Transcripts For CNBC Squawk On The Street 20130716

By cocacola and throw in goldmans strong quarter, and j j and a lot to talk about, and the yields are hovering at 2. 5 for 10years as we wait for bernanke on the hill tomorrow. And we are looking at the biggest loser on the dow today which could be coke. The Company Blames weather and other things, with and we will talk about it. And the shares of the dow component johnson and johnson are up after strong pharmaceutical sales helped to push the companys profits above expectations. And goldman Strong Revenue trading, but how does that compare to competitors like jpmorgan and citi. And the alpha conference kicks off tomorrow. We will give you a preview of what to watch for. And once again, with coke, the shares are down in the premarket and take out the items in the Second Quarter earnings and in line with the case volume down below forecast, and this is what coke cfo had to say this morning on squawk. It was disappointing in the quarter for volume and we said all along along the road a bump here and there and we didnt expect the world to have a bump and the whole industry slowed down. A lot of it is the macro environment, but a lot of oit is weath a lot of it was weather. I hate to say weather, but it was. And the point is that we continue the take share. Talked about a wet season around the world. Monsoon season in india and weather in the states and currency, too, jim, forecasting for hit they will take on the currency later this year. I want to know if it was raining on their side of the street and sunny on pepsicos, and yesterday they were alltime high and this is the proven model, you need more than just drinks. And i think that by the way, the number one drink in india is mountain dew which is pepsico, and we will see if the rain affected mountain dew sales. Cocacola is a Great American company and when you listen to the quarter, you absolutely believe and when you listen to gary who is terrific, you expect more from the company, and they do, too, and they will readjust and it is not sell. And the weather, this is one of the advantages of having done it for a long time, and i dont recall weather being an issue with cocacola in the past. Has it been . Sint ironic that we have had really good numbers from the financials, and great disappointment in those, and then the staple of the old time great staple is cocacola, and it is just it is flat. Yes. I mean, the case volume 4 last quarter and 1 this quarter and talked about the slowing demand in china, but there are some who are saying, get ready for an entire earning season of multinationals saying that the strong dollar is hurting us, and we think that it is going to be around for a while. And the currency headwind is 2 , that is a 3 headwind comparable on the quarter is very big. You hope that people see through it, because the currencies fluctuate, but look at the quarter. 1 corporate volume growth, and this is a high multiple stock for heaven sake and not that great yield protection, but it is not a buy. I am saying it will be, and i dont want to sell it, but it will be dun to 36 or 37 and judge wapner had a big debate about where cocacola should be and i say straighten out the problems and this is not enough weakness when pepsico is going to report a terrific quarter. Why . Because i think that the snacks are hot globally. And because cocacola is always way ahead of pepsico when it comes to international sales, and pepsico like General Mills just starting to see the big world roll out, and you dont have the difficult compares that cocacola has had to sufficient for a long time. And you dont believe that coke is a slowing proxy around the world . No. And j j is a Global Company and we saw good numbers for them, and i always feel like, you know, it is not a lot and it is not going to cost a lot the buy a coke, so when i hear economic problems and i drink coke whether it is hot or cold or wet or do you say, gee, it is wet out, i dont need a cocacola, i will have what . I dont drink soda. You dont. Well, you are like jerry seinfeld. He hydrates and he does not drink. And i guess you dont have to hydrate as much with a coke. What is with the hydrating . What is with the hydrating . I will have a smoothie and that it is. Otherwise when it is rain iing out. Cocacola, im switching to mountain dew or a dr. Pepper. Something else is that is exp expensive is buying drug, but that didnt hurt johnson and johnson with the conglomerate reporting Second Quarter profits of 1. 48 operating basis, and ahead of estimates and wall street ahead of consensus led off of the prescription drugs and medical devices. Gorsky your man is dlifing. This is the ceo matters. This is the ceo matters call. Remember, we had weld in there and and i think that the company had emerson lost the way, and they had the manufacturing problems and that is clearing up. Well, significant issues, and in the position it would seem to decredo. And we know that j j are the Gold Standard and with the tylenol mystery, they were hammered, and then they became a coaster, and have you people heard of coasters. What movie is that from . Trading places. And he became a coaster, and gorsky has come in and shaken it up. He is a proven leader. When you get out to speak against pharma, everybody wanted him. He is a hitter and not a coaster. Jpmorgan did analysis of the percentage of the time they beat 24 of the last 25 quarters, but missing on the revenue onethird of the time. Yes that yes, that is right. And when they print the earnings, the stock is not up but down. And it is interesting to point out, because j j is one of the classic stories where the headlines are fash ybulous, andn when the Conference Call comes out, you say, i have been had, but this is going to be higher than it is, and you always want to hear the call, but gorseky is a guy who recognized that j j had been challenge d. When i see the doubledigit growth on some divisions that had been single digit and not the big currency worries and j j a Large International company, and the rights of approval in front of the fta, and the psychotics that is a pioneering drug, and i believe that gorsky is making a difference and j j is still back, and this run from the 70s to the 90s, everybody gets it. It turned out for real. And get to goldman before we run out of time. Goldman shares are up in the premarket, and they are handily beating the estimates of Second Quarter earnings of 3. 70, and helped by gains of incomes and commodity and trading revenue, and the stock, jim, close to a twoyear high today. And there we are, and one of the things that amazes me and i never thought when i worked for goldman who was private then of course, that they traded around book. Tangible book is 141 and it is as if goldman is frankly another firm. But they have not, because they have distinguished themselves in the period of turmoil as did jpmorgan and jamie dimon, and this is a great environment. So many of them in the turmoil of the last month would be bad, but the fixed income is terrific, and the equity underwriting. Yes, they did say in the june where they were pointing to the things to become a little bit less favorable Market Conditions and challenging in the latter part of the quarter and the Interest Rates and the volati volatility increased, and they put up a number across the boards and the ratio by the way ending 43 for the first part of the year. And post lehman high. And running 44 first half last year, and you never know, and on the basis of 431,000 and the unemployment was down 1 , and that is interesting. So they are not hiring. Not at this point. Not the hiring machine they were. Overall financial services, but worried about the jefferies quarter that we talked about and the fixed income commodities for Goldman Sachs and therefore we will see what Morgan Stanley looks like. It is the strongest ipo market, and it is funny, because i thought it would be the deal, but you corrected me early on, and 1. 9 billion in equities which is 23 higher than First Quarter, and very few are talk and it, and we have to focus on the deal, because they are red hot. A couple this week, and alka med is going to be good and retail me not or retail me not, but a coupon company, and i feel markets where a lot of companies are making money. And 45 higher in the Second Quarter. Isnt that amazing. And from the banking underwriting and the saving is higher pointing out, and put morgue money at risk. And yes, svr up sequentially, but not as much as last year. Well sh, if the revenue came, and they could not make as much money with the regulation, but that is not looking the same. Yes, 10. 5. Yes. Okay. We were worried about 5. 0 and 6. 0. I remember when they were trading at 2 1 2 times or 3 times the book. And the market down and the capital up, and you wont get to those numbers, but the point is a good one and maybe they should trade it one times the book, why more . Well, in some days traded more. And you get what coke is saying that the world is slowing, but goldman is crushing and like we are going back to 2008. People trade when it is rainy out. Stick with the weather motif, and people put bandaids on when it is rainy out, but they dont drink as much cocacola. With all of that in mind, there is a lot more Economic Data coming out, and we will get into the Industrial Production later on and an exclusive with the radioshack ceo live from the Concept Store in the big apple, and we will see how it fits into the electronic retailers turn around. And the futures going for nine days straight on the s p 500 that we have not done in nine years. Back in a moment. announcer scottrade knows our clients trade and invest their own way. 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Rick santelli here and we are about 34 seconds away from may industrial sorry, june Industrial Production capacity utilization, and we had may Treasury International capital flows and if you look at the net long term tick flows and it is two months in arrears, it was down 27. 2 billion and the reason that this is interesting is that if you go back a couple of months, march was down 29. 6 billion and that is the worst amount of foreign interest in june of 09, so we want to Pay Attention to that, and here we go with the june industrial capacity utilization, and up 0. 3 which is exactly what we expected. Little better on the utilization rates of 77. 8. 77. 8 stax up nice, because outside of the first several months of the year that were at 78. 1, that is the second best grouping in the 78. 1 is the best since july of 08 and a tale of two bits of data that we continue to see the utilization Production Firm as well. When i look at the energy prices, i get a sense off that dynamic as well. Carl, back to you. All right, rick. Thank you for that and interesting numbers and couple of them that we got out of the consumer yesterday, and we will see what the market makes of it. Kelly evans is here watching that and a slew of other things. Yes. Good morning. A ton of data out, and i wanted to talk about what is happening and if you look at the 10year, and there is so much focus when it moves up 5 or 10 basis pointses and every time it slides down is unnoticed, but it is important and tells you what is going on right now, and we are at 2. 53 latest and at 2. 52 before the cpi, and that is where we were by the way on july 3rd before we got the strong june reports job july 5th, and then we jumped up to the 2. 5 range, and then we saw the consequences immediately with the regards to the mortgage rates, and so has the bar been raised because of the prejobs report, and that has been on the weaker side. And looking at the june retail sales report was half as strong as expected and added to the sense that the gdp number for the Second Quarter will be quite weak in the rapg nge of less th 1 . A lot of the bond rallying where we stand today and we know, guys from the last four years the fact that the rates are little bit down and the data is softer is not the worst case in the world for the stocks, but hearing from the chairman today and thursday, what it does mean is that if those sectors like, jim, financials, and how many times do we hear from friday and monday and goldman, and if people are buying into the names and they believe that the names are higher and going to benefit, this calls that into question, and we see the data Getting Better and the stocks can do better and the rate specific sectors and the rate specific names are going to need to see the data flow through with growth regard to the third and the fourth quarter, and the jury remains out on that fact. And it is a great point, because jamie dimon told us that jpmorgan and as rates go higher, we make more money as rates, and the one wild card was if they dont, and the consensus is that going higher. Yes, and look, certainly, they have moved higher, and obviously a big move from 1. 66 to 2. 5 where we are now, but to go another percentage point . We will have to see the growth expectations to pick up. Well, the auto growth sector, and as sales rise, so does growth. Well, i dont like that, because ford is the only one doing well in europe, and they take ford off on the conviction buy and put on gm and if we dont get the rate rise where is the thesis . Where is the thesis, guys . Exactly. That is why any time you see this thesis, you have to know that higher rates are not a foregone conclusion from here. Is there a chance that Interest Rates will go down . The if the mortgage buyers will materialize, and there is a moving higher, but it is that the Mortgage Market has been moved by the fed speak, but depending on whether people are buying into the produshgts then, jim, they should, and that is a positive sign. And the housing stocks are terrible and the only ones not taking place in this incredible rally that you talked about. Those stocks just kind of go down a little bit. Exact ly. Great call. Sounds good. We will talk about this and a lot more tomorrow as we bring you all day coverage of the big event, cnbcs delivering alpha conference and featuring the heavy hitters including jack lew, john paeltz and bharara an icahn. If you look at the quality of the guests, and the quality of the info, tomorrow. And we will be there tomorrow, dave and i, and we will be doing our part of the show there, and 8 20 is when the first start. I appreciate your letting me know, and i have been told. The reason i mention is because the allstar game is played in your Stomping Ground and if you stay up to the end, you will not make it. I have not made it to the end of the allstar game, but i will be there for all of the allstars tomorrow for delivering alpha. You see that . That is good. And who is the homer now, david. You liked the despicable me ii. That is incredible. Half a billion in the box office. Unreal. Cramer is about to give you some moneymaking advice that you dont want to forget and we will get the mad dash in a moment, and as kelly said to keep an eye on the futures after Industrial Production comes in with a slight beat coming in from squawk on the street from the nyse straight ahead. With fidelitys options platform, weve completely integrated every step of the process, making it easier to try filters and strategies. To get a list of equity options. Evaluate them with our p l calculator. And execute faster with our more intuitive trade ticket. 