bring down the anxiety, the skittishness and volatility about the tapering. it's going to happen, and interest rates do have to rise at some point. >> long-term perspective, that's probably the case. >> i understand. thank you both for joining us and that does it for us today and right now -- thank you and watch "fast money halftime report." see you tomorrow. it's time for "squawk on the street." good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim kramer and david faber. the streak has broken after the dow's 76-point loss after adp did miss. mortgage rates above 4% and hawkish fed speak last night and in europe flash pmis were tepid and marginal growth in germany. the nikkei fell 700 points, and investors are not impressed with

shinso abe's plan. possibly setting the tone going into friday's big jobs number. >> as we just said, japan's prime minister abe fires his third hour in the economic quiver, but in the eyes of investors it misses the mark. apple loses its patent ruling to sam suj and gets slapped with import models. >> the battle is not over and with mortgage rates hitting a pivotal point. >> the jobs picture on wall wale's front burner today, new data shows private sector employers added 135,000 jobs in may and that is below expectations and higher than april's revised total of 113,000. the report comes ahead of friday's much anticipated jobs number and one day after the dow streak of 20-day tuesdays was snapped. they tend to undershoot bureau of labor statistics. some say you might get an

in-line number if the pattern is intact. >> i've been looking at the adp number and we used to talk about the monster employment index and then we stopped talking about it. there's been very little cohr lagz unless you want to tried adf and decide that that's what matters. >> it has been a bit of a sideshow that we, i think focus on because we're so desperate. now -- >> desperate for -- >> anything. any clue and it's funny that you have lennar's ceo. you know it's down for the year? there's been a lot of destruction in this market between tuesdays. >> there has been. >> and we broke our streak yesterday, of course, with tuesdays. >> it does, yesterday it didn't feel good. why is that? what does that actually mean? the guys hiding in yield are doing badly.

the guys seeking growth yesterday was a terrible day. the guys who are playing the idea that there's a world rebound, well, they're not getting it. so you just, no one's at peace. this is a market where everyone is not getting what they want. sometimes you can't please anybody. right now you can't please anybody. >> meantime, the cdos coming back in london. >> hey, listen morons who are buying that stuff. i hope every penny is taken away from you. listen to me right now. give me the right camera, for heaven's sake. >> it's not cbos. >> people lost fortunes and they couldn't unravel. these guys are fool. with the people whose money you're rung say holy cow! how did you blow up? i listened to "squawk on the street" and they said you're idiots. you're idiots. you're morons. you're killing the system and i

hope every one of you gets every penny taken away. there, i said it. now i'm on record. >> i'm glad you are. >> these cdos are not based on mortgage-backed securities. if you recall when you go back to the crisis it was in part the magnification and the repetitive nature of everything being based on everything else that the losses became so enormous because you're going, one mortgage-backed security, whatever it was, can generate $1 million in losses. people can't unravel these. no. it's very hard. you're right. listen, i always said the creativity of people in finance should never be underestimated and during a period when everyone is reaching for yield to try to come up with products whether they be new or old to satisfy that, you'll never keep up with the regulators. never. but we digress, talking about cdos, it is a sign of reaching

for yield and perhaps willingness to take risk in this market and in this world that we are currently dealing with. >> as someone involved in the sell side of this, let me tell you why this is happening, okay? let's just call it. how much money? the the gross credit on selling these products is all hidden. you make a fortune selling them. they're out in the next two years. they say hey, god love you and they absolutely bang every single account. they are able to make an important sell in the stuff and that's why it happens. >> on an individual basis? >> if you sell this stuff. you are making nothing selling treasurys and making nothing selling corporate, but you jam accounts with this stuff and this is jamming. we used to call it jamming. it means when you go to an account and you take two points and you make a fortune and you're out in 18 months and everybody wins when you go to the client and i don't mean any insult to louisiana-pacific which does go down every day. >> we had it with

mortgage-backed securities and lead it to cbos. it's not synthetic cbos. >> almost like fantasy football. it was a lot more solid and i had doug morris. i knew, listen, let me tell you something. i had kaepernick. >> that was a great call. >> but the guy on the other side of you shorting kaepernick was mightily. >> he got all of his money taken away. >> these cdo buyers. >> no one was prosecuted for buying the stuff and no one was prosecuted for selling the stuff. if you don't go to jail you're a winner. >> you mentioned lennar and we'll talk to lennar today. >> with mortgage rates, the 30-year fix side now at 4-1. five years ago it was 3-4. >> too fast. >> does it mean people move quickly to buy a home? >> initially, you're stunned and the refi numbers back to where

they were in 2011. the mortgage actually indicated that the purchases are down huge and this is not what the fed wants. now maybe you can say we don't have enough houses for sale because there is a declining inventory, but these are all bad. what am i talking about? it's bad. it's bad. i had radiant on last night, a large mortgage insurer. >> no one cares. people say mortgage rates went up big, 60 points on the two-year and not enough for the banks to make money on the cds. anybody who wanted to refinance probably has. if you haven't by now you might be late. let's move on to japan and talk about a market moving all over the place. shinzo abe, special zones to attract overseas business. that third step, by the way, follows the loosening of japan's monetary policy and of course, its decision to boost public spending.

japan's nikkei fell nearly 4% after abe's speech and it did close at two-month lows and it is still up quite nicely for the year, but man, has that been volatile. mostly on the down side over the last couple of weeks. >> fifth time in two weeks it has fallen 3% in a single day. 3% or more. five times. >> i remember those days for our market. it was a while ago. the proposals seem good and he's not putting them into place for a while. >> critics saying not enough meat on the bone, and not enough specifics, perhaps as he target ands tries to get some inflation going and 3% income growth. >> although bringing corporate taxes down, more free trade and trying to loosen the pension rules. >> the kind of thing we've been talking about in this country for a long time. >> i've been amazed by this guy and you can't be amazed by this market. these things were all pretty breath taking and no one has the money to be able to afford it, right? the country can't afford it, but

at the same time the guy is doing everything right and it's hard to move faster. this country has been on do not resuscitate life support for how many years? the fear in some quarter is you do generate some inflation and you end up with no growth which is stagflation which could be here. that's just the killer of all stocks, but that is the concern there and the jgb yields is getting away from them and that they got even by more. it's just one opinion and they'll have to buy even more if they want to keep yields low. >> let's talk about stagflation, they're shrinking because people feel like, wait a second, if they're spiking that quickly, inflation must be coming back much faster than the 10% and people say that, so let's sell the high multiple stocks as they do horribly in an inflationary environment. >> a big setback for apple today. the international u.s. trade

commission said they infringed on a patent by samsung. the importer sale of iphone 4, the ipad 3 g and the ipad 23 g distributed by at&t. apple plans to ael pooh the ruling which the president has 60 days to review. if he does not veto the order it will go into effect and we know the legal battle over these two giants and it hasn't gotten prettier over time. >> we don't want to overemphasize these because when apple first won, apple didn't go up a lot, but piper jaffray tried to put up 1% revenues. >> apple is snake bit. he didn't stay in the 440s. >> the developer's conference is the tenth, next monday and they did put out a line. they said a whole new world is coming and a lot of the apple watchers are trying. what could that possibly con node? is it about maps and is it a new

version of the os? >> simba, wasn't that a whole new world? >> it was jasmine and aladdin. and we'll talk about what apple has up its sleeve on monday. >> i hope we're not wearing short sleeves when it starts. look, the stock, come on. where's the omg product? i mean -- let me tell you something, if they unveil a car that runs on water, you know what i'll say? it runs on water. it's nothing. i have 40 million cars on order. >> water's too expensive. >> come on, we're running out of water. i want my apple to run on fiji water. that's how hopeless it is. >> we'll have it with shuttle now and it will cost $200 to go to the moon. how can they charge 200 for that trip? >> the rivalry with samsung is nothing to shrug at. it is a significant battle.

one wonders whether they did reach some sort of a settlement given the patent lawsuits going one way and this ruling going another way, but according to the press reports, it is nothing. >> intel -- how long can that go on? >> steve jobs said he didn't like intel and rather remarkable. here you are using and supplying the company who is annihilating you because they're your arms dealer. >> we saw this in 1939. they're selling arms to the guys who will come in and question. >> yeah. between patent, the tax issue, the alleged price fixing issue, their general council's office has to be the corner of the building. >> you don't want corporations where the gc is running things, believe me and that happens in way too many corporations and

they get conservative. >> shapiro came in at dupont. >> it happens all of the time. >> when we -- when we -- yeah. when we come back this morning an exclusive with underarmour ceo kevin plank whose company is hosting an investor day upon. we'll also talk with a mystery guest. you'll have to wait to see who we're talking about, but you may have educated guesses. >> also ahead the lennar ceo, stuart miller, we'll hear his state of the housing economy and a couple of red arrows at the open and we'll see if it changes in the middle of the session. but for the time being, "squawk on the street" is back in a moment.

