Transcripts For CNBC Squawk On The Street 20130625

the 10-year yield is hovering above 2.5. and europe up 1% this morning and overnight in shanghai, wow, what a ride down 5% intraday, but they rallied to close almost flat. >> a victory! >> the road map begins with the volatile markets and the dow has posted a number of triple-digit moves and this is the most since 201 2011. we will tell you how that will affect you. and robert shiller will tell us about the housing recovery. and we will hear from the board of lawrence robins from glenview capital management. >> and we will also have an interview from previously on "squawk on the street." >> do we have tape on it? >> well, we can search quickly. >> futures higher after the 39-point drop on the dow, which amid higher treasury yields and cash crunch in china, blue chips had fallen 248 before recouping the losses. overnight in china, the shanghai down in the session, and only to snap back with a nice decline after the central bank said they would guide rates to what they are calling reasonable levels, jim. whatever that means. they say that they can manage this liquidity risk, reasonable. >> well, the communists have a terrific capitalist system there, and the communists are in charge of everything and even the supreme court and street cleaning and people forget it is 100% communist controlled throughout the government, and so when they say these things, the people tend to believe them. but when you read about the corruption e internally, it is a nasty place, but each day we get through the mine-field, there is a mine field th-field that we h through taiwan, and brazil andk through it, it is not that radical. >> and i loved the piece about -- >> didn't you love that piece? >> i thought you would say the ceos being taken hostage in their own headquarters. >> they were talking about it on "squawk box" but it is rising frequently that the ceos take the corporation hostage. >> is this when -- >> they thought he was going to be laying off people, and this is a misunderstandable, but he is being held here. >> it is a bottom line issue and not top line issue. >> and look at that. nice to see you. >> and there are some shareholders in this country who would like to do that to their ceos. and have a conversation like that. it is pretty funny. >> different kind of culture. >> funny in a sense, but we feel for him, although we will see. he has not been harmed, but h d held. >> and they have the 8th amendment? cruel and unusual, or a 6th or the 5th? they ain't got no amendments, oh, yeah, the 2nd amendment. >> and they have a shadow banking system in which they are trying to rein it in, but it is an important part of the economy in china, and are you allocating the capital to the most efficient and best means and clearly in china, they are concerned that is not happening on the shadow banking side which is a huge part of the e kconomy >> it is amazing, because we had a shadow banking system in our country, and loft the s&ls paying too much. >> and a bunch of non-lender companies lending for housing, and they were not paid back. >> well, the communists have taken the worst part of communists. >> you love the say communists. >> says the man who looks like len lenin. >> he is my great uncle. and i'm mistaken once a week on the street for being related to lenin. >> and is that a marxist? >> how would you call the system? >> totalitarian iism. >> and bringing it back home here, jim, a lot of the people argue that the bond market here is leaning too hard one way and the onus is on the data to outperform. did durables and does case-shiller do that to them? >> well, the bond market is bigger than any of the numbers and bigger than bernanke, and we had a bunch of the fed heads saying it has gone too far, and that is fine, but let's not lose control of what is going on which is that the fund flows are truly trillions of dollars and not necessarily paying attention to anyone in the fed and not the durab durables. so that with that said, we should not sell the bonds off of that number, if you are an american, and watching things, and you are watching the 10-year, it is not a great sale. where do you put the money? maybe things calm down, and catch the breath and as the mutual funds come in to mark it up, we will have a little bit of normalcy near the end of the market. >> and everything is teed off of that bond market. >> absolutely. >> it is for sellers or huge dislocations in certain pockets of the bond market whether it is corporations and emerging markets where we have seen it or some high yield. inv investment grade is not that bad. municipals and again, this concern that you get this washout, jim, and everything is linked and people take risk off and you have trades linked to trades and therefore everybody takes risk off because they are losing here and they can't lose there. >> that is why i think it is not over and you can get arrested. look, we are not on the market that is ready for 3% on the 10-year. >> is it really unwind? people talk about it, but i don't know if it is as dramatic as the fears seem to be. >> weren't you surprised there were so many people in the emerging markets trying to reach for the yield? >> yes. i had not realized the corporate bond market for merging markets as it is defined has grown 50% in 18 months. that shows you how the money has been chasing yield in this world. >> that is the number that caused a lot of the dislocation. now i don't know whether it is done. i know people at home are thinking that we are a little xenophobic and left of the centric, and that is the a.c.t. coming up again. and richard fisher was pro bernanke, and maybe nobody in indonesia yesterday panicked. i feel that japan was not horrible, and china, i mean, china had closed down 5%, and you know what the conversation would be like? it would not be about bernanke, but about china imploding. >> and whatever buying there was, wasn't it related to the feral hog comment? >> yes. there was a knuckleheaded seller trying to get ahead of something that did not happen. i have been following this guy mark sebastian and look at this, and when everything is right, don't change anything, but when it is wrong, everything is up for grabs. i am watching the vix, and he has taught me when the vix is higher and the s&p 500 is lower, that is the buy-point. we had it yesterday at two the three. >> and the bond market, and there is enough of the municipals and 20-year paper and 5% or more yield, and triple tax free in a lot of the cases, but you are start ting to hear the stories a little bit and starting to creep in. you want to be there, don't you? >> yes, you do. the rich people, and i say rich people and i don't mean to be pejorative, because if you don't have a lot of income, you don't have to worry about the municipals, but there are parts of the market interesting. and when you say that 400 municipal workers hit you. >> and potentially no buyers. one has to think that is what is happening. >> you have to catch the breath, and last thursday between 6 and 7 when the 10-year went down 1.5 points, and it was like, no. and then yesterday morning you had it again and you sit there and say, this thing is trading like a cap stock, but it is a trillion dollar market, and it does, it frightens you when you see those moves, frightening. >> and shares of lennar up sharply. >> yes. >> and pre-market, and case s l case-shiller reporting fiscal second quarter earnings of 0.61 a share which did beat wall street, and also new orders rose 27%, and the ceo says that it points to a solid housing recovery. earlier this month on "squawk on the street," he spoke about rising interest rates. >> you are seeing a knee-jerk reaction to a reversion to a normal line of where things should be. so, you know, interest rates have been at historic lows and they will reverse to some normal trend, and the first reaction from the investor community is going to be how high can the interest rates go before it affects the market. >> take a look at the yir. i mean. by the way, a lot of the hedge funds were long this whole home builder trade, and they have been crushed. >> and real estate investment trust, and you are looking at like pompeii. >> yes. 673 in a flash. >> and stuart miller when he said those comments about lennar, and this morning as we have discussed in previous calls, with interest rates reverting to normal levels can go to panic, and now it is good day and bad day. and lennar is a good stock, and if you look at the charts, lennar is hideous, and in times of flux people look at charts. i am reluctant to bring up the charts, because i'm not a chartist, but at certain points you look at them and say, boy, is that hideous. that is hideous, and lennar is one of the culprits here. but if people paid attention to what the company is saying and not the 10-year, you would be a buy buyer. >> it is saying something, because look at the peaks and the valleys. >> that is a w-pattern and breaks down and a head and shoulders and now a reversing head and shoulder es. >> and they are arguing that the -- nevermind. >> and now looking at the mac d, you will miss the entire cup and handle that is developing. >> is that 4% move today actively reflective of the cancellations and the orders up and selling down? >> it is hard to believe that the good quarter given that the stock is down. the gross markets are great, and this would be, this would be a fabulous quarter if it were not in the housing industry where it is gripped with short sellers everywhere. everywhere, the short sellers. >> all right. >> when is the selling down in the yir? >> i thought that the selling, and i'm looking at the components and some of of the components are now yielding 5.6, and the bigger withins are not stopping it. >> all right. speak i speaking of housing, i saw case-shiller with the highest break on tin deghe index, and w bring in robert shiller. and larry robibins breaking the silence. >> is he like harpo? >> a implied upside on the open, and much more on "squawk on the street" in a moment. ♪ [ engine revs ] ♪ [ male announcer ] just when you thought you had experienced performance, a new ride comes along and changes everything. ♪ the 2013 lexus gs, with a dynamically tuned suspension and adjustable drive modes. because the ultimate expression of power is control. this is the pursuit of perfection. 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(announcer) scottrade. awarded five-stars from smartmoney magazine. i want to get back to the key housing data out. kay schiller records showing a record home month to month home rises, and the biggest increase in seven years. joining us is robert shiller, the professor of economics at yale university and president of schill schiller. you have not been especially sanguine on the housing, and certainly that flies in the face of the number and what it says. do you believe it? >> i am getting more optimistic. these were strong numbers. i think that for the next year, it is probably a safe bet they will keep going up. a lot of the people are flippers now, and i can't tell them that they are wrong. i just don't know about the longer term, but for the short run, it is looking solid at the moment. >> it is an older number, and it is for april obviously, and we have seen rates change in that time. the release seems to indicate that in that environment people will shift to a.r.m.s and not necessarily a bad thing and is that true? >> well, i don't know about. a r.m a. --arms, but they are still low, and people are juiced by the interest rates, because they believe they may go higher, but they want to buy because of the mortgage rates. if you were ben bernanke, you say, wow, it is out of control and i have to raise the fed's fund rate. >> well, he has to before too long. ben is probably congratulating himself that qe3 has worked. >> well, i mean, literally, i mean, there are just not enough homes, right? you can't get the increase with the supply and the demand, and either too many homes off on the sidelines owned by the investors or the home builders can't put them up fast enough? >> that is the true, and always been true, and that is what made the boom happen. in the boom, home builders were going as fast as they could and a couple of years for the supply to come online. >> but where are we on the affordability given this rise of rates particularly over the last month or so, and the rise in home prices? are we nearing anything that would be, that would stop this continued growth? >> no. no, the affordability is still great, because home prices while they are down, while they are up over the last 14 months, they are still low and mortgage rates are still low. so this is still a good time to wi, i think. although the long run future is always unknown, but the immediate market looks good. >> robert, diana olick, our real estate correspondent points out in may, a month after the numbers, one-third of the home buyers were all cash, and does that worry you? >> yes, it does worry me. the sentiment is changing, and we are a more speculative market, and more flippers and more people who are not going to be stable home buyers, and that is why this thing could evaporate. peel should always remember that prices go both ways up and down, and they could go down. so someone buying now may not be so happy in 3 to 5 years. >> people got that message over the last ten years to a certain extent. >> not everyone. >> well sh, are we going to sta to see more affordability products from those who provide mortgages? >> well, the one thing, and i don't know what i do know is that we are likely to see more rentals. this is a trend. and more apartment living and more city living. those are trends that also threaten. and by the way, this boom is not uniform across all region, and it is also not as strong in the far out suburbs, so people are becoming more urban at the moment. >> robert, as someone who bought a house in the period, i have to tell you that i gave up trying to get a mortgage and trying to get the average down, and listen, i said, i will find another way and not a mortgage and a credit line, and robert, it is so hard to get a loan. there are people who find other ways to pay cash, because you can't get a loan. >> well, some people can't, right. >> it is tough. >> and even this is with tremendous government support for the mortgage market and this is another reason to be worried about the longer term, because we don't have a healthy mortgage market. >> finally, robert, you know, this number, and we will see what the consumer confidence says in half an hour or so, but it is going to be used as a sign that consumers are more flush and times are good, and is that a logical extrapolation from this set of data? >> well, the consumer confidence has been rising both with the conference board and the michigan surveys for months now. i think that is a good sign, but the correlation historically is not that strong between consumer confidence and home prices. home prices are driven by lately people's speculative sense of the market. and right now, people are looking and the prices are going up, especially like in california. it is a no-brainer. to buy a house now and sell it in 6 to 12 months, and that will probably work. markets are stronger. but in the longer run, where this confidence, what it means is harder to discern. >> yeah. robert, thank