i think qe-2 has worked, the quantitative easing. it's helped the upper class, middle class, lower class, made things more affordable, made people feel rich and spend. i'm not surprised bernanke has said what they said, they're going to back off. i think the trend is going to continue. it's going to take a while, but at the end of the day -- >> thank you for being here. >> this guy doesn't give up. >> great having you. >> great having you. make sure you join us tomorrow, "squawk on the street's" next. >> all right. good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla with david faber, kelly evans, the new york stock exchange, cramer is off again today. the stocks are up four straight days. the best four-day run for the dow all day long. tepid action after disappointing

trade data out of china. and bernanke's fed speech later on today. ten-year note, one to watch as mortgage apps down four weeks in a row. and we'll keep our eye on europe. mostly in the red. our road map begins with the markets, rates are rising, but don't tell the bulls, the dow is 109 points from its all-time closing high. >> following in rupert murdoch's footsteps, the tribune company planning to split the broadcasting and publishing business taking the same path as murdoch's news corcor. and coach gets initiated with an outperform. well, the dow in the midst of the first four-session winning streak since the end of april. but stock futures are mixed after a surprise drop in june imports and exports adding to concerns about a slowdown in that country. wall street is bracing for the 2:00 p.m. eastern release from

the minutes of last month's fed policy meeting. traders looking for further clues on when the fed might scale back the bond buying. also, ben bernanke scheduled to address an economist conference that will be shortly after the market close. here we are not far from highs, of course, worrying about china yet again and endlessly talking taper. >> yesterday on "closing bell" was calling this the most hated stock market rally. and that's been the theme, but it still is a theme to some extent. and there is data earlier this year caught my attention in light of this. in light of the fact we're at new highs on the stock market. more than half of the u.s. households own stocks. there's been low participation. people keep looking back and saying why would i get in now? >> the number of -- the amount of money that's under management around the globe, boston consulting, out with the data, surpassing the high from '07 '08, so more people in the world have more invested in quite a

few years. $64 trillion. >> exactly. how much money is in bond funds. but the question is, how has it changed? >> i was making a joke there, but yes, i know. and how is it changing, of course? >> a little slow -- >> that's okay. bond funds as you mentioned, but we are starting to see outflows as you might expect. and within the equity markets and certain pockets and we're still in this waiting period earnings season, all we've gotten is what alcoa, we'll hear from the banks later this week we start to hear. >> friday is jpmorgan and wells, absolutely. meanwhile, the chief equity strategist and portfolio manager joins us here at post 9:00. can we continue to do this? even with rates rising? >> if earnings are good. that's the big if. we've moved past the p/e driven phase of this market for now, which has powered us for 18 months or so and now it's up to

earnings. and i don't think we're going to get a lot of margin expansion and then it comes to revenue. we're right at the front end of it. i think earnings will be okay, not great, good enough and i think we will waffle around on the market. >> i can't help but feeling the last quarter it was the same. i mean, earnings were not great. >> you're absolutely right. and revenues have -- >> and we powered through that. it was almost like a little heisman to, you know, not so good. >> we had the fed squarely in our corner, now they're in our corner, but not as much as they were. earnings don't have to be great, but they can't disappoint again. and eventually, it has to be earnings and i come back to and revenues, as well. which requires a somewhat better economy. >> how do we evaluate whether -- is it really all about the disappointment? because the expectations going into the season have been so ratcheted back that the question can't possibly be do they just beat that lowered bar? it has to be how much fundamental strength is there really?

>> and that's why i come to revenues. earnings in the first quarter beat expectations but they'd been lowered so much. i think earnings will be okay. the question is, will revenues? >> i'm sorry, carl, go ahead. >> imf is cutting the global economic outlook. trade data out of china's suggesting lower growth over there. there are going to be big 4x head winds. the bears argue growth is slowing, not that it's shrinking, it's slowing, it's not accelerating. >> you're pointing out to good things on the slow side. on the other hand, we've got consumer confidence picking up, consumers doing okay, cap expenditures, maybe a little bit better. europe's doing less bad and you put some of these things together, i think we have an economy that's okay. i'm not going to pound the table, but okay. >> you'd stick with domestically centered companies? >> for now, i think that's going to be the play. the earnings to the u.s. portion of the s&p 500 are likely to outperform the nonu.s. part in

part you brought up because of currency. >> and where within the u.s. in terms of sectors if you're going to look for that revenue growth that you're talking about and conceivably then a response in the market and a positive sense. >> some of the consumer discretionary names, i think there's more juice in those stocks left. technology, although often you bring in some nonu.s. pieces when you do that, but i think tech will be good, stocks have been acting a little better, believe it or not, some of the industrials have, as well. >> have you read this upgrade of hp, citi going from a sell to a buy. >> you know, i -- free cash flow. >> i know, but they've been in a sell for i think a while. >> yeah. >> they missed the entire move. >> price target, 32, we'll take it. >> now we suddenly see signs of something positive. we've had it as a sell, but don't worry, it's only outperformed by -- it's up 80%. >> this year, yeah. exactly. >> i was going to ask bob, as well. we were talking about the extent to which people are participating in this rally. low stock market ownership by

u.s. households, you guys are launching a bunch of new equity funds. what's the challenge? is it getting people to shift from other kinds of products like bonds into the equity market? or is it just interest in equities period? >> i would say both, kelly. we've had interesting equities year-to-date coming out of cash and to some degree from overseas. there's almost no evidence that money's come out of bond and gone into stocks. i still think that's in front of us. i think we'll have a period of good enough economy where earnings are okay, the stock market's okay and rates creep higher. >> don't we have a demographic that wants to draw on that income to some extent. you know where your bond payment's going to be. it's almost a different kind of demand for financial assets. >> when you can get almost half the companies in the s&p 500 with a higher yield than a ten-year treasury, i'm not sure equities are a bad place to get not only yield but some growth in that yield. bonds don't have a dividend that

grows, stocks do. >> that's been the case for much of this year. and in fact, we did see a great rally in the markets for the first half of the year. again, you know, should we temper expectations especially given what's the ongoing debate about when the taper begins? >> i don't disagree with that. i think it's going to be sloppier and the trading range we've been in call it 1,560 the low. nothing like the first half. >> have you had any clients say, bob, i got killed in bonds, i want you to send me to equities? >> there are some beginning to ask those questions. you and i have talked about this. until investors see stocks going up and bonds going down, they're not going to do that great rotation. we're beginning to see a little bit of it. >> the statements for june are certainly -- >> not going to be fun to read. >> all right. bob, thanks so much. >> thank you. >> bob doll joining us. take a look at your screen. we're getting news on apple h e here. a federal judge has found the

u.s. government various states have shown that apple did, in fact, conspire to raise retail prices of ebooks. the judge denise coty says they are entitled to injunctive relief and a trial on damages will follow. that's a big step forward on the chapter for that company regarding pricing on ebooks. >> they're saying apple will have to pay these states, it could be in the millions, the company is expected to appeal, but this stands. and this, by the way, was being watched by the industry generally. there's a lot at stake here. a surprise. >> apple was a beneficiary of this, you would have expected they would have been on the other side of this not having conspired. >> a lot of the publishers. >> trying to get prices lower. >> a lot of publishers have closed the book having settled to varying degrees, but apple wants to fight this. we'll see how much. now jon fortt with more at hq.

>> tim cook said recently in the past few weeks that they very much want to fight this. i'd be surprised if they give up at this point. i've got an e-mail and call into apple. apple didn't win this round. arguing their primary concern wasn't with pricing, it was getting into the market with not being undercut by competitors like amazon, apple tried to argue that the market actually got more competitive with them entering the federal government here focusing on the price issue, though, apple was arguing that amazon's control over the market was actually bad for the market. arguably making more of a european argument over how competition could work. but the judge here focusing in on price. it'll be interesting to see how apple's statement on this is worded. the amount of fight they have left in this. actually, kind of ironic that

today is the five-year anniversary of the app store. and apple's ecosystem is large part at stake here. the approach to the ecosystem is what's being criticized in this ruling. we'll see going forward whether they're going to hold the same sort of strategic wait for their ecosystem approach as it did in this case, didn't seem to work out for them. >> definitely going to draw renewed attention to those e-mails between jobs and some others. we'll come back to you for more at our headquarters. in the meantime, heading out west for the asiana plane crash investigation. our phil lebeau in san francisco with the chairman of the ntsb. morning, phil. >> reporter: good morning, carl, and i'm joined by the chairman of the national transportation safety board. you've had a chance to talk with all of the pilots in the cockpit, and the thing a lot of people are questioning right now, how is it you have three people in the cockpit as they're heading in before the crash and yet none of them apparently

notice they're going too slow? >> well, the information that we have from the pilots in their interviews is that they were focused on lateral and vertical lineup. they did recognize that they were slow, but they didn't recognize that until very late in the landing process. >> is there any indication that the automatic throttle malfunctioned? in other words, they were relying on that to maintain the speed they thought was appropriate. any indication that didn't work? >> well, we're certainly looking at what tools were available in the cockpit, what the crew knew about them, how they used the automation and whether it was working as designed. we have a lot more work to do in that area. the crew interviews are helpful, but we have flight data record information. 1,400 parameters we're sifting through. we want to make sure we understand what was happening and what the crew thought should be happening. >> there's been a lot of discussion about cockpit

culture. and specifically when it comes to the korean airlines and the question of whether or not out of deference, one member of the crew does not say something to another member of the crew. any indication that this issue played a role in one of the members of the crew not saying something? >> well, we always have to look at the dynamics between the crew. and, in fact, we actually have a term that we used to talk about that. crew resource management and it's how the crews work together whether or not a junior officer will challenge a senior officer and how that senior officer is expected to respond and create a team environment. we want to identify what communications took place, what the crews expected, and certainly how they were trained with respect to crm. >> any indication that played a role in this? >> i think it's too early to reach any conclusions. we have a team that's going through the cockpit voice recorder. asian, korean speakers and

english speakers, and they'll be helping us understand what was on that two-hour tape but certainly focused on the approach. >> the crew was not given drug and alcohol tests after they landed. because it's a foreign airline. i think a lot of people heard that yesterday and they said wait a second, i don't care if it's from the united states, korea, wherever it's from. if there's a crash on u.s. soil, shouldn't they have been tested? especially since the first responders who were coming to the scene, they were tested afterwards. shouldn't everyone have been tested? >> well, we're looking at what's required. we know for u.s. carriers based in the u.s. that the companies are required to conduct drug and alcohol tests within a specified period after an event. we'd know that this crew was not tested by their company for drug and alcohol immediately after the event as we would expect for a u.s. carrier. we need to understand what the company's policies are, what the country's policies are and how those work together with when they operate in the u.s. >> it's up to the company not the country? >> that's right.

each company is required to have a plan in place in the u.s. for a u.s. commercial operator to drug and alcohol test their employees. they need to request those tests, order those tests and need to ensure their employees have been tested. we know that didn't happen in this case according to those protocols. but we need to understand why. >> the chairman of the national transportation safety board with an update, guys, three days since the crash of asiana 214, they're going to be out here for two more days and we'll have an update later, as well. >> thank you so much as always, our phil lebeau out west. when we come back, senate agriculture committee chair debbie stabenow. we'll take one more look at futures, pretty decent action here, especially given the past four days. the best run-up all year. we'll talk more about that in a moment when "squawk on the street" comes back. (announcer) scottrade knows our clients trade

