pencils out to the court to calculate things. >> i can't imagine cal tech has much of a tennis team, do they, with all the nerds? >> one the-third of cal tech students are on varsity team. we've got a lot of -- >> sam, thank you for this. unfortunately we've got to jump because we have another show starting. >> appreciate your time. thank you. >> thank you. >> thanks. >> it's now time for "squawk on the street." ♪ good morning, everybody. welcome to "squawk on the street." i'm brian with the man himself, jim cramer. we are live at the new york stock exchange. david faber is off this week. carl quintanilla is on assignment. let's look now at your futures on this wednesday. listen, we're not implied a big down drop, folks. down slide is down about 20 points. s&p and nasdaq down fractionally as well, though. nasdaq looking a little stronger than the other two indexes as it has the rest of the year. what about europe again?

not a big move. the dac and the cac are all lower. not a big drop there as well. our road map starts with housing. lows beating expectations and toll brothers ceo saying the recovery is real and it is only just beginning. very positive comments there. and maybe some cracks in the consumer's armor. sales falling short at target. teen retailer american eagle also under pressure. speaking of pressure, hold on to your staplers. two who took my stapler? staples is falling premarket on weakness mostly because of international sales. and google, iu, the football fan. a new report says, get this, a real story, google may want to get its hands on the nfl's most faithful followers by bidding on a tv package from directv. stealing it from directv.

>> eric grugman who runs the nfl on that part i don't know if they're crazy about that but they can get some revenue. not what they want. >> and i they need to make a big splash, google, if they want to expand other video offers. >> ever run an nfl video on tv. i just worked with the nfl enterprises group. just guys. that's the toughest group in terms of copyrights. >> they protect their brand. we must protect this brand. >> they have the most protection as anybody and the most viewers in the world. they don't -- they have strength because they can run through replays. >> i know. 6-10 eagles this year isn't going to help much. that's not a good way to launch the show, is it? >> no, not at all. >> my chargers are 0-16 rchltsz home improvement retailer lowe's beating estimates on the top and bottom line. raising their yearly forecast again. also, toll brothers, the

country's biggest luxury homebuilder reporting a 24% rise in quarterly revenue. customers continue to buy homes at higher prices despite rising mortgage rates. we talk about this on the 3:00 p.m. show. >> i don't want to be that aggressive. i've got t to tell you, brian. >> on toll. >> mortgage application is down. nationally, re-fi is down. i think this housing market has cooled. but don't take it from me. take it from the "usa today" which has the finest story, housing markets getting less crazy for buyers. everyone must read this because this says that the rates have cooled and affordability is not so hot. excellent piece telling the truth. i'm not sure. i don't want to say that homebuilders are disassembling but way too bull ush now for months. >> it's the greatest. they think that we've got -- we've got to wake up and smell the coffee.

i'm not talking about green mountain. i'm literally saying they're cooled. there's a lot of markets that are cool. >> herb is not awake. 4r sleeping in san diego, slumbering in his velvet a jam mass. we talked about that yesterday. and toll brothers, doing the urban stuff in new york. high in condominiums. do you view them as any kind of a read or metric on housing or are they literally by themselves? >> in the end, everyone has -- well, no, people buy houses for cash if they're very wealthy. people do that. but in the end you've got to go through a mortgage process. in the end, affordability. in the end there is a belief now that i can wait. there was a kind of feeling, i've got to move. now i can wait. not as many bidders. not many people buying over the price. it's cooling. it's cooling down. that's not bad. >> i have literally walked the plank, like johnny depp, and i've gone out and said, i don't believe, it's my opinion, i don't believe these rates will kill housing. they may hurt prices a little bit but i still think people are

smart enough to realize 4 1/2% is a pretty darn good rate. what did you pay for your first home, 15%? 10%? >> 8.75%. >> i refinanced that literally four times. every time it's been great. i am now down to 3.58%. i feel terrific about it. i will say i'm talking about a temporary cooling because in the end, rents are still no bargain for americans. you still want to have equity in your home. this weight, do i lock in the rate, is the bank maybe a little relu relucta relucta reluctant, wait. this is the chattering i'm hearing. which means the fourth quarter should be back. >> do we care about lows? >> oh, my god, do we care about lows? they will be smoking it. they nailed the gap between lowe's. >> 180 between home depot. i like home depot very much but the guys who run home depot,

great quarter. lowe's has got game, my friend. they've got game here. >> what you referred to was -- home depot same-store sales were still above lows. the gap between the two was the smallest since the third quarter 2010. >> i've got to tell you, i think lowe's -- i'm going to say this. mr. blake, don't take this wrong. lowe's is taking share. by the way, the client business is good for lowe's but lowe's is taking share. i don't mean any disrespect because i think home depot is the greatest. you know, that was a great quarter for lowe's. >> i do believe you called home depot best of breed. >> it is best of breed. >> you know what, sometimes in this particular instance, lowe's is becoming a real challenger. do not recognize that is to be short sighted and not doing the homewo homework. >> fair enough. i will say this. increase was a nickel, less than increase last quarter. that means mr. -- all right. >> going the right way. >> the industry is great, how about that? once you buy your home and the

home is going up in value, buying basic clothes. >> gets more share. lowe's gets more share. stealing share from each other. menard's, right? could be taking share from each other. >> hardware, ace may not -- has not been the place for some time. discount retailer target reporting a quarterly profit. two cents above estimate. revenue was shy of consensus. the retailer expects low year earnings thanks to cautious consumer spending. >> now, yesterday, yesterday everything was great. retailers were soaring. every retailer was up. urban outfitters crushed it. everybody is sorting out today. the consumer is dead. >> well, welcome to the stock market. >> let's not be that bipolar. i do believe that target is like walmart and macy's. macy's said back to school is good. now, jcpenney, the embattled

mike ullman, i know you have the jcpenney hour in fr 2:00 to 3:00, they say back is school is good. this is a market where execution is everything. urban outfitters had an amazing quarter, amazing quarter. case by case. >> and courtney reagan had a great piece on who is doing it right, who is winning in the market, companies are innovating and bringing out original products, controlling their inventory better. hey, listen. god forbid, maybe target is just not executing as well as them. >> given about 90% of the products are probably the same as home depot, shopco is where i go in the midwest? >> may not be as good as they used to be. >> meyer? >> customer management, one of the things that mr. hanes cited was on the urban outfitters call, tremendous. mark behind the scene, people are doing better customer relations management. that's what domino's attributed to its strength. domino's is up huge. >> the tweets. >> they did get back to me.

>> you called them out on national television. >> ce oero sales was luke warm. >> 6'8". >> bigger than you. we came back and forth. did a little battling talking and urban and customer relations. >> he's watching. he's watching "squawk on the street." >> i don't think he is. >> you called him out. >> he hurt my feelings yesterday. just like i hurt carl icahn's feelings when i said he wasn't as good looking as ackman. i don't know. i mean, feelings. >> nothing more than? >> yeah. >> nothing more than feelings. >> carl icahn has feelings? staples down sharply in premarket trading after reporting weaker than expected quarterly results thanks to weak sales overseas. prompted the retailer to cut the outlook for the year. company is tying the weakness to closer to 49 of european stores. it's going to close european stores. weakness overseas. staples, again, are they symbolic of a bigger economy or literally is staples just by itself, they are what they are and we know that small business growth has been slack and they

gain from small business growth. >> well, they are who we said they are. hiring picks up small firms in "usa today." i'm going to criticize "usa today." what i can say is that the small business which, of course, generates the most of the jobs, is obviously if you look at staples, a small business play, not generating a lot of jobs. if you're jackson hole and you're one of these fed heads and shop at staples and looking at macy's and looking at walmart and reading target. urban outfitters says things are good so therefore things are good. kors says things are good so things are good. not tap but michael kors. really expensive. i don't know if you check that out. >> talking about the brewers? no, retailer, mike cellchael ko >> i like tap. i think it's good. >> i have not looked at the brewers in a while. >> boston beer. now, i have a kraft beer, i had brooklyn beer on "mad money."

the kraft beer craze is not stopping. even though it all tastes like cereal to me. >> there were 800 20 years ago. >> i have a buddy that cuts my hair and he's involved in kraft beer. i have a brewery open up in queens. i have a brewery in flushing. >> let's recap the a block. lows, okay, you like them. getting better. did a good job. target, maybe not executing as well as you hoped. >> i'm not crazy about that quarter. >> staples has its own issue. we talked about dennis green. >> yes. >> of course. >> they didn't make the playoffs? practice. up next, google ceo larry page reportedly had a very interesting meeting this week. twhaun could significantly change the way you watch your favorite football team. also ahead, as we await the fed minutes, 2:00 p.m. eastern time today, and get ready for jackson hole, former governor

randy kroszner, we'll get his take. another look at the futures as we head to the break. slight drop at the open. again, volume is light. a lot of individual stock stories out there, folks. just because it's summer, don't tune out. more "squawk on the street" live from post nine when the nyc returns. >> coming in hot. ♪

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get this, sports fans. google reportedly ready to perhaps buy its way into the tv world. all things, the "wall street journal" reporting that google ceo larry page along with the continent at youtube met with executives from the nfl led by commissioner roger goodell and sunday ticket package was among the tok tpics of discussion. they are meeting with multiple silicon valley companies. out of market games end at the end of 2014. so next season. jim, do you believe that google will actually make a push to get nfl sunday ticket? >> the nfl is -- >> do you care if they do? >> do i ever. i have the package myself. the nfl is most powerful brand in sports. maybe the most powerful brand in the world.

many more viewers for nfl -- for an nfl season than all the other league leagu leagues games combined, nba, baseball. this is huge for google. they can write the check. >> this would like youtube -- let's say they do it. pay a few billion. petty cash for them. >> i could get rid of directv tomorrow. >> all of a sudden you've got smart television where's you've got youtube built into smart tvs. roku internet applications. all of a sudden, picture that, i can watch my chargers through youtube on tv. >> this would be remarkable. right now i watch nfl.com, watch the "red zone." the cable company is not outbid larry page. i don't know. if he's a big nfl fan, literally -- remember, buying the "washington post." this cac panlg really put directv on the map. this is the story to follow.

we need to have the nfl on the show. we need them to call in right now. this is remarkable if they would be willing to do this because it would undercut everybody. >> making the call. there you go. >> it would be huge. is this the beginning of when google will charge? you've got to charge for that product to monetize it. >> now you're getting into a different discussion because i was saying i believe at one point facebook will begin to charge, right? maybe google now -- >> might not be so crazy. >> google will start to charge for certain applications? >> people will pay for it. know that they will pay for football. we know that because the nfl has unbelievable statistics about ho whaches, how many people watch. women watch. more women watch than men watch the super bowl. this is a remarkable moment. google moves in. this is going to change our perception of google. i would buy google up to 1,000 if it paid anything reasonable. >> this f. they get the nfl oh. >> this -- >> i would pay 100 bucks a year for mlbtv to watch them and

pujols worst contract in history in sports. >> i have cable and i also have the sunday package because i have -- >> now you would pay youtube? it's a closed channel. how would they manage that though? if you're google, how do you pay? you have to log in. put in a unique code. i think they could figure it out. >> this would be the biggest game changer. this article, all things -- my hat's off to them. >> i got it. >> make the password -- >> make the password 1234. super secure. >> i like that. >> you can also use your birthday which i've been spreading to everybody. >> thanks a lot. >> i'm a human tree. need guidance in this market? jim is here for you. we've got the mad dash coming up next. again, as we go to break, let's look at stock futures. implied open. slightly down. nothing to get out of your car and run around on in screaming panic about. it's not the end of the world. we are indicated down. just a couple of points. a lot of big individual stories