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Well, they have gotten and they believe that even the best ones which is starbucks and mcdonalds and ideally it should be bought lower and they down grade brinker and texas roadhouse and blooming brands which you know as outback steak, which you go to regularly, and why, they believe that the stocks have run too much abs , e talk about the gasoline going up, and you go out not as much, and the consumer stronger, and the higher rates and this is the kind of call that make you puzzle, did the consumer piece, and are we in a moment where the economy got weaker . And did we dictate Consumer Spending . No, we did not. Well, no. And does that worry you . Did the call resonate with you . And love how they say buy lower as if you had the opportunity. And starbucks reported april 25th last year, last quarter, and the stock if you take a look, the stock immediately went down we dont go back that far. Right here sh, david, the st got hit, and then it jumped up, and as Howard Schultz talked on the Conference Call of no saturation, and china doing great, and the stock literally shoots up 10 straight points after market, and you know somethi something, i understand that people could say, why doesnt it rest . It is a rest move and no more than that, and meantime, we are getting the positive comments from the staple on yum, and that stock is trading higher, so it is not all bad for restaurants, but a lot of the holdouts. And larger issue of keeping an eye on the consumers and the gasoline is weakening, and the refinancing and the taps being closed may be more important. You are right, because the refis were quite bad. And cash in the pocket. And if you push yum, you know, you are pushing Kentucky Fried Chicken over in china as a stock, and david novak and i have been a friend of the ceo, but this is a call that says that the consumer is not doing that well. Well, that is an important point to the overall market and the market is going to be trading in 4 00, and lets call it. And stick around and we have more names to be talking about the opening bell right after this. Aaa. Fffffff. Laclaclac. Hes an actor whos known for his voice. But his accident took that away. Thankfully, hes got aflac. Theyre gonna give him cash to help pay his bills so he can just focus on Getting Better. Were taking it one day at a time. One day at a time. [ male announcer ] see how the ducks lessons are going at aflac. Com [ cows moo ] [ sizzling ] more rain. [ thunder rumbles ] [ male announcer ] when the world moves. Futures move first. Learn futures from experienced pros with dedicated chats and daily live webinars. And trade with papermoney to testdrive the market. All on thinkorswim. From td ameritrade. Squawk on the street live from the Financial Capital of world and the opening bell is set to ring in over a minute here on a tuesday morning. A lot going on and big earnings from big companies, jim. Those who are bearish to market still argue that u. P. S. Is warm, and coke had some volume growth slow down, and citigroup had said that the north American Consumer looking weak in the back half and what does it take to and the employment play, and you know it. It is a uniform, and i think that we should pause, but there is just animal spirit, and i know that is always just a little ridiculous to attribute, but, you know, we are going into the part of the earn iing season whe we will have real thinkers, but what happens is that i think that there are people who say that when the Companies Support these days, they are down beat. U. P. S. Is shocking. That is the industrial economy. Yes, i know. Im still i dont know. Hard to compete. And that is difficult. And the restaurant thing and i went to see the Department Stores and the chains, and i bet you those numbers are okay, and costco reported a good number, but it is mixed. Meantime, opening bell. The big board and a look at, remember, volume yesterday when down here no great shakes, and we will keep it in mind, and the big board is from qsac, which is raising awareness and services for the autistic, and at the nasdaq comcast corpse, our Parent Company and bravo media celebrating season two of chef robels and company, and a great show, which i know that you watch a lot. Despicable you . Well, im waiting for the despicable me 3 and 4, im sure. And there were bond movies and you dont talk about those . On the toe . Who are you calling kemo sabe . Well, we talked about boeing at the top of the the show, and that fire at heathrow, and today, the spotlight on honeywell and the talk of the transmitter and the emergency transmitter, and do you worry they have a problem . Well, no well, okay. This is dave kote, the ceo who reports this week, the Charitable Trust name, and i believe they immediately, and i hate to jump to the conclusions as does honeywell, because think of where we were friday when everybody decided it is the battery even though it is the wrong end of the plane, but maybe a maintenance problem. Maybe theres a maintenance problem, i dont want to im going to buy honeywell this week and not sell it and just like you had to believe in mcnerney, i believe in kote. The ceos, and gorsky and the ceos are making a difference. It is a great series, my friend. And it is enormous organizations and you wonder if one person can make a difference well, we have a country led by a president and you dont think that the president makes a difference . And there is a lot of people in that country, with 310 million peop people, and how do you put that together with a cfo . You are right. And the premiere in china can make a difference, and and the cfo of United States is speaking tomorrow at the delivering alpha conference. Yes, that is true. Jack lew, let me point out. And that is a small world, isnt it . It is. And it is a small world after all. And small borough over there in queens, but we have the stars. We are going to talk to the radioshack ceo in a little bit which is the second biggest gainer. And well, part of the street, i founded or whatever, and they say that this fellow sold walgreens, and maybe that kind of turnaround, but i never recommend stocks when they take over the basis and the fundys are not that good. I think about the day that i went to radioshack and a woman told me why you are shopping here in boston and i tried to get heifer off of the phone and she said, why are you shopping here . Good question. They do have sofballing and not seeming like a natural, but the fellow is a sell over companies that dont seem like naturals. What if i could hit on a couple of stocks bufted by deal rumors. Lexicon is down, and then you had bloomberg and reuters reporting that they were up, and taking a look at it there with the shares, and trying to follow up, i cannot think of the bankers who would be employed by roche or alexion who are aware of this and it does raise the question, where is it coming from and how likely to happen . Again, we have mentioned the incredible multiple and not just earning, but revenues. I know, i know. But the enormity of the price of tag overall, and not that roche could do it, but unclear why they would go into the financialing market, because they are so big and so credit so well thought of, they can make a phone call and get the money you would think. We will see. But these are two well respected news sources on m a, and im at a loss as are a lot of the bankers saying, if it is going on, we are not involved. And smart people in biotech industry saying, jim, you believe this thing . I say, no, i believe when two credible news organizations say they have the story, something is going on. But i agree with you, the people i trust on the biotech side and not the bankers, but, you are blowing smoke here, jim. Theres nothing. Wouldnt that be something if they were both wrong . Well, you never know, and what talks took place at some point, but i share it, because it has been in the radar of those who like to play the deals, but the stock was down sharply, and also elan, and we have talked a great deal about it in the past, and the end of the month and keep an eye on it, and that is not an auction, but they are central bidders have lined up. They are talking a good game are the bankers at least about the likelihood that you will get a deal. We will see. But they are hoping that they get something in the not too distant future and weeks away. What a win, the whole time you have been talking about, it has been percolating. And forest labs is one that you are hearing about. Forest hills or forest labs . What about forest hills . I like forest whitaker, a great actor. And what about the potential of queens over there . How about that . We havent heard anything yet, have we . No. And i might share a birthday with edward i think the third son. He is the third son, elizabeth. A royal. The fabers . The house of fabers. And famed day, and in other words same year, same day. And the prince and the pau r pauper. And dont forget my dad mr. Quintanilla. Bob on the floor. Bob is not good yet. Okay. We will be back later. I am shocked by the quintanillas. I want to point out that google got another fourpoint price digit this morning. It went higher and not 1,000, but this raymond james, and google would be obviously, if they dont blow the number out this is going to be the disappointment of the earning season, and keep an eye on it, because it is the most price target raised since apple, however, i do believe that google is going to do a great job. They wont miss. They will have a great quarter. You might have a Conference Call that sends people in all sorts of directions. But this search business is a Fabulous Business and they take the advertising and we know that the advertising on the web continues to get stronger. It is just obviously what is called the cpms are coming out. And yahoo and alibaba, and you have the effective tax rate and 15 of the tax price and then they trade at 3. 8 times or 4. 0 times and but great acquisitions and energized it. Does she make great acquisitions . Do we know . Well, paulson and actually the oneyear anniversary is today. Yes, and it is amazing the memo that said that people have to come to work. What kind of culture do they have that you have to have a memo to come to work. Have you ever gotten a memo from the company you worked for, david, that said to come to work . Well, actually, talk about the culture or talent, and consistently seeing 5,000plus inbound application every week. In may, the applications for jobs at yahoo peaked at 10,000, and so there is a sense that the attrition is down. This is what we know from the twitter reverse, and these places have to attract the great minds, and it is funny when think of the people who are at the top of the universities and the great schools, they want to go here and not goldman. Goldman has a lot of being generic for the mortgage wall street. And wall street is not as attractive for certain people these days as right. The guy who majors in physics now may go to use it instead of developing structured products that are going to ruin the world. Right, the fab google as opposed to the fab goldman. That would be a good sign. You mean, in terms of america . Yes. There you go. Lets talk dell, david. Okay. Thanks. Lets do that. Lets bring up the drum roll. Bring up the drum roll and talk dell, because the vote is getting much closer, of course, and there is a lot at stake here, and beyond the vote, itself, and the whole idea of Institutional Investors starting to take issue with the idea of going private, but as for the vote, well, right now, if you were to count the votes that have been cast, and remember in this kind of a situation, you can pull back your votes, it would go down. The vote would be in the negative, and the deal would not be approved. That, again, all of my sources far and wide who are reporting into me here, and the large percentage of the votes that have not yet been cast, and so it is hard to determine where the vote would be or will be on thursday. This is an important point, black rock as of now has indicated it will vote against the deal. You have heard a lot of focus on the tiro and they continue to say no, and blackrock which is more influential, and a larger shareholder than tiro and 3. 6 of the overall, and im hearing at this point, they are against the deal. Now, if in fact, you do get a vote that is against the deal or looks to be going against it, lets call it the next 36 hours, the special committee of the board, jim, is going to adjourn this vote, and push it off, and they are going to give michael dell his final opportunity to raise his bid or declare, im invested already at 1365. Mr. Dell and silver lake have told all of the advisers who are turning around to tell anybody who will listen, they are done. They will not raise the bid. I have heard that many, many times. And oftentimes that does not prove to be the case when you look at the case of losing your deal if you are michael dell, and it is only 35 cents a share to you. Only, and i realize it is a lot of money, and dont you do what you need to do to preserve it and allow the lbo to happen . We will see. But right now sh, this thing is going to be so close, and in fact, may very well go against him unless he raises or in fact, he were to, and they need to adjourn the meeting for a little bit. Well, the institutions, david, they dont have loyal toy mi loyalty to michael dell, and probably meaning that michael dell will leave on the other, and there is no loyalty here. Right. There is a sense of many institutions that the privates are taking advantage of us, are delivering the profits and to private hands that would otherwise come our way, and so you combine that with the opportunity that icahn has put on the table whether you like it or not, or believe it is going to be something that he can truly pursue that is emboldening them to take the steps. We shall see. Again, this could get approved. It is close. Blackrock voting against is interesting development. And loading the company with debt is better than and loading the company in public hands is better than private. And we go the Rick Santelli at the cme in chicago. Well, thank you, jim. As i talk to the traders and look at the fixed income in global markets, all is leading to ben bernanke and what he say or may not say, because what i am seeing in europe is not augering what is going ing up s against the dollar. You can see that we have slid into the 2. 5 zone, and that is where we settled on july 3rd and 4th before the settlements and we were under, and 2. 50 is important sliding into tomorrow, and ben bernanke, you can see the maturity and the lot of vibes lately is looking at the same pattern. If we switch gears now and look at foreign exchange, and if you look at the euro chart for two days, you can see that the euro versus the dollar is improving a little bit especially above 1. 