tomorrow. it is a busy morning ahead at 8:15 eastern time today. we'll be getting july's adp employment report. forecasters say the economy likely added 183,000 private sector jobs during the month. that would be down slightly from june's 188,000. then coming up at 8:30 eastern time, the advanced reading of second quarter gdp. they're looking for a reading of .9%. also today, the government will adjust how it measures gdp and revise its estimates back to the 1929 numbers. all the way back to 1929. among some of the most notable changes, money spent on the arts will count as gdp. that means hollywood will have a much bigger role. later this afternoon, the fed will be wrapping up a two-day meeting with a policy announcement at 2:00 eastern time. no change is expected, but the markets will look for any hints of tapering later this year. >> the gdp numbers will be changed retroactive so much that it is going to be much more

positive, all the qe we take back. we weren't in a recession and won't have needed any of it, which is weird. huffington post -- >> never mind. >> lead story on huffington post is what the i guess the dallas fed figured out what the great contraction, they're calling it, what it cost us, something like 14, $15 trillion. >> wow. >> yeah. in lost wages and everything, take everything into account for the -- and naturally the huffington post points a finger squarely at quality for causing the whole thing. but anyway, let's check on the futures at this hour. yesterday after all was said and done, the averages were -- the dow was unable to hold on to the positive gains that it started with, closed down a point. up 36 points today. the s&p indicated maybe up 4 1/2. s&p is at a level that some people think could be important to make a stand if we want

another leg to this rally. there you can see the nasdaq, which is probably a performing better, but doing pretty well since facebook and even though facebook is not a nasdaq stock. >> did you see facebook, where it is, within four cents of where it was -- within four cents of the closing stock price. still at like 37.60 something. >> that was the guy that had a good day on monday. >> yeah. >> the bad guy with a bad day on monday, is the friend you'll talk about right now, bill ackman, with herbalife and the wiener schnitzel had a bad day. >> a lot of bad days. >> i watched it, tmz, for what it's worth, it is pretty cool. they have cameras everywhere. did you see the -- i watched -- >> i didn't see what they got. >> what is leathers, what is her first name? >> sidney or -- >> she has gotten together with

david faber, they did the report on the porn guy. ♪ i only got one source. she did get together with the guy he interviewed, the porn king of l.a., and they have a shot of her walking out, getting into a sports car with all of herta t tattoos, she's going toa porn movie and they're going to do the phone sex and everything. >> are you kidding? >> no. this may be the biggest opening of -- speaking of hollywood, adding to gdp, you got to -- everybody, all the economists are raising gdp. this is going to -- would this not be a big hit? huma is taking an extended leave, apparently, did you see that? she's on vacation. the clintons are so po'd at this point. i forgot about -- everybody loves me now and now this comes back and everybody is talking about the blue dress again, right? >> it dropped off.

i kind of stopped. can i tell you about other breaking news? >> bigger than that? >> yeah. >> okay. >> are you ready? >> i am. >> listen up, bill ackman's pershing square has taken a 9.8% stake. this is something that cnbc has learned. air products is a $22 billion producer of industrial gases that are used in industries, everything from steel production to food processing to electronics production. this stake, which cost ackman $2.2 billion to acquire, it is the biggest investment pershing has ever made at cost. earlier this month, ackman told investors he built up a major position on a large cap investment grade u.s. corporation and ever since that time, the speculation took off. some were actually speculating that air products might be that company. that stock has risen from the low 90s to above $105 at its close yesterday. $105.61 is where it closed yesterday. last week, air products adopted a poison pill plan.

the company cited unusually high volumes of stock trading. this gives existing shareholders the right to accumulate deeply discounted new shares if another group acquires 10% or more of its shares outstanding without board approval. that poison pill prevented ackman from taking a larger stake in air products. yesterday he said -- he zs acknowledge the speculation complicated his plans. he said -- air products major competitors include france's air lockheed, lendy and praxair. he thinks air products is undervalued and has ideas on how to make the company more valuable. he wouldn't elaborate, but a look at his involvement in the canadian pacific railroad, it

may be a plaque book for what he plans to do with air products. ackman bought a 14% stake, he then proposed bringing in new management. the board resisted that and ackman brought a proxy contest. he won an overwhelming majority of the vote, something like 90%, ended up garnering 8 out of 14 board seats. and at that point, he did bring a new ceo, an experienced rail executive, hunter harrison, remember that, we talked with him about this. last june was when he brought in harrison. canadian pacific shares soared from $8 billion when ackman first got involved to over $20 billion today. now, in catching up with them, i got the chance to ask him about herbalife too. that's the company that he very publicly shorted. and which just this week reported a much better than expected earnings report. ackman has not publicly commented on herbalife since january of this year, and the stock has continued to climb. what he told me at this point is i haven't covered a single share. ackman wouldn't comment beyond that, but did put out a press

release earlier this year laying out his concerns about herbalife's earnings, some thing he pointed out, this is a company that has 18% revenue growth, huge earnings per share growth, that's because they have a lower tax rate, brought back a bunch of the stock. look at the operating income, up 3%. points out in that press release those are not sustainable measures. also, if you look at this, the ten q they restated their balance sheet for 2012, 2011 and 2010. and price water house, their auditors did not review the financials and the company itself does count venezuela as a huge market. they had a big problem trying to exchange bolivars for u.s. dollars. if you're looking at it in terms of what they could bring back, those bolivars to u.s. dollars at this point, it would be 75% less than is reported on their balance sheet for a writedown of $93 million. this will continue. we saw herbal life shares yesterday, up something like 5% or 6% as we were watching in the premarket. by the end of the day, closed down 50 cents.

this is still something that they're going to be watching very closely. >> do we know is carl icahn going to short air products? >> i don't know. watching what carl icahn had to say, you can imagine he probably would target this. >> ackman is saying that he sent a letter that sort of indicated -- >> he sent a letter to investors. people track down air products. >> how do they do that? what did he say? bigger than a bread box -- >> it is a an industry very difficult to get into. has high barrier costs, that it has multiple different -- >> and people watch volume and stuff and people figure out what it was. >> there was speculation and stock did rise on the speculation. the company adopted this poison pill plan. >> he thinks it's being mismanaged, undervalued based on -- >> undervalued. didn't -- >> usually what he means.

>> look back in his playbook, that hasn't been what he's done in the past. >> sometimes it worked. >> sometimes it worked. this is an interesting arena. there are three other major competitors. >> the guy shook up the jp penney is back in and he brought his guy in for a year and the guy handed out some buttons with pictures on them and now he's gone and the original guy is back. >> you can look at wins and losses. >> hong kong dollar still not tied to -- still is tied to -- i don't know. he's had his -- had some huge home runs. how much has he made in cp? 8 billion to 20. is that the market cap? the market cap of the company. >> the market cap of the whole company over that time period. he's got a lot of money in canadian pacific. this is the biggest bet they have ever done. i want to look at where the stock is right now. >> can't tell. got a big wide -- this is something. we have three hours. we have -- is it really the

employment report this week? >> it is. >> wasn't it just -- >> we're just getting older. >> the months are -- and -- >> time is -- >> andrew is back tomorrow. >> yes. >> are you alerting viewers or warning viewers? >> alerting or warning. >> we'll hear from nbc parent comcast also today. mastercard, sodastream, allergen and garmin among others before the bell. we have a few other stocks to watch today. all of these are after the bell movers from last night. amgen initially traded higher, reporting better than expected earnings and revenues and they said it expects full year revenue at the upper end of its range. when it was all said and done, looks like down a little. take two posted a smaller than expected loss on revenues. it beat the street. shares rising on that news. and earnings and revenue at restaurant chain buffalo wild wings topping analysts

consensus. and hasn't been a lot of sporting events to watch, that helps, football season, buffalo wild wings, they go hand and hand, right? >> they do. >> and aflac, aflac, the earnings and revenue also surpassed expect takings. did they get a new guy? not gilbert? >> they had the guy, they did find a new guy. talked about it last time. >> a knockoff, cheaper version. the insurance company's guidance was slightly below forecast. see where that stock opens up today. and we'll talk to our friend ann amos, aflac ceo in the next half hour. i think he's doing it himself now in house. >> aflac. >> we didn't get the job. i was pretty close. aflac. that's pretty close, right? >> that's pretty good. >> yeah. going for the annoying --

>> i usually do. >> that worked well. >> yeah. >> did sound like gilbert. let's talk about technology news. facebook stock is close to reclaiming its $38 ipo price for first time since going public last year. the shares have surged more than 40% over the last week after the company came out with the quarterly results that really surprised the street. you can see right now that's trading at $37.87. just about 13 cents shy of the $38 ipo. microsoft is losing money on surface tablets. the annual report shows slow sales have been eclipsed by advertising costs and accounting charge as well. and china mobile says its chairman met with apple ceo tim cook in beijing yesterday. the two are said to have discussed cooperation, but no additional details made available. china mobile is the only chinese carrier not to have a deal with april to apple to sell its iphone and ipad products. auto news, fiat winning a

sparbl vict partial victory for a full buyout of chrysler. a u.s. judge accepted the legal positions in two key disputes with an autoworkers health care trust that is a minority, as you know now, after everything. and the judge stopped short of ordering the trust to sell its chrysler stake and the remaining issues will now go to trial. and ford plans to offer a natural gas version of its f-150 pickup truck. >> wow. >> the trucks will have factory installed valves, pistons and rings to handle natural gas and gasoline and the option will cost $315. the buyers will have to pay an installer to put in new fuel tanks, lines and injectors, costing $7500, $9500. ford, general motors and chrysler have natural gas powered heavy duty trucks. it costs the equivalent of $2.11 a gallon. you make it back, but will take

time. it is like anything, $3.62 is the average for a gallon of regular gas. we're in a position now where you don't know what comes first, the chicken or the egg, the infrastructure or the cars that need the infrastructure. you'll see more places where you can get it, as more cars can run on it. >> i see more cars that are plugged in lately. >> how beautiful is the way this works, though, now that fracking and now we see it is $2 and now people say $2 -- that's cheaper than $3.62. you can see the free market, the way it will migrate people to using natural gas and all our energy costs will come down asd birthday. how many times do we have to learn names? adam smith first wrote that book, in the 19th century, or 18th century. >> all knowledge is cyclical. >> yeah. then it went away andn brought it back and then went

away, the elites kill it. and then milton friedman came along, and now paul krugman and we just learn it over and over and over again. i don't know. >> like everything in life. >> really? >> yeah, pretty much. >> i guess so. >> pendulum swing. >> it does, yeah. it is a dismal science. economics. i agree with half of that. it is dismal. i don't agree with the science. how can both krugman and friedman and people like him win a nobel prize when they're die metically opposed in all of their thinking, which is right. who is right? sorry. but i digress. tune in for that. neat to talk about -- we used to run -- what a perfect foil, phil donahue with his hair and everything, so clueless, and he used to try to go up against milton friedman and the look on his face, remember that video we would run, a cnbc ad, where he's asking those stupid questions and milton friedman buries him and can't do anything but just

laugh at the end of it. he hasn't learned anything either. >> how old would he have been today? >> phil donahue? >> no. >> milton friedman. i don't remember. would have been quite a bit -- i think over 100, right? >> i think. i'll look that up. >> we should know since we're celebrating his birthday. the jury in the fabrice tourre case will begin deliberations today. he is accused of secretly helping paulson and company construct a $2 billion deal that it could bet against. he faces penalties and lifetime ban from the securities industry. >> me, i'm looking this up. time for the global markets report. >> 101. >> would have been 101. that's what i thought. and wasn't adam smith 17 -- i think -- anyway, ross westgate is standing by in london. see a little green, see a little red beneath you. what's going on over there,

ross? >> well, we're finding it hard to find any momentum. so much event risk in the states with the adp, the second quarter gdp figures and the fed as well. investors don't want to put much in major asset classes. waiting for stocks here, fairly evenly split. bit more weighted to decliners. but the indices are mixed. look at the ftse 100, has been up to the best numbers of the day. the xetra dax is fairly flat. consumer confidence up to the best level for about three years. retail sales down in june. that's the worst for this year. the cac quarante is fairly flat. the ibex is down. away from the headline numbers, we look really at a lot of individual corporate news. and that's where the focus has been today. semens down .2%, confirmed peter loscher, the ceo is gone, he's

resigned. that follows second profit warning of the year last week and the cfo is taking over. so that's been confirmed this morning. they also announced today new orders which beat expectations, but net profit came in a little weaker. ab inbev, the biggest beer brewer, second quarter, selling less beer. the maker of budweiser. profit up 5.8%. the market likes that, up 7%. peugeot doing well, up 7% as well. cut its net loss, still not making any money but cut its net loss by half in the first six months of the year. trying to reduce its burden of cash by half as well. and they have better news yesterday, the european commission and the financial assistance that france gave peugeot doesn't conflict with rules. they're also starting to bend their lines for gm.

