syria but beyond that -- >> you would go in right now? >> stock specific. >> stock specific. >> i would be someone -- i would wait until next friday. >> watch the google situation. it's pulled back. maybe it pulls back on this news today. >> i doubt it. thank you, guys. thanks a lot. i'm sure everyone will now spend their time on gawker to spend more time on this. >> we've got to go. make sure you join us tomorrow. "squawk on the street" is next. good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer. david is off today. bulls may have some material to work with this morning. q2 gdp revised up to 2.5. big time m and a in telecom. for the moment we have both futures and yields on the rise. the ten-year at 285. don't forget u.s. strike still appears to be in the works. europe in the green as well. as we said, very nice moves in

india. the ruby, best day in four years. road map begins with the markets on the heels of that strong gdp number. futures are higher although concerns over syria weighing on investors. telecom deal potentially worth up to $130 billion. we've got details and what it means for the sector. shares of one retailer on fire this morning after reporting stronger than expected guidance last night. we're going to tell you which one that is. let's start with the mark markets. second quarter gdp revised up. previously estimated, thanks largely in part to an improving trade picture. and claims down 6,000 to 331, signaling a slight slowdown on the pace of layoffs and worries about military intervention in syria. a lot of places we could go, jim. what is most interesting to you? >> well, i'm glad you see that the gdp is finally keeping pace with what has been the jobless

claims. i couldn't understand why our gdp was so low given the fact the jobless claims have been best in five years. that is a positive story. of course, now, we always have to talk about, well, our interest rates are going higher. interest rates go higher on things that are better. this is a push me, pull you situation. i do think that when you have a slow summer day or a day that was supposed to be slow and you have a verizon vodafone deal talked about and verizon goes up higher, that's the acquirer, we see this is kind of a nicer moment than i would expect given the fact the syrian backdrop is not positive. >> let's get straight. let's skip ahead to verizon vodafone. news in the wireless space. british telecom company vodafone is in talks with verizon to sell 45 % stake in the u.s. joint venture. the deal could be worth as much as $130 billion. journal says it could happen within a week. is the important thing here the speculation it feels about broader m and a in the space? >> i would like to but every time i is a that david faber

says, jim, it is the worse in several years. verizon will look different. verizon, if they had 100% of verizon wireless, split two company or say the landline business can fund some growth in wireless. i think people are getting too excited and verizon here. they might do some stock in that deal. they microsoft, by the way, are facing a newly competitive t-mobile. a newly competitive sprint which has been going down of late. at&t doesn't want to lose the business. everyone is so excited this reminds me of every time you get a premarket bump of the inquirer it can go back down and get a better chance. bonds may give you a better chance. verizon had been a bond market equivalent. >> yeah. >> but vodafone seems really attractive. it's way too cheap. vodafone makes sense to go higher. >> saying that they could actually return the proceeds or half of the proceeds back to shareholder in about five years.

already pays one of the best dividends on the ftse. >> it's terrific. europe may be returning. seeing the pmi from europe to be better. vodafone has great assets undervalue because europe has been bad. this is one of those where you go by verizon, if we were over in london i think we would be very excited about vodafone and what this implications are for the new vodafone. that's a buy. >> earlier premarket move about 9%. that is a 12-year high on vod. >> if you think europe is coming back like i do, vodafone is a great way to play it. >> interesting. now, what's left for verizon? there had been discussions about their interest in canada which after this deal would seem to be small potatoes. more of a distraction. >> italy, there's also -- everybody is floating all sorts of rumors. maybe at&t is going to get involved. this is a more competitive business than it was since sprint and t-mobile. look at the way verizon is trading down. i would say half of it is trading down because of the ten-year going higher, the yield

going higher. this group which has been such a great duopoly watch t-mobile. they've been shaking the industry up and taking customers. >> let's say the deal gets done next week. it would be a historic deal in terms of size. after yesterday we didn't close on the lows. we got a few green arrows today. >> people kind of liked it. >> are we working our way out of woods? >> i think that if you get this -- get syria off the front pages because perhaps it's not as -- they can scale back because they don't seem to have the coalition. everyone is a little tired of war. it's not post-world war i. actually kind of feels like post world war i. a lot of countries are tired of war. >> david cameron is trying to answer to his populous about it. >> if you go back to world war i, france was tired. england was tired. that's one of the reasons why, of course, bad guys were able to take action. i hope that's not the case this

time. but you still got washington. you're still going to come back and they're going to be at war with each other. you and i are going to say, boehn boehner, that was a terrible discussion. lew came back and he didn't have anything to say. i guess our taxes will come up. that's the environment i come to work with, with rates going higher meaning we're going to be worried about housing. it's a shunken universe of what i can buy. >> you keep talking about the idea of this list of goodwiners is getting -- the island is getting smaller. >> i look back and try to circle back to all the big winners and who i feel comfortable. tjx, why? apparel. everybody else is bad so they dump the apparel on them. we're not seeing a huge group of stocks that make you want to buy them with gasoline going toward four, with the psyche getting a little bit worse. but that said, there is a bit underneath here. yesterday's action was not -- was a little constructive. when i go to the chart and i find sometimes, i don't mind saying it, i go to chartus.

kind of negative because we break some of these averages, we the way, there is mark-up. end of the month mark-up that still exists. >> before we do retail, what is this idea of month-end selling here because august has been so over sold, is that why we're hearing about that? >> people want to go in and i keep coming back to your data. september is a tough month. be a little cautious here. i don't like to be cautious. i like to say, go buy them. we have salesforce.com tonight. last year was tough. we had guests last night be good but again, williams-sonoma what not that good. they made it not that good. they said there was weakness. so you know, you go -- there's one good, one bad, and then it kind of feels like two bad, one good. i don't have enough good store is are. i just don't. >> you mention the retail story. williams-sonoma what is trading lower after the accidental early release of its results. >> don't you love that. >> company reporting a drop in

quarterly gross margin, bigger d discounts. jim mentioned gas as well. trading higher after beating estimates thanks to improving sales in north america. >> look, they use the word -- sometimes on the conference calls, let's go well, west elm, good social media. then it says retail channel is underperforming. i'm like, sell. sell. but urban, which had a great quarter, does a 10 million share buyback announce and then you're on the guest call and it's denim selling well. people start buying vf corp. because they have a big preponderance in denim. maybe denim is coming back in style. people's expectations were low on guess. remember, also, guess, when you go stwthrough it you get handba and accessories. accessories, it's going up. handbagses is kors and that's going up a lot. people aren't using the coach look.

hard goods within soft goods. you buy accessories and they do well but if you buy apparel but maybe now denim. it's a confusing story. it seems like a confusing story is not leading to a lot of selling. >> interesting. if the stock market is a casino, the retail space is like the baccarat room. nobody has no idea how it works. players in there are willing to lose a lot of money. >> these guys are at the wheel of fortune. >> no matter what good data points we get out of gas or anybody, it doesn't make you more comfortable about the space overall? >> no, i still think the consumer is trying to figure out if they should go buy a cellphone, whether they should buy a nice tv but they're not thinking, you know what, i'm going to go back to macy's and see what they've got. macy's did say back to school was good so i don't want to put the kabash on that. target and walmart were not good and they are still america's retail. >> we started out talking about

the gdp number. q4 last year was 0.1. then 1.1. now we're at 2.5. i mean, directionally it's a good story. >> phil lebeau with a terrific story this morning with alan mulally. saying that car sales are fabulous. truck sales are fabulous. richard smith was on. 26% of all transactions are done by a real estate broker from realogy. business still growing. 17% to 19%. no slowdown on existing homes. did point out new homes because of the way the rates went. lock in problem there. not as strong. you've got existing home sales. we had a number yesterday and said don't worry about that, real estate guys have told you not to worry. did have good statistics. mulally saying things are good. keep cars at holmes and things bought into homes.

in a few weeks we're going to sit here and talk about government shutdown and government shutdown no n. 2011. i love kelly's work, but 2011, interesting year in her work. fiscal cliff. terrible time to buy. we'll have a new name. >> we haven't thought of that. >> we haven't thought of it yet and it's not going to be positive. >> whenever those guys get involved, it generally is not. we'll talk more about that in a little bit. when we come back, ford cranking up production of the fusion, adding 1400 jobs at the same time. we're going to go live to the assembly plant where it's all happening and we'll hear from alan mulally. and oil prices continuing to climb. tensions in syria, of course. what what means for the energy market and gasoline prices here in the u.s. futures, though, up for the second day in a row. not as much as earlier this morning. but the opening bell is not far away. a lot more "squawk on the street" live from post nine when we return. [ male announcer ] . time to have new experiences with a familiar keyboard.

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gratifying but also we really wanted to focus production in advance. we know we missed it a little bit, we're going to catch up quickly. >> that was ford's ceo alan mulally in the last hour talking to phil lebeau. adding 1400 jobs to meet rising

demand for the ford fusion. >> making money. remember the old days they always lost money on the little cars? alan mulally has the cost structure down and the good leverage there. i think europe is getting better for them. he did talk about you ashah, made you feel like asia is not doing as well as japan but that's been alan's rap. the best part of that interview is talking about how come the multiple hasn't expanded. that isn't alan's job. it is amazing here. keep thinking it's going to go higher. boy, are they making money on the f-150, 250, and the super duty which, of course, i have. >> yeah. nice job by morning joe today, too. sort of highlighting the challenges in front of detroit. >> yes, that was really good. that was really good. >> very nice work. speaking of the consumer, kelly evans talked about it on the i yesterday. >> morning, yeah. >> not your father's volatility is the joking reference here but, in fact, there's quite a bit of important things happening below the surface.

gdp report which showed 2.5% growth, critical. what we need to see is that kind of performance repeated in the second half of the year to support interest rates at these levels. look at what's been happening with regard to where we've seen more of the action lately. not in the stock market so much, and we can see the narrow trading ranges we've been in. the vix hasn't gone anywhere. the story is about the volatility, guys, in the bond market. there's a term for this that the fed uses and has been focused on lately. it's called term premium. the fact that we've moved on the ten year. the key interest rate which determines everything from mortgages to speaking the cost of finance across the economy, the fact that that's gone from below 1.7% to almost 3% is a huge move proportionally speaking. what happens is as those rates get more volatile, investors demand more of a premium for that. so that's partly what's been behind the move higher here. that's different from what we've seen in the past. so as people look to what rates

the economy can support, you know, when you think about the fed taper and what it's going to do here. keep in mind the fed is going to be thinking about this and saying that now that interest rates are moving around so much and they may need to be higher for people to hold on to them, how much of an impact, how much of a negative impact might that have on the real economy? that's why i say again, the gdp report is important and you want to now see after that big move, you want to see rates set until here. we're starting to see that. that's going to be supportive. what you don't want to see are another sort of 0.1% point up and downside overnight all the time. >> richard smith, 26% of the transactions is saying, listen, we just calm down. we're fine. not calm down for new home destruction because the lock-in all for the same reason. the twerk, what is the term? >> i was thinking miley cyrus.

