally going down, the revenue per package going down. they're not working right now. >> i think people respect the product. they think it's best. i think they feel that every single time it goes down, it's a great opportunity. johnson & johnson. no matter what they say. people say, hey, you know what? next be better. fedex has performed as a halo. >> as a macro bellwether, this gets reflected in the 3 "m"s of

the world. is this that or is this more about execution of consumer preferences, not necessarily issues in the home. >> i think it'll will be about industrial and you've got the background of europe being weaker, the background of copper not doing that well, background of people saying, wait a second -- maybe what they were saying is fedex is really bad, and fedex being a met for for worldwide commerce. >> right. to carl's point it seems it is a metaphor of worldwide commerce which is a reflection of growth and it doesn't seem to be telling us anything particularly good. >> an analogue, a met a more, or a s asimply. >> let's do it all. >> we certainly see it in terms of the impact on ups as well. at the same time, jim, could this, in fact, be the buying opportunity on this time on the

pullback ahead of the fourth quarter which is traditionally strong? i mean that is the cycle. if you believe consumers are going to be okay and they're going to buy and ship things to other family members around the world, maybe this your opportunity to get in on the stock on the pullback. >> those who did that last time made money. it went from 85, bounces to 90. i wouldn't be surprised if by tomorrow people say, you know what? this is my play. now the expectations are lowered. the expectations are so low this is no longer factoring in the apple iphone 5. >> so let me factor in another layer of questioning. that is fedex or ups is seeing a pullback. ups has a much bigger dividend play. so if you're going to play the fourth quarter shipping, which one would you rather do it with? >> i think ups is a company that

likes to shoot itself in the foot and then claim physical issues. they'll say, jim, things are awful. i prefer ups because as you mention, i love yield. there was an article today. i always find that so funny. i mean if you're going to take cd rates to one, you're going to find someplace to have little income. people need income. >> yes, they do. yes, they do. dividends are one place to get it. there are now stories that people are trying to target particular stocks and companies that have increases in their dividends. >> that's the way it used to be. it was actually not a game. it was a way to make money. maybe it's back. all right. let's move on and talk about app. because that is a stock we've been closely watching for some time. will apple open for trading above the $700 mark? last night it hit 6 furn the

first time six months ago. news that they've sold 2 million iphones in the first 24 hours of presales. even the most optimistic didn't think 2 billion would be hit in the first 24 hours. >> absolutely right. i think forging, verizon's out there saying, look, we've got band width galore, you use this, and this is going to allow you to watch nfl. i use that as a common parlance. i'm still looking at the game last night to see what peyton does. i'm conscious it's like a still life, but when you get that, i'm watching every game i want. i put that out there because the next thing you're going to hear is sales from the others. guys buying it today, will you

give it break? the market wants it go down. will you give it a break is the way to look at it. i don't want to be a buyer in the market when the whole looks ugly. >> when do you buy? >> is there anybody establishing a long-term position now? >> i -- >> if so, maybe they should give it up. maybe it's time to hangt up. >> david, you might have said that six months ago when it cost 600. well, it would be crazy if -- >> if you simply say it's a company growing at x. >> exactly. at this valuation. >> or y, you might say, yes, i'll buy it, and that's true. >> you're urging for those fo

portfolio managers that they should take a vacation. >> yes, i do. i don't know. >> i mean you'd use it as a met a more. >> what is it time to switch into advanced my crow? you know, take advantage of that little price play there. >> isn't it to david's point that stocks don't want to go down, that weight for the pullback doesn't come. doesn't that point to the relative performance issue they're talking. discounts aren't happening so they buy it when they can. >> remember the day when people were selling a lot of stock to be able to get into aig and apple was down 20. i'm just saying, look, when you have a market where everything is down or whether it be fedex, it stands to reason if fedex is saying things aren't so grade, there should be someone out

there saying there should but a trade. i doan want to trade up. the trading had lost a lot of people money. agree with david. if you miss it, it's hard, let's say intellectually, to catch it. i missed the first 50, but i'll get the next 250. maybe these are people who stuck by r.i.m. you're saying -- >> they also may want to rethink things. >> i detect a little bit of irony there. >> usually people do. >> i'm only teasing. >> we got some increases. bank of america goes to 7.50. >> usually that's low on the street. >> this is just a stock that has over ridden so many price

targets it gives them something to talk about. >> there you have it, 700 in the premarket session once again. >> why can't they wait? there's nothing wrong with saying why not let the s&p knock it down. this is not like dole food. >> imagine how much the stock has gained in market cap this year, around $270 billion and that is more than the rest of the 70 companies in the s&p 500 sector, more than what what they've contained in markets going to the s&p. >> when you look, you read through it. it's because they're not alive with apple. >> right. the rbc called today. align yourself with wireless kbhun indications. get yourself away from the pc system. >> those who align themselves with the empire -- the soviet

union, which is everybody else other than apping should have got on the bus. >> you're comparing android and google with the soviet union? >> i'm doing anything i can to win you over to the idea that long-term anything is not that bad. >> i haven't thought otherwise. >> when you play games with your kid -- >> i sat here for years talking about how incredibly cheap it was. >> and you told me to read the jobs book. >> i did. >> which is a remarkable book. if you haven't read it, you shouldn't read it. you missed the book. >> we always have time to read the book. we love walter. meantime chicago fed president charles evans saying the decision to launch a new round of bond buy willing add stimulus to the economy but on

the squat this morning richard fisher said he would have voted against it because he believes it won't do much to create jobs. here's what he said. >> let's be fair to the chairman. he has to pull the group together and the group as a whole feels the economy is barely steaming along. it is in positive tear moan, yet it's at risk. we've got a lot of guests on. he says they're running flat out and has even more tools to work with down the road. >> does anyone -- dick fisher, tremendous guest, thoughtful guy. i always enjoyed listening to him. does it matter that he's wrong or does it not matter like sports where you can be 0-7 but be a great team? i mean is there any rigger to

this business, say the nfl versus the refs. does it matter or maybe it doesn't matter. >> i don't know. i feel like from a trader perspective, there's nothing wrong with it. there could be debate if it actually happens but there's a debate. whether or not it plays out, we don't know. i don't know of another one at this point. >> otherwise known as don't fight the fed? >> yes, exactly. way to boil it down. october 8, 19778 at the federal reserve said, lab, we're not to be to boo accommodative. you had one of the greatest rallies ever.

was it right that is's shifted. the data's awful. the employment numbers are often. all these guys come out and question it. other than oil, which i could argue is geopolitical, you know, people are making the same amount or worse. that's where the noninflation is. i don't know a lot of people who are making more than they made in 2008 in this country, 2007. so i mean the criticism of bernanke seems -- it's almost as if -- it's from rich people. >> you mean talking about the 47% from some vir owes we saw last neonight in his view. they made have erode his

richness. >> once real poor and forgetting i was real poor because the fair mount was not a place to sleep in the back but it saves me money. i'll come back and say people come on tv who are rich don't realize there are people who don't have jobs. what great comment. if you don't have a job, you can't save anything. he's worried. on the anniversary of occupy wall street what he's saying is, hey, listen. a lot of people are doing bad. >> what struck me about fisher, he said he was not sure if qe3 actually contributed to the increase in oil prices. i think as a guy who called 3% to 4% gbp this year, i thought he was was soft. >> it with be -- you know what,

i're gotten to put it through the prism that this man was much more optimistic than he should have been. that's okay. i'm not slighting him, that he's a joker as steve jobs called them when they got it wrong, his is the right one. when we come back, the snack attack. two weeks into the nfl season. which food, beverage and supermarket companies are most likely to help you score some profits? there's some eats being done in the first quarter, we know that. >> they ate peyton last night. >> we'll talk about it more when "squawk on the street" comes back.

a null industrial robot that can work alongside people, a robotic co-worker of sorts is set to be unveiled by rethink robotics. it will be safer for humans to work around than traditional robots. it's founded by the same company who came up with the robot, the

rumba. tweet your responses and we'll air it throughout the morning. >> a robot that would make better calls than the replacement refs who decided many games this weekend. >> you know, it is amazing something as incredible as the nfl with the value of that league which just prints money wouldn't just say, okay, you know, this goes to tin ted grity of our product, pay them whatever they want. >> clearly underestimated the perception of the fans on the sport. >> right. >> i was at the eagles game where they lost control immediately. everyone was down there giving every the business. the refs were like, go for it. guys were down there slamming

each other, the refs, let them work it out. >> come on, guys, keep it clean. >> i couldn't believe it. >> all right. when we come back, we get a jump on the market action the cramer way. he's on a mad dash. it does look like we'll open slightly higher. apple, we'll see where it opens. tdd#: 1-800-345-2550 this morning, i'm going to trade in hong kong. tdd#: 1-800-345-2550 after that, it's on to germany. tdd#: 1-800-345-2550 then tonight, i'm trading 9500 miles away in japan. tdd#: 1-800-345-2550 with the new global account from schwab, tdd#: 1-800-345-2550 i hunt down opportunities around the world tdd#: 1-800-345-2550 as if i'm right there. tdd#: 1-800-345-2550 and i'm in total control because i can trade tdd#: 1-800-345-2550 directly online in 12 markets in their local currencies. tdd#: 1-800-345-2550 i use their global research to get an edge. tdd#: 1-800-345-2550 their equity ratings show me how schwab tdd#: 1-800-345-2550 rates specific foreign stocks

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about five minuted and

change until the opening bell. let's do the "mad dash" with jim. for a second time a firm comes out with a call on pcs and ships. >> i like that. the best novel ever, read it in french. is there a reason for existence here, and people are saying there isn't because this is -- this is the so-called dying of the pc, not the death. because you're still getting billions and billions sold, but i've got to tell you, this call which includes intel, and other devices, they're saying, look, these stocks are done, stick a fork in it, by implication, stick a fork in hewlett-packard, stick a fork in dell. a very important ceo leaves. this is the time when you were supposed to be buying these. >> hp, of course, has a big product, refresh coming up. the journal spotlighted that

this week. >> it was a good article. >> on the spectrum of negative sentiment, would you put pc makers above chips? chips above pc makers? >> great call. i feel the semiconductors are still hanging in there, so they can come down. dell, i don't know. there you go again with an existential issue. i've got to tell you, hewlett-packard, maybe they can turn it around. intel, they've got that yield. how about how microsoft hangs in. >> as someone who's tried windows 8 already. i like windows 8, but i've got to tell you. i thought zune had some gr gravitas. >> zune. >> so there's a lot going on on cloud people like, a lot going

on on software, but if it's pc,its just got a real bad feel. >> a lot more with jim after the break. opening bell is coming up next. don't go away. ♪ [ male announcer ] introducing a stunning work of technology. introducing the entirely new lexus es. and the first-ever es hybrid. this is the pursuit of perfection. or a cdomestic energy future