and diageo, 2.68%, the global spiritsmaker downgrading, suggesting we may be hard to maintain double digit growth in sales in emerging markets. but did have a 5% rise in net sales, the fiscal year, increased dividend by 9%. and really where they're benefitting from, of course, is better sales in the u.s. really switching their marketing spend, up their marketing spend for a year and a lot more of that is going into the u.s. a focus of global companies saying the marginal change in growth is coming from the states rather than elsewhere. they're putting more tension into that. that's where we stand with the individual news at the moment. elsewhere, pretty steady and unchanged ahead of all the u.s. data and fed we have coming up. back to you guys. >> ross, thank you very much. i'm glad you brought up diageo. we'll focus on that next. as ross mentioned, rising liquor consumption in the united states boosting diageo's full year results. we'll talk to one of the company's top executives right after this.

let's get the national weather forecast from the weather channel's alex wallace. crisp, beautiful day yesterday. kudos. kudos. >> you are welcome. you are welcome.

you can't blame if he mee for wh -- me for what is to come, though. right now, not so great in the south, rain impacting us in and around atlanta after a couple of dry days. rain this morning. we'll keep things unsettled for us, thanks to a cold front trying to move into parts of the south. ahead of it, showers and storms we'll see coming back into charlotte, charleston, back down to north florida as well. now, while all that is going on, several different cold fronts continuing to slide through parts of the midwest. and has kept us a bit on the cool side over the last several days. we'll keep that going over the next few. through at least the late part of the week, high temperatures here for us for the upper midwest and great lakes. a bit below average by anywhere from 5 to 10 degrees. today, temperatures, look at that 74, marquette. cincinnati, 76 degrees. not bad at all. in the northeast, after your great last few days, cold front will be marching in towards the east coast cities. out ahead of it, moisture

flowing northward. a threat for storms coming in, not for today, i think today will be your last day. boston, new york, down towards philly, but tomorrow, those thunderstorms will return, potential for some heavy downpours out there. hope you enjoyed it. thanks will be moving downhill for the megalopolis. back to you. >> will it clear up by the weekend? >> weekend, yeah. half the weekend i would say looking pretty good out there for you. doesn't look like it will be a washout. i'll say that. >> you started with atlanta. if someone were going to be in the general vicinity of the south, this weekend, how is that looking? >> it is going to be one of those weekends where it doesn't look like it is going to be a widespread rain event, but we'll watch for some storms afternoon activity, typical for early august. >> it is. it is not like here because it rains and then it is gone. and it almost cools things, they come in and never really just rains and rains and rains. it, like, they come in and go,

they come and go and then sunny and yeah. >> exactly. got to be prepared. >> just do. yeah. if you're in a bathing suit, doesn't really -- >> wet anyway. >> exactly. all right. >> thanks, alex. >> you bet. diageo is out with full year earnings. brands include johnny walker whiskey, smirnoff vodka and guinness stout. there was double digit growth in emerging markets, but sales in western europe continue to be a little bit of a problem spot. joining us is diageo's new ceo, ivan menezez. thank you for joining us this morning. it looked like your results came in and strong results because of demand in the united states and north america for high end spirits. can you tell us a little bit about that? >> sure. overall results was strong, both in north america and the emerging markets. we expanded margins and delivered good cash flow. north america is a real engine

of growth for us. this market has great characteristics for premium spirits brands. and as you saw, total sales 5%, we grew our profits 9%. strong margin expansion. and it was driven by the performance of our top end, our reserve brands. these would be brands above johnny walker black label are growing double digit. crown royal grew 17%. now this is happening because the demographics and the economic conditions in the u.s. are very positive for our category. and we see spirits taking share of beverage alcohol on a sustained basis. we have done it for 15 years. and i expect it to continue. so that's a real strength for the company. over 40% of our profits. and that -- in an uneven world

where market goes up and down, it is wonderful to have this bastion of strength at diageo. >> can you tell us how long that trend has been continuing? i guess you can see at least some emergence from a downturn in the economy here. how steady has that been and when did it begin? >> well, in the spirits category, it is actually been pretty secular trend. and what is behind it, becky, you have the demographic of america are very attractive. we have a million americans turning 21 every year. the multicultural composition of america is very positive for premium spirits brands. taste profiles and the social trends, the cocktail culture is alive. we have got whiskey performing very well, total whiskey business is up double digit. johnny walker is growing double digit. and so this trend has been going on for a while. i see it as sustained. and it is just americans want to

drink better into cocktails and what better experience. and i expect that to continue. >> now, we did mention that the emerging markets were at the double digits. some people categorized that or looked at that and classified that as a little bit disappointing, that is not the same growth you've seen in the past. can you talk a little bit about that. >> sure. in the past year, if you look around the world, we have had some markets that have been more troubled. brazil is slower. nigeria is slower for us. india and china slowed a bit. on the other hand, mexico is amazingly strong. south africa is really strong. southeast asia markets like thailand and vietnam very strong. so we have traditionally grown double digits in the emerging markets. the prior two years would have been 14%, 15%. this last year, even with the downdrafts we have grown at 11% and we have grown profits there

at 18%. >> when it comes to europe, still a problem spot? >> europe is a mixed picture. i would say southern europe, which used to be a big piece of our business, is still under pressure. it is now a much smaller piece of our business. places like spain, italy, greece, just not enough spending power. you got unemployment at 25%. people are not going out. they don't have the money in their pockets. now that is getting a smaller and smaller part. if i look at germany, we're growing double digit. our reserve brands, the high end of our portfolio in western europe grew 11%. even in the tough times. so it is a mixed picture. i expect our performance to improve over the years. things have stabilized. and we are driving the pockets of growth more strongly and playing to our strength. >> you say that the southern

europe is becoming a smaller part of your portfolio, is that because you're pulling out of the markets or because the sales have dropped off so sharply? >> a combination of that and the growth in the rest of the world. if you went back many years, southern europe would have been 10% of our company. it is now 3%. >> wow. >> happenfulily say that. it is a good thing. as you look at the mix of our business, in terms of we are getting 42% of the emerging markets of our sales, north america is about a third. that shift in our balance towards the higher growth markets really gives us the confidence that we can be one of the best performing consumer product companies in terms of top line growth and margin expansion on a sustained basis. >> ivan, thank you very much for joining us this morning. >> thank you. coming up, more on bill ackman, talking to becky,

putting an end to speculation and revealing his firm's largest ever investment. and thoughts on his much talked about -- is had herbalife or herbalife? why use the h? >> herbalife, right? >> i think it is herbalife, but herbs, and herb greenberg -- >> i call it -- that confuses me because -- >> i know. it is confusing. first, though, he got his start in business with a little help from donald trump. now the winner of the first season of the apprentice -- oh, my god. oh, my god! bill rancic! how are you? bill rancic joins us on the set next. you're like a big star.

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welcome back. news we broke in the last half hour of "squawk box," bill ackman's pershing square has taken a stake in air problems and chemicals. something that cnbc learned and that stake cost him $2.2 billion to acquire. it is the biggest investment that pershing square ever made at cost. earlier this month, ackman told investors he had built up a major position in a large cap investment grade u.s. corporation. giving enough hints away that people started speculating, trying to figure out what company it was. air products was one of the companies that people speculated it could be. in fact, since then the stock has risen from the low 90s to close above $105 yesterday. last week, air products actually adopted a poison pill plan,

cited unusually high volumes of stock trading. that prevented ackman from taking an even larger stake in air products. in speaking with ackman, he says i was a little too cute in my letter to investors, i didn't expect people to be running around looking for the company. i think it alerted the market. he also acknowledged that speculation had complicated a plan his plans a little bit. he said it made the stock more liquid, so it allowed us to buy 10% of the company, but we would have bought more if they hadn't put in the poison pill. he commented on herbalife, the company he publicly shorted and which reported a much better than expected earnings number coming out this week. ackman has not publicly commented on herbalife since january of this year, as the stock has continued to climb. this is what he had to say about this. i haven't covered a single share. ackman wouldn't comment beyond that, but put out a press release that laid out his concerns about herbalife's most recent earnings report citing the growth of 18% when it came to revenue.

huge earnings per share growth, but operating income only up 3%. he said below tax rate and the company bought up a lot of stock, those are not sustainable. and also pointed to some things the company had to do, restating their balance sheets for 2010, '11 and '12 and pointed out that pricewaterhousecoopers did not go over those financials. >> i used to think, you know, herbalife, i followed it for -- used to live in l.a., you fly over the airport, you see the herbalife, the founder, i never knew what to think of it. then they sent me some stuff. no different than the powder -- probably as good as any of that that you buy at gnc. that's a viable business and people use it. you can make it out of whey or whatever. >> it is the way it is marketed and how they do -- we had the ceo on and asked him questions and he doesn't give you too much

guidance. ackman says it is a pyramid scheme. >> got me with the candy bars. i would buy these. i don't know if i -- >> have you? >> i haven't bought any. i would have to go, like, a member of the cult to get some, right? they scare me, those people that are -- you have to join scientology or something? >> it is not like that. >> shouldn't say anything about scientology. our next guest is well known to tv viewers, bill rancic the winner of donald trump's first season of "the apprentice," now teaming up with intuit to launch a small business, big game, you got a reality show. you're -- i saw you, that was not acting. i mean, i saw you, i was like holy -- >> you're in studio with us. >> good to be here. >> this is so timely and don't get me started on small business. because here we are, 7.5% unemployment, five years after a recession. every big business we know of

started as what? >> small business. >> see? that's why he's so good. but -- >> what is shocking is i don't think most people realize is that small business is what employs most of america. >> the engine. >> yeah. >> people think, entrepreneurs are a bunch of rich people. three out of four times they fail and they make an average of $50,000 a year. it is the whole -- if obama, president obama, sorry, if he wants to help the middle class, you got to help small businesses. and just this latest thing, the -- cutting the corporate rate on big businesses to 28, but leaving small businesses at the individual rate of 40%. not even thinking -- not even seeing that you need overall tax reform. >> it is the backbone of america. what made america the greatest country in the world. it is pretty cool. we're actually calling all small businesses to go to smallbusinessbiggame.com and we'll look at all the businesses and in the end one small business is going to get a fully

paid, fully produced commercial to run during the biggest football game in the world. that's right, the super bowl. >> really? >> yeah. >> that's an opportunity of a lifetime. i commend brad smith, the ceo, for intuit because a lot of businesses say they're supporting small business but this guy is walking what he talks. >> what are the qualifications for the small businesss? what do they look like? >> financially sound, have to have 50 employees or less, if they go to the website, there is a whole list of rules and things, but essentially you have to be a small business owner. don't have to be a customer of intuit. so we're calling on anyone who wants to -- >> this goes all the way back to the apprentice stuff. you've been involved in -- >> right. >> business ventures ever since. >> even before the apprentice, i was a small business owner and mr. trump hired me on and that was ten years ago and i give him all the credit. if it wasn't for him, i wouldn't be here today. >> i'm trying to imagine a small business that could handle the demand that might come in.