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not to be specific but we're eight minutes and 19 seconds

away from the hoping bell. time for cramer's "mad dash." apple. >> i can only stay like this for so long. okay. >> why are we looking at apple? >> price target of 500 and apple takes up the price target. boost the price target. they're going 500, which obviously one point was higher, to 560, the same. china mobile boost, buyback. don't forget there is an idc story saying that china -- apple is losing tablet share in china. samsung, same song. >> ubs upping it? >> a lot of guys are doing this because apple moved the price target, icahn. >> topeka capital market still up there with 1001 price target. gimmicky, by the way. that's basically a double from here. i don't know byron white is a good guy. maybe call in the morning. argus doesn't get a lot but big

call on herbalife. >> are you listening? >> they are raising their price target. now, this thing has become an unbelievable battleground, as always. as always. this is the situation. remember hitchcock would have these things. this is the maltese falcon. who cares about the falcon? i do think, by the way, that this is -- this is anti-ackman again. ackman comes out. he uses a different metric. he's using justice department. >> yeah. >> federal investigation per share. and he's saying that's about to go up. he's waving his federal investigation per share mobile and -- >> did you read ackman's letter that he came out? he basically cited unfortunately top distributor. looks like he killed himself. >> ackman cited that. >> citing things that are not normally cited when you criticize a company. cash flow. he's talking about the model, about some of the people leaving. recent top-level guys leaving the company. >> meantime, we have new buyers

of it. he may be lowering his price target from zero to minus ten. it's one of those things. minus ten number now. >> look at that number. up 101% year to date. >> you think at the end of the year when ackman lowered the boom. we have green mountain coffee boom lower. the shorts, great article in the wall street today about how the shorts are taking it on the chin. i wandonder if icahn cares abou the investigations. >> argus raising target to 80. that's a 23% gain. >> must not have read ackman's letter. >> ackman says r sazero. quite the disparity. >> obviously ackman, there's just lots of -- ackman is a confident fella. if he says there are a lot of investigations coming, i wouldn't tell him. he's probably got some wedge. >> can we throw up dick's?

citi says use the weakness in dick's recently as a buying opportunity. do you agree? >> i went over the comps yesterday. >> that's what they were talking about. >> it's business mall because, well, they made it dismal. stat really did not tell a good story. they did say that underarmour is selling well. don't do that. the stocks say a lot. quality company. if you read the comps, you don't want to buy it. >> citi is out buying the name. it's not helping the name. down right now. >> when a conference call is like, look, things are not going well for our company. you have to have a leap of faith. this is not like the petsmart call this morning which i think is good. it's an expensive stock without a cattle. >> dog food good. sporting goods bad. is that fair? is that a fairway of characterize the "mad dash"? >> kors good, coach bad? similar companies doing very differently. >> case by case.

tiffany looks like it's good. fossil looks like it's good. it is so hard to figure out. you've got to read the conference call. that's how you know. >> that's why we listen to you. the opening bell just a few more minutes away. more "squawk on the street," more action, all coming up. stick around. ♪

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you, my friends, are watching or listening to "squawk on the street." david is off. carl is on the "today" show today. so you're stuck with me live from the financial capital of the world where the opening bell is set to ring in 45 secs or so. jim, not a big down day expected here. a lot of retail names once again the focus. >> later in the day. and that's going to control. there's a show on at 2:00 that i like to watch that will have the fed minutes issue. >> i know it's a tall loud guy with big ears an an australian woman. >> i like that show. >> i'm going to watch it myself. that's the other fed use your show. everyone should watch. that's really going to be what everyone is waiting for whether they should or not. >> i love "street signs," i love 2:00 p.m., great minute. i have to parse the language

closely. us, that, this, that, there, their, they're. >> you have to. >> ridiculous. he said this morning in his note, i long for the days when i didn't even know who the fed chairman was. all right. there you go. wednesday, august 21st, the markets are opening right now. 9:30 on the nose. let's see what happens today. >> a lot of red. >> i know. >> a lot of red. >> oil and gas company. >> i've had hunter on. missed some quarters. you have to be candid about it. even when it's great. >> yeah. like you said, listen, a lot of red in the early, folks. you have to listen on the radio. most of the screen is down. but again, not down too much. >> no. and look, also, one of the things that the call ratio to market has changed here because of target, walmart. >> there you go. muscular dystrophy association. we should note pushing the opening button at the nasdaq.

marking the annual labor day telecast that comes on labor day. opening thoughts, jim, again, retailers, some individual names in focus. >> you said the most important thing group said yesterday was a good day. today is a bad day. >> i was being facetious. >> no. that's what's happened is that we are in a moment where people actually expected the target would be good. i mean, the stock had come down so much. how could they miss. people expected the toll brothers would definitely be better than expected. stock comes down. how could they not raise guidance? you've got this whole kind of, boom, wait a second, whether where is yesterday? and yesterday might have been a year ago. >> yesterday might have been a year ago. that's poetry in motion, jim. >> free beer tomorrow, never comes, right? >> this is a bipolar market. every day it's this, that, and the other thing. convulsi convulsive. >> bigger question, long term. the american consumer coming back.

that's all i care about. >> not -- >> the point of view -- >> if you're the federal reserve, i think you look at these -- if you do look at the -- not the aggregate data that sometimes doesn't give you a straight answer. you look at the department store numbers, you don't think that people are coming back. you think that maybe that rate increase, the federal government here, buy in the higher taxes. the federal government is really hurt the consumer. i think it's about time we started with that. it didn't really matter. federal government really hurt the consumer here. it hurt the small businessperson here. look, i'm not being -- it's not illogical, it's empirical. >> i don't want to fear down the road of politics. >> i'm calling it federal government and not one part or the other. federal government is a real pain in the butt. >> reuters story today. of the million or so jobs created in the past year, three out of four of them have been either part time, low wage, or

both for a few reasons but one of the reasons the reuters story gave, of course, is the new health care act suggest that people don't know what's going to happen so they're not willing to take on the obligation, you know, it's very -- to let someone go individually. they're hiring temps, part timers, which is going to hurt the economy because those folks are not making the income perhaps they did or they should. >> that's not a political thing. what that is a recognition of data. paychecks we have all the time on "mad money" and the morm immigration of focus. look, the federal government is the enemy of business creation right now in terms of the list -- the enemy's list. it may not be -- you know, holder wants -- >> stock market has tended to do better when congress is out of the picture. >> yes. >> right? >> they're fighting in their way and it never escapes the roach motel that is inside the beltway. >> did you notice that mastercard, they've been hitting those stocks. is that suddenly a federal intervention. the federal government went on

vacation for a couple of months and we didn't see the impact, the taxes. we're seeing it now. hurting people who shop at target and walmart because these are very well run companies and shouldn't be missing. >> let's give people an update. tar t get, down 2%. staples down 12%. lowe's up 4 1/2%. a name we have not talked about today is incite pharmaceuticals soaring up more than 20%. if you thoen that stock, congratulations. positive drug trial results for a drug that treats bone marrow cancer, pancreatic cancer. i notes it's early on. don't want to give people false hopes. up 23%. on onyx has that pancreatic cancer drug. >> unbelievable this year. >> it's been good. >> your favorite company. >> i like -- yes. >> they're also literally in your backyard. they are. they are probably a 1/2 mile

from me. >> there's no company that has an amazing story more dhan celgecel than cell 15 because they came from one of the most evil drugs in the world which is banned and they bought the rights. redid it and now they're going great things, treating multiple myeloma. incredible story. >> like botox. i remember when botulism. botox turned out to have a lot of good things but for -- >> for bone mary cancer. >> american eagle, by the way, the other name just to complete the five stock, american eagle is down 10.3%. american eagle. i tell you what, jim. i'm not an investor. if i was a trader i wouldn't touch a thing in retailer. >> thank you. >> anf, similar names. similar tickers. they look like

9-year-old daughter and i go in the stores. >> i bought flip-flops from american eagle and aeropostale. they were identical. my daughter said, how can you buy it? holster runs hot and cold. who can invest in these. >> i wouldn't touch them. >> not a chance. >> it's too of the moment. when you've got to rely on the fickleness of the american -- i'm already starting to say to my 9-year-old, it's like, you just hit the world of pain coming. >> just wait. it's a world of pain. >> betsy johnson bill, who wears that stuff? >> betsy johnson? >> yeah. bob pisani is on the floor with more of what is moving the market this morning. bob? >> good morning. a couple of guys just coming over talking about the bounce that they saw yesterday here. so tech is up a little bit. financials are down a little. either side of up or down 1%. lowe's numbers, i was worried about lowe's last week.

same-store sales, too aggressive. wrong. 9.6%. you guys were talking about that narrowing of the gap between lowe's and home depot. same-store sales. very impressive numbers. full-year guidance, 210 from 205. one of the retailers raising guidance. up from 3 1/2%. one interesting point about the company. they have an aggressive buyback program going on. pink $1.2 billion of it went to buying back stocks. that helps on the bottom line. just bear that in mind. here's the big question. is this a top or home improvement? that's all anybody wants to know. we've been talking about the valuations. they're stretched. home depot, lowe's. close to 20 times forward eps, 2014. that's historically very, very high for them to trade at. so can you continue to have this? here's the weird thing about this. you can continue to have great earnings in there putting up guidance, that's terrific on the

earnings side. the valuation could come down. the stock price could come down even as earnings are still holding up very well. just bear that in mind. that's my only comment of that. maybe summer. boy, is it the winter of this paying for the other retailers. you saw what happened. staples with the guidance slower. 1212%. american eagle, big crowd here just three minutes ago. american eagle is down 10 1/2% right now. . did you see the guidance? 14 to 15 cents for the first quarter? 35 cents was the estimate. the ceo came out and said we saw a decline in traffic. look what else has been going on? dick's sporting goods has lower guidance. nordstrom came out last week, full year below consensus. kohl's guided lower. that's last week. aeropostale had the sales. it's obvious there are small groups of people spending money on flooring and kitchens and appliances.

those numbers are doing well. the rest are not. guys, i think a lot of this can be attributed to fairly week job growth. staples, a company that's not getting any growth at all in the office space. obviously the lack of job growth is hurting them. great story today. 75% of the new jobs created are part time jobs. that's going to be a big factor in whether or not a company like staples is going to sell more office supply. back to you. >> yep. look, if you're the federal reserve, blook at this and go, all right, it's not working. try something else. you don't start thinking about tightening or tapering or whatever. >> there's a difference. >> i know. but you just had a tapering in the actual ten-year. >> we've already seen it, right? >> the bond are ji-- >> let's find out from the expert. >> will the ten-year yield hit 3% any time soon? >> it shouldn't be. i'm going to talk to the expert and go to rick santelli because rick knows the story at the cme group in chicago. go ahead, rick.

