fed wants -- i don't mean that they want it -- but they want it to be over. >> richard, hopefully that is not going to happen. >> well, no, question are far away from that. is the fed tightening credit? >> you know what we are not far from? 9:00. thank you, guys. join us tomorrow. "squawk on the street" begins right now. a lot of the movement, and this is where i think that we have to do a better job of communicating the intentions, a lot of the movement is in fact due to the people thinking that we're going to be having a higher path of the fed fund rate than they had thought for a given set of economic conditions. >> fomc member narayana kocherlakota adding to the conversation. i'm carl quintanilla along with

david faber and jim cramer. gold is the big story near a three-year low falling by as much as $47 and now down 10% for the month. as for europe, seeing the gains there, and we will see if it lasts into the close a few hours from there. jim, start there and leading with the markets. you talk about getting through the mine field with the emerging markets, and looks like we have done it again. >> well, the main story out here is china. i don't know fit is the main story, but it is. china reversed the course and said, we will bail out all of the banks, but it has not helped the chinese markets, but it has put the systemic growth on the table, and the gdp is backward looking and people say, why was i selling things? what was i doing? general mills report out, and buy that stock, because it looks down, and we get back into the -- wait a second, did we do the wrong thing selling last

week, given that things are not so crazed? well, i have to tell you that we have to have a real yield curve which is what we are getting, but it does seem that this is developing into more of a relief rally after the information. >> and those who thought that there is a great unwind coming here, and i know so many carry trades, and things that are connected to other thing ths th may eventually go back to connected to the 10-year, and now no? >> well, no, it happened, but it is not going to go to 3.0. the 10-year won't go to 3.0, and this information does not support that. >> the gdp revision does not seem to support that. >> and that is almost three months ago and very old number. >> yes, that is true, but it is another forecast that the fed didn't seem to get right. >> well, what did the fed get right? well, this is a head long rush to 3% on the 10-year. suddenly, people are saying, you know what, it is going too fast versus the actual market, and that is positive, because we needed to catch our breath.

we were talking about earlier in the week, carl, how it is the end of june, and we are supposed to be all going to montauk or in my case ocean grove and we can't do that, because it is crazed. well, maybe if it calms down and near the end of the quarter, people say, i will buy micron and buy adobe on the upgrade and take a hard look at some the chipotle. >> well, maybe you wait for the quarter to be over. but i wonder to the certain extent how much of the movement has been a result of things that go on at the end of quarters when it comes the window dressing or lack thereof. >> protect this house situation, and people are saying, i don't have to be as skittish, because i don't have to look at the 10-year for 48 hours. it is true that the 10-year is control and then the china banks. >> and russ groef should love st that. >> no comment on that. >> you don't have any comment on

that? >> no comment either and you got hurt. a lot of people got hurt. but i'm not being facetious, but cnbc.com has a great article on that. >> and a lot of people hurt on those types of funds. >> and silver is down, and gold look agent a kwaent -- looking quarterly loss of 23%. and we are at a loss, and what is going on? >> well, no bids. this is a catchup move to the interest rates going higher. you can't have a sudden move in interest rates and sustain some of the prices that we have had. when i saw silver go down like this, i said, where was that -- who was in that? someone's in that and caught. >> bugner hunt. >> he is getting annihilated. but he sold some oil at a high pri price. i look at the moves and find them breathtaking, because one of the things they talked about

on "squawk" and the cross talk, that some people are poorly positioned and some value here, and silver has value, but this is downgrading the miners. have you seen the stocks? the stress. >> i have seen the report for example when it comes to copper. >> and gold. >> what is that saying? what is this decline -- what message is it sending? >> it is the message that is that we are going to have higher rates, and people are now no longer being able to borrow 1% to buy the gold. and gold doesn't have a coupon, so sell it. the world flows are happening so quickly. >> and copper? a message about china? >> i think it is a message about china, and china is in trouble still, and we have nice news from the banking group, but silver and gold, and the chinese buy dwoeld, and india buys gold, and they are not buying gold. the actual buyer is out of the market, and the financial buyer is taken out by the margin calls. and it is breathtaking and today, we had reversal because

the interest rates came down, but the they go to 3 on the 10-year, gold would repeal. >> yes, the targets of gold are lower. we have had three major research funds lower the overall metals forecast whether copper and some people still like a palladium play here and there. >> how fabulous was the goldman sachs short at 1,500? and we have criticized some, but that is one of the best calls i have ever seen. i remember it came out at 4:00 a.m., and oh, no, and goldman timed it perfectly for europe. and lloyd blankfein, and i don't know if he is still active, the ceo, but it is right on. >> it is the beard. >> does it make up for the early good-bye to moncall that they were -- >> well, that movie was not a win. who starred in that, elliott gould? that was bad. bad idea. yeah, that was bad. well, you know, good with the

bad, and "the long good-bye." and they should have gone with daschle hammond "the harvest." >> what do i do today if i'm looking at the volatile market, and i'm an investment manager, what do i do? >> have a game. >> go for a picnic. it is warm. >> and what everybody is trying to figure out is this a real rally or relief rally? if you get the interest rates to go back to 2.4 for 10-year, then you will have a couple of day rally that morphs into something better. and i know that david is not a traditional chartist. >> no, not traditional, and i prefer picasso, and i like the head and the shoulders where the butt should be and the nose. >> and how about him? he is in the blue period here. >> i am always in the blue period. >> you are in the blue period, and a lot of people coming out of the foxholes now, and i saw adobe upgrade and that is reported in the midst of it, and

go back to the general mills and they are usually down $2 on the numbers, but it is not so bad. >> talk about it. go the general mills. >> you want to go there? is. >> yes, two big earnings reports and one is general mills and 13% rise in the earnings quarter as the packaged food. and monsanto, better than expected earnings and looked over the outlook for the year with the seeds and the planting and given how wet it is after a lot of the drought, it is wet. but start with general mills and fourth quarter again, up 13% hi higher sales volume and a name you mention in part because it has a high multiple. >> yes, general mills is closer to 18. >> yes, 18. >> and ken powell, fabulous ceo and managing the costs better than anybody else, and really good international growth and in the end, they are mid-single-digit growers and when the test case came out, it said revenues.

so it stabilize and the bottom line on general mills is that this is a place to hide. but people want to be in the cyclicals all of the sudden. they want to be in aerospace and not cherrios so that the stock is a push, but it does not belong at 46 or 51. >> to be fair, they had raised the targets a couple of times this year. >> and preannounced better than expected, but one thing that has happened, carl, we need to see the stocks to stop going down, and i was in the bond market equivalent and now case by case, and anything that says that people are calm will make it so mills just goes back to the old days of going up 14 cents a quarter and the next thing, it is up $2 and the dividend is up $2.50, and then a great mom and pop stock, and lit reve-- it wi revert to that again. >> and on consumer resistance pricing on a week that starbucks raised the price. >> yes, the coffee is down, and the prices are going up at

starbuc starbucks. >> well, it is an innovator. >> i remember the days of bogo. buy one, get one. there are periodic cereal wars and pushback, and i mean, when you go to buy the cereal, it is daunting, because it is expensive. >> well, it is. >> as you point out, a lot of it is packaging and that gets back to the petroleum. >> well, the insides of what it is, is almost meaningless, because it is about the cell -- what the, form of plastic inside, and the box outside and the liner board has gone up, and the gasoline to ship it there, and the least important thing is the wheat or the oat. and wheat or oat, they have been coming down, so people expected them to get better, but it is irrelevant, because the gasoline went up. >> we could have bowls there in the supermarket, to fill up our own thing. >> that is good for kroger. >> and what about monsanto? >> i had the ceo of dupont on last night, and she said it is

the wettest spring, and we had another company reporting terrible digits and the simple avd, that reported terrible numbers yesterday and based again on this american bankrupt group and the fact that it is a wet spring. i want to take it for what it is worth and say that monsanto is not bad. i don't think it is bad. but the stock can surprise you at the end of the day. and the ceo is hue grant and incredible he can do both. >> yes, he is a renaissance man. >> and hugh jackman should be the head of dupont. >> and not working that much in terms of the hollywood. >> well, hugh grant has turned it into a science company, and ellen is trying to do the same thing. these are companies that have, look it, they have made it so we are drought resistant crops and good, and biotechs and not re n rejenneri. >> well, a patent suit decided by the supreme court where we are -- >> yes, it is a big day where

they will resolve all of the remaining cases. before we run out of time, let's listen to what ellen coleman told you last night about the issues. this is "mad money" from last night. >> we have been working to lower our footprint in greenhouse gases over the last 20 years, and we have made progress there, but it is interesting, because the price of energy and where it is today, whether it is up or down, but where it is today means that biotechnology and biology really in the conversion of cellulose into higher order materials, there is tremendous opportunity. >> she is not steering the old dupont which is trying to figure out whether to be a commodity company or oil company, and she is reinventing the company entirely as a science company and enzymes and she mentioned enzymes multiple times to being able to engineer a better crop, and being able to engineer more safety at kevlar, and something that stops a bullet immediately that is incredible, and engineer

ing the lower oil costs through biodegradable oil, and the natural oil and they rick mag it on the -- i was going to joke last night, but it was not a comedy, but they are making edible tires. and they are making tires out of edible -- and they are becoming the science company in this world. >> and although to be fair, it always has been, and innovation 30 years ago was a different type of innovation, and it is somewhere else. >> they were living by math, and that went to lilly and pfizer. >> and then some serious stuff 30 and 40 years ago in the war, too. >> and this is not dakron and nylon, but this is feed the world and make the environment safer and make the customers happy, and it is working. her food business her food business is working and they are making rye bread better. and trust me on this. >> i will go with that with the rye bread. >> and great pumpernickel. >> and more to come on "mad."

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falling 3%, and the average rate is 4.46 which is the highest level since august of 2011 and a far cry from where we were a couple of months ago. jim, the question is does this take the wind out of the housing market sales? >> well, we listened to stuart miller yesterday and over and over again saying don't worry about it, but at the same time, that is monumental and i was talking to the executive producer last night who had locked in a mortgage 50 days ago that almost, and i mean, it is -- it's a third lower, and it is -- >> li i mean, we had shiller on who said don't worry about, but the cost of owning is up 26%

if you are taking on a mortgage loan, come on. >> and lennar came off, and they said it is because they didn't have enough land, and stuart did speak eloquently about the housing shortage and how few homes we have built, but i look at the number, and i'm just saying that i have to wait for it to come down, because i am not buying a house this week, because it is relative. yes, we all remember 7%, and my first mortgage was 9%, but there is a group of people who say, well sh well, that went high and i will wait for it to come down. >> yeah, although. >> but maybe it doesn't. >> maybe it doesn't. >> but it is daunting, because those stocks are down for a reason. >> and david asked the question yesterday whether this leads to a new wave of affordable products with a few more bells and whistles to get you in at least in the beginning. >> well, the affordability products are out there, but we are not finding that they are widespread and you have to wonder. >> well, you could get maybe the low er fico, and also, you

should not do it with housing, mi and there is an interesting part where they talk about mortgage insurance has come down in price, and that is pmi, and really ir radiant, and they were searching for something saying that it is very affordable. we well, it is affordable, but for a second you have to thishgs and i think that these stocks are momentum stocks and the second that you have to think has made so it that the stocks and the wind has come out of the sails, and that was a beautiful lennar number, and the reversal was outstanding. i believe in the housing shortage story, but that stock came down. i remember the guys from restoration hardware and they said, here is the choice, redo your house or take a vacation, and that is more important than buying a new house for the moment. >> right. >> because of course the re-fi conveyor belt has slowed down or maybe done and to the extent that your house has gone up in price, a la '05 and '06 and not the case as much, but you can

take out some equity and that is over to redo the couch and whatever. >> and the prices went up too fast, and shocking that case-shiller was, a couple of months ago i was tell with, maybe we are making too much of this, and maybe it is neither here nor there and spiking and if you are bernanke, you say, good, maybe it will cool off a little bit. >> and six times income growth and what is happening to the value is a lot. >> yes, let it cool off. yes, it was about to become a bubble, and let it cool off, and that is good. you don't want the bubbles. >> true enough. when we come back from the monday sell-off and tuesday rebound, how can we profit today? cramer has you covered and mad dash is next. the futures are looking good despite the downward revision in the final revision to qe1 gdp. back in a minute.

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♪ all right. little flash and a little "mad dash." >> dish, david. >> yes? >> jpmorgan reinstates with the neutral, but there is a lot of incendiary talk that dish has one more shot here. >> they are adding to it at jpmorgan and the note is saying, oh, the journal reported they are interested in the -- well, the journal did not report that.

and now he has all of the spectrum that he has to put to work. and he may lose it if he doesn't. >> and t mobile has been a dog. >> and the germans want out, and you could argue it. >> yes. >> and ergen never does what you expect him to do, but he does what you don't expect him to do. would he turn around to sell the company? is he 59 or 60 years old, and worth about $14 million? he has the other company, and dish and remember, they split it. >> you are not just saying that this is left field, but something could be going on? >> you want to be an analyst and write a note about it or see if there are comparables on it, fill up the paper. >> in this environment of sprint who would think they got a bid, and now suddenly competing against verizon and at&t and we had a liberty mobile -- battle with vodafone. >> and if in fact he were to throw in the spectrum, it would

not be a problem with the anti-tru anti-trust, and with the temo, and take the germans out and makes sense, but i'm going to si that charlie ergen never does what you think he will do and in fact, does what you don't think he will do. >> and picasso, i want to go to europe again. this morning we are seeing the upgrades of bbva and why does this matter? well, citi is upgraded an caught up in the whole merging market thing, and they have been horrendous, and this is amazing, because this thing was really making a gigantic comeback, and i like bba more, but if you saw the banks strengthen, that would be a sign that europe is not as weak as we thought. i think that europe is bottoming and i was watching draghi this morning, and he looked good. >> you thought so? >> he is a good looking guy, and who plays him in the movie. >> you have said bottomed, but -- >> bottomed, and not bottoming. >> and i'm looking at the pmi

and not seeing a whole revision of unemployment, and yes, europe is bottomed, but it is not going up. >> well, that is progress. >> this is a great ban bic the way, because it is the bank in texas. >> and we will keep an eye on that, and the stocks will open in a moment, and get ready for a big day of trading and a lot more here on "squawk on the street." today a high octane "squawk on the street," tanking oil prices, falling demand. will a key report spark a will a key report spark a [ male announcer] surprise -- you're having triplets.

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it's not rocket science. it's just common sense. from td ameritrade. "squawk on the street" live from the financial capital of world. the opening bell is set to ring in about a minute, and trying to build on the s&p's best day yesterday in almost two weeks. index is trying, guys to, hang on to a 1% gain here for the quarter, and break even would be 1569. trying to close at that level on friday afternoon. >> these junes are bad, aren't they, carl? >> yeah, yeah. cashin was here earlier in the week saying the old songs about telling may, and they may not be exactly on, but they ring sort of true. >> well, we have to make it sell in june. and you are ee cummings, and robert frost, sell in june and what? >> take the different path. >> and sell in june and miss the

swoon. how about that? >> okay. >> and let's look at the opening bell and the s&p on top of the screen, at a top of the board luxoft celebrating their ipo. and the steve nash foundation raising money to help underserved children and what a star he was for so long. >> hey, that is good. >> i love that steve nash. >> i know. >> and still in it at 39 years old, and still, class, man, banging the bodies with the big guy guys. >> and how great jalen is. okay. look, this is one of the moments again where david alluded to it, and there could be a lot of craziness, because it is a great day to move the stocks up. that's what people do at the firms. hedge funds want to beat it, and they come in and buy, and say they own boeing which i have the ceo of boeing on tonight,

mcinerney, and buy boeing and take it to the top. they have 2 million boeing before, and they just made $2 million more. >> yes, you want the quarterly performance to look good, and you are getting paid on the year, so i do look at the last few days of the year to see what guys are screwing around a little bit in illiquid names. or taking huge short positions that then move a stock down dramatically so that they can potentially collect a incentive fee. >> that is interesting and we saw it happening in the end of the year with herbert greenberg. >> oh, no. >> there are some winners and micron is a big winner, and people are going to pile into, that and they had a big quarter, and you will get netflix and that stabilizes and had a negative note out yesterday that took the wind out of the netflix sales momentarily, and so it is a joyous day at the hedge fund community. move them up a little bit. >> and adobe getting an upgrade from jefferies.

>> and that stock got lost in the shuffle because of the decline, but yet it is one of the finest quarters. they have a subscription cloud, and the regional banks make a lot of sense to me, and i am waiting to see the ones who reported. general mills down 36, and -- >> mon ssanto, and apollo who i the biggest loser down 6%. >> apollo is a chariot, and don't take the kids on that ride, man. that and cracking, i threw up on that one. >> thanks for the information. >> i had loafers on. >> no, don't release the crackin. >> and morgan stanley cuts southwest and they are bullish on the airline cycle, jim. but they say that the historical competitive advantages are down over time. >> wait, this is a competitive industry, and you get nothing. i flew first class to new

orleans and i got a box of raisins. i said, what do they get? holy cow, they don't get raisins and i get it. and then remember that dewars, and shout out to the them, and gave it to the staff. >> and now after yesterday, they said that the listeners is at 2.5 million and auto listening and a half of all of the listening takes place in the car. had no idea about that regarding pandora. >> yes, harmon told me that cars and radios are the same. what is interesting about p pandora is that they are like david to apple's goliath, and wasn't apple supposed to wipe out pandora? >> well, part of the upgrade is the iradio threat by apple was manageable in the eyes of zacowan. >> and to that point, seriously competing to pandora and

spottify. >> and well, it does matter. greg buffet is a very bright guy. >> yes, liberties -- >> and something that liberties doesn't own? >> they have an infinite return in that anyways. more or less. >> well, i think that the p pandora was just a vampire stock. true blood. >> true blood. >> meaning that you cannot kill it. >> it account no be killed. there is no silver bullet. there isn't, david. >> no silver bullet. and you know, whatever it takes, and what are they using these days to kill the vampires. >> wooden stake. >> there no wooden stake in the pandora. you cannot kill it. >> chipotle gets initiation. >> yes. >> and a buy. >> well, that stock has done nothing in the meantime, and panera has done well, and this industry is really hard to figure out who has the hot hand, and brinker downgraded by morgan

stanley and that is a company that is not even down. >> and stearns says they can double the current floor space for 3,000 domestic restaurants possible. >> they are not saying that. that is stearns' view. >> well, chipotle has been the closest they can do that and the only guys doubling and tripling is whole foods. i like them. they are doing fabulously, and i would prefer them over chipotle. >> a nice rally. >> thank you for bringing that up. >> the s&p 500 up 1% on the nasdaq. >> positive day, and seasonally, you get to the end of june, and you also have, and don't forget the tnx which is how people should follow it, the tnx is down pulling back from yesterday which is the 10-year interest. it is set up today for a good day. >> it seems to be, although we have seen plenty of setups for good days turn around. and the gpo is down 3% given that continued decline in gold. and yeah, looking on the screen here, 1 to 1.5% moves in a lot

of the big stocks. >> and suspicion of opens is what? mitigated by the fact that we have had a miserable couple of weeks. >> well, i have been saying on the show that perhaps, i have to figure out whether it is relief rally or not, and perhaps the stocks got to a level where if interest rates go to 2.7, the stocks are chully 2.4, and you to go buy the stocks, and that is happening. watch the biotechs, because they were the leaders and fell on hard times and celgene, and gilead, and others come back, we have an excitement on the reversion. >> and another triple-digit move on the market, and we are 13 for 17 triple-digit move s on ts on dow. >> incredible. >> the most in a year and a half. it is incredible. >> although we have have not met the high price for the dow, and if you do that algebra, fwabut the same time, does it draw people away. who is left? who is still left? >> that is a great question.

>> who is left watching? >> well, don't you talk to people at home who want to get some beta? they want some -- >> well, they are delivering alp alpha. our comp is coming up, but i think that there are people who made a lot of money in the last few months, and e trade etrade up, and i have to see how that is happening and the cash, but i thought that the market was attracting people again, and then the pole axing, and maybe they come back. >> maybe they come back, and keep saying it and maybe one day it is going to be true. >> and the mergers come back. >> well, it is bound to happen one day, and instead, of course, you have people down 15% on some bond fund they own, and instead of saying, i should have owned equities, they say, i don't want any part of this. >> and i would have rathered owned johnson and johnson than aaa. and who is that guy? he has been remarkable.

jo johnson and johnson is better than a bond move. >> look at that move! >> the hi layian wonder the iai himalayan wonder. you are at base camp three. >> i don't go higher than base camp three. >> no, that altitude, keep me there. >> i think that there are exciting moves of great american companies coming back. i have boeing on tonight. when you look at boeing, look at boeing! i mean, wasn't the dreamliner was supposed to be the end of boeing? what a fabulous stock. mcnerney never blinked. >> second only to hp. >> and this boeing cycle is so powerful and now talking about the 777, and they are talking about -- you know what is so great about boeing? most guys don't have a 20-minute plan and they have a 20-year plan and never mind that they have been meeting it.