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♪ tribune, the parent of the "chicago tribune" and los

angeles times announcing plans to separate the publishing business from the broadcast business, essentially split the company. the move underscores the shift in focus of the tribune's tv business in the bid to maximize the growth potential there and the growth potential if there is any of the publishing business. the announcement comes days after the tribune agreed to buy 19 local tv stations, a $2.7 billion deal that we were talking about last week. part of another trend that we're seeing, that of consolidation amongst a lot of local tv stations. what's interesting here is that tribune has been thought to be looking at sale of some of those assets whether together as a whole or separately. that would generate a decent tax burden for the company. it doesn't preclude that going down the road of a spinoff if, in fact, they do get bids that perhaps exceed what they might be able to get as a public company. nonetheless, we're going to have time out there, we're going to

have newscorp. already out there. >> it's a trend. >> three is a trend. we've got yet another pure play publishing company, one wonders whether we'll start to see consolidation within that arena as well as we start to see all of these things floated out there. now, these things take time. you may recall newscorp announced the split so long ago, it only happened in the last week and you have to watch the capital structure, how much debt and/or cash will be put on to the balance sheet. >> is it about shoring up the balance sheet of one? >> not necessarily. it's more about trying to separate out. one that's interested in much more in growth which you could argue would be in the broadcast side of the business particularly with the consolidation opportunities that continue to exist there. and obviously publishing is not growth. it's challenge and the questions are legion as to what they're

going to do. >> publishing revenue for tribune last year, 2/3 of revenue, overall revenue, 20% of operating net. 20% when it's the lion share of your revenue shows where the margins are. >> for the spinoff. what is the investor base for a company that -- >> well, conceivably, if you can get it, you can cut costs and deliver a decent amount of free cash flow. it can be one of those kind of companies that delivers at least some sort of a return. and maybe one of these guys gets it right on the digital front. who knows. we'll still be waiting. >> interesting. when we come back, will news from the fed today add to the market's winning streak? or put an end to it? art cashin up next with what to expect from today's action. futures a little moderate here floating around the flat line. we'll get the opening bell in 8 1/2 minutes. income? with fidelity's options platform, we've completely integrated every step of the process, making it easier to try filters and strategies... to get a list of equity options...

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getting the national medal of the arts today along with george lucas among others. a few minutes before the bell, let's talk to art cashin director of floor operations with ubs. good to see you this morning. >> thank you. good to be here. >> four days in a row, time to take a breather or not? >> well, a couple of things. obviously barring an act of war, the biggest event of the day is going to be the fomc. we don't want to go with the historical patterns too many, but the last four times we've gone with fomc. the china numbers were dreadful,

there was some hope that the people's bank would have to loosen up. but elsewhere, things are slowing. and that feeds into what we've been talking about for the last four days, which is the feeling that this is new money for the new month, the new quarter, the new half, and maybe that money's beginning to run out now so we'll see. so either way it's caution or maybe not a new supply of funds. >> yeah, i mean, things are slowing, earnings aren't going to be that great. they're going to be much lower bar and yet stocks rallying are -- and having a strong rally into this season. it's as if no one cares. >> but, again, the feeling is, it's global, okay. the rally has been global up until late yesterday. and so it tells you that it's new money for the new quarter has to be deployed. and whether you're waiting for the rotation or not, the one thing you do know is new money's not going to go into bonds, it's going to go into equities and that's where it's been going. >> are the fireworks going to be around the minutes at 2:00 or the speech at 4:10 which

technically is titled i think the first 100 years, it sounds like a real knee slapper, art. >> well, the logic is really that the minutes almost must provide a surprise. while everybody came out singing from the same hymnal after, this was the meeting that inspired the talk that tapering is proximate. he might have to change his speech slightly. we'll see. >> thanks a lot. we'll see you later. for wall street, it is the drive for five today, can the dow extend the winning streak to five? the opening bell just minutes away. weekdays are for rising to the challenge.

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[ cows moo ] [ sizzling ] more rain... [ thunder rumbles ] ♪ [ male announcer ] when the world moves... futures move first. learn futures from experienced pros with dedicated chats and daily live webinars. and trade with papermoney to test-drive the market. ♪ all on thinkorswim. from td ameritrade. you're watching cnbc's "squawk on the street" live from the financial capital of the world. the opening bell set to ring in a minute. on may 28th, the dow closed at 15,409, that was the record close. and we're 109 points from that. >> on may 21st, the s&p 1,669 and we know what happened on may 22nd. >> intraday high, a little farther to go, 15,542, but

obviously getting very close to key levels. nasdaq, of course, a 12-year high and the best four days for the dow since the beginning of the year. let's get the opening bell here at the nyse. at the big boards, an oil services company celebrating its anniversary on the nyse. and staples marking the start of its back to school shopping season? what? is that -- am i missing something? >> no, this is the time. >> i've got a pit in my stomach even though i haven't been in school in a long time. >> i loved -- >> made me upset. >> you didn't love it? i loved the pencils, like the -- >> i loved all that too, but it's not even august. is this summer school? what are are we talking about? getting all that inventory, pencils. getting all that inventory to stores probably does take some time that we're not aware of. >> it's the second biggest

season to holiday. >> yes. and big precursor to how the holidays shape up. absolutely. speaking of retail, we should mention family dollar likely to be a mover today. two cents above, revenues inline, raising the forecast for the year. they do say some financial head winds in store for the consumer. >> exactly. i mean, it was a pretty important statement and one that investors are nevertheless shrugging off because they like some of the other operating measures. >> i'm going to take a look at fedex if i can. because yesterday we watched shares of fedex up sharply on this news that bill ackman is seeking investments for a special purpose, a vehicle that will make a significant potentially activist investment in a large cap company and a number of other parameters. he wasn't telling anybody what the company was. and, of course, not sure on the fee structure or how much money he's already raised. of course, his track record is not the best when it comes to these spvs, many people think of

target immediately in which investors lost over 90% of their money. and then there's jcp and then there's the herbal life controversy. yet, none of that was enough to stop shareholders or investors or traders from speculating that perhaps it's fedex that he's targeting. stock up 6% yesterday. >> the letter according to reports said it was a large cap investment grade u.s. company with a global customer base, high barriers to entry, high customer switching costs and substantial pricing power. investors took that to mean or adt got play too. >> wondering if it was part of an oligopily. the idea that i've got to become an activist, come on, that he can still do this. he's a great marketer, extraordinarily bright and he wants everybody to know it.

but, you know, you just wonder given his track record, what's been -- what he's been going through lately. >> that's what made that -- >> how he could raise the money, people speculate. by the way, you're speculating on it succeeding and him succeeding. >> exactly. >> general growth, that was a beauty. you've got to admit it. >> it was not an activist investment on his part. >> yeah. >> but we'll see. fedex shares for their part down a bit. but that was quite a pop yesterday. there is an argument to be made, apparently on ground and expressed separately. they don't finance their airplanes the way a lot of people think they should. there may be some arguments to be made that fedex could be run more efficiently. you know, i know i spoke to one shareholder who was talking to me about that yesterday. no idea if that's the name. and there are a number of companies wondering if it's them. we're sure it's us. >> meanwhile, hp is the second

biggest gainer today on the s&p. we mentioned that note out of city going from a sell to a buy. price target 32, they took a survey and they say that services 22% of profits are sales i should say are reversing some share losses of the past five quarters even though pcs remain weak and my favorite line, we admit that hp does not have the best track record in terms of capital allocation particularly on m&a, which is inspected. >> wow, that services line is important, though. pointing out that ihs talking about second quarter laptop sales down 7% sequentially. so that's versus the first quarter. it's the first sequential decline since 2002. you would expect, for example, hp to take it on the chin in light of that. >> listen, do they admit they've been dead wrong on the stock? >> a sell within the best performing dow name of the year. >> we've seen this name from the

october/november lows. it's more than a double, well more. that's scary to do that. then to go to a buy. i don't know whether people should not be selling. >> yeah. >> you take them as a contrarian sign. >> yeah, interesting. and finally, we do have yum tonight, our earnings season starting to trickle in with alcoa earlier in the week, but yum brands a name to watch tonight, particularly as the conversation once again today goes to growth in china. >> and joe biden's there as part of the strategic economic dialogue, a lot of focus on the currency, but of course, the fundamental situation because in the burberries today, you can't compare with chicken mcnuggets, but they did see better than the asian story. some of the shares down sharply, i think, around this time last year. >> let's get to bob pisani and see what else is moving down here. hey, bob. >> we're up given what happened in china, it's impressive we're up. slightly more defensive tone,

carl, to the markets. health care, consumer staples lead the way. those china numbers were just dreadful. and i don't care what you say about them trying to stop money laundering and moving of money across borders here. a decline of 3.1% in exports when they were expecting a 4% gain, a seven-point swing. th that's a huge number. this is not good news for gdp numbers. they've been targeting 7.5%, that's looking increasingly difficult to attain at this point. we also saw the import figures decline, as well. shanghai stocks, you think they'd be down, no, up 2%. bad news is good news. now they're speculating that the people's bank of china is going to cut interest rates and they're going to do stimulus, so chinese stocks had the best day in a long time up about 2%. i think that was the best day since march overall here. elsewhere, let me move on. if you think there's problems with money trying to find a home, there's plenty of money out there. did you see this announcement? kkr announcing they're going to

start a new $6 billion asian fund. the asian markets have underperformed dramatically this year. japan might be the one exception out there. but there's no shortage of money trying to go into asia. they open an office last year in singapore, specifically to look at the possibility of adding into their investments there and that apparently is now happening. obviously the story is buy into consumer growth. but as you see in china, that consumer growth is getting a little bit harder to find here. there's been a lot of speculation about whether higher interest rates are going to hurt housing. we've got the mba mortgage reports today. clearly refinancings are down. some of them down as much as 50% in the last few months. also down in purchase applications. here's what i would know, they've been down three weeks in a row. purchases not re-fis, but the rate of decline not as great as the prior two weeks. i think the bottom line, we're definitely seeing some effect, but it's not clear how much yet. finally, restoration hardware, did you see this? another secondary.

this is the second secondary they've had this year. the stock's been on fire, $77. remember something, this is the premiere company in this particular space that had two successful secondaries now. they went public back in november, $24, the stock was trading at $77, the big problem i have with it right now, the thing is, pricey, it's like 50 times forward earnings. the same problem i had with the home building stocks a few months ago. but this thing is now at the extreme end for what we're dealing with. even in the consumer space, even in the home furnishing space, yes, it's the premiere name, but close to 50 times forward earnings, i think that's pricey by anybody's standard right now. >> absolutely. certainly is, bob. thanks very much for keeping an eye on that. let's check in with seema mody. she's at the nasdaq. >> well, the nasdaq closed at a 12-year high in yesterday's trade. traders trying to see if the composite can hold 3,500. that's a key support level that market technicians watch. a mixed picture for large cap

tech. leading the index on an upgrade at citi, the stock on a tare up about 80% year-to-date. apple shares gained yesterday after it ended its litigation against amazon over the use of the app store term. and blackberry once again in focus, outlined a three-part transformation plan for shareholders at the annual meeting. also following a report from "wall street journal" that blackberry is planning more job cuts on top of the 5,000 it laid off in 2012. and a quick check on social media. reports circulating that zynga will unveil a real money gambling app for facebook users today at an event in barcelona. also in focus, moving lower after citi initiated a sell rating on the stock. david faber, back to you. >> thanks very much. hey, faber report, why not another day talking about dow. little bit of a development here. it sheds light, perhaps, at least, in terms of the thinking

of carl icahn. only eight days away from the important vote where shareholders will either approve the buyout proposed by silver lake or say no thank you and then perhaps proceed on a road to try to get that recap plan in place that mr. icahn has proposed. but this morning, icahn doesn't come back and say, hey, the recap plan. he says i want you to go and seek appraisal rights for your shares. this gets somewhat complicated, although it is part of any number of deals. but it'll essentially allow minority shareholders to have the stock price by judicial proceeding. the requiring company's obligated to repurchase at that price. and what you can do by asking for appraisal rights, you have to vote no, first of all. what's interesting here, it's so close.

