Transcripts For CNBC Squawk On The Street 20130806

And of course, the latest lightest volume of the year yesterday, and the fed may respond to dday later at the fe meeting. And today, the publisher newspaper business, the post and can he do for papers what he has done for books . And the big black and blue ibm shares falling under Credit Suisse. And michael kors up strongly after sales, but American Eagle outfitters are losing altitude after issuing a profit warning they post in a couple of weeks. Meanwhile, a stunner the world of media, Washington Post selling the Newspaper Publishing businesses including amazon to jeff bezos, and Julia Boorstin has more on that blockbuster deal. This news took everyone including editors and writer at the post by surprise. The Washington Posts Company Whose name will change saw the stock rise with caplan tech being sold and now what the billionaire icon plans to do with the newspaper. Jeff bezos stressed what a newspaper plays in a free society, and he says that the newspapers duty remain s s to readers and not the owner. The charting of the map ahead is not going to be easy, and there is a need to invent, which means we will need to experiment. And after knowing each other for a decade, this came together in the conference last month. We met at a conference fa facetoface twice. The second week in july. We spent an hour together, and he asked for time to study the numbers, and then we spent another two hour s together, an at the end he said he wanted to go ahead. That is hardly the first billionaire to buy into publish i ing. The red sox owner john henry bought into a newspaper, and Warren Buffett bought newspapers for 322 million, and last month chris hughes, facebook cofounder bought a newspaper. Carl, we are going to be interesting to see what the next move is. Back to you. Thank you, Julia Boorstin in los angeles today. Guys a big talker, and big talker yesterday afternoon. Tackle the price, dennis. 250 million, and some have said if buzz feed or tumbler had sold for that, people would be cry i ing. Well, buzz feeds latest valuation is 2 200 million and few years old, and post a lot older than that. And instagram, 850 million when f factoring the stock price at the time. So the market is saying that even the Washington Post is basically worth that of one buzz feed today. So we can get sentimental about it, and that is why we do it, but no reason to do it, because the world moves on and i will be excited to see if bezos can come up with nice experiments here. When he says needs to have an experiment, i take him on the word. There is no grand plan with amazon or other linkages, because of the values of the surviving metro papers are so low, a, basically not vizable in the valuation of the Public Company Washington Post, and if anything, they were the perceptual overhang and then it gets to the low dollar level within the zone of a individual wealthy individual to buy on the call option of media going. And the ones who have left have cut the cost structures down, and that is in the times of digital and this is an interesting test case, because they have more traction with digital. And i would say, that it could draw some parallels. With the post. And that is what i was going the say, because you have a paper that is not profitable, and Rupert Murdoch has wanted to keep going for the sake of keep going, and if we can liken that to bezos with a Washington Post, fine, but does somebody have to deep pockets and a vanity project to keep it going . Well, that is the question. And my employer has a different mandate on personal and individual, and they have to make the profits work, so if the post is going to be bought, it is going to be bought like tmz or even a buzz feed that does seem more of a possibility even though it does serve a function of covering new york in the local area. And this is a chasm of bezos interest in the paper and amazon and the big piece is this, the capper on the most powerful example of vertical integration in america, and why is this not a big amazon leverage play . Well, it could be, and could be conceived alt that that, but this cost, it has to be that. If you look at the corporate structu structure, they own brands that they have not broadcast that they are part of amazon, and he does like to collect things that maybe will work out, and maybe some avenue down the road. I would say that characterization is wrong of the new york times, because it is a personal investment of jeff bezos, and if he were to pull into amazon, there are legal problems and arm length negotiating problems, but maybe strike a deal with amazon, but they have to be done at arms length and made available to other media publishers as well. And as you said the Washington Post shares were rallying. And that stock has been rallying. That is the irony. Tribune splitting off, and news corp. And i have been off of the publishing businesses and the stocks are rallying, because they are about broadcasting. And two things, the pension plan in the Washington Post was overfunded, and we had a part of that because Warren Buffett 35 or 40 years ago gave good counsel about that, and then we need to learn from don graham, and maybe an old media baron, but he networked like heck to get to the new age guys and on his board is chersheryl sandber they included a little time line here, and 1877 is the Washington Post begins publishing with a circulation of 10,000. And the New York Stock Exchange got sold, so dont forget about that. Yes, and that looks like history. We will talk to steve levi from wired. And he is one of the few to interview bezos who says that things like physical newspapers wont exist in 20 years, and that is coming up in the next hour. Meanwhile, ibm shares are decreasing, and Credit Suisse is down to neutral citing weak cash flow, and challenge s s to the future organic growth, and the note is starkly worded. We believe that ibm is secular decline, and losing share, and free cash flow, and if you take out financing and m a, it is going on for a while. That my impression that the note could have been written any time in the last several years, but what he is saying is that the game might be up. Ibm is focused on the earnings per year, and the sales growth has not been there for years and an interesting subtext is that the cloud has almost more victims perhaps than beneficiaries and you are seeing the older companies that are being disintermediated and ibm is one of them, and that being said, the downside target of 175 based on maybe 20 earnings number, and it seems to me that it is not too far from finding the valuation support. We have seen calls like this all year long, dennis. It has not worked. Right. Ibm is not a bad performer, but the relatively new ceo of ibm has not had a good run, jeanne rom any ti. And on the other side of this as mike makes reference to is the Cloud Computing folks, ibm, and the Cloud Computing service, and a whole host of Star Companies really taking the market share. Disruption everywhere. Before we run out of time on this block, we have breaking news from Julia Boorstin on time warner, and cbs. Well, cbs is responding to the time warner ceo glenn brit. Yesterday, time warner sent a letter to the Ceo Les Moonves saying, i cannot believe that you have not reached out to me personally as i have on more than one occasion, and he called out the interview with incoming ceo, and said im surprised and disappointed when the incoming ceo said that im not aware of cbs having made a counter proposal or responded to the proposal in any way and i find this dishonest, because we have received the communication five minutes before air time as he must have known. This goes on for 2 1 2 pages and moonves saying no not a sincere or serious proposal saying it is a well wrought distraction and saying that they have never received a markup or replied to anything that they have said to Time Warner Cable. Basically attacking them for not negotiating, but grandstanding and as for the controversial offer to go a la carte, and moonves says this is an empty gesture. They have created a certain way that content is distributed and compensated and we both know that a la carte universe is one that Time Warner Cable welcoms. S then he goes on to criticize other parts of glenn britts letter asking why he is so reluctant to the come an agreement that has every other op rayer to has come to, saying that time warner has paying ten networks more than they compensate cbs all which has far fewer viewers and this is a rather incendiary letter, and time warner asking them to get back to the table to negotiate and calling them out on the proposal. We are weird to be injected into the debate after he references cnbc in the first paragra paragraph. Yes, that is right. So yesterday Time Warner Cable issued this letter and immediately after the incoming ceo rob marquez came on to the air, he came to us to cnbc before giving cbs a chance to e respond. Thank you for breaking the news yet again. Julia boorstin is awfully busy out there in los angeles. Mike, has this cross eded a lin where in a type of negotiation that we dont see all of the time . Well, perhaps. I actually thought that the gambit yesterday was tactically brilliant and this proves it. Because it says that you say that you are worth per sub and figure it out even though Everybody Knows that Time Warner Cable does not want to unbundle, but it is getting angry. I see opening day for the nfl as the implicit deadline and it is going to happen before that. I have a word for it, it has crossed the line, and cross ed the line to sad. Maybe bo dering on the pathetic. Both sides and as my colleague Martin Pierce has noted this morning that both sides need to understand that there is a much bigger problem and that is the move to digital entertainment, and as they bicker, they are going to have time passing by, and lose the real opportunity. I call it sad. And other blackouts of the channels and viewers frustrated so it is bad for the industry, broadband. And media is on fire today in terms of the story count, and speaking to which, many of you would not think of using twitter without it. We are talking about the hashtag and we will meet the creator later. And strategist byron wien, and we will ask him what is worrying him for the second half of the year. And the dow, with the worst day since june 28 with the dow down 0. 3 . In todays markets, a lot can happen in a second. With fidelitys guaranteed onesecond trade execution, we route your order to up to 75 Market Centers to look for the best possible price maybe even better than you expected. 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Well, as we discussed on thursday in todays Digital World it is a twoday or threeday impact and you saw it in the first two days and the market had Interest Rates against it thursday, and they overcame that. Friday a rather soso payroll report and overcame that, and then yesterday, you had the lightest volume of the year. So that tells you that they may have tapered out themselves. Art, the volume is spurring interesting discussions, and some people are saying, look, august phenomenon, and others are saying, no a land shift or in or a shift i should say in how people are investing in etms and nonspecific stocks, and how much of this is a change . With well, when the atfes become liquid and people would buy all 500 stocks that would contribute to the volume, the 500 stocks in the s p, and then when you would buy the etf, they would hedge themselves by buying some portion of it. And now that they are liquid enough, that hedging is not readily evident. So you might see the buyer of an etf getting it from another seller and that is 500 transactions that you dont see down here, and that is a big structural difference. And the flipside, art, is one of the observations is that in the last few years is that v volatility precedes the volume spikes and in other words, it is like whatever the active traders are, they want to feast on where there is movement as opposed to driving with the real money buying, and is that something that seems correct . Well, no question about it. All of the old talk about what you do and dont do in a dull market, but one of the things that you do is to stay away from it basically, because very little money to be made, and little opportunityb and look for news changes, and you need the volatility to inspire extra volume. Doesnt look like that, because it is sitting at below 1,200, and art cashin from ubs. And we will look at jeff bezos purchase of the Washington Post newspaper. And also, serving up business at open table, and we will talk to the ceo of the reservation website, and the stock is up so far this year, and we will look at the dow futures with it down 44 points, and the magnitude of the decline for the s p and nasdaq. Can things turn around . We will have more straight ahead. E lexus golden opportunity sales event and choose from one of five lexus hybrids thats right for you, including the lexus es and ct hybrids. This is the pursuit of perfection. Im bethand im michelle. And we own the paper cottage. Its a stationery and gifts store. Anything we purchase for the paper cottage goes on our ink card. So you can manage your business expenses and access them online instantly with the Game Changing app from ink. We didnt get into business to spend time managing receipts, thats why we have ink. We like being in business because we like being creative, we like interacting with people. So you have time to focus on the things you love. Ink from chase. 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That is actor Ashton Kutcher here at the big board this morning ringing the opening bell this morning to highlight the newest film called jobs and not about the recessional recovery, but based on the apple cofoufounder steve jobs. I did not see steve jobs ringing any bell or pricing any ceremonial button. I dont believe it happened. There is a part of the trailer where they show him on the floor, but it would have been at the nasdaq, right . On the floor of the nasdaq in 1980. And he was like at the Trading Floor when they were opening the stock. Yes, and actually kutcher in some press interviews has said, look, we werent there for a lot of the stuff, so it is our interpretation of how the events might have gone down, and he has taken a fair amount of criticism before production began, because people who think that apple are bananas sometimes and part of the response to critics is, just let me do my thing and see what you make of the film. And when apple went public in 1980, one of the first great opening days of the time, 1. 