>> you used the trade. the one thing i learned was when you see a momentum trend, don't try to pick where it stops. what you want to do is try to pick a range so you can guide yourself because the market, well, the market ebbs and flows. if you're looking t upside, all you have to do is watch that five-year. currently at 157. 161 is its major area. the curves had a lot of wiggles since july, early july, july 5th. if it starts to trade above 1612 look for more steeping on the rest of the koufcurve. on the downside, under 274 in tens. how easy is that? looking at charts. intraday or two day, the pattern is the same. taking out yesterday's high on the two day. boom, your momentum comes back. hot in treasuries right now. and if you open it up to 620, my favorite place to start to chart. if we were to close right here, 284, second highest yield close going back to july of 2011. put it in perspective.

but it's just not us. you know, flight to safety. usually when merging markets melt down, buying in the good sovereign no. because they're hot right now. if you look at the boon, you can see it's moving up. open that chart up to march of 2012. that's the last time we saw it. look at the build. big day there. they joined the treasuries long end. highest yield since july-august of 2011. last chart. dollar index. boy, this thing is kevlar coated because it's hovering. so say traders. back to you. >> hey, rick, thank you very much, buddy. big fed day again. thank goodness, everybody. finally bringing some class in this joint. kelly evans. where have you been? >> i was preparing. >> it's television. >> i was looking through the dollar index and, in fact, that's exactly what i wanted to pick up on. rick just mentioned it. also talking about this yesterday. and got a couple of questions on it. people saying why is it that the

dollar has been so weak when all the headlines are about the collapse and emerging market currencies. matter of perspective. the u.s. dollar index is basically measuring the dollar against the trade partners. 83% of the index, guys, is not the emerging markets, not these other currencies you've heard about late think. 80% of the index is the british pound sterling, the euro, and japanese yen. the three currencies have been resilient over the last couple of months. it has a little bit to do with their own economic situations improving. a little to do with what's going on in japan, as well. the yen has strengthened and not decline declined. as a result, we've seen the u.s. dollar index weaken. is that a problem? keeping the commodity prices higher than they would be otherwise but certainly no important inflation. fra frankly, this is a lot of problems they would like to have. their own currencies not necessarily as weak as they would like, especially if you're in the eurozone and not in

germany. the u.s. meanwhile, we're going to get a little bit of a tail wind, a little bit of a benefit for those companies. >> every quarter we're on it's like here's how much we have to take down for currency. i'm surprised people don't care about this. >> it's not usually a huge factor but in the third quarter when we're going to see pressure on sales for other reasons, we're going to perhaps get a little bit of help and sure pop for the dollar. >> impromptu sullivan trivia time. we're going to play a game that i'm inventing as we speak. what is the most important currency t in the world for the stock market, for the stock market of the u.s., the most important currency? u.s. dollar, yen, ruby, or other? >> other is tied back. >> it's an actual trivia question. >> the trouble is the answer changes. >> i just made it up. kelly, what would you say? >> there are times it's the dollar. >> i believe it's the yen. >> you can make a case.

you've got to go dollar. >> i point out there's a lot of false correlations. remember the days when the dollar was going down. therefore oil buzz r was going to do certain -- >> i want to make a point. if you look at the ten-year, it's been rising during the asian sessions. a lot of immersion emergining m. they are selling their treasury holdings to do so. what i'm suggesting is that -- >> currency is often tied to our treasury. >> right. what's happening is it's partly because they need to keep raising dollars because their funding situation keeps worse seasoning and drives up our interest rates. the question becomes, is the back of the heel here happening for the right reasons or for the wrong reason? >> does it even matter why? >> yes. >> no prks t. market says yields are going up. that's all that matters to me. >> it matters because people see better growth. that's great. fine. deal with that. stocks will rally. if it's rising because emerging

markets can't raise enough money, if it's rising because there's a little bit of a squeeze, that's going to have an a negative impact on growth back here. >> by the way, i'm going to blow your big brain -- >> is that where you're going to go? >> no, the best performing stock market in the world over the past month. >> argentina. >> i watch the show. i watch the show. >> you're the one! >> no, i watch the show. you are fabulous. can i just say that? you are fabulous. i'm learning. >> she never answered the trivia question. >> dollar, yen, ruby, or other? >> that's a nonanswer answer. liberal elite? >> we talked about this. you're tell lehe elite not elit. >> more elite. >> a little virginia love. >> i like this. >> okay. my answer is that it is a and b, it's the dollar and the yen. >> a and b, liberal arts major,

i guessed it. coming up, more flip-flopping by kelly evans. plus, to taper or not to taper. randy kroszner tells us what to expect at the jackson hole meeting. later on, staples getting crushed after earnings. the former chairman and ceo office of home depot is giving us his take. >> i like that. as we head to break, this morning's early movers. if you're on the radio, lowe's is up. nasdaq is up 2%. >> utility is coming back. housing is calming back. let's stay focused. >> right after the break and kelly will finally answer the question. [ male announcer ] come to the golden opportunity sales event to experience the precision handling of the lexus performance vehicles, including the gs and all-new is.

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hp moonshot. it's time to build a better enterprise. together. and experience the connectivity of the available lexus enform, including the es and rx. ♪ this is the pursuit of perfection. welcome back to "squawk on the street." i'm bertha coombs in nymex. well get the numbers from the government at 10:30 this morning. at this hour, oil price, crude trading low we're the dollar stronger ahead of the fed minutes and as inventory numbers. industry numbers after the close yesterday, ap i-reporting a 1.2

million drop in crude compared to 1.5 million estimate for eias at 10:30 this morning. it was more bullish when it came to gasoline. 3.7 million barrel drawdown. that's more than twice the estimate on eai. natgas is the big performer in energy with the expectation, brian, that we're going to be seeing higher temperatures as we close out the summer. particularly in the midwest. back to you. >> thank you very much. facebook's ceo mark zuckerberg wants to get to billions of people who do not have access to the internet to getting a cess to the internet. zuckerberg announcing the effort to cut the cost in developing countries which could mean billions of new facebook users. listen. >> the first billion people that we've connected have way morme money than the rest of the next 6 billion comcombined. it's not fair but it's the way that it is. we just believe that everyone deserves to be connected and on the internet. so we are putting a lot of

energy towards this. >> rare public comments there from mark zuckerberg. looking out for facebook as well. do you care? >> no, it's nice. >> from a stock perspective. >> yes. i read this. you know what, this guy is not stopping. he wants everyone in the world on facebook and he's -- this guy is a visionary. he was underwait rated because of the darn ipo. still the hottest space on earth to try to get a job, by the way. best schools all trying to get a job at facebook. number one place. there is lot more "squawk on the street" ahead. coming up, it doesn't matter how big or small you are, everyone has a hobby, whether it be water-skiing or six stocks in 60 seconds. just don't jump off halfway through. "squawk on the street" will be right back. at a dry cleaner,

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time, six in 60. six stocks in a minute give or take. let's look at cummings, the engine maker. >> i'm hearing that cummings -- that truck sales have not been so great. >> former bank of montreal making a call. >> tupperware is not herbalife. it doesn't have the same business model but i see it making it. >> we talked about google getting nfl rights. what about dtv? >> it's tricky. >> you've got to be able to block local games. >> directv down 1.1%. hue bet pahewlett-packard? >> hottest stock of the dow this year. >> toll brothers? >> let's talk about this because i said that maybe this was going to be a pause. they're talking it up and it's working. this is a very important, very important conference call. bob might be -- he may be more right than i am. >> ceo. stock up 1.4%.

plo . >> they're saying this is a hot one. you're from jersey. i'm from jersey. >> i'm not from fr jersjersey. i live in jersey. >> is there any place you're t not from? >> no. virginia, by the way. virginia tech. go hokies. >> i watched the chargers game. >> what's on "mad money" tonight? >> i wanted to mention cummings because i've got eaton and this is also eating. i'm eating the cookout and the nerms of the electrical company. cummings isn't that much more with eaton anymore because it's not just trucks because they bought cooper. we're going to find out about that miss because the stock got clobbered. >> how much is eaton like a honeywell where honeywell is a broad measure of company. >> they've got more space, more tur turbo. eaton is more industrial. >> much more residential and

nonresidential construction company. we will have a lot on that tonight. >> eating with eaton. >> you know what? you're really good. >> and if you're in the woody allen movie, it would be eaton with keaton. i don't even know what i'm saying. >> when i comment i get in trouble. straight ahead, breaking news -- >> what do you have? >> i don't know. >> the fed minutes. the fed minutes. >> breaking the fed minutes. >> straight ahead. breaking news on housing at 10:00 a.m. existing home sales. plus, target in the red after earnings report this morning. that stock is down more than a percent. find out how you should be playing it. thank goodness we're going to be joined by also classy but dodgy kelly evans, simon hobbs. it's all coming up on "squawk on the street." (announcer) scottrade knows our clients trade and invest their own way. with scottrade's smart text, i can quickly understand my charts, and spend more time trading. their quick trade bar lets my account follow me online so i can react in real-time. plus, my local scottrade office is there to help.

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and pilots and stadiums. but, of course, it's a good listener too. [ female announcer ] today cisco is connecting the internet of everything. so everything works like never before. welcome back to "squawk on the street." i'm hampton pearson reporting live. hoef saems jumping 6 1/2%. annual rate of 5.39 million unit 'that is the highest monthly increase going back to november of 2009 which was slightly higher which also marked the expiration of the homeowner's tax credit. the consensus forecast, increase of 1.4% and 5.15 million units.

the year over year increase, 17.2%. sales were up in july in all four ree jogions of the country. sales were up 12.7%. the median home price nationwide is $213,500. 13.7% year over year increase. all cash sales accounted for 31% of all transactions in the month of july. the housing inventory stands at 5.6% or 2.28 million. a good home units say chief economist from the national association of realtors, mortgage interest rates are at the highers level in two years pushing some buyers off the sidelines. back to you. >> wow! clearly higher rates are just killing housing, hampton. please note my sarcasm. hampton pearson, thank you very much. >> someone is trying to take a bit of a victory lap here? >> it's a long way to go. i just said 4 1/2% is still dog

gone good. my brother-in-law is a realtor. things are strong for him still. >> how many are actually cash sales and when do you expect it to show up in the third quarter? the people aren't actually using the mortgage. >> so maybe higher rates don't matter for them. >> they will. >> you don't borrow money, higher rant won't matter. >> it will probably come in the third quarter. a lot of people would have bought all of their purchases and that might be why it's stronger now. >> if you're buying all cash -- let's say i'm wrong. higher rates do hurt. prices fall. extra cash, that's good for me. i'll buy morehouses, right? >> prices go down, buy more. >> what we're concerned about is what the federal reserve is going to do in response to the data. finding out what the real underlying state of the economy is for the bulk of the people. >> i don't know but you know who does know? >> steve liesman. >> excellent segue, my friend. less get more insight into all things data, all things fed.

senior economics reporter, steve liesman, all things fish in jackson hole, why open ppg what do you make of the housing data? this is a number that actually does include higher mortgage rates. >> yeah. and i think that's going to be good news for the federal reserve. i think that there is going to be the question as to whether or not you have people who are kind of came off the sidelines because of the higher rates, things could still go higher. they want to see this continue. but i think if you look at what's happened with lowe's and home depot, which i think have been pretty decent news in terms of housing, some of the builder sentiment surveys have been positive. the idea that the housing recovery can withstand these somewhat higher rates, they're still low by historical standards but higher than they had been by almost 100 basis points. the idea that it can p withstand that is going to be something the fed is going to be very concerned about. overall what i'm hearing from some fed officials is that they're not certain about what's going to happen in september because they're not certain

about where the economy is going. among the things that weigh on them is the effect of higher interest rates. what's going to happen in washington when it comes to the debate over the debt ceiling. and also the effect of the sequester. i think they would probably like to taper when it comes to the september meeting but if the data is unclear then i think they'll hold off. >> steve, right there. we want to keep this conversation going now and bring in randy. federal reserve governor and professor of economics. boost school of business. professor kroszner, good morning. >> good morning. >> so we been having this back and forth discussion. when we get the fed minutes later today do you expect them to show the case for the september taper which they are saying is pretty much priced in? >> sort of as steve was saying that a lot about the data because there's going to be one more important piece of data before they sign, which is going

to be the employment report at the beginning of september about what the employment situation was in august. fi i think if that number is weak, negative revisions, they may wait. otherwise, i think they're on track for taking a step down in september. one thing that i think the minutes will talk about is that they're not going to do a traditional taper of, you start and you go straight line down. the chairman has never used the word taper. my guess is they will talk about different alternatives for how they might unwind this. a step down in september, take a pause, see what the consequences are and then perhaps do more. >> let me double background. let's not forget the last employment report that we have was disappointing. and the assumption is presumably that the fed is still more concerned about employment at this stage than anything else given where inflation is. therefore, while they may be desperate to do some tapering before he leaves office,