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the rash was on my right hip, going all the way down my leg. i was embarrassed to have anyone see my shingles. it was very, very painful situation. i'm very athletic and i swim in the cold water in the ocean. shingles forced me out of the water. the pain level was so high, it was like fire. and i was thinking like, i wish i had that cold water i could go in it. the doctor asked me "did you have chickenpox when you were a child?"

i'm very healthy and i do all the best things to keep it that way. all of a sudden i got shingles. it was so hard to accept that pain, it became unbearable. . >> as you may know, kelly evans recently joined us from london, a town that's getting more notice today because of a story in the journal that we were talking about. >> it's a global story when you're talking about credit. it was true and credit boom 1.0. now we have to call this one credit boom 2.0. the journal drawing attention issue one of the wall street's

riskiest bets returning. >> i know you were talking about this. since securitized products. this was something regulators thought were left for dead to the extent that they don't address these kind of products. they have not only come back, they could come back with a vengeance and we've seen it with collateralized loan obligations and collateralized debt obligations. we're talking about the kinds of things banks make alone. what do they do? they have to hold capital against that and free up the balance sheet to do other things and sell it off to investors. why would investors want these things which are basically repackaged inventory because there's a reach for yield right now because there is a sense they're not getting a return elsewhere and the defense have held up okay. it's reflective of the broader environment and both the push by regulators ironically to increase capital levels and what's one way to do that and look at what happened with deutsche bank. how do they do that?

issuing cdos. if you wanted to say what's different about synthetic cdos, it might just be this. it means you're piling bets into one product. more underlying security because these are the insurance contracts on a loan, for example, and that increases systemic risk. >> and aig-insured -- >> insurance for anything. sure, we'll take that, we'll take that. >> is there a sense in london that these guys learned a lesson or they're any more gun shy than they were two years ago, three years ago? >> the question is what's the lesson? you have massachusetts which i think just back in march did win a settlement against goldman related to some of these deals say we as investors didn't know the risks. so this time around this is going to be the big question. do we know the risks? >> can the media play a role? >> i think there are two different things. securitization has been with us and will be with us forever and

by the way, they like to call it a technology so they're all inventing new forms of software, but the fact is it is help nfuln a lot of riskses. >> you have to have that. you have to have securitization. how many times do you go? how many times do you cut up, and you have betting on the outcome. we're talking about different kinds of assets. >> does s&p -- s&p, leaf comes in and they signed aaa? >> exactly. there are a couple of things this time around that will need to be different and how closely they're looking at the real underlying securities are fine. i wonder if we should draw a line between synthetic cdos. the insurer or whoever is standing in between they haven't had to hold up enough capital. so when it went bad. they had to sell -- there's no

reason, really -- >> no, they don't raise any capital. so all you're really doing is enabling two parties to make a bet. they may be doing it to hedge other things, but that's just gambling. that's where all of the money was lost. >> fannie mae made some bad loans because the vintage -- the vintage that radiant insured in 2006 and 2007 is still defaulting. they're terrible. they redefault after they've been refinanced and the fact that they would be able to securitize, 96% of mortgages are being sent to fannie mae. these banks are keeping them on their balance sheet. >> if you think that this indicates that the credit boom tries to forget about it. forget about it, we may be in early innings here. >> we'll see you in a few minutes. >> thanks. >> cramer's mad dash and we'll get the opening bell in a few minutes also and later, a live and exclusive with the ceo of underarmour and a mystery guest,

as well. not telling you who it is yet. futures for the moment. "squawk on the street" back in a moment. ♪ bonjour ♪ je t'adore ♪ c'est aujourd'hui ♪ ♪ et toujours ♪ me amour ♪ how about me? [ male announcer ] here's to a life less routine. ♪ and it's un, deux, trois, quatre ♪ ♪ give me some more of that [ male announcer ] the more connected, athletic, seductive lexus rx. ♪ je t'adore, je t'adore, je t'adore ♪ ♪ ♪ s'il vous plait [ male announcer ] this is the pursuit of perfection. the day building a play set begins with a surprise twinge of back pain... and a choice. take up to 4 advil in a day or 2 aleve for all day relief.

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and that is my friend jim cramer's role. what do you have to say about what's going on? >> there is to have as much as possible. the stock's been an amazing performer. down 20% from its high. he feels you have to have email marketing and you have the nurture pg ibm makes an incredible acquisition. there are only a couple of cloud companies. the stocks are oversold. they like citrics. these are very big numbers being thrown around. exact target, very good company and at the sammy time the market doesn't like it. it doesn't like it. that was an overpay. >> listen, zee to do it. they've been partnered for a lot of different relationship, but the exact target is nothing overseas. if you're a pure growth guy. sales force.com. david, people right now say,

listen, i'm not paying up for growth. if we're in an environment where everybody is stagnant. >> and that's, i think, is a backlash. >> people feel maybe i paid too much and the key part that they're not expensing and it's not coming into -- if you included, the bottom line goes from positive to negative. >> you go back and forth with benny. he's a very good open guy. >> and you know a lot which is bountiful and the deferred revenue which is huge. you and i both know these are actual tells of future revenues with deferred and of the actual operating gain. >> how much cash is being generate side key and one that many investors focus on beyond all others. >> and it's often been cite as people who are too aggressive in this. they are gigantic and the company is doing very well and it is going to get the final thought. >> do you buy here or not?

i can't get the market so i don't care for the market right here. i want things to come lower. >> talking about that market, by the way, we'll see that opening bell. we'll with assess the housing recovery by lennar's ceo, stuart miller. he's among the business leaders taking part in the opening bell ceremony and our good friend, as well, jeff sonnenfeld will be ringing the bell to celebrate it taking place on the big board. "squawk on the street" is back after this.

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now you can get all the online trading tools you need without any surprise fees. ♪ it's not rocket science. it's just common sense. from td ameritrade. >> you're watching cnbc's "squawk on the street" live from the financial capital of the world. the opening bell in about a minute or so. keeping a close eye on a number of names. jim, david, as we got news from treasury that they are going to sell 30 million shares and the fund retiring and selling 30 million shares. the ipo is at 33. 35 today. i have to hand it to the guy who is in charge of the disposal of t.a.r.p. he promised that he wouldn't let people get buried who bought it on the ipo. a lot of people thought that at 22 they would cry uncle and sell

at the bottom. you know what? everyone's making out okay. you may hate bailouts, but this was done well. >> yes. 95% of t.a.r.p. funds have been recovered. there's the opening bell at the exchange. the yale chief executive leadership institute with the yale ceo summit at the nyse. our good friend, jeff sonnenfeld in the middle there. the lineup is amazing, dave hormatz, steve miller, a lot of good policy discussions will happen today and the ceo of lennar who is participating in the summit. we'll talk to him in a minute. encore capital group and a provider of debt management solutions. so we'll keep our eye on a number of names, as we said. amazon is getting a chatter today because of the reports that their fresh grocery business which they've had in seattle for a long time might go to l.a. this week. san francisco, maybe 20 cities around the country.

this is something a lot of people have been waiting for. bezos is notoriously enigmatic about it, but i've got to tell you, when you rule out all of those warehouses, carl, you're every bit as good as fresh direct, right? he is a serial creator of warehouses. >> they have a very big cloud business. >> it's huge and hugely important to the future of the company. >> that's why it's not just walmart. this is the age of amazon. >> yes, it is. >> the age of walmart. now i'm asking to do a -- i would love to do that. mr. bezos, if you're out there, any time. >> speaking of groceries very quickly, whole foods opens a store in detroit today. the ceo is on record saying they're trying to fight elitism when it comes to the brand

recking on nigdz. >> they're degree a lot of things and one of them were the stores they opened in south bend, indiana, notre dame. listen, we are not. negativism to use william sapphire, they are much more egalitarian and don't forget, when they run specials these days and they do run fresh blueberry special, a chicken special, they are offering blue plate specials. >> really? that's very nice. >> when they opened in brooklyn, the 25,000 square foot store on warehouse row, the wonderful venis thve venice. >> lovely stretch of water. beautiful. >> it was green the other day. what's the deal there? >> some plays in energy today. jeffrey's up, baker hughes and barclays is up, conoco phillips. this group has been a laggard, and this quarter has been a bad

quarter for a while. my favorites are eog and noble have not been that terrific lately. maybe this call gets some traction. i don't know. could be. unclear. >> yeah. any vulnerability with the banks? >> refis and we mentioned mortgage apps down 11-5 and the refi's cash cow, it appears to be performing the way it once was. remember, the flipside is that these banks need rates higher. can you make up in volume? obviously, it will be a difficult question, but they need rates higher because all we care about is the interest rate margin and so any backup in rates so to speak, the backup in rates has been wonderful for the banks and they were benefiting the stocks until recently. >> i know citigroup doing a lot of great things and they would like a little more juice and they would be able to sell citi holdings and it's a mixed

picture. it is so mixed right now that no one wants to step out of the tent and do some buying. it seems why not just wait? lock in gains and no investor will be mad at you for taking off a 12%, 13% return. >> go to the hamptons. go to bridge hampton, ocean grove or to asbury. they don't go to ocean grove, i've never seen a manager there other than me although there is a public relations man from j.p. morgan. >> oh, yeah? >> investor related. >> a lot of discussion today about what happened with productivity and labor costs in the quarter. i think one of the largest declines in hourly comp since the '40s even as these companies have spent a lot of money trying to buyback stock and dividends. >> what a great time to taper, right? >> yeah. >> no one's making any money except for the people who shopped at the gatsby index. it is ironic that if you didn't have a tapered discussion and just looked at the month of may,

the thing you would say is you have to do more bond buying and precisely that is when richard fisher comes out and plosser will speak tomorrow. i'm sure he'll say this is how i learned to have -- plosser, fisher, they've been dead wrong, but you know what? it doesn't matter if you're wrong. david, does being wrong matter? >> not really. not in economics certainly. only in the super bowl. belichick doesn't like to be wrong. he doesn't play for real. he's just in sports. >> let's get to bob pisani who is seeing what's moving on the floor. >> i'm waiting for stuart to come in to talk from lennar here. eager to see what he has to say. hovnanian is looking out for earnings. it just came out, revenues were higher than expected. it's up right now. in fact, this one of the only homebuilders trading to the up upside. by the way, homebuilders were a

market leader and they've fallen back in the last couple of weeks and we were just checking this morning, kristen and i, the home building index and the construction etf, the homebuilders is now down 10% from its highs and it's essentially fallen to correction territory at this point. so keep an eye on that as some of the big leaders fall back. a lot of discussion about interest rates and that's why i'm glad stuart will be here. did you hear what mr. fish her to say from the dallas fed yesterday? it is one day to say we'll taper bond purchases and everybody's been saying something like that, but mr. fisher came out and said we've had a 30-year rally in bonds. this is the end of that rally. that's a pretty unusual statement from a fed official to declare the rally over, essentially and it's rather emphatic and different from what he said before and this wasn't a short-term top and this is the end of a 30-year rally in bonds and a rather unusual comment and the mba and they were talking about rates around 4% and what is the elasticity of mortgages

versus demand. so if the mortgage rates go above to 5%, for example, will sales drop off x percent? it is not clear and this is a very different environment and it's not affecting things very much and the mortgage index part of the mortgage banker's association is up 14% year over year and it's not dramatically affecting it yet and refinancings down and that's no surprise there and let's move on talking about global markets and we're kind of weak and we have a one-month low and most of europe i see and australia is a four and a half month low. the dollar-yen relationship now below 100 and the important thing here, guys. that's the risk on, risk off metric and the dollar yen goes below a hundred and the yen starts strengthening and it's a risk off today and we're right there right now. finally on the adp number, 135, and watch at it 10:00 when i get the ism services number.