6 billion market cap and it is over 400 billion now, and josh gatt playing waz. And do you think that you have to be interested in American Business to see it . Well, that is the point to cast adam kutcher, and people who are interested in apple stock, and we saw it in the apple bubble if we could call it that and not necessarily an interest in the investment, but the story. People are not that interested in business stories, even though it is steve jobs. You can name a few business movies, but they are incidentally about business. Yeah, money ball. And did people think that we were interested in the founding of facebook before the movie . It is how the drama plays out, and the problem is that you need to know the way that the story ends, and you know that, so i dont know how they build suspense. It plays better with apple at 464 instead of 390. Well, the products are p pervasive enough to know that it is beyond business phenomena. Yes, steve jobs is one of the most recognizable names in america, and that is what they are hoping turns people out. Well, he is turning people out here. Well, the red carpet people. And 14 million followers on twitterer. And you have 14. 1. Well, 13. 9. Anyway. By the way, Ashton Kutcher. Yes, he will be on the closing bell, and Maria Bartiromo sitting down with him for the interview that you can catch at 3 00 p. M. And getting into the exchange this morning if you are thinking of dropping by, can the dow bounce back after the Opening Monday . The opening bell is just moments away. If you have high cholesterol, heres some information that may be worth looking into. In a Clinical Trial versus lipitor, crestor got more highrisk patients bad cholesterol to a goal of under 100. 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[ coyote howls ] how about no more surprises . Now you can get all the online Trading Tools you need without any surprise fees. Its not rocket science. Its just common sense. From td ameritrade. Ashton kutcher waiting his turn to ring the opening bell and you are watching cnbc squawk on the street, and that bell is in 90 seconds from now, and we are coming off of the dows worst day since june 28th and even though the light volume and the lightest of the year. And the dow has gone 25 straight sessions without a loss of 100 points or more and if we do it again today lose less than 100 points it is the longest streak since 2012 when the street was without a doubledigit loss. And meanwhile, 100 points has never been less percentage wise, and we are not getting that decline. Right. You mentioned the volatility with cashin, and where we now . 12 . Below. I think that the volatility levels as measured are reflecting the environment and not raising a red flag yet, but all of the pullbacks have been the sideways shuffle, and not refreshing. And we are in a fed dominated market, but the fed says that it is the only thing that matters it seems. And speaking of it, lockhart is on the tape saying that he sees unemployment at 7 by mid14 and by september, but it depends on the second half of job creation, yadda, yadda, yadda. And did he inject the possibility of october . Well, he says nothing to say we cant do it after the october meeting and even though there is not a scheduled press conference. And some say before the september elections and lockhart not being a guy who is on one side or the other. There is the opening bell, and we will look at the s p at the top of the screen at the big board and actor Ashton Kutcher celebrating the latest film jobs based on the life of steve jobs released august 16th and over at nasdaq is the Group Responsible for keeping the Drinking Water clean for the huds hudson. We will see how close the cameras can get to him, we dont know at this point. But we will keep our eye on michael kors, because 61 cents does beat. And same store sales, 27. 25 in north america and 56 in europe, and not the 40 numbers that we are used to getting, but it is a barn burner. Well, the retail stories of the last few years and this is a Retail Company that has really built something, the accessories and the purses and the like are so vast they have built something incredible. It is a new alltime high. And even higher than coach even though it is a smaller revenue base. And in terms of the market guides they guide 64 cents and the street at 64, so going into next quarter, more conservative, but that is the main bullish story, and on the flipside American Eagle down 16 , and they are cutting the guidance from 21 cents to 10. They report august 21st, and the ceo Robert Hanson says they are not happy, and janny cuts to a new neutral, and abercrombie down, too, and sympathy, they say it is womens clothes and teens, mike. What do you think . Well, we did not shut down a enough of the teen retailers in the recession, and it was a mini bubble in retail, and they are still there and fighting over this market share, and there are the discount guys who have to get ever cheaper with jean and tshirt, and i dont see how is it going to happen. And makes you wonder about the shopping malls, too, because we know how much space the teen chains take up. And gross market up 100 basis points to 18. 7, and the Retail Pharmacy same store sales up 8, but front of the store down, but you are looking at a demographic play here, and even though tough times in the pharma. And dont forget the tough combination of the front end and the retail, and the whole sector, sort of the distribution sector inside of the pharma has contracted. And you want to talk about deere, because big macro call on deere out of William Blair this time cutting to underperformed and the price target is 75. We dont have a major contention with deere they say, but they think that Farm Machinery in north america next year down 10 and down 10 the next year and additional Downside Risk on top of that. Well, it is actually amazing, because the farm economy is in a boom, and i dont nt know if th got caught in the machinery and overbuying or what, but this is the analysts overperforming the stocks by the way. I want to stop your serious conversation about Farm Machinery to get to Ashton Kutcher who is near bob pisani. We are standing here on the side. I know that bob is trying to get there. Bob, do you have the mike on . I do. They are saying that they dont want me to talk to him actually. He is not doing interviews. That is the whole point. And wondering. Make making the traditional stop at the telephones between post 8 and 9. It is interest, because we get a lot of actors in here, but not one who has caused a stir as much as kutcher has. Demonstrating times past, and we are talking about bradley standing over here, and hey, what, the president is coming . Look at the buzz they are making. And so, guys, all of this is happening as apple is down 37 cents. Well, it is nonplussed by the cameras. He has done it before. And we are not going the bob unless the control room tells me differently. And we have disney reporting tonight, guys, and talking about a name where espn mints cash and raising the prices at theme parks, but i mean, another name, mike, where valuation calls are not uncommon. No, they are not. All time highs and disney has gotten a premium versus the other Media Companies and mostly deserved and we will want to hear about the details of the lone ranger, and the charges and i dont think that the market would care. And what about espn, because this is the elephant in the room when we are talking about cbs and the fees paid to the cable channels and the potential for unbundling and would they make comments about that . Well, they press bob iger to have a comment about this, and interest that everybody in the business maintain itself, and they have put the side bets out there with hulu and pulled it back with the rest. To me, i dont think that big change is coming tomorrow for espn, but i think that he has to comment on it. Yes. And for disney, like so Many Companies it is at the 52week high, and the valuation trading at 20 times the trailing earnings and if you are a stock analyst, it wont hurt you the pull back on the valuation, because throughout august, carl, you will be pulling back price target 5 , because the stocks have run up immensely year to date. And it is a point that cramer makes, mike, asymmetry between beating and missing at least on the earnings front, and you are up 20, and you miss your, and i cant think of the name off of the top my head down five. And everyone assumes we are at the inflection point. And that is the canary if you miss the quarter that everybody is insensitive to the point of topping out with the earnings, but if we step back, i like the overlay of the skepticism on the market, and we get 2 dips and all of the sudden the bears start jumping around like it is christmas. That is good until it stops. Bob pisani, i see you ready and how close to the man . Well, he is standing offhere and sort of watching and he is getting a tour of how the open goes, and of course, a similar one price for every stock that opens here, and they rex plaining whplain i are explaining how the Trading Operations work here, and a lot of people want to say hello. A number of different people here from the floor, and trading community, and just coming by to say hello, and everybody seems to think that the guy is pretty good. Everybody wants to know how the movie is going to look with him in that particular role and he has not said much about it and maybe more information on that. And did you see the trade ba balance numbers . Amazingly good. The narrowness of the trade deficit i think that right now, we will see the gdp numbers in q 2 go from 1. 7 to 2. 2, and something in my ear i just got, goldman raised the gdp numbers for the Second Quarter as a result of the trade deficit and that does not make a difference, but in this case, it does. And a lot of the ceos in the earning calls noting growth problems overall here. There are pockets of optimism here. Did you see what is go ging on . Michael kors raising the numbers and fossil, and yesterday, vsw raising their numbers and the big thing is the retailers who are all accessories, guys, and doing well, but some of the retailers having problems like e air row p aeropostale. Only 7 of the companies have a downgrade to the one they have gotten there yesterday. This happened with qualcomm, and another group, hyperjeffrey. Thank you, bob, on this busy day on the floor. Now we go over to seema mody. Well, one consistent trend over the last few weeks is the outperformance of the nasdaq in comparison to the s p 500 and the dow. Today, we are looking at the nasdaq trading in line with the major indices, and biotech weighing in on the composite, and pharmaceuticals missing the wall street journals as sales of eye lia slowed, one of the top drugs. Elsewhere, Cognizant Technologies and indian i. T. Consulting firm reported better than expected results which is a common theme among the i. T. Firms. More companies are spending money on i. T. , and analysts say it is an encouraging sign for the tech sector and something to watch. And speaking of the tech, facebook closing at 39 for the first time ever, and they have now gained 50 over the last month. Facebooks market cap of 95 billion is now three times that of yahoo and almost double of hewlett packard, and so this is in some way, carl, showing us where facebook stands in terms of the iconic tech names and now im inclined to say that facebook is hanging out with the big dogs. Yes, that is seema mody over at the nasdaq. Rick santelli joins us from the cme. El well, good morning, carl. If you look at the oneday or twoday chart for Interest Rates there is traction at the low 60s, but in a onemonth chart, it is revealing the stubbornness or the stickiness or whatever descriptor you want to use is in vogue, and we continue to see the asymmetric venue of the Interest Rates and more stubborn on the upside to the stronger data and more to downside on the weaker data. And we look at the boon overseas with the onemonth chart, reveals the same pattern, but the difference 196 basis point, and hovering at 170 and we are hovering at 266. Looking at foreign exchange, and dollar index, and twoday chart, definitely not a huge aggressive pattern here, but it is definitely the type of pattern that is slipping in value, and if you open the chart up, also to the chart of the day a onemonth timetable, you could see 81. 5, and we start to close below there, and many traders believe that the technical momentum will take over at this point. Hey, supply, threeyear notes 1 00 p. M. Eastern today, and i will be there to grade it, of course. Kelly, you should run after ashton, because we want to see an interview in chicago. You will get an interview, rick, but you have to wait a couple of hours for it. Now checking on the action in the pit. Sharon epperson over at the nymex. Well, gold has fallen below 3 1,300 an ounce. They say it is weighing on the gold prices. You add to that all of the chatter we are hearing and the interpretations of the chatter, and when the Federal Reserve here will slowdown the bond buying, and that is something that at least dow chief Richard Fisher talked about yesterday, and some say that is the reason why if it happens in september as he alluded to, we could see even lower gold prices. 