about a lot of stocks. >> well, it is time, becky, to use the assets, and they are maybe becoming an ibm, which is basically an enterprise and a razor blade company that is a tremendous cash flow generators, and that is where you will get it. apple will have a 60 billion buyback and that is the largest buyback in history. >> thank you, sir. join us tomorrow for. "squawk on the street" begins right now. good tuesday morning and welcome to "squawk on the street," i'm carl quintanilla and james cramer and david faber on the new york stock exchange, and futures are keeping the cards close to the vest after the 65-point gain on the dow. we are awaiting new york fed president dudley speaking at 12:30, and the nikkei with a pop overnight, and the yen hitting 100 to the dollar for the first time since june 5th. and unemployment, the record is

revised up 0.10 to 12.2%. a road map. auto sales optimisticed by a weak employment chatter. and pimco posting the weakest month since 2008. and the xbox's gaming ceo jumps ship for zynga to play retooling with friends. >> and the proposed too big to fail banking regulations are to release headlines in a moment. and dunkin' brands are initiated with a buy over at lizzard. >> a kickoff with the markets as the futures are pointing to a slower open as the futures running down, and pimco, the world's largest bond fun falling in june and logging the weakest monthly performance since 2008. and the new york fed president bill dudley is to speak today at 12:30, and we are waiting for

reports from ford and gm and chrysler is out. but broadly, jim, people are saying until we get over to the 50-day trading average, it could be a trader's summer. >> yes, that could be a case, carl, but i'm not expecting big things from the earnings, because we have a disputed global picture, and we is what i most worry about. these ceos will give you a forecast and if i were a ceo i would say, we had a dramatic move of interest rates in the end of the quarter, and we don't know what the effect is going to be. i listen ed ed to the ceo of hu union saying that we are in the early innings of housing, but it does not feel real to me or ring true to me, because the interest rate spike is too dramatic. >> and that is when it comes to housing or when you are talk more broadly? >> i mean, how -- >> it is not clear to me that the interest rate spike is going to hurt the earnings in other areas? >> well, ford, my charitable

trust owns it, but mew lulally we need a little pause, and a little pause is not something that you want to hear in the elevated market. we had such a rush back from the lows that i think that we can trade around as we get more information. remember, i have a little more positive view of europe than a lot of people. the chinese articles are horrendous, all right. i don't think that our kun tre is doing poorly. all of that kind of cuts towards the market doing nothing. >> yeah. you mentioned that it is hard to know the impact of rates will be, and you can imagine that a lot of the ceos are saying, you know what, we will see some foreex headwinds and procter & gamble and some of the large multinationals. >> yes, the companies, the stocks are still high. i don't see a permanent decline in the general mills, and they rkt aing well, but the kellogg's are acting better than i

thought, because people realized that we are not going the to 3, but not back to 2 is the perception. that is not something that you feel good about given the fact that we don't have the big hiring. >> right. we don't. and i would argue that there has not been a great level of ebbulence and freeing up cash flow that might not have ever been there, and the productivity increases that we continue to talk about. but it has not felt like a long time for the animal spirits for those to say, hire more people, and open up and invest. >> we have paychecks on tonight. they have hundreds of thousands of clients and one of tto of th

about paychecks is that they have not hired and no new small businesses. that is who hires people. you have an onyx that goes up and noodles, an ipo that goes up a great deal, and then you don't have the hiring that you would like to see. again, this is not cut for a big incline. >> and meanwhile, marty in the journal saying that the fed should taper now before the market dislocations are worse, and arguing to stick around at the current rate is not going to do as much good as it has. >> can't he wait for this limited time of the big run. when i read that faux urgency as far as i'm concerned and now we have to do it. i mean, we sauna thailand could collapse and indonesia could collapse and can we give people time to pull out of the markets

slowly and take a look at the bond funds and i misspoke yesterday because i said when they get the statements and a lot of the people are online and my statement is online and a lot of people say, holy cow, that is bad. >> i looked this weekend myself. you look at various things, and you realize, wait, i do own the total return fund from pimco. >> and do you go buy the burberry coat? they announced good news last night. >> and more no tto the point, du pull out or just the total return which is on an and yuleized basis over five years, and you look at the emerging markets where you brought them up, and significant fund flows out now, and there is positive $10 billion for the year, and that is what you wonder about, and selling to get selling is selling which is a key consideration for people. >> anything where you say, i don't want to lose anymore which is what he would do, and feltson

is saying that he is not worried about the stock market, good. he is a senior statesman and i had him as a teacher 40 years ago, and he has been around is what i am saying, but again, i think that bernanke did not expect what occurred, and they spent a lot of time trying to pull back and if he goes back to start doing it, where is their credibility? i mean, the credibility would be nil in my eyes. >> the chinese central bank. >> holy cow. what is going on there? >> and the al teternative is to search for the next onyx? >> that what i said last night on "mad money" maybe more onyxes than you think and more companies doing better than you think, but you have to, and look, i had boeing. i had starbucks, dupont, okay. macy's. ford. all of them think that they are doing, and ford with the little pitch, but memorial day was big for them, and they say that this level of growth, this level of

the world, we are going to do well. why would i want to sell those stocks or why would i want to buy them, and that is why carl is correct in suggesting to mark some time. >> that is boring. >> i am going to take a little time. get out of here. >> you don't mind, right. knot going on. >> you take some time to montauk, and i will figure out the beach to go to. and your beach is small enough people would say, that is where he is. i will go find him. >> but you know, it is entirely possible. i remember taking weeks off in the hedge fund, and why did i do it? it is because i wanted to overtrade. i have the equivalent of "monsters u" and i'm the only person who apparently didn't see it. >> well, my kids did. >> i am the only guy. they said it was great and a heck of a lot better than the "lone ranger" reviews. one star. they called it heaven's gate as

a family role. >> and disney on the role with eisner getting another year. >> and now the former head of microsoft's xbox business, and he still controls 61% of the voting stake in zynga will stay on as the chairman and the product manager, and he will replace mark pincus officially next monday. z zynga, time to buy, jim? >> yes. he is the real deal. they have a lot of cash, and i believe you can reinvent the company with cash. i think about groupon, and when andrew mason went on the way, and he is now in the music business or something. >> and we will hear later the music. >> i always loved the man. i never cared for him in terms

of a business person, but in terms of the love for the man unparalleled, but pincus was a divisive maker and this man is a peacemaker, and not the cult variety. >> you change ceos and you think that suddenly those people will want to play again. >> i keep thinking of ea, electronic arts and starting to lose, and they made a comeback. i know that john dell moved on, but you can make a lot of capital if they make it happen. >> well, they have to make it happen, because what is going on right now is not working. >> well, buy a company that is not doing well in the gaming business and cotech didn't do that well, but he paid himself a lot of money. >> and he has been a friend and profound influence on me and the interactive world.

>> steven spielberg. >> right. katzenberg, and these guys don't dish out compliments. they are not going to call and say, i like "squawk." >> well, they could like the show. >> well, that is a tough guy, and i keep saying that we had ted lionce, and he said that groupon is going to make it, and a lot of people were skeptical, and they had a high end, and i don't like the stock of groupon, but -- >> well, too early to declare victory. >> look. they did not go through the cash, and take the cash and have gigantic furnaces and shovel the wood in and a la the classic movie "the shield" when he took all of the armenian train money, it did not destroy the money, and it would have taken a long time. they should give it to hizenberg in "breaking bag" and give it to

them. >> we have kayla tausche in washington with details of breaking news. good morning, carl. the federal reserve board of governors is to vote on a capital restriction rules. this is in basal three rules that is to take place later in the summer. this is what is going to be discussed. the board is currently proposing that the banks increase the tier 1 capital to 6% from 4% which is an increase, and that means that the banks have to hold more money on the balance sheet in relation to the assets that i have, and especially the risky assets, and that increase does not apply to banks with less than $10 billion in assets which is what the fed decided to do to alleviate the pressure on the smaller banks.

and dan turrillo says there is a leverage inkrecrease in the wor and that will respond to the u.s. banks that operate globally on a large scale. the new proposals do increase the risk associated with some assets and that is of course, the nature of some of the assets and how risky they are, and the bank's expose sure to private equity and hedge fund assets will increase as compared to loans more than 90 days past due which is treated 150% of the value, and previously, they were rated at 100% of the value. now, the one thing that people are going to be focusing on here is the treatment of mortgages. in previous appropriations, the mortgages risks were tied to loan to value, and the amount of a down payment that a borrower would put down on the mortgage and the fed is saying that it would hurt small banks, too, because that is the business that the small banks are in, and even on a much smaller scale, and instead of basing it on loan

to value, it is based on the general capital rule. if it is the first mortgage, it is 50% risk weight for the bank and second mortgage or third mortgage or anything down on the credit scale is 100%. that is far less scrutiny given to the mortgages than some of the mortgage treatment in the past. as i said the meeting starts at 9:30, and the vote is around 11:00, and this is a key move by the fed in terms of regulating the bangs here. guys, becausek to you. >> thank you, kayla. guys, coming on a day when raymond james does upgrade jpmorgan. >> yes, downgrades there. and i find that there is a parallel universe in banking. washington says not enough capital, and not enough capital, and then when you are studying the banks, they have so much more capital than any other banks, and when you hear things like "the hearing is nye," and

that is an overstatement. well, i have been following the banks since 1982, and they are stronger than ever. >> and that is true, but in capital, but less profitability in terms of returns. they have been adjusting to the the world that has been coming for years and now is here, and the only thing nearer term is the gyrations of june, and the quarter from jefferies which is a may-ending quarter of fixed income commodities down 36% year over year, and it duds make me wonder about the near term earnings in the likes of morgan stanley or goldman sachs or citi, and what we will see because they have increased the number cuts. >> well, we have seen number bumps in wells fargo. >> and by the way, the range is going to 64, and jpmorgan will report earnings a week from friday, around the corner. >> well, it is interesting because jpmorgan en whi saw

this, this whole move, jpmorgan has fallen behind the regionals and the regional s wis with a b comeback and perhaps they can't reprice the cds in the way i'd like them to, but i don't want to sell the banks, because i believe they are a cleaner segment of the society. and now ticker outer wall, and we will talk to the ceo about the red sox business and what he hopes to do in buying a recycling business. and the starbucks orders are about to get more complicated and find out why you want cold foam to your vocabulary. the futures are up, and we will have more on the opening bell right here on "squawk on the street."

