secondly, to be able to disrupt the way jeff is and be local and mobile and everything that jeff knows how to do. that's what newspapers know how to do. i think it's really cool that everybody wants to buy newspapers. i kind of like this trend. >> me, too. >> yeah. walter, thank you very much for joining us today. it's been a pleasure. thank you so much, steve, for joining us. you, too. that does it for us today. see you tomorrow. right now it's time for "squawk on the street." good morning. welcome to "squawk on the street." i'm david faber along with jim cramer and scott wapner. of course, we are live from the new york stock exchange. carl quintanilla has the day off. on this morning after the dow's worst day since june, well, since late june, stocks poised to open lower yet again. we're talking about guidance from walmart and cisco that was not good and is being met with a negative reception as you might expect. take a look at the futures there

setting up for pretty nasty open. at least if you're long at this point. look at the ten-year. that's become an important -- oh, it's always important but it's become perhaps important again to what's going on in terms of trading and the view of the overall equity markets rising to two-year highs after weekly jobless claims fell to levels not seen since october of '07. yes that is a good thing. in fact, you could argue that's even a good thing, too. let's get to the road map. it starts with the major indices in the red. investors wondering whether we were in taper territory as two dow components red on the market. >> one is walmart. shares rolling back today after the retail giant cuts the full-year forecast citing tightened consumer spending and payroll tax increase. >> another dow component deep in the red today as well is going to be cisco. company cutting 4,000 jobs despite an increase in profits that is sending the stock down sharply in pre-market trading. >> and organic food maker annie

is up 40% out performing the likes of whole foods. jim talks to the c ireo in an exclusive interview. i hope you ask them about all the macaroni and cheese in my pantry. >> for a moment i don't want to be light and at all humors but the annie's is on fire because of the mac and cheese. >> my daughter especially, it's a wonder how she lives on anything else. >> i'm with you. >> let's start off with the markets here though, of course. you saw the futures. not looking like we're going have a good open. here we are, a lot of positive signs in terms of the economy, you might argue. even in today in the "journal" for example, consumer debt at lower levels, willingness of the consumer to take on new debt to fund muches of cars and other large items is increasing. china not so bad. europe, out of recession. so what's going on? >> macro is great but when you have to coattail with companies,

it's bad. here's a macro environment when you look at everything you just said, walmart raising numbers, right? isn't that what is supposed to happen? ma walmart cutting numbers. cisco raising numbers, right? no. we have to deal with the four walls of the corporate canvas and they are simply not able to turn this macro positive into microearnings gains. that's a real conn conundrum. even when the ten years are going happy days are here again. >> it's a toxic combination of bad earnings, warnings, 2.8 on the ten-year and the taper looming. right? put all that together. >> i'm in love with macro but swimming in the toxic pit here. can i just say there's a giant reset going on. david had an interview this week. with this guy david berman. it happened. he said, listen, all the retail sales numbers are too high. that's what happened. it's just playing out right in front of us. all -- but now we're getting the reset. what's going to happen.

by the way, let's take it with ten. john chambers, that stock up was up 34% going into the quarter. stock was up 17%. stock would be flat to up. john chambers felt like the stock got ahead of itself. it's almost like the ceos said, whoa, guys, you're bullish. i understand. you're looking at the macro. you're worried about a taper. can we just tell you that boots on the ground, it's okay. it's inconsistent. >> it's been something we've been hearing now for years. this earnings season is not shaping up to a particularly goods one. when you look at it -- right, it depends. you can cite in times that it was good. i can certainly cite over the last couple of days, of course, we're going get to walmart in a minute. macy's and walmart and any number of others that have not been. >> teen retailers have been bad. we talked about it yesterday. >> we're loose looking at an s&p that's up 18%. up 18% in the broad market this year. >> create money? consume rer -- these are taxes. these are de facto taxes on the people, gasoline, unemployment

change. washington, this is what happened when you try to balance a budget. try and balance a budget? take the gdp out. that's what we're all -- >> trying to balance. >> trying to balance. >> you -- trying to do it in an ass backward way. am i allowed to say that? >> no. >> sorry. >> i'm going to -- >> at the half? that's a halftime language. >> listen, it's cable with a ticker. i've said that kind of stuff before. >> mike you up like we did like ray lewis in the baltimore days? we mike him up. you know how he talks? >> all right. >> sorry. >> in the end, in the end, the market comes down because of the reset. but cisco trades at 12 times earnings now. you think that that is not a better company than intel, mr. pc, microsoft, another pc company, oracle which is a company being v-- but john

chambers takes it down. what do you want us to do, sell it and short it? >> ask this though. how the k. the bed get out of the way in my regard when there are real questions about what is happening in the company? simple he can't. four lows, rising rates, health insurance premium, gasoline. if you're the fed, what are you going to say, i, too, want to join the 1937 brigade here of sending us back to the great recession as the fed did when it joined roosevelt and congress in '37 in one of the greatest mistakes in economic history? do you want it repeates? bernanke actually reads history. >> he does. in fact, we've known for many years she the a. student of the great depression. >> walmart and macy's, he feels the pain. unclinton like, he feels the pain. >> living off that federal reserve salary. it's not's. >> i he's not buying kors bags. let's talk about walmart because the shares are going to fall in premarket -- falling in the premarket and probably going to be down in the actual market. excluding items, second quarter

earnings were in line with forecasts, up 25 a share. revenues were below consensus. same-store sales fell. retailer cut the full-year earnings forecast adding it expects comparable store sales for the current quarter to be relatively flat. walmart says the retail market remains challenging in u.s. and international operations. as customers are in cautious spending mode. good old caution. of course, walmart represents about 20% of sales from the publicly traded retailers in this country. and they are cutting their growth rate in half. >> their sales forecast they cut in half. >> in half. >> so 20% of all publicly traded sales from retailers and they're cutting it in half. that ain't a good sign. >> how much is u.s. and how much is international? >> it's still more -- >> the new age of walmart. >> you know what, it's at 70/30? i'm not sure. let me make sure i know. >> you know what, you know what

started off the bad retail was gap stores and costco. gap stores actually got it higher. how quickly we forget. costco did 4% sam's did 1.7% in the clubs. is there any chance at all that walmart may be just simply not as good as it used to be? >> certainly a possibility. but they have had periods in the not so distant past where they have outperformed as well. >> stock did well from 58 where "the new york times" says who knows what's happening in mexico and great buying opportunity b to 80. i only say this because walmart is a great company. i don't want to -- i don't want to slag them at all but that's a biggest mate cut. i'm just wondering, do they j not see anything coming february was bad and march got stronger? didn't -- why can't they forecast better, david? >> i don't know the answer to that. i don't know the answer to that. i mean, it's an enormous company. there will always be this

argument that you simply t get so big that it becomes more and more difficult to manage. 118 billion -- $116 billion in a quarter in revenues. you're talking, i mean, the numbers are enormous. the store count is enormous. that being said, it is still viewed as a well-managed company. and usually these kinds of things are a short-term setback that will be in some way addressed and, therefore, changed. opportunities is what they call these things. it's an opportunity. >> walmart -- i think -- i'm looking at walmart to buy it. why? because it's going -- it's 520. these are not -- it's not taking numbers from six to three. it's not a jcpenney situation. oh, jcpenney, i think they had a good afternoon. >> did they? >> didn't they? >> right before the bell yesterday. >> 615, were they hurt? >> you're talking about sales? >> sales. >> there was a customer, i saw, came in, bought something. >> it's time to get grand. these estimate cuts are not the

end of the world. cisco didn't really cut estimates. okay? it didn't. i heard all morning how dire cisco is. he's sticking with the 5% to 7 p rs growth. he said that this is going to be conditional. it's going to be way things are going. he did not take things down. china is weaker. less than 5%. >> polls were not as bad. >> kohl's. >> you mentioned it. probably can't see this. i got these socks at kohl's. 17th wearing. >> they still have -- holding up. >> 17. you keep track? >> i don't need -- >> i keep track of what socks came from where. >> you can get these three for eight bucks. >> that's a deal. >> but the shirts don't hold up. i got to tell you. the shirts do not hold up. >> they did. they managed their inventory better than perhaps others. >> that was an important call. >> my understanding they were coming off of easy comps. coming off of. >> they've been disappointed and they didn't disappoint. >> negative sales numbers. >> that's fine. >> people -- i don't like the

ten-year going up and i don't like estimates going down. it's got to be -- you're defending cisco this morning as is -- can goldman's out defending it. >> at 23, 24, i'm defending it. not at 25. it's got to come down. >> did you see this note from isi? he compares john chambers to george jefferson. he says, despite a humble upbringing and doubts from many that knew him george over came the obstacles and successfully started a chab of dry-cleaning stores in new york city. similarly, john chambers is also faced a fair share of daughters over the past 12 months and emerged victorious. >> west virginia, it's my home. >> moving on up. >> gino smith and john chambers. graduates. >> all right. >> all right. one more key economic report to go before the opening bell. breaking news on industrial production is just moments away. plus, organic growth with a twist on the other side of the break. it's cramer's exclusive with the ceo of natural foods company --

>> no one else has it, annie's, exclusive. here's a look at the futures. it's going to be a nasty open. dow to open low their 115. s&p looking down 14. more "squawk on the street" live from the post with the most. post nine when we come back. t# 0 playing this and trading. tdd#: 1-800-345-2550 and the better i am at them, the more i enjoy them. tdd#: 1-800-345-2550 so i'm always looking to take them up a notch or two. tdd#: 1-800-345-2550 and schwab really helps me step up my trading. tdd#: 1-800-345-2550 they've now put their most powerful platform, tdd#: 1-800-345-2550 streetsmart edge, in the cloud. tdd#: 1-800-345-2550 so i can use it on the web, where i trade from tdd#: 1-800-345-2550 most of the time. tdd#: 1-800-345-2550 which means i get schwab's most advanced tools tdd#: 1-800-345-2550 on whatever computer i'm on. tdd#: 1-800-345-2550 it's really taken my trading to the next level. tdd#: 1-800-345-2550 i've also got a dedicated team of schwab trading specialists. tdd#: 1-800-345-2550 they helped me set up my platform the way i wanted, tdd#: 1-800-345-2550 from the comfort of my home. tdd#: 1-800-345-2550 and we talked about ideas and strategies, one on one! tdd#: 1-800-345-2550 really gave my trading a boost. tdd#: 1-800-345-2550

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welcome back to "squawk on the street." july industrial production will be out momentarily along with utilization. we already had tip data, two months in arrears. june, the net long-term flows of minus 66 billion. the worst in six years. down .1 on the -- sorry about that, folks. on change on industrial production. now, utilization, this is key. we were hovering at the best levels really close to the best levels since july of '08. this time, 77.6. that's a big miss. 77.9 expectations. our last look, 77.8, downgraded to 77.7. now 77.6. so utilization rates moving a bit lower. production itself unchanged. and tick data saying that

foreign investors aren't nearly as enamored with some of our dollar denominated financial asset of late. jim cramer, back to you. >> thank you so much, rick. good to see you. shares of organic food maker annie's is up 30% this year. pretty amazing. consumers continue to embrace the healthy eating trends of the good mac and cheese versus the bad mac and cheese. and, of course, here's the real enemy, the gold fish. order this morning, i spoke to ceo from the annual growth conference in boston. i asked him how he is capitalizing on that kind of growth. >> this last quarter we grew our consumption of annie's products about 20% which is the fastest growth we've had since the company went public. >> this quarter that you're in now you said this is accelerated revenue xwroet. you're only one of three or four companies that is accelerating this quarter. >> well, our consumption at retail accelerated. our sales were about six points

off of that because we had one-time issues with easter shipments in from q-4 into q-1 and big inventory adjustment with one of our large customers. the fundamental underlying of annie's prauoducts continues toe strong. we reaffirmed sales guidance and first half in that range which implies this quarter we're in right now will be in 21% to 25% range. we do see a strong ends pin for natural organic across the country and we think more and more consumers are leaning in that destruction and we're excited about the future. >> john, i want to go a little bit beyond the numbers. you have a couple new products. big innovator t in the category. you're doing some frozen organic and natural foods. target, 1700 stores. are you really able to take categories that historically have not been able to have natural and organic and innovate to the point where you can be, say, in tv dinners that have never been organic?