presumably, it doesn't necessarily have to come down, does it? >> it doesn't necessarily have to come now. the employment report was weaker but not so weak that i think it takes them off the track. if they had another month of weak numbers, particularly in, let's say, 150, negative revision. that may cause them to rethink things. >> the taper in september is not a done deal, is that what i'm hearing? >> i think it is data dependent and i think it's not going to be a taper. i think it will be a step down and a pause rather than a straight line down. chairman never used that word taper. >> go ahead, steve. >> kelly? >> i want top pass along what a observer said to me. he said, if the market thinks that the fed is going to be tighter than is otherwise warranted by the economy, the market has that dead wrong. the idea that the fed is going to lead on the issue of tightening on policy is really goes against everything the

federal reserve had said. you can expect the federal reserve to lag behind the data and with strong data. i think the market fear right here is that there's going to be some kind of policy in the state and i'm not saying that's right or wrong if the markets should have their fears. they're the ones investing the money. i would say if the concern the fed is going to be too tight. i think everything bernanke and every central banker who i talked to has said is really goes against that idea. >> let me just have one more thing, steve, which is the case of deutsche bank at cnbc.com. he said there's still a tremendous amount of confusion. nothing is going to be settled this afternoon. this is the problem with transparency. all being asked to comment on stuff that everything doesn't know. confusing? >> i want to respond to that. i talked to a fed official who said, actually asked me, what do you think we should do in september? he said, what's going to happen

to the economy? i wassen sure. he said, if you're sure about the economy, then i can be sure about policy. that, you know, when randy because saying it's data dependent, the fed is uncertain about the economic outlook for the reasons i detailed earlier. debt ceiling debate. effective higher interest rates. uncertainty on that it would provide transparency. >> can i jump in for a second, too? randy, want to ask you this. we tend to look at this tapering idea of binary events. the rolling stone will gather. what are the odds if they do start to pull back that all of a sudden things turn down. they can put it back on, right? this is not like an all or nothing proposition for the fed. >> exactly. the chairman has been obtained to try to make that point. as i said, he has never used the word taper. he doesn't want the idea to be that once you start inevitably you've got to go to zero in a steady way. >> why do you think people, randy, are acting like that's the case? >> i don't understand that.

the chairman has never used the word taper. i don't know where that word came from. it's been true in other times when they have unwound programs it's been steady. i think the chairman made it clear. it makes it clear. they introduce the notion that they can increase or decrease the purchases, at the same time fed chairman is talking about the potential stem down in the fall. >> i want to say very quickly that i think a concern the idea you have, brian, is reversing policy. you think you're confused now. let's say the fed went up and went back down. you would be complaining about the confusion from the federal reserve and also there's an issue of credibility and issue of expectations which the fed wants to guide in the key part of the policy. >> i correct you, steve. i believe it's all credit ability rather than credibility. >> appreciate the discussion. >> all right. let's focus on target

trading in negative territory, beetding the streets on the earnings headline. the refrigerator knew was a little bit soft. discount retailer said, expansion. more importantly, it is cutting is earnings forecast for the third -- for the second time in three months. let's bring in patrick who is a senior equity analyst with mkm partners. patrick, good morning. i guess to a certain extent, patrick, we might have known there should be softness here given what walmart said last week and how the two trades in terms of stock prices, it's almost identical. in anticipation of it, target is down 8% over the past month. where will the stock go down, do you think? >> i do think, simon, some of this was priced in. they had a 1.2% increase in u.s. same-store sales. and that was a little disappointing relative to original expectations of 2% to 3%.

it was better than walmart. walmart had a 0.3% decrease in the u.s. same-store sales. so a little better than walmart. traffic was weak though unfortunately at target. so it wasn't a great preempt but i do think a lot of the weakness was priced in. and i think this stock starts to move higher from here. >> interesting bhip is that? >> well, i still think target is very well positioned in the u.s. i'd like canada, although canada was probably the bigger disappointment in the quarter. they lost 21 cents in canada. they had guided for a 16-cent loss and actually significantly increased their estimate for dilution in 2013. up north of 80 cents now in the prior guidance, dilution of 45 cents. >> on the target, it is 77. that is bullish. where are we on retail? yesterday was a good day with best buy and urban outfits.

home depot said it had one of the best quarters in a long time. perhaps it was all disappointing. where are we on the consumer at the moment? >> kind of mixed, i think. there had been some good reports and plenty of bad reports, particularly in the apparel space, the teen apparel space has been weak. the consumer is squidish but does have more capacity to spend than they did a year ago. needs a catalyst to spend. but very mixed. >> and in that requirement briefly, who out performs? >> well, the off price apparel space. tjx had same-store sales growth. ross will report tomorrow. off price, i think dsw is doing well. value plus brand. >> good to talk to you, patrick. thanks for your time. patrick mckeever. i like your point. teen apparel space has got to be the most insane space to invest. gap is up 40%. american eagle is down 25%.

abercrombie and fitch is flat. i go in the stores and i think they're all selling the same stuff. >> that's the problem. coming up next, indonesia and thailand, the emerging markets this week. the question is what these markets have to do with your money. "squawk on the street" is back after a quick break. right now, 7 years of music is being streamed. a quarter million tweeters are tweeting. and 900 million dollars are changing hands online. that's why hp built a new kind of server. one that's 80% smaller. uses 89% less energy. and costs 77% less. it's called hp moonshot. and it's giving the internet the room it needs to grow. this&is gonna be big. hp moonshot. it's time to build a better enterprise. together. ♪

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welcome back to "squawk on the street." i'm dominik. here's one for the sports fans. if you like the new york knicks

or rangers. earnings per share coming in at 47 cents. beating the average analyst estimate for 30 cents per share. sales came in better than forecast as msg really a sports and media both posted higher revenues which helped to offset a drop in the entertainment division. msg shares are up although off their session highs. guys, back over to you. >> thanks very much, buddy. emerging markets feeling the brunt of the pain lately as investors look to the fed and the whole tapering thing to begin next month. maybe. the emerging market indesfalling 4% over a weak period. is this an opportunity to get in or should you sell and take a loss if you got one. jeremy schwartz at the director of research at wisdom tree asset manageme management. jeremy, when we see emerging markets. huge term. markets are different all over the world. let's be as specific as we can here with the names. in all, the brits, brazil, russia, should we sell them all,

buy them, what? >> it's interesting. the emerging market had been one of the worst performers this year. they've been down 10% overall this year. they're definitely diverging. leading of a. downturn. russia and china are showing some strength. i believe the emerging markets do actually offer some attractive ral you asian. the current crisis is low as i've seen in time. and i think that the overall strength that is actually quite good from the perspective. >> jeremy, haven't you been long emerging markets all year though? >> we've been treated an etf provider and we provide tools for investors. we do believe we've done a lot of research on emerging market valuations. when you look at the current prices we see, you know, five years, prices had been lower than they are today. and each of those five years, very, very positive returns. of when i look at those valuations i say those look like a good set of valuations to be getting into the emerging market. >> by mri point is the

valuations have been a compelling one all year and it's been wrong. why should people look to valuations today as a point get in when there could be a strong argument these things are value trap? >> well, you know, you can only look at the past data and the objective about what does the valuation say. and a lot of people worried that the u.s. has already moved too high and they are worried they missed the boat but the emerging markets haven't done that. what are the long-term potential and what are the catalysts. the underlying trend is demographic. and so i do think there's an underlying support for the long-term story. when are the prices low enough to make a good entry point? >> jeremy, do you think that there is a bubble in some parts of emerging markets coming into the summer and that one of the reasons that the fed started its taper talk was deliberately in part to reduce risk taking in emerging markets? what bernanke calls reaching for

yields and what fisher has subsequently described as going from wild turkey to cold turkey. does the fed know exactly what it's doing in emerging markets and the effects that it will have in order to save investors? >> i actually believe people are overreacting to the fed news. people seem to be selling a lot of these emerging market kurchs ku currencies and it's going to remove the punch bowl from the liquidity providers. one thing to remember is that they are serving up plenty of saki. just starting to provide their community program and they're going to be stepping in when the central banks from the u.s. -- jeremy, just to the question that i asked you. do you think the fed saw a bubble and decided it in part had to react for that and start the tapering talk? >> no, i believe they believe the u.s. economy is getting better and as the u.s. economy is getting better they're trying to -- looks like the interest rates to start reflecting what the economy is doing and not really what's going on in the

emerging markets. the emerging market is seing off because of the fed tapering and i think that's an over reaction. >> jeremy, we'll leave it tr. thank you very much for joining us this morning. jeremy schwartz from wisdom tree as people look at whether they should look at opportunities in emerging markets. russia is always, by the way, had a massive valuation discount. >> that's the thing. >> through the gates of hell if you want to invest there. >> sometimes things are cheaper. >> contract on oh. >> i agree. >> on the human rights. >> ask hell. up next, trading glitch that could cost goldman sachs more than $100 million. more on that after the break. she loves a lot of the same things you do.

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some breaking news. bradley manning has been sentenced to 35 years in prison. also be dishonorably discharged

from the military. we don't know how much of that sentence he will serve. >> the government was pushing for 60 years. 700,000 documents were rethe leaks that he made. huge. huge amount of espionage. in the latest t in the technical glitches to disrupt the markets, goldman sachs could have a bill of more than $100 million. mary thompson has more on that story. mary? >> that technical glitch flooded the option markets with bad trades from goldman whose ultimate loss will depend on how much trades the exchanges cancel or bust and what goldman owes any impacted counter parties. in a statement the company is saying the exchanges are working to resolve the issue and the losses won't be material for the company. according to a person familiar with the situation, here's what happened. changes to the firm's computer system believed to be the reason shortly after the markets opened tuesday goldman mistakenly sent to the exchanges an internal

risk it compiles on the equity options. also included, false execution prices well out of the range of those bid/ask prices. at which those trades were executed. what this means is even if the goldman internalists had a kelloggs option of a bid of ask -- excuse me, a bid of nine and ask of 11, the trade may have been executed only at a dollar. the nyse and nasdaq reportedly busting or canceling some of the trades yesterday. most likely because of the wide gap between the bid/ask and the execution price. what determines the bad trade? well, the exchanges had suffered similar rules. here's what you would find on the nyse website. a clearly erroneous trade is an execution is an obvious error in any term, such as price, number of shares, or other unit of trading or identification of the security. as we said, it's not known net how many bad traits were canceled. all of the exchanges completing the reviews and nyse telling traders most of them would be

busted and if so, $100 million. it has yet to be determined. they did not return e-mails and calls from cnbc seeking comment on how many of those trades were canceled following their review. kelly, back to you. >> okay, mary, thank you for laying that out for us. for more, let's bring in principle at sam o'neal and partners. richard, what has to happen for this to be material for goldman? >> well, if the number that the media is putting out of 100 million, you know, goldman revenues are $9.1 billion or so in the last 12 months. we don't any even if it did hit $100 million, by the way, my sources are saying that it probably won't. you know, it's just a drop in the bucket for goldman. >> sure. what about though the error itself? has that become an issue here? >> yeah. i think what's interesting here is, you know, we've had another problem with the trading error where, you know, it sort of has run away from a broker dealer. and i know how mary thompson was

just reporting. these clearry erroneous trades are going to bail them out this time. more intense scrutiny both on the exchanges, the regulators and the broker dealers to prevent something like this happening, you know, beforehand. >> richard, it's brian. listen, goldman sachs, people compared this to night capital literally trading error, the software glitch, brought the company down. we've already slammed high frequency trading from left, right, and sideways. how much longer do we have to realize that there are severe problems with these types of trading that can literally destroy firms? >> well, i think there's a big difference. first, first with knight, much smaller firm, much smaller capital base. and a much bigger loss. but even besides the point, brian. you bring up a good point. but the one point i want you consider would be if you look at

electronic trading and what goes on in our markets today. the electronics just mimic what happened in the markets manually prior. we talk about colocation and, you know, locating the server right next to the exchain. even in the manual world. the world in the open outcry. traders are on the floor. proximity advantages. now there's speed advantages. just take yesterday. what has happened here with electron electronics, you do have the potential to amplify. machine like trades can amplify the errors which partially occurred yesterday. you i guess by point is electronics mimic the manual world. we've got to do a better job and put better controls on it. >> richard, there are many people, if you look at surveys at home who think that the system is rigged, they think that the system is rickety, that it could come down at any point. the flash crash, knight capital.