mcnerney is a heavy weight, and i have always wanted to meet him on set. and he is coming on and tomorrow howard schultz is coming up with starbucks, and alan mulally and terry unger in one shot. it is the ed sullivan show. it is a really big show. i have a really big show. >> it is like having the beatles on. >> and tiny tim. >> and simon and schuster, and the publisher, and they used to be my publisher, and i like how they have taken up a whole group of stocks. honeywell, and dave kote, wow! >> and let me see if g.e. is going up. >> who? >> general electric company that used to own our network is up 1%, and you were talking at the group. >> yes. >> and the dow is up 135, and over the josh lipton to see what is moving. hey, josh. >> yes, carl. you are looking at the blue

chips up about triple-digits here at the open. you did get the gdp print, and that was a significant revision. in fact, this morning, strategists said they don't usually write about that backward-looking number, but the magnitude of the change caught them by surprise, but the equity market is looking through the revision, and especially with the data that we got clocking in better than expected. behind me, you can say hello the luft which is a new ipo and the first russian ipo and the software developer deutsche bank, and boeing and some of the clients are priced at $17 each, and we will keep you updated on luxoft. and gold miners hitting a low. the gdp is down 50% now over the last 12 months. a final mover that was interesting this morning is boise cascade. it is a building materials distributor providing

second-qua second-quarter guidance and well below what the street was looking for. eps at 21%, and the street wanted 27 cents. >> and that is terrific. gold, you mentioned it up top, the gold miners youshg have to get out of them by the end of the quarter, holy cow. hit the bonds in the climate, and rick was impassioned about climate this morning. rick is with the cme group in chicago. ri rick? >> well, listen e i'm not sure which way the climate change is going, because mother nature never stops, but i will tell you this, anybody who tells you to stop debating, stop listening to. when i see a 252 and 10s, the number coming to mind is 9s. we are now 9 basis points down on the percentage chart. and now the nasty revision is the walk around the block to put the gdp at sub 2%, but sub 2% by a ways at 1.7. if you look at the two-day chart, you can see the loss of

the momentum, and fi could put up a three-day chart which i don't have, you could see a 2.65 intraday high, and that is really a loss of momentum. but despite all of that, as you see yesterday with the chart going back to mid-11, a fresh high yield going back to the early days of august. it is hard to break that comp, because the early days of august were close to two and three quarters for the said 10-year maturity. if we look at the foreign exchange, like a two-day dollar yen. it is not going anywhere and jgj rates have lost because of ovolatility. and now looking at the volatility index chart, and the culprit is the last chart here, the euro versus the dollar. jim, you think that the recession is ending in europe, but mario draghi keeps bringing out the cannon and the sky is falling and there here better b

plan wit, becauh it, because th a lot of derivatives in europe. >> they got bamboozled. >> well, we know that berlusconi will not serve again. >> who is spending more time in prison, berlusconi or -- how bad do to chinese look having that guy under arrest by who? >> his workers. and whether he canley or not is not clear. >> trotsky believed that they should be able to mo hive me. >> and he was on -- >> trotsky was? >> no, we are still trying to find him. >> the interview was fabulous. that is why i had to bring it up. >> can the bank stocks overcome some of the rising rates, and we will talk about the potential impact and how you play the financial levels when we come back. also coming up gulf oil ceo joe

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today kicks off microsoft's build conference and they expect to reveal a public preview of the 8.0 windows operating system. it is the first update and has been criticized by some users. >> i think it is a touch screen and it is good. i have seen the product and i like it. microsoft is doing a lot of things. david first mentioned that there was activism among the shareholders and i don't know whether ballmer listened or what, but there is a tremendous plethora of activity. >> there is a lot of activity

and ballmer is approaching things differently, and we did at the time make note of the significance presence of the large fund that does get active and slowly and over time and not like in there and out of there, but i am wondering if it is already being felt in some ways. >> well, a couple of guys who downgraded microsoft ahead of the quarter, a prominent analyst, and the stock has been on fire since then, and at what point do they capitulate? the bernstein guy has been dead right about this, and this is a breathtaking move for a stock that everyone had left for dead. look, ballmer is my classmate and we hung around at the reunion together, and it is the legacy on the line here. i think that the legacy is on the line, and he is delivering. >> new cfo and still speculation bt the balance sheet maneuvers they could make? >> well, they have a lot of flexibility and good productses, and by the way, look at oracle, and it it has been a huge disappoint. >> recently. >> and microsoft has not, and

look at apple. microsoft is the de facto old tech leader. cisco is having a huge meeting and 20,000 there and 20,000 on line, and cisco has made a resurgence and my charitable trust owns that, too. and it is a move. >> and on of the components that has maintained the high since may. >> yes. and there is a p.c. coming out that doesn't have a lot, but huge battery life. that is going to be intel fueled and old tech, and remember, i have been saying he ing heliote glacial tech. >> and let's get to central banks that are driving the global markets as we no. the minneapolis president narayana kocherlakota was on "squawk" and this is what he had to say. >> well, the problem, is that

our intentions have to be clearer about the policy instrument once the recovery advances. >> so that brings us to the "squawk on the street" tweet question. so much drama over the fed, and what would you call a soap opera about the latest fed chatter? you can tweet us, and we will get to the responses later, but a lot of tweet in the arrogance of some over the viewf of central bankers who are trus frated that the market is not responding the way they want. >> yes. the market is a little bigger than everybody. the people keep wanting to put everything on the fed. but i think that it is easy. i know when it certainly when it was a beat reporter, and i wanted to put it into authorities, and it is easy and make some calls and get them with the background, but this is a bond market is not ruled by the fed, and it is a tiger that is woken up, and you can't contain it with statements. i does not allow that. it is bigger than that, and i really believe that. >> but that is the concernings that it is out of the control of the fed and we were there 2.67

and now acquiesce sent again? >> well, it is not a domestic situation, but it is "as the world turns." mr. soap opera. >> well, that was cancelled unfortunately. >> well, i never missed a di of school and i had perfect attendance, so i didn't know what soaps were on. did you have perfect attendance. >> my mom sent me to school with 104 temperature, and excuse jimmy from track practice, and my coach made me wear it and said, don't come in here. and 104, and my mom said, you get to school. get to school. >> that is a bad idea. >> well, that is a good idea. a lot cheaper. >> well, we want to mention that lexoft is trading sharply higher in the debut and 14% gain. here is what is next on "squawk on the street." coming up, surf's up for the dogs of the dow. will you be able to catch a wave to profits? let jim cramer and six stocks in

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from banana r-rama, we go t jim-rama. >> and the six in 60, and you should own it. >> i heard mosaic? >> when the stakes held, we are back in hurt. >> and what about key corp? >> well, upgraded and travel trust and we talked about how this is the best chart in the book other than regions financial. >> and intuit? >> well, herb was out there immediately saying this is bad. the street won't let this stock go down, and it is the work of david's picasso and this is divinci. >> and dhm? >> no love here. and merrill lynch is neutral and the home builders hate them so much it is scary. >> and dollar tree today?

>> well, goldman says it is a beat and raise story, and my dad and i loved dollar tree, because it is the best candy aisle in the world, and don't pay at walgreens or cvs, because this is the place for candy. >> i don't know where you put it all in that trim fi seek. >> i do my best. >> and what about mcnerney. >> i want everybody to go to the world war ii museum in new orleans and you will see a b-17, and he built, that and he will give a great speech on one of the show me speeches. bowing boeing is a great american company and i'm proud to get him. >> a big get. >> and this man is implacable, and he is unperternable, and the dreamliner is a problem, and everybody said it is dead. no, this man is intrepid. >> yes. for want of a very phrase, very nice. jim, we will see you tonight at

7:00 and 11:00 eastern. thank you, jim. over to simon. >> how do you follow that? h. >> we will have an interview with the american ceo held hostage in china, and oh, you might find the supreme court rules on doma which is coming up on the second hour of "squawk on the street." everybody has different investment objectives, ideas, goals, appetite for risk. you can't say 'one size fits all'. it doesn't. that's crazy.

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the street" for a wednesday. the dow is up triple digits, 120 to the upside, and while gold continues to hover around the three-year lows. we will tell you what the minneapolis fed president told us that could raise some concerns. >> the income yields are elevated so we are talking to one of the biggest names in the bond market, jim casey, the cohead of debt capital markets at jpmorgan. >> the soaring yields could be problems for the financials and the balance sheets ash and we will tell you which banks are the best positioned and which aren't. >> and the american ceo held

hostage in china. we will have the latest. and the president's take on the market on the way to communication. and steve liesman has details. no shortage of the fed guys coming out to blame the markets for misinterpreting them for the last couple of days. >> well, kelly, i disagree with you, because i don't believe he is blaming the markets, but i think that narayana is more than any other fed president blaming the fed for the communication. we will get to the government's sharp revision of the gdp that plays into the revision. and first of all narayana kocherlakota said that the confusing of the fed's timing of the tapering with the confusion of the rate hikes. >> the conversation of the ta tapering and how fast the flows of purchase are reduced are being translated in markets into concerns of what is going to happen to the fed's fund rate and the right approach for us to deal with that problem is to be clearer about what our intentions are about that main policy instrument once the

recovery advances. >> as you heard what narayana is doing is to blame the fed for saying that the fed needs to be clearer. he said that the rate hikes are way off and he does not see the unemployment rate hitting 7% until mid next year, and you should purchase assets until next year. and so this is the fed decision that the only dissenter. and looking at the graph, services down 1.4 to 1.7%, and the government does not do a good job in collecting servics.s it is something that the data collectors need to do to give us a better look at the economy. and business investments down sharply and most due to structures. government spending down but not revised down. consumer spending and you are

looking at the graph, it is still one of the better quarters that we have had and improvement from the prior quarter here, but not the 3% that the fed is looking for, for the end of the year, and we will have to make up a lot of of ground on that. and kon sconsumer spending is ud it remains the best quarter since 2011. and here's the deal. we need to figure out what this means for the second quarter and if the fed is on track for 3% numbers it is look g fing for. >> what did the minneapolis fed president have to say about the juxtaposition about the inflation expectations falling quickly, and the day the coming in weak and yet they are still talking through or parsing through the exit? >> what he said is that the fed needs to be symmetrical about inflation, and if the fed is going to be concerned about inflation on the upside, and they need to be concerned about it on the downside. >> steve, allow me to break n because we are getting the rulings that we expected from the supreme court, and that is big news. we will get it from hampton

pearson. and hampton? >> the ruling is in on the federal defense of marriage act, doma, in a 5-4 decision, justice kennedy has struck down the federal defense of marriage act which defines marriage for federal purposes as marriage between one man and one woman. i will read you one key sentence from the opinion and we will get into more of it later the federal statute is in violation of the fifth opinion, and the opinion and the holdings are confined to those lawful marriages, meaning in the 12 states where gay marriage or same-sex marriage is now legal. supreme court 5-4 decision striking down doma in the 12 states and i believe the district of columbia where gay marriage or same-sex marriage is currently legal. back to you, and of course, we have one more ruling coming up on the california ban on same-sex marriages if you will, but that is the historic headline right now. >> hampton, we await that

decision on prop 8, and that is of course, california's ban as you said. a 5-4 vote, hampton, makes it seem like a narrow ruling, but the early take is that it is really quite broad as justice kennedy lays it out? >> again, i just got the copy of the opinion now, and what i really wanted to do was to basically go to the key sentence to make sure that we had the headline right. i look forward to digging into the opinion to see what the court says, too, in terms of the substance of the whole issue of domestic marriage going forward especially in terms of where the key federal statute is concerned. >> we are looking at the live shot there outside of the court, and it happens to take place on a week where the gay pride parade in san francisco takes place sunday, and for some perspective, when the defense of marriage act was passed in '96, it was actually quite a pop ula bill. 79%, according to our friends at nbc news voted for it in the house. 85% of the senate voted in favor of doma at the time.

