Transcripts For CNBC Squawk On The Street 20120919

talk about that in a second and europe as wellas we have bond auctions beginning to watch and more movement out of spain. you can see moderate green arrows from the ftse, the cac and the dax. bank of japan boosting its asset purchase program by 10 trillion yen sending the nikkei to six-month highs and on the heels of the ecb and fed. will this help the economy? >> the iphone five is good, but is good good enough to keep the market at new highs? we'll have a firsthand look at the new iphone later on in the show. the changing of the guard over at goldman. cfo david viniar is retiring and harvey schwartz is in and how does he lead the economy in this new era of banking. first up, less than a week after the fed's qe 3 announcement, the fed becoming the first to boost the monetary easing. the move to boost the japanese economy helping to send gold to six-month highs and the nikkei to four-month highs and it's all wrapped up, guys with the fed in a slowdown in china in the territorial dispute between japan and china. the bank of japan says it's only about the data, jim, but we'll see if that's actually true. >> the world is slowing. fedex told you that better than anyone. fedex has the pulse. there are many things being done trying to reverse the world being slowing. obviously, these all have side effects that maybe no one wants. gold, i think, can go to 2,000 in this environment. i think its currency meaning everyone wants the currency to come down. japan is a democratic issue. >> it's too many old people and not enough young people working. it may depend on the data, but things could get much worse very quickly given the dispute going between china and japan and some are saying that the impact on japan could be worse than what was seen from the earthquake and there was even talk from a china researcher tied to the ministry of commerce that perhaps china should actually jump jgbs, japan government bonds n order to enact some sort of sanction. >> it's a frightening prospect. of course, it's something we've often heard when we talk about relations between u.s. and china given how much debt china also holds and if you do that, you hurt yourself if you're chinese because the value goes down. japan has no shortage of issues on the largest context. my friend has been on many times and hopefully will be on again in a few weeks. we'll have him talking about japan and the keynesian end point when they get to that point, in his opinion, at least, revenues don't even meet. tax revenues don't even meet debt payments. it's not that far off. others say it is nonsense and they have proved at least the critics wrong for a while. >> a lot of questions about whether or not whether or not this will be how it will end with bernanke. this one with demographic issues like japan's, testing the relationship with china. it's not unthinkable that ten years from now the prospects for recovery is still fading. >> 23 years ago, tokyo was king of the world. they were going around the world buying up companies and everyone thought that the tokyo stock exchange could go up forever. 38,000. this is a remarkable time and they couldn't reinvent themselves anda it's a stagnant country. i know this sounds pollyannaish, but when i look at the world, europe, asia, india, brazil, i come back. stable leadership and the country's got some growth and the country is the united states. >> and we don't have the demographic. >> no, we don't. where they are selling more adult diapers than baby diapers. >> kimberly-clark. >> the aging of this country will accelerate. >> we're selling fewer baby diapers, let's be clear. there are fewer babies being born. >> right. it's a declining population as well to a certain extent and the dramatic age -- >> right. i think that our household formation was a cyclical decline related to the recession. i wouldn't be sur poised if the 1.85 children per house, i find it hard to reconcile that. it goes back to two and we see a gradual choice in housing. people were living with their mother-in-laws, and i had that experience. it's tentative. >> now you're in your car, you weren't living with your mother-in-law, you were in your car. >> live inning my car with a couple of kids and it wasn't -- an suv, that would have been an svu situation. reverse the letters. >> if everyone is debasing their currency, is anyone debasing their currency? >> that's a great question. >> a race to the bottom. >> the dollar is at a one-month high a week after the fed. >> stability matters. think about the issues that we're talking about, japan and china. i mean, in china we're talking about where's waldo? where's the leadership? in japan, since 1934, is the greater east asia that's breaking down? i mean, wow! this country has an leshelectiod it seeps like it will happen in november and there isn't a war going on. this is positive. >> we're connected into all of those events you just described. if tensions between china and japan escalate it's not as though we're not going suffer. yes, we are a safe harbor, but the marks are linked and if they start to sell jgbs in a big way or japan has a fiscal tsunami of some kind -- i shouldn't use that word, excuse me, a bad time of it fiscally, that will affect us. >> this isn't nan king -- come on, it's a hot war, it's a cold war, i think we can handle it. >> the morgan stanley note this week that talked about the global economy being in a twilight zone. we are all susceptible, a tsunami right now would not be good. or even here. >> let me completely derail you, what was your favorite "twilight zone." eye of the beholder --? it was right at your fingertips. that's just remarkable. >> mine was the one with the stop watch, you know? >> right. >> let's talk about apple because it has been about seven minutes and we haven't brought it up since then. the morning-after shares of upon apple closed above $700 for the first time ever. the reviews for the i phone and most, in fact, are positive. apple has taken a great product and made it better. cnet says you're going to be shocked at how light this phone is and "the new york times" david pogue says the camera is among the best ever put into a phone. these are all fine and good. they're nice reviews. they're fabulous reviews. >> "usa today," my favorite paper because it speaks in english says there should be lust for the phone. i never -- >> i don't know what that looks like. >> i never sought lust from it. it's still in the end, a device, but this is not a 4s, but maybe the 5. if i being get some lust going. >> hope it never comes to that, i i'm hoping. >> inanimate objects and lust. >> i can still touch that phone, right? >> yes. >> this is not like work a holiks where they do things with computers that is just disgraceful. i do think the idea of breaking your contract which is mentioned in the new york times to get the new one, even the idea of breaking a two-year contract to get this is on the table. i like this, but siri woke me up this morning, again, talking about lust and siri can book me a reservation and tell me last night whether the phillies won, rained out, i know, it is a complete lust issue and i'm willing to throw out other aspects of my lust to get that lust. >> lust for the iphone 5, does that equate to lust for the stock? he had an interesting call on "market watch" saying there was so much bullishness on the street for this stock, maybe we should be more skeptical than we have been of apple's run. >> i got an e-mail yesterday from a guy saying, remember research in motion. you started getting compression. >> yea. now i'm up to page 390 on the jobs book. >> excellent. and you know at a certain point it does run out. the vision of jobs has to run out. i don't like atock doesn't go up on good news. that's a sign that things are peaking and this is going up. david said something that stuck in my brain and i lost it over which was hey, if you haven't bought it yet, what are you doing? maybe it's too late. i'm coming around to that view. >> if you haven't bought apple. >> there was an effective rebuttal saying hey, listen, the stock is as cheap as it's been in the past. >> you could have said that $300 or $400. >> how about a pullback? remember when we had that window? >> i mean, it does, $660 billion market value. >> i don't know. i don't know, well, because it does become harder and harder when you're talking about those numbers. the dollar volume numbers. >> right, but you have verizon out there telling you you could get the phone cheaply. at&t. i'm schizophrenic, if not bipolar on the issue. i do believe i want 4g that works on a beautiful screen which means i have to go have verizon subsidize my purchase, if not sprint subsidize my purchase. there is a corner, there is a corner one block away from here that has verizon, sprint and at&t, and i suggest you camp out and see the demand for your own eyes. >> we're going to have reporters looking at some live. join me? >> why not? on the corner of wall street. >> it hasn't all been universally good reviews. the lightning connector has gotten mixed reviews and the maps app, actually, has gotten relatively negative reviews when comparing it to google maps. interesting. >> the picture, will it be one of those situations where i'm going to get a better picture of carl? i don't know, man. that is so, so -- can you really best that picture? we'll find out on twitter momentarily. >> we'll watch the stock once again today. meantime over at goldman, retiring as you may know, after 12 years on the job, 22 years on the firm and harvey schwartz has become the new cfo at the end of 2013. schwartz considered to take over when ceo lloyd blankfein will step down. he's helped the firm manage through the crisis and he will become a non-independent director of the board. david, i'll toss this straight to you. what does this mean? what is schwartz like? >> i don't know schwartz particularly well, he's well thought of and respected in the company. as the goldman way he's had a senior role in a lot of different parts of that company. they almost always promote with him for this position. this is a position that's been held for quite some time by mr. viniar, i think it was 12 years as company cfo and he's not going to be easy to replace and always communicated very well and clearly certainly with wall street. many of us will remember when he was in front of whether it was the senate or different investigating bodies during the financial crisis. his ceo, perhaps, did not perform particularly well, but mr. viniar was almost always on message and did a very good job. >> cordial, ran a great conference call. alwaysfeld his conference call, i don't know if you agree with me. >> and then you come back to risk management. in the documentary we did on goldman sachs a number of years ago. the company's ability to manage risk in a way and communicate within its ranks and understand and mitigate risk is -- was unrivals and probably still is. a lot of that is reports into the cfo. craig broderick, the guy that runs risk management is an important component of that, that's important. it doesn't mean it will change under schwartz, but they're the things to remember when you think about mr. viniar's tenure. >> blankfein, schwartz, cohn, what do they have in common? a challenge. >> oh, is that it? >> do you think that's why viniar is out? he had too much hair? what are we supposed to glean from that comment? >> i worked at the securities division which was a very interesting promotion because the securities division always considered lesser when it comes to reggor of numbers, better when it comes to schmooze. do we want to schmooze the cfo? don't know. >> here's the conspiracy theory behind this move and we don't know if it's true that viniar wanted to be ceo and blankfein said that he willemai ceo of goldman sachs and viniar saw this as an opportunity to move. that's one theory. the other is viniar is stepping down because the quarter will be good. >> conspiracy theories. traders are conspiracy theorists. >> it tells a smaller fraction. >> he's not old. he's done very well for himself, no doubt about that. anybody who worked at goldman sachs for 32 has likely had a pretty good run. >> the times says the stock is worth about $225. >> pittance. >> versus the people that had the republic. working at goldman is like dog years. we're discovering that so he's actually old in dog years. >> he's 200 years old. >> this is a guy and you've met him. he's a nice man, does that matter? >> i think it does. >> maybe. i don't know. >> he's a human face from wall street -- he was. he's a good guy. i know that that will light up twitter. i just said that one of the 53% was a good guy. >> i'm going to definitely retire. >> it was a .95 at tangible book value and they're taken 50% from the highs and increased liquidity enormously and goldman seems to be changing faster than many of its peers in terms of adopting to the new world. >> if they get swaps, there's a great article about swaps today. if you get the proprietary business listed in places and the last bit of vig that you have at goldman or any of the brokerage houses where you can still jam with points is gone. if everything is competitive, this continues to make me believe that while it trades at a fraction of book, book does go out of the elevator every morning and you don't want to see too many people retire at goldman. >> too many people? they lost an entire -- >> she's young, but many of them were encouraged but they've had an enormous exodus this year of senior people. over the last year, if you take a look 18 months and put down a list, but they do that. they managed to bring people up who are very talented, whatever talent means in that business. >> how about the way they change junior people? it's not fun. jim sable, we did a tribute to him right at the top. the nfl is sometimes not fun. you only get four years. you see players and the ray lewises enjoy it. you have the four-year period and you take the money and run. it's not fun. it was fun when i worked there. we weren't doing water balloons and stuff, but it was fun. i remember a game of paintball that we played. you could blow a guy's head off at that place and come out number one. no concussions. i'm just saying it was fun. >> yea. >> i know. >> i don't hear anyone say when a great time i'm having at goldman. do you ever hear that? >> no. i don't really care. >> that's true. -- >> if they're having fun. >> lennin always said -- >> it's sht at the top of the list, are goldman guys having fun. i'm worried about them today. i hope they're having a good time. >> that's a 1% issue. >> so concerned. >> meet the ceo of the company whose stock is on a tear up 150% over the past 12 months and later an exclusive of one of the titans of bond investing, and double linebacker will join gary out west. an interesting day setting up and we'll run through some of the housing data, a lot of it today when we come right back. sometimes investing opportunities are hard to spot. you have to dig a little. fidelity's etf market tracker shows you the big picture on how different asset classes are performing, and it lets you go in for a closer look at areas within a class or sector that may be bucking a larger trend. i'm stephen hett of fidelity investments. the etf market tracker is one more innovative reason serious investors are choosing fidelity. get 200 free trades today and explore