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there we have the opening bell. cia director david petraeus commemorating the company's 60th anniversary. i guess the action kicked off there. alcoa is one we're watching. jeffrey's downgrading the stock today saying that they had always been inclined to downgrade the stock if there was a bump-up in the stock price. they saw it and now the rating goes to a whole grading. >> inventories are high. alcoa is one of the stealth rallies that's going up. he's one of the funniest guys. grew up in east germany. i mean the tales he tells about

east germany. i have to tell you that i think he's done great job, but this -- he's fighting some serious headwinds. >> the other part of this jeffries call is they strongly prefer to go with the stock that's trading higher, but that stock is trading lower as well. that stock down 0.7%. >> it's very low. they expect china to do something. they did something. they got whopped over the head by obama and, you know, we seem to forget there was a major trade war started over there over the weekend. >> hey, not stock-specific but everyone is talking about mitt romney's comments on "mother jones." do you think some of the negative tone today is the idea that the campaign is troubled? that his chances are smaller

than they were yesterday? >> i'm getting horrible heat because i mentioned that a lot of people were against befornan. and now i'm really going to get heat that, yes, it had a feeling of csx or southern norfolk train having trouble staying on the tracks there. notice i didn't say union pacific. >> are you basically -- are you hinting that a romney win is market positive? >> did you say something about a romney win? >> does not compute? is that what you're thinking? >> no. i'm just thinking it's going to be an uphill battle. look, would the market duo higher? i said that last week on the show and everyone said, you partisan. you love romney, you just want the market to go higher. good, let everybody hate me on both sides. you know, come on, guys. >> goldman making a call on homebuilders yet again, talking about low inventories, reaction

from the fed. they go through the regular names, toll,pulte, mdc, kbh. is it too late? >> i don't know. kbh reports on friday. they've been red hot. lennar's up big. i do think people are translating immediately that the fed will work in terms of housing. i don't know. the housing market could be a little overheated. >> i'm just throwing this out there. it could be the next leg that could provide support in an industry that's already showing signs of turning around. we'll see if that happens. >> they're starting to look up to people. they've been horrendous performers. i've been watching whirl poole, a 52-week-high yesterday. that's the gang that couldn't shoot straight. >> speaking of house derivative plays this morning in calls, bed bath and beyond getting a downgrade from oppenheimer. their concern near term about product cycles being over and

that coupons are re-emerging as another driver of traffic, so that stock is down 2%. >> when i was at bed bath two weeks ago and three weeks ago -- >> did you bring your 20% coupon? i always have one. let me know. >> the person in front of me gave me the coupon. >> really? >> yeah. it was really one of the greatest hand-offs better. that allowed me to get a much better deal, but i was smack down at my boss at bed, bath, and beyond. i tried to take a picture of the lork lines and tweeted showing bed bath may be doing better than expected. they came over to me and threatened, you must take a picture. >> i said, listen, i'm going to take a positive picture. she was so mean to me i would not go back to that one. so i whent around the corner. >> you took your coupon and went

somewhere else. >> i was stunned. i can't believe they were stunned that i was going to take a picture of a busy place. i know the stock has run very big. they disappointed. they merely went down to 59. i thought this call was basically, hey, listen, don't forget. it could happen again. >> yeah. >> i know we always like to talk stocks but it is worth mentioning that corporations in this country continue to issue bonds as a record level that we've more or less never seen. investment grade issues total $61.5 billion. that's just investment grade thanks to our friends at thomson reuterses. that's only happened twice in reuters history that corporations have issue thad dollar amount or more. >> should we be buying morgan stanley? >> perhaps. $16.82 billion in high yield. busiest week of the year for

high yield issuance and we're at record. >> it used to make -- the brokerage houses, the big houses, they used to make so much money. >> they did. >> and they're just not making enough? >> they're not making quite enough and so much of it is in the trading and the capital levels are higher than they had been. they're not taking as much lever ralk. it's not just flow. it's a lot of other things that go with part of that. but the issuance itself, incredible. and we talk a lot about it. corporate america man, never been better in terms of balance sheets. >> bernanke is worried about people not buying the bonds. david, how much can it hurt the investment banks that they can no longer shoot against their clients. >> banks, by the way, are down

today. one of the big drags on markets. >> interesting. they've been very high. bank of america, they called another piece of paper over the weekend. bank of america continues to get their balance sheet right but the stocks have been overheating. there's been a lot of your heating in the banking stocks, david. >> yes, there has been overheating. they had a great move. >> can't yourish wans call one of the reasons or do you think it's all bernanke pumping up the banks? >> i don't even think with records of the level grades i don't think that was the -- >> do you need more m & a? what do you need? >> i think it was largely bernanke-related. >> i agree. let's check in for mary thompson. she's in for bob pisani. mary. >> the markets extending the selloff in today's session. weakness pretty much across the board. dow's off just about 28 points

right now. of course, fedex is in focus along with some of the european banks that were weaker coming into today's sessions. let's take a look at trabs ports. down 1.4% come papared to 0.4%. we'll see whether or not the weaker oil prices we're seeing as oil extends its dede klein on the floor, which, again, continues to move lower. keep in mind we have the national association of homebuilders coming out with a report today. ahead of it, a home builder issuing a -- telling us in the first two months of the third quarter, orders were up 62% year over year. the company was held by an acquisition. we'll see whether north it helps with the stock that was trading very, very close to a four-year high going into the close of yesterday's session. dole foods also selling two

units. it's going to raise $1.7 million which will allow it to pay down debt. this is having a bit of a ripple effect which were actually higher in the premarket. and we just want to end with alpha natural resources. the coal company is going to be cutting 1,200 jobs as it shifts its job from producing cole, again, cut 1g,200 jobs on that. right now the dow is off about 32 points. jim, back to you. >> thank you so much. well, thanks, jim. about 39 minutes ago we ha treasure international capital flows. that's july to date. it was very firm. so we continue to see sponsorship of our securities, our equities and some of our financial assets. if we look at the two-day chart of tens, you can see rates are coming down. we were around 1 3/4 before the feds started tinkering a bit. now we're at 178 after a couple

of set. s of 180. of course, everybody's trying to handicap will spain or won't spain. the clock is ticking, tick, tick, tick. everything is down so countries like spain can help. if you look at the dollar index to date, yes, we're down on the year. good news, the dollar is up a little bit today after falling close to 5% really since the previous fed meeting to this one. and there's some unintended consequences, maybe intended consequences. looking etf that represents the price, not the spread, the high yield securities or as we affectionately call it junk. it's hovering in the highs for sure. we're hovering at the best level since the summer of '08. back to you. >> thank you very much. let's check out the energy market and go to sharon

epperson. sharon. >> everybody was trying to figure out what happened yesterday when we saw the drop in crude prices in about 60-minutes time. what happened? there are various reasons. perhaps speculation we're going see a release from the spr but the cme group said there was no technical glitch. the white house has said all options are on the table. now we go to fact that there was, indeed, long liquidation and perhaps a lot of it due to the fact that we did see long positions near their highest levels that we've seen in several months for the wti contract. in terms of technical levels, for bread crews we saw the 115 breach and huge volumes in the selloff once we went below the mark. the other thing that they're mentioning, the one i haven't heard that often but that's out there is the fact there may have been some major inflation bet that us with taken off the table. if you look at the drop in the

break evens on tips perhaps there is some inflation bet bgs taken off the table today and we continue to see oil prices dropping as well. back to you. >> sharon, i'm back to you. is a notion of a fat finger taken off the table because oil remained lower throughout the session? >> that is exactly right. if you even look at what happened in yesterday's session, we saw another drop. and so almost immediately anyone who really looks at that says that's probably not a fat finger. the other thing they look at is that as prices continue to fall, that concludes that maybe we are seeing a bearish scenario here. maybe there is a supply and demand shift happening and if anything's happening there. >> sharon epperson, thanks so much for the latest on that. jim, that was an interesting move. stocks weren't taken down by it. maybe we were figuring out what was behind it, perhaps there was still an error during the trading session, but now we come

out of it. stocks are moving lower. oil continues lower. we have the warning from fedex. does this add up to sort of a bearish outlook? >> it's funny. wasn't oil supposed to go up after the move? i think the decline in oil was so odd at the end of the day that it seems like we're retesting that weird, odd very thin trading that's going on in oil. i would urge people to remember that even in the big decline from 147 to 50 in the 2008-2009 period, some say it traded in the 30s for a minute, there was not a large cancellation of oils though the stock did go from 90 to 17. so i urge people to recognize the oil surface companies don't trade on the same split second way and split point way that the oil futures trade. >> it brings to mind our call out of i believe it's b of a on gold, jim. looking for $2,000 an ounce by the second quarter of next year,

2,400 -- that's a ways out -- by the end of 2014 if this notion of qe3 is truly open-ended, their view is by the time jobs are strong enough to end the policy, gold will be that expensive. >> look. we had some commentary today about rand gold, which is finding gold all over the place. there is tremendous difficulties finding gold. what i keep coming back to is the supply is not there. but the demand, everyone's trying to depace currencies will be there it's currency that seems to hold its value. it's not necessarily a precious metal. up next, a new robot that can work alongside people set to be unveiled today by a companies who founders came up with the room ba. so what would you design a robot to do for you? tweak us. we've got your interests straight ahead. as we head to break, the early movers. up 1%.

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let's take a check on shares of apple. it hasn't crossed $700. $696.90 is the level. the all-time high. in today's session, $695.95. we're butting up to $700 but we haven't crossed it yet today. >> thanks for that in the control room. >> yeah, nice. this new industrial robot, have you heard about this? can work alongside people set to be unveiled by rethink robotics. the question, what would you design a robot to do for you? >> redesign congress. >> drew writes, to shut up the neighbor's dog. and trader bill writes how about a robot to counter all the expletive high-frequency trading.

>> a robot to counter the robots, interesting. >> yes. it's a fever pitch, jim. >> oh, i had someone in my -- at the game on sunday telling me, jim, these guys provide a lot of liquidity. i just wanted to throw a red flag, a challenge flag. it's absurd. they suck out the liquidity. if you get them over a tavern situation. >> over a drink. >> i think there has been attention paid to it but perhaps not nearly enough at this point yet. i think there's still a lot more to come in terms of the integrity of the markets. >> with those bandits out there, those captain morgans. >> i think it's a fair question. the journal today theorizes that shah pyre owe could be out of the s.e.c. relatively soon having done a lot or not too much. >> not that much. i think -- look, we need an arthur levin figure who says,

all right, here's the deal. regular people hate to mark it. i never felt that shay shau peer owe was out like arthur lever it. that's why one of the regular people hates the market, i thinks it's corrupt, would rather be in cds. >> would you call yesterday a flash crash? would you put it in that universe? >> these are all the millions -- look. there's these moments where people sell -- we had an s.e.c. sanctioning of the new york stock exchange. nothing. i don't know. i read all that. i thought it meant something. there's two classes of people. there's a class that trades ahead and a class that trades before. i don't like the high frequency trading at all, but they do have their minions who come out and say how great they are all the time. they're really remarkable. liquidity is their main argument and without them there would be no liquidity and it enables you to -- is that is the argument.