>> i was worried that's not going to happen. the word erratic is with us. all the countries keep banging down the bonds, right? >> there are those who argue new homes precede existing so we're in for weakness on existing. >> yes. could happen. >> re-fis are down 16% since may. wells fargo is laying off people in their re-fi division. >> exactly. this is all why. hsbc, nice note drawing attention to the term premium issue this morning, again, to the volatility in the bond markets is saying they think the ten-year is headed to 2.1% in a year's time. >> what? >> yeah. exactly. >> come on. the consumer product goods -- >> before gdp this morning. >> package good stocks are going down. those are great proxies for the ten-year. >> the market in which sees the ten-year closer to 3.1%. they're arguing isn't taking this enough into account. jim, you're right. if the economy strengthens. we can support a higher ten-year. if they don't, guys, there could be room to go to the downside here. i know that's not -- >> i'm thinking like a jim

mccoggin who says four is the pain threshold. that's the g-force at which you do pass out. >> we were talking about real estate. we're above five. mortgages, people say, whoa, 5 1/2, 6, those are -- now, you know, everyone says the same thing she did. hey, i first bought my house and i got eight. that is not what -- oh, well, so these rates are low. the affordability is not as good as it was. >> in my experience, if you're someone who is under the age of 40 looking to buy a property you're not necessarily thinking of rates at double digit levels anyway. you're thinking about how low they were. >> they walked to school in the snow for a mile up hill. >> my father, gi bill, you know, 3%. i said, hey, listen, i didn't -- i got 3%, too. now this lure of who remembers the 3%. >> the jumbo rates which are frankly practically lower than some of the rates that you're get to think 30-year fixed. anyway. >> good discussion. see you in a few minutes. >> that negative tinge at the end reminds me of the journal articles. i loved your journal stuff.

i loved it. when we come back, cramer is going to tell us what stocks we need to be watching in today's trading session. mad dash is next. look at few dhuuturfutures. we've lost some ground here. a lot to talk about. more "squawk on the street" from the nyse is straight ahead. if you're serious about taking your trading to a higher level, tdd#: 1-800-345-2550 then schwab is the place to trade. tdd#: 1-800-345-2550 call 1-888-284-9410 or visit schwab.com/trading to tdd#: 1-800-345-2550 learn how you can earn up to 300 commission-free online trades tdd#: 1-800-345-2550 for six months with qualifying net deposits. tdd#: 1-800-345-2550 see how easy and intuitive it is to use tdd#: 1-800-345-2550 our most powerful platform, streetsmart edge. tdd#: 1-800-345-2550 we put it in the cloud so you can use it on the web. tdd#: 1-800-345-2550

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just about seven minutes until the bell. let's get cramer's mad dash before the market opening on the thursday. we've been talking about the organic fresh food space for so long. it might be getting crowded? >> like the williams-sonoma what call there was a moment that took your breath away in fresh market where they said, also, some of our stores have opened at the low end of expectations. no! don't ever say that! and then we started thinking, what's in people's heads? trader joe's. is trader joe's the private guy, german family, are they starting to cut price and make it so the whole group is soggy? i continue to like whole foods. this one was priced for more perfection. everyone felt that these guys have the halo. fairway is the only guy i know left with the big halo. i like the concept but we don't want to see new stores do poorly. then you sense that the runway is not so good. so watch this. that was not a good call. >> i want to look back and think that the sprout ipo was close to the top if not the top.

>> that's a good thought. that's a good thought. i got to look into that. i think that's a good thought. you would circle back to whole foods. >> interesting. speaking of food. cbp. confusing quarter, depending on how you look at it. 35, 43, 37. >> this group has been in a big funk. look. this stock continued to go up despite the fact interest rates are going up. since then, it doesn't have the growth. 1% organic. other than gold fish, gold fish is doing well. >> pepperidge farm is doing well. >> no growth in the packaged goods. that is just a bad recipe. look at hershey's which had a fantastic quarter. that can't get out of its way. proctor down from 81 to 77. watch these. plus, you know, when you sell in the emerging markets which campbell's doesn't, remember those people you just mentioned, they're not going as well. may not buy as much shampoo. this is challenging. i want to be careful with this group. >> u.s. soup and sauce, sales up

7%. and people will say, like housing, sales in the spring, soups tend to sell in the colder winter months. >> campbell's has said that. remember i had irwin simon on from hane that -- on "mad mon money." he's saying fresh soups do well. we think of campbell's of canned soup but they are doing line extenses and they've got a males program in europe. not a bad story or a good story. it's not a perennial tankout like heinz was. when we come back, the opening bell a few moments away. a another big day of trading as we look at potential m&m and syria and a nicer vision upward on gdp when we come back.

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gigantic positive if verizon has that level of confidence, it's terrific. pmi in europe was good. you had all of these good things and you run in and gdp is good. you have this macro and try to marry that with macro to find the stocks. gas is good but i get the fresh market slammed upside the head. i'm trying to figure out how to play some of the other retailers because i don't really get a sense that things are that much better. remember, ford, goodman, okay? but if we see rates tick up and small business go down because of washington, that's going to hurt the "f" series. one good, one bad. some could say, jim, you're so on the fence and i say, yeah, i'm on the fence. >> you have said, i remember yesterday, your quote was, now is not the time to be a hero because you don't know if you're being brave or foolish. >> i can't gain syria. are they with the president and the telling them, really? >> we have seen some work,

interestingly, yesterday, some technicians looking back at bosnia, libya, other limited strikes. the market the month later was up. >> fabulous piece in "usa today." decline the day after the shock was 1.5%. the pullback at 5.9% on s&p. will we be there? 1.5? then we are almost there. one of my favorite technicians is saying we're going to reach the bottom in three days. >> interesting. opening bell. s&p. down here at the big board, wells fargo advantage funds and at the nasdaq, stock building supply celebrating the august 9th ipo on that exchange. ticker symbol there is stck. let's get to what is going to be the big story. you will want to see how vodafone and verizon both trade. >> yes. one thing that david is the expert on this. i'm never going to put myself as an expert. this deal is on again and off again. this time it sounds like there

is a price, the price is how. one thing you keep hoping to see, like real estate. the rates are going against us. let's do something. this might be that moment but i keep thinking that sprint, revitalized sprint with that big japanese money and this t-mobile keep an eye on them. they are back. >> yes. >> they used to be back and then at&t did that brilliant thing of trying to take them over. that took them out of the market. a lot of bad blood between the two companies. now the t-mobile is coming in with good plans. i think we often forget, those of us who don't look at our bills as closely, although i do because i have two kids. you've got to look at that phone bill. your phone bill and cable bill, the kind of things you pay constantly. your phone bill is way out of whack. we get david faber, we can get a real sense of what's going on with verizon because he's closer to it than anybody other than the ceo. >> if we manage to reach him on vacation today there might be a question about financing. some other reports argue they're

trying to get 10 billion per bank, of several banks to fund 60 billion. >> atms all over the place, they don't know. that atm didn't know what that guy took out. >> verizon shares down some 14% over the past four months. >> let's face it. we were talking about it during the break. big deal like that makes you feel fabulous. but i also felt fabulous when buffett brought heinz. i was so excited. >> what happened? >> faber hit me upside the head and told me what the real world was like. the next thing i know, he was right. >> a lot of people argue the lack of follow through in the food space, m and a was one of the problems. >> it was. the biggest deal we've seen since then is pin nnacli foods buying salad dressing. >> we are going hear from david in a few moments. put some color, any details he can add. he's been cover that story for a very long time. u.s. air and amr apparently open to negotiating a settlement of the suit from doj block that

proposed merger. >> apparently washington, d.c., the airport there is the fulcrum. if you want that group back on, you got to see jet fuel come down and you've got see washington relent. now, the statements out of washington when they said we're going to block this were so negative that i don't know whether -- who is putting the story out. this is so buy their. if u.s. air gets amr the stock goes up 50%. if they don't get it, you're kind of seeing the stock where it was. so you know, one down and eight up. maybe you buy calls. you watch how they do the calls. there will be a call combination out. you've got to go out a couple of months and that will the tale. i think if we had faber now on verizon, this is what's cooled in the game, stalling. >> others call it tap dancing. >> tap dancing. i like that. >> you mentioned urban earlier. the 10 million share buyback, i believe, yes?

>> look, urban is the best retailer out there because they've got special situations. i've had three people out of plus 35 35 comp. anthropology is a housing play. when i was on that call it was amazing. 6% urban flagship, they were he mea lementing. it came down. the company is doing the smart thing with the buyback. >> perhaps there's going to be a larger window for any strike in syria as the british apparently have their own things to work out in terms of endorsing it. the u.n. charter, legalities today. president sounded soft on pbs last night. >> look, the leadership -- i was going to say, as a result, we're seeing con naco sell off. >> no one wants to be lbj. i'm old now to talk about vietnam but the ghost of it was mentioned today in one of the news roshtsz. they didn't have the public. the public is really kind of,

whoa. we liked that you were getting out of afghanistan. we want a new story? no. meanwhile, the buybacks is important. joy global on the call yesterday, good number. disappointing numbers. mike sutherland, ceo, was on "mad money," the buyback could start today. the buyback is moving joy global. the thin market combined with buybacks combined with the fact that we haven't really seen housing drop offer despite the rates are up. these are all kind of like, hey, you know what, i could take a little flier head. >> speaking of fliers, lab brokes, one last story. the british book making company taking bets on who will succeed ballmer at microsoft. >> right. >> the favorite, 5-1 is steven elop who runs nokia. >> i'm not allowed to bet, it's in the contract. i don't want to take -- i just -- that's like -- that's like betting mol any no showing

in the movie "the gauntlet." that's 100-1. >> tim cook is 100-1. >> tim cook, the banker, who also works at apple? the greatest bond call in my life was because of tim cook. i'm making him 50-1 to succeed. gary cone, lookout. i think we're going to check in with bob pisani who is here on the floor. hey, bob. >> good morning. we are starting positive on the dow industrials. interest rate sensitive sectors like utilities and reits. emerging markets turning around. airlines, tough time recently. also doing better today. i see vodafone, up, 8%. didn't see verizon. i saw a print a little while ago up art 4%. the big question today everybody is trying to figure out is the economic data today good enough for the fed to be on track for the concept to go ahead and

taper. put the yields up on the bond. yield has moved up a little bit. stock futures moved down a little bit on the news this morning. gdp better than expected. jobless claims. judging so far by the way the bond market is talking, most people down here feel the data is good enough for the fed to at least consider some kind of taper, taper light in september. jobs report next week will be the major issue. boy, is there confusion about the timing of syrian thing. nobody can agree on anything. attack this weekend seems to be in doubt. they're waiting for a report. how long is a report going to take? nobody can seem to tell me. nobody knows. it could be a week or more. we've just seen word of merkel and putin putting out a statement saying look for a diplomatic solution. do the u.s. and the uk go it alone at this point? we don't know. here's the other thing thorn in this debate. there's a g-20 meeting september 5th and 6th. that's one week from today. everybody says, oh, i'm sorry, we're all meeting. can't have a conflict going on

during the g-20 meeting. it has to happen before that or after that. nobody can get their calendars in sync. as for the way the markets are acting, look at the open today. 25 million shares opened on the floor. folks on a heavy day, a busy day on the floor we do close to 100 million. so put up the screen. i want to show you what we've been seeing so far. very moderate to light volume. i'm being generous in that. the put/call ratio is about one. that indicate nos panic. to get interest you have to go 1.2 to 1.5 up there. that's not there yet. the vix has had a modest rise but nothing compared to june. it was higher in april and earlier in the year. i don't see that number as particularly high right now. the one thing that is disconcerting is very high levels of technical damage. as you erode every day just a little bit, you drop a below the 50-day moving averages and start getting concerned. as they say down here, jim, you

can go broke on low volume. it's that technical damage that's worried me a little bit. i think you addressed that earlier in the day. >> there is technical damage. we went -- we went below the 50 day which nobody wants to see. see if we can resurrect it. >> absolutely. we have david faber on the phone this morning for more on this verizon/vodafone deal reaching him on vacation. but we all know that david never stops works. >> carl, thanks. i am sorry i haven't been working this week but i've been able to break that huge story for us that we've been follow for quite some time. but that vodafone confirming at least that they're back in serious discussions, certainly an important story for the market today. >> your reaction, now that you've seen some of what the d de tails and obviously some of the companies' commentary. can this get done? >> yeah, i think it can. it's really a question of price, which is always been a key here. i mean, as you know, i've been