1282 is the technical low of last week that traders are watching. We are watching the metals in the positive direction which is copper. Copper with a little bit of a lift from the positive factory data coming out of europe overnight as well. We are looking at copper as the only part of the complex that is higher at the moment. Ill send it back to you, carl. Thank you, sharon epperson. And you mentioned the fashionable results from michael kors who is smashing the streets. The stock is up almost 70 in the last 12 months. Still time to ride the kors rally . As we take a break, the dow is down 83, and on the bottom is ibm, and we will look at some movers on that one. [ kitt ] you know whats impressive . A talking car. But ill tell you what impresses me. A talking train. This ge locomotive can tell you exactly where it is, what its carrying, while using less fuel. Delivering whatever the world needs, when it needs it. After all, whats the point of talking if you dont have something important to say . Time to have new experiences with a familiar keyboard. To update our status without opening an app. To have all our messages in one place. To browse. And share. Faster than ever. Its time to do everything better than before. The new blackberry q10. Its time. The new blackberry q10. The world is changing faster than ever, creating new opportunities for those who stand ready to seize them. In a time when the biggest risk is playing it safe, we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, our flexible, collaborative approach helps forwardlooking companies not only run better, but run different. To give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because now more than ever, the future belongs to those who challenge the present. All we do is shop until we drop shop until we drop, and that may be the theme for michael kors as the company is reporting better than expected results. The stock almost doubled as it continues to expand in europe and saw a huge increase in sales. Joining us for more is the Senior Analyst from cowell and company, and fay, good morning. Good morning. Were you surprised at the strength of the results . We expected kors to report great results, and it is obvious that they have a momentum demand, but it is not surprising how well things have turned out for them. Is that chinese buyers overseas as people say when the contin continent has been mired in recession or just a market share story through and through . Well, they are not a market share story through and through. They mentioned in the Conference Call a moment ago that in europe they are seeing terrific results and traffic from outside of europe, and some of the connections not only from china, but asia and the gulf countries and brazil as well. Faye, we are sitting at the price target above this morning, and carl said that the Company Guided below where the street said it would be, and is there a concern from the runup that the bulk of the gains have been made . Well, i dont believe that there is a concern, because this company has beaten the numbers and continues the beat the numbers, and there is a lot more stuff ahead. Faye, looking at the kors brand, what is the magic . Describe what is happening . In terms of the sales, they describe themselves as the jet set brand which for some of us of a certain demographic sounds like a retro term, but for younger people, that is an appealing concept. It is certainly a clean look. A somewhat it is not a preppy look, but it is hard to describe, because, you know, you know what it is when you see it, but it is a very clean look with interesting colors and ornamentation, and not overly elaborate. We wont be seeing much paisley from michael kors, and the ads are consistently featured some kind of glamorous travel people jumping on the private plane and helicopter, and that is part of the whole image. Faye, on traders last night we were bebaiting to get ahead of the earnings and the stock tells you not to be greedy here, and they regret it this morning, but at what point do you wrestle with that and at one point you say that the pigs get slaughter ed . Well, the pigs do get slaughtered, but it is not relevant here any time soon. Enormous momentum across categories and across geographies, and lots of opportunities to add new stores all over the world including in the United States. Lots of opportunities to sell more watches, and we saw terrific results out of fossil covered by my colleague john kernan, and they are a terrific watch licensee, and particularly through fossil, and mens wear, they are just starting. They have been in menswear, but not aggressive way, and that is going to be happening, but i have confidence they will execute it extremely well as they have Everything Else. Have w who is going to stop these guys . Reinvented coach, or log numbers . Well, fashion has risk. Lots of things can not necessarily i would not say stop it, but can lead to a lower growth deceleration. Hard to know what will happen here, because we are talking about a year or two out. Coach is interesting situation, and coach has a lot of wood to chop, but talented people there, and ultimately coach will be in good shape, but i dont know when which is why i dont recommend the stock. And asianpacific and others doing well, but coach has a lot of appetite for the consumers and the Branded Products and nike, and lululemon and people are willing to pay a lot more brands. Faye, thank you very much. Talking michael kors. And here is the man who invented hashtag, and he never work worked for twitter. We will talk profits and pipelines with the companys ceo of regeneron pharmaceuticals. Geoff im the kind of guy who doesnt like being sold to. The last thing i want is to feel like someone is giving me a sales pitch, especially when it comes to my investments. You want a broker you can trust. A lot of guys at the other firms seemed more focused on selling than their clients. Thats why i stopped working at my old brokerage and became a Financial Consultant with charles schwab. Avo what kind of Financial Consultant are you looking for . Talk to us today. Now the proud own over the Washington Post after shelling out 250 million out of his own pocket brings us to the squawk on the street. Bezos bought the Washington Post for what . Tweet us the responses, because it is a relatively legitimate debate going around the circles this morning, what are the intentions . I am looking forward to the experimentation, and as he said, maybe some things are not going to workings but what is working right now, well, not much of it. Is the posts fault that it has happeneder the world shifting around . Mike, you have written about this recently . No, it is mostly the world shifting around and the post was in a vulnerable spot because the grand family decided to make it a metro paper and made the decision years ago. Look, we will basically write the history of american journalism saying that every subsidized ad funded every pulitzer in the generation. And some say that what has happened is that the classified ads have gon the yelp, angies list or whatever. Yes. And one thing that happens is did the Washington Post miss it . That is politico coming up right under the noses. They owned the political story, and then an entity with a faster metabolism took a big part of the market share away from the post. I agree. And early investor in twitter through the instruments, and obviously, he is and there is a great tidbit how he is commissioning a clock to be built that will be buried in a mountain to tick for 10,000 years. He has a longterm vision, and not a shortterm trader. Yes. And jcpenney is down 3 , and this is a new low for jcp, and is this a kors corollary in terms of the shares shifting around or if this is just more about worries about the retail or consumer in general . Well, not enough time in a slow season of the year for a jcpenney to prove to anybody they have it figured out. And even with the funding when they are batted down by the company linger. It is a jcp penny more than anything, and sears in the same boat. We talk about the great icons of the 20th century, and both of those are slowly fading off of the page. Thank you for coming in. Dennis berman of the wall street journal, and jay santolli. People who know the tech titan and the industry well, and will we we will have the strategist byron wien and what s is he worry about for the second half of the year . And why you may not take your wallet to the restaurant again . Open table is going to San Francisco where they are trying a new payment for restaurants. 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Now, everyones in the spirit of sharing. Hey, can i borrow your boat this weekend . No. [ male announcer ] share more. Save more. At t mobile share for business. Again, with the sound track to news newsies there. Jeff bezos buying the Washington Post. We will talk to one of the few people who have spoken with him in recent months. And regeneron with a rare sales miss, the companys president and ceo will join us for an interview. And serving up business at opentable with the stock up 35 this year, and we will talk to the companys ceo live later on. We kick off with the bezos deal, and who knew that the amazon ceo would buy the Washington Post . Live now with the latest is Julia Boorstin. Simon, considering that the Washington Post revenue has been shrinking over ten years, it is more about the play than the upside. In bezos letter to the employees he says that the Company Values the post and has no plans to change the company and wants to keep up with the internet transformation of the news business. It is not the first time that bezos has tablg evken a personae in a news asset. Earlier he bought business site insider to help grow the operations. Bezos joins a long list of billionaires jumping into the publishing business. Last week red sox owner john henry bought boston globe, and last year Warren Buffetts Berkshire Hathaway bought four newspapers, and not only did Rupert Murdoch buy news corp. In 1997 but when he spun off the assets to news corp. This summer, he gave the new company 2. 6 billion in cash and no debt. Barry dill ser the exception. This weekend he sold newsweek to ibt media. One thing that all of the billionaires betting of going on a buying spree and publishing have in common is a longterm approach, and both in the Business Strategy of the assets and the personal commitment to the news. Carl . Thank you, julia. You are all over the story all morning long. Julia boorstin in los angeles. We want to continue the talk of Jeffrey Bezos decision to buy the Washington Post, and we are joined by the editor of wired. You interviewed him in 2011 and covered a lot of ground, and judging from that interview, what do you believe that the intentions are . Well, his intentions, and i believe him when he says that he wants to uphold the values of journalism there. But make no mistake about it, it is an exciting moment for the news industry for publisherinpu because this is a guy who specializes in innovation and disruption. He knows how the leverage the internet to create incredible value, and he Sees Opportunities there to the traditional publishers have not seen and the way that the west coast entrepreneurs understand the internet at a deep, deep level, and we will see things that we have not seen before in the news industry to leverage the valuable, valuable product they have. And the media component of all of this is getting tons of attention, because the media loves to cover themselves, but as a business network, we are watching amazon, and do you see synergys with amazon or a personal project . Well, as the reporter mentioned, this is a personal investment by jeff, but ecommerce is in his dna, so he would exploit the aspects of the newspaper that he sees that other people have not seen before. There is a physical component of the delivery and amazon has been super aggressive in trying to shorten the time to deliver the products to customers there, and here he has everyday delivery going to peoples houses, and so these are possibility directions to go. Steve, it would be great to reinvent the newspaper industry, and others have used the firewall and tried to fight the decline, but i know that is a private deal, but assume it is part of the amazon ecosystem, but it is simpler than that, and actu actually now newspapers may become a utility in the same way as mail on amazon prime is a utility, in other words, you pay your 79d a year or whatever it is for amazon and you will get a choice of subscriptions to the newspapers and just like netflix was buying programming to take them there and he is buying the newspapers on the cheap as you look at the cost of netflix for programming. That is what jeff and i talked about when they introduced the kindle fire, and i said, maybe these should be given free with content subscripti subscriptions, and he said this is something that we are not doing now, but we will. I know that in a year you will have an app for the Washington Post that is different than it is now, and probably different than any other app in the country. Steven, if they are doing that and doubling down on the content, and using it in a b better way, does that mean that the Washington Post now might invest in going after a lot of the journalists that it thinks that it needs to be bringing into the fold or using the resources they have in a more effective way . Well, too soon to say whether they will do that, but the Washington Post is an unbelievable brand on its own. You the bob woodward, but basically, you dont get the Washington Post to read xperson or y because it is the overaggregation of the great journalists who make so it valuable, and jeff will understand that. Steven, talk amazon more here. Of all of the things they have brewing, groceries, web services, whatever synergys may come as a result of the media deal and original content and studio work, what is the first to boil . Well, you mentioned the back end there. Amazon has a fantastic infrastructure, and because jeff nose it so well, the Washington Post maybe a good customer for it. I also think that really, he has the freedom to try things that havent been tried before. I used to work for the Washington Post corporation and i used to work for newsweek, which is not part of the deal anymore obviously, but, it is very, very difficult for a legacy publisher to take the big steps necessary to transform this business to the new internet platform which is so dominant and destructive to the Business Model there, and jeff has the freedom there, and the freedom of thought to jump into the new exfeermts experiments and he said it to the Washington Post employees, he wants to experiment, and invent. Yeah, we use the phrase new lease of li lease but in this case, it appears. Thank you, steven levy from wired. Rick, santelli, any jolts . Yes, 3. 9 million, and it was actually 3. 936, and so we have seen increase of 29,000 in terms of the openings, and it hovers near a fiveyear high. Put it in context. The key area that we want to get above is 4 million on the jolt, and we have not been at or above 4 million since march of 08, but hovering close to the fi fiveyear highs, and on going improvement, but it is a debate as to how deep the improvement is and the quality of the jobs that we are creating. The yields are continuing the move higher to 66 in 10s and climbing. Back to you. Thank you, Rick Santelli. A double dose of ceos. The president and ceo of regeneron, and later on open table ceo with us to talk about the urban spoon acquisition, and why you may not have to bring your wallet to dinner again when squawk on the street continues. Rket centers to look for the best possible price maybe even better than you expected. Its all part of our goal to execute your trade in one second. Im derrick chan of fidelity investments. Our onesecond trade execution is one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. [ male announcer ] you wait all year for summer. This summer was definitely worth the wait. Summers best event from cadillac. Let summer try and pass you by. Lease this cadillac srx for around 369 per month or purchase for 0 apr for 60 months. Come in now for the best offers of the model year. While the markets were lower overnight, and sure enough, tending here to the u. S. Dow trading down 100 points and right now 99. 