Plus cisco earnings due out any moment. Jon fortt, eric, mark having instant analysis of the numbers and the expectations call for 51 cents of share on revenue of 12 billion. We want to kick off with bob and todays pullback. Reporter depressingly similar pattern again today, maria. Opening, and markets just move down. More times than not since august, putting up the dow, thats whats happened. Sometime in the midday, sometimes, weve had a rally to move to the upside. But not today. Basically ending not too far from the lows of the day. Has the market lost its bid . Put up the full screen. Higher rates clearly a bit of an issue and clearly a bit of a problem overall. However, i would point out that the u. S. Has seen stock weakness while we have seen strength in europe as well as strength in emerging markets. Look at the Global Markets for the month of august. U. S. Has usually been a leader for the several month, but now is a laggard. Brazil, germany, china, all notably outperforming the u. S. Emerging markets have had a terrible first half of the year. Chinas strength is sucking in some commodity stocks. They have been big performers on the plus side this month. So steel and coal and copper stocks these are exchangetraded funds all have been to the upside. What are higher rates doing to the stock market . Theyre killing the homebuilders. Taylor more son recently went public, had the earnings out. Orders below expectations. Theyre a highend builder. They said higher rates didnt hurt them. But the orders were not as strong as they thought. You can see that stock is down 8 . Taken all of the builders with it. The etf for homebuilders is at a low for the year. This is a lossmomentum group. Department stores, a tough day. Macys came out. Sales were well below expectations. The analysts got this one wrong, again. I think a little bit of laziness on the part of some of the analysts. They should have better models. A real disappointment. It dragged down most of the Department Stores. Maria, volume has been painfully low, as you noted today. Theres very little economic or emotional involvement in the markets. And they have a phrase for this its called august. Id be careful about making a lot of dramatic pronouncements based on the painfully low volume weve been seeing recently. Back to you. Yeah, i agree, bob. Thank you so much. Joining me now to talk more about the markets and investing is nathan and peter. Gentlemen, good to see you. Do you agree, we should ignore the volume numbers . It doesnt necessarily indicate a lack of participation, but really just a lack of overall participation because of the summertime . Nathan . No, i dont think it has anything to do with volumes right now. I think were suffering from taperalisis. Weve been told well get taper. Two out of three economists says well have a taper in september. And then the Producer Prices come out. Today, what we have is a difference of opinion. The bond market hardly budged. They want 2. 7 on a 10year treasury and the stock market said, wow, we may not be able to raise our prices, and we could have deflation. The fed doesnt have a solution for that. So i think we had a very big difference of opinion. Id like to see us do taper or not do it, but talking about it seems to be doing nothing good for stocks. Peter, when do you expect the tapering to begin . Well, i think whats going to happen is as we approach september, we are going to have more intense focus on this discussion, maria. Much more than weve had, say, this month. And this will be a buying opportunity. I could see the dow trading anywhere down 100 to 300, 350 points. During that time, that volatility which i would call benign volatility, because thats going to happen thats the time to jump in and buy your favorite stocks. I do think the fed will probably start to take the foot off the gas at the end of september. Even if they dont, they will be such discussion, such focus on this, it will be the top priority of every analyst and Portfolio Manager out there. Thats the time to take advantage of it. So what would you be doing now then, knowing that the market has been trading down . Were at about onemonth lows. How do you want to be positioned, peter . Well, we have our clients positioned just the same as we were about a month ago, and what im saying is, as september approaches, we are going to see more dips. Buy your favorite stocks. Get in to risky assets at that point. Because, maria, we also have to focus on the fact that higher Interest Rates i know many have said this, but i think it bears infinite repeating higher Interest Rates will be a sign that the economy is picking up. Twothirds of the economists out there right now are saying that the fed is going to taper. Well, logic dictates, then, that twothirds of the economists out there are saying that the economy is going to pick up. So thats all very positive. I do not applications are around 50 from april, though, maria. Go ahead, nathan. Mortgage applications are off 50 from april. So somebody is noticing Interest Rates. Improving all that much . Thats right. Well, what the rate also have an effect, without a question. That that doesnt really impact, i would say, the general earnings of companies. What im talking about are stocks. Companies right. I know theyre driven by the consumer, many of them, but still there are companies, even this month, on light volume. Youve seen Many Companies trade up in double digits. Thats because their earnings have been very strong. Their outlooks have been adjusted upward. And thats factoring in a pro forma tightening by the fed. Im glad you mentioned earnings, because cisco is out. We want to get to jon fortt to go through the numbers. Jon, what else can you tell us . Reporter the numbers look solid, maria. Revenue came in at 12. 4 billion, what about what the street was looking for. Net income at 2. 