following this quite closely throughout much of this year. you know, sometimes you see bankers and the companies themselves almost -- it's not as though they're fully choreographing something but they certainly have a timeline. i think coming into this year there was a hope on the part of verizon, given the interest rate environment, given their desire to own all of verizon that this would be the year. and they made their moves. they became more aggressive as, if you recall, the spring went into the summer. you had comments from the cfo of verizon about how they believed it could be structured efficiently taxwise for vodafone which is a key concern. but one of the key constituencies that vodafone had to deal with and negotiate with was its own shareholders. there is where i felt there was a sticking point in terms of would vodafone be willing to sell what is its most valuable asset and what would it do in terms of redeploying all of the

cash that will come from the sale of that 45% stake in verizon wireless. that conversation has also been going on for some time. here we find ourselves now heading into the fall. towards the end of this year where i feel like there really was the hope on verizon's part that their partner would agree with them to finally get something done, rates moving up to a certain extent, therefore making a huge borrowing would have to take place more extensive. and with that conversation i think between vodafone and shareholder base gotten to a conclusion where, okay, we're going to really give this thing a shot. maybe we have more of a strategy. what we're going to do when we take in all the cash. >> david, how about this idea? you're the man who would be able to say this. verizon pays vodafone. vodafone goes to liberty media and buys assets. vodafone take advantage of the term in europe and verizon get a higher multiple because it's a wireless company with a very

small relative landline business? >> listen, first of all, the deal, we always know the deal -- even at -- you can get to 120, $130 billion number which is an enormous number, of course, as we know. jim, the analysts have been writing about this for quite some time because it's been out there for a long time. have all agreed that it is a beneficial deal for verizon even up. >> you're right. you know, i asked malone about it when i saw him in april. you know, is that possible down the road that you then sell off the distributors buying up in germany and so forth and europe at liberty global. vodafone seems somewhat surprised in the question. you've got to remember at&t. he did that once. we did that big deal. at&t taking the paper. his memory on that one is not good. he watched himself lose an enormous amount of value there. that being said, i don't think you can rule it out.

there are some antitrust considerations of course that also have to think about in terms of some of the property, particularly perhaps germany. so, yeah, there's a road here. believe me, vodafone, they don't -- they don't want to look at this in europe, being the wireless -- very differently regulated. not affiliated to make money the way our carriers have. man, this will be a huge thing. >> huge. >> key issue here for everybody involved. doesn't mean they're going to get to the finish line but they're certainly giving it a good shot as we head towards the fourth quarter. >> a lot of labor day weekends ruined. i don't want yours to be rueinr, david. go back to the beach. >> the sun is not out. so if you need me later, i'm around. >> i might do it. thank you, buddy. let's shift to bonds and the dollar. rick santelli at the cme group in chicago. a lot of currency, a lot of bonds, a lot of stuff. >> oh, yeah. as a matter of fact, if you're short treasuries maybe david doesn't have the sum but it's shining bright for you today.

look at the two-day chart of fives. they are zooming. zooming. they're up about seven basis points. i know we had a new guy yesterday, really an old guy, a a long story but we turned a five-year into a seven-year. that story for another day. if you look at two days of tens, yes, they're up. yes, they're effected by gdp and initial jobless claims. but the next chart really shows you it's all about flattening, major curve flattening. 115, the spread on the fight. that's the big trade down here. tens versus fives. let's look overseas at the boon. yes, the yields responded to the 8:30 data but not in the same way afterwards as they started to slip in yield. foreign exchange, big topic. the euro and dollar index, look, they are finally giving us a clue as to direction. euro down, dollar up. look at one-day, two-day, and june 1st. you can clearly see it seems as though whether it's what's going on in syria or what's going on regarding the u.s. economy, the

euro/dollar is starting to sink. >> yes, it is. >> let's go back to carl quintanilla. >> thanks. >> did you see that chart? amazing. >> yes. >> et cetera will look at energy, too, and commodities. bertha coombs is at the nymex. >> coming off just a touch but curves, it's is a lot sharp we're that big move we saw on fears of a strike on syria. that has eased back as of this morning. but we are still near two-year highs. what's interesting is this big move has certainly given brent back that premium. it's back to a two-month premium within july that got to less than $1 at one point that wti had actually a couple of pennies above brent but that certainly reversed course here. this morning in about 45 minutes or so we're going to watch fortunate gas inventories. expecting an injection. natgas supposed high because we are seeing high temperatureses through the weekend in the midwest working their way here east. and as far as metals are concerned with that -- those

numbers we got at 8:30, we are seeing the dollar stronger and metal easing back, as well. carl? >> all right, bertha, thank you so much. teen aretailors have been a rough month as you know. just look at the declines. if they are not shopping at these stores, where are teens shopping? we're going to go straight to the source and find out. great piece by courtney reagan this morning. former member of the cia is going to tell us how worried we should be about cyber crime and this group, the syrian electronic army. wreaking havoc all over the place. as we go to the break, dow is up 22. look at early movers. [ male announcer ] it's time.

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look like. the person wearing the frames, by the way, amanda rosenberg, the woman reportedly dating co-founderer is sergey brin. they wanted to design it so you would want it to wear it. >> i want to wear these. >> really? >> this might be my weekend project. that's cool. look, i love the stock google and the company. one of the hardest places to get a job. one of the kids waiting to get a job all apply to google. you can't get it. >> having some friends who have actually landed jobs there, it is not easy. it is no picnic. multiple rounds. some of the notified by text. very strange. >> by the way, what's really interesting is that that's the way it used to be to get to work at goldman sachs. multiple interviews and then said, forget about it. >> you said yesterday you think

it's a good bargain, here at 854? >> i do. i think they're going to solve the mobile conundrum. they've t got social, mobile, and cloud. you need that trinity. they're one of a handful of people who has it. yelp has it. yelp is just a stock just -- it doesn't like to quit. >> getting a lot of notice today, too. some of the other big winners of the year, best buy, netflix hasn't given up as much ground. >> powered right through this correction at a level which just says, you know what, the head of steam is too big. a lot of stocks that are liked by younger people. netflix, chipotle. >> tesla, too. watching the names to look at that. here's what is coming up next on "squawk on the street." coming up, surf's up for the dogs of the dow. will you be able to catch a wave to profits? let jim cramer and six dogs in 60 seconds lead the way.

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look at the parliament in the united kingdom. prime minister david cameron speaking to parliament about military action in syria. trying to basically muster

support in his country. this morning published legal reasoning as to why a strike would not need u.n. security council permission. but we continue to watch this and will bring you more headlines as they come. six in 60 this morning with jim. we're going to kick it off with perrigo. >> merged with elon. i like this call. >> jpmorgan says buy cree. >> cree had great sales at home depot but they missed the sales. right level to get? >> what does citi say about hog? >> sales are strong. this one is one of the great hard goods place. >> you've been liking game ston. >> game stop has the whole -- they have the big rollouts of all of these different boxes and the games business is very strong. all of them, activision. >> cautionary words on oracle? >> oracle nsap. they're saying be careful if cloud is hurting their core business. >> and mohawk. >> this is interesting because one of the things that continual

theme, where wl it be sherwin williams, owens-corning, whirlpool, housing is going to stay strong and you want to buy carpet, you buy a mohawk carpet. >> with that, jim, we might tread some water here in the early going? >> cross kurns. the cross currents are pretty interesting, carl, because you will have a zillow up after that stock has gotten killed. mohawk up. nice recovery going up in what was hot. could that be end of the month markup. we have the don't taser me, bro. >> that's all you need to say. >> don't taser me, bro. >> see you tonight, jim, 6:00 and 11:00 b eastern time. simon here, a look of what's coming up. >> we're going to be live from the middle east with the latest there in the next hour of the program. but trace back what conflict, gas prices and retailers in this country. we're also going to have a

former cia official on to talk about the prospect of more cyber attacks from the syrians in this country. and jobs and growth, we'll talk about ford increasing production of the fusion. hour two of "squawk on the street." in a world that's changing faster than ever, we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present.

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welcome back to "squawk on the street." our road map begins with gdp revised up and jobless claims down. we'll find out if this will be enough to keep investors positive despite geopolitical head winds that are ever changing timelines for possible military action in syria. possible strike on the ground would be accompanied by strikes from both sides in cyber separations. we'll examine this very different battle and what it could look like. >> a potential $130 billion deal inchi inching its way closer to reality. vodafone and verizon. verizon wireless. >> more from ford's ceo alan mulally on expanding production just north of detroit. markets are cautiously op mystic this morning after gdp

topped expectations. joining us now is jim paulson, chief investment strategist and smith, chief investment officer. good morning. >> good morning, kelly. >> good morning. >> jim, i just want to start with you because i remember talking, you know, a while back and we were talking about the way in which stocks and bonds were positively correlated and the change in inflation was kind of drive that over the years. i wonder if we're getting to a key point now where that relationship is starting to change. and if so, what that means for investors here. >> well, i think we're heading that way, kelly. i think if growth continues to come back and people get comfortable with sustained recovery and we start worrying less about falling back to recession and more about is there a inflationary fallout, i think we will see a more normal stock/bond correlation like we have in the last three or four decades. i think the implication there a

little bit is good for money managers, good for active mamgers because it allows for more individual security analysis, individual company bets. it's not just risk-on, risk-off trade any longer, it's will be more a skill of picking the right areas. i think it's a good thing. i think it is coming but it's not here yet. >> that's exactly what i was going to ask. how do you know whether and when that period has arrived? what are the key gauges that you're watching? >> well, i'm certainly watching, let's say the trailing one-year daily correlation of stock and bond movements. that is still very, very hyatt. i'm also watching some of the sector correlations and they're starting to breakdown. so if you look at the correlations, the average correlation of the ten sectors, the s&p, it's almost breaking below the range it's been in since it blew out in 2008. i'm looking at international correlations. those are also breaking down. so you're seeing some of the

internal dynamics starting to go back to normal but the stock/bond core is still pretty strong yet. >> hank, how do you recommend people position here? >> well, i think first of all, we remain bullish on the equities and we believe that these pullbacks and even we get a correction which we haven't had for a while should be used opportunistically to add to positions. look, all the money that's come out of bond funds so far hasn't come out of equities, it's gone into cash. anyone keeping money in cash by definition is not positive, is not optimistic, is not confid t confident. so sentiment is still skeptical and very anxious and that is a positive for the equity markets. >> hank, when the bit makes the decision to fire on syria. are we effectively handing over the fate of these markets to the rest -- for the rick santelest r

to iran and syria's allies? it is they ultimately to decide whether there is a war in the middle east. i would think it's difficult for the stock market after perhaps a knee-jerk rally to rally consistently through if there was contagion through the middle east. >> well, historically the sell-off usually comes before the guns and missiles. and this has been the most telegraphed advertised strike maybe in military history. so who knows whether we'll have the same kind of reaction post. i would just say the markets are always faced with international tensions. look, the middle east hash in a conflict for a long time. >> it is rare that you have other players, though other substantive players who could act in this present environment. i'm thinking particularly of iran which is so close to the syrian regime. the actions of iran perhaps with israel will become -- this is

not an isolated attack on saddam hussein, is it? >> well, it certainly has the potential of expanding and blowing up much more than just one player, what was now a civil war in syria, and then the u.s. and maybe some allies coming in. it does have that potential. but as far as derailing the market, hey, maybe -- maybe it is the impetus for more than a pullback and a correction. i would say if we get that, take advantage of it because the fundamentals still favor being an equity owner over being a fixed income owner. >> jim, i'm guessing you're buying into this equity rally as well because you've been positive pretty much for the last several years. at what point does that change? does your fundamental thesis here change? >> well, as you know, i had 1700 target, kelly, this year. when it got there in may i've been put out of piece and said we're going to be in a trade range the rest of this year. i still think we are.