>> yeah, maybe we will be there in the future in tv dinners but right now we've launched family size entrees made with organic ingredients, really great tasting products that we know our consumers are going to love. if you look at frozen, massive categories. they lack innovation recently. overall category numbers are kind of stagnant for the conventional stuff. the real bright spot is what the national organic players are doing. we're seeing strong things from target and others to bring in really important innovation that's going to allow moms and dads to eat healthier food options conveniently which is a huge opportunity for our company and the whole industry. >> john, i'm holding up the classic kraft mac and cheese and i'm holding up your mac and cheese. what makes them different? what are you doing that's natural organic that the guys from kraft aren't doing? >> well, annie's has always been about really simple ingredient

statements, really simple ingredients. we use organic. we use cheese that's made to be free of synthetic growth hormones. we don't use artificial colors. we don't use artificial flay vorss. we use real block cheddar cheese. these are all features of quality that more and more consumers are seeing as really something they desire. and when we're in a category like mac and cheese participating with a big really fine company like kraft, we're bringing a lot of new consumers into the category that wouldn't shop it if there weren't an option like annie's available. we love competing in that environment. >> john, one last question. i go to my store and i see gold fish, enemy of parents. what do you have to combat this? what's the friend of parents? >> cheddar bunnies is the friend of parents. made with organic wheat, cheese-free of synthetic growth hormones no, genetically modified units, bunny on the package and mom ought to get a high five for that one.

>> i see you in some stores, you're in organic ghetto and some of them you're in head to head with the big package consumer companies. >> usually over by the mop closet. no, we want to be right in the mainline aisle. and one of the big growth initiatives that we've taulked lot about at annie's is moving them in the mainstream aisle so consumers can see the choice right up against the convention alaska te al alternativeses. >> the reason this is important is if you have a right pram product in this environment, everybody if you're in challenged retail places like the department stores and the discounters, you're selling them. this stuff is expensive. it's more expensive. $2.6. $4.49. less than half. this is what the consumer is doing. if it's healthy, they're spending. >> are you taking that macaroni and cheese, most importantly, are you taking that home or give that out? >> this mac and cheese is

guaranteed to last through nuclear war. gold fish, thermal nuclear war. >> my 4-year-old just called and says he wants that. by the way, we're show that dan loeb on the floor right now because the ipo of third point read this morning. he's had a great year, by the way. >> she has had a great year. >> offshore fund is up 16% as of the end of july. so he'sed a quite a good year. >> as more hedge fund guys get into this reassurance business, whether it's david einhorn, green light, sec and now dan loeb, ipo'ing here at the new york stock exchange today. >> it is well managed from the insurance side. people just, oh, it's a play on -- it's a play on -- look, it's a great insurance well-run company with good underlying portfolio. all right. up next, it's the mad dash as we countdown to the opening bell. let's take one more look at

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report good numbers next week. people buying hard goods. they're not buying soft goods. i don't know. this is a gutsy call because are people still spending on their homes? >> i don't know. you talked about affordability. potentially move ing away from people. is that great cycle ending? >> i'm worried. i'm worried at 2.8 on the ten-year. i'm worried that people are not going to spend as much on their home. i'm worried that home depot is going to go the way of walmart. home depot is in a sweet spot right now but what happens if home depot saw what walmart did? this is the negative feedback group that i fear so much right now. >> are the two connected? >> john chambers says, how aim supposed to be bullish because of walmart? i think routers are going to hit the walmart than this would. >> i would tend to agree with you on that. that's one or two of the many stocks. of course we're going to be following this morning. by the way, a company controlled by head fund manager dan loeb is

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you're watching cnbc's "squawk on the street" live from the financial capital of the world. we have the opening bell set to ring in a minute or half or so. i can't see the clock but i'll take a gander on that and a guess on that. what's our focus today, mr. cramer? >> well, i think the two dow stocks, walmart and cisco definitely weighing on the market. at the same time, i want to urge people to recognize -- cisco was not a bad call. it's just that john chambers chose to be down beat on his outlook. that shocked people given the fact that cisco spending was supposed to be up. cisco is as big in terms of trying to be unwheelie as walmart. there's always some weak spots with these gigantic companies. >> there always does seem to be that, right? that's part of the law of large numbers and being so enormous. does that mean you simply should stay away from them in your portfolio? >> 12 times earnings, cisco. wait until it gets hit. look at the chart. john chambers is a closet technician because every time it

gaps down he talks it up, every time it gaps up, he talks it down. that's been the way. >> there you hear it. of course, the opening bell and over at the headquarters, you can see a close-up of realtime. largely red on the board. 500 stocks that make up the s&p at the big board, of course, as we told you. third point, reassurance, it is run -- well, it is a part of the third point hedge fund which is run by dan loeb. celebrating the initial public offering. he's not the ceo of the actual. >> you know when you're old, a guy you played football with in the backyard and your kids went to elementary school with, he's a ceo, cfo, wow, i'm an old guy. >> john burger, chairman and chief underwriting officer as well. the breast cancer research foundation, finding a cure for

breast cancer. looking down here. down .7% already in the s&p. another not particularly good open. i don't like groupon. maybe it's not time. i'm noticing it down 7%. to bring that up out of the blue. >> ever since mason left that thing, it's been on fire. >> volatile stock. let's look at the keys we've been talking about this morning. start with walmart and just see how that thing is opening at this point. you can see it is down -- >> 2%? >> yep. >> cisco is getting hit good, down seven. >> it's an ugly tape. we have not had a leader in a long time. when you're led by the kohl's stocks. what does that remind you of? it reminds you of the middle of 2008. i mean, that's what you're left with in leadership. >> or potash. >> killed that cartel. >> killed -- i'm saying that was the fertilizer. >> then the justice department killed the airline cartel. what in the heck is going on? all the great or cartels are

leaving. >> where did you like cisco? >> 22. 12 pe. which is the same as microsoft and intel. they're in secular decline. that means the long-term decline. and cisco is in secular upswing in a cyclical downturn for this quarter. it was broit on by the outlook of chambers. he could have done the same exact conference call. i think he just wanted to talk the stock. up 30 mrs going into the quarter, guys. >> what do you think about the idea that some of these old tech names. intel got downgraded today. over the last month -- >> you're oh tech. micron has been the hottest stock, now it's downgraded. i think people want to say, you know what, i want to be careful here. i want to clear some victorieses. analysts declare victorievictor. i had the ceo of agnet on the other day. 100,000 customers. business is strong for them. this was on "mad money." i don't want to leave this

market but i recognize people want to take profits. it's not a bad idea. you can't want walmart to disappoint. >> from a tech standpoint do you want to be now with the facebooks and the apples and not with the intels and the microsoft and the cisco's perhaps? >> i think that you don't need to leave the latter but the latter disappointing in earnings and the former a ellie have great secular growth. chambers' terrific conference call until he gave the outlook. you want to be in mobile, you want to be in cloud, you want to be in storage. you just mentioned the companies that have that. that's where i want to be. social, mobile, and cloud are the holy trinity of the next five years. you got to have them. where is intel's social mobile cloud? >> it's somewhere. >> is it? >> well, yeah. >> it's in the clouds. >> yeah. it's coming. >> on that note we should -- i mean, weakness from cisco rolling over into the likes of hewlett-packard which is down about 2.5% this morning. microsoft, to your point, down 1%. >> how much is hewlett-packard

up going into today? >> it's very -- 90%. >> huge number. >> shouldn't there be a bill shnitzel there? >> yes. >> that's what i'm saying. 34% is a lot for a cisco's look going up. >> dell, david, is going to, what, announce after the bell today, and you know, you know that's not going to be great. >> no. >> that will not -- it's only a question of how bad it will be but at this point you've got a 13.88 deal. voting standard that's been changed. we do have a challenge still coming we'll see on friday, i believe, vice chairman is going to weigh in on that. carl icahn challenging a number of things. but it does look highly likely that deal will get done. the stocks should not react one would expect. none the less, we will get a look at how bad things continue to be and whether michael dell has been right in saying we -- it's terrible, it's awful. we've got to do it all in private. >> one of the things that's really hurting them, by the way, is prices did not come in.

flash prices haven't come in. the inerds of a pc are not going the right way. >> they were taking a share at no docosts but reporting a prof, too. >> no one talks about them but they should. >> no one talked about samsung and suddenly -- one and two. >> samsung, suddenly people are using -- just be aware that some of these foreign companies are doing very well and we don't focus on them enough because we don't trade them. >> you're absolutely right. when it comes to that area, what lanova has done in terms of taking down margin and price and crushing the likes of competitors who are trying to go down there with them is very important, or choosing not to and therefore focusing on the high end. you're right. >> reset. markets resetting. get a little market -- get a little decline here. a lot of fund managers groups guys speak to, well behind the market. they come in or do they short?

>> guy behind us waiting for the opening of his ipo has done well. i was membersing earlier how the offshore fund attend of july was up 16%. >> yeah. >> so dan loeb has had a good year. some of the other big fish in the hedge fund business haven't had such -- >> not as good. >> we also have a year right now where the s&p is up or until today. 18%. >> that the not -- i'm sure in his world, not -- >> you want to out-perform. although when you're running 10, 11 billion, you can be up 18, 129%, running 220. >> i took a lot of heat yesterday speaking to you gisz about how carl icahn is doing fabulo fabulously. is carl icahn up 16%? >> he is. >> all on his own capital. >> i just think that those who were shooting at me yesterday, icahn, what does he know how to do? who is he? he is the hottest investor in the world right now. that's who he is. and he's following me on twitter now because he's following you guys. he sent me a nice e-mail and he

said he took hombridge that i said akron was cool looking but i said nothing about his looks. he is james bond of hedge fund managers. >> from one bond to another. >> he does like a nice martini from time to time. >> starting about 8:00. let's get to our own bond on the floor of the new york stock exchange. bob pisani. always a sharp dresser. bob? >> and you see dan loeb behind me just chatting with him. they all seem happy. reassurance companies rare. this is the first reassurance company that's going to go public since 2007. the last one was valid, symbol was vr. believe it or not it's been a six-year drought for reinsurance companies. just opening. $12.25. price was $12.50. just below the initial price. $12.25. that's what the price opened at. by the way, from what i can see this is the last ipo on the

calendar for august. we had a whole slew of them in the last two weeks. 14 by my count. good number for the month of august. bottom line is i think this is going to be it until the beginning of september. mean why, the choppy economic data really smack things around here. ten-year and the stock stock market overall, ten-year yields moved up on better than expected jobless claims numbers. the ten-year moved down on the july industrial production numbers and xat ycapacity utilization. walmart down. kohl's interestingly is up 4% even though it guided lower. i think what's going on here, thele aing around. the same store guidance they gave and this is a kohl's that i'm talking about. was 0% to 2% for the current quarter. and i think a lot of traders now feel that there's some hope the guidings that kohl's gave even though it was disappointing may be on the conservative side. i think that's why kohl's is up overa overall. david, you had david berman on from berman capitol on monday talking about estimating the numbers would be terrible.