19, and so declines in the nasdaq and the dow falling more because of the decline in ibm. Looking over to regeneron, and the companys earnings are falling shy of expectations. The Company Wants to seek approval for the eye drug sooner than expected. We are joined by the ceo howard schleifer. Thank you for having us. Some of the concern for speeding up eylea, what is happening with the other important drugs or products . Well, regeneron has a pipeline, kelly, with all different antibodies coming from the labs in clinical development, and improving our other indications as you heard this morning eylea, and other for macular edema, and other drugs for lower cholesterol is in a phase three trials, and we expect many of the trials to give us data this year and next year. Busy time for that program and for the Rheumatoid Arthritis program and the Dermatitis Program and the Asthma Program and a lot is happening. Well, you are in the places where next big blockbuster drug is coming, diabetes or macular stuff, and so what happened in the quarter . Well, the quarter is fine. The product eylea is growing and we did 70 increaser in quarter over quarter of the net sales of 330 million, and the second year in the market, and we are guiding the second year to do between 1. 3 and 1. 35 billion in the United States alone. The product is growing outside of the u. S. Where we have a 5050 profit share with our friends at bayer health care, and they posted nearly 1 million in sales this quarter, and so it is great. People are focusing on the numbers, but maybe they are looking at the wrong numbers. The numbers are the patient number numbers. When you think of diabetes, there are 25 Million People in the United States with diabetes and maybe up to a Million People who have macular edema, the condition for which we got this exciting phase three data and we will submit our application a year sooner than expected. It seems in pharma overall, there is some m a based on the favorable tax structures and talk about spinning off somebodys Animal Health unit here or there, and doesnt it Say Something about where the overall pipeline is and they are trying to move around the deck chairs . Well, some of that and certainly the Financial Engineering is one way that people sort of fill in the gaps, but i think it is different. I think that our industry and i have been doing this for 25 years at regeneron, and the industry is in the golden age. There are exciting products for a lot of important diseases in the pipelines and that have been improved and we have a robust pipeline and im lucky to be partnering with george who opened up the labs, and he is head of prolific research, and he is in the lab with the approved products and the others as well. It is a good time. I want to take you back to eylea, and you have Clinical Trials on treating the loss of vision due to diabetes, and how rapidly do you believe you will get approve not only here, but recently on the Conference Call rush who has the census said they were not worried about your entry into the market. I suspect if cnbc had a worry meeter in south San Francisco, that worry meter would go up now, because i know that we have had lots of discussions with the fda and the original lay of the land is that you needed two years of data in the United States and we went to the fda and made a scientific argument. And we worked together with them, and they came up with a good result to allow us to submit the data after one year. Hopefully we can get it approved sometime next year and compete in the marketplace. It has less harsh warnings than the census on the label which is important for marketing . Right. The label we have approved for is macular degeneration, and so we can give a fixed regiment every other month, and theirs is every month, and this is a big difference. We hope to get a differentiated label for macular edema, but that is still to come. Boom or still trouble spot when it is implemented well, i dont believe it will have an effect one way or another. The fact is that patients like vu drugs, and Companies Like e regeneron can provide drugs to affect patients lives and how it is paid for the people will sort it out, but the need is there. If you can address the need, there is always an opportunity and market. All right. We will leave it there, leonard. Appreciate your stopping by this morning. Great to see you. From regeneron. Next up strategist byron wien will tell us why he is worried about the second half of the year. And later, we are joined by the man who created the hashtag, oh, yes, even though he never worked at twitter. We are back after the break. This is the pursuit of perfection. If then schwab is the placeing your trato trade. Higher level, tdd 18003452550 call 18882849410 or visit schwab. Com trading to tdd 18003452550 learn how you can earn up to 300 commissionfree online trades tdd 18003452550 for six months with qualifying net deposits. 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Tdd 18003452550 fffffff. Laclaclac. Hes an actor whos known for his voice. But his accident took that away. Thankfully, hes got aflac. Theyre gonna give him cash to help pay his bills so he can just focus on getting better. Were taking it one day at a time. One day at a time. [ male announcer ] see how the ducks lessons are going at aflac. Com [ male announcer ] come to the golden opportunity sales event and experience the connectivity of the available lexus enform, including the es and rx. This is the pursuit of perfection. S p and the dow in the red for the second day having the biggest drop yesterday since june 28th, and what is keeping veteran strategist byron wien up at night . He is the chief strategist at blackstone, and glad to have you here. Thank you, carl. Always good to be here. This is too many folks making too much stuff around the world. Yes. That sums it up, doesnt it . It does. There is not enough demand to absorb all of the manufactured products being produced everywhere. Where does that leave us . You go into whether or not the fed should taper and you go into the earnings misses, and i assume that the net view is lower on the s p 500 by year d yearend . Well, not a whole lot higher, but maybe flat. We will probably be going lower first as we have been for the last couple of days. The earnings, and look at the First Quarter and the Second Quarter gdp are disappointing and earn inings are disappointi and the thing that im most worried about are revenues that are disan pointing and that means that more trouble is ahead. So im concerned. We were up 20 the yeartodate before this decline happened and im worried that is an awful lot to do in seven months. Byron the point about there being too much stuff relative to demand is one that is being paid attention to, and one that is gaining, and it points to disciplinary measures in the global economy, but what should policy makers do if anything here given that the stock s s i the u. S. Are at all time highs or something for the investors to think of, and think about investing differently . Well, one of the things that the policy makers have to reflect on is that the economy is only growing less than 2 with all of the monetary easing that we have done. Furthermore, i dont see any reason for tapering whatsoever. We are not at the inflation target of 2 or the unemployment target of 7 or 6. 5 , so there are no signs in terms of the macro factors that would indicate that the fed should stop easing. Moreover, the economy needs it, because there is no fiscal stimulus, and we are totally dependent on the monetary stimulus to keep the economy humming along at modest 2 growth rate. And byron, a lot of people who are going to look at that and say that the problem is that the gains are not being shared and if it were something coming on the fiscal or the structural side they would be building for a more lasting e recovery and one more encouraging and one that the concentration of the wealth generated by the stock market and the prices moving higher would not be so concentrated among the upper echelons of the wealthy. So on the one hand, you can recognize what is happening, but on the other say, well, we should be try inging a differen tack here. I agree totally. In 2010, the budget deficit which is a portion of the Gross Domestic Product is 10 , and the budget deficit this year is 600 billion on a 17 trillion economy or about 4 . The government could spend some money on job training, infrastr infrastructure and development, and but you cant get anything through congress on the fiscal side. The fiscal side would help the 80 who are not benefitted by the stock market rise, and the rise in the high end real estate prices. Yet, byron, if you look at the consumers in the country, they are in great financial shape to buy stuff and move forward and the latest Federal Reserve data shows that the rashg owe relating Consumer Debt to income is now at the lowest for 33 years. We could really snap back in this economy, couldnt we . Well, we could, but i think that the figures are disproportionate, and they tend to favor the higher end, and those are the people who do the big borrowing and not the big spending and the propensity to spend at the high end is relatively low to the income. What we have to do is to stimulate the middle 60 , and the top 20 will spend, but not a big part of the income. The bottom 20 are in trouble, but the middle 60 could spend more, and we have to provide incentives for them to do it. And so, when byron, when people say shares of credit card delinquencies more than in 20 years, and the Mortgage Rates lowest in 20 years, and the do you believe that the metrics are misguided . No, they are real. But i am saying that they are not enough to get the economy growing to 3 , and that is what we want to be shooting for. And finally, byron, the obvious follow is, well, where do you go, right . Back to the bin laden market and take yo. Back to the bond market and take your chances at 2 . No, there are equities to buy in the pharmaceutical area and the technology, and i think that mexico is attractive and i like japan and plenty of places to go. Great note. Everybody should try to get their hands on it, byron. Ta talk to you soon, byron wien. And now open table is buying the open spoon system, and testing a system to have the diners pay for the meals with the app. Will it pay off . The ceo of open table will join us next. Clients are always learning more to make their money do more. ann to help me plan my next move, i take scottrades free, inbranch seminars. Plus, their live webinars. 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 dont trade like everybody. I trade like me. Im with scottrade. announcer scottrade. Ranked highest in Customer Loyalty for brokerage and investment companies. One hour into trading and here are the stories that we are squawking about 10 30 on the west coast and 9 30 on west. And we will look at cash flow and future organic growth. The brewer is reporting better than expected earn inings for coors. On the food front, hormel, tyson and hershey are among the stocks hitting new alltime highs, carl. All right. President obama traveling to arizona today to lay out the plan to help responsible homeowners and those who want to own homes. Diana olick is in washington with more on what the president will say later. Good morning, carl. The president is going to phoenix to take a victory lap for the fledgling housing recovery and saying that the race is not over yet. He is calling for more mortgage refinancing and overhaul of the mortgage industry starting with the dismantling of fannie mae and freddie mac. Even before the speech, the administration was making the sell. We cant go back to what made this crisis happen. We have to build a Housing Finance system in the future that protects the taxpayer and puts the private capital first, but we have to have a system that provides safe, simple 30year mortgages. And the president wants to streamline the refinance process for borrowers in danger of falling behind on the payments so far the program called h. A. R. P. Has helped 2. 6 billion get lower rates, but it is only for those who have governmentbacked homes and that leaves out a lot of folks. So the rates increase has put the president on the edge of this, because with it going to 5 , many borrow borrowers are out. Inv investors swarming the market with buying Distressed Properties from the trough, and that sin vess or the and n an that is the investors and not the government, and they say that the investors are 30 below their peak. We will see what the president has to say. Yes sh, thank you, diana oli and now the dow is down exactly 90, and make it 100 points. We are back in a minute. Mine was earned in djibouti, africa. 2004. Vietnam in 1972. [ all ] fort benning, georgia in 1999. [ male announcer ] usaa Auto Insurance is often handed down from generation to generation. Because it offers a superior level of protection and because usaas commitment to serve military members, veterans, and their families is without equal. Begin your legacy, get an Auto Insurance quote. Usaa. We know what it means to serve. Trust your instincts to make the call. 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Analysts at deutsche banning saying that the checks show that expedia has moved up into top position on trip adviser following a drubbing of the priceline through q 2 and they recommend adding to the positions of expedia at the current levels which is 50 bucks, and expedia is still down 70 this year. Carl, back to you. This is all happening on the down almost 100. Ceo jeff bezos is the proud own over the new york publishing businesses after shelling out 2 billion of his own pocket. He bought the Washington Post to wha what . And this one is that he is using it for styrofoam filler. Well, i liked that one. And you are biased because you come from wsj tv, isnt that true . Yes. And then lured on to rel tv. Yes. And the luring runs from papers to television, but, again, it does feel like the world is changing quickly. Yes, and speaking of changing quickly, look at some of the stocks that are leading the s p on the downside today and a lot of the consumer names, sears, jcpennys, dillards, pulte, nordstrom that is interesting, when you look at the 10year and trying to figure yuure out why sit do and see if it is what edwards say in the conference this afternoon. Well, we are in a summer lull, and the volumes yesterday were the lowest since the 12th of november last year. That is misleading, and that is part of the discussion that we are having which is more, and more important which is that it does not capture all of the etf market. Well, it is in the middle of the summer and these are not conviction moves as it is in other times of the year, and i know it is counter to the cable training. Well, it is contrary to the cable trading. Yes, on all fronts. Exactly. And he has been called the godfather of the hashtag and we will talk to the inventor of the famous social Networking Tool coming up. 