what is the big picture here? is this financial system, is this trading system robust and solid and mistakes will always happen or do we have in the grand scheme of things, deeper problems? >> no, simon, i think, you know, to -- i would agree with the point that i think investor confidence is a bit shaky given the errors. i think it's up to the industry. i don't think that the -- you know, the market structure in electronics are hanging on a thread. i do think that they need to put in more safeguards and they have to work together, you know, to prevent errors like this. what i don't think the investing public may not get is that, you know, when they do a trade, almost every trade is going to be automated in some fashion. but i can see if you're sitting on the outside and looking in that, you know, it isn't a pretty picture when it looks like goldman loses -- you know, yeah, again, i'm -- >> electrifying stock to hold it to six months to a year in which case it could broadly be irrelevant. >> exactly.

exactly. >> we're not seeing goldman shares under any more pressure than is considered this morning. richard, thank you for your perspective there, of course. we'll have to see how it plays out. >> $100 million. a lot of money. maybe not to simon but $9 billion in revenue a year. >> again, the jpmorgan example, it took the period of almost several weeks if not months for the size of those losses to become -- >> there are derivatives on that. we've got to go. we've t got breaking news at the my neks. >> we've got the weekly eia numbers. drawdown on crude. down 1.4 million barrels. rising, 87 0,000 barrels. in terms of gasoline, that is the disappointment. not a disappointment, sorry about that. a bigger than expected drawdown. just over 4 million barrels. that confirms what we heard yesterday from the american petroleum institute. we are continuing to see gasoline extend gains here.

one of the things we are seeing though in terms of that trade between crude oil and gasoline is that crude oil is under pressure a bit because we are hearing that libya now is going to be bringing back some of those fields that have been off line. they say they will be able to offer from two of those fields. so overall the global supply situation is a little bit bearish. none the less, we are seeing gasoline lead the complex higher. breaking news there ahead on the show, retail irs week's big winners already. what do they need to do? what do these companies need to know to keep the momentum going through the back to school season? the former ceo of office depot will weigh in and staples is down over 10%. i turn ed 65 last week. i turn the math of retirement is different today. money has to last longer. i don't want to pour over pie charts all day. i want to travel, and i want the income to do it. ishares incomes etfs. low cost and diversified.

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welcome back. these are the stories we're talking about. one hour on the trade. potentially big news on the sports world according to quul things d, they talk about rights to nfl sunday ticket. the nfl's argument, agreement, that is, the directv will expire at the end of next year and at that point sunday's ticket could be up for sale. plus, this morning facebook owner mark zuckerberg wanting to get internet access to billions of people unable to getting a cess already. it's aiming to bring cheap services to 5 billion people throughout the world. and buying just keeps on growing.

the twitter owned video applications has 40 million users. carl is one of them. increase of 27 million people in 2 1/2 months. and that number is going to register not act i users. still a big number, especially after facebook's instagram was made. staples is down after missing earnings estimates. with us now is the man that is no stranger this. steve joins us, former chairman and ceo of office depot, now leading the non-profit committee for economic development. good morning. welcome. >> good morning, simon. how are you? >> i'm concerned about staples. i'm concerned about the space. if you look at the stock price we've been doing well on that particular stock. there was a feeling that maybe we were bottoming. and today they missed estimates. what do you think of the industry at the moment? >> the office products industry has always been a bellwether. it's important to track this industry because they sell

mostly to small businesses as well as somewhat to consumers. if small businesses are not buying and consumers are not buying, it doesn't bode well for the economy. you know, we have to remind ourselves that 70% of the economy is driven by consumer spending. so their volume is very, very important. their volume is down and the office products industry has been pressureford many years, since the -- >> a bit more complicated than that. you know this better than i. the discounters. onliners. walmart, target. they're closing down 49 stores in europe. do they have the right strategy? >> what they're trying to do, and i think we need consolidation in industry. officemax and office depot agreed to merge. shareholders approved it. waiting for government approval. it needs to happen because there's so much pressure and so much competition from the online world and so forth. i think the bigger picture is the economy. we at the committee is very concerned about the state of our

economy and the fact that we're not growing fast enough and job growth is tepid and most of the job growth, 77% year to date, has been part time low-paying jobs. this is not the kind of recovery that you would expect to see or want to see in a healthy economy. >> steve, let me just draw you into that merger talk, if i may. the former head of office depot now merging with officemax. the news we have overnight, of course, is that they have greed to pressure from the activist investor starboard to put three executives on the board. starboard with 14%, 15% stake, at a time when they're rying to do the deal, trying to find a ceo. i mean, what do you think of that decision, does it change the outcome? >> no. >> resisting it? >> no, look, the focus has got to be right now on the merger make that happen. it's the right thing for both companies. it's the right thing for the industry. and it needs to be executed very well. so the board in whatever composition needs to get very focused on that and it's going to be a different board anyway

once you have the two combined companies to have components of both. >> would you have agreed with the activist investor that the board as it stood lacks experience and do you think now that they're putting their own people on the outcome will be different, the shape of the business will be different? >> look, i think the important thing is getting to the merger and that's supposed to happen in a few months. i'm not sure how much time they have to make a lot of change. the important thing is when this merger happens, everybody gets together. the board gets on the -- in the same playbook with the new management team and they move forward and get this thing executed. this industry is in a precarious period of time. it is economically presurd and it's important that you have one strategy and you execute going forward. again, it's a bellwether of the economy and the bigger issue is the external pressure from the economy on this industry. >> you make the point very well. thank you for joining us. thank you. let's send it over to dominik. what are you looking at?

>> how about snack foods. diamond foods soaring. the company behind emerald popcorn issued a stronger than expected outlook for fiscal fourth quarter. the company said it will settle a lawsuit tied to accounting issues. they'll pay $96 million in cash and stock into a fund for investors under the post per post settlement. diamond denies any or wrong claims of doing. remember, that your earnings restatements and scrap a $2.4 billion deal to buy briuy bring chips from procter & gamble. >> thank you very much. slowly but surely they're getting their stuff cleared up there at diamond foods. they had a suicide of a board member in 2000. >> good of you to mention it. >> good morning to you. >> jolly good morning along. >> set the dark cloud here. wow! is solar back from the dead? china-based solar panel trina raising the outlook today. stock is up a cool 90% so far

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litly it seems there's been a bright spot for solar. trina solar has raised the forecast for solar panel shipments. what does it mean for the broader industry? let's bring in jane wells and trina solar president for america's mark meddenhall from san jose. jane? >> thank you, kelly. mark, thanks for joining us. let me see if i can do this. stocks way up over the last two days as you reported. much better than expected shipments. much narrower loss than expected. others talk of expanding capacity, growth in china and japan. what was what's going on? i thought this was a low-margin dying business and that china was slowing? >> i think the entire industry has been experiencing a lot of growth. but the last couple of years have been difficult because of over-capacity industry thank is now beginning to sort itself

out. trina has always managed to manage its finances in a conservative fashion and i think we're now beginning to see the benefits of that conservative management of our balance sheet. >> it sounds like asia is absorbing a lot of this capacity. what is going on in asia? >> we have the expansion in japan which is trying to replace a lot of its power production that occurred after the unfortunate tsunami that occurred there. but china is also -- has great demands for power. so they're expanding both in wind and in solar and we're picking up a lot of that business in our own development. so the world needs more energy. and we're happy to be one of the largest producers producing the solar products to fulfill that need. >> now, the u.s. has slapped tariffs on chinese solar panel makers claiming illegal pricing that you just won a huge contract from sempra to build the largest trve facility in the

u.s. more than one million modules. are those tariffs having any impact on chinese panel makers? >> i think it means that we have to continue to manage our process and our products well. so it does have an impact. we could even have lower prices and more product without the tariffs in place. we managed to find a business model is that is successful that continues to help grow and help support the industry and put us in a profitability position. >> chinese retaliated with tariffs of their own on u.s. panel makers. is that one reason why you are seeing broet in japan and china. >> i don't think that really has much to do with the growth in china or japan. i think it has to do with the underlying need for more energy. >> really? >> the chinese growth is the fact that -- the chinese government is putting in place a lot of solar installations and solar power production, of which

is number of u.s. companies are approaching us as well to develop products within china. i don't think it's a pure china play in that regard. >> how are you managing to grow margins from, i think, under 2% a year ago to 11 and perhaps 12% this year in this business? >> well, i mean, over the years the cost of the panels by all manufacturers have come down. and we continue to march along in a very steady and a very concentrated fashion, not reacting completely to all the market pressures, so we gave up a little bit of market share earlier this year. but continue to work on up improving efficiencies over products. as you may know, we just won the silicon valley coalition award for being the highest rated manufacturer in the world for both sustainable practices and for worker safety and for reduction of toxicity in our products. trina has been in this business for 20 years. we're one of the largest manufacturers in the world and

we manage our finances very carefully. i think that is recognized by our customers as a company that's not here short term, that's not new to this game, and that manages this business in a very responsible fashion. >> mark mendenhall, president for the americas trin what solar. thank you for joining us. >> thank you, jane. nice to see you again on the west coast. this afternoon could be huge for markets with brian sullivan at the helm of the network. the fed will issue the minutes. and we'll get a better idea of when they're likely to tape ter easing. make it happen with the all-new fidelity active trader pro. it's one more innovative reason serious investors are choosing fidelity. get 200 free trades

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as we count you down to the release of the fed minutes this afternoon, let's bring in rick santelli live in chicago. morning, rick. >> good morning, simon. you know, it is that time where we're all looking towards the fed and we'll spend hours looking at the minutes. we'll peruse dictionaries looking up the words, we'll look at synonyms, ant nims, hidden meanings. let's take a more macro view and look at how all roads in many ways lead to the fed and their programs. when it comes to timely solutions, you're better off

studying how markets treat companies like kodak or jcpenney. but if you're looking for timely solutions in the government, you know, even not just our government, any government, sorry, you're looking in the wrong place. but this is really important because it's the government's presence and footprint getting bigger and bigger, and i'm including the fed, you get less in terms of timely solutions. think eric holder announcing they are going to go after all the wrongdoers because of the credit crisis as the clock ticks on the statute of limitations. but keep this all in mind because the president has after martha's vineyard been on the road talking about important issues. one of the things he said is narrowing the rich s/poor gap i his highest priority. probably more in tune with

trying to push larry summer's position as fed chairman, no artificial bubbles. i want to know the difference between a real bubble and artificial bubbles. here is the deal, why all roads lead to the fed. the stock market is making new all-time records. i still contend that it makes many people scratch their heads because the administration isn't taking credit for what some deem a world class equity rally. why? remember, the fed. because in many ways whether it's bubbles, whether it's timely solutions, think quantitative easing, rich/poor gap, all of this really is being set up right here. think about corporate profits and then contrast that with employment. see, the problem is that really all roads should lead to jobs, jobs, jobs. but there is no real solution to job, job, jobs because the government can't create the kind of jobs that the private sector can that are the real gold in

our golden type economy. in the end what the fed does today, i'm not sure that the cover your butt mentality can ever be escaped by bureaucrats because in the end if ben pulls quantitative easing in his mind too early and negative things happen, he will get blamed. staying the course might not accomplish anything but it takes him away interest that and we have a change of guard. i don't know, but from where i said i would say no timely solutions and when it comes to bubbles and regulations and dodd/frank, show me one example where a regulator saw a bubble early and did something to prevent it. back to you. >> rick, i can't come up with one. rick santelli this morning. >> geez, that's amazing, isn't it? >> exactly, exactly. now, really, i'd love some examples, people. >> it's the exact opposite. they were easing regulations as the housing market stashthed to roll over. >> the top brass at google meeting with roger goodell.