your next investing idea. we're half an hour away from home sales. mortgage apps not too bad. up a tiny bit and architecture buildings at a five-month high back above 50. >> we need to see commercial construction, that's where there's been such a lag. only a couple of shopping centers built in the last few years. i still like the tenor of housing. do you want to hear kb homes on friday, but i come back to the idea that las vegas is coming back and that was the worst market. when the worst does better, toll brothers is saying florida is better, phoenix is better, california is better others will follow. atlanta is getting better and it's a case by case situation, but they're all positive. >> the housing market say percent of gdp and not what it used to be at the height of the housing market. so when we see this turn in housing, it's a great turn. it's optimistic and a data point that's positive. at the same time it just won't have the same impact on a giant turn in the u.s. economy, a broader turn. >> the non-conforming mortgages are very hard to get. a lot of buildings don't a phrase which is the way a lot of banks have been able to turn down loans to buy a building in new york for 2 million, excuse me for these large number, but new york is new york, and it appraises for 1.8, and that's how building sales keep getting killed. >> apartment sales. >> i tried to buy a commercial building and the interest rate was almost twice what it would be for residential. almost twice. >> melissa's point, we may be making a base, but it will be a low base to grow on. >> yes. it ain't going down. i was trying to open a restaurant which is a killer, bad business, terrible. >> just give us the money now. instead of you wasting it. >> did you have a name for this place in mind? >> yes. the fat mermaid. because i think i have the u.s. license and that's the name of the fabulous part that's next door it my house because of the war between the zetas and the big prison break yesterday in mexico clearly helped the values of my mexican properties. >> coming up next, cramer's mad dash to the opening bell and find out what he thinks about a particular stock going under his microscope and let's take a look at the futures as they head into the wednesday session. more "squawk on the street" straight ahead. at optionsxpress we're all about options trading. we create easy-to-use, powerful trading tools for all. look at these streaming charts! they're totally customizable and they let you visualize what might happen next. that's genius! we knew you needed a platform that could really help you elevate your trading. so we built it. chances of making this? it's a lot easier to find out if a trade is potentially profitable. just use our trade & probability calculator and there it is. for all the reasons you trade options - from income to risk management to diversification - you'll have the tools to get it done. strategies. chains. positions. we put 'em all on one screen! could we make placing a trade any easier? 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[ male announcer ] alka-seltzer plus liquid gels speeds relief to your worst cold symptoms plus has a decongestant for your stuffy nose. thanks. that's the cold truth! about four minutes before the bell this wednesday. time for cramer's mad dash. a day after the biotech index hits new highs. you're watching it again. >> yes, i've been finding love in hopeful places. this is celgene's fear. gilead is hepc, a gigantic and horrible disease that people suffer of. they're doing their best to solve that. they paid a huge amount of money that david faber highlighted as being questionable, but it seems to be working. this is bob mugan strutting his stuff. right here the wall street a bandzonned the stop because they didn't get the correct approvals in europe. what a buying opportunity. this looks like k-2 and everest that will take out that top. >> does this translate to pharma at large or is it only about biotech? >> think this is a dog eat dog world, biotech eating the dog that is old-fashioned pharma. ben bernanke driving it toward merck and willy, science it dragging it toward d stocks. >> very nice. >> we'll break down the trading action when "squawk on the street" comes back. up. a short word that's a tall order. up your game. up the ante. and if you stumble, you get back up. up isn't easy, and we ought to know. we're in the business of up. everyday delta flies a quarter of million people while investing billions improving everything from booking to baggage claim. we're raising the bar on flying and tomorrow we will up it yet again. like in a special ops mission? you'd spot movement, gather intelligence with minimal collateral damage. but rather than neutralizing enemies in their sleep, you'd be targeting stocks to trade. well, that's what trade architect's heat maps do. they make you a trading assassin. trade architect. td ameritrade's empowering web-based trading platform. trade commission-free for 60 days, and we'll throw in up to $600 when you open an account. with the opening bell there as the world continues to react to the move of the bank of japan overnight. the nikkei, the highest since may while we were all asleep, the dow on, of course, up 11 points yesterday. at the big board here, staffing firm on assignment celebrating its recent transfer from the nyse from the nasdaq. we'll speak to the company's ceo in a few moments and over at the nasdaq clinton global initiative. its annual meeting taking place in new york city september 23rd to the 25th. if you're driving in midtown in the next week or so -- >> good luck. >> yea. good luck. names we haven't gotten to. jim, you want to do autozone? >> i hear every single time reports it's disappointing on the revenue. no. this company is slowly taking itself private and it's another big buyback and they're in the sweet spot with the auto companies and with the autos. this fleet, 11 years old, once again, the stock was down big before the market opened and now it comes back. i don't want to short autozone. >> some comments out of 3m's ceo. it's commenting about the change in the macro economic environment. he says that the economic environment has changed and now it's 7% to 8% organic revenue target is a stretch target. so that just speaks to what has happened since he initially gave that target and that things are worsening. that's a headline here. >> no dow for industrial companies were at a very key level and they're all worried about fiscal cliff, the ceos and they're worried about china coming back. we want them worried because we don't have great growth. it is not like the stocks are expensive, historically. i think 3m, one of the great serial dividend boosters. it reminds me of fedex and it turned out the stock moved too much. i'm surprised it wasn't for sale. >> ceos have been cautious for a long time and the world gives them even more reason to be cautious now aboutic ii imakin bigger diseases in terms of capital spending with things that would create jobs. >> it is interesting that the guide down was something they thought they could do because it was a stretch. it wasn't that long ago that they laid out these targets. >> right. that's the issue. >> that is the issue. we're also watching, of course, the banks in terms of the changing of the guard at goldman sachs. not moving too much here, but the banks overall not moving and maybe that speaks volumes given the tremendous run they've had in the next couple of weeks. >> you have to consolidate. the world is not such a hot place and yet stocks are consolidating after a major overbought move. i bump into people all of the time and they all say the same thing to me. the reckoning is coming. the reckoning is coming. didn't that happen from december 2008 until march 2009? wasn't it the lincoln tunnel scene that he so greatly laid out in one of the best novels ever? >> it was a masterpiece. he will come out as the charles dickens of our area. >> is the shining coming out soon? >> really? >> holy cow! really? all work and no play makes jack a very dull boy. >> the cash you brought up on monday while you guys were out was the disparity between the economy and the market might be growing and the rest of the year given some catching up, right? some fund manager trying to catch up with the central banks, doing what they do. possible? >> yes. this is the whole problem as -- monday was viewed, i believe, as a price break for managers that allowed them to come in on tuesday and buy stocks and you talk about the world surface stocks. the question in the day. >> that was a very strange. they look okay today in terms of trading and names like ensco, nob and rdc and rowan companies and you see it about 356. there's a huge surge in all of these three stocks individually and the theory of the trading floor is that there was analgo come into the close and you see that spike higher and a fall lower and if you piece it together, what happened in the credit market the day before and what happened with with these drillers, it's just -- nobody knows if there is a connection, there probably isn't, but it makes you think. >> how did do you protect the people from the algorithms? >> i do wonder looking at the macro again about revenue growth and how strong or whether there will be any at all. i talked about the picked income markets we remarked on. record high yield issuance, and it does have an impact on equities, don't forget that, and you meant the top line growth as a company, but if youio can refinances, that's immediately accrete testify free cash flow and that gets into poem's metrics in terms of stocks and makes them cheaper. >> that's what bank of america is doing, calling debt and calling debt and calling debt. you mature it after at a lower rate. >> it is another reason that bernanke is helping things on one side and the equity markets in a strange way even without revenue growth because you have free cash flow growth. >> we spoke to the ceo of kimco realty on "fast money." he said that's exactly what they doing, as debt is maturing we're rolling it over to much lower rates. >> and a lot of companies are using that additional free cash flow to buy back stock and you're reducing the float and some creeping buybacks out there. >> take a look on a cablevision. i remarked on it last week. >> three and change. just the investment and on the canvas not that long ago. now they're raising money. kimco, and we had a discussion once about whether they were being amazoned at 15 and look at the stock at 20. >> not being amazoned anymore when you see ross stores and bed bath & beyond and whole foods which is expanding at this time. >> the dollar stocks being hit here. is there a trade up going on? >> kohl's this morning saying it's going to hire 10% more workers than it did seasonally a year ago. up 10%. jc penney with a big investor briefing led by rob johnson. >> the stock's been hot. no denying that the stock has been a rocket ship. >> let's check in with brian shactman, he's in for bob pisani. >> good morning, melissa. the dow might be going negative while i'm talking been it's only up about a point. the s&p did just go negative, traders talking about what is the next major catalyst in the market? post qe 3 or will we have to wait for the election or the next job report? we talked a lot about japan easing and i won't go into too many details and asia, mostly higher overnight, but i want to touch on europe because it's fascinating and two debt auctions in portugal and germany and the demand for the portuguese debt was more than the germans. the two-year note had its first positive yield move, just in terms of risk appetite and some of the underpinnings, interesting to make note of that. ubs being a call on the rails and downgrading from buy to neutral, csx and ump, saying they might be dead money and we talked about the volume in coal volumes and there's not a lot to run up with ubs and ump -- of course, ump is one that cramer likes. we want to talk about the banks and we might see more of this. some trust bbnt and huntington bancshares basically saying they'll do great because of their lack of exposure to europe and valuations are where they should be and suntrust is at a 60% run-up in 2012. all three of these have outperformed the broad are market and the financial sector and those are the hold or take profit-type calls. i want to touch on general mills and up about 1% so far and good profit and showing pricing power which is important and the yoplaity acquisition did use the numbers, but still the international numbers were much better than expected. jim, i did confirm that. it did go negative while i was speak, down about two points. >> union pacific had positive comments and a great summary of things. let's head to the bond pits and rick santelli is in chicago. >> i'll tell you what, jim, i find the credit markets fascinating in the context of the last fed meeting. if you look at a two-day chart, we're drifting lower in yields. what's interesting is the 13th was the day we had the statement last week. on that particular day, interest rates moved up about 14 basis points. since that day our close has been within a six basis point range from 180 to 186, a pretty tight range. look at a two-day chart of the dollar/yen. man a lot of this was expected, however, we did have a bump in the dollar yesterday about noon and around the bank of japan's statement time, but the bumps didn't last long so they expanded the asset purchase program 10 trillion yen, about $125 billion. why? because central banks have this herd mentality. they're all running and following each other. they're quantitative easing and my quantitative easing, look at the next two charts. he here's the dollar/yen, year to date. look at the difference in the euro versus the yen. a much different profile. it underscores how fx needs to rejirg for export economies and we want to pay attention to this. we'll go to david faber who has ali ba bushing b arc news. >> yesterday we found out in this ongoing saga involving yahoo just how much would be returned to shareholders through the sale of half of the 40% stake in ali baba and it ended up being quite a bit, perhaps more than had been anticipated given the filing that we got in the ak not that long ago from yahoo that had indicated that perhaps the use of proceeds from the sale of this 20% overall stake in ali baba. much would be used and help it with its growth in the fupure and the end of the day, no. in fact, i mischaracterized this as well as many others did along the way, assuming somehow that melissa meyer would actually be directing a lot of persons from the sale back to the company and not the shareholders. at the end of the day it didn't happen that way. the consideration you see right there and then you have taxes and fees and everything else. they've been trying to avoid that for complicated structures for literally years and they couldn't figure out a way to do it and they did it with the taxes paid. it's going to result in an additional $3 billion being returned to shareholders. some shareholders estimating it can come back in the way of buybacks in 2014 and. they repurchased $450 million worth of stocks. 