there is an important component there that tracks what's going on in private sector payrolls on friday. that's the important one to watch today on eastern time. guys, back to you. >> bob pisani. >> the school of management hosting its annual summit at the big board. the ceo of lennar stuart miller is one of the participants and joins us at post 9. good morning. >> good morning. >> the panel you're on is the ceo as statesmen, your voice in public policy. what's it about? >> well, we're generally talking about the interaction between washington and ceos in general. for housing we've been a centerpiece over the last few years. the education of our legislators and our white house has been pretty important. housing issues have dominated and the ceos of the housing industry have been there. >> great to see you, first of all. >> nice to see you, jim. >> known you for years. aren't you surprised that people are saying you have a 10% increase in housing from kay

schuller that it's a bubble and it is all over when mortgage rates go to four? >> you are clearly seeing a knee-jerk reaction to what i think is more of a reversion to kind of a normal line of where things should be. so, you know, interest rates have been at historic lows. they're going to revert to some normal trend and the first reaction certainly from the investor community is going to be that question and how high could interest rate goes before it starts to affect a housing market and you'll see the reversing in pricing and the buying public and the investor community as well starts questioning. start to see another bubble in housing prices. the fact is that we're getting into a normal trajectory, and housing continues to find rebound and gain strength. sort of what are your expectations in that rebound-gaining strength that you just mentioned. >> look, over the past five years we have underdelivered,

underconstructed for a growing population, growing household form eation that has been stymi by economic downdraft. so as we look at normal, we probably needed a million and a quarter, a million and a half homes per year. we performed or delivered at half a million homes per year both multifamily and single family and we're going to have to catch back up in order to serve the needs of a growing population. so right now for single-family homes we're talking 500,000, 600,000 homeses per year and probably go beyond that just to make up for the deficit to mawe had in the last years. just the increases in interest rateses are not going to stop the progress forward. >> we don't have enough houses in the country. all of that inventory that was supposed to be there seems to

have disappeared. how fast can you build them because prices wouldn't go out of control if you could somehow build more. >> well, that's the issue in today's market is you have a growing demand that is somewhat limited by mortgage approval process. you have a greater demand for rentals because of the inability to provide single family homes. inventory is the issue and it is constrained by the availability of approved, entitled, developed land. what you are seeing with the builders and the multifamily apartment builders and the single family would abouters is the inability to get the land that we need to meet the demand so we have inventories that are very, very low and that will have prices up and that's where the balloon is coming up the other end. >> we have conversations about your costs, whether it's paint and although lumber is confusing. is lumber a tell for anything right now. >> lumber's been way up.

lumber's come down significantly. with commodities you'll see a lot of movement and it will send a lot of signals to the market. the fact is prices of homes are moving higher than costs are moving. costs are fluctuating up and down. copper's been down. the commodity story is a mixed bag at beast and i don't think i'll read a lot on costs and there are labor shortages which portends good things from unemployment numbers and wage growth, but at the same time you're still seeing tepid unemployment numbers. it's a mixed bag of economic information at the end of the day. housing is starting to assume its traditional role in economic recovery. we're starting to see a real recovery in housing that is not likely to be pulled back because affordability is high and the relationship between monthly payments for homes that are owned versus rentals in comparable neighborhoods is still favorable for a purchase in homes.

>> let's go back to this tight credit and when i speak to -- they're a great home. >> citigroup and bank of america. talk about 710. are we going to be able to someone who is not perfect? >> we sure hope so, and we as a nation starts to get old. what you hear from washington is that the middle class family is having trouble participating in the housing recovery. this is a resident tone that we've heard through many generations and what is -- frankly led to subprime lending and the excesses of the 2000s, but there is a reversion to normal that has to take place. we overcorrected an underwriting standard. too big of a down payment and too high of a feico score, and now we have to hold on to levels that held us for 40 or 50 years

of mortgages having very low deficiency rates. those -- that normal underwriting standard will allow a lot more demand to come through the system and help with recovery. >> you've done a fabulous job and you followed your fabulous dad and built a remarkable company and survived through the most difficult time. congratulations to you and have a great summit today. >> jim, thank you for always remembering my dad. he's the foundation of our company and you're very kind to remember him. >> best it's ever been. thank you so much. let's shift to bonds in the dollar and rick santelli is at the cme group in chicago. rick? >> jim, i think the following two charts say a lot. adp was on the soft side and as you see, interest rates, you could clearly pick out 8:15 eastern, but if you kind of race that this pattern really hasn't changed. look at the s&ps which were open, the futures contract. same thing. it is a wire chart, but, you

know, pretty much the pattern continues. so do the fundamentals really matter or is it just an adp issue? i don't think so. jobs are important. we can get along with weak jobs and we're all in this mode that the fed knows exactly how to fly this ship back to some sort of reality planet. if we look at the nikkei this says it all, and i know carl has talked about it but you can never show a nikkei chart short where the spread is what? 700 points? >> if you lock at the jgbs over a couple of day's chart. it is volatile and it is something traders are paying an extra amount of attention to, but it seems contained and it's still contained under 100 basis points. the foreign exchange side and very key technical levels and if you look at the dollar yen, we are now floating several

sessions below 100 and that's key on the carry trade if that yen strengthens and the same issue with the euro at 130. a very key level to pay attention to. now we're going to go to david faber, and i just have one question, can dell get all of the dudes back, david? >> i don't know about that. can they get the dudes back is a great question. a lot of questions, rick, who shareholders of dell will be voting and it will be -- not including michael dell shares, but voting to approve or not the 1365 offer from mr. dell including silver lake at his partner. it is michael dell's deal this morning. we get an investor presentation from the special committee of dell's board of directors and they file that and it is filed with the sec as advocating support for the deal that they struck, that $13.65 all-dash deal with michael dell and silver lake.

much of it you haven't seen to a certain extent. however, there is a key element of it that we haven't seen before and that is they are questioning the efforts of southeastern and icon when they share a $12 proposed of the plan by icahn. eventually they say we have 17.3 billion in cash and we'll pay you a dividend and let's assume the 20% of the shares that tender elect to keep all stock. so we'll pay a $12 dividend, but the special committee on slide 33, i think it is, goes into some detail saying you're forgetting to -- and another half a billion in shortfalls and estimated cash available because business is not doing that well, is it? because cash generation is down. the adjustments of cash needs and in addition to liquidity andy equal to what silver lake,

the revolver at the closing and you have incremental termination fees are low and it should be 150 and finally, when you get to it and the adjusted cash that's left is 13.4 billion. go back to 20% electing a dividend. all shareholders are in southeastern and icahn say we want our money. they don't say they want all stock and then you get an $8.50 dividend. that's a different equation for investors if they're correct in this and this point of being a significant liquidity gap and it's really an option. i get all of that, but i'm willing to do it. if it's 8.50 jim, instead of 20 bucks do you make a different decision? by the way, we haven't gotten the commitments from mr. icahn or at least he hasn't detailed

that to a special commit. i hear out in the market that he is out looking for a ceo. >> really? >> remember the strongest performers of this quarter has been? amd and intel's been a performer and hewlett-packard has been the big dalledy. you asked me where would dell be? dell would be at 15 so you put 8 on it and it's down the road. $7 stuff. it's kind of interesting. >> we'll see what happens if they vote down this deal and it is worth the read, right. as long as you don't pick that fellow below meg whitman. >> that guy? >> you don't pick layo, you're okay. >> when we come back, ceos live and exclusively on "squawk on the street." we'll talk to kevin plank, the ceo of underarmour, as well as a mystery guest. believe me, you know the name we're talking about. we'll be right back. [ male announcer ] it's intuitive and customizable,

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take a look at dow as jim said during the break, trying to stage a show. half a dozen components in the green led by h, and we'll get "six in 60" with jim in just a moment. i don't want to pour over pie charts all day. i want to travel, and i want the income to do it. ishares incomes etfs. low cost and diversified. find out why nine out of ten large professional investors choose ishares for their etfs. ishares by blackrock. call 1-800-ishares for a prospectus, which includes investment objectives, risks, charges and expenses. read and consider it carefully before investing. risk includes possible loss of principal. we went out and asked people a simple question:

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time for "six in 60" with jim. >> they can't knock it down on the downgrade, maybe there will be an oversole rally in oil, at least. >> that's why i put that in, too, because there was a great interview in the financial times talking about how the company has reformed its company. domestic play and it's working. >> merrill likes spf and not sunscreen. >> i thought i should put this in because of our great interview with stewart miller. those stocks have done very poorly of late and so maybe this is a breakout. >> how about this caterpillar call? >> everyone knows capex is low for miners i want to take you outside of the trade. >> this has been a hated stock because people like amazon. i like the way it's reacting to this upgrade. >> downgraded by deutche. >> microsoft is not prone to downgrades and people like it

ahead of the gaming division. >> some of the discussion whether or not they get more generous. why go to a sell here? this is not an expensive stock and what happens if ballmer actually does something? >> what happens today on "mad money?" >> this is a classic, high-multiple company that has done so much to take costs out of health care. it's a great bellwether, like sales force.com where the people will buy high multiple stocks. watch it, we'll find out. >> we'll see you tonight. 6 and 11. ism services after the break. do not go away. ♪ bonjour ♪ je t'adore ♪ c'est aujourd'hui ♪ ♪ et toujours ♪ me amour ♪ how about me? [ male announcer ] here's to a life less routine. ♪ and it's un, deux, trois, quatre ♪ ♪ give me some more of that [ male announcer ] the more connected, athletic, seductive lexus rx. ♪ je t'adore, je t'adore, je t'adore ♪ ♪ ♪ s'il vous plait