i wouldn't be surprised if volatility picks up here after labor day as all the players give back. i wouldn't be surprised if we get below 1600 and back above 1700 before the year is out. i just think -- i agree with the other ges. i just -- i just think there's a lot of uncertainty i that we have to digest. big change of valuation. complete reprising of bond yields. you've got eminent tapering. you've got eminent war. a fiscal drama yet to play out. i don't think that any of that is going to take us down a lot because of, like this morning, the reports are just too good. we'll private sector growth grew 3.3% in the second quarter. it's up almost 3% year to date. it's just too good to allow the stocks to fall but it's hard to get really excited to step up and take a buy right here when you've got all of this uncertainty. you know you're going to face in the next 60 days. >> growth but perhaps not quite acceleration yet. we will continue to wait for it. jim, thank you very much.

hank, appreciate your time this morning as well. on that note, oil prices pulling back a little bit today after surging on the syria concerns. how high will gas prices go? tom close is chief oil analyst at gas buddy. kyle cooper researcher at iaf advisers. tom, i like your point that some of these analysts are playing a game of price is right and that they're all trying to get the high on the street in terms of their forecasts for crude. is that a wise strategy, or not? >> i don't think it's a wise strategy. and i think it's kind of a perverted "price is right" where it's who can overshoot the price without underguessing it. remember, these financial companies and a lot of hedge funds and a lot of people in that world have very, very substantial long bets on crude oil futures and options. so you have to take that as a vested interest. >> kyle, you said the physical reality of a real disruption, in your words, is exceedingly low. all that said, you can't -- the

possibilities above zero that this gets out of hand to some degree. you think a spike to 125 is not unreasonable? >> no, i think we can go to where crude oil is 115, 120, 125. obviously you could get it into some really expo then shall numbers, should iraq attack israel and the whole region blow up. but we're so much better off than we were, let's say, in the first arab spring. much better off than we were in 2003. and we're much better off than in 1990. we're between canada and the u.s., we're getting about 10 million barrels a day of crude oil that's homegrown. and we really don't depend on the mideast for that much anymore. >> tom, your thoughts on that? >> actually, this is kyle. but so, i mean, certainly -- that is certainly the case. this week's eia oil production. canada is well over three. indeed, we've cut middle east exports -- imports significantly. the ones that are really at risk much more so are -- is europe.

they rely on those imports much more than we do. >> tom, isn't -- if you don't have a situation that gets out of hand and other players coming in in the middle east, isn't the most likely direction for oil actually down because of the demand destruction that is coming through with a higher dollar, because of what is happening to those oil consuming nations in asia. because europe isn't really growing at this stage. most importantly of all, if the united states attacks syria, standing squarely behind it will be saudi arabia ready to pump and pump and pump as much as it needs to do to keep that price of oil down? >> well, i think that the price is frothy. so i think the prices could back off if you don't have the support from what could or what if scenarios out there. in the u.s., for example, people get concerned about gasoline. the season ends this weekend. we're going see gasoline demand drop 400,000 barrels a day or so. the world uses perhaps 91 million barrels a day. when you get a mild recession,

you can decrease that by 1, $2 million barrels a day pretty much in a heartbeat. it's a very delicate balance. there are many scenarios where prices could back off substantially. >> i'm curious as well what the level is for demand destruction these days, tom. we talked a lot about how u.s. can get higher prices than used to. what's the red line, so to speak, at the pump? >> the red line at the pump is probably when you get up to $4 a gallon. that's when people really pull back. let me give you an example op on the west coast we were over $4 earlier this year. more likely you could buy $3.40. $3.50. people out there actually stopped driving a little bit and they'll quell some of their driving some more as we get into the september. so it's not the point that a lot of wall street analysts would have you think that has to do with disposable income. there's a point where people will drive less because they do believe that they're being taken advantage of. >> and, kyle, i'm curious as well. there are some people saying

that the spike that we've seen, increase in upward pressure on oil prices isn't so much about syria arizona much about libya and the production there that's off line. what's your view? >> absolutely. libya is a much more significant real term and near term situation. they dropped from what had been 1.5 million barrels a day to around 200,000 in the last couple of weeks here. so that's actually a much more significant factor in terms of the real supply of physical crude. however, with crude stocks still high and refineries running at a decent clip, as tom mentioned, gasoline season is coming to an end and on top of that, u.s. refineries are exporting 350,000 barrels a day overseas. if needed, we could keep a lot of gasoline here and actually help suppress prices. >> now, a new kind of strategic petroleum reserve perhaps? >> that's a discussion for another time. thank you so much. down to 79 cents on crude to 109.31. tom and kyle, thanks. breaking news on bank earnings just coming out president hunter pearson has the

details live in washington. hampton, over to you. >> simon, another record quarter for bank earning, according to the fdic as far as the nearly 7,000 fdic institutions. net income, $42.2 billion. up $7.8 billion or 22.6% from the previous quarter due to rising income and falling loan losses. net operating revenue, $170.6 billion, up 3% from a year ago. net loan loss and charge-offs, $13.2 billion. that represents a 30.7% decline year over year. and the biggest decline, residential loan losses making up a big portion of that significant downturn. equity capital, down by $14 billion. 0.9%. proportion of non-profitable banks, falling to 8.2% versus 11.3% from a year ago. the number of problem banks, below 600.

553, to be exact. the ninth straight quarterly decline. and that number, part of the statement from fdia chairman, overall results show a continuing recovery of the banking industry but he cautions, revenue growth remains weak. carl, back to you. >> hampton pearson in washington. hampton, thanks. british prime minister david cameron debating military action in syria. it is a big political question as to whether or not they join this international effort. of course, the president here saying he's not made a decision yet about the u.s.' next move. we'll go live on the ground to richard engel to find out what happened, after the break. make it happen with the all-new

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situation in syria is still very tense as the u.n. inspectors continue their investigation. richard engel has the latest lei outside syria and talk of turkey. richard, the whole world is watching this team of inspectors wondering when they're going to leave and issue that report. >> well, they are supposed to finish up their work tomorrow and then leave the country probably on saturday. they have said they will probably release some preliminary results once they have left the country. the u.n., however, is already more or less tipped its hand, u.n. envoy saying yes today that it does seem a poisoned substance, a toxic substance was used to kill large numbers of civilians but they didn't say who did it.

and that's pretty much the u.n.'s mandate at this stage, just to determine if, in fact, chemical weapons were used. not -- they are not tasked to determine how and why they may have been used. i'm not sure if it's necessarily going to add much definitive information to the debate that far. it will just add a basis for more discussions. >> richard, the uk prime minister david cameron is in front of the house of commons at this moment in london. he has a problem. he admitted there is no 100% certainty about who is responsible for the chemical attack and therefore people have to make a judgment. that opens him up potentially to so much skepticism amongst the public that he may find it difficult if he finds it difficult to join the united states in a strike. do you think that the obama administration could possibly go it alone? >> i think it is becoming increasingly difficult.

the momentum seems to be slowing down. if you remember yesterday we were getting records from u.s. officials saying that the train was out of the station, it was too late to dial back, and it was coming and they were talking about it starting today. i can tell you even here we were beginning to make our plans, how we were going to cover the events if suddenly bombs were falling on dadamascus. now, you have the arab league saying it doesn't support military action. the red cross saying it doesn't support it. egypt saying it wouldn't back a military action. the uk labor party wanting to slow things down and have two votes to authorize military strikes. today the administration is supposed to give a briefing about why it believes that chemical weapons were definitively used by the bashar al-assad regime. the longer this goes on i think the less momentum you're going to have and more doubt injected into the process.

>> nbc's richard engel for news turkey this morning. thanks. straight ahead, with the potential verizon/vodafone deal. find out why this could be a once in a decade deal for the banks involved. [ female announcer ] what if the next big thing, isn't a thing at all? it's lots of things. all waking up. connecting to the global phenomenon we call the internet of everything. ♪

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man, what a story on the wireless space today. vodafone confirming in talks with verizon to sell the u.s. joint venture. verizon wireless, a deal could be worth $130 billion. dennis berman is the businessed for of the "wall street journal" but in a previous life he covered m and a and i'm guessing he would have loved to have covered this deal.

>> this is what we call in the journal newsroom the big white whale. it's been circling the world's oceans for almost ten years. and it appears, carl, to be finally perhaps harpooned by these two companies. >> faber was on this morning, dennis. he thinks there is a path to dlget this done. you think in a rising rate environment they better make their move soon. >> yeah, i think david is right. there is a path to get this done. but there's also incentive to get this done which is why this perhaps is the moment. we see what's happened to rates. we've seen the ten-year moved 100 basis points over the last few months if you do and i haven't done the math. if you do the math, 100 basis points moving the ten year, what that reflects in corporate bonds on $60 billion note, talking serious, serious interest expense. now does appear to be the time before the fed pulls out and artificially low corporate bond rates go up as well. >> dennis, you mentioned this deal has been going around for almost a decade and i'm just

curious from, you know, the strategic point of view here. a decade ago this was gotten done. obviously price matters but do you think over time it has made sense and would ever continue to make sense for vodafone to just hang on to this stake? >> well, let's think about two strategic things happening in this world today. the wireless space in the u.s. is getting more competitive. his son buying sprint. we're seeing a number of the last bits of u.s. telecom space combined. what's happening in europe, the second point is there does seem to be a wave of consolidation that probably will happen there, too. dozens and dozen of operators smushed into all of europe. it makes sense for both of those companies to part their ways and put their capital where it's best used. for verizon it's in the u.s. and for vodafone it's in europe. we can call vodafone's global wireless strategy probably has failed. a pan-european strategy does not seem out of the realm of reason

for the company. >> except that's not really what vodafone is doing, is it? or not so far anyway. we can speculate about the future. its spending $10 billion to get its hands on the largest cable tv operator in germany. that's what i don't understand, denn dennis. vodafone think the mobile margins around the world are going to be under pressure so it's looking to diversify, to go into cable television. and yet here you have verizon which is borrowing $60 billion to double down on its stake in mobile when you say that it's under pressure here as well because of a resurge in sprint or t-mobile. >> the wireless space in the u.s. is largely a duopoly. largely. while there is more competition in europe, i did bring that up in the u.s., there is still a lot of money to be made in the wireless space in the u.s. that gets us to the second point, simon. what happens to the old wire

line business of verizon. it's an increasingly small business of the overall company. people have been talking about this for a long time but it does seem possible this sets up the next move which is that wire line company gets ripped out of verizon via a spinoff of some sort. >> what about the impact on danks, dennis, in a year where it hasn't rained as much as they would like? >> no. so what they do with the whale, they -- back in the day they would harpoon them, check up the whale meat and eat for months and months and months. that's what's going to happen at wall street. that bluber is rich. i'm going on with the metaphor. this deal is so rich with fees, $60 billion of debt. i honestly can't think of a placement this big in, many many, many years. >> what if they're all fighting for it, dennis? does that mean the price is lower than it might ore this wise be? >> the debt, kelly, is that what you mean? >> exactly. i guess if you've got all of the banks who want a piece of this business, are they not going to -- think about what happened with the facebook ipo. >> obviously there's going to be a volume discount.

they're not going to be paying the same fees as they would for a smaller offering. law of large numbers in a debt offering of this size means there's going to be a lot -- this is going to be the biggest fee paying events on wall street for -- i would say even larger than the facebook ipo simply because debt and equity usually has a better payout to wall street. >> yeah. i wouldn't be surprised to see you back among the riffraff covering m&m, dennis. we'll see what happens. thanks again. dennis berman. let's head it over to dominik. dow is up 38. >> tiffany and zayle and now signet. the company behind kay jueweler. u.s. sales really showed gains. the uk sales were a little bit weaker. now, signet gave a disappointing profit outlook for the current

quarter. it looks like jewels, maybe they're not all created equal. >> for sure. thank you for that. up next on the program, the former member of the cia will weigh in on the dangers we face on cyber crime coming out of syria and the syrian electronic army. we're back after a break. (announcer) at scottrade, our clients trade and invest exactly how they want. with scottrade's online banking, i get one view of my bank and brokerage accounts with one login... to easily move my money when i need to. plus, when i call my local scottrade office, i can talk to someone who knows how i trade. because i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade. awarded five-stars from smartmoney magazine. time to have new experiences with a familiar keyboard. to update our status without opening an app. to have all our messages in one place. to browse...