3.65 billion and jim, nobody's made a lot of money in this name except if you were selling premium along the way, those people did a good job. it looked like a good trade for him early on, and at the end of the day, a lot of guys are in this now for the turnaround because we've had the stock. >> technology investors want growth. there really isn't anything more to it. google has growth. yahoo doesn't have growth. if we saw growth peck up, david, i don't care whether they took that money and burned it. we need growth. >> of course, this thing has an incredibly low multiple, melissa. j.p. morgan, they're talking about a $19 price target based on a multiple of two times estimated ebitda for 2014. >> that's tricky because sometimes stocks have low multiples for a reason. >> they do. in fact, the question is whether the new ceo. >> right. >> -- will be able to come up with a growth plan for this country. >> there is growth on the web and they don't seem to have it. it's not a zero sum gain. there are a lot of companies doing well on the web. >> let's send it over to carl who is here with a bell ringer. >> we are joined with president and ceo of on assignment, a professional firm on the life sciences sector, the ticker has been plastered on the floor all morning long, asg america, over 150% over the past two weeks. thanks for being with us. congratulations. >> thank you. >> welcome to the big house, as they say. we signed with a company with a major acquisition. we closed may 15th and it makes us the second largest professional staffing company in north america and we decided being listed on the nyse which is the most recognized trading floor was the right thing to do. >> you priced a second aero-friday. >> we did. >> it's expected to close today? >> it is. >> why now? walk me through the timing of that. >> we've been pretty clear with the shareholders that we uponed to have an orderly distribution of the shares that we gave the company and we acquired an a.p.e.c. system and a lot of the shareholders had been doing a lot of work and when we came to market it was well received. it was six times institutionally oversubscribed. a lot of debate about why the shares have done as well as they have. a lot of people say it's because firms like yours have chosen to differentiate themselveses. what is it about life sciences that makes it different from the overall job market? >> two things drive us, secular changes and the labor markets which are having employers want to use more contract labor than full-time labor. more importantly, we focus on only math and science skills. er respective of unemployment, there is a demand for math and science skills. we do everything from physicians to i.t. engineers and programmers and scientists and chemists and you just can't fine those people. >> tough to get. interesting company, one in four shares owned bien siders and peer, congratulations. >> thank you very much. >> look forward to see young around the block. >> peter demaris is on assignment. >> titleist golf pro, j.p. holmes. thank very much. >> thanks, carl. we have some breaking news from groupon and let's go to julia boorstin with the latest. >> groupon is getting into mobile pages taking on established payers like american express and square which is partly owned by visa along with paypal and google. the service called groupon payments allows small businesses using groupon's merge ants apps to a touch a swiper and it will charge 15 cents per swipe plus fees and one point for mastercard, vase and discover. square charges merchants a flat 2.75% rate per swipe. groupon is targeting restaurants, salons and spas, businesses too small to pay the small fees that amex charges and too big to rely on square's doggel. it hopes to lure businesses by processing payments overnight instead of the days that most credit card companies take. plus businesses get analytics on their transactions, while groupon gets details on how consumers shop. let's take a look at how groupon sales are today and they're down over 80% since the company's ipo last november. big question is when whether there payment stream can turn things around. >> i'm just north of san francisco and it's one of groupon's mergeant partners and this is someone that was testing the system. he'll be joining us here into the very crowded payment space and his overall strategy to turn groupon around. melissa, back over to you. >> let me clear they're giving the devices for business, but they're charging -- presumably, since groupon targets deals to customers they'll use the data about how and where people shop to better target deals. >> all right. julia boorstin, thank so much. as julia mentioned a huge spike in groupon shares. the stock is up by 7.5%. coming up, the iphone 5 will be here today, here meaning post 9. we'll show it off to you and get a review of the gadget. let's take a look at the early movers on the street. when you take a closer look... ...at the best schools in the world... ...you see they all have something very interesting in common. they have teachers... ...with a deeper knowledge of their subjects. as a result, their students achieve at a higher level. let's develop more stars in education. let's invest in our teachers... ...so they can inspire our students. let's solve this. >> reviews for the iphone 5 are in and cnet says you'll be, quote, shocked at how light the phone is. we'll have that later in the show with the iphone 5 in hand. it will be nice to come face-to-face. with the famous product. we know most of you haven't touched the new iphone yet, but what else do you think will shock you about the iphone 5? tweet us at cnbc squawkst and we'll get your responses. kind of like meeting a celebrity, isn't it? >> i think so. will siri tell me it will play in fantasy? i'm worried about garcon. >> i'll go to adam thefter. i have a direct line to him with 1.7 million followers can siri inch mediate. we just tweeted that almost, almost there to the number of points for the month, that would make us the biggest point gain since october. >> and apple, by the way -- >> september is always supposed to be so bad. >> apple is good today, by the way, record high, intraday high on apple, 703.50. >> we'll see what happens. a lot more "squawk on the street" still ahead. >> coming up, argg! this may be talk like a pirate day, but before you walk the plank pay some attention to jim cramer and his six stocks in 60 seconds. you may just find some treasure. we'll be right back. ♪ ♪ monarch of marketing analysis. with the ability to improve roi through seo all by cob. and you...rent from national. because only national lets you choose any car in the aisle... and go. you can even take a full-size or above, and still pay the mid-size price. i'm going b-i-g. 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[ male announcer ] good choice business pro. good choice. if we want to improve our schools... ...what should we invest in? maybe new buildings? what about updated equipment? they can help, but recent research shows... ...nothing transforms schools like investing in advanced teacher education. let's build a strong foundation. let's invest in our teachers so they can inspire our students. let's solve this. how do you know which ones to follow? the equity summary score consolidates the ratings of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past. i'm howard spielberg of fidelity investments. the equity summary score is one more innovative reason serious investors are choosing fidelity. get 200 free trades today and explore your next investing idea. >> time for six in 60. >> sherwin-williams. the housing stock still rocking. don't desert that call. >> more 52-week highs in here. >> i thought it was base camp four. >> you're in the mound metaphor. >> how many times do we have to say lcd they say is better. >> waste management goes from hold is sell. i know, i visited one of their best stumps and it was relatively empty. nice view of the city. >> we haven't mentioned the div hike at microsoft. >> joining the 3% club? no one seems to care. >> need am downgrades hasbro. weak back to school. >> hasbro was inexpensive and i was surprised with this call. >> bob iger, the stock seems to be stalled right here. it's a breakout and the charitable trust owns it. >> it hasn't dampened the name. >> new ride. new rides. >> what's coming up tonight? >> mark bennyoff. this guy is a showman. he's the heir to steve jobs when it comes to showmanship. no one is heir to steve jobs when it comes to brilliance and he was good friends with steve jobs and i think this is 80,000 strong and it gets people going about the cloud. people don't want to own the pcs. they want to own the cloud. sales force is the cloud. >> we'll see you tonight. >> oh, man, all fired up. great show, man. >> great show. 6:00 and 11:00 p.m. eastern time. don't go away. [ engine revving ] ♪ [ male announcer ] every car we build must make adrenaline pump and pulses quicken. ♪ to help you not just to stay alive... but feel alive. the new c class is no exception. it's a mercedes-benz through and through. see your authorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services. through mercedes-benz when you take a closer look... ...at the best schools in the world... ...you see they all have something very interesting in common. they have teachers... ...with a deeper knowledge of their subjects. as a result, their students achieve at a higher level. let's develop more stars in education. let's invest in our teachers... ...so they can inspire our students. let's solve this. welcome back to "squawk on the street." i'm diana olick, existing home sales jumped to a seasonally adjusted rate of 4.82 million units and that is well above expectations. sales up 1.3% year over year and the fourth consecutive month of year-over-year gains. 7.7% in the midwest. up 7.3% in the south and up 8.3% in the west. the west, the only region seeing a year over year-decline in sales. median home price $187,400. that is up 9.5% from a year ago, but be careful, it means sales above and below are split. so this is a change in the mix of homes selling. sales of homes under $100,000 fell 5%. so you see where the shift is going. sales fell off a lot. 22% of all home sales were distressed, foreclosures and home sales. that number has been up 35% to 40%. that m that mix of homes is selling and that is skewing the price higher. inventori inventories, 2.7 million hopes for sale and that was down 18% from a year ago and we are now at a 6.1 month supply of homes and one-third of homes sold in one month and they're starting to see fewer days on the market. realtors are beginning to see a believable, upward trend in home sales now. again, existing home sales 7.8% month to month, well above expectations. carl? >> that is real news. thanks a lot, diana. diana olick in washington. let's hit the road map for the next hour. we have starts earlier this morning as well. are we getting closer to a real bottom or did we trip right over it? we'll explore. >> speaking of potentially turning corners. >> jc penney, we'll see ron johnson's anticipated update to analysts later today. >> we'll we'll have the iphone 5 with us on set. senior editor scott stein with his review of the device. how pesky is the new connector and does the maps app leave something to be desired? some insight on the latest housing numbers. joining us is patrick new port with ihs global insight and david crow, chief economist with the national association of homebuilders. gentlemen, good morning. >> good morning. >> good morning. >> patrick, i'll begin with you. biggest number on existing in about two years coupled with what we got with starts earlier today, what does it tell you? >> the home sales are really good news. this has been one of the weaker segments of the housing market and this is the first strong reading that we've had in this recovery, up to now, members have been gradually inching up. the housing starts and permits numbers were okay, but they're showing gradual improvement nationally in all four regions, so the recovery is still on track, and it's just a very slow one. >> david, do you think this is a cleaner number in terms of the internals? diana walkeds through the percentage of the distressed. that is something you'll want to see in a recovery. >> yea, it is a much cleaner number sxots a supportive number. so we're beginning to see this kind of optimism in a lot of housing reports and not just in one single one and not just in one single month and not just in one or a few markets. i think the fact that it's spreading across a larger number of markets is why we're seeing such good numbers nationally. >> patrick, i'm wondering how you interpret the numbers yushdz neeth the headline numbers in terms of homes under $100,000. sales of those declined, distressed homes declined a lot. are we to believe that there are fewer of these on the market that they've been cleaned out or taken off the market. >> we still have over $5.5 million homeowners behind on their payments and we'll see more distressed sales and they'll be there for another two or three years, but the fact that they're down is good news and the up and down is telling us that the number stresses up and that's good news. people are buying homes, distressed and undistressed. >> what is the next leg in this recovery? it starts the quarterly average is not that different from the second quarter and the permits were pretty good this morning. would you expect q-3 and q-4 to start to accelerate here as we go to year end? i'm not sure accelerate is the right word. we'll continue to see modest increases. we got a lot of roadblocks out there and we had tight credit for buyers and builders. we had tough appraisals that are often busting a contract and now builders are facing higher prices for some of the building materials. i think all of those will keep that recovery continuing to be a modest one, but, yea, i do see computer increase for the rest of this year. probably getting to a close to 800,000 per year start level by the end of 2012. >> so, patrick i'm curious, in terms of extending qe-3. when do you expect that to trickle into lending and the ability of homeowners to get loans or homebuyers, i should say? >> i think it hasn't had much of an effect at all or hardly any effect on lending because interest rates have been at record lows and existing home sales and mortgage lending hasn't taken off hardly at all. so i think it is -- what i think might be good news is that it starts going up and long-term rates if they're driven up by the strength of the recovery. so i think qe-3 will help a little bit, but the former job market and the stronger economic recovery and when that happens you will see paradoxically interest rates going up and the housing market getting back on track at a faster rate. >> david, there still is consternation about the possibility we lose some key tax deductions related to mortgage interest payments and how much of that will be thrown into any recovery reporting together? >> a pretty awful wrench. many people if they don't deduct their interest have at some point in the career of owning their home. you take away a significant age, particularly to the middle class to be able to afford that mortgage payment. so some curtailment in that would have a dramatic effect on the market. >> we'll see if that happens. that's a little ways off, but something to think about, guys. thank you very much for your time. patrick and david. >> sure. all right. let's go back to headquarters, sema. >> i have our eyes on crackier barrel. the company also backed its earnings guidance and projectioned revenue of 2.6 to $2.65 billion, meeting street