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some news in the coffee world. starbucks is said to be testing cold fountain drinks according to the journal today. a drink called the cold milk foam is being initiated and dun kin brands are initiated buy at lazard to bring it to more than 50,000 locations which is more than mcdonald's. >> and you are talking about the

west coast as being a move for them. >> that is a pretty good stock. >> it is the best performing restaurant ipo, and maybe tied with bloomman this year. >> well, i know that we had the noodles, and i did a positive piece about noodles last night, and the piece was not hot, but the piece was trying to explain how the stock could double and perfect green mountain corp said that you have to be careful, because the comp store sales are growing, but the restaurant group chuy's has been strong. this group has been very strong. when i see these kind of dunkin' getting the momentum, and, you know, by the way, krispy kreme had them on "mad money" and they are at a 52-week high, and there is a doughnut and coffee love affair and a bull market in these products. >> yeah. i think that the lazzard talks about the 100% no price model and the new products, and baskin

internationally is a big deal. i did not say that. >> yes, it is a better brand than i thought. dominos and the franchise model, so look at that stock. these companies always seem to be catching it here constantly, and i like them both. i think that starbucks, and my charitable trust sold it at a huge gain and we kick ourselves everyday, because it is one more leg in what is a multi-leg stool that howard schultz has put together. remarkable company. >> mocha and foam. that combination alone. >> and the pomegranate lemonade, and if they are rolling out great food products, don't get in the way of the juggernaut. >> and watch the kitchen complexity, because it has come to bite them in the back. >> yes, i should have asked him about, that kitchen complexity. >> and what stocks should we be watching ahead of the open? cramer has that with the "mad dash."

futures are weak, but we will speak to dudley and auto sales are strong. we will be back in a moment. is that we get to create our future. you get to take ownership of the choices you make. the person you become. i've been around long enough to recognize the people who are out there owning it. the ones getting involved and staying engaged. they're not sitting by as their life unfolds. and they're not afraid to question the path they're on. because the one question they never want to ask is "how did i end up here?" i started schwab for those people. people who want to take ownership of their investments, like they do in every other aspect of their lives.

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i get a little bit more than 5:30 before the opening bell. cramer talked about return funds and bond funds and merging market funds down in june, and the gold funds are ugly. let's talk gold. >> these are companies that we have regarded over multiple years for being the blue chips for gold. jefferies and that takes down

barekle and to a hold, and they say that are concerned about ken ross and some of the best miners in the world. so other than rand gold, what do you say about a company who has a product coming down in value. >> how much do they have? >> how much debt? >> yes. >> well, gar rick took the big write-off. these companies are not in trouble, but they remind me with the steel companies and the iron companies and just over time, they kind of lost their fizz. i have to tell you, david, i would not own a single one of these right now. >> all right. >> i think that you have to see where gold goes. i felt that gold was good for the trade, but it is the raw cost of finding the gold that has gone up so much, and the countries that you have to find it at, and the instability of those countries. >> right. so many associated costs with it, and the metal is plunging. not accustom ed to seeing in th

right corner down 24 or down 46. whoa! >> these are the blue chip miners. these are not the fly by -- and these are like barrick, have you ever met the management there? it is the best it is, and it is a tough time to be a gold miner. >> we will keep an eye on the gold stocks and 4:00 until the opening bell, and then another day of trading right here on "squawk on the street."

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♪ all on thinkorswim from td ameritrade. ♪ you are watching cnbc's "squawk on the street" this tuesday live from the financial capital of world. "opening bell" in a minute's time, and the dow gained some 65 points yesterday to kick off the third quarter. going to watch zynga, guys, clo closely as they hire the head of xbox to be the new ceo. and the journal says now that 95% of the matrix comp is in stocks. 95%. >> well, that makes me want to buy. remember that xbox was a huge success and 40 million subscribers and bomber, we tend to be myopic, and think of them as windows, but you have to understand that xbox is a driver that gets this guy, and i'm

shocked that they got him. shocked. he's a great hire. >> he is a good hire it would seem to be, but time will tell. >> time will tell. >> the jury is still out. >> wow, time will tell. and we should call it the time will tell show. and how do you go with the time will tell. >> well, i use ait a lot. >> well, a smart guy. how about time will tell for dell. >> well, ask not for whom the bell tolls. >> and atp the of the screen, s&p 500, more mixed session than we had yesterday. at the big board mol mulina hea care, and over at the nasdaq is outerwall celebrating the new name. and we will talk to the ceo coming up. and auto sales are key. some of the annual estimates on the rate would put us to the best level since before the

recession in '07 or so. >> how about the feel good story about the exporting the cars. and some of the numbers were traumatic. >> how about that honda is exporting cars from the u.s.? >> i felt great about that story, and we have cars built in mexico, because of nafta and you can be pro or against nafta, but it has hurt us, and the koreans -- >> and it has helped us, too, nafta. >> well, on the auto side, and the koreans are not open on their market, and the president is trying, but in terms of the maybe we make them better than others. did you see the costs of making them here versus other countries? >> $38/hour is where the pay has gone down to. >> that is an average, because some guys get $22. >> but it is making us more competitive in auto industry versus germany, japan. >> and ford is still hiring. remember the f-series is remarkable success and the numbers back to 2006.

so there is a lot of good news in autos, and there is a lot of good news in housing, but again, you say, you know what, maybe the stocks reflect all of the good news, versus going right back to biotechs where the people just can't get enough. the biotechs. >> you know who is putting together a good string of good days, apple. tacking on another 1.50 today. >> well, i am glad you mentioned it, because it does feel very much as if apple got, and you did not want to show that you owned apple at the end of the quarter and suddenly, you say, i can circle back and the risk is defined with the dividend and i keep thinking about how we are coming in, and the and is who said that we are are going to be below consensus, and the whisper of the number that people are going to be talking about is so low that unless they just really get crushed, they can beat the number. because you lower, lower, lower

it, and david garst was talking about the son, and earlier on "squawk" prepped the parents that he would get a c in business school, and he comes home with a b and everybody is thrilled. three months ago they say if he comes home with less than an a, we will have to rethink. maybe if it is apple, you have everybody coming with a c and they come with the b, yeah! >> or the reverse window dressing, because people were selling it to end the quarter and now buying it back? >> it is funny, because people don't believe this stuff happening, but it does happen. >> and human beings. >> it seems silly, but it does. >> it does happen. and you know, there are a lot of the mechanics to the stock market that don't make sense, but that is one of the things that does happen. >> one thing that does happen is phil lebeau covering auto sales. phil? >> slightly better numbers for june and increase of 13.4%, and compared to the estimate of edmunds of 11.7%, but the big number, and we saw from chrysler

and gm that we will see in a half hour has to do with the trucks. the f-series sales in the month of june are up 24% and the best june for f-series sales since 2005. and big month for ford when it comes to trucks and a big month of all in inkrecrease of 13.4%,d carl, you were remarking earlier that we could see the best sales since before the recession, and some are talking about the sales rate of the month of june hitting 15.9 and perhaps 16 million. we will find the full number on later today. guys, back to you. >> 16 would get your attention? >> oh, yes. look one place that is really looking, and i felt that allan mew lally when he was on "mad money" and he said, europe, don't worry about the numbers, because phil is using numbers that when we were in a boom t e

time. i was in the super duty this weekend, and the super duty that i bought three years ago, king of the highway, my friend. king! don't get in front of my super duty. >> trust me. >> i do, believe me. i don't want to get in it with you, either. >> no, because i can't drive for -- why? w wow. look. i had a tesla and ai got people out of my way. >> and a portion of the size of the gm report. and 25%. >> yes, and phil lebeau is the best there is. >> the guy can do no wrong, and i cannot see it happen. >> you fill it up in the morning with gasoline, and away he goes. >> he is high octane guy. >> yes, fuel mileage. >> and we will get gm at 10:00 a.m. in the meantime, we have not mentioned capital one, the $1 billion buyback. >> geez, that company reported a not great quarter, and subsequently people think that they are in the sweet -- but when you look at the stock, that is one of the weakest quarters and that company has come back

strong. credit cards, and remember they do a little better with the numbers coming with the treasuries and capital one is a tra transformation, and when that number came out, i didn't think that anybody had faith in them, and it has been nothing but net since then. and people should recognize a big credit card but they have assets. >> banking assets, and a good banking presence. >> it had been, i felt, a target of elizabeth warren, because she didn't like the credit card business, but they haven't been hurt from it. the critics. capital one looks good. >> true enough. >> let's look at josh lipton and see what he is watching on the floor. >> carl, on this tuesday, the global markets are looking mixed. let's start in china and fears of a liquidity squeeze, and the rates continue to squeeze, and up for three straight sessions. in japan, the nikkei is up for four straight sessions, and tacking on 10% in the four days,

and that is the best four-day gain since april 8th, and in europe, relatively light newsday and the strategists are pointing out just as the s&p 500 failed at the 50-day, and so did the european markets. here in the u.s., more fed speak, and new york fed president bill dudley will speak at 12:30. he could be supportive of bonds and stocks. and i was just on the phone with rod seymour suggesting that the risk window remains open for stocks, and support, he says is 15, 16 and the resistance is 15.22 which is the 15-day moving average. back to you. >> thank you, josh. >> that correlates with what i heard separately. >> this is the rock and the hard place. and shifting to the dollar, and go to rick santelli from the cme

group. good morning, rick. >> good morning, jim. and of course, a half day for all practical purposes, and if you are looking for the full sessions of all markets and futures and fixed equities, this is the last one even though the equities will have a normal scheduling friday which is important and means a lot. we saw unemployment in europe moving higher rather than lower and miscalculations based on france and how it figured the eurozone on unemployment rate, and that is not looked at in a favorable fashion, but a huge fashion. and if you can look back, rising back to the 250 level, but for you people out there who like to wager on the football games and hockey, it is the over/under. look at the two-day chart. one from over, and now a pivot and now under and key to pay attention to the zone. the over/under in the bund is