you so much for shedding light on the numbers and appreciate it very much. robert shiller joining us from new haven this morning. news out of carnival, guys, they are going to split the roles of the chairman and the ceo and aaronson will lose the role of ceo. >> well, maybe that is what happens if you make a lot of mistakes or -- i have to tell you that carnival, it is clearly bottoming, but they have had too many mishaps. if it were an nfl team, the guy would have been broomed a long time ago. >> and yes, arnold donald who has been a board member will assume the role. >> and a guy with two first names. my father says be careful. >> 34 years at ceo. >> it is a great company and i know lots of people who just still love carnival cruises and i think that they had, honestly, i believe it was bad luck. i don't believe that management has lost control of the fleet. a lot of bad luck there. and mickey arison, and at one i time or another, you have interviewed him. he owns the heat also. >> and great parade yesterday. >> and yes, lebron from akron ought to do a little bit go out on the ships a little bit. right? go to take a lebron cruise. >> a lebron cruise. i would do it. >> and kind of play some h-o-r-s-e on the open seas. >> and the guy with the spiked hair. i would take a cruise with him any day. >> maybe not. >> and he is funny. >> and the carnival earnings and we have a lot more earnings after jim's "mad dash" so don't go away. ♪ ♪ ♪ [ male announcer ] if you can't stand the heat, get off the test track. get the mercedes-benz you've been burning for at the summer event, going on now at your authorized mercedes-benz dealer. hurry, before this opportunity cools off. tdd# 1-800-345-2550 hours can go by before i realize tdd# 1-800-345-2550 that i haven't even looked away from my screen. tdd# 1-800-345-2550 ♪ tdd# 1-800-345-2550 that kind of focus... tdd# 1-800-345-2550 that's what i have when i trade. tdd# 1-800-345-2550 ♪ tdd# 1-800-345-2550 and the streetsmart edge trading platform tdd# 1-800-345-2550 from charles schwab helps me keep an eye tdd# 1-800-345-2550 on what's really important to me. tdd# 1-800-345-2550 it's packed with tools that help me work my strategies, tdd# 1-800-345-2550 spot patterns and find opportunities more easily. tdd# 1-800-345-2550 then, when i'm ready... act decisively. tdd# 1-800-345-2550 i can even access it from the cloud tdd# 1-800-345-2550 and trade on any computer. tdd# 1-800-345-2550 with the exact same tools, the exact same way. tdd# 1-800-345-2550 and the reality is, with schwab mobile, tdd# 1-800-345-2550 i can focus on trading anyplace, anytime... tdd# 1-800-345-2550 until i choose to focus on something else. tdd# 1-800-345-2550 [ male announcer ] all this with no trade minimums. tdd# 1-800-345-2550 and only $8.95 a trade. tdd# 1-800-345-2550 open an account with a $50,000 deposit tdd# 1-800-345-2550 and get 6 months commission-free trades. tdd# 1-800-345-2550 call 1-800-578-4439 tdd# 1-800-345-2550 and a trading specialist will tdd# 1-800-345-2550 help you get started today. five minutes before the opening bell and time for cra r cramer's "mad dash." >> one of my favorite companies getting dinged, walgreen's. rite aid is getting expensive and mr. lawson is a great ceo and he comes out to say that the front end sales are not up to expectations and in other words not the drugstore, but they lost traffic when they had the tussle and it went to cvs and this thing is getting hammered. i have to tell you, david, maybe if they get it together, you do want to do some buying, but i don't want to throw the stock out. every time people have, you know it has bounced back. and i think that they have a terrific ceo and it took my breath away that they had a bad front end of the store. >> and a number of different events every time you think it is going with the momentum. >> and i also feel by the way that the rite aid has come back. >> yes. >> and so you finally, and looking like a slap happy due w dueopoly, and now you have a competitor and no longer just cvs and walgreen's, and let it settle, but i want to come back to it. >> and watching walgreen's and a lot more. we will have larry robbins a huge holder of a lot of stocks like this, including expresex s expresscripts, and so many more. we will have more news after the opening bell coming up. changing the world is exhausting business. with the innovating and the transforming and the revolutionizing. it's enough to make you forget that you're flying five hundred miles an hour on a chair that just became a bed. you see, we're doing some changing of our own. ah, we can talk about it later. we're putting the wonder back into air travel, one innovation at a time. the new american is arriving. ♪ [ indistinct shouting ] [ male announcer ] time and sales data. split-second stats. 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[ indistinct shouting, bell dinging ] ...you'll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪ you are watching the opening bell and the s&p 500 at the top of the screen in a moment as we await the action here at the big board of the nyse. the theater fund celebrating the first tkts booth in times square booth. have you ever used that? >> yes, two for one. i was so poor i loved that place. >> what a way to bring the broadway to the masses. over at the nasdaq, grammer si institute. a market for leading financial institutions hosting a forum at the nasdaq today. and starting the session with what may be a triple-digit move. we have had 9 of 10 triple-digit moves and 12 of 16 for june. >> exhausting. exhaust i exhausting. obviously, if you bought a little yesterday, you lighten up a little today, and that has been the philosophy, and no follow-through these days after years, and remember tuesdays and they used to be up days. >> yes, for a while. >> and we had a heck of a streak going there for a while. and then we didn't. >> like dimaggio. >> yes, and interesting that carnival is getting a boost at 3% that arison will remain chairman and new ceo. >> well, that is funny on the day that it depends on the day, right? you have a nice glow from overseas and suddenly, a wind at everybody's back and everybody is feeling good and the only thing down is netflix on the downgrade. >> and barnes & nobles will be down badly. we were going to talk about it in the mad dash. and looking at that downgrade, but barnes & noble down almost 11% at this point. their digital business is just a lot of pain. >> not working. >> not working out well. >> and microsoft. >> they have lin riggio out there trying to acquire the old book business and the dot-com, but microsoft in there on the digital business. >> and microsoft looking at nokia and what else would they be looking at? kodak? >> the investment of microsoft was ready to change and what they find in the sofa. >> did you say sofa change? >> yes. >> did you have slipcovers when you grew up? >> no, but my grandmother did. >> mine, too. >> one did. >> and what was that about? >> it kept it clean. >> mine, too. and especially from guys like s us. >> because you didn't have money to take it in. starbucks up 1% and raising the prices for some drinks for the first time in two years. do you normally stop by? >> triple venti skim wet is a part, because the stage manager got me passion fruit lemonade and i sent an e-mail to him, and he said, one of the many new drinks about to come out by the inventive team, and we will have howard on "mad money" this week, and we may break form and knock back a couple of the passion fruits. >> wow, and then what will break out? >> i don't know, man. i have to tell you, but he is on a roll. howard is on a roll and the company is on a roll. and remember, they have a lot of fabulous executives, including just what i think is the best social media world adam brotman and you take a story of starbucks, and it is reproduced millions of times. the loyalty card is good and i believe they are a juggernaut. >> interesting. i can't wait for that, because howard is always great. david mentioning the bernstein downgrade and the price target is 180 and the stock is reflecting unrealistic expectation about subgrowth and margin growth. >> they are not negative and they see 140 million subscribers and they are questioning the valuation. >> he is arrested development of the stock. >> you have 1 million of them. >> i don't know how many. >> well, it is the house of card s. >> netflix is the performer of the s&p and maybe for the quarter and the year or certainly for the year, but i would not sell netflix, i would not sell it. and balmer ought to by netflix instead of fooling around with the nook. that would give him along with the xbox followers and he would lock up a huge number of people in the country. >> you have been saying that for a while. >> steve watches. how are you? school going well for you? >> yes. >> he watches the show. i hope he watches the show, and he told me himself. >> and coach is not moving a great degree, but lizar does take a survey asking people their favorite handbag brand and people say coach down from a couple of years ago. >> and jimmy choo toe cleavage and the shoes are the reason it could come back. but coach, nike, china. and you put a kentucky fried chicken piece in a coach bag and then have some nike sneakers, and you are dealing with the triple play of pain, not unlike what mr. t. predicted for rocky, right. pain. >> that is right, pain. and talking about pain and china, and lvs las vegas sands had been talking about a concerns of downgrade in china, but if you look in the last few weeks, it is something. >> a lot of the snapback ra rally, and looking at the tape, everything is snapping back and a lot of the knee-jerk action and carl, you were so right to hit on the up 100 and down 100, and it is a roller coaster, and it does not make people feel good about the stock market. i thought that we were bringing people in with the streak, and now people say, ah, it is back to that way where i buy and by the time i get the report i have already paid too much, and the next thing you know, we will lose more people. >> interesting. you covered it last night on "mad" a couple of the investment in america series, one is echo on the front page of the journal regarding pipelines out of texas and the energy trade here. >> the energy trade remains incredibly strong. i have ms. coleman from dupont the night, and she does not have much use of the natural gas, but they are talking about it. the cfo of u.p.s. came on "squawk" and talked about how natural gas is so prevalent and even though a huge amount of capital infrastructure you have to do, they are looking at the natural gas vehicles. you have to get the oil out of the new orleans, i mean the louisiana hub, because there is just -- they built all of those for keystone, and dirty oil so to speak, and some people it is heavy crude, but we need light oil, and we have too much oil in the wrong places. >> talk much more about what you have to night in a few minutes. >> thank you. >> and meanwhile, josh lipton is on the floor watching at what is happening. >> after the sell-off yesterday, the green on the screen. the dow shooting up 80 right at the open. central bankers around the world working to calm nerves and remember yesterday china was the word of the day down here, and you had liquidity fears and credit crunch and would it slow down the economy more, and now the chinese policy makers are out talking about the interbank rates and pinning the squeeze on the seasonal factors and saying that central bank will closely monitor the rates and look to provide some calm. here, we will look at the chinese companies listed in the u.s. and tickers like l. -- litb and also economic good, and durable goods beat, and we will look at the home builders closely, including lennar. they report best of estimates and especially interesting commentary from the ceo, and very positive saying that despite the recent interest rate increases, they have seen very little impact on the sales or the pricing. he went on the talk about the next phase of the housing recovery continuing to show strength. talked about how they are well positioned for another year of solid housing profitability. on the other hand. also, check out barnes & noble, and there is a different story with the fourth-quarter loss, and the same store sales with come competition of amazon and apple and those division sales down 34%. david, back to you. >> thank you, josh lipton. yesterday, we had a deal in the hospital sector, and today, something rarer, we have a large shareholder and a hospital company filing consensus implication implications to replace the entire board of drirectors glenview capital, and larry robbins will be with us in a little while. there is larry there. you don't usually see the consensus limitations when they are not related to an m&a event that is to help them bring it to the board and have it well received n. this case, mr. robbins in the detailed letter of some 13 pages in length, and 47-slide presentation makes the case that this is simply a board that has not done the job necessary for the shareholders over a long period of time and citing what he believes is underperformance. when you take a look at the total shareholder returns for example calling it a lost decade. there's the board and eight nominees to replace each of them and it is 50.1%, and once you are declared effective by the s.e.c., you have 30 days to get the 50.1%, and you can call a special meeting in 48 hours and say, see you later, board of directors. it does not happen often. and again, the total shareholder return is one of the things cited. we will ask many things from mr. robbins about why he is doing this, and it is not a fundamental investor, but they have taken this fight. >> that is horrible. >> and you can look at the hma shareholder in graph form for you as well, and that is where it comes down to, and of course, a lot of reasons saying they had no strategic vision, and searching for the fifth ceo in 13 years, and of course, glenview is the largest single shareholder in the company with 14.6%. and a lot more the talk to mr. robbins about, and one of the shareholders is tenant who did the deal yesterday and instrumental in the clearwater deal with sprint/softbank that took place last week. by the way, the shareholder today on sprint. that deal will close when it is voted soon. close early july. >> and don't panic, right? it is a derecho. >> right. >> what a saga. >> and then we will talk about mas is a san in a big way. >> you are working on the japanese. >> and you know, it is stevenson mcadam masason? a trio? >> yes. >> the pep boys. >> yes. right. >> it is going to be a troika. and also what is charlie ergen after? he has increased the value of the spectrum, but perhaps he can argue that the time line on the spectrum, and hey, i tried this and that and give me more time fcc if they come after him to put it to use. >> i see a price for develop in. that is something. let's shift to the bonds and the dollar. rick santelli with some great points this morning on the durable goods in chicago. go ahead, rick. >> thank you, jim. since you brought up the durable goods. durable goods was from the expectations standpoint much better than expected. many of the traders have been e-mailing me talking about the sequential weakness and the transportation, and