based on everything i hear, it's not in the bag for the dell side despite what were those very favorable advisory opinions, my advisory firms. one wonders why carl is not more focused on simply arguing the merits of the recap plan because the appraisal rights route would often lead you to think, well, you're trying to get a bump, try to pay you more at some point either before or even after conceivably if you have those appraisal rights. but you have to vote no in order to have the rights. get enough people voting no you get nothing here, remember. yet another iteration on the dell front. eight days in counting. >> next thursday, right? >> yeah, next thursday. >> people were talking about a hit it would be to iss if it doesn't happen. >> yeah, there's a lot of pent up frustration with iss on all fronts, frankly.

that's a story, perhaps, for another day. and it would not be the first time that shareholders went against their recommendation. it has happened. rick santelli at the cme group in chicago. good morning, rick. >> good morning, carl. well, people down here are definitely talking about china. they're talking about it in a much more doom and gloom fashion than i think the media is in general. if you look at the export number down over 3%, keep in mind that was up close to 10.5% for the first half of the year. if you look at imports down .7%, they were up close to 3.5% for the first half of the year. so these are issues that loom large in a world that's interconnected no matter how many metaphors you want to use about clean shirt in a dirty laundry bin or closet. let's look at the ten-year, two-day is maybe the best. definitely feels as though treasuries have rallied, rates have moderated. as you can see on this chart,

it's been a narrow range and we are still within striking distance, and our close last several sessions are among the highest going back anywhere from 22 1/2 to 24 months depending on the maturity of treasuries. if you open up the chart to may 28th. and i'm going to use it all day long. people on the floor are focusing. may 28th is when we closed at our highs in the dow jones industrial average. we have relinked an interest rates. even though we're still in striking distance, what lesson should they learn by what these charts are saying? they're about ten basis points lower for a variety of reasons. think interconnected, think of the imf and their forecasts and how wrong they've been. we do see europe under some pressure. italian downgrade, maybe it was just catch-up, spain may be next, maybe that's just gossip. but in the end, this can't be

ignored forever. bank of japan two-day meeting, you're seeing a lot of activity along with our pins coming out. the dollar's still hovering close to three-year highs is taking a bit of a breather. carl, back to you. >> thank you so much. crude oil meantime in rally mode this morning, 105.23. big story of the week, bertha. >> forget china, normally that would be a bit of a head wind. forget the strong dollar, it's all about inventories here and the resurgence of wti nymex crude. take a look, the differential between brent and nymex today below $3 at some point. and the crude curve for wti nymex is in sharp -- people are valuing the front month contract more than later term futures. we're finally seeing some of that landlocked oil getting down to the gulf coast refiners with more pipeline capacity coming online. and we're seeing that in part in

the inventories. tim evans over at city futures says api reported a 9 million barrel draw. if that is confirmed by eia, it will be the second massive draw of crude we'll have seen and also a big draw of gasoline, as well, according to api, down to 3 1/2 million barrels. with all this pipeline capacity coming on, carl, we should get used to some of these very big draw numbers. back to you. >> we will see you at 10:30, bertha, thank you so much. in the meantime, the trumping forecast with a major jump in sales, what does the message tell us about high-end retailers and how we might play them? that's next. for the strong and the elegant. for the authentic. for at home and on the go. for pessimists and optimists. for those who love you a little and those who love you a lot. for ultimate flavor and great refreshment

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now, she's from the advisory group. and dana, these numbers, do they surprise you? >> they were better than expected. they were better than expected in total sales, better than expected in same store sales. and what's interesting is that half of the growth came from large leather goods and outerwear. so big-ticket items drove the sales gains. >> what's going on with the china story? is this all about hong kong? or is there a sense in the drop or perceived dropoff in asian demand from this time last year? that story's just done? >> i don't know if it's totally done. one of the things burberry saw was an uptick in the chinese business. but the real change is there's more spending outside china. under 30% of global spend comes from chinese. only 14% came from those chinese spending inside of china. >> well, that's what's so interesting about this. if their europe comps looked okay and you said to me, well, that's because it's the chinese buying in europe, i'd say that's

okay. but the performance across asia is strong. is it japan, other parts, southeast asia? >> it's also hong kong, taiwan picking up a little bit. korea getting less worse. each of the different regions from their business opportunities both online and in stores, they saw a pick-up in business. the speed at which they're getting the goods available now from the fashion runway to the stores, it's just basically taking on a whole new proportion of their business. >> is this a story where they've turned things around again, turned the ship around from when the stocks sold off sharply after a surprisingly weak disappointing sales update last year? is this a company-specific story? or is there a read through for the broader luxury sector? >> there's two things. number one, it's company specific because they've enhanced their business model. the speed to market is quicker, the collaboration with digital and stores is working. on the whole luxury goods platform, there's a little bit of resurgence. i just came back from europe the other day and i was in italy, paris and also london. there's more russian and chinese

shopping, they're buying apparel, the russians are buying apparel, the chinese are buying accessories. lvmh is upgrading the stores as is chanel and leaving burberry to follow the platform also. >> just to put it in some context, coach gets initiation at another firm with an outperform talking about nice valuation. stock's come back, new management, i mean, if you had to choose between a burberry and a coach, where would you go? >> there's a bit more momentum than in coach. i think coach's valuation is appealing. i think the new management team will be effective beginning in 2014 as they put the game plan in place. >> interesting. do you think the accessory trend is playing out to the degree where we're going to be talking about an end later on in the year, perhaps? >> no, i think accessories are still going. i think one of the things that's happening, there's more choices for fashionable apparel at competitive price points.

with accessories, you want the brand name label, you wear apparel on the inside, you don't see the label, you wear accessories on the outside, see the label, accessories will still work. >> how much further do shares go from here, do you think? >> right now around 15, i think no surprise if they get to 16 plus. i think when you think about coach, they will report the earnings at the end of july. i think the key there, they're going to see the continuation of sales improvement and continues to grow very fast. >> joining us with insight on burberry's trading statement. thank you very much. >> thank you. a judge takes a bite out of apple. this ebook pricing case. how that might impact the company. as we go to break, dow's up 18 points. and here's some of this morning's s&p losers. down 5%. out there owning it.

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apple's app store turns 5

years old today. when it launched in 2008, the store started with 500 apps. today there are over 900,000. and the store just recently passed a milestone of 50 billion downloa downloads. some day you'll tell your grandchildren, before we had apps, we had what. we'll get your responses throughout the morning. you've got to imagine a generation of kids, david, our kids are going to wonder, wait, before you couldn't just hit buy? >> right, we have those conversations, i do with my kids all the time. just in terms of television. explaining we used to have to actually watch what was on. >> or meeting people, you know. we think about that sometimes. my friends and i will often say to each other, what would we do if we couldn't update to say i'm 15 minutes late or five blocks a i way. >> you talk to a lot of developers, making apps is a big small business in this country, but for a lot of them, getting on the app store is just getting lost because there are so many to choose from and it's hard. it's not well curated for the

small developer. and that's why some of them say i'm not going to do it through itunes, for example. >> i find it a personal challenge to see if i can go without apps to actually still ask people for directions. >> oh, that's so quaint. >> why would you do that? >> i think these are important skills to have, life skills. anyway. >> in case the power goes out, i guess. the grid goes down, yeah. >> you'll want to be with me. simon hobbs is here to tell us what's coming up at 10:00. >> good morning, everybody. after the break, we've got our wholesale inventory's going to be released. we'll look at how the power is shifting back from china to the united states increasingly with a guy that specializes. and planet of the apps, we'll talk about the fifth anniversary of the platform that changed the world. hour two of "squawk on the street" wednesday morning. mr. goldman loved his family a lot, didn't he dad? he sure did. that's why he had state farm life insurance. like you. so his family never has to worry, right? mr. goldman didn't have life insurance.

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may wholesale inventories down .5%, much different than the up .3% we were expecting. and if we look at the sales side, there's good news there, up 1.6%, five times the level we were anticipating.

all this comes a the a time rates are creeping up, equities still in positive territory and everybody's going to be spending many seconds reading the minutes in several hours m back to you. >> rick santelli, thank you, i wonder if that's going to shave off the second quarter gdp figures. i want to see how we're setting up this morning ahead of the fed minutes and hearing from bernanke this afternoon. the dow's adding only about 20 points. coming off one of the strongest four-day sessions of the year. not a ton of momentum. a lot of people waiting to see what happens this afternoon. the ten-year, i think, the last i saw was somewhere around 265. a bit of a holding pattern. we'll get a ten-year auction around 1:00. >> with that, let's get the road map for this hour. a judge ruling against apple saying the tech giant is guilty of collusion when it comes to ebook prices. and we'll take you live to

sun valley. who's there and who's not. and working with china, the administration meeting with chinese officials today. we'll talk to an american businessman about whether he's seeing a slowdown overseas. >> also, hedge fund advertisements, they could become a reality after today. we'll have the latest details coming up. a judge finding that apple conspired to raise the retail price of ebooks. our jon fortt with more of that at hq. >> particularly the end where the judge sort of picks apart a lot of apple's arguments. i want to go through some of that. first of all, from my reading at this point and a lot of experts going through this now, it appears this ruling hits at apple's business practices. but the impact on its strategy going forward might be limited. i'll get to why in a moment. of course, next we do move into the damages phase. there's money on the line for apple. there are also a number of states attorneys general looking at this. i wouldn't be surprised to see

apple get sued over this in some states, as well. let's talk about the judge's key findings here at the end of this more than 100-page ruling. first of all she said apple's tactics did force prices higher despite the fact that apple said that wasn't their main goal in this. the judge saying it's awfully fishy it happened in record time, prices did go up. steve jobs' words had an impact here providing compelling evidence of a conspiracy. the judge said, particularly his words to rupert murdoch saying let's give it a go and see if that works and words to a reporter saying that the other players, namely amazon would have to compete at the same price as apple because of agency agreements we were to find out. judge found apple fully complicit in this price fixing scheme as the judge put it even though it was actually the publishers who raised prices. apple arguing, hey, we didn't

raise prices, they decided to do that. you can't fault us for doing it. and the judge largely putting aside apple's entire argument that the ebook market would not have materialized if apple hadn't entered the market. publishers looking at holding back titles from the ebook market because it wasn't a good business for them. the judge saying no individual tactic that apple had here was wrong. it was bringing all the publishers together in this way that was the problem. interesting, though, the digital content game has moved on to video. not clear this particular decision on ebooks is going to be that big of a deal going forward, guys, back to you. >> important ruling there with the latest. bringing the focus back to the market and the economy, fomc minutes due later today around 2:00 p.m. eastern. will stocks be able to hang on to five straight days in light of that? let's bring in the cnbc contributor and shawn matthews ceo of cantor fitzgerald. good morning. >> good morning. >> joe, let's start with you. is it going to be the minutes,