1.7. if you look at the jgbs, we don't want to get ahead of the game, but it is flirting with the 90 basis point level, and you have to pay attention, because we are relocking and loading on what was perceived as the old kerry trade, and interest rate figured prominently. and now the foreign exchange, the dollar is having a big day, because of the weakness of the euro, and to aforesaid mentioned unemployment data. whether it is dollar or euro yen, 100 on one and 130 on the other, and they are making a comeback and the trades can get some horsepower. back to you, carl. >> thank you so much, rick. rick santelli. >> well, i'm fascinated by the situation at dell, and i wanted to talk a little bit more about it in spite of the fact that we were joined in the closing bell by carl icahn who is arguing for recapitalization plan of some significance of which he got the

financing line up yesterday, and we report and he confirmed in the interview, but what is the lingering question is what is going to happen on the july 18th vote? and does mr. icahn want to truly own this ailing computer company or looking for a significant bump in price? to that end i will tell you that mr. icahn and michael dell had dinner. they will not comment on it, but in the course of to dinner, they were discussing what is the price that you would accept, carl, for me to make sure that i can win the july 18 vote, and that is more important, because according to the many sources that i'm talking to, it is highly doubtful as of now that dell is going to win the july 18th vote. as i have said that it is what the institutional resources assesses in terms of the vote,

and from what i am hearing of the meetings taking place with dell, and the iss, it seems that the iss is going for icahn, and therefore they won't win the vote conceivably, so michael dell, do you raise? do you have to come up to raise the bid for dell? and if so, what is the price to get mr. icahn to sign the voting answer? i don't know the answer, but when i asked carl icahn about the dinner yesterday, this is what he had to say. >> carl, i heard you had dinner with dell a couple of weeks ago? >> well, we are not supposed to talk about that, but i don't know where you heard it, but you did not hear it from me. i am not going to talk about that and i'm not going to say yes or no, because i don't know where you heard it from. >> i didn't hear it from you, but i did hear that you had d dinner with him which is obviously an opportunity for the two of you the discuss what your price is what his thoughts are about what he is going to do for

the company, you are not going to deny that you had dinner with him, are you? >> you know, it is like the old saying, that i won't say yes for the. ? these are the times i wish that we had him live instead of the telephone. >> he had dinner with him. >> of course. >> what kind of oplaplace? >> i don't know, but they had dinner. this is the crunch time, and we will hear next week from iss, and i don't want the prejudge it, but at this point, if you are michael dell and looking to lose the vote on july 18th, you have to think, am i willing to raise and where could i go in terms of raising the price where i could guarantee to get the vote or do i want to risk losing my company. >> it is incredible david, this guy who built this company is going to have the raise the price until somebody comes in, and then tracing the vote out, i would trace out the offer. >> and the numbers can be compelling even though the special committee argues there

is liquidity gap in there if you can deliver a let's call it 9 a share, and then a stub of 250 a share. >> that is a buy. selling three times earnings is crazy. >> yes. >> counting down, but this drama is fascinating, and we will see if there is any information when iss comes out. >> never go to dinner with anybody. faber has every waiter on the take. >> that iss is great. >> i won't comment. kelly is here. what are you watching this tuesday morning? >> well, as much as you are fascinating with the markets, people want to know what happened. we have been talking about the weird signals coming out from the may 22nd, whether it is a speed up or slowing or square from the fed. that is going g ting to bring

topic here of what is happening with the prediction market and gdp. you cancan do the gdp bonds, an lot of people out there will be familiar in terms of this debate with the nominal dwdp. since may 22nd, again, some confusion to some extent in markets about whether what we have seen the fed spurring freakout in credit markets or equities or responding to improvement of conditions on the ground. trying to get the signal from the noise here would be much easier if if thethere were a pce look to saying that the market participants see the growth and increasing over to the longer term or decreasing? a couple of ways to do that is that you can, again, set up futures in the gdp linked bond or do a prediction market. one of the guys calling for this is noting that if it is done right, the markets, themselves could more smoothly guide the

taper and there wouldn't be any friction back and forth between what one group is thinking and another at the fmyc, and another fed notes that without this type of thing in place, we are still flying blind. that certainly seems to be the case thinking about the market activity over to the last six week weeks. and guys, the jury is whether this is the right thing for the fed to target gdp instead of inflation, and the tacit market. and there is a strong case for being set up a market to get this information out there, and then we would know with clarity, are we talking about the growth or not. >> well, to some extent. >> helping people know what people are thinking. >> and better than what finesfelt came out. >> it is better when he is in the journal, and jim, you didn't like the piece? >> well, what you said is more

formative and gun to the head -- and gun to the head may not be the right thing. >> and his response would be if there is a supply shock here happening to the economy, it is not something that you will necessarily as the fed respond to, but it would help to have clarify from the market itself. >> i could not agree more. >> see you in a few minutes. when we come back, we are going to talk to the vp of general millmotors, and that ma is out in about 15 minutes. [ kitt ] you know what's impressive?

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that is a life shot of fed chair bernanke, and in the fed meeting today, kayla tausche brought you the headlines and we will take a deeper dive into those later on. right now over to sharon epperson with the news at the mynex. >> well, after the gold that we have seen, not a lot of metals momentum on the session, but we are hearing from the ubs that the super cycle is over and they are advising the clients to gear away from the raw materials and particularly the gold prices as the possibility of tapering of qe stands before us. instead, go for the equities and underweighting the industrial metals. meanwhile, a lot of the traders are chatting about the differential between two global benchmarks for crude oil and the difference of the prices of wti

and regular crude has fallen in the day, and that has caused goldman sachs to cut one of the main trades of the year. they have come off of the trade which is to be long wti and short brent. thank you. back to you. >> thank you, sharon. and you may have heard the ousted ceo andrew mason has a new inspirational album hitting the stores and it is called "hardly working "and available on itunes and spottify, and here is a listen to his new tune. ♪ i look at the road ahead >> one of the viewers said for those who find nickelback too edgy, it is for you, and it duds bring us to the squawk on the tweet, what should the title of the hidden track on mason's album be called? tweet us on the "squawk on the street," and we will get to the answers in a morning.

he has collaborated with r.e.m., ho hootie and the blow fish, and some studio guys in the sound station, and so many people. >> is he autobiographical group of lyrics? >> well, this may be a better profession for him than ceo. >> look. people have to find their dream for. if it is not being the head of aipo, then do something else. >> it is hard to begrudge this. >> i feel good about the music therapy initiative that he is on. it can't hurt anyone, can it? no. zynga is up over there on the new guy. >> and pincus could do an accompaniment, you know? >> get rid of pincus controlling 61% of the company. >> a groupus. >> incubus. >> well, you know, say

congratulations to everyone. everyone who cost everyone a fortune, and we wish you the best of luck. don't let the door hit you on the way back. >> still ahead, a merger on wall street, and night capital and getco officially completing the merger. we will talk to the ceo of knight capital, and that is a first here on cnbc. coming up, has this market left you with egg on your face? well, clean that mess up and listen to cramer, and the six stocks in 60 minutes. it'll keep you from cracking. "squawk on the street" will be right back. ait. ♪ summer's best event from cadillac. let summer try and pass you by. lease this all-new cadillac ats for around $299 per month or purchase for 0% apr

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you can see this morning with jim, six stocks in 60 seconds. start with kree. >> well, this is where goldman raises the target, and this is lightbulbs, and they are looking like they are from outer space. i like it. >> barkleys. >> well, they are like other people, and they hated the stock in the great run and looking for the moment to upgrade and they took it. >> credit suisse on sha near.

>> i like the limited partnership. >> outgoing gamestop? >> this stock is incredible. it keeps going up higher, and the xbox ps4 and all of the games that we play when we renot working. >> and di muir ra? >> well, they say it is too expensive, but you cannot stop the tractor supply. and this one, dell emc could miss the quarter, and what part of hardware is doing well? i don't know. carl icahn, genius, but business is bad. >> interesting. how about tonight? you have a big show tonight. >> i have paychecks tonight which is, you know, going to talk about the problem with the job creation, and then brian france, because nascar is clearly back. more promos, and more diverse group of people. i want to talk about whether the tesla should be in nascar. >> some of the hot cars outside

of the headquarters in engle cliffs. and which ones are going to t drive? >> well sh, i had one that i we 240 miles per hour, and that is because i was not driving, another person was. >> and straight ahead, we will get the sales number from jim, and talk to the vp of sales in a moment.

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welcome back to "squawk on the street." may manufacturing orders and the second quarter number up 2.1, and darn close the expectations, and last month gained 0.3 from the originally reported 1.0, and now standing at 1.3, and as a side bar, ias of new york with the lowest levels since '09 and not frequently watched, but this time around maybe something to pay attention to. carl. >> well, we got the gm numbers and they totaled up 6%, and they said they had good momentum heading into the second half, and the gmc sales up 4.5, and buick down 4.1, but they are putting the seasonally adjusted annual rate for june 15.8 which is above the 15.5 estimate. >> and we want to know what,

15.46, and 15.46 was the highest last november prior to now, and the question is if june tops it after ford and general motors report. >> yes, and the dow is up 45 and modest gains for the start of the second half. we will bring in jerry castellini, the president and the ceo of castle mark management, and jim from an investment group. jim, many saying before we break to the 50 average we are no no-man's-land, and how do you see the quarter shaping up? >> well, so far, if you wanted a correction, you best not have blinked, because monday was the low it seems to many us. we have the power drivers in front of us for the a better second half. you have to look at the names

that you were hoping to buy into correction, and probably missed. and you need to focus on them right now, because the summer is a lot more interesting on the upside than people generally see. >> interesting. ron, you agree? >> yes. there are interesting cross currents here and around the world. the u.s. has done a very important thing, and it has taken a while for investors to really appreciate it, and you will see it in the car sales numbers. the private sector has despite tax hikes and government sequestration, the spectrum is driving the market higher. what is happening in the market is not so much earnings driven move as valuation move. people are appreciating that the stocks are a more interesting asset class if we have a prolonged, long, albeit slow recovery, and most of the move in the first half was

valuation-driven, so i suspect the same in the second half. i think that outside of the u.s. the world is a little different. >> rod, you have summed up the bond investor's dilemma has heads you lose, and tails, you still lose, and you have remarked why equities are a good buy, but we should say it comes in 2.4% this morning coming in, so it is not as if the big move that we saw after may 22nd led us to a i here leg, because since then, we have come in below that? >> well, the things ebb and flow, but still, the bonds are a head you lose and tails you lose. the heads is that you can lose slowly which is that the yields can stay around these levels, and you know, you are not getting a coupon that really keeps pace with inflation. that is the slow lose, and the tail lose is that the economy

sustains momentum, and then the fed yields go to three. so the investors are waking up to the fact that ponds are dead money to enflation,inflation, a why it is overrunning the stock. >> to be fair, the market has beaten the peers and the argument from the south side is that multiple expansion has taken us this far, and that is fine, but the baton has to be passed from revenue growth, and top line growth, and the revenue growth, and the estimates are not that great. >> well, carl, that is one of the most compelling things about the market, and where we stand in the cycle. the estimates are low, because the companies don't give you enough to speck ulate on the upside. you can follow the macro trends in housing, autos, manufactured, pmi, and all of those things suggest that the revenues are

accelerating to the upside and the revenues if margin, don't be surprised if in the fourth quarter there is a double-digit year over year comparison earnings which pushes into 2014 into a violent way on the oupside. upside. that will give the investors a tailwind to look at the name, and maybe mmm has exceeded the valuation, but some places have sat out. some of the simple growth stocks have been quiet in the first half of the year, and the energy stocks with oil down $100, and the oil stocks are mediocre and have a lot further to go. so there is plenty of places to go to invest in today and feel like you have a valuation cover and the accelerated earnings, and i would get behind that before we see a higher move. >> rod and jerry, interesting time on a interesting day shaping up.

dow almost down 55. >> and 16.20 is the level and the s&p 500 sitting at here, and carl, it is the 50-day moving average that we have tested and failed in the last couple of trading sessions. over the sue herera for a quick market flash. hey, sue. >> hello, key. we are watching the shares of davida health care, because there is a proposal for the medicare to cut off the payments there. it is a steep cut, but 9.4% medicare cut to the two providers that are renal care which is kidney care, and that is met with a lot of the selling on the street, and 94% in comparison to other medicare cuts is a steep cut. they are basically hoping that the investors are that the proposal will pear back a little bit and a cut of 5% to 6%, and that would be the norm. sue, back to you.