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Well, europe is starting to see a little bit of the light at the end of the tunnel with key Economic Indicators strong at the end of july. Safe to invest in the eurozone . Well, lets ask chief financial strategist at Morgan Stanley grah graham. What do you think of invest ing in europe . Well, in the backdrop, it is a pickup of the Economic Indicators and fair to say that europe has stopped contracting and it is probably not growing et y yet, but we believe that europe will slowly move out of the recession in the next year otwo, and a year of less sovereign debt concerns, so europe is coming back on investors radars and people are taking a serious look. But people should tread carefully, because this is a case where not only there are still structural problems, but questions of whether the growth rates this we might start to see are sustainable. I think back to david tepper yesterday talking to scott wapner and saying, yeah, maybe europe has turned, but no hurry to get in, because it is not as if this is a swift and strong rebound, and what do you say too that . Well, look, we dont expect the European Growth to accelerate dramatically on the outside, and that is not likely to happen, but we are seeing the Global Investors reengaging, and there is a feeling in the market that d. M. Is becoming more normal, and europe is a way to have a normal trade. And the corporate profitability is 20year low as opposed the global profitability. So the macro background is growing in profitability, and europe is on the upside so we are seeing interest of people taking money out of the en a. N. D then back to the u. S. You said that there is a sweep spot for ur mean inv investment in july, and now it is maybe passing, and you not totally happy clappy about the situations in europe, and you are cautious to an extent . Well, mediumterm, yes. We believe europe is moving this the right direction and according to other Asset Classes in europe, what we have been flagging is that the market has had a strong run and driven by better european macro data and better bond yields in the u. S. If you go back to july, the sentiment was weak, because of the june correction and now the situation has improved and the bonds are drifting higher which will weigh on the equities a little bit. But we wouldnt be looking to go in fullin, but we are positive on the sixmonth, and we believe it is an interesting entry point. Graham, curious, if europe is turning broadly, shouldnt the banks be leading the way out of it and if you look at hsbc, the punishment for the investors not meeting the targets and the concerns about the profitability Going Forward and doesnt that perhaps call into doubt whether in fact this thesis will be intact . Yeah, i think that you are right. The bank sector has the lead. We are overweight in the bank sector, and i would take issue with the folks at the hsbc, because what we are seeing in the results like you are seeing in the u. S. , the financials are leading the way. So that the european earnings season is weak if you strip out the financials, but if you include all of the financials, it is a small increase. So it is right to look at the financials and the banks in particular, and the likes of hsbc and standards have been sort of long held positions in europe, because people have avoided the domestic plays. We think that people are going to start to focus on the domestic names and they should do better. Okay. An important place to watch for the turn around. Graham seker out of london. And now over the Rick Santelli with the exchange. Well, im glad we do it on the fly. You guys came to me early and i have fun coming early, and this is interesting. Todays data, trade deficit 34 billion and change and the smallest since november of 09. Why is that important . Because much of the good news, and it is great news, on the narrowing of the trade deficit has to do with energy whether we export more of it and the exports were up 2 , and i believe 2. 2 to a record level and much of it on the energy side. And on the imports, well, think about it, if you rex porting a lot of energy, you probably importing less. Imports down 2 . A lot of that is energy that we are not importing. Granted, there was a time in the past when the import numbers being weak was a surrogate for weak demand. But i dont think it is true here, but there is something true and once again, i dont want to use a negative to push a positive, but this is one area where theres been very little nurturing by any government official. Its pretty much from the bottomup, the Energy Sector is doing wonderfulfully and i would like to see a push by whether it is congress or the administration, and think of keystone pipeline. Now the irs, and there are a number of stories about the irs and most of them are not good. This story, im unsure of, but everybody should be aware of it. It is about a small muni issue called the debra heart around lung center. It was not that big of an issuance. But here is the rub. They swapped it in 04 and added a drerivative, and forget gettig on the weeds on this, but what the irs is saying that swap crea created an income that may be taxable and may change the tax exempt status of the issue. Now im not saying it is a good story for bad story, but upon reading it and read iing how th 04 changed what was originally issued earlier, it makes sense, but there are a lot of munis with derivatives attached to them down the road for a variety of reasons, so i think that this is a very important moment in the muni market under some duress in some markets to pay very close the attention to, and the last point about the trade deficit going back, this could add according to peter bookfarm my buddy 0. 4 to the gdp. We saw being better than expected, it might put it over 2 . So on the energy completion, my hat is off to you, keep pushing. Carl and kelly, back to you. All right. Rick santelli, fiesty as ever this morning. And now a new system to test in restaurant when you can leave your wallet at home. The open table ceo will be with us live at 11 00 as squawk on the street continues. For the strong and the elegant. For the authentic. For at home and on the go. For pessimists and optimists. For those who love you a little and those who love you a lot. For ultimate flavor and great refreshment with or without calories. For carefree enjoyment. For those who have a lot to say and those who have nothing to add. For those who want to choose and choose. For every generation. For us. For everyone. Forever. Time to have new experiences with a familiar keyboard. To update our status without opening an app. To have all our messages in one place. To browse. And share. Faster than ever. Its time to do everything better than before. The new blackberry q10. Its time. The ones getting involved and staying engaged. Theyre not afraid to question the path theyre on. Because the one question they never want to ask is how did i end up here . I started schwab for those people. People who want to take ownership of their investments, like they do in every other aspect of their lives. Welcome back to squawk on the street. Im josh lipton. It is a day in the red here, and some of the worst hit are your retailers. Aeo, we know that story, saying Second Quarter profit will be a lot less than the street expected, talking about weak sales. Jcp also falling hard. Big names have made big bets there, including bill ackman, george soros. That stock down some 30 so far this year. Rounding out, some of the others falling in the sector, kohls and Urban Outfitters falling in sympathy with aeo. You may soon be able to pay your bill in a restaurant why your smartphone instead of having to flag down the waiter. Open table is testing a new payment function on its mobile app that will allow you to pull up your check at your table, adjust the tip, and pay by tapping your screen. The ceo of open table, matthew roberts, joins us now exclusively from San Francisco where his trial is under way, i believe, matthew, in 20 restaurants. How is it going . Its going great. We are in a unique position i think to make mobile payments a seamless reality for diners and to provide great hospitality for restaurant customers as well. We already have the technology in the hands of both the diners and the restaurants which really puts us in a position to solve the check settlement problem like we solved the online restaurant reservation problem. I believe the biggest problem youve got at this stage is how does the waiter know that people have paid online and that when they get up to leave, theyre not about to do a run up . If you solved that yet . There are a lot of ways to solve that. Because we have the technology in the restaurants already, we can actually indicate before the diner even sits down that they intend to pay with their app, so we dont have to deal with the i dont know whether theyre going to pay or whether theyre not going to. So when do you think youll roll it out beyond San Francisco . Were looking at piloting the integrated solution by the end of the year in San Francisco, and then were going to move out from there. Okay. I just want to nail the colors to the mask. The base of the business at the moment looks very strong. You actually had a 25 rise in the number of diners that you sat in the last quarter, 25 up on last year in north america. Its 35 million transactions, and at the same time youre up 46 internationally albeit from a low base. Now that we have said that, lets talk about the competition that you face, which seems to be very intense. I read that you charge a restaurant, say, 5 to seat two diners at once and then its 2 250, 300 for them to carry your infrastructure. How will you fend off your competitors who seem to be doin . Our fee is 1 for every reservation in which we deliver 43 of revenue for the restaurant customer. The competition, weve always had competition, well continue to have competition. We really like our competitive position. I think the numbers speak for themselves. We have over 28,000 restaurants worldwide. We seat over 12 Million People a month. We do this by delivering great, great products and services to both the diners and to the restaurants. Theres a lot of perceived competition actually from people that we are their partners, not their competitors. You are partners partly because you said to barry diller youd by the reservation system from urban spoon and go into business with them, so youre buying up competitors. We have been talking to urban spoon for a while about introducing more people to online reservation and to welcome the 2,000 res book customers. I would hardly characterize were buying up competition. This is the partnership weve been in conversation with. Theyre focusing on the part of the business they do really well and were going the same. The elephant in the room is the fact that yelp with whom you partnered for three years bought his own lowcost reservation system seat me and i announced on the Conference Call that you were going to start advertising here in this country in particular to try to deal with that, 2. 5 million to 3 million. Where does this end up . Because if you look at the Online Travel agencies, you have a wall for customers and a huge expenditure on advertising, and we saw the effect that that could have, for example, on expedia when it lost a quarter of its market cap two weeks ago. Peour organic growth has bee very strong. Its based on a strong word of mouth from satisfied customers. Our incremental marketing were going to spend, which is really relatively small amount, is really an investment to layer on top of this strong foundation. So very few other companies spend the very small percentage we have historically on direct marketing. Its really building on strength and looking for ways to chase growth. So what is the vision, matthew . Where will we be with your industry and restaurants and technology in 10, 15 years time . What is the vision . Well, restaurant reservations last year, only 15 were online. We think that at least a majority of restaurant reservations will happen online. If you look at international, were really even earlier in the game there. Only 3 of restaurant reservations happen online internationally and we think at least a majority. Both in north america and internationally, we think restaurant reservations will be a fantastic experience for tine diners to be online. We look for ways to expand that beyond just the reservation, but into all other areas to provide amazing hospitality for diners and great products for our restaurants. Its a fascinating space. Matthew, well watch with huge interest. Matthew roberts, the ceo of open table of San Francisco. Its interesting now if we take a look at whats happening on the dow. Were down 127 points. Weve seen deklaiclines across nasdaq and s p as well. Carl, you mentioned early a lot of rate sensitive parts of the market were under pressure, and Charlie Evans will speak in about two hours time. Voting member of the fomc. Someone who has been very clear in the past about the targets hed like to see the fed hit before it does anything with regard to the taper or moving Interest Rates. So, again, well see if that can turn sentiment around. To simons earlier point about light volume, yesterday the lightest volume day of the year so far. Thats including days like the one before the fourth of july and so forth, and a lot of discussion about a socalled buyers strike normally around 10 30 eastern time you might see some buying come in. So far few takers. If were down triple digits, it will end that streak we were talking about earlier where we havent seen the market losing more than 100 points in a couple weeks now. Yesterday and in the last couple of trading sessions when we started lower, we have closed up okay or weve at least come off the lows of the session. In the meantime, can i say how excited i am that tonight were going to have the premiere of the new twitter documentary. Actually it premieres tomorrow night. Theres a screening tonight at 30 rock. Im exciting im going to my first premiere with cnbc with kelly. Do you know what youre wearing . Something fancy. We can critique it tomorrow on air. You could, yes. I want to go tonight. I want to go. At 9 00 p. M. Eastern time,. Great timing. Well talk about some europe action in a few minutes. If youre just joining us, here is what you missed earlier on. Welcome to squawk on the street. Here is what happened so far. I do believe that he will do something interesting. The question is what is that. Janet yellen should get the job. I think don is very solid. He does know monetary policy. Hes been at the fed for years. Hes lobbved by the staff, well respected on the hill. But janet should get the job. Shes the best qualified. Thats what we do. Theres no reason to be sentimental about it. The world moves on and im quite excited to see if they can come up with any nice experiments. Time warner does not want to unbundle, but i think it probably is getting pretty angry. I see opening day for the nfl as the implicit deadline. There is the opening bell. Up with year from now youre going to have an app for the Washington Post thats going to be different than the Washington Post app is now and probably different and the app for any other newspaper in the country. I think our industry vl in a golden age. I think there are a lot of exciting practice ducts for a lot of important diseases in the industry that have been approved, that are in late stage. I dont see any reason for tapering whatsoever. Were not at the inflation target of 2 . Were not at the unemployment ta target of 7 or 6. 