do you think? or anything we might hear from bernanke that will be more important? >> minutes in my mind are more important. i don't believe the chairman wants to preempt the testimony next week by telling us something really important. i believe he'll stick to the topic which is kind of 35,000 feet, overview of the last 100 years of fed policy making and not delve into the things we want to know. but on the minutes, i think they'll be interesting. i would not be surprised if some members want to taper in july. >> well, people, though, when the minutes came out last time around, the big surprise was a number of people wanted to taper in june. isn't some of that expected? and wouldn't there be room for a dovish surprise if it seems people are worried about the economy? >> no, i don't think so, kelly, the data have gotten better since may and if anything, it's going to keep the fed on track. most but not all primary dealers look for some type of tapering. and, of course, if the data the next few weeks turns out to be stronger, those expectations of a september taper and ultimately

a conclusion of qe will grow in size. >> i know we have to bring in shawn in a minute, but i want to pick up what you're saying. the bond yields have moved dramatically from where we were because of this disconnect between the academic view that the fed wanting to communicate on the dramatic moves we have on the market. if you're going to get a more hawkish statement today, that's going to further accelerate a move higher potentially in the bond market yields which is what bernanke probably doesn't want. so isn't he forced out today to say something in effect to neutralize the statement later in the day? >> i don't think so, simon. and you're right, there's a big -- versus what they decide to hold on their balance sheet. the problem is yields are too low, they were artificially low, the economy's healthier, yields will back up. i would argue even -- we need data, we've already had a pretty massive move. >> for your business, you want higher rates here, do you like what's happening with the move

we've seen? >> i think higher rates are coming, it's just a question of how long it takes to get there. when you look at the tapering question, certainly they are going to taper and it's going to happen at the end of this year. but in reality, fed funds used to be the way they control the money supply. and they're not going to talk about raising fed funds for probably another year or so. we're pretty pleased that the rates have backed up the curve, you'll see the move back into products. >> there's been a lot of focus in europe, trying to figure out what to do to increase lending to small and medium-sized businesses. do you think the rise of something like clos, cbos, the products we started toe so in the last boom could actually help financial institutions lend more right now? and is that why you guys are hiring? >> well, i don't know if it's going to help. you start to look at the construct of structure products are perfectly fine, it's the leverage that's associated with them during the last cycle that was the problem.

and certainly when you look at leverage or the triparty system in general, you're not going to see the same characteristics even when you get to a bubble-like state which will be significantly smaller than it was in the past because of leverage. >> is that partly because of what we saw yesterday trying to keep that leverage ratio in the range of 5% to 6% instead of 3% where it is internationally? >> that's part of it. but you're also looking at the triparty system which actually would lend money against assets so corporations and people have gotten much more conservative on what they'll lend money against in the tri-party system which is only going to make it more smoother going forward as opposed to the kind of really bubble-like scenario we had in the past. >> joe, i'm curious. a lot of traders say every so often these minutes come out and we lose our minds over what the doves said, the hawks said. in the end, it's sort of what bernanke wants it to be. i wonder how much give there is. >> that's a very good point. there's 19 people, 12 of which

vote, it's like moving a big ship. that's why i believe the changing in the chairmanship if it happens isn't going to be as market worthy as people think. let me just say something on tightening in the data. if jobless claims continue to move lower, going back to 1955, when they're consistently below 350 as they were last quarter, the fed always hikes within a year. i'm starting to worry and wonder whether this tightening is going to be a lot sooner and what we're positioning for is more like an '04 event where the market sold off big time in '03, but then sold off hard next spring. >> as you believe, they're underestimating employment growth. >> yes, absolutely. the figures are wrong, historically always wrong. and they'll be wrong further. >> joe and john, thank you both for your time this morning. appreciate it. >> thank you. new details emerging this morning in the investigation into the crash of asiana flight 214. following interviews now with the pilots, phil lebeau live in

san francisco. that was a great interview you did with the ntsb chairman an hour ago. drug testing, communication amongst the crew, the automatic pilot. where are we now? >> well, i think we're in the place in the investigation where they still need to put all of these pieces together to start to get a better understanding of what happened in the last minute and a half leading up to impact right before the runway. when they hit the sea wall. here's where the investigation stands this morning, all four pilots, they have been debriefed. and they are now actually free to go back to south korea. it's unclear if that will happen right away or they'll stay here perhaps have a press conference. the three-person cockpit crew was focused on the plane alignment. the slope as they were coming in. that is where the attention was focused and they failed to recognize they were going too slow even though the automatic throttle was in place. some were wondering if they were counting on the throttle to maintain the speed of 137 knots, which they were not. the crew was not given blood and alcohol tests following the

crash. this revelation yesterday has a lot of people scratching their head saying why not? well, foreign carriers are not required to give blood and alcohol tests. here's the chairman explaining why. >> each company is required to have a plan in place in the u.s. for a u.s. commercial operator to drug and alcohol test their employees. they need to request those tests, order those tests and they need to ensure their employees have been tested. we know that didn't happen in this case according to those protocols, but we need to understand why. >> and, again, the companies not the country, the companies are the ones that make a decision about whether or not drug and alcohol tests will take place following an accident. and what's interesting, carl, is the first responders coming to the scene, they were given blood and alcohol tests and even though there's no suggestion that the crew was somehow impaired, it does raise a lot of people's attention that they were not given tests. it seems sort of common

protocol, you would expect that to happen. but, again, it did not in this case. >> the pilots' union here. talk to you soon, phil lebeau in san francisco. straight ahead, why facebook has four executives in sun valley this year. only google has more than that. find out who they are and what the social network could be looking to buy. plus, eliot spitzer back into politics on "squawk" this morning. what an interview that was. who is he going to gun for? find out what he had to say earlier this morning. back in a minute.

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eliot spitzer speaking out on "squawk box" earlier today about his bid to run for new york city comptroller. the man formally known as the sheriff of wall street had to say about becoming the top financial officer. >> will they trust me to be the overseer of the pension funds and the budget of the city of new york? there have been very few independent voices in the past number of years about public finance, about budgeting, about capital markets and i think when the public looks at what i have said and compares the historical record to what actually i was saying, they will say, you know what, this guy actually did not only understood it but acted upon it in a way that was designed to remedy the flaws. >> spitzer also saying whether he'll be redeemed in the public's eye is up to voters. >> whether there will be redemption is something the public and voters will

determine. and throughout my career, i have deferred to the public's judgment on those issues. when i was a low-level prosecutor, the jury rendered a verdict, i respected it even if we might have agreed or disagreed. as attorney general, as governor, the public will render a verdict. i'll make my case and comfortable with whatever the result may be. >> there were no tears. a lengthy exchange with the "squawk box" team this morning. >> yeah. i mean, kernan and andrew might have cried afterwards the way some of those questions were answered, he did not want to address the questions head on. a couple of times he said let me rephrase the question. classic spitzer. >> exactly. what did you guys think? >> i have so many thoughts and so few that i want to share. >> maybe during the commercial break. >> yeah. >> i would question the attempt to become mayor. he's taking the limelight at the moment and raising the whole question of whether disgraced people should be allowed back into public office when anthony weiner was winning in the election and thought he put that

issue behind him. >> the "times" called it the kardashian ticket. it's a little bit surreal to watch both of them now in play here. when they asked spitzer is he endorsing anyone for mayor, he said no. >> no, because he's going to be the thorn in the side of any mayor. he's going to be tough for whoever becomes mayor for sure. >> we asked who was up for this position yesterday. asked him about this, does he think the limelight helps his case, hurt his case? he's as a strategy not going after spitzer, just saying i'm the best guy for the job, period, i have integrity. >> and he's been at it a long time. well, it's the fifth anniversary of apple's app store. apple got a blow in the courtroom today. the federal judge ruling against the company. we've got a panel to break down what happens next.

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speaking of sunshine, sun valley is always seen as a who's who of titans. you have to be a heavy hitter to get an invitation. live in sun valley with a look at who made the cut this year. and julia, more importantly, who didn't? >> reporter: well, simon, this time last year, we were just coming off the facebook ipo. but this year, the old guard is in the spotlight and media m&a is expected to pick up. with hulu on the block, time warner, and viacom walked in this morning. rupert murdoch is here with his

sons james and lochlan keeping quiet about the newscorp split. warren buffett's here but didn't get out of the car and sony's ceo wouldn't talk about reports that sony is splitting up. now, facebook has four executives in attendance. that's more than any company other than google and disney. this time we also have first-time attendee dan rose vp in charge of deals. with an ipo expected in the next year, twitter ceo and jack dorsey are also here. and shining a spotlight on the next potential billion dollar acquisitions or ipos. including the ceo of stripe, patrick collision, alex carp, nicholas woodman who is the ceo

of go pro and pinterest ceo ben silverman. who is not here? larry page isn't coming because he's ill. don mattrick isn't making the trip and ma rissa mayer wasn't on the list. i asked jack dorsey if he'd be posting vines through the conference on twitter and he said, absolutely. >> whoever's manning the camera at that entrance, julia is awfully busy. that was a lot of good tape of executives getting out of their cars. we'll come back to you later on, julia boorstin in sun valley. meantime, a judge ruling against apple finding the tech titan violated the law on ebooks. they cannot ignore the anti-trust laws when they believe it is in their self-interest to do so. as apple celebrates the five-year anniversary of the app store.

lance is the editor in chief and the associate editor at in gadget. >> good morning, thanks for having us. >> it's sort of an inauspicious anniversary with that ruling, wouldn't you say? >> yeah, we knew it was coming. steve jobs didn't make a secret of it. he thought that apple -- that amazon made a big mistake and publishers were frustrated and he basically negotiated a better deal. but i guess you could also put that under the, you know, sort of price fixing and, you know, so they found the obvious. that's what the judge found. >> yeah. brian, is it something that's going to dog them for a while? they seem so resolute in fighting it on principle almost. they can certainly pay for whatever damages come along out of the change in their sofas. >> yeah, apple's certainly got a pretty large purse and, you know, event had much trouble bouncing back from this sort of thing in the past, i suspect they'll be just fine. >> lance, let's talk about the

app store itself, we were having a discussion about small app developers and the problem of discovery on that store. they're going to have to do something about that long-term, aren't they? >> yeah. i mean, i guess they probably see it as a -- you know, it's the best rises to the top. you have reviews right next to apps. so the good ones come up to the top of the page. but, of course, they feature apps. and if there are 1/2 million apps in there or more, it's virtually impossible for the little guys to get noticed. i've got 75 apps on here right now and i don't switch up a lot. i find the apps i love, put them on, and it takes a lot for me to add a new one. >> what's the hallmark, brian, of a good app? i assume it's an app that gets people to pick up their phone more often than others. >> i think a really great app is one that takes advantage of the hardware in ways we haven't seen before. one of the really brilliant things that the app store has done is taken this computer and it's unlocked pieces of technology in ways that apple hadn't thought of in the past.

squares a really good example. it's changed retail. >> lance, you make the point, there's different ways to go, you can do something information related like some of the yahoo weather apps. i'm looking at the list of the most downloaded ever. >> look, the phone one's about staying connected. and very early on, the applications that were popular were the ones with a social component. twitter didn't have a native app, but there was twitter and eventually twitter bought that and caught up and, you know, when you think about the apps that are rising like messenger, these are products that are tieing in, snapchat, tieing into that social impulse. you know, so you sort of have to really engage with the phone to engage with your friends. that's the beauty of these apps. it's not always about some sort of, you know, really crazy feature that relies on the hardware or the os in some special feature of the os.