>> yes, the surprise drop of medical costs is weighing on the general inflation, but gm with the auto sales numbers is better than the market expecting. phil lebeau has the report. >> well, we are seeing much more across the board with higher numbers. let's join the vp of sales for general motors kurl mcneit mcne. is there a possibility of to a run rate of 16 million vehicles in the month of june for the industry? >> well, it is possible, phil. right now we are in the 15.8 light range, but that would conceivably push the total over 16, absolutely. >> kurt, we are looking at the full-sized pickup sales up 29%, and we saw greater than 28% for ford and ram.

right now we are talking about the construction market moving back into the pickup market and how much do you say that we have leg legs to go with the pickup trucks? >> well, we are seeing increase in housing to your point, and the energy community through, you know, the middle part of america is also showing a lot of growth. we look at small business owners, and those owners that, you know, buy less trucks for the small businesses, and that was up 40%. as far as pickup sales that was up 70% for the small business owners and lot of good growth in that space. >> kurt mcneil, the vp of sales for general motors on a big day for general motors with the sales increasing 6.5%, but the early report is pickup trucks,

and we knew they would strong, but look for the big three to pick up the stock, because all of them are reporting gains of greater than 20% in june. >> yes. as you have tweeted 29 on gm, and 24 on the f-series of ford. amazing numbers. phil lebeau, thank you. >> 11 months later, knight is just completing the merger with gecko, and we will be joined by the ceo of knight. and now could the ex-cfo of one company turn around zynga? ed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price -- maybe even better than you expected. it's all part of our goal

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shares of zynga rallying again today ahead of news that microsoft's xbox business will take over the helm of the company. we have more on that. >> carl, the question is how much don matrick is going to do to change things at zynga looking at the of all challenges at the company. facebook through the pc browser where is a huge majority of the zynga base is, and web browser of facebook is in decline relatively speaking, and a lot of the audience that zynga needs to be engaged is moving to mobile. so why does zynga not follow them there?

well, it is trying. they had advantages going to the facebook, with early platform and feedback scale and loop, and it depended on the platform to keep going, but it is not, and zynga is not, and slashed 18% of the staff a few weeks ago, but a new ceo means a big turn around, right? well, not so fast. mark pincus is keeping the title of boss, and also the majority of the shareholder vote. it sounds like pincus believes that the overall vision of the company is correct, and he wants to stay involved in strategy and that makes mattrick's job seem like one of the hardest of all time. and the outlook is positive. needham's says that he will bring a morale boost, but it is

wondering how much he can break the china if he needs to. >> thank you, john ford for that update. and now after trading glitch at knight capital nearly cost the company, they completed a merger yesterday with getco company, and formalizing operations today. the new ceo of that company dan coleman is with us at post 9. dan, welcome. >> thank you. >> obvious question, why keep the knight name when it is the once whose reputation was affected by the glitch? >> well, we have changed it to kcg, because that name is important to so many clients in the u.s. >> but isn't the whole point to shore up the rep youtase, and you know, bring out a -- you are from to get co side of things, and why not take that name and

go forward? >> well, kgc will be a different name to recognize, and we want our clients to be comfortable with the firm. >> who are the clients? >> 650 broker dealer clients and couple of thousand institutionals. >> fair to describe you as one of the highest trading firms? >> no. i would say that the wholesale business at the former knight, kcg trades 1 in 3 retail trades in marketplace. it issing a regators of retail flow, and the traditional institutions. >> but retail flow is not about necessarily clients, when we talk about the high frequency trading, because it is the way in which the trades are executed, so when i as a retail guy place an order for a share of google today, the question is execution. where does that order go and how

is it placed? >> a lot of the order come to kcg and we will give it the best execution that the clients expect from us. over the past few years, these wholesale marketmakers added 320 million of value no the retail clients, and these relationships are deep. when something goes wrong like a facebook problem, the firms stand up for the clients, and it is an important business. >> what about something goes wrong as in knight losing $466 million last august because of a software glitch, and what assurances that something like that won't happen at a combined getco and knight? >> well, we would not have done it if we felt that. knight has done a lot to improve the reputations, but together as a new firm, we have heightened focus on the risk, and emergency risk group on call 24 hours day, and ultimately we have to be paranoid about the operation risk. >> but we hear about the stories

with frequency, whether it is facebook or knight or vatt, and it is not going away in terms of the technology changing? >> well, it is redefining, and it is ultimately good. decreases the spreads and makes it easier to spread. when we have a plane crash, we don't all go to buses, because we want to understand it and move on and that what we want to do with our firm. >> it sounds like trading trends which talk as we try to dissect the fed's next move is going to revive trading or bring in trading? >> that is a great question. i love the question. the treasury is a benchmark to all investing, and when the fed is buying 45 billion of treasuries every month, the benchmark price is not returning in two years or five years and when the fed steps back for the 10-year benchmark, investors

will be more comfortable in investing. you will have a move from very safe liquid assets like money market funds into riskier assets, but you will have a comfort for investors using the cash flow models. >> have we hit the peak earnings capacity for companies like yours if the volatility is down, and we know that the earnings are tracking the vix, and the vix has been muted? >> well, the volatility is important in any firm involved in the marketplace as are volumes. volatility is lower than it has been and so is the volume. we see opportunities to go after new products in new areas. for example, our firm will have the scale and the capabilities to go after products coming to is as a result of dodd frank.

>> such as? >> clearing corpse will be the balance sheet of the marketplace going forward and we can service clients based on the ability to execute and not the balance sheet. >> that sis a huge area, and we will watch it carefully, and dan, good luck. >> thank you very much. >> thank you for joining us. when we come back coin star officially changing the name to outerwall. we hope to get an explanation why and announcing a $350 million acquisition, and we will talk to the ceo in a first on cnbc interview when we come back. ♪ the world is changing faster than ever, creating new opportunities for those who stand ready to seize them. in a time when the biggest risk is playing it safe,

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self-service kiosk used to purcha purchase mobile phones and other devices. and joining us is the ceo of what was norm formerly known as star. let's get the name out of the way, and what is outerwall? >> well, it is the umbrella brand that encompasses what we have been doing for 22 years which is pushing out the walls of retail to bring great products and services to our customers and convert iing abou 12 square feet into the most profitable square feet for the partners. with the two great brands that we have red box and coin and now the acquisition of eco atm, it is a great way to know what we are doing, and build out the overall umbrella brand. >> we have done stories about the companies that buy back used mobile phones, and is eco atm an

addition ma the dvd and the red box have a shelf life? >> well, eco atm is a great market that we think will grow over 75 million of the mobile phones are sold, and less than 30% are return. so we can grow out the business. we look at the red sox business, we had over 43 million unique credit cards interact. when you match up with red box instant service teaming up with verizon and other partners it is a success overall. >> and would you consider of expanding into different models of operations? what is outerwall meant to emphasize here? >> outerwall is going to emphasize that we innovate and push the outer walls of brings

products and services to our customers. as we look at the overail business, we will continue the do that. the coin star business, you can load the paypal account with coins or have them drop from the coin machine. if you look at the red box business, instant, and streaming service on top of the kiosk and it allows us to do a um number of things. >> i am sorry to cut you off, by it is almost as if what you have is a giant interactive mobile phone the way that you are getting into the services, and competing with almost traditional atms. >> well, what we are doing is to look for great places where the customers are looking for products and services, and where they go each day, each week, each month and delivered in a way to bring value, and convenience and simplicity, and if you think of the red box service when you used to go to the brick and mortar stores, you would walk around the walls for

the latest release, and we have that content in an instant for the red box customers. we will have them in unique places where people are day in, day out. >> and the kiosks are using electronic artificial intelligence, and to activate the mobile device -- can you explain how the kiosk works? >> yes. you go up to the kiosk, and let it know what phone you have, and then you put the kiosk into a container, and then lit do a checks, electronic check and visual check to see if the phone is what you say it is, and what condition it is in. from then, it will determine the price it will pay you and then it will accept you and give you the cash. it is a simple process and one that we are very excited about, because the phone s as are purcd before we buy them through a reverse process, so we know how many fens and price point and

all that. >> and even with apple getting into the trade-in game, any concerns there? >> well, the turn-in market is a great market, and 175 million phones are purchased each year and less than 20% are turned in. most of them are in drawers or not turned in, so we think that there is a lt of room in the market to grow, and obviously, we think that our solution is one that will work well. it is great for the environment as well, because what it is doing is to recycling the phones and the ones that are not necessarily smartphones or highly desirable, we sell those phones to be recycled, and so that the component parts don't go into the landfills. >> we will leave it there. thank you, the ceo of outerwall and former ly coin star. i love it. the fed is meeting with the banking regulations, and we will talk about what ramifications that could have across the sect

sector. >> and protests continuing in egypt. we will get the details from the ground. "squawk on the street" is back in two. [ all ] fort benning, georgia in 1999. [ male announcer ] usaa auto insurance is often handed down from generation to generation. because it offers a superior level of protection and because usaa's commitment to serve military members, veterans, and their families is without equal. begin your legacy, get an auto insurance quote. usaa. we know what it means to serve. ♪ unh ♪ ♪ hey! ♪ ♪ let's go! ♪ [ male announcer ] you can choose to blend in. ♪ ♪ yeah! yeah! yeah! or you can choose to blend out. ♪ oh, yeah-eah! ♪ the all-new 2014 lexus is. it's your move.