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welcome back to "squawk on the street." we just got the number from the government on this week's injection of natural gas. 67 billion cubic feet.

that was hotter than some were looking for. we are watching natural gas here now in negative territory coming off. it had been high attorney day with the fact that we had been seeing some hot weather in the midwest. taking a look at crude. it was off of the lows. now heading lower. again, traders very much watching the situation in britain as they debate whether or not to give cameron the go ahead for a strike. a lot of traders, guys, are talking about a strike if it happens. perhaps happening as soon as the long weekend. they think that perhaps it would happen some sort of action might happen when the markets are closed in order to make things calm. of course, going into a long weekend that makes it difficult to place bets. a lot of traders yesterday said they saw a lot of activity in terms of call buying as prices went up to a two-year high. today we're seeing some of the calls being sold and a little more put buying, a bet in terms of options for prices to go a little lower. back to you. >> all right, bertha. thanks very much for that. now, as she mentioned, tensions continue to rise in

syria as the u.s. prepares for a possible military strike. what happens if syria's retaliation is in cyberspace? let's ask mike faye, worldwide chief technology officer with mack afee and john pierce, research vice president at nss labs and security readvisory company and also a former staff officer with the cia security and a author of "blackhackonomics." good morning. >> good morning. >> mike, first to you on this, is retaliation going to take the form of cyber crime? is what we have seen so far just the first glimpse of what might be more to come? >> i think whenever you look at retaliation in today's world you have to assume that there is a possible cyber angle. the syrian electronic army hasn't been traditionally known for an outrageous level of sophistication, though. the most of their work is

classified as hackofism. >> they record it as the work of people who are not very sophisticated. how important is that and, again, do you expect this to escalate if and as this conflict conversations? >> yeah, i mean, i expect it to escala escalate. i would disagree with what mike said. when you look at the syrian electronic army they have upped their game. when you look at what they did to the "new york times" a couple days ago, they basically did some dns modifications which redirected people the other sites. there isn't very trivial to do. fur thr more, there was an alleged allegation that they were going to take down the israeli critical infrastructure. these type of activities, in my opinion, are not the activities or hacktovism. they have a mission to pull out. >> john, can we just explain what's happening here with the domain name system. basically this is -- this is a registry that's in australia

that matches the number of a service, say "the new york times" server to nyt.com and enables people to match the labels and it's kind of the backbone to everything that is going on. how difficult is it to do what they did in australia and why is it in australia, why is it not within the shores of this country where it can be better protect protected? >> well, when you look at dns and dns at the highest levels like the yellow pages of the internet, to answer your question, i meerngs it's very sophisticated. i mean, there's talks about social engineering that caused the modifications of the dns registry. after reading some reports that came out of australia, that doesn't seem to be the case. when you start looking at the global infrastructures that we have today, yes, it would be nice that we have everything hosted here in the united states but we live in a world economy where things are hosted all around the world like content delivery networks that deliver information, facebook, twitter, et cetera. so not -- i wouldn't say it was

less secure because it was in australia but when you start looking at the sophistication of how they did it, in my opinion, that is not the work of a hacktovism. >> we talk about sophistication levels and the mission of the syrian electronic army. what is the mission? bringing down "the new york times" for a couple of hours is not disrupting the national grid. i mean, where is the path between this and that? >> well, i think when you try to link up the hacktovim attack concept with an actual grid attack or something here elaborate, the one thing you also have to keep in mind is all of this stuff is for sale. so regardless of your capabilities inherently, your access to good code, your access to vulnerabilities and attacks are, you know, it's a monetization problem, not necessarily a capability problems. so what you see is an organization that is, you know, integrated into that world. they have access into that world.

and presumably, they have means at their disposal. i think that's why you can make the leap of something that, you know, is disrupting the media that could possibly jump the chasm to something more difficult or something more painful. >> john, the fear, if or when there is an attack on syria, is what the retaliation is going to be from syria itself and also its allies. what is the capability of iran at the moment? we know that israel and probably the united states managed to attack it quite sophisticatedly through the virus on the nuclear reactors, in return what has iran built up? >> so, we talked about this in my first book. i mean, their cyber cape its based on research we did, i think it was on scale of one to five, five being the worse, they were somewhere around three or four. they have sophistication and d advancement in terms of cyber weapons. when you start looking at russia that was selling convention alarms to syria, no one's really talking about are they selling

cyber weapons as well. so i think when we start looking at the allies and the different groups in that region, hezbollah, syria, iran, when you start looking at the cyber cape its of all of them which they have quite well demonstrated that they have that i think this would be the first conflict where cyber warfare is going to have a significant impact to possible u.s. interests. >> well leave it there, gentlemen. thank you very much for your time this morning. >> thank you. things look pretty grim right now for the city of detroit but it's not all bad news when it comes to the motor city's economy. we're going to show you a bright spot thanks to a hometown company, when we come back.

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[ telephone ringing ] now a waiting room is just a room. [ static warbles ] welcome back. here's a bright spot for the detroit economy. ford is expanding production at the flat rock, michigan, assembly plant just knot of the city because of the red hot sales of the ford fusion. phil lebeau joins us live from flat rock with more. >> kellly, right now they are announcing that the production

has officially begun here for the fusion at the flat rock plant. ford is adding 1400 new workers. most of them are already hired. they've already been trained because production is starting right now, today. those 1400 workers means that ford has now hired or now has employment totaling 69,000 here in north america. and think about this. half of ford's plants in the united states and north america, they are now running three shifts. why are they running three shifts? to keep up with demand. ford's u.s. sales in the year to date up 13%, just under that, 12. %. the industry by comparison up by 8.5%. and for ford and the fusion, in some markets, the day supply is down to 12 to 15 days whereas a typically would like to have 65 days supply. we talked to ford's ceo alan mulally about leaving some sales on the table earlier today when he was on "squawk box." >> the demand is very gratifying

but also we really wanted to focus to mass that production. even though we missed it a little bit we're going to catch up quickly with development here. >> look at this because i think people might be a little bit surprised to see how close ford is to catching general motors in the u.s. it's not going to happen any time soon. may never happen because gm has more capacity than ford. they are now within two percentage points of catching general motors for the lead in the u.s. and take a look at shares of ford. like all the auto stocks, it's had a heck of a year. one last thing, carl and kelly. we talked to alan mulally on "squawk box" and said, when are you going to sear multiple expanse for ford shares and investors. for a long time, when you look at the stock, alan mulally said we're going to start so see that expansi expansion relatively soon because they've been growing the earnings. >> in the meantime, the way in which they've been working the plants in detroit, i wanted to

emphasize hugely profitable with the new union contracts that have taken wages down from $28 an hour to $15 an hour if you're a new entrant at a time when, of course, by putting a third shift in you're supposed prosing the fixed costs every single time. this is a sweet spot for them that near in at the moment. >> absolutely. and it's like that for the remainder of this uaw contract. and it's not just that they're in the sweet spot, simon, in terms of bringing in new entrants at a lower price point. remember, they have been able to get rid of all the egg wilegacy health care. they don't have that holding them down anymore. >> phil lebeau in flat rock, michigan. great stuff. thank you so much. perhaps less significant than ford's production boost but more mouth-watering, bacon body work for your ford fiesta. in honor of international bacon day which we all know is this saturday, ford is giving customers the option to wrap their 2014 fiestas in a series of vinyl graphic packages.

it ranges from lower key fender flares to this sizzling racing stripes on the hood to this full body bacon wrap. prices start at $78, plus installation. >> i think if you were traveling at speed it might not look like bacon though. you might not recognize that as bacon. you would just think, oh, my dear. that's a needed wash. >> exactly. >> maybe it sizzles as you pick up speed. seems reasonable. $78 to wrap your car in bacon. shares of williams-sonoma what are lower this morning despite reporting better than expected earnings. improvement on the housing front is boosting sales but growing competition from the likes of restoration hardware and crate and barrel are clearly a looming threat. laura joins us and has a buy rating on williams-sonoma what but lowered her price target to

$59 from $62. good morning, laura. >> goods morning, simon. all of these results are about pottery barn. >> pottery barn drove the growth. the only weak spot is still the namesake brand, the williams-sonoma what brand. >> what do you think of the competition from, for example, restoration hardware and sales seem to be -- same-store sales seem to be accelerating rapidly. why still have a buy recommendation? >> this is a very large market. if you look at restoration hardware's price points and the market demographic they're after it's very different. restoration hardware has gone way up market trying to open art galleries in chelsea and so forth. that's really not what pottery barn does. pottery barn's market share is only about 4%. so there's room for both to grow. and you can see williams-sonoma what's internet business grew better than 20%. no weakness in top line at williams-sonoma what. >> i had a friend just this week

complain about a $10 container of pepper at williams-sonoma what. and i wonder if you're getting any anecdotal pushback on the pricing over there. >> in fact, williams-sonoma wre mizes the problem and the gross margins were weak and they were weak because they got more promotional at pricing. predominantly at the williams-sonoma brand, a little bit less at pottery barn. i think they're looking at their prices. >> isn't there a brutal price war on kitchen wear at the moment? >> kitchenware with good brands are available all over the place. kitch kitchenaid gadgets at walmart, all over the retail landscape. it's not as exclusive as it used to be. >> lalaura, what would your adve be for management here? reacting to trends.

expecting perhaps there's some change in consumer behavior at play. >> williams-sonoma, the core kitchen brand, used to be truly innovative. they brought lecreuset to the united states for the first time, stemware and cookware that the u.s. had never seen before. now that the globe is flatter and we see products sooner and from all sorts of smaller retailers, williams-sonoma has to push the envelope and get even more innovative, come up with its observe products and use that strong brand name to show better, more innovative products. >> laura, it's been quite a tough, turbulent retail earnings season. some doing well. some in teen retail notably doing really badly. today the column in the financial times has a fresh take on how to pay your way through what is happening. they say, look, the sort of central bank action that we've had from the fed has benefited, in essence, the upper echelon of the middle class.

not the top, not the middle, not the bottom, but the upper echelon, consumers with well-paying jobs and investment portfolio that have some real estate, not in undert water mortgage. would you agree that that is what is reflected in what's working now for the retailers? >> we follow everything from dollar tree and family dollar to tiffa tiffany's. and absolutely without a doubt there's no strength at the retailers that cater to the middle and upper classes. >> laura, we'll leave it there. thank you for your time. >> thank you. from fast food to no food. thousands of fast food workers across the country set to walk off the job today, calling for more money and the right to yup i don't know i unionize. plus, the dow now 76 points higher. highs of the session as we are getting closer and closer to the european close. discussion about today's market action when we come right back. [ male announcer ] come to the golden opportunity sales event

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looking at a session that's improving rather quickly. dow is up 72 points. oil is off $1. the vix is off a touch. we're seeing ten-year yield ease off a little as well. the dollar up 1%.