of course, something to consider, and of course, kay schiller, the anxieties up, and maybe -- case-shiller, and maybe the rush is on. and out to 5s and 7s by thursday and these are important auctions to watch. we will be handicapping it. and now for the 24 chart, what you want to notice is that as you look at the 5s and the 10z and the 30s and the further down the curve you go, unruly, and some of it is erratic upside yield and downside price behavior continuing to resurface. keep an eye on 250 and 150. and we know that europe has many issues like recession versus the u.s. if we look at the japanese, we have talked about many times how the jgb after a big run in yield and rundown of price in may has really, really settleded down. this year to date chart clearly shows that we have had a string of pretty much the entire month of june between 80 and 90 basis points on the closing basis. any breakout in either direction will be something to pay close attention to. on foreign exchange, the dollar index just like 10s and 30s wants to do bertter. all of that says to take a breath before you look ataat th com markets to continue. and finally congratulations to theblackhawks. a 17-second miracle, and a lot of sleepy people here. >> and what a party to wrigleyville. congratulations to the hawks. and kelly is here from post 9, and so much fed focus and we haven't seen anything yet. >> this going back to what ed yardenni likes to call it a consensus, because we have not only had so much communication, and a statement, and press conference and the non-voting members of the fed coming out with their own statements trying to explain what is going on and you might say because this week is extraordinary, and we heard bullard and then kocherlakota coming out yesterday trying to explain to some extent what the fed was trying the do saying that there is no need to panic, but the trouble is not the style of communication actually, but the content. we are getting extremely different messages and the general point, and the general way in which the fed has chosen the timing and this market backdrop to start talking about the taper has people confused. so on that note, i know we will have kocherlakota on "squawk" tomorrow morning and something that the markets would like to ask him. let's rip through them. insist why tapering is not tightening when the market is saying otherwise. this is one that people have to analyze, because there is data about it and the investors are trading off of it. did they view asset prices prior to may 22nd when bernanke was testifying frothy and the only way to lower them. some people say that is the only way to interpret it. and what level of progress would the fed alter the plans? at one point we heard 22 months before they would exit, but generally speaking 150, could we push off that view? this is an extremely important one, how can the fmoc describe inflation expectationsane cord when they have dropped so considerably, and guys, i will point to yesterday as well, the lowest point we saw in the morning in terms of the stock sell-off came when inflation expectations, and what the market thinks is going to happen on the five-year basis fell below 2.4 which is 3.0 in january and if you want to know what is happening in stocks, you to watch the inflation expectations. >> and did the calm cause the move up in expectations. >> and from wild turkey to cold turkey. >> and yes, he is not a voting member, but everybody knows he is hawkish, and if he is coming out to reassure people, and we will hear from the six different members from thursday to friday this week, and the question is can they send a consistent message and answer some of the questions that the people are confused about on the street or risk confusing people. >> i love the supreme court analogy in the way that the justices have their ways of talking to the legal community now, and can't we get it at once. >> this is babblilicious. >> this is what is coming forward on "squawk on the street." coming up, do you think that you have what it takes to train the dogs of the dow? well, that may be harder than it looks. but with jim cramer and his six stocks in 60 second, it may not be so rough. "squawk on the street" will be right back. we went out and asked people a simple question: how old is the oldest person you've known? we gave people a sticker and had them show us. we learned a lot of us have known someone who's lived well into their 90s. and that's a great thing. but even though we're living longer, one thing that hasn't changed: the official retirement age. ♪ the question is how do you make sure you have the money you need to enjoy all of these years. ♪ to enjoy all of these years. the world is changing faster than ever, creating new opportunities for those who stand ready to seize them. in a time when the biggest risk is playing it safe, we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, our flexible, collaborative approach helps forward-looking companies not only run better, but run different... to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because now more than ever, the future belongs to those who challenge the present. otherworldly things. but there are some things i've never seen before. this ge jet engine can understand 5,000 data samples per second. which is good for business. because planes use less fuel, spend less time on the ground and more time in the air. suddenly, faraway places don't seem so...far away. ♪ time for "6 in 60" with jim. six stocks in 60 seconds. >> well, on the s&p 500, merrill lynch is coming back with a nice gift. >> and blackberry? >> it is a squeeze, and it could be a short squeeze and they report at the end of the the week. >> and new details on george zimmer? >> yes, i did this for david, because mr. zimmer had diffic t difficulty accepting that men's warehouse is an independent company with a independent board of directors. >> and lammish research. >> it is semi con ducks or the and i love it. >> and apple? >> we are so used to the numbers being cut, of course. >> and goldman neutral on valero. >> in has been a great call of goldman and have been knocking some of the calls, but this is a great call to sell it and declare neutral is a victory. nice going. >> very nice. we know it is a big week on "mad" and what is coming up? >> investment in america's ellen coleman who is one of my favorite ceos who has changed dupont and changed it into safety and safe for the environment, and i can't wait to talk to her. a charitable trust name, and she is terrific. >> 6:00 and 11:00, and you are not going away. minutes away from the first consumer confidence report. since the board's decision not to give embargoed copies of the meeting we will find out what happens. >> and eamon javers broke this for the you players at home. >> and larry robbins, his first television interview in more than a dekachlcadedecade. i will be right back. i'm a care. when you do what i do, you think about risk. i don't like the ups and downs of the market, but i can't just sit on my cash. i want to be prepared for the long haul. ishares minimum volatility etfs. investments designed for a smoother ride. find out why 9 out of 10 large professional investors choose ishares for their etfs. ishares by blackrock. call 1-800-ishares for a prospectus, which includes investment objectives, risks, charges and expenses. read and consider it carefully before investing. risk includes possible lof principal. [ kate ] many women may not be absorbing the calcium they take as well as they could because they don't take it with food. switch to citracal maximum plus d. it's the only calcium supplement that can be taken with or without food. my doctor recommends citracal maximum. it's all about absorption. the conference board is set to release the latest conference number at the top of the hour, and the group's first since it s is declaring that it will no longer declare economic data to the news organizations in advance to prevent trading before it is released. eamon javers has been on the story since the beginning, and he is in washington. >> well, carl, they will put the number out at the top of the the hour in a few minutes and they will use old fashioned technology and things like e-mail and the web in order to disseminate the story and they won't give it in advance to members of the media. here is the statement that the conference board put out last week when they said they would change the policies w. the growing influence of private sector data, the blurring of the line of news outlets and data providers and the ongoing pressure for trading advantages measured in milliseconds are almost impossible to monitor with any legal or technological clarity. so they fear that the data is leaking out because of the people who have access to high speed pipes coming from the members of the media loading them in a specific way for alg rhythmic computer to trade on them in real time or near realtime in milliseconds, so we will see how the process plays out, carl. >> thank you for that, eamon javers. it is interesting that some of the old school conference boards the university of michigan run over by technology in the last few years. >> i wonder if somebody from the s.e.c. picked up the phone and said, you know what, we are not crazy about this in a world where we are supposed to have fair and free disclosure and i wonder if anyone did make that call. i have lawyers who tell me that the government was not that happy with this. >> when you speak quietly, it scares me. >> because the government is not going to tell us, but this is a total violation of the spirit of the law, and eamon brought it to -- and i will tell you that people will tell you that the government was very unhappy about this. >> and we will see if it reflects anything on what case-shiller said today and durables and two good data point s. consumer confidence is not the only key coming out at the top of the hour, and breaking news on new home sales, and larry rob brins, o bins coming out in a rare television interview coming out. 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[ male announcer ] that's handy. ♪ ♪ ♪ ♪ [ male announcer ] if you can't stand the heat, get off the test track. get the mercedes-benz you've been burning for at the summer event, going on now at your authorized mercedes-benz dealer. hurry, before this opportunity cools off. welcome back to "squawk on the street." we have a trio of important data after several important data points already released. durable goods beat expectatios.s was nlts as good as last month, but solid, and of course, case-shiller very strong number. we are a few seconds away from two june numbers and the form former -- this is besting most of the expectations of consumer confidence i which is comps back to the best level of june of '08 when it was 477,000, so it is up a couple of percent. confidence board 81.4. 81.4. buckle up, people. we are looking for a number in the 75-camp and when is the last time we saw 81.4? i will tell you. january of '08. that is when it was. june richmond fed eight versus expectations of two. last month was minus two. eight is the best number since november of '12. no matter how you slice it, especially housing and in the form of new home sales and kon sum consumer confidence better than anticipated and no sequential issues there like durable goods. carl, back to you. >> nice hat trick, rick. thank you very much. we will come back to you for analysis. we want to bring in diana olick, and steve liesman, and start with this number on the homes? >> well, it is a beat up 2.6%, but what i am looking at is prices. we have been talking about the prices all morning with case-shiller and the prices for new homes jumped 10% from a year ago and the year over year and look year over year and not month to month, because they ease slightly. what is interesting is that the home builders have been increasing the prices a lot, and also slowing the sales of the lots in order to gain the pricing power. remember, this number is signed contracts in may and not closing numbers like the existing sales so this is the indicator on rising mortgage rates because they were rising in may, and they apparently kept the prices up over 10% which is a good sign for the builders going forward, but the skwe will that change as we see the rates jumping more in june, and we will see the signed contracts. again, the month supply is still lean, but the builders themselves have been admitting that they are slowing sales of lots and slowing production in order the gain the pricing power. so overall, a good number and good on the price jump, but, you know, we will have to see going forward how the rates will affect all of this, carl. >> that is the variable that has changed since a lot of the numbers have been put together, diana. and let's get to steve liesman on the data that includes richmond and confidence, steve. >> well, that is the one thing that i like a lot is the richmond fed number, and i will tell you why, carl, because there are numbers about the manufacturing sector, and this is a servicing index and this is still doing well and we need additional data on the manufacturing sector, but it is up 15. i really just want to see the tick of the market. i want to see how the market process is, and my take is good news is good news. give me economic growth and replace it with the fed stimulus any day. we have bert housing data. we have better confidence data which is obviously not a real number, but attitudinal number you could call it and the durable number this morning which is in line with the expectations with the 1.1% increase in the business investment number, and a lot of it as we can see is transportation taking out ex-trans up 0.7%, and we are crawling off of the swoon that we had at the end of the 2012 and beginning of 2013 and ratcheting back up. this is a key for the outlook, carl, does business spend, and does the environment seen positive because of spending. >> steve, a quick question, because you can say that tin crease in rating and especially the real rates over the past couple of months, if the economy not improving is a problem, but all of the data point to the i conmy might still be hanging in there and improving, and do you think though that this is priced in or new information telling us that we are doing okay on that front? >> well, kelly, what would you deskr describe? the bond market is a little bit like a blood hound, you know? it has an ability to smell economic growth before it is apparent, you know. and i'm wondering, too, the same thing. we had that rise and we went from 160 up to 20110, and theres an idea that it is overdone, but as you know, kelly, the inflation component has fallen and expectations have fallen off, so this is an expectation of the real growth in the economy and some component of less qe, and that is the part that the market has overdone, and forgetting that bernanke has told us that he will be in the gamer for another year of quantitative easing and then the rates will be lower for a period of time after that. i'm seeing here real growth in the data here supporting what the bond market seems to have sniffed out a month or so ago. >> yes, that would be a better outcome, steve, than if the rates were headed higher and not that sense. so it is again to come back to whether there's any inflation here, and