qom back. will he or won't he or does he have to? that is the questions that michael dell is ponder and appears early to say that july 18th could be a difficult day for the found over dell and the 13.65 share leveraged buyout that he has agreed to with the company he founded and runs. this's because on that day

shareholders will vote either in favor or against and mr. dell, himself, not able to vote his shares, with the special committee having made that provision. he is up against a proposal from carl icahn, a recapitalization proposal for which mr. icahn has circled for a significant dividend to perhaps $8 or $9 to shareholders and leave a stub equity for which mr. icahn says will fetch more than $13.65 on the table. the iss meetings that took place last week according to sources close to dell did not go particularly well for dell. they don't believe that they will get the support of iss. we will see again, and if iss does not support the dell bid, the shareholder vote may well go against mr. dell, and hence, will he consider raising? that is a question i put to mr. icahn yesterday in an interview

on cnbc. >> there is no way that ki predict what michael dell will do. i don't know if he will or won't frankly, but we wanted to be involved in the company. we think that there is great potential in it. i think that there's been a lot of drum beating that the p.c. business is falling apart, and when people tell you that it is no good and bad, that is when you buy. the old graham/dodd flphilosoph. i don't think that the p.c. business is over, but it has been curtailed quite a bit, but pcs in offices are not going away. >> people tell you sit no good and bad, that is when you buy, and it has worked out extraordinarily well for mr. icahn, one of the great investors out there, and if he does succeed in getting more

from mr. dell, and agrees it to, you can argue that he is the only guy in position to get more money for all of the old shareholders a long way from the greenmail from 20 years ago. by the way, le hear live from mr. icahn delivering alpha the day before the big vote. i'm excited to see that and hear what he has to say. >> well, we have a few up peer, so they can't be dead yet. >> well, they have to be replaced. i like the keyboard, and it goes back to the blackberry issue as well. and now there is the fed going to speak about the new banking regulations. the fed estimates about 100 banks will need to raise 4.5 billion by 2019 to meet requirements. kayla tausche is in washington joining was the latest and jeff hart, bank analyst at sandler o'neal, and welcome to both of

you. kayla, can you give us a sense of the surprises coming out of the meeting? >> well, kelly, two basic tenets or themes that came out of the adjustments made by the proposal put in place last june, and update to this. first, easier on the small banks. they said in the last one that the small banks were excluded, but there are easier terms, and the small banks don't have to issue equity to meet the levels, because they said that we don't have access to the capital that the big banks have, and we have assets that will count toward that level that the big banks won't. that is a good sign here. the other surprise here is that the way that the regulation would treat mortgages. everyone expected the rules regarding mortgages are stricter, but they are looser. instead of the basing of the risk of the bank to loan to value or down payment or some measure of how secure or backed that loan is, and instead, they are going to be under a blanket

rule, first lean mortgages and what counts as 50%, and other lean mortgages will be 100%. that is more lenient than a lot of people were expecting. >> yef, you covjeff, you know, e big banks, and what did you see from the details? >> well, from the big bank perspective, i didn't see any problems, but positives. we were hoping to get some feedback on the simple risk ratio, and it is a 1,000-page document, but at this point, i have not seen a number thrown in for that which is what we are looking for. and you can opt in or out to include oci or the unrealized gains or loss on the portfolio on capital and the mortgage risk

ratings are good, but that is not to say that they could change, because the definition of qualifyied definition is making it better than expected. >> jeff a couple of the upgrades from other firms, and part of the bullish thesis is the notion that the release reserves might be released at a greater magnitude than some expect. would that change any of that in the coming quarter at least? >> no, it duds not look like it wou would. what we are seeing on the credit side is that things are as good as they are going to get in credit card land but the delinquencies are going down, and so they are forced into relief, and housing is better. the thought of reserve releases more than expected more than the quality of the credit environment than the treatment of the reg cap.

from the reg capp perspective, t is not going to affect it much. that will provide a good outset, and incredibly, credit to the upside. >> and kayla, looking at the incentives for the smaller players and relief as you mentioned, but it is enough to shift us away from the too big to fail model? >> well, you know, kelly, that is a debate that will keep going on. there is expected to be a senate hearing on the brown/vitter proposal put forth in the senate, and this is the fed's answer to too big to fail, but dan turillo who has been spearheading the meeting says that there is going to be a new ratio that they do agree on that is going to be put in place, that is possibly stricter which would allow the banks to borrow less to fund the activities day to day, and that is a surge

charge for all global significantly important financial institutions which is 1% to 2% and these buffers will grow and keep growing, and we haven't seen the end of it yet. >> right. maybe the final will change the raic ratio between the big and the small players. and kayla, thank you for the reporting on that, and jeff, appreciate your time as well. interesting story. meantime, a live picture of cairo today, and it is day three of the protests against the current regime. we will get you the updates lye from egypt in a moment. what does the geopolitical unrest mean foryour money? we will talk about that as we look at egypt's market. back in a moment. you know, that could be a question of blood flow. cialis tadalafil for daily use helps you be ready anytime the moment's right. you can be more confident in your ability to be ready. and the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph, like needing to go frequently or urgently. tell your doctor about all your medical conditions and medications,

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are another reason serious investors are choosing fidelity. now get 200 free trades when you open an account. are you plabing to go back to china any time soon? if well, we have to meet with the ceo and some issues coming up. what you are seeing is the key investment measures. >> and if you think that you are going to double your money in ten years and double it ten years from there -- >> how do you measure the volatility going on? >> well, everyone is trying to figure out, is this a real rally or a relief rally? it is day three of protests over in egypt as president more si says that he is rejecting the army's ultimatum, and cnbc's yousef

yousef ga mall -- gamal eldin is there. >> today, it is tense, kelly, and there is morallies projected today. that is the risk and the anxiety that the two clans start to clash and you could see more clashes. but the army made it clear yesterday that the politicians have 48 hours to sort out their differences, and if they don't, and they made it clear in no uncertain terms they would put forward a road map. what we don't know at this point whether the military would venture into moll tipolitics li did after the ouster of hosni mubarak or bring people together, the opposition and the current government. but the pressure, kelly, it is piling on president mohamed morsi, and the cabinet falling

apart. we understand that several ministers have tender ed the resignation which is pushing him into a corner. yesterday at 2:00 a.m., the presidency releases a statement saying that we will continue the way we have, and we don't think it is advisable for the army to put a statement like this, and the kick here is that they did not consult the presidency before they put out this statement. just a quick look at the markets if you want to gauge, the market is up 5% after the close of trade, so quite an interesting development, and we will deep you posted. carl. >> yousef, thank you. yousef gamal el-din in cairo. most investors are not phased because the market is up more than 4%. now why should merging market investigators be worried? we are joined by ed waward frome

grimaldi firm. is this vis-a-vis reflect iing e market? >> well, it is dominated by a few large company, and it is not a proxy that i would use, and turkey is a better proxy. emerging markets are skaucaught the political vice, lurking instability, and also the backup of interest rates is causing the capital outflow in the economies. >> right. anything about egypt or the merging markets attractive to you? >> not right now. they are setting up to be an incredible trade going forward and massively underperforming one of the s&ps by a wide marge to make them a great mean reversion trade, but the problem is a lot of selling and liquidation going on and the selling begets more selling. we are not there yet, but it is

coming. >> interesting. what are you waiting to see? something from the flow standpoint or some line that we cross or something more geopolitical and the resolution of the military and more si or something like that? >> well, the stocks look ahead, and of course, the emerging market stocks are underperforming for some time, and discounting the slowing global growth going on around the world. i would like to see them in a trading basis and stop going down, but for a u.s. investor, one of the keys is going to be what happens with the u.s. rates. if the u.s. dollar is going to be strong, that trade not going the work for a u.s. investor. >> yes. was there any profitable trade surrounding the turmoil with mubarak? some kind of history lesson here in the past couple of years? >> i mean, i think that you have to if you are in it and an

investor, what is tis time the frame, and if you are willing to hold for a few years, then you can do it. we are seeing citibank move into iraq. and you would want to play some of the more peripheral plays in turkey which has a more heavily traded companies. >> and the point about cairo being a thib market in some ways and in a lot of ways one to keep a look at. thank you, edward dempsey talking to us today. and the federal reserve with measures to improve banking performance. that could impact banks big and small as they continue the approve the measures we will bring you that news. as we watch the stocks this morning the dow is down 60 points, and the s&p 500 is hanging above the 50-day moving average. when we come back, rick santelli will join us with the insight on

fed tapering. and also, don matrick is leaving microsoft to go to zynga. and the question is can don save zynga? we are back in two. od days. and some difficult ones. but, through it all we've persevered, supporting some of the biggest ideas in modern history. so why should our history matter to you? because for more than two centuries, we've been helping ideas move from ambition to achievement. ♪ and the next great idea could be yours. ♪ and the next great idea could be yours. could save you fifteen percent or more on car insurance. yep, everybody knows that. well, did you know some owls aren't that wise?

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let's get the santelli exchange for a tuesday. hey, rick. >> hi. the dow sup 61, coming back a little bit. listen, when it comes to data, it's rare that you see all sectors of the economy moving exactly the same, and i think today is a case in point. we saw new york ism. i don't pay a lot of attention to new york ism, not because i have anything against new york. it's just that market participants don't, and i try to look at the markets through the same lens that is traders do, but at 47 it was the weakest level since may of '09. we have had many data points that seem to be going back to '09. we also had another data point today in the form of manufacturing. not only was it solid, last month's was revised to an even more solid read.

you heard phil lebeau talking about the renaissance in autos. is it because they are running the companies so much better or is it the fact there were so many old cars out there, but it doesn't matter. we're seeing that manufacturing is much more of a split decision. we're also seeing that the split decision in europe as to how long or how deep the recession will be, will a country like germany end up holding all the weight or will they be affected in an adverse way? those questions are unanswered and taking a bit of a toll on the euro today. but no matter how you slice it, i think you need to continue to monitor that the economy as a whole in the u.s. may have a parachute but it still seems to be going down a bit. i want to talk about the taper from the market's perspective. in my opinion, markets don't do taper. we have seen a lot of talk by very smart people about how it's a communication problem in part with the fed, that if they communicated better, the market would more gradually price in

the issues. i don't see it that way. i think markets are markets, and for the most part they're more digital with regard to how they price it in. the one area with an asterisk, the exception, is what was alluded to in a great op-ed piece today, and that is it's how much the fed own that is will have a lasting subsidy on interest rates, but where will interest rates be? here is the biggest problem. we've coiled interest rates to the point where i can't tell you if they should be 100 basis points higher, 200 basis points higher, but in the end whatever that number is, we are certainly going to see a very bumpy ride to price that dynamic. back to you. >> rick santelli from chicago this morning. thank you, rick. looking now as well at some of the headlines coming out with the fed. it has approved a final rule to help ensure banks maintain strong capital positions. it's adopting the proposed rules. understanding as well that the

occ and fdic will take up consideration of these rules next week. so we'll keep an eye on this space and how financials are trading, but no major surprises at this time. and it's tweet time. andrew mason dropping his new album titled "hardly workin'." you're listening to a sample. if he had one, what should the title of the hidden track on mason's album be called. we'll bring you some of the answers next when "squawk on the street" returns. ♪

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♪ >> what a voice. andrew may soson with his new a. the ousted groupon ceo is out with a new motivational business album. the song is titled "my door is always open." brins us to our squawk on the tweet question, what should the title of the hidden track on mason's album be called? ivan writes, buy one get five free.