8 billion which, again, is about in line. Looking for cash. Let me give you a little insight into dividends and stock repurchase. Cisco paid Cash Dividend of 17 cents per common share, about what youd expect. Repurchased 47 million shares of common stock. Last quarter, they repurchased 41 million shares of common stock. Were going to have to wait for the call to get a lot more detail on guidance. But at this point, the numbers seem pretty much in line. I also want to get the gross margin number out of here for you. All right. We want to get to some analysis on this, and join eric from Jmp Securities and mark. Good to see you both. Eric, your reaction to the numbers . Well, i was hoping that we would see some better upside. Cisco was pretty upbeat on their last release, and weve seen good indicators from a number of other vendors. So i was hoping we would see a little better upside on the revenue. The companys done well from a margins perspective for a while. So im not too surprised on that. But in general, i was a little bit more upbeat than what he had just mentioned. And youve got a hold rating, correct . Thats correct. Mark, whats your take on the numbers . I think if you look at the details, and i think the margins will be key, it shows the company is much different than it was even just a year ago. Theyve actually quickened their decisionmaking process, theyve improved the sales execution, and theyve also heightened their ability to gain market share. So i think it all looks pretty good so far. I think on the call, the view is that the blue bill, a key indicator, will be above one, and they saved a lot going into their conservative seasonally slow october quarter. So i think the results are pretty good, maria. So the results are pretty good from your standpoint. Cisco became the 24th most shorted stock in the dow. You have an outperform rating. Why do you think theres so much negativity around it . I think if we look at it from the stock point of view, its had a really hard bounce from 20 all the way up to here to 26, maria. So i think people are thinking, whats the next step function that will drive the stock higher . And i think a lot of that will be accelerating topline growth and improving margins. In our view, it will be a steady progress towards a stock that will appreciate from here on forward. But the big move has been made already, so i think some are betting against that. But i think the view is that the execution is improving. It is a much Better Company than it was a year ago. And, eric, from your standpoint, the biggest headwinds facing cisco right now, what are you expecting to hear on the call . Well, the key for cisco is how effect everly they can transition effectively they can transition the company. The goal is to become the number one i. P. Company and they want to expand in adjacent markets. I think the key element for investors is how effectively theyve been able to expand some of the product lines that theyve been theyve entered into in the last couple of years. Things Like Data Center networking and collaboration and Service Provider video. Things like that. It needs to be a key driver in terms of generating the growth that mark had referenced there. So in terms of in terms of margins, do you think that the margins have disappointed here, or are you pleased with what youre hearing . In terms of the margins, directionally theyve been moving in the right way. I think, however, investors there are some that want to see that want to see sharper rates of improvement in both Gross Margins and operating margins. Some of that is mixed, which they will articulate on the call. And some of that is just something theyre seeing rapid growth in the data center business. But overall, we do think if you think over the next 12 months, the margins will directionally move higher. And we did a survey with investors, maria, saying whats the most important thing that will be the driver for the stock Going Forward . Its less about the top line. Its all about margins. And what about what about the dividends, eric, in terms of new money to work, paying back shareholders here . Well, i think that the stock is pretty well reflected the increase in dividend from that they did last quarter when they went to 17 cents. And they just made a fairly large acquisition in cash of a security company, sourcefire. I would be surprised if we have much opportunity for them to take up the dividend from here anytime in the relatively near future. All right. We will leave it there. Gentlemen, thank you very much. The stock down about 3 right here. Thank you. Well keep watching it. We appreciate it. More on todays Market Action coming up after the break. It was the tweet heard round the world. Why the world wide web, billionaire investor bill icahns tweet about apple yesterday sent the stock soaring, his investment soaring into the tens of millions of dollars. Is tweeting the way of the future . How dangerous is it for the free and fair market . And adam richman has a new restaurant called fandemonium. That and a lot more coming up on closing bell. If youre like me, youve been working youve been working like a dog all year. But you dont need to camp out til labor day to reward yourself mattress discounters labor day sale is on now rest those tired bones on a queen size sealy gel memory Foam Mattress for just 497 get 48 months interestfree financing on the entire tempurpedic cloud collection. But this sale wont last long mattress discounters welcome back. The market falling for a third day in a row. Over to josh lipton for the movers and shakers. Reporter bigname movers in todays session. Lets start with those in the red. Deere, maker of agricultural equipment, reporting quarterly profits that beat solid sales of tractors, harvesters, but some analysts, including those at william blair, think Third Quarter results mark the peak here. Expect farmers to cut capital spending. Also macys posted Quarterly Sales and profit that missed. What analysts wanted to see, by the way, the first time the retailer has missed on the earnings since 2007. Mariotte, also moving higher, late in the day. Dow jones reporting it was close to a deal to sell three hotels to Abu Dhabi Investment authority for 800 million. And now view for house hold, debuted on the nyc, priced at 23 per share. Finally, apple keeps trucking higher. Yesterday, of course, carl icahn revealing he had a large stake in the company. We learned today that leon coopermans Omega Advisors also took a stake in apple. Last quarter. Not everyone, though, is an apple fan, though. In 13f, we heard julia robertsons Tiger Management cut its stake in the company. Maria, back to you. All right, josh, thank you very much. The tweet heard around the Global Markets yesterday was from carl icahn. Taking to twitter to say he has taken a big position in apple. The stock started its climb higher and continued that climb today. As you can see, 498. 