whether the market participants see it as better growth prospects, because yesterday the answer was no, and today, maybe the answer is well, yes. >> well, i have been doing this for a while, kelly, and i have watched the market get distracted in the absence of earnings data or the economic data, and there is nothing like real economic data or earnings data to focus the market on the thing that it does best which is discounting future earnings. i'm interested to see how it prices this in. we had where happened to the stocks here are about unchanged in this data, so it is pretty much in line with the expectations, but the key question to me, kelly, does the market perceive the federal reserve on the verge of a policy mistake here, and in other words, too tight to its view of the economic outcomes, and to the extent that we have better economic data goes in line with the fed's outlook, and policy would not be seen on the verge of a mistake. >> right, right. >> and diana, one question for you, and we have not touched on the case shchiller with you directly, and part of the -- kay shkay do you believe lit will play a role? >> well, people are wanting to play, but the 30-year fixed is the of whelmingly popular mortgage of choice, and we are not seeing jump up of a.r.m.s and underwriting is tough and people think that the rates are low enough to take advantage of the 30-year and the 15-year, because they are bigger savers. >> diana, what about the rise of home prices bringing inventory back on to the market? you have been chronicling amazingly well, the investor purchases, because they guys did not buy them to hang on to them, but to sell them. >> yes, the smaller investors are starting to flip the homes as well as you heard from robert shiller. you will hear the organic sellers saying, i'm out from underwater, and i can put my house on the market. but there are 4 million delinquent loans out there. as the banks ramp up the foreclosures, we will see more distressed properties that have been delayed, and when we see that. >> but every home price rise reduces the prompts. i don't know where they are. >> well, we have the underwater homeowners unable to refinance if they don't have government-backed loans, and it is a big issue out there. >> all right. guys, one more reason to watch mortgage apps which cashin said will be a more important number over the next few weeks. thank you, both, very much. do we believe it is a war with investors on wall street? we have spent a week debating ben bernanke's take on the qe,h are all on the same page, but now there is a tone for markets not the force a tapering u turn and not to fight the feds. big money does organize itself like feral hogs, the dallas fed president told the financial times. if they detect a weakness or a bad scent, they will go after it. we are joined by the manager of the hodges small cap fund, and also the chief strategist of rbc capital. good morning to you. michael, it is interesting to read what fisher is saying here. he says that the federal open market committee is very mindful of what happened when george soros launched a speculative attack on the pound in the early 1990s and he says this may be the same sort of situation, when you look at, michael, the moves on the interest rates and do you see feral hogs at work? >> no. my wife does want me to lose weight, but i don't think that hog is the right description. i think that this is not people attacking, but it is unwinding of the position, and liquidating of old positions, rather than new positions to go after any weakness in the market. the reason that the price movements have been so big is that it is not the same market that we grew up with. in the old days if someone was selling mortgages and mortgages got cheap, fannie mae would come in to buy tens of millions of dollars to keep the spread in line, and the primary dealers in any liquidation would take more risk on the books so that the institutions were transforming interest rate risk into credit risk. as the regulators have tried to tamp it down, you don't have the same shock absorbers in the system anymore so you will get outside move. >> nonetheless, michael, does it not concern you that a man who is a voting member of the fomc next year believes that you have to hold the line against an aggressive market in this way? >> well, again, one member of the committee, i don't think is too important. but the consensus view out there is unwinds of position rather than anything new. >> and let me ask you, because if he uses this language in public, eric, god knows what they say behind closed doors and perhaps this has to do more with the internal debate of the fomc whether they should walk back on the tapering? do you think that is likely in some big way give tn the moves that we have had? >> well, i don't think that anybody out there was investing on the premise that they expected quantitative easing to last forever. we think that the volatility here recently over what the fed may or may not do has created the opportunities to go in to look at individual companies and this well anticipated correction that everybody has been waiting for has been under way. it is too late to play defense. you can use this volatility to your advantage if you are an active manager. >> michael, just a quick question here. we have seen the 10-year spring back to 2.58% this morning after the better data. but you could not ask for a batch of reports to come in with a more unambiguous beat than what we have gotten this morning, so from here, what supports the 10-year at these levels? what is it going to take for the economy to prove that it is resilient to the effective tightening that we have seen in the markets over the last six weeks or the two months? >> yeah. i think that the market has come too far too fast, and more obvious than the five-year part of the curve than the 10-year part of the curve and that seems too much fed pricing indexed in, and i think that we will have o to -- it is going to be hard for the fed to unwind all of this. it does not want to say that it is going to continue to buy forever, and we need to live through this adjustment to not having the fed dominate the market at some point, and if they go on again/off again, it is going to make it worse rather than better. >> eric, what happens with the equity market from here to the end of the year in your view? what is the central advice to investors in equities here? >> well, at the hodges funds, we believe that the investors should really focus on the well run businesses that control their own destiny that aren't necessarily dependent on what the fed may or may not do, but instead rely on their own ingenuity. >> eric, story. really sorry, do you really believe that the stock picking works in the environment where the market has moved 4% in one week? >> absolutely. like i said, this volatility that we are seeing can create opportunities if you focus on well run businesses that rely on well calculated business decisions versus what the fed may or may not do, and the fact that the fed is not in there artificially stimulating the market is a sign that the economy is improving. if you go out there to focus on the individual businesses and which ones are doing well in the environment, we are finding plenty of opportunities in the hodges funds that we think that will do very well picking stock s in the environment. >> okay. sage advice, guys, thank you for the analysis. eric marshall and mike clougterty. thank you. this is what marisa meyer told uts last month after buying tumbler. >> well, we wanted to move faster in terms of shipping products and making decisions, and we have achieved a lot more velocity which is what is being fell right now. >> today marks myers' first annuan annual shareholders meeting, but not everyone is excited about it. we will have that next. uh... after you. ♪ [ sighs ] [ male announcer ] it's all in how you get there. the srx, from cadillac. awarded best interior design of any luxury brand. lease this 2013 cadillac srx for around $399 per month, with premium care maintenance included. 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(announcer) scottrade. voted "best investment services company." i'm hampton pear snon washington reporting. we have had a key ruling from the united states supreme court striking down a key provision of the 1965 voting rights act. section four, the section in particular the voting rights act that had the do with the formula of how those states that may have been under scrutiny for restricting voting rights and what was the formula the formula for preclearance of any changes they wanted to make in the formula and the supreme court in a 5-4 decision said that the preclearance formula is now unconstitutional and it is up to congress to fix it. a key sentence from the majority sentence from the majority opinion says that section 4 in the voting rights act is a formula that can no longer be used for subjecting jurisdictions to preclearance. so that's the key ruling today, and we are still of course waiting for the key rulings on gay marriage going forward, and that is it today from the united states supreme court striking down a key provision of the 1965 voting rights act. carl, back to you. >> hampton, that is big news. thank you so much, hampton pearson in washington. meanwhile, the yahoo! shareholders meeting begins in an hour, and with acquisitions including the social media site tumblr, and melissa meyer joined us on "squawk on the street," and this is what she had to say. >> i dont n't know if there is another immediate one on the horiz horizon. i don't want to say ever, but you want to integrate it that it is tumblr is executing well, and seeing through the partnership and the collaboration opportunities, and so i would want to take a moment to do that if at all possible. >> take a moment. and so now joined by all things dee editor, and the single largest holding since 2011 of yahoo. eric, you wonder at what point the ceo is happy with the way that the furniture is arranged in the new house. where is she in the narrative? was tumblr the beginning of the end? >> i don't think that tumbler was the end by any means, and we know that yahoo was in the bidding process for hulu, and marisa myers talked about an interest in individuvideo, but perceptions, 18 months ago what were we talking about yahoo? seriously talking about it ending up in the hands of private equity and not a year since she has taken over, and stock prices speaking for its f itself, and the latest multibillion dollar deal or $1 billion deal and talking about whether it is in the process of hulu or zogby, and making smart acquisitions, and marisa deserves credit for changing the perception. >> and buying the buzz, eric jackson, what they said when the tumblr deal was announced. when does that play off in shares and clicks and ad revenue that has not been positive in recent quarters? >> well, definitely by 2014 which is what they said at the time of the acquisitioacquisiti obvious that tumbler is on a growth trajectory, and marisa is taking a hand's off approach and what we have seen with youtube and google and now currently with facebook and infa grastagid it is the right direction. i think that tumbler has a right direction and part of mobile and that is a part of the yahoo story that the critics were jumping on and now clearly they have a great mobile property on their hands. >> at around $24.50 here, and we have seen targets from the sell side venturing into the 30s. is your appetite to add more or trim or maintain the position or what? >> well, i'd say add more in the last week, because the stock has really dropped by 10%, and it is really hard, you know, that is a t function of the market, and some stories over the weekend of the chinese stocks and the different v.i.e. structures and that has inv investors worrying about the alibaba holdings, and this is their alibaba holdings, and the japanese holdings and the turn around of the core business which is in the very early innings. >> and eric, as a shareholder, should the shareholders be concerned about meyer and the way she has handled yahoo mail? and twitter has not indicated they like the changes made and that is one of the tent holds for them and key historical ways that people stay connected to yahoo generally speak iing. any concerns on that front? >> well, mail is a huge property for yahoo! kelly. i would say not just for yahoo! but any internet change. when there is a change, there is an outcry, because whether it is updates to flickr or twitter, because it comes with the t territory. she is focusing on the key properties which are a key part of the turn around of the core business, and they need to be updated. >> finally, eric kesseldahl and you talk about the stability in the first year, and how does the company get talked about in the valley from the culture standpoint, because she made controversial moves in the early days that rippled out to the mainstream media, and have they faded? >> yes, of it, it is a matter of perception, and in silicon valley, you want to work for the company that is cool, and no question that marisa meyer and her job at google brought some celebrity stature into yahoo, but a delicate dance, because marisa has been trying to lower the expenses, and so there is cuts in employment, but also wanting to raise the profile of yahoo as the cool company to work for and so it is a delicate dance eer, and she has handled it pretty well, and partly the acquisiti acquisition, because was she is acquiring good teams of people, and the team in zombie and intere interested in quickie, a mobile video service, and so those are as much about hiring people as acquiring good properties. >> yes, good point. arik kesselledahl and steve jackson, thank you. and we will have corzine's response next. and the decade-long silence is breaking today from larry robbins calling for the shake-up of one company. our exclusive interview with the ceo and founder of glenview capital management straight ahead. exhilarating c250 sport sedan. ♪ vo: i've always thought the best part about this country is that we get to create our future. you get to take ownership of the choices you make. the person you become. i've been around long enough to recognize the people who are out there owning it. the ones getting involved and staying engaged. they're not sitting by as their life unfolds. and they're not afraid to question the path they're on. because the one question they never want to ask is "how did i end up here?" i started schwab for those people. people who want to take ownership of their investments, like they do in every other aspect of their lives. everybody has different ideas, goals, appetite for risk. you can't say 'one size fits all'. it doesn't. that's crazy. we're all totally different. ishares core. etf building blocks for your personalized portfolio. find out why 9 out of 10 large professional investors choose ishares for their etfs. ishares by blackrock. call 1-800-ishares for a prospectus, which includes investment objectives, risks, charges and expenses. read and consider it carefully before investing. risk includes possible loss of principal. and so too is the summer event. now get an incredible offer on the powerful c250 sport sedan. but hurry before this opportunity...disappears. the mercedes-benz summer event ends