>> that's the great thing. we're not going to just feed them to the lions. the small business who is the winner at the end, we're going to arm them with all the tools. intuit will supply them with consultants and we'll prepare them. >> the website will be up and ready to go with extra servers? >> i compare it to like oprah's, you know, greatest things times 100. you think about the viewership of the super bowl, so it is going to change the life of one small business owner and really all of them. we're going to shine the light on the importance of small business like we're doing here this morning. >> marcus lemonis is this guy, we just launched a new show last night called "the profit". >> i saw it. i watched it. >> awesome. $2 million he's put into the -- can he win? this could be a like a cnbc intuit bill rancic -- i'm sure -- >> it just occurred to me that that car company, on the super bowl -- >> he uses a lot of tough love. >> yeah. he was on "the apprentice" at

one point. maybe he needs to say you're fired. did you see the guy with the hat? >> i did. the two together. >> first thing i would have said is lose the hat. that's my first -- i own the company now, get rid -- you look ridiculous. take the hat off. he didn't do that. >> he did not. >> that was cut. >> editing room floor. >> this is good. >> what is the state of small business today? you've been watching this for a long time, has it gotten more complicated, more difficult after the recession? >> i think it is tough. it is harder for the small business owner to get money. the people who need the money can't get it. it is starting to loosen up a little bit. i think people are now moring could -- more cognizant, the money stays in the community, it helps build the community and people are enlightened a little bit more than they were over the last five years, because companies like intuit are shining light on the importance of the small business owner. i'm bullish. i think a lot of young kids are coming out of college now and saying, wait a minute, i can do this on my own. i don't need to go and work in

corporate america. and i think that's great. that entrepreneurial spirit is now finally starting to come back. >> the most important thing, we need to do, you know, we need to do more in terms of making it easier for small business to succeed. >> it starts at the top. like you said earlier. got to incentivize them and -- >> we keep hearing 98% of them, i don't know. both sides have a reason to ignore small business. i don't really understand what it is. it really does -- every large company started as a small business. >> right. >> trying to think of -- now i'm thinking about reality programming. we got you here. and we are doing it at night. i'm trying to to think ofhink o use rancic. >> count me in. >> how long will this run during the day? the show you have now? >> the julianna and bill show? >> yeah. >> we'll see. we're the longest running most successful show in the history of the style network, which is

part of this family. >> how long is this? >> seven years in. seven seasons in. seven seasons. so we'll see. >> so that's weird, though, your life. is it -- >> i'm the executive producer of the show. so -- >> is the camera always running? >> no. no, no. not like the old days. >> think of anthony weiner always had a camera on him. >> i love -- if you follow donald on twitter, i love his tweets about anthony weiner. >> think if he was a reality -- you know, i'm thinking ratings there too. >> he would pull major ratings. if he wins this thing, which he's in fourth place now, i mean, it is just -- >> you saw, what's her name? >> a better chance of winning the lottery, i think. >> flowers, or feathers. >> the sexting partner? >> yeah. leathers. >> she just met with -- >> steve hirsh. >> see, he's hip to what i'm talking about.

>> cash in on this. >> yes, she is. >> no, dummy. >> she could be a small business owner. >> think of the names you could come up with for -- we got to get the post to help us, the name for weiner's reality show. think about that. will you think about that? >> i will definitely -- >> you got a lot to think about. another reality show for small business on cnbc or something and then whether intuit can back our boy lemonis. >> i'll do my homework. >> say hi to your wife. >> congrats on the son. 11 months, right? >> 11 months. 25 pounds. >> is he really? >> he's either going to be a concert pianist or wide receiver. his hands, i mean, they're giant. >> really? >> yeah. >> that's nice. good. that's awesome. or a small business guy. >> thanks, guys. >> thank you. when we come back, aflac's earnings and revenues surpassing expectations. we'll talk to the insurance company ceo right after this. "squawk box" will be right back. [ male announcer ] i've seen incredible things.

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welcome back, everybody. aflac reporting better than expected profits thanks to stronger premium growth in japan. but the life insurer forecast for the next quarter are falling short of expectations. dan amos is aflac's chairman and ceo. thank you for being with us this morning. >> thank you, becky. my pleasure. >> you know, your earnings for the last quarter were stronger than had been expected, but the guidance is what the street is

really focusing on. why are you bringing those numbers down below what the street had anticipated. what are you seeing? >> it is a luxury we have because earnings were so strong, we want to prepare for to prepa beyond and with changes in different areas of the world, especially with the post and what we made at announcement of, we're going to be spending more money on that. and then with health care, the affordable act, we are preparing and training our agents. we have the luxury of doing that and so we're going to do that that the second half. that ultimately means we're going to chaef oachieve our tar operating earnings per share. >> when you say you have to prepare and train your agents for the affordable care act, what do you have to get ready for? how complicated is it? >> well, for example, the

exchanges that are out there, we want to have our own exchange and the opportunity to do that. we're not going to let our agents go out and use the exchange till they totally understand it. so it just takes time to go through that process. but the big thing is japan post which we announced on friday. most people don't realize that japan's post has -- is the world's largest insurance company with over a trillion in assets. >> wow. >> and the largest employer in japan. they're going to be selling for us. that's a real game changer for us. we are very excited about that. and think it offers wonderful opportunities for us in the future. >> obviously you have a lot of business in japan. you have for a long time. the yen was down about 19% over the quarter versus the dollar. that obviously poses a big head wind. do you expect that trend to continue? >> you know, i've always learned it's hard to predict.

earnings excluding yen was up about almost 15% and the yen weakened about 15%. it was about a break even. i think around 100 yen to the dollar is probably the area it ought to stay in. as soon as i say that it will change. i think it's in this area and it's probably where it should stay. >> in terms of investment gains, you did see outsized investment gains. what have you been able to see in the market an just where has that strength been coming from? >> well, i think we're going to continue to see strength, you know, as interest rates have moved higher, ultimately that helps our operating income, so we feel very good about our investments. as you know, we revamped our investment department two years ago with eric hersch. he's doing an outstanding job for us and creating ability to be agile and adjust to the marketplace when things are taking place.

and so i feel very good about what we're doing in that area. >> dan, thank you. we'd love to have you back to talk more about japan soon. >> love to. thank you. our lineup of corporate executives continues on "squawk box." brian roberts, comcast's boss. including the es and rx. ♪ this is the pursuit of perfection. ♪ peace of mind is important when so we provide it services you bucan rely on. with centurylink as your trusted it partner, you'll experience reliable uptime for the network and services you depend on. multi-layered security solutions keep your information safe, and secure. and responsive dedicated support meets your needs, and eases your mind. centurylink. your link to what's next.

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good morning, welcome back to "squawk box." we've been watching the futures. dow futures up by 3 points, s&p futures up by just over 4 after a mixed day for the markets yesterday, although the nasdaq did close at its highest level in 13 days yesterday. that index is indicated higher as well. in our headlines we've been

looking through a lot of things, including earnings that are just hitting the wires from comcast. >> from comcast, the mother ship. that's the new mother ship. comcast is reporting 65 cents a share in the second quarter. the estimate was 63 cents. it's 2 cents above and it's up 30% from a year ago figure. before the results came out, there was a lot of conjecture about revenue and whether it would hit expectations. a lot of the wire service is saying that people in the last couple of quarters were, i don't know, somehow disappointed although the revenue number was good. in this case, revenue is up sharply, up 8%. i'm sorry, up 7%. just 16.3 billion. 16.3 billion, which is above the estimate which was 16 billion. when you talk about comcast and the consolidated results, with a lot of cable companies you talk about cash flow and consolidated cash flow. most of these metrics are well

above expectations. free cash flow, total consolidated up 25.4%. that is a record for the second quarter at 1.95 billion. the estimate was 1.76. and total consolidated operating cash flow, up 8.4% to $5.4 billion. one thing that has been known and it's just been rumored that the cable business was going great, not just comcast but all of the cable players, that is illustrated here, but also the company is highlighting a lot of nbc universal highlights in what it's calling steady progress. at nbc, because revenues, nbc universal revenue up almost 9%, 8.9% to 6 billion. there was revenue growth in every business. film and entertainment was a pretty good turnaround as well, too. with "fast and furious" and "les

miserables." did you see it. >> i did. >> i love the musicals. >> was it in english? >> yes. >> theme parks, there was a shift in holidays. that's been a bright spot for the company. we don't want to beat a dead horse. we'll talk to brian roberts at 7:30 about the comcast results, both on the cable side and the -- we had an up-front number out yesterday as well. i think it was 2.1 billion or so. we'll see how that was. and then you know, you've got all the stuff between cnbc and time warner to talk about. let's say steve burke says to brian roberts we are going to charge you more for bravo. how much do you want? we're thinking this. he says, no. brian might say, hit me, let's

do it. then it goes to nbc. >> it all flows back. >> we'll ask him about that as well. >> he'll be joining us at 7:30 eastern time. let's talk more about the headlines this morning. the fed is set to release a policy statement at 2:00 p.m. eastern today. the dow, the s&p 500 have had relatively little movement over the past week or so. the dow was down by less than two points. it's because everybody is waiting to see what the fed might say and its market impact. we'll have more on that in just a moment. plenty of economic numbers for investors to start considering ahead of that fed meeting. a little over an hour from now we get the july adp report, a measure of private sector job growth. it gives us some insight potentially on what to expect on friday. when we get the jobs number from the government. at this point, the economists are looking for a number that is right around 183,000 new private sector jobs for the month. also coming up at 8:30 eastern time, the first look at second

quarter gdp. consensus forecast are calling for annual growth, a rate of 0.9%. we'll have more on that. plus, cnbc learned that bill ackman's pershing square. that's a $22 billion producer of gases used in industry. that stake is the biggest investment pershing has ever made at cost. ackman told investors in a letter that he built up a large position. some had speculated that air products might be that company. air products stock has rizen from the lows in the 90s to close above $105 yesterday in part because of that speculation. you can see in the premarket it is up, trading at $109. just last week, air products adopted a poison pill plan, citing unusually high volumes of stock trading. the plan gives existing