50. It did cross 500 earlier today, but closed below that. The securities and Exchange Commission says it is okay to use social media for disclosing material information, but does this type of hyped disclosure take it too far . Ron insana says its opening a pandoras box and could lead to market manipulation, but dave says its the new reality of 2013. They join me now along with peter costa of empire executions to get ontheground perspective. Peter, i want to kick it off with you before i talk to the pros and cons about this. Do you look at tweets in terms of in terms of your clients . Do you focus and put importance into tweets depending on what it is . Maria, im going to say, you know what, i might be old school, and that is why i dont look at tweets. And one of the things i think well probably discuss that, i think it is opening a pandoras box. Understanding that new media is very important as far as getting information out, but i dont think the individual or the private investor is really being served properly with that kind of information. I think that thats more you know, Something Like that yesterday, you look at the trading in it, that stock rallied very quickly after carl made that tweet, and theres no way humans could have reacted that quickly to it, unless theyre following carl icahns tweet, and thats it. Right. So theres algorithmic programs that search for the key words that will send a stock moving, and thats exactly what happened in that stock. No individual investor really i mean, benefited from that. Ron, whats the pandoras box thats opening that you want to talk about . Well, maria, we have the activist trend now that in some ways reminiscent of the corporate raiding trend of the 1980s, and it included carl icahn and a host of others, irwin jacob, not the ceo of qualcomm, a different gentleman, all of the guys out there trying to force companies to either get rid of the cash, part with certain businesses or recapitalize. They did it to have leveraged fashion in those days. Now you have corporate raiders coming after companycashrich companies. In the 80s, they would whisper in our ear, not a turf thing, and the reporter would tell you what he told you if he was an activist, find out whether or not the statements that were material and made to you made sense. Now they can go straight to the investing public without an intermediary having to figure out whether or not theyre just doing this to push the stock, theyve got you know, at the can pump and dump if they want to, although its illegal, but theres the possibility of that kind of risk where investors can get taken for a ride with no inbetween, no buffer in between, you know, the person who puts out that type of information and the person on the other side of the trade. All right. Dave, you say this is this is the new reality. Explain. Well, its not only the reality, i think its a huge net benefit to investors. I mean, listen to what rons saying. Rons saying, well, if we in the media arent here to stand in between, then it cant be good enough information. This is about rapid flows of information. I mean, this is publishing, right . No, its not. The tweet button is a publishing mechanism. It depends on intent. If you look at his tweet, all he said, weve taken a large position and we think the company is undervalued. Is somebody at cnbc going to check that out and say, no, its not. Absolutely. Well, certainly, we would. You know, pardon me for using this eck precious, but in the old days, you had to check on the 13d filings to see if a company had a material how is a tweet different fundamentally from icahn, from icahn enterprises, where he said hell talk officially, how is that different from any filing with the s. E. C. . How do you know hes not selling it as soon as hes putting that tweet out . In fact you dont know that with any investor. I mean, its all about so are you saying there should be legislation around tweeting, or no, i didnt say that. No, but i thought that if you are an investment manager, youre not supposed to be out there tweeting. I mean, as i understood it, if you are i mean, certainly for a Public Company ceo, but i guess it doesnt apply if you are running money, if youre in charge of assets. I dont think it should. I dont think anybody should be talking their book and tweeting at the same time. That sets up a dangerous scenario in which how is that different than than anybody can i coming on cnbc and talking about what theyre managing . Ask questions and probe a little bit more deeply than just everybody taking things at face value. Sorry, peter. No, i just want to tell you something, that as far as the s. E. C. Approving what happened yesterday, i think once they look into it a little further, it wont be an acceptable practice. You know what, if youre advertising a position through an advertising medium, which twitter can be considered that, thats illegal. There are certain restrictions on what you can say to potential investors thats what i thought. Theres a lot of things that [ overlapping speakers ] those are artificial distinctions that dont exist. What needs to happen, it needs to be we need to know what the distinction is. You think its an artificial distinction. To me, thats an advertising medium. How many people go on twitter and advertise what theyre doing . Its an advertising medium. I believe it is. Its absolutely Money Managers that come on anybodys business show are advertising two things. Number one, this is what i own, and i think you should buy it, because