soon. the cftc is looking to jon corzine for the collapse of global and the misuse of consumer funds. kayla tausche, this has coming later than people expected but a big move. >> yes, kelly. two years after mf global declared bankruptcy, and legal battles still continue focusing on jon corzine, and now they will considering civil charges for the executive for critical oversight at the time of the bankruptcy. they say that the charges were close to being dropped and denying opportunities to settle which is an unusual move. the agency had been working in concert with the department of justice and the likelihood of the ftc charges does call into question the involvement of the d.o.j. on the enforcement action. both agencies were investigating corzine over the customer funds in the firm's final days. more than $1 billion is unaccounted for after they tried to sell itself, and avoid bankruptcy. with plans of the upcoming charges, corzine defended himself saying that not only has he not engaged in wrongdoing, but he didn't know that the funds were being misused. the rep said that in the final week mr. corzine was not informed nor given reason to believe that the customer funds were at risk or being used improperly, and never given communication written or oral that segregation rules had been or were in jeopardy of being violated. that could be key. carl? >> that story got a lot more interesting. thank you, kayla tausche, at headquarters. coming back, china in bear market territory. signaling many companies to navigate the trades. we will help you navigate the choppy trade there. and a ceo held in beijing by his own workers and we just spoke to the co-founder. stay tuned. otherworldly things. but there are some things i've never seen before. this ge jet engine can understand 5,000 data samples per second. which is good for business. because planes use less fuel, spend less time on the ground and more time in the air. suddenly, faraway places don't seem so...far away. ♪ we know some people are never happy with the way things are. suddenly, faraway places don't sat honda,far away. and are always dreaming of how they could be. smarter, simpler, how-on-earth-does-it-do-that... er. and they make it that way. because things can always be better. we like those people. they think like us. introducing the best civic sedan yet. made possible by honda. an hour into trade, and good morning if you are just joining us. these are the stories we are squawking about. 7:30 on the west coast, and 10:30 here in the east. the new home sales are at levels not seen since july 2008. the consumer confidence index rising for the third consecutive month up seven points in june to 81.4 which is the highest in more than five years, and walgreens is the biggest decliner on the s&p 500, and the drugstore posting lower estimate earnings because of weaker consumer traffic. and some firms are negative on the precious metals and you might say it is about time. deutsche bank and goldman sachs cutti cutting copper outlook on china fears. we are joined by jeffrey. >> can you give us a sense of the views of gold and how they have evolved on over the last couple of years to this point? >> well, in 2011 we said that we thought they were approaching a cyclical peak in a bull market, and in january of 2011 when they were talking about 2,000 and $2400, we issued a sell recommendation, because we thought that it would fall to $1,300 an ounce, and on june 14th, we issued a buy recommendation saying that the sale could spike down to 1250, but it was a good buy from the intermediate perspective of two the five years. >> so you are calling the bottom at 1260. how high do you believe that gold can go here? >> well, we qualified it last week, because we are waiting for the bounce in the market. there is a lot more bearishness in the sell-off now than in april. the expectation is that the gold prices will trade sideways be e tween 1350 and 1550 for the next couple off years and then rise again beyond 2015 at some point. >> well, wait a minute, if you are talking about $80 of upside, why should someone get expose sure here when there is so much volatility, and again, as you said so much bearishness and l vulnerability? >> well, when we issued the buy recommendation, we called it a qua qualified recommendation, and qualified it first on the issue of the sell-off from the fcom meeting last week, which there was, and the second was to consider the opportunity costs of buying gold now fit is not going to rise that sharply over the next couple of years. and then we went in to talk about the opportunity costs. if the money is in cash, the opportunity cost is nil, but if it is in bonds and stocks, you have an opportunity to benefit, because the stocks and the bonds as we have seen in the last week are much more vulnerable to the downside than gold. gold has already fallen 28% over the last two years. >> well, less vulnerable now, but gold is basically collapsed since hitting the high. so it was definitely vulnerable. >> gold has given up 28% over the last two years. the stock market at a record level and bond prices are at record lows. i mean, you know, you have seen a 60-point move in may, late may and early june just because bernanke said at a commencement speech that maybe the fed would move toward tapering, and the bond market is vulnerable, and the stock market is extremely vulnerable, and gold is too, but in relative perspective, it is less vulnerable than other two markets. >> jeffrey, what would be useful if you are going to call the bottom and talk about the rise is to perhaps diagnose what broke with gold. why did it fall? what was the promise that it didn't deliver on and is that promise back again, because a lot of people went into gold and are deeply disappointed it didn't perform as an asset class that so many people promised it would be. why did the trade break and why is that trade now amended? >> prior to september 2011, you had a lot of people who were bidding the price of gold up. they were buying gold everyday regardless of how high the price was, because they were convinced that the dollar or the euro or the ecb or the treasury or the local banks would fail, and that we would have hyperinflation. by september of 2011, the world started to wake up, and it is progressively we have seen a shift in the consensus view, and people are realize ing thing the not necessarily going to see hyperinflation because of the monetary accommodation, because let's be honest, we haven't seen it over the last five years, and in addition to that, the world financial system is not going to collapse. so investors have shifted from that to a muddle through economic outlook, and in that environment, gold makes less sense. it makes sense to buy gold and own gold, but it does not make sense to chase the price higher and higher and higher to record levels. investors are waiting for the lower prices to buy. >> we will see if the gold here can be a story of value now that we have fallen quite significantly. jeffrey christian, thank you for your time. interestingly, that the 52-week low and now we are just $2 below that. >> and we will see if that falls through and whether it triggers a leg lower. >> but i didn't hear the argument that to buy gold but some price action moving up. i didn't hear fundamental arguments, but i did not hear of the fundamental arguments broken, but am terribly sorry, gold bars. >> they will be after you. >> yes. >> and a ceo is being held in his own factory in china. eunice has the detalils. >> well, china is known as the factory of the world, but these days that factory is feeling a lot of economic pain. >> reporter: it is not often that you are a prisoner in your own company, but that is what is happening to the american ceo of specialty medical supplies. he has been held captive at his factory in china since last friday by workers who have been with him for nearly a decade would you believe he would be in this experience with so much experience in china? it is common in china, but rare for an american boss. the 42-year-old decided to move part of the business to india, and laid off 35 workers and paid them severance, but then rumors started that he was going to close the factory. which he says are not. >> they are demanding full severance pay, but they have a job. that's a problem. >> the workers won't let starnes out, but they will let us in. >> i thought i would have more support from the local government saying this is not the right way to get something done. >> reporter: are you planning to keep the business in china? >> well, i was operational seven days ago. and the workers are saying that he is not detained here, and they say he is free to walk around the grounds, but it is very different from being held hostage. not the starnes. >> first couple of days were very, very tough, and not anything physical, but more mental stuff going on. and standing around you anywhere you walk 14 to 18 people following you. >> his lawyers are negotiating and so far, no deal. what is the first thing that you will do when you get out of here? >> i want to u shower and shave and i'm only 42, but i am looking a lot eeld older than i. i'm looking really gray. >> eunice chang in beijing. well sh, they say that the hostage takings are something that happens time to time, but it is rare and not a problem for international business community here. >> that is amazing that he can smile or laugh about that given the situation which i mean, you want to laugh at it, but it is not funny by any stretch. >> eunice, where are the security forces or the friendly chinese policeman to help somebody who is being detained against their will? >> well, i'm not sure about helping them, because there were security forces when we were there and people who were officer clothing as well as plain s clothed police. he said that the local officials were putting pressure on him to try to meet the demands of the workers. so he was hoping that somebody would come in, and he said that they are taking a very hand's off approach, and if anything, they are siding with the workers to try to resolve the issue, but from their point of view. >> eunice, any sense in which this is some sort of media or publicity stunt by this guy? >> no, this is is not a pub l publicity stunt. i mean, he is not happy to be there. he definitely wants to get out. he was talking about how he wanted to walk out of the gates, but the problem, as he noted that all of the gates are blocked. he is constantly followed around and every single exit and entrance has somebody there. he said he finds it intimidating, because wherever he goes he has a crowd of people around him, because they want him to really solve this issue, and he said himself, he said, you know, i'm not the kind of guy if i get cornered, backed into a corner that i will be able to negotiate better than i would if you would let me go back to my hotel room, and get a change of clothing and have a shower and something that is to eat that is familiar to me, because he is eating food that people are bringing to him, and he cannot negotiate properly. >> a good piece of tape, eunice. and our eunice yun joining us today. and what can $1 million buy you? our best homes across the country after the break. mine was earned in djibouti, africa. 2004. vietnam in 1972. 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[ female announcer ] today cisco is connecting the internet of everything. so everything works like never before. as well as they could because they don't take it with food. switch to citracal maximum plus d. it's the only calcium supplement that can be taken with or without food. my doctor recommends citracal maximum. it's all about absorption. and all day today on cnbc, we are showing you what $1 million can buy you in different parts of the country. we have sent six different cnbc reporters to six different real estate markets to check out the $1 million summer home. we have cnbc broker and contributor dolly to join us to crown the top house. nice to see you again. >> nice to see you. >> this is how it works. two side by side $1 million summer homes and to make et more interesting we asked the reporters not the reveal where the homes are located and only dolly knows where the homes are, and they she will reveal that after we take a good look. earlier in the day, a $1 million duplex in hilton head, south carolina went up against a $1 million in jackson hole, wyoming, and ocean duplex won. round two. ocean duplex is taking on the woodss woodsy estate. a lush landscape greets you on this quarter of an acre, but it is not the house that you are paying for, but what is straight down the garden path 100 yards the beach. this 18-year-old home is two stories with a finished lower level. it has see dar siding and situated with a half acre of property with landscape designed by a master gardener. >> this has a roomy kitchen and a two-car garage to store the beach toys and a wrap around porch to unjoy the sun rise. >> this has views of the lake where the outside comes n and the home features a great room with cathedral ceilings and a wood fire fireplace. >> you will have no trouble finds room for the guests with four full bedrooms and three baths and you will want to stay here in the owner's suite, because when you open up the doors to the terrace, the sounds of the ocean comes rolling on. >> the master suite is on the main level, and you have access to the main deck. there is a rec room above the garage. >> you will also get a quirky bit piece of history. the homes around here are designated parkland that can never be developed. it is island living at its best for $945,000. >> 400 feet from the ocean. whether you are a snow skier or water skier, you can have it all right here for $990,000. >> well, very different homes. >> where do you think that the woodsy estate is? >> wyoming. >> i'll say minnesota. >> simon? >> do i keep to keep guessing? it not a big enough lake to be one of the big lakes. >> lake tahoe. >> the site of earn rnest hemm y hemmingway's childhood cottage. >> not florida. >> not spain. >> it is in northern michigan. fabulous, fabulous place to vacation. beautiful home, and tough to pick between the homes, but while loon lake offers twice the size, twice the value -- >> sorry, which has twice the value? >> the 4,000 square feet versus under 2,000. >> and isn't it location, location, low case, and in this case, the sea. >> no, it is a great location with a water-front home, and where all of the wealthy people from chicago and st. louis and people from all of that region vacation. >> so two properties with the exact same price, but you are saying that the woodsy estate is a better value. >> yes. >> twice the size. >> twice the size. every bell and whistle. there is nothing missing from that house. everything from the hot tub to a dock -- just everything. >> some might a nitpick nitpick say that the decor is a little bit dated. >> well, the '70s in a way. >> well, the decor is appropriate for the area. if you want to be there, that is the decor. south carolina is a little tired. that house, just the whole area seemed tired. i think develop lake walloon wins. >> i disagree, i like the seaside. >> do you worry about flood insurance sn. >> i'm not that grown up. >> so that's your winner. the woodsy estate. >> and we go on to the next round. >> this is like a