estimates that it increased by 25% and the stock today hitting a new 52-week high. melissa. thank you, sema. apple shares hitting a new intraday high and with the unveiling of the ios 6 platform is 800 by the end of october a reasonable wager? we'll get a longtime shareholders' take next. the day after closing above the 700 benchmark, apple is releasing the new ios system. the new ios 6. siri with more personality. a forbes columnist is also a longtime apple shareholders. eric, it's always good to see you. >> hi. >> you're an apple bull. >> yea. does it concern you about the repitity and just because from a portfolio management perspective, i would imagine you would have to start selling just because the portfolio is getting bigger as a percentage. >> not now. remember we had the run from march and april of last year where the stock almost doublid and believe then that it had come too far too fast and we were due for a pullback. we did get that and we saw the stock retrace to almost 500 over the summer and now we're into the new product launch season. iphone 5 is the biggie and we'll have ipad mini. probably we'll have tv coming in the first half of '15 and this is the time of the year when the stock runs and it will continue from here. >> reviews are coming out today and how important are the reviews after apple surpassed 2 million on the first day. >> i don't think they're huge and this has been a stock that people obviously wanted it right out of the gate. the 2 million preorders just on day one was a phenomenal response, and i think it shows that people see this as a major upgrade. it's probably the screen as a big thing for that, but the reviews certainly don't hurt and they've been almost universally positive. >> a big picture, eric. the stock has -- the company's had an incredible amounts of market value since the passing of steve jobs, but many people know that he was responsible to a certain extent for future product launches. even after he passed we had already thought about them. tim cook, widely respected and he's not steve jobs. are you worried there will come a decision point where they're going to miss steve jobs and they'll miss his passion and his criticism and make perhaps a faulty decision? >> i think that the legacy of steve jobs perhaps is the single greatest accomplishment in time is the succession plan that he laid out and the rest of the management team and how capable they all are. so i think they are underestimated in their ability ands i think he's a control freak kind of who what you alluded to and with the lead time he had into his own health i think we'll see his fingers on new products that will be out for a decade to come, and i think, therefore, i'm given comfort by that. people seem to complain about tim cook a lot. we heard a lot of complaints last week about the product launch and how dull it was. this was the dullest, most blockbuster product launch in the history of business. so i'll take blockbuster and i'll take the rising stock price any day -- iffy have to take some dull, that's fine. >> there's a big debate, eric, as they move out of north america and the rest of the world, the rest of the world doesn't have the apple infrastructure, certainly not in china which is the most promising. is there going to be stunted growth once they venture out overseas? >> i think the biggest risk to my bullish target for the stock and seeing that it gets up to 1650 in three years from now. the biggest risk to that aren't the products is what's going to happen with pricing? iphone will be the juggernaut in the portfolio to drive this, but are you going to be able to get really strong pricing in some of the emerging economies in china and india and southeast asia and so forth. they've proven that the lesser models they can still do very well with those, and if you want to bring up one question about the stock. that's one i would agree with you, we'll have to watch. >> they would have to introduce a low-cost smartphone, something to compete with nokia. >> nokia and all of these other low-cost manufacturers, those are the ones that have really sopped up a lot of low-end market. >> 1650 by 2015. what does that model look like? is that a model or do you throw a dart on a board? honestly, how can we model out so far, three years. we have no idea what the products are what the margins will be on those products. >> you mentioned the ipad mini, where is it going to be priced because if it's going to be priced above the high end of the iphone and the touch and below the current ipad, where does that leave you with a small area in which to exist. >> the model is based on existing products and, you know, so any new products that get thrown in the mix are gravy that get layered on top of this and it just needs to look at where do you think the smartphone market is going? do you think we're at the peak of smartphones or are we at the early innings of how this rollout will happen and do you believe that iphone will have a significant market share of that market? obviously, i believe that's true. i think minis and tablets will continue to roll and the other big part of the factor leading into the price target is tv. i think tv will be a major engine, too. >> when when is your best guess? everyone will speculate on those, when will we see a robust tv product? >> i think june of next year. they're playing coy, but i think there's a product coming. >> okay. i have a of it for my birthday. it is -- i mean, it's probably the biggest bang for your buck in technology, the thing it allows you to do for just a couple of hundred bucks so the way they'll improve on television is very interesting. >> i have it. absolutely i have it, and i think we'll have the hockey puck version because there are a lot of old tvs, but we'll see the full hardware/software com bipation and it's the first time that we see this merger of old broadcast tv with the internet, with web, with twitter and these services in an exciting way that people fine-tune it and are easy to use it. you're mr. yahoo and mr. apple, and we talked about it a couple of years ago. they're returning $3 billion, most of the sale from the stake of ali ban arc the stock is 16. why own it any longer? >> there was some hesitation yesterday on the news because people weren't sure, does that mean a special dividend or a special offer? >> it will be in the form of buybacks. >> but they didn't communicate that. i think they do need to communicate that and i think they need to get out there and talk about that. over the coming days we'll see people jump in and buy the stock. we've seen that this morning. >> we had a discussion with cramer this morning who said he was coming around to the idea that it was too late to jump into apple. >> if you owned none would you be buying it fresh here? >> as i think many shareholders, have apple as part of their portfolio, yea. sit back, there will be a media frenzy every time this thing clips another $100 increment level, but sit back and enjoy the ride. this is definitely one of the lowest risk, most expensive stocks in terms of market cap than we've ever seen. >> good to see you. iron fire capital. when we come back, jc penney holding calls with analysts after setbacks at the retailer. the stock has rebounded more than 40%. should you bet on a longer tomorrow turnaround at penney? "squawk on the street" is back in a moment. bob... oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. nave 50% on banners. wouldn't it be nice if there was an easier, less-expensive option than using a traditional lawyer? well, legalzoom came up with a better way. we took the best of the old and combined it with modern technology. together you get quality services on your terms, with total customer support. legalzoom documents have been accepted in all 50 states, and they're backed by a 100% satisfaction guarantee. so go to legalzoom.com today and see for yourself. it's law that just makes sense. a short word that's a tall order. up your game. up the ante. and if you stumble, you get back up. up isn't easy, and we ought to know. we're in the business of up. everyday delta flies a quarter of million people while investing billions improving everything from booking to baggage claim. we're raising the bar on flying and tomorrow we will up it yet again. how they'll live tomorrow. for more than 116 years, ameriprise financial has worked for their clients' futures. helping millions of americans retire on their terms. when they want. where they want. doing what they want. ameriprise. the strength of a leader in retirement planning. the heart of 10,000 advisors working with you one-to-one. together for your future. ♪ welcome back to "squawk on the street." i'm sema modi. downgrading idenix. it's a drug potentially entering the market in 2015, doubling its price target on shares of achillion to $13. >> thanks, sema modi. >> anschutz corp is considering selling the sports and entert n entertainment that owns the staple center and los angeles kings and hoping to bring the nfl back to los angeles. it would garner a lot of money, conceivably, jane wells, wouldn't it? it's a big potential price tag. >> this could end up being bigger than the dodgers sale based on the real estate alone. it's a sprawling empire co-owning the l.a. kings and it also owns lchl a. live next door with the nokia theater. the company is in the middle of a long, frugal process to build a million dollar-plus football stadium in l.a. and selling the naming rights to farmers insurance. even though it's believed aeg would not break ground until the nfl agrees to bring a franchise back and then there is aeg's concert business. >>. >> one more time. the company was going to sponsor michael jackson's comeback tour and just last week dropped its insurance claim because of the singer's death. it had a piece of the film "this is it" which grossed $72 million. it owns the galaxy, david beckham's team and why sell now? we don't know if there are issues behind the scenes, but you can say the company is at the top of its game. the kings worth an estimated $232 million are finally champions. the clippers and lakers filled seats at staples and residences at l.a. live are starting to sell at a nice clip. the only question is who would want to buy with this football stadium up in the air. one being name side the potential suitor "the l.a. times" and patrick shaw who made a run at the dodgers earlier this year. they are worth about $7 billion each according to forbes. david? >> that's not bad. that's real money when you talk billions. >> thank you, jane wells. >> extending the asset purchase program by 10 trillion yen. how does this impact the currency? let's bring in kathy, with the "money in motion." what are the effects that we initially see and how are traders getting behind this move? >> melissa, in terms of the magnitude and the size of the program, it was the timing that was a surprise. well interestingly enough, we haven't seen the sell-off in the yen last. it was lower where it was before the bank of japan and this is similar to what the federal reserve did where the market prepared for the move and the move came in and that evaporated quickly. >> it does. in terms of how it changes the dynamics overall it does seem like we're in a global race to the debase as central banks around the world are easing in various ways. so what is the currency trade that you're looking to put on right now. >> think in terms of the stimulus that we see in the markets and we may not see the initial effect immediately, in qe-1 and qe-2 the dollar did not sell off in the start of it and there's an opportunity if the euro dollar breaks below 129. so the trade that i'm looking for is i'm basically looking to short the euro dollar at 129, and the stock at 130.50 and a target of 1.27. if we do break that level i do think we'll see a flush lower. >> we've been above 1.30 for quite some time. what makes you think that we'll get down to the level where you'll want to enter the trade? >> number one is the qe-3 and how that will not necessarily lead to initial dollar weaknessness. number two, you have a lot of trouble politically and this morning we had a banking union that could be significantly watered down with with the large-scale banks and we also have s&p basically saying they're not going to cut spain to junk status and this is good news and not so good because that means spain is not going to ask for a sovereign bailout and in that case the ecb's osh mt program can't be implemented. i think that this could trigger a new look, but i want to see it below 129 for getting it. >> kathy of bt asset management and for more "money in motion" tune in at 5:30 eastern time for money in motion and check out the web-only tutorials where you can learn the basics of currency trading. carl, over to you. >> when we come back, crude oil inventories and a key day. plus weighing in on apple's i phone 5. we'll see if one tech watcher thinks you should believe all of the hype when we come back. ♪ ♪ ♪ [ male announcer ] introducing a reason...to look twice. introducing a stunning work of technology -- the entirely new lexus es. and the first-ever es hybrid. this is the pursuit of perfectio . >> i'm sharon epperson at the new york mercantile exchange. wti crude futures down below $3 a barrel and brent crude below $10 a barrel and we're talking for six-week low for brent crude prices and wti prices at the lowest level in more than a month as well and this has a lot to do with the bearish sentiment we've been telling you after the steep drop on monday. still, many theories out there about what caused it, but overall it just has led to a bearish sentiment among traders on the floor, and we also have gotten fundamental news that's rather bearish, a big build in supplies according to last night's data from the american petroleum institute and then, of course, the saudis saying they're pumping more aggressively to 10 million barrels per day. all of this is on the backdrop of what the white house may do. some speculate they will do at some point which is to perhaps release emergency reserves from the strategic petroleum reserve. right now the energy department is out with its weekly number on oil, gasoline and fuel supplies and we are looking at a huge, huge build in crude supplies up 8.5 million barrels and the increase in crude supplies of 8.5 million barrels and gasoline supplies down 1.4 million barrels and we were expecting to see an increase there. gasoline supplies down 1. million barrels and a build was expected and activity lat supplies are down by 300,000 barrels. this is a tremendous increase in crude supplies and we're trying to find out what's behind this big change, but you have to think that, of course, after hurricane isaac, there are a lot of kind of getting back on to the regular game plan here with the crude inventory levels and it is having a negative effect on oil prices and we're looking at nine excrude futures down at 92.25 and down almost $3. back to you. >> thank you very much, sharon epperson. i fon 5 reviews are in and we just happen to have a real iphone 5 here with us on set at post 9. who brought it? senior editor scott stein. you've got it in your hands? >> it's what everybody wants to know. i think if you look at the larger screen and you look at the fact that it's thinner, to me it's the fact that it's lighter and there hasn't been an iphone before that's been this light and you look at a