so far he's been right. he made an interesting point. and i talked to him this morning. he reiterated the idea here. it's not the consumer that's necessarily so weak, it's retailers themselves that are weak. consumers are buying cars and houses. and they're buying goods on the internet from companies like amaz amazon. and they're buying home improvement products meches very high on home depot and lowe's. they're going to be out early next week. they're not buying as much from the traditional retailers. he reiterated to me this morning we ought to be making a difference between genuine weakness in the consumer itself and the consumer shifting some of the money around right now. meantime, remember here, the numbers here on walmart were amazing. sales lowered to 2% to 3%. previous guidance to 5% to 6% gain. that's amazing when you talk about 20% of retail sales in the united states. david, back to you. >> all right, thanks very much, bob. yeah, berman's call has been a good one so far. i do want to look. seeing it right there. a lot of hedge funds took this name up or i should say were

making up the book here. >> right. >> ads you might expect. third point hedge fund. high reinsurance but they are not atypical. there are a large number who have created these reinsurance companies. a way to have noncorrelated risk as you look at dan loeb to the capital markets. way to leverage a capital structure. you know what it means for that guy there? it teens carmen and capital at 2-20 and that will put a smile on dan's face all day long. >> warren buffebuffett? >> no taxes, by the way, because they're all bermuda based. >> berkshire model. 13 fs. insurance money. >> yeah. >> and so, listen, the -- they love permanent capital in the hedge fund business. it's money. let's move on, if we can, to a faber report from this morning on a name in the biotech sector that has certainly been a focus

of those who play in the risk oh oercht space, if you will. i know, jim, you've been wondering what's going on there. on onyx is what i'm talking about. you may recall not that long ago amgen, still no clear where the weak is from. 120. the company put itself up for sale. here we are a while later with the process having moved along. and a number of developments that i can confirm having been reported elsewhere. there's $130 deal on the table from amgen more or less, but there is a condition that amgen put on that saying they would like to unblind data from a trial that's only half done. it's not that important at trial. it is in -- this trial is called the focus trial. it's always been viewed as somewhat risky at least by the street. the trial is best supportive

care in myeloma patients. they have so many different trials going on. by the way, this is from isi schoenebaum who is by far considered the ax, the guy with the most insight. he said, listen, this has always been viewed by risky by the street. best supportive care and how it's going to do in myeloma patients. you can't unblind this. there's no way. if amgen is really asking for it to be unblinded they know that's not a realistic ask. >> you unblind it if it turns out this is trdramatically life ciaing but you're not going to unblind it to go down. >> so they can know. the question, is you put a condition on it you know is not necessarily one that can be met. by the way, people who -- they may be freaking out but those who know the company well are not concerned about this particular trial. and so -- >> didn't amgen feel that other companies were going to come in?

my sources tell me that no one came? >> that is the question. if amgen is the only buyer is this simply a price negotiation and a we to potentially move the price down? that is what he believes to be case. he says, it's just a price negotiation at this point. my conviction is that amgen is still likely to buy onyx. and this comes from my belief that a focus trial failure, even if it were to be the case, is manageable. that's what we've got on onyx. t it will be a big deal. it could happen very quickly should they say, okay, forget that condition. it may be that amgen -- run by a former banker, a good one. >> right. >> is just, you know, doing what they can to say, yeah, 130, maybe not. >> onyx has some life-saving technologies. important to say it's a real company and that technology would give amgen the growth that amgen does not have. >> amgen's market cap has only gone up since we first learned about this. let's shift to the bonds and dollar. rick santelli at the santelli

group in chicago. >> wow, interest rates continue to be on the move. we've talked about how these sticky interest rates definitely didn't seem as though they were getting ready to do any major retracements. look at the 24-hour five-year note. it did not take out their july 5th high yield at 161. even though there are only slight curve implications today with the ten-year yield over performing to the upside, downside of price, not huge. this is really the fight, five versus ten, playing catch-up a bit. if you look at a 24-hour ten, made it up to 282. that is the -- well, if we had closed there, it would strb a fresh high yield, closing back more. it has moderated a business. up eight basis points. you can see what i'm talking about, july, august, 2011 on that chart. let's look at the boon as we monitor european rates under the notion that maybe things are not

perfect but they did score a gdp victory yesterday morning and, yes, those yields keep moving up. take that chart back to march of 2012 to see the last time they were at the zone. now let's switch gears a bit. always like to look at a little foreign exchange. pretty easy today. if you look an at annic tra day dollar index. the same pattern as interest rates did. one it came out, we saw a drop in claims. rates went up. dollar went up. as we saw, maybe the most important bit of data today, treasury international capital flows down almost 67 billion. always two months in arrears for june. it showed a record amount of selling in treasury and notes, 40 billion. last month close to 30 billion. monitor this, the bigger dollar index chart shows bullish by technicians. back to you, david. >> thank you very much, mr. santelli. bond report. kelly evans joins us here. i have a feeling that i know what you may be talking about. >> rick keyed that nicely going over what's happening with rates just now because if anyone is

wondering what's happening with stocks down, down 160 points or whatever. it does have something to do with what's happening in the ten year. we've got to talk about the ten year. we saw because of things improving in europe already that was pushing for example, german bond yields higher, and putting some upward pressure on yields back here at home. then we got the jobless claims this morning showing the nice decline and one of the lowest levels in years. that gave us another leg up. as one of the analysts put to me, now the question is not so much can the economy handle rates here so much as what keeps us from hitting that next key level of resistance on the ten-year, is it 2.85%? we've already been at $2.82% which is significant. we're going of see stronger u.s. fundamentals and probably see some pain continuing in what's happened this month which is in angst to see him at the journal. utilities down 2.5%. the homebuilder etf guys are on 6. 6% this month.

so the real question becomes, are people going to continue to rotate out of the areas and into place where's they see obviously that they can perhaps benefit more from this and move higher and ultimately, and we'll get there, is the u.s. economy strong enough to handle rates at these levels or are some of the retailers this morning giving us a sense of the damage that comes from this readjustment? >> we've talked affordability which and we've gone back and forth. really, the consumer is not in a position to be able to afford 30-year mortgage. >> look, that rate that it's at now isn't bad but they missed the market. some people hope it comes back down. also, it's a little tougher to get the mortgage that you want it because it's in flux. the bankers aren't saying, sure, it's done. the bankers are worried it's really going crazy. it's tougher. >> just got to keep an eye on what happens with these yields now. have we reset? is this thin august trading and people are pushing this thing to see how far it can go?

do we wind up capping things here? if we continue to move higher equities are going to run into resistance. >> total agreement with you. that's what i worry about. don't have any leadership. what stock is leading this? you know? peabody called. there's one. >> we don't want that. >> secular decline call. >> yes. see you back in a bit. coming up, an exclusive with cowan and company ceo jeffrey solomon. you will see what he has to say about the current market climate. take a look at the climate this morning. a little chilly p in here. dow is down 165. s&p down as well 1% plus across the board. those are the losses we're seeing right now on the street. we're back in a couple of minutes.

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. as you might imagine, not a good day tort markets. across the board red. 10, 10, 10, all red. led by arksz you might imagine, walmart certainly not good. see it there. we're down 1.2% on the dow and about the same on the s&p. shaping up to be a not great week but that doesn't mean there aren't a lot of opportunities out there. we're going to talk 6 and 60 with cramer right after the break. this man is about to be the millionth customer. would you mind if i go ahead of you? instead we had someone go ahead of him and win fifty thousand dollars. congratulations you are our one millionth customer. nobody likes to miss out. that's why ally treats all their customers the same.

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>> micron. >> this is not an expensive stock but all tech is coming down. >> foot locker, fl. >> upside. i just mention this because people are talking about who is going to run jcpenney. >> right. >> ceo. by the way, christine day i think is the only person who can move jcpenney up. >> interesting move for shul.

pulte home. >> whipping boy, look at this, best performance stock in the s&p last year. horrendous now. >> i know. >> i point out there are some tech companies doing well this is is a company spun off by hewlett many years ago. doing good. >> always acquisition. carnival? >> sure enough, goldman goes whole to buy. just a coincidence. >> and estee lauder. >> can i tell you, sell to rich people, you do well. >> that says a lot. >> doesn't it? didn't matter. the people who shop at walmart are the only ones who got hurt. >> interesting economy we got. >> isn't that a shame? talking about "mad money". >> when you go to a store and you get that store brand, it's all made by perrigo. looks all like pep to business no mol. can't wait to hear them talking about the frugal consumer.

>> they're going to be in ireland. they're going to have a tax rate that is virtually nothing. i want to hear from this guy. >> i hope they talk about the deal. >> they should. 6:00 and 11:00 tonight. jim, thanks. you're off tomorrow,i think. >> yeah. >> get it every so offer. >> out with my daughter good. excellent. enjoy. we are moments away, by the way, from a double dose of breaking economic news. fed and sentiment, this on what is shaping up right now as a rough morning for stocks. we've got a little bit of time left though. [ male announcer ] come to the golden opportunity sales event and experience the connectivity of the available lexus enform, including the es and rx. ♪ this is the pursuit of perfection. so you want to drive more safely? of smart. stop eating. take deep breaths. avoid bad weather. [ whispers ] get eight hours. ♪ [ shouts over music ] turn it down! and, of course, talk to farmers. hi. hi.

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welcome fwook "squawk on the street." our august read of philly fed index, 9.3. like empire, a miss. a bigger miss. looking for 15. last look at 19.8 was rather notable. it was the highest level since march of '11. this backtracks on that a fair amount. but once again, you know, this survey isn't necessarily the end all but traders, this someone of theirs favorite regional fed manufacturing indices. back to you. >> rick santelli, thanks very much.

steve liesman joining us from back at hq. on a day where the dow is down. >> let me tell you about the philly numbers. really mixed report. new orders were up, unfilled orders were down. number of employee were also better. so really mixed report inside it. and that, as kelly suggests, really capping off a mixed day. she told you industrial production was unchanged. looking for a gain there. cpi right in line. 02 on the headline. 02 on the core. claims though that big surprise here. 220,000. empire state was 8.24. it was worse than expected. the employment number inside that was a little bit better. look at the inflation numbers. you can see that the core and the headline are both in line here. really stabilized here. maybe taking the edge off that disinflation or deflation concern that was out there. and one more thing, this is the

good news chart. forward moving average of the claims number. down to the lowest level we've seen since '07. the kind of levels we hit on the way up we're hitting on the way down. some economists, for example, john at rdq saying this makes them more optimistic for the reports and makes them more confident of a september taper. so that's something that i think the market will be factoring in. good news today looks like it's bad news on the economic front and bad news on earnings, also bad news, simon. >> but that is really front and center, isn't it? it's the employment figure that's come through today at a six-year low. you see the yields spiking again to, what, 2.8% on the ten year. so the bond market is selling offer and you see that reaction again, more than a triple digit loss again for the equity market tapering. front and center, steve. >> i also think, simon, about this number. when i saw it i wanted to make sure there was no extent you waiting circumstances. this number is real. we moved off that 350,000 numbers on claims that gave us

200,000 on jobs. so now maybe there's a sense, 2.25, maybe 2.50, maybe something that's out there. the fed has to be factor that in for sure. >> fascinating to see the homebuilders also selling off today because mortgage rates are going higher. in the midst of that, the latest survey from the national association of homebuilders. diana olick is in d.c. with those figures. >> that's right, simon. homebuilder sentiment rose three points to the highest level in eight years. now hitting 59 on the national association of homebuilders sentiment index. 50 is the line between positive and negative. of the three components the builders are saying current sales are much better, up three points. future sales expectation is up one point. fire traffic was still unchanged at 45. that's the only component of the index still in negative territory. positive momentum could be slowed by tight credit. low supplies of finished lots and labor. but also of course as you said, we're talking about higher

mortgage rates. that's why you're seeing this disconnect between the stocks of the homebuilders really tanking versus homebuilder sentiment that is confidence going forward in the market. obviously you'll have a lot of smaller private homebuilders part of this confidence index and not so heavily weighted by the public homebuilders. again, the public homebuilders are not seeing the kind of new orders that the market had expected and we did see a lot of buying leading up to the housing recovery. some people saying that the homebuilders were overbought and now that we see a higher interest rates, that concern really weighing on the stocks. but apparently not on the confidence of the smaller mid to small size homebuilders, private builders who are getting a lot more interest from buyers in their markets. >> diana, it is fascinating. you would have thought with just some of the headwinds to take a step back. instead, at new eight-year highs. remarkable. now we shift our attention to walmart. the retail giant reporting an increase in profit but slashing its full-year outlook.

that news pushing shares into the red there, down 2.2% today. courtney reagan with more details on this one. >> good morning, kelly. markets paying attention to the large retailers when consumers and the u.s. around the world are curbing spending. the biggest concern is that walmart doesn't see it abating any time soon. walmart reporting earnings in line with expectation know revenue fell short by $2 billion. also slashing full-year guidance for earningses and sales. registering a second consecutive negative quarter, down 0.3%. reversing a five-quarter positive streak. traffic while improved from the first quarter, still down half a percent. walmart says traffic and comp sales did improve throughout the quarter. company executives cite the 2% payroll tax hike, lack of inflation, cooler than normal weather, vowing to more tightly control expense going forward to

compensate for the lower sales. expenses related to the foreign corrupt practices act, compliance and the investigation higher than expected for the quarter. walmart cfo said that early reads on back to school for apparel and home at least, quote, seem to be good and encouraging though it is early to give a read overall. according to nelson and pd estimates walmart gained market share on food and consumables over the quarter but lost ground in tv category has electronics were being challenged. separately and somewhat surprising after macy's miss on wd, kohl's reported in line with street estimates though the department store did trim the full-year outlook and elevated inventory remains a concern. simon? >> okay, courtney, thank you very much for the detail there. let's continue the conversation about walmart. the director of furnishings research at raymond james and he joins us to analyze exactly what the world's biggest retailer is turning is now.

bud, importantly, you think this is a buy opportunity. >> yes, i do, simon. we upgraded the stock during the last quarter, believing that it was a good place to hide during a reasonably tough economic l climate. we still think that. we thought that it was a good time to upgrade. and actually we found some things to be positive about in the quarter, so we also think we're correct in our assessment. >> i'm just curious as to the statement you make that it is a good place to hide in a difficult environment. over the past year, the last 12 months, the stock's up 4%. the market has risen by 20%. this has been a lousy place to hide. hasn't it? >> you're right, compared to where it's been. we don't want to go where it's been. we want to go where we think the market is -- where we think the stock will go. that's what we will take advantage of, the decline in the stock. the stock had advanced

significantly higher than where it is now. it's come back into us. at this level we thought it was a good time to start to upgrade the stock to an overweight position. >> even if you assume that walmart is an xengs ali well-oiled machine, when they come through and say that our expectations for the back half of the year up through a lens of cautious consumer spending, even they don't see presumably a bright environment. >> that's correct. and i think that's a good place where you have to put money to work. this is a good place to be even in a cautious environment. i think our estimate for the full year going into the report was 5.25 which is still within their guidance. i realize consensus was a bit higher than that. but we actually found some things to be positive about in the quarter. we like the fact that looked like traffic and comps in the u.s. were improving during the quarter. even though the international operations still have a lot of work to do. other they're focused on that. >> bud, we are talking about a

company that cut its sales forecast though in half, a big cut. >> cut it short by about $14 billion. about a third of that is -- a third of that is currency related. but you're right. sales forecast. >> i understand. >> right. >> you sound quite dismissive of sort of any sense of bad news here. you upgraded the stock a month ago. surely you had to be surprised by these results. >> we were not -- we were obviously surprised a bit by the cut in guide again. but remember, what the company said on their call is they're really forecasting guidance, forecasting sales to a cautious lens right now. and i think that's the right way to do it. so they're trying to be as careful and as cautious as they can be. and our view is to try to buy the stock when you think that you have a lesser downside risk and a higher upside potential. what we suggest the clients do

is overweight the stock in their portfolios. this is a big company. >> it's a clear $84 is the price target. thank you very much for the contribution. it will be interesting to see if we can achieve that. a big day there. >> thank you, simon. >> thank you for the view. now, another large cap bellwether falling sharply today, cisco. that company announcing plans to layoff 4,000 employees along with earnings that are shy of what the market was looking for. seema has more from the nasdaq. >> that's right. cisco's fourth quarter earnings beat estimates by a penny. profits rose 18% year over year thanks to upbeat demand in switching servers and wireless business. it was a tech company's cautious outlook on the road ahead that got the street concerned. cisco's results are many times used as barometer aztec spending. john chambers says it's challenging and inconsistent. but he also said, quote, the ability to be the number one i.t. company sin creasing. cisco unexpectedly announced

plans to cut 4,000 jobs or 5% of the total workforce. second round of cuts this year. the last one was in march. cfo frank said the company expects to take a charge of roughly $515 million on a pre-tax basis to cover the restructuring costs. now, today's trades, cisco is the worst performing stock in the tech sector. goldman sachs says to use the pull dals back to buy the stock, it's more macro driven than company specific. scott, back over to you. >> all right, seema, i'll pick it up from here. coming up next, ceo of cohen and company joins us on his take on the markets. important day for that ten-year yield. he'll tell us where he thinks things are headed from here. [ male announcer ] come to the lexus golden opportunity sales event and choose from one of five lexus hybrids that's right for you, including the lexus es and ct hybrids. ♪

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take a look at what's happening here for the markets. another day of triple digit declines. the dow dragged down by walmart and cisco. the ten-year on yields have moved north of 2.8%. let's get foou views from jeff solomon joining us here at post nine. jeff, welcome. >> good to see you. >> we wanted to start off because it's such an interesting day this markets. when the ten-year yield moves this spring at the lows up to 2.8%, what does that mean for you guys? >> i think it definitely means that people have to readjust

where they're going to be asset alloca allocating. it makes it a little more difficult for people who crowded into the dividend yield trade, a big trade for a lot of people. but i also believe that attend of the day these are long-term trends. gap up, actually create a significant amount of pain for investors in fixed income and so as a result they're looking at equities. >> banks, though. we saw banks really take a hit on a lot of those securities they had on their balance sheet. has this really caught a lot of people off guard? you guys included. >> no, it didn't catch us off guard. we're not running a big balance sheet like a lot of global investment banks are. those are mark to market losses. i'm not terribly concerned about that. >> can i pick up something that you just said. >> yeah. >> as a result of the sell-off in fixed income, people were looking at equities. i think we're breaking that. this is the second day now that we've had a big fall, more than a triple digit fall. as the bond market has been selling off over the last few weeks the equity market has also been gently selling off.

now it's accelerating. we are accelerating the sell-off on the equity market. the great rotation is not rotating at the moment. >> well, i just think there's no volume in equities. i think people are on vacation. i think the quek at this timity market is on vacation. no catalyst. just washing around. we'll pick a view economic things. there will be a few company earnings or things that may come out of the market in one direction or the other. hard to say this is the beginning of a trend. i don't think trends begin or end in august. there's not enough conviction. >> the things out there seem to be more risks can anything. right? we have the debt ceiling is looming. the taper is looming. china is looming. i know everybody says europe is bottoming but there's still the risk that anything could happen there. >> i think there are no knowns and there are no unknown 'what you just mentioned, the budget crisis is looming. we've seen that play before. as long as it goes according to what everybody is writing about.

we site it coming. i don't think the market reacts to it until something takes a -- veers off course. my view on that is that, you know, these are always on the market, always fear in the market. it creates dips and buying opportunities for people. this could be one of them. but, you know, i don't want -- this could be one of them? >> sure. >> come on. is it one of them? >> look, we've had a great run in equities. we've had a great run in the issue market. i look at the new issue market as an indication of where market sentiment real will is. we had close to 61 ipos -- actually we did have 61 ipos in the second quarter. 37 of them already in the third quarter. that should give you there's capital on the sidelineses looking for investment opportunity. i look at the ipo market as bellwether for people sentiment. that seems to be strong. >> what are you you see ing there? i remember the cowen name from years ago, biotech companies the firm used to take public and

focus on the middle market. what do you say now? >> we're seeing significant demand and significant demand in the health care sector in particular. if you look at the sectors that have done well, health care is right at the top of the list. certainly the jobs act last year has helped people to get their heads around on the value of being public and capital formation really critical. and so we're definitely seeing that there's a better method for people to access the public markets and good science out there. so we're actually seeing significant demand for health care, good health care companies. especially in biotech. >> you know, cowen and ramius, how is that going? >> good. >> are you happy with having done that deal? >> it's been more challenging in the environment than i think we thought it would be. but i think we're in very good shape. thes asset management business is doing well. things are doing well at cowen. making some pretty significant inroads on market share, where we want to be. and i'm feeling pretty good about it. >> asset management, they are reinventing themselves, asset

banks, broker dealers reinventing themselves after the crash as investment asset managers, basically. >> they started as an asset manager. >> we did. >> is this the model? is it the only model that can really work now and why? >> i think you have to have balance in your revenue streams. look, capital markets revenue streams are inherently more volatile and there's been a lot of challenge in the traditional investment banking model, as people try to reinvent them. asset management has been a place where you can go and find a fair amount of stability. management fees come in. as long as you can build a good brand and perform over an extended market cycle people people control and trust and believe in the brand. it's a stable revenue base. >> i can go back on one thing you said. the rush to ipo you said was evidence that actually there was demand for those ipos in the market, in those available capit capital. isn't it more to the point that people who rushing to exits for fear of where the market might go?

>> any time you have buyers of ipos there's sellers of ipos. >> the decision to go to ipo is the decision of the seller, not the buyer. >> we've seen venture firms having to put up more money at the ipo. in many instances we're not seeing the sellers. in the case of the private equity firms seeing the companies delever. i think it's a good thing. frankly, i like to see more companies delevering because it creates a stable base in the financial system and makes us less likely to have the volatile we did in '08. i feel like it's a a healthy environment right now for equity capital formation. >> jeff solomon from cowen and company. thank you for stopping by. >> that said, markets are sharply in the red. dow down 200 points as you can see. more on that sell-off after this break. with the spark miles card from capital one,

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that's right. we're down triple digits on the dow jones industrial average. off over 200 points. in fact, the nasdaq the hardest hit of the indices. dicaprio jo bob pisani joining us onset. >> put up the ten-year. we were just talking about this. when interest rates move up, the ten-year is spiking up today. i was just on the phone with one of the well-known housing analysts and she said, look, this very typical. we've had this happen before. interest rates sensitive stuff. tends to move to the downside. put up that ten-year. there you are sitting there with the two-year highs. it doesn't help when you have two big dow components disappoint today when you have cisco and walmart disappointing overall today. we've had fairly negative commentary in the retail space recently. i think it's very interesting. home depot is down. most of the analysts and traders are very big on home depot because it's still very big in the home improvement space. most traders point out cars,

autos, home improvement. there's your strength in the retail sector. yes, your traditional retailers are not doing well but others are. even home depot today is down. disney is a big decliner and that doesn't have a lot to do with anything that we're talking about today in terms of the retail space or cisco. look at the seconder. it's down across the board. 1 1/2 percentage points to the downside. even consumer staples are weak. when you see this, not just cyclical groups but more consumer oriented groups to the weak side, that's general market sell-off. i would say the volume is not heavy. we're not seeing big spikes in volume. big spikes in etf trading either. >> haven't seen any volume at all. >> no. makes you wonder what t it would take for people to really start worrying. >> they're not here. they're at holiday. >> art would say the bids would dry up. the bids have simply dried up. nobody is buying. you t get snowstorm normal leve

selling pressure. heavy volume where people are trying to get out under any circumstances. >> how much of this do you think has to do with the fact that jobless claims are the best level in however long couple of years or whatever. >> six years. >> it's the good news is bad news phenomenon yet again because there's the fear of the taper in the market despite what anybody wants to say that the market has priced that in. it clearly hasn't. at least from an initial reaction. >> i think the problem is the market can't figure at what's the right interest rate? what's the right rate on the ten-year for everybody to be comfortable with now because we don't know -- while everybody believes there's a taper coming they don't know the iks tent of the taper. they don't know whether it's going to be 85, 75, 65. >> it makes a nonsense of central banks saying we're going to seep interest rates low for an extended period of time. from around the world, western europe as well the market rates at the ten year is moving higher. you can anchor short-term rates. if t five-year or ten-year is

moving up that is clearly going to take demand out of the any. >> i want to point out this strange dichotomy and it was mentioned earlier in housing. we t dot terrific housing sentiment numbers out just a short while ago. 56. highest since february -- i have february 2006 right now. the itb which is the index here for housing stocks is down 22% now off of the highs. you're now talking about real correction. >> because you have to cut prices. raising prices. now they have to cut prices to sell inventory. >> it's a rather odd to see this severe sell-off that's going on. i'm waiting for somebody to come out and argue they're over bought here. i'm going to talk to them. i had to cut the conversation short to get down here with her. >> we appreciate it. we also think, bob, that a lot of people who have been telling us they're waiting for a correction to buy, now the proof will be in the pudding. bob pisani, more from him coming up waez keep an eye on the market here. now just off the lows, still down almost 200 points though. all right. cisco shares plummeting as the

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welcome back. i'm sharon epperson at the nymex with breaking news about the natural gas storage levels. energy department report that natural gas storage levels rose by 65 billion cubic feet in the last week. this was an increase in

injection into storage that was expected but not as much as was expected. analysts surveyed by plex sected i object between 68 and 22 billion cubic feet. we saw that uptick ahead of the number perhaps in anticipation and we are now looking at natural gas prices trading at $3.40. up about 5 cent tons session. traders say technically this level right here could perhaps be a breakout level to the upside for natural gas if we see a settlement price around this $3.40 level or above. traders are looking at this as a bullish number and increase of 65 bct for natural gas. keep your eye on the weather. tropical storm on the islands. traders will be watching as well to see for its el dwopmentes. are looking at temperatures there a little bit cooler than normal for this time of year in the summer so that is pressured natural gas prices this week. right now this number on storage

levels are a bit bullish for the markets. >> people are going to look at natgas again for support in the market storm here. speaking of which we want to look at shares of cisco now down nearly 7% after a weak forecast in earnings report last night. and word to the company is announcing 4,000 job cuts. joining us now at channing smith, managing director of capital advisers ard core portfolio manager at capital advisers growth fund. it owns 390,000 shares for the company. andis an analyst. jim, first to you. your reaction to the quarter. to the job cuts in particular here. >> yeah, absolutely. i thought it was a solid quarter. concern was the forecast going forward. but honestly i think it's more of a company being cautious in the midst of a slow global recovery. so i wasn't too concerned. the job cuts was a little concerning. again, i think it's them responding to the marketplace and where they see areas of growth. really moving to the resources to area where's they think are going to provide more recurring

revenue growth versus one time such as product growth. >> jim, if the shares were up 7% right now i would say fine. they're down 7%. that's a huge move. so clearly there's something here beyond what you're describing as a solid quarter that has most of them t. market concerned. >> right, again, it's the forecast. also if you look at what the stock as done for the year. the stock is up to lot this year. yes, we've got a little bit of a pullback and people concerned about the job cuts. again, going forward where i see mobile data growth and data growth going overall and where service providers are going to have to spend on the networks over the next year or two. that's why over the long term, yes, it's a decent size pullback today but overall not that concerned for the longer term. >> channing, briefly, because we're waiting remarks from the president here any second, but your fund is 390,000 shares. off 7% today. are you choosing this as a point to load up? >> yeah, we're going to look at it. we think it's a buying opportunity here at 12 times. look, to echo your other guest's

comments it was a good quarter. earnings met. revenues met. operating trends were in line. it's a good quarter. forecast was weak. they did mention in the call, management mentioned that things were a little lumpy. so inconsistent growth patterns, that seems reasonable to us. if you look at the economic indicators we've been all over the board. we buy into that. also the big concern on layoffs, if you look at the structure -- >> i'm sorry, channing. i moust be looking at a completely different set of figures than you. i thought that in this quarter orders from asia declined by 3% and business in china declined by 6%. and yet i see john chambers who is a master of tap dancing in interviews suggesting that it doesn't really matter if one business is soft because it's such a big complex organization other parts of the business will make that up. and yet asia is clearly a problem for cisco. other networkers are also in negative territory today. >> and i would agree with that

simon. if you look at the u.s. and europe, they were very strong. asia was clearly weak. japan was extremely weak. china has been weak. so, yeah, from that region the numbers were weak. if you look at the u.s. and europe though where the majority of the business is, very good numbers. we think that china, seems like that region is turning. well see what happens in japan. i think the jury is still out there. but if you look at rev ney growth there was over 6% year over year, simon. >> when the man says actually i'm going to cut 5% of my workforce because we've got this middle section of the workforce that isn't performing, we need to be more responsive, you would also say there isn't a fundamental problem with this business, either? >> here's how i would look at it and there's going to be a lot of different opinions on why they did that. >> sure. >> if you look at where the business is going and you buy into what john chambers is saying at internet, everything, is where they're going to see the revenue and earnings growth, it makes sense. look at the acquisitions. last 15 acquisitions, 14 of them

have been in that internet type of business. look, routers and switchers, mature business, grew 3%. but that's what they're getting away from. they're going to have to reinvest t in the faster growing areas of the business which are internet of everything. it makes sense that they would pair back some en routers and switches and invest and hire more into their faster growing business. we'll is have to see how that plays out. simon, i'm sure it's a little bit of give and take. i'm sure they want to reduce the workforce and reinvest some in the new businesses but it probably a mixture of both. >> jim, is it too early though to take a stab at this stock here here? i know you maintain your buy opinion on the shares. others were would argue, jim cramer sitsing next to me just a short time ago said 22, 23, may be good entry point but right here, not yet. just simply not yet. >> right. i still -- i like the shares, i have a buy opinion.

we'll see what happens over the next couple of days. what goes on with the whole sector. obviously weighing down the sector because cisco is the biggest player here. but as other guest alluded to, there are a lot of areas that i do like. i agree, i think they are investing in other areas such as security. ic i think they're going to be ramping up in that. and if you look at the global recovery, xecht for what's going on in china and japan, overall, i think it's kind of typical. you're seeing strength in the more developed countries, north ameri america, northern europe. emerging markets continue to struggle. overall, again, i think we're seeing a near-term issue. but going forward, i think you're going to be really happy with this company and i think over the long term over the next year or two i think you're going see pretty solid and strong growth. >> all right, jim channing sticking with his shares. we watch them down about 7%. moving on now to major news, president obama making a statement moment ace go on egypt. he said the u.s. will cancel

joint military exercises with egypt. to help us understand this, john harwood joins us live now from washington with more. john? >> kelly, it was a minimalist response by the president. you had some people including former advisers of his own saying that the united states should suspend or cut off military aid to the egyptian government. the president did not do that. he said that they were going to cancel those bright star military exercises scheduled for next month and continue to consult with his national security team on other steps. what he was trying to do was signal united states concern but not do anything to significantly weaken the relationship between the united states and the egyptian military. there will be more pressure if the violence continues. for now, this is all the president is doing. >> it's a dangerous position, though, john, that they find themselves in. on the one hand condemning the violence but on the other refusing to support the regime.

i it's almost laughable to suggest that there would be joint military exercises between clearly the military in cairo is otherwise engaged. >> it's a reflection of the decision. the u.s. government finds itself in. they believe that long-term the egyptian military can be a constructive force this that country, but right now that position does not make them look good and it's something the administration is going to have to calibrate as we go forward, as i mentioned, simon, rising pressure from some republicans, john mccain and others, to do more. they're not going there yet. >> and, john, the main question or at least one of the main questions has been whether the u.s. will cut off that $1.5 billion worth of aid, whether president obama will use any language drescribing what's bee happening there as a coup. is there any change in direction this morning.

>> no, not at all. they are declining to determine what happened in egypt a coup because that would legally trigger a cutoff of aid. they don't want to do that. there are other incremental steps, small steps they could take, a travel ban on u.s. tourists to egypt, that sort of thing. he did not announce those today. there are some more very small tweaks they can do. but until you get to that military aid, i think you're going to have heat on the administration, so long as the violence continues. >> sure. john harwood from washington there. we've gotten, again, the president's remarks. we will be getting video from that statement that he has made. >> we should explain this. it's because he's in martha's vineyard so there isn't the infrastructure to bring back the video as you would normally have. he's interrupting the holiday. it kind of takes a bit longer. i guess you can get the audio because that's where he does his weekly address sometimes but not the video. >> maybe we can get the video once it's recorded and sent out. >> we will. in about half an hour.

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welcome back to "squawk on the street." we're keeping an eye on shares of retailer kohl's which caters to that middle class shoppers. the company reported earnings that matched analyst estimates and even though comparable store sales rose less than what analysts thought, remember, that sales and stores opened at least a year. it was still a rise and that compares to disappointing results from larger retailers

like walmart and macy's. so kohl's, one of the real bright spots early on in retail earnings season. simon, back over to you. >> thank you very much. we're down 208 points on the dow. today of course two big earnings reports. walmart and cisco signaling a move away potentially from discretionary spending. what are we seeing in the "travel and leisure" industry? a key pulse clearly of consumer spending. we're delighted to welcome on to set adam goal seen, president f and ceo of royal caribbean. what is happening in the consumer in your space at the moment? >> i was hoping the only red around here would be my tie but i see red everywhere i look. i think the history of the last four years is grudging improvement in the economy, grudging improvement in consumers' outlook. people want to go on vacations. that hasn't changed. we talked about that here before. >> yeah. >> that doesn't change from one day to the next. so generally speaking, people want to get out and enjoy their holidays. >> there was a suggestion

earlier in the week that perhaps when we saw the bad results from macy's, what the consumer spends on is changing. less discretionary spending on outer wear or something bigger ticket items, which would include holidays, which would include cruises. what is happening with your price at the moment? >> well, i did notice that borrowings have been up for the consumer for the first time in like six or seven years. maybe you're right, it does suggest a different kind of trend. but we have projected positive yields throughout the year, meaning our revenue for this year will be higher than last year. that's been true for now several years in a row. they aren't huge advances but as i say, it's been consistent progress. >> it's a difficult environment for you, isn't it? and none of you, none of the three major companies did interviews when you came out with your quarterly results. i know you had a problem with the season, the fire and the effect that that impacted you're out look. moving forward what is really interesting is that you've chosen a strategy to celebrate

your 50 millionth customer. not just one event but something that's going to play out on all ships across the fleet. does this play out once or a continuous celebration, roping in social media, please post your wild moments that you've had in the industry? are you trying to change the conversation? >> well, we certainly would like to inject some more positive into the conversation. i mean, we're very fortunate as a brand to have 43 years of history generating fantastic memories for 50 million guests. family reunions, vow renewals, honeymoons, what have you. we would like to put some emphasis on that. for the next year we will be celebrating the wow moments that our guests tell us about, usually through social media. >> once on a ship or every cruise you will have a wow celebration? >> we're making the opportunity available to our guests to inform us of the wow moments we've delivered to them across all ships for the next year. >> a continual celebration for the next year on every cruise? >> yes. so many different kind of wow moments. dining, entertainment, excursions on the land. we want to hear about it.

>> tell me have you over-compensated in europe? i think you cut your passengers in europe over 10%. are you going to cut it another 10%? there was a dinner earlier in the week where i think somebody said you overcut in europe given france and germany, is that correct? >> i think that's a strong statement. we have retracted our capacity in europe as you say over a couple of years. we had really built up an aggressive way. unfortunately right into the macro economic difficulties that europe had. and that particularly effected the mediterranean rim countries. one of the advantages of our business is that the ships are mobile and we can move them to markets that are stronger and we'll continue to do that. >> things are not so bad. goldman's upgraded carnival which continues to be the eye of the storm for the industry overnight. your own stock has done very well over the last month. let me leave you with a gift of a question finally. in fairness to you. which is, the new ships that you have coming onstream, over the next few years are in your view a real game changer in terms of

cost, if nothing else? >> it's not just the cost. it's the value and the diversity of the experience. the incredible innovations that are going to spark -- >> like what? why should shareholders care? >> we continue to generate innovations that bring people to our ships and create demand. from all around the world. not just from the united states. so the amazing mechanical arm that's going to come up and take people 300 feet above the water or the simulated skydiving experience, those are special things that redefine people's idea of cruising. >> wondering what that thing was earlier we were showing. it looked like a space ship with people flying around in there. >> we were asked for years to put a ferris wheel on a ship which doesn't really work so this is our attempt to get people way up above the ship to look around at the ocean, the ship below, and maybe at the destinations. >> when did you last take a cruise? >> it's been a little while. >> oh, come on. that's not a good indicator. >> i'm spending time in maine, which i love to do. when quantum of the seas comes in next year i will be liing on her for weeks on end. >> are you looking forward to

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welcome back to "squawk on the street." let's get straight out to the cme group. rick santelli joins us. rick? >> good morning, kelly. you know, i think this is going to feel a little like a "60 minutes" episode, tick, tick, tick, holding a stop watch. i think it is time to stop and watch. it's about treasury international capital flows. tick data put out by the treasury, of course. and it was a big down number, close to $67 billion, the biggest drop in seven years. you have to go back to august of '07 to find a bigger drop. now, what does it mean? well, whenever i have issues about numbers, and this one is a complicated one, i like to go to the websites. let's go and look at what the treasury website said about this number, and i'll read, follow

along. the net foreign purchases of long term securities were negative $66.9 billion. after including adjustments, the overall net foreign acquisition of long term securities is estimated to have been negative $85.4 billion in june. if you look at our two big companions in the whole securities daisy chain, japan and china obviously stick out. combined they sold over $40 billion in securities. let's take it another step farther. why would they do that? well, let's just think about the term mark to market. now, i understand that the fed in all the purchases starting with q1 really caught a wave when interest rates moved down so they made some money there. it's a mark to market loss of

hundreds of billions. would. >> i was wrong years ago. i never thought we'd see aggressive selling by japan or china. just much less aggressive buying. we need to continue and compute with what this means at a time where the momentum of the market is usurping the management of the federal reserve. judge, back to you. >> mr. santelli, thanks so much. of course, big sell-off here on the street. all of the major indices down more than 1%. we'll have much more, of course, on that when we come back. [ male announcer] surprise -- you're having triplets. [ babies crying ] surprise -- your house was built on an ancient burial ground. [ ghosts moaning ] surprise -- your car needs a new transmission. [ coyote howls ] how about no more surprises? now you can get all the online trading tools you need without any surprise fees. ♪ it's not rocket science.

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it's time to build a better enterprise. together. welcome back to "squawk on the street." on a day where we're seeing the dow down more than 200 points and we're approaching 11:00 a.m. which is interesting for a couple reasons. usually that's when we start to see some of the selling pressure abate. so we'll watch and see if we get a similar pivot point and drift off the lows. but right now we're sitting towards the session lows. >> it's a combination of the bellwether blues 6 cisco and walma walmart, a little bit of a tantrum over the taper and whether that's going to come

and, of course, the ten-year. >> geopolitical unrest. >> sorry, i would put it on the data. i would put it on the employment data driving that -- driving losses in the bond market and then everything else obviously factoring in the two earnings reports you've had overnight. >> the good news in the job market. >> well, right. >> it is good news, but you've got so many asset classes that have to move to accommodate the fact that there's going to be faster growth. in theory the stock market should be rising. in theory the bond market should be selling off arguably more rapidly if it is really good data. >> take a psychological switch that's going to have to happen for the market to accept the fact that the taper is going to happen and that rising yields at this level as a result of an improving economy are okay. it's going to take a little time. >> people have said a rotation out of fixed income into equities mainly because a lot of people are trying to sell you equities. if you have a big dislocation in a major asset market, that's not

going to be a smooth transition even if that is the end game. >> there are going to be people who are buying treasuries today on this sell-off. >> absolutely. >> there will be. >> absolutely. >> do you see deflation in the economy? >> you certainly don't see inflation. right now inflation expectations are starting to rebound but the cpi, the ppi yesterday, it's clear if you are buying treas y treasuri treasuries, if you don't think the u.s. growth would be above 3%. you could make a decent case. >> for a long time people have advocated buying some of these stocks. why wouldn't you buy the treasury? >> got to keep that in mind as well. >> scott, thank you for your time this morning. more on "the halftime report" in an hour's time. here is what you might have missed if you're just tuning in to "squawk on the street." welcome to "squawk on the street." here is what's happened so far. >> if you're going to give the money back to the shareholders that way or buy back the stock that way, it's because you do not have anything better to do with that money. you don't have something you

want to launch. you don't have something you want to buy. you don't have something you want to invent. >> it's where is the stock two weeks from now, a month from now, a quarter from now. it's so important to continue our financial model. we have delivered on everything we told the street we would do on the high end of expectations. >> we have to deal with the four walls of the corporate canvas and they are simply not able to turn this macro positive into micro earnings gains and that's a real conundrum. >> the fundamental underlying consumption continues to be really strong. we reaffirmed full year sales guidance of 18% to 20%. >> our august read of philly fed index, 9.3. like empire, a miss. >> home builders sentiment actually rose three points to the highest level in eight years. >> hard to say this is the beginning of trend. i don't think trends begin and end in august. there's not enough volume, not

enough conviction. >> we have projected positive yields throughout the year, meaning our revenue for this year will be higher than last year. that's been true for several years in a row. that aren't huge advances but it's been consistent progress. and good thursday morning. we're live here at post 9 at the new york stock exchange on a day when the dow jones industrial average is having one of its worst sell-offs of the year. the dow is now down about 214 points. we're slightly off the session lows, and just to give you some perspective, we did have a sell-off of about 248 points back in june. so it's been an unusual instance where we've seen stocks down triple digits at all. these tripc clle digit back-to- losses would be the first to june. the s&p 500 off 23 points, 1661. here is some green on your screen. shares of kohl's rallying after a rise in quarterly same-store sales.

cha they reduced their full year forecast. the gain in sales was enough to boost the stock after bad numbers from macy's, aeropostale. >> it is a brutal day for stocks. biggest declines in almost two months. a big day, we'll bring you the latest as it happens on cnbc. a big part of the sell-off today is because of declines for two very important stocks. walmart and cisco. we'll tell you why the consumer is driving both companies to the downside. and egypt on the brink. president obama canceling military exercises with egypt over more than 500 people are killed during clashes between military supporters -- between the military, i beg your pardon, and supporters of president mohamed morsi. we'll be live on the ground in cairo with the latest. >> first though to the markets which are down triple digits. let's bring in steve, managing director at wedbush securities.

steve, what are you interpreting from the declines we're seeing and what's kind of an unusual morning. >> i'm attributing the weak market we've had over the last few days to a couple of things. number one, with walmart and cisco, we're continuing to see that some people in corporate america are having a little bit of trouble finding revenue growth and finding profitability. so the tail end of earnings season has, quite frankly, not been as good as the beginning of earnings season. secondly, i think people are concerned about what the fomc are going to do in september and more concerned about what the market's reaction will be to the fomc's move after what we saw in june. finally, i think it's becoming clearer to many people that the obama administration is really leaning towards larry summers as the choice for fed chair, and i think people view him as more hawkish than yellen, and that worries investors. so i think when you add those three things up, that's

generally why you have been seeing a weak tape recently. >> wow, steve. that's a long list. let me put one thing front and center for you, if i may, and that is the state of the u.s. consumer. one of the things we need to do if we're going to survive the taper at these sort of market levels is we're going to have to have growth coming back and substantial growth, and we know the consume sr is two-thirds of this economy. from walmart today, it's the second consecutive quarter that they've actually had declines, and they are very good at selling. what do we make of what macy's said yesterday when they so disappointed because they were not able to sell? what is the consumer doing at the moment and how do you profit from it? >> well, i think part of what's going on is a secular change. macy's and walmart, walmart a little bit, but really don't have an online presence. i think what we're seeing is the consumers moving from bricks and mortar to more and more online

purchasing. that's part of what's going on. i would agree with your premise that i assume you were going at which is the economy is not that strong and the consume ser nr i that healthy. i agree with that. i think the underlying economic data is mixed at best. we should be seeing employment gains in the 400,000 to 500,000 level at this point in the recovery and we're not getting that. i would agree the underlying economy is not that strong. but i think with retail you have some secular changes going on as well. >> so if the consumer is not that strong, is it likely that the fomc will surprise us and not taper immediately in september and, therefore, de facto presumably the market will rally and this is a buying opportunity? >> i think that's a strong possibility. i think what we will see is something somebody coined it as taper light. i think we'll see some move out of the fomc. they know they can't continue these extraordinary measures forever. i think they want to get a start

on it. i mean, the economy is not great, but it's not terrible either. and these plans were put in for a terrible economy. so i think we'll see something out of the fed, but i do agree with your premise. i don't think it will be the full monty, so to speak. i don't think it will be a full move to $60 billion. i think it does present a bit of a buying opportunity. >> stocks are down more than 200 points. steve, thanks very much. want to now turn to egypt. and we'll do that as soon as we come back from a short break. simon? >> yes, we have a big decline on the dow. it's really large now, 213 points. you can blame a lot of it on the u.s. consumer. we'll tell you if things could get better anytime soon. and also rick santelli will pile in with his news from chicago. rick? >> you know, simon, whether it's etfs, whether it's futures contracts, there's a lot of different ways to price in commodity price movement, and a

lot of interpretation in how that figures into inflation. we'll dig into that area in ten minutes. (announcer) at scottrade, our clients trade and invest exactly how they want. with scottrade's online banking, i get one view of my bank and brokerage accounts with one login... to easily move my money when i need to. plus, when i call my local scottrade office, i can talk to someone who knows how i trade. because i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade. awarded five-stars from smartmoney magazine.

welcome back to the program. retailers are a major focus this morning amid the market's triple digit declean. >> the consumer in focus again today. retailer shares moving in different directions. walmart really concerning investors about the continued cautiousness of consumers around the world. markets certainly pay attention when the world's largest

retailers say consumers in the u.s. and around the world are curbing spending on discretionary items. walmart doesn't see it abating anytime soon. reporting earnings in line with expectations. revenues fell short by $2 billion. the discounts retailer slashing its full year guidance for earnings and sales. company executives citing the 2% payroll tax hike, lack of inflation, cooler weather, and a larger than expected currency impact for sales weakness. they're trying to compensate for the lower sales. the key to same-store sales registering a second consecutive negative quarter. that reverses a five-quarter positive streak. traffic improved but it was still down half a percent. walmart says traffic and comp sales at least improved throughout the quarter. walmart's cfo said the early back to school read for apparel and home at least seem to be really good, encouraging. too early to give a read overall. separately and somewhat surprising after macy's miss,

kohl's reported earnings and revenue in line with estimates. it's elevated inventory remain a concern to analysts. dillard dillard's, estee lauder moving higher. we have some different directions for retail but that lower consumer is still very, very concern being their spending and that really could be extrapolated out for a much larger group. simon? >> okay, courtney, thank you very much. so let's focus on walmart for the moment. clearly joining the club of retailers posting disappointing quarterly results. the world's largest retailer reported earnings in line with estimates but sales and forecasts were below analysts' expectations as courtney has just detailed. joining us now is patrick, senior equity analyst, and joe feldman a senior research director at the telsi advisory group. patrick, what should investors do now? how do they interpret what they're hearing and where do they put their money? >> just in general, simon, or

for walmart specifically? >> i mean, whatever you think is the logical conclusion at this stage. is it just a walmart phenomenon or is there something more major happening that really investors need to listen to? >> no, i definitely don't think it's just a walmart thing. we did -- we got disappointing numbers from macy's yesterday. we got some big warnings in the teen apparel space last week. so i don't think it's just walmart. but there have been some bright spots within retail as well. dsw kind of prereleased -- i guess this was two weeks ago -- some better than expected second quarter numbers. i'm looking for pretty decent results from the off price apparel retailers. i think what it all tells us is that, you know, the consumer is value focused and looking for very deep value, looking for brands. not dead, certainly alive, but really needs a reason to spend, needs a catalyst to spend. >> but isn't value and brands what walmart is about and walmart for a second consecutive

quarter has got sales below expectations, declining sales. >> right, right. watt ma walma walmart, part of that is competition with the dollar stores. they're more convenient but have the same sort of a value proposition. >> joe, what wins now? >> well, i think what's been winning will continue to win, which is everything home related. we're seeing bigger ticket items winning. autos are clearly selling. appliances, home related spending, project improvement. things like that continue to be winners. i think you're seeing a bit of a split economy where that lower income consumer has been under a lot of pressure. that mid to higher end -- certainly the higher end, maybe not middle, but the higher send doing okay. even articles out and looking at some of the business lending that's out there or consumer lending, you're seeing borrowing is increasing actually for auto loans, for house loans.