>> the argument that we are innova innovating, right? somehow we're financing -- >> germany was able to take care of the 60,000 people when it went over the top. the machines are faster than people and the machines, i think, are in charge. >> but it happens with every single technological advance and regulations need to catch up. technology moves faster than the pace of regulation. it's just a matter o time. it happens in if the private sector with the personal side. it happens out there. it has moved faster than regulation and isn't it just a matter of time? i mean what are you going to do? put the genie back in the bottle? >> it's not progress. it's not progress. i like progress. the i dethat an etf is faster than humans? i mean there are some that i would could be put back in the botter. this financial technology does not seem to -- >> it has absolutely nothing to do with assessing the particular

product. >> right. it just makes it so the market is more difficult to raise capital in. i thought that's what -- if it's destroying the ability to raise capital, driving it out, i don't see how that innovation is good. not unlike r.i.m. or terminator 2. >> they win self-aware. >> we have to always go back to, you know, important hasta la vista stock market. >> sky net. always geet goode to get a sky net reference in there. a lot more "squawk on the street" still ahead. coming up -- it takes a lot of work to build up muscles, especially the ones in your portfolio. but we've got the guy who will train you just right. jim cramer's "six stocks in 60 seconds" when "squawk on the street" returns.

how do you know which ones to follow? the equity summary score consolidates the ratings of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past. i'm howard spielberg of fidelity investments. the equity summary score is one more innovative reason serious investors are choosing fidelity. get 200 free trades today and explore your next investing idea.

skbrooz ten coming up. >> you've got to wonder whether

fedex management got it wrong in asia. whatever. it's another profit warning. we're going to discuss it with someone who thinks it's 40% upside. a very bright man will join us. bond investor stephen walsh in an exclusive interview. and also we will discuss beer and food, snacks to the produ r producers. back to you. >> we'll see you in a few moments. >> let's get to six in 60. start with manu. >> terrible numbers sell. >> heavily shorted? >> heavily shorted from get-go. abbott labs downgraded. >> all the splits worked out really well. >> some of the checks on panera today, chipotle earlier on? >> chipotle, we had a good check yesterday, pa nair ya today. this is a remarkable stock and i love to eat there. >> they said the numbers are too low on sandisk. >> i thought this was interesting. i have shied away from that but

it does have an apple flavor to it. >> what's the news on cheniere? >> oh, i had him on. he was going to japan. maybe he nailed down the deal. >> finally -- >> this is a stock you want to buy ahead of dream force. >> tonight, sounds interesting. >> going off the charts is this the peak? so many people are asking me, isn't this right here? we're going to sofrl it technically tonight. >> we'll see you at 6:00 and 1 178. bob...

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let's solve this. welcome back to "squawk on the street." i'm diana olick. the national association of homebuilders sentiment index now stands at 40, the highest level since june of 2006. 50 is still the line between positive and negative sentiment. the chairman of the bank cautions there's still a long way to go on the recovery and several obstacles are slowing our progress, particularly tight credit conditions. of the three kmoents, current sales rose four points, sales

expectations rose eight points and buyer traffic was up just one point. the west and midwest were leading. just one year ago, the sentiment index was at 14. carl? >> wow, we'll see if that all comes to fruition. thanks so much, diana. diana olick. an economic bellwether warning us again the economy is slowing. fedex lowering its 2013 profit target saying earnings could slide as much as 15% a year. is this part of a larger macro issue? >> in case you didn't know it's officially nfl season. that means bring on the snacking. which company can see the biggest gains on the back of the grid iron. >> we're going to sort through oil's wild ride and tell you how to play it. >> it's a david faber exclusive. sitting down for a rare interview with a lieder

investment firm. but first we've got to get back to the earnings story of the morning and that is fedex. shares are down after it's reporting its cutting the forecast for the fiscal year ending in may saying the global economy is worse. joining us from air freight and ground transportation analyst. guys, good to have you with us today. brandon, i want to start off with you because you have an overweight rating on fedex and you had indicated before you were wondering whether or not sentiment would change given the warning it is giving today and the data point about companies shifting to slower means of transportation, are you paying less. what is your take on the stock now? >> yeah. good morning, melissa. thanks for having us on. fedex is facing a structural slow growth. they're willing to move things urgently and they're seeing trade down in the network but they have long-term answer here. they have a great ground business.

there's lots of products moving over the internet, but the question now is how do they deal with the aircraft and expensive delivery networks that people are trading out of. >> so if your view is positive locker term, do you deal with it or are there better ways to play this trend that we're in that seems like we're in during that global economic slowdown and that is more freight traveling by ship, not by plane, for instance, slower means? >> well, across the board, even on the oceanside, we're seeing slower growth rates than anticipates. so this isn't just on the air freight side. i think they're feeling the most of it. but in the long-term perspective, i think fedex is going to learn,000 restructure operations to drive a better income overought. so i would be sticking with the stock. >> and part of that -- part of that restructuring is exacting costs out of the fedex express. can it do it faust nr or do it enough to offset the slowdown it's seeing in the macro bases?

>> they're going to pay nouns it. they're going to take a significant amount of the costs o it of the network. there's going to be moves in the aircraft deployment, shifting in the markets where they're not needed. that's not currently in the stock price. ice not currently in the isty mountains that are thrown out there. >> no, jim, because the situation is apparently getting worse. do you look at management and say actually to a certain extent you are cull papable here because fedex built out its express network very deliberately, the overnight service in asia, invested heavily when others chose not to and now the great revolution is maybe people aren't going to shift as rapidly. as i said in the conference call, increasingly by sea. isn't that what you pay the management to detect in china and in asia? isn't that why, for example, the ceo's salary doubled in 2011? >> well, i don't think what you're seeing is a long-term shift from ocean to air.

twhank you're seeing is the global macroeconomic picture is not what they had expected. customers when they see a weakening environmental, they shift modes of delivery. they ship from air to ocean, groujd to freight, and that's what's going on right now. but that's not a long-term permanent picture. that's a cyclical shift that will reverse itself once the economy gets going. >> is that true? i was wondering if there's something ingrained in us, the more we shop online, the better we plan ahead? i can't remember the last time i was caught off guard and had to get something the next day. aisle always doing -- i know i mean nothing. i'm totally anecdotal but the less expensive -- >> when you think about it that way, it's actually not true. when you're ordering an iphone apple has time to get itshiped from asia to the u.s. but when you order it or order

another product you're not going to wait for a ship to send it over, you're going to want it in two to three days and they're going to figure out smarter ways to get it to you. it's still making a good amount of money, still generating cash and investing in a product long term. >> speaking for both of you it sounds like we as investors are waiting for the u.s. to come into a better economy. is that what's the case? is that what's going to unlock the fedex or what's going to be the next catalyst here, brandon? >> that's cyclical. it's a very exposed company. i think back to an earlier issue, fred smith has made some good decisions over the past couple of decades. he's gotten into a situation. i think they're addressing the longer-term shifts. i think what you're going to see is you're going to get a better cost base and earnings base and more focused strategy on where the focus is coming from as opposed to where the historical

air shipments used to live. >> what do you think they issei october 9-10 in memphis? what will that restrurking amount to? >> i think they're going to have to deal with the higher questions. people are less -- see less urgency to move things by air. there's more sophistication in the supply chains to address those challenges that shippers are facing. >> jim, are you still a price target of $122 which is almost 40% from where we are now? >> yeah. the stock is trading well below the line, trade beg low the market. we thiv this is a bellwether company that has its thumb on the pulse of what's going on in the economy. we do expect good things coming out of this restructuring and we think if the economy grows globally or in the u.s. this company has a great deal of operating leverage to expand. >> why is fedex raising its rates?

i'm curious what the company is thinking. why raise the rates there? that doesn't seem like it's going help. >> i think what they're trying to do is to match the right level of capacity with the right level of demand and get the right products in the right network. you'll hear the company talk about this quite a bit. i expect to hear them talk about it in october. and pretty of that is going to be through pricing too. in the air network, we need to be hitting our margins and return markets and if you're not willing to pay that, we have better alternatives in slower modes but we're going to manage some of it in slightly higher price increases. >> got it. thank you for your time. >> thank you. we've gottet a market flash here. it's a tech name. no, not apple. jackie deangelis back at headquarters, good morning, jackie. >> good morning. google's motorola mobility using an intel processor. it's got a wide screen. it also has a logger battery life. so it's looking to compete here with the likes of apple and

samsung. looking at google shares, they're higher by $3.50. apple shares are lower today as well. we're going to be watching this one very closely. simon. >> thank you. nl season is officially under way, so how is the gridiron affecting the snack and beverage industry? we're talking input costs and who might be the biggest gainers in the industry with a side of sunday night football next. 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! we knew you needed a platform that could really help you elevate your trading. so we built it. chances of making this? it's a lot easier to find out if a trade is potentially profitable. just use our trade & probability calculator and there it is. for all the reasons you trade options -

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the usda out with its outlook on poultry claiming prices are rising due to fewer birds. our own jane wells is playing her own game of chicken by taking a closer look at pricing within the industry. take it away, jane. >> hey, david. in the game of chicken, you may soon be a loser. now, take a look at this chart. you can see how much higher full bird prices are trending over the past few years. . they're up 10%. feed is up 20%. here tees deal. chickens raised for meat taken eight weeks to mature. current poultry prices, even though they're high won't be

high enough. >> we estimate the average producer by december is probably going to be losing somewhere on the order of 5 cents to 10 cent as pound. >> now, jones has a buy on it. same with pill grimace pride but she has a hold on sanderson farms which has the opposite business model. it sells prices that are too low to offset feed costs. >> we had priced all of our grain needs through july, but we've been back on the market since august, and we're basically hand-to-mouth right now. >> sanderson farms' cfo mark cob real is starting to cut back orders for hatching eggs. they're not the eggs you eat. it's the eggs of chickens. expect fewer eggs by thanksgiving and prices to rise but sanderson is going to eat it in the meantime, not going to ask for more than the market value of the birds right now.