lot of the large smartphones on the market and they tend to be heavier and the screens tend to be larger and this feels like a larger screen than for someone that doesn't necessarily want a gigantic phone and that's kind of the elegant. from the front it's not meant to be all that much different. >> it's funny because the closest competitor is the samsung galaxy 3 s and that is the exact opposite in term of the samsung galaxy being much bigger. i don't want to carry it around. it's just too big. >> i think that's the wor, fablet, and the phones and tablet and apple's created a separation and they're saying, you know, there's the ipad for this and then for the phone we wanted to get a phone that's holdable and pocketable. it's true. you talk to a lot of people that you're even onboard with the large-screen phones or you say to yourself i don't want to explore that. the iphone has to bridge that gap and that's what's happening here. >> is the term phablet, is that used in tech circles? >> i don't want to use that in tech circles. i've heard the term and it will fade out, too. >> so you were already in contract, how tempted would you be to break it and go for this? >> if i had to pay extra for it? >> yea. >> year over year, i think it's really tough to justify the purchase of a new phone, i would say especially when you have a new ios coming out, i think you have to download that, try it and see how you feel. you being also ride the wave and get the $99 year over year and you're saving a lot of money, but if you're a power user top to bottom and this has had tweaks all over the place and it's a fine-tuned re-written revifthz iphone 4. in that sense, a lot of changes, but there aren't two massive game changer changes. if you're a power user i think you'll appreciate it. >> if you got the phone before world of the presales, would you imagine that the phone would break records? given the features of the phone? >> based on the reputation of the phone. a lot of people like -- it reminds me years ago with the palm. my mom had her palm pilot for years and clutched it. you have a comfort level with the operating system and what you bought into and that's why people say i want to stay in that ecosystem and i do see people that want to move back in. >> oh, really? >> this is the one they've been waiting for because with the iphone 4s it was the sense of at the time with steve jobs that was the final reveal and that's not futurist being and elite, it's very elegant. >> the design, i need to touch it. i need to. >> e on, my god, it is incredibly light. i'm just going put it in here. what about your overall review? give us your sense? what are the strengths and more importantly are its weaknesses? >> the strengths are that, we have the checklist at cnet last year of things we wanted to see in an e phone and 4g lte which smartphones have. any smartphone hard core techie will say, come on, that's been out there. to apple's credit they've included that and they've gone with the faster processor, and they may skip a feature saying we're getting the same screen here or the process is similar, but we've upgraded this. you look at features that will be included and then they say wait a second, this is what i wanted in a tab sxlt you have the features that most people will be looking at, maybe they didn't include the totally out there idea, but it's very practical and phones are practical devices and i think essentially somewhere in the review, all of that is better. the battery seems to be holding up similar to the iphone 4 owe s and the screen you grow into and you get extra room for tweets and things and you get a better vertical readout. >> walk with us through a couple of apps because mid-caps has had a chickered review. this is kind of a mixed bag. maps is beautiful. the 3d effect is a showoff, absolutely, but maps is a functional tool. you can be amazed by how it looks on here, but the fact is that right now i haven't found it to be quite as robust as far as google search terms and you have to see where google makes an ios maps app you may keep that side by side and keep a couple of maps in your pocket. turn by turn is great on this, but you're missing street view and public transition directions are being offloaded. they recommend that you go to an outside app for that. if you're living in new york, you need that. >> does this flyover, is that key? does it make a difference? >> it's great if you're scanning a neighborhood. the details in the cities that support flyover that street view can be tough to tap, tap, tap, and if you're looking at a place -- i looked at an old neighborhood in san diego, and you can get down to the point where you can see the storefronts and look on a multi-block radius and get a sense of where that's hands on. it's like google earth, it's a pretty attempt and it's not available on all cities and that's another drawback. the other part is this connector on the bottom. this lightning connector and at some point it's been shrunk and it's going to happen. do you think the first lightning bolt will be faster somehow? it's not, it's the same speed and you have the hotel rooms and all of that stuff you may have bought. that accessories and you'll have to buy a new pin adapter or a new accessory and a lot of people are using blue tuth, air play, i think that's the game plan for the future is the idea that how many things are you plugging into? you'll use this wirelessly and you're just using this to charge and sync. >> next to the mike, you can demonstrate some siri stuff? how reliable. >> siri, who are the new york jets playing in october? [ bell ] >> okay. sports, let's take a look. >> your meek's there. >> oh, yea. 2008 at 8:30 p.m. >> the jets are playing the texans and it brought up the schedule here. >> do you need for sports games and sports, restaurants, movies? i've noticed that there are various tweaks with siri does and doesn't understand, siri is faster and it has much to do with the 4g lte connection. it's zippier, so when i set an alarm via siri, there's, siri did you get that? siri was quick or the fly. so a faster assistant. i'm not a huge siri fan and if you'll tap in a turn by turn navigation, that could be useful. >> what's the bottom line. if you're in an existing contract, wait? if you're not, this is a thing of beauty and what you should get? >> this is the iphone that we uponed and has the future listec whiched off. beyond that, what's the future tech? if you're looking at everything that we have been talking about, that maybe we have been complaining about comparing to other smartphones, i think this is the future set. so i think that's exciting. so if you've been waiting and hoping that you've been hoping to get something that comfortably hits the points. >> before you go, if you're an engineer at samsung today, what are you thinking to yourself? it's an interesting thought of a phone that's pocketable. that's the thing to think about. right now there's an arm's race of large screen phones and apple said not that way. >> it does make phone calls, too. >> it apparently makes phone calls. >> better speaker phone quality. it does still make phone calls. >> thank for coming by and bringing the new iphone. appreciate it. a got a market flash. herb greenberg. >> this is a big bull/bear stock and it's down currently around 40%. this is on a report from citron research that ate nah has stopped payment on the company, for most uses, for the company's multiple scler owis drug. i have a call out to etna on this and i have not been able to get a hold of the companies and moving rather quick low. why isn't this stock currently halted? >> take a look that the chart. in the last month alone, shares of jc penney are up over 20%. ceo ron johnson is gearing up to take it on a tour. has the tide finally turned in jcp's favor? we'll talk about that after a break. you know why i sell tools? tools are uncomplicated. nothing complicated about a pair of 10 inch hose clamp pliers. you know what's complicated? shipping. shipping's complicated. not really. with priority mail flat rate boxes from the postal service shipping's easy. if it fits, it ships anywhere in the country for a low flat rate. that's not complicated. no. come on. how about... a handshake. alright. priority mail flat rate boxes. starting at just $5.15. only from the postal service. 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[ male announcer ] ...forbusiness.com. ♪ ha ha! take a closer look at jc penney shares seeming to be turning the corner. today the company's ceo, ron johnson is back in the spotlight as he takes an lives on a tour of a prototype store in dallas. on the cnbc news line brian nati nagel over at oppenheimer. how nervous should the shorts be, if at all? >> think they should be nervous. when you look at jc penney, i initiate coverage with a positive rating several weeks ago and there was a point at that point when he basically says, look, there are challenges at jc penney and the sentiment toward the stock had been way too negative and they were fast to dismiss the long-term potential of the turnaround and what we've seen in the last few weeks or so is that incrementally positive data points of jc penney and the event today in texas which i'm attending will be for most investors, the first time they see this store and what ron johnson's true vision for the company is. i would be nervous if i was a short here. >> brian, you write about a few things. one, you think the challenges are transitional and you mapped out some stores and you see they tend to operate in many areas without direct competition to macy's and then you talk about the tracking, at least for the month and the quarter looking pretty good. what's the most important thing? >> think the most important thing and this is where i've in a lot of discussions with people negative on jc penney. i look at the very weak results we've had over the last couple of quarters. in my view that does reflect transitional issues. kind of in a funny way, the weaker the results now, what that suggests to me is how aggressive this turnaround has been. so what jc penney is basically doing is turning stores on their head and remodeling the stores, bringing new merchandise in and bringing new brands in and that allows them to clear out old product and take the hit in the near term. >> in terms of the store within a store concept of note, disney will have a store within jc penney stores and they've had a number of notable sign ups in terms of having stores within stores. how much is the mini stores within jc penney and what's to prevent a consumer from going in, looking around or not going there at all and going straight to the source? >> it depends, you're right. right now in their stores one of the first areas they remodeled was the denim section. they have a couple of private label brands of denim and levi's. the private label is exclusive to jc penney and levis are sold elsewhere. they're doing a great job of merchandising these products and they are creating a very inviting shopping experience in these denim sections and elsewhere in the stores. so i think that's the key for as far as mark share gains going forward. >> what is the term of revenue sharing and i wonder if there needs to be a threshold of sales in order to continue operating within jc penney. what pressure is ron johnson under to keep the stores under one roof? we don't know the answer under one point. i know the people do, as well, so we get behind the economics of some of these deals, but i assume at this point, the issue is brand by brand or concept by concept and we don't know the details right now. >> so they could be paying the store to be in there at this point? >> it's possible. we just don't have enough data to know the details of that. >> the stock performance over two months, is it commensurate with the level of investment and improvement? i mean, has the stock caught up to the good news, to the degree there is any? >> i look at the stock, i think what's interesting about the stock right now is you guys called it out the almost 50% move since late july. the operations of jc penney have not gotten 50% better. so on that simple analysis the stock price would be ahead of the fundamental performance of jc penney, what i think is happening is we have a the lo of the negative sent ement and the shorts have started to cover, and what i don't get the sense yet is that the investors have started to take the really big, sizeable, long positions of jc penney and i look at that as a positive because as the story continues to come together you will have investors covering shorts and i think that's what will take us to the next level. >> brian, have fun in dallas. >> thank you. >> we'll see you later. brian nagel joining us from oppenheimer talking jc penney. >> we'll have the analyst behind that call next, but first, gary kaminsky's got a big interview coming up with the man behind double line capital, a huge manager at this point of bonds and, man, gary, he's had a great call, hasn't he? >> and david, you will know that this has been an amazing success story. we will sit down with jeffrey gundlach and we'll talk about bonds and we'll talk about bernanke and you know i am right at home where a steam roller is the corporate toy here. take a look at this. we'll see you at the top of the hour and we'll be right back with more "squawk on the street" in a few moments. introducing the entirely new lexus es. and the first-ever es hybrid. this is the pursuit of perfection. bernstein's analyst says it is time to, quote, curb your enthusiasm on the group making the call to down grade the likes of suntrust, bb & t and huntington bank shares. that is kevin st. pierre that joins us to discuss and why the down grades? >> as you alluded to, the valuation of the stocks moved from a significant discount to tangible back value over the past year to a premium to tangible back value. the a the investors have made money in the regional banks over the past three, four years has been buy at a significant discount to tangible book value and sell when they reach 1.1 to 1.3 times tangible book because for the most part these are banks that aren't going to be earning a whole lot more than their cost of capital and i don't want to pay a whole lot more than 1.1 to 1.3 times and that's where we are on a few of the stocks, suntrust and huntington bank shares, two of the three we downgraded today. >> it would occur to me we got existing home sales, for example, does seem to be at least a little bit of momentum behind both the housing market and even perhaps on commercial development. wouldn't the likes of a suntrust be a beneficiary of that? >> absolutely. i think it gets back to a point someone was making in a discussion of j.c. penney in that has the stock price, have the stock prices gotten ahead of the fundamentals, and i think we need to distinguish why the stocks have done so well versus what the stocks will do going forward, and i think some of the euphoria around the southeastern real estate prices and looking forward real estate being better has really been why the stocks have performed so well and so now as we look forward the fundamental impact on our earnings estimates going forward, home prices in the southeast going up another 10%, wouldn't imply the kind of out performance that we have seen over the past few weeks. i think valuations got up with fundamentals and i think those looking for the story, momentum could continue. i don't know if they'll push another 10 or 15%. i think we're close to the end and that momentum may push them more. i think the fundamental impact and the realistic earnings estimates were appropriately valued. >> kevin, does qe3 matter at all in your view of the stocks as it trickles through the system? will that make a difference at all. >> the current rate environment is about as bad as it can get for the banks. low and flat on the yield curve is a bank's nightmare. to the extent that will persist until 2015, that is going to mean incremental margin pressure, perhaps a little longer than most people have factored in, so it certainly doesn't help, and what would really help and what we point out in our note today is that i think the stocks will work when and if we get towards an initial rate hike by the fed, so whether it is 25 or 50 basis points initially, that's all the banks will need for significant relief on the net interest margin and that is way out on the time horizon, so i don't think that really matters in the near term. >> kevin, there was a time not even that long ago but where we would talk about consolidation in this industry. suntrust's name would come up, of course. is that completely off the table? i know the idea of the big getting bigger is probably not one that's well embraced. is there a possibility of consolidation amongst some of these names? >> i think, yes, consolidation will happen and it is actually been a bit surprising that we haven't seen more activity, and one thing we incident positiout grade is the risk to the upside here is that they do smart deals over the next couple of years, something like we saw m & t do with hudson citibank shares, so i think there will be consolidation and multiples reasonable for those that can leverage a multiple. from a suntrust perspective, it is big. that whittles down your potential number of bidders because it goes against the interest from a capital perspective to get into that systemically important bucket and that precludes some of the bidders that historically might have looked at suntrust. >> all right. kevin, we'll leave it there. thanks for joining us. there are a lot of movers in today's session. we'll have the latest next. 