bracket. is this march madness? >> yes, exactly. >> allow me to read. it will go head to head with another million dollar summer home in another mystery location in "power lunch" and later she'll crown the top house during "closing bell" with maria bartiromo. >> we'll see you later. >> thank you. >> when we come back larry robbins is breaking his decades' long silence. he's telling one company the entire board has to go. a simple question: people how old is the oldest person you've known? we gave people a sticker and had them show us. we learned a lot of us have known someone who's lived well into their 90s. and that's a great thing. but even though we're living longer, one thing that hasn't changed: the official retirement age. ♪ the question is how do you make sure you have the money you need to enjoy all of these years. ♪ has a lot going on in her life. wife, mother, marathoner. but one day it's just gonna be james and her. so as their financial advisor, i'm helping them look at their complete financial picture -- even the money they've invested elsewhere -- to create a plan that can help weather all kinds of markets. because that's how they're getting ready, for all the things they want to do. [ female announcer ] when people talk, great things can happen. so start a conversation with an advisor who's fully invested in you. wells fargo advisors. together we'll go far. welcome back to "squawk on the street." tuesday's edition of the santelli exchange has to talk about the data points today. now, we could argue about what i do for a living. i tell you what expectations are when we get numbers at 8:30 and 10:00, and that's the benchmark. many traders take a bit of a different view. they look at the sequential trends, and they are right. going from 1.7 to 0.7 on durables may not be the direction one wants to move sequentially but it was still better than expectations. if we look at new home sales, without a doubt that and case-shiller, very hard to dispute those are good points. now, are they already old? the big talk on the floor, of course, is that the rise in rates is important in every aspect of the economy. the cost of money is at the bottom of everything, whether it's housing or investors trying to look at which companies are going to come up with the best products to utilize their resources. all this is going to have to come under review. one of the issues yesterday was fed speak to the same end, and what really caught everybody's imagination was, and i'm sure you viewers and listeners, feral hogs. about a year ago i did a piece where, maybe it can be seen on the screen while i talk, i threw a piece of raw meat on the floor because in the world i used to live in and now that i report on, you know, we fully expect the trading community to be like hungry dogs. if you leave your dinner instead of on the barbecue on the counter and it's a nice, juicy t-bone steak, don't be surprised if it's gone because your dog is going to eat it and the dog didn't do anything wrong. there's a certain animal spirit to the market. but the comment debated on this trading floor is richard fisher -- traders have an affinity for him. he on many occasions talks about his own experiences, more real world. but many traders down here think that a lot of the moves we've seen are a deleveraging move and not necessarily one that's voluntary. richard fisher semz to imply there's an intensity here to challenge the fed. i'm not dispurityibutting thapi. i will stick with the raw meat analogy. i think animal spirits in the marketplace is a good thing. i think you always have to protect the meat a bit with simple regs and that's the other issue. a lot of the dodd/frank regs still unwritten have kept many market participants from making good bid offer spreads which exaggerated so say traders a lot of the moves we've seen over the last week. carl, simon, back to you. >> thanks so much. getting some news on edward snowden if you're wonder being his whereabouts. vladimir putin is saying he's in the transit zone of the moscow airport and russia will not extradite him because he's not committed any crimes in russia. putin goes on to say he hopes this does not affect relations with russia and the united states. >> the fear has got to be what he has given up for that protection. what was on his usb that he's given to venezuela or to them in order to get this protection or did they just do it because it's just an altruistic move. >> where is he then? >> in the moscow airport. >> exactly. and how long is he going to be there? what kind of provisions are being made for his presence there on just a short term or longer term? >> it sounds like "the terminal" the movie with tom hanks where someone could be there for months. >> we have had julian assange holed up for how long. >> you wouldn't want to be very long at moscow airport. i can tell you from personal experience. we'll take a break. back in a minute. is that we get to create our future. you get to take ownership of the choices you make. the person you become. i've been around long enough to recognize the people who are out there owning it. the ones getting involved and staying engaged. they're not sitting by as their life unfolds. and they're not afraid to question the path they're on. because the one question they never want to ask is "how did i end up here?" i started schwab for those people. people who want to take ownership of their investments, like they do in every other aspect of their lives. a talking car. but i'll tell you what impresses me. a talking train. this ge locomotive can tell you exactly where it is, what it's carrying, while using less fuel. delivering whatever the world needs, when it needs it. ♪ after all, what's the point of talking if you don't have something important to say? ♪ welcome to "squawk on the street." here is what's happened so far. >> there's been no bad economic news. there's been no bad earnings news. it's just a readjustment to thinking about qe finally going to end if the economy improves. >> may durable goods up 3.6%. a bit better than expected. >> that's the best number on case shiller in the history of the index. >> there's this minefield we have to go through. we have to go through the philippines and indonesia, through thailand, china, brazil, through europe. and sometimes when you get through it unscathed, the futures are up very radically. >> i'm getting more optimistic. these are strong numbers. i think that, you know, for the next year it's probably a pretty safe bet that they're going to keep going up. >> some news guys out of carnival which i'm sure you're seeing here. they are going to split the r l roles of the chairman and ceo and harrison will lose the role of ceo. >> consumer confidence 81.4. 81.4, buckle up, people. >> we need to live through this adjustment to not having the fed dominate the market at some point and if they go on again/off fen, i thiagain, i th makes things worse. >> striking down a key provision of the 1965 voting rights act. >> good tuesday morning. we're live here at post 9 at the new york stock exchange. want to get a check on the markets as we try to reverse yesterday's 139-point loss with a triple digit gain. getting almost that much back. dow is up 106. s&p is up 12.5. nasdaq is up 17. wall green's trading sharply to the downside. coming in below expectations. ceo says front end sales were not up to expectations. lennar is seeing green, up over 2%. earnings and revenue beat estimates as new home orders jumped 27%. lennar and the rest of the group helped by strong housing numbers today on home prices and some new home sales. >> let's get to the road map now for this hour. already a dozen triple digit moves for the dow this month alone. will today make it 13? unlucky? we'll tell what you to watch for. a great day for housing. strong numbers on home prices and home sales. but the real question especially given what happened with rates is whether the good news can last. one of the biggest names in invest something live for his first tv interview in more than ten years. hedge fund billionaire larry robbins is here. >> first up, some sense of calm in china this morning that's helping the u.s. markets in an attempt to reassure markets. china's central bank says it will provide cash to financial institutions if needed and will not allow a banking crisis. michelle caruso-cabrera is live at hq with more on that. >> early this morning, just five hours ago, the central bank of china posted a statement about the credit crunch that's been spooking the international markets. the bank acknowledges that, quote, recently they provided liquidity to support some financial institutions. and also that some banks with abundant liquidity have acted as market stabilizers by lending out their funds. some intrabank lending. in this statement, and the central bank is not independent, they are a political arm of the government, they also scolded the banks and told them to face liquidity volumity with unimpassioned manner and avoid irrational behaviors. for those financial institutions with loans that match the state industrial policy and benefit the real economy, if there is a temporary liquidity shortage, the central bank will provide support. the rest of the banks, they don't think support state policy, that will be done on a case-by-case basis. this statement was posted after shanghai closed. stocks were lower again today but nearly as bad as yesterday. the interbank lending rate, the shy bor, the overnight rate, it fell again today but remains at elevated levels. there are two key takeaways investors should have right now. one, we are potentially at a watershed moment in china's modern economic history. two, it could get really scary if they make a mistake in execution. when the new leadership in china took over earlier this year, the whole world wondered would they be committed to financial reforms. at least for now it is an unequivocal yes and more importantly, i told you the scary part, those familiar with the thinking of some of the leadership, say they are willing to tolerate slower economic growth in order to clean up a part of the financial system they think could lead to crisis if left unchecked. a slower growing china is tough for many parts of the market. and we have to see if they stick with it and if they can execute. >> right. even without signs of a crisis, slower growth will still be a big problem. michelle, thanks very much for that. turning to yahoo!'s first shareholder meeting under marissa mayer which is kicking off. that stock rallying since she took the job. john foon fortt is live with mo. >> it should be starting just about now. not a lot on the agenda that's controversial. a vote on directors, executive compensation, approving the accounting firm. and then a couple shareholder proposals having to do with social responsibility and disclosure of political contributions. yahoo! is recommending no votes on both. as you mentioned, this is her first shareholder meeting. she joined just a few days after last year's meeting. and yahoo!'s business itself is in a bit of a tough spot. the stock has been up. display revenue, the core of their business, down 11% year-over-year to $402 million. search revenue is up 6%. it actually eclipsed display revenue which is unusual. total revenue just about flat. yahoo!'s in the position where it's been charging more for fewer ads, so one of the things that meier has talking about is using video and mobile products to try to get users and user engagement up, especially among the younger demographic. now, she is likely to face some strategy questions, some investment questions, questions about acquisitions, and, you know, there is a bit of controversial here that doesn't directly have to do with yahoo!. of course, she's on the walmart board as well. there were a few protesters out her office at yahoo! who got arrested and there's some protesters here right now with yellow tape over that you are mouths. has to do with walmart workers who want to unionize who have recently been fired. workers are here trying to get her attention about that issue. she apparently has not met with them. back to you. >> interesting they would follow various directors to their own meetings at their own companies, jon. we'll see you in a few moments. jon fortt at the yahoo! shareholders meeting. stay tuned because you do not want to miss this. a rare interview with hedge fund legend larry robbins. hasn't done an interview on television in ten years. faber has got him. cnbc is the only place you will hear from him, and that's next. z summer event is here. now get the mercedes-benz you've always dreamed of. but hurry, because a good thing like this won't last forever. 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[ male announcer ] see your authorized dealer for an incredible offer on the exhilarating c250 sport sedan. ♪ a lot can happen in a second. with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price -- maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments. our one-second trade execution is one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account. and so too is the summer event. now get an incredible offer on the powerful c250 sport sedan. but hurry before this opportunity...disappears. the mercedes-benz summer event ends soon. glenview capital management has been one of the more successful hedge funds in the u.s. since its inception. the fund has averaged roughly 15% annual returns, that's net of fees. it's founder and manager larry robbins, one of the best stock pickers i know with an ability to find value and stick with it amidst the din of dissenting voice that is is typical in the markets. one thing larry has not been is an activist investor until today when his firm filed a colonel solicitation to review a board. 