>> frankly, if we go to them when we're losing money, they'd probably come back to us when the chikt market gets real strong and that's when we make a lot of money. we'll live by the deal that we made with them and it will be priced off the market. >> now hurt jones says poultry markets could finally regain prices by the end of the first year. by that point sanderson's business model could giving it an advantage over tysons and pilgrim's pride but not ride now. >> interesting stuff. thanks so much for that, jane wells, from los angeles. speaking of food costs we can't forget to mention it's officially nfl season. don't brag, jane. what effect might it have on the bev makers and sellers? jonathan phoenixy, a senior analyst at montgomery scott. guys, good morning to both of you. >> good morning. >> good morning. >> let's start broadly. the dynamics jane spelled out regarding costs, are they offset

seasonally by more consumption in the fall? does football season make a difference? >> it doesn't make that much difference in terms of consumption. if you look at where salty snacks are sold, it's pretty everybodily distributed throughout the year. there's a lot more soft drinks sold in the summer than the nal months. so i mean no. the point that has to be made also is some of the commodities are going down and some of the commodity is going up. so aluminum costs are down, plastic costs are down. thankfully they're not buying any chicken, coke, or pepsi, so there's a little bit of an offset right now. >> well said. and that's why some are on your buy left, is that correct? >> these correct. >> you like kroger, conagra, smuckers, walk me through some of this themes that are running through those names. >> sure. as far as football season goes, it's really about getting into the fall and winter and, you know, key holiday shopping season that, you know, tends to be key execution time for the grocer.

you know, food retailing. walmart, target, offering consumers a lot of value. krogers competed well. they just raised their dividend 30%. we like that. as far as the food manufacturers, we really like the inextendive ones and the ones that are focused at home in low risk businesses that are offering a lot of val crew to consumers. i think conagra is the best example of that. >> bill, can i take you back to the discussion about coke and pepsi? a lot has been made of their failure to invest and promote the pepsi brand for soda within the united states. how relevant now is the home market for investors when, for example, coke is suggesting they will invest $30 billion over the next two or three years with the bot lers to double consumption around the world? >> it's a great question. so there's been a terrific change of heart at pepsi. this year about $600 million of

advertising spending behind the businesses, the bulk of that is going to happen in north america. you probably just saw they sign add deal with the nfl. clearly they feel the pressure and want to start growing some of their businesses here at home again. >> and how does that compare to mao tau kent and the mass everybody bottlers worldwide. >> remember, coke bought their bottle in the u.s. so they have a lot more skin in the game. the good die naming here on the beverage side is guys are kind of getting along and playing nicely for the first time in a while. i think they want to make more money. they're cognizant of the economic. they're making the pack sizes smaller and lifting the profit margins. >> jonathan, you've got a pretty come pre hence v coverage univer universe. at least 20, 25 names. who would you avoid at this point? >> well, we're cautious on shares of hormel. i think that's one of probably

several food companies. you know, volumes have been okay, maybe not growing as fast as historically but really could get squeezed by this sudden and unexpected increase in corn prices. corn in the whole grain complex is up about 40%. if we were having this conversation back in early june, not forever ago, we would have been talking about significant cost declines. that is hard on a company and could pressure earnings where volumes are not up to snuff. i think that's true of other food package companies as well. >> bill, you mentioned food and aluminum pack js coming up as well. what about corn? >> most of the soft drinks have high fructose corn syrup, so clearly that is a fairly sizeable headwind that they're going to have to deal with going into next year. now, to head some of this out, it's not going to be it immediately. as we get into the middle of next year, that's going to be a

big issue to deal with. >> all right. the nice thing is we got some stock picks and that football season is beginning. you can't go wrong with that. appreciate your time. we'll see you later. >> thank you. bye-bye. still to come, a plunge adding to the lack of confidence in the market as traders today are trying to rationalize the move. we're talking about the oil's mysterious decline in just a few moments.

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tim seymour joins us founder of emerging money dot-com. hi, tim. are you worried about fedex and what that means for emerging markets in the area of the worlds that you focus on. >> yeah. thing a lot of this news on the lower asian growth is priced into a lot of narths and a lot of different sectors but when you listen to fedex, they have their hand on the pulse. they are a leading indicator. they're telling you that the visibility through at least the

end of the first quarter is uncertain. so, you know, for a company who's had international business grow to about 31% of the low revenues to the low 20s in the decade, this has become a very important part of their earnings profile. when you listen to the ceos of not only shippers but the cyclical economy, the auto dealers are down. current output for europe remains very challenging and i think it came in weaker than expected. a lot of that is because china is telling you that things are much weaker there. the imports number printed it for your the first time in four years and that tellings the story. >> the central bank certainly in the united states and europe are pumping strongly or at least threatening to pump stronltly in europe and therefore arguably people can get, i guess, trapped

into risky stocks where the fundamentals aren't very good. and actually fedex today for what is this, the second or third morning we've had this summer is actually only down about 2%. >> well, i think you've seen people do a lot of rotation, if you look at transports, places where you have an upside and a safer pat of the complex, i think you look at valuations. they're not terribly cheap. i would go with the kansas city southern, ksu, who's got 45% of their business coming out of mexico. the latin america story is a lot easier to see here, one, because, there use new growth coming out of mexico. a new steel plant, auto plants. the intermodal cross-industry process is change for them. on a five-year, these guys i think have a slately different story to tell than fedex. if you look at some of the cargo shippers and the airline space,

they give great exposure to latin american cargo shipping, which is a lot stronger than what we're seeing in asia right now. >> interesting. tim, thank you for your time. you can catch more on "fast money" and on tuesday right here on "squawk on the street." coming up next, oil taking a wide ride yesterday, some volatile swings yesterday. how can you play the volatility in oil if you dare? that's coming up next. sometimes investing opportunities are hard to spot. you have to dig a little. fidelity's etf market tracker shows you the big picture on how different asset classes are performing, and it lets you go in for a closer look at areas within a class or sector that may be bucking a larger trend. i'm stephen hett of fidelity investments. the etf market tracker is one more innovative reason serious investors are choosing fidelity. get 200 free trades today and explore your next investing idea.

some of the stories we're talking about, home builder sentiment rising to six-year highs according on if national homebuilders. up three points in september to a better than expected reading of 40. a new intraday record high in shares of apple. they hid $701.44. google trading at new 52-week highs. some 29% in the past three months. the chicago teachers' union delegates meeting today to desight whether to end the strike. it's closed the schools for more than a week and prompted mayor rahm emanuel to seek a court order to stop it. cnbc's reema ellis joining us

live now from chicago with the very latest. reema. >> simon, one of the things that was happening was the city and mayor rahm emanuel was hoping for immediate relief in if form of an injunction but he doesn't g it that yesterday. what's happening today at 4:00 this even, some 800 members who are delegates representing the larger body of striking teacher, they will go into a meeting to decide whether they will vote on this 200-page document, a tentative agreement, that could end the strike that is now in its second week. no one knows exactly what's going to happen. there's been talk of a lot of in-fight. some people say they're not happy with the terms of the contract. they wanted more. but the leadership of the union is saying that this is -- while it's not great deal, they think it's the best that they can get and they're going to have to try to sell that to their membership this afternoon. >> meanwhile where are we on the court action? >> on the court action, that happens tomorrow morning.

if indeed there is not a resolution to the strike this afternoon, the city will be going before a hearing before a judge tomorrow morning, again, seeking is an injunction that would force the teachers back into the classroom. there are a lot of people, particularly parents, who are hoping it won't come to that, because they would like to see a resolution to this strike today to get more than 350,000 students in the chicago public schools back into the classrooms. >> reema, thank you very much for that. reema ellis with the latest from chicago. thank you. rapid drop in oil prices leaving more questions than answers in its wake and shaking confidence in the markets. good to speak to you both. trey, i want to get your interpretation of what happened yesterday given the decline was sustained yesterday throughout the session into the electronic session and into today's session as well. >> well, there's obviously a lot of speculation among the trading community as to what caused this, but one particular --

while we're going to play the blame gram for a little while, one idea is in the electronic trading world we call it a fat-fingered order. let's imagine 200 contract ace crewed but i hit too many and i hit 2,000 acrued. if you look at the spread action, if you think of it that way, that month would have distorted the months around it. if none of the six months of crude exceed that, then nove would have lost grounlt to the others. we didn't see that. as a trader error, aisle rule that out. >> i'll agree. when you look at what happened in other commodities, when you look at the ags and metals, they're saying that is definitely not perhaps the

reason, moreover look at what happened in terms of an options exploration day. a lot of folks who hamay have bn cut on that side of the contract, add to that that long positions were at levels we haven't seen since may in the wti market and so you had long liquidation, you had options exploration, and you had low liquidity, and all those factors really help to contribute to a massive selloff. >> sharon, i'm sorry. it sounds like what you're saying is this was taking a massive -- granted long position across a commodities situation. is that the bottom line here? >> it appears to be that way. when you look at the action in some of the soybeans and other metal markets, there was basically no activity and then a sharp selloff. not perhaps as dramatic as we saw in the oil market but if there is a major fund that's taking off positions in commodities, it would perhaps explain the fact if they're more

heavily weighted to oil you would see a bigger downdraft in the market. >> trey, have you ever seen a drop like this? if we are to believe this is some ort sof simple taking off of a long position and granted there are all these other factors often, low volume, operations, et cetera, had you ever seen this sort of move that had been sustained because of the fundamental taking off of a position? >> let's also remember that that options exploration, that is a very important part of the story because if i'm short put and the market starts breaking, that gets me long and the farther it breaks, the longer i get. so why isn't it possible for us to just say, hey, listen, people had resting sell/stop orders in there that if the price gets down to here, it's lengths markets and those stop orders fed on each other. let's be honest here. crude oil is a very volatile market and yesterday is snow exception. i see moves of crude. crude is volatile, traders have to be be very, very careful. you've got to focus on risk

managementment. i have a feeling we going to do all this investigation and find out the markets ran into a bunch of stops an longs got scared. there you go. >> trey, just in terms of the subject of long-fingered, if i send an e-mail to my boss and i miss spel resignation, the system will say do you mean to send this i'm with the error in it, why do the trading systems not say, you know, this is a completely different order of magnitude from the sort of trades you'd normally attempt to put through, we object to it. surely that's built into the system. >> spell check. the market need as spell-check. >> first of all, let's be clear. like on my trading system on the floor, i have stop measures in here. you've got risk parameters set in those. obviously i can't speak for the entire electronic trading kmun, but, yes, there are things like, that safeguards to prevent those

things from happening and maybe those safeguards is why we can rule out what happened yesterday. i don't think yesterday was a fat fingered order because it would have distorted the spread market and it doesn't. so i think it's just stop running. longs make markets go down. the longs got nervous an they started selling and that begat selling and that begat selling and the market broke. >> sharon, in terms of today's trading and how yesterday's move, given that it seems like a fund mental move, some sort of view on the market, how is that influencing today's view? >> well, traders that i'm talking to on the floor see what happened yesterday, and the continuation of some of the selling overnight as a bearish signal. others say perhaps cautiously you want to get back into the market at the levels we are here at the lows of today. but they are very cautious of that and because of the way the selloff happened yesterday and what we saw in the spreads as trey mentioned. so that is something that's influencing them. and many of them are staying on the sidelines right now. the volumes are not that great at the moment. >> right.

an trey, same question to you. not only was fat finger immediately thrown into circulation but also a possible spr release, and that always seems to be sort of the ceiling on top of the crude market. that, you know, you can have ben bernanke pumping it into the system and the prices will go higher but there's always that threat of an spr release that looms. >> in an election year shouldn't we ask that question too, that it might be politically convenient for the current administration to try to bring gas pries down as we move into the election season? yes, people will speculate on that. if you look back to when they did release oil from the strategic reserve, you saw the impact on the carry spreads. i actually think crude oil is you want to be a buyer of rates rather than a seller of rally because the end price is saying give me the crude right now, i'm not interested in storing it and the action in the spreads just

this morning with the spreads firming up even more, that makes me want to be a buyer, not a seller. >> are you? >> sure. in fact, i like some of the forward spreads here. believe it or not in the month of july, the global usage record was the largest in the month of july. so that's a commodity i want to own, not at a commodity i want to try to be short. >> sharon, you've got netanyahu on "meet the press," embes in ben zba city being attacked, navel exercises in the middle east. is that part of the discussion? >> it is definitely par of it. what got oil prices to $100 to a barrel last week while some will say the fed action certainly played a role, a lot of it had to do with what we were seeing in terms of protests and violence last week. that's what helped to drive prices. we didn't see the same type of qe rally in oil as we saw in

other kmomts and others are saying perhaps there's the notion as we see prices get to these levelsites going to stall recovery, any type of qe rally, so that's something we're looking at as well. >> we're going to leave it there. trey conepa, thank you, and sharon epperson. they're touting its fusion model sales and fuel efficience. there's a live shot of alan mulally commenting and phil lebeau. >> we make this on the same production line. 70% is the same. so we can make the car in the quantities people want and more affordably. fuel efficiency as people pointed out. number one reason to buy it. >> alan, we're live on "squawk on the street." so many are watching what's happened over the last couple of weeks, the discuss about the

board and your recession plan. give us an update for how long you want to stay in charge as ceo of ford. >> thanks for giving me an opportunity to clarify those rum rumors, phil. i have absolutely loved serving ford. i've had an opportunity to serve for your a second american and global icon. i have no plans not to continue to serve. i'm absolutely thrill and honored to be served ford. >> but stay as ceo? you can serve ford but stay as a ceo. the >> i love and i'm so pleased to be able to serve as a ceo with the ford motor company. >> are you frustrated by these rumors over the last couple of weeks? i saw you earlier and i get this sense this is one of these things there's a rumor swirling around your tenure. are you frustrated be this? >> phil, not at all.

ford is such an important company for all of us in the united states. the auto industry is nearly 30% of the gdp. as you reported so well, we're leading the development of the united states. even though it's a slower recovery from the reserks it was also the deepest recession we've ever had. people care about ford. we love ford. it's important not only because of the economy and the great careers but also they weren't part -- they were part of the economic solution. i really understand the interest in ford and again i'm so pleased to have the honor to serve at ford. >> what do you say when you look at ford's share price and they say you've about been stuck in this 9, 10.50 range? is it because of europe? >> i think there's a lot on investors' minds. we've had a slowdown in asia and

the china, which is good. united states is great market. south america, we're positioned well in all of them but clearly we're going through a big cycle here. and i think the most important thing we do at ford is to continue to invest like we have in the united states in the toughest of times to invest so we'll be here when the economy comes back. >> ford ceo alan mull laully joining us live on "squawk on the street." >> with the fusion hybrid. >> first on cnbc during power lunch coming up at 1:00. back to you. >> thank you very much. >> way to roll, phil. as was said phil will sit down with ford motor company's alan mulally. >> did you see the sales are down 29% year on year. down by almost a third.

that's astounding. everybody's crushed. gm is down. everyone is down. but the situation for august is really bad, really bad. >> it appears the be strong, pretty robust. >> i think they're down 8.5% for august. it is deteriorating. >> that is true. absolutely true. when we come back, david fash exclusive. five-star portfolio manager, steven walsh will join us live at portfolio 9, tell us how he's playing the big market melt-up when we're back in two minutes. e better employee benefits while balancing the company's bottom line, their very first word was... [ to the tune of "lullaby and good night" ] ♪ af-lac ♪ aflac [ male announcer ] find out more at... [ duck ] aflac! [ male announcer ] ...forbusiness.com. [ yawning sound ] oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here.

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they feareding investors' desire for some sort yield, but with

borrowing rates ever lower, is there a bubble in the making? steven walsh is the chief asset officer at western manmeagement. investment grade and junk bonds make up at least for now about a quarter of its portfolio. steven, glad you could be with us. it's paid to take risk in the past few years, no doubt about it. >> absolutely. >> does it still pay or are you starting to get a little bit nervous? >> yeah, that's the question we've had. as we sit here in september on the heels of 3 1/2 years of truly pretty stellar performance we're beginning to think valuations are looking a little stretched. >> why? >> you've about had a great deal of policy thrown around. i think over the last 90, 100

days markets have anticipated that good news and have priced in a lot of that news already. so, yeah, the view point tends to be don't fight the fed. there's a lot of liquidity coming into the marketplace, rates are low. but it's always a question of wa's priced and i think as we stand back and look at high yield, coming on 6% yields today and spreads of around 500, 5.25, we're starting to thing they might be pricing. >> i want to make that price. spreads have been lower. but the overall yield has never been lower for high yield borrowing, right? >> right. >> you could break the 5%, certainly the 6% threshold. >> absolutely. bb companies are borrowing below 5%. that's an extraordinarily low yield for what's almost equity-like security on your p capital structure. >> so you're going to start to sell high yield. >> sell high yield. >> and what do you do then?

you even been up to 8.5% because you're willing to take risks. >> the flip will be going into treasuries. i know that doesn't look like great investment. >> no, it doesn't. >> if markets are pricing in such good news there are certainly potholes. despite a very positive move by the ecb. the federal reserve has said this move they made last week would not be a panacea, that there was still a lot of economic challenges in front of the u.s., but yet we look at credit markets that are pricing an awful lot of good news. we say pull back. so we will go into treasuries to help balance that portfolio. >> so you're not seeing the world quite as rosy perhaps as the credit markets would make it out to be. >> yeah, absolutely not. it's notes like the sky's going to fall in. >> you make the point. europe is still a huge issue. you and i have talked about it for years, and, yes, draghi has

sad some good things but we're only a year away. >> that philosophy change that the ecb has been big going from trichet to draghi. he's bought is this bond buying program. that's really good. but the underlying problems, balance of payments, david, as you said, the european issue is not over yet and then you look at markets and say are they pricing in too much optimism. we favor that a little bit. >> we're also looking aet a positive makeup of your portfolio. mortgage-backed securities provide about 11%, at least according to the slides we just looked at. $40 billion a month, duh that make you a seller? >> well, that's where we stay overweight. we're actually 35 to 40% in agency mortgages. 11% in non-agency mortgages. that might be one area we'll stick with for a little while. the fed has announced a very

focused program directly on that asset. we believe the net incident is about flat. so we're get nothing new supply every month and yet the fed is buying $68 billion to $70 billion a a month. that sort so far supply/demand imbalance is likely to keep spreads low for a while. we've stuck with the trade for a little while. >> what would change your opinion on that? >> and is it going to work? is it -- is the margin going to make any big difference here? especially if lending standards of banks continue to be strong. >> we're not a big believer that qe-3 is going to deliver like the fed expects. the fed hasn't said -- they've said it's not a panacea. they're not looking for a lot. we think they might be underestimating the costs to the quantitative easing program, the large security purchases, maybe it's inflation down the road, maybe it's disruptions in the capital markets. the fed is a big participant in our markets. and that sort of non-economic player in the market has the potential, we think to create some dislocation. >> so on one hand you say don't fight the fed, but at the same

time you're willing to take risk off because you don't think the fed's going to work the same way it has the last three years. >> don't fight the fed exactly where they're buying. stick with them there, they told you i'm going to buy you a lot of these things, we think the market's pricing in close to a $500 billion purchase program. they're going to direct it at agency mortgages for now. we'll stick with that trade. and that's a pretty low-beta trade. there's not a lot of risk in mortgages. fixed income is high yield, let's take chips off the table in high yield. >> all right. steven walsh as always, appreciate your time. >> thank you. >> western asset management. back to you guys. big-name retailers issuing profit warnings. so our global slowdown fears are back in front for the retail trade. but first, rick santelli, i understand you found a very special guest down there. >> i did. i did. you know what? in the two irs agents that came with him. listen, we've heard of flash crashes. today, we're going to have a flash bash when gary's here. you know, we're going to have

questions on the back of these cards like what happened yesterday with the oil market? that's an important one. or, hey, do the wealthy of this country really not spend their money? you have any good questions? >> is bernanke the worst guy in the world for your long-term financial health? >> see all these -- >> is qe a waste? >> we're going to answer. on the santelli exchange. >> do not miss it and we're going to share top billing, see you at the top of the hour. look at these streaming charts! they're totally customizable and they let you visualize what might happen next. that's genius! we knew you needed a platform that could really help you elevate your trading. so we built it. chances of making this? it's a lot easier to find out if a trade is potentially profitable. just use our trade & probability calculator and there it is. for all the reasons you trade options - from income to risk management to diversification - you'll have the tools to get it done. strategies. chains. positions. we put 'em all on one screen!

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market's up about three points with some of the movers today. amd sliding big time after the management shake-up. of course, the cfo leaving after three years there, i believe. looking to pursue some other opportunities. in addition to some big calls regarding ships of large pc era if not over is quickly dwindling. >> cutting intel and a bunch of other, sector downgrade, in fact. >> apple crossing $700 once again, $718, the intraday high, $701.44. >> $701.44 on the dot. >> and etf rallying on the back of this bullish call out of goldman, and they mentioned particular names they like. >> actually, there's a downturn in the xhb here. and this is interesting, happened after the sentiment

number crossed, but that number was higher than consensus estimate. we saw this decline here even despite the goldman call. of course, the sector trading this particular ecf trading close to levels not seen since april of 2008. so quite a run. >> some final thoughts, next on the program, and of course, gary with rick in chicago. when you take a closer look... ...at the best schools in the world... ...you see they all have something very interesting in common. they have teachers...

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squawk on the tweet for tuesday morning. new industrial robot is going to be unveiled today by a company called rethink robotics. we're asking you, what would you design a robot to do for you? so many possibilities. marty writes teach governor romney to run an effective campaign. dave writes, hold my spot in line at the apple store. going to be a big weekend. ryan writes, i'll vacuum, dust, do the dishes, i need a robot that folds laundry. >> isn't that what marriage is for? >> whoa. >> wow. >> sharing the task. >> there you go. >> sharing the task. >> just leave it there. >> okay. >> i think is safe to say. >> what's on tap tonight? can the mark sustain these gains? we have noted technical analysts to join us, she'll give us her

lowdown when it comes to the s&p, nasdaq, as well as some others. >> interesting, especially on the tail of the interview talking about whether or not this is the high. and cramer's looking into that tonight, as well. >> yep. >> we'll see you all later. >> see you later. here's what you missed earlier on this morning if you're just joining us. welcome to hour three of "squawk on the street." here's what's happening so far. >> i present my views, i speak the truth, quote unquote as i see it. >> you would have voted no? >> i would have voted against it. >> a lot of this weakness in in fedex is in asia. you can see the slowdown in china. part of it is exports. you're seeing the weakness in demand in europe. the weakness in demand here. china's feeling the effect. >> i mean -- give it a break. the market wants to go down. will you give it a break is the way i look at it. i don't want to be a buyer at

the opening when the whole market looks ugly. but some people can't resist it. what a great comment he had, if you don't have a job, you can't save anyway. he's worried on the anniversary of occupy wall street, what he's saying is, hey, listen, you know a lot of people -- it's all bad. >> the good dynamic here on the bempbl side is that the guys are kind of getting along and playing nicely for the first time in a while. i think they want to make more money, cognizant of economics, making the pack sizes smaller and looking at the profit margin. we're in a pretty good cease-fire on the soft drink side. >> if you think coming out of the crisis the single investment theme that's dominated fixed income has been take risk, high-yield bank loans, structured medical repoortgages. as we sit here in september on stellar performance, we're beginning to think maybe valuations are looking a bit stretched. >> good tuesday morning, live here at the new york stock

exchange. the dow, of course, could not make it five in a row yesterday. we haven't had five days in a row up in about six months, but we're going to try to erase some of the losses this morning. dow was negative, now up 20 or 19, s&p's up less than a point at 1,460 and the nasdaq down a point or so. chip makers appearing in the big winners and losers today, broadcom at rbc, and amd, on the other hand, sharply lower following news of the company's cfo is resigning after only three years on the job. after reporting third quarter profit revenue that did beat estimates, comes after fedex warned earlier this month that a slow down in global manufacturing. but first, it's bottom line. lest get the road map for this morning, apple finally did it crossing $700 a share. is it time to start worrying about a pullback? or will this stock keep on going? we'll talk about how to play it. plus, retailers taking a dip in the red. how can they get back on the top? we'll find out if bracing mobile

technology is the key to retail success. then markets overseas taking a hit as investors wait for spain to decide whether to ask for help from the ecb, we'll find out what it means for markets here at home when we bring you the european close in less than 30 minutes. and the new human-friendly robot that can take the world of manufacturing by storm. the founder of rethink robotics will tell us how his robot could save american jobs. all that and more is coming up in the next hour. first, though, get back to apple's big milestone. as we said, shares crossing $700 earlier on. can it go even higher from here? managing director senior tech analyst over at jeffries has a buy rating and a price target of $900. good to have you back. good morning. >> thanks for having me on, carl. >> a lot of people keep waiting for the opportunity. is that coming? or is this going to continue to look like a diagonal line? >> tough to see it go this quickly up, but we think there's

a lot more upside and the next big data point is b on sunday when apple gives us the first full weekend of iphone five sales. we expect that to be big. and after that, we've got to wait for the launch of the ipad mini and results in october. >> let's talk about this weekend first. what's the number? where's the over/under in terms of disappointment in terms of meeting expectation? >> i think if they do anything greater than 6 million, it'll be a huge positive. and the reason i say that number, there's a view on wall street there is significant supply constraints, even now there's only around 5 million or 6 million units they'll be able to produce by the end of the month. if we get a 6 million unit number, that'll le lay a lot of those concerns. we think we can do eight after the first weekend including preorders. >> interesting. we're watching sort of the time post here on the screen of the dates in which it hit 400, 500, 600, 700. today, of course.

i'm looking for instances in the next couple of months where, i guess, macro concerns aside, the stock might take a breather, and they have just a calendar going into october and, of course, you're dealing with the holiday season. >> yeah, it's really tough to get off the train right now because you've got such a big q-4. the ipad mini we think is going to be a block buster, iphone 5 is already a mania. we've got a good runway here. what i expect will happen is the street will probably get ahead of itself some time in the november time frame. we might get a bit of consolidation of stock there, but that might be it for the rest of this year. >> yeah. everybody's talking about china and the degree to which the company needs a deal with china mobile. the best read we've gotten so far is it's not a story for 2012. maybe next year and maybe not even next year, what's your time frame on that? >> we think most likely in q-1 next year, but it comes down to the chinese government. decides which carrier gets which hand set. they're all government controlled.

and the government wants to even out the subscribers. they want china telecom and unicome to gain subscribers on purpose because china mobile's so big. that's the challenge that apple's facing with mobile. >> would you argue that a would be china deal has the most upside of any potential catalyst over the next two years? >> really, there's two upside potential catalysts, china mobile and docomo. they're a huge carrier, big 4g network, they're bleeding subscribers in japan like crazy, they don't have an iphone, that could be a big subscriber boost, as well. they're bigger than verizon. >> interesting. you caught us on a landmark day, peter. we know you cover the company closely, we'll see you soon. >> thanks for having me. >> talking some apple today. meantime, presidential candidate mitt romney as you probably know by now facing some criticism after a video of comments he made to the fundraiser in may drew attention on the internet.

it was surreptitiously recorded and provided to the magazine "mother jones." >> don't worry, we'll take care of them. how are we going to do it? convince everyone you've got to take care of yourself? >> well, there are 47% of the people who will vote for the president no matter what. there are 47% who believe that they are victims, who believe that government that has the responsibility to care for them, who believe they are entitled to health care, to food, to housing, to you name it. entitlement, and they will vote for this president no matter what. and the president starts off with 48%, 49%, a huge number. these are people who pay no income tax. 47% of americans pay no income taxes. so our message of low taxes doesn't connect. tax cuts for the rich, that's what they sell every four years. and so my job is not to worry about those people.

i'll never be able to convince them to take responsibility for themselves. we want the 5% to 10% in the center. those that are thoughtful and voting one way or the other in some cases emotion, whether they like the guy or not. >> our chief washington correspondent john harwood joins us with more on that story. john, after so much discussion of quote unforced errors over the last couple of months, where does this rank? how does it change the race? >> well, i think it's a pretty significant problem for mitt romney. i don't know how much it changes the race. there are a couple of concerns. first of all, democrats are pouncing on this and saying you have this wealthy republican candidate expressing contempt for almost half of the voters in this country. secondly, it is distracting mitt romney from a time where he wants to make a forward-looking economic argument. and if you want to see the concern that mitt romney had about this episode, it was how quickly he raced out last night to have an unscheduled press

conference to try to say at least clarify but not take back those remarks. here's mitt romney. >> it's not elegantly stated. let me put it that way. i'm speaking off the cuff in response to a question. and i'm sure i could state it more clearly and in a more effective way. but it's a message which i'm going to carry and continue to carry which is, look, the president's approach is attractive to people who are not paying taxes because frankly my discussion about lowering taxes isn't as attractive to them. >> now, of course, historically if you look back at the numbers, the number of people who don't pay income taxes has varied over time, back in the depression in 1932, it was half of all households didn't pay taxes and it went down to about 19%, 23%, in 1982, 1992, by 2002 we'd had a recession, the number was back up to 30%, by 2010, it was back up to 41%. the one paradox of this comment by mitt romney saying the 47% of

those who pay no taxes are for barack obama is that many of those people are part of mitt romney's base, that means elderly people who don't make much money and working class white voters, those are key elements of mitt romney's victory strategy and he's got to figure out away to make sure this doesn't become a liability with them. >> john, david brooks, today, of course in the "new york times" calling it a depressingly inept campaign. bill crystal even saying it's ridiculous mistake. to what degree is the establishment moving away from the campaign with 49 days to go? >> there's a lot of concern. and one of the things we'll be watching is, do republican congressional candidates begin shifting and distancing themselves from romney? i don't think we're at that point yet. look, he is behind president obama, he needs to make up ground, but not terribly far behind. he still could win this race and debates coming up in a few weeks are an opportunity for him to make headway. >> and a bit of money advantage too. the ad war is still going on.

john, thanks a lot. interesting story. john harwood joining us from washington. meantime, special edition of the santelli exchange today as you may know, rick is joined on the floor of the cme by our own gary. >> good morning. >> good morning. >> gary and i have been writing down questions, we had people write down some questions, sometimes uncomfortable questions are easier to deal with in kind of a flash bash, and we're having our bash right now. so, i guess, gary, why don't you start us out with a question? >> here you go, rick. entitlements alter voting practices, true or false? >> i think true. obviously this question is in the context of what john harwood just talked about, i didn't listen to the tape, i don't know if it was spoken eloquently or spoken in a way that wasn't pretty. but in the end, i don't think we need to spend a lot of money on research and create a t.a.r.p. program. people give you stuff, you're going to vote in their favor. >> i'll give you that one.

>> let's go another one here. >> you going to pick one for me? >> you pick one, i'll read it. what happened to all the savers who top pick -- >> by that we're talking about all the people being forced into equities right now given the bernanke policies. will et me read something to you, rick, that i thought hit it right on the head when i was coming into town last night. where fed policy has succeeded is enriching many financial services providers. at businesses within the financial services eco system favors retirees. this is why we see real estate prices in new york, london, aspen surging while those in chicago and cleveland remain lackluster. this came from quarterly letter out of asset management. we know you and i have talked about it and savers have told me and told you for weeks about the fact they are being forced into an asset allocation that they should not be in at this point. but they're being -- >> you're not listening to the party line, gary. just on our shows today, here's a couple of comments i've heard.

>> yeah. >> first of all, wealthy people don't spend. >> of course not, they just save money. >> and the wealthy are the most impacted by qe. >> in a negative way. >> that's a good one. i have a friend who signed a house in arizona, missed three deals because it hasn't appraised properly. trust me on this, public, when credit is a huge issue, those that have money benefit the m t most. you transfer wealth from the poor to the rich. do you disagree or agree? >> i completely agree. and let me say this, i know because i've spoken to many people from my former life, rick. when this trade unwinds, when these people -- >> answer the question, though. >> when these people are forced to sell, because we know this is going to end terribly, it's going to make 2008 look like nothing. >> we have a lot more questions. >> we've got a lot more. >> what do we have here? >> the fed can keep rates low as long as -- >> they wish. >> can they keep rates low? >> you see that behind me?

that might be a bit that's been taken over, but at some point when it comes to life, it's not going to be the fed that decides when rates go up. >> this is the euro/dollar future pits right behind us. i told these guys, when this unwinds, when the fed starts to exit, this is the place you'll have to pay attention to because this is where reality will happen when everybody says wait a second. there's no buyers. >> so reality isn't the fact they could just take one of these cards and write down where they want the ten-year and start mailing in. when you print money you can do whatever you want. >> they're telling us we've got to go. >> do people who own gold really -- >> forget -- >> i'm going to give that one to you. that is a classic of all time! gee, i don't even remember where the gas tank is. he must obviously drive three miles -- >> one more. pick one more. >> pick one more real quick. nyse 5 million, what do you think? >> as we know, all of the stuff that the regulators have done

whether it's what happened with mf, new york stock exchange -- >> ambulance chasers. >> regulators. >> high-frequency trade is when they go -- and all the lights turn green. >> the great thing about being here in chicago is people say it like it is. you know what? we said it all along, the regulators don't understand the business and until they do, they can't regulate. >> yeah. but you're two steps removed. the people that write the regulations don't understand the business. dodd/frank. i rest my case. perry mason's over, back to you. >> more of this at the bottom of the hour, carl. >> i want to see you at gibson's for dinner tonight. that was great. >> that's where the 1% eat. i go to mcdonald's! i want my toy and i want my 16-ounce drink. >> thanks, guys. we'll see you soon. when we come back, retailers have been on a role, but the sector's been pulling back over the past few days. is it time to sell? we'll find out after the break. ] when this hotel added aflac

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interactive brokers, the professionals gateways to the markets. disappointing numbers coming over overseas retailers like burberry and h & m over the last

week. could they be the canaries in the coal mine? the president of sw retail advisers and the senior portfolio manager at rockdale investment management. good morning to both of you. stacy, good to have you back. >> great to be here. >> coach and tiffany were concerns earlier in the year, today's fedex is being used as a proxy for people getting shopping online. how bad has the sector topped out for the year? >> well, if you look at the h & m numbers, they're exposed to europe. that brings back the concern for europe, it brings back the concern for u.s. retailers exposed to new york, abercrombie, fossil. but surprisingly august numbers in the u.s. were really strong and consumer sentiment was surprising last week. so we're still seeing some momentum inside the u.s. >> do you think weather is related to any of this? or going into the fall? >> well, it's always easy to blame the weather. >> sometimes it's actually true. like last winter was a problem. >> yes, and it was too warm. h & m has said it's too hot in

europe so people didn't come in the stores looking for fall merchandise. and in some sense, it does make sense here. and also the sales were very heavy in june and july. there might be consumer fatigue, and if weather's not on your side, the consumer gets lazy and doesn't come in your store. >> combining the european environment and the u.s. environment. >> el with, i agree that the european environment is weak. but i don't necessarily think that will affect the american environment. it's going to move on its own and the u.s. environment has been pretty good throughout the year. august same store sales numbers were pretty good, the retail report last week was pretty good. so all else seems to be that u.s. sales will continue to chug along and be very independent of what happens in europe. i would agree that retailers with european exposure or restaurant companies you would want to be a little more cautious. but something strictly in north america, i think it's probably pretty positive. >> yeah. do you like mattell, a retail play that's going to get

seasonal attention going into the holidays. and nordstrom too, which is a lot, mainly a share play, right? >> that's right. nordstrom is the share play. it has u.s. exposure, going to have a little bit of canadian exposure, but not too bad. mattell does have the international exposure, but it is a holiday sales play. back to school was pretty good. you know, leads to a belief that the holiday season will be okay. both of them are reasonably priced 15 times earnings. they haven't really rallied like other retailers in a sense, i think they're both good buys. >> and you like walmart as a defensive pick if the environment looks to get a little bit more challenging as the year goes on. one thing, stacey, it's hard to divorce from the environment is jc penney because they've had such problems all summer long. there's sort of been this piece over -- the nordstrom sort of brings that up, don't you think? >> sure, so i think jc penney has been a share donor in the last nine months. you have to consider potentially

if they get back on the right foot that take some share back and brings back to them some of the other department stores suffer. but i think jc penney's issues are long-term. so i really wouldn't worry too much about that share going back to jc penney. >> if you had to divvy up between luxury, discounters, dollars, themes, is there one element of the sector that's most favorable right now? >> well, i have to say that this year inventories are in amazing position. they're very lean, especially in a teen space. you and i talked a year ago about the fact that gross margins were down 500 to 1,000 basis points in the teen space. that's not going to happen this year because you have lean inventories. so the teen space is set up pretty well for the holiday. >> and david, last word to you. and "the new york post," there's stories about cotton prices year-over-year, down 30%, that's going to help gaap, right? >> it should help margins

overall, that's always the big question with retail, what's going to happen with margins? sales have been pretty good, but they've had to be a bit tight with promotions. if they can pick up margins with lower cotton, that does help and that's a positive. >> it's been a roller coaster all year, but fun to watch. david, stacey, thanks, guys. straight ahead, the close in europe, oh, about 6 1/2 minutes to go. back after a break.

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welcome back to "squawk on the street." a quick market flash on manchester united. we're watching the stock, its fiscal fourth quarter loss widen. decline in broadcasting and match day revenue, hit a session low of $12.06, that was six cents above the all-time low right now trading at $12.65, down about 2.4%, carl. >> we'll see if they can win some matches in the meantime, but thanks a lot. when we come back, europe's

trading day comes to a close, three minutes and 15 seconds, simon is chomping at the bit.

i want to get to europe's close today. we've got auctions out of spain, some investor confidence numbers out of germany. simon hobbs. >> the biggest thing rolling across all markets is having had that huge surge on the fed last

week without further things. you're getting that mild profit taking, particularly on most sectors. fed through from asia, in to europe and some arguably. so some of the banks are down. let's have a look at the close here. >> the european markets are closing now. >> and you'll see it is a lot of red around. portugal's down, in the right-hand portion, down 2%. you see also heavy losses from greece and alike. in terms of what we're watching for, the greek might do a deal within the coalition on thursday, thursday's also an important day, when we start getting the purchasing managers indices coming through, which will indicate the degree to which we're still heading into recession for much of europe. or the prospect of actually the action, the verbal action of ecb perhaps turning around sentiment. there's always that possibility. broad profit taking. you see these banks down across europe, some of the german banks, kcb, in netherlands, down

3.5%, the italian banks and the spanish banks are also down, they clearly are a key focus. the big question as you move out past this kind of hiatus is for how long will the market hold on in there with spain if the spanish can't make up their minds whether they can access a bailout or not. and today the spanish prime minister, the deputy prime minister was saying they were still considering the terms of any bailout, but he has really put himself into kind of a limbo, if you like, by not really clarifying exactly what spain is going to do. therefore, there may be a finite claim, whether good will, the verbal intervention from the ecb starts to have less and less of an effect. and you might see confidence lost and the yields slowing out. now, if you have a look at the two-year, and carl mentioned you had an auction at the short end of the curve, i think 12 months and 18 months, 3.5 billion euros if i'm correct, just slightly higher overall. no great shake. but the ten-year, still, those

yields are down. they haven't actually begun to spike back. and in fact, you'll be aware we made a major move further into negative territory recently taking us below 6%. and for the moment we're holding firm, everything is fine, but that on the market arguably will be finite and we have to see the point where the market and the politicians could interact or not interact to that effect. i should mention the data continues to be poor as we await the pmis on thursday. the automotive sales across the whole of europe, not just the eu eurozone down for 11 months, real bad for the likes of ford, down 30% -- beg your pardon, 29% year-over-year, gm down 29%, the head having to promise italians he will not close plants locally. particular pressure among the french to do that. the germans, i guess, are really where the powerful selling is at, the bulk of the market.

they too are in slightly negative territory. german car sales fell 4.7%, which is not terribly good. and the miners have slightly reversed course in europe today. we mentioned these guys that are exposed to russia or south africa. the precious metal miners, still up about 11%, 12% for the month, but it's just a little bit of profit taking there. interestingly on the iron ore front because that does move the global miners in london, australia overnight cut its forecast for iron ore by about a fifth. i'm not sure that's a huge surprise to people, for example, carl, in china recently. >> and you mentioned ford. apparently this new fusion being compared to thes a aston martin. >> wow. >> thanks, simon. simon hobbs. let's get a check on energy with sharon epperson. a little bit of decline in crude. >> looks like oil prices were setting a bit, but that's after a huge drop yesterday.

we're still looking at key technical levels according to traders, namely with the wti contract now below the 200-day moving average, that's going to be key to watch, and also watching whether or not the brent crude contract can hold this $113 barrel level is going to be key. as we move on from trying to dissect what happened yesterday, traders are focused on the fact that on the one hand you have the fed action and what's going on in the middle east and north africa supporting prices. on the other hand, you have what could derail this economic recovery, and that is higher prices and it's the fact that we're seeing perhaps impact on physical demand. and on the other hand. so the bull zone bears are trying to duke it out here. we also want to know what's happening in the precious metals market because there it is more clear what the qe-3 rally really means. and there is where you see a number of firms raising their price targets for gold for this year as well as future years. we have bank of america, merrill lynch saying they see gold as

$2,400 an ounce by the end of 2014 we told you about yesterday, morgan stanley raising its calls. not only gold prices rallying here, but silver, as well. back to you. >> thanks. talk to you in a little bit. sharon epperson. let's bring in mary thompson with a look at what's moving through the nyse. up over two points. >> that's right. what's interesting, carl, the dow has lost about 20 points in the last five minutes or so. what we're seeing is some buying in the consumer staple stocks providing support to the dow companies like coca-cola. but again, giving up some of those gains recently, we continue to see weakness in materials and some of the energy stocks too keeping pressure on the broader markets. and of course, tech keeps jumping in and out of positive territory today. overshadowing the markets the earnings report from federal express. it's also hitting transports hard which are much weaker yesterday than the broader markets. today, continuing with that theme down 65 points. again in the wake of that earnings warning. take a look at the sector check.

because as i mentioned, investors taking a nibble at some of the safer sectors, consumer staples higher, also health care moving higher today, as i mentioned tech, trading close to an 11 1/2 year high, consumer discretionaries. biotech at a historic high, and today's session, the third session in a row it's reached those levels. tech higher, actually weaker now. there's kind of a couple of things at play here. you have two big companies apple at an all-time high and google at a five-year high offsetting the weakness in some of the chip stocks notably amd on the news. and coming off those levels. a man amd down on the news that the ceo has resigned. and the home builders have been interesting to watch. good news on the confidence level, positive orders from ryland, looking ahead to existing home sales.

they have given up their gains. the dow holding on to a five-point gain. >> doubled the gains. nice job, mary thompson. let's get back to the cme where santelli and kominski talking about aig, i did not realize this, the fourth year anniversary of the bailout. >> let's ask the only question that needs to be asked today. was it a success? >> well, it was a success as the government told us last week, rick. but when you think back to that, what was aig's original charter? it was simple, to price risk correctly, match liabilities with assets, and invest conservatively to the balance sheet. and number three, don't do anything else. that's the charter of the insurance company. what did they do? got into prop trading, the businesses, and the fact i don't think what the return is for the shareholders, the precedent was set by the government investing and liquidating later on, no matter what the returns were.