5 . A good morning. Were live at post 9 at the New York Stock Exchange with a check on the markets on this tuesday where were losing ground and have been losing ground pretty consistently all morning long. Dow is thousand down 137. The s p back below 1700 at 1693. Were once again talking about support levels around 1689, 1678. Nasdaq down 37 points. Thats more than a percentage point to 3655. Shares of ibm slipping this morning. Credit suisse downgrading the stock to underperform. Cvs firmly in the red this morning despite a 16 gain in profit. They did narrow their full year earnings view so it may be the reason for the decline. Some relative weakness in the front end. Amazons ceo buy the Washington Post for 250 million. The question is what is he going to do with it . Well talk to the man who wrote the book on bezos to find out. Trending now, the inventor of the hash tag wip joll join u live. Also, team retail is out this season. Names like American Eagle and aeropostale are hurting. Well talk to one analyst who says massive down grades are on the way. Things are getting personal up front in the fight between cbs and time warner. Cbs les moonves slamming the latest offer as a sham and a distraction. Julia boorstin has the latest on that. The war of words is heating up. Les moonves is shooting back at Time Warner Cable with a letter. Moonves making public his 2 1 2 page letter to Time Warner Cable ceo attacking him for failing to respond to efforts to negotiate. He called that incoming ceos interview on cnbc saying it was dishonest to say on cnbc that cbs has not responded to their proposal when they just had five minutes ago received it. Moonves writes, quote, after reviewing your letter, we have concluded there is not a sincere or helpful proposal in it. Saying that Time Warner Cables approach is not negotiating. Thats grandstanding. Yesterday on cnbc incoming ceo rob marcus proposed what cbs Ceo Les Moonves called sarcastically a Ground Breaking offer to you a la carte offering cbs outside the traditional cable bundle at an added fee for customers. Cbs can choose the terms and the price and we would agree that 100 of whatever was charged and paid for by customers would be paid over to cbs so we would not profit at all from the sale of that product. Moonves responded, quote, anyone familiar with the ent entertainment business knows this is an empty gesture. We know that a true a la carte universe is not one that Time Warner Cable welcomes. Moonves shut down the proposal of returning to terms of recently expired contracts. Moonves pointing out that those terms were established in 2008 before the introduction of transformative new technologies like the ipand and amazon streaming. Sources tell me those new technologies are one of the key sticking points of the negotiations here. The question is what kind of freedom cbs should have to distribute its content via the internet. Kelly and carl . All right, julia, thanks very much for that. We also want to look at the broader market. Reaction has the dow down 130 points. The s p 500 and the nasdaq shedding about threequarters and almost 1 respectively. Yesterday apple was helping the nasdaq. Today that index ty underperforming. You might argue were going to be victim to some trinends tt exist all year long. Some argue thats not exactly the overriding dynamic today. That it really is just about a lack of people willing to step in here, but it will be interesting, all those bears who have been frustrated for most of the summer looking for a pull back. Maybe getting one today. Who knows if it came off lockharts comments earlier and whether the evans comments will change that. Whether it was tepper who told scott wapner hes going from bullish. You cant ignore that 12. 5 points off the s p and the session is not even half down. Lets talk about the bezos deal. Richard brant is author of one click jeff bezos and the raise of amazon. Com. Good morning. Good morning. We have a gentleman here, press shy, rarely does interviews, but of the things we know about him, we know he likes to disrupt businesses and then make virtually nothing in profits for a very long time. Is this going to be any different . I dont think so. I think its exactly what hes interested in and what the Washington Post, hes not really hungry for profits. I think what hes most interested in is learning the newspaper business a little bit so he can figure out how to make money off of them, probably through amazon. Really. So you do see it part of the discussion yesterday was, hey, its not an amazon deal, its definitely a jeff bezos, almost a vanity project some tried to portray it. You dont think it is as such . Well, it is not an amazon deal, but the idea is that jeff bezos wants anything that he can sell online, he wants to be able to sell it. And that includes whats called content. Digital information. Now, amazon would very much like amazon would very much like to be in that business. Owning the Washington Post, jeff bezos personally, allows him to learn the business side of Newspaper Publishing. As he figure that is out, he can help try to figure out what model will help the Washington Post make money. If he can figure that out, especially if its being sold through amazon, then he can start selling any publication through amazon and at some point make a profit on it. Richard, another interesting theory out there is that bezos considering the way in which he typically will allow for media access only to one or two reporters at any given time, doesnt really like amazon to talk, but maybe he would give the post an edge here. Is that kind of is that just a conspiracy theorist talking or could Something Like that really happen . I think Something Like that could happen, and thats very problematical for jeff bezos, amazon, and the Washington Post, primarily the Washington Post. I doubt if he will do that because it will be so obvious that hes giving preferential treatment to the Washington Post, and the post would get a lot of criticism for that. I think its possible, i dont think its likely. Following up on that as well, there was that moment where the Amazon Kindle interviews have started and the kindle video singles, or whatever theyre calling them, the one they had with president obama, there were a lot of people asking about the relationship and the way in which amazon is kind of inserting itself into the press world. Yes, thats right. Jeff bezos is very good at controlling the press. He chooses the reporters hes willing to talk to. He gives very, very few interviews. Nobody at amazon can give interviews, and as a result, the press it puts pressure on the press to be good to amazon even though they will try not to so that they can get the interviews. So hes very controlling of the press, and certainly thats a concern. But, again, i dont think that jeff bezos is interested in the news gathering or reporting or writing part of the press or of the Washington Post. I think what hes interested in is the Business Model. Hes a businessman, a great retailer, and thats where he can make a difference. Hes said in previous interviews, he does not see the physical newspaper existing in about 20 years. With control now of the post, would you expect him to do away of the paper i have on my desk in the near term . I would bet on that, yes. I think he ceasees a lot of products like this as just on sa lessant. I think it will end up pretty much online, perhaps all news will end up online or on the air. Wow. Richard brant, interesting. The game just changed to a large degree in the media business. Thanks so much. Thank you very much for having me. Want to get now to a market flash. Lets send it over to josh lipton back at hq. Were keeping a close eye on the dow and the s p obviously, but were also watching the small caps, midcaps, and transports, all actually falling harder than the major benchmarks today. In the midcaps, American Eagle, acm, tdw. In the transports some of the worst hits are the airline, ual, delta, alk. The Airline Index having its worst day in about a month. Kelly, back to you. Thank you, sir. Coming up nix, the man who turned the pound symbol into a hash tag and he never worked for twitter. The socalled godfather of the hash tag will brojoin us live. First, lets get out to Rick Santelli. Theres a couple conventional wisdo wisdoms forming these days. One is that Interest Rates will go higher. The other is that in that environment Regional Banks will perform better. All at the bottom of the hour. We route your order to up to 75 Market Centers to look for the best possible price maybe even better than you expected. Its all part of our goal to execute your trade in one second. Im derrick chan of fidelity investments. Our onesecond trade execution is one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Dow now down 114. We love to say it, slightly off the lows, but thats not saying much as were looking at some of the worst action at least for the transports since the end of june. June 24th. On pace for their worst day since june 20th. Sort of echoes some of the things we were say being the broader indices yesterday. And a small jump in the vix as well. In the meantime, making a profit is never easy. Sometimes it can actually get pretty ugly. Im not going to take your deal. Why is that . We had a handshake on it. Theres a lot of stuff you promised that didnt go through. Like what . You said you were going to give us 100,000. You didnt see all this being spent . I saw some lights going up. Thats about it. You saw some lights . How about the gpss that went in the system. How about the camera system that went in. I saw some graffiti being how about the a couple panes of glass is not worth 100,000. You [ bleep ] kidding me. No, im not kidding pu. Are you trying to tell me you didnt put money in my business . You didnt show me. Would you like to see it. Its too late now. Why is it too late . Youre kidding me. The sales didnt go up. In matter of two days . Thats because you dont know how to manage this place. You better call your mama and get my money back. Better tell your mama, mark la m lemonis. Youre seeing an excerpt from the profit. Welcome back. Thank you. That moment where youre like, really . Really, i was pissed. I saw so the First Episode aired last tuesday. I loved it. I mean, it basically when you watch, it you realize that this is about what a lot of reality shows are actually about and that is people. These people are emotionally attached to their businesses. I got to know how are the car guys doing now . The car guys are doing great. I talked to them this week and their phones are exploding. This is really a microcosm of business. This isnt about a car place or a flower place. This is profiling business in general. But you have had to be very you get these guys in a room and its so interesting because at first theyre always yeah, yeah, yeah, we want to work with you. But then when they have to realize they have to make changes, these car guys had to give up the wholesalers who they had a relationship with going back to their father, and thats a difficult thing. So much of the time these emotional decisions get in the way of people being able to just execute. I want to trademark deal amnesia, which is a term i have where people need money and theyll do anything and say anything to get the check. After they get the check, they kind of forget what they signed up for, and its a problem. What about running the Federal Reserve . There are people saying if he can deal with these guys, maybe he can deal with some congressmen . I dont know, i think i like making money. The fed has bought a lit in the latest backup in bond markets, so, yeah, that would be kind of a problem for you i guess. Absolutely. This new episode you try to turn around a struggling florist. Talk about the challenges with that and then we also want to ask you how you would turn around the Washington Post on a big day for that today. Turning around a business regardless of whether its a florist or the Washington Post is really just basic fundamentals. Its really understand the people, but in the case of the post, its really understanding the process and the product. Im confident that this gentleman will figure it out. I think he understands what needs to happen in terms of the product offering, how technology is going to lay in. But what would you do . Ultimately you focus a lot on cash flow here. If it comes down to advertising and to subscriptions, whats the model . What would you say . I think the model is having a really good online and print crossover in terms of advertising and delivering people more content. The trick to the newspaper game and the magazine game and the tv game is really content. I think this gentleman, jeff, is going to figure out how to bring content to the post. Maybe more intrerviews. I would look at the sg a right away. For me thats the problem. In other words the employees. It doesnt always have to be employees, but when you look at the hierarchy of any business and im finding this in the smallest of business, people like layers. Im a big believer in flat organizations that are trim. I want the owners, the general managers, out of the office and behind their desks and on the floor working. Whether thats the Washington Post and cutting out the supervision, Vice President s of Vice President s of Vice President s. Business doesnt need that anymore. I call it flattening things out. Judging from that clip and the exchange between you and that man, theres not a lot of gratitude, right, when you come in . I wonder if you expect that . If you expect them to sort of bristle at the suggestions youre making . I dont want them to bristle. I like pushback. If the ideas are good and were having heated debate about their business, they know their business better than i do, they know their product. I want them to push back and tell me why my idea doesnt work. Youre not like where is the gratitude . But what i do want to have happen is if we help their business and in the end he tells me morale is better than ever, business is better than ever, i say lets do a deal. He says why should i . You fixed my business. I dont need you anymore. Its about when you shake somebodys hand and you make a deal, stick to it, even if its a bad one. Just briefly, whats the past week been like since that First Episode aired . A lot of requests for people to come help my