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bloomberg the company, not bloomberg the mayor, making headlines this morning releasing an in depth report of his

practices of reporting on clients using its wall street terminals. kayla tausche has more on the back of that story. >> that inquiry was launched in may following a series of complaints logged by wall street firms such as goldman sachs and jpmorgan that bloomberg reporters were using data about its terminal clients, many of which were at the firms to break stories. the 100-page inquiry completed by ca consultant found a time when the tv anchor had used the terminal to locate a rogue trader. jpmorgan's sale of a muni bond was compared to a nazi invasion of a town and acknowledged it was inappropriate. what it did not find was that reporters were using login data to find when some had left the firms.

the review also places emphasis higher up on the standards of its news division and it's relationships with bloomberg's lucrative sales force. the ceo personally delivered the news of the report to clients. a newly pointed senior independent editor will field complaints from the public on new standards at the company and report directly to the ceo. the creation of that job just one of the results. another, a new standards editor, a newsroom standards task force and stricter chinese walls between the news, sales, and data divisions at bloomberg that often had tons of information about those clients. wall street firms for the most part believe bloomberg did all the right things corporate governance wide but the development of new products to rival bloomberg, those i'm told will still proceed. the complaints may have calmed b you the competition is just getting steeper. >> kayla tausche, it certainly is a story that's been developing for a couple months. i will say this as a long-time

employee of bloomberg, i was there for 12 years, anybody that's going to come up with a competing product to the terminal, good luck. it's a status symbol more than anything. >> it used to be. there you enough other -- i have a couple friends last year starting a hedge fund. what did they not do? they didn't get bloomberg terminals? >> what did they get? >> they're doing research -- >> but in terms of -- i'm saying the bloomberg terminal has become a status symbol. if you have a bloomberg terminal, it means your company is basically willing to pay "x" thousands of dollars a year to employ you which says something. >> but you have to wonder again if we've seen a little -- just a chipping away. not saying it's anything more than that, but just a chipping away at that stalwart. >> is that carl quintanilla over there? >> hey, spotted. he's made it. carl! >> i loved your twitter revolution, by the way. how did the "today" show go? >> yes, we are. thank you, brian, for joining

us. >> we're live. should we promo the fact you have the moment of truth this afternoon on your show on "street signs," the fact we'll get that fed decision coming through the fomc minutes. >> co-hosted by myself and amanda drury. >> i will be doing "power lunch" in the run-up to that i will be handing you over quite a large audience. don't lose it. >> the all british accent hour. >> three hours to go? lots of reasons to stay tuned in this afternoon. brian, thank you. carl will get up here. if you're just joining us, here is what you might have missed. welcome to "squawk on the street." here is what's happened so far. >> i think people are feeling bullish about the do it yours retailers and their prospects. house something certainly an important part of that. so is the improvement in gdp, although that's moderated a bit. >> is there going to be a financial crisis in the emerging markets? >> i do believe that's going to be the case in a couple years' time. maybe even less. >> they've narrowed the gap. >> i was just going to bring

that up. >> i like home depot very much. the guys who run home depot. it was a great daughtquarter bu lowe's has game. this is a remarkable moment. if google moves in, this is going to change our perception of google. i would buy google up to $1,000 in they paid anything reasonable. >> if they got the nfl -- >> wednesday, august 21st, the markets opening right now. >> we have july existing home sales jumping a whopping 6.5%. >> the chairman has never used the word taper, and my guess is they'll talk about different alternatives for how they might unwind this. most likely a step down in september, take a pause, see what the consequences are, and then perhaps do more. >> most of the job growth, 77% year-to-date, has been part-time, low-paying jobs. so this is not the kind of recovery you would expect to see or want to see in a healthy economy.

we're live at past 9 at the new york stock exchange. the dow having a hard time once again getting out the red. we are looking at our worst six days of the year, down 3% on the dow. s&p also down 4 points, 1648. the nasdaq is off a slight fraction of a point. shares of toll brothers is higher. the largest luxury home builder in the u.s., a 24% gain in revenue as customers continue to buy homes at higher prices. ceo says he thinks the housing recovery is real and that we're in the early stages of a rebound. meantime, shares of staples getting hit this morning. the second quarter earnings did slip 15% amid some weak sales in the u.s. and overseas. they lowered their outlook for the year and they expect sales to decline by a low single digit percentage. a big day for the economy. in a few hours we'll get more clue as to if and when the fed could start pulling back on stimulus.

we'll tell what you to expect. >> that's right. and is the american consumer still spending? major retailers, tartarget, low, and staples. and the nfl talking with google about the future of nfl sunday ticket. we will tell you what that could mean for your sundays in front of the tv. first though, investors will be keeping an eye on the fed this afternoon. the minutes for their july meeting will be released at about 2:00 p.m. eastern and we're looking for any clues on tapering that quantitative easing program. joining us are craig and dean. guys, good morning. >> good morning. >> dean, first to you, what's the expectation that a tapering or winding down of purchases is referenced and that september is the reference date? >> we think that will be discussed. they won't necessarily be speaking about it as a done deal in the minutes. we do think they ultimately will

taper in september, but the fed will want to have kept its options open at this meeting. >> greg, earlier, a couple guests were making a lot of the fact that the fed itself, that bernanke has never used the word taper. is that significant? >> it's not significant. the fed always has its own special rhetoric. he talks about monetary accommodation. i read nothing into the fact they haven't used those words. they're always afraid the language will con trastrain the ability to act. one of the reasons they don't like the word taper is they think it implies a reduction in the pace of bond buying, month after month, quarter after quarter. bernanke has gone to pains to say this will not be a mechanistic process. if the economy unfolds as they expect, it will look pretty mechanicistic. >> interesting. ahead of the minutes and ahead of any meeting in september,

we're left sort of floundering with, okay, is it going to happen in small bites? is it going to be asymmetric? is it going to be treasuries or mbs or some weird combination of the two? is that discussion worthwhile at this point? >> well, yeah, it's absolutely essential. especially the question, carl, of how much. to me the question is no longer whether they start to taper and i strongly believe it will begin in september, it's by how much. and consensus forecasts are in the area of $15 billion to 20 pl billion. the most interesting potential for the minutes this afternoon is do they shed any light on that amount. some of the recent chatter from jim bullard, for example, suggests that a way to go ahead with the taper but to acknowledge the continued downside risks to the economy would be to begin very small. i wouldn't be surprised if they start with a taper of only $5 billion to $10 billion which would probably be seen bullishly -- seen as bullish by the market. >> dean, what's your view on that? the size and the composition? >> we think they will taper by

boo $15 billion, and we expect it to be in both mortgages and treasury that is they taper. there's less clarity from the fed on the composition of how the taper works than one might want. they really haven't said much at all about how they'll go about this. >> what detail in particular would you like? >> just whether or not mortgages will be included in the tapering or whether it's going to be all treasuries or a mixture of both. that would be very interesting information i think for the markets. >> and, greg, what about -- there are people out there saying that the fed's confusing everyone because so many different officials are speaking about so many different things and we just hear too much from them generally. is there anything to that point here, that there's too much noise and not enough signal? >> it's true. it's always been true. it will always be true. that's the price of democracy. you have like 19 officials out there, 12 of whom vote, all of whom have -- feel it's their responsibility and their duty to express their popinion. i want want to sacrifice that

diversity of the opinion because the market needs a single signal. let's not lose track of the key thing. trying to filter through the noise, there's a powerful signal. the hawks and the doves alike want to get this process of tapering started. the reason we haven't got yet stronger information on how much they will taper as specifically when is because those are the questions over which the hawks and doves are still twdivided. i'm not sure we'll get a lot of clarity this afternoon. there's still data to come between now and september 18th. the fed would want to maintain optionality on what they do. >> including that all important august jobs report. >> thank you very much. >> thank you. >> it's going to be a big story. before that though, google potentially eyeing a deal with the nfl. we've learned that google's ceo larry page did meet with executives from the nfl, including commissioner goodell. one topic on the agenda was rights to sunday ticket package currently owned by directv. want to get more insight from rich tullo and julia boorstin

joins us as well. the deal is up in 2014 with directv. does google have a shot? >> i think they have a shoot. one thing about google is they own youtube. youtube is all about serial viewing. if you look at sunday ticket, what is that? that's serial viewing. second point is google and the nfl can really help each other out a lot. the nfl wants to drive ticket sales at the stadiums, at the jets and other markets around the country. they're building fantasy football salons. google can take over that enterprise and help nfl fill the stadiums. the third point is google i think is in a good position with the cloud tv, with streaming to not only provide the nfl sund ticket on an o and o basis but

resell it and expand the platform. also google is a global platform. directv is not in every market around the world. ultimately what google is doing is created a tent pole for itself to land in tv. fox showed us if you have the tent pole, expand the day parts around the tent pole, make more people watch, and then promote your own content on the tent pole. i mean, that's the secret for success, isn't it? >> i can see all the advantages rich outlines for google, but what about the nfl? is this too risky for them to stray from their more i guess typical directv or cable relationships? >> well, right now directv pays the nfl about $1 billion a year, and i know that the nfl wants to increase that. obviously they're not looking to get paid less and it looks like they would obviously like an increase. it makes sense for them to talk to everyone right now. they're talking to cable companies. it's interesting opportunity to talk to a digital distributor like google, and they're

interested in that possibility, but i think this is far from a done deal and i think we have to remember that they are still in talks with directv and directv does not want to lose this asset. having nfl sunday ticket really did help put directv on the map. i bet they will fight to keep it. >> does it have any implications on the core package that is go to cbs, fox, nbc? >> not immediately. at some later on date, just as we see cbs and time warner discussing what the package entails, at some point it will. but, you know, ultimately that gets decided by the marketplace, right? what the network is willing to spend on it, what the msos are willing to charge for it, and where the monetization comes. why we like google is they bring in -- unlike netflix, they bring in alternate points of monetization into the system. netflix is a disrupter. they're going to kill cbs' content at the end of the day

whereas google is bringing in more points of advertising, targeted advertising, and helping everybody make money. >> i think it doesn't make sense to compare netflix and google because their business models are so very different. i think what's interesting about this nfl deal is that it's unlikely to be ad supported. google is -- youtube is primarily ad supported. google is obviously an advertising-based company but youtube has introduced a couple subscription options. it feels if they would do an nfl ticket oms it would likely call into the subscription options youtube has started to offer. this would be very different from what google's bread and butter is. i think that's why it would be interesting. it would really make a big push into the live events business which is very different from the vast majority of what they do, which is these prerecorded content. but i think it's interesting because it is different, but i think we have to be really careful to assume that they would necessarily want to move in this very different direction. >> right. just talking about it just makes me want to watch football. i'll tell you that.

julia, rich, thank you, guys. thank you so much. the real story on retail. lowe's getting a big bump to the upside while target and staples are in the red this morning. how do you know which retailers are safe for your portfolio? that's coming up next. but first, rick santelli watching some rising rates today. rick? >> yeah. well, you know what? yesterday was what we used to call counter trend tuesday and i guess stocks were up. that's interesting to ponder. we're going to ponder and we're going to digest a bit of that existing home sales data we saw with one of my favorites, peter boockvar. but we're not only going to talk about that. i think we have to wade into taper land as much as i think it's been overplayed, but peter always likes to play in and he always has an interesting interpretation. be there, ten minutes. [ male announcer] surprise -- you're having triplets. [ babies crying ] surprise -- your house was built on an ancient burial ground.