>> what do you think the next five years looks like for apps? >> oh, man, that's -- that's a tough one. i mean, i do think we're going to see a lot of smaller companies sort of start rising to the top now. you know, we've certainly seen that from a hardware front. we're just going to have to see companies that can really kind of help set this operating system apart. apple's got a lot of competition. android is out there, windows phone is doing a lot better than thought. can take advantage of all that apple's offering there. and all the things they're offering on the hardware front. >> brian, lance, interesting, especially for all of the small business people out there developing apps at home right now. thanks. our question, some day you'll tell your grandchildren before we had apps we had to blank. tweet us @squawkstreet. the chinese market having a rough year, of course, compared

to things here. is power shifting further back to the united states? and what does it mean for your money? and later on the program, we know which states are the top for business. but which state has the best workforce now? find out when we come back. [ male announcer ] frequent heartburn? the choice is yours. chalky... not chalky. temporary... 24 hour. lots of tablets... one pill. you decide. prevent acid with prevacid 24hr. you decide. wi drive a ford fusion. who is healthier, you or your car? i would say my car. probably the car. cause as you get older you start breaking down. i love my car. i want to take care of it. i have a bad wheel - i must say. my car is running quite well. keep your car healthy with the works. $29.95 or less after $10 mail-in rebate at your participating ford dealer. so you gotta take care of yourself? yes you do. you gotta take care of your baby? oh yeah!

welcome back to "squawk on the street." another major drawdown on u.s. crude inventories. the government reporting crude

inventories last week fell 9.9 million barrels. we saw gasoline inventories fall 2.6 million barrels. this is right in line with what we saw last night from the american petroleum institute. inventories rose by 3 million barrels, that was worse. we are seeing positive movement here. crude had been trading at $105 a barrel and holding in there, a lot of the gains having come overnight. one of the interesting things as we've seen a big drawdown in terms of oklahoma supplies, that's a delivery hub for nymex crude, down 2.7 million barrels last night. and andrea lippo says we're starting to see the bottleneck starting to get unstopped. just within the last quarter or so, we have seen about 300,000 barrels a day of oil coming out of there including the whiting, indiana, refinery starting. so that's drawing nearly 9 million barrels a month.

and, kelly, more pipeline set to open by the end of the year. >> yeah, that's going to be one to watch, bertha, $105 a barrel for oil. thanks very much for that. meanwhile, a meeting today in washington to discuss everything from security to economic issues. eamon javers now live from d.c. with all the details. eamon. >> good morning, kelly. secretary of state john kerry is here today despite the recent hospitalization of his wife theresa heinz-kerry. thanking all of the other leaders here for their well wishes on behalf of his wife. he said she's feeling better and they're ready to get down to business here in washington today. all four leaders interestingly who are co-hosting this including secretary of state kerry and also jack lew on the u.s. side as well as the two counterparts are new to this process. the ongoing dialogue between the two nations. all four of those cohosts today will be new to it. there's an opportunity here for them to get off on the right or possibly the wrong foot.

vice president joe biden opened up the session this morning with a few remarks in which he really hit on this notion of competition and friendliness between the two countries. take a listen. >> the competition is good. is good for us, is good for you. we welcome it. we welcome it. and we will both be better for it. as i said as a consequence, if we get it right. so will the world. >> and, guys, the range of issues they're dealing with here is pretty astonishing in scope. starting with north korea, accounting rules for customers doing business in the u.s. and in china u.s. export controls also on the list, climate change, and of course, cyber espionage. and interestingly enough, u.s. officials held a background conference call for reporters talking a little bit about the cyber espionage issue. they were asked on that call by a chinese reporter from the

newspaper china daily about whether the edward snowden situation was going to play into the discussion between the u.s. and the chinese. of course, the u.s. have asked the chinese to knock off the cyber espionage against american companies and american economic interest. and the chinese pushed back on that with snowden. u.s. officials on this call earlier in the week said we're going to separate these two issues. we view this as very different. the chinese don't see it that way. >> in the meantime, eamon, they're taking those issues offline so if the talks don't crash they'll be dealt with by separate process. >> that's right. that's right. in fact, they had cyber espionage discussions earlier in the week already. a lot of that is underway and in a slightly different time frame. >> thank you very much. keep us updated throughout the show. let's discuss more now about china and how it influences our markets here and your money. specializes in importing goods from china. good morning.

we were saying in the break there, 34 years. >> 34 years. 1979. >> a lot of experience. do you think -- this is a really interesting inflexion point for the chinese and u.s. economy. do you think that power is shifting further back to the united states in economic terms? you see costs rising in china of which i'm sure you're aware. and costs falling here certainly in terms of energy in the united states. >> well, you have kind of a diametrically opposed situation. you have china where the demand is clearly dropping for export. their export numbers, i think, this morning were negative 3% as opposed to a projection of positive 4%. at the same time, their currency has appreciated 10.5% in the last five years, 3.5% in the last year. so what you have is a vendor stuck in a place where as a manufacturer he can't pass on the currency cost because he doesn't have the demand for the

product. so he's really in a squeeze at this moment. so from our perspective, we find it kind of disconcerting because we don't have demand here. and at the same time, we can't generate demand through lower costing. >> so what do you do? >> well, a the this minute, you kind of tread water, bide your time, do a little bit of outsourcing to places like the philippines, vietnam, indonesia. we do a little out of portugal and india. but for the most part, none of those places can rival china's infrastructure. they have, you know, they can go from raw material to finished product regardless of what product that is. whereas a lot of these other countries, you can't get -- you have to bring the actual raw materials from china to those countries. >> it's interesting, though, you say there's no demand here. i think that would surprise a lot of people who look at the growth figures and go, well, at least the u.s. is holding up relatively better. is that not the case? >> well, if you dig down into the numbers, consumer consumption has been pretty flat

over the last period of time. you look at most retailers, the same store sales are very flat, they are not expanding. so until we see more demand h e here, that doesn't translate to manufacturing demand for them. the same goes, you know, their largest export customer is europe. europe's been in the toilet bowl for years now. >> well, peter, give me a feel for what's going on in your opinion in china. exports is down. >> right. >> we know they're trying the incite consumers there to start buying stuff. how is that going? and what do you think in terms of gdp which is still 7.5%. >> gdp can be anything you want it to be. if you build buildings people don't live in or roads that no one uses. we follow the ism numbers very closely. the open order for manufacturers have been trending down for years now. and they have a problem. what happens is they're running at 50% of capacity, a lot of factors going out of business. a lot of factories had to go to

shadow banking system. and now they're stuck and don't have the ability to repay it. >> for people who worry about china but don't quite understand how to assimilate what is going on, i mean, how dangerous is it? you have a new government that's trying to take power, it's got a huge task of restructuring the economy and yet you get breakouts like -- with the banking system two or three weeks ago where they didn't supply enough liquidity. how dangerous is it now? >> let's put it this way. it's less dangerous than what happened here in 2008. because it's -- their system, their banking and monetary system isn't as fluid and transparent as ours. we exported our problem around the world financially. their system is somewhat insular. so it will maintain somewhat of an insular effect. that being said, those who ignore history are doomed to repeat it. they went to shadow banking, that's financing we had here. they've gone to excessive real

estate where, i mean, how is having empty homes in china any different than empty homes in las vegas, phoenix, southern california and florida. so they're going down the same path. it's just taking them a little longer to get there. >> nice to see you, peter. >> thanks for having me. now to some investing news here at home, the sec is considering whether to allow hedge funds to advertise. >> carl, the commission is as we speak hearing presentations on an important provision of the jobs act that will lift the long time ban on general advertising for hedge funds as well as other many private companies. a little later this morning, they are expected to vote on actually lifting the ban, something they've been mandated to do by congress but has been delayed over a year now as they get mired in technicalities and some delays. the dharm v chairman has said that taking action on this solicitation issue is a top priority for her. but there are a lot of other varieties to consider.

a key one is who is permitted to in these hedge funds. right now, the guidelines that are investors must have $1 million in net worth in addition to the value of their primary homes or two or more years of earning $200,000 per year or more depending on whether they're single or married. if married, the bar's a little higher. it's on the issuing company, though, to verify that the potential investor to whom they are advertising is, in fact, qualified to invest. but there's talk about congress and the sec raising that income and net worth threshold. another issue being discussed this morning, as part of today, the sec plans to vote on how to collect the information about the verification process and what the best way is, guys for companies to conduct it. they're sort of rejecting the notion that a one size fits all verification model works. but the question is, what's the best alternative? >> yeah, a lot of discussion about where the little guy comes out in all of this. a discussion that will continue. thank you so much. >> does that mean if bernie

madoff were in business now, he could launch a advertising campaign? and you can investor in bernie madoff? >> right, and that's the concern. the interesting thing, as well, not even just hedge funds. >> it wasn't really a hedge fund anyway. >> who's policing it? >> well, right now there are regulations that prohibit them from going out and being able to run these sort of national campaigns. and even so, there will be restrictions on whether they can use celebrities in some of the more, you know, general public aimed strategies, i guess you might say to recruit money. >> the power of the financial lobby. >> they're not going to have great returns to point to when they're going out to the public if this year's any indication. >> check out crude, $105.50. speaking of, we were just talking about production and manufacturing. unbelievable gains. the two-week inventory drop is the biggest since 1983, and now the premium between brent and

wti narrowed to it was $17 in february. >> some said that spread was going to widen to $70, and now it's about to be overtaken, wti over brent. >> a key aspect of the market today. coming up, we'll talk to the blackberry shareholder who asked the ceo if the company should be broken up. he'll join us live later on. and don't forget, one week from today, july 17th, cnbc's delivering alpha conference. these are some of the headlines. for more information, go to deliveringalpha.com. "squawk on the street" is coming right back. er about insurance, because what you dont know can hurt you. what if you didn't know that it's smart to replace washing-machine hoses every five years? what if you didn't know that you might need extra coverage for more expensive items? and what if you didn't know that teen drivers are four times more likely to get into an accident? 'sup

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while dramatically reducing waiting time. [ telephone ringing ] now a waiting room is just a room. [ static warbles ] welcome back to "squawk on the street," i'm josh lipton. we're watching best buy this morning, which is under real pressure. the analyst at cleveland research reportedly out with a note saying that the chain's domestic comparable store sales

appear to be slowing that the fundamentals remain challenging. the stock down some 5% right now. of course, it's also been on fire this year. up nearly 140% year-to-date. carl, back to you. >> yeah, that does move the ball forward on that name. a lot of question marks earlier in the session about what happened, josh. thank you for that. meantime, america's top states for business have been revealed and the winner is south dakota. which state is tops when it comes to workforce? scott cohen is live in crazy horse, south dakota, with more on that. scott, a lot of discussion on twitter on how no one expected south dakota, one of the big surprises of the year. >> yeah. and you know, carl, south dakota has always done well in our study from year to year. it has very low cost and that was important this year, but a lot else going forward, as well. but, yeah, a very much a well-kept secret. we're at crazy horse memorial and one of the hazards of working on top of a mountain is lightning. so we've had to move off of the arm of the statue, which i'll

show you in a moment and move to a safer space. they've been working on this for 65 years and blasting off fragments of the rock face as little as this one. there's a whole lot of them, a lot more than just in this box here. take a look at the video we shot earlier of the mountain and what this is going to be. it's really pretty amazing. and in a lot of ways sort of an answer to mt. rushmore which is about 20 miles or so away. let's take a look at the worse force which is an important category on our study. we look at things like union membership, the education of the workforce, the availability of workers, working training programs in the states. georgia earns top honors for a second year in a row in our workforce category. it's one of the least unionized states, workers are reasonably well educated there and with unemployment on the high side, no shortage of workers, that's important. georgia's followed by arizona, north carolina, florida and tennessee. what about the bottom workforces, though? a tie between hawaii and new york. which is america's most

unionized state. ohio where population growth is stagnant and the education of the workforce is near the bottom followed by new jersey, vermont, and west virginia which has the least educated workforce in the country and one of the most heavily unionized. one of the things we look at and this generates controversy is the whole idea of right to work states. it's a state where you can't be forced to pay union dues or fees in order to work at a plant or company. 24 states are right to work states. michigan became the 24th state earlier this year and that improved michigan's ranking in our force force category. it was 38th last year and now 15th in the workforce category. you can learn a lot more about our study, read a lot of material including a dozen or so governors that have weighed in. we'll have more of your reaction later on today. guys? >> thank you very much. our survey from crazy horse. still ahead on the program, the smithfield ceo is going to face