shareholders the right to accumulate deeply discounted new shares if another group would acquire 10% or more of the shares outstanding without board approval. that poison pill prevented ackman from taking a larger stake in air products. he says i was too cute in my letter to investors. i didn't expect people to be running around looking for the company. he says he thinks air products is undervalued and he has ideas on how to make that company more valuable but he wouldn't elaborate on the plans. he did comment on herbalife. ackman has not publicly said anything about herbalive since january of this year as the stock continued to climb. he tells us at this point that i haven't covered a single share. now, while the street's knee jerk reaction to its earnings this week was to run the stock up by more than 5.5%, the stock ended down by about 50 cents yesterday. for more, go to cnbc.com where you will find our newsmaker

interviews on demand. we have a lot, the fed, adp, gdp all on the calendar today. here with us for the next half hour of allen. we also have ed keon. ed will tell us how to use the knowledge in our for tportfolio. what are we going to get on gdp? >> it's a weak number. it's all about the second half next year. and whether the economy will lift up, the unemployment rate will come down. >> the even though it may be under 1%, i don't know if it will, if you think it will be under 1% gdp. >> 1.2. >> this is not indicative of a

swoon, according to everyone. it will snap right back. there's some one-items in here like an earnings report. >> i hate to do this but i don't think we should look too much at gdp. it's not a good indicator of the economy or a good indicator if you're looking at the stock market. >> some people think the stock market is a better encater of the economy. >> the stock market has a much bigger effect on the economy than most people think. what it is, the federal government purchases in real terms, which is about 7.5% of the real gdp. we have built in spending cuts as far as the eye can see, they're going to stay. we may change the sequester around some in washington. it's going to stay. and the government is shrinking as part of the economy. i think that's a good thing. i think you should look -- need to look at the private sector which is largely consumption in housing. later this year, business and

capital spending. that numbers looks good. >> what's your number for unemployment. >> we're a little south of the consensus. i think it's lively out in the leisure, hospitality, services area, where the so-called low-paying jobs. those people earn money and spend money. the fundamentals around the consumer are getting better, i think. >> you know what to do with that info? >> buy stocks. >> yes? >> we're overweight, equities have been for quite a time. we continue to think that's the right long-term play i think overweight stocks, underweight bonds be that's been our position for quite a while. that's what we're sticking with. >> what are your favorite sec r sectors, some individual names. >> we're looking broadly. we are heavily overheat, the united states, for example, compared to the rest of the world. the u.s. story is compelling and there are issues we would like to see resolution of before we

get more excited about the markets. >> do you like tech? >> i think you want to have exposure to kind of the higher beta stocks, parts of the stock market if you like the mark net general. >> does that mean we're early in the move then? it seems like we might be late. >> i think it has a way to run. the key is going to be the economy. i do believe the private sector is in much better shape, the gdp numbers are really influenced by this huge amount of fiscal drag and a huge tax increase we had to start the year. as the negative effects of that start to wear off through this year into next year, i think we'll see strong growth. >> weren't those offset by the fed? that's why i have a problem about the article and the stock market. certainly you couldn't tell 50% of the country that, hey, things are going great. what are you talking about things are hard for you? the stock market's up. what are you whining about? the stock market only helps certain people. >> there's a dichotomy there. a difference between main street

and wall street. you know, companies are run to maximize shareholder value. that means maximize the share price. sectors are paid a lot of money to make that happen. they're very smart in doing that. you see it in all the earnings reports that you're showing. better than expected, that's not so much the case. the case is year-over-year. you keep the head couldn't the down. if you have a chance to substitute capital for people, you do that. >> eventually you have to if demand picks up. >> you need to produce more but these days you do it with machines. >> i can see how policymakers would hear what you just said and figure out a way to induce companies to do it then, which might not be the best thing when competing globally. >> they might do that. this mantra of shareholder value is engrained in our society. it ensures we get what we're seeing. >> does the fed get credit for

raising asset prices in the stock market? and is that a real indicator that the economy is better or just an indicator that the fed has been really active? >> for me, the fed gets credit. for this inventive quantitative easing which i think has worked in the united states. we see it in the data. >> you don't care how it happened, do you? >> well, i think the key to the fed in my view right now is not so much whether they taper, what month they taper, when they end qe. the potential is in the real economy in the form of reserves. that money will eventually be loaned out and find its way into the real economy, even after the fed has stopped qe completely. i think if credit availability gets a little better next year, which there is a good reason to think it might, you combine that with strong growth in autos and the housing sector. the car rental companies ran out

of cars when i was in chicago last week. it also suggests that maybe businesses are finding themselves with a lack of capacity, whether it's physical plant in equipment, whether it's people. that's when jobs will come back, when the shortages are strong enough that businesses need to have people to create that profit maximumization. we're not quite there yet in terms of getting momentum going but i wouldn't be at all surprised if that happens. >> i think jobs will be better but we're not going to see anything like the old days unless we get very, very rapid growth, which isn't in the cards. the stock market will do very, very well. and then we'll just see if those trickle down to the rest of the way. but i think to count on big-time jobs growth, it just isn't in the cards. >> i was thinking maybe the president should consider reinstating those payroll cuts as a way of helping the middle class. that was a big increase to start the year. that's the tax cut that puts more money into average people.

every working person would benefit as opposed to some of the other tax cuts under consideration. >> thank you, allen, you'll be around for our next segment. we'll get back to whether we should thank the fed or fire the fed. i don't know. >> those are good questions. we should talk about both of those. >> when we come back, we'll be talking about mortgage rates. they've been creeping up slightly over the past week. economic news today. and fed speak this afternoon could change that. we speak to the ceo of the mortgage bankers association on whether now is the time to refi. also as we head to a break, check out shares of comcast. ceo brian roberts will join us to talk about the company's quarterly results. "squawk box" will be right back. this summer was definitely worth the wait. ♪ summer's best event from cadillac.

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welcome back, everybody. mortgage applications fell by 4.3% last week. the average 30-year mortgage rate is 4.58%. that is still near two-year highs. joining me is president stevens. >> you have been talk about quantitative easing. the interesting thing to look at is interest rates are up 1 full

percent over two months ago. when you look at the that increase, that's without pullback. it's merely based on comments made by the fed chairman. we have yet to really know where interest rates are ultimately going to level once quantitative easing happens. a lot of this is a bit overlaid with emotional reaction based on betting on the future. our forecast is rates should level over lower than where we are today by year end. a lot of this is uncertain because what the fed says moves the markets dramatically. rates are clearly up and mortgage applications are down. and quite frankly we saw home sales drop a little bit last month -- this month over last month. some of this impact is already happening and i think more of it is driven by emotion than actual reality because the fed is still buying. >> you think this is a short-term shock to the system? >> we forecasted all along the rates would rise. that's a reality. the fed has created enormous --

a short in the market which has kept rates low for many americans. the question is where is the real level here? because you know, you hear the chairman speak as we heard a month ago and rates moved dramatically over a couple day period there. again, there's been no pullback yet on qe. you've been talking about it all morning, when are they going to slow down purchases? we have yet to see that real impact. so what's the real normal for interest rates? we think it's around 4.5% by year end. but again, that's taking emotion out of the market. >> how about you, what do you think? >> i think historically what happens in business cycles, demand comes on, interest rates rise as a derivative of that and housing keeps going up. my question for david is what's going on on the demand side. i know the refi stuff will soften because of the bump-up in rates. you get more wealth for the housing sector. they buy more houses. >> you've been commenting here

for a while about main street versus wall street and how does unemployment ultimately affect consumer demand and those variables. those are the same things we look at. we saw 1.2% drop in new purchase applications. month over month. we think some of that is emotion driven. people see interest rates rise. they slow down a little bit of that eagerness to jump into the market. overall, i think the trend is for us from our perspective, we expect home price appreciation to continue ranging somewhere between 4.5% and 5% this year and increasing a little bit next year. we expect demand to continue on the purchase side. you know, inside all these numbers we've seen a 50% drop in refinance activity overall from just a month ago in the marketplace. but home purchase mortgage volume is up about 5%. so what we're in right now is this anomaly of waiting to

determine what really the fed impact is going to be on interest rates and how that's ultimately going to affect home ownership demand. the last thing i'll say, 4.5% interest rates for 4.58, the rate we're recording now is still below where rates were a couple years ago when h.a.r.p. was implemented. we're in a low interest rate environment and rising rates is the sign of a healthier economy. all of this plays together that we're in a bit of a wait and see mode. >> how much does somebody have to put down today to get a mortgage? are we talking 20% for most people, is it more? >> if you do an fha loan, obviously it's 3.5% down payment. that's limited by loan amounts. those loan amounts will come down at the end of the year. and the conventional space you can do 5% down financing. you need very, very good credit. in the jumbo market it's about 20% or 25% for the high end of the market. >> okay.

>> wow. >> david, thank you very much for joining us. i'm sure we'll be talking to you again soon. >> you bet. >> allen, thank you for joining us this morning and giving us the insight. >> happy birthday, milton. >> fire the fed or not? >> no. i think quantitative easing is actually working, has worked in the united states. it's working in japan. and if you light up the inners of the cyclical mechanisms and economy, here it's happening, housing prices are up, the stock market is up, wealth is building, people will realize capital gains. you get the mechanisms going to become self-sustaining. some people call that a liftoff and the quantitative easing has done its job, then they need to start to take that out. that is tough. that is tough. markets will react and leap around every time they do that. it's uncharted territory, we have no history.

>> what we've seen, this is just the beginning of the moves? >> oh, sure. yes. we're talking about a three, four-year process, two parts to it. first part is slowing down the rate of purchases, then that stops. and then someday we'll raise interest rates, they're saying 2015. that's a lot of time for the economy to do better. that's a lot of time for revenues and earnings to grow. that's a lot of time for the stock market to have a very good run. >> is there a scenario you could come up with if you wanted to be negative, by when it was all said and done it was a net negative we didn't or do we already know it was a net positive qe? >> i think it's a net positive. >> no matter what. it's not going to end badly? >> i can never say no matter what. lots of things happen that co-mingle with it. you can't separate it out. >> the easy monetary policy we had before the financial crisis was a net negative, right? >> yes. >> we didn't benefit from that? >> the way we've dealt with this is controversial in japan, china

now, we're not through with the whole episode, i think it is working. one of mechanisms is financial asset prices. >> allen, thank you. when we come back, we have a preview of today's big gdp report and what to make of those numbers, plus, the ceo of comcast. we are celebrating the life of milton freedman. he would have been 101 years old today. we'll speak to the ceo of the foundation that carries on his legacy. "squawk box" will be right back. no, thank you. we know you're always looking for the best fill price. and walk limit automatically tries to find it for you. just set your start and end price. and let it do its thing. wow, more fan mail. hey ray, my uncle wanted to say thanks for idea hub. o well tell him i said you're welcome. he loves how he can click on it and get specific actionable trade ideas with their probabilities throughout the day. yea, and these ideas are across the board -- bullish, bearish and neutral. i think you need a bigger desk, pal. another one?

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up next, the ceo of comcast, brian report eoberts joins us t about the stock price. and later this morning, celebrating the legacy of milton friedman, the ceo of the friedman foundation for educational choice will join us. "squawk box" will be right back.

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welcome back to "squawk box," everyone. let's take a look at some of the earnings reports out this morning. humana reported second quarter profit of $2.60 a share. that beat estimates by 16 cents. the health plan provider raised its full-year forecast as membership levels continue to rise. it now sees $8.65 to $8.75 a share, up from the prior $8.40

to $8.60 that it guided. the street is by $8.68. that stock is up by 2%. adt earning 53 cents a share for the second quarter, cents better than the treat was expecting. revenue beat the consensus. the provider of security products points to growth in its business as well as cost controls. that stock is up by 3.7%. garmon posting 7.6 cents a share. revenue beat estimates about i aid wide margin as well. garmin warns that declines in the personal navigation device market continues to be a head wind. comcast reported second quarter profit of 65 cents a share, 2 cents above estimates. revenue also beat consensus, the stock is higher in premarket trading. joining us now is brian roberts, comcast chairman and ceo. mr. roberts, brian, good to see you. thank you for joining us. >> great quarter. happy to be here. >> anyone that follows media,

when comcast reports, it's almost -- it runs the entire gamut to talk about. there's consolidated, cable, nbc, we want to talk about all those. initially you just want to talk about, it's the first quarter that nbc has been a wholly own unit. tell us what you think the highlights are of this quarter. >> well, i think that's a great place to start, because you know, we made a big, big decision for the company at the end of the first quarter to buy the other 49%. i think our timing at least for the first 0 days looks great. the market conditions were perfect back then. they've changed a little bit. media valuations have moved a bit. but mostly we had 21% growth in cash flow at nbc universal, 9% revenue growth, really all the businesses grew revenue and that's a real highlight for me. and so our decision to invest another $18 billion in con ten

we feel great about that and we're off it a 21% increase in one quarter. that may not be completely sustainable at that level. but all the businesses are for the first half of the year, had a strong year. i really am pleased with steve burke and the advertising up front and all the things i'm sure we'll talk about. >> we do want to do that. you've made a few decisions about nbc. there was the initial decision and when to buy and the rest. i don't know if you thought about this, you probably have, but -- it was a different environment when you decided to buy nbc. obviously the macro environment has improved. you have steve burke, known as a great op writer of nbc. things have improved there but how much more do you think nbcu is worth now than when you paid for it? >> i'l that to the analysts. we figured we spent all in around $28 billion when you take -- >> 10%?

20? >> i'm going to defer -- you do see interesting things such as theme parks, a part of the company we don't talk a whole lot about, a solid first half of the year continues to do really well. we have exciting atracks in the future. you see other companies going public in that space. there's been a resurgence of interest. so i think the diversified nature of the content portfolio does have, you know, a lot of value. more importantly from where i'm judging, a lot of business opportunities ahead. we don't feel that we're at maximum performance. i think we're operating better and well. the team has gelled, as you said. steve's doing a great job. it's fitting well with our cable company. our cable company had a really strong quarter. we can talk about that as well. >> becky said she thinks 20%. i think 25% more. i think at least -- maybe 30 even. that was the next place i was going to go, actually, brian.

that is i have heard anecdotally that cable, not just at comcast, that cable is just doing so well and, can you explain, is it the macro environment? is it that really is going to be what end up winning out over a lot of other delivery systems? why is cable doing so well? are small and medium sized businesses deciding that's the way to go? what makes it -- what's improving there? >> well, i really can speak about comcast. we had a good -- really good second quarter. we had about 6% revenue growth, 6% cash flow growth. just right around there. but we had the best quarter in high-speed internet sales. 120% better than the second quarter last year, for instance. that we've had in the last five years. and in video we continue to have losses and that's not our goal. but they were less losses than the year before. and phone also is doing well,

the triple play bundle continues to be the best value and attractive product in the market. and then in our case, we're trying to digitize those products so you can take them everywhere. we're trying to wrap that under the xfinity brand. we have a business service unit that's the fastest growing in terms of percentage at 28%, 27% growth for the quarter. and all of those things help offset the programming costs which have been increasing. and so it's a recurring business, if you invest in those business as we have with our high-speed broadband platform, we increase speeds for the entire customer base in the last year or so. the product just keeps getting better and better and more important. on the video side we keep adding features like high-def, on demand and now of tv everywhere. it's the best, most compelling product and we have to keep working on it.

it all comes down to service, can you show up on time, give customers more of an expectation that they can do it themselves. self-installation has never been higher. we have more online customer care than we've ever had. just the experience gets better quarter after quarter. kne neil schmidt has proved to be a world-class operator in making us a better company. >> earlier this week we had a strategist on and he was talking about how far the media companies, the cable companies have run. he thinks the next driver will be household formation. i'm wondering what you're see on that front, if you agree with that and what kind of numbers you've been seeing when it comes to household formation. >> it's not been a driver the way it was for years and really decades. and so it's a little better but not meaningfully so, such that we're having, you know, tailwinds. and so i would be hopeful that

as the economy continues to improve, that we will get some more housing formation. that will be a great thing for our business. gives us a chance to sell all three of those products. we have to compete more than ever before. it's always nice to have a bigger pie to chase. and so i agree, it could be an upside but we have not yet really seen much in that way, that is pockets but not a meaningful driver. >> there's been stuff written lately about when content goes up against distribution, like we're seeing now, with cbs and showtime, et cetera, that content has been winning. sooner or later, the distributor has to pay up because they have to carry it. if steve comes to you and really tries to gouge you with some of the content, what are you going to -- are you going to pay up because you need it on the cable systems? have you thought about that scenario? >> look, we've said for a long

time it makes a lot of necessity an sense for the consumer that both sides find a medium balance. it doesn't mean one side's business may not improve a little more than the other side. if somebody wins and somebody loses you end up in an untenable long-term model. this business model has been innovative, it's created wealth for both content companies and distribution companies. and frankly, we made a big part of our logic for why we wanted our shareholders to have something unique, which is a foot in both camps. we're actually trying to work with steve and neil schmidt, putting the two together, innovate, how can we make new steps forward for consumers, whether that's going to be in 4k television, ultrahigh-def someday, in whether that's in letting shows come to on demand and other devices sooner, in more ways.

and at the same time, you know, yes, there's higher content costs, nbc universal have higher rising costs whether it's at the sports platform that they're buying for nbc sports or other content costs. it's part of the eco system. it's very much top of mind. i do hope in the end all sides find a way to work together. >> that's a good problem to have, obviously, to have both sides of that. and then i was thinking, i saw cbs and moonvest talking about they've had a lot of success with "under the dome." now they can go to netflix and amazon and get some more revenue doing it that way. you could do that and not go outside the company, couldn't you? you could go to xfinity or something. that's another advantage of having the different distribution channels, right? >> well, it's the kind of area where we're definitely making investments in.

we have something called stream picks at the cable company. we have minority nonvoting interest in hulu. we want to be across the digital space. at the same time, we do business with netflix and amazon and, of course, our customers get those products through comcast broadband. it is in everybody's interest to find a way for the consumer to get whatever they want whenever they want it and to have a lot of choices. and that is what we're all racing toward. i think we're in a very special place at this cross-section of media and technology. it's an opportunity that we're not trying to be complacent but rather trying to innovate and push ourselves with the kind of things you're talking about. >> i didn't think about that. yes, with netflix you have the broadband. i was going to go on, i had an additional thought about that. i can't remember what it was right now. i will come back to that in a second. okay.

the up-front for nbc was much better than last year. somehow it was bundled with the other properties. did that pay off and 2.1 is, what, how much more than last year? >> it's a couple hundred million dollars, my understanding. linda yockareno, new to the company, first up front. we changed something that had seemed kind of logical but maybe there was certainly other ways to do business. we chose to put all the nbc properties under one umbrella, under linda. so that would be the broadcast properties, the cable profits, the sports properties, the digital properties, hispanic offerings all under one executive to go out and offer a complete solution to your clients. and i think that we've had a very good up front, very strong up front.

i think maybe better than some of our competitors. i think the overall environment was good, maybe not the best. and so net/net, we feel we came out with a real progress. and also our shows generally speaking performed better than they had in prior years and our ratings got better. and are, therefore, what it is we were offering not only was a complete solution but it also was doing better in the market. so a lot of good forces but it starts with leadership and we had, you know, a really strong leader in linda and we were delighted with the outcome. >> i was thinking about hulu. were the offers -- suppose there were five different people that wanted. were the offers not up to speed or the potential was it so compelling that it was better to invest in it than selling? >> i have to refer you to talk to disney and fox about that question. they're the decisionmakers, but

it's a changing space and when they chose to keep it, and to invest and to be part of that company, we certainly said we'll put our pro rata share of that to stay in. >> yesterday i also saw that it was just written that moonvest said greenblatt made a comment that flat was the new up. he disagreed with that. where do you come down? >> i'll leave it to those two. they're more expert than i am. >> you're a cable guy. >> no. i think that -- i hope we're managers as well as folks who can see good opportunities and invest in those businesses and in bob greenblatt, i think we have a very, very super star talented programming executive who, you know, maybe is realistic in what's happening with so many choices for consumers. but it still is the best value

for an advertiser, because it aggregates more eye balls than any of the other media offerings out there. what we're focused on is whether it's "america's got talent" or "the voice" return with the original judges or the new primetime season with some very exciting shows that i know bob and the team have worked really hard to create. they're starting to advertise those shows now. you can feel the excitement in the air. we are coming from a position when we bought the company where for year after year after year we were in last place, in 2013 we moved up. and i know bob would like to continue to move up. so part of it is getting paid for what you're already performing and in the case of nbc, it wasn't where we wanted to be. and we said it would take several years to do that turnaround. you feel like that's begun and that's his great leadership. >> it was losing money. is the broadcast network making

money now brian? >> well, if you add up all the parts including the tv stations and the syndication, you know, i'll defer to mike angelocis when he's on here to break it up for you. we feel we're in a good trend and not in the position we were when we bought the company. that's why you see the improvement you started the interview with. >> we don't want to go too long. there will be a time and place to talk about aero and what happens if people are able to pick and choose cable channels that they want. the future is still daunting, but you feel like it's all manageable? >> let me say this. there's -- the future, when you're at the cross-section of technology and media and you have a company that's uniquely in that position, the first thing you have to do is execute well. what i think today is all about is the kind of numbers we posted, the broadband increases, nbc 21% cash flow growth.

free cash flow, the best quarter we've ever had. i think that gives you the momentum to solve whatever is put before you and try to make those worries into opportunities which we've been having this conversation, i'll come back again and we'll continue to talk about where the media business is going because it's so interesting and exciting. >> good. this is a, you know, company reports at 7 and at 7:30 we get to talk. i think we should keep it like this. it's excellent for comcast and "squawk box." thanks for coming on and giving us so much time. up next, a check on the markets and later, day two of the fed meeting. we'll talk tapering with william poole. "squawk box" will be right back. weekdays are for rising to the challenge. they're the days to take care of business.