30 levels and held that challenge a few sessions ago. If you look at the pattern, you can see it is similar to the 10year. So now reading the marketplace, many believe that the reins are held firmly by the Federal Reserve on the taper which many down here believe, believe is an Interest Rate easing form when the Interest Rates are virtually at zero, and back to post nine. Thank you, rick. See you in a little bit. When we come back a live and exclusive interview with the ceo of radioshack and we will hear the game plan for turning around the electronic retailer as it battles best buy and amazon. Weekdays are for rising to the challenge. Theyre the days to take care of business. When possibilities become reality. With centurylink as your trusted partner, our visionary Cloud Infrastructure and Global Broadband network free you to focus on what matters. With Custom Communications solutions and responsive, dedicated support, we constantly evolve to meet your needs. Every day of the week. Centurylink® your link to whats next. Faso you want to save on autoof insurance . Drive a hybrid. Get good grades. Lose the bling. Go paperless. Combine policies. Make automatic payments. And of course, talk to farmers. Hi we are farmers bum pa dum, bum bum bum bum and i have a massive heart attack right in my driveway. The doctor put me on a bayer aspirin regimen. [ male announcer ] be sure to talk to your doctor before you begin an aspirin regimen. Go talk to your doctor. Youre not indestructible anymore. Radioshack is in the midst of a turnaround plan as the electronic retailer looks to revive the losses and slumping sales. Courtney reagan is over with the companys ceo. He hello. Hello, carl. This may not look like a typical radioshack and one that you have seen in the neighborhood, because this is part of the new Concept Stores for radioshack and the plan to reinvigorate the consumer and the Shopping Experience in general, but the analysts will tell you that it could be an uphill battle. At the companys peak in 1999, it had a market cap of 19 million and now it is sitting over 300 of the market cap, and now im joined by the ceo joe magnacca and he is the ceo, and thank you for joining us, and thank you for letting us be here in the new Concept Store. I have to ask you that over the last few days, there is speculation, that all of this is being done the set up radioshack for a sale. No, i was brought in to transform the business and the team im putting in is focused on rebuilding radioshack and we have a great space for technology and a brand in the past that has lost its way and our job is to reinvigorate the brand as you mentioned and to rebuild the con fidence in radioshack and bring back the lost generations of folks that we have lost over the few years. And the stores certainly look fresher and more modern, and it cannot be cheap to transform a fleet of 43,000 stores and is liquidity an issue . Well, the cash sheet is strong and we have a payment coming up, and we are not concerned to pay it off in cash, and we have been talking to the bankers about opportunity to refinance some of the debt, but what you see in the store is what we refer to as a high touch store, and so we are not looking to apply it across the 4300 locations, but what is happening in ft. Worth is the bones of the stores and the aspects of this are replicated in a meaningful way, and we are rearranging the merchandise and the adjacentments to take that concept across the majority of the stores. Okay. I understand that jim cramer has a question . Yes, i know that you have done fabulous job at reed which many people felt was challenged, but is this a tougher situation, because you go into the stores and a lot of the stores that you dont like the look of, and is it a monumental amount just because there are so many stores versus dewayne reed . Well, i think that, jim, thank you. First of all, we had a great lot of fun doing the dewayne reed transformation, and i see the parallels and the scale is different, but we have great offense, and the objective is to transform the box. The focus that we have in remerchandising the store, as i mentioned to courtney, is easy to elaborate across a majority of the chain. The good news with the 2,000foot box, it is easy to turn it quickly inside of the business so i see a lot of similarities of the dewayne reed transformation and this one. What about the exposure of delco, and this is a competitive market, and when i go into the radioshack and go in there because you have great selection, but the company before you spent a tremendous amount of time to get the sales people to understand the different plans, and are you sticking with the notion that this is a place to buy your cell phone . Well, as you know, jim, 50 of the revenue is based on the moeblt, and again, we are very, very confident and comfortable with the mobility strategy. Our objective is to give the customer a choice, and you have heard the news over the past few days the mobility is changing dramatically, and you heard the at t announcement earlier, and when the technology changes, it is good, because people look to radioshack to explain the mobility, and so we to grow the mobility, and grow it profitably and the second objective is to take the nonmobility business to the next level which is the old radioshack that we grew up on. And mr. Magnacca, and the products have change and you have rearranged the store and lessened the products offering, and tell us about that. Well, you know, we kind ofed were looking for assortment, and what happened is that we created duplication in the products and so we wanted to diffuse it and make it more comfortable for the customers, and inside, there is more space, and we have not taken away a lot of the selection, but reduced the duplication, and made it more shopable, but the Mobility Program which sits on tables in most of the stores has moved to the wall and amerimerchandised t by carrier, but carrier, so all of the samsung and the htc product together, and that is how they shop and it is much more comfortable in this environment. Thank you for having us today, and good luck as we watch the new stores being transformed and thank you again for joining us. Joe magnacca, the ceo of radioshack with an exclusive interview here. Nice job by courtney. She delivers the mail. And people know on mad money. A lot more ahead on squawk on the street. Coming up, we are jumping into the stock pool and inviting you along. Lets get soaking wet. Six stocks in 60 seconds when squawk on the street returns. Theres a look at the losers and lets get six in six 60 wit jim. When you are on the plane, wireless is the best. And should you avoid allergen . Well, people are worried about the tear drug, and they are saying dont get in front of it. What about the sin tas warning . Well, this is a bread and butter company, and they are not hiri hiring. And what about bally tech . If you want to buy it when it goes higher, buy it. And what about this one, hca . It is a sleeper. And Affordable Care admissions are up, and if you buy this for next year, it is a home run. Tough time for the hospitals in the last two quarters. Yes. What is coming up mad tonight . I have a oil stock that i have played for so long, carl, that it is literally, if you asked me about it, i would say, are you kid manading me. I am going to look at the charts and major change, and down 40. It is starting to get cheap. I have ideas, but i wont give it away, because in general, you are bullish on the sector. And yes, i have not been and tonight, im changing my mind. Okay. We will see you tonight at 6 and 11 00 p. M. Eastern time. And we will get the sentiment numbers and more reaction andmarisa mayer, and her numbers from year one going into year two. But not rely on it. Who can focus on making your legacy last for generations to come . That someone is a Morgan Stanley financial advisor. And were ready to work for you. People find out state farm does car loans as well as they do insurance, our bank is through. Good point. Grab an edge. Look theres two guys on the state farm borrow Better Banking sign. Nope for real theres two dudes on the state farm borrow Better Banking sign. [ reporter ] breaking news from the state farm borrow Better Banking sign. Were seeing two men that have climbed the borrow Better Banking sign gentlemen please get down from the state farm borrow Better Banking sign. Phil get the hose. Okay hes getting the hose. Alright, lets go. [ male announcer ] talk to a state farm agent about car loans that can save you hundreds. Thats borrowing better. [ male announcer ] you wait all year for summer. This summer was definitely worth the wait. Summers best event from cadillac. Let summer try and pass you by. Lease this allnew cadillac ats for around 299 per month or purchase for 0 apr for 60 months. Come in now for the best offers of the model year. Going for nine straight sessions higher and we have not done that since 2004 and for the time being, it looks like trouble getting there and the stocks are off after case volume numbers out of coke were weak, and the latest multinational to say bad things about the Global Economy and now over to the data from diana olick. Din dian diana . That is right, carl. Home builders fell flat and this is from the National Association of Home Builders and given the rising rates in june and july and the expectation for flat, and jumped six points to 5750 which is the line between positive and negative and this is the highest level since january of 2006 and the three co components is current sales rose five point, and sales expectations rising 7 points, and the buyer traffic rising 5 points and buyer traffic is only one in the negative at 4. 5. Home builders are warning possible policy threats ahead given the mortgage financing and the mortgage Interest Deduction that could derail the recovery among the Home Builders, but cite prices for land and labor and prices are softening a little bit which is good news, because they have been high and hampering the rise, but this is good news for the home builder index sentiment. And diana olick, nobody expected that jump. Lets bring in the fed president , well, not fed president , but he will be speaking to members of congress and members of Congress Looking for the moment of clarity for the fed tapering program. And we bring in our own senior economic reporter Steve Liesman joining us as well as bob from the home builder confidence rising and in light of the strong data with regard to home builder sentiment, and the higher rates have not derailed the home builder confidence and if anything, it seems like they are hopeful that people will turn out here and buy homes. Well, if i had a mind of buying a home any time soon, the uptick of rates would get me off of the dime. I i would not be surprised to see the uptic in the buying in the short term. We will hear from the fed chair thursday and this is probably the last time he is going to be speaking before congress in this fashion, but for the time being, i wonder if the markets are not vulnerable, bob, to the confusion that is still reins about whether ending purchases or tapering the purchases is the same thing as tightening policy and what is your view on that . Is. Well, it is not in the way he describes it. As long as in my opinion as long as he is buying stuff in the ba Balance Sheet is expanding, policy is eased. If he buys a little less of it per month, it is still easy, but not quite as easy. In his view, which i dont quite understand, but he does have it, in his view, if he stopped the bond purchases altogether and froze the Balance Sheet of the fed, that would lock in the present degree of ease. He would not regard that as tightening. So, hes going to have to convince the world and i think that he is well on the way of doing so that a taper in the quantitative easing portion of the policy is not really tightening, and it is separate from the Interest Rate portion which he says will go on forever. Steve, part of the issue lately seems to be that the markets are hearing what they want to hear which you could argue is basically taking the new information about the economy into account, but that means that tomorrow could go either way. Right. And it could. And i want to answer bobs question in the question that you asked of bob and the way i answer it is it depends what the market come toons understas to tapering is not tightening, but if the market is on track for a tapering in december, then we could be in for a surprise. To my belief and im interested in what bob has to say about this, because i think that the policy at the fed right now and certainly the guidance from the press conference and from the meeting in may 22nd is that the fed will taper in september. Unless there is a change in the forecast, that looks for a strengthening in the economy in the second half of this years, i think that the fed is probably going to be on track there. Now, if the market is believes that is not the case, then i think that maybe tomorrow or maybe over the next few weeks if the Economic Data comes in that does point to a second half rebound, then the market is going to have to redigest the news that theres a tapering coming in september. Yeah, i think that, you know, if you stop buying 85 billion a month and start to buy 60, i mean, he could have come up with 60 originally, and that number came out of the air, and probably after a week after he chose 85, he probably thought, why did i go so high . And you know, bob, i agree with that sentiment in the sense that i think that he wants to have the flexibility to move. He wants to have the ability to convince markets that 85 is not a be all and end all and that 65 is a possibility or 45 is a possibility, and that, yes, it is still indeed is an ak come mow daytive policy in that regard, but once you read the forecast, the committee has to come to a consensus to come to that forecast. Yes, the chairman is running out of time, and he wants the course set before he has to leave in january, but i think that in his speech to the National Bureau of economic research, he made some progress in being able to convince people that a tapering is not a tingt i tightening. Well, bob, this is academic, and he is overcomplicating the situati situation, and as for most people trading in the market dont believe that qe has much effect on the economy at all and simply a trading signal. As long as they are buying, the market is supported and the confidence is there and buy equities and if they are not buying, dont buy the equities, because the confidence will end, and almost as if they have painted themselves, bob, into a corner where it is a buy and read results as regardless of what the qe has on Market Sentiment, and would you agree with that . Yes, i believe i would. And recently, and maybe still, people have been confusing the feds qe purchases with the massive increase in the money supply. I think that it is beginning to dawn on people that as hard as he is pushing to get the money supply growing faster, it is not. It is growing less than. per yea 7 per year, and money is not that easy in terms of what is getting to the main street. What