See there. 2. 71 . Yeah. Lets move on to europe. Second quarter gdp data indicating eurozone emerge by recession. In and also some growth in france. And that gets us to our road map which starts with a rare miss for macys. Shares of the Department Store are falling in the premarket. The ceo says consumer are worried about the uncertain economic environment. Apple still getting the icahn burp thmp this morning. Carl icahn tweeted he bought a stake in the tech giants. And strength on the farm. Deere beating on the top and bottom line this morning, citing strength in Farm Equipment sales. Bill ackman speaks out about the villains of the Capital Markets in his public bat with other highprofile Hedge Fund Managers. Man. A lot of personality. A lot of personalities running around there in vaktism land. Hes start with shares of macys. Down sharply in the premarket. Retailer posting the Second Quarter results that were below wall street forecast. Samestore sales fell 0. 8 from one year ago. Ceo Terry Lundgren saying he is disappoint wed the results. Macys lowering the earnings and comp sale guidance for the full year. Interesting, i do go back to an interview i do with david berman. That was on monday. He was very negative. In fact, saying while consumers are okay, soft good retailers are not people are making decisions about how to spend their money and theyre going with the same sunk, the apple, the hard goods on amazon, as opposed to retailers. At least so far that these seems to be proved right. Rather amazing where people are spending money. Spending money on vacations. We know that from hotel. We know that to spruce up their house. Perhaps because houses are going up in value. They are not spending a lot of money going to the Department Store. I got the tell you my first take when i read this wasnt, wow, how disappointing. It was, what are the numbers going to be at jcpenney if macys is this bad . Great. Oh, boy. Here we go. Probably not going to be all that great, right . I dont know. Retail in general retails are a real worry though. Its not the key month. Right . No, but the numbers that have come out from the teaen retailes have been ugly. If you take coors out of the mix of retail discussion, its been bad across the board. Thats true. Almost across the board. Now i want to circle back and look at a couple of stocks. Gap and costco dont look so bad. Two of the only retailers still reporting monthly comps. We get so few of them that we dont get as good a read perhaps than reused to. Sure. But you said it, jim. Im curious. Lets follow on that thought. Macys, is that just the beginning . Just the beginning of whats going to be a bad season here . Why did lundgren specifically point out that back to school is encouraging . Lund xwregre lundgren, yes. Its difficult because lundgren has become the benchmark. To go back to berman. Ive known him for years. To hear him uniformly negative is worrisome. He said by the week, macys, dont sell. Buy it, dont sell. Inventories were up, too. Somebody has got a macdown. Thats why i came back to jcpenney. Its interesting, by the way, johnson did have this kind of idea of building up the house wears, which have been good. And thats a big hole in the store because the johnson strategy was aborted. But it just seems like whatever penney did was wrong. Whatever they did. You mentioned the markdown angle. Thats going to be the story, i think, in back to school. And even as you head later out into the holiday season, if youre going to draw traffic into your store, and youre going to ring up a lot of sales, youre going to do it with the big 50 and 70 off sign in the front window, dont you think . Lets see what pvh has to say. The one of the thingses that incredible now. These pvh is 50 of the tie market, you go and buy a macys shirt. Antitrust regulators. They broke up. Can you believe it . The airline we sat there, usually listen mad dash, he was like, its going to be great. Its going to be great. Eric holder and bear were listening. I remember when i saw its a mess. When i saw eric holder i walked by him at white house, off the record, i walked by, you know because i was there. He, hes going to kill me because ive been saying its the rip van winkle, pro trust department. Moved antitrust over to commerce. Holy cow, did they wake up. Thats why i like u. S. S airway. They cut out the snack box and get rid of the doers, right . Which i already criticized because i wanted them. And you know what they served . They served thunderbird. Thunderbird is very good. Dont knock it, really. I didnt know that. Am tingle pink, do you go there, too . I will go wherever i need to do. Train . Wood alcohol . Wont go there, either. Headaches, man. Stir it up. Lets talk about what wall street is buzzing about this morning. Of course, late yesterday carl icahns large