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funny thing. after the fall of communism, everybody in the world agreed that socialism was a failure. everybody in the world more or less agreed that capitalism was a success. and every capitalist country in the world apparently deduced from that that what the west needed was more socialism. >> and here we are.

today we are paying tribute to a man arguably the most influential economist of the second half of the 20th century. milton friedman has been called the grand master of economics. joining us now is president and ceo of the friedman foundation for educational choice. i understand you're nice, robert, i saw some of your notes. i don't want to be too incendiary here but wealth of nations was 1776. we learned about how profit incentives allocate capital. hayek, 1944. milton friedman, 1962 and now it's 2013 and here we are. how do you explain, we learn these things and then the next generation has to relearn it all over again? >> so maybe samuel johnson said it best, you road to hell is paved with good intentions. a lot of us have good intentions but we forget that society is

best organized as milton friedman said when it's organized in the interest of individuals pursuing their self-interest and not government coercion. >> yes. i have trouble sometimes getting people that disagree with that proposal to connect the dots between good intentions and outcomes. and a lot of them have no interest in looking at what the end results are. they like to feel virtuous on the front end and they just compartmentalize it or their brains are different or something. can you explain it? >> they forget about the back end, forget to unleash the productive enterprise of free markettes you need individuals working together. that's a far better way to organize society. milton friedman said it best as he always does, within he said, you know, when you spend your money on yourself you're very careful about how much you spend and what you spend it on, but when you send 134u7b else's money on someone else you don't care how much you spend and what you spend it on. that's government. that's the problem, we're

spending someone else's money on someone else. that's education in a nutshell. >> history shows us that pendulum swings eventually swing back the other way. where are we at this point in history, do you think? there was the reagan revolution. i don't know, bill clinton sort of continued, noio, an emphasis on free market. where are we in the pendulum swing? does it eventually swing back to free markets and the private sector? >> seeing overregulation, government centralization. you're seeing more ideas tipping toward milton friedman. in the last three years you've had five statewide voucher programs. you're starting to see this idea of his about giving parents the freedom to choose the best school for their children be widely accepted. you have 23 states that have 44 programs over 250,000 children getting vouchers and over 600,000 families using tax credit. on one hand you have a

centralization, you're seeing this growth, on the other hand you're seeing educational freedom. that's great for us in the long run. >> we all agree, both sides agree on education. it's the way -- once again, good intentions. thank you and congrats. we love milton friedman. anyway, thank you. >> thanks for having me. great birthday today. this is "squawk box." we'll be right back. if you're serious about taking your trading to a higher level, tdd#: 1-800-345-2550 then schwab is the place to trade. tdd#: 1-800-345-2550 call 1-888-284-9410 or visit schwab.com/trading to tdd#: 1-800-345-2550

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stock futures have given back some of the gains this

morning. still holding on in the green. we still have adp and gdp coming up, numbers that could move the market. we have former st. louis fed frez william poole. we'll be right back. [ male announcer ] these days, a small business can save by sharing. like carpools... polly wants to know if we can pick her up.

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two key data points that could move the markets. first up, a look at jobs in july. adp private payrolls at 8:00 a.m. eastern. and william poole will tell us how he thinks the central bank will react. >> and bill ackman is at it again. he's taking a new stake in air products and chemicals. we have more on that story as the third hour of "squawk box" begins right now. ♪ so get ready get ready welcome back to "squawk box" here on cnbc, first in business worldwide. i'm joe kernen along with becky quick. we'll less than 15 minutes from the adp private payroll numbers. forecasters polled by dow jones were looking for annan crease of 183,000 private sector jobs. and then, 15 minutes from now we get that. at 8:30 we get our first look at

gdp which ranges, the estimates as low as under 1 to high 1s. think it would be point something? >> the consensus is for 0.9%. >> 0.9. it's not a swoon. then it's a one off. that's what they're saying. >> right. >> then at 2:00 p.m. the fed will release its latest policy statement. really you should watch all day. let's get a check on the markets this morning. the dow has pulled back, now up just 18 points or so. as far as the futures go here. let's see whether that changes as we move to our facebook. yes, it did. >> this morning in fact, facebook crossing that ipo price of $38 in free market trading. this is the first time that the stock has topped this price since the company went public last year. there were a series of them above $38.

it's sitting right at $38 right now. the shares are up over 40% in the last week since the company came out with the much better than expected quarterly report. a lot of the comments that zuckerberg made on the call made analysts think this stock has room to grow. yesterday, the nasdaq closed at a 13-year high. news we broke earlier, cnbc has learned that bill ackman's pershing square has taken a stake in air products and chemicals. the stake which cost ackman roughly $2.2 billion to acquire, this is the biggest investment pershing has ever made at cost. earlier this month, ackman had told -- investors in a letter that he had built up a major position and a large cap investment grade u.s. corporation. since that time, obviously people started speculating, trying to figure out the

company. some even assumed that air products might be that company. as a result, the stock has risen from the low 90s to close above $105 yesterday and on this news this morning, it's up another 4.6%. air products' latest trade at 110.11. just last week, air products adopted a poison pill plan citing unusually high volumes of stock trading. that plan gives existing shareholders the right to accumulate deeply discounted shares. the poison pill does prevent ackman from taking an even larger stake in air products. he says i was too cute in my letter to investors. i didn't expect people to be running around look for the company. i think it alerted the market. he said he thinks air products is undervalued and he does have ideas on how to make the company more valuable. he wouldn't elaborate on his plans but if you look back at what he did in canadian pacific, he brought in new management, a new ceo and that stock went from $8 billion in market cap from $20 billion from the time he got

involved to the current day. ackman comment on herbalive. he publicly shorted that company. it came in with much better than expected earnings this week. he hasn't publicly commented on herbalive since january of this year. the stock continued to climb. he did point out in a press release he had issues with the numbers herbalive put out for those earnings. that stock end up closing down on the day. we'll keep an eye on everything that's happening with this but again, that stock ended down by 50 cents yesterday. read all about ackman's latest moves on our website, squawk.cnbc.com. that's where you find our newsmaker interviews on demand. cnbc parent comcast reporting earnings of 65 cents a share, revenue came in above expectations. earlier on in the show, we spoke to the boss, comcast chairman and ceo brian roberts. >> we had 21% growth in cash

flow at nbc universal, 9% revenue growth, really all the businesses grew revenue and that's a real highlight for me. and so our decision to invest another $18 billion in content we feel great about that. all the businesses are, for the first half of the year had a strong year. so i am really pleased with steve burke, and the nbc universal team. >> on the news the shares of comcast currently up just under 3% at $43.90. the federal reserve are releasing its views on the economy this afternoon. joining us for the hour is bruce kazman, the managing director of global research. also from st. louis, we're joined by allen skranka. a huge part of the question is what is going to happen with jobs. you are not that optimistic in terms of jobs picking up.

>> on a global basis, what we think is going to happen, gdp will pick up. that's the key issue once we watch the data this week. we think it will come with productivity. companies have provided us with a bridge here with big drags on the fiscal side and the global side. as we move forward and those drags fade, gdp picks up. >> you are convinced that those drags are going to drop off? we're not looking at another situation when we fall back into tough times. >> there's two things to be watching right now. one is the data this week. we'll get a weak second quarter gdp. we're below 1% in our estimate. to watch the july news, not only the payroll numbers. we have car sales for july. if we start to see those lift, we can see those giving us help. europe is a much more important player in the global scene and feeds back into the u.s. in an important way. we think europe exited recession last quarter will grow 1% for the next few quarters.

i think watching the data and the dynamics in european financial markets becomes the second key, the global key to the u.s. story as well. >> what's the fed watching in terms of, i guess you can look at gdp and say it's not going to be a big deal because we think this is a one off and things improve from here, but the jobs picture, that's a key. what do they need to see to actually start tapering? >> i think they need to see a number somewhere in the range of the mid-100s. i think they're convinced if the jobs are holding up, it's the right thing to do to start tapering. they may not go that aggressively in the stages of this. they need a payroll number. >> that's a low bar. >> i think it is. it is a bar we may not reach. the issue right now is are we in the backdrop of this weak second quarter gdp number? are we seeing corporates hold in here on the hiring? we'll get information in a few minutes. the real surprise would be to be disappointed and go below that. i think the fed needs to borrow somewhere in the mid-100,000s to go forward in september.

>> allen, what's the market going to do with this? if you see a number that's in the mid-100s, 150, let's say, and the fed makes it sound like that is enough to get them to start tapering, how does the market react? >> becky, we've been long-term throughout this period. we're a little bit cautious right now. we think the market is assuming qe will go on for a while. we think it's going to begin to taper in september. and so we're long-term bulls but short-term cautious. this is the fourth largest gain in the stock market since 1928 without a 20% correction. so i think we're overdue. >> so what happens at that point? i mean, what does it take to kick off that correction? is it anything that the fed says at this point? are we worried that the economy is not strong enough to stan on its own two feet if they were to start backing out? >> i think the fed has caused some confusion by making so many comments and putting out so many numbers and dates.

i think some investors, not all, but some investors have lost sight of the big picture message from ben bernanke which is i'm going to stop buying government bonds soon. i'm going to start tapering. and i think that moves interest rates are moving higher and some investors with long-term bonds in their portfolio have not taken action yet and they need to. >> where do you think bond prices are headed or yields i should say? >> i think yields are are headed higher. the federal reserve is going to really take careful steps to try to manage that rise in interest rates but they are headed higher. i think investors have to understand that longer term bonds are going to fall more than shorter term bonds and that's why we've shortened the maturities in our investors portfolios to under five years. >> do you think that is going to be a violent move or do you think the market can handle this? you're making it sound as it you think it will be a real dislocation. >> well, you know, the market often corrects in a surprising fashion, becky.

so you can never predict when that's going to happen or how much it's going to fall. you prepare for it and you do that by managing asset allocation. if you had 50% in stocks and 50% in bonds three years ago, that percentage now is 60/40 because the stock market has risen so far. >> you say pull back, when would you get back in, you need to see a 10% correction, 20% correction before you feel more comfortable? >> you never jump all the way in or jump out of the market. you manage that equity percentage to your risk tolerance. again, if your risk tolerance is 50/50 but the market is pushing it up to 60/40, that's a big mistake. investors make a big mistake as the market moves higher. i'm suggesting you need to manage that waiting carefully. >> bruce, you sound much more

optimistic in terms of the economic outlook. do you think there's a way the market could get a better economic picture and still do what allen's talking about here by swooning? >> i think the big picture story we have to realize if that interest rates are going to go up, it will go up because the fed is convinced the economy is stronger and it will be tapering. there's a conditionality that i think we need to stand. i think the long end has done a fair amount of adjustment it needs to on the economy doing better. if the economy delivers and we're growing 2.5 to 3% over the next four quarters, i think interest rates will go up a bit. i think we'll get up to 3% on the ten-year yield. the bigger issue will be that the economy will be starting to break out of this rank that we've seen. i think that's going to be the big event. if we don't do that, payrolls don't hold up and gdp doesn't pick up, the fed will have to pull back its messaging and in that environment, the interest rate outlook will be quite different. >> bruce is staying with us. allen, thank you for joining us. >> thank you.