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welcome back to "squawk on the street." we have april factory orders up 1%. that's a half a percent light of expectations and our last month originally released at down 4% is more negative, down 4.7%. 53.7 on may. non-manufacturing ism, the service sector. arguably, better than we were anticipating and if we look at new orders which is fascinating, 56 versus 54.5, that's really

good and on the employment side, this is very important. the employment is now 50.1, barely above 50 and our last look was at 52 and i guess that's going to be important considering friday's employment data. back to you, simon? >> thank you very much, rick santelli. let's focus in particular on the employment growth according to the survey is decelerating and it is slowing down. our senior economics reporter steve liesman is back at hq. what does that tell us about friday, steve? >> i was just looking at that, simon. >> we've gone down from 57.5 in january to now 50.1 and we're increasingly watching this survey, the services sector survey for a read on the friday jobs report because obviously, services is the bigger part of the economy. manufacturing is just a small part even though it's a lot of the variability and yet it does raise questions about employment for friday at 50.1. very mixed internals on this

report overall. 53.7 is better than expected and one of the few reports we've had and rick, just telling you the factory orders coming in below expectations and being revised down in the prior month. new orders was the one shining light there. new export orders were down and also imports in general were down and the employment also fought it. let's take's look at other employment data coming in today. adp coming in at 135 and april was revised down 113,000 and the second monthly decline, inside that number and 138 and that is not huge right there and non-farm payroll estimate. my suspicion is that may come down if we get a chance to survey the forecasters. >> adp and bls is kind of going a little bit separate ways and adp coming in below the bls and

it's been about 50,000 over the past several months and many we should not change our forecast here. i have a couple of more quick things to show you here. small, 58,000 medium has been lagging there. 39 and 39 and one bit of breaking news. the nfib releases the employment component of its survey for the month ahead of the job's report and the small business hiring was flat in may and that follows five months of gains for five months of business. kelly, a lot to put into your model that i know you have there to come up with your number for friday, but right now i would say it's looking on the weaker side. >> steve, i don't have quite the sophistication that perhaps our next guests do, but thanks very much for that. to help us figure out how this sets the stage for friday's jobs report. chief u.s. economist at ubs and chief u.s. economist at rbc capital markets.

good morning, guys. >> tom, let's begin with you. we've gotten a stronger read on new orders here and as simon mentioned and you've just heard more and employment almost in contraction territory. what do you make of it? >> maury, why do you -- >> did i just see me flash up there? >> tom, why don't we pick up with you, and we'll pick up the connection. >> oh, it's maury. >> what do you think this morning? >> okay. maury? >> maury, tom can't. >> sorry. >> i can hear you fine, so if you want to ask me anything at all. just fire away. >> i had so many questions. >> live television. interesting, i was curious what liesman was saying about your model. >> right. and people call it regression analysis and it's more as i am guessing analysis about what friday's going to bring. >> although adp hasn't proved

its methodology and we've been working with moody's.com so it does track the jobs report better now. again, we've been running with about a 30,000 undershoot of adp friday. >> just to kind of pushing it to one side and looking at the big picture. this is all very good news for the rally because all of the employment data is coming in even if you take the point at dan greenhouse that it estimates on average 37,000 what you will get for the employment growth and you are still looking at 175,000. that is important because if it's not enough to spike yields higher. it is not enough probably for the fed to come through and to start talking about accelerating withdrawals from the market and i think the rally continues in the summer on the basis of what we know now. >> are we getting to the point where bad news is becoming bad news again and i only float the question because of this. >> if what we already have is priced in qe 85 billion in a

month, et cetera. if people are starting to wake up and say, wait a minute. what with else can the fed do here? they're already starting to question the negative impacts of the program and what if they had to do more potentially? if we have that connection back with mahery and tom to bring them into this. maury, you want to respond to that about what the fed might make of the data today and what you think we're setting up for on friday? >> i think we'll see a pretty good number on friday that's better than consensus. we have a 200,000 number on payrollses which importantly reflects two things. the unemployment claims have been relatively low and qe affects jobs in the economy with a lag, but when we look at lending conditions in the banking system, they're telling us that we should have much better job numbers this year and so far they've looked somewhat better. >> that's not a consensus call because i think now people are looking in the range of 160 and

170. more importantly, maury, we may be reaching that point in which as we heard from fed officials we get consistent job growth of 200,000 a month and you're looking through adp. that's a very interesting survey, but it has been understating what happened in two of the last three months. it understates and overstates by roughly around 50,000, and i think in terms of the fed which very important is this recent talking more about the poor pce. i know they've said that what happens with tapering depends on the job number, but they've also started to express more concern about core pce, and i have trouble seeing them dialing back on the qe as long as this core pce is around 1%. that's just too low for them. >> this is what simon was saying that the data here fits bo the

camp of, you know, okay. certainly not good enough to talk about in the immediate taper and that's your view here that this will then be welcome by stocks? >> yeah. i think that the stock market has been sort of paranoid here that if you give them good numbers, they should think positively about corporate earnings and then they worry about, you know, tapering qe and then you give them lousy numbers and they rally and say oh, good. i'm not going to lose my qe. >> crazy. >> how about seasonality? some of those who are taking the under on friday's number suggest that the last several mays have been pretty weak. averaging 69 on private. do you think that's still intact this year? >> i think what's going to be more important is what we've been seeing on the claims. and the claims are coming down. >> right. although i wonder, the change on

that over the last several weeks, correct me if i'm wrong was not as dramatic as the change leading up to the prior nfp number. if you look at a four-week moving average of claimses where it is going into the may survey period versus where it was going into the april survey period you're lower and it looks better. >> maury, hasn't the conversation changed recently to be slightly more complicated and more interesting than the fed on its own and what that might do and actually the yield on the ten-year. we've not shown the yield on the ten-year and i would love to know where we are now at this point because that was the threat that was coming from left field. the bond market would sell off, but the yields would rise and they would suck people out of the defensive area of the market, almost, almost, irrespective of what the fed was going to do and it seems to me is that if we had peaked out given the weakness of the data.

>> you know, we happen to think that the ten-year yield in the near-term is probably going to come down because the market was premature in looking for a pullback in tapering on the qe, but, you know, i think it's going to be hard for the bond market over an intermediate term to attract money away from the stock market because once the fed does start tapering more seriously which i think they'll do next year. people will be bearish on bonds and say, gee, you haven't built in all of the end of qe yet. so i don't know that -- for a trade bonds look fine, but for longer term investors who are doing asset allocation, i think it's a different story? >> maury, thanks very much. we are at 2.11 in the ten-year. the dow's off 60 points. >> a setback for apple as the u.s. trade agency rules the company violated some of

samsunga patents and our john ford is in san jose on what's more with john. now the dust is settling on last night's sec ruling on the wireless patents. a couple of takeaways we should focus on one. there's no immediate impact and decide that it will go loorng with that the itc says. it depends on what apple has up its sleeves with product announcements this summer. the ruling from the itc affects some of the oldest mobile products apple sells. the iphone 4 from at&t and the ipad 3. the 4 and ipad 2 both have lower resolution screens that are probably going to be incompatible with the latest version of apple's mobile operating system, ism 7 sense we expect this summer. apple's new product cycle kicks into gear. it shows off the latest version of ios 7 at the worldwide

developer conference and it giveses them time to tune in their apps for that and releases final versions along with new hardware in september or october. so if you're counting on your fingers you can see it here. a month and a half of when apple tends to be ready to unveil new phones and put the old ones out to pasteur and if apple will do all of that earlier than usual it means having a major update to the os ready early, too. that tends to be a challenge for them. so what's at stake if apple doesn't have the new stuff read ney time? it has to stop selling old iphones on at&t? not too much. gene munster at piper jaffray estimates it's 1% of revenue max and apple needs to draw down the supply chain, but it wouldn't look good, carl. >> a big change for the show on monday. i know you'll be there. >> john ford in san jose. >> when we come backs, under armour shares up 5%. we'll talk you to the any of with the ceo david plank as well

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>> the treasury department is selling 30 million shares. phil lebeau has more on the story. phil. >> kelly, it will take time for the treasury department to be completely out of general motors. we'll talk more about that in just a bit, but first about this offering which will commence tomorrow at the close of business at the end of the trading day. the treasury department selling 30 million gm shares. the uawv which has a sizeable chunk of general motors will be offering 20 million shares and it prices after the close tomorrow. why are they doing this after the close tomorrow? that's when it joans the s&p 500 and the s&p 100 indexes and the estimate is by joining these indexes, investors will add in about 78 million gm shares. that's how much is going to be added in to various index funds around the country. it's also estimated by joining the s&p 500, general motors will likely see and there is a good

chance if history is any guide, so what happens with the federal government's stake in general motors after this sale? we don't know exactly how much they'll get from this sale, but the bail costs the federal government $49.5 million. the fed rerecovered 30.4 billion. at that time it still held 241.7 million gm shares and a break even price if they were to sell, all of those would be 79.2 and that is not going happen if you take a look at shares of general motors. it priced at $33 a share now trading at, what? 34.63. it is up 4%, 5%, since the ipo back in november of 2010. what's interesting, guys, is to see whether or not we see a pop in these gm shares. remember, when this is all said and done the federal government is leakly to still end up losing 8, 9, $10 billion, something in

the magnitude when they're out of gm in the first quarter of next year. guys, back to you. >> it puts the 1% move in context. phil, thank you very much. keep following that story. stick with us because live from the company's investor day meeting, kevin plank is coming up, along with a mystery guest and it's a name you will know and will definitely want to hear from. are you thinking of playing golf with your spouse? why not show up in style with these his and hers cnbc polo shirts signed by the entire "squawk on the street" gang. well, it can be yours if you can guess friday's non-farm jobs number. tweet your gohs squawkstreet and don't forget the #nailthenumber. you have to be at least 18 years to enter. sorry, kid. go to sort s pts.cnbc.com and ye until 8:30 a.m. eastern friday morning. good luck.