there is capacity to spend. again, i think it's the high end that's getting that lending to spend. it's really the lower end where you're seeing a lot of pressure. you will see pressure at like target and dollar stores and others. >> joe, here is what's interesting. at the same time consumer confidence continues to rebound. so if anything you'd expect maybe that survey, which is not weighted more towards people who are spending more, in other words a person is a person, maybe you would expect to see more weakness there and we're not seeing it. on the one hand, we are seeing from these results and we know it's a case there's a lot of pressure on this buying cohort. on the other hand, you know, what do you do with some of these investment picks? do you try and just stick with the ones -- do you stick with the winners and not the losers here? is the thesis that maybe this is just temporary and will come to pass as we head more into the fall or vice versa, that it's the start of a weaker consumer in the months ahead? >> well, some interesting commentary i got out of walmart was the fact that sales trends did improve through the quarter and they actually talked about the 2% payroll tax being a drag

certainly in the quarter and still being a bit of a pressure. but they told me that they saw it easing a little bit. so i'm wondering if the consumer that at the lower end is starting to adjust to it a little and then that spending level will still come through. we'll still have a holiday season. i still think you want to play a name like walmart. it's a good solid core holding. it has the best exposure from a staples perspective, and it just makes sense to me to be in a place like walmart, but clearly as i mentioned before, you know, like home improvement spending, home depot, lowe's, they will probably have pretty good quarters and have a decent second half of the year. >> joe, this is the stupid -- potentially the really stupid question of the day. are you ready for it? i'm going to attempt to link what is going on now with the fact that coke is having to -- coca-cola is having to advertise the idea that its diet drinks are still okay for people to buy. my argument would be that this country, like other countries, is going through a period of

some enlightenment where people don't just buy stuff anymore like their parents bought stuff. they think about what they're buying, they might be saving to buy bigger ticket items, and, yes, they'll take out loans for that, but after the brutal years that we have been through, people are much more careful, much more considered, joe, in what they do. fair comment? >> i think that's a very fair comment. even walmart we're starting to see people trading down a little bit on basic staple items. even something as simple as diapers. not necessarily buying the branded diaper. maybe using some of that savings to buy something else. so i think you're right. i think just, you know, the old way of doing things, even in the beverage market as you just described, people are drinking a lot more healthy-type beverages, a lot more vitamin water, things like that. >> patrick, curious for your thoughts on this as well. >> no, i think simon has got a pretty good thesis there. i think it makes quite a bit of

sense because -- and as joe mentioned, the consumer has more capacity to spend today than the consumer had a year ago. they're spending it more selectively and not across the board, and i think if you look at walmart, they are the low price leader. they have continued to sharpen up on price. >> okay. sorry to cut you off, patrick and joe. here are the remarks from president obama regarding egypt. >> -- response to the events of the last several days. let me begin by stepping back for a moment. the relationship between the united states and egypt goes back decades. it's rooted in our respect of egypt as a nation, an ancient center of civilization, and at cornerstone for peace in the middle east. it's also rooted in our ties to the egyptian people forged through a long-standing partnership. just over two years ago america

was inspired by the egyptian's people's desire for change. as millions of egyptians took to the streets to defend their dignity and demand a government that was responsive to their aspirations for political freedom and economic opportunity. and we said at the time the change would not come quickly or easily, but we did align ourselves with a set of principles, nonviolence, a respect for universal rights, and a process for political and economic reform. in doing so we were guided by values but also by interests because we believe nations are more stable and more successful when they're guided by those principles as well. and that's why we're so concerned by recent events. we appreciate the complexity of the situation. while mohamed morsi was elected president in a democratic election, his government was not

inclusive and did not respect the views of all egyptians. we know that many egyptians, millions of egyptians, perhaps even a majority of egyptians were calling for a change in course, and while we do not believe that force is the way to resolve political differences, after the military's intervention several weeks ago, there remained a chance for reconciliation and an opportunity to pursue a democratic path. instead, we've seen a more dangerous path taken through arbitrary arrests, a broad crackdown on mr. morsmorsi's associations and supporters, and now tragically violence that's taken the lives of hundreds of people and wounded thousands more. the united states strongly condemns the steps that have been taken by egypt's interim government and security forces. we deplore violence against

civilians. we support universal rights essential to human dignity, including the right to peaceful protest. we oppose the pursuit of martial law which denies those rights to citizens under the principle that security trumps individual freedom or that might makes right -- >> president obama made these remarks about happen an hour ago. what you're looking at is the tape. simon, we already know the substance of what he's been saying. we want to get reaction now on -- egypt's reaction. yousseff, what can you tell us? >> reporter: briefly a key takeaway from the speech, not just appreciate yating the complexity of the situation on the ground but making it clear one of the steps the united states is going to take is to cancel aby annual military exercise. remember, egypt's military is one of the largest in the

region, among the top 15 in the world, and it's exercise. there's a clear step against the egyptian military adding some level of pressure but no mention of u.s. financial assistance to egypt's military which is to the tune of some $1.5 billion if you add the economic assistance. briefly an update from the situation here on the ground, we have clashes still ongoing between security forces and supporters of the ousted president mohamed morsi, not just here in the capital of cairo, but across the country. we understand that there were attempts to torch government buildings and also attacks on churches. it's raising the stakes and, of course, the implications as to whether or not law and order can be restored very soon. the fact of the matter is that you have a state of emergency, off curfew in effect. the death toll continues to rise as well. kelly, we're now at 525 people in the last 36 hours who have died. that's according to the ministry

of health. over 3,500 people were injured. the muslim brotherhood is making clear that the death toll is far higher according to their own count, and they've also made it clear that their anger is now, quote, out of control and that they will fight this to the very end. in any case, we're also seeing economic ramifications, big companies like general motors and shell are not just reconsidering their operations, but they have halted it temporarily until the situation becomes clearer here on the ground and, of course, the banks and other commercial activity appears to be slowing down for the moment. that's all we got from here. back to you. >> yousef, stay with us if you would. let's bring in john harwood who joins us from washington. john, there will be those who will have wanted more from president obama. okay, today he has interrupted his vacation to make a statement condemning violence, but still there's no sanction against the military authorities in cairo.

what happens now do you think? >> we'll see how much the violence we saw yesterday continues or whether it doesn't. he will get krid simpcriticism cutting off military add. some of his past advisers had called for that step to be taken. but richard haas put out a tweet saying the president had done the right thing but not suspending aid. that the effect of his announcement of canceling the bright star exercises was to put the government on notice, the egyptian military on notice, that time is running out and gradually ramp up pressure with a possibility for more steps later. >> i guess it still leaves measures to be taken. john, we'll leave it there for the moment. thank you very much, john harwood there as the president speaks in martha's vineyard. up next on the program, we are cutting our losses slightly, we're down 177 points on the dow. the network equipment giant cisco has certainly skidded after reporting quarterly results below expectations and

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the moves we've had in the bond market with rising rates has obviously been a challenge for the market today as have two specific earners. one is walmart which disappointed. the other is cisco. the cisco report is having quite a widespread effect within tech. juniper, hp, all down. it's the tech really that's bearing the brunt of a very poor day. this is the second day of triple digit falls on the dow. >> take a look at cisco in particular. that stock down more than 7% after the company announced it was cutting about 4,000 jobs. jon fortt is following this story and has more out of san jose. good morning. >> good morning. i guess this is what happens when investors get whiplash. analysts had just turned more

bullish on cisco and they reported a quarter in line with expectations but revenue guidance, it was about a percentage point shy of analysts' expectations at the midpoint. they guided to an annual growth of 4% when the street wanted 5%. the stock is taking a dive down 7%. cisco also said it's cutting 5% of its workforce. ceo john chambers joined us on squawk box and he emphasized he feels good about his business overall. it's global gdp that has him spooked about where demand will come from and when. listen. >> we're just being cautious because of the inconsistencies that walmart reported today as an example. gdp growth, you know what's happened to that, it's been revised down again and again and again, and the same thing, inconsistencies in our business. >> on the call last night, chambers pointed to asia as a trouble spot with tough comps in japan, continuing struggles in china. other tech stocks reacting in

sympathy. em c down 1.75%. microsoft down 1%. it's worth noting it's the enterprise stocks that are getting hit the worst. apple actually doing a bit better. it will be interesting to see how all this is reflected in dell's numbers after the bell. cisco saw public sector spending come back which normally would be good news for dell but dell has issues of their own with their investor battle. back to you. >> thank you very much for that. jon fortt with a rundown on a big day for tech. the markets in europe are closing. we'll bring you exactly what is happening there and the effects on the united states after this short break.

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the european markets are closing now. >> well, obviously with the dow down 172 points, it's not going to be a pretty picture in europe. sure enough, you will see that you've got a sea of red there. i should tell you actually that its assumption day, a public holiday for italy and other countries. in general then, it is holiday thin, but bear in mind where you are coming from. let's have a look at a chart recently of where we've traded united states against europe. yesterday, of course, we were talking about the great data. coming into today's session, here in this country we've been down for six of the last eight sessions. in europe they've been up for six of the last eight sessions. now from a lower base but you

get the general point. we've discussed mae eed many ti improvement in prospects. they love a bit of summer and they got a good bit of summer. retail sales doing well in the uk but that's left the home builders down in particular today in the uk because many people are saying that the data in the uk is actually getting really good so maybe we're going to breach that unemployment rate of 7% sooner rather than three years' time which means all bets are off on keeping interest rates where they are and you know if interest rates rise in the market, what that does to mortgage rates. exactly the same mirrored in this country. in germany you can also see the way in which interest rates are rising as treasury rates rise here. it is common across the developing world as our view of the economy improves in the midst of this angela merkel out and campaigning before the general election which is going to be, as you know, on september the 22nd. angie seems to be the posters that most people are holding up.

now, there's an awful lot that is on hold until we get through this election. greece, portugal, spain, and cutting pengucu cutting pensions in france. certainly a lot is on hold for the result there. kelly? >> simon, thanks for that. we want to check now on how commodities are holding up in this tape. sharon epperson joins us from the nymex. what's going on? >> let's start with the u.s. and the u.s. commodity that is doing the best right now is natural gas. we told new the last hour about that natural gas storage report that showed an increase in supply. that was less than analysts had expected. that's a big reason why we're seeing the uptick here in natural gas prices and, in fact, we're looking at a technical level that traders are watching very carefully, $3.40. a close above here they say could be a technical breakout to the upside for natural gas. we're watching a couple developments in the atlantic to see how they pan out in this time that is, of course, hurricane season.