>> 100 on the dollar. >> doesn't matter. they were doing something they weren't originally chartered to do. the money should not have been invested in somebody that broke their own charter and own rules. what about gm? because gm you saw the government as trying to possibly look back and forth in terms of what's going to happen with the gm bailout. was investing t.a.r.p. money in gm a good use of taxpayer money? >> in my opinion, it turned out well for gm, turned out well for aig. should they have done it? we have bankruptcy court that deals with that, why does the government put the weight of the federal government behind it going into a bankruptcy like this? because obviously they wanted to affect the outcome, which players were affected the most. one of the big reasons for the bailout was all the cottage industries that would have been downsized. they haphazardly got rid of dealerships, we never hear about the dealership or the affinity or voting records or how researched that is. but in the end, if i make dash boards, windows, tail pipes,

tires, we sell 15 million units, and trust me, whoever would've made up that difference would've needed tail pipes and door handles and glass disingenuous argument. >> and the selling shareholder of gm, takes -- >> by the way, still owns 500 million shares. >> and if the government takes a loss in gm, it's not going to be on paper, it'll be a paper loss because as you know anyone who has the right to taxation can essentially book, raise money, take the tax money and offset the losses. there'll never be an actual loss. >> let's make it even simpler, on any given sunday night, we can pick out the biggest losers at the roulette wheel and write them a check for their losses, some of them are going to turn out well, some of them aren't. let's bring in our buddy james. >> listen, something happened this week with paragan financial group. tell me, i'm not an attorney, why do you have to have a plea deal for a guy who basically told you he was guilty in the

suicide note. >> to me, it was an admission that the people who were charged with protecting our financial system don't think they could get a conviction over a guy -- >> he's a public defender. >> he had a public defender. >> and a confession and suicide note. he's not giving them any information, not naming names on accomplices. >> don't we want to get to the bottom? how a firm of this small of size, there had to be so many people working with him. doesn't anybody want to know the truth? >> i do. >> and while we're on the subject, real quick, gary, what about what's going on as an aftermath as we come close to the one-year anniversary of mf global? i still can't get the head person out of my mind. she obviously knows something. is she ever going to write an article? >> what you took away, what will happen in terms of mf as a result of this? >> doj made it clear, they don't want to prosecute mf. they don't want anyone in jail. and let me tell you, he's a

criminal, he stole $1.6 billion, he should be in jail. >> you said when you were on air you were going to try to get every state in this country to try to prosecute corzine and mf. >> we're working on it. and one problem a.g. has said the doj said it, you can't do it until we release it, which i'm sure won't be until after the election. >> now you're going to go from one insolvent city to another, you're going to head to l.a. >> i am. >> are you working for moody's now? >> we're going to sit down with jeffrey gundlach, we'll find out about all these issues we talked about today, rick. and most importantly, i want to know when the fed wants to exit, is gundlach going to be a buyer of those bonds? because if he says no, who's going to be the buyer? >> back to you. >> he's had great calls this year. i look forward to that. thanks a lot, guys. our next guest is focused on the three head winds facing the u.s. economy, the debt ceiling, the fiscal cliff, and of course,

europe. joining us today is the chief international economist with deutsche bank. good to see you. >> thank you. >> essentially everything it wanted from the german court from draghi, from bernanke, and that's not to say we don't have some issues to get through in the fall. what do you think it means to growth here in the states? >> well, i think that over the last two weeks essentially it's been a real game changer, first of all, the draghi plan has put out clear institutions and clear framework for what's happening going forward. on the other hand, the qe-3 last week basically in the u.s. also laid out a plan for what the fed is going to do. so now we suddenly have a fairly significant tail wind through the outlook and we have definitely removed some pretty significant tail risk from the table with these actions of the central bank. and that definitely does bode well for gdp growth for the u.s. once we get to the other side of the fiscal cliff or the debt ceiling, those issues still are hanging as a cloud over the growth outlook, but once we get

into 2013, it does look like there will be unleashed some powers that will be supporting the recovery from here. >> to what degree? where does gdp go to? how far does unemployment fall? >> yeah, bernanke is obviously spelling out very clearly the problems in the labor market, we have a number of issues with the labor department, we're not creating enough jobs. but with a growth picture, where a lot of the weak data we've seen in the last four, five months, simply because of the uncertainty coming from the fiscal cliff, the uncertainty coming from the debt ceiling, and the uncertainty from europe. so if the european risk has been now fading at least somewhat here with the ecb decision that's been quite significant, then we should start to see more support of gdp growth, and therefore the fed forecast for last week does make a lot of sense seeing some acceleration of the growth going into 2013.

>> everyone's trying to go into bernanke's head and find out what it is. we all know he's trying to meet his mandate and that is to maximize employment. but through what avenue? and i wonder if you think housing is it. is it really housing he's looking to boost? and through that we bring jobs? >> no doubt about it that where the qe-3 decision, that must be the idea of trying to help the housing recovery even further. and one thing that's very important is things have been relatively stable in the housing market for the last two years or so, but the index today combined with a whole range of indicators we have been seeing more recently are suggesting that the housing recovery is starting to move in the right direction. the recovery in housing is not spectacular, but there's no doubt that the upside potential to gdp growth from housing is certainly very significant. and therefore also just to add to construction would also be quite significant for that front. we're watching housing very carefully because we think that's the first domino that

needs to topple to move things in the right direction. and it's safe to say we have the worst behind us in housing, now it's a matter of what is the speed with which the housing recovery will proceed from here. >> no, really, the ncb numbers are encouraging, but it's awfully difficult to call. thank you for your time. >> my pleasure. >> thank you so much. straight ahead, can robots save american jobs? the company rethink robot thinks so. and claims it could bring more manufacturing to this country. the company's founder is going to explain after the break. want to try to crack it? yeah, that's the way to do it!

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coming up on "halftime," doug cass reveals his latest market call. is housing really on the comeback? and where could the stock market go if it really is? we'll ask the expert robert shiller. and what's next for apple? the stock at all time highs is a big split coming? carl, we'll see you in about 12 minutes or so. >> sounds good, scott, welcome back. remember the roomba? well, one of the inventors of that robot is unveiling a new robot today aimed at improving productivity in a manufacturing sector. joining us this morning, roger brooks of rethink robotics joins

us to talk about why he thinks his new robot could help boost jobs. good morning. >> good morning, thanks for having me on. >> john markoff calls you a legendary robotist. is that the name under this will be sold? and tell us more about them. >> yeah, it is the name of the product, and it's a robot that ordinary factory workers can program or teach to do a task and be right next to them. they can upload very simple tasks that are repetitive to the robot themselves and thereby increase the productivity of american workers. >> $22,000 "the times" says, i assume that's retail. >> that's retail. >> who is a likely buyer? to what degree to they use it? how many might they order on a manufacturing floor? and why doesn't it replace some human capital? >> yeah. we're initially aiming medium

manufacturers, there are 300,000 of them in the u.s. and robots have been such a complex thing and expensive thing to bring in the factories. lots of them don't have any robotic help at all. this is really aimed at small manufacturers, small batch runs where they might get, you know, one robot for every three or four production workers that do the simple task and let the people who are much more cognitive do the more complex tasks. so we've worked with a bunch of small manufacturers, had them -- had the pro bottoms in the factories, thatted the workers program them themselves. and thereby get rid of, let the boring jobs be done by the robots so they can do more productive value add work. >> yeah, it's been said it's awfully difficult to get a human being to do the exact same motion the same way over and over again. that's obviously where robotics come in. there's a former apple executive who says it feels like a true

mac intosh moment where all of a sudden everyone had one and worked with one, that's how some are envisioning this next new era of robotics. what changes have taken place to make it possible now? whether it's cost, whether it's people's proceedings for what these machines can do? >> yeah, that's certainly how i see it. it's like going from the mainframe to the pc where before ordinary people couldn't touch computation and now they could. and the reason we can do it now is that the cost has come down dramatically. it's been driven by consumer markets, you know, digital cameras, the connect, all those sorts of sensors have come down in price, computation has gotten less expensive. and people are used to dealing with technology, you know. they go to an atm, they deal with a screen with menu items. so people have changed via accepting of this sort of technology and the cost of the

technology has come way down. and if we do human centric design of the interface, which has not been the tradition in the product, but doing human centric design of the interface makes it so ordinary people can use the robot. >> how many of these do you think you can sell? >> well, we're on a scale, we're building them in the u.s., by the way. our mantra is build stuff in the u.s., we're making these in the usa. we've got a very scaleable production line going up now. we'd like to sell thousands of them or see how high it goes. >> are your expectations for baxter more or less aggressive than they were for the roomba? >> well, the roomba, we thought we'd sell 15,000 roombas and then we sold 70,000, and now 8 million have been sold. so, you know, we're going to have to listen to our customers, adjust our product a little bit, make sure we get it right as we get it out there. i'm optimistic this can really

help american manufacturing. and it's going to change some of the jobs, but the pc didn't get rid of office workers. i think this robot is going to help american manufacturers do more. >> yeah. we well, it's a different customer base, but different price point and margins, as well. dr. brooks, look forward to hearing more about it. thanks for your time. >> thanks very much for having me. >> rodney brooks joining us in boston talking about baxter. meantime, the white house is reaffirming its position that all options including an spr release are on the table dealing with the oil markets. also constantly monitoring the situation with international partners. oil is trading slightly lower today after a volatile afternoon session yesterday. here's a look at jay carney talking about the market, crude is down to $95.95. up next, another retailer in the midst of a serious pullback today. more on that after the break.

welcome back to "squawk on the street," market flash on bed bath and beyond. oppenheimer taking this one to a perform, saying they have near term concerns on a stock. those include recent key product cycles and outsized market share opportunities that are fading. that is reducing the earnings upside on this one. looking at it 69, down 2.5% today, carl. >> thanks a lot. when we come back, we'll read some of the answers to our

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