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[ male announcer ] fedex office. now save 50% on banners. . >> you would have to say it is getting closer and closer to being, really, right, definitely i think you made money. >> keeping a close eye on crude oil this morning down almost $3 this morning. all those that said qe3 would send crude through the moon have to rethink things here. >> this was simply the inventories reported when we saw that move lower sharply when sharon came on and gave us the numbers, much greater than expected. this is something that certainly to be watching and whether or not it helps transports which have vastly under performed the broader market and analysts say, yeah, 2007 highs, but it is the none confirmation that is the troubling thing. >> what's that? >> technical analysis with mary ann bartels. we'll answer a lot of technical questions whether or not the markets can move higher. >> we'll see you tonight. >> yep. >> thanks a lot, guys. if you're just joining us, here is what you missed earlier on this morning. >> this without a doubt, i watch this religiously. i understand almost nothing on this show. yet i continue to watch. >> the stories say, oh, we're recovering, yeah, we're back to 75% of where he with were in '07 and our profits are back to where they were with 30% down in people. it is a common theme. business after business after business. >> when i look around at the world, europe, asia, india, brazil, i come back. there is one country with stable leadership. you have inflationary control. the country has some growth, companies well capitalized and the country is the united states. >> david said something yesterday that stuck in my brain. i lusted over. if you haven't bought it yet, what are you doing? maybe it is too late. >> existing home sales jumped 7.8% in august. >> existing home sales, really good news. this has been one of the weaker segments of the housing market and certainly the first really strong reading that we have had in this recovery. if you're looking for everything that we have been talking about, that we may have been complaining about, comparing to other smartphones, i think this is the feature set. i think that's exciting. >> good wednesday morning. live here at the new york stock exchange. a check of the markets, dow holding onto gains, about 13 points and more interestingly we're now looking at the biggest point gain for any month since october of last year. nasdaq down about a point and half and s&p up one and walmart joining forces to cost of healthy foods for customers, more than 1 million members of the healthy rewards program will receive a 5% credit out of 1,300 healthy food items at stores. goldman making a bold call saying don't fight the fed and incrementally more negative by cutting shares of schwab to neutral from buy. big hour on squawk on the street. in a matter of minutes an exclusive interview with one of the most utmost tight ans in bond investing, jeffrey gundlack will join us. what if you could make money off the videos you upload to the intern internet? vimeo is doing just that and one top market strategist lays out his game plan on november's big election, gold on the back of the ecb and our own qe3. first, kick it off with the results of newest nbc news wall street journal poll showing the president leading governor romney nationally. john harwood is here with details on that and the state polls getting kind of interesting. >> no question about it. what we see in this poll, carl, is the effects of the two party conventions having yielded a step up for president obama. as you mentioned, among likely voters in our survey, he leads 50-45 and there are three building blocks of obama's move forward in this race. first of all, you ask people about how they feel about the country, up to 39% say we're headed in the right direction. that's an improvement in sentiment from earlier this summer, the same is true on what is going to happen on the economy over the next year. you now have 42% saying it is going to be better. optimism is lifting the president. secondly, on key issues, he has a 10 percentage point lead on medicare. when you ask people who would be better to handle the issue of taxes, even though mitt romney is proposing a tax cut and president obama proposing to raise taxes for people in the top end he has a 6 percentage point lead over handling the issue of taxes and he has drawn even on the economy which is supposed to be mitt romney's strong suit. the other thing that president obama has done at the democratic convention and beyond is reframe the conversation from a referendum on his management of the economy to a choice for the future. ask people if they're better off than they were when president obama took office, 41% say no. when you ask who is better prepared to lead the country, 47% say obama. 36% say romney. romney has to close that gap and coming out of this discussion of the secretly recorded video at the fundraiser, he is now trying to pivot and talk a little about his vision for shrinking government. that has some potential to rouz the republican base that he hopes independents do. >> from a strategy standpoint i wonder, this move he made not backing down from the comments themselves but trying to refine them in a way that puts them in an intellectual debate, is that smart or not? >> not sure what choice he has, carl. the argument that he is making is not only widely shared among conservatives and something that we heard during the republican primaries, but it is linked to the vision that he and paul ryan are articulating about the future. mitt romney backed off a little bit from the ryan budget but still by selecting paul ryan and by making the case we have to move away from an entitlement society, he has invited this debate and the fundraiser invited this debate and democrats are happy to have it. we have two evenly divided parties and each side will take their best and see who comes out on top. >> peggy noonan and the journal saying it is time to admit the campaign is incompetent in her words but that party elders still have a chance here to come and right the ship. are you seeing signs that is about to happen or is now happening? >> no, i don't. frankly, i don't think the problem is mitt romney's campaign per se. the problem is that mitt romney as an individual embodies some of the internal pressures within the republican party that either are going to get resolved in this campaign with a winning presidential campaign or resolved afterwards when republicans try to pick up the pieces and see what happens for 2016. >> john, interesting week. talk to you soon. thanks a lot. john harwood in washington. >> hop over to the c&e group this morning. rick santelli gotten gary inhouse yesterday once again with the santelli exchange. good morning, rick. >> good morning, carl. foreign policy usually is in an area that -- isn't an area that moves the market as lot directly. i don't talk about it much like many viewers and listeners on satellite radio, we like to stay up on current events. it is to that end that i want to touch on some issues that can be market moving. the telegraph over the last several days has written many articles about what's going on between japan and china and some over islands and it is really starting to turn nasty and there is a lot of press on this topic overseas. we have seen an article more recently written by malcom moore of the telegraph that talks about our ambassador to china's car was basically semi attacked, but that story didn't really pass the litmus test as others on that part of the globe who e-mail me have pointed out, you have all the embassies in rome, basically the issue between the chinese and the japanese and their embassy in proximity to the u.s. embassy kind of just moved that crowd over. it really wasn't directed at the u.s. it doesn't change the point and the point is hillary clinton awhile back talked about how one of the significant foreign policy issues for us in the u.s. is our debt with china. so that's what i want to really talk about. there is another author that works for the telegraph, and part of the context of the story he wrote yesterday, ambrose evans apritchard, there are forums and pure accurates in the government that made comments along the lines of we hold the most of the japanese outstanding paper. we're the biggest creditor, so we should use that position to further some of our issues with japan. now, tie that up with what hillary said and what the chinese may be directing at the japanese and you become right at the epicenter of the crux of the matter. what binds the world together is money, money, capital, trade, this is what binds the global world together. we have a relationship with china where they needs us. it isn't a question of being nice to us or we're their favorite. the real issue is they need us, we need them, it is mutually a good situation regarding trade. at the end of the day as we see kind of little pockets of foreign policy and economic warfare and quantitative easing and other countries like today with the bank of japan having to keep up with us and trying to value their currency to keep drad going, we come at a point our debt with other countries can be used much more than just a financing and that's something we need to pay attention to because it could show up in the markets. does that mean the chinese won't buy our debt? i don't think so. what it may mean is we may see more words coming with regard to stipulations for that to continue. >> well, said, rick. if anyone is wondering the article in the telegraph was a little sketchy but the end result we're told at least by them is he did escape unharmed. hope to hear more about it later on. thanks, rick. talk to you soon. let's get a market flash on the back of the oil inventory number, a big one, seema is back at headquarters. >> airline stocks flying high as the price of oil continues to dip further, dropping roughly 7% over the past three days. take a look at the airlines, united and continent he will up better than 5%. >> when we come back he is being touted all over the street as the new bond king, jeffrey gundlach joins us for an exclusive interview. we'll get thinks thoughts on the economy and bernanke and a lot more. if we want to improve our schools... ...what should we invest in? maybe new buildings? what about updated equipment? they can help, but recent research shows... ...nothing transforms schools like investing in advanced teacher education. let's build a strong foundation. let's invest in our teachers so they can inspire our students. let's solve this. gary made his way from chicago to los angeles and brings us the ceo, cio, and co-founder of double line capital. good morning, gary. >> good morning and thank you and i am smart enough to know the viewers want to hear from jeffrey and not me. let's get right into it. ten year treasury. >> i think it bottomed out, prices peaked in july of this year. we talked about that a few weeks in advance. i don't see any investment value in the ten-year treasury at all. the yield has risen towards around 1.8. what's it is big deal? i think i was in the new york stock exchange in april and i think it was right where it was today and i said what are you hoping for, 1.25? still doesn't give you much of a return. i am struck by the bullishness that suddenly emerged for treasuries and ultimately the dollar and the teeth of the european crisis. it struck me as being almost an exact mirror image of where we were a long time ago in the mid-80s when voelker was in charge, fighting inflation, inflation was falling. there is a huge real interest rate on the ten-year treasury of 10 percentage points and everybody hated it. >> where do we see the ten-year a year from today? >> i have been saying i think the yield could rise 100 basis points from where it is now even before year end. for this reason we have gone to the lowest interest rate exposure in history in the summer of this year and people keep saying what is the catalyst? why would the ten year treasury go up? it is going up. it has been going up. it was 1.39 in july, and here it is a couple of months later and it is already up about 50 basis points. i think the reason ten-year treasury rates can go up is because it is so unattractive as an investment at 1.8. >> you were on the other side that far when everybody hated the ten-year. >> right. >> you mentioned the interest rates. what about qe3? >> well, it is not going to be very effective. it is not very big. it is bernanke trying to do something, and you can't blame him. the situation in washington, congress, the president is so gridlocked. there is no addressing of the real issues in this country so you're left with the fed and trying to do what they can do. it is futile. i thought the most interesting thing about bernanke last week, of course, was that statement that we're basically trying to get jobs now by doing qe3. i don't see the connection at all. also, that we're going to keep doing this even when you get a few months or perhaps even longer than that of stronger data, so we're in this kind of situation of zero interest rates and the fed doing what they can seemingly