it is a remarkable reversal in the broad thinking in this country. >> and 17 years a lot has changed and clearly a lot has changed from the thinking of people of those polls that would be very, very different today, and the key vote was justice kennedy's i believe. people thought it all along, and of course, he wrote the majority opinion. >> and interesting that people want to know what has changed aside from the public sentiment, and the impact of the journal's write-up on this as well, but when the defense of marriage act was adopted no state permitted same-sex marriage, and the act was largely theoretical, and the impact for the bill was the fact that the 12 states have now passed it and therefore there was harm inflicted on the same-sex marriages. >> well, it is more controversial now, because 33 states have explicitly said they don't want gay marriage, and now is the going so be -- and some people will say from the constitution, you are manufacturing a right to gay marriage, and you may find that there is action on that, and

just to be very clear, what this striking down of doma will now allow same sex couples to jointly file their tax returns and to receive social security survivor benefits, and federal deductions and gift taxes and deductions and this is something that wall street has campaigned for, and a lot of the big banks actually gave representation to the supreme court in advance of this. i spoke to lloyd blankfein, the chairman and ceo of goldman's, and he had been vocal on the support of gay marriage. he said that the decisions will help to define who we are as people, and whether or not we are part of the group directly affected. and for many people in business, this is about and although it is controversial, many people will be very, very angry at this, and for others, it is a question as to how you treat lgbt people within the community and indeed within business, and that is the reason for them petitioning the supreme court to get this result. >> and there is at least eight states where they allow for the civil unions that are not

necessarily marriage where people might find themselves in the lurch, because it only applies to marriage, and a what you are talking about a lot of the benefits. >> and guys a couple of key sections from the opinion, itself, in terms of the majority opinion, quote, the class to which doma restricts the marriages are those persons joined in same-sex marriages made lawful for the state, and this imposes a disability on the status that the state finds dignified and proper. the dissent, chief justice roberts, justice scalia concurring, and justice roberts' dissent, that i agree with justice scalia that the court lacks revision of the courts below, and he says that unifo uniformity and stability amplify and justify congress' original justification that marriage at this point had been adopted by every state in the nation, and every nation in the world. so there you have fleshed out in

both the concurring and the dissents, and really the nut of what the court was wrestling with here constitutionally. back to you. >> thank you, hampton. live from outside of the supreme court, and joining us now with reaction. vikram amar who is from the university of california berkeley at davis school of law. and your reaction to striking down doma and going into, this you didn't think it would be that simple. >> well, i think that everybody who looked at the oral argument had a sense that it would be five votes to strike doma down if the court reached the merits, and there was a question if the court could take the merits, and as you mentioned some of the dissenting courts felt it did not have jurisdiction to resolve the case, but if they did, justice kennedy tipped the hand at oral argument, because the question was how much of his rationale for striking down doma would carry over to strike down

laws of the 38 states that also ban same-sex marriage, and it appears from the quick review of the summary of the opinion is that the reasoning that he used strikes down doma, but it does not interfere with the state decisions to ban same-sex marriage. and we will get more on that when the court decides the proposition 8 case from california in a few moments. >> so you don't force the 30 states that are against it to legal legalize same-sex marriage in the states, but presumably, and you are still, correct me if i'm wrong to have to honor contracts, marriage contracts that are now legal in states in the 12 states that do allow it, and the indeed washington, d.c.? >> no, that is not true. two separate parts of doma. one part said that each state could decide whether to recognize samt same-sex marriages from other states, itself, and that the provision at issue in the case is just

what the federal definition of marriage is. that is what got struck down. the provision that gives the state the power to decline or recognize same-sex marriage from one of the 12 states that currently have it is not an issue in the case, and not affected. >> thank you, sir, for joining us, vikram amar, a professor at uc davis school of law. you mentioned that it is gay pride call in san francisco, and it is friday the 44th anniversary of the stonewall riots beginning just up the road from here. therefore, it is going to be one hell of a party for many millions of people this weekend across the country. >> yes, as we await a ruling on prop 8. big news and big implications on taxes and immigration and a bunch of issues that we luck about the a later. in the meantime, the markets are up 120 or so, and the stocks are shrugging off the downward revision this morning, and dow enjoying a triple-digit gain, but can it continue? barry knapp is head of the portfolio strategy at barkley's,

and brian from bmo strategies. barry, so much, kocherlakota on the air this morn, and they saw, the qe has accomplished the objective, and to do anymore would put us into dangerous territory? >> yeah, no. that is right. i fully understand why they did qe2 and a real market applied deflation, and the same is true with operation twist. no such risk in the case of the qe4 now, because we can't call it qe forever now i suppose. i do believe what they were ultimately trying to do is to mitigate the risk of u.s. taxing their way into recession much like france, italy and spain did last year, and given that even with the 1.8% downward revision into gdp, we are tracking 1.8, and this quarter, and growing it at the roughly same pace that we were through much of the

recovery, and despite the fact that we hit the economy with $250 billion of fiscal drag. in that sense, mission accomplished and the risks, and you know, we have all read this time it is different and we know the risks of holding real interest rates negative and particularly all of the way tout to the 20-year part of the treasury cur ve are considerabl. so this is clearly a good thing. a hurdle that we need to get past, and it does not mean that the equity market will act great through this process. and in fact, it should, the correction that we have seen seems perfectly rational to us, and we will continue a bit longer, but the other sides of this traditionally are when the stock market really performs we well. >> right. a matter of getting through the mini crucible or so. but brian are you of that view, and how long to get us back to the area where we have reset and even see the equities climb with the 10-year note yield? >> well, it is interesting, carl, because we think that we are in the fransition right now

between kind of unwinding this reliance on monetary policy and kind of winding up the fundamental investing, an unfortunately the stocks are up for the than 10% this year. and we have found a tremendous amount of resilience in the last couple of days as the investors calm down after the reactionary trading last week, and with the fed speak, and we believe it is an issue with respect to being a bumpy summer. you know, using a car analogy, and the car went into the ditch for a couple of days and now back out into the middle of the highway and going higher. what stocks are showing everyone is that they are a viable asset for the portfolios, period. that does not mean that we are straight up from here, carl, but it is that we are going to have a bumpier road than people are anticipating. >> and can have we put in the bottom for the stocks, brian? >> well, it is too early to say that the correction is over, but we are convinced that the market

is feeling better about things going forward. the stocks lead earnings which lead the economy. that is why we are not reacting on the fundamental basis to the gdp print. here is perspective, in three days the second quarter is over, and why are we worried about the first quarter gdp, that is what the market is telling you. are we going to continue with correction, too early to say. and what investors fail to do is that they try to time the market too much. we are saying stay invested in areas like industrials and technology and the states. >> all right. guys, thank you very much. you are catching us on a busy news morning but we will keep the focus on the markets as much as we can. see you both next time. >> all right. and now the balance sheets could be affected and who is most at risk? we will give you some of those

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and knew the average mortgage rate has jumped to 4.6. % which is the highest level since 2001 -- 2011 i beg your

pardon. and now the bank stock investors are trying to determine when to sell before a parabolic rise in rates becomes a reality. j.r. cassidy is bank analyst at capital markets and he joins us this morning. >> good morning, simon. >> try to keep everybody on board here. let's talk about what is happening first of all to the assets that the banks have. the banks have hundreds of billions of dollars of treasuries and mortgage-backed securities that they are required to hold by the regulators as part of the capital base available for sale, i believe is the terminology. as we have seen the very assets fall in value to, what extent has that capital base for the big banks been eroded in your view? >> right now sh, the unrealized gains have come down about 50% since the beginning of this qua quarter. when you look at the federal reserve data, we have seen the unrealized gains fall to about $16 billion for the industry. and now that is before this real

run-up in the rates, and so when we see the data friday and next friday, we expect the gains to come down, but some banks will have unrealized losses which will have a small negative effect on their capital base. >> okay. and unrealized net gain is the way that you measure this change in the stockpile of assets if you like. what is the -- does that matter to a stock investor? >> i think that it is something that we are going to watch, and what we have said to the clients in the past, that the the rise in rates is favor fobl the bifv banks, because it rises the rates, and if the losses in the portfolio become greater than anticipated that rise in rates will be negative, because people will focus on the unrealized losses, and we are not there, but we are watching. >> two major parts gerard, and how do you boil it down for the investors? what is the advice?

>> well, that is a good way of putting it. the first moving part is the net interest margin this quarter, and because of the slightly rise in rates, we will see the less pressure on the net interest margin, and that is not a positive, but the gains in the bond portfolios, th s they had first quarters are going to be better. and they are doing better, because the underlying economy is better and the regional banks are a way to play that with the way that the housing market is recovering today. >> are you tell manage telling banks like zion, and citi and bank of america? >> well, we would own the zions and the key corp, and citi and jpmorgan will have strong capital quarters, and we want to own them as well. we think that both of them, the money centers and the regionals will do well in a slightly

rising rate environment. >> good to talk to you, sir. thank you for the advice. gerard cassidy there. >> and this man went to china to lay off a couple dozen workers only to find himself held hostage in his own words by his own workers in his own factory. we are awaiting a ruling from the supreme court on prop 8. back in a minute. [ male announcer ] the mercedes-benz summer event is here. now get the unmistakable thrill and the incredible rush of the mercedes-benz you've always wanted. ♪ [ tires screech ] but you better get here fast. [ girl ] hey, daddy's here. here you go, honey. thank you. [ male announcer ] because a good thing like this won't last forever. mmm. [ male announcer ] see your authorized dealer for an incredible offer on the exhilarating c250 sport sedan.

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let's get back to hampton pearson at the supreme court with more breaking news. hampton? >> kelly, from both the majority and the dissenting opinions, a couple of remarkable quotes. from the majority opinion written by justice kennedy and quoting and this is a new york state case that got to the supreme court. when new york adopted a law to prevent same-sex marriage, it sought to eliminate inequality, but doma frustrates that objective with a system-wise enactment with no identified connecting to the federal law. and again from the majority opinion, it will write it into the code.

a and what is the a wliserring quote, to defend marriage is not to humiliate other people with arrangements than it is to condemn the constitution of the united states and to demean other federal constitutions. scalia said it is one thing for society to elect change, but another ing thing for court of law to impose change by judging those who oppose it as enemies of the human race. so you can see how polarized the justices were in et going to the 5-4 ruling. and we are awaiting a ruling on the prop 8, the california ban on same-sex marriages. back to you. >> interesting, hampton, how many times the word humiliate is in the dissent and the majority opinion. kennedy writes, quote, that doma humiliates tens of thousands of children now raised by same sex couples. >> well, is ate reach into the humanity of what is at stake in the ruling here. civil liberties and civil rights, if you will moving forward and again, defending, if

you will, the traditional values in terms of the constitution, and its role, and those who disagree. absolutely. so this was really a case not only about the law, but the gut of the societal implications. >> yes. >> we are getting headlines that we do in fact have a decision on prop 8, and the ban on same-sex marriages and i will know what it is momentarily. >> okay. hampton, thank you very much for that. hampton pearson in washington. >> do you want want to take a break or wait for prop 8? >> okay. we will take a quick break and back in a moment.

we are back at the supreme court. we now have the second important ruling on gay marriage and constitutionality, and this is the so-called california proposition 8 case that banned same-sex marriages in the state of california. the court has essentially decided to send the case back to a lower court for further review. key part of the majority opinion, we have never before upheld the standing of a private party to defend the constitutionality of a state statute until the state officials have. and we decline. and we will send it back to the lower court, because the petitioners are not satisfied that the burden to demonstrate standing to appeal within the 9th circuit was without jurisdiction to appeal, and the case is vacated and it is

remanded with instructions to dismiss the repeal with lack of jurisdiction. so prop 8 is back to the lower courts, and so says a 5-4 majority here. >> let me come in here, hampton, prop 8 falls, because what they are saying is that they are deferring to the the existing decision that was made last year by san francisco's 9th u.s. circuit court of appeals who had decided to invalidate prop 8 and by saying at the supreme court level they don't have standing to argue here, they are trying to get back to that decision, and as we have already had on record from california, therefore, gay marriage will recommence in the state of california in the middle of july. so on both the headlines that are coming out of the supreme court, the lgbt community have won their way. and that is my reading of it, hampton? >> yes, the appeal of the 9th circuit is vacated and

instructions are mandated to dismiss the appeal because of lack of jurisdiction. so new ball game in terms of the political consequence s fs for state of california for those on both sides of the issue. >> right. >> without making a judgment on the core right for gays to marry, the court is essentially opening up a new political debate in the country, and begins anew, right, hampton? >> absolutely. >> but it is exactly in line with what the president has said that it is for the states to decide. >> yes. >> whether gay marriage is legal, so they are not establishing a rights to gay marriage at the federal level, but it is still importantly stands in the individual states, and in this case, it means prop 8 falls. >> correct. >> and the heart of this thing of why they have in a sense kicked it back to the lower courts is that it was private parties who brought the challenge, and not the state of california if you will. we got to the whole legal issue of standing to bring this case in the first place. that is what this court decision

turned on. >> right. >> as we can see from outside of the court, hampton, cheers and a couple of the cheers from the wire services saying that doma is dead. some people are singing the "star spangled banner" and it is going to be a remarkable weekend in california. >> yes. >> and now out to nymex as well to bertha qumes with the crude oil inventory? >> yes, carl. we have the inventory numbers and essentially crude is flat on the week, and dow down 18,000. that was a surprise. or rather up 18,000. we saw the distillates rise over 1 million and huge increase of gasoline inventories up 3.65 million, and also an increase as well in utilization, and in

curbing, oklahoma, the delivery point for mynex crude we soil. a bearish report and more so than what we were seeing over night from api, and gasoline is hit hard with crude oil now closer to the lows of the session. back to you. >> all right. bertha, thank you so much. over to sharon epperson who has the executive director of the iea with those numbers. >> well, this is the first interview here for koishgs and i'm delighted to have maria v vand vanderho vesh vanderhoven. we are seeing the domestic production booming, and what impact is that having globally in terms of the iea's outlook for crude globally? >> well, at this moment, we can

see that the outlook for crude oil instead of a growing demand for crude not only in the developed world, but especially in the developing worlds like china, india, brazil, and others. so this is something that is happening everywhere, and that means that all is there to stay. crude is there to stay for many, many decades to come, and it is still very important to see to it that it is part of the energy security is how the crude situation is in the countries. >> but in terms of flow, there is a difference of the landscape with the amount of oil that we r are seeing from shell in the u.s., and amount coming from the non-opec country, and how is that going the change the market and the landscape? >> well, it is a fascinating question, and what you can see with the opec now, and that is a country like saudi arabia has, and so when nonoil countries produce more and bring it to the market, that is what happens

with the spare capacity that still there, and could be larger than it is now. as for the united states' situation, and you know all about the export expectations that is not for me to make a comment on that, but what we expect when there is a huge development in crude production in the united states, and much more than it was ten years ago for instance, and then there is the shale oil, and that is another game changer. >> demand. talk about china and the slow growth there, and talk about how that affects the global impact on crude demand and what impact on prices? >> on the long run, we don't expect it will have an impact or still very impressive growth, because in china we expect it to be now in 2035 an increase in the demand of about 30%, and 60% of that will be in china. so the demand is still there. and what you can see is that it is trade flows that will be changing, and to china and asia and what effect that will have of prices, and that is a d

different issue. >> well, another factor have an impact on the oil prices and the gas prices as well, a and this is what you are here to talk about in new york, renewable energy, and you are predicting that iae fuel will be produced by wind and solar and much more than gas. what are driving the growth in renewab renewables? >> well, globally, you can see that it is putting in the new markets that remerging and more renewables in the markets and brazil and china and the second thing is that the cost of effectiveness of renewables. the renewables come down as the technology is expanding, and with the technology really developing, and the costs come down, which is important for the investors, and then of course, there is the concern about the climate and that is another issue. you mentioned the power generation -- >> well, we have to wrap, but it is important to end on the climate, because in light of

what president obama said yesterday of course in the new plan that is right in line with what you are reporting today from the international energy agency. thank you so much, maria van der hoeven. >> let's get a flash of the hq with mary thompson. >> looking at the shares of gmn. first over to raised to a buy from neutral. they say you should take advantage of the stock's 15% decline since mid may and added to the buy list of deutsche bank and they cite the resent weakness of the markets in las vegas, and ma cow. ov to you. >> thank you, mary. we will be speaking to one of the biggest names in the bond market, and jim morgan's jim casey is here with all of the action that we have seen. plus, the man who paved the

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the cost of debt going up, and does ta change your value as to plugging in the value? >> consumer confidence, 81.81.4. buckle up, people. for a while the credit markets have been in the concerns of investors at late, but what about corporations that issue debt and the funds that buy it. jim casey heads capital debt markets at jpmorgan and you must be busy lately, but give me a quick take on where we are in terms of the market given that we are focused as we should be on credit. >> okay. so, credit pricing basically

stems from the treasury market where everything started, so to take a step back, we have gone through a vicious but very short cycle. the peak of the market is going to be viewed as kind of the first week of may when the 10-year treasury was about 1.65, and backed up to 2.66 and that is a 6. 0% backu -- 60% backup, and that is severe. >> yes. >> and the domino effect, and the market in first week of may was 3.38 and now it is 4.25 which is a higher backup, and the yields are more severe. down to 5% and now 7% and that is a 40% back up, so the only asset class that has escaped if you can even call it that is the loan market where yields have gone from 5% to 6%. >> but obviously, they adjust, and so it is not fixed and you have buyers there. what are you seeing in terms of the appetite for new deals, and are the issuers nervous to issue into a market like this? >> well, you know, appetite for new deals has been touch and go, and you have to pick your time very carefully.

you need to find windows where you have market stability. you don't want to be launching a deal on the day when the market s are in full sell-off mode. jpmorgan has been fortunate, and we did a deal for chevron last week, $6 billion and came at 2.25% in a treacherous market. >> how many years? >> a variety of maturities. >> right. and still issuing a 2.25. and obviously, a great balance sheet there. >> yes, it does. >> jim, we set records every year it seems and every month in terms of not just the inflows into the funds, but more importantly issuance, and is that over? >> well, i think that the, it is probably over for a while. i think that a lot of the reissuance and the cheap maturities won't see a window the do that again. so overall levels of new issuance will be coming down, and probably more m&a driven.

>> and we will see the outflows reported in the newspaper, and some numbers and primarily retail driven funds and total return returns putting up the hellacious numbers for june. is that what is going on, or are the outflows overstated and the yield is going to be okay? >> well, i will answer the question with a little bit longer answer here, because i think that it is helpful to the viewership to understand what is happening. >> please. >> outflows are a function of what the returns are. so the returns in the high grade market as of the first week of may were running about 2.3% and they are now negative 3.4%. that is a 570 basis point decline in returns. yields were positive and now it is a 500-basis point move, so if you translate the moves into dollars and cents. in the corporate market around $350 billion of losses in a six-week period of time. so obviously, people are going

to want to pull the money out. so we had an outflow a couple of weeks ago in all fixed income markets and so all taxable income markets, the treasuries, high grade, high yield, emerging markets and over $9 billion. we haven't seen an outflow like that since october of 2008 in the depths of the financial crisis when 12 billion was taken out. other than that, there are no comparable weeks. >> well, that didn't make me feel any better. the buyers and is there a lot of nervousness or more kind of stability that you'd expect? >> well, a lot of what is advertised and what is reported is on the retail side of the equation, so you have etfs that the results are going to be reported daily, and lot of to funds flow in and out is retail money. that represents around 20% of the buying power. 80% of the buying power is institutional money, and when jpmorgan does the surveys which we do fairly frequently in

tumultuous markets like this, the feedback that we are getting is that institutional investors are patient, and long term oriented and the attitude is tell me when i should find a reentry point into the market where i can get locked down these higher yields, and the conversation typically evolves around that topic and the conservation is not typically get me out of this market, but tell me when to sell. that is an important distinction. >> we always like to end on the leverage buy outs. we haven't seen that many, but one wonders with the backup of the rates, can you finance the big deals or skittishness, and can we be concerned with the bridges out there with the home bridges and lbs out there? >> with respect to the appetite for lbos, we think it is significant and the best case in point is the heinz lbo and i can point out that not a lot of

people thought that jpmorgan could raise that quantum. we said we could raise $15 to $20 billion and we took heinz on the road. >> it with news march, and buffett and it was not the -- great, but not the greatest example of what is going to happen now. >> that is true, but, but, the order book on heinz was $28 billion. so clearly, there is market depth, and we think that because institutional investors will take the long-term view, while that market depth may be reduced, it certainly has not gone away. so jpmorgan is perfectly co comfortable taking on risk in lbos and giving capital to the clie clie clients. >> i always like to let you end with the marketing thing. j jim, thank you for coming on to share your insights, and this is critical to the market overall. and jim casey, debt capital markets at jpmorgan chief.

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>> thank you, kelly. as i look at a advanced look at

the said second quarter, all i can think of is interest rates are down. stocks are up, and growth is down, and it seems like the low growth bull is market back. but this is really meriting some looking into, because just to look at the net differences in various sectors of the marketplace is not enough especially for the strategists out there, and the likes of articles in the journal today talking about big funds and how they have underperformed, but maybe the underperformance is not necessarily because of no wisdom, but maybe because of too much wisdom, and poor timing. and boy, let me tell you something when it comes to tradinging, it is never about coming up with the right strategic quantitative strategy, but it is about timing. . >> so last night, the 10-year unchanged at 10.61 which represents a high yield close

since the increases in rates and the decreases of stocks have been misinterpretation of the fed, but it doesn't seem to square when you look at interest rates, okay. interest rates response today was quite clear, and i think that it goes to why so many bond fund strategy was early and not necessarily incorrect. because at the end of the day, the interesting part of the life that still exists in the treasury complex in the bond traders is quite system pimple. weakness, the rates are lower, period. end of story. that seems to be the big dynamic, but in including the equity traders are going to continue to think it is about the fed, because the ben fefact is their friend, but strategy-wise, gdp old or relevant, and this is key, but i don't believe it is old, because looking at the day that we have had in the last few months and the context of the final revisions and most accurate in the gdp and draw your conclusions regarding the trends of the economy, and back to you. >> rick santelli, thank you very

much, sir. tweet time. minneapolis fed chair narayana kocherlakota was on earlier. this is what he had to say. >> the right thing for us to do is to make clear what the main policy is once the recovery advances. >> that brings us to the squawk on the tweet, and so much drama over the fed recently. what would you call this drama recent recently? we will get to your responses next on "squawk on the street." [ male announcer ] i've seen incredible things.

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what a day. let's get to squawk on the tweet. seems to be a lot of drama owe ov over at the fed late pi. what would you call a soap opera about the latest fed chatter. down market crabby. schuman writes tune in for another episode of as the helicopter turns. >> dave tweets as our stomachs turn. christopher tweets, i like this, the bold and the bernanke. gd tweets, breaking bond. and jim tweets the rates of our

lives. >> the rates of our lives. >> if only cramer were here to comment on breaking bond. we know "breaking bad" is one of his favorite shows. >> we're getting more forward information from trim tabs. just people exiting mutual funds in just an amazing can he agree. some wondering, david, whether some of that is bleeding into equity funds. maybe that's what's accounted for the last couple days. >> it's possible. we'll see. jim casey made the point a bit but these are retail outflows and it hurns when you're a retail investor. you will look at that june statement and it's going to hurt even more. there may be more repercussions but it's not institutions, not pension funds who have to have the allocation to fixed income regardless. >> look at the muni space in particular. people were positively salivating over the 5% yields making the point why would there be a sell-off, why would we see this panic? >> there's concern about detroit when it comes to the muni market. >> but that spooked retail investors out of the asset class

creating an opportunity. >> other point he made was that the institutional veferts are lo looking for entry points. that's what a lot of people sitting home near retirement will be doing. at what point do i further sell my defensive stocks. >> you have $57 billion that come in every month from coupon payments and matures. there's always money coming back to the funds. >> pension funds have to make, what, 7%. they have to make it somehow. that's not changing anytime soon. >> that's how they ended up in emerging markets. >> and inflation. >> thanks for helping us get past through the past two hours. if only every day were like on the news flow. here is what you missed earlier on. >> welcome to "squawk on the street." here is what's happened so far. >> i think it's in the best interests of the local area here. definitely in the best interests of the people that i employ for

us to come to some sort of solution. >> we've said we're going to keep the fed funds rate extraordinarily low at least until the unemployment rate falling below 6.5%. it still leaves a lot of uncertainties about what we're going to do exactly when. >> i think everyone is trying to figure out is this a real rally or a relief rally? and if you think interest rates will go back a little bit, say 2.4% for the ten-year, then i think we'll have a couple day rally that maybe works into something better. >> bottom line on general mills is this was a place to hide, but people want to be in the cyclicals all of a sudden. they want to be in aerospace, not cheerios. so i think the stock is kind of a push. >> the supreme court in a 5-4 decision, justice kennedy speaking for the majority has struck down the federal defense of marriage act. this is the so-called california proposition 8 case that banned same-sex marriages in the state of california.

the court has essentially decided to send the case back to a lower court for further review. >> good wednesday morning. we're live at post 9 at the new york stock exchange. get a check on the markets on a very busy day packed with fed speak and supreme court decisions. the dow has lost control of a triple digit rally but still up 93. s&p is up about 9.5. nasdaq up 22. of course, coming after yesterday's gains, the best gains in about two weeks. apollo group moving to the downside. third quarter earnings fell 40% as fewer students enrolled and then there's pandora rallying this morning. the internet radio company upgraded to outperform. cowan says pandora has plenty of advertising opportunities. >> a huge loss in gold. not enough to slow stocks this

morning. the dow is still up almost 100 points. is the sell-off officially over? that's the question we'll be asking. also, president obama warning he'll veto the keystone pipeline if it adds any increase in greenhouse gas emission. what does that mean for big oil and the price of gas. and the man who turned shark and death defying walks into major business, discovery founder john hendrix will join us. >> gold continues to fall. the precious metal at a three-year low. want to bring in jim paulson and jim, director of tjm, a cnbc contributor. good to see you both this morning. welcome. >> thanks. >> good morning. >> jim, you have said that we would see $1,700 by the end of the year. this -- where we're at these levels here would appear to be at the low end of your buy range, right? >> yeah.

i think since a few weeks bag when it reached almost $1,700, i felt the market would be going into a trading range for the rest of the year, and i think that's what we're doing. i picked a range, who knows, $1,550 to $1,750, and for the rest of the year -- >> wait a minute. jim, jim, wait a minute. $1,550 to $1,750, that's a pretty wide range. >> well, it's about a 12% range and if you look historically in the last 20 years, kelly, at the normal six-month range, it's more closer to 20%. >> wow. >> so it's not maybe as wide as you think. i know what you mean. i would be buyers down here again because i think we'll see $1,700 again this year. i'm not totally convinced we might not also see, you know, back in the 1500s or $1,550 but i don't think we'll go a lot lower than that. i think this is a rate rise environment and we're going to have to didigest, but to me whas really going on here is a

cultural attitude adjustment which steve liesman really highlighted this morning. we've gone from worried about an armageddon around every corner to finally giving up the armageddon ghost, and when we do that, we have to reprice markets. it's much more appropriate for a economy that's likely to sustain. i think the market will be okay with that. >> it is important that we've switched from this mentality of armageddon to maybe bond market armageddon which at least implies there's something positive stirring below the surface but a worry that could still keep people on the sidelines, no 12? >> there's no question that any transition no matter what it is is scary to the stock market. when all of a sudden we're saying that the fed, who has been so important to this rally, particularly because they've compressed yields and made those yields in the stock market look so good, when they're going to

start moving out of it, everyone has to step back and say what was the reason i was buying stocks and while we have that transition period it will be negative. we were in a little bit of a corrective phase before the fed came out and said anything a week ago. to me it seems like there's still probably a little more damage to be done in the stock market. >> but what do you base that on? people this morning are pointing to the fact we've seen some relief with regard to swap spreads, a few other happenings in the credit market that suggest in fact perhaps some of that stress we've now moved beyond. >> but think about this, michelle. one of the things that led the stock market the whole way up was the big like no growth dividend payers like utilities and then some small growth dividend payers. all of a sudden we're taking the ten-year from 1.6% to 2.6%. those stocks have to look less attractive just based on that relative comparison. that was one of the biggest things that drove us here. we said before like a reprice, and while that's happening some weakness should ensue. >> jim paulson, before we get to

gold, i want to get -- one question for you, is any of the action we've seen over the past two days people who were hammered by their bond mutual funds and are saying after all of that, i am going to finally give equities a try? >> i think there is going to be some of that, carl. i have been saying for a while it's one thing sitting in bonds and underperforming the stock market. it's quite another if you're sitting in bonds and you're getting hit and you're starting to feel pain. this is the first year in this recovery really that we've brought pain to holding bonds, and i think that's going to cause a lot of people to re-evaluate what their appropriate asset allocation is going to be. one of the things that after a period of digestion i personally think the bond yield will go up to 3% yet this year on the ten-year, not in a straight line, but i think it might get there by the end of the year. i think that sets up 2014 with a lot of people making a reallocation back towards

equities and away from bonds. maybe to some extent realizing that bonds don't just provide low risk. they also can give you risk in a different environment than we find oursds nelves now just entering. >> to get to that 3% level, what does that imply happen was payroll growth over the next several months in your view? >> i think payroll growth has to say okay but i don't think it has to be spectacular. if we're in the range of the 175 to 200k, i think that's going to be good enough to keep taking yields higher. we've got enough other things going on like the housing activity. i think we're starting to see a little pickup in industrial activity. if you're producing somewhere between that 200k job growth, i think that's going to be plenty sufficient to keep yields repriced if you will for a sustainable recovery. >> finally, jim, can you explain the action on gold? we're down $40 now. that's getting back to where we were earlier this morning.

how long does this last? >> i think it's going to last a while longer. my methodology for selling gold yesterday was largely technical. it was coming out of what's called a bear flag consolidation and i sold around $1,270, $1,268. this kind of move has to mean a couple things. we saw this gdp number come out crummy. stocks rallied. if people had any inkling of buying gold, that would have been a good time to buy it. it has to be one of two things. it has to be there's some sort of worry back there about deflation or just after a ten-year bull run, these corrective periods get elongated. gold has something it's dealing with, and it has to be one of two things to shock people back into buying gold again. and that's some big headline that would force you into gold or like a precipitous decline in the dollar. since it doesn't seem to mee like either of those things are coming up quickly, i think gold still trades heavy and it is. >> guys, great insight.

covered a lot of ground there, too. talk to you soon. the jim and jim show. >> in less than an hour microsoft will kick off its developers conference in san francisco and detail what to expect from a huge new upgrade to windows 8. julia boorstin is live at that event and joins us now. what is the fate of the start button? >> well, kelly, we expect ceo steve balmer to take the stage and unveil windows 8 to developers coming here. he's going to urge them to build app that is will work across all of microsoft's various devices and to help the company catch up with apple. apple has 900,000 apps listed. microsoft has 80,000. windows 8.1, a free software upgrade, is designed to be more user friendly responding to complaints about the prior version. it will bring back popular features like the start button. it will also feature the ability to customize and file saving in the sky drive cloud, an upgraded

windows store and built in apps to make the system more intuitive for pc users and create a platform to bring in developers to create more apps. we do expect to see a new model of surface and the announcement of a seven-inch addition as microsoft looks to compete with other smaller tablets. we will hear comments about microsoft and oracle's partnership which was announced earlier this week. they're teaming up on cloud computing to help customers move into the cloud as microsoft steps up competition with amazon's cloud service. throughout the event we'll be looking for any clues about the reported executive reorganization that microsoft will be announcing reportedly on july 1st. i'll be back in "fast money" with all the headlines from the big presentation here and the speech we're expecting from steve ballmer. >> another big event. when we come back, he's the man who paved the week for shark

week and nik wallenda on that high wire. we'll talk to the founder of discovery john hendricks. >> first rick santelli thinking through this morning's gdp number. >> we're going to discuss the relevance of growth in the economy, the relevance of restrictions on trading the markets based on unwritten rules and dodd/frank and, in fact, we're going to discuss what's going on with mario draghi and europe all with a very outspoken man, andy brenner. be there, 20 minutes.

dow is up 85. take a look at consumer discretionary today. it's the best performing sector on the s&p. mary thompson is back at headquarters with more on that. >> that's right. consumer discretionary consumer staples, those are some of the better performing sectors. weakness in the materials in today. look at apollo group. this company coming out with weaker than expected results because of disappointing i guess you could say enrollment at its university of phoenix. this, of course, is a for-profit education company. so it is actually the worst performing stock within the s&p 500 today, down over 5.5%. carl, back to you. >> mary, thanks so much. college isn't what it used to be according to the cnbc all-america survey. americans today have overwhe overwhelming doubts about the value of a four-year education. our steve liesman is back at headquarters with more on that. this i got to hear, steve. >> what are you thinking for the

twins? four-year degree for sure? >> that would be a start, yes. >> yeah. well, you know, most people still think that, but what we found is some really interesting questions that people are interesting not of the professors but of the universities themselves and the value of a college education. let's start off with the broad question we asked in our cnbc all-america survey. is a college education part of the american dream? you can see pretty overwhelming results, although i have to tell you not as much as we saw last time when we asked about whether owning a home is part of the american dream. we probed a little diener. a slightly different question. is a college education worth the cost with all this concern about debt and the skyrocketing costs? what you see is slightly smaller percentage of people believe it's worth it, and that's all adults. but now let's move on. the green is not worth it. when we look at people who have less than a college degree, in other words some college, this

group split even on whether or not a college degree is worth it. post grads probably like carl, overwhelmingly in favor of it. moving on though, looking at whites, pretty much like all adults. but look how much minorities value a college education compared with whites. a greater percentage of minorities think it's very pompt. then the last group, independents. i bring this up because our pollsters point out how inskrutable independents are as a group. you can see they're somewhat below the average for all adults. let's move on. we ask another question, what would you recommend for your child. we broke this down into three groups. what would all adults say, what would you say if awed postgraduate degree? would you recommend trade school? you can see those of us with a college degree are more in favor of that although not a majority. how about a two-year degree? a little less than trade school interesting enough. and thin here is the four-year degree and you can see how it's

different. a all adults right there. in that 50% bracket. this is something we need to track over time. especially given rising debt, rising university costs, whether or not these numbers change and how they change and what americans think about the value of a four-year degree. we'll be back at 1:30 with the results on what americans think about their jobs. are they satisfied? what about their bosses and their salaries? you can read this all online, cnbc.com has a bunch of stories on this and the full results. >> it's important. if you look at the unemployment figures even as bad as they were throughout the recession, there was always this wide gap between people with a college degree versus without. i think that figure, steve, the latest is still below 4% the you be employment rate for college grads. >> that's right. they experienced a jump but nowhere near people without a college degree. here is the question. whether or not you can get there in a different way.

this is a trade school or a two-year degree or a vocational degree, is it a way to get to a certain job security without the cost and the debt? what we know is more and more americans are concerned about the debt that's piled up with the university education and kids getting out of school trying to bear all that set out there. >> yeah. maybe universities get the message and try to rein in some of their -- the prices. it's just unbelievable. >> this comes because of the immigration focus in congress, they're not going to act in time probably to offset the doubling student loan rates next week so they have to do it retroactively. >> great numbers as always, steve. >> thanks. >> steve liesman at quarte headquarters. nik wallenda crossed the grand canyon. it was a massive hit for the discovery channel. where does that network go from here? we'll ask the founder, john hendricks. first check out discovery's new ad for this year's edition of "shark week." >> we're moments away from

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discovery communications has 162 networks around the world with highly rated tv events such as "shark week" and this weekend's sky wire live with nik wallenda crossing the grand con on. joining us is john hendricks, the founder of discovery. he's just written his memoir "a curious discovery."

it's interesting you started this in the early '80s. you loved documentaries and educational programming and that's what formed the basis of discovery. now when i turn on discovery, it's extraordinary success but it's honey boo boo and property wars. does it disappoint you in some ways the way tastes have changed. >> we're a very different company now. we program over a portfolio. discovery channel and science channel are consistent with the core of what we've always done. with tlc which i like to think of as the life channel, we portray different lifestyles like a honey booboo, like the amish. over the portfolio, if people are interested in crime, we have i.d., investigation discovery. i think to be a global force far into the future as a media company, we have to go beyond the bounds of just pure documentary entertainment. >> is there still an appetite

for documentaries? you refer to 1975 hbo was starting and the fcc had problems with this infringing on the rights of the broadcast networks to do news. what a world it was then. >> we're convinced about 25% of the viewers out there are information seekers, and they turn to television for knowledge and information. cnbc is programming for them right now. we're in that area, too. 75% of the viewers turn to television or amusement and entertainment. as discovery grows around the world, you will see us taking an interest for example in euro sport for sports. the sbs acquisition. we will dive into more than just documentary entertainment as we continue to grow the asset around the world. >> it's interesting you mention euro sport because a lot of people say the only future for television is live events and that's why sports are becoming so valuable. do you share that view? >> well, i do think news and sports are very important to the cable bundle, and it's just

difficult to get sports events and live streaming news at the broadband speeds we have today. so we think there's a stickiness to the cable bundle that has news and has sports. so that's true. but also quality entertainment. so i think of this as almost a new golden age of cable television. even network that is compete with us like tnt and amc are producing better and better dramatic series that are shifting advertising. >> but golden age for content doesn't necessarily mean golden age for people watching sitting in front of that box the way they used to. so how do you stay relevant? >> if you look at some of the surveys, tv viewers are happier than ever because we have control, we can watch what we want when we have time to watch it because of the dvrs and the demand systems. it used to be we compromised our viewing 20 years ago. if there wasn't something good on at the moment we had to scroll through and compromise ourselves to the next best thing. now whatever we've programmed

our dvr or whatever the cable or multichannel delivery system has on, more content is available. we're happy to be in the content business owning our content and having content that has long time value. >> and around the world. >> what you have done internationally is maybe the great success story of the company in the past ten years. how much more runway is there given -- >> a lot. you mentioned, david zasloff. he's been a transformative event. after coming in in 2007, he's accelerated the pace of our international expansion. we can amortize the cost of an expensive production like north america. we can amortize the cost all around the world. >> 13 million people watched that guy walk across -- >> i'm finally breathing again. i didn't think i could hold my breath for 23 minutes.

that was something. >> that is big risk as a network. what happened if something went wrong? >> well, after we investigated, we know there's risk to television. we aired the "challenger" event live, and that was scary for me. that was the next space shuttle launch in 1986. so there's risk in sports, racing, all of that. but we think with nik wallenda with his skill sets and he assured me personally that he could grab that wire and hang on, that we felt comfortable in airing it. and it was a lifetime with nik and we knew he was going to do it. >> ray kelly doesn't want to let minimum -- him walk -- what's up with that? >> that would be an inspirational event. we'll work on that. >> your story is an inspirational one as well. i enjoyed reading it.

the book by the way "curious discovery." john hendricks, thanks. >> great to see you this morning. it's tweet time. with all the drama over the fed recently, what would you call a soap opera about the latest fed chatter. you can tweet us @squawkstreet. it's been a green day for europe. we'll have details on the close when we come back. [ male announcer ] i've seen incredible things. otherworldly things. but there are some things i've never seen before. this ge jet engine can understand 5,000 data samples per second. which is good for business. because planes use less fuel, spend less time on the ground and more time in the air. suddenly, faraway places don't seem so...far away. ♪ summer event is here. now get the unmistakable thrill and the incredible rush of the mercedes-benz you've always wanted. ♪

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the european markets are closing now.

>> bell sounding across europe. simon hobbs is back to tell us what we've seen today. simon? >> the important thing is to check the figures you see, the degree of the bounce back in europe today. the dow here is up a half of 1%. much bigger gains in europe. a very different central bank. mario draghi has said today the ecb's policy stance is accommodative, the exit is distant, they stand ready to act again with further action. looser monetary policy from the ecb in contrast to the fed if needed and the stock market in europe, as you can see a rallying. let's get a perspective. let's get a context on where we've been over the last month and you will see that europe, the yellow line, has performed -- has performed much worse during that period than the dow jones industrial average on the fed concerns and what's been going on in china. the european banks have led the rally, but it's a very broad-based rally. 95% of the stock 600 are higher.

you see the banks. that's partly because the peripheral bond market is also rallying today. draghi had something to do with that. the fact you have the italians denying they have a derivatives problem. i know rick santelli will talk about that in a moments. let's look at the rates. there you go. the recent runup we've had on spanish and italian rates. italy is arguably breaking to the upside. more on that from rick in a moment. i want to show you the uk builders which have also gained. something is going on in the uk. the finance minister, george osborne, has just announced entitlement reform of sorts to save 8.5% from the uk budget. a lot of that money, even greater amount of money, will go into infrastructure spending. an announcement on that will be made tomorrow but a lot of pain in the uk. $18 billion of cuts now from current expenditure with the promise of $150 billion of infrastructure spending to be

announced tomorrow that they will finance in a very different way. back to you. >> quite a day on all frobts. thanks so much. let's get a check on energy, too and commodities. bertha coombs at the nymex. hey, bertha. >> how are you, carl? we have right now the dollar moving near the highs of the session, and that is pressuring commodities overall. the inventory numbers as far as oil and products were concerned, fairly bearish. we saw a flat number, haven't seen one of those in a while in terms of crude stockpiles. the expectation had been for a decline. and refiners produced an awful lot of gasoline. they may be stockpiling ahead of next week's july 4th holiday but folks aren't biting. we saw a big build in terms of gasoline stockpiles, more than double than what we saw from api which was bearish last night. so overall you do have negative kind of vibe going on in the oil complex. switching over to metals, as i mentioned, the dollar here

moving towards the highs of the session. we've got oil moving -- gold rather moving back down towards the low. gold trading here below $1,250 an ounce for the first time since august 2010. that strong dollar basically putting pressure on metals across the board after that gdp reading. back to you. >> all right, bertha. thanks for that. let's get to josh lipton. >> off our session highs but still well in the green right here. talking to guys down here today, what they'll say is really it's about central bankers, policymakers around the world. they're very busy talking today. chinese policymakers easing worries about a credit crunch in their economy. you have ecb president mario draghi saying policy will stay accommodative in the foreseeable future. the blue chips racking up another 88 points right now. if you look at the s&p 500 you will see a more defensive tone. it's health care, staples, utilities. more risk-off tone in your

benchmark gauge right now. want to touch on gold. it's fallen today. if you look at the gd x, it hit its low nest 4 1/2 years. down 50% in just the past 12 months. some of the miners on the radar. guys back to you. >> thanks so much, josh. let's get to rick santelli in chicago with more on the markets. hey, rick. >> hi, carl. yes, i'd like to welcome andy brenner. morning, andy. >> thanks, rick. how are you? >> absolutely. good. listen, i have three areas we want to hit each one and move on. first area i want to hit, i look at interest rates, i look at stocks, i listen to the fed. who has it right and what are the credit markets going to pay the most attention to between now, for example, and the july employment report first friday? >> i think what you're going to see is a lot of people backing away from what bernanke outlaid

last week. "the wall street journal" said it today. they said the marks misjudged bernanke. we think bernanke misjudged the markets. they're very much overleveraged. when they think the punch bowl is going to be taken away, they start to go to for the exits at once. go through the whole gamut. everything was for sale. i think they're going to look and see what the fed governorers are going to do. it may not be the answer you want to hear but i think we'll be in a 2.25%, 2.75% range ten-years for the next three to four weeks. >> excellent. second point, dodd/frank largely unwritten yet i'm hearing so much clamor that the types of players that used to step in the market and make markets in high yield, treasuries, poof, they're gone in anticipate of issues like the volcker rule. your thoughts? >> this is a disaster. it's much mo worse than the volcker rule.

you have the basel accords. you have the regulators want to charge banks double for each of their assets. you know, so why is a bank doing going to step in and buy treasuries, agencies, make marke markets, run a book if they're going to be charged double? >> mario draghi in europe. i'm not going to be polite about this. i have gotten e-mails for years that mario draghi and many of the academic kind of derivative brains of europe have not only caused and created many of these der riff at thises, they've done so in a way that's coming back to haunt them. what are your thoughts on that and mario draghi's constant comments about the bazooka which many believe has not yet been manufactured? >> granted, the bazooka has not yet been manufactured but today not only did you have draghi but other ecb members. one of the bundesbank heads said they were going to be

accommodative. to add more, angela merkel came out and said germany has to do more to promote growth throughout europe. so i think we're going to be okay for a little bit. as far as derivatives in any kind of games, we're very much negative on that. however, if you're referring to the ft article today, we still reserve the right to see if they're just taking a hedge position and saying they lost billions on one side without compensating the fact they made blls on the other. i don't think the yir is out on that. if it is similar to what they did in greece, we have a real problem. >> thanks, andy. thanks for your time as always. carl and the gang, back to you. >> all right. thank you, rick. jpmorgan chairman and ceo jamie dimon reacting to today's decision to strike down the defense of marriage act. that's coming up. plus, the future of the keystone pipeline. president obama saying he'll kill the project if it adds any greenhouse gas emissions. what does it mean for the future of the keystone and, in fact, for prices at the pump? we'll ask the ceo of gulf oil

joe petpetrowski when we come b. e james and her. so as their financial advisor, i'm helping them look at their complete financial picture -- even the money they've invested elsewhere -- to create a plan that can help weather all kinds of markets. because that's how they're getting ready, for all the things they want to do. [ female announcer ] when people talk, great things can happen. so start a conversation with an advisor who's fully invested in you. wells fargo advisors. together we'll go far. mine was earned in djibouti, africa. 2004.

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coming up next on "the half," make money in a volatile market. we have all of your winning strategies. southwest airlines gets grounded by morgan stanley after a big run for the stock. not all of our traders agree though and that's why we're

going to debate it. plus, bargain shopping for stocks with the man considered to be the dean of valuation. carl, we'll see you in about 15 minutes. >> sounds good, scott. thanks so much. as you may have heard by now, the supreme court voting to strike down the defense of marriage act earlier this morning. now we have some of wall street's reactions for you. here is what jpmorgan chase's ceo jamie dimon had to say. we have long standing policies and practices in place to provide our lgbt and all of our employees with equal benefits, respect, and fair treatment. this is good for our company and clients, but more importantly, it's the right thing to go. we believe the rights of all people are important and must be protected. then the president just released a statement calling the decision a victory, kel, he called the defense of marriage act discrimination enshrined by law and the country is better off with this decision from scotus. >> simon mentioned the support

wall street had for this act to some extent. interesting to see those statements come out. now to the ongoing controversy over the keystone xl pipeline. >> yesterday president obama saying construction of the pipeline should not be approved if it will increase greenhouse gas emissions. let's get some insight from joe petrowski, ceo of gulf oil. thank you for joining us. >> thank you for having me. >> can you comment, first of all, on this latest decision to chi the keystone to greenhouse gas emissions and where you think that leaves the likely -- the ability for this project to move forward? >> well, that's distressing comment. that should not be the metric. this is, to use an analogy that president obama likes in basketball, the shell gas revolution for the united states is a slam dunk or a layup. if your metric is it's going to increase any greenhouse gases, all manufacturing increases greenhouse gases.

any economic activity. a perfect greenhouse gas system is one where everybody is unemployed and there's no manufacturing. this is a tremendous opportunity to keep going a cheap source, domestic source of energy to fuel our economy. >> i think some would argue where we've gotten to a point where we need to prioritize things like the environment or like the impact that climate change, whatever you want to call it, is having. certainly the insurance industry has been roiled by this. at some point don't you have to say, yeah, we have to take this a little more seriously? >> i think everyone is taking it seriously. we're phasing out coal plants for natural gas plants. we have dropped our carbon emissions as low as it's been in 19 years, and our gdp, our dollars spent per gdp of output is the lowest it's been in a decade. so we're making efficiency standards. we're using less energy per dollar of output. it's just a question of how much

is enough? if the democratic party does not embrace natural gas, i mean, the only ones that could oppose natural gas are russian oligarchs, arab sheikhs -- >> it's a good point. let me just say -- sorry. finish the point. >> i said nobody is against the environment. we're all for the environment. it's just a question of having some balance in the program, and we're going to need more pipeline in this country one way or another just to fuel the natural gas plants that are going up and the increased usage for natural gas as a heating fuel. >> let me ask because it's an extremely important point and one i can't understand. why is the price of oil still at $97 a barrel when other inflation proxies, if you look at silver, which is also an industrial metal, have collapsed when frankly we're talking about

concerns about china and when there's never been so much supply purportedly when it comes to oil here in this country. why are we still at $98 a barrel? >> well, i would say two reasons. one, we haven't done the complete switch from oil to natural gas. that's going to take time as a transport fuel. it's going to take time as an electric fuel. i mean, we are in a business now of producing natural gas as a transport fuel and we're selling electricity because we anticipate much lower prices coming forward. the other reason is, and let's not delude ourselves. the pipeline already exists today. it's called rail, truck, and barge. we're moving natural gas to market. it's just costing more than it would be in a pipeline to the tune of $15 a barrel versus $1 a barrel. i think if we encourage the penetration of natural gas into the oil sector, there's no reason oil can't be $50 a barrel. and i think everybody would

rejoice over $50 a barrel except maybe vladimir putin and maybe some arab sheikhs. i think for the united states there would be nothing better than $50 oil. there might be some solar and wind interests who are against it, but even with solar and wind being a greater portion of our electric grid, we're going to need more natural gas as we know the wind doesn't always blow and you need natural gas in black start units to keep the system stable. >> all i know is there are plenty of people coming into the year saying we'd already be at $50 a barrel and that hasn't happened. but, joe, thanks again for your views on all this. joe petrowski, ceo of gulf oil. and this is where silicon alley gets its buzz. specialty coffee delivered straight to businesses all over new york city. we're going to tell you why it's such a big hit with startups when we come right back. (announcer) at scottrade, our clients trade and invest

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we've seen this kind of innovation. it's something where you can call and have soap deliver and now you can have coffee delivered. it's going up against the at home model that starbucks and green mountain have tried to do. >> one of the innovations we're most proud of is our coffee kegerator. it's right here. >> put it in a keg, it comes out on a tap. >> keggers at the office. >> it's coffee, so it's productive. >> how much of a threat is the cup, the cup that we talk about so much? >> the k-cup? >> actually, that's probably what most offices have, but we're priced competitive and the quality is far superior. we have been converting most of our offices used to use k-cups and now they use us. >> you're joining us on a week where starbucks raised some of their prices for the first time in about two years. i would assume you feel like you

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with it. >> is the plan long term to get bought by a larger distributor? by a name brand coffee retailer we might know? >> we're growing so quickly and we're so young that every two months i feel like we see new opportunities. we just launched our keg a month and a half ago. it's already dramatically changed our business. so at this point we're not looking to get sold. we're looking to grow and keep the quality high and look for our geographies. >> how profitable are you? who looks after the books? >> i look after the books. we are profitable. we are operating on a profitable level which is also exciting and little different. >> we're growing 15% month over month for the last two years. >> in terms of revenue. >> revenue. >> your parents must be so proud. >> our mom is definitely proud. >> and heavily caffeinated i'm sure. >> actually she drinks tea. >> which is coming. >> thanks so much. >> thank you. >> good to see all of you. >> when we come back, be sure to answer today's squawk on the tweet question. with so much drama over the fed recently, what would you call a soap opera about the fed

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squawk on the tweet. there's a lot of drama at the fed. we're party to it every single day. we asked you what would you call a soap opera about the latest fed chatter? kurt writes, one flew into the cuckoos nest. dennis tweets, the guiding light. carlos tweets, taper hospital. mine was the young and the stress test. >> not bad. i'm not witty enough. speaking of taper hospital, one place we've seen headed for the emergency room, precious metals and silver in particular down 34% this month. 23% for gold, and that would be their worst run in decades. pretty much since post-war records began. stocks looking okay this morning. if you were looking for annen flati -- an inflation protection, that was not the place to be. >> finally, we're quarter end. if you want break even on the s&p, it has to be 1569.

we're above those levels today but not by a lot of cushion. we'll see what the next couple days bring. >> keep an eye on that. >> that does it for us today. >> we're on the street. >> we're well caffeinated. let's get back to headquarters, scott wapner and "the halftime." thanks very much. welcome to the halftime show. four hours to go until the close. let's take you to the wall and show you where we stand on this day on the street. we're up 75 on the dow. s&p and nasdaq nicely positive as well. here is what we're following on "half." value plays. the dean of valuation on which parts of the market look too good to pass up. and where apple shares go. where is the love? southwest airlines shares up 30% this year but just got grounded by morgan stanley. our traders debate that call and the stock's next move. our top story, buy or beware? stocks are up once again following the