kyle writes, short it from the original motion picture soundtrack i could have had $4 billion. tag writes, my bubble popped. it's hard to start a career when coming off such a bruising business loss. >> there's so many things i don't understand. i thought he was going to be out in the jungle and forest with a drum and doing something artistic and he comes out with this which is about motivational speaking from a guy who was ousted with ceo. >> as we said with cramer, the capital loss for him and for all the people who got in at groupon at $20 at the ipo, that's pain, that's real money. >> it is absolute pain with the stock up 3% to about $9. they have adult supervision now. that was one of the early cracks. mr. mason is a young man still exploring perhaps other careers at this point as he's allowed to do as a man in his early 30s, i believe, but, yeah, some of his behavior especially did not give you a great deal of confidence

and then, of course, in the running of the business as well. >> on monday they announced groupon reserve which leds you bid on i think across ten different cities high end restaurant meals, correct? >> and stock year-to-date up 84%. so those who were smart enough to buy it in the midsingle digits have made a nice little profit. we're of whwatching the market . >> 1624 is what patty and others are saying following this. 1620, 1624, we really haven't moved that much this morning after those initial opening levels. so testing it, being able to hold higher than it, you know that will be a big signal for traders. >> dudley speaks at 12:32. apple, 6% in two days to the upside. hasn't done that in two months. and cramer made the point, david, you don't want to show that you owned it at the end of the second quarter, but maybe you do want to nibble it at the

beginning of the third. >> right. believing they'd have to really be particularly poor earnings for it to justify going down from here. those were his words, not mine. we shall see, of course. again, time will tell, carl. >> i think the journal reporting their cfo is the top paid cfo out there. >> leading the charge on cfo pay. >> still the biggest market cap company. >> if you're just joining us this morning, a lot going on. here is what you missed earlier on. >> welcome to "squawk on the street." here is what's happened so far. >> what we need to see from here is profits, revenues. we need to see people revising upward their gdp forecasts. so it's going to be bumpy. >> at a 4.5% rate, you can buy a 4,000 square foot house and maybe at a 5.5% rate it will have to shrink to a 3,000 square foot house but you still need shelter and that is what's -- >> bernanke did not expect what

occurred. they spent a lot of time trying to pull back. if he now just goes back and starts doing it, where is their credibility? >> zynga. is it time to buy? >> yes. yes. >> what? >> i think this guy is the real deal. i was surprised he left microsoft. they sill have a lot of cash. i think you can reinvent your company with that crash. >> the big number, it has to do with trucks. f series sales in the month of june up 24%. >> technology does redefine everything, and ultimately it has a lot of good. it decreases spreads. it make it is easier to execute. when there's a plane crash, we don't go back to buses. we want to make sure it's safer. we want to move on. >> it encompasses what we've been doing for 22 years, which is pushing out the walls of retail to bring great products

and services to our customers. good tuesday morning. we're live here at post 9 at the new york stock exchange. a slow and steady build all morning long. dow sup 70. s&p getting close to some historical resistance at 1623 and change. it's up about 8.5 points and the nasdaq again up today after a pretty good day yesterday as well. up almost 16 points to 3450. regional banks on the rise. among them bb&t hitting its highest level since may of 2010 and priceline, wow, what a comeback over the past few years. a 14-year high on a big travel week as we get closer to the fourth of july and a holiday shortened weekend, kel. >> that's right. now let's get back to kayla in washington with more on the headlines coming out of the fed with regard to bank capital. >> hey, kelly. those regional banks likely on the rise because just moments ago the open meeting of the federal reserve board of governors did vote to approve

adjustments made to proposals over bank capital. it would raise the tier one capitol banks would have to hold to 6% from 4%. given the capital buffered banks on the whole would have to hold 8% capital on their balance sheet. the chairman coming out and saying they were able to strike a delicate balance over small banks. the new rules were a little more lenient toward community banks. bernanke praising the risk model saying that the staff that built the model that evolved from the previous proposal and saying big bank regulation is coming together. the officer of the comptroller of the currency, one of the bank regulators that will vote on the proposals next week, came out in support of the fed's vote saying it would shield the american taxpayer from ever having to rescue a big bank again. praising the fact it is a little lighter on residential mortgage treatment which will be favorable for the homeowner or

borrower in that situation. the last agency that has to approve this rule, fdic. still no word when that vote will take place but we have one of the three main regulators today approving the new capital rules for the banks. >> thanks. saying they will never have to rescue a big bank again at a time when regulation is still so varied. thank you for the latest on that and amazing to see jpm up 2% again today. assessing entry points for stocks around this weeks's possibly volatile jobs data and the former head of microsoft's gaming division jumping ship for zynga. and auto sales running hotter than expected. bob lutz will be here to weigh in. for more on the markets, let's bring in david katz and

allen lance, editor of the lance letter. good morning, guys. >> good morning. >> david, sounds like you think we're in for a summer of really at least trying to sell into rallies and buy on dips. i know you think we're going to be higher at year end, but sounds like it's a trader's game for the next few months in your view. >> we think investors want to turn down the volume, look at their time horizon. we think stocks are going to be higher and we wouldn't try to adjust what you're doing based on the day to day volatility. when you have a sell-off like the last few weeks where stocks sold off 4% or 5%, we'd buy stocks you like at better prices and we had not jump into a rally. if the market rallies 5%, we wouldn't use that as an entry point but rather as scaling back a little bit. >> people have talked about 2.5% on the ten-year being a mood indicator above or below. you think stocks can perform even up to 3%, 3.5%? >> the economy can definitely

perform up to 3% or 3.5%. that's still historic lows. the reason the fed will taper off is because the economy will enter a self-sustaining mode and we think that's bullish for companies and that's bullish for the stock market. the flip side is the market has become obsessed with these ultra low rates and free money and when that goes away, you could have these knee-jerk reactions. it's going to be a balancing act. the fundamentals are good for stocks and valuations are pretty reasonable and inflation is very low. all of those things are good and that offsets the fed stopping the very easy monetary policy. >> picking up on valuations, allen, you are among those who must have been buying apple the last couple days saying that now after going negative in september, perhaps it's getting a little too cheap? >> yes, kelly. it's a situation where at $700 in september everybody loved it and, you know, under $400 the last few days here before the two-day rally, you know,

investors didn't like it, and i think with the dividend, the buyback, some good news they have coming out on the horizon after next quarter, you know, buy into the weakness, and i know it's a lot easier having sold at $690 and $700, but, you know, apple is one of those companies i think that you can buy and get a good total return type package which is ideal in this type of market environment. >> and are you, in fact, looking for those kinds of names here as opposed to the market more generally? >> yeah. last time we were on we talked about mercury general, an insurance company that was trading below book value and had over 6% yield. now you can do old republic international, 15% under book value, close to a 6% yield, and i think can move up. again, like david said, try to buy into weakness. don't buy into the rally or if the jobs numbers are good, we'd be taking money off the table,

taking risk off the table, but into those sell-offs, take advantage of good high quality companies. >> david, some of the names you like at current levels, cisco, dupont, emr, jpmorgan, oxi, schlumberger. it sounds like you're net net bullish on the overall economy. >> we think the overall economy will be okay to good and at some point become self-sustaining. a lot of those businesses are selling at very, very reasonable valuations. you're going to get a multiple expansion on higher earnings. we think they're pretty low risk because they haven't done a lot. 10, 11 times earnings is a good entry point. >> guys, we'll see what the next few weeks of summer bring us. david and alan, thank you so much. >> thank you. shares of zynga are surging after a shake-up in the company's c suite. don matrick will take over as

zynga's ceo next monday. mark pincus will stay on as chairman and chief product analyst. good morning. >> good morning. >> of what do you think about the move? can don rescue zynga? i guess at this point looking at the stom reaction, he better. >> well, i think don brings a lot of credibility to zynga from the video game industry. he has -- he's been successful at both electronic arts as well as microsoft. in particular strength in building game franchises and platforms which he did at microsoft. i think where zynga will continue to face a challenge though is the pivot to mobile and more specifically running on ios and android as platforms and i think it will have to see how don is able to navigate those potentially tepid waters. >> collin, what is seen as don's strength, the devices side or

software side and which is more important in terms of focus for zynga? >> he's been successful at building a platform both from a hardware and network perspective and also has the software background as well from electronics arts years ago. he certainly has all of that. i think that will be an upgrade for ziyngazynga. >> is the runup warranted we've seen since the news was out yesterday afternoon? >> sure it is. zynga is in kind of a deep hole. their core business is social gaming and that's just not growing. as collin pointed out, the mi grition of facebook use to mobile means zynga has to adapt and move to mobile and that's not an easy task. i think don's biggest strength is the guy know what is he doesn't know. he didn't go to college. he's not some mba who thinks he's got all the answers.

he knows exactly what he doesn't know. he expects a lot out of his people but he's really comfortable bringing great people in around him. i think he's kind of a masochist. i think he took on a difficult task. he has to work with pincus which hasn't worked out so well with other execs. >> i'll ask collin whether or not you would have preferred to see pincus step aside completely? >> i think pincus still has a lot of influence, he's chairman of the board. in an ideal world don would have had more independence and perhaps pincu cirque stepping aside would have been a better option but that's not the situation we face today at least and we'll see if they can work together over the next 12 months. >> all right. still shares are above the price target. collin and michael, thanks very much. >> meantime, monthly auto sales have been coming in pretty good. we'll find out what they could signal about jobs in the mimind

the consumer. first, rick santelli weighing in on the market. >> absolutely. we have one of your favorite guests as well as mine, ira harris. we're going to be discussing everything from the unemployment figures in europe, today's manufacturing, whether it's factory orders or autos. how will foreign exchange movement affect automakers globally or will it at all? maybe we'll even have time to touch on a little gold talk. all ten minutes from now. ira harris like ymca. with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price -- maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments. our one-second trade execution is one more innovative reason serious investors are choosing fidelity. now get 200 free trades