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mortgage apps falling again last week as rates are on the rise. more on that story four weeks in a row. >> that's right, carl. dropping steadily on that sharp jump in rates, take a look, if you will, refis down to a two-year low, continuing to take away from consumer spending power. purchase applications were down 3% and down a whopping 28% in the past month. we visited an opening house for real estate agents out in northern virginia yesterday, and the story they say is this housing recovery is changing very quickly. >> it's gotten a lot quieter which is a shame because rates are really low. that will cut down on business because people are going to say, hey, i missed the boat and i won't go out and purchase. >> having a chilling effect on the overall temperature on the

market. coming down from red hot to white hot. still a lot of inventory and we're cutting the good property. >> reporter: incredibly low inventory means more buyers will be priced out sooner than later as prices continue to go up. >> diana, thank you very much. diana olick on the strength of the housing recovery. over to a man who knows a lot about rates. rick santelli live in check. richter. >> thanks, i'mon. i was going to talk about munis and list nick to diana talk about the rise in interest rates, let's switch gears on the fly here and talk about something else, reits. today i've probably been handed five major articles written about reits but i'd rather go back to some articles i read in

january, february and march. there's been various points of escalation for various reasons but in the end i remember the doom and gloomers saying the reits would have some problems and the answer is simple in, a de-researching mode. short-term funding, historic lows creates a bunch of problems when those low rates don't remain low. leverage short-term funding. let's look at the typical reit before the debacle started. most articles said if you want to get nervous look at the debt to equity. remember, they pay out all their dough in dividends. debt to equity was anywhere from

7-1 to 10-1. you would cry in you read this. huge market caps very little in the form of sales revenue, and when you look at most of these securities and a lot of leverage was in mortgage-backed securities, a lot of leverage has taken a dive from the higher coupons in '08 and '09 and 10 have been moderating and since all that went to dividend revenue, all you are to do was look at the rate, that it really was a canary most wanted to ignore. most was in the neighborhood of 13% to 17%. i wanted to talk about munis because the losses have been so large. leverage is like an onion and just because this layer or level is behind us, that tranche doesn't mean there isn't more to come. watch rates.

tuesday is wednesday. i love that commercial about hump day and the camel. homer jenkins jr. writes for "the journal" and i'll ask him his common sense answer to some of the issues regarding level. back to you, kelly. >> looking forward, rick. now to tweet time. apple's app store turning 5 years old. when it launched in 2008 the store had only 500 apps. >> from the mouths of babes. >> still, over 900,000 apps, how many do you have, simon? >> not many. >> we want to know. some day you'll tell your grandchildren, before we had apps we had to what? >> they will probably say what is an app? >> that's when we come back. mine was earned in djibouti, africa. 2004.

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apple's app store is 5 years old. tom day you're tell your grandchildren before we had apps we had to what? scott writes have actual conversations with people, face-to-face even. before apps we had to walk to the game console and put it into the machine. >> we had to go out and play.

talking about getting tides to do that these days. put me down and go outside. >> get active. red arrows across the board. dow negative for an hour. >> nasdaq positive. not seen much throughout the morning. see if market ends up being a negative or positive. >> good to have you back. we'll talk eastern in a little bit. just joining us, here's what you missed. how long could the end of these take versus the beginning of tightening? two years? >> the beginning of real tightening has to wait for the fed to want to slow the economy down. the opportunity to serve was the opportunity to serve whether as assistant attorney general or governor, i hope the controller of the city of new york.

you try to contribute and that's what this is all about. >> earnings don't have to be great and just don't disappoint and if we'll have substantial degreeses it has to be earnings and i come back to ref news as well which comes back to a somewhat better economy. >> apple did in fact conspire to raise prices of e-books, that's the court ruling just crossing. >> i believe he'll stick to the topic which is kind of 35,000 feet overview of the last 100 years of fed policy-making and not delve into the things we want to know but on the minutes, they will be interesting. i won't be surprised if some members want to tapener july. >> how is having empty homes in china different than empty homes in phoenix, southern california and florida so they are going down the same path. just taking them a little longer to get there.

>> good wednesday morning. live here at post 9 of the new york stock exchange. let's get a check of the markets. the dow sits 100 points and change from its record closing high. down 20 points. s&ps hanging on -- nasdaq hanging on two points and s&p down three. oil is getting inventory numbers that are, again, very bullish, 105.71 is now the check. >> people are buying more low margin items like food and cigarettes causing profits to fall and hp getting upgraded from buy to sell over at citi. citi pointed to increasing benefits from cost savings as well as momentum as the main reason. block bluster whirling against apple. a judge saying the company

conspired to raise money on ebooks. smithfield foods under intense scrutiny. safe for america to buy the biggest pork producer? coming soon to your kids' lunch menu, greek yogurt. the ceo of chobani is here with more on that story. >> apple has issued a response to cnbc in which a federal judge found them guilty of fixing prices. just got this moments ago. they said apple did not conspire to fix prices and we'll continue to fight against these accusations. when we introduced the ibookstore, we gave customers more choice and injected much

needed competition in the market. we've done nothing wrong and will appeal the judge's decision. now the department of justice also issuing a much longer statement that i can't read in its entirety but the point here, the doj saying the result is a victory for millions of consumers who choose to read books electronically and pointing out that the publisher's e-books increased by an average of 18% as a result of the colusive effort by apple. apple saying by entering the market we encouraged publishers to put the books out there and broke amazon's iron grip on this market but the doj saying bottom line prices went up when apple happened because they force that had to happen. interesting, roger parloff over at "fortune" opined that the supreme court may indeed end up taking up this case, very interesting and this is structured different than your typical antitrust case.

it might spark their interest and interesting to see how far apple's appeal of this can go, but bottom line, a lot of action in this space, the digital content space has moved on to video. not clear how this decision might have an effect on strategies going forward. a big loss for apple this morning. >> for a lot of investors, they may start to be calculating. is this about the damages they pay or the remedies they put in place the way they have to change their business? maybe both. one thing i will see is the e-book market overall not as big as something like music or digital video so it would be a surprise to see the damages getting into the billions here. we all know how much money apple has. up towards $150 billion, maybe

more than that now. they can certainly afford to pay out a little bit. >> can afford to buy a large country for that matter. apple starting to flat line at 1422.31. our jon fortt over at headquarters. >> u.s. stocks are mixed. following a drop in imports and exports out of china. the president of oberweis joins us and steven katz, good morning to you both. >> good morning. >> jim, first of all, the trade figures, as week as they were saw the china zhang high composite index up today. is that because you'll see people look at some policy act to support the industry. the old bad news is good news. expectations for policy response are going up but wouldn't surprise me to see the

government hold firm and none policy issues they could take like revell programs, not necessarily fiscal changes but could also stimulate nick growth. more of a bump in the road. >> the chinese leaders have made it quite clear they are willing to stomach this with what they have seen with a slowing economy. they want to transition from the export-led model to more of a consumption led one. any reason for the people in the market to really think they are going to come out here and decide for optimal policy support. look across the chinese market and pick areas where there's going to be growth. part of the problem is aggregate demand is week, meaning outside of china, the u.s. and europe and within china there are areas that are very strong. there are 100 cities with more

than 1 million people and no premium auto dealers. you just have to be a stock picker. that's great. that's what we're great at trying to find niches and opportunities even if it's not what they support the last couple of years. >> stock pickers' market, what are you recommending for markets? >> we focus on the u.s. markets and are finding lots of opportunities so that's where we're looking to find the bulk of our money. when it comes to china the biggest concern has to be the impact that it has back here. what kind of impact is that if it slows from say, you know, 7% to something south of that? >> well, we think china has slowed in the last month or two, and a lot of u.s. companies, multi-nationals have had conferences and they lowered their expectations for the back half of the year based on that so we think china's slowdown is currently in the u.s. numbers. if china starts to reaccelerate and europe bottoming out, that should be a positive for u.s. stocks and for u.s. businesses

that are multi-national and we think the u.s. economy is doing a little bit better. taken all together we think that earnings should be okay as a result of that with a pretty decent outlook. >> david, i wonder what your appetite is here for stocks. a lot of people who have been trading this range between 1600, 1650, i mean, you know, you sell at the high end, you buy at the low end and just play this until things look materially different. would you buy stocks ahead of the quarter? >> well, we don't think that the quarter is going to materially move stocks higher. we think that the quarter is going to come in line with expectations, probably a penny or two better in terms of a lot of earnings report and a little bit light in terms of ref knew. like the last quarter or two, we don't think that moves the needle, but it sets the tone for the stock to do bert as people look for the economy and the outlook for the economies are pretty good. having said all that we'd basically be buyers into weakness, we'd not chase the rallies. >> interesting. jim, your thoughts on that and then added to it the effect of

what's happened to crude over the past few days. is that bullish for the s&p because of the components, or negative because of its effect on the business and the consumer? >> i think it has to be a little bit higher magnitude to be a negative effect on the consumer. i think in the short term it can be bullish if you saw a very significant move, it would be different. i think around the world right now china probably represents my single most favorite place to be parking money. >> wow. >> not because the economy is great, things are slowing but because of valuations. prices are really cheap, among cheapest in the last decade, and when you can find pockets of growth within there that are trading at reasonable valuations in relation to growth rates, now is the time to do it, not when everybody loves china. >> those are strong words. the other side of the argument, of course, is that china's going to be a value trap, that it's dead money and that something is cheap for a reason. >> yeah. sometimes they are, but dividend yields are also going up so we see cheap stocks that are

throwing off increasing cash flows and distributing them back to shareholders which avoids the proverbial trap of getting stuck. >> blackberry's ceo had one main message, keep the faith. so should we listen to the chief of blackberry? we'll ask a top blackberry shareholder who says the company should be broken up in a moment. but first, rick santelli, you think the world's biggest economies are pulling a them ma and lewouise. >> thelma or louise, burning all the wood just to keep things going? listen, if it's wednesday, homer jenkins jr. has a comment in the "wall street journal." we'll ask him about whether ben

bernanke's strategy is going to end well. let's hear about it from homen je jenkins jr. at the bottom of the hour. 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 of fidelity investments, and low fees and commissions are another reason serious investors are choosing fidelity. now get 200 free trades when you open an account. this is greta. she works in quality control.