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it's three-time super bowl champion tom brady of the new england patriots. that's right. tom brady along with underarmour ceo kevin plank will both be live on "squawk on the street" when we come back. >> the business of minting coins is as good as gold despite the decline into bear market territory. today is the 75th anniversary of the west point mint where the american eagle coins are produced. cnbc's sharon epperson has a look at the facility and the process which i imagine is fascinating, sharon. >> it is absolutely fascinating and we're 30 miles north of new york city, simon and it is the largest gold coin product facility in the world. this is where all of the american eagle gold coins are made right here behind me and demand has been so strong that

the u.s. mint actually had a shortage of the smallest version in april and sales resumed last week. this is the finished product, but before we get to this there is a long minting process and it all starts deep inside the u.s. mint in a gold vault. >> we have over 4200 bars in this area alone. it's about $2.3 billion that you're looking at here so we do have a lot of precious metal here. these are the gold bars that we send off to the vendors and there are high-flying gold bars that are sent to the vendors to alloy and now down an alloy to produce the banks that we make the gold coins with. they are checked for quality and one of the gold blanks has been rolled and cut and put into a little container and lead is melted off and that's part of the process that we go through to determine the fineness.

after we check the lab for quality control and they immediately go into the press as you can see over here. >> and she is the plant manager here at the west point mint. these are the finished products. there's a lot of attention as always on gold, and it's actually the cheaper alternative and it is the silver that is the best-seller. all combined so far this year the u.s. mint has sold about $2.5 billion worth of gold and silver coins. >> i trust, sharon, that those are not going in your pocket. >> they're not going in my pocket. in fact, inside before you leave security they have an oops box, so just in case you had one in your pocket and you forgot about it before you go in the metal detector, no questions asked, just get it out of your pocket. >> a lot of jokes about free sample, i'm sure. >> that was a beautiful spot and incredible pictures. >> exactly. we'll have a lot more and it's not just the bullion coins and they have collectible coins that

they mint here as well and beale talk about that and the minting process that's involved there and that's coming up on "power lunch." all right. >> in a few moments, he has taken the stage at underarmour's investor day where a large part will be the international initiatives and how do they fight nike on a global stage and the footwear business and we'll ask him about welker and gronkowski and other things football related. >> we have to ask him whether he thinks the taper will be coming in june or september. >> he's on top of it, i'm sure. >> you can take that one. >> i've never seen you so excited since you joined the show since you knew that tom brady was on. >> i will confess to be -- i'm looking forward to this one. >> sixth round draft pick. >> of course, you haven't have to justify it, yes. it's not as if he sort of sailed in to the nfl -- >> he made his own luck.

>> and i think he's done an incredible job under so much pressure. so yes, i'm a little bit excited. >> exactly. >> when we come back, as i said, underarmour looking to score and we do have an exclusive on the ceo of tom plaunderarmour, tom and tom brady. i'm a conservative investor. i invest in what i know. i turned 65 last week. i'm getting married. planning a life. there are risks, sure. but, there's no reward without it. i want to be prepared for the long haul. i see a world bursting with opportunities. india, china, brazil, ishares, small-caps, large-caps, ishares. industrials. low cost. every dollar counts. ishares. income. dividends.

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mortgage rates continue to

serve, rising above 4% for the first time. the ceo of lennar was calling the reaction a little overblown. take a listen. >> you are clearly seeing a knee-jerk reaction to what i think is more of a reversion to kind of a normal line of where things should be. so, you know, interest rates have been at historic lows. they're going to revert to some normal trend and the first reaction certainly from the investor community is going to be that question of how high can interest rates go before it starts to affect the housing market. >> that's the question and let's pick that up with diana olick who joins us live. hi, diana. >> hi, kelly. we knew we would see this 4% on the 30-year fixed and it is the highest level since april of 2012 and it's the biggest one-week jump since july 2011 and that all according to the mortgage bankers association and look at just how far we've come in the past month. the 30-year fixed jumped 30

bases points from last week to average 4.07% and rates are now up 48 basis points in the past four weeks thanks to concerns that the fed will stop buying mortgage-backed securities sooner than expected and it's currently buying $85 billion a month in mbs. the higher rates, of course, refis down 15% last week to their lowest level since november of 2011. they now make up just 68% of all mortgage applications and that had been up in the high 80s when rates were lowest. applications to purchase a home down just under 2%, but with buyers coming back to the market, suddenly rising rates are not exactly what we needed in this market. the chief economist for quicken loans saying this morning that homebuyers were potentially shocked by this rise in rates and that's why we saw the big drop. of course, we also just saw home prices rise in april over 12% year over year. we'll be talking about the rising interest rate environment

and we are here in reit weeks and reits are getting hit hard on this. >> this is a key day. thanks so much, diana. >> got some breaking news out of the nymex and our bertha coombs has that. >> it's a little bit bullish, and we have a drawdown of 6 1/4 million barrels of crude. the of mat had been for a mod of the draydown of 500,000 barrels and it's a little less than what we got from the api, american petroleum institute private number last night. gasoli gasoline. >> again, often on the weekend of memorial day there aren't as many shipments out, so we did see a drawdown of gasoline on 366,000 barrels, that is holding gasoline here. you've got crude, above 94, moving to the highs of the session right now and one of the things that's very encouraging is that cushing oklahoma, that is the hub where wti nymex crude

is delivered and it saw a drawdown last week of 484,000 barrels. carl and guys, we are getting very, very close to moving much closer to the capacity limits there. so that is a bitten couraging to traders this week to see cushing have a drawdown. >> thank you very much for that. >> up next on the program, how a 15 mini-second glitch held high-frequency traders make an awful lot of money. we'll have details after the break and don't forget, the underarmour ceo will be there live with patriots quarterback tom brady. [ kitt ] you know what's impressive? a talking car. but i'll tell you what impresses me. a talking train.

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>> market's down some 0 points and watching a number of different things and you were pointing out crude after hitting 91 and change, lowest levels in a while. getting a little bit back today. worth almost a dollar if you look at that $94 for wti at a

time when we're supposed to have so much supply here. we're supposed to be moving away the benefits for consumers and we continue to see not much relief at the gas pump. >> meantime, a lot of stocks continue to make news and not on dramatic developments and for instance, amazon reported to be rolling out a fresh grocery business and in a take with the dow down 55 getting a pop. >> it's interesting what impact that will have with the grocers. >> i think we're good. we're going go to athletic apparel retailer underarmour. high on the agenda, growing internationally and competing with the like of nike and adidas on a global stage. here for a cnbc exclusive is kevin plank, the chairman, president and ceo of underarmour and with him, a man you know, tom brady from the new england patriots who signed an endorsement deal with underarmour in 2010. good morning to both of you. >> good morning, carl. >> kevin, i want to cover some of what you talked about in the

investor day and that is growing internationally. 6% of revenue is ex-north america. for nike is 59, how quickly and how much do you want to see that number grow and through what channels do you make that happen? >> carl, coming off our last investor day, two years ago in 2011 and the first time we crossed the billion dollar milestone in 2010 and we committed the street that we'll double our business by 2013. and this year with the latest outlook north of 2.2 billion we are confidently on our way to achieving that milestone. we laid out a new growth goal of doubling where people in 2012 whereby 2016 doubling again to $4 billion. so as a company, obviously international will be a big part of that, footwear will be a big part of that and selling a lot of cleats will be a part of that also. >> and you have a guy that knows some portuguese sitting next to you. >> i think viewers are curious. >> there's a sense that you

could have signed endorsement deals with anyone. why underarmour? what was it about their pitch that appealed to you versus some of the others that you must have gotten? >> sure. well, i looked around our locker room. i looked around what was going on in high school with the younger kids and the kids playing pop warner and it was all underarmour, and you know, i was going into the 14th year of my career now. i couldn't have made a better decision and being around kevin and developing a relationship like i have with him over the past three and a half years, i'm very privileged to be a real small part of this company and i'm really looking to, you know, see those growth goals that he set out as a shareholder of the last three years. >> we have work to do. >> how involved are you in product development? because people have gone from loving underarmour when it first came on the market to losing their competitive edge as competitors got better. so what is it that you specifically are doing to help

them meet the demand that you might have for product and for here? >> well, he is a great team that, you know, i'm very confident in. i have my job that i need to do, and kevin has his team that he's assembled that i'm confident in. of course, i participate in the thing that involves me and in terms of the overall football business i leave that to kevin where that's his expertise. >> that is our job to make sure that we got the best product for all of our athletes and what we have for the consumer is the same stuff you're seeing on sundays is the same product that we're delivering at dick's sporting goods or sports authority or footlocker and finish line that you'll see out there, as well. >> mr. plank, you mentioned the key of being with the continued growth of the company and there are those kind of regional sports authority types and dick sporting goods in europe as much. what is the strategy in order to get your product with people in

europe where the distribution channel will not be the same. by the way, they're into soccer a lot more other than baseball and football. >> yeah. you've got to evolve. time prepares for a new opponent each week and we think of it the same way when we approach each different market. you better be local first and we're not new to it and we've been in japan since 1998 and bee have a business growing at a rate of 50% this year. we know that our brand translates and as we take on these other key markets in places where it's going to brazil and in china, we have five or six stores open now and in fact, we've got a lot more in the pipeline. so a lot of times you're not going to find the great key wholesale partners which is the reason that we have our own retail stores as well and one that opened up in our backyard in baltimore and it's performing very well for us and very exciting for the opportunity that we have. not only abroad, but frankly here in the states, as well.

>> it's a very important point. why bother to pick this fight at the moment. what are the endorsements that you're going to do in the soccer world? are you really going to take on adidas? you said yourself this will be a grueling fight. you're a small player, you're a great, all-american brands and you've done great things in the united states, but this could destroy a lot of equity value, couldn't it? if you get it wrong abroad. >> with tottenham hotspur and toluca in mexico, we understand the world's a big place. we love the beautiful game as much as the balance of the world and we'll play there, too. the fact is we've been very successful in our own market and we're not going to define what we do or don't do based on anyone else. the same march that got us to year 17 or year 18 in the business crossing $2 billion and committing by year 20 to cross

over the $4 billion. by crossing $4 billion, i think most of it's still in front of us and it's about our team executing. so we've got a really good plan, and the best thing we can point is point to the history that we pout paper to date and we continue to perform and continue to beat the expectations that we've set for ourselves and i think that other people have set for us, as well. >> if you don't mind, set business aside here and ask you a couple of football questions, tom. i'm from denver, so my folks are thrilled about welker. are they as happy as you are upset? >> it was a very sad day for me losing one of my best friends, i'll say that, but i know that he's moved on to a great team and a great place. they have another great quarterback, one of my friends, but we're competing against those guys this year. we'll get a chance to take them on and we have a lot of time between now and then, but i love him and wish them the best. >> will gronk be ready for day

one? >> oh, man. i'm here to talk about underarmour. i'm not a medical doctor. >> we can handle that. >> i don't know. i -- i certainly hope so, but i don't make those decisions. i know he's a really hard worker. he's really committed to getting himself healthy and whenever that happens he'll be out there, so i hope it's soon. he's a great player and we love having him out there on the field. >> we do have some reports, again, another question that's not related to underarmour for the moment about big-time suspension, tom in major league baseball. i'm just wondering as someone who is a professional athlete and makes their living from fans who are paying to see a sport what that may do, if it's true, to mlb and the sports at large? >> well, it's been a hot topic for a while now. so, you know, there's a lot that's been said over the years with performance-enhancing drugs

and such. there's really no place for it in sports. so whatever comes of it, you know, that's dealt with my by major league baseball, by the nfl. it's my job to play within the rules and i understand that as a professional athlete and i try to do my best within that. so, you know, how it sorts out, that remains to be seen. >> kevin, picking up on that point, as a marketer, as someone who is putting their logo on so many of these athletes, how do you get your head around this? we are talking about some of the biggest sports franchises in america and a reputation that, frankly, is being sullied. >> i back up what tom says. the whole purpose of our company is to give athletes just a little bit of an edge and a little bit of an advantage to make them dryer, faster, cooler on the field and we all have the expectation that we are all supposed to play within the rules and everyone knows what that is. the powers that be will make that clear and make sure that the right authority will act on that to take action. what we can focus on are the

right athletes that we can give them those edges out there the right way. >> mr. plank, my 10-year-old boy has been clothed in your garments now more or less consistently now for the last ten years and i assume he will be to a certain extent for the next few years and play high school sports and he probably won't play in college like 95% of the athletes who play in customer. how do you keep that customer who were so loyal when they're 10 when they get to be 20? >> yeah. it's personal, isn't it? when kwlou talk about sports and you see my kid and he's got a chance and could he be the next tom brady or where what are they going to play? we start off on field and the single t-shirt that kept you cooler in the summertime and the trajectory for us is of course, never abandoning that original promise of giving at leets that edge, but we're finding that the consumer wants to take our brand off court, off the field more and more. so you're seeing new programs we have out there whether it's our alter ego product or the golf

line. your probably noticing the brand more and more. it works and it's functional and it's great product and we've done a good job because of people like tom who help us talk about the core values of the brand and it's not just simply who has to simply live within the confines of living on field and that's the expansion of underarmour come from is taking kids from not only on the field or to the field or to the jim or off court. >> finally, tom, look, is there any prospect of you playing, maybe coming here to new york? >> wow! >> uh, not much. i'll say very slim that the point. i like where i'm at. i'm very settled. thank you for asking. >> well, just thought i'd throw it out there. >> it would have been news, tom. you have to give her that if you had said anything else. >> it sure would have been. >> that would have been news to me, too. >> the rupture in new york city. >> guys, it's great to talk to you both and as we should note,

kevin, too, what you're doing for the city of baltimore obviously appreciated by the people there. thanks for coming on. please come back soon. >> thanks very much, guys. great to be on the show. >> kevin plank, tom brady. >> did you mean switching teams or socially? >> no, i meant switching team, come on now. i know he signed a contract and they'll have him through 2017 and he'll be 40 at that point and chances are slim. >> given his genetics, you never know. he can play until he's 60. >> exactly. >> still ahead on the program, if you want to sit next to justin bieber at the next heat game or find a seat as far away from him as possible, either way seat geek says it can help you find that seat and do it affordably. the ceo will be here at post 9 to tell us about the company. we'll be right back. [ male announcer ] my client gloria

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dow now down 92. let's get to chicago. rick santelli is there. >> hi, carl. i found it interesting we had the pairing of productivity, costs and of course the adp jobs number. so to summarize we see that productivity isn't as ro bust. we see labor costs falling away.

we just don't see enough jobs. i read several papers recently. one paper is rethinking conventional wisdom. a monetary horizon to 2013. and i want to read a couple of things that were written by steven hank. the fed's zero interest rate has exacerbated a credit crunch that has been holding back the economy. the only way out of this trap is the fed to abandon the conventional wisdom. when you look at the numbers and we had a discussion on "squawk box," think about it this way. if i'm a business owner, why invest in people? i have the cost of obama care coming up. it certainly doesn't look like they will be contained or less than the shotty system we were trying to fix. you have a variety of issues. you have benefits.

you have a lot of things associated with the biggest cost on most balance sheets. the human cost. instead, what do you do? i can get some money, and i'll invest in software. there's very little stimulus. let's bring up another idea. small and medium enterprise. basically small and medium sized business. the reason i enjoy this is for the same reasons. he says why would a bank offer any small or medium size business loans at the current structure of interest rates? there's not enough in it to take the risk. so this is one of these

catch-22s, and i've had this debate for years going back to 2010 that ultimately if the price of capital goes up, if the cost of money goes up, lending money is more profitable. and the amount of customers that can get involved becomes larger. it seems inconsistent with the fed's plan, and i guess that's the point of both of these papers. so in the future i think a lot of the economists that have been studying japan for decades have a lot to say. zero interest rate policies certainly wasn't the panacea for japan. back to you, carl. >> thanks so much, rick. another glitch for making money for high frequency traders. and samsung defeating apple in court. will the ruling cause more trouble tub for the stock? we'll talk about that when "squawk on the street" returns. ♪ bonjour

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and with responsive, dedicated support, we help you shine every day of the week. some high frequency traders made a lot of money thanks to a timing glitch. how did it happen? >> good morning. we learned monday's

manufacturing report number was in fact released inadvertently early to a select group of high frequency traders who were able to jump in on the information and train. let me walk you through this monday market mystery, started with a chart provided to us by the folks at a chicago area analysis firm. you take a look at the chart. on the right hand side there's an arrow. that's the 10:00 a.m. release time. on the left happened side of the chart, you can see there was a market reaction. 15 milliseconds early in the spy before i'm told now we don't have the chart. and that chart shows this release happened 15 milliseconds because they can see the market impact. as many as 30,000 or 20,000 shares were traded. nanex saw downward moves in that 15 millisecond time frame and

about $28 million changed hands. here's ism's partial explanation. there's the chart there. you can see the market reaction, about 15 milliseconds early. tfr right hand arrow showing you when you the market information was supposed to go out. they say ism entered into an exclusive agreement to offer a data feed for the ism on business. this offers subscriptions worldwide and trading algorithms. this information is going out to a group of trader who is have the ability to deal with it. we reached out to a source familiar with the information. the source says the feed released the data 15 milliseconds early on monday morning. the source characterizes this as

a minor sock synchronizing issue. so guys, nanex spotted this thing. we looked into it. and this is what we were told from the source. this is described as a minor, technical clock synchronizing glitch. some of the traders were a able to execute before the release time of the information. >> i think it was this time last year when there was a huge debate over whether the labor department would stop putting data out and tried to make people do it the old school way. these issues are actually pervasive. if this was one isolated timing image, we know the advantage

that it's giving to those traders. >> remember in this world of high frequency trading you only need one millisecond or less to execute a trade. a lot of money can trade hands in 15 milliseconds. this era of high frequency trading has really changed the game. >> you can see who is trading and find out what went wrong. kwl you bet. >> here's what you missed earlier on. >> welcome to "squawk on the street." here's what's happened so far. >> if we see weak second quarter numbers when they come out, a few bad jobs reports, we're going to say, whoops, this was something we couldn't handle. >> the key number is in terms of what the fed is doing and the interpretation of what the fed will do, it's the job number. we need 200k on a consistent basis.

>> go talk to jamie dimon. people lost fortunes. you guys are fools. you're morons. you're killing the system. there, i said it. if they -- let me tell you something. if they unveil a car that runs on water. it's in the numbers. now it's nothing. >> there's the opening bell. sbl interest rates have been at historic lows. they're going to revert to some normal trend, and the first reaction from the investor community will be the question of how high can interest rates go. >> this morning we laid out new growth from 2012 to by 2016 doubling again to more than $4 billion. >> i'm very privileged to be a real small part of this company. and i'm really looking to see

the growth goals that he set out as a shareholder over the last few years. it is 9:00 on wall street. dow is down triple digits. down 105 points. it's been a slow grind all morning long after some disappointing economic data. not all, but some. nasdaq is off 25. home builder is reporting a jump. the ceo was on the show earlier this morning saying the price of homes is increasing faster than the cost of building them. and we're keeping a close eye on the transport. >> and here's our road map for this hour. samsung winning a legal victory against apple. it could bar the sale of older iphones but it could still hurt apple's revenue now. find out why.

and crocs. some love them. some not so much. they are stepping up the shoe game with redesoins and new products. we'll get details later in the program. and game one. miami versus san antonio spurs kicking off tomorrow. there may be an easier way to buy the coveted seats. we'll explain how. but first the markets. we're down 109 points. wall street is anticipating friday's jobs reports. let's bring in mark, chief investment strategist. scott and chris, chairman and chief investment officer. good morning to you both. >> good morning. >> we snapped our winning streak for tuesdays. now we're down another 100 points. what's going on? >> well, actually i think the market is acting as it should.

the number is setting up for perhaps a jobs report on friday that will be less than what the market is expecting. we have the numbers that were just above or below the boom bust line and today's number, the employment component was just barely above the boom bust line. so we're in a period where we're not getting economic validation to support higher equity prices. is this an environment where bad news is? >> it's interesting that you say. that i've been using the phrase bad news is good news for the market. it dwefrs the consequences of the tapering program that much chatter has been dedicated to i think, yes, we're starting to get rationalization relative to expectations where this data is not encouraging regardless of the fed's influence and there's

increasing concern that the influence is waning. and that's evidence in the second quarter economic data which will clearly come in below where we were in the first quarter. >> you tried to put numbers on risk reward here. you think changss of a downslide versus a continued runup, about three times greater for the idea that stocks correct rather than continue to climb. why is that? and to what degree, as you say, you're raising cash as we see evaluations expand. what do you sell first. ? >> you sell anything overtrending. you have to look at the risk and reward. there's 10% of upside. there's 30% downside. i have an old saying. sell when you can, not when you have to. you have to trend the names as they start to rise at very high values and rely on tremendous good news in the future that may or may not come.