stake, it is a large stake, although still small when you compare it to the overall market cap. In am, icahn calls apple undervalue. Increased stock buyback could push the shares up to 700. Icahn says he had a nice conversation with ceo tim cook and that they plan to speak again soon. You know, probably very good friends by now. Apple shares now in breaking distance, of course, of 500. Talked about it yesterday right here. Sort of the lack of attention as stock was moving up was interesting. They already had a large buyback in place. They already borrowed more money than any company hasbroed to fund what is the largest buyback. It will be interesting to see after a 5 pop yesterday whether we get any follow through. Why would apple be you will see amiable. Amiable is the word. Toward icahn thats what carl told me it was. Thats his words. Very thoughtful guy. Right . And i dont present a Financial Engineering thing that was not as good for the company as the bonds deal they did. Why is this amiable . Why is the icahn call amiable . Its certainly not amiable with michael denton. Thats a very different st y story. They were criticizing and going back and forth. Southeastern has significant influence and has been a nasty battle. To be take a 3 billion position there and you own a lot of the company. Here, take a billion and a half position and you hardly own any of it. When youre tim cook, also, when you get that call from carl, at first youre like, oh no, and then youre like, i wonder what is this guys motive going to be . So, yeah, the first conversation is, amiable. Right. But if carl applies the pressure that hes been known to put on these types of situations, where does it go from here . One of the things that we talked about on squawk going back and forth, what icahn really know about apple . Does he know about apple, does he know about netflix, does he know about i would argue that and i have followed carl for a long time, talked to him for many years. I would agree with your earlier assessment. Hes having an incredible, incredible run. I think hes got over 20 being, maybe up to 22 billion in net worth. Its all his money, too. No outside investors. Right. Hes completely free to do whatever he wants. Thats an amazing point. I would argue that he still operates largely. Hes got a lot of smart people who work for him, does numbers. He knows his way around a Balance Sheet well. Largely operates by instinct. I feel like theyre getting taken advantage of on dell. I think apple is cheap. Youve had the conversations. Thats what they are, largely. If you expect him to explain to you why time warner should be broken up in the Media Business or why yahoo and microsoft make a good fit i dont think carl is going to have a discussion of why a twoinch larger or couple sent meters larger screen is going to make a difference. Which is more valuable, cutting price target on apple, going down, raising it, going up, or icahn just saying, you know what, i understand companies. This one is too cheap. I would rather go with the latter. I dont need that grandular. I know. I just wonder what took him so long. Its been cheap. Maybe he bought the bottom. Maybe he did that. By the way, the strategy of this new oh we his discovery of twiter is fascinating as well. Side story here. But it is interest that he uses to disseminate market moving information. He wants it to be a bigger part of the story. Right . Thats why he did it the way he did it on this one. Did ackman Say Something negative about a until could this be just one more death match . I dont believe he did wander into any discussion with apple. Not even at 380, ackman didnt go short . I think to davids point though because this is carls money. This is a potentially dangerous place for tim cook. Dont you think . Its one thing when David Einhorn comes down with a strict. If carl wants to shake you up carl doesnt care, hes going to shake you up. Those who have gotten the call from him, aubrey mcclendon, former ceo of chesapeake found icahn, very reasonable man, has good ideas. Its not like mike wallace online one, the old joke, the most the most diangerous cal in the world. Icahn is a guy youve got to listen to because hes been around forrer but einhorn has been around forevered. And that one was not amiable. And they fought him very quickly and rather successfully. Now, you do get back to the point that theres not how much can an icahn do in a largest Market Capital in the world. Its not as though he can take a sizable position and threaten me could move to a proxy fight. You dont know where all the large shareholders stand. But it seems unlikely at this juncture. But it is interesting to note an activism generally we have seen a willingness of some of the wellknown players to take positions in extraordinarily Large Companies which they can never get to a point where they say were going to try and bayou or affect change for a huge ownership stake. Whether its it was bill ackman and p g or whether its carl icahn here. Thats what im talking about here, which is ackman never threatened to take over proctor. Value we keep talking about how most, positive. Thats all im saying with icahn. Does he want board seats . You can put that out there but in the end, i would rather take his call and work with him because hes pretty smart. Meanwhile hes up 75 million in position. Quickly from a stock standpoint, this puts in absolute floor on the stock, dont you think . Herbal life floor. All right. Coming up, the most Innovative Companies coy ies according to. And there are names that didnt make it that might surprise you. Lets take another quick look at the futures as well as we get set for this wednesday on the street. Implied open slightly negative across the board. More squawk on the street live from the post nine at the nyse when we come back. Make it happen with the allnew fidelity active trader pro. Its one more innovative reason serious investors are choosing fidelity. Get 200 free trades when you start using active trader pro today. But when it comes to investing, i just think its better to work with someone. Someone you feel you can really partner with. Unfortunately, ive found that some Brokerage Firms dont always encourage that kind of relationship. Thats why i stopped working at the old brokerage, and started working for charles schwab. Avo what kind of Financial Consultant are you looking for . Talk to us today. We do . I took the trash out. I know. And thank you so much for that. I think we should get a Medicare Supplement insurance plan. Right now . [ male announcer ] whether youre new to medicare or not, you may know it only covers about 80 of your part b medical expenses. Its up to you to pay the difference. So think about an aarp Medicare Supplement insurance plan, insured by unitedhealthcare insurance company. Like all standardized Medicare Supplement insurance plans, they help cover some of what medicare doesnt pay and could really save you in outofpocket medical costs. Call now. With a Medicare Supplement plan, youll be able to stay with your doctor. Oh, you know, i love that guy. Mmhmm. [ male announcer ] these types of plans let you visit any doctor or hospital that accepts medicare patients. And there are no networks. You do your pushups today . Prepare to be amazed. [ male announcer ] dont wait. Call today to request your free decision guide and find the aarp Medicare Supplement plan to go the distance with you. Go long. After resigning from jp cent anys board, bill ackman is speaking out on a wide range of issues. Heres what he said yesterday to charlie rose. Short sellers are often vaued as theville lance of the Capital Markets but i think that actually the s. E. C. Falled around the jim chanoses of the world, that would be a much more efficient way to get rid of fraud. Why is this stock going up . Simply because carl icahn and others have been promoting it. Thats why. Ultimately mean that the people in the investment communities believe in carl icahn more than they believe in you . Certainly on this investment, yes, thats the case. They were talking about herba life there. In which he also told charlie rose that icahn used the herba life investment in ackmans words, to get back at me. Right . For this longstanding feud that theyve had going back about a decade. The other interesting part about this interview, i thought, was where he refused ackman to say that he respected dan lobe when asked by charlie rose whether you respect him. Well, hes a good investor. Their feud is an interesting one here, too. That is nasty. I believe traces its roots to the target investments. Special purpose vehicle. Yeah. I believe loeb was an investor. A lot of people are upset with ackman. It was a terrible loss. 90 of yep. In that spv and where some argue they were using options and they werent aware it was going to be an option. Led position. Loeb for his part would say, wait a second, hes exaggerating where i said herba livestock was going to go. Loeb in his letter said i think its worth 65 to 68. If you look at a ten to 12 earnings multiple. That was a bipg side from where he bought the stock. Loeb made money. What about the whistleblower thing where ackman is going to finance people who want to talk badly about herba life. I dont like to see anything in a product that i buy. An article in the times coauthorered by andrew. Our own. I have to tell you, ackman should be giving millions to Eliot Spitzer because a spitzer controller would take up this herbalife situation. Dont forget spitzer investigated his first hedge fund gotham back in the day when ackman was very early in this idea of publicizing your positions, