sorkin and brian sullivan in for joe kernen. good morning, everybody. >> good morning, good morning. >> u.s. stocks are now on a three-day losing streak. their worst run in two months. the hardest hit s&p sectors yesterday were the financial and consumer discretionary areas. utilities did close higher. but, yeah, look at that. s&p down by about 6 1/2 points. in asia, the nikkei suffered a rough session, closing down by nearly 2%. bank of japan did decide to leave monetary policy unchanged at the conclusion of its two-day meeting. that announcement was expected. meantime, south korea's central bank, they kept its policy interest rate unchanged at 2.5%. and unanimous vote. the rest of asia ended mixed after some upbeat trade figures from china. the company's exports jumped by 5% in july, imports surged by 10%, and both those figures were better than expectations. we'll talk more about china in about ten minutes. >> among the markets today, the big weekly jobless claims out, due out at 8:30 eastern.

worth watching this morning, the treasury will hold a $16 billion auction of 30-year bonds at 1:00 eastern time. and on earnings, before the bell, fannie mae coming off a big beat by freddie mac will be out. you got t-mobile and amc networks. we'll find out how "breaking bad" is doing -- >> oh, the best. >> i know. i have never watched "breaking bad." jim cramer talks about it. >> you got to binge the whole thing before sunday. >> i'm flying to the upper peninsula of michigan. i got a long layover in detroit. i put four episodes of "breaking b bad" on my ipad and plan to watch it. later on this afternoon, lions' gate, monster beverage and priceline among others. some of the nation's retailers will report their monthly sales today. limited, gap and costco are among the biggest ones that still do. earlier this morning, real

early, costco said its july comps rose 4%, just shif analysts' expectations. hurt by a stronger dollar that pulled in weak sales from overseas stores. >> jpmorgan says it is being investigated by criminal and civil divisions of the department of justice over offerings of mortgage-backed securities this is financial crisis stuff. the doj gave them notice that it had preliminarily concluded the firm violated federal security laws in offerings of subprime and alt-s a residential mortgage securities. the only thing that is bugging me about this story a lot is jpmorgan, and don't want to -- i don't feel like i need to be the defender of jpmorgan, i came to jamie dimon's defense a couple of months ago, they were, like, little bitty players in the mortgage market. they actually were one of the few firms that didn't have real mortgage problems and this is not to say that they need to be defended, but it just seems to me that in the grand scheme of

the world, this is, like, and given all the things that happened during the financial crisis in the role they played, i just think there is a strange -- it is what happened to goldman sachs after the crisis. the people who sailed through the crisis and did the best and got the target on his back in a very strange way and it has been bugging me. >> i guess because they're the ones left standing. want to go after the bad guys, most of the guys got to wash it out. >> you're exactly right. listen, first off, a great public cry, especially pressure on the white house, to bring some criminal charges against some people. not just civil, but criminal. and to your point, if you go back to 2005 and 2006 and you look at who the top ten subprime lenders were, the wall street banks packaged and securitized the mortgages, of the top ten, i'm going to guess eight of the ten are gone. >> or rolled into somebody else. >> the real dirtbag, and i think that's a fair to say, word, subprime lenders, guyetts who

pr -- the guys who preyed on the weakest of the weak, the worst of the worst, they're gone. >> not to justify it, just looking at the logic on how that one -- >> i see how they get there. it is just a very sort of perverted version of justice. and i also find it strange that -- >> i'm not arguing with you. >> we're five years out, and now we have two months left before the statute of limitations comes up on a lot of the stuff. i'm surprised because some of the stuff is 2005, 2007, maybe the statute is different, i don't know. >> i don't want to speak out of school, i don't know enough about this particular case. >> it may very well be it is egregious, it may very well be there is a circumstance in here that is just not good, but -- >> you know what is not good, by the way, you have very smart viewer, i need to correct -- three minutes in the show, i have to correct -- it is amc theaters. >> that's what i wondered. i looked it up on -- >> i stink. i should know that. it is early. >> amc is owned by -- >> i could see the logos and you couldn't.

they were over your shoulder. >> that's fair. but a viewer named prentis bryant, good job, man. he called me out. >> we always say it is squawk-a-pedia. >> our viewers slack compared to yours. >> they're not up this early. >> they're all in boise. we need new viewers. the old ones are out, they stink. >> who is amc owned by? >> obviously if i knew, i would have said that. >> i'm just -- i know that they own ifc and we. they also own sundance channel. and the company is originally -- >> let's not highlight my mistake any further. >> unrelated news in jpmorgan land, this is good news, they say their trading business made money every day in the first half of the year. the firm posted market risk related gain on each of 128 days in the period with two days exceeding $200 million. the financial times reporting also that bank of america was the only other bank to avoid a

down day in the first quarter of the year. >> amc networks trades under amcx. that's the symbol. >> independent company. good for them. a little news on nelson peltz this morning. a july 31st investor letter, obtained by cnbc, shows that trian partners on shore funds return eed 11.8% year to date, that's up .4% in the second quarter. the fund says the second quarter performance was like a duck on the surface but paddling furiously underneath. also talks about how the firm completed a raise in june for an undisclosed investment, delivering alpha last month, we reported the trian took a stake in dupont. unclear if that's the same investment that they're referring to as sort of mystery investment. but our own manit hoja obtaining these letters from all the hedge funds. >> what is funny about the letters is they're all touting returns up 12%, up 13%. the dow is up 18%.

the dow doesn't take 2 and 20. the dow can be had at the low cost index fund for 25 basis points. these guys are all -- most of them are under -- the biggest names are -- we're up 16%. >> because -- >> they're hedging. >> they outperform when the market underperforms. you look at 2008, there are a lot of them that did not do that. >> fair enough. let's look at the markets. i say the same thing, we have guests on, i don't want to make a big deal about the fact you're up 12% when you can't match what the -- >> the index fund in my 401(k) plan is outperforming your 2 and 20. >> i say the same thing. futures again, as we mentioned, the dow and the nasdaq, the s&p all down for three days in a row. that's the first time that happened for the s&p in two months. also, in morning, though, dow futures will be up about 50 points. oil prices, right now, oil prices are down 20%. 104.17. still pretty high. but if you look at the trading range where we have been over the last several weeks that is

below that 105 to 107 range. and the ten-year, this morning, we'll get jobless claims out at 8:30 this morning, you can see now the ten-year is yielding 2.6%. the dollar yesterday dropped to a seven-week low, it is down once again against the euro, sitting at 1.3358, but up against the yen, trading at 96.33. gold prices at least right now are up barely. they're up at $1,288.50 an ounce. >> global markets report now. louisa bojesen is standing by in london. and louisa, i listened to you in on the way in this morning on the "worldwide exchange." i heard you talk about the lobster oversupply and how much you love truffles. besides that what else is happening in the world today? >> we were asking viewers what the most overrated luxury food is. >> caviar. >> a whole host of people writing -- i love caviar. how can you not love caviar? >> because i don't really know what it is, i never had it. >> little fish eggs, it is brilliant. you should try it. i had fish ovaries for first

time recently as well. i recommend that. sheep brain last week. not recommending that. but anyway, let's -- let's talk about the earnings, though, here in europe, this morning. earnings galore. nestle right here, trading down by some 2%, cutting growth targets, citing a weak operating environment in europe, especially this is the world's biggest food group, a bellwether, saying organic growth was somewhat muted. net profits for first half missing expectations, seeing sales growth around 5%. around here, you have henkel trading higher by 3%, confirming outlook for the year. reporting results in line with estimates. this is a german consumer products group. they have seen a rise in sales and adjusted operating profits for the second quarter. and especially they're seeing business being driven by emerging markets. adecco, higher by 3.5%. this despite them seeing a 3% drop in revenues. this, if you haven't heard of it, is the world's largest

staffing company. and they're now confident about heading into the second half of the year, saying that labor markets in europe, but they're stabilizing. the group is also planning a new share buyback. right under adecco, deutsche telekom popping higher by more than 5%. the former phone monopoly in germany, they reported second quarter earnings very much in line with market expectation and they're saying they now are cutting the full year cash flow goal to somewhere around 4.5 billion euros and looking to fund growth in the u.s. in particular. but earnings expectations for 2013 have also been trimmed a bit to 17.5 billion euros. this german carrier, though, is saying that it is expecting its t-mobile usa unit to add more than half a million customers in the second half of the year. and, of course, there is a lot of speculation about whether or not t-mobile could be sold off at some point. you have commerzbank. if i move myself, you can see commerzbank popping up by 11%. not worth all that much in euro terms. this german lender posting a 51

million euro loss, they missed quarterly expectations. again, a pop in the share price. doesn't take much given that it is worth below one european share on a share by share basis. looking at general european markets here this morning, you'll see we have a little belly button of red right there behind me. the rest of the european markets are trading in positive territory, just switzerland, that is that red belly button in the middle. you have the ftse 100 higher up by some 18 points, xetra dax, german market higher, ftse mib up by a bit and ibex 35 hanging on to gains from a mixed close that we saw yesterday. guys, back to you. >> all right, louisa, thank you. in the meantime, we're watching a whole host of key numbers coming out of china this week. and questions surrounding the new leadership's major bank lending reforms and the next wave of bad loans that the country may face. joining us now from hong kong is

simon cox, the asia economics editor at the economist. the numbers out overnight where you saw imports up by 10.9%, shipments abroad up by 5.1%, that's better than what people were expecting. is that enough to calm fears about a slowdown there? >> i think it will encourage people. it is the first concrete sign we have seen that growth is stabilizing after a run of data that disappointed on the downside. i think what is also encouraging people is we're getting a little more clarity about the economic philosophy of the new government. there was a theory, especially in june, that they were trying to get all the bad news out early in the term. trying to blame everything that was going wrong on the economy on the previous administration. i think what we're seeing now is that he thinks he can probably stabilize growth and reform the economy at the same time. i think he's probably right about that. >> 7.5% has been his number that he's been shooting for. does that look like a likely

number for gdp for the year? >> i think that's a decent estimate. somewhere around there. i think that's news to people. there was a theory that maybe he would accept lower than that. he seemed to clarify that over the last month, 7.5 was still the target, 7 wouldn't be a disaster. and while he wouldn't go to enormous lengths to make sure that the economy didn't fall below it, he wasn't indifferent to growth either. that balance is what reassured people. this isn't an administration that is going to take a liquidationist line on everything. it is an administration that shares the goals of the previous one, which is to maintain decent growth, but also try and wean the economy off its dependence on investment. >> the government has done a lot to try and liberalize rates in terms of just removing the floor from lending rates. but is that enough, and what has kind of happened from that move? >> i think that was more of a token gesture to be honest. that floor under lending rate was pretty much redundant. most companies were borrowing at

higher rates than that. they have never quite done it. and i think their fear is there will be excessive competition for depositors among chinese banks and that will be destabilizing to the financial system. that's something that worries me a great deal and something we have seen in the past in other emerging economies and saw it in the u.s. >> of all the thing you watch, what do you think is the biggest concern in terms of where china is headed and where there might be potential missteps. >> if you look at the traditional macro indicators, china is doing okay. employment is not too awful. inflation is contained. the two numbers that are frightening everybody, the investment rate, which has been very high for a very long time, but particularly the credit to gdp ratio, which has grown very quickly this year, and that's posing a bit of a puzzle for people. people are wondering how come loans are going so quickly, but growth hasn't responded. there a couple of answers to

that, it is a statistical artifact we have lots of double counting and the economy is okay. the other more disturbing answer to that puzzle is that people are borrowing in order to buy assets, there is a sort of asset bubble in lending that is fueling it. and deleveraging from that could be quite painful. >> what do you think is happening? which one of those scenarios? >> well, i think there is a lot of evidence it may be the latter, that people are buying existing assets, that doesn't add to gdp and borrowing to do so. that's a concern. my feeling, though, is china is probably better positioned to deleverage than other economies that had to go through this. my hope is that china can deleverage without all the disruption and distress that we saw in the u.s. after 2008 or japan in the early '90s. i think it is still an economy with a lot of room for growth and a economy after all where the government owns most of major banks and can take its time and choose when to recognize losses and who to allocate them to. and i think that's an advantage it has when dealing with this

deleveraging process. >> great. simon, thank you very much for joining us today. simon cox from the economist. in earnings news today, tesla's quarterly results blew past expectations. >> killing it. >> shocking everybody. >> i was at a dinner last night and that's all people would talk about, how is it possible the stock is up as much as it is. what is going on? how did everybody miss this? you explain. i'm sorry, i got ahead. >> how they missed it, listen, they underestimated the power of the company. i don't think people can figure this thing out. there is an analyst on the show yesterday that is a technology analyst, not an automobile analyst, and we're starting to see more coverage of tesla as a tech company, as opposed to a car company. they also own a huge amount of intellectual property. if you value a car, company on a per car basis, did the math, i think it is valued at $500,000 now per car sold. a completely worthless metric. >> as they ramp things up, they have a backlog of 20,000 cars, orders for 20,000 cars on backlog, just in north america. it is 40,000 around the globe.

>> but still, that's fair. but they have to ramp up production to get that done. if you look at 20,000, 21,000 cars a year sold, becky, that's about a week of sale for gm. they have a ways to go but still a cool company. tesla shares surged on the big beat. the company's conference call featured the ceo suggesting that his next generation car could reach half a million in sales. there you go, becky. tesla would need more battery sells than the entire laptop industry if that were to happen. at one point, musk laughed when asked about competition. like, literally, openly guffawed. >> because there isn't. >> i haven't met anybody who owns a tesla that doesn't literally rave about the car. not just say, yeah, it is a great car. >> the picture we showed is a bad picture of him. that drawing in the journal is the worst drawing i've ever seen of him. >> that picture looks like he's 19. one we showed. >> he looks like a girl in this one. i'll stand still. >> that's not a good picture.

>> don't say that. >> that's not what he looks like. a bad likeness. >> i was at an event with him a year, a year and a half ago, and somebody asked him do you expect your company to be taken over by an automobilemaker, toyota, gm. he said, no, if anybody, like a tech company. he didn't say google, but that, to me, was the way they think about the company is so different than anybody else in the whole business. >> yeah. the cars are amazingly fast, by the way. no engine, incredibly light. groupon's earnings matched expectations. revenue slightly better than consensus. the company authorized a $300 million share buyback program. the new ceo, one of the founders, he was sharing the role who became chairman. he will join us -- or join "squawk on the street," right? >> "squawk on the street". >> that should be a good interview. he's a mercurial guy. >> mercurial. do you think that's a compliment

to call someone mercurial? >> i don't know. >> i don't know how -- mercurial is interesting. anyway. just it's -- it is sort of nice, it is sort of cunning. >> i guess it is better than being called martian or venetian or -- >> yes. coming up next, why the head of the afl-cio says labor is in a state of crisis. first, a check on the national weather forecast from the weather channel's reynolds wolf. reynolds, good morning. >> good morning, becky. here is a quick snapshot on the forecast. it looks like today we could see cooler temperatures in the northern plains, severe storms possible in the northeast. flooding rains still for the central plains and, yes, still hot in texas. we're talking brutal heat there. later on, as we make our way to the weekend, more showers to the eastern third of the country. still very warm in the southern plains. speaking of the southern plains, no delays expected in dallas, but when you get on the plane, keep the shades down. makes it a little cooler inside the plane itself.

atlanta, pittsburgh, could have thunderstorms popping up. with it, delays are a possibility. folks, more coming up right around the corner. keep it here on "squawk box."

it is time for "the executive edge." this is a new segment we're launching this week, focused on giving business leaders a leg up. our goal is to highlight interesting stories that go beyond the morning's top headlines. let's start things off this morning with some brow raising comments from the president of

the afl-cio. in an interview with usa today, he says the labor movement is in crisis. he plans to push for far reaching changes next month. including expanding membership beyond unions. >> it is far, far more inclusive than at an earlier time so we don't have my issues and your issues, but they will be our issues. and it will be a seamless operation where all of us work on those issues together to make a better country. >> gentlemen, there are areas this makes sense. it is also stirring up some controversy. >> there is no question that we are at a time, i don't know where you are on this, brian, or becky, but labor has lost the game. and the question i have -- at a time when upper mobility and i know joe will give me a hard time about this, but statistically the stats will tell you upward mobility is at its worst levels ever. the question i have is whether

fast food workers become part of this, whether child care providers really become part of this and how you really bring them inside the tent when there is a lot of other issues that not everybody agrees on. >> that makes sense to go after -- they're saying they're going after all workers, they're there to represent all workers. you can get the workers to actually pay dues, probably the af afl-cio's biggest problem, that will be more difficult. the sierra club and others, that's going to run into all kinds of problems with their current membership. if you look at carpenters union, they endorsed the xl pipeline out there. the sierra club is opposed to that. if you start having some of your current members that are opposed to some of the views of the new groups you're trying to bring in, that's where you could see things get a little fractious. he said i think labor participation is below 10%, 11% unchanged. his point is you got to make some changes. >> and you got to remember it is an organization like any

companies whose workers they represent too. they have their own obligations. go back to 2005 washington post article, he hwe need to rework finances. a couple of people out a few years ago, former members or members of other unions questioning their cash flow situation. the afl-cio, regardless of the people, the companies it represents, has its own financial issues that it needs -- the only way, like any organization, doesn't matter what you are, you need new members to supply and fund old members. that's it. >> i wonder if there is a larger question of unions in america, where union membership is going, period. recently gone down, been a number of examples, obviously -- >> listen -- >> whether it is detroit or autos or airlines where it hasn't worked and yet we're now in a -- such a different economic environment, where i can see unions become more popular again. >> i think you're touching on an important topic, bigger than this. i understand wage inequality is

at a record and it is awful and does great harm to social good. but -- >> but the bottom -- >> it is hard to find a country -- it is impossible to find a country as i found it where you can be high wages and low cost of goods. we either pay up for what we make, right, so we can pay a fair wage, or we demand cheap goods and then cheap wages. you can't have both. they don't work out. there is no margin. we got to decide as america what we want to be. >> i agree. >> folks at home, you're watching your television, but is your tv watching you back? senator chuck schumer said he's disturbed by that idea. he's written a letter to samsung, lg, sony and other tv makers asking them to adopt new security protocols. he writes, i was disturbed to read recent reports of hackers exploiting new features in television sets in order to break into home entertainment systems of users and spy unsuspecting channel surfers.

i have to admit, this story gave me a little bit of a freaky feeling, the idea of people watching you without you even knowing it in your own living room. >> get out your creepy porn music because the thing that is so disturbing about this is -- >> what? >> you know, our -- you know the -- what is the -- >> where are you going with this? ♪ >> now you have cameras in every bedroom, in every -- >> who has cameras in their bedrooms? i don't. >> this moment has been brought to you by andrew ross sorkin. >> you don't have a tv in your bedroom? >> hello. >> that's very good for you. but i -- >> i have a window and i watch squirrels and birds at play every morning. >> i bet you more than 50% of homes in america have televisions in bedrooms. >> we do. i can't remember the last time i turned it on to tell you the truth. >> i believe they have cameras in there. >> every single television has a camera in it? or is this just a smart tv? >> a lot of new -- most new tvs these days, not most, but a lot of tvs have cameras in them.

>> there is an easy fix to this problem. there is an easy fix to the problem. they should be required to put a little light, anytime the camera is on, it should have a red light flashing back at you. >> someone can hack that. the computer has it. the kids have it. >> we're all up in arms about the surveillance. i don't know how i feel about the whole thing. i see both sides of it. but we're willingly giving up everything. i'm checking in here. everybody knows where we're going all the timeme mentime. if we opt in, it is okay. if it is done without our okay, we're not okay. >> that's a huge difference. opting in, versus opting out and whether you should be forced to say opt in before you can get my permission. >> i'm just trying to look through the camera now and figure out what all the viewers are wearing. >> creepy spy. under the radar story for you, tax breaks are luring top filmmakers to britain. the director of the british film

institutes film fund says filmmakers working in the uk can receive a refund of up to 20% to 25% of the total amount spent on a movie. avengers sequel and the next star wars installment is due to start filming in the country next year. 20 to 25%. that's a big chunk. >> michigan's done it. new mexico did it. canada's done it. now the uk is doing it. everybody is going after california's business. a lot of cases they're winning. i referenced "breaking bad," new shows are set in detroit now. they rolled back some of the tax credits. but still. >> a number of the studies that have later been done about this tell you that the tax credits have not -- bring all this business to the cities and is ultimately not brought in additional revenue directly from the film-making. what brings in additional revenue is the fact that they're new york or london or detroit is in the movie, or in the tv show,

and therefore people then come as -- >> they also substitute. how many movies substituted toronto for new york. hard to believe. canadians are so nice. it is hard to see the substitution. the other thing too, it doesn't sound as good. this is no insult, becky. you get, like julia roberts, can you imagine the bright eyed bushy tailed getting on the grey hound bus, where are you going? i'm going to albuquerque. hollywood has more flair. maybe albuquerque or toronto will have nuances later on. >> money talks. >> and what walks? >> i forgot that part of the line. >> my initials. >> yeah. >> that's right. good point. that does it for our executive edge" today. when we come back, the future of entrepreneurship in the united states. that's too long for the printer. the role of the nation's business schools also coming up. first, there are a lot more millionaires in the united states this morning. there were three winning tickets for last night's $448 million

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♪ hey, i just met you this is crazy ♪ ♪ but here's my number so call me maybe ♪ ♪ it's hard to look right at you baby ♪ welcome back to "squawk box" here on cnbc. i'm becky quick with andrew ross sorkin and brian sullivan. apple's iphone continued to lose market share to android phones in the second quarter. idc says android phones accounted for 79% of the worldwide shipments. that's up from 69% a year ago. apple's market share is expected to grow again when a new iphone comes out probably this fall. more apple news this morning, five of the largest publishers are -- book publishers, objecting to tough new restrictions sought bit government against apple for illegally conspireing to raise ebook prices. the publishers are arguing that provisions proposed by the doj would instill punish the publishers and it already

reached settlements with the federal government in dozens of states. the publisher of the new york times says the newspaper is not for sale. the statement posted on the company's website, the trustees of the trust and the rest of the family were, quote, united in our commitment to work together with the company's board, senior management and employees to lead the new york times forward and into our global and digital future. >> a lot of questions after the bezos washington post deal. >> yeah. >> the question, if you're with the new york times office, what is going to happen to the times, is the times next? it was interesting to get -- i got one of those e-mails late last night, i think, before they posted it. maybe when they posted it everywhere else, but interesting. >> yeah. it is good. let's look at the markets this morning. now the futures are indicated higher. you'll see at least when we call up the boards those futures, dow futures up by 60 points. s&p futures up by just over 5 1/2 points. this is coming after three down days for the market. that's the first time the s&p has had a three-day losing streak in two months.

take a look at europe now. some of the early trading is showing some green arrows there as well. these are some pretty modest gains, gains of .4% across the board for germany, france, and london. and in asia overnight, you did see a decline at least for the nikkei, which was down by about 1.6%. oil prices have been a little bit down this morning as well. down by about 15 cents. still sitting well at 142.22 for a barrel. the ten-year note yielding 2.6%. we have the jobless claims number at 8:30 a.m. eastern time. that will be interesting for people to watch, try to get a feel for what schais happening the jobs market. dollar traded lower across the board. this morning, down once again, against the euro. down against the yen and the pound. 133.58 where the euro stans. yen at 96.25. gold prices haven't moved a lot. up to $1,290 an ounce. >> we have a great guest,

important topic for our country, here is the question, is our nation facing a coming crisis in entrepreneurship in education? bill alet is the senior lecturer at sloan school of management and author of the book "disciplined entrepreneurship." thank you for being here this morning. here is my question for you. i was thinking about entrepreneurship the other day and thinking about age in all of this. i think of peter teal and what he says about college and some of the great businesses that have been developed by entrepreneurs. everyone said you can be an entrepreneur at any age. at some point, by watching the show, at any age might think i'll start my company. and yet the companies that have been the most successful seem to have been started by people who are typically between 20 and 30 years old. i'm thinking of mark zuckerberg, he was 19, steve jobs, bill gates, even ralph lauren was 28 years old. buffett started when he was 26 years old. estee lauder was 29 years old. not a lot of examples of people, and there are some, i don't want to say there aren't, and look at

people like you on musk who has done it serially, but is there something very special about this sort of 20 to 30-year-old period and if you're 50, can you do it just as well? >> well, i mentioned the -- i wrote this article called the six whopping lies that people tell about entrepreneurs, and i didn't include that. but that would be one of them that you have to be young. having breakthrough ideas, look at other areas like physics, all the other great ideas came before they were 21. want a brand-new idea, it is hard when people are in the system for too long. >> it came before they were 21? >> most physicists after their 21 -- >> you're stoned, that's why. >> entire universe is inside a cell on my fingernail. >> you to come through the system. >> is it that or is it that if you're 40 years old, you're probably going to have a mortgage and kids and obligations? i don't know about you, i have monthly bills that need to be met. i can't go to zero guaranteed income.

>> so many people who say, you know what, i'm going to get out of college, work for a couple of years, make some money, put money away and then start my company. but then they have the mortgage and kids and don't want to -- right? >> at mit we love data. it shows compellingly you're better off in your second entrepreneurial venture than you are in your first one and third one. s they that's my example. the outlier of steve jobs or mark zuckerberg is like saying look at lebron james. everyone should be like lebron james, go from high school to the pros. these are not -- this is not the statistically valid set. >> not the norm. >> the key thing is you can learn entrepreneurship. it is something that you can be taught. >> you don't think it is an innate -- you don't think when you look at the most successful, i will take the outliers, everybody wants to be an outlier, there is something very special about those particular individuals that those people were born with it, it wasn't

learned. >> we have looked for the entrepreneurship gene and there is no entrepreneurship gene. >> there is not. >> there is not. it shows people, people say parents were entrepreneurs. statistically that's not true. and we have over and over again seen that people can become entrepreneurs and it is not the -- not charisma that makes them entrepreneurs. it is disciplined execution that makes people successful entrepreneurs. >> what does the serial entrepreneur or the stereotypical entrepreneur based on the data look like. >> first of all, they have the spirit of a pirate. this is the kind of creative irrevere irreverent, this is why mit has been so successful. what we call hacking, the rest of the world calls creative irreverence, taking on the man, taking on the machine. that's the mit blackjack team. >> i thought about writing a book about this, but i think you beat me to the punch. in our job, we get to meet great people, amazing human beings all over the world. i don't know about you, andrew

and becky, none of them have anything in common except for one thing that i've noticed, this weird and uncanny ability to take on and manage risk, and to sleep at night. >> yeah. >> i'm terrified if i have $5 of credit card debt. i have heart palpitations. boone pickens, tellman, they can borrow a billion dollars and sleep lake a baby. >> the thing is, when you do that, it is like in sports, you're taking risk the moment you step on to the field. but you manage that risk so you do not take unreasonable risk. so although entrepreneurs, i was talking to brad feld, i said, do you know any entrepreneurs who gamble? he said, no, that's stupid. why would we gamble? it is a definition of gamble, brian, it is a definition of what you think is risk. i don't think it is risky when i have an asymmetric -- i have an advantage in something. so right now, if i wanted to play you in basketball, i would take on that bet because i play a lot of basketball. >> you haven't seen him stand

up. president pretty ta he's pretty tall. >> i'll take that back then. >> i have an 8'9" reach. but i'm the worst basketball player in the world. but you'll win. >> you said that your metric -- my metric would be that there is remarkable -- these people have a remarkable drive because they have something to prove. >> yeah. >> and a psychologist would tell you there is a remarkable and probably surprising almost healthy insecurity that keeps a lot of these people going. >> you're on to something and mit sloan professor named edgar shine, very renowned and we had this long discussion. do entrepreneurs have to have demons in their bodies? and we came to the assumption that you do have to have some sort of demon in your body to drive to do this because -- >> fascinating. >> who knew entrepreneurship

could be so -- >> it may come from a dash place. >> i think the best business book i ever read is andy grove's "only the paranoid survives". that's until yours comes out and it goes into that. especially in this business, you got to be scared every day, right? that's the way it is. >> yeah. and as walter payton said, tomorrow is promised to nobody. jeff bezos, just bought the washington post, going to bring innovation to the industry, that's one of his things. it is always day one. tomorrow is promised to nobody. i just want to conclude the part about the part you have to have the spirit of the pirate. jeff bezos and steve jobs had the execution skills of a navy s.e.a.l. team six simultaneously. it is this dichotomy that makes for great entrepreneurs. it is not just this craziness. it is actually that they execute like hell when they get down to it. >> bill, the book, "disciplined entrepreneurship," a great conversation.

you got to come back. >> i would love to. i love new york. i'm a big fan of the "squawk box." >> and, you know, if you're here, joe kernen, mit man. >> we love that. we love that. he probably speaks in equations and numbers as well. that's what we like. >> sometimes. >> yeah. great. thank you for coming in. appreciate it. >> appreciate it. when we come back on "squawk box," another drugmaker accused of bribery in china. plus, we'll talk markets with top strategists at jpmorgan and fidelity coming up at the top of the hour. then at 7:40, former yahoo! board member michael wolf on the future of the company. and later this morning, the ceo of the pga. the season's final major prepares to tee off today. stick around. we'll be right back. [ male announcer ] come to the golden opportunity sales event to experience the precision handling of the lexus performance vehicles, including the gs and all-new is. ♪

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welcome back to "squawk box." look at how things are setting things up for the day. 70 points higher. nasdaq up 15 1/2 points. the s&p 500 up close to 7 points. making headlines this morning, the big one, sanofe is taking bribery allegations very seriously. the allegations were publishedn a chinese newspaper today. it suggested that the staff bribed more than 500 doctors in china in 2007 to raise sales. chinese police detained four chinese executives from glaxosmithkline. you might remember we talked about that story in connection with allegations that the british drugmaker funneled money to travel agencies to facilitate bribes to doctors and officials, so this story is only getting

bigger. coming up, we're going to head to the chairs. we're going to chat on some of the morning's more off beat headlines. then stocks selling off for three straight days. is this a sign of more to come or an opportunity to get in? two strategists are get in? two strategists will share their opinion. we are back on "squawk box" right after this. announcer: where can an investor be a name and not a number? scottrade. ron: i'm never alone with scottrade. i can always call or stop by my local office. they're nearby and ready to help. so when i have questions, i can talk to someone who knows exactly how i trade. because i don't trade like everybody. i trade like me. that's why i'm with scottrade. announcer: scottrade- proud to be ranked

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. >> welcome back, everybody, we are in the chairs this morning taking a look at a few articles that have caught our attention. guy, yesterday, the big story was about fukushima. apparently, there is contaminated water leaking into the ocean. the front page of the new york times and other newspapers this morning is about how shinvo abay is going to take more control. this will cost $11 billion. to this point it's left to the very company that was overseeing the plampbt when the problems arose. since that time, there have been problem after problem that have come up. first it was a rat nau gnawing through exposed wiring at the

power plant. they started leaking. now the latest is the water, that was contaminating groundwater, now it's leaking into the pacific ocean. is setting off international concerns about what's happening here, so now shinvo is stepping in. the question is, can this popular almost take on these troubles and will his government fair any better? >> it's a tough situation. mine is so soft in comparison to that. it's a terrible segue. it follows on the twitter revolution. >> top trending topic in the united states, but now, so it's the washington kindle formerly known as the washington post, struggling nates take their strikes on the field, price gets hit by a pitch t. braves tweeted out who were playing the nationals, clown move, bro. they said, which part, giving up the home run or drilling the 20-year-old with the first pitch next time up? in other words the official

twitter feeds of the braves and nationals are snipeing each other. the orioles are taking a pot shot at the nationals whoever the 22-year-old behind these official feeds, probably, social media. >> you know what, that's what twitter is about. natural dialogue, not like coming up next.... >> when you actually know the person who is saying it to you. it's the new chicken on the web. we don't know who you really are. >> i agree with that. >> i agree got a quickie, u.s. attorney bharara, what does he eat? he says i eat raw meat, when raw meat is unavailable, i eat a granola bar every morning. >> i guess it's a protein thing for him. >> the raw meat was i think. >> a joke? >> a joke. he took a shot at insider trading and networks like ours and says too much attention on inside trading cases. there should be a lot more

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. >> good morning, everything, welcome back to "squawk box" lear on cnbc. i'm becky quick along with andrew sorkin and brian sullivan in for joe. the futures this morning are indicating a little bit higher. right now, they're picking up layout the morning. dow futures up above fair value, s&p just over 7.5, in our morning headlines, coin posted stronger than expected trade

figures overnight. this is the latest in a string of upbeat numbers. the news raising hope the world's second big economy may be stabilizing. shares of groupon will be worth watching this morning after the company posted better-than-expected sales and named a solo cpo. the revenue were just over $608 million. eric lefkofsky will be joining the ceo. the interim co-ceo has been named chairman. amgs, keep an eye on tesla, that stock is soaring after the company reported a profit when it was expected to see a loss. tesla delivering far more cars than the street had anticipated. we will have much more on these surprised resultings coming up in half an hour when we speak with craig irwin. >> t-mobile says its customer base grew stronger for the first time in years.

four u.s. wireless carrier added 688,000 customers. that's a significant swing from losing 557,000 in a year ago period. the additionles come on the back of offerings the apple iphone for the first time, this started back in april. the company also has revamped its plan to offer lower prices and no service contracts, with i is somewhat revolutionizeing the whole model. >> they went over brian sullivan. >> i am one of those. >> yep, so what happened? why? >> no contract. >> how much did you pay for your phone, though? >> i paid full price. >> water full price? >> i paid like $600 for it. >> that's a lot. >> i'm not touting t-mobile. i didn't like this contracts. i got tired of getting out of these contracts. if you do the math, over two years, yes, the up front cost of the phone is a lot higher. granted. do the math total over two years, you save like 800 bucks to go on the new contract with the up front contract, so. >> does anyone do a finance deal on the phones, themselves? .

>> i'm sure they do. i didn't do that. >> they are changing its pricing structure. >> the point is, the total math in terms of the same data, it's unlimited data and phone, i'm not taughting t-mobile, the service still has issues. i'm nurse, i signed up like last week. >> you were complaining you couldn't get aal, either? >> in this building, you couldn't get a signal anywhere, which is probably a good thing. >> have you verizon. >> some people say i have my own antennas, they don't seem to help. >> also, costco says july same store sales were up 4%, that is below what the street is expecting. the company says changes in gasoline prices have had a positive impact t. foreign exchange rates, they hurt results, right now, let's get to our guest host this morning. julian timmer is co-portfolio manager of the global strategies fuvendz, tom lee is key strategist at j.p. morgan chase. >> thanks for having us. >> tom, you have been right with your views on the market for a

while. what are you thinking right now? >> you know, we're at new highs and i know a lot of investors are cautious or subsequent cal. >> are you? >> i think it's still profitable to put money to work today. i think we're going to be higher by year end. i think the support really is coming from economic momentum showing a lot of improvement both in the u.s. surprisingly in the u.s. and then europe finally exiting recession. then i think there is a really good story relative value. piece can still expand. >> you sound a little more hesitant when we talked to you in the past. is that a fair reading or am i putting something into that? >> well, you know, the only caveat i would say is august/september are months where markets can be a little more volatile, one, people are on vacation, september are months people worry about crashes. being said, i do think that's what's on everyone's minds, in the past couple weeks the meetings we had with hedge funds, mutual investors, people are looking for short ideas

right now. so i don't think anyone is prepared for the market to actually rise. >> how about, when you look at the mark what is your sense of where we're headed? >> the markets have been quietly going up, they say never short a dull market. for me a global asset allocation person, the real value is in looking at regional global trends and so for me the really interesting themes are interasset class, so being very underweight emerging markets because of concerns over china, for instance, pairing that with an overweight in the u.s. because that clearly is the engine of growth globally and as tom said, europe is definitely coming up. 'we've increased exposure there recently, but really focusing on the interasset class the sector level, on the balanced portfolio like i do, what kind of duration do you want to have? for me to two big risc out there are china, you know, they've borrowed a lot of money, they're not generating a lot of economic

growth with that money. this notion about are we about to experience a great unwind with all these yield-seeking funds that the fed sort of engineered everyone to go chase over the past five years and what we saw if may and june was the hiccup there and so that's something i worry about that pay create volatility in august an september as tom said. >> let me ask you specifically about china. we did get trade number there is this morning, does that put some of your fears to rest or do you still have to wait and see? >> the trade numbers have been all over the place as you know for the last several months, so the official statistics, i'm always a little skeptical of. if you look at real economic indicators like real 48 or electricity consumption, they're pretty weak and coin has borrowed a lot of money through the shadow banking system in recent quarters, a tremendous amount, amounting to 40% of the gdpt. china model is you borrow money, you build stuff, then the gdp follows. they have been doing that for

decades. >> for the gdp you say follows. >> yes. they've done that for decades, now they're borrowing ever more money and they're producing ever less gdp. i think a lost borrowed money goes to rolling over bad loans, they're creating zombie banks that have existed in japan for decades. >> why do we worry so much about china year in? i understand they're gigantic, right, they have a lot of people. they're a fast growing economy. yet the average income is about $25,000 u.s. per 84. the average income in japan written off all the time is about $35,000 u.s. dollars a year. it's still a bigger economy. why do we focus so much on china? >> well the question is, is china systemic to the rest of the world? when europe blew up years ago -- >> are hay? >> they are not in markets in my opinion. >> i completely agree, that i are a massive supplier of generally low cost products. >> for me the weakness in china spills over into emerging markets, which is why we're so underweight.

it spills over into the commodity complex, which is why copper and other commodities have been so weak. there was a weak decoupleing in about 2011 between commodity prices and stock prices globally and china is sort of at the center of. so -- >> so china is not nearly as systemic as europe was in the debt crisis. in europe, it was all the banks, which were way too big having to shrink their balance sheets, in china, you don't have that problem, it's very closed. they are the contributor of gdp growth. you take that down, you get less growth. >> tom, when we look at september, yesterday, our guest host was jeremy siegel, he was pointing out, there was a lot of things in september t. feds will be meeting, the expetation that tapering could start that month. the president, very likely, will announce his choice for next president or fed head and all of those things as you mentioned, people already look at september

as a down month. are we focused on it enough so we can avoid that problem? do we really believe tapering will start in september? what do you think the market's reaction would be to something like that? >> i think these are fairly visible events. these aren't going to catch people by surprise. so i do think the market is bracing for volatility. i think that's why people are raising cash or looking for ideas to short. i think tapering is a bigger deal, ultimately, for rates and for credit than it is for the equity markets. i think we got a taste of that this summer where the stockmarkets actually had new highs. we had new volatility. >> a move of about 100 basis points? >> correct. because in past years, a move like that in rates would have been pretty damaging for equities. this time the equity markets sort of looked right through that. the regard to the new fed chairman, i think that that's probably much, a much bicker issue for the market, actually, in some sense. it really affects what happens the next few years. >> if i had money sitting on the

sideline, i was thinking, i want to call my broker, do you say, do it tomorrow? or actually call him in october? >> i think one of the reasons i would actually put the money to work today is when markets go down and corrections take place, most people end up being paralyzed. they don't want to put money to work in a down market. i think it's better to not worry about timing, realizeing -- >> if you listen to both of you, it sound like two months and andrew there is a stat you will forgive me for not remembering the stat. maybe you knows, which is something effective. you go back over 30 years, 50% of all market gains over those 30 years occurred in something like 90 trading days. there were 90 amazing days. >> you had to be there. >> that if you weren't there, you lost half of your return. right. you've heard that? i'm not exact right on the numbers, you bet the point. >> i think i heard another funny stat from our economist which is if you bought -- >> it's from the economists.

>> that's right. striking america. if you bought the market only on the days of fed communication days that accounted for like 80% of the market moves. >> but, you know, it goes to show that investors need a plan and they need to stick through it, especially when they really don't want to. >> right. >> so if you are dollar cost averaging with your 401k, don't go making crazy decisions when the market groes goes really up or really down, ultimately, you will be okay. >> how have you altered your plan say over the last six month? >> i got some more cash than i otherwise would have had, both coming out of the bond allocation as well as the equity allocation. so i'm worried about this notion of a great unwind. andrew and i were talking about it earlier, that a lot of money has flown into these bond funds that reach for yields and that's been the behavior that the fed has basically created with qe and zero rates and the dealer community's and to absorb those

kind of flows should they happen. they did happen in may and june, something like 60 billion was redeemed from those types of funds. the ability to absorb that is at record lows, bake amy, because of regulatory changes, because of rick appetite itself and this is why high yield spreads blew out 120 basis points in june and the ten-year yield went up 100 basis points on a fairly small redemption based on what has come in before then. i think that's the biggest risk out there. it may not happen. if it does, that's a risk. >> let me ask one more question, if there is not demand out there from the investors a and the dealer community can't absorb that, if the fed buys an additional 20 billion a month in these securities, is that going to be a bicker problem than we think? >> i think so. least for the bond market t. question is mr. that spills over into the equity market. back in may and june, we did see a 6% correction in s s&p. if they decide to go into

equities or a rotation into cash, they don't want to hold these bond-like securities or funds anymore because the fed is now tapering, if there is no ability from dealers to absorb that supplies it has to be reflected through pricing. and so you could have a combination of widening spreads and rising yields all at the same time. >> all right. that's a scary thought. we will dig a little deep near that. you will be with us the rest of the show. up next, russian-american relations being strained by a number of issues, not the least of which the asylum for former nsa contractor edward snowden. the president can selling a one-on-one meeting with vladmir putin. find out how these strains could play out in the market. there is your new morning yahoo logo update. they said they will change their logo every single day for 30 days. so tomorrow's will look different. >> just so i know the chance, they're not going to show us the one they are picking until the

last day. >> that's right. >> so everyone that you see we should hate just because we a have to? >> although, maybe they're going to throw the winner in, by the way. i think yesterday, you said the newia hologo is actually google. "squawk box" is back after this. golden opportunity sales event and choose from one of five lexus hybrids that's right for you, .

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take a look at the futures. dow futures are now up about 85 points from fair market value. they continue to climb, people feeling better about things as we go. china numbers were out before the numbers started moving. either that or people are starting to make i wake up. s&p futures are up 8-and-a-half points. we have jobless claims out in an hour and 15 minutes. >> president obama can selling a plan with vladmir putin. the dip lo melting relation deter at the derrior rated in part on the edward snowden saga. the deputy director of csiis's russia and eurasia's matters. are there currently right now u.s.-russia relations and is this just noise? >> yeah, there are definitely

u.s.-russia relations, just at the diplomatic level, the summit is off, you have the foreign and defense ministers meeting in a couple of day, you got, president obama is still in sanet petersburg for the g-20 summit. there will be some kind of action with president putin while he's there. on the substance, u.s. and russia have a lot they need to talk about, whether it's syria, iran, yank or missile defense or anything else. >> exactly. so how much will be lost by not having this one-on-one meeting? >> you know, in the short run, i think you lose an opportunity to kind of layout markers for the bureaucracies so they have goals, which is the value of these sums sometimes, in the longer term, though, again, the relationship is still there. it will be defined by the two countries have to be built on. >> the they have a relationship?

>> not u.s.-russia. >> putin and obama, did they have much of a relationship before? it's been a fairly cool relationship, let's say. president obama had a much warmer personal interactions with former and president and ever since putin came back to the kremlin, the tone has been a lot cooler tan it was in the past. >> jeff, do you think this was the right decision to can sell the meet something. >> you know, i think given what's happened with the snowden case the administration really didn't have a choice. it seems there were a lot of back channel talks going on about what exactly to do with snowden so the summit could go forward, maybe put off a decision on whether to grant him an asylum until after september. given that ultimately russia chose to give him asylum a month before the summit was scheduled, i think the administration felt it had no choice. >> would it have been if they

pressed ahead, you know what, they said, he's a whistle blower, some people think he's committing treason. you think about it, you say, he's a kid, we're going to keep going. we have a relationship that's more important than this one guy? >> yeah, it would have been pretty awkward. it would have been pretty awkward to have president obama in moscow along with edward snowden, but more than that, i think the reaction here in washington would have been pretty difficult for the administration to deal w. they caught a lot of flack for the reset policy for russia already. i think trying to extend that and holding a summit meeting under the circumstances, there would be more political fallout from that than they wanted to deal with. >> jeff one last sort of relationship question, we're talking about a cold relationship. is that a political can you lusby putin or is that they really actually don't like each other personally, meaning is it a political can you lus that it

plays to the citizens in russia and plays to what he is trying to project around the world? >> i think it's a little bit of both. certainly the personal chemistry, if you look at the times the two presidents have been together is not very good, but at the same, you know, president putin has always had a pretty healthy skepticism of the united states and what it's doing, especially now since there has been an upsurge in protests in russia since about late 2011, i think the kremlin has made a cal can you lated decision to use anti-americanism as a tool really to rally the public as a way to build legitimacy for the government. >> jeffrey mankoff, it was a real pleasure. >> thanks for being here. coming up next, why the lobster industry is feeling a bit crabby, details coming up after the break. we will tell you about that story. then tesla quarterly result, boosting the stock in a very big

way, up 17%. we will talk sales and whether or not the company can hold its charge. "squawk box" coming right back with a lot more. .

. >> we go from state your name ups to main lobster. the industry is being crippled by a glut of surprised, sending the ounce per pound flumt plummeting. sending it to writ has not been afford, that's affordable. according to figures of the maine resources, the volume of the state's lobster har vest has skyrocketed thanks to warmer oaks temperatures, which helped the shellfish and their larvae

grow faster. the problem is demand for what has long been considered a luxury has dropped. therefore the prices paid the fishermen at the dock is down. prices peaked at $4.63 per pound in 2005. they fell to $2.69 last year. the u.s. harvest sold to restaurants or food processors. the hard shell lobster are easier to transport. each country is the largest impoverty porter of the other's lobster. >> i don't think they're charging less to a lot of restaurants. >> maybe not. >> i had been wondering since day one whenever i thought about things like this, who was the first poor soul that felt the need to eat a lobster? let's go into the mud and pull out a giant cockroach, break it opened, suck out the inners. >> you know who they used to feed them to, they were so gross, they fed them to

prisoners. >> now they're the most expensive things on the menu. >> they used to pave the roads a couple hundred years ago, they were not considered edible at all. >> now, when did they become a luxury? i like them, but it's basically a giant bug that lives in the wate water. >> it can hurt you to eat it. i hurt my hand. >> it doesn't surprise me. >> the 1%, trying to break opened the lobster. >> you know what we call that, rpp, baby. >> what's that? >> rich people problems. >> lobster cut me. >> then he was late. tesla broke down. >> still to come. >> pour champagne in the wound. >> le left the board of yahoo, now he runs activate, a firm specializing in media technology and entertainment consulting. michael wolf joins us to talk about everything from yahoo to the cbs-time warner saga.

still to come this morning, the pga of america the ceo on the season's final major. we talk golf the battle between time warner cable and how it affects the weekend's events, "squawk box" will be right back. and 900 million dollars are changing hands online. .

welcome back to "squawk box," everybody, i'm becky quick. here are your business headlines this morning, j.p. morgan says it is being investigated by criminal and civil divisions at the department of justice over offerings of mortgage-backed securities. the dog gave j.p. morgan notice that it had environmented federal security laws in subprime and all day residential mortgage securities. during the years 2005 to 2007. also, groupon's earnings matching expectations. the company also authorized a $300 million share repurchase program and jamd eric lefkofski the new ceo.

lefkofski will join "squawk" on the street later this morning. they are cutting the euro zone this year and next year t. latest survey expects the euro zone to contract to .6 of a percent in 2013. respondents blamed key demand and markets like china and brazil. tesla surprising the street with much better than expected quarterly results. the shares jumped on this news, craig irwin is a clean tech analyst at web bush securities, craig, obviously, this game is a big surprise to the street. when you look at these numbers, do you think it's sustainable and are you changing your expectations for the stock's earnings down the road? >> good morning. yes, no, this is a very impressive, very impressive quarter. so two very important things happened this quarter. we had a 25% increase in production to 500 cars a week to 400 last quarter. we saw the impact of their police accounting, the finance accounting. so we did not raise our outyear

numbers, clearly the margins that they cheated in the near term were impressive. they, if you look at the non-gap margins, they were 22%, if you look at the gap margins, almost 25%, 18 the street at 19, so, clearly, they're executing impeccably on their margin trajectory, so, yeah, very impressive result. >> the stock was up 17% on this. it's now trading i think around, let's see where it is, you raised your price target to 150. the stock is at 156 already. do you think it's coming back down from here? >> it's difficult to say. this one has been so volatile. there have been big up days big down days, clean tech had a low level of volatility until a couple months ago. i ex'effect that volatility will go up. it's quite possible we could see this bounce around from here. >> here's my confusion, craig. is that tesla, amazing company, amazing cars, give you all that. the company now with today's move in the pre-market has a market gap of $15 billion.

general motors has a market cap of about $50 b.. >> doctor 16 billion. >> now it's up to 16 billion. so gm is a little more than three times, tesla's market cap, but sells infinitely more cars. to me, we have seen one of those is mispriced. >> that's a valid question. i think what you have going on is tesla really is a technology company that makes cars. they don't have legacy health care issues, legacy pension issues. this is really a car company starting with a clean slate, being developed in silicon valley. general motors is a legacy leader and has a lot of assets to deal with as far as how they're going to make them. >> you are exactly right. that's great point. because market cap, obviously, has to take in all the liabilities. some people sort of halfway gest that gm is a health care company that happens to make cars, but how do we figure out if tesla

will not have these same problems ten, 20 years from now? are they going to be able to evolve differently? >> tesla is evolving so amazingly fast. i mean, there's chatter about, you know, the google car, autonomous driving technology t. reality is that could be the vehicle on the road in 1516. so, you know, evolution is something that happens typically very slowly in the traditional auto industry. tesla i think is going to continue to surprised people there. >> craig, what happens to tesla, ultimately? meaning, is it a stand alone independent company forever? does it end up buying a legacy any? does the legacy company buy it? does the technology component company like a google say, you know what, we want to own tesla? what happens? it doesn't go, this does not go on forever, i don't think. >> there are a lot of different schools of thought there. so i personally believe they probably will end up being taken out, but not in a very near

term. i think that the incumbent autos oems should view tesla as a threat. tesla is showing that i could potentially be a very, very profitable auto company off on the lrz. you know, if every man really is willing to buy tear cars in the way some of the more bullish analysts are willing to project, then you know, it could very well stay a stand alone company. >> so they're expected to sell about 21,000 cars this year, right, craig? >> that's their guidance. we were kind of surprised they didn't increase it given the 605 units in upside kwarter. >> this is a complete garbage pret metric, but i have been on it a while, so i'm going to stay on it. at a 16 billion cap, values each car at $761,000. >> wow. >> that's the cars divided into the market cap. 761,000 per car. ten times more than the model s sells for. krablg, how is that possible?

>> well, people are really factoring in the success of the vehicles. people are looking out onto the horizon, now, my number for 17, i have a 150,000 cars being sold. to say there is a lot of upside from here, you have to be able to get faith on them filling their new facility. that's like 4, 500,000 units. that's a leap of faith. then we have to have every man buying these cars in significant volume. >> craig, thank you very much for joining us this morning. >> thank you. >> we appreciate it. right now, let's get back to our guest host, tom lee of j.p. morgan and we were talking off camera about something we had mentioned at the top of the show, just the number of bonds that are out will. the number of assets in bond funds out there right now. i didn't realize it's about $2.3 trillion, which has more than doubled from where we were in 2008. when you look at a chart of those rising assets and we talked about this huge decline in the bond funds over the month of june, it was something like

$69 billion at that point. it is barely a drop in the bucket of where bond have exploded. that's a really worrisome fact. >> yes. i think this is one of the key things that i am concerned about for the market. you know, you can argue whether the fed was involved in creating the tech bubble in the late '90s, whether it was the liquidity that came out of long-term capital or whether the fed enabled the housing bubble in the mid-2000s because of the very low interest rates after the dot-com crisis. every time the fed has enabled a liquidity infused surge in asset prices, eventually, you had a great unwind. and i think what we saw in may and june was maybe a taste of what an unwind would like like in all of these funds, not just bond fund, equity behavior, reits, staples, utility, et cetera, that if the fed is going to taper and eventually exit. it sound to me the fed wants to

get out of the qe business, that of the trillion or whatever how much money has come into these funds searching for the yields, dictated bety feds through interest rates and qe, if that becomes a great unwind, hundreds of becomes leave that space, of course, nobody knows if they will then that can be difficult, if the capacity isn't there to transfer risks from one set of hands to the other, it has to come through price and this is my i suspect that the reason that the fed backtracked so quickly on on focm, a week later, not so fast, we didn't mean it, i think they saw what happened to the bond market and volatility, the move index bonds went from i think like 40 to 120, basically, overnight. if the era of low rates and low

volatility on rates is ending, that's something that the fed has to be very careful for. i think that's why they're being so careful right now in what kind of language they use. >> tom, do you worry it does spread over to the equity market, too? >> i mean, it's definitely an overhang. i think it's top of mind for pa lot of investors. so the good news is it's not something that's going to blindside investors. i think people are pretty worried, yes. >> so by the way, i just did the math. >> black to tesla? >> i'm sorry. 750,000 per car sold, i did the math on gm, they sell 2.8 million vehicles, that's their current run rate, 17,000 per car. tesla is 750. >> it doesn't make sense. >> i know. happy thursday, everybody. we got a lot more coming up, after the break, he is one of dan loeb's go-to guys when it comes to shaking thing up at media companies, activate founder ceo michael wolf, former

board member recently of yahoo. he will talk sony, so much more. the pga of america, the ceo, he will talk about this weekend's big tournament taking place in the rochester, new york. at the oak hill country club. [ male announcer ] these days, a small business can save by sharing.

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welcome back to "squawk," taking a look at the futures, the dow looks like it opens higher. subpoena close to 8 points higher. the nasdaq a little over 16 points higher. the media industry putting the spotlight on itself with the cable wars, high profile deals, share holder activism. with le talk to the ultimate media insider about the ever changing landscape, michael wolf is founder of the media consulting firm activate. he was also up until a few weeks ago, a yahoo board member, former president and chief operating officer of the mtv networks, a good friend of dan loebs. you have views on sony andrea hoo on everything, jeff besos too. i want to start with yahoo for a second. we were talking about the new logo they may be coming up. you guys stepped down, dan, you

and harry wilson just a couple weeks ago. there were reports when you stepped down that there was disagreements about the future strategy of the company. is that right? >> totally untrue. totally untrue. anything, when i went on the bird of this company, my entire focus water on its re-invention and really re-establishing its presence as a great user experience, that's why i hired marissa meyer and the rest of the board. >> you did a tremendous job. why did everybody step down now? >> as part of the agreement, as part of the proxy battle, we agreed once third point stakes fell below 30%, we signed letters of resignation, we didn't have a choice. they didn't have the choice. >> why did the stake go down? is it because dan feels like he's made the gains or i guess people read into that. it was a lack of faith in the company? >> you know, i'm not the investor. my role here was to focus on the

business and it's amazing how well the business has gone. since marissa mayer got there, the traffic is up, already we have unbelievable -- if you look at the home page, they have the most amazing weather app there. they've reinvented flicker. the ad revenue will follow. from a business perspective -- >> when you look at how promiseing the past year has been, do you look at the next twoer year or two, it will be promiseing? >> i think what happens the advertising revenue will follow the gains if traffic. >> quickly on sony, i know you know dan, obviously, there has been this back and forth with sony, sony came out and said, we're not going to do everything you want. i call the new dan loeb was much more conciliatory, nicer in his letter in response saying, you finally gave me some of the things i want. i can live with there a while. we will find new opportunities, whereas in the past, he would have, you know, some kind of

scorched either kind of letter. >> i don't think you should expect sony is yahoo. i think what is most amazing of what happened is sony quickly recognized they had performance issues in their entertainment business. they said they would provide a lot more visibility and they would start revealing those numbers. in addition, they said they would take steps to improve the business. what it also demonstrates is sony's recognition that its entertainment assets are very, very valuable. so when you look overall, it's a win for shareholders. >> it's a win for loeb, too. when he wrote the letter, it was at 13 or 14, it's at 20 now. he's made 15% being nice, if he sells, who knows? >> i think this is a case where by pointing out the discrepancy between the performance of one entertainment company vs. another, it just demonstrated that its owners have take action and improve it. >> michael, let's talk about the news of the week, bezos

acquiring the washington post. does that make sense to you? what do you think he is going to do with it? what do you think he is think something. >> a lot of people take two data points, john henry buying the boston globe, a little earlier. >> 72 hours earlier. >> then you got jeff bezos buying $250 million for the post. they're totally different. john henry buys the boston post, it's a part of the local community. jeff bezos, it's a story of innovation and growth t. fact that it's no longer a publicly traded company, it is being run personally by somebody who is a tech innovator and can bring real perspective to that, somebody that has a long-term view, i think it will live. >> jeff called you after the show, you advised lots of ceos, on media things like this, projects like this wlark the heck should i do with this thing? you would tell them what? >> i think first of all it has the promise of being a national franchise.

today it's about a half a million. >> still a local paper. >> it's still a local paper. it has the opportunity. it's a part of the cultural fabric of the united states. it has the opportunity of being a national paper t. "wall street journal," of course, usa today the fourth should be the washington post. it's nowhere close. a lot has had to do with the fact it has to cover the local areas sell advertisers. >> so you think you stop the local piece of it? do you splinter that off and create a separate sort of local community hundred. then you create the washington post, it's a national brand? how do you do it? >> i think the washington post, i think a lot of the future is digital. right now, it's constrained about the ink on paper piece of it. so what ends occupy happening, that tran six away from local to national, a lot of it has to do with the ability to deliver. >> isn't local where the money is, though, for the print that's still there? >> the print that's still there. >> can you be a third or a fourth national brand, if you have the new york times and/or

the wall street journal and/or the financial times and/or the los angeles times, i mean, at some point, there is not room for a bunch of national brands. >> it's the six most popular news site in the united states. >> why don't they focus more on washington rather than what the new york times is already doing? >> right. i think that's the challenge. being a part of a publicly traded company. in the harsh light of the public markets, it's very hard to take the kind of steps for restructuring that can be done with a private owner. so i'm really opt mick about what a tech info rate issor like jeff bezos can do with this. >> last question. we got to run, cbs, time warner cable, you said something interesting ability who has the leverage and what happens here? >> at the moment the cable operates or have the leverage. the more cbs is off cable, the more they realize viewers don't need it. then suddenly the football season comes back, there's sports, people will be clamoring to have it back. >> it sounds like content still

wins. >> content is extremely valuable. >> thank you for being here, we appreciate it. >> coming up, the rivalry between tiger woods and phil mickelson renewed this weekend. we are going to talk golf and more with the pgaceo next right after this. then later, some management changes and a better-than-expected quarter, thriving groupon shares higher. is the stock dill a deal? we will talk to piper jaf reon his latest column. .f reon his latest column. .

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students had fallen behind, and morale was low. my first job was getting everyone to believe... that we could turn this around. i needed my staff to see what was possible. turning around a school, is not some, mystical, magical thing. it does take hard, dedicated work each day. i was a chemistry major in college, and then... i joined teach for america. that's the reason i'm here.

joining us now is the pga of america ceo, pete, it's going to be a great weekend. it's going to be a hard course. we will see if anybody shoots under par, before that, we have to get to the 800-pound gorilla, the time warner-cbs thing. is it possible on sunday some people in new york and dallas aren't going to be able to see the final round our any rounds? >> we are certainly keeping our eye on that issue. we have a great partner with turner sports and cbs. cbs has done a great job of keeping us abreast of all the developments, so we're playing it by earment we have our fingers crossed maybe that gets resolved, if not, we work with cbs, do they talk to you about

what to expect, whether people can see it any other way? >> all those questions, it's a little premature for us to make decisions. we're in constant contact with cbs. we had conversations with them last night at our distinguished service award ceremony with lee tremendo trevino. really, no developments that we could comment on at this time. >> all right. so, let's go into the golf game, right? i'm setting it up, joe is a huge golf fanatic. mickelson, tiger, how great is this for you guys? >> you know, it's amazing, golf is firing on all cylinders at this point. we have great major champions with adam scott, justin rose, phil, tiger woods had another run-away victory last week. there is such great momentum in the sport at the highest level. here this week, we have 99 of the top 100 players in the

world. it has all the ingredients to be a special championship. the weather has been really unbelievable. so, so far, so good. >> why is oak hill so hard? i think the last tournament there was 4 under was the win, which is not great for these kind of caliber of players. i mean, we might not even see a winner under par. why is this so tough? >> you know, it's one of the great historic venues in this country. it is timeless. it has a championship pedigree that's second to none in this country. quite frankly in the world. it's a golf course that stood the test of time. it's not overly long. it's tree-lined fairways. they're kind of a charming timeless parkland, layout a donald ross design. it's one of those golf courses that make the players, the best players of the world think, think off the tee, think around the greens. you add championship conditions under our champion kerry haig, it really is something that was competitive 100 years ago and

competitive today. and that's rare in golf. >> pete bevacqua, they're ledding the fans decide the placement of the hole the pin on the 15th hole on the final day. put it on the cart path, america. >> we want to thank you for spending the hour with us. jurrien timmer. plus we have jobless claims coming up, plus market reaction and a ceo change. we have been watching the futures. those dow futures up 80 points above fair value. kewaukee box will be right back. at cognizant, .

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flattops, the growth was coming there. europe was the less than expected. versus up in terms of expectation. asia paveng, the middle east and africa down 1.9% when the expectations were a growth of .1 of a percent. so again the u.s. was up enough to overcome all of that, the global comp is better-than-expected. the ceo, don thompson says, when theying will at all these things, in july, they delivered

modest global comps, sales growth. they were looking ahead, they remain focused on building market share and strengthenning these positions. again, though, that tells you about the u.s. economy, too. i don't know if it's a good sign or a bad sign. more people are looking for the dollar menu. we'll see what happens with that stock today. >> okay. we are just beginning our 8:00 hour. i'm andrew ross sorkin. becky quick, joe kernen off today. we have chief u.s. strategist j.p. morgan, a member of the 1,700 club, thick this out this morning. he is on the cover of "usa today" money section. >> did you know that? have you seen that? is that surprising you for the first time? here you go. look at that. that's a shrilly pick, too, huh? >> will you sign this for me so i can stel sell it on ebay, after you do, you have to go

pro. >> that look likes high school picture. >> who took that picture? do you remember donny glamour shots, we used to dress up. >> you look little sanguin for someone who won 1,700. >> i can say to brian with love. >> there we go. >> can we revise the headlines? will you be in the 1,800 club, known 00 club? >> i think we will ultimately tloois slice through those levels. >> ultimately when we're 80, in the sect six, 12, calendar months? >> i think it's possible, yes. >> can i keep this signed? >> yes. >> now i have a college quarterback and a strategyist's signature. >> the other morning headlines this morning, becky will bring you that mcdonald's knew, watch shares of groupon, the company posted better-than-expected sales and announced a $300 million stock buyback. they named eric lev could have

eo -- lefkofsky. another premarket mover, we talked about this before, tesla stocks soaring after the company reported a profit, analysts expected a loss. you can see tesla also delivered far more cars than expected and that stock now up over 15% of the premarket. we will have more on what was a real surprise from those results with paul ingrassia who will talk about this at 8:40. fannie mae's profit is mainly driven by the housing recovery. a lot of people will talk about what the government decided to do and where we stand. the mortgage finance company says it will make a $10.2 dividend payment to the treasury, so taxpayers can be happy about this. the company has been operating under a federal conservatorship since it was seized five years ago now, a month away from the financial crisis. >> let's get a check on the

overall markets. we're coming in on a three-day losing streak t. futures are indicating a solid open. the dow futures up about 80 points, s&p and nasdaq higher. when we came in, they were basically flat. over the last two hour, they've increased their optimism in asia. the markets ended mix. the nikkei flopping all over the place, the big drop down 1.46% again. hang seng index ended up higher as well. we have positive data out of coin, exports jumped 5%. imports surged 10%. both figures better than forecast. over in the european markets, where they are actively trading, gains across the board. in germany, france, the u.k., the gains nonetheless. do remember, folks, in about 25 minutes, you will get the weekly jobless claims number. obviously is very closely watched. the consensus is around 337,000. would be against 326,000 last week. also worth watching.

traernry holding a $16 billion bond auction 1:00 p.m. eastern. today, becky, you talked about mcdonald another, tesla, the bands unrelated. they're up 15% now in the premarket. >> wow. >> we have been watching a all of these numbers closely. let's talk more market strategy with david bianco, the chief strategist at stifel nicolaus. joining us from chicago is jack abland. lee is here as well. tom, david, you are a little more concerned. we may have seen the gains at this point? >> i still like to think of myself amongst the race of bulls. i'm not in the 1,700 club. my year end target is 1675. >> you are close. >> we are talking small ditchses here. but i would agree with tom in the sense that something well into the 1,700s and higher is well within reach provided

things go right. and a couple of things that have kept me cautious over the past couple of months have been that we have had very slow investment spending. may be getting better. i'd like to see more data, by business, china slowdown the spending, manufacturing, activity, export activity, profits at the s&p both this quarter, second quarter and past two years have been flat. that's going to mass by a strong growth of the financials. may be getting better. i think it's very dependent on china and business spending. then the other thing, which i think we need to keep in the back of our mind, i expect the fed to taper this autumn. i want to see is how that affects the dollar and commodity prices, if a dollar strengthens in a big way and commodity prices weaken in a big way, i think investments will turn down and not get better. >> jack, you heard these suggestions from tom at 1775 for the s&p at the end of the year,

david saying maybe 1675 at the end of the year. how do you feel about those expectations and where are you, yourself? >> sure, i equate the stockmarket to major league baseball. major league baseball has done a large part trying to get rid of steroids. as a result of that home runs as the total are down a thousand. attendance is down 7%. now this is really what baseball is. unfortunately, people don't like it. i think the same can be said for the stockmarket. i mean, we're used to $85 billion a month. you know, coarseing into our vains, ending up in the stockmarket. eventually we have to get off that and we end up with a market that people look at and go, is this all that it is? i think if you strip away all of the stimulus right now, we'd probably end up back at about 1750, i'm sorry, 1550 to 1570. obviously, we're not going to do it cold turkey. so my sense, you know, i tend to agree, with retowards the high

end of the range for this year, september is generally not a great month, especially if we start tapering. so, you know, i'd be inclined at least to hold just because i don't think the downsides so terrible, but, you know, active traders could certainly take some profit off the table here. >> you think this comes as a massi massive dislocation? >> i think we already had sort of the shock factor, the fact that, you know, interest rates and the ten year have gone up by more than 100 basis points or. so we had slight dislocations in the risk markets. we've recovered from that as chairman bernanke has backtracked on some of his rhetoric. the fact remains, i don't know, in september, certainly before chairman bernanke steps down in january, he's going to want to start to at least reverse some of this experiment that he's put on a few years ago. >> you know, the interesting

thing is we were talking about a series of opinions around the table that are all within 200 points, looking at the s&p. so are you not talking about a huge bull case versus a huge bear case on these sixes. tom, is it fair to say everything these guys have said, you have some thoughts of that, yourself. you are taking the flip side of the coin that looks a little shinier? >> yes, i'd say these are all fair reasons to be cautious. one of the things we have to remember is if these are things really well understood, it's going to be in the markets. i think one of the things i have been finding is hedge funds, asset managers, individual investors are pretty cautious. with regard to earnings, one thing to deep in mind in q2, if much things are carried the weight in the corner, top line growth for sick lick also looks infected as of 2012. we are seeing an accelerating top line. so you know, i think instead of sort of saying let the data, wait for the da-to-turn, i think

we are anticipating the data will turn. >> i guess the big question that comes up with that, maybe david you can answer this, too, the concern, investors have been so beaten down by what happened in 2008, they haven't come back in. if they aren't lured in by a super strong stockmarket, what happens if it's not a stellar of a performance? does that do anything to lure them back? >> you make a good point. investors have seen the market perform well over the past several years. people can only wait so long to tolerate things like staying in cash and getting low interest rates. i can understand the drift into equities. that's something we expect to be important to the market and prevent a correction. >> if rates rise, though, does that get rid of this idea, i can't keep it in cash, i'm not making money in a bank account? >> it would take a significant increase before people felt they were getting a decent return on the lower end of the rick spectrum. i think the more moderate yields we expect how it affects

currencies and commodity prices. i think what it comes down to for the short term is something in the mid-1,700s seems well will be reach and reasonableable for the end of the year, is it enough upside to warnt the risk and to, know, whether you want to protect the gains that you have made in a strong year, i think that's what professional money managers will be wrestling with within they come back from the holiday. it may be the case of you want greater returns for the rick. the market griendz upwards. i think that's what investors want. >> there is a catalyst, a positive catalyst out there. i think we saw a hint of it this, mo. is, china is not dead, germany is not dead. europe is not dead. i think week, you know, everyone had written off these markets and, you know, we may just recently made some investments in europe. we've hedged the currency. we do think that could be that growth could by a companied by some stimulus. it could tamp down the euro a little bit.

but i this think, you know, there are other markets that are cheap. the emerging markets are trading roughly 30 to 35% discountry to the u.s. i think there are some opportunities to rotate, programs, if we could get continued good news out of those markets. >> jack, don't you think that hedge prime, it's good to chat again, don't you think the emerging markets deserve 30 to 35% given what's going on in the middle east the brazilian, i don't want to calm it a crisis, a fairly dramatic slowdown and negative headline, recently. >> i think part of the story deserves, especially the commodity story. but i do think that the consumer story is out there. it's underneath the surface. if you strip away what is emerging market stock down let's say 10% for the year so far, the consumer portion of emergening down maybe two, i would encourage investors to look at perhaps the consumer portion. so stay away from the commodity producers, i do think we will

see a recovery there. >> jack, thank you for joining us this morning. david and tom will both be with us the rest of the program. coming up, shares of groupon are big after hours t. company announcing a $300 billion buy back. we will talk to an analyst to see if they can keep going. still to come, we will dig into another pre-market mover, paul agrassia will talk to us about that tesla shocker last night, coming in with way better results than anyone expected. first, we will tell you about one of this morning's big losers. here's a hint. think retail, we are coming back with the answer right after this. here at fidelity, we give you the most free research reports, customizable charts, powerful screening tools, and guaranteed 1-second trades. and at the center of it all is a surprisingly low price -- just $7.95. in fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and etrade. i'm monica santiago of fidelity investments, and low fees and commissions

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. >> welcome back to "squawk box," everybody. right now, the dow futures are up 83 points, s&p futures u up over 8 points, the nasdaq indicated higher above the fair value is indicated higher at that point. shares are trading lower for aeropostale. the business update the ceo mentions an increase in promotional activity, the company dealt with weak traffic

trends and a calgarying retail environment at least that's how they see it. >> okay. we have a stock on the move all morning, groupon reported profits in line with top estimates coming in at $609 million t. company announced that $309 million share buyback program. that was a big surprise, interim executive eric lefkofsky is going to become the permanent chief. he is joining us with reaction. the senior analyst piper jaffre. good morning. >> good morning. this i kind of left for dead maybe a year ago. i thought this was one of those trajectories that ended in a beat. it looks like it's going in the opposite direction, can it keep up? >> i think it actually can. part of the reason is a year ago, it was a different business that it is today.

they are pushing from an e-mail, people get sick of those e-mails to a pool destination where they keep deals up longer and ultimately people search the site for a deal. it's easier to find deals. so everybody is cheap. everybody wants a good deal. they're starting to capitalize on that. so i think the concept of everybody looking for a good deal isn't going to change over the next decade. so i think in that sense, this actually becomes investable story over the long haul, which a year ago it wasn't. >> tell me though, about the competition. when i think about the competition, i think about google, american express. i was about a week ago, i walked past a jamba juice with my iphone. i downloaded some app through google that told me if i walk into jamba juice, the smooth think would cost $2.50.

where does groupon play in that? where do they play in that relative to other players who may have more entrenched relationships with retailers? >> you are going to get bombarded with deals across the board. as mobile phones become and advertisers get smarter at targeting your jamba juice is perfect, there is going to be that bombarding factor. where groupon dimp shats, living social is a true competitor. it really becomes a place thatting a gre gates these deals. it's the difference between a deal pushed on you versus you going out and trying to build a night or a weekend or some event around that. so i think that's the fundamental difference. it's a push concept, which gets fatigue. this is an actual destination. they had 54,000 deals on the site last quarter. it was up from 47,000 in march. there is a lot of deals up there for people to search. >> comment if you could on the international expansion, the costs over there, a lot of the big issues they had had was they

had made a lot of acquisitions. this is a business that requires feet on the ground. it's not simply technology. >> a big sales force, calling local merchants, international has been a debacle, it was down 20% in june, 18% in march. 12 if december. so you see this kind of sliding performance internationally. essentially, the way the company thinks about it is, their oldest geography internationally is three-years-old. the youngest is 3-and-a-half, they're basically asking investors for more time to take the playbook that they have been successful in the u.s. and export. that if they can export that play boork, i think you will see improvements in international. i think investors will give them a little more leeway that they put two quarters in a row. >> a lot of other folks who actually care about getting in your inbox. i know you said groupon cares a little less of getting in your

inbox, google, gmail changed the way their inbox is structured so they are filtering out promotional e-mails separately. they are putting social e-mails, they get what they think is your primary e-mail, social stuff from linked in, facebook, twitter, whatever t. promotion, there are worries that companies like groupon would be impacted, the implications foss not just groupon but others would be significant. what did you see? >> like you mentioned is they're shifting it away. 40% of the deals were from e-mail. it's their guidance implies some of that impact from some of that fimters. what they talked about on the call is not having a measurable impact yet. they obviously are hedging that bet significantly. they want to become a destination. i think they're believing that is going to get more difficult in the future. >> as the e-mail gets smarter, it gets harder. gene, thank you. appreciate it very much. >> thank you. a quick programming note, don't miss groupon ceo eric

lefkofsky, he will be joining "squawk" on the street at 10:15 eastern time. it's thursday, folks, weekly jobless claims, setting to tape here in 7 minutes time. then tesla, shocking analysts with better-than-expected earnings and revenues. we will chat with industry watcher paul ingrassia about the company's strong quarter. whether or not the company deserves to be valued where it is, stick around. of the availab, including the es and rx. .

welcome back, everybody. last week, we told you about the plan from the city of richmond, california to use eminent domain to seize mortgages of local residents under watt on their loans. they would keep them in their homes by preventing the banks from forecloseing. they would buy them at a discount rate and help the home eners refinance. now an investor group is trying to prevent this practice. mortgage fund trustees, wells fargo and deutsche bank filed the lawsuit on behalf of an investor group. the sense is that the city's use of eminent domain does not meet the legitimate use tirement t. group says the city's actions will result in steeper

downpayment and interest rates. ing a 50s say it is within the law and no investor will be made worse off by the sale of any loan, we will continue to follow this story. when we come book, though, we are a few minutes away from that closely watched weekly jobless number. as we head to a break, look at the u.s. equities futures. it looks like the do you would open at 78 points at this point. "squawk box" will be right back. you wait all year for summer. ♪ .

. >> welcome back to "squawk box." here we go. initial jobless claims, three, three, three. $333,000, that is from a slightly upward revised $328,000. so we call it an even handful higher, that 328 from last look was originally released at 326. if we look at a slightly different time line and a bigger swath to look at continuing claims, you know, they definitely moved up from 2.95 million to slightly over 3.01 million, closer to 3.02. but if i can't get my gps on what the correlations will give

me on job creation on initial, i guess the best i can do on continuing claims would be to have a larger number confuse me. if i look at yields, yeah, they were down to around 255 to 256 before our time zone, but they're right back up to the first significant high on the big run up in rates that started in early may, the first significant top was 2.61. that may remain the pivot. the dollar index, that is the story. it's been all about foreign exchange. you get a couple good numbers, europe now, it bottoms in. we had a lot of good numbers in the last five years in the u.s., the bottom wasn't necessarily in. it's about the speed of this bottom. nonetheless, 7-and-a-half week high on the euro versus the greenback. a seven week high on the pound versus the greenback. all that, of course, is predicated on the outlook of urine economically. ly tell you this, some of my equity guys have been smart, if you look at the chart the last

month, you look at the dax or the kak. against the s&p and the dow, you find they are reversing a trend where we were overperforming, that, in essence, helps their currency. i think it's all based on the same notion. back to you. >> thank you, fantastic. for more on this, ubs economists drew, what do you make of these numbers? >> it's more good news, if you look at the labor market, in general, every indication is it's doing reasonably well. every, basically, every data point except for gdp shows the u.s. is doing very well. i think that tells you what will get revised as time goes by. >> let my take it back. you had said we were going to have shop choppy times over the next month-and-a-half. >> potentially. >> potentially in the market. i want to know if you think that is going to appear and actually have a real impact in a real

economy and in the jobs market, drew? >> well, i mean the choppier the financial markets get the more the greater the chance there will be a disruption in the real economy. i think that's one of the reasons why we think of the fed tapering in september. we have to ask ourselves a question, do they want to pull back to go through the whole pos says again? if they want to do that, i'm glad we're getting a fed chairman in january. that's a disastrous mistake. what we need to do is move forward with what we have. everyone is on the same page. it will be a taper, grad wam, it whether take place over a number of months. it's occurring in the economy. it's doing reasonably well. i think if you sit at the federal reserve right now, that's probably what you should hope for. you shouldn't fool around with that. if you fool around with that, you rick higher rates, you rick inflation concerns now that inflation looks like it's bottomed. you risk a real derailment of the u.s. economy. >> these numbers are for you, you look like you are yawning?

i agree withdrew. i think the future is great. >> david, i think you are great, too, pal. >> wow. >> i think we're on track for the moderate recovery and everything that seems to be playing out is a renormalization of the economy. that itself what we need to see, how rates renormalize. >> i want to give a shout out to drew, hey, drew, it's brian. you have been right on the money, it's hard to be optimistic. it's hard to be out there on your own and for a while, you were, you have been positive for a long time, you have been perfectly correct. so great job by you. so i want to know this. >> thanks, i owe you a beer. >> just won? i want to know what you saw that made you opt mick when others were negative, also, what your outlook is now. you know this camp of higher rates will crush us, they're fine, it is becoming bifurcated. >> well, i think there is one thing that we focused on a lot, well, two things, one is we thought labor force

participation rates would be stagnant. the second thing we look at carefully are credit conditions and the senior loan officer survey. we think that's a good indicator for job growth and my colleague does that. he's been spot on with that. so, you know, we got two out of two. that's a good batting average for economists. in terms of hurting the economy, i would say, yes, in the long run. we have to remember, if the fed is raising rates or allowing rates to go up. it's because they think the economy is beginning to grow. they want to kind of pull it in to make it longer lived. just because rates go up doesn't mean everything has to fall apart. it could mean you get a longer period of decent growth rather than a spike higher and lower in growth. less volatile growth in my mind is more valuable than higher volatility growth. >> we lived through the skweser, the payroll reset. those may ends up hurting us

longer term. we lived through them than a lot of people said we would. higher interest rates are mostly a voluntary endeavor, right? >> does that add to your analysis? >> yes. i also think you don't have to buy a car or a home. >> there also has to be a supply of credit, right? you have to think, we always think, low interest rates are good, not if you can't get the loan, right? banks need to make money, too. if they're not going to make money on it, they will be stringent in kerms of who they lend to. from an economic perspective, i would argument you hire rates, a greater ability of lower rates. i think we are beginning see that play out. with regard to the sequester, i view it as no one likes what is happening, except for the fact that it pulled down the budget deficit. is allowed. i believe corporate leaders make investments. they might not like how it occurred or where they are coming from. they see the improvement in the budget deficit. theyty people in washington, if they're not serious, have fallen

into it by accident. that's good enough. you take what you have, you run with it. i think you have seen a pickup in corporate spending in part because of the u.s. budget situation. >> we will leave it there. rick, thank you for. that drew, thank you. talk to you guys, soon. when we come back, we are watching shares of tesla. the stocks up sharply after the company reported better tan expected earnings in revenue, look at that, up 15% right now. we will talk to auto industry journalist paul ingrassia. "squawk box" will be right back. . f-f-f-f-f-f-f. lac-lac-lac. he's an actor who's known for his voice. but his accident took that away. thankfully, he's got aflac. they're gonna give him cash to help pay his bills so he can just focus on getting better. we're taking it one day at a time. one day at a time. [ male announcer ] see how the duck's lessons are going at aflac.com

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. >> welcome back to "squawk box" the futures this morning have been higher throughout the morning. can you see right now, they're up about 70 points right now for the dow futures, open up about 70 points if we were to open right now. amc networks, it's unclear if that is comparable to the 78 cents consensus, revenue of $379 million beat expectations t.ceo says the overall financial result, were driven in the final quarter. tesla delivering more cars the electric car maker earning 5 cents a share. analysts were expected a loss of 17 cents. expectations came in just over a quarter million dollars t. company says it delivered more than 5,000 cars, tesla shares, folks, they are responding.

in the pre-market, that is a big movement. tesla is up 16%. joining us on a take, reuters managing editor paul ingrassia. palm, i tweeted out earlier, i sent it out, tweeted out, it's meant a tongue in cheek, if you divide the number of cars per year, you'd be valued at $750,000 per car, for gm u.s. sales, that would make theme 17, it is completely tongue in cheek. pem people get all worked up when you talk about tesla. it shows the extreme valuation the company has, does it deserve it in your mind? >> this is obviously an internet stock valuation on a car company, which is remarkable. look the stock quadrupled over the last 84, which anything that happens like that, you got to sort of wonder, is it sort of on a bubbly, frothy sort of feeling? but here's the deal, i mean, the tesla car, even though the volumes are small, has outsold

both the chevy volt and nissan leap and guess what, tesla's roesers are priced double the amount of the price of the leap and the volt. it's not, you know, it's not hard to understand why, it's cooler to say, hey, i drive a tesla as opposed to, you know, i drive a chevy. >> listen, it is a spectacular car. i've had the opportunity to drive the old roadster the model s. consumer reports loves them. everyone i know loves them, no doubt about it. however, palm, is and everybody, people, the commentary you get is, it's not a car company, it's a tech company, it should be more valued like that to your point i get it. at the end of the day, that imply components, assemble the robots then deliver the car. it is still in a lot of ways an industrial company, is it not? they're having physical products. >> yeah the message here might be buy the car, not the stock at this point. but, you know, there is a bet on

the future here, it's mot just battery technology, but in a couple years, tesla is scheduled to introduce the generation of the ge n3 car has it's known internally. it will be priced about the level of the volt or a little above the level of the nissan leap. so if tesla can somehow bring what it's bringing to the luxury mark,ably that to the mass market, there could be upside growth. nonetheless, your.is the well taken the car may be a better value right now than thing to, at least in terms of industrial difficult industrial terms. >> paul, it's a question i asked an analyst earlier in the program about sort of the future of tesla, not netsly the next 12 months or 24 hour months, does this company remain independent? do you see this as a company that gets merged with somebody else? these prices, by the way, may not make sense, maybe they end up buying somebody else. is it something that gets merged with another car company, maybe a technology company? how do you think about this? >> well, you know, listen, it's obviously going to be

speculation on my point. i think it could go either way. it's hard for me seeing them staying as they are. it's a dynamic company. you think either they will get a lot bigger or they will be a part of someone else or acquire someone else over the long term. but it's really just speculation at this point. i think a lot of it also depends on what else happens in this whole effort that's beginning out in silicon valley to reinvent the car? actually, it's not begin, it's under way, so you know, driverless cars, future propulsion technology, what happens to hydrogen fuel cells? there is a lot of really interesting things going on. a lot of tesla's fate will depend i think on the future evolution of automotive technology. >> yeah. hi, this is tom. i have a quick question for you. i don't look at specific stocks, but a couple of things i've noticed when we see disruptive technologies, one is there is a lot of value assigned to

scarcity, to what extent is the fact that this company could be one of the few pure plays out there. the second, how do you think the technology is versus what other large auto companies are working on? >> well, they clearly have a smerio battery technology. the bigger question is this, you know, what is the future of battery powered electrics versus the long-term future of electricity, electric powered cars that are powered by fuel cells? stoikt for the slouch when it comes to -- toyota is no slouch when it comes to research. a year ago, they emphasized battery car research to focus on a leapfrog into fuel cell electric car research. so i think, you know, in other words, tesla as the disruptor could end up being disruptive. that's the nature of fast evolving technology. >> paul, i'm sorry. i will jump in. you know how much i respect your views. i have been doing this a while. i remember talking about battery

power and plug power and fuel cell cars back in the late '90s and early 2,000s that didn't amount to anything. >> well, no, they haven't. you know, i mean, that's why, you know, everything is up for grabs here, everything is up for play. now, i think the difference is, i mean, look, hybrid car is very much like the prius were made by general motors in the mid-1960s. the only thing is, what they didn't have is modern computer technology and microchips, all that stuff that made hybrids really feasible on a mass market scale. so, you know, technology sort of moves in strange ways. what we do know is batteries. >> you talked about whether tesla, the disruptor hopefully geddes disrupted. they've obviously made the big bet on batteries. are they secretly privately looking at other forms, too, to keep up in case something disruptive also comes along? >> i must answer, i don't know, but i wouldn't be surprised. >> the technology is impressive,

but what i'm intrigued about the company is they've tapped into a luxury and prestige brand. do they need to drop prices? or could they fully raids this em? >> probably both, to be honest with you. typically, when a car company evolves, it sort of goes in both directions. you know, this company has a luxury appeal, but if they can bring similar technology to the mass, you know the $30,000, $35,000 price range, then what happens is their volumes can increase a lot. then that volume can really make the whole operation a lot more efficient. so, they're probably going to go in both directions, go higher and lower on the price scale. >> thanks. >> paul ingrassia, great stuff. a good in-depth discussion. thank you for joining us, see you soon. >> glad to be with you. coming up, fannie mae posted a $ 10.1 -- $10.1 growth in the

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here's your brain explosion story of the morning. lender fannie mae posting a

$10.1 billion profit. reported strong earnings yesterday. all this the president and c congress working to wind them down. diana olick is joining us. diana, no company in the world like fannie mae, now gigantic profits again. >> tlarts. this $10.1 billion net income is nearly twice the $5.1 billion reported in q2 of last year. now this is the sixth consecutive profitable quarter for fannie mae. fannie mae and freddie mac, two-thirds of all new loans reported a positive net worth of 13.2 as of june 30th and will pay $10.2 billion to taxpayers which treasury purchased $117 billion of that 2009 to keep the company afloat. it does not go to pay back any of that. of the september dividend payment, fannie mae will have paid $105 billion in dividends

to treasury. ceo said on the conference call this morning we expect our revenues to be stable and earnings to be strong over in next few years. now, this strong quls d 2 was driven by continued stable revenues and boosted by increase in home prices in the quarter which resulted in a reduction in company's loan loss reserves. earlier this week president obama traveled to phoenix to dismantle fannie mae and freddie mac. the ceo said today that profitability should not slow that appropriate debate. now, loan losses, delinquencies, are still high but again, improving home prices are helping that. fannie mae stock is still not worth anything but yet it can be used to trade a lot just on speculation over what will happen to both fannie mae and freddie mac. coming up, our guest host this morning has been jpmorgan's tom lee. we're going to give them the

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welcome back to "squawk box." it's time for the stock of the day. >> and the stock of the day is orbitz. oddly. earnings falling short of expectations. revenues beat the street. travel site offered upbeat current quarter guidance. >> i think that's a good stock of the day. it's up 11%. >> why isn't it tesla? >> that's what i was wondering, mcdonald's, tesla, groupon. you can get rid of that. >> brian's been contemplating. >> i can? which one? >> giant eagle. on the back. >> all right. let's get back to our guest hosts for the last word. tom, you think that there's a really strong wealth effect. that's part of the reason you're so positive on the market. >> that's right. i think we've had five years of

people not spending. the wealth effect, which is the wealth created from stock market and housing, is 10 trillion over the last two years. that's 70% of gdp. you can't find that type of wealth created in any other region. and yet consumers are spending like it's '82. so i think sometime in the next 12 months we're going to see a real surge in investment companies and consumers buying a lot more cars and houses. >> we said this week that the average age for -- the age of the fleet of cars in america is like 11.4 years. that's the longest we've seen. nobody can figure out why they haven't been replacing those cars sooner. >> that's right. 70 million cars were built before 2001. >> wow. >> and their average book value is $2500. they're not insured for collision. half of the car on the road is one pothole away from being scrapped. >> david, you do think that there are going to be sectors that are winners and losers? >> that's right. i think the market still offers healthy long-term returns.

more selective because the market is no longer broadly and significantly over valued. with data we're seeing with jobs and consumer spending and likely higher interest rates are good for the financials so we stay overweight that or overweight tech. things have been sluggish for tech but i think it's worth the weight. the valuations are cheap. parts of consumer, industrial, media, branded a par real, whether they're growing abroad, profits are strong. in industrials i like aircraft, cautious on machinery. remain cautious on metals and mining. remain cautious on the things that are exposed to china's slowdown in construction spending. >> outside of metals and mining, some of the industrials you're worried about, what other sectors do you think maybe have run their course? >> other parts of the market that are bond substitutes, staples in health care. health care is my preferred defensive sector. i think the earnings growth will be okay it is spite challenges at managed care companies. when you see some of the pipelines deliver at pharmaceuticals and biotech.

and i think there will be some decent growth there. >> we do have the jobless claims that came out this time around. but in terms of tapering, when do you expect, david, to see some sort of tapering, september? >> yeah. i think they should, you know, stick to what they've -- maybe they would have liked to have seen better improvement in the economy and jobs. costs and risks to ongoing qoe. wean them. 60 or 75 billi$75 billion a mon >> easy wean or train spotting like heroin withdrawal, shaking in the bed? >> the sooner they start, the more gradual it will be. >> what about you? in september? >> that call cops frmes from ou economists. you had bruce last week, they are calling for a tapering in september. >> if it comes later though. >> it's one of those things that's probably good for the short term and then raises risk for the longer term. >> we need to get the ban wean for -- >> actually it's me verse.

the market, if we don't start the wean, they don't take that as a good sign. >> you just coined the new slogan, the market wean. >> the market wean. >> yeah, because i think the underlying message if it's delays that the economy is weakening. >> all right. >> good news is good news. bad news is bad news. join us tomorrow. "squawk on the street" begins right now. good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with kelly evans from the new york stock exchange. cramer and faber are still off. at post nine today, strategist with ipq capital iq. sam, it's good to have you this morning. futures are up despite worrisome signals. a lot more retail is coming out with warnings about the quarter. we're going to talk about that in a moment. in asia, the nikkei was down but