>> are these the typical staples that have done so well all year? >> anything that has done well all year. particularly anything vulnerable to the summer slowdown. there's a lot of things lining up to cause us to have weakness in the second and third quarter. and we're thinking in the third quarter it's going to be more significant. anything relying on very, very good news, you really have to trend the names. >> we're down 130 points or close to. is this profit taking, or is there more of a fundamental reassertion about how strong the u.s. economy may be and ultimately where that leaves the fed. where that leaves the entire trent that has gotten us to this point in the market since the financial crisis. >> i think it's a little bit of both. clearly the market was vulnerable.

the move was almost uninterrupted since the beginning of the year. but in addition to that i thinkly the is reconciliation between the expanse in the market and one that requires economics to fill in the void that was created by the lift in equity prices that wasn't being matched with the economic data points. i don't care this is anything more sinister than perhaps a corrective phase and one widely anticipated. we held out 4% to 7% as being reasonable. is i would have to regather my facts as we approach that number but at the moment, i think as the market is digesting gains, not a time that we're going to see something more like 2011. >> chris, briefly, last word to you. >> this is a market where you have to say where can i find the risk in the portfolio?

find a wait to get the risk out. if you have bonds you need to sale. the rates may drop a little bit. people are going to get their heads handed to them by market. >> interesting to see the ten-year there thank you to you both. >> another big story, samsung with a big legal victory against apple. how will that impact apple and the stock price? gene munster is a manager. guys, good morning to you both. >> good morning. >> good morning. for those not versed in the regalty here, what is on the line, and what happens if this ruling is held up? >> first up, it's not even written in something that the terms that humans can understand.

your know how they do it. but the es since of this is it has a 1% negative impact. beyond the september quarter it doesn't have any impact. the last products would be the iphone 4. and that will be retired. just to put some parameters around it. >> does it feel like this is more of a rear-view-mirror legacy issue than it is about what they may or may not introduce this fall. >> the law system moves far slower than the technical advancement. so it's somewhat i amazing that the iphone 4 is still in the market and this reached some level of adjudication. it could be appeal. president obama could veto it. i don't think that's happened since the carter administration. the law on the technical side

doesn't match up. the real issue is whether the two sides can come to any sort of agreement because they each kind of have guns pointed at each other's head now. >> it's interesting as well and good morning. >> to see them adjudicating the cases and taking over a role from the slower federal court system. is there anything there that you would say looking at their behavior, here is the impact this could keep having on the tech sector if they continue to be the ones ruling on this. >> well, gene has it right. you're not human if you're writing the patent language. by most people's interpretations in the patent world, this was probably really pushing it from the itc perspective. there are only two countries where this was held firm. and president obama made the

announcement about trying to clear up the mess and he pointed some of his power himself. >> let's talk about monday. is that norly a good event to buy in front of? >> usually people buy in front of and then sell. i think the stock is acting differently than it typically does. and this is one of the avenues that they can do that. whether it's spotify or pandora. it's really laying the ground work for future products. >> any guess as to what we will talk about on monday. is that music service going to happen in time?

>> yeah, i think there could be something around the payment that's part of a long shot. and ultimately the real focus will be this lays the ground work. there could be, you know, this is a real long shot, but maybe a 10% chance that there's an app store for apple tv. it would be the logical time to have that. >> we have something interesting here. you know, i know we have to go here, real quickly. it seems this is really on apple to show it has something. if you play with the samsung 4, that thing is pretty darn good. >> it's got to be an interesting day to watch. nice to see you together again. >> she's back. she's wonderful. >> she, is we got her. we love her. one housewife millions of dollars up in smoke.

it's a real life weeds scenario right in our neighborhood. >> and this man mario botali. he is wearing bright orange ones. the company is capitalizing on it. is it enough to take them to the next level? first, rick santelli. you have to ask him about yields. >> we're going to ask him about how high yields and how high they are that owned high heel a couple of weeks ago. and we're going to talk about the metrics of the economy. are they really as good as convention naz wisdom dictates? in about 30 minutes, everybody go beaterman, beaterman, beaterman. we gave people a sticker and had them show us. we learned a lot of us have known someone

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dow is extending its losses. take a look at materials on the s&p. down more than 1%. josh lip on the is back with more on that. >> material is the worst performing sector today. within that sector, some names to highlight. and monsanto is lower on the developing story regarding genetically modified wheat found in an oregon field. certain wheat imports currently

banned in japan. there's a shortage in the main source of wheat flour because of the ban. shares down 5% in the past week. kelly, over to you. >> now it's showtime's hit tv series weeds come to life. and it's right in our backyard in new york. andrea day is there in new york. >> reporter: hey, federal agents telling thus morning even today we're so stunned by all of this. we're talking about a 45-year-old woman. she loves horses. she has two kids. she's divorced. she lives here in scarsdale in the lap of luxury. it's crazy. yet, she was going to queens and growing pot. we're talking immense quantities. here's what a former prrtd had to say. >> she's facing a schedule one federal felon, which is a minimum of ten years to life. >> all right.

now this is the warehouse. investigators say they got a tip from an informant and as they always do, first they check out the utility bill. they found enormous amounts of electricity going on. $9,000 an month being paid in cash. it was loaded with tp of the line growing equipment. 3,000 plants worth $3 million on the street. the woman is now facing charges. investigators say she would go every day from scarsdale, every day, drive to queens, where she would quietly conduct this operations to at this point all they know is she was allegedly growing these massive quantities. we'll send it back to you. >> in this case fiction is jst as strange as life. ann degree you, thank you for that just up there in new york.

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markets here. another tough session for the dow. dow is down 126 today. getting awfully close. and it's coinciding with another trend this morning. zh if you look at the japanese market, sold off after the prime minister's plan came out roughly as suspected. maybe not quite as aggressive as peep like. take a look at this. in some ways it's all you need to know. we're down 8/10 of 1%. and we are quite a ways above 100. now well below it and decidedly so. we were down 136 at lows. >> right. european close coming in at two. game one of the nba finals is tomorrow night in miami. if you're in the market for tickets you may want to check out today's breakthrough. seat geek is for thousands of events. users search for tickets for more than 50 sites like stubhub

and ticket master and they provide stadium maps. a feature called deal score that highlights the best value for the user. he joins us this morning here at post 9. great to have you. good morning. you don't buy tickets. you don't sell. you don't set prices. >> so seat geek is like kayak. we aggregate all the tickets on the internet in one really easy to you buy from one of the 50 plus providers that we work with and we get a fission for the sale. so those companies pay us 10% of the price of the tickets. this comes at no cost to the consumer. it's a totally free service. >> right. you have able to roll in fees so it's apples to apple. >> yeah, so one of the things we nodes is how there's different service fees on every market.

it was difficult for consumers to share them side by side. we show all the fees. >> to some extent, that's their advantage, tacking on all the fees at the end. >> ticketing companies love us because we generate more traffic for them than any other source. they're happy to pay us a percentage of the result. >> i wonder about the secondary market for tickets. so much is people saying i really want to connect with the person who has this conflict. why not for that market? forget the primary market. >> we see it as being very efficient. it's a realtime supply. and ticket prices tend to reflect not only the demand that you see, but whenever there's a big news story. so if a team goes on a winning streak, we'll see the prices jump as a result. we're impressed by how efficient the market is. >> there's a story in the times

about why tickets in general are sort of stmicily underpriced. what about a ticket that venues are not willing to raise it. why is it happening. >> i don't know the answer. but i do know there's a lot of pressure from artists and teams to make sure their gains are accessible. they may keep their prices artificially low. the tickets make it to the secondary market where it will reach the natural price. a lot of the time the secondary market will have better deals than the primary market is showing. the best case is baseball. i won't mention because one is in new york, the ticket prices are much lower than they are in the primary. >> ashton kutcher is one of your investors. >> sure. >> so we raised about $4 million so far. we're profitable. we're growing at a really

healthy clip. we have no real plans to raise money. we're in the position of being profitable. >> yeah, that's a good place to be. please come back. it's a fascinating business. everybody knows that. thanks for being here. we should mention they have a multiyear policy and content sharing partnership with yahoo finance. >> and there are just a few minutes left in europe's trading day. we'll have the impact as we keep an eye on the markets her. stay with us. what's in your ear? oooo! a quarter!

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let's bring in simon hobbs now as we mark the close with the bells sounding in europe. >> 80% of the stock is in negative territory. we have data out that indicates the euro zone is contracting still. some quite strong data in the uk. we'll come onto that in a moment. don't forget the ecb meets tomorrow. 80% of the economists surveyed by reuters do not expect a move. and an 18th country, despite all

the problems in the eurozone to join the single currency. let's move onto the individuals sectors that are moving today. it's interesting some of the u.k. financials are lower today. notably the world's largest hedge fund. they reported a 6% loss on a key fund last week. you had kmens coming out saying they may have difficulty in japan because of the turmoil there. lot of the financial stocks are lower in the united kingdom. retailers across europe also stand out today tatd the bottom of the pile in a market that is falling. this is effectively kind of a sell because of the struggles they will have in italy, spain and poland on their sales growth. and underlying sale growth this the uk.

this is the third largest retailer. it was negative. and it has to be said that in a sea of unimpressive data in europe, the services are accelerating. don't forget. the guy that is in charge of the canadian central bank takes over in july. we thought he may do some good tricks. >> right. what now? >> maybe he won't do anything. >> can you imagine? simon, thank you very much. >> you and your fancy french. >> is that fancy? i think i mispronounced it. >> let's get a check with bertha coombs. >> hey, whichever one. it's always wonderful to be mistaken for sharon epperson.

and also the inventory number that we saw. not as bullish as the numbers we saw last night, but still, larger than expected draw down of crude as we saw imports lower and crude, gasoline also saw a draw down. there had been an expectation initially for a built-in gasoline. but traders say these continue to be very much the conversations that you all are having on traders saying right now the negative forces and the positive forces when it comes to oil and products are very well balanced. there's no real indication as to a direction here either on the economy or the fed. ? in a gold pit that's something they are very much talking about in terms of the fed, in terms of tapering and what that means for gold. right now the bias is to the downside. today we are seeing gold edging

higher as the dollar is weaker. copper is up for a third straight day. part of that is supported with the second largest copper mine in the world. tragic deadly collapse during a training operation on may 15th. looks to be closed for the next three months. that is providing a little bit of support from copper on supply disruption. but kelly, the big question is are we going to see any real demand as we are seeing things continue to be slow and tapering in the u.s. everyone is looking for what is going to be the best move. what will it mean in terms of the fed tapering the qe? >> real demand is the question. loets bring in bob pisani with a look at the big board. >> why is the market dropping? everyone who is watching this dollar-yen relationship. this is the new metric everybody

uses to judge risk on and risk off. we dropped below 100 on if dollar yen and as we started moving down about an hour ago, the markets started moving down. this is a big trade. it's not just people trying to sell to get ahead of it. the momentum may have shift. rather than weakening week after week, the yen is strengthening. so as we saw the market moving down, this is well below 100 here, the stock market started moving down. this has been an enormous trade. look,s in one of the biggest trade of the year. the yen is weaker hear. and we have been coming down for days now. people are paying attention to it. take a look at how the sectors are. it's all the sectors involved. that's weak side.