she makes a nifty living sleeping on mattresses pioneered by engineers whose singluar devotion is not stopping until they have given her the best sleep of her life. that's not greta. save up to $500 on the tempur-ergo collection and get your best sleep possible. visit tempurpedic.com to find a store near you. here's a question. should blackberry spin off its devices unit? that's what one activist share holder is saying. he asked the question to blackberry's ceo yesterday. the ceo and chairman of jaguar financial seeking a split of the company.

blackberry is his largest holding. vick, good to have you on the program. good morning. >> my pleasure. >> a lot of promises yesterday and a lot of hope that this is the beginning of some turnaround. are you happy? >> not really. it was a very big disappointment. primarily the lack of disclosure. disclosure is a big issue for this company. they are coming across as being fearful and insecure. q&a session, they mandated last 25 minutes, one question per questioner, and, you know, they do the same in terms of their quarterly results that they are not prepared to disclose the number of subscribers anymore. that's very unfortunate. you had to wait until the conference call to get the number of bb-10 units that were shipped, and that was 2.7 million units out of 6.8 million. they are withdrawing. it's almost like they are pushing a rope up a hill, and they are being fearful and insecure, and it's very unfortunate. you've got to eliminate that noise. you can't be afraid of your

shareholders asking very tough and very frank questions. the minute you come across that way, i think it's over in the street. >> yeah. speaking of questions, we mentioned the question you asked him about strategic options. here's the response. before you go into any strategic options, i think you have to create value. currently i cannot district management from what i expect them to do. what's wrong with that answer? >> actually it could be a very positive answer, but the bottom line is there are two options here. you grow that software and services business which is their huge focus. i mean, the z-10 has not worked out in the united states. it's been a failure. there's no question. the q-10, we'll find the quarter ended august 31 so we don't note extent to which they can transform that shift from a device-only company to a software and services company. they have always been in services, but now they are going to accelerate. they are focused on ot air which is over-the-air transmission of their software from r.i.m. to

car manufacturers, for example, and m2m which is machine-to-machine. that's sort of the future of the company. the question is can they do it quickly enough with the cash that they have which is small? >> right. >> i mean, on the positive side they generated cash flow of 630 million in q1 and got 3.1 billion, up from 2.9 and that's good, but is it enough? if it's not enough you have to seriously examine the strategic options. we've been saying that for quite a while. >> i was just going to say, shares are just below $10. if they pursue some of the moves you mentioned, how much value could they unlock, and at what price did you guys get involved? >> $15 to $20 is our target range, and they could either do it organically as the previous questioner mentioned. that's a possibility, but also in terms of a breakup, there's no question. i mean, the enterprise value right now is 2 billion. they have a market cap of 5 billion, 3 billion in cash. there's 2 billion enterprise value which is really, really

cheap. a device company, coupled with a software and services company, easily would get a combined value of 15 to 20, and bear in mind there are patents as well. the other aspect of value is q and x. q and x is an awesome operating system that they paid 200 million for. it's worth far, far more than that purchase place. >> we hear that a lot from bulls on the stock, but, vick, i don't want to put words in your mouth, but if you really are an advocate of making big transformational decisions, sounds like you've essentially written off them as a device company the way we've known them for the past ten years. >> actually, you know, it's not that extensive. our focus, the bottom line is, they missed the core competency of the company. what's the core xe tensy. the core competency are boring, serious, professional, business, government people like myself, and they didn't lead with that. having alisha keys as the global

creator director, give me a break. total disaster on z-10. should have jamie dimon up there playing with his q-10 or warren buffett. that's the core competency of this company. they have to be nimble, quick, efficient and stick to what they do best. they haven't done that, and that's hurt them. >> thanks for your candor. please come back. >> my pleasure. >> now, the ceo of smithfield foods is set to testify on capitol hill try. the hill trying to convince skeptical lawmakers to sell the company to a chinese company that that's a good idea. committee chair debby stie stab is one of the skeptics and she will join us in a bit. and delivering alpha coming up.

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let's get to rick santelli with the santelli exchange in chicago. hey, rick. >> hi, carl. i'd like to welcome a very special guest. i love wednesdays and i love reading holman jenkins jr.'s column in "the journal" every wednesday. thanks for taking the timed to be our guest. >> my pleasure. great to be with you. >> thelma and louise, taking that last shot, boom. are the biggest economies of the world delusional, holman? are to looking at the fact whether it's japan, europe, u.s., to the lesser extent china, thinking that if they use the market and interest rates as

little toys to fix things or make things better, if they fail nobody can take our place. that seems to be the logic i see. how do you see it? >> i see it the same way. governments everywhere have accumulated 50 years of excesses, high taxes, high regulation, retirement and medical systems. they can't sustain themselves, and they know they have to fix this problem, but instead the last -- since the crisis, basically they are relying on central bank to somehow patch things over by printing money, and it's not working. i don't think that people fail to understand what needs to be done but the political cost of doing it for any given politician at any given moment is too high so let's hand it off to ben bernanke, he'll take care of things for a while by printing bucks. >> ben bernanke, of course, is not only going to give the speech later on today, the minutes of the last fed meeting come out, holman. princeton professor, super smart guys, but in the end let's keep it simple. he's call bratd oibrated our ec

basically run the carburetor at low interest, low interest rates is the calibration. what makes him think recalibrating is going to be easier, even work? are we going to be able to sunset some of these post-crisis programs, specifically leading to low interest rates and high stock prices? >> that's the $64 trillion question. it's amazing. you know, for 20 years the independent central bank was the icon. it was the altar we worshipped at. countries even wrote central bank defense into law. that went out window in 2008 which makes you think it was an illusion and now we have all these policies meant to keep goosing the economy we refuse to reform, and it's hard to see how he ends it. of course he wants to, wants to get back to the position where the central bank controls the value of the dollar and preserves its purchasing value, but he can never get back there. he's got to fill in for all the fiscal policies and regulatory policies that governments won't

adopt so i don't see how he's getting out of it. he's sending a signal, yes, please give me a way out, but i don't actually see it happening. >> final question in the last few seconds. when i talk to people outside of what i do, friends, relatives, they hardly know who ben bernanke is. do you think a big part of this problem is that the general public can't keep up with complicated topics? is this something that -- that has the ability to change any time soon? >> i don't know. i think i'd worry more when everybody knows who ben bernanke is because that's when things are really hitting the fan. most people thank god and have lives that are more interesting to them than the financial news and still ren gaged with their families, their jobs, their careers, their projects. the time to worry is when everyone knows who ben bernanke is and praying somehow that he can rescue them from a situation he can't rescue them from. >> holman, thanks for taking the time to be the guest today and i'll look forward as usual to every wednesday to read your column. >> great to be with you. thanks so much for having me. >> thank you.

carl, kelly, back to you. >> all right, rick, thanks so much to that. want to get to kate kelly with breaking news from the s.e.c. kate? >> carl, thanks, that vote we were talking about and essentially by a 4-1 vote the s.e.c. commission has agreed to lift the ban on hedge fund advertising and other startup company advertising effective 60 days from now. as part of that, there will also be a ban on so-called bad actors, folks with felony records, among other things. and finally, they voted to proceed by a 3-2 vote with a measure to collect more information essentially on the impact of these new results on the private offering market, so, carl and kelly, we'll be seeing some changes to the marketplace probably two months from now as well as more information to come on the new frontier and how it's going. >> kate, does this mean, even if only 8% of households would qualify under the income thresholds and wealth thresholds, we might all be seeing thetizements all over the place, correct?

>> we may be seeing them, seeing disclaimers on them how past returns are not a guarantee of future returns. used to that sort of thing from the mutual fund industry. one interesting thing as well is there's talk for the threshold investment. right now it's $1 million in net worth, other than your primary residence or a salary minimum, 200,000 for a solo person and 3 pun,000 for a couple, so if you meet those you can theoretically invest in some of these private companies or hedge funds. however, there's talk about raising that threshold, and that's probably something that won't be taken up until 2014 with congress as well as the s.e.c. getting involved. >> all right. we'll keep an eye out for all of it. kate kelly, thank you very much. now, $1 billion dole for smithfield foods under the microscope on capitol hill. is it a good idea to sell america's biggest pork producer? we'll ask senator debbie stabenow next.

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the european markets are closing now. >> i missed it, did you? simon hobbs tells us what happened as the bell sounded across europe. >> berlin is already shooting down this proposal that came from the commission today to create the second tier of banking resolution, if you like, banking union, the idea that there will be some multi-national agency to wind up banks so on and so forth and

shooting that down already. meantime, european markets have actually come off their lows with the exception of greece which is down over 2%. there will be a general strike of tuesday of next week as the parliament attempts to vote on the thousands of extra job cuts there. let me just show you a live -- some live data from italy on the bond market. today italy managed to sell 9.5 million euros, albeit at elevated levels of paper, despite the downgrade from s&p last night and the five-star movement did so well in the last election, suggesting there should be fresh elections because of the downturn there. if you take one thing away from what i'm telling you, it would be this chart that i now want to show you which is the climb back as we wait for ben bernanke this afternoon. the climbback that you've had in europe since may the 22nd, and bernanke first talking aggressively about tapering has been far less on european markets than it has been here in the united states, so the underperformance companies. one more, guys, before i hand it back to you. let me show you shares of

burberry. people have been selling into burberry, up 8% as it came through the 18% gain in sales because of the success of its spring/summer collection, innovative marketing, says the ceo. have you seen this, this is the advert available, sienna miller and her fiance, called french kisses. the big question is if they can raise the margin at burberry from 17% up towards what the other luxury goods manufacturers are obtaining. >> i have that same jacket and pants at home, i really do. >> let's leave it there. >> thank you, simon. oil has seen big moves. bertha coombs at the nymex >> you know, carl, last week oil here in terms of wti crude went above $100 a barrel seen in part because of the concerns over egypt, but this is very much a

domestic story and today's inventory numbers are really underscoring that point. we saw production last week of 7.4 million barrels a day of oil. that was as much as we imported. our production is now on par with imports which have come down so far. record distillate production of more than 5 million barrels a day and a massive drawdown of 10 million barrels for the second week, more than 2.5 million coming from curbing, the unlocking of that bottleneck in curbing which is driving wti nymex strength and a big drawdown when it came to gasoline. the expectation was for a build, but it appears we've had a 2.5% increase in demand year over year. back to you, guys. >> bertha coombs, thank you very much. speaking of oil, josh lipton taking a look at some of the energy stocks. josh? >> yeah. kelly, as bertha mentioned, oil rising today so we want to highlight how energy stocks have

been performing. in fact, energy stocks outper tomming the s&p this month on crude strength. the spx energy sector is up 3.4%. that's the best of the ten stray groups, the broad gage up 2.7%. within that sector check out the oil and oil service stocks this month. shr schlumberger and halliburton. >> is everyone just waiting on the fed? >> i think so, but i want to point out we dropped at 10:00 as the wholesale inventory numbers come out. that normally is not a market-moving event. put up the dow here. i think the certain here overall is businesses are not expecting demand to pick up and don't add to their inventory levels. this normally is not a market-moving event. today it was, not dramatically so. take a look at the major sectors, kind of a risk-off day.