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welcome back to "squawk on the street." take a look at shares of on nix pharmaceutical up 2% on some reports there could be interest from pfizer. earlier this week the company turning down a takeover bid from amgen. shares up 64% in a week. carl. >> thank you so much. signs of strength from the auto industry. the monthly auto sales numbers have been coming in better than we thought. bob lutz is a cnbc contributor. good to have you back. good morning. >> good to be here, thanks. >> pretty nice numbers from all the big guys. these -- the annual adjusted rate look, i don't know, can we do 16, bob? >> it's almost -- it's estimated at 15.8 which is almost 16, which is a level we haven't seen since before the '08 meltdown,

and the nice thing about it is this time it's not based on a lot of discounting and fleet sales and distressed sales at low prices. this time it's genuine demand. and, you know, full-size pickup trucks are up almost 25%. luxury cars are up. retails are up versus fleet, so this is a very, very healthy, very healthy sales number. the other thing that's very good is that actual production in the united states is at levels that we haven't seen in over a decade, over 16 million units produced by both the transplants and the u.s. companies, and yet inventories aren't building. so i think we're looking at a very, very healthy automotive market for the foreseeable future. >> we keep hearing though, bob, about auto finance, structured products, loans going out to

those with credit scores in the mid 600s. people are a little worried about that. are you? >> no, i'm not. as long as it's, you know, contained. as long as it's built into the pricing. obviously when -- in these programs that we used to disparaging refer to as finance-a-flake, you expect a certain loss ratio, and i think there's -- there is a possibility to go into more subprime lending without getting the industry into trouble, and then what you also have to remember on the other side is some of the companies like chrysler and general motors are just now really getting back into leasing. for a long time general motors, especially impacts the cadillac brand, was precluded from leasing so that's coming on. and with all of the new models coming out and with the strength

of the domestic automobile producers, all three of them, i don't see -- i really don't see any storm clouds on the horizon except, say, a sudden rise, a sudden rise in interest rates, of course, could put a damper on everything. >> bob, you mentioned leasing which is an interesting point. anecdotally i have heard of car companies calling a lot of people with a lease and offering them pretty amazing terms in order to transition into that next new vehicle. what do you think is driving this and what does it mean for the automakers? >> well, whenever you do a so-called lease pull ahead, you contact customers early and say, here is an incentive, we'd like to terminate your lease early and put you into a new car. that is generally i won't call it a desperation move, but if you have enough -- if you have enough demand for a given car, you don't have to do that, and if you do tooven of it, you will destroy your residual values

because you're just turning the lease and putting too many off lease vehicles into the used car market. so it's not a good thing to do, and a company that does too much of that is -- that's what all three american companies did before '08 was lease pull ahead, daily rental sales. what i call junk business just to get the numbers. i don't think anybody is doing that anymore. >> one more quick question as well because morgan stanley drew attention to this recently, what they were calling a silent price war that was happening in the used car market. have you heard about that as well and what does it tell you about kind of the strength of demand moving forward here? >> well, anytime there's a price war in the used car market, it just means there are too many used cars out there. part of that comes from doing too much leasing. however, i really have not heard of any dramatic drop in used car values and, you know, you can

always look at the negative side. nothing is ever perfect, but right now i would say this automotive market, new car, retails, fleet, and used cars is the healthiest we have seen since 2007. >> that's the way it's shaping up, bob. always good to get your insight. have a good one. >> thanks very much. happy fourth. >> thanks, bob lutz. >> new construction versus prewar. millions at stake. then possibly the only thing worse than flying is the outdated terminal you're usually stuck in. one company that was trying to change that, we'll tell you who and what they're doing when "squawk on the street" returns. well, it's officially beach season. so why not grab those rays in style? by packing up all your needs in this cnbc tote bag.

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let's get to rick santelli and get the santelli exchange with more on the markets. rick? >> thanks, carl. thanks, ira, for being the guest today. taking the time. all right. so we had some data points today. first data point that everybody was talking about, in fact, is autos seem to be on a good clip and we'll get the annualized rate shortly. but some pretty good numbers and also pretty decent numbers and revisions on factory orders. could you argue a ism floated

above 50. what is going on with the economy in terms of manufacturing? >> it's holding. we hear about the jobs coming back from china, still out on that. there's a tepid recovery going on. there's no question about it, which is why the fed feels like they can pull back from the tapering and i happen to think that's what their plan is because at least you get to remove some of this froth that they've created but that he realize and that they're pulling it back. they have to step in and smooth it -- >> let's look at the big three in terms of countries that export or deal in autos. u.s., japan, germany. how do you think the movement of the cross rates will affect countries in a superficial way. >> we've talked about this. japan is definitely taking market share back from the europeans. you can spin it all you want for me, it's not in good shape. registrations domestically are

down. japan numbers were down yesterday but we're talking about the export market. the euro/yen movement has absolutely allowed japan to recoup a lot of lost market share. >> we saw the unemployment rate, you know, once again moving up in the eurozone as an aggregate. thoughts there? >> you know, with that on the nonperforming loans, the european banks are m severe trouble. there's a lot of spin going on, a lot of people looking for comfort. they're chasing some of that yield. i don't want any part of that yield. you want to chase -- >> you know, another big story with europe and it's usually not my wheel house but it has to be are the issues with then sa and the spying that's going on. it was big all weekend with regard to germany not being happy. does that affect our relations potentially with germany or europe? >> i'm not going to get into the politics of it because that's not where i choose to go, but from the global macro finance world, it's important because i think you have dirtied the water with the europeans and it takes

the united states off what was previously a strong bargaining position because it was back in april and may when jack lew was talking about pulling back austerity and the united states is trying to get this trade deal done. there's voices other there calling slow down this horse and i think this trade deal -- i'm using president obama's words, this was a big thing for their economic program going forward. >> all right. way tonight get so much from you. real quickly, gold. ira and i have a reason there might be more upside than downside with gold. real quickly, it's about china, the yew an and gold. >> november 2ened, 2009, the imf sold 200 tons of gold to india. the chinese were not happy. that price was 1048. in yuan terms it was 7150 -- >> which is where -- >> you might want to buy gold. something happened on july 2nd, 1953, 60 years ago. it was this guy's birthday. ira, happy 60th birthday from everybody at cnbc.

you're always everybody's favorite guest. >> thank you. >> carl, back to you. >> happy birthday to ira, rick. thanks very much to you both. now the bells are about to sound across europe on this day that the euro is actually slipped below $1.30. we'll bring you details on the close and impact on our waters next. next, egypt's affect on oil trading has spread. crowds out in full force. we'll be right back. erectile d- erectile d- you know, that could be a question of blood flow. cialis tadalafil for daily use helps you be ready anytime the moment's right. you can be more confident in your ability to be ready. and the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph, like needing to go frequently or urgently. tell your doctor about all your medical conditions and medications, and ask if your heart is healthy enough for sexual activity. do not take cialis if you take nitrates for chest pain, as this may cause an unsafe drop in blood pressure. do not drink alcohol in excess with cialis. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long-term injury, seek immediate medical help

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the european markets are closing now.

>> and markets have closed across continental europe with shares as you can see there ending the day mostly lower after starting off the second half on a positive note yesterday. there are some specific concerns weighing on individual indexes. eurozone unemployment hit a record high, 12.2% i believe was the reading there. the german dax losing today. in the uk business confidence actually reached its highest level since 2007. that was bolstered by rising service sector exports in particular at their highest level since records began in the late 1980s. the bbc forecasting the british economy also grew 0.6% not annualized in the second quarter. over in italy, tensions remain high in the country's fragile coalition government. the civic choice party threatening to withdraw from the coalition because of frustration with slow reforms. some signs of concern as well in portugal, although you also have

the big italian insurer saying they're looking at opportunities, carl, across peripheral markets. >> let's get to josh lipton, see what's moving here at the big board. hey, josh. >> hey there. we are leaning green here today. you had some economic data, factory orders best estimates. the s&p now up in five of the last six sessions. that's the best six-day gain in nearly four months. we're watching that 50-day moving average very closely, 1624. remember, failed to hold above that yesterday. as for some specific movers, how about the dow. jpmorgan, raymond james rates this one a strong buy. telling their clients they see a more favorable outlook for eps growth. their target is 64 bucks. apple is working, nice back-to-back gain. yesterday apple filing a trademark application for an i-watch in japan. we'll end on ford, gm, and toyota all giving us their june sales. all above estimates. guys, back to you. >> thank you very much for that. the protests continue in egypt as high ranking government officials quit their posts.

we are live in cairo. yusef? >> the situation is very, very tense in downtown cairo. you can hear some of the honking and chants in the background. everybody is prepping for day three of these demonstrations. so we expect as we have seen in the last two days opponents of incumbent president mohamed morsi to come out and to show their discontent with the current way things are being dealt with, but the problem is, carl, that you also have those supporting the incumbent president planning competing rallies, and that is where there is tremendous risk of violence and clashes, and that is keeping people quite a bit on edge for today. now, the countdown is ongoing when it comes for politicians to find a solution to the political paralysis that has hit this country in less than 24 hours the deadline expires, and then the army said it will put forward a road map. no clarity yet what that road

map will look like and how things will work. are we going to see a return of the army to government? that is a key question, but in any case, keep a close eye on the space. the numbers will continue to build as we've seen in the last 24 hours. yesterday and the day before. so this is a remarkable development and we'll just have to wait and see whether the politicians can get it together or not. >> yousef, thank you for that. obviously is fast-moving story in cairo and those protests reviving concerns about oil supplies and the suez canal. our sharon epperson live at the nymex with more on that. >> traders are watching all of this very carefully. there is no clarity on the road map that president morrisssi wi lay out. traders want to see clarity, and when they don't see it, that's when we see the volatile in the oil market. you mentioned the suez canal. that's the biggest factor in this situation with egypt. it's not so much that egypt is an oil exporter, but it is key

to the transportation of crude oil and other commodities through the suez canal. if there is some disruption there of the suez canal, those shipments would have to go around the southern tip of africa, much longer route, and that could disturb about 4 million barrels per day of opec oil which flows through the suez canal and about 8% of the global sea born trade that goes through that canal. so it's a very, very key port of entry right there, and if there's anything that disturbs that, that is what traders are very concerned with. if you look at where oil prices are right now, we're looking at u.s. oil price that is are up about $2 since friday. brent crude up only about $1.50 since friday. not as much of a gain. some traders say while they're looking at the differential between these two global benchmarks, one of the factors that may be causing that differential to come in is this concern we could see a disruption of middle east shipments going to the european region, and so that is something that they're watching very carefully. they're also watching all of the

international oil companies in that area to see their reaction. so far they're just monitoring the situation very closely, carl. >> sharon, stay right there. we also want to bring in addison armstrong, director of market research, a cnbc contributor into this conversation. thank you for joining us. >> thank you. >> given the pictures we just saw and the reports about continued unrest and especially the situation with the military involved there, how serious is this? what does it mean for oil prices and some of the concerns sharon just outlined? >> strangely enough, i actually think the military's involvement is helping to keep the brent price from moving even higher. i think it's a sign of stability and traders have taken it that way. it's one of the reasons why i think you have seen the spread between brent and wti move in over the past couple of days is because the brent price is just not being impacted as much by what's going on in egypt as one might expect. >> so you actually see the military there as a calming influence? because that would be at odds

with egypt's history. >> well, the fact of the matter is the egyptian military runs the suez canal. the egyptian military runs many state industries, and it is in their interest to maintain the economic viability of the country, and i think that this move is one that is trying to show the world that the economy will continue to move forward. oil will continue to flow through the suez, and there shouldn't be any concerns about disruption. >> what changes that then as we look at pictures and as yousef mentioned, as the number of people in the streets continues to grow? i mean, at what point then does the perhaps assurance that people are taking from the military's involvement give way to more generalized concern about the future of this country? >> right. well, we would have to see a real deterioration in terms of the civil rule of law and just the way the military is handling the situation there. you know, what brings to mind is

a situation like in libya where the government basically collapsed and there was a vacuum of power, and if you remember, that was when the oil price really started to take off and we lost about 1.5 million barrels of libyan output. those the closest corollary i can think of. i think it's very difficult for me as someone who spent time in the region, someone who has lived in egypt to imagine a situation where the military lost complete control. it seems that the people want the military to come in. there's a real anger at the muslim brotherhood and the way this has all been handled, the way that none of the benefits of freedom have filtered down to the people, and i think that the military is seen as a bulwark against that. >> i think you bring up two good points. we're not seeing any disruption in output and we're not going to because egypt is not an exporter of oil. that's a key point to watch.