we're watching what is happening to brent crude prices. brent crude is at a four-month high. they're also looking at the relatively flat price for gasoline futures. maybe that's going to be some good news for drivers getting their last vacations here at the end of the summer. and we're also going to keep our eye on what's happening in gold because we did get a couple of reports reflecking what has happened to gold in the last quarter, in the second quarter, and the world gold council saying demand down 12%. paulson and company talking about having their position in the gld, cutting that position in half in the second quarter. a lot of that has a lot to do with the price action we're seeing in futures as well. >> even paulson given up to an extent. sharon, thank you. you can't get away from it, the losses onhe equity market is

big. bob has more detail. >> we'll see if we get a bounce now that europe has closed. i suspect that's not going to happen today. i think this is a general risk reduction day and as simon showed you, that's happening as well in europe. here is the dow industrials and, again, this depressingly familiar trend here. where you open and just move straight down and some days you stabilize, some days you don't, but you see we have come off the lows. we have a sort of double whammy going on in the stock market. number one, ten-year yields at two-year highs he said. that's a real problem for the market. but the other thing is we are not seeing the second -- the third quarter growth that we were supposed to get as advertised. cisco, macy's, walmart, you get the point. remember, everybody had been hopeful we would see the growth in the second half of the year. so far early indications it's not materializing. that's a major problem weighing on the markets. the result today is risk reduction on low volume. it is low volume, by the way. let's move on, show you a couple things. what's risk reduction? when you get consumer discretionary and health care

all down almost the same amount, that's risk reduction, cyclical, the consumer stocks, all of them are down. ten-year intraday. better than expected jobless claims. there it is. shot right up and it came down a little bit on disappointing industrial production numbers but you see still elevated right now. how about another sign of risk reduction? simon accurately pointed out europe. money used to be going into europe, out of the united states. that's not happening today. both of them are down essentially and i think that's another issue, another sign that risk reduction is real. how about the home builders? we had amazing numbers overall for the home builders this morning. the housing market sentiment indicator highest in seven years but look, we are 22% off the highs. this is really a correction going on in the home builders today. finally, one thing to quickly point out. you look -- there is a bifurcation. d.r. horton and kb home are the entry level home builders. i'm not saying it's not a

debacle, it's a debacle all around, but the market is distinguishing between first time builders and guys who are the move up higher price builders like toll brothers. >> good point, bob the builder. thank you, sir. let's go to rick santelli in chicago with a look at what's driving intlation. asset price inflation? >> no, actually what we see and what we pay for or what we get may be two different experiences and that's what i have learned with all the e-mails as this topic has been hot at least on my list. i'd like to welcome porter bogus. we could look at how inflation is calculated today. weigh saw the level on cpi. we can look at the way it used to be calculated and take today's level and multiple it by several fold. we can do the grocery store experience that most americans have. the long and short of it is that experience of the consumer just doesn't seem to add up with the realities we see in the marketplace. so let's find a place to start. you have a unique opinion.

let's look at the goldman sachs inflation index. what have we seen there? >> the goldman sachs commodity index is what we were referring to. since '06 it made a huge run up with crude, came down, and really it's been trading in a range since quantitative easing started. you go in and break it down and it's heavily weighted across the commodities and we're seeing that in some respect in the commodity prices moving up, but why is it showing up on the consumer side in the grocery store, at the gas station but not in your portfolio if you own it? >> that's a good question. >> one of the problems that you can see with an etf and gsg is the one -- >> etf based on the index. >> on that index that shows that same phenomena, you may be putting $100 in. you personally might way $7 or whatever the commodity -- the commission for it -- >> for the etf. >> but underneath inside there are commodity commissions that

go into it, there's back office expenses and everything. those aren't necessarily shown on the label. >> so what you're saying is, okay, so $100 to get an etf purchase may be $6 or $7 is fees. you're thinking $93 is buying commodities. maybe 40% of that is buying oil. but there's intrinsic costs that are eaten up that aren't necessarily on the label. >> not necessarily. you may see over time you think you're tracking whatever inflation index is actually there, but it's eroding as the commissions eat your -- >> there's certainly a boat load of money going into the space and it has been well behaved. what does that mean in english? how can i tell my mom, yes, you're paying more and maybe here is a reason that we don't see it on the headlines. >> well, one reason is fees going to the different banks that run it. they have inside expenses. there's no real limit as to commodity commissions. we talked about that. those are negotiated between the individual. where the additional expense,

and it shows up in the bottom line in the consumer, is all this money is coming in on the buy side only. there's nobody out there saying, well, maybe there's no interest and short it. no, this is only buy. they don't care about price, they just need to own. >> i got you. porter, it's always an experience. thanks for taking the time. guys, back to you. >> all right. rick santelli this morning. rick, thanks very much. turning our attention back here where stocks are down 172. we've come off the lows a little bit, but according to our next guest, this market is looking a lot like 2007 all over again. we'll tell you why he's getting ared to push the panic button. that's when we come back. ready . that's when we come back.

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[ static warbles ] welcome back. there's been a lot of talk comparing the market today to periods in the past. our next guest says his valuation model points to stocks being as overvalued now as they were during the 2007 market. is that a harbinger of things to come and could today's triple digit sell-off be just the beginning? dan seaver joins us now. dan, good morning. >> good morning. >> when we see reports that george soros is making bets on the s&p 500 being lower from here, at least you can read that into his latest quarterly filings, are you surprised by that? i would guess no, and why do you think we're looking at a market today that's similar to the 2007 period? >> well, my measure of valuation is a long-term measure of valuation. it's based on value line

immedia mediation appropriation and my work shows over long periods of time it has predictive value. the problem is right now that number is relatively low. it's down in the range that it was in 2007, and so that tells me that over the next few years the returns on stocks aren't going to be particularly good, and they could even be negative. >> we actually had spoke within a guest a couple of days ago, dan, who said if you take the inverse cape ratio, again one of these ways people try to gauge the markets, value it, it suggests u.s. equities are looking at an annual return of 4% in the years ahead. is that kind of consistent with what you see? >> yeah, i think returns are over the next few years from current levels will probably not be very good. if you look at corporate earnings, i can't see them growing much faster than gdp over the next few years and nominal gdp isn't going to grow very fast. so it's a little harder to

justify, particularly with interest rates rising, to justify the current levels of the stock market. so i think it is somewhat vulnerable. >> but so is your argument along the line of gdp, dan, isn't it? if you expect -- companies have done extraordinarily well of being profitable with very little revenue growth or disappointing revenue growth. if you start talking about gdp accelerating forward and we've just had some quite stunning gdp figures out of france and germany for just the second quarter, if you start repeating that, particularly in this country, then your argument is seriously undermined because you start growing the revenue, the profits are going to rise to an even greater extent particularly those companies, industrials, cyclicals, that have large fixed cost basis surely. >> actually, i don't buy that because i think it's unlikely that gdp is going to accelerate to some dramatic rate. we're still coming out of the great recession and maybe we'll

get nominal gdp growth of 4%. i think that would be terrific if we could have 3% real growth, 1% inflation, and if gdp nominal is growing at 4% and corporate profits are already at a record percentage of gdp, i don't see what's going to make that percentage go even higher, and so i don't see corporate profits rising very fast in the united states. >> hang on, hang on. if they rise proportionately, then the profits should rise by 4%, and then you multiply that by the multiple. so if it's trading at ten times profits, that could be, i don't know, a huge gain surely. >> i guess i don't see that. i'm not willing to pay as much for slow growth and earnings and i'm not sure others will either. so i don't see great opportunities at these levels. >> would it be fair to say that the federal reserve has pulled forward the returns it would otherwise be accruing to this market over a period of years during a stronger economy? >> well, i think the fed has

certainly helped the stock market tremendously in recent years, and qe has certainly helped the stock market. a lot of the extra liquidity has gone into stuff like stocks, but over the next few years the fed is going to be pulling out all that extra liquidity and it's going to be pushing up interest rates, and i don't see that as particularly constructive for the stock market given that i think valuations are on the relative high side right now. >> it's a debate that pretty much everyone on the street is having. dan seaver, thank you for presenting your view as to why the market may be topping out. right now stocks down sharply, 171 on the dow. though we are off our lows. we were down in excess of 200 points. art cashin will be here to tell you what happens now as we trade into the afternoon.

welcome back to the program. here is what's happening in the market. the dow is now down 177 points. all three indexes are down more than 1% this morning. the nasdaq douwn 1.3%. we'd love to get some thoughtsc. perhaps you can tell us what's going on. >> hopefully we're not going to repeat what we did the last time we broke the 50-day moving average in the dow. that was, i think, a 350-point down day. >> wow. >> have we broken it? >> yes, we have, conclusively.

i don't believe we've broken it in the s&p, and i think, you know, my call of a couple weeks ago about the check engine light is looking better and better. and even our old friend the hindenburg is getting some respect. we'll see where it goes. the driving force this morning is twofold. obviously, the jump in yields has gotten everyone panicky. that's i think the only reason we have this brief respite here is because the yield on the ten-year has dipped back below 2.8%. the viewers should watch that. if it goes back up again, there will be more pressure on stocks. and the other thing is the theme that simon has been pounding all morning, and that is you look at walmart and several of the retailers over the last week or so, and it looks like the american consumer is in the witness protection program. nobody can find them, and what does that mean for back to school? what does that mean, more importantly, for the christmas season which is 80% of the

earnings for all these people coming in? >> so if you backed up a bit, what would you say to people who aren't trading the market but, you know, they're prepared to move in and out on, say, a six-month basis? what should they do now? do we believe in growth? do we believe in the consumer ultimately and we believe that this stock market will be supported once they start removing tapering? >> well, i would recommend a little caution here, and that is because some of the various valuations that i have seen over the decades are all at cautionary signs. the yield of the stock market versus the bond market has a pretty big disparity. there are several other things going on, and so, you know, what could turn it all around? the dippers could show back up. the hedge funds are terribly

under invested. people are calling them up and saying, if you're not going to use my money, do you want to send it back to me? >> if they've tracked the market, they've made 17% already. >> but they haven't. the hedge funds -- if you look at the performance of hedge funds, it has been abysmal. this year they have -- more of them have struck out than anything, and in most cases the returns are certainly in the single digits. >> i suspect we're all going to look back on this period and say we should have realized the impact of buybacks on this market. >> there's no question about it, and, again, as you and i have discussed, what's been going on here is that management has gotten very innovative. they do more with less. they have options on their stocks so they buy back their own stock, which then allows the earnings per share to look much better. and that's why i think the hedge funds have so badly missed it. many of them are macro players. they look at what's the gdp going to be and what's the unemployment going to be?

and all of those things, if i blindfolded you and said these are the numbers, where should the dow be, you would never be at this level. >> exactly. >> and i think that's what's going on. so anyway, i'm still caution. >> and flathere's a whole other conversation about the market divorcing from the fundamental that will become important. thank you so much for your time this morning. simon? >> all the major indices are in negative territory. we will have more in a moment. lecoca-cola is partneringg. with nashville parent

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started heading south again. we're now down 183 points on the dow. there are two stocks in clear focus. cisco arguably has the bigger fallout in technology after what they said overnight. you see hp, oracle, intel down in negative territory. the other one we're watching clearly is walmart, and a lot of questions after what they had to say about the health of the american consumer. juke s >> you can see apple outperforming on this tape. some of the home builders sensitive to this market, but they're also holding up okay, at least the names like a dr horton and it has to do with the stronger home builder confidence

number. >> and some of them have been smashed. >> apple above $500. is apple the savior of the investor at home? >> i think it's just distracting from some of the underlying weakness we've started seeing in tech. coming up next, the judge, scott wapner. thank you for tuning into us for "squawk on the street." time now for "the halftime." thanks so much. welcome to "the halftime show." live from post 9. four hours to go until the close, and right there is where we stand. it's a nasty day on the street. the dow has been down more than 200 points. it's just about there right now, down 194. the dow breaking through its 50-day moving average, so some technical damage is being done on the street today. there's the s&p and the nasdaq in the red as well. here is what we're following on "the half." roughed up retail. is walmart's war