health care, utilities, consumer staples, see what i mean, a risk-off kind of day when you get these kinds of sectors and leading fractionally overall. the big discussion is what big bank earnings will look like and these are the bright spots for bank earnings. earnings will be up across the board. the whole market knows this. everybody has been buying bank stocks like crazy for the past month and a half. here's the bank index, the bkx, the white line is the s&p 500. look at the outperformance just in the last month and a half because everybody has known who is watching this that the earnings will be outperforming right across the board. here's a number of good points about this, though, a lot of good things to like of what's happening. credit quality is improving, wealth management part of the business is growing, the yield curve is steepening. trading activity higher and underwriting pretty good bond trading pretty good, very volatile and good for the trading communities overall. a couple things that are worrisome and you know about the mortgage refi situation as well,

but let me just show you the things that are concerning that are out there right now. mortgage refis have been dropping. lone growth is still about 3%. i mean, it's all right, but that's pretty modest loan growth and bond prices down. a lot of firms that hold the bonds that are in active trading accounts, they have to mark those to market. that might affect the earnings overall here. i want to focus on the mortgage original nations. let me just show you. five companies control 50% of the entire mortgage original nation market in the united states. 70% of all mortgages are refis so that's refis dropping is going to be an issue, and i expect to hear a lot from wells fargo about this, a quarter of all the business. before i toss it back to you, let's put up some of the banks here. the important thing that we're seeing is some of these companies, just because the yield curve is steepening, don't mean they will make more money. comerica, loans based off of libor. they won't be dependant on rises in treasury. if you've got a doughnut shop out there, bottom line, you'll be more dependant on libor which

will move with the fed funds rate which isn't moving and just because the yield curve is steepening, the companies that have the loans based on libor, they won't necessarily make more money. the libor rates aren't necessarily going to go up. it's an important distinction here with some of the banks. back to you. >> a lot of questions about what's going to happen as they take that important rate over. thank you, bob. >> thank you, bob. >> meantime, the senate agriculture committee holding a hearing to examine smithfield food's chinese meat pros zor chinese international. the hearing is aimed at determining whether the sale poses a risk to the u.s. review standards and whether the review process for those buying american companies needs to be are considered. joining us for a first on cnbc interview, senator debbie staben stabenow, chairman of the agriculture committee. >> good morning. >> what are your concerns, do they revolve around food safety and the import of food from the

china to the u.s.? >> there are a number of issues we'll be taking up today, hearing from the smithfield ceo and looking more broadly at our relationship with china and the food systems and so on. on the one hand we have a company that is being paid a premium of about 30% above what would be the market value to buy it. we think it's because they want the 20 years of food efficiency and food safety information and so on to be able to bring their systems up certainly, but then the challenge is they are five times more in terms of the hog production business than we are. our largest export market is japan. china is right next door. we're very export dependant in this industry, in the pork industry so what happens long term, even though it looks like a good deal now, do we lose those export markets and potentially lose a tremendous amount of market share? also food safety is really about

national security. not just one company even though it's the largest sale to accompany is china and we note chinese system is very, very different in terms of how it's set up. may not be directly owned by the chinese government, but we all understand how tight and interwoven that is. but what happens to us in terms of other companies down the road? do we want other countries owning our food supply and i think we've asked treasury and the committee that looks at this on foreign investment to take a look at food security after they are reviewing. we've asked the banking and finance committee members to join us. we have a lot of questions about what this means long term. >> we asked the company for an interview. they said no but did give us a statement which reads in part that the transaction is focused on exports. they say the combined company will not import any product from

china into the u.s. the proposed combination does not have any implication for the u.s. supply but your point is broadly about precedent regarding deals that may come down the road, right? >> yes, we certainly care about this one, but i'm also concerned about down the road. this is a very export-driven market, and while they may not be bringing pork into the united states, i'm concerned about losing export markets because china sits right next to japan, and i think that's a serious issue for us. also, we're adding a company with a good record in terms of food safety and allowing china to use that name while they have a very spotty record. what does that mean overall? >> sure. senator, just a quick question. one thing when we're talking about access to making airplanes or even, you know, cyber technology, but are you arguing bacon innovation is something china will steal from us and do better? >> i have to tell you we as a

federal government, you and i as taxpayers have put in over $800 million in research and development as it relates to food safety and feed processes and efficiencies and so on, and essentially we have a chinese company buying that. they are buying it on a premium because they are behind you. they want all of our efficiencies in part paid for by federal taxpayers. they are 20 years behind us, so they get up to speed. they have more hog production, and then they take over in terms of exports around the world. we have a real potential of losing this industry i think and its market share in the long run, so that's a concern of mine as well as food safety and the long-term implications. >> given the number of deals in this space, senator, the whole market's attention. that's for sure. appreciate your time very much. >> absolutely. >> debbie stabenow, senator from michigan talking about that smithfield deal. >> huge deal. stay tuned to cnbc because we'll

have more on smithfield with senator chuck grassley who will be on "power lunch" at 1:45 p.m. eastern. >> apple's app store marking its five-year anniversary today. when it launched in 2008 there were just 500 apps. today over 900,000. that brings us to this morning's squawk on the tweet. some day we'll all tell our grandchildren before we had apps we had what? tweet us and we'll get your answers in a few minutes and soft biggest names in media arriving at the annual sun valley conference in idaho. we'll take you there live. julia boorstin is on set when we return. in today's markets, a lot can happen in a second. 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

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coming up next on "the half," breakout or breakdown? where's the rally next and what about china's dismal data? banking on the financials, a top financial analyst gives his second half playbook for the banks, and we'll also have one high class debate where traders are split over the future of coach. they will grab their man bags and battle it out at the top of the hour. >> some of the biggest names in media and tech and venture capital are gathering in sun valley, idaho for one of the biggest conferences of the year. julia boorstin is there live and joins us with more. hey, jewel why?

hi, carl, attendees at this year's conference, everyone from comcast to disney and apple and amazon are all fighting for a piece of the future of television. barry diller's cord-cutting enabler aereo is shaking things up facing lawsuits from many of the media moguls, including rupert murdoch and cbs' les moonves and bob igar. >> it's the technology that allows people to use the airwaves that belong to them to get over the air television. i don't think it should be but probably inevitable. it's inevitable because it -- people there don't want to subsidize espn, for instance, and -- and they should be allowed to do so. >> barry diller there was talking about whether or not the bundle of content, the cable content would be broken up. in a sign of just how valuable

sports is to holding together that cable bundle, no content is more important for live tv or more expensive. this morning kicked off with a panel featuring nfl commissioner roger goodell and nba commissioner david stern. there are an unusually large number of sports teams including red sox owner john henry. another hot topic is apple. as jon fortt has been reporting, a federal judge ruled that apple conspired to raise the price of e-books. the justice department says it conspired to undercut amazon. apple does say that it will continue to fight these accusations. apple's media chief eddie cue is described as a central witness in the antitrust e-book trial and is here along with amazon's jeff bezos. we haven't seen them together, though they are both here. following the morning's panel, the attendees will gather by the duck pond for lunch and many will go with their families on a whitewater rafting trip. carl, we'll continue to bring you more and more on cnbc.com. back over to you.

>> sounds strenuous, julia. thanks very much. it's a beautiful shot there as well. if the white house has its way greek yogurt will be on lunch menus at schools across the u.s. and it could mean big business for our next quest. the ceo of chobani joins us when "squawk on the street" returns. really? yeah, i'd like that. who are you talking to? uh, it's jake from state farm. sounds like a really good deal. jake from state farm at three in the morning. who is this? it's jake from state farm. what are you wearing, jake from state farm? [ jake ] uh... khakis. she sounds hideous. well she's a guy, so... [ male announcer ] another reason more people stay with state farm. get to a better state. ♪

>> the obama operation wants to add greek yogurt to children's food. the founder of chobani, joining us here at post 9, welcome. >> thank you so much. >> the first time you have been here to the stock exchange? >> the first time i have been here. >> your impression? >> i thought there would be more and more people. i seen some movies. this is great. >> i seen you eyeing that bell up there. choe bean has been successful. do you want to think about going public, raising capital? >> you know, we never thought about. that we focus on what we do every day. we manage to grow without going outside for a capital. so we are 100% independent. even though we grew to over a billion dollar in business. we study the nba loan. we will be spending almost $900 in business infrastructure and expense.

yogurt has not only been good to a lot of people. it will be good as well. >> what does it mean if the obama administration doesn't press for it in lunches in. >> it is has been a simple, delicious product i. has been around hundreds an hundreds of years. it should be available for our kid. we try to build a school district and try to make it to the menu. we found out about the usda rules and the programs and we have been trying to bring it to the schools. so we had the news that the pilot plan is going to be new york, idaho, tennessee and arizona, i think it's important to make sure the growing yogurt is the greek yogurt. >> is it going to be your yogurt in. >> it can be anybody's as long as you call it. if you call i mayonnaise. it has a standard identity. you can call a ball of macaroni call it greek yogurt there. is no standards, strained. means 3 pounds of milk becomes 3

pounds of yogurt. it is good for the farmers. it has high proo protein. we have to make work on it to make sure it's clear. >> yesterday, they had their ceos on, general mills, they are making a big push, seeing what it has done for you. how much of a threat, how much of a fight for shelf space? how will that change over the next couple of years? >> well, we look at the last five years when we is that right chobani the great market was less than 1%, carl. now it's almost 25, 40% t. category has changed dramatically. it was changed by a newcomer like us. and it's important a company like chobani comes to the fwoorld more and more and challenges what is there and make it better. i'm glad that other companies are changing the way they are making. they can the prevevtives out, make it healthy. make it delicious. this is the way the food is going to get better for

everyone. i see some signs people are change figure way they're thinking. it makes me happy. >> we are seeing consolidation in the surnlt business. does having u fewer players mean you can't drive the best deal that you can? >> we are betting yogurt to go what it is today to double the next five years. we eat less than here in europe and south america and canada. so if we do our product right. there is room for everyone. based on that belief, you build a minister flat in i'd hospital it is bumping yogurt like crazy now. i think the future for your good is really just starting right now. it's just starting right now. >> especially if you are about to add another generation of consumers as the goes forward. thank you so much for joining us. >> don't touch anything around here. >> happy birthday to the apple app store, which turns 5 today, if you can believe it. more than 800 apps are

downloaded every second. equals 2 billion apps every month. it brings us to the squawk on the street question. some day we will tell our grandchildren, before we had app, tweet us. your answers are next. .

. >> the apple app store is five-years-old today. some day you will be telling your grandchildren some day before we had app, you had to use a keyboard, set our physical alarm clongs up each night. remember that? bob write, ring the doorbell at the front door. rick states we stay away from angry bird, we walk to school with books uphill both ways in the snow. good ones today. >> jack london i think used to drop something to drop rocks on his head to wake up. he hated to sleep. a true story. >> it worked, too, some great books. by the way, a quick programming note. you don't want to miss this christine davis the woman hoping to run against elliot spitz ler on "kudlow" tonight 7:00 p.m. eastern time. is what they call in television

a get. >> not kristen davis the actress. will be interesting, having spitzer on ""squawk box"" earlier this morning. let's get back to headquarters. scott wapner and the halftime. >> all right. guy, thanks. welcome to halftime show, four hours to go until the close. a mixed day on the street. the dow is trying to get something going, unsuccessful thus far. nasdaq is positive. here's what we are following on the half. money in the bank. after a 23% rise already this year, how much juice do the financials have left? coach outperformed, is it reason enough to boy that stock? one trader says yes, the other says no, which is why they'll debate it. our top story, brake out, or break down, stocks trying to rise a fifth day in a row. stunning new data out of china paints a dismal picture for that country's gro