we have had so far with the qe is this Balance Sheet changes on the fed Balance Sheet and commercial banks Balance Sheet. Simon, im not so cynical about the traders and the market. I believe that these are new concepts and the fed has had a Communications Problem communicating these concepts and the differences of this concepts, and i think it has had some success and will continue to succeed. I think that the perception is very difference, because you are plugged into the fed, and you are, your perception is well, the market has reacted, simon. I have watched it. They want the people to believe it, and the market does not hear it in the way that you hear from the fed from the private conservations. Eventually they did hear it and they made the trade. I still have a question, simon, as to whether or not the market is believing in a september t e taper or not, but they have gotten the message that the fed can continue to reduce its purchases and still helping the economy. Oh, really. Well, we will see about that, steve. We will see. That is true, we will see. That is a true statement. Thank you. Thank you so much, steve. We will get over the washington and the senate is convening right now setting up for what is a dramatic day that the democrats could attempt the most significant change to the chambers rules in nearly four decades. Our correspondent john harwood is in d. C. With the lat est. Good morning, john. As dysfunction aal as washington is and ugly and messy as it is, there is lingering reverence of the members of the senate for the traditions of the senate even though it does not look like the senate did 40 or 50 years ago and that is the crux of the, and the pivot around the negotiations taking place over the Nuclear Option. Old style senators and the people who respect the tradition dont want to give up the minority rights provision that says that you can filibuster, and you can require 60 votes for almost anything to be done. The younger members especially are saying that this is gumming up the works, and we are not getting any obama nominations through and legislation through for the most part and we need to move faster, and be more efficient, and the push and pull between those numbers has caused the republicans and the democrats 98 of the 100 senators met last night in the Old Senate Chamber trying to come up with a deal to avert the rules change that harry reid has threaten and at stake are a couple of nominations to the National Labor Relations Board and a couple of the cabinet members, and most of the people i talk to in the leadership still believe it is going to be worked out. At 11 00 there is a closure vote on richard cadre who would head the treasury department, and they are likely to get cloture, and the smart money, carl and simon, this is going to be worked out and they wont invoke the Nuclear Option, but we will be watching all day. And john, the rhetoric between reid and mcconnell, and have you seen anything like it in terms of the int intercongressional relations . You mean where the one leader says that my friend, you are going to go down as the worst leader in Senate History . Something like that . No, i have not seen that, my friend. Well, the gentleman from north carolina. John, thanks a lot. We will see what happens later on in washington. And culprit this morning the coca cola sales have disappointed the market, and the stock is down heavily weighing on the dow and the companys Conference Call is on right now, and you may have seen the cfo on squawk box this morning, and we are back at hq with the latest. Well, simon, as the Conference Call is going on, coke is off of the lows which is helping to move the dow into positive territory, but it is an issue of volume and while it may seem like a perfect day for cocacola in the northeast, with the triple digits, it has not been weatherwise which has dragged down the volumes. This is disappointing with north america volumes down and in germany, one of the nastiest springs in years, and latin america up 2 , but held back to some degree by civil unrest in brazil. Africa up 9 and the Pacific Region up 2 , and china flat. Nonetheless, the ceo on the Conference Call this morning says steady as she goes. Things are well, and a short time ago said he is confident of the companys strategy, and listen to some of what he had to say. As i think of the Second Quarter, nothing has changed in our ability to continue winning in the industry. The there is no question that there are systems commitments and superior execution is stronger than ever before, and our business fundamentals remain firmly in tact. He does have a lot the deal with though in terms of weather, in terms of the civil unrest and the crisis in europe and you can look at the shares of the cocacola as the Conference Call got under way at 9 30 eastern and the stock is climbing back a little bit, and we will keep listen ing listening to the call and keep you updated. When somebody is saying they are taking volume and value and you do what you can within an industry that is compromised, scott, or whether you compare it to what pepsico may come out, and jim cramer was adamant that he is not thinking that cocacola is anywhere near pepsico, and if that is true, then mr. Kent has problems . Well, they are sharing in some areas, but if the volume is something isolated to cocacola, they have bigger problems than those things like weather and civil unrest that affect everybody. Okay. Thank you, scotty. Meantime, coke is inspiring the twitter question today. The company blamed waster in part for the poor earnings this quarter and brings us to this mornings squawk on the tweet. Coke blaming weak sales is blank blaming blank. To be fair to the cfo of coke, he is talking about something that we dont have any information on. And if we have more rain in atlanta than last, so what does that mean . Well, companies will use the weather, but what happens if weather patterns are changing, and is it forcing companies to grapple with something that they cannot grapple. And the company is on a winning streak that is in the likes that we have not seen in nine year, and will we come out on top with the dow up three points . Art cashin is in post nine to help answer that question. It has been a year since Marissa Mayer has taken the helm at yahoo and we will see what she plans for the year ahead. [ male announcer ] the allnew 2014 lexus is. This is your move. [ indistinct shouting ] [ male announcer ] time and sales data. Splitsecond stats. [ indistinct shouting ] its so close to the options floor. [ indistinct shouting, bell dinging ]. Youll bust your brain box. All on thinkorswim from td ameritrade. Flatline today after an eightday winning streak on the s p, and art cashin, the director of floor operations is here. Nice to be here. Nice streak and i wish it happened on the volume and i joked with kelly saying that thousands of shares have traded hands. And we had to push to do that and nearly needed a cattle prod. Well, it is um m shgs si, it is structural changes going on and the volume is tough to bring back, and the more amazing figure is a much longer streak in nasdaq and we havent seen it since the 90s, but i would have thought during dotcom explosion it would have happened, but even then it didnt happen. Do you think that the run going into bernankes testimony should give people pause . No, not really, because i think that right now, you are seeing a little bit of a sleep walk and a little bit of a low amplitude sleep walk yesterday, and people are waiting to see if there is a bernanke surprise. And you know, you would only hope that the elected officials would be smart enough to ask key questions. If you are going to taper, are you going to equality taper in the Mortgage Backed securities and treasuries and key questions and nobody asks them, and nobody uses the figure of 85 billion, and they are buying more. They get interest payments, and they have to redeploy that, and stuff that matures that has to redeploy and it is more than 85 billion and people are not digging down into the details. In the basis of digging down, Steve Liesman and i were having a conversation of how sophisticated the Market Sentiment is over 65 or 85 or 40 or a binary signal to buy or sell the market . Well, in this business, it is natural for the traders to assume almost on any question that they are in a game of musical chairs. If things, and if circumstances are going to change, and if Steve Liesman stands here to say it is going to taper, but not really an impact for five months, people cant afford the wait for that, so you yet have to wait for the instant realization of things when a decision is made like that. I tend to agree with your side of the argument, because all of this tapering is not tightening. Tightening would be putting the car in reverse. Tapering is taking the foot off of the accelerator, and it is going to slow down anyway and may eventually stop. This is a weak economy, and that is the kind of thing that makes this market nervous. Well, you mentioned very weak economy and we are getting a sense of the in terms of the corporations of how they are doing, and a mixed bag at this point, and art, im curious from your take from the likes of cocacola who does not come in with a great number, and u. P. S. On the industrial economy weakening and what are you seeing . Well, we are guessing that im not an analyst, okay. So i cant tell you that i have dug through all of the numbers. But if you look at some of the aspects, you look at the russell going twice as well as the s p, and even after the rates started to pick up, that kind of tells you to have the people doing business in the america, and the multinationals may be suffering and i dont know how much cocacola concern could be part of the international business, but i do know that u. P. S. Geared itself up to take care of china and how things are changing in china and they are not exporting in the same manner. So they say that industrial shipments dont look big, but it is because a lot of the stuff is offshore. That is right. Art, thank you for coming in. See you soon. Art cashin. And gasoline prices have risen more than 5 in the last week, and the key question is whether the prices will continue to go up and what impact that will have on the consumers across the country, and find out if there is more pain at the pump coming your way. We will be right back. Hey linda what are you guys doing . Having some fiber with new phillips fiber good gummies. Theyre fruity delicious just two gummies have 4 grams of fiber to help support regularity i want some. [ woman ] hop on over [ marge ] fiber the fun way, from phillips. Its hard to believe he was ever sick. But the bills, they just keep coming. You remember the Life Insurance you bought years ago. It has living benefits that you could use for times like this. whispering mom, is he sick . No, honey, hes fine. Dont worry. Your hair will grow back. Mine did. [ male announcer ] state farm puts the life back in Life Insurance. With benefits you can use when you need them most. Gas prices continue the rise across the country as crude oil trades around new highs. Bertha coombs is at the nymex with more on that. Good morning, bertha. Good morning, simon. We have the crude flat right now and slightly lower, but taking a look at, we have the gasoline in that Energy Complex which is outperform i outperforming. In the last few weeks, we are seeing a move up in oil prices and a big shift with wti nymex almost equal to the prices we have seen in brent, and tom riley is with the sbs commodities, and tom, some folks are calling it a perfect storm. We have unrest in egypt, and underscoring the problems we are seeing in the middle east, and the libyan production was bad last month, and opec producing less, and then you have a little bit more of the oil coming out of cushings here, and all of the sudden, things are on the rise. Yes, the draws in cushings that caught people off by surprise, and you will see the Oil Prices Trading higher from here, and we broke into the range that we were in for eight months and got above 100 with the news coming out of egypt. I think that we will stay above 100 in the next month, and maybe test 110 and you wont see a spike, but it should go hi higher. Well, it is interesting, because we have n the spike in the gasoline prices, and the contract has been leading in the complex, and some areas in the midwest between the refinery outages and the wti prices going up, we saw the prices up in the last week as much as 50 cents in some counties in indiana. Yes, illinois and indiana have paid the highest price and almost as high as c. A. Dra whac but their summer blends are difficult to make, and when prices go up, that is difficult, and on the east coast we are playing 3. 50 which is a dollar less than the midwest and look for us to trade higher here, but not above 4. And you think at the gas pump the prices wont continue to spike higher here . Well, higher, 15 or 20 ecent burk n but not spiking higher. I see you in the pit these days looking for speculators for the prices to go higher. Thank you, bertha, with that look into the energy sector. And stocks dipping into the red and trying to come back to the flatline. We will talk to two analysts off of the Conference Call to find out what goldman had to say about the quarter and the rest of the year. We will be right back. Exactly one hour into the trading and some of the stories we are squawking about at 10 30 on the west coast and 1 30 on the east coast. And shares of j and j rising and the medical conglomerate posting bet better than expected numbers and raising the guidance for the year. And amazon is hitting a new alltime high, and they are up 12 in the last month. And markets are trying to break records today, but will the earnings derail the winning streak. Bob pisani is on the floor with that . Can we make it nine, bob . Yes, we can. Here the problem. Goldman with the great number, but the First Regional Bank comerica reporting and little problem here. Why are people buying the banks . Well, simple, two ideas, the rates are going higher and the problem is that the rates have stabilize and the longterm rates have stabilize recently, and second, the perception out there that somehow long term rates matter for the banks and most of the loans are based on libor which is the fed rates and they have not gone up much, and the second problem is that people were buying the loan growth, but it has been anemic and that is why i want to get to comerica who came out with the earnings on the surface looking good and beat here, but they have a problem. Low lower loan growth estimates, and they are lowering the numbers, and from 8 to 3 , and that is a problem. We have to put up the stocks of the regional banks today, and you can see that they are all down on that particular loan growth decline that we are seeing here, and we need better loan growth in the second half of the year, and the banks are pricing it in, and we are not seeing it so far and the other issue when we change gears is coca cola and everybody is talking about the weather, but, folks, raining all over the world, and monsoon condition on the planet . Look at the numbers. The consensus, they missed on all four parts of the world, and europe down 4 , and the consensus was flat, and raining in germany and really a 4 miss . Latin america expected up 2 , and expected to be up 5 , and no monsoon there, and pacific up 2 , and expected to be up 4 . And this is big misses like this, and north america was down 1 1 , and that is the first volume decline in north america since the First Quarter of 2010 and that is a miss, too, and maybe rain, but we have Something Else going on here, folks. We are losing market share for cocacola or a Global Consumer slowdown of sorts, and maybe both, because if you look at the soft drink category, it is not looking like obviously that pepsi is picking up the market share and maybe a little bit of it, but nobody is gaining on cocacolas woes here. Back to you. In fairness to them, bob, the rains were quite bad in germany and people died. It was really, really bad. In germany, but latin america. Okay. Take the point. And in the pacific. And bob says that the competitors are down today as well, and the important point is that it is not a case where coke is down and even else is rallying. Right. And thank you very much. And also, to another corporate story, the shares of goalman sachs are down in negative territory despite on the face of it a huge earning beat, and the profits more than doubling than a year ago, and 81 cents a share above expectations. Eric straw is the managing director and leon humphrey is joining us as well, ceo from s p capital, and folks, you have been listening to the Conference Calls, and let me kick off a eric, which is the reason they have beaten which is a big surprise of the investment and the lending segment of the Balance Sheet. Were they investing in that sense and presumably now they sold some of those, and therefore, they have been able to raise 1. 