>> a real interesting day of reversals. let's get to chicago and rick santelli. >> let's talk a little technical and talk about some of the fixed income issues because all eyeballs are focused on interest rates. it's really the end all game here because no matter how much optimism, for example, there was in housing just three to five weeks ago, we see that some of these moves in interest rates were sure to and have caught up with the housing market. the only debate now is how much more will it catch up, what will the lasting impact be, and what's more important, the rate of change as to how much interest rates have changed or the historical perspective that you're still under 5% in a mortgage and history would dictate that's a good deal. i would tend to lean with the former rather than the latter. it's always about rate of change. whether it's new normal on the economy or equal lib brie yum in

whatever you do or trade in life, it isn't what it was before. it's what it was yesterday, what it is today, and what it will be tomorrow because the rate of change is what prices everything. now, when we had that strong revision to gdp today, what happened? the yield curve flattened and the flatten is important because most of the flanning occurred in the five-year sector. today we reached up to 167 back up to 162. last friday we were up at 170s in a five-year. this is what you want to watch. is the throttle broken or not? i still think there's not going to be symmetry. it's going to be asymmetrical. we'll get bigger run-ups on stronger data. keep a huge eye on 161 in fives. by the way, something very historic happened this week. we all know the fed has kept rates basically at zero since 2008 and the great repression continues. we hit the $2 trillion

outstanding mark in high yield junk securities this week, and i think that is significant. ponder that for a minute. carl, back to you. >> all right, rick, we will do that. thank you very much. let's get a market flash. dominic chu over at headquarters. >> carl, check out some of the price action on the internet and new media names that are helping to lead tech stocks higher. shares of facebook up around 2%. internet radio company pandora also north of 2%. daily deal site groupon over 3%, nearly 4% and yelp popping more than 4%. take a look at zillow. up around 4% to 5%. so a lot of these internet new media names making waves in today's trading. one of the reasons you see the nasdaq helping to lead the way higher. >> big moves there, dom. teen retail has been a bit of a mess lately with a couple winners and a whole lot of losers. why are some names doing well and others struggling? courtney reagan went shopping with some teenagers to ask them

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here is one that retailers and parents have been trying to figure out for a while, understanding the teenage mind. good luck with that.

why are some teen retailers doing well while others are struggling? turns out brand loyalty still has a lot to do with it. good morning, court. >> a few retailers have suggested strong early back to school sales with the teen retailers bearing the brunt of the wapain. i joined eight teenagers to see how they're shopping and gather some insight about which retailers are hot and which ones are not. when it comes to teens, the mall experience, browsing the physical stores, is still king. all of the teens we shopped with prefer in-store to online. >> i love this store. literally i have so many clothes. >> the lighting, the music, the smell. >> new stores, i see something cool. >> though they noticed sales and window displays, at the end of the day, it all comes down to brands. >> when i was in middle school i shopped at holster and abercrombie. now i like the gap. >> really like the kendall and

kylie line by the kardashians. >> i think it's all about -- >> it's all about like brands and what everyone else is wearing. >> except you don't want a label splashed across your chest. >> that's true. >> you guys are tricky. while they don't use the web to find coupons or really shop, they are following their favorite stores and stars on instagram. >> they advertise it on like their social media which we're all following. you will see like, oh, she's wearing those shorts and you're like i have to have them. >> the shopping trip was quite an education for me. some of the lessons, none of the teens have bought any clothing for back to school, and bootleg jeans are totally uncool. >> that's a good question, court. what is cool? did you get any sense as to what they do want this fall? >> so you know what they said? they said it's all about comfort for back to school and particularly when it gets cold, which could be some of a concern for the retailers trying to push

out the trendy stuff. they said we just want it to be comfortable. they're a little split when it came to uggs. i said that must mean uggs. they said i've kind of grown out of those. >> as a foreigner is there anything particular to kids in jersey that might be different to kids when it comes to comfort in other parts of the country. >> these were just eight kids in new jersey. some public school, one private, one of the kids getting ready to go to college. so there are certainly going to be regional differences. i can't say that this group speaks for everyone, but it was still insightful. there could be differences around the country, sure. >> that was a fantastic spot, court. thanks a lot. courtney reagan back at hq. if you're just joining us, here is what you missed earlier on. >> welcome to "squawk on the street." here is what's happened so far. >> second look at second quarter gdp. whopping 2.5%.

a 0.7 recision to the upsitde, better than anticipated. >> we're short of production on the fusion. our sales up another 13%. this is going to add 30% more production capability for the fusion. >> vodafone seems really attractive to me here because the stub of what's left is way too cheap. vodafone makes sense to go higher. fiscal cliff, terrible time to buy, sequester comes. one month from now we'll have a new name. we haven't thought of it yet and it's not going to be positive. >> whenever those guys get involved, it generally is not. >> i wouldn't be surprised if volatility picks up here after labor day as all the players get back. i wouldn't be surprised if we get below 1600 and back above 1700 before the year is out. >> this is what we call in the journal newsroom the big white whale. it's been circling the world's oceans for almost ten years and

it appears, carl, to be finally perhaps harpooned by these two companies. good morning. we're live here at post 9 at the new york stock exchange on this thursday. let's start with a check on markets. a pretty nice rally shaping up with the dow up 78 points. about half of a percent. the same for the s&p 500 and the nasdaq up better than 1% this morning. shares of guess are rallying today after the company's second quarter earnings topped estimates. the apparel company did post a 7% drop in profit, downgraded its outlook, but that hasn't hurt the stock trading so far. shares of campbell's soup are falling after posting a loss in the fourth quarter. the company reported a major write down in its european business. the world holding its breath as the u.s. tries to decide if and when to take military action against syria. we're going to go live bringing you the latest in a few moments. plus a major deal drewing in the

telecom space. vodafone is in talks to sell its 45% stake in verizon wireless. we'll tell you what this could mean. and thousands of fast food workers across the country set to walk off the job today. we'll go live on the ground for some details. first up, tensions around syria are growing as we wait on whether the white house will intervene in the region. the question then "whbecomes wh are the options and the potential repercussions. michael reuben is joining us and michelle wolker. guys, good morning to both of you. michael, i notice the cover of "the economist" is a picture of assad and the headline is just three words, "hit him hard." do you think that's the prevailing view right now? >> i think it is the prevailing view that we need to do something, although i suspect it's going to be more symbolic than real. the fact of the matter is we've been discussing this for more than a week now, and that's

given assad and all of his top lieutenants opportunity to go to the ground to survive any onslaught. >> michelle, richard engel of nbc news this morning made the point, the longer the debate goes on, the less momentum there is for a strike. are we at a point where building international support is now a losing proposition? >> well, i think it's probably the point that the less momentum there is for a strike. i think everybody wants to be as cautious as they can because it's really a no-win situation. you have the possibility of a bigger strike leading to a wildcard escalation and a less impressive strike that would mean that he just kind of laughs everybody off. but i think that the real aim is something that shows that the world is taking a stand, that the u.s. is taking a stand, but that minimizes all the downside risks in terms of costs and all of the other things. >> michael, at the same time while britain is debating this, they said they have evidence that perhaps 16 chemical weapons

attacks have already been used in syria. so there's going to be people saying already the world is not necessarily showing a strong backbone to how assad has been behaving and it would seem as though this back and forth lately isn't going to help that. >> well, indeed, the united nations in previous inspections has accused both the regime and the opposition of using chemical weapons. perhaps if our goal is to suggest that chemical weapons should be completely off the table, then the strike shouldn't simply be limited to the chemical weapons held by bashar al assad's lieutenants but also some of those held by the more radical groups in the opposition. >> michele, we keep looking to the u.n., the u.n. charter, members not supposed to take action against each other unless there's imminent danger. does the u.s. need to worry about that or not? >> the other side of the international law issue is the responsibility to protect. when a government is not protecting its citizens, in fact, when it's attacking them, there is a very strong legal international precedent for stepping in, and i think that's very clear here.

so you can't ignore that. >> as cameron is trying to prove to his own country today. how much is riding on the inspects' report and what they say? >> i think quite a bit. there's a lot of concern about past wars being waged on not so good information. the other big thing to pay attention to is next week's arab league meeting. i think leadership from that region will provide very, very important cover for the united states and for other countries that might intervene. >> also potentially complicating the time line, michael, is the fact you have g-20 meeting in st. petersburg on september 5th and 6th at a time when russia is one of the key opponents to what the u.s. wants to do. how does that complicate what the ultimate decision will be? >> certainly it complicates things if we want to get the united nations security council to approve, but there's a certain amount of hypocrisy going on. after all, when russia invaded georgia back in 2008, i don't remember moscow wanting to get

united nations security council approval first. >> that's a good point. michele? >> i think the role of moscow, of china, and of iran is going to be crucial in this. you know, iran has said they are against chemical weapons. i think china and particularly russia is going to be a big concern. the possible upside surprise, which this is an outlier, would be russia or iran or china might intervene in some way to try to push for a solution that would make everybody happy because i think everyone wants to do as little as possible while making as big a statement as possible, which is a paradox, but i think that's what everyone wants. >> and it's a good point. michele and michael with their views on that this morning. thanks very much. >> thank you. let's go to the ground in the region. nbc's richard engel joining us from the turkish border with syria. good morning, richard. >> reporter: good morning. the syrians are trying to figure out whether this will happen or now has the momentum truly stopped. we've been speaking with rebels this morning, and they are

starting to wonder, is the united states really going to act? are they going to act alone or once again is the world going to look away and allow more people to die in syria because they are too afraid of getting mired in what is absolutely a very murky and complicated conflict? >> richard, there have been various reports out today from sources that, i don't know if we can trust or not, but there have been reports that assad is moving some of his prisoners into areas where there would likely be a strike. any way to confirm that at all? >> reporter: i haven't confirmed that. we've spoken to people in ka mass cuss who actually described the scene as very calm. so far the syrian government's attitude and strategy has been to say, we're victims in all of this. we are being attacked all around us by terrorists. the united states and israel are backing these terrorists, and we are defenseless citizens who would never use -- or defenseless regime who would never use chemical weapons against its people, but they

have had notice, and it would be foolish to assume they haven't moved some of their most important hardware, their helicopters, their fighters. but moving human shields to specific government buildings, we have not been able to confirm that. >> finally, richard, as someone who has covered and studied the region for so long, i'm sure you have heard your share of worst case scene aarios in this situation, people worried about retaliation from syria toward israel, hezbollah stepping up attacks in lebanon, russia closing exits for u.s. troops in afghanistan. do you think any of those are realistic at all? >> reporter: they're all realistic. it really depends on what happens. if the united states attacks, and mostly i think if the united states attacks in a big way, it could set off a very unpredictable chain of events. some of the ones you mentioned, attacks against israel, drawing russia into it although i think

that's unlikely. the rebels, including those wit to power. i think that's probably the most realistic scenario, that if you hit too hard, the regime collapses, and then we have potentially an al qaeda-run state with hezbollah desperate and iran desperate, and the other scenario is if you either do nothing or hit too little, then bashar al assad can say to his army, we're going to win this. look, we just stood up toe to toe against the international community and the united states, and we didn't blink, and we're still here. so having a very symbolic strike could actually give the syrian regime a little bit of momentum and a little bit of a shot in the arm. >> very difficult needle to thread, richard. appreciate your analysis and reporting. richard engel near the syrian border. richard, thanks. now, meanwhile this morning, gdp figures show the u.s. economy grew more quickly than thought in the second quarter helping to push markets higher. let's bring in gary kaminsky.