as far as the eye can see, but it won't bring interest rates down. just look at the bloodless verdict of the market. >> did you do anything differently in this building last week as a result of qe3 in terms of the portfolio or the portfolios you run? >> not really. it is more in advance a little bit. we felt that qe3 would probably be a mortgage-backed securities buying program and something we invest a lot in and we figured we would be buying the certain pass through securities in the market and those would be pretty strong beneficiary and it is absolutely true. ten-year treasury prices have gone down since july, the ten year treasury yield is up 40 plus basis points and that means a decline of about 4% or so and mortgage backed securities on their high so we were oriented towards the agency market and now the problem with all of this manipulation of the market is you can play a small ride to a gain but once you get to that gain what's the forward looking prospect? it is less. >> bernanke, you mentioned bernanke. should he be reappointed to the fed? has he done a good job as head of the federal reserve? >> it kind of depends what you think the fed is supposed to do. if you're looking for the fed to be some sort of back stop to everything in the economy, then i guess bernanke has done a good job. i am sort of a smaller government, smaller intervention type of fill so far i can person. i don't like to see the markets being so grossly manipulated. as my friend jim grant says we're living in a hall of mirrors where you don't really know what investors think because the price discovery is being destroyed by government intervention and to that basis i don't really like what the fed is doing. i think that we should have market prices. >> you want somebody who is going to basically let price discovery happen naturally. let's talk about equities. you made comments recently about the equity markets. this is a bond shop, and obvious i will you made a very timely call in terms of equities. what's your outlook on the stock market here in the united states and around the world right now? >> if we want to talk about stocks, so-called risk assets, in jenny don't like risk assets at the level they're at today. in the short-term and i am not very positive. in the longer term i think these policies that the fed is trying to put in place mean that longer term you want to be involved in real businesses and real assets that can have the ability to preserve purchasing power and move forward. i don't think we'll have a lost decade and i won't buy them because everything is so high. i was fond of the spanish stock market in may, not because i thought europe would resolve because it hasn't. we talked like it has and it hasn't been resolved. i liked it because if there was going to be an inflationary fix you want the stuff that's bombed out and the spanish stock market was bombed out. it was down at 6,000 and now it is 8,000. the market that has bombed out now and a little bit scary that it is so bombed out is the shanghai come' over in china. with all of these world stock markets at local highs, almost the levels they broke down at precrisis, precredit crisis in the u.s. is where the s&p 500 is, pre or mid-banking crisis in europe and here you have some of these emerging markets like china, at the lows of many, many years. >> looking at the chinese market, something that's worked for you, you mentioned stocks. let me ask you about apple. >> sure. >> as you know you were asked about apple and that stock has been i guess we can say a modest stock and i did something last week in terms of the at tricks what it created for portfolio managers, those that owned it and not owned it. what do you think about people buying appleck rnow? i think the obsession with apple is truly remarkable social phenomena. when you watch cnbc, everybody wants to talk about is apple going up today, down today, fixation, obsession, with apple. to me that means the stock is over believed and over bought. i have been sort of not a believer in owning apple stock but not out right. i am going to talk about for investors recommending stocks or stock markets is pair trades. looking at things and saying if we're going to get inflationary fix, you want to own the spanish stock market. you want to own natural gas. you want to own agricultural commodities. short things like apple and the s&p, now, we have had the inflationary fix. apple is up about 15% from where i said i thought maybe it was a short versus a long natural gas and natural gas is up 40%. >> right. >> these are pair trades. when i talk about a pair trade, what ends up happening is someone looks at the one side of it and says that didn't do well. you have to look at the total. >> when we come back later in the hour we'll talk specifically about some other pair trades and i am going to ask jeffrey if i was somebody who had a nice 401(k) i am about to retire, what do i do with that money so that i can retire and create some income in the zero interest rate environment that seems that we will have forever. we'll do that later in the hour when we come back. >> great stuff, gary, lighting up the wires and the web as you speak. thanks so much. straight ahead we'll count you down to the close in europe about nine minutes to go. back after a quick break. don't go away. [ male announcer ] the freedom and spirit of malibu is an awesome place to be. introducing the all-new 2013 chevrolet malibu eco. ♪ sophisticated new styling, the fuel-saving intelligence of eassist, 37 mpg highway, and up to 580 highway miles on a single tank of gas. ♪ the all-new 2013 chevrolet malibu eco. ♪ it has everything to put you in the malibu state of mind no matter what state you live in. ♪ a short word that's a tall order. up your game. up the ante. and if you stumble, you get back up. up isn't easy, and we ought to know. we're in the business of up. everyday delta flies a quarter of million people while investing billions improving everything from booking to baggage claim. we're raising the bar on flying and tomorrow we will up it yet again. since ameriprise financial was founded back in 1894, they've been committed to putting clients first. helping generations through tough times. good times. never taking a bailout. there when you need them. helping millions of americans over the centuries. the strength of a global financial leader. the heart of a one-to-one relationship. together for your future. ♪ welcome back to the third hour of squawk on the street. i have a guest first time on with me. he is from argus, chief investment advisor. welcome. >> good to be here. you know, peter, i like reading your material and in one of your more recent pieces you wrote about mario draghi's secret weapon and you framed it that of course this was designed to ease tight credit conditions in certain countries but really that isn't what is happening. maybe you can explain to viewers because i find the difference between easing conditions and kind of subsidizing their funding costs a completely different animal. your thoughts? >> well, you have to compare this to what the federal reserve is doing. what they're doing in europe is they're essentially helping out spain and potentially italy and any time they buy the bonds of those countries they will sell the bonds of somebody else. it is called sterilizing, so they don't totally expand the money supply or the monetary base. in the united states this is totally open ended and as the fed announced last week. they're just going to print money until we see a major improvement in the job market. i consider what's happening in europe actually better monetary poli policy. >> why would you consider it better? i don't think either of those policies address what they're trying to address. in the case of the u.s. i don't see a correlation with fed programs and unemployment or at least not one big enough to pull out and with regard to europe, if outside investors don't come in or you don't fix what's wrong with these countries, how long can the printing presses go? can you comment on my opinion versus yours? >> sure. remember, europe is where we were a few years ago. they still have to shore up the banking system. they have to do a lot of things including deposit insurance if you deposit in different countries, so what draghi is doing is financially trying to shore up the banking system. what we're doing in the united states if you at price of gold, the inflationary expectations in the tips market, the inflation protected bond market, this is something else again. this is historic, inflationary monetary policy that will debase the u.s. dollar. >> okay. now we have come to a point we can agree on although i want to put a quick footnote. we just learned recently the germans were putting conditional itie on ensuring deposits all over europe. that is a new twist. what you just said about future inflation, you also write a lot about gold. i am a little kba point that gold hasn't had its gold in birthday meaning trading 2012 in 2012. what is keeping it back? when you write so much, all of this is going to translate into much larger inflation issues down the road. why is gold taking so long to get up to a same level as that in 1980 adjusted for inflation? >> well, it wasn't clear until just recently that the fed was going to engage in another round of quantitative easing. also, it wasn't clear who is going to be the president i would say under mitt romney, governor romney, we are likely to see a change in the federal reserve, and i think that would probably be good for the dollar, not so good -- it would be very bullish for gold. i am sorry, good with romney and very good for gold. >> bearish for gold. we're going to have to stop there, peter. we're out of time. thank you. you gave everybody a new variable. you gave us a way to look at gold and make more accurate predictions about the outcome tuesday, november 6th. thanks for joining us, peter. carl, back to you. >> bells about to sound across europe. we'll get the close next. ♪ [ male announcer ] introducing a stunning work of technology. introducing the entirely new lexus es. and the first-ever es hybrid. this suit of perfection. a fair amount of green around the continent as the markets come to a close, a lot reacting not to things so much european but to things that were rather japanese, the bank of japan easing and some upbeat u.s. existing home sales here in this country helping lift most european markets. take a look. spain up 236. take a look at the euro as well, a close eye on currencies on a relatively bullish day for the euro maintaining it is level above 10 and yield on the spanish ten year moving lower as well, back below 575. heineken a big winner, moving closer to gaining full control of singapore's asia pacific breweries and this after a rival and a key shareholder agreed to support the $4.5 billion take over. want the european close as well. hop over to sharon watching an enormously interesting day in the energy complex. >> it is always fascinating. this week has been tremendous. look what happened to brent crew. barely above the 108 level here. we have seen this contract break below several key technical levels including the 200-day moving average and the sentiment that i am hearing from traders i am talking to on the floor and trading desks around, it is really bearish and a lot has to do with breaking below the key technical levels and you have to look at where we are for the wti contract. there just above the $92 a barrel mark and did get the data coming from the energy department very bearish and 8.5 million barrel build in crude supplies and that of course due to a lot of imports and such, but it definitely under scores the fact that there is bearishness out here and we have the exploration of this october contract as well, so that could add to volatility just as we saw on monday with the volatility around the options exploration, so what does this all mean? you look at what happened on monday and traders say dropping that much, the fact that we have seen a 7% slide in three days, the biggest streak we have seen here like this since june, it really underscores that there is a bearishness in this market place, and while we may see middle east tensions continue to pop up, we are seeing more supply from the saudis coming on board. we're also seeing of course this increase that we are seeing in the u.s. supply and demand continues to be weak, and while qe3 may help to support commodity prices, that as gas prices rise is going to really perhaps derail the economic recovery, so there are all of these factor that is traders are trying to dissect and bottom line when you are trading day-to-day, minute to minute, here looking at the technical levels they say and particularly bearish right now. back to you. >> unbelievable given all the geopolitical worries and the worries about the fed chair and the market confounding a lot of people today. thanks a lot, sharon. brian shactman is here looking at what's moving as well and dow, brian, has had very few negative days so far this month. >> i know. on top of that, carl, only 40 points or so but if we close at these levels it will be a new high dating back to december of '07 and i remember doing those reports with the affiliates when we hit dow 14,000 and we're only 1 400 points away at this point. we talk a lot about tight ranges, only about a percent between the top and the bottom sectors and discretionary has been on top and materials led the recent leg up in the last few minutes, only about 8 or 9 points off the high of the day and at the bottom energy which is the only negative sector at this moment. housing does fall into discretionary. the itb, of course, the u.s. home construction index near pushing up against the four-year high and also the existing home sales number obviously which was much better than expected. take a look at interday of homes because it really shows the leg up that a lot of these housing stocks had after that number came out. 5.5% to the upside. that's a name up about 150, 160% in 2012. we had the airlines. take a look at the xal, the airline index, that also is having the best day in a month. sharon talked about this 8% three-day move in oil having a positive impact on the airlines. finally, energy, the weakest of the bunch in terms of s&p, large cap sectors, and it is a lot of the drillers and the exploration are the weakest and schlumberger with oil services in there, down 1.5%, obviously as you might imagine the weakest sector. this will be a new closing high if we hang onto it. back to you. >> a quick market flash on on the toy makers. seema has more on that. >> your favorite sector, of course, under performing the major indices now afternoon needham and company raises a red flag about week q 3 sales and worries that softer consumer confidence could lead shoppers to defer purchases until after the november election, why they downgraded mattel to hold the stocks under performing the major indices at the moment, carl. >> thanks a lot. when we come back, you heard part one of the interview with the highly touted new bond king. what about part two, the newly crowned bond king talks the old regime and the change canning of the guard. there is a live shot there. we'll get to gather after a short break. [ horn honks ] hey, it's sandra -- from accounting. peter. i can see that you're busy... but you were gonna help us crunch the numbers for accounts receivable today. i mean i know that this is important. well, both are important. let's be clear. they are but this is important too. [ man ] the receivables. 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it is great to keep taking in assets and as we have seen with many hedge funds you get too big and especially in the bond world where you have firms, what is the right size that you can still effectively manage a portfolio, grow the business, but continue to show that outstanding performance? >> it kind of depends on the way in which you approach the market. at double line we're a culture of portfolio managers. we actually have very little in the way of traditional marketing type of people. everybody here is an investment person. for that reason we really aren't a distribution focused firm. even more important than that, when it comes to the bond market, we're extremely concerned about counter party risk, about kind of derivative-based portfolios, and when you get to be a multi million dollars or what you're doing is dealing in counter party contracts. when people are investing in fixed income, presumably in the broadly speaking, doing it for safe money, the lower risk money. you shouldn't be doing counter party risk, i don't think. >> put a number on it. what is the right size? where should viewers be concerned once a bond fund is above x dollars in terms of size? >> well, for us i think it is somewhere in the maximum $100 billion category, and probably south of that. at double line we closed one of our mutual funds, a joint venture with river north, rnsix, up about 11% year-to-date. we're in the process of closing our hedge fund strategy which is going to take its last new investors for some time in december because that is up at about 4 or $5 billion. for the total return strategy, the flagship product, i don't think we're going to be have that open once we get over 50 or $60 billion. this is a firm we like having sort of a mid-size staff and a mid-size culture. i am not interesting in having offices in singapore and mumbai and traveling around the world worrying about trades. we want a manageable business where we know what we're doing and people work together. maybe 100 employees. we now have 80. we now have north of $45 billion assets under management. we will probably be closing our strategies in the fixed income at about 60 billion of aum and maybe diversifying. >> from where i said it is admirable to hear somebody say you will close rather than just opening up the spigots and letting it come in. i was in chicago yesterday. many people are worried about the fed's eventual exit. >> there is no exit. there is no exit. >> when the fed wants to exit, they will have to approach people like you. will you buy bonds from the fed when they want to sell bonds? >> i think it is more likely that the fed buys all the u.s. treasury bonds that exist than that they're going to work the opposite direction and start selling them. i have no concept of what the fed exit strategy would look lior does an investor or viewer need to have a concept because it is way out in the future. the fed is doing exactly the opposite. they're expanding their balance sheet. they're working on qe3 and qe infinity. >> you do believe we're going to have qe 7, 8, the, something that will go on throughout our lifetime? >> that's what ben bernanke said. he said we will do this until the economy shows recovery and even past the time that shows recovery and investments, it is not all about trying to figure out what some distant event is going to happen. it is dealing with the next move in the chess game. the next move is not the fed exiting. it is the fed continuing, and that's what we have to deal with. >> that's why i want to go to this question. i am a person who follows the rules. hypothetically, i have a 401(k) and half a million in that 401(k) and about to retire and i move that into an ira rollover and i listen to you and other bond experts and there is no income to be generated anywhere. what do i do in the world that you just explained in terms of what the fed is? how do i invest that money so that i can generate some sort of fixed income because i play by the rules, i have been a saver, and as a result of that bernanke is punishing me? >> unfortunately that's true. this is a world investment where you have to get away from all of the types of traditional things that we're advocated and largely still advocated which is index based. you can't own treasury bonds. you have to move into international bonds. i like for the first time in years bank debt type of funds where they invest in floating rate senior in the capital structure of corporate bonds which look relatively attractive versus traditional junk bonds. of course mortgage-backed securities around the edges that we're so expert in and finally, really safe dividend paying stocks and i mean really safe. i don't mean technology companies. i mean consumer product companies, cam pelz soup, craft. >> whats my expected return the next three to five years if i follow that strategy? what is my expected return? >> i think if you're a buy and hold person, will you be disappointed. you will end up with something around 5% or so at best case. this is a market where buy and hold unfortunately is completely out the door. this is unfortunately because of all of these policy manipulations and these wind towers of risk and the u.s. deficit and the european situation, people have to be more active than ever before which is really difficult for individual investors. you need to move to active funds. they're doing it for you or else you need help and an advisor that will help you. >> i want to go back to certain stocks. you point out you have had a number of pair trades and can't just look at one side of that. when almost every analyst was bullish on bank stocks a couple of years ago, you took the opposite approach and it was a very, very significant call. >> yeah. >> you looked at the bank stocks based on what you knew that they were holding on the balance sheets. where do you stand on that today? would you advise people buy the bank of americas, the cities, the commercial banks that wells fargo, we sit in the wells fargo center, are these equities knowing what you know, are these stocks you would buy? >> i would not buy them at the price. >> shorting stocks? >> no, i wouldn't short them. i am more interested in shorting betas right now and the markets, brought markets for individual names at this point in time. i think the bank stocks are sort of reasonably valued where they are today. i don't think they're a great short. they're so challenged. this is an environment how is a bank really going to grow and make money? the credit card businesses and what it used to be, the home lending business. >> they will be dividend paying stocks again. when you talked about safe dividends, as they are able to return capital, would you consider the financial institutions safe dividend paying stocks? >> i don't think so. in this environment there is too much risk that something bad is going to happen in the european situation which everyone now thinks is so-called resolved which is just absurd. it is a circular financing scheme that needs to have one fundamental question answered and it is not yetne answered. will germany pay the debts of the periphery or not? many suspect the answer will ultimately be no. if that's the case the banking system is vulnerable to a significant shock. if you're thinking about i have fixed income money and may have dividend paying stocks, you don't want to move into things that can go ka boom. you want to go into things that are almost totally recession proof. that's why i talk about campbell's soup. >> campbell's soup, not the germany exposure. if you have been listening, you know the concerns that will happen with germany. thanks very much. i will stick around here and we're going to have a discussion that will bring you tomorrow in terms of how does a bond fund get rated in terms of what do those bond ratings mean in terms of you as the individual investor? will you not want to miss that. i will bring that tomorrow. i will be staying here in l.a. and catch you again tomorrow on the program. >> that sounds like a dangerous combination, you staying over night in l.a. great stuff today, larry. >> thanks. >> great stuff. when we come back, what if you could make money off the videos you upload to the internet? vimeo is making that possible. the ceo will join us live after the break. [ male announcer ] for the saver, and a big first step. for the spender who needs a little help saving. for adding "& sons." for the dreamer, planning an early escape. for the mother of the bride. for whoever you are, for whatever you're trying to achieve, pnc has technology, guidance, and over 150 years of experience to help you get there. ♪ today about anyone with a smartphone can become a film maker. making money from the videos tends to be the compensation. vimeo is changing that, announcing a new tip jar feature with plans to roll out an open pay to view service. joining us here, tell us all about it, the ceo, carey trainer. good to have you with us. >> great to be here. >> my brother is an amateur film maker and always posting on vimeo. what will tip jar allow him to do? >> we'll be interested in hearing how he feels. our vision for tip jar is really to empower film makers like your brother with tools to be able to go direct to the audience and start to earn revenue from their work. >> you will pass on 85% of those funds to the creator. >> that's correct. >> pocket the rest. any estimates as to what, how much, what percentage of viewers actually put something in the jar? >> it is a great question. we literally just launched it this morning, all excited to see the tips rolling in. what we're really doing here is we view this as an expansion of the video market overall in terms of bringing new content to market and we're very interested to see also just how big this market can get, so we don't have any specific estimates in terms of how large we expect the market to get or how broad. we do know it is the right future for vimeo and it will be great addition. >> are they credited to a certain account, through pay pal, how does it work? >> the viewer can pay in two i ways, credit card or pay pal and the creator actually receives the funds via a pay pal account. >> and next year you will roll out the pay to view which is a wall. >> that's right. >> if you want access to the content you do pay. which do you expect to be the bigger contributor? >> that's also something we're interested to see how the mix moves out. pay to view, we'll start previewing with a series of films from now through the end of the year and that will be available for all of our vimeo pro subscribers early next year and one of the things we're most excited about is the combination of the two features. we do see them as they're very different ways ultimately to generate revenue from your audience, one where it is free to view and they can tip voluntarily and the more familiar traditional pay wall. we're even hearing creators start to think of interesting applications, this is great because i could offer one film in a series for free and allow people to tip on that and then they can get exposed to the content and maybe the rest is behind a pay wall. we think it is the two features that present a flexibility opportunity for film makers >> and it is all intended to draw content to vimeo. >> yes. >> one of the top ten distributors of video online, 75 million monthly unique viewers. >> that's right. >> still not nearly as big as youtube. >> no. >> is that the goal? >> i am glad you asked the question. it is not for us. i think vimeo demonstrates the power of doing something distiblgtly different. youtube is a phenomenally successful sight but vimeo is the high quality video sharing site, specifically for creative people and we are rewarded with that because we are doing something distinctly different and it is all about quality and creativity. it expands across the technology, the player, the site government and also the quality of the content and even the conversation around the content. we're very social site like many other social media platforms, but we try to be very supportive and encouraging of creativity and not open it up for rants. >> right. >> it is that quality that pervades the service and focus on creativity and empowering creators. we think it is that clearly different proposition that allowed vimeo to thrive and in a lot of ways we think we have a bit of mac to youtube pc fight going on. we're very excited about it. >> we had this conversation with a lot of young companies up against some unit of google and their strategy almost has to be asymmetric because they are so big. that said, you have had a campaign recently, an old spice commercial that shows to lead with you, the anchor, distributor so to speak. your pitch sounds like what, what you just said to me? >> it is. i think in the same way that viewers choose vimeo for a distinct set of reasons, a lot of brands are choosing it for that same set of reasons. >> viewing tools? >> it is certainly the quality of the experience that i talked about, like the content looks fantastic. it is really a different audience. it is an audience attracted to that environment and in a lot of ways brands are like people, too. they have distinct personalities and looking for different environments and just in the same way a different group of users is attracted to vimeo we see a distinct set of brands and certainly when they're trying to do different things. in the old space example it was focused on presenting a highly creative in fact somewhat quirk and i interactive video that we worked closely with them on. >> how big do you think the next year will make you in terms of users? >> we're very excited about the year ahead. we don't have any figures that we're sharing publicly in terms of projections. however, we're very happy with the overall growth of the platform just in terms of members and we're also very bullish on the business. in addition to the businesses we're launching today, we do have a robust growing subscription service as we also touched on we have an advertising business and that's in addition to the transaction business that tip jar and pay to viewer are great additions to. >> exciting new world. >> it is. >> a lot of eyes watching you. thanks for coming in, kerri trainer. the reviews in for the iphone 5. we held one on set today. we know most of you haven't touched it yet. what else do you think would shock you about the iphone 5? one reviewer said you will be shocked how light it is. tweet us. we'll get your responses after a break. we've all had those moments. when you lost the thing you can't believe you lost. when what you just bought, just broke. or when you have a little trouble a long way from home... as an american express cardmember you can expect some help. but what you might not expect, is you can get all this with a prepaid card. spends like cash. feels like membership. oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners. i think that the obsession with apple is truly remarkable social phenomena. when you watch cnbc, everybody wants to talk about is apple going up today, down today, fixation, obsession with apple. to me that means that the stock is over believed and over bought.

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