11-year interruption, larry robbins joins me now. nice to have you back, so to speak. >> thank you. nice to be here. >> you're here today, hma, you file a consent solicitation. you have been making a little noise but today you come with eight directors. you're trying to throw out the board. larry, i follow m&a as you well know. consent solicitations in my memory don't usually seem to work. >> we're not taking this as a traditional activist situation because as you pointed out, we are what we call suggestavists. in this case for reasons where we point out in painstaking detail in our 13-page letter, 47-page slide deck that's available at revitalize hma.com, he set forth why change needs to happen. we wanted to take our suggestions to shareholders. the suggestion we're making is a newly constituted fully independent board of an extremely qualified, very experienced health care executives and former health care executives are best positioned to take the company forward and that's why we filed our letters today. >> before we get into some of the fundamental disagreements you have with this management team and the board, timing is interesting to me. hma just a couple weeks ago i think hired morgan stanley. they put oweut a press release assessing the various things they may do including a potential sale and a ceo who is leaving. why come now with this consent solicitation? why not have waited until you see if they get sold or have a new ceo? >> they don't make wige jits. we're in the critical business of delivering quality health care to patients. it matters to the patients, the dock e docto doctors, and nurses of hma. this is about changing the tires while the car is moving. in the event one concludes the changes are fair, necessary, and appropriate, then waiting doesn't serve anybody's interests. the second thing is all the issues you talked about, is the company going through an active evaluation of stra tege ikt alternatives, are they looking for a new ceo? right now they have a ceo who is resigned and they're searching for a new ceo and long-term replacement as well as all the things going on with respect to the implementation of health care reform starting in january. those all call for having the best suited board to be seated immediately to help the company through those issues and through those challenges and opportunities, and so we very much believe that time is of the essence. >> you do but you didn't want to wait and see whether they come up with a potential suitor here? >> when we say come up with a potential suitor, it's possible and it's been written in the financial press, that the company may have interest from one or more strategic acquirers and that's possible. in our experience and your experience in the m&a side, when somebody comes in to buy a distressed property, they buy it at a distressed price. we think in order to have a full and fair price and full and fair value for hma and the assets are not distressed, the hospitals are in great locations, they're of great quality, this is a very fine company, we just believe that its direction could be accelerated. if you want to achieve full and fair value you have to have a credible and independent path to move the company forward as an independent long-term operating entity and at the same point in time be open-minded and have a full and fair process to listen to all alternatives. >> a deal could make sense. i know one of the arguments you make in terms of your portfolio and you own a lot of hospital company stocks is consolidation. >> yes. >> which we're seeing take place. community health has been a name that's oft rumored to have interest in hma. i think you own a stake in that? does it make sense? >> over the last decade we've been significant health care investors, in drug distributors, manage the care, and hospitals. there's been scale benefits to consolidation but the most important thing is the companies that did well not only for our long-term portfolios but for the long-term fort folios of all their owners, are the companies that drove their company forward with strong operations, with strong use of free cash flow. so the hospitals are no different. yes, there were seven large public hospital chains and after yesterday's news, there are now six, and there are absolutely key benefits not only strategic but financial to consolidations between one or more large hospital operators. we are absolutely open-minded that is one way to drive value. but that is not exclusive of the other way to drive value, which is we need to have very strong management team and a very strong path to independence regardless whether we become a division of a larger company or whether we go forth on our own right. >> you mentioned your 13-page letter, 47 dn. >> sorry about that. >> you got a lot to say. if you could boil it down or come to programs one or two key disagreements and disappointments you have with this management team and its board, what would they be? >> first of all, we need to understand that as long-term investors, we need to look at the long-term track record. at hma there's been what we would call a lost decade. in the ten years ending 2012, shareholders have had an annualized return of zero. if they use their money for other things they could have had a higher and better return. so the problem is not near term, it's not recent. it's over a long period of time. we think some of the root causes of that underperformance are because the company could demand a higher standard of financial management and excellence. we think that the company could allocate its cash flow better. boards and financial managements are responsible for having a long-term capital plan to minimize the cost of capital as well as to have a long-term capital allocation plan -- >> and these guys don't? and they haven't? >> we don't believe that they have done an effective job. as a matter of fact, when we stack up all the hospital public companies, what we find is that 100% of their free cash flow went to acquisitions and that 0% of the free cash flow went to share repurchase when they could have bought back their own stock at exceedingly low multiples yet they were buying hospitals in markets that were new geographies for them. so we believe that a more balanced approach with a more ind lek actually rigorous and honest assessment that didn't have a style bias. there's not one right answer. share purchase is not some magic trick. acquisition is not some magic trick. the philosophy can't just be a philosophy to get bigger and that aggregate growth is the key to shareholder value. it needs to be a balance and we would like to have that come from both the financial management team as well as through the leadership of the board and over a 10 or 11-year period we've studied, it hasn't happened at any point in time along the way, and, therefore, change is necessary. >> i want to move on to some other topics while we have you here given this rare appearance. >> sure. >> real quickly, your take on the tenet deal yesterday. >> a perfect example -- we happen to be the largest shareholder. we applaud the deal in yesterday. we established a significant position in tenet about a year ago. tenet said no to the overtures of community about two years ago in a bear hug letters -- >> that was nasty. >> -- and a potential hostile takeov takeover. when we approached our investment in tenet, we approached it at the same way we would approach it at hma. it's possible they could improving through allocating capital through a purchase or m&a and look what they did. in september or october they borrowed $800 million at low rates. they authorized a $500 million or 22% share repurchase on top of already having bought back 26% of the company. they announced and completed $400 million of acquisitions and yesterday they announced an acquisition that we believe will increase earnings per share by a full dollar in 2015. on a cash basis which looks at the way warren buff fit looks at it, they improved the earnings by 25% per share. that's a great example of utilizing all the tools in your toolbox to drive value. >> i know you have had a very good year at glean view. you don't give the numbers but i hear about them, but i wonder have you changed your approach in terms of value and particularly just the broader markets at this point on the equity side given this huge backup in rates as evidenced by the ten-year? >> let's keep the huge backup in rates in perspective. >> 100 bay significance points is 100 basis points. percentage wooids it's huge and it's a dislocation. >> no question about that. tenet will have to pay about 3.75 or 4% after tax to borrow the money necessary to buy vanguard stead instead of 3.25% could have a while ago. but the return on the capital is the question. if you believe you can get a 12%, 13%, 15% roe by deploy that is capital with significant strong organic growth as well as with synergies, whether you're cost of capital gap between debt and equity, that's the opportunity. tenet has to do it responsibly and they have. while they have taken leverage up, they have talked about the opportunity for portfolio pruning. >> what about the larger issue here about the cost of debt going up and what that's going to the equity market? we're seeing it every day. obviously we're up today. is that changing your approach in terms of seeing value or are you taking risk off? >> we are not taking risk off. we believe that this is still a very, very above average opportunity set for long-term investors and, frankly, as an industry we need to remind ourselves to think and act like owners. as the owners -- as an owner of a business, we look at the opportunities. our companies are trading at 10.5 times earnings. that opportunity set may not last forever. we can now access debt through the high yield markets at 3.5% to 4% after tax. the high gray markets can access that 150 basis points cheaper. as we look at the totality, this environment went from being a ten on a scale of one to ten to maybe becoming a nine but nonetheless we believe this is an above average opportunity to deploy capital. >> just to sum up the mentality i hear from investors a little bit, one saying the real problem is the world central bankers have screwed it up. you can't tell what's real anymore. nothing is real. investors are better to keep their money in real assets like ships and avoid paper investments. so why is that wrong? >> first of all, whether you own a ship or whether you own a company that owns ships, those things should be inextricably linked. you touch an an important point. for 4 1/2 years stocks moved in correlation with people's views about central banker effectiveness, people's views about will the system crash as we know it despite in this building it's been going on for 125 years. more importantly we should think like owners and say the stock we own correlates to our ownership percentage. if it's a good idea to own ships, then couldn't we do that by owning that through the stocks and, in fact, in the last 12 months since the middle of 2012, the market has started to move that way and companies are starting to deploy capital like owners. if their stocks are undervalued, they're buying their stocks. even apple is distributing more cash. >> isn't that a result of cheap money to a certain extent? hasn't that been the fuel for the fire? >> it's a result of cheap money which is still cheap on an absolute basis. also as a result of the gap in the spread between the cost of that capital and the uses of that capital and that process is going to be going on throughout time. look at all the great capital allocators and what they're doing. malone is deploying capital. war rin buffett is deploying capital. we don't need to anticipate what they might do. we can just look at what they are doing and we can realize they are taking advantage of precisely that, and while the opportunity may not be quite as good as it was two weeks ago or four weeks ago on the interest rate curve, on a historical basis it's pretty attractive. final stat i will leave you with, when interest rates are between 3% and 7%, let's say the central banker all leave and the 10-year calls, the long trade history is to trade between 17 and 18 times earnings. with our portfolio trading at 10.5, we'll take our chances. >> we're out of time. let's not make it 11 years between visits. with we do that? absolutely. >> he will be a guest at our delivering alpha conference talking about, what else? health care. you might expect that. >> love it. great interview. and some great news on housing today. home prices were up a record 12.1% year on year. but is the housing recovery for real? we'll try to answer that later this hour. more "squawk on the street" after this. i want to make things more secure. 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[ female announcer ] if you can't afford your medication, astrazeneca may be able to help. the european markets are closing now. >> and you will see across europe there's a lot of green today, but do bear in mind over the last five sessions this market in total has fallen about 6% and it is bouncing from six-year lows. the other standout is the fact that italy is underperforming. i'll come back to that in a moment. it's interesting what's driving us higher. obviously the data in the united states has improved the situation. broad bounce back. china's soothing words that bertha was referring to before the commercial break. that's two have helped push us higher. and it's the european auto automotives that have led the charge. paugeot has announced they have new orders for their urban crossover. it seems to feature basically women driving the car and chasing people through the streets before it's stolen by their boyfriend. but that is the new crossover. 26,000 orders, so they're going to increase their daily production. in that environment in western europe, increasing daily production, so the stock is higher. >> europeans are finally following the americans in a love for suvs. >> in a sense, yes. i mentioned the fact the italian market was lower. you will see the banks have led us down. the underperformance there quite noticeable. the other thing that's happened locally is you had an auction at the short end of the italian market in which the yields were basically twice what they paid a month ago. and that duration is precisely the duration of which you would expect the ecb to intervene. whether there's a concern that maybe the ecb is less likely because you have berlusconi with all his trouble in court and the potential destabilizing effect on the ruling coalition. their ability to push economic reform through and be on the right side of the ecb, i don't know. the s&p have said they don't think we're in the danger zone at all for the likes of italy and spain. >> you can always adjust a ratings firm. >> in the meantime, the ecb might still be minded to further loosen policy in contrast to what is happening here. will that always be the cry here on in every time a ratings agency is mentioned? >> yes, yes. you can just guarantee they will reinforce whatever is happening in the markets there. i have just never seen them necessarily be prophetic in saying what's going to happen. >> because they're a ratings agency and they have to be evidence-based and make their judgments on what has happened. >> i understand. >> rather than what might happen because then they wouldn't be a ratings agency. >> fair point. but i still think -- i guess what i would say is this. i see them often more of an excuse than a driver of market behavior. when people are citing them, there's usually something else going on. jil bear that in mind. thank you. >> let's bring in josh lipton with a look at what's moving back here stateside. >> you can look at the dow, the blue chips racking up 101 points here. you talk to traders, they point to two trends. one they will say china, all the liquidity fears yesterday with a credit crunch. now though chinese policymakers coming out and calming some nerves. also, of course, we got a lot of economic data this morning and it was better than expected. durable goods, it was consumer confidence, richmond fed. no surprise what's working today, the economically sensitive sectors, semiconductors, banks, we're watching the home builders. you had home prices beat. you had new home sales beat. phm, hov, spf, lennar. lennar also reporting invested estimates. i thought the ceo's comments especially optimistic and positive. wall street also relating the housing related names. whr and shw some of the names on our radar. another group would be the refining stocks. there's an interesting article into "the wall street journal" pointing out that new pipelines are carrying a glut of domestic crude. phillips 66, marathon, valero. we'll end on a down note, walgreens on a three month low. they barely budged, same store sales. the ceo talking about an economy that remains challenging. cvs also falling in sympathy with that move. guys, back to you. >> thank you very much, josh. ahead in the program, we will focus again on the housing market. josh mentions it, important, of course, on many fronts at the moment. not the least of all what the fomc might do. home prices up over 12% year on year across the nation. will that trend continue? 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our next guest is watching housing demand across the country and has realtime information on what buyers and sellers are thinking. let's bring in glen kelman. good morning. >> good morning. thanks for having me. >> thank you for being here. can you tell us a little bit about what red fin does? >> we're a technology powered real estate broker. we have the world's best real estate website but also hundreds of our own agents touring thousands of customers writing offers every week. we track everything our customers do on our databases. >> in a market that's desperate for information on what's really happening in the housing market. is what you're saying on the ground confirming some of the unusually strong data we have gotten in regard to prices in particular? >> that data is backwards looking. we see some indication that the market is slowing down. prices have been rising extremely fast over the past three or four months. but buyers going into this weekend were greeted by a significant rate hike and so we saw more people making offers, more people touring homes who are already in the process, but new customers are actually down 11% this weekend. so some people who had been banking on low rates for the rest of the year have been shocked by the price increases and the rate increases. homes are less affordable now than they were a few months ago. so we're seeing fewer bidding warms, homes staying on the market a little longer. it's still a strong seller's market but not as strong as it was in february or march. >> this is exactly what people have been asking is whether this increase will scare buyers off. why isn't it making people scramble to lock things in before rates head higher? >> well, there's sort of been a divided reaction. people who are already in the market, buyers who are touring homes or writing offers have actually stepped into the market. people writesing offers were up 4% this weekend. people touring homes were up 1% this weekend. if you're halfway through you will finish and lock in a rate. people who are just gett etedge started are the ones who stepped back. >> so scaring off some of the new customers that backup in rates. people generally are also trying to get a sense of how healthy and fundamentally sound the housing market is because you heard schiller just there talking about how he can see the case for flipping some of these properties. we know there been a lot of cash buyers and speculation. but underneath all of that, do you get the sense there's broad based participation, that people can access financing and are interested in trying to get exposure to the real estate market? >> i do think there's broad based demand. the past three months saw unsustainable price increases. we saw some frothy markets, 79% of the homes in february were involved in a bidding war. that's now down to 69%. so the fact that the market is cooling just a degree is probably good news because it was overheated in the early part of the year. >> overheated. that's an extraordinary thing to say given what we've been through. can you flesh that out a little bit? >> it is. well, it was very typical for us to have 10 or 15 offers on a single property, some were cash buyers, some were borrowers but we had investors from wall street competing with people on main street. there was a huge inventory crunch. the number of homes for sale was down 30%. you had an enormous number of people trying to buy a property when there was almost nothing to buy. now we're starting to see inventory increase and we're starting to see buyers step back from some of the crazier bidding wars we saw in march or april. >> was this across all regions, glenn, and what regions are you most exposed to? san francisco, for example, has seen some real increase in price activity. other areas still more. is this a geographic effect? who is buying? >> well, we saw it start in california and then washington, d.c., which always does well because of federal spending, and then expand. even in the cities of say chicago or boston or miami, we saw the market really heat up this spring. the hottest markets were always california and washington, d.c., but that became more broad based by may. now we're starting to see in some of the early markets like california or even phoenix the bidding wars are cooling off, the markets are staying on -- the properties are staying on market just a little bit longer. so that's why we think that it's going to be a more sustainable increase over the next six months, whereas the past three or four months have been almost unsustainable. >> slow and steady, we'll take it. glenn, thank you very much for your time. >> thanks for having me. >> the markets just giving up some of their earlier gains. we're up about 90 points. so by the end of the session will the 13th triple digit move still be to the upside? 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(announcer) scottrade... ranked "highest in customer loyalty for brokerage and investment companies." in case you're just tuning in, good morning. within the last 30 minutes on the network we had an interview with larry robbins who has had about an average 15% return every year on his funds. he was talking to david faber and david asked him whether the move that we've had recently in interest rates would ultimately mean that less deals were done, and he was pretty unequivocal in saying it's still pretty easy funding. >> we can now access debt through the high yield markets at 3.5% to 4% after tax, the high grade markets can access at 150 basis points cheaper. as we look at the totality, this environment went from being a ten on a scale of one to ten to maybe becoming a nine, but nonetheless we believe this is an above average opportunity to deploy capital. >> the optimistic larry robbins. let's bring in margaret karins and art. what do you think of the market at the moment? >> it's interesting. if you take today, for example, this is a great day where we've actually moved away from that counterintuitive thought process that good news is bad for the market. i think we've done enough of a reset. we've calibrated the market to a point where we understand what fed policy looks like and what's going to drive that. so i think that we can actually celebrate two good pieces of news in both the durable goods and case-shiller. and i think we've significantly tested a downdraft at technical levels that are important for the s&p. we'll see what the end of the week brings and the start of a new month when people get their statements in the mail and see they have lost some money in the bond market and see if that sauces any rotation out. >> what about earnings season, art? as we look forward to that, there's a lot of chatter about whether or not we've had more negative surprises than you might expect, more negative preannouncements. at the same time these rising rates for companies that are supposed to be buying back their stock and a lot of them funding at least some of that with debt, i guess it's going to impact the earnings moving forward, isn't it? >> to a certain extent, simon, unless you make the assumption that the folks that were going to lay on debt to buy back shares have already done that at a more favorable interest rate environment. you do that because you can, not because you have to. i think the concern about the fact that the ratio is so far -- the positive is 7 to 1 is of a concern. remember, we have a very similar ratio coming into the last earnings and we got through that okay. i think the alarm bells are going up about the current earnings reporting season, but i think it might be a bit early. i don't think we need to necessarily throw the baby out with the bath water on that just yet. >> fair comment. margaret, obviously you're watching the other side of the market, the fixed income side. what strategy are you laying out now? what are you saying to clients? >> absolutely. first thank you very much for having me today. >> pleasure. >> really appreciate it. >> welcome to cnbc. >> thank you. the strategy we're laying out for clients today is we're expecting rates to continue to ratchet higher. we believe the market is struggling between the supply and demand neck tickles, especially going into quarter end and dealer balance sheet pressure with the long-term economic fundamentals, and we really need to wait and see how the economic data unfolds. >> but, margaret, in order for rates to head higher, the economic data has not only to hold in there but to keep improving, does it not? >> yes. i think that that's why the fed is watching closely the market reaction, and what we've really seen is the fed coming in, especially yesterday when markets backed up quite swiftly, and calmed markets down, said you're moving too fast. everything is still data dependent and the fed will remain accommodative on the front end of the curve for a very long period of time. however, the market is pricing in tapering. tapering is clearly on the table. bernanke has given us the guidance for tapering. so we think part of that is being priced in, but also the supply and demand technicals can be quite dramatic here with everything -- all the trades that went along with qe, all the investors that went along with the fed in the can't fight the fed trade is starting to unwind and dealers just don't have the balance sheet they used to have to absorb that supply. >> if you read what richard fisher told "the financial times," fight the fed has moved 180 degrees now. i appreciate he's a hawk but he's basically saying don't try and make us walk back on this. this is the way forward. do you think, margaret, in your heart of hearts that the fed is making a policy error here? >> no, i absolutely do not. >> interesting. >> i think the fed is -- they're going to overshoot. the risk of undershooting and having to reaccommodate is too great. what we're seeing is the continuation of qe. we're seeing messaging in order to try to get the market to understand what's going on. the problem is that they're trying to have the market price this gradually, and the market doesn't work that way. i think we're moving in sort of fits and starts and trying to figure out -- in the treasury market trying to figure out where rates should be and the problem is that we've got this huge amount of qe carry trade unwind. also, all the investors that were forced out the curve into higher risk product, including higher spread product, including structured product are now looking at those positions and actually wondering if they've been compensated for the risks they're taking and that unwind requires dealer balance sheet and balance sheets are down by i want to say 45% since 2007. >> guys, we've run out of time. it would be great to continue the conversation but thank you both, margaret and art. >> thank you very much. paid $200, get a snazzy smartphone and without signing any contract. is that really possible in the mobile phone space? 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[ static warbles ] and so too is the summer event. now get an incredible offer on the powerful c250 sport sedan. but hurry before this opportunity...disappears. the mercedes-benz summer event ends soon. today's squawk break through is offering something the big u.s. wireless carriers cannot and that's free mobile service. the startup called freedom pop announced it will launch a free wireless service plan operating over sprint's network including unlimited text messages and 50 megabytes of 4g data. the ceo and founder joins us now. steven, welcome and good morning. >> thanks for having me. >> so explain to us how this can possibly work. there's no free lunch so what's the catch here? >> there actually is. we basically are extending a model to the mobile service industry and offering users a very compelling free offer. for those users who want more data, you can get unplimelimite minutes and text for 10 bucks a month which is 75% less than the family plans that at&t and verizon are pushing. >> what are the different levels that you offer? there's a free plan and then there's one that's $10 a month and none of these are contract plans? >> they're all no contracts. it's 100% no contract. we're leveraging voip to offer pricing that carriers can't compete with. >> you're turning voice calls into data packets which is what skype does and running them over bandwidth purchased wholesale on sprint's network. why sprint? >> for a couple reasons. bottom line, they have a much more aggressive wholesale business. they're willing to take more risks. and, two, they have very good pricing which allows us to offer aggressive pricing ourselves whereas the other guys are a little more conservative because they're more likely to get disrupted. >> so why doesn't sprint do this themselves then? >> well, i'll tell you what, we expect some people to follow. the issue that all the big guys have, whether it's sprint, retrail, verizon, or at&t, if they tried to do it there's billions of dollars of revenue at risk. >> steven, are they an ol lig oply then? >> absolutely. the new family plans, that's 40 bucks a month for a service that we're going to be offering at $10. that's many billions of dollars. >> talk about the hand sets as well for people who may not have a mobile device or want to bring their own. how much freedom do they have? >> so that's the best part. this isn't specific to like unique or these niche hand sets. i'm holding a galaxy two. this galaxy two is a freedom pop phone. we'll be offering it at sub $200. you can bring any phone you want, an lg, whatever it takes, anything that's sprint certified. >> steven, how profitable is freedom pop and where do you hope to be in a couple years' time? >> two good questions. first of all, we actually proved out this whole model. already doing massive traction on that and profitable. gross margins are about 50%. when you talk about a year, two years out, we expect to be in the many millions of subscribers and the best part is most of our traction to date has been with zero mar gketing spent. >> there's been plenty of buzz. that's why we wanted to have you on and talk a little bit about it. appreciate your tomorrow. >> let me mention carnival which continues to gain on the market after the announcement the role of yoel and chairman will be split. they're not guiding down again after the profit warning they had about a month ago. more on that on "power lunch." >> thanks very much for tuning in to "squawk on the street." as we hit noontime on the east coast, let's get over to the "fast money halftime report." thanks. welcome to the halftime show, four hours to go until the close. let's look at where we stand on this bounceback day on the street. there's a look at it. the dow jones, nasdaq and s&p higher. a tiger's eye. is one of the most popular trades still a moneymaker? the best ideas on how to play japan. stalled engine? navistar shares have been a wreck but with carl icahn along with the

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