business, i got one this morning that says i dont have a business, i dont have a job, can i have some money . So the answer is you can have a job at camping world but you cant have my money. Its been interesting. Wow. Im sure making the inbox even harder to manage. The next episode is tonight. Dont miss the profit on cnbc 10 00 eastern and pacific with marcus lemonis. Breaking news. Lets get to scott wapner at hq. Some more on the latest between dan loebs third point and sony as the back and forth continues. Remember, late last evening sony formally rejected third points plan for sony to spin off its entertainment unit. Third point had responded with a letter last evening saying it was disappointed but that it intended to explore further options to create value for shareholders. I can tell you that now im told according to a source close to third point that the firm is right now taking a wait and see approach, that it remains highly engaged and is keeping all options on the table. That it will not rule out a proxy fight though seems unlikely now given the progress theyve made. That being sony, over the past three months and the trajectory theyre on in the Electronics Business and the commitment theyve just made to improve the entertainment business. Third point im told from a source expects sony to lay out a plan shortly to achieve more profitability in the Entertainment Division and demonstrate progress against that plan by the time of the annual meeting. Im also told from the source that third point views this whole thing as a big win for shareholders and the company, a win win for everybody involved because it got sony to focus on its issues over the last few months. Im also told from a source that the size of third points stake in sony has not changed and that its roughly 7 , just under that amount. So again, the latest is according to a source third point taking a wait and see approach, that it remains highly engaged and is keeping all of its options on the table. A proxy fight is one of those options but, again, seems highly unlikely at the current time, though third point im told is expecting sony to lay out this plan to achieve more profitability shortly and demonstrate progress against it by the time of the annual meeting. So weve been watching this story, the shares fell, theyre down 6 now, but they fell once sony came out and formally rejected this third point plan overnight, and this is just the latest development in that ongoing story, carl. Scott, just trying to read between the trying to read the tea leaves. Is there a plan, a path, by which sony would not spin off entertainment that third point could live with . I think they want to see better profitability when it comes to that, margins, et cetera, within the Entertainment Division. And thats why i say i think theres a feeling that its already somewhat of a win win because theyve gotten sony to focus on the most critical issues, the very issues that dan loeb and third point themselves raised when they wrote the first letter when they took the position in sony, then when they pupp upped that position and wrote the second letter. I think part of the win win comes from focusie forcing s to focus on the entertainment tuition. I think they would view it as more of a success. Thank you. At the very least theyve gotten them to focus on the issues. Right. No direct comment on George Clooney im guessing in the letter. No. Okay. Scott, thanks a lot. Scott wapner breaking that news back at headquarters. Hes the godfather of the hash tag. He never yorked eworked at twi though. Hes going to join us after the break. [ male announcer ] lets say you pay your guy around 2 to manage your money. Thats not much, you think. Except its 2 every year. Go to etrade and find out how much our advice and guidance costs. Spoiler alert its low. Its guidance on your terms, not ours. Etrade. Less for us. More for you. Its guidance on your terms, not ours. Weve been bringing people together. Today, wed like people to come together on something that concerns all of us. Obesity. And as the nations leading beverage company, we can play an important role. That includes continually providing more options. 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Lets send it over to josh lipton with a quick market flash. Kelly, were watching gold falling below 1,300. Thats the lowest level in more than two weeks. Sharon epperson pointing out it dropped below last weeks low of 1,282. A close below that would be bearish. Check out some of the miners today. Nem, abx, auy all down hard in todays trade. Carl, back to you. Thanks so much. Want to check out the move in gold. Sharon epperson is live at the nymex. Another crazy one there, sharon. Its absolutely true, carl. As josh mentioned, we are looking its a gold prices below 1,300 an ounce. There are a number of factors traders are pointing to. Theyre looking at the Economic Data out of the eu, looking at the industrial activity out of the uk and germany, better than expected. Since it doesnt look like financial collapse is imminent, thats one of the reasons traders say were seeing gold selling off. Theyre also watching every comment from every fed official to see when we may see tapering of bond buying, and that is something that is also weighing on gold. Keep in mind though as we look at these technical levels, a close below that 1,282 level, last weeks low, could send gold prices down further. Also keep your eye on whats happening in the oil market because were seeing lower prices there. Were seeing lower fuel prices and that is great news for consumers because prices at the pump are now below where they were this time a year ago. Were seeing gasoline prices at the pump that are at 3. 61 a gatga gallon. Finally were seeing it happening. A little bit of support there, relief for some consumers. Weve been all over this story today. Amazon founder jeff bezos is now the proud owner of the Washington Post shelling out 250 million out of his own pocket, and that brings us to this more than agencies squawk on the tweet. Jeff bezos bought the Washington Post so that he could what . Tweet us your thoughts squawkstreet. Teen retail continues to crash and burn. Take a look at American Eagle today. Its not all bad though. Well take a closer look at retail and find you the best place to put your money. And the bells are about to sound across europe. Well talk about the details on the impact here this afternoon after the break. Aaa. Fffffff. Laclaclac. Hes an actor whos known for his voice. But his accident took that away. Thankfully, hes got aflac. Theyre gonna give him cash to help pay his bills so he can just focus on getting better. Were taking it one day at a time. One day at a time. [ male announcer ] see how the ducks lessons are going at aflac. Com if then schwab is the placeing your trato trade. Higher level, tdd 18003452550 one day at a time. Call 18882849410 or visit schwab. Com trading to tdd 18003452550 learn how you can earn up to 300 commissionfree online trades tdd 18003452550 for six months with qualifying net deposits. 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Call today to request your free decision guide and find the aarp Medicare Supplement plan to go the distance with you. Go long. The european markets are closing now. Lets bring in simon hobbs now with a look at how the european trading session panned out. Theres an awful lot of red around in europe. I mean, it was kind of flat to begin with before u. S. Open, and now weve gone further into negative territory during the course of the session. Again, its low volumes. You could argue a lot of it is simply marking down. It is led by the mining stocks. Sharon was highlighting how the metals are under some pressure. You have a kneejerk reaction coming through on some of the miners. The big theme out of europe even in these summer months is this question as to whether the recession is over and we can talk about some sort of stabilization in the third quarter, and after six quarters of gdp decline, whether some of that misery is now over. You see the euro climbing higher against the dollar on that basis 102. 31 1. 33. Today it was the german factory orders that were good, the Industrial Production figures very good out of the united kingdom. If you look at the uk rates, you see they like treasuries are beginning to spike higher. It begs the question as to what mark carney will do thursday morning, the guy who was at the bank of canada and is now at the helm of the bank of england. What sort of Forward Guidance can he construct to bring those yields down so the uk economy isnt harmed further as a result of that . In peripheral nations like spain and italy, the idea of growth affects bond yields in a different way. They moved to the town side because it makes the situation slightly less desperate. T one other thing, i just want to mention to you on the berlusconi front, europe is alive with talk that his eldest daughter might be the anointed heir if he is confined to his house and dismissed from Public Office for five, six years, who knows, that his eldest daughter marina could take over. Did you see there was a poll in france on nicolas sarkozy. Now the most popular politician even though hes not in office. I was wondering who the competition is. Francois hollande. Carla bruni. Kre turned up like rock stars to a concert. Rake sick santelli and the santelli ex chain. I would like to welcome the ceo of Zions Bank Corp. Thanks for taking the time. Thanks very much. Here is my assumption. My assumption is i think rates may continue to rise. Now, if i was an investor and you were trying to talk me into investing in Zions Bank Corp Regional Banks in a rising rate environment, give me your best arguments as why thats a good idea . I think generally Regional Bank tend to be asset sensitive. Their loans will reprice faster in a rising rate environment. Thats particularly the case with us. We may be the most asset sensitive Regional Bank in the country. We figure that if Interest Rates were to rise, say, 200 basis points, 2 percentage points, that will increase our intrasensitive income, which is largely our net interest income, by about 15 to 18 , and that all drops to the bottom line, and that becomes even more pronounced if rates rise higher than that. So it becomes a very great kind of an environment for us to operate in. It also means we have probably a little better what about the other side better loan growth as well. During the crisis, of course, many banks, includingier o ieyo had to borrow some money. Have you been able to capitalize on what had been a major drop of Interest Rates to refinance and is that unique to zions bank or have most Regional Banks ended up doing enough while the window was open . Well, weve been doing a lot of refinancing of both debt but also preferred stock. We have a lot of preferred stock that has been refinanced, repriced, and that will help a lot. We still have theres still opportunity even with rates where they are today to do more, but i think all banks have been working pretty hard on refinancing higher cost debt and preferred. Well, harris, one of the big topics is the taper. Lets dig down into something very specific, the purchases of mortgagebacked securities by the fed. Now, im not sure, but what is the portfolio of mortgagebackeds in your bank and do you see that as a dark spot that investors should Pay Attention to for banks as a whole with regard to the potential for these mbss to fall in price and rise in yield . Yeah, i think we think thats going to be a very big issue for the industry. I think its a risk that, probably the biggest risk in the industry right now. One that we ourselves think if you cant really manage it, maybe you shouldnt be taking it. And so in our case we have less than 1 of our earning assets through mortgageback the skurds. About threequarters of 1 . That tends to be much higher than that for the industry. I think the median for Regional Banks is probably closer to 5 . We think that you get a couple hundred basis points increase in the yield curve across the curve, and thats going to wipe out 200 to 250 billion of capital potentially in the industry, and a lot of that is going to be in some of the larger banks where under the new capital rules, its going to count against their capital. So its a big deal for the industry. Now, we dont have much time left, but harris, i totally agree with everything youre saying and i think it makes zion bank very interesting for investing purposes, but i dont think were going to see a quick rise of 200 basis points, but it doesnt dismiss the idea that from a variable rate loan position, you are well positioned. Do you think well see an increase . I dont know when its going to happen. Nobody will know that. Rates will be low until theyre not, but things could unwind i think faster than most people think, and, you know, i think its playing chicken with the yield curve to be out i dont disagree. Harris, im out of time, but thank you for making your presentation and the viewers and listeners, i would think that zion banccorp should be on your list of banks with potential upside. A lot of people eger to see that one happen. Lets bring in bob pisani with a look at whats moving at the big board. We can tell you not much green. Something interesting has happened and i havent heard this in a long time. Traders talking about europe. Europe fell off the cliff. Nobody has investing in europe. They pulled hundreds of millions of dollars out of europe and recently weve seen money going back in. I think its a nascent story thats developing. I want to show you whats been happening in the uk. Weve had excellent economic reports overall. When is the last time we saw this . Manufacturing and car sales and home prices and retail sales, all of them were a little better than expected. The european stock markets are also doing better. Here is something you want to watch. Look at the ezu, the big Exchange Traded fund for europe. If you only want to own one stock for europe, this is the one you own. Its sitting a the a twoyear high. Its down today but on friday it hit a twoyear high. Money for first time in a long time has been flowing into this exchangetraded fund and other european funds. This really bears watching. Its small, but i think it could become a big story and take money away from the United States if the data keeps supporting that kind of effort. Meantime, we got a kind of split market in the United States. Look at the retailers. Michael kors and fossil come out and say business is great. They raised the estimates. American eagle says business is not great and look at the teen retailers, abercrombie, American Eagle, theyre in terrible shape. Shoes and jewelries ay is hot. But the teen retailers are fairly tepid. We know about the global xh commodity market, its been awful. Here in the u. S. , theres also some pockets of strength. Look