so there's the risk off side of this whole equation. again interest rate sensitive groups are getting hit hard. and of course, we had a nice little run-up. but we're down almost 11% from the highs we hit recently. still up on the year. but 11% on the highs, that's getting a lot of attention in the last couple of days. i want to mention -- put this up. this is interesting. weren't we at some kind of point. that's when mr. bernanke spoke in congress. i don't know if it's long term, but short term, heck yes. the s&p's historic high, down 4.2%. the vix is up 33%. the volatility is down 8.1% since that day. finally just want to note here, last night, very interesting development. approval for new circuit

breakers. remember the odd movements we had in the electric utilities? they have approval for these new circuit breakers. i know that's a strange time. there are active breakers in effect for the rest of the day. the bottom line is there will now be protection for the entire day for circuit breakers, which we need, i think very importantly, the whole market will be protected with the same kind. and hopely the we'll get these crazy gyrations that. >> thanks, bob. it's reits week in chicago. and diana olick is there live with more. good morning, diana.

>> good morning, carl. and of course, rising interest rates are front and center. here's dozens of ceos from multifamily and other sectors they are facing rising costs and a tougher yield environment than they have in several years. it impacts our ability to inquire aggressively. >> and the sector was recently downgraded. take a look at the past month. rate were benefitting for the frantic search rates, of course, getting caught in the downdraft. what is the best bet?

well, i spoke to the ceo of the largest student housing reit, american housing communities. he says he's the best bet. >> we have a very favorable comparison. the transactions are 7 to 7.25% yield. so we tepid to have more cushion in that regard. >> so the big question going forward is this a long-term cyclical change and which sectors should you stay away from? he says mortgage rates are being hit the hardest. also stay away from office and industrial. we'll talk to the ceo. of one of the largest coming up in this halftime money report. back to you, carl. >> yeah, we're in interesting times when it comes to that sector. want to take you to pictures of philadelphia. this is coming on word from the

associated press that a building has collapsed. a fire commissioner says as many as 8 to 10 people are believed trapped in the rubble. dozens of paramedics and fire crews are on the scene trying to find those who may be trapped. one affiliate says five people have been taken to the hospitals. no word on what caused the building to collapse, which happened around 10:45 this morning. so if we get details on that we'll bring it to you. meanwhile the count down is on for jobs friday. santelli will break it all down for us. >> and crocs is moving away from the signature shoes. will the new strategy work? the president and ceo john mccarvel will join us. we're back in two. in today's markets,

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coming up next on the half, will rising mortgage rates crack the rally, the recovery at large? and what are the wealthy doing with their money? we're giving you $270 billion worth of advice. plus, time to be a blackberry believer? two traders go head-to-head on that stock. we'll see you in about 15 minutes. zbr perfect. now to rick santelli in chicago with the latest on jobs, the

reaction and what's happening with fun flows. over to you, rick. >> all right. thank you. yes, charles is our guest. he knows all of those answers. charles, let's start with the adp jobs report this morning, and in the context of some of the things you've written about jobs, it isn't something that's a bankable commodity for more horsepower in the economy. what is your thought? >> well, we're also estimating 135,000 new jobs in may, and our numbers, which is based upon income tax collections and adjusting for change in tax rates, et cetera, we're estimating relatively flat and consistent despite all the the ups and downs that the bls is reporting. >> now, i have seen two things in housing i want you to comment on. the big banks are firing a lot of people because the craze is

over. and the stress test was applied and showed $110 billion in losses. ask you comment on housing? >> well, there's no question housing t a 2%, 3% mortgage rate, you don't need much to pay your mortgage. now that interest rates are going up a little, everybody eligible to re-fi has. and two, all the investors taking them are professional investors. they're not residents. people are still underwater or can't get a mortgage in the majority of homes. so without a move-up market, yes, we've had a pop in housing. but it's limited, and it's probably over. >> we have to go to tax collection. real quickly, everybody is en

enamored with tax collection, i love it i can't believe it's a one-time event. >> absolutely. nominally, wage and salary growth is averaging 3%. that's before inflation and after all the tax changes. that compares with 4% growth rate and 11 and 12 are consistent through the years. the higher taxes are lower. 130,000 jobs a month is the limit that you can expect. that's not sustainable recovery. we're nowhere near it. and that's probably why japan and the u.s. markets are starting to look very vulnerabl vulnerable. >> now you hit my next one, which is japan. maybe they're selling equities

here. run us through. >> according to the toke quo stock exchange, foreigners were net buyers of japanese stocks to the tune of $80 billion through the middle of may, and japanese investors were net sellers of 20 something billion themselves. so morningers were buying. japanese were selling twochlt weeks ago when bernanke made the comment, you mean, free money is not going to be around forever? and people are worried. the japanese just panicked and started selling. 7 billion japanese trust banks sold 7 billion worth of their own stock in two weeks. those losses are forcing them to sell other assets outside of japan. repatriating the end. and they're also selling jgbs. >> the last one to me is the one to pay the most attention to. final time we have. we all know when interest rates started to move above 205, that

very significant high yield close, we saw close to two and a quarter. what we have really seen is an exit from the riskier side of the sector in high yield. talk about high yield flows. >> well, new money stock going into bond funds starting in may, or decreased dramatically. the lowest monthly in-flow to bond funds. without more money going into high yield. you know, sbha logical investors are probably selling, given the risks and high prices and without the new money from the bond fund flows, high yield is toast, it looks like. >> excellent. how are you doing personally with your portfolio? >> well, my flow etf, ttfs is up 500, 600 basis points more than the s&p year to date. and we're still up 29%, 30% over the last 12 months versus 22%, 23% gain for the s&p.

so it's still looking good. companies shrinking the to this float, buying back shares and only using free cash flow to do so have been outperforming and probably will even if the market does go down. >> excellent. charles, it's always a pleasure to have you on the show. carl, back to you and kelly. >> perfect, and rick i love that you got in the question on high yield. that has been hammered for several trading sessions here. well, the australian croc population is at the highest level in 40 years. authorities are saying to beware. coming up, we're tackling another type of croc. we're going to take them for a spin when we come back. ♪ [ cows moo ] [ sizzling ] more rain... [ thunder rumbles ] ♪ [ male announcer ] when the world moves... futures move first. learn futures from experienced pros

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crocs on the comeback trail, they started with quite the splash and bottomed out with a massive stock fall five years ago. they are moving beyond the core products, up about 10% in the last month. here for a cnbc exclusive. ceo of crocs. good to have you back. first, show us what you've got. is this a departure from the core silhouette as they call it in the business? >> i think it starts with the material set, same kind of material we used in the original croc designs but colorful and lightweight, something you put

on after work and wear for a weekend kind of way. just something fun. >> how are sales are of the new product going versus the classic clog we've all seen now? >> the overall sale of clogs has gone up. different silhouettes are still being made, but new products account for 35% of the revenue per quarter right now, per season. new products are really important to driving line growth. >> you have 300 year year round styles now? >> yes. >> some people were disappointed in the mammoth for winter. the more swings you take, the more misses you'll have, right? do you feel it was a disappoint? >> when we launched it from design to production was two months and first year we built 5.5 million pairs. i think what happened over time in 2007 and 2008, in the u.s. market, we took that core platform and kind of used it as

a revenue driver, discounted the product. you shouldn't do that with your halo kind of foundation products. last year we brought out a new version, nicer, newer design, still warm and comfortable. >> do you think now your company can weather a concern better than 2008 or 2009? >> i think so. you think about the business then, it was 75% whole sale. today we have a better balance and diversity of products is so much greater. you think about when we ipo in 2006, we only had 25 styles, three of which accounted for 90% of our rerevenue. you think about the diverse fiction, more wearing occasions, a global business. people forget, only 32% of our revenue comes from the united states. >> people actually have focused on the weak europe and potential for a weak japan. they know the challenges or opportunities but see them as

challenges right now. >> we think of it as an opportunity. this impulse purchase in any continent, people that can buy products you feel good about it during 2008 and 2009, why do we sell so many crocs? it's an easy purchase, it's lightweight and colorful. it's not a luxury good item that people are going to decide whether they are going to buy it or not. quality has always been a key priority for us. people know they buy it. it's going to last a whole season for their kids or themselves. >> you mentioned kids. we were talking about my kids who still wear them. a lot of people who have responded to us promoting you being on the show said they've got the kids locked up and at least in the summertime, it's what little kids wear. they have to keep the mind share with adult and adult women especially in this country. what is marketing cost? >> i think we have often products like this that we have, it's really focused on the female consumer, making 85% of

the buying decisions for the family anyway. how do we get the mom to also engage in the brand when they are buying shoes for the kids? so a big push in the last two years on women's products, much higher percentage. we've seen a shift from a marketing standpoint to a little bit younger consumers, not just looking at the clog, but they look at a casual sandal like this and it's a good impulse purchase for them too. >> what does mario batale think? >> he loves us, we love him. >> there he is in the bright orange clogs we've seen him in so often. >> he's great. >> good to see you again, congratulations. >> we want to check in on markets as well. dow is down 127 points which puts it pretty much near session lows for the day. bob was talking about the nikkei and yen earlier. overseas trading having an

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juniper up 5%, making comments that the routers is above average for q2. >> we'll see what that does for the tech sector, shares up 4.9%. >> let's get back to headquarters and the halftime. >> all right, thanks so much, welcome to the halftime show, four hours to the close. let's look at where we stand on wall street right now. ugly day is developing, we're at the lows of the session as we come on the air, down 150 points on the dow. nasdaq is weak as well. here's what we're following, government private, the man who picked stocks for citi's wealthiest clients gives you advice for free. blackberry shares kept pace with the market this year but now what? two traders go