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welcome back to "squawk on the street." teen apparel retailer american eagle outfit certifies taking a hit in trading today. the company had preannounced earnings earlier but today it was about profit margins and the forecast gross margins tell photographer 3.5% due to discounting. american eagle also issued a weak prop in the sales forecast for the back to school quarter given that continued price cutting. so those shares down 9%. still off session lows though, carl. back to you. >> that's a touch space to watch. thanks, dominic. target just barely beat the

street on earnings. lori is the co-founder of cross ledge investments and courtney reagan joins us from headquarters this morning. good morning to both of you. lori, you know, you listen to the earning call at target and they're making broad statements about the consumer saying they have less money because of the payroll tax. what they have they're spent on big things like cars and that crowding out other spending. do you believe that or is this an execution story? >> i do believe the things that they spoke to because we've been hearing that kind of across the board, and they actually for their u.s. business i think delivered a little better than what people were expecting coming in. up a little over 1% versus walmart we know was down on the margin. but when you look at these big ticket sales and we can turn to home depot's report yesterday that they're over $900 project, that takes the place of a lot of

smaller ticket item the consumer would have otherwise had money to spend on. >> courtney, you watch all these companies. where do you put target right now in the universe? >> yeah. target is a really interesting one. i know folks typically look at it and think their consumers are a bit higher income than walmart. i don't know that that's totally true. i understand what lori is saying about the consumer and how that is still hitting them. i think it's interesting to look at the canadian operations of course just getting ramped up there. some disappointments there. i think they're still trying to figure out that canadian consumer, carl, because it seems as if the opposite of what american consumers bought is what the canadian consumers bought. so they bought more of the apparel items, more of the discretionary, less of the consumable which is a flip-flop of what happened here. so i think that does speak to that payroll tax increase because certainly that's something that we dealt with here that canadians perhaps did not. >> and, lori, if we are getting a glimpse of the future and this

is a world in which consumers can't necessarily bolster their spending power by taking money out of their homes or what have you, what do you do as an investor? do you pick the smaller more specialty winners here? do you just kind of hope that the targets of the world are able to rotate and make themselves -- position themselves for whatever it is that consumers want these days? >> right. in this slower growth environment, we do tend to look for specialty retailers that have very strong brands and have been able to continue to drive traffic and comps in this difficult environment, that it's really not lifting everybody. if you look at a company like urban outfitters, they were able to report 9% same-store kaels. michael kors has been on fire. there are some companies that still have tremendous brand equity and are able to drive a special consumer experience, and other than that we're playing some of the home improvement related plays because we think this turn still has a lot of legs. people underinvested in their homes with good reason for many

years and they're just starting to play catch-up. >> all the signals about back to school have not been reassuring. if, in fact, it does disappoint, does that necessarily mean holidays will be weak, too? >> i don't know necessarily think that's true. we saw an increase in spending in back to school last year. so at least some of the surveys indicate a decent amount of parents and families alike have decided to make use of what they bought last year as far as the school supplies and the clothing. so, you know, possibly just some smarter spending there. that being said, you know that some spending does have to take place. it's inevitable that kids grow out of their shoes and their clothes. i don't know that it's always -- >> you're telling me. >> right, exactly. you have little ones. i know it's not always a direct indicator of holiday. of course, there's some consumer sentiment but by the time christmas rolls around i would hope at least the payroll tax cut shock will have worn off but i think we'll still feel it for back to school. >> courtney, thank you very much. lori, appreciate your time this morning.

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for more on the marks thetss morning, let's get to rick santelli. >> good morning. i'd like to welcome peter boockvar. thanks for taking the time. >> thanks for having me. >> let's cover several topics. first topic, you saw existing home sales. what did you see and what's your interpretation, especially when it comes to weren't most of these programs designed to get the single-family first-time buyer to get their piece of the american dream. doesn't seem to be where the action is. >> first-time home buyers made up 29% of existing home sales in

july. historically it's 40%. the investor class has obviously been a huge influence over the last couple years in the housing market, particularly the big funds that have been buying massive anmounts of foreclosed home. i don't consider the housing market anywhere near close to being normal. >> you know what i have never understood, peter, you know, i understand the politics of trying to make the banks the culprits. we had the city in california trying to do eminent domain. i guess in the end what's wrong with having new people buy things at lower prices that can't afford them at higher prices? i don't understand why so much engineering needs to go into this. >> right. and this is the consequence. we had a massive bubble that manifested itself over the last 15 years, but it was certainly fed by artificially cheap money

from the federal reserve and this is what you get. you get a housing market that's going to take many, many years to heal and fits and starts i think will likely define the recovery. >> peter, when was the last time you refied or bought a house? recently? last three or four years? >> refied, yes, over the last couple years. >> how many pieces of paper did you have to sign before that process was done? >> many. >> i mean, i'll tell what you, it's unbelievable. you could create a library by this paperwork. when officials come at me or politicians and they have headlines like everybody was taken advantage of, i want to know what robot today stood in the homeowners' spots to sign those those zillions of pieces of paper. but that's another story. >> when they artificially suppress them below where they should be, you create a yield

grab. it manifested itself in emerging markets and the mortgage backed securities market but we're seeing it again, a yield grab. now that the interest rates go higher, that yield grab reverses. it will have ripple effects everywhere. >> final question, we only have about ten seconds left. after the minutes are released, do you suspect we are going to see yields close higher or lower than they did yesterday? >> i think higher because i don't think there's nothing in the july minutes that's going to dispel the likely fact that they're going to begin to taper in september. >> awesome. peter, you're always fun. i can't wait to have you back. thanks for being here today. carl and kelly, back to you. >> rick santelli, thank you very much, sir. more from rick later on. he was the chairman and ceo at reebok but now he has his eyes set on the golf course. paul fireman will join us later this hour. plus, the bell is about to sound across europe. we'll get you the details on the close and the impacts it's having around here. simon hobbs when we come back.

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simon hobbs joins us now to count down to the close in europe. >> it's the third day of losses in europe. we've not seen that for a couple months. admittedly some of it is due to the fact that a lot of stocks have done "x" dividend and they trade in negative territory. there is a huge debate about tapering. let's look at the map of europe and see where we are. you will see that negative bias as i say for a third session overall. >> the european markets are

closing now. >> let's have a look at where we are on heineken. heineken today has warned the coke effect, that cold weather has impacted earnings in europe and, therefore, they didn't imagine to meet expectations. they say the outlook isn't terribly good for the rest of the year. you have carlsberg that reported. they mentioned to stick to their full-year forecast. there you go. that's where we are. a couple other things that are going on today. the new state broadcaster in greece kicked off transmission today. remember that they shut the old one down. this is time when front and center is this discussion about whether there will be a third bailout in greece. the german finance minister of course put that on the table earlier in the week. in the midst of the german election and now you have one of the two senior germans at the helm of the ecb who is in athens today to talk to everybody. it will be interesting to see what they come out.

it's interesting the kind of tap dancing to say this will be a smaller bailout. in germany that's the message. and they might he can tend loans or maybe fund part of it from the eu's existing budget, the existing annual budget for the european union. meanwhile, over in italy, it is reported that silvio berlusconi's party will imminently present the president with a list of demands in order to keep the coalition government running as silvio berlusconi faces the prospect he could be disbarred from public office our disbash disbarred by the senate which is essentially a political vote. >> thank you so much. let's get a check on energy and some commodities. bertha coombs is at the nymex. >> kind of a mixed day. we have the stronger dollar keeping a bit of a lid on crude, especially with folks being cautious ahead of the release of the fed minutes this afternoon and looking for any kind of hawkish comments when it comes to tapering.

also a mixed report when it came to the inventory numbers. crude just in line, just shy of the expectation. a 1.4 million barrel draw, although we're continuing to see a an increase when it comes to refining. it was up 1% last week. it had an impact when it came to gasoline. gasoline was the outperformer in terms of the eia report. a drawdown of more than 4 million barrels with the implied demand up about 2% from this same time last year. so as prices have come down, it appears folks are, indeed, driving here during their last few weeks of their summer vacations looking out ahead towards labor day. and natural gas today is also looking stronger. gene mcmillan at tfs says we could see a drawdown tomorrow. if we see one in the lower range, in the 60 billion cubic foot area, that would be bullish. technically natural gas is looking bullish. we are seeing more demand next week with higher temperatures as well as the fact we're hearing reports that more power

generators are switching from coal to nat gas. so gene says some of the shorts are covering here and that's supportive technically to the move above 350 potentially for natural gas. as far as metals, we are seeing caution and a bit of a trade to the downside here ahead of the fed this afternoon, and, carl, it will be very interesting to get that news from the beautiful jackson hole area from our steve liesman this afternoon. certainly will make whatever hawkish comments come a little more easy to take. >> we all want that assignment, bertha, but steve gets it. you know that. thanks a lot, bertha coombs. >> with the real hawks. maybe they can deliver the message. let's bring in bob pisani. >> when the existing home sales numbers came out at 10:00, my eyes popped out. the highest level since 2009 and well above expectations. i got e-mails immediately saying the higher rates did not kill the housing markets. but this number reflects

closings. the pending home sales numbers were not quite as strong and some of the comments from the mortgage bankers have indicated there is some slow ngs in housing because of higher rates. what is very good news to see is stabilization in the home builders. the last week or so they've stopped going down and basically these prices are where they were five or six days ago. toll brothers had a good, not a great, report. new orders up 26%. that's okay. that's what we'd call acceptable. it wasn't knock the cover off the ball but it was okay. what's not doing so well is these interest rate sensitive groups, but there are opportunities here. so utilities again today are on the downside. and we were also putting up reits here. they were weak as well. trust me, they're to the downside. i want to point out while utilities are nearly 52-week lows, the yields are really up right now. that, of course, makes sense as the prices would move to the downside. put up some of the yields on the big utility names. today southern hit a 52-week

low, but it's yielding almost 5%. look at this. there's southern. first energy, 5.9%. these companies have basically been given up by the investing public but people are interested in dividends. here they are, folks. i think you're going to have people calling for buying utilities fairly soon. as for the home improvement space, historic high for lowe's. the numbers, like i said last week, i was concerned about the sales numbers, knocked the cover off the ball and the gap between home depot and lowe's in terms of same-store sales are lowering. masco has been moving sideways for a while. that's to the upside. i think the big problem, put up the screen here, i just want to tell you what i think the problem is with these companies right now for home depot and lowe's, is the valuations are very stretched. you're dealing with about 21 times forward earnings on all of these companies. on both of the big news here. so the good news is they've raised the earnings but when you get valuations, it is possible in the near future if the problems continue with the housing market, the earnings can

hold up but the valuations could come down. if they start valuing this at 18 times forward earnings, the prices will come down even if the earnings hold up fairly well. just bear that in mind. i don't want to throw cold water on a great report but that's the concern. on emerging markets, they're still coming down. bombay is near a 52-week low. and etfs that trade here are down. i want to point out something about the etfs. these etfs trade in the united states. india is closed, but the etfs around these trade here. they trade largely on perceptions of how the stocks might be trading next day, so the perception here, even after they close in india, is stocks will be down the next day. a little bit -- people need to bear that in mind when you talk about the foreign etfs that are trading actively in the u.s. when the markets overseas are closed at the same time. juke also watch their currency. we've got the turkish lyra hitting fresh record lows. >> and those rumors yesterday of capital controls in india, i got

a lot of e-mails about that. government officials denied they were going to incompetent statute capital controls but if you start restricting amounts of money that can be brought in or out of the country or the convertibility of the rupee that dollars or other currency. that's a very serious matter. >> a lot of questions about what the policy will be in india. >> right. >> thanks, bob. speaking of things coming down, let's get a market flash. dominic chu back at hq. >> we're watching the big integrated oil companies in the dow industrials and why? because out of the 540ish points that the dow has fallen so far just in the month of august, 52 of those points have just been because of exxonmobil. now, if you widen it out to exxon and chevron, since july 23rd, that's the last 20 trading sessions, they've accounted for a quarter of all of the dow jones losses. exxon has fallen 19 out of the last 20 trading sessions and, by the way, if you're looking for the single biggest drag on the dow in august, no, it's not the

oils. it's ibm, the most heavily weighted stock in the index. it accounted for around 78 points of the 540-point drop in the dow so far in august. so some big names in the dow taking it on the chin so far in august. >> amazing what a difficult period it's been for exxon. thank you, dominic. if you build it, they will shop. shares of lowe's rallying after second quarter profits up 26% year on year. we'll take a closer look and tell you what you need to know about this company though when we come back. my mantra?