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welcome back to "squawk box," just seconds away from the adp employment report for july. u.s. equities futures are indicated higher. liesman is here and they both know the numbers. i ridiculously act like i can't say it for another two seconds. steve? >> strong private payroll growth reported by adp of 200,000 in july. estimate was 183,000. june revised up. putting it on top of what the bls reported for the entire economy. good sector this month, up 22,000 with an inexplicable decline in manufacturing, zandy will have to answer for that. the nonfarm payroll estimate to are this friday, 183,000. this could cause some tweaking. depends on how much you think government will take off. we'll talk about that in a second. i wanted to give you the

information 2349 discussion that we've been having about obama care and the size of the company, small business under 50,000 adding 82,000. medium business, 50 to 499 employees, adding 60,000. large business 57,000, overall, small business has been running ahead of those with 50 and more. that could be a reason the obama administration changed the rules. and delayed implementation of it or it could not be. we talk with chief economist at moody's analytics. mark, overall, does this suggest maybe we should be thinking more positively about the friday number? >> we've been growing 200 k for the last 3 months, 6 months, 12 months, 24 months. it's more of the same. 200 k in any other economy other than the one we're in with a 7.6% unemployment rate would be considered pretty darn good. 200 k is not too bad. >> put together the dissidents

we're going to get. all the inputs have been weak. basically for the two months of data that we have. you've been doing this relatively strong jobs number. which one is right? >> i think they'll both get revised, actually. gdp growth will probably be revised up. i expect to see some of that in the revision we get in a few minutes. the trajectory of growth should be lifted a little bit. i would expect with the benchmark revisions -- >> every five years the government goes backward. >> in january we get a benchmark. i would expect that to be done. to make it more skin the with adp was saying in the spring. adp was weaker than bls in the spring. i think that's right. fundamentally, i think what's going on, a lot of the weakness in gdp is related to the sequester and the government cuts. it's to defense. that's very productive. that's a big hit to gdp. it's not as big a hit to jobs. >> it's hard to have this conversation without bringing

bruce kasman in which we'll do in just a second. the sector, 22,000 up for construction. is that one of the stronger numbers we've seen for construction? that's a delay we had. we had a surge in housing but then we didn't see the employment gains, now it seems to be coming a little bit later. the manufacturing sector, which mark i went back and checked, your manufacturing numbers are much weaker than the government's manufacturing numbers. is there a reason you could be undercounting it or the government overcounting? >> first construction. i'm counting on lots of good things from construction. we'll get a lot more home building. we should see more months of 20, 30 k going forward. this is key to getting to a higher level of job growth going forward. i'm expecting a lot there. this is just the beginning of it. in terms of manufacturing, bls is 0 to plus 5. adp has been 0 to minus 5. >> it's 50,000 jobs over the level is different over several months. >> yes, this may be one area we

see revisions to the bls data. this is where the sequester and the defense cuts have their biggest impact on manufacturing. >> would you react to the jobs number here? is this in line with your thinking of where the job market is? >> i think it is. i think it's an important message if it's confirmed by the friday payroll number. >> it will be, bruce, i'm confident it will be. >> let's talk friday at 8:30. i would step away from technical things here. there's a fundamental story, labor costs are cheap and companies are hiring. the other is companies have accepted a profit margin squeeze through the first half of the year through the drags. they're looking through it. the good news, it wasn't for sure coming into this number and coming into friday is that they seem to be continuing to provide us with that bridge as we looked three, six months out and start to see the drags fading. this is a very important number against the backdrop of what we're going to see at 8:30. it's behavioral, it's about

corporate behavior holding up and having incentives to hire. >> the other reason for the weakness is inventory cycle in manufacturing. that's depressing gdp growth. it's not going to have as large an impact on jobs. >> i haven't checked the markets. were the markets reatting? >> i was watching closely. >> you would have interrupted, right? >> i was watching that closely. it looks like the last time i saw it, dow futures up 20 points. >> it's down a little. >> no, they were up 18. it's roughly the same. >> we don't know what to do if it's good news. we don't. we still haven't decided whether good news is good news or bad. >> good news could cause the fed to backward taper. the market doesn't like that. bad news, we keep the fed in the game. didn't it the make sense that good news is -- if you're thinking about the world making sense. >> it doesn't, though. >> if people are working, if people have jobs, that's a good thing, that makes we want to

invest. >> bruce said he thinks if we get a number in the mid-100s like 150 or something, 150 or north of that for the jobs number on friday probably means the fed will say they can taper at that point. >> yes. >> that's a relatively high bar to jump over. >> to my mind the taper is coming and the economy has to prove why it shouldn't taper. that's really -- i think -- >> i don't know if the market has figured that out yet. that to me is a surprisingly low hurdle. it's coming in september? >> right. but let me just amend that. the real story is, the taper is coming for two reasons. one is the fed expects the economy to do it. i also think the board, the committee wants to come off that 85 billion. it's done a lot to prepare the market for it. i think they'll go to 85 and maybe 65 billion. and they may stay there for a little while, maybe for a couple months. is that your outlook, too? >> i think they'll stay there until december. >> right. >> i think if we get this number and validate it, we're done on

tapering for september if we get a strong payroll number on friday. >> i think the market knows that. we're then going to enter a debate, which is how long can the fed stay on hold on rates? that's going to be a much more complicated discussion. we'll get a new round of fed forecast in september. they'll go tout to 2016 and forecast an unemployment rate to back where they think the norm is in the economy. they'll have problems holding down expectations on how fast they'll be tightening over the next two to three years. i think that's where the debate will go right now, how we guide markets. >> that's the thing the fed cares the most about, not so much the tapering expectation, it's the expectation for rate hikes. if you listen to the rhetoric in the last couple months, it's about, look, we may be tapering but we're not tightening. kasman is saying you can't keep the genie in the bottle. >> right. >> the fed has laid out a clear path for us.

just as long as we're around the edges of that path -- >> just because the fed says it doesn't mean we have to believe it. >> eventually we will. if that's the reality of what's going to happen, i think expectations will get driven to it. >> mark, steve, guys, thank you very much. we'll talk to you again very soon. >> friday. >> friday you'll be here? >> yes. >> bruce is staying with us. when we come back, more key data. we get our first look at second quarter gdp. that's coming up in just about seven minutes. [ indistinct shou] [ male announcer ] time and sales data. split-second stats. [ indistinct shouting ] ♪ it's so close to the options floor... [ indistinct shouting, bell dinging ] ...you'll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪ from td ameritrade. it's been that way since the day you met. but your erectile dysfunction - it could be a question of blood flow. cialis tadalafil for daily use

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welcome back, everybody. take a look at shares of ibm. a disclosure contained in a filing this morning, ibm says it is cooperating with the probe. the stock is down $2, which is about 1%. microsoft is losing money on its surface tablets. the company's annual reports shows slow sales. also shares of mastercard getting a boost this morning. the company's earnings beating the street by 66 cents. revenue also topping estimates and that stock is up by almost 3%. when we come back, we're just a couple minutes away from our first look at second quarter gdp. right now as we head to a break, take a look at the u.s. equity futures. they've been in the green all day. right now up by about 23 points for the dow futures. "squawk box" will be right back. ♪

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welcome back to "squawk box," everybody. we are just a few seconds away from our first look at gdp in

the second quarter. we've been watching the u.s. equity futures ahead of that. after that stronger than expected number from adp, the dow futures are up by about 23 points. that number came in at 200,000. leaves a lot of people to wonder what will help on friday. rick santelli standing by, steve liesman and mr. kasman in studio with us. rick, the numbers, please. >> the second quarter gdp under new computations is bigger, up 1 1.7. if we look at consumption, it's been downgraded to 2.3 and it is currently on the new read 1.8. that's better than the 1.5 we were expecting. but 1.8 sequentially is a bit weaker. if you look at the price index, up 0.7, that's smaller than expectation and about half of the revised 1.3 from our last look. if you look at core, strip out of all-important food and energy

on a quarter over quarter basis, it's up 0.8. also on the light side, and also close to half of the 1.4 last look. if we look at second quarter employment cost index, it was up a little more than expectations, up 0.5. this is not part of the gdp. this is another number. that was up 0.5. our last unrevised look was up 0.3. i can't tell you if that 1.7 would have looked different under old style or how much affect there is but it's definitely better than anticipated. and we moved up 4 basis points on the adp number on a ten-year from from 263 to 267. we've extended that to 269. i would suspect there's a good untoo the to challenge that. back to you. >> all right, rick, hold on.

let's get more reaction for these numbers with steve liesman and bruce kasman who is here. looking at these numbers and the market reaction, the market is taking it by better news but not a whole lot. the dow futures are up 30 points, being up 20 points before we got this. steve, what makes sense to you? >> i'm trying to make sense these numbers. there's a lot of stuff going on. we want to focus on consumption. consumption was 1.8. bruce, a tad more than expected by the street. business investment, 4.6, a tad weaker, i saw numbers like 6% or 7%. it is a turnaround from the first quarter. i think a big surprise may be government. down overall just 0.4. compared to 4.2 down in the first quarter. so government a little bit, federal 1.5, state and local, actually positive. i'd have to go back and find when we had a last time a state and local positive there. but there's two ways to think about the government numbers which is "a," the sequester

wasn't as bad as we thought or "b," it's coming. so i don't know which one, where you're going to side on that. let me take a look at inventories here. >> steve, folks, i have something big i should tell you. >> go. >> i normally don't look at the old revision, we are looking at a new look in second quarter. our 1.8 from the first quarter took a huge hit. >> right. >> huge hit, down to 1.1, which explains why i'm seeing a lot more selling, in my opinion anyway, in the s&p futures, the dow futures are down 33. so down, major down revision from 1.8 to 1.1. >> take that information back because i can't handle it. because the numbers we' s were supposed to go the other way. we were supposed to have upward revisions. hit the tivo, hit rewind.

otherwise, kasman, we're out of luck. >> is it just a timing issue where it got washed into the second quarter instead of the first quarter? >> i can't see all the numbers but if we're running 1.5 in the first half of the year and the surprise in the second quarter was from a stronger gov, i don't think these numbers by themselves, i can't see all the details here, give us a profile of the economy that's a lot different. i think steve's point is right. we don't have a good visual on where government spending is going to go in the next few months. economy is growing 1.5%. that's probably reasonable guide to where we are. jobs are holding up and we see the july numbers coming in strong. i think our picture of the economy is broadly what we thought it would be. >> it's a slight gain, 56 billion versus 42. is that -- >> that's a bit stronger than we thought it would be. >> a bit stronger. okay. let's see if we can take a step back and do our job and make some sense of all this. it's hard on a day we get these revisions. we have 1.7 for the second quarter, 1.1.

we're talking about a 1.5% economy, a final sales of -- do i see that right? final sales, 0.5 in the first quarter? >> you probably had the big gov weakness. >> can you separate out for us, how is the private sector doing? >> if you're willing to take away the government side and say you have the payroll number, if you look at the gdp numbers over the last few quarters, i think you have an underlying economy that's growing somewhere in the range of 2.5 to 3 which is where we think things will come back to as we go -- >> you don't change your outlook for a second half rebound here? >> no. there's volatility around gov but it looks like inventory is stronger. i think the dynamic here is basically what we thought, weaker gdp number on average in the first half of the year relative to what we'd like to see. payroll's holding in, momentum building into july. drags that we know on the fiscal side. >> can i do simple math here, i average the two, 1.7 and 1.1.