also, people are very familiar still with those images they saw from two years ago. what happened in egypt two years ago, but also what happened in libya, as you mentioned. they do have a frame of reference of how bad they're going to let this get before they really worry about the oil price and whether or not shipments will be disrupted and at this point i think they're very much taking a cautious approach, a wait and see approach, although the fact there's no real clarity yet is something of great concern. >> certainly. >> addison, we got inventory numbers. obviously there's a lot of inventory in this country. would you argue we are on a retail front insulated from whatever may happen around the globe regarding energy prices? >> not really, carl. yes, i think on a headline basis we see the production is growing. we see that our inventories are near record levels. we see even gasoline inventories are much above normal for this time of year. but we're moving into the traditional high demand third quarter of the year. we've already seen wti prices

trade up to their highest level of the year just this morning. and it's doing that on the basis that there are concerns that supplies will tighten in the third quarter. refinery runs remain very high but they have much more room to move higher. we're running at 90%. we could go as high as 96%. we could see that because distillate inventories are so low. we have to be concerned about heating oil and building those stockpiles ahead of the winter. >> carl, we're also seeing, of course, some of the bottle necks we have been talking about in the middle part of the country being relieved a bit and the fact we're seeing refineries start back up, the fact we're seeing a lot of crude being shipped by rail getting out of the middle part of the country even though we are seeing increase in production, we are also seeing that oil get to other parts of the country, and that is helping according to some of the traders i'm talking to, that that is helping u.s. oil prices behave more like a global benchmark, react more to

when we see global developments than it has in the past. >> that's an interesting point and one to keep in mind when people wonder why the price is so high given that situation. thank you for your time this morning, addison armstrong. it's class warfare on the island of manhattan between the house poor and the cash rich. we'll find out what's at stake in a new square footage square off. don't forget to tweet us. we have been playing andrew mason's new album all day today asking you what should the title of the hidden track be called? that's @squawkstreet. your answers coming up. the most free research reports, customizable charts, powerful screening tools, and guaranteed 1-second trades. and at the center of it all is a surprisingly low price -- just $7.95. in fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and etrade. i'm monica santiago

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tell your doctor your medical history. and find an arthritis treatment for you. visit celebrex.com and ask your doctor about celebrex. for a body in motion. a new report shows the manhattan real estate market is at its busiest level since spring 2007. it's so busy, in fact, that diana olick had to come here to check it out. she squouns us at post 9. >> all real estate is local. the real estate market saw it's busiest spring since 2007 with sales up 19% from a year ago. inventory in q2 was the lowest for the quarter on record. why? same story as the rest of the country. negative and near negative equity. new yorkers are stuck in place unable to sell. >> they just have low equity. they may have refinanced, taken out a second mortgage. when they bought the home, they may have been able to figure out a way to put a small amount

down, smaller than what was known about. it's the same problem here that it is everywhere else. >> so with so little supply, prices moved higher up nearly 14% for condos from a year ago, but flat for co-ops which make up 75% of manhattan market. so why the difference? well, foreign buyers with all cash are fueling the condo market. the median sale price for a condo $1.25 million, but for a co-op just $665,000. and condos are where all the new development is. developers are targeting the high end with these condos. the top 10% of the manhattan market, which means over the $3 million mark. >> we've become even more international than we were say 20 years ago, and condos are the product that a foreign buyer, an international buyer would like. but don't count out the domestic purchasers. >> so what are we looking at for q3? that is all going to depend on

mortgage rates and don't ask me where they're going because everybody does. >> if it's all cash buyers, they're a little less sensitive. >> we also forget one-third of the u.s. markets are all cash buyers, too. >> the carrying costs as well for some of these. in manhattan, forget just the price of buying it. how much are these people trying to minimize the extent to which they're having to pay out a lot each month? >> right, exactly. with co-ops you're looking at very, very stringent restrictions and that's really not helping that market so much. >> some boards don't like outsiders so to speak. >> no, they do not. >> want to hedge their bets in terms of the people they let in. >> welcome. enjoy your time here. perhaps you're watching us in an airport right now and likely you have already suffered through a subpar breakfasts a flight delay, and that guy who wants to talk to you in the terminal. one company is trying to change all that. our next break-through because what else are you going to do while you wait for your plane? a!

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welcome back to "squawk on the street." let's send it over to courtney reagan at headquarters for a quick market flash. hey, court. >> take a look at shares of killon pharma. we're seeing shares down 24% and seven times average volume. there's some concern that the company's lead hepatitis

medication when it's combined with an hiv treatment could be harmful. some analysts are worried about it. others are not. still, we're seeing shares bidding down on the possibility. we're going to continue to watch it. the fda has not made any safety rulings. carl? >> court, thank you so much for that. as travelers take to the skies for the upcoming fourth of july holiday, today's break through is using technology to gave airport terminals a makeover. they have invested money to deploy ipads for free use to browse the web, order food as they wait for their flights. otg is planning to deploy 7,000 ipads between three major airports. rick is the founder and ceo of otg management and he joins us on post nine. on behalf of the flying public, thank you, for making this experience a little better. how did you get this idea to make -- to go into this line of

business? >> it's our pleasure. what we've done in 2010 we rolled out our first gate hold rooms with delta in terminal three in jfk and also terminal two. if you think about the gate hold rooms where people lined up seats forever in the last 40 years or so and you sat there and looked like you were waiting to get a root canal. we realized a lot of customers like to stay there. let's take the gate hold rooms and turn them into something special and deliver an experience. when the ipad first came out in 2010, we rolled out our first gate hold rooms which put an ipad in 80% of every person in there. tracks our flight, you can order food, surf the web, order retail, do anything you'd like, play some games. you then swipe your credit card, whatever you like and someone brings something right over to you. it puts seats in front of people -- i'm sorry, it puts tables in front of you, a place to put your food down and plug in and charge up, really deliver a different experience. >> who hires you, the airlines or airports? >> we have multiple different

business models. in some models it's the airplanes, in some it's the airports. >> the reason i ask is this is something where airlines could maybe hire you guys to get a one up on a competitor or a situation where an airport might be competing against someone else. how expensive is what you do? >> it's very expensive, our technology portion of it. every six ipads, we spent probably triple what our competitors spent because of the technology. what you just said is the competitive advantage that the airport and airplanes are now seeing because of this and happy customers is something that's truly special. if you think about it, they're putting flat bads in the sky now. we have wi-fi in the sky. so the competitive edge is your time you spend on the ground prior to getting on the plane. >> trying to think of other locations where you have large groups of people coming through, right, with time to spare. hospitals, you name it. how much runway is there in airports and then in other locations, too?

>> we're exclusively in airports and that's where we're going to stay. 90% in every airport in north america becomes available in the next ten years. our gate hold area is the largest piece of real estate in the airport and the most desirable location for the customer to be in. we're the first ones to take the gate hold areas that were forbidden territory and turn them into sfernss. the runway for us, the sigh is the limit, no pun intended. >> what do you mean the real estate is coming available and where do you get the capital? who is the investor base? >> the airports are all around the country. the average term of a contract is seven to ten years. so next ten years, 90 plus percent are becoming available. we're privately funded and a private company. >> you have grown that way? >> yes, we have. >> talk a little bit about your business model and how profitable you are. >> well, we have the large est every examiner getting on a

plane is enplanement. we're 45% higher than the average of the top 50 airport in the country. that's delivering an experience. we're a stres price company. we deliver a full restaurant experience. we have chefs like michael white, chef driven concepts and give the customers what they want. whatever they want, they should get. >> you're in business at a time when the number of people in the air at any given moment is higher than it's ever been. a lot of that is international. are you going to be a u.s. business only? is there plenty to do there or do you go to some of the emerging markets? >> well, right now we're looking all around the world. we doubled our countries. we're in canada now, this is our second country. which is pretty close. but we are looking all around the world. >> do you want to go public? where do you want the company to be in five years? >> we want to continue to grow a great company and deliver the best experience we can for our customers, and we leave all of our options open for the future. >> all right.

i'm sure there will be people listening and watching closely to see how it goes and doing so while they're waiting for their plait. >> rick, thank you so much. otg management. andrew mason's new album drops today. that's it. "hardly workin." we've been asking what you should the title of the hidden track on the album be called? we'll get to your responses after a break. (announcer) at scottrade, our clients trade and invest exactly how they want. with scottrade's online banking, i get one view of my bank and brokerage accounts with one login... to easily move my money when i need to. plus, when i call my local scottrade office, i can talk to someone who knows how i trade. because i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade. awarded five-stars from smartmoney magazine.

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♪ okay. it's got a hook. >> that's andrew mason's new album. his first big venture after leaving groupon. brings us to our squawk on the tweet question. what should the title of the hidden track on mason's album be called. brit writes, hidden track, how about hidden for a reason? jack writes, blame it on the synergy. john writes, a remake of dreamer by super tramp. you guys are so cold. >> plenty of disgruntled investors out there. up 83% this year. >> we have gotten people writing

in saying obviously what he did at groupon hurt a lot of people. others said he created a company that is now a household name and created some capital for some investors who managed to play it the right way. >> and, in fact, it was to some extent the victim of his own success because so many different companies started to get in on the space it became so crowded. >> interesting. market, of course, hanging in to a gain of 60. we're watching apple -- >> it's almost as if someones is frozen this market. i don't think it's moved since we were sitting here at.16. we're at 1623. apple has been a big mover. >> crude less than $1 from $100 a barrel. >> can we talk about the spread. if you told people whoo was happening with the inventories with the geopolitics. we're supposed to be at 50 bucks? it's ridiculous. >> the last time crude hit triple digits, september 14th. that's going to be a big story.

>> absolutely. as you said, especially given that the dollar is headed higher on a secular basis and certainly can look at the yen, other news today. >> we've got to get through today. shortened session tomorrow. let's get back to headquarters, scott wapner and "the halftime." guys, thank you very much. welcome "the halftime show." four hours to go until the close. we are pretty much at the highs of the day on this day on the street. there's the dow, up 60 points. we're watching the s&p and it's 50-day moving average. we're just a touch below that, but something certainly to keep an eye on which we will be doing over the next 60 minutes. nasdaq higher as well. here is what we're following on "the half." noodles and nachos. a restaurant ipo up 135% in four trading days but is noodles & company the next chipotle or just a flash in the pan? cat fight. a caterpillar