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coming up next on "the half" byron wean is worried. why this legendary market watching is worried stocks could go lower in the second half. and green apple. this stock is on a tear. and is home depot a home run for your portfolio. all those things and lots more coming up on "halftime." back to you, kelly. >> looking forward to it. shares of lowe's are up sharply after the company reported better than expected second quarter earnings. they saw increased revenues from the ongoing housing recovery. joining us now for her take on things, laura shampigne. laura, good morning. >> good morning to you. >> thanks for joining us. a lot of people will say not so

much did we miss something in the earnings report but more with the valuation and the runs lowe's and home depot have had. what do you do with the shares? >> we have a hold rating. it's wonderful to see the sales growing, it's the strongest rate in many years for both companies but we think there are better ways to play it. lowe's and home depot won't be growing stores for many years from now. >> what are we playing here? i have heard it described as couple different ways. there are some people saying this is the consumer buying big ticket items and fixing up their home. there are others who suggest actually the earnings beats are coming from the increased amount of buybacks for these companies and still another group saying, well, maybe it's actually small business or more of the commercial side of things that's at play here. >> the beat is definitely on sales, and the pro is possible moving the top line. big ticket purchases were up significantly. lowe's on the conference call that just concluded said its entire beat relative to expectations came from

appliances. so the pros are driving it, big ticket items are driving it, and then we're just seeing for both companies how much flows to the bottom line. >> laura, for a long time, it just didn't seem like lowe's was going to be able to pull it together and pose a real challenge to dough pepot. would you say they're now a challenge? >> i'm not sure they're a challenge. they're both entrenched in an oligopoly in what they do. lowe's still grew sales slower than home depot. although a 10% comp is something to write home about. home depot some some margin pressures. >> i know you cover hardlines, but would this translate to buying a masco or sherwin-williams after worrying about those names in recent weeks? >> it definitely sales something good about their sales trends. home depot and lowe's are their big customers. as we mentioned, we follow lots

of smaller hardlines retailers seeing the same trends. >> what are your top picks right now? >> we like lum ber liquid aters. stock has had a great move. they have a new store reset we think will pay off. we like khan's. if hardlines you think have run too much, we think francesca's is a steep high run stock. >> we're still shaking our heads at the number this morning. many think that would be the high for the year. do you agree? >> tough to tell. what we're really watching are home prices. as long as home prices continue to head higher and, sure, they're all tied together but we're still 30% below the peak for home prices. there's a lot of room for those metrics to improve. >> i'm surprised that you're focused more on prices. why is that? >> if people believe that their homes are good investments, they'll invest in the home. i think people look at their own

net worth and how they view their investment in their house and we think that impacts do you put in a kenmore or do you put in a wolf? >> i love that. that's fascinating point. >> you think that offsets, for instance, first time buyers being priced out? 13% year-over-year, at some point you just can't catch up to that market given what incomes are doing in this country, laura. >> that makes sense to us, but once again turnover is great news for these stocks. but we just need customers to want to invest back in their homes. we had such a great run in the earlier part of this century. i think that some of those kitchens and baths that were replaced in 2005, 2006, are starting to look older. as long as home prices head up, we feel good about remodelings. >> laura, thank you so much. >> thank you. eric holder expected to announce significant matters related to the 2008 financial crisis today. what does significant matters

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attorney general eric holder says he expects to announce some significant matters related to the 2008 financial crisis. his comments came in an interview with "the wall street journal," but what exactly does he mean? our senior correspondent scott cohn is back at headquarters to explain. >> we would love to know that. he wouldn't talk about specifics and i'm told what he really wanted to do was to dispel any ideas that people on wall street might have about things blowing over.

sure enough, he said anybody who has inflibted damage on our financial markets should not be of the belief they're out of the woods because of the passage of time. and if any individual or institution is banking on waiting things out, well, they have to think again. five years since the depths of the financial meltdown, that's heightened speculation and plenty of criticism about the lack of high-level prosecutions. also a lot of talk about a supposed five-year statute of limitations for many types of fraud. holder was pushing back on that in particular i'm told just like manhattan u.s. attorney preet bharara did at our delivering alpha conference last month. >> bank fraud statute has a statute of limitations of ten years. when you're talking about ongoing activity and ongoing misconduct on a conspiracy theory that elongates the statute of limitations. >> eric holder said he expects to leave before the end of the president's term. some say he could be out this

year. he told "the journal" he expects to be there to announce these significant cases. we could be in for a couple busy months. there's a lot of push from a lot of high-level people in the justice department to bring these cases to a conclusion. >> we thought we might actually hear by now some detail on this, but it appears as though we aren't. >> we aren't but it's getting a lot closer. there is this sort of push to get these things done. it's been five years. statute of limitations notwithstanding. there's some optics here. they want to get these things done while it's still fresh in people's minds. >> scott cohn with the details. thanks very much. a second chance at a first impression. when liberty national held the barclay's tournament in 2009, some golfers, including tiger woods who won that year, complained about the course's design. in response, they've redesigned the entire thing and we'll talk about that with the head of liberty national and the former reebok ceo paul fireman. that's next. ) scottrade knows or clients trade and invest their own way.

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welcome back. let's get straight out to dominic chu with a quick market flash. >> take a look at shares of insight corp. the biotech company is soaring today after positive data from one of its drug trials. in this case it's an experimental drug to treat

pancreatic cancer. tests demonstrated better survival rates in some patients versus those given a placebo. it's looking forward to working with the food and drug administration on that next round of testing. carl, back over to you. >> thanks so much. the barclay's pga tour kicks off tomorrow and is returning to the liberty national golf course. paul fireman is the co-owner of liberty national, also the former chairman and ceo of reebok international. he joins us this morning from the course. paul, good morning. good to have you. >> good morning. pleasure. >> how excited are you for tomorrow? >> this is very exciting. we waited four years to come back and we've prepared well and we're hearing good thick and we' we're very excited. >> we were talking about some of the comments made back in '09. various comments tiger made about the conditions and the difficulty level. you have compared golf courses

to painting and you said they change over time. how has liberty changed? >> i think all creations of that of change and adaptation, especially a golf course. the ground is moving. you lay it out one way, and we had a great architect, but you never can tell until you finally play it enough times, and we've listened to the pga tour. they came back to us along with phil mickelson and other that is gave us feedback. we've put that feedback to work with steve, the architect for the tour, and i think the work has been sensational. it came out great. >> paul, speaking of change, a lot of people are trying to figure out what's going on these days with the u.s. consumer. i know you left reebok a couple years ago. when you look around and study the consumer buying habits you might see around you, what do you think is going on these days? >> well, there's no question that there's more confidence today for people in middle and upper income. there's still a very serious problem because the stability that underlines all of this is

not quite cleared up and i think that all comes back to a political system that's not working, and we're a global market now, and we just aren't as competitive globally as we need to be and i think that's what we all have to work on in the future. >> i understand you are the director of the one of the biggest private funds in massachusetts. how do you invest in this environment? >> carefully, carefully. you know, you always want to invest. you can't leave your money stale. you certainly can't carry it in treasury bonds. that's not going to work. there are a lot of good companies, a lot of good investments to be made, but the question is the volatility of the world still has a high risk factor that could cause enormous problems if we don't shore up the base. >> paul, you know, you ran reebok really back in the day as some would say. introduced the first women's athletic shoe for the brand in 1982, and you expanded very aggressively internationally. when i was a kid, i always assumed it was a british brand

because the logo and the way it was perceived around the world. would you be as confident pushing into europe today? >> yeah, i think europe is still a very strong potential market. look at how many people. it's just an enormous amount of people, a great amount of money to be spent. the issue really is europe has the same issue we do. it's just an unstable base, and you just can't have such a disproportionate amount of time who are not earning at least a base amount to live on. and that's the biggest problem. >> how about china? it's always a big talking point whenever we talk about futures for nike, for instance. are you confident that the growth that we've seen over there for the past five or six years is going to continue at the same level? >> well, i don't know exactly if it will continue at the same level. it certainly -- it's a producing country now like we used to be back in the '30s, '40s, '50s.

when you're producing goods, you want to spend your money. the chinese want to get off the farm and become productive and gain greater salaries. they want to buy cell phones and cars. they're going to do well in the future. they have their political issues they have to control, too. >> paul, what would it fatake f to you leave the golf course and get back into retail? >> oh, much greater incentive than anything you could offer me. i like where i am. >> running jcpenney, for example? >> no, i have no ambition to run anything except the private equity company i work with, and i love coaching young people and new businesses and businesses that need help. i do not want to be at the head anymore. that's just too much pressure and too much tension for me. i'm much -- a much better clear thinker if i don't have the responsibility of the day-to-day

responsibilities. >> thanks for stopping by. >> it's been a pleasure. thank you. >> paul fireman, the co-owner of liberty national. it's going to be a great weekend to golf. not such a great trading session here, kel. we're down 76 points. dominic brought up the point that we're down 700 appointments from the august 2nd intraday high on the dow. a quarter of that, exxon and chevron. as we know, exxon has been down almost every day since then. >> and ibm weighing on that index as well. a lot of the attention will turn to the minutes from the fed out in a couple hours. people are saying the weakness we're seeing and patterns across the dollar and other asset classes have to do with positioning for the september taper. if it's not in there, we could see an unwind. >> the vix up 11% currently at its highs of the day as we are at our lows for the session on the major indices. vix it at the highest level in a month and a half or since july 3rd. so you would expect that essentially going into the minutes. not a huge surprise. >> we know there's going to be more interesting action

overnight as bob mentioned what's happening with some of the etfs in india, turkish lira. it's hitting new lows. >> glad you keep bringing it up. we'll see what the afternoon brings with the dow down about 70-plus some odd points. let's get lack to headquarters. going to be an interesting afternoon with the minutes and "the halftime." four hours to go until the close. this is where we're standing right now. the dow is off by 72 points and down about 700 points from its record high. the s&p is off by 7.5 points and the nasdaq is off by about 12. here is what we are following on "halftime." apple picking. a new lease on life since carl icahn gave the company his stamp of approval. we've got the analyst who is raising his price target today. no place like home. the builders may be rolling over as rates rise, but home improvement is