good morning. >> good morning, guys. good to see everybody. >> a lot of people have been trying to figure out if this rally in the market, 76 points on the dow this morning, is because people sense that the time line of a syrian strike may be pushed out or is it because of fundamental good news on the economy? >> give the volumes are so lacking, you can't really say that there's any one strong directional thing happening but i would say this. today, yes, good news appears to be good news, good news for the economy, good news for the markets. as it relates to syria, the main thing if you want to dumb it down, everything that's happened in the equity markets in 2008 has been driven by the fed and driven by the liquidity of the central banks around the world. if we're in a military conflict, it's very hard for people to see the fed even attempting to try to do something in september or october that's going to disrupt the financial markets because when you've got one -- while you're fighting one military conflict, the fed who has been one directional since 2008, why would they put -- why would they risk at any point trying to do

something where you go to the unknowns at that time? >> even though we know that historically on limited strikes the market tends to be okay at least in the following weeks? >> carl, as you know, you and i have sat here for many years. we sat here many years together. this has been driven by the fed, driven by liquidity. why would three want to risk having something happen where we sill have a very fragile economy? it doesn't make a lot of sense to me or for those actually running real businesses. >> you mentioned fragile economy. we were looking over the last few quarters of gdp. 0.4% in q1, 1.1% in q2. >> i can't tell you about the stock, as a result of being around the country and talking to people that run real businesses, i have emphasized it a number of times. people are cautious. they're not looking and they're not running their businesses allocating capital in their own businesses as though we're going to have any kind of strong economic growth. so the muted recovery continues.

but i will say from an investing standpoint, creates a lot of opportunities. >> where do you see that right now? >> frequently asked question. i get two questions asked all the time. what was it like sitting next to carltanilla for all those years? i brought along a chart, we've had that meredith whitney event in the muni bond market. i don't see -- the immediate why is not really putting it up in the sense of what we had back then, but given what's happened in detroit, given what's happened in interest rates, you have an opportunity now, we've got some examples of what advisers are doing in terms of munis, this is an opportunity if you want to be a muni investor to attractiveely buy long-term bonds at attractive rates. something i tried to constantly mention here, huge difference between owning a bond and owning a bond fund. >> absolutely. >> and i think that is an

important thing. i saw something in the media -- >> what do people do if they come to you and they say i just want the bond? what do you say to them because it's tough as a retail guy. >> if an investor wants to allocate certain money into fixed income. our advisers, we try to align the investment with what is the realistic expectation. if they don't have the capital to go out and buy a specific bond, we try to buy bond funds that have certain duration limited duration maturities. you can't just go out and group all bond funds together. so i saw, you know, many times i would see what a pimco would say when he was here as the capital markets editor. pimco was blaming the media this past week for the exodus of bonds. >> right. >> i kind of had to chuckle when i read that because again there's a difference between bond funds and bond investors. when you work with an adviser, if you own a bond fund right now and you have got a short-term capital loss on that bond fund,

what you can do is take that loss, harvest that loss, and possibly take advantage of what's happening in the muni market, go out and buy a bond and increase your distribution while bringing down your risk profile -- >> so you're saying the great rotation is from bond funds to bonds. that's what i'm hearing. >> well, that's definitely something i would suggest. when you work with an adviser. before i run, can i say one thing? >> no. >> i want to say because i haven't been back here in a while, we continue to have great momentum and things are extremely strong at the firm, we're building up the best wealth management platform. i wanted to say hello to scott see g siegel -- >> if this was the oscars they would have started the music. >> start the music. start the music. come on, bring it on. but i wanted to say we have great momentum and the advice business continues to be the place to be. enjoy the holiday weekend, guys. >> that's why you're a salesman.

>> that's a filibuster. great to see you, gary. >> you might have a tough time grabbing a burger and fries today. thousands of fast food workers staging walkouts calling for an increase in the minimum wage. and rick santelli is looking at this morning's gdp number and the fed tan per. >> we're going to continue with the notion whether interest rates will be fair and balanced when it comes to weak and strong data. we will have andrew brenner, and his comment is bond funds are still hemorrhaging and we couldn't turn the markets around in a crisis week. you're going to want to hear how he finishes those two statements all at the bottom of the hour. clients are always learning more to make their money do more. (ann) to help me plan my next move, rates will be fair and balanced i use daily market commentary to improve my strategy. and my local scottrade office guides my learning every step of the way. because they know i don't trade like everybody.

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buy a tempur-pedic mattress set and get a free twin tempur-simplicity mattress. find a store near you at tempurpedic.com. might take you a little longer to get your beurger and fries today. jackie deangelis has more live in new york. jackie, good morning. >> hey, good morning, carl. after hitting the streets in midtown manhattan, they've made their way to downtown manhattan. fast food workers are protesting wages. they want $15 an hour, they also want the right to unionize. some the fast food restaurants will be the ones you know. mcdonald's, burger king, taco bell, domino's, just to name a few. here in new york city specifically, there are more than 50,000 fast food workers.

they make an average of $8.89 an hour. that's a little bit more than the national average in terms of minimum wage, but according to an m.i.t. study, to live in in town you need to make $24.69. that's substantially higher. we wanted to find out why they hit the streets. here is what they have to say. >> we deserve $15 because we work too damn hard. we work hard. everything was going up but my pay. my represent is going up, groceries going up, clothes going up, but my pay is still where it's at, and how am i supposed to live off that? >> reporter: as you can see behind me, several hundred to a thousand fast food workers hitting the streets at the moment. we had an opportunity to catch up with christine quinn to get her take on this. i want you to hear what she had to say.

>> it's just not right for folks to work long, hard hours and at the end of the day still have to be on food stamps or public assistance. >> reporter: now, we also got a statement from mcdonald's earlier. in part that statement said that mcdonald's aims to offer competitive pay and benefits to its employees. we provide training and professional development for all of those who wish to take advantage of those opportunities. but as you can see behind me, a lot of people hitting the streets here, and the point that christine quinn brought up before is that if the restaurants don't pay these people more, it's the public that's bearing the burden of it, but some of the other people we spoke to said either way the public will share in that because if the restaurants start to pay more, what's the price of a hamburger going to be? guys, back to you. >> and, jackie, this isn't just a new york strike, is it? this is happening across the country? >> reporter: that's right. it's actually happening in new york city but also 50 other cities across the country.

so this is not a concerted effort just here in the city. it's not specifically a new york city issue. this is an issue with fast food workers across the entire nation. >> and one that we can see has people pretty upset. jackie deangelis from in front of that protest as it moves downtown this morning. thanks very much. now, a huge telecom deal inching closer to reality. vodafone acknowledging it is in talks to sell its 45% stake in verizon wireless for as much as $130 billion. we'll tell what you this could mean for verizon shareholders and for customers when we come back. mean for verizon shareholders [ male announcer ] it's time.

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got some news on the wireless space this more than. vodafone confirming its in talks with verizon to sell its 45% stake. the deal could reportedly be worth as much as $130 billion. will power senior research

analyst and craig moffet. good morning to both of you. craig, they say in the release there's no certainty an agreement will be reached but do you think there will be one? >> it certainly sounds like they're closer, and we haven't had many acknowledgements yet from vodafone they're getting close to a deal so that's a step in the right direction. >> does it make you want to buy vodafone or verizon more? >> the market likes it for both sides. like any transaction, you have to have a buyer and a seller. it's hard for a transaction to be truly good for both parties and it comes down to what do you believe about the future growth rate of the u.s. wireless business. vodafone is saying i'd rather be a seller and verizon is saying i'd rather be a buyer. >> will, for this business which is still so lucrative, is $130 billion even enough. >> i think it's probably the right number. that would imply about eight times 2014 ebitda or operating cash flow. i think without question verizon wireless has been the jewel asset among telecom operators in the u.s. and perhaps globally.

so i think $130 billion could get it done if verizon could come up with the right composition of cash and stock to do it. >> why do you think vodafone wants to sell it, will? >> well, i think it probably recognizes that the u.s. market is going to get more competitive, and this is something that i think has been underappreciated i think by investors for some time. we've been recommending vodafone on the view that the verizon wireless asset has been undervalued. if they can get what they perceive to be an adequate value, now is probably as good a time as any to try to monetize that. >> it pays a heck of a dividend. one of the best on the ftse and a lot of discussion about how much of the proceeds they could potentially return to shareholders over the next five years. some say it could be up to 50%. >> yeah. i think that's one of the things that has been a sticking point in getting a deal done is vodafone has had to first arrive at an internal decision about do they want that much cash because

they know there's going to be a lot of pressure from shareholders to return it. >> craig, does the ten-year above 3% scuttle the deal? i don't know that it scuttles the deal. it certainly lights a fire and creates a sense of urgency. every additional interest rate point if you're talking about $60 billion of debt is $600 million a year of interest, and so that focuses the mind, as they say, that we better get this deal done soon before interest rates rise anymore. >> i'd love to read the tax analysis on this deal. some lawyer is working this weekend. that's for sure. thank you so much. will power, craig moffet, we'll see you later. >> tension in syria causing plenty of volatility in emerging markets. are riskier assets getting too risky? also, we're counting down to the close in europe. we'll get details on the trading session there and the impact it's having back here when we come back. stay with us. (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.

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the european markets are closing now. >> european markets have just closed. simon hobbs joins us with a recap of the session. >> and they are substantially higher. they have been lifted higher through the session as a result of the data here in the united states and, of course, the moves you have had on the dollar which have sent the euro breaking lower. snapping what was a three-day losing streak. the german unemployment data is obviously worse on the month, but if you look at the track of three months, you had two good months before that. i don't think people are too worried about that at this stage. top gainer in europe is obviously vodafone. you were discussing just before

the break the sale of verizon wireless or its stake in the united states, $130 billion. it's lifted over telecom players. there is still discussion about consolidation. vodafone is more interested in cable assets at the moment. the earnings are good in europe. wpp saying it thinks as a result of ad sales in this country and the uk that things will be better for the full year. it's lifted its rival publicist despite the fact that sorrel was putting the knife in on the merger. one of the big beasts in european finances resigning from the head of zurich financial. josef ackermann has made the move after the death of his cfo. he says i have reason to believe that the family thinks i should take my share of the responsibility as unfounded as many allegations might be. he's the former ceo of deutsche

bank. let me finally show you the action in athens today where the labor unions have begun their protest season against the civil servant job cuts. the latest we have from the troika, the rest of the eurozone, is they're going to try to force the greeks to put all their privatization assets, all that land and those companies into a holding company somewhere in europe under the legal responsibility of the eurozone so they can better get rid of those assets and sell them off to the private sector. we'll see how that flies as, of course, we go into now the third bailout potentially of greece. back to you. >> simon, thank you very much. get a check on energy and commodities. energy has been a story all week long. bertha coombs at the nymex. >> hi, carl. we're seeing a bit of profit taking here today, although oil and energy prices have held fairly steady for the most part. the sense now that a strike against syria, military action, not seen as imminent between the debate in the uk parliament, comments from angela merkel saying she would prefer to see a

diplomatic resolution, but we are continuing to see that brent premium widening, and one of the things that people are watching for is what this means in terms of the international supply. more analysts say they do not think this will impact oil but the perception in terms of supply is what has driven this price. the saudis, in fact, say they are going to increase production according to oil consultancy by a million barrels to 10.5 million but a lot of that is putting back on the market what has been lost because of the lift in libya and their production being cut back. the interesting thing to watch is the crude curve here in terms of wti nymex crude, way stronger. a lot more backwardation. but still not a big move on the back end. as far as metals, it's extending there as well with the dollar a bit stronger following the data this morning and we are seeing gold giving back after a recent run-up but still holding above $1,400 an ounce.