2 billion more than 1. 2 billion. Eric, why isnt that going to boost the stock today . Is that because it is a oneoff . Yes, i believe that it has been carried over, and in well, eric, forgive me. We missed the beginning off what you were saying. Can you start again for us . Yes, absolutely. I was saying that the investing and the lending segment is a little bit of an analytical black box with two assets in it, both equity public and private and the fixed income, and while the fixed income throws off the earnings in a more sustainable way, the gains component is very predictable to predict, but in terms of affecting the outlook of the back half of the year, it is difficult to say it has meaningful influence. I get it. Ken, half of the revenue is driven by six parents in Commodity Trading and equity trading and that is up from the year from last year, but not as good as in the First Quarter. What is the outlook there for that run from the bidders, and what did they say on the Conference Call . Well, two aspects is trading and Investment Banking. In trading, you have to see a higher level of risk taking, and volatility sometimes works in favor of goldman. Investment banking what has not moved into anywhere a full gear is mergers and acquisitions. So, they like the other two major banks had very strong equity, and debt underwriting, but m a has ways to go, and we believe it is the upside of the second half of this year going into next year as well. Ken, they seemed to benefit from a number of onetime items including a lower tax rate, and the stock is not showing what you would have expected given that the bottom line number is so strong. Give me your take from that and what you pick d ed up from the Conference Call when they discussed those issues. Yes, sure. That is the question of the quality of earnings for the quarter, and the analysts will bump up the analysis just because of the tax rate. You have analysts who are looking at the velocity of the Capital Markets and trading and looking at as Bank Analysts regulations and how they manage the capital and the return of equity on goldman is till low, like 10 or 11 . You know, that direction is very important for investors, so, you know, we think that directionally it is positive, but the activity has a ways to go across most businesses. That said, it is basically equal to the cost of capital and no great promises, and that is going to increase substantially, and what do you think about the stock which has done extremely well over the past year, and up 67 to 68 and risen faster than the s p 500, and would you buy it here . Would you book the profit, eric . What would you do . Certainly not a buyer, because i view the stock as being about shared values, and as you point out, roe is about the cost of equity suggesting that the stock should trade around the book value which is where it is trading currently, so that is fair. This is back to the quality of earnings argument which is to get some kind of multiple expanse, there needs to be the view in the market and among the sell side that the estimates will mo higher and that return component starts to move considerably above the current cost of equity. We are out of time, ken, but you are essentially the same with the 1. 88 price target, and more of the same view . We have a buy recommendation on the stock. You think it is substantially hi higher . Well, a 1. 85 target price, and we believe that the velocity of the Investment Banking and trading will be higher as we look out over the next 6 to 12 mont months. Good to meet you both and thank you for joining us on cnbc. Ken leon, and eric wasserstram. Well, the shares of baidubai the chinese Search Engine up on the news that they are going to buy a app store, which is going to help their mobile in china and the market likes it. It is a 1. 9 billion deal and much of it coming in a purchase from net dragon netsoft which owned 97 of the company, and the shares traded lower in china, but baidu is up today. One year ago today, Marissa Mayer took over for yahoo and since then, the stock sup more than 70 , and the question is what does she have up her sleeve for the future . We will find out when squawk on the street comes back. Mine was earned in djibouti, africa. 2004. Vietnam in 1972. [ all ] fort benning, georgia in 1999. [ male announcer ] usaa Auto Insurance is often handed down from generation to generation. Because it offers a superior level of protection and because usaas commitment to serve military members, veterans, and their families is without equal. Begin your legacy, get an Auto Insurance quote. Usaa. We know what it means to serve. announcer scottrade knows our and invest their own way. With scottrades smart text, i can quickly understand my charts, and spend more time trading. Their quick trade bar lets my account follow me online so i can react in realtime. Plus, my local scottrade office is there to help. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer scottrade. Voted best Investment Services company. What are you guys doing . Having some fiber with new phillips fiber good gummies. Theyre fruity delicious just two gummies have 4 grams of fiber to help support regularity i want some. [ woman ] hop on over [ marge ] fiber the fun way, from phillips. Their students need Financial Literacy education. But the funding, resources and curricula are often not there. Pwc is doing something about that. Im bob moritz, u. S. Chairman of pwc. Pwcs earn your future is a 5year, 160 million commitment of funding, volunteer hours and curricula to help provide students with financial wellbeing. Pwcs earn your future empowering students and future leaders through financial responsibility. One year ago Marissa Mayer left the Promised Land at google for yahoo and from tell commuti to tumbler, here is a look at her journey to save yahoo in the beginning there was yahoo and at first, it was good, but then we are looking at yahoo sent it went public in april of 1996 and the stock has been floundering since their heydays. Yahoo needed a savior and one year ago, the heavens parted. We have a new ceo for yahoo Marissa Mayer of google. She will bring new life and new blood. Hallelujah and then one day later today, a big chunk of the focus goes beyond what investors can expect from her as ceo to the fact that she is and expecting ceo. Wait, she is pregnant . Even without a newborn bringing yahoo back from the dead could mean a miracle. I think it is tough for christ, himself, to come in there and run that company. Have a little faith. One thing that marissa brings to the table is that she is focused on the innovation, and she will take risks. Risks . Yeah, she has taken a few hail marys this year. And some say there is a rufrl over there at yahoo with Marissa Mayer saying no mortell commuting starting in june. Ugh that didnt go over well. And then the fashion risk. This is Marissa Mayer, the ceo of yahoo last night in new york city at the metropolitan museum of art, and the theme of the party was punk, and you dont see many ceos doing that these days and good for mayer. And we wonder if she said a prayer before buying tumbler. You dont set out to do an acquisition, you only do it if makes sense. And now the stock is up 70 , so maybe marissa is a godsend. It is not me, and one of my great mentors said that great executives confuse themselves when they convince themselves that they do things. What is next for the yahoo ceo . I hope to grow more. And hopefully we will. God only knows. As you know, today marks the oneyear vrgs of mayer becoming the ceo and since the new post as we noted the stock is up 70 , and she has made 17 acquisitions and the investors are awaiting the results after the bell. And we will talk to the chief operating officer of the company who knows more than anything, and great to have you back, chad. Thank you. Good morning, carl. And she has done new attritions are down, and flicker, and tumbler, and shut down 25 products and when is all of it going to result in better matrix, and better share . Well, it takes time to turn around a company as you know, and it has been an interesting first year in that she has changed the impression of yahoo and employees want to work there, and companies are willing to be bought by them at good prices as opposed to exorbitant prices, so she has put the company in position to put them in leverage for mobile. It is not like it happens overnig overnight. They have to integrate the people and integrate the services and start to execute on them. But in one year, that is a huge turnaround from the perception of y of yahoo over the previous six years. And why is the stock 74 higher than a year ago today, and what is the one fundamental change there has been amid the acquisition and the talk of the mobile strategy . If i were to guess, i would say two things, the general sense of confidence to have a stable ceo and a good board of directors who is thinking of returning the value to the shareholders which has been miss missing for a few years and the success of the alibaba investment, and people are getting greater clarity of the value of the asian assets and splitting the operating business, and those investments out, and giving value to both sides. Dan, forgive the question, but how can you distinguish between a ceo who is aligned in the board aligned to return shareholders through a mobile strategy and height . Because you dont know how they are going to do that yet. I appreciate the alibaba asset risen in share value, and that is partly why the shares have risen, but what is concrete to the point that kelly made . Well, look, you cant ever know for sure, but it all has to do with the confidence of the Employee Base and the clarity of the vision and the purpose, and there is evidence when you see how quickly they have been able to reinvigorate some of the products that languished for years, and so, the resurrection of flicker as example shows how quickly the company can move when they are e are focused on something. Also the ability to bring in the top talent, and you have to focus on how they could not hire anybody or acquire anybody and the products were not better. Under her leadership, you see clear evidence of that, and it is early in the tenure to see whether or not the acquisitions that she made will get the leverage and the position and the mobility she hopes they will, but clearly a Different Company than 12 months ago and all positive. Good point, dan. We quickly forget how the company was 12 months ago and how people were talking about it and the board and a sea change there, but you are confident that this will eventually stop being a sum of the parts story . I believe it is finally in a position to be able to make that case and to start executing and start at tracking and has started attracting the kind of employees who can do that. It is the position to be relevant in your daily life, and that is important position to take, because when you look at the last 20 years of the internet, there is only a couple of companies who have survived the tumult, and yahoo is one of them. It is no in the position to start to execute again and pull it off again, and no guerarante it will, but it is in a much better position to do that. Out here, the employees have a buzz and want to work there and believe in the vision, and they believe she has the vision to execute on, and that is half of the battle, because before, if nobody wanted to come or know what to do, there was no chance of success. S p tells me, dan, as we are talking that since she took over market cap is up 10 billion. That is called Wealth Creation right there. Dan, appreciate your time right there, and see you next time. My pleasure. Dan rosenweig from yahoo we are going to talk about the features that only your smartphone can see. And a make oaf for the stores as the new ceo of radioshack is speaking out. That welcome back to squawk on the street. Im scott cohn. Guess where i have . Cnbc Global Headquarters where were looking at shares of tesla motors and they are down big today on the nasdaq. The issue here is a note by Goldman Sachs which looks at three different scenarios for sales and no matter how it comes out, they say the shares should be trading lower than they have been. The low end of the range, 58 a share. The high end 113 a share. They put a target price on the stock of 84. So the stock is selling off in a big way. It is down about 7 around the lows of the session but look at tesla yeartodate. Still up about 250 . So not bad but giving a bunch of that back today. Simon, back to you. It is an honor to have you on the markets desk today. What can i say . It is an honor. Scott cohn. Lets send it over to chicago to the cme for Rick Santellis tuesdays exchange. Well talk about a lot of topics youve been discussing and im in lots of agreement with you on many of these issues. Lets start out with Treasury International capital flows, called tic. It might be tick tick ticking. Its always two months in arrears. Were looking at maida that. I look at net long term which was minus 27. 2 billion. Why is this important . Its the second smallest its the second smallest negative weve had. If you go back to march, it was minus 29. 