at the brewers, for example. Not absolutely amazing results for molson coors but it was good enough and better than anybody anticipated. Companies are able to pull out profits on this. This is another sign, block at a molson coors, another sign of a company these able to eke out profits even though they specifically said overall demand was weak. Theyre still able to do it because of the cost cutting efforts theyve been doing. Common thread. Thank you very much, bob. Here is a story weve been following closely at cnbc. The fbi is worried that some reporters may be getting their hands on u. S. Economic data early and passing that information onto traders. Eamon javers has been all over this story from the beginning. Joins us this morning from washington. Good morning. The wall street journal is advancing the ball on this story today reporting that an inspector generals report from the Commerce Department is revealing that there could be flaws with the way the government tries to protect Economic Data thats market moving before its embargoed time release. The question here is whether high speed media organizations who have access to this information before hand have any way around the black boxes. Take a look at the findings here from the wall street journals reporting. They say that the report shows that there are flaws in the system to prevent this Economic Data release. They also say the report is part of a broad Law Enforcement inquiry and that the fbi in quantico, virginia, tested these socalled black boxes, found ways around the security, including something as simple as simply running a cable around the black box and getting access to that information. The fbi is said to be looking into this because theyre said to be concerned about trading ahead of market moving Economic Data. The big question here is whether or not anybody actually did this. The fbi according to the journal was able to discover that its at least possible. Whether anybody did it is an entirely different question. They say no evidence of that as of yet, kelly. But certainly an important story to follow, eamon. Thank you so much for bringing us the laetest. Whats the best place for you to put your money . Maybe this chart will give you a hint. Take a look. And well take a closer look at which retailers are moving in the right direction when we come back. With fidelitys options platform, weve completely integrated every step of the process, making it easier to try filters and strategies. To get a list of equity options. Evaluate them with our p l calculator. Maybe this chart will give you a im greg stevens, and i helped create fidelitys options platform. Its one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Like carpools. Polly wants to know if we can pick her up. Yeah, we can make room. Yeah. [ male announcer ]. Office space. Yes, were loving this communal seating. Its great. [ male announcer ] the best thing to share . A data plan. At t mobile share for business. One bucket of data for everyone on the plan, unlimited talk and text on smart phones. Now, everyones in the spirit of sharing. Hey, can i borrow your boat this weekend . No. [ male announcer ] share more. Save more. At t mobile share for business. [ male announcer ] you wait all year for summer. This summer was definitely worth the wait. Maybe this chart will give you a summers best event from cadillac. Let summer try and pass you by. Lease this allnew cadillac xts for around 399 per month or purchase for 0 apr for 60 months. Come in now for the best offers of the model year. So, if youre sleeping in your contact lenses, what you wear to bed is your business. Ask about the air optix® contacts so breathable theyre approved for up to 30 nights of continuous wear. Serious eye problems may occur. Ask your doctor and visit airoptix. Com for Safety Information and a free onemonth trial. Coming up today on halftime, talking tech. The man who put the hurt oni bm and give you all the plays. Plus goldman is out with a list of the 40 most overpriced stocks. Well reveal them. First solar has had a stellar sixmonth run. Will earnings keep it going or derail that rally . Well debate that at noon. Thanks very much. Two retail names heading in opposite directions this morning. Michael kors shot up sharply after better than expected quarterly results. Same store sales rose 27 . Shares of American Eagle are dropping hard after they issued a profit warning for the Second Quarter citing weak sales and low margins. Joining us now on the program, cnbc contributor stacy wid litz. Good morning. Good morning. I guess its already well into the afternoon in london. This story here has a lot of people asking how much more aggressive the teen retailers will have to be in Closing Stores . Thats the key here is that were really we overexpanded over the past five to ten years in teen retail and in a lot of spaces. So, you know, theres not a major amount of store openings going on in the space, but i think we need more closings. Thats really the key. A lot of these brands tend to start looking the same and theres not enough to go around. So today American Eagle said that their comps will be down about 7 versus expectations of flat because the environment is incredibly promotional. So they have to mark down and keep up with that. Stacey, with American Eagle shares down 16 , that would suggest investors see no reason to stick around for the duration. What is the case for buying into these shares . Do you just have to wait until they get so cheap or the company has closed enough stores or i mean, how can you at this point look at them and see any kind of opportunity then . Sure. Well its interesting, American Eagle has been one of the more consistent in the space where as aeropostale has really missed on the basics and fashion mix. So this just shows you that, again, the space is starting to look a lot of the same. I think its also under pressure from the fast fashion retailers and also potentially from gap. So i think you want to see a lot of closings in this space before you really get excited about it, and the space is not for the faint of heart. Its very volatile. Stacey, on the kors front, i know you wrestled with whether or not to get in front of the earnings saying that the stock made you not want to be too greedy. Would you have done it differently now . The stock was up 10 . There was some data that came out that said business wasnt great so there was an opportunity there. I think once the stock runs up into the call, the street was very positive going into the call. You know, to jump in front of it, probably not the best idea, but in terms of a longterm holding, i think this story is this, there was a 29 spread in the samestore sales number between kors and the coach number that was just reported. That is massive. So i think its a market share story on top of the fact that accessories are just hot. Thats what women are spending on rather than apparel, and that will continue. And kors is just hitting a home run in terms of the design. I remember a few quarters ago they were posting 40 u. S. , mid20s now. You still think theres some runway there i assume . I do. And most interesting is if you look at the european business, sure, north america was up 25 which is outrageous. Europe was up double that, less than 10 of their business is over here in europe, and i can tell you that when you go into a Department Store here or a retail store, its the best brand in terms of price, fashion, tradeoff here and they, unlike a lot of other u. S. Brands, have come across the pond and only increased prices about 20 in line with basically the tax that you pay here. So theyre not going after the consumer and charging 50 more. I think in europe its possibly one of the biggest opportunities and thats why they recently doubled the estimates for stores store potential in europe. Yeah. Stacey, its a great point. Say hi to the newsroom while youre there. I will. As we watch the retail space this morning. Small is back in style after more than two decades of declines. Mom and pop manufacturing is back. We bring you some of the most successful smalltime shops in the country in just a moment. Come to the lexus nc] golden opportunity sales event and choose from one of five lexus hybrids thats right for you, including the lexus es and ct hybrids. This is the pursuit of perfection. Lecocacola is partneringg. With nashville parent and charlotte parent magazines, along with the mayors of those cities, in the fit family challenge. A Community Wide program that offers free classes that inspire families to get out, enjoy moving together, and even track their activity online. Its part of our goal to inspire more than three Million People to rediscover the joy of being active this summer. See the difference all of us can make. Together. So you want to drive more safely . Of smart. Stop eating. Take deep breaths. Avoid bad weather. [ whispers ] get eight hours. [ shouts over music ] turn it down and, of course, talk to farmers. Hi. Hi. We are farmers bum pa dum, bum bum bum bum i was born in a small town and i live in a small town welcome back to squawk literally out here on the street. Taking a look at mom and pop manufacturing this morning after more than two decades of closing shop because they couldnt compete with the lower cost of goods made overseas, small factories are back and for our made in america series we go to phil lebeau. Phil . Woodways in michigan has never been busier. With 40 employees working two shifts, woodways makes custom cabinets for homes and offices. This year sales are up 20 . A far cry from 2007 when suzanne and her husband bought the bankrupt company, carved out a new business plan. We can compete globally because the customer can call us, we can do a design and have it on this machine in an hour. Other small americans shops are finding they can not only compete but actually beat larger low cost foreign manufacturers thanks to machines like these. Theyre cnc machines, computer programmed to cut specific designs and parts. For years they cost well over 100 grand. Too much for Many Small Companies but not anymore. New cnc. Com in holland, michigan, sells cnc machines for 40,000. Demand is so strong, its expanding, hiring workers. The key to its success there are components from germany, italy, japan, stuff from china. What were trying to do is cherry pick the very best components. Automation and robotics, once feared by small manufacturers, now allows them to do more, sell more, and add more workers. Still, job growth for small manufacturers has been tepid because they need to stay lean. Existing small manufacturers have learned that they have to sometimes turn on a dime. Suzanne says her Cabinet Company is proof, small manufacturers can adapt and grow. We come up with new ways to use the cnc, new ways to design cabinets, and that inventiveness is why the jobs can be here and why manufacturing can be here. Phil lebeau, cnbc business news, zealand, michigan. Kind of puts that ism into perspective. We still have a ways to go when we see the u. S. Manufacturing employment below 12 million today. It peaked in 19 i think 79 at 19. 5 million. Totally different era. Unbelievable. Big news yesterday, the founder of amazon, jeff bezos, buying the Newspaper Publishing business of the Washington Post. Cost him 250 million. Our squawk on the tweet question today, jeff bezos bought the Washington Post so that he could what . Tweet us squawkstreet. Well get some of your answers after this break. I have copd. If youve got it, you know how hard it can be to breathe and man, you know how that feels. Copd includes emphysema and chronic bronchitis. Spiriva is a oncedaily inhaled copd maintenance treatment that helps open my obstructed airways for a full 24 hours. You know, spiriva helps me breathe easier. Spiriva handihaler tiotropium bromide inhalation powder does not replace fastacting inhalers for sudden symptoms. Tell your doctor if you have kidney problems, glaucoma, trouble urinating, or an enlarged prostate. These may worsen with spiriva. Discuss all medicines you take, even eye drops. Stop taking spiriva and seek immediate medical help if your breathing suddenly worsens, your throat or tongue swells, you get hives, vision changes or eye pain, or problems passing urine. Other side effects include dry mouth and constipation. Nothing can reverse copd. Spiriva helps me breathe better. Does breathing with copd weigh you down . Dont wait to ask your doctor about spiriva. In a we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. So, if youre sleeping in your contact lenses, what you wear to bed is your business. Ask about the air optix® contacts so breathable theyre approved for up to 30 nights of continuous wear. Serious eye problems may occur. Ask your doctor and visit airoptix. Com for Safety Information and a free onemonth trial. Lets get to squawk on the tweet. The founder of amazon jeff bezos buying the Newspaper Publishing business of the Washington Post for 250 million out of his own pocket. Brings us to this more than agencies squawk mornings squawk on the tweet. Tom writes so he can rekindle the papers fortunes. So he could read more than 20 articles a month without subscribing and james writes so he could fill the classified with amazon ads. It will be interesting. Some guests saying get ready to say goodbye to the physical newspaper. If anyone is going to do it might be bezos himself. Thats one of the things they will be talking about on the documentary tomorrow night. The future of media, how t t twitter has changed everything. Twitter revolution premieres tomorrow night at 9 00 p. M. Eastern. Another tweet issued by bill gross over at pimco on the job openings data out at 10 00 a. M. Saying they dont validate 200,000 payroll prints, more like 125,000. Taper may be delayed if yellen has a big vote. A lot of people saying bill gross hoping that will be delayed given their portfolio. Yes. Interesting what byron wean told us earlier today, worries about the second half, too many people making too much stuff for demand. I love how chill everyone is out here. Can we get this it is great to see. Look at that. Its like welcome to august where people on wall street are like, you know, just hanging. Taking it all in. Good to see all of you guys. Lets get back to headquarters, scott wapner and the halftime. Carl, thanks. Welcome to the halftime show. Right there on the wall is where we stand. Its a down day on the street. Nearly a triple digit loss for the dow, s p and nasdaq down as well. The 40 most overpriced stocks. Goldman is out with a list. We got our hands on it and well share it with you ahead. Too hot to handle. Is first solars sixmonth surge a signal to get or sell . First, our top story, tech. Nasdaq is at a 13year high, apple and facebook keep climbing, but ibm gets a downgrade and the sector is still one of the underperformers of 2013. So what