>> bertha, thanks so much. bob pisani is here watching the dow up 85. >> we have a little rally going. who would have thought? it's not an enormous rally. a little more than 100 points in two days but a lot of people weren't anticipating that. let's go through some of the reasons of what might be going on today. obviously some calm in syria is a major factor here. a lot of confusion over what the time table might be. nobody can seem to figure it out because now we have to wait for the report back from the inspectors on the ground in syria and then next week is the g-20 meeting at the end of the week so everybody is trying to figure out, we can't have a conflict while there's a g-20 meeting. it's like nobody can get their schedules aligned. i know that sounds crazy. as for the economic data, gdp data a little better. the weekly claims. the idea is taper light. at least this data might be good enough to go on with the taper overall here. as for the stock market, i said this morning concerns but no real panic. look what we've been seeing for the last several days.

light to moderate volume. the put call ratio is one. no sign of worry there is. i think the biggest concern is some of the technical damage we've seen breaking through the 50-day moving average had been a big issue for a number of people. take a look at the bond market because that's what people have been watching very carefully and a little bit of meandering going on here. even the bond market not quite sure what to make of these various scenarios out of syria. in terms of the sectors today, no surprise that telecom is the big mover here today but that's, of course, because of what we've had going on with verizon and vodafone. consumer discretionary. an update on that nasdaq outage. the nasdaq has released a letter to its listed clients. this is a communication, of course there are many listed clients out there, where they talk a little bit about the problem. let's call it a partial mea culpa. they say it's clear these systems could be more robust in their support of markets begin

the complex ecosystem in which we operate today. they're also releasing what they call a commitment to transparency. this was kind of interesting. probably the most interesting thing. they're committing to providing with you information as we know it. that's an interesting statement. of course, they have been very criticized for delays in providing updates on what exactly has been going on. i think the biggest problem, guys, is there's no real moving the ball forward here. they're still essentially saying the problem was with the nigh sa, with arca, communicating with a system down here with the nasdaq system causing it to go down. nyse completely reject that is idea. >> glad you're following the story. bob pisani down here. i want to shift to the bonds and dollar and get to rick santelli. do you think that seven-year auction will go better than the five-year yesterday? >> no, i think all the auctions will be pretty close to the hook, meaning a "c," an average auction, but we'll, of course, have to wait and see. mr. are mortgage implications

potentially. i would like to welcome our guest mr. fixed income andrew brenner. thanks for taking the time, sir. >> thanks for having me, rick. >> you know, i love reading some of your blogs and your research because you just get right to the crux of the matter. i don't think we have sem motor trick ricks. i think they're skewed to higher rates. what you wrote was a crisis week cooped turn the market around and we still see bond funds hemorrhaging. i would gather you agree with me. why don't you expound on the notion? >> we continue to see bond funds getting outflows. you had a huge amount in june. you had a significant amount in july and in august it's picking up again. we just see interest rates going higher. you know, syria crisis could erupt over the weekend, maybe you could rally a little bit. you also have index buying for the end of the month tomorrow, but we generally see -- we see us taking out 2.92%, 2.93% going

well above 3%. we have been saying this for six months. today you had gdp at 2.5%. where is the crisis? why are we still at 0.25 fed funds? why is the fed going in buying $85 billion? it's not helping treasuries. it really isn't. and quite honestly, mortgage spreads haven't changed. they're basically where they have been 2 1/2 years ago before the fed started buying. so you know what? we think the fed should kind of take a step back, move away. let rates get to a more market level. >> i agree. i asked the question a month ago, what is ben afraid of? today after that gdp and i remember on the 6th of august andy when we did the trade deficit, it dropped down to $34.2 billion, the lowest in close to four years i believe going back to october of '09. so that, of course, along with inventories gave that 2.5% gdp number, there really doesn't seem to be a crisis. where did five years go?

to 167 today. that's the high yield close. do you think watching five year will keep you on the straight and narrow in terms of the best trades for higher rates on the curve? >> i think you're deferl goiini going for higher rates. we tend to think it's going to be the ten-year. but you know what? you have got -- the market is still way too leveraged. everyone still feels the fed will continue to taper and maybe a reduced rate, and at some point it's just going to turn around. you have already gone from 1.60% ten-years out to 2.80% today. it's just going to get worse. you'll probably end up somewhere around 3.25%, 3.5%. >> elliott a looking around 3.33%. we're out of time but i'm in total agreement with you. but let's see if the market is in total agreement with us. thanks for showing up today. back to you. >> rick santelli in chicago. directly or indirectly, emerging markets are, indeed, a portion of many people's portfolios.

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down? and battling over the builders. we have two traders who just can't agree on this sector's next move. carl, we'll see you at the top of the hour. >> thooanks a lot. thousands of fast food workers staging walkouts across the country demanding the right to unionize and pay of at least $15 an hour. jackie deangelis is live in new york right in the middle of one. jackie, good morning once again. >> reporter: hey, good morning, carl. well, as you can see, there are hundreds of fast food workers behind me. some of the chants that have been coming out in the recent minutes. on $7.25, we can't survive. and fired up, we can't take it anymore. these people are fighting for fair wages. they're fighting for human dignity, and also the right to organize. now, here in new york city, the average wage for a fast food worker is $8.89 an hour. that's a little higher than you get across the country, but still these workers say that is not enough to survive, especially in a city that is so expensive and especially in an industry that's roughly $200

billion a year. they're demanding $15 an hour, and they certainly think that that is reasonable. now, earlier i played some sound for you from christine quinn, but i also have a statement from joel loda. he said that the government cannot keep piling expensive mandates on businesses and expect them to remain resilient. doubling the cost of worker's salaries, many of whom are part-time -- >> we lost jackie's feed there, carl. i was actually going to ask, it seems as though it's quite a big movement here. a lot of people gathered. not far from where we're sitting right now. >> interesting, too. it hasn't affected the shares of the companies per se. most of them are hugging the flat line to slightly up. mcdonald's has had a couple good days. we'll see how this builds. >> and not just in new york this more than.

the uncertainty in syria causing jiters in emerging markets. the question is what's the best way to position your portfolio amid all the volatility? david focuses on emerging markets and he joins us now. david, good morning. >> good morning. >> there are some people here saying after the beat down that emerging markets have had, maybe now is the time to get exposure, but i got to read you this quote from albert edwards this morning who says the emerging markets story has once again been exposed as a pyramid of pifle. what's your take. >> emerging market performance has been quite mixed. you have had some disastrous markets and you've had some markets that are up over the last 8 to 12 weeks, including hong kong and poland. so you have had a mixed performance. i think that the longer term story of emerging markets of the emerging middle class, people changing their lifestyles and quality of life, remains intact over the longer term, but it's going to be a bumpy ride as we've always predicted in emerging markets. >> what's interesting as well is people are drilling down and trying to figure out what parts of the emerging market space are

attractive and which parts are vulnerable and the convention wisdom this is about funding, that this is about those countries running a current account deficit, for example, doesn't necessarily seem to be what's mainly important here. how do you look across the space and differentiate for those people who do feel they want to step a little bit out on the risk spectrum? >> well, i think a couple things. we always look for large dynamic, domestic seconders wse attractive demographics. you want companies that have the ability to take money in and improve the conditions and health of their economy with an attractive demographic supporting that longer term. so if you have an appetite for risk, you want to be looking at some places like brazil and indonesia and certainly in china. as a longer term way to play some of these trends. i think some of the smaller less liquid markets are always going to be bumpy and places like turkey, which we thought was a good market a couple years ago has shown some of the issues

with political risk that you definitely need to be aware of. >> david, you mentioned brazil and indonesia, a couple places where rates are starting to move a little bit here. the central banks getting their ducks in a row. what would you do if you were a central banker in indonesia let's say? >> well, indonesia has gone through a very difficult time over the last 6 to 12 times. one of the things is they've been trying to get their fuel prices back to a market rate which has caused some political dissension and some economic tensions. so i think that they're doing the right thing, taking the longer term view, raising their rates to protect their currencies. i hope they don't do too much of that because i do want both economies to develop a good, healthy export sector into what we see as an improving external environment. we've had good news out of europe in recent months. we've had relatively positive news out of the u.s. i hope they take advantage of these weaker currencies so really build an export base. >> because, david, the risk if they raise rates here, even if

it's to defend the currency is going to be it's too much for their weak economies to handle and they're going to be dealt a recession in a couple months' time. >> that's exactly right. that's something they need to balance very carefully. you know, the bigger risk in both of these places is inflation, quite honestly. brazil has a long history. hyperinflation. once it settles in, it can be very painful. if the syria strikes takes place, br zil will benefit. other places like india will get badly hurt. there's a tight line they need to balance between growth and inflation and currencies and rates. >> as people take another look at the emerging market space. >> once again. if you think college these days is too expensive, join the crowd. but students and families are finding a new way to make college affordable. we're going to explain that in just a moment. i've been doing a few things for a while that i really love-- tdd#: 1-800-345-2550 playing this and trading. tdd#: 1-800-345-2550 and the better i am at them, the more i enjoy them. tdd#: 1-800-345-2550 so i'm always looking to take them up a notch or two. tdd#: 1-800-345-2550

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google glass may not always look as geeky as it does right now. the lead designer for glass posted a picture on her google plus page of another google employee wearing frames that really don't look that different than any other frames and what might be an insight into future google glass models. the person wearing the frames is amanda rosenberg. the woman reportedly dating google co-founder sergey brin who just separated from his wife. there had been a lot of talk they would bring in a designer to try to make it look not as weird. >> right. because it does look aculine an.

even in the sunday styles profile that ran in "the new york times" over the weekend, it points out that the women who are designing google glass are trying to crack through that, to introduce projects that look a little softer. this product is something that isn't even on the market yet in the first iteration. >> of course, google not having too bad of a day. in a nice tape, dow is up 81, google is up more than 1%. feeding the nasdaq which, by the way, peter shak, one of our big statistics guru at cnbc points out the differential between the dow's performance in august and the nasdaq is about four percentage points. the biggest since january of 2012. names like a google, like an apple that's kept the nasdaq going. >> i'm wondering if the nasdaq is becoming a high beta play on the dow.

d as you point out there are interesting stock specific things happening in the nasdaq. >> also in another areas, too. ford is an interesting story, up 3%. that's a nice move on news they are expanding production of the fusion adding 1,400 workers. >> no, no, no, it's on news they are going to wrap the fusion in bacon. >> sorry, buried the lead there. phil lebeau had some great statistics looking at u.s. market share. ford, 16.1. gm, 18, getting a little closer at least in the u.s. could they make it a horse race. >> i meant to ask him the last time ford's market share has been bigger than gm's. >> the biggest story is verizon vodafone, whether we get more color on how the financing is coming together. >> and, again, what that means for customers who are paying a heck of a lot here in the u.s. for their data plans but is making verizon a very lucrative

business. >> $130 billion is a lot of money to try to raise. cramer compared it to going to various atms because they only let you get out $100. >> we know wall street's mouth is watering for that. >> with that, let's get back to headquarters, scott wapner and "the halftime." carl, thanks. welcome to "the halftime show." right here on the wall is where we stand. up day for stocks. dow is up 87, nasdaq, s&p positive as well. here is what we're following. gundlach unplugged. the king of bonds in a halftime exclusive on rates, the fed, and what stocks he's playing. battle over the builders. a halftime throwdown. first, our top story, a rough august for stocks winding down. what will september hold? the typically tough month comes with so much f