>> about 1.5. >> i add a point for the government and i get a 2.5% economy. is that how i do the math. >> yes. >> when and if this washes out, we're not making a qualitative assessment, long term this could be good. >> are we including movies? >> that's another point, hollywood. >> lone ranger. >> anything that has long term. i was wondering if "squawk box" would be included on that. >> the money we spend on "squawk box." >> there's two moving points in the second half, the drag on gogov is expected to fade. the global stuff is getting better. >> where was the ten-year? >> rick, can you tell us if good news is good news down there or good news is bad news. >> i don't know if this is good or bad news. >> it's the same argument you are having. you're talking about oh, well it's because of the government side. you know, i'm only interested in the private side of the market. that seems interested in some

sort of reality, continues to be the interest rate complex. so you know, yields moving up make sense. they didn't move up precipitously because as excited as i was at 1.7, even though it may be revisions in terms of the new calculations, when i saw the 1.8 go down to 1.1, if the average is around 1.4, the excitement of surprise is one thing. there's no excitement for stellar growth in these numbers. >> no. that's right. >> i think that's what the market should reflect. i think that's why we did an aboutface, we're headed to 270. we've slipped a little but but a double asterisk to that asterisk, interest rates have a bias to go up. the real rate should be 3.5. we'll cut them some slack, maybe it will only go up to 3. even that is probably at a discount. >> we have to say good-bye to steve. you can do that. do you still say that we should not have let brian roberts come on because you had a report to

do and you're mad we let brian roberts -- do you stand by that? >> there are many ways you tried to get me fired over the last 11 years. this is the most diabolical of all of them. >> do you stand by -- >> if i answer that question i'll get in trouble. did i stop beating my wife. that's what you're asking me. i thought the interview you did was excellent, joe. i thought brian roberts were terrific. >> you wish we didn't do your report. >> i have no comment. great to be with bruce kasman as well. breaking news on dell. let's get to david faber. he probably doesn't have make-up because it's early. >> i have make-up on. we got the news from dell, tweeted out a moment ago, joe, as well, the special committee of dell, perhaps not a surprise here, finally says no to that

revised offer, that higher offer from michael dell which had the condition of them having to change the voting standard by which dell shareholders would vote on the deal. the special committee saying we carefully reviewed the letter of july 23rd where you propose to increase your offer to 13.75, subject to our change in the voter standard. we can't do that. we're not prepared to accept that proposal. i've spoken to a lot of people as you know, close to this who indicate there simply was not really a great deal of support on the board of directors at this point. not that they couldn't do it under the business judgment rule or that it wouldn't pass muster in delaware court but simply they felt that not for 10 cents. it's unclear at what price would allow them to feel as they they could change the voting standards. what they are trying to do is encourage michael dell and his partner, servlink. they have not agreeded to do so. if they continue not to do so, we may still get the vote on friday.

at $13.65 a share for that leverage buyout, which at this point if it were to go that way might very well go down to defeat. if, however, they do agree to 13.75, the special committee is prepared to move the record date for that shareholder vote. it is june 3rd currently, meaning you have had to have been a shareholder as of june 3rd. moving that to august 10th. that's where we stand an dell, guys. this battle continues but not unexpectedly. as we told you day one, the special committee has come out and said we can't do that, can't change the voting standard for a 10 cents bump. >> the biggest knock is the idea they would actually go along and change that. that would put a lot of pressure on the special committee. >> he's been out there, becky, write letters saying you can't change the stand art now, not

after all of this. this is the field we've been playing on all along. it's not right to change it. michael dell says wait a second, let the shareholder votes be heard. nonvotes should not be considered no votes. but it is typical of delaware that that's the way it often goes in these situations. they're sticking with it. >> you're still into this. you don't have any update on the clear wire soft bank story, do you, david? >> they reported not great earnings yesterday. >> you do have something. >> i think it ended. >> you do have something. >> more on becky's story, of course on air products. it was probably -- >> what i love about dell, 10 cents. i love that. >> david reported that it was probably air products. >> you did? >> yes. last week. you guys go home. you don't watch 9:00 to 11:00. i don't expect you to. >>contrary.

i certainly do watch. i like to watch. that's very true. i like to watch. >> i've known that about you. >> coming up, more on the gdp numbers, and a look ahead to the fed announcement and jobs friday. remember what this guy used to say some incredible stuff. maybe we can get him to say something today, william poole will join us next. [ male announcer ] it's time. time to have new experiences with a familiar keyboard. to update our status without opening an app. to have all our messages in one place. to browse... and share... faster than ever. ♪ it's time to do everything better than before. the new blackberry q10.

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when you open an account. all right. let's talk more about all of this. we saw impossible to interpret the gdp and the jobs report without knowing whether it's

good or bad and what the fed is going to do and who better to talk about this than william poole, a former st. louis fed president and a senior fellow at the cato institute. it's great to see you today, sir. i want to start with some of the things that i think you're implying in our pre-interview. that is that one thing we need when we get a new chairman or chairwoman and if we do get one, is someone who will be politically independent so the fed doesn't get behind the curve in terms of withdrawing all of this accommodation. but in saying that, do you think the fed has been too accommodative at this point? >> you're mixing up a couple different questions here. let me start with the latter point first. before the talk began, the taper talk began, everybody knew, everybody knew that the policy couldn't continue forever, that the fed would at some point

reduce its purchases and wind down its portfolio. everybody knew that. inside the fed, outside the fed. so what do we make of the beginning of the fed's talk about it? how do we -- it wasn't news. but the market reacted, obviously, to the bernanke suggestion that maybe the time is not too far away. let me note that first. >> right. >> secondly, the fed hasn't actually done anything yet. there has been no change in its purchases. there's been no announcement about when the purchases might change. so the fed hasn't actually done anything yet. and yet, the bond yields zapped up by about 100 basis points, give or take. so let's try to put those things together. the fact that the bond yield responded had to be due to expectational effects. it had nothing to do with anything that the fed was

actually doing. >> right. >> it had to do with expectational effects. so maybe we need to consider this hypothesis, that the entire effect of quantitative easing was a consequence of expectational effects and had little to do with the actual amount of money that was being poured into the banking system. so remember a couple years ago the fed started to talk about holding the fed funds rate near zero for an extended period and then they said, i think the first was to mid-2013 and then they put that later. maybe what's really happened here is quantitative easing was a giant earnest money if you will. it was meant or had the effect of convincing the market that the fed really was going to hang on to near zero rates for this very long period. and maybe the effect of quantitative easing was entirely

through that route. >> yes, so it made us believe they would hold it low all the way till 2015, so the minute they start talking about not doing it, we can no longer be sure rates will stay low and the rates will start moving before they do anything. >> correct. and that's the natural thing that you would anticipate. so what the taper talk is all about is to begin to warn the market that the time is not too far away, and that means the time of interest rate increases is not too far away. >> all right. but your point about picking someone that won't let the market -- that won't get behind the market itself, is that saying that someone who would stay accommodative, because the president -- because politicians want the economy to do better and then the market itself would move by raising rates even though the fed was behind the curve, that could create a problem? >> we know that interest rates are going to be rising in coming

years. that has to be the case. rates will be rising. and the question -- rising rates are always a source of controversy. so the president needs to appoint someone who's going to be tough enough to put those increases through as they have to go through, to keep the economy stable. >> you think that's yellen or summers? >> i don't know. what i'm trying to emphasize, though, this point has not been discussed in coverage by journalists. the president needs to pick somebody who has the guts, who will be able to do it, who won't get pushed around, who won't delay, dilly dally. that is an important issue. who will be tough enough to make it happen. >> who wild be independent enough and not care what the administration or congress or anybody else says and do you

think that's what we're going to get. >> it's important for the president and his advisers to understand that it's in the interest of the democratic party for this to happen in a way that doesn't throw the economy off the rails. because if we end up with a period of inflation, it is going to cause a lot of turmoil that population hates it, and the voters don't like it, ap it is i it, and it is going to cause a great deal of trouble with the medicare system. we haven't had the medicare price controls tested by a price of general inflation so far. >> do you think that summers or yellen fits that requirement? >> you know, i'm not really sure. i'm not going to try to make that judgment quite frankly. >> hmm. >> interesting analysis. i'm trying to -- i don't know how many times we have seen in the past that they have considered what the effect on the economy would be when they do certain things, and i dont n't

know if they will consider it this time either. we appreciate your time and we hope you come back because i think that we have more to come talk about, so we appreciate it. >> when we come back, we will get jim cramer's take on ackmanackman and the gdp a fend. ♪ this is the pursuit of perfection. oh, just diagramming this accident with my state farm pocket agent app. you can also get a quote and pay your premium with this thing. i thought state farm didn't have all those apps? where did you hear that? the internet. and you believed it? yeah. they can't put anything on the internet that isn't true. where did you hear that? [ both ] the internet. oh look. here comes my date. i met him on the internet. he's a french model. uh, bonjour. [ male announcer ] state farm. more mobile than ever. get to a better state.

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york stock exchange. jim cramer joins us now. jim, apple shares are on fire moving above $38 for the first time of the ipo and facebook -- blah! you said this, and you called this back when they came out with the earnings and you said it would get there, but i didn't think it would be this fast. >> well, in is the best conference call of the year, and they said we have figured out mobile and figured it out to the point where it is hugely profitable for us and maybe better than google and that is the subtext. and zuckerberg totally delivered and this was an amazing quarter and the stock's reaction makes sense given the fact that they have figured out the holy grail of how to get young people the watch something on the facebook and also click on ads. >> but a 40% move is phenomenal quickly. >> well, it is going to be -- people were shorting this. and there were analysts and i don't want to go into the like

mitch richfield, and they were shorting it. and he is going to say, no, jim, but people were betting against the company, but you couldn't, because within one year, they figured out how to make mobile work and nobody has and congratulations to facebook and the stock deserves the runup. >> is this the goofus or the pacific ackman with the apd? >> well, i liked air gas and that is the company that air products tried to take a run at and failed. this is hard for me to get at a higher valuation than currently, unless there is some hiddens aset that is in allentown, and it is about 15 miles from where i grew up, and it is a sleepy stock and unless he bought it at $90 and needs to get to 120. >> well, he started out at 93 or 94. >> well, let' hope he can get

out of that and cover it in herbalife and live happily ever after. >> that came down, and the balance sheets, big adjustments on the balance sheets? because income state adjustments are scarier than the balance sheets? >> well, i went to audit the financials, and herbalife came out with why it is a bad quarter and i dont n't know if they finished the release. they could not get the stock down and people were hoping for giant dutch tender, but they could not do it with the analysis. and the company is fine, and they have a higher valuation than tupperware and avon at this point. >> jim, we will be watchinger a coming up. >> and coming up our guest host will be given the last word when we return.

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welcome back, everybody. let's get the last word from our guest host, bruce kasman, if you had to sum up of what you thought of the gdp numbers today, what would you say? >> little better. when you go through the gdp report, through the guts of it, it is a little better demand and the july numbers and we haven't seen the big one in friday and the economy is going in a positive direction, and the bridge that we need and the wild card is the global. we think that europe is more

important in improving emerging markets, but there is a lot of questions. the fed is your friend even though it is tapering, but the global picture is the wild card to keep your eye on. >> bruce, thank you for joining us today. that does it for us today, and join us tomorrow. right now it is time for "squawk on the street." >> good wednesday morning and welcome to "squawk on the street." i'm carl quintanilla and jim cramer is back and david faber at the new york stock exchange. 1.7% was the gdp in the second quarter, and it is above expectations, although nothing to write home about. and q1 is revised down, and futures have been hesitant to respond ahead of the fed decision at 2:00 p.m. today. it is worth the 10-year at 2.68 and whether that move is on any mention of the word