6 billion. But then you have to go all the way back basically 4 1 2 years to january of 09 to find a bigger negative number. Lets keep this simple. What it means is foreigners arent nearly as enamored buying dollar denominated Financial Assets and i think its something we need to Pay Attention to. Lets switch gears a bit. Art cashen, hes the first time everybody thinks about. I agree with him on one thing he said today and that was when the Federal Reserve tells you theyre buying 85 billion its not true. Although its closer to true today than it was earlier in the year, people on this floor are aware of it. On the mortgage side, when people refinance, the paper gets taken away from the fed and they buy to replace and that replacement has put them higher than their limit which on the mortgage side has been 40 billion. Art calls that kind of an involuntary taper. Thats the same principle Richard Fisher had on hour show a month ago. That theres distortions in the Mortgage Market because of the feds purchases as a reflection of how much total supply is out there. Theyre definitely a big gulp. But here is the point. This is where i disagree with art a bit. The market supposedly is trying to handicap the taper and art says its like taking your foot off the gas or many say, including the fed, you guys dont understand, this really isnt the same as raising rates. Thats where i disagree. I think its exactly the same. Theres flows and theres ownership, okay . Now, the ownership as of last wednesday was 3. 6 no, 3. 462 trillion was the feds Balance Sheet. Here is why its important. Because the reason they do quantitative easing at all is those flows of purchases are to lower rates when youre at 0 Interest Rate policy. Take your foot on the gas, use any analogy you want, the market looks at it like less accommodation, that Interest Rates may go up because of less flows. They didnt handicap the flows adequately. They may a faux pas. Back to you. Rick santelli, thank you, sir. Cocacola inspiring our twitter question. The company blamed weather in part for its poor earnings performance. Coke blaming weather for weak sales is like blank getting blank. Tweet us squawkstreet. Well read the best answers. Honey, is he too into this car thing . [ mumbling ] definitely the quattro. Honey . Huh . A5. What . [ sighs ] did you Say Something . Did you Say Something . announcer at scottrade, our clto make their money do more. Re ann to help me plan my next move, i take scottrades free, inbranch seminars. Plus, their live webinars. I use daily market commentary to improve my strategy. And my local scottrade Office Guides my learning every step of the way. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer scottrade. Ranked highest in Customer Loyalty for brokerage and investment companies. [ whirring ] [ dog barks ] i want to treat more dogs. Our Business Needs more cases. [ male announcer ] where do you want to take your business . I need help selling art. [ male announcer ] from broadband to web hosting to mobile apps, Small Business solutions from at t have the security you need to get you there. Call us. We can show you how at t solutions can help you do what you do. Even better. As you may know, coke is blaming weather for its poor earnings today. We wanted to know coke blaming weather for weak sales is like blank blaming blank. Kelly says like apple blaming worms. A kardashian blaming the paparazzi. And patrick writes like blaming for toothbrush for a parking ticket. That wasnt my submission, by the way. Different kelly. John says like blaming the sun for rising in the east. If youre just joining us, here is what you missed earlier on. Welcome to squawk on the street. Here is whats happened so far. Revenue came in better than expected. Im looking at the revenue number, 8. 6 billion. Street was looking for 7. 9 billion so thats significantly higher. It was a disappointing quarter in terms of our volume. We had always said that along the road there would be a bump here or there. We didnt expect the world to have a bump and the whole industry slow down. I dont drink soda. You dont . Okay. Youre like jerry seinfeld. He hydrates, doesnt drink. I guess you dont nid to hydrate enough. Whats with the hydrating . Have a smoothie and thats about it. Hes a proven leader. When you get off the desk and speak to ceos of pharma, everybody wanted him to run their company. This guy is a hitter, not a coaster. I was brought in to help transform this business and the team im putting in place is really focused on rebuilding radio shack. Were in a great space relative to technology, and its a brand that really in the past has kind of lost its way. Hes going to have to convince the world, and i think hes well on his way to doing so, that a taper in the quantitative easing portion of his policy is not really tightening and its separate from the Interest Rate portion which he says will go on forever. Good tuesday morning. Were live at post 9 at the New York Stock Exchange with a check on the market as the s p tries to go nine in a row to the joupside. Were down about four points to 1678. Shares of Buffalo Wild Wings slipping this morning as well. Downgraded to neutral saying the earnings picture still positive. Rinker international, another stock getting downgraded. Analysts at jpmorgan cut it to neutral saying the casual dining stocks are fairly and fully valued. No smiles for cocacola investors today. The company blaming weather for a weak earnings report. Well talk to an analyst to tell you what you need to know. Radio shack looking to make a major turnaround and its all starting with a brand new look. Well take you inside the new radio shack in a couple minutes. And the ceo is speaking exclusively to us on cnbc. Plus, does your magazine or newspaper have more to it than meets the eye . Well show you one Smartphone App that brings you tons of extra content lurking just below the surface. Happening right now though, senator harry reid says hes confident a way forward has been found to eye vert a showdown on the fill buster in the senate. Our john harwood has the details in washington. John . Carl, as we said last hour, the smart money was on hem working out a deal and a couple mings after i got off the air harry reid came to the senate floor and announced that they were close to a deal. Here is harry reid. It was a very, very good meeting, lasted four hours. People were still as highly engaged at the end of that four hours as they were at the beginning. So i think we see a way forward. And what was interesting about what harry reid had to say was after all the acrimony last week with mitch mcconnell, his counterpart on the republican side, who did he praise for negotiating a solution to the socalled Nuclear Option . Not mitch mcconnell. Instead, it was john mccain, a veteran senator, somebody who has tried to be at various points in his career a bridge between the two parties. Here is harry reid on john mccain. John mccain is the reason were at the point we are. A lot of people have been extremely helpful, but this is all directed toward john mccain from me. No one was able to break through but for him, and he does it at his own peril. Here is what the terms of the deal are according to aides on both sides. Five of the seven nominees that president obama had put forward, his nominees for labor secretary, for epa, for consumer protection, Richard Cordray in that new agency created under dodd frank, those will go forward. There will be two new nominees to the National Labor Relations Board, republicans have resisted those because a court had ruled that they were appointed unlawfully when the senate was not actually in recess. Recess appointments without a recess. And the white house with the advice of labor is going to come up with those two nominees and republicans are agreeing to confirm them by august 1st, which allows the nlrb to function. So this appears to be the way forward. Its not official. We do at 11 00 get the cloture vote on Richard Cordray and will affirm there are 60 votes for that to happen. But john mccain by promising to deliver five other republicans in favor of this compromise getting democrats over the 60vote threshold for the nominations has brokered this deal and it looks like the Nuclear Option will be averted. So, john, there will be in a sense no structural changes to the filibuster as we know it . There will be no structural changes for now, but harry reid, his aides told me, pointedly did not agree to not seek any changes in the future. So hes holstered the weapon, but he hasnt given up the weapon or taken the bullets out. Interesting metaphor, john, and very interesting report. Thank you so much. Our john harwood on the case today. Big story in washington. Big story back here on the street, of course, is cocacola. The stock is down more than 2 on Second Quarter sales coming in below expectations. Want to bring in bill schmidt from deutsche just got off the phone on the Conference Call. Great to have you. Good morning. Good morning, carl. Weve been trying to put this weather excuse into some perspective because theyre getting made fun of to some degree. How did they put it . It was weatherrelated. If you look back historically, theres a strong correlation between weather and cokes volume. So, you know cokes job is to market to people when theyre thirsty and if theyre not thirsty because its raining all the time, you wont have volume. You had a 55year rainfall in germany. An early monsoon season in i7nd india. It makes a lot of sense. I buy it and i expect we should see similar impacts on pepsis operations . More than half of pepsis business is food. That free dough lay business is a lot more immune to the weather. Across the industry carbonated soft drinks you will see soft values because of the weather globally. What i dont understand is what the cfo himself said. If the monsoon season in india and giving them the benefit of the doubt on the weather issue, but if the monsoon season in india was early, it only comes once a year and they should make it up in the back half and theyre very confident. That weather affect should not necessarily be affecting both cocacola and the sector more broadly the way it is if theres a sense that theyll be able to make it up, that its a one off. Whats really going on here . Why are the shares across the sector down more than 1 . Its a great point, kelly. It always happens. My view, i have been doing this a long time, you always buy coke when it sells off on weather. Weather is always an anomaly. India had a late monsoon weather last year. So that doesnt answer the question though. So is that what youre recommending for people is that they look at this as an opportunity to buy into these companies or is the market telling us that the demand destruction were seeing around the world is legitimate and its a concern . No, no. You buy them here. You buy them on the weather anomaly, absolutely, unequivocally. Lets talk about currency. Cfo on our air says brace yourself for a higher dollar and one thats going to be here ostensibly for a long time. Is 4 impact for the rest of the year, is that reasonable . Yeah. Thats pretty reasonable. Thats going to be a problem for my group broadly. They have a lot of sales outside the u. S. A strong dollar a typically awful for the top line but it makes up for the commodities side. Well keep our eye, obviously thats something well want to keep in mind as we work our way through earnings season in general. Bill, thanks for your time. Thank you. Anytime. We should mention pepsi will report earnings on july 23rd. It will be so important to watch for this and see what they say as well. You just heard about cocacola blaming weather in part for the poor earnings performance. Thats inspiring todays squawk on the tweet. Coke blaming weather for weak sales is like blank blaming blank. Tweet us your responses here qua squawkstreet. Radio shack rolling out a new look. Well give you an inside look at the now Concept Store. Plus, at t is letting you move on up a whole lot quicker. Well tell you about the companys new plan that lets you get a new phone every year. But first, Rick Santelli, what are you watching today, man . Well, you know, art nolan, who is going to be my guest at the bottom of the hour, says up 12 of 14 sessions in the s p. I guess its nice to be the dealer at the black jack table. Were going to talk about why thats odd and how ben bernanke will deal with the oddities tomorrow. All at the bottom with art. Be there. Farmers presents 15 seconds of smart. So youre worried about house fires . Stop smoking. Manage your wires. Watch out for space heaters. Clean the chimney. Get one of these. Cool the romance. And of course, talk to farmers. Hi. We are ers bum pa dum, bum bum bum bum what are you watching today, tomorrow. Want to show you dell here. David faber reported earlier this morning on squawk on the street that the board vote thursday could be postponed if the deal is seen going down. Take a look at what that did to shares of dell. Down some 16 cents and they stayed down throughout the course of the morning in a pretty mixed tape overall. Below 13. Remarkable. Radio shack trying to turn it around. The Company Announcing a new plan that includes a brand new look for many retail sores. Courtney reagan is live at one of the stores and she joins us with more. Hey, court. Good morning to you, carl. Radio shack is a brand that many know but it may not have been a destination for many of those same shoppers for a number of years. The ceo is trying to turn that around. Reformatting the stores much like the one were in now as well as giving the company a new look, changing the color and rebranding the private label merchandise. Some wonder if its in preparation of selling the company. We asked the ceo that and here is what he had to say. Thats not the case at all. I was brought in to transform the business. The team im putting in place is focused on rebuilding radio shack. Were in a great space relative to technology. Its a brand that really in the past has kind of lost its way and our job is to reinvigorate the brand and to rebuild confidence in radio shack and bring back those lost generations of folks we have lost over the last few years. Since the share price peaked in 1999, radio shack has gone from a 15 billion Market Cap Company to just over 300 million today but so far this year shares are up more than 48 . Analyst dos think the new Format Stores look better and cleaner and fresher but theyre not sure if its enough to make them competitive against the likes of best buy and amazon. The ceo says cash is not an issue. Our cash statement is actually very strong. As you know, we have a payment coming up. Were not concerned. We can pay that off in cash. We have been talking to bankers about refinancing some of that debt. Now, this isnt the retailers first attempt at a reinvention but a number of analysts are willing to give radio shack the benefit of the doubt. Thank you very much for that. Lets say youre watching your favorite tv show and you see a product on screen you want to buy. Now you can find that exact product by pressing a button on your remote. Julia boorstin has that story from los angeles. Hi, julia. Reporter hi, kelly. Until now if you wanted to buy a product you saw on tv, you had to buy it online or in a store. Now with your remote control, youll be able to buy Home Furnishings or clothing just right there on your tv set thanks to a new app called shop tv. Its its preinstalled in samsung tvs. If you activate the app, a banner pops up to indicate a product is on sale. Clicking a button allows consumers to make a purchase from the shop tv store with pay pal or a credit card while the show keeps playing. Shop tv then shares the revenue with the tv networks. The app was created by a startup called delivery agent. Its raised 178 million from investors, including intel capital and samsung ventures. This is unprecedented and certainly unprecedented in the last decade in terms of consumers actually using their televisions in their living rooms as truly connected experiences. Reporter now, others like American Express have created tv commerce partnerships, but shop tv does not require consumers to use any device other than their remote controls. And shop tv is also launching a scale. Samsung is 10 million connected devices. Shop tv will work with 450 top shows on 55 Different Networks offering several hundred thousand products thanks to partnership with cbs, nbc, fox, and cable channels including hbo and bravo. Though the app is starting off only enabled for tv shows, the company says eventually it will also work with tv commercials. Now, we do have to add a note of skepticism here. The analysts we spoke to said that theres been a lot of tv commerce endeavors attempted before and they havent totally taken off so well have to see if this one does. Back over to you. Still trying to find a way to make the universe work in this new environment. Thanks so much. Our julia boorstin. Speaking of new environments, at t is launching a new plan that would let you get a smartphone contractfree. Its called at t next. And its similar to something tmobile announced last week. There is a catch. Do you have to pay the full price for your phone. At t is offering a financing plan where you pay no money down and a Monthly Payment for the phone is added to the bill. The new iphone bill would be 32. 50 a month. Galaxy s4, 32. Interesting the way its being framed among various circles but the bottom line is pricing is changing in the industry as theyre trying to get replacements in peoples hands more and more quickly. I say cars are the new mortgages and mobile phones are the new cars. Yeah. Im not sure anyone could ever pay 32 a month but its interesting to move from this model of the one off, how much are you getting the hand set discounted. Maybe it will be better for margins as well. If the companies are able to sell a lot of carriers would take the hit and say at least we got a subscriber for two years. For those who like to get a new phone as quickly as you can, at least you have that option in the middle of where you would have normally been this a contract. I wonder though it comes at a time when demand for some of the smartphones is slowing. Are people as excited about the next iphone or the next galaxy s4. Thats a key question. Well see. Number of big earnings crossing today. Cocacola, Johnson Johnson reporting today. We have some more details coming up next. [ female announcer ] its simple physics. A body at rest tends to stay at rest. While a body in motion tends to stay in motion. Staying active can actually ease arthritis symptoms. But if you have arthritis, staying active can be difficult. Prescription celebrex can help relieve arthritis pain so your body can stay in motion. Because just one 200mg celebrex a day can provide 24 hour relief for many with arthritis pain and inflammation. Plus, in clinical studies, celebrex is proven to improve daily physical function so moving is easier. Celebrex can be taken with or without food. And its not a narcotic. You and your doctor should balance the benefits with the risks. 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Com and ask your doctor about celebrex. For a body in motion. Visit celebrex. Com and ask your doctor about celebrex. We replaced people with a machine. R, what . Customers didnt like it. So why do banks do it . Hello . Hello . if your bank doesnt let you talk to a real person 24 7, you need an ally. Hello . Ally bank. Your money needs an ally. Welcome to the earnings squad where we dissect the stories search talking about, help you trade the stories you may have missed. Im melissa lee along with my partner Herb Greenberg and today Cnbcs Kayla Tausche joins the squad. Only 7 of s p 500 Companies Report sod far. 64 beat their eps targets, 19 met stimentsz. 17 of reports have come in below forecasts. Now, with he did get a number of dow components out today. We kick it off with cocacola down almost 3 . The company citing slower consumer demand and weather as reasons for the disappointing earnings. Excuses, excuses. Four the four of the last five quarter weather has been the excuse. I went back and looked years ago back to 2006, theyve actually cited weather a number of times and what they often do is citing it favorably in other parts of the world. So this is often been something theyve been able to say has benefited them. Maybe its hotter and drier in other parts of the world and thats been a boost to sales. But people want to sit here i think what the difference now is when you have the volume decline, you have the volume that was across the board. The volume declines were across the board when it comes to regions. You want to add the weather on top of that and see if its Something Else. I want to veer from coke here for one second because late yesterday cintas reported. Their excuse was the effect of the Affordable Care act which is something were going to start to see something to watch. We are. Especially as noted here as smaller businesses, smaller customers feeding up to them, putting their businesses on hold. Thats an excuse as we get into the season well want to watch for closely. Currently will be another excuse well be watching when it comes to multinationals. Specifically coke saw 2 impact to revenue. The cfo said were in for a period of stronger dollar. Affordable care act actually we heard that a little bit from the j j Conference Call. Led by strong growth and new products. Trading higher after raising the forecast. Interestingly, it didnt raise the forecast by as much as the Second Quarter beat. A lot of analysts are saying theyre being conservative or leaving some room for future quarters to raise. The concern is medical devices, a weak spot when it comes to it was still strong. But theyre saying on the Conference Call is hospitals were pulling back on cap x because of concern about Affordable Care act and patients are demanding more data to justify new treatments they also have a lot to answer to in medical devices and a lot of these higher tech areas because this is coming at a time when Johnson Johnson the only company thats chosen to not split up. If you dont have a unit like that outperforming with flying colors every single quarter, that becomes harder to defend. Definitely. And we note away from devices, you know, to see tylenol so boldly mentions, list terrine international doing very well is just an aside. When we talk about the devices, the spending on devices, we had the Intuitive Surgical last week, this is going to be a bigger deal Going Forward for the hospital industry not just the j and js which are supplying them. It will be big for the suppliers across the board. Its the first real shot were seeing by device manufacturers. Keep an eye on it. Johnson johnson new high although pulling back just a tough. Yahoo stock up more than 75 since Marissa Mayer took over. The company is out with earnings after the bell. What are you going to be looking for here . What ill be looking for is a company that the bar is so low here, kayla. The bar is so low, its almost like people think they cant help but beat. Last quarter they came in under where people expected on advertising, and this is really going to be Marissa Mayers oneyear anniversary, her real effort the number im looking for in that period is head count. When she took the reins last year, a lot of people said too many smart, strong, talented people have already left the company. Can she stop the bleeding . Do people believe in her story . Shes acquired more than a dozen small startups but how much has she been able to retain some of that key workforce. Full coverage of the yahoo Conference Call on fast. If you want to join the conversation tweet ug at earningssquad. On squawk on the street there, may be a whole host of extra content in your newspaper or magazine. You just have to use your smartphone to find it. Plus, the bells are about to close across europe. The details on the impact in the usa are coming up. Worth the wa. Summers best event from cadillac. Let summer try and pass you by. Lease this allnew cadillac xts for around 399 per month or purchase for 0 apr for 60 months. Come in now for the best offers of the model year. [ agent smith ] ive Found Software that intrigues me. It appears its an agent of good. [ agent smith ] ge software connects patients to nurses to the right machines while dramatically reducing waiting time. [ telephone ringing ] now a waiting room is just a room. [ static warbles ] markets are closing across europe. Here is a look at where we stand. The dow down about 34 points, the s p as well off about a third of 1 . Simon hobbs joins us now. Simon, we have about ten seconds to go before the close in europe. Certainly some areas, including portugal and, of course, the periphery more broadly was the talk about what was happening in spain over the weekend suggests there could be pressure coming from these markets once again. The european markets are closing now. Yes, kelly, i think thats very true. There is without any question a deteriorating political backdrop in europe. As far as the markets are concerned today, its not a huge loss overall. Yes, its red, but theyre not that deep given that weve falling here on wall street as well. Interestingly, if you looked at sectors that were trending, the clear sector is basic resources. Rio tinto still Going Forward. Weve had this discussion time and time again on the program. Weve also seen Precious Metals higher today. Lets have a look at some stocks and you will see what i mean. Some decent gains but bear in mind basic resources has been a lousy performer so far this year. Whether its Short Covering in front of bernanke tomorrow, i dont know. Lets look at the basic resource sector. I think were down for the year 23 . To the point i was making. The new car sales figure around europe is terrible today. Its down 6 from last year which was a 17year low. Im not going to take you through all the detail again. Just want to show you the upside, and that is that michelin said last month there was a 2 increase in the demand for tires in the primary second and 3 increase in secondary market. The tiremakers have done well. To the point, the bigger point about the deteriorating plig situation, let me show you the scenes in greece today as again they have a general strike to protest against the Civil Service cuts. Remember, you got 12. ,500 Civil Servants to be put in a mobility pool. In spain the Prime Minister is refusing to resign over a Party Funding scandal. In portugal theyre struggling to form a coalition to push forward with the bailout. What concerns me about greece was the airports were closed down for four hours as a result of this general strike. And i read in todays daily news that foe see ya vergara was on the streets so im slightly concerned one of the National Treasures here might not be able to get back and may be stranded on that greek island. Well see whether theyre able to chartary flight. I dont know if we can show that but we have pictures of the lovely Sofia Vergara sizzling in greece. I was there ten days ago. I recommend it. It is the jewel. Doing their part to boost the economy, carl . Sofia is there, simon was there. Curious. Very curious. Lets get a check on energy and commodities. Bertha coombs is at the nymex. Sofia vergara has not been spotted here. But what is hot is the weather. Were seeing some mixed trade as far as the energy benchmarks. Nat gas up with this heat wave gripping much of the country. Weve also got gasoline higher, a little bit of resistance when it comes to brent and wti with those bad figures out of europe. If you look at whats been going on the last couple weeks, clearly the massive inventory drawdown weve seen in crude in terms of eia stockpiles, 20 Million Barrels in the last two weeks have driven this move higher on wti. Mike fitzpatrick says tomorrows number is going to test this bullishness weve seen as more speculative funds have moved in on the long side of wti. Its stalled and found resistance at 107. Well get the api number this afternoon and thats been fairly predictive lately. The expectation for tomorrow right now stands at a drawdown of 2. 5 Million Barrels of crude according to analysts surveyed. Theyre looking at gasoline unchanged and distillates to build. Numbers the last couple weeks have been outsized particularly when it comes to gasoline. Bertha, and we will watch to see what impact that has fe pump. What a run its been for the das knack hitting 12year highs for the fourth day in a row. Seema mody is following the action. Will we continue the streak . We could potentially. Right now wear off the highs but the composite hitting a fresh 12 1 2 year high for the fourth consecutive session as tech continues to play catchup with the market. Todays big winner baidu, chinas largest Search Engine. It acquired 91 wireless which operates two Smartphone App distributors in china. Citi upgraded them to neutral writing this acquisition a positive. Amazon shares hitting another alltime high. Now up 11 just this month. This stock is on fire, guys. Netflix, facebook, chip stocks like intel also posting gains. Its not just tech. As we see the stabilization in gold prizes, gold miner randgold resources, now staging a come back. The nasdaq has been the key laggard but thanks to the recovery in tech and biow tech the nasdaq is outperforming the dow and s p 500. Analysts predict as the economy improves, corporate tech spending will pick up and that will be a likely catalyst for the tech sector. Quite a run its been. Thanks very much. Lets get to Rick Santelli in chicago with a look at what traders are expecting from bernankes testimony tomorrow. Right now over here for us, that absolutely is the focus. It has to be the focus and its unfortunate in my opinion. Arty, hes trader x, okay . Now, for tomorrow, what are you going to be listening to and what do you think the arbitrage is in the marketplace and im talking between the fixed income markets and the equity markets. The fixed income market has priced less chance of a bigger taper but theyre still pricing some sort of taper. It seems stocks are going right back to their highs are not pricing a taper at all. I cant disagree. Where do you think a tenyear note yield would be if the taper chapter never occurred . I have to think it would be north of 2. 35 , 2. 25 , somewhere in there. Because the taper really gave us that lead down to lets be conservative. Lets say it would be at 2. 20 . We have 33 basis points thats in there pricing some sort of scenario of tightening. I know they dont want to hear tapering is tightening, but im sorry, quantitative easing is a form of easing. Its not quantitative buying, its quan tay tiff eatitative e. Whats the set up for stocks and treasuries . I think the treasuries are probably fairly priced depending how any set up the taper. I think this is his last chance to really set the market up for what theyre going to announce if theres any tapering, what kind of size. So that would be generally i would think bad for bonds unless they put it off farther. I think the stocks might have missed this one predicting that its going to be no taper as opposed to some sort of taper. I think the danger for stocks 2 , 3 , 4 correction . You know, this is a grand experiment being run by the fed. They mention taper and we had a 6 correction in stocks. It depends on how they preface it. If they preface it as this is going to be a long way to work out of this thing, maybe so to thread the needle he will basically leave the impression hes going to taper but with no date. Stocks will think of it optimistically. Do you think ben before he leaves his post there will be significantly less purchases . Yes. I think from the last time he spoke that he wants to start to taper before he leaves. And i also think that the minutes from last week before his speech were very interesting because they showed a lot of disagreement on the fed. They have talked for years about having an exit strategy and having lots of things. Theres a decent discrepancy and there is. The discrepancy really is about the mortgage side. But once again you have to prioritize where the power is depending on who disagrees and who agrees, i dont know it carries the same weight. When i look at coke and i hear about the miss, go back and look at where the expected earnings were in january for some of these stocks. Theyve downgraded them so much. Thats my two cents on coke. Back to you. Alcoa, too. All right, rick. Covering a lot of ground there. Thanks a lot, Rick Santelli in chicago. Shares of goldman falling. Our Mary Thompson at headquarters with more on that. It was shared buybacks, lower tax rates, and stronger than expected results from the lending unit that helped them beat the street by 83 cents. The call with Harvey Schwartz just concluded. He said the firm is cautiously optimistic about the operating environment while noting last quarters operating environment was really impacted by varying Economic Data and central bank actions. He said that caused clients to reassess their risk appetites in a world where an easy money policy is no long you are assured. He said clients are more information centric focusing on da to determine how to position their firms. Schwartz doesnt see the eventual end of the Federal Reserves quantitative easing as being a bad thing noting if feels good to be getting to a more normal environment. Another concern of goldmans clients, the slowdown in china and whether u. S. Growth could be Strong Enough to offset whats happening there. He fielded a number of questions about how the firms positioned for the regulators proposed leverage ratio of 5 for Bank Holding Companies and 6 for the operating subsidiaries. Unlike some other banks, schwartz declined to say where the ratios stood and how goldman might get there by 2018 only saying he was very comfortable goldman could meet them by that date. Repeated lie noting this is only a proposed rule. Carl, back to you. Sounds like mike mayo is having a bit of a field day with that one, too. Mary, thanks. Im sure he is. Mary thompson. Lets get to josh lipton for a market flash. Check out the Health Care Providers this morning. Tga n hga forecasting better than expected earnings. Tenet health care, community health, and lifepoint hospitals also higher. Some of the biggest names in business speaking exclusively at cnbcs delivering alpha conference tomorrow. Well hear from pete bharara, jack lew, and more. Paulson, the Hedge Fund Billionaire is getting bullish on a new sector. Well tell you which one after the break. Weve completely integrated every step of the process, making it easier to try filters and strategies. To get a list of equity options. Evaluate them with our p l calculator. And execute faster with our more intuitive trade ticket. Im greg stevens, and i helped create fidelitys options platform. Its one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Some of the biggest names in are you sure we should take this billboard down . 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[ male announcer ] legalzoom has helped a million businesses successfully get started, including jessicas. Launch your dream at legalzoom today. Call us. Were here to help. Coming up next on the half, the markets moment of truth. Liesman and the traders on what bernanke will say tomorrow. Plus the big three on how best to play the markets right now. After a 12 runup is facebook finally a buy . Josh brown and stephanie link will face off on this controversial name. Thanks a lot. Cnbcs delivering alpha conference kickses o off tomorr. I will be speaking to john paulson. These days hes getting bullish on a new business, and thats housing. Our kate kelly is back at hq with more. Good morning. For having made such an enormous impact in terms of publicity by shorting housing, this is a curious trade. No, youre absolutely right, carl. Is just going to make that point as well. Hes known for this massive housing short from 2007, a bet that generated 600 returns, but what people may not return is now paulson is long housing in a significant way. Four years ago he opened a private equity fund dedicated to purchasing distressed Residential Land assets. Much of them in foreclosure or brups in sunbelt states like arizona, nevada, florida, colorado, southern california. His thinking was when the market came, these cheap assets would turn more valuable, especially in places where the land was entitled, meaning it already had approvals for building. Over time the fund became one of the nations biggest Residential Landowners we think. They have about 28,000 lots in total as well as some hotel holdings. And now the Housing Market does appear to be improving. Housing starts topped a million for first time in recent history in march and home builder confidence is at a sevenyear high. New family home sales, a key gauge for paulson in terms of this portfolio, are also moving up from their 2011 lows paving the way for him to make some sales. Early this year paulson said that buying a home was probably the best piece of Financial Advice he could offer a retail investor. With the backup in rates and the prospect of higher home prices, i wonder if he will say that tomorrow if you ask him the same question. When you start to think about some of the risks to that trade, you have to wonder about the spike. Whether he sees it as something ephemeral. Just to put a side note on all this, well probably question him a little bit on telecom m a, the kinds of things he made his name on 20, 30 years ago. Youre absolutely right. We were talking about this yefd in light of the leap wireless bid from at t which pretty much doubled the stock price from before that news came out. Hes one of the biggest hoders in leap, third big west a 10 position. This is only the very latest profitable tellico a m situation for him. He made money off the softbank sprint deal and the tmobile deal. s been an activist in some cases. Hes been able to use positions to influence the outcome of some of these deals. Less debt, for example, higher cash component to a deal. I dont think thats going to be called for in the case of leap because they seem to like the deal as it is and as it is its an 88 premium. So thats nothing to sniff at, but youre right. Since 1994 hes been a merger and its something hes continued to find success in. Its interesting because at the same time hes more involved in this trial of fab fabs. Being short housing is as much in the news as being long. Hes very private, never does television. Well get his response about all the publicity. Jack lew kicks it all off at delivering alpha. The third anniversary of dodd frank, look for details of his road map of financial regs and he sits down with Steve Liesman. Starts live on squawk box 8 25 a. M. And well kick off a very busy day. Lets get to john harwood with breaking news in washington. John, i imagine this has something to do with cordray at the cfbp. It does. Speaking of dodd frank, jack lew will have some good news to talk about tomorrow with Steve Liesman which is that the senate has just moved forward to final consideration of Richard Cordray to head that agency by 7129 vote. 17 republicans joined with their democratic colleagues. This is the first sign of that deal that was just reached to avert the socalled Nuclear Option. Republicans agreeing to let that go forward. Theyre going to let go forward the nominees for epa and labor secretary. The concession by democrats was the white house in consultation with labor is going to send up two new nominees for the National Labor Relations Board to replace two whose recess appointments had been declared illegal by a court and business is going to move forward, although youre going to have meetings by members of the Senate Caucuses of both parties over lunch and that will be where we finally make sure that this deal that harry reid says hes struck with john mccain is going to go forward but the signs for Richard Cordrays consideration are that it appears to be Going Forward. Does this mean pending litigation on which there are stalemates like immigration or the debt ceiling, do those now have an easier path, too . Not at all. This is solely about democrats trying to dig in to move some of the obama nominees, especially the ones for the nlrb. I wouldnt expect this to affect the polarization that infects this town all the time whatsoever. John harwood in washington. John, thanks. The latest issue of your favorite magazine may have more than meets the eye. Well tell you how you can go beyond the cover by using your smartpho smartphone. Ut from an early age, children internalize behaviors that affect financial Decision Making later in life. Pwc is helping spread that message. Im bob moritz, u. S. Chairman of pwc. Pwcs earn your future is a 5year, 160 million commitment to help students learn the financial skills they need as they grow. Pwcs earn your future empowering students and future leaders through financial responsibility. Our next guest is trying to give you more bang for your buck when reading a newspaper or magazine. The app lets you hold your smartphone or tablet up to a magazine unlock extra digital content. Here to tell us how it works is omar, the cofounder of blipper. Welcome. Good to have you. I have read about this and im still trying to understand it. How does it work . Well, blipper allows the user to download a application on any device and point to an image or object and get instant information from it without any bar codes or triggers. Just recognizing the image the same way the human eye would and pulling a layer of interactive content. You have a physical copy of a newspaper or magazine, you put your smartphone up to it, and get extra content. That includes what . That includes to could be anything that the smartphone can do. It could be couponing or competitions. Allowing the user to buy products off the page and thats great for people who have ads who want to make the ads pay for themselves. Whether theyre sitting in a train station or bus station, they can point the cell phone and get the information. We have seen bar code scanners. The role they play is also to tell the consumer, the Person Holding a mobile phone that theres content, theres something extra here. If you guys dont have that kind of symbol, how do you tell people that theres Something Else . People normally put a blipper call to action on the products. For example, budweiser or pepsi, they would put a logo to say this bottle is interactive. Theres a call to action in everything we do and the user starts recognizing our logo and get their phone out and point at it. The guardian called you one of the young invo naters last year. What is the plan . To get bought by an Advertising Firm or Something Else . Were not focused on the sale at the moment. Were trying to link the physical and Digital World together. The closer we get to a merged world where theres a blurred line, thats what were moving towards. Recognizing more objects, being able to do more campaigns with people, and who knows in the future. How do you make money . We charge for using the platform on a campaign basis and we are funded weve got some seed funding but were funded through revenues. Is it true you created the technology while working on some of these nasa probrobots. Not exactly that. This technology was developed independently of that. Something to watch. It assumes the physical newspaper is going to exist even if its a novelty over time, right . Its not just a newspaper. Its any image in the world that exists. And the physical world is not going anywhere and were trying to recognize everything in the physical world. We have to put a blipper sticker on carl. Assuming i stay in the physical world, i guess. Omar, its fascinating stuff. Well keep watching. Thank you. Thank you so much. Stocks trading to the downside. We were just discussing why with art cashin off camera. Talked about what our thesis is here in just a moment. Peace of mind is important when youre running a successful business. So we provide it services you can rely on. With centurylink as your trusted it partner, youll experience reliable uptime for the network and services you depend on. Multilayered Security Solutions keep your information safe, and secure. And responsive dedicated support meets your needs, and eases your mind. Centurylink. Your link to whats next. As sir george of the kansas city Federal Reserve saying the fed should start cutting its massive Bond Buying Program right away. That in part spurring another leg down in the s p 500. Were off half of 1 . We sort of know where george sits in terms of the spectrum of hawk and dove. Shes dissented at every meeting this year. I think in some of her comments today acknowledged her view may not carry the day in terms of the committee or what the chairman says tomorrow but clearly a day before the fed chairman talks you might expect some traders to take a little risk off. Could make it harder to hit some of the targets. Well see how the afternoon shapes up. Lets get back to headquarters, scott wapner and the halftime. Thanks. Welcome to the halftime show. Right there on the wall is where we stand. Its a down day, a lit of a down day. The dow, s p, and nasdaq are in negative territory after a pretty good streak. The big three, nigh gren, taylor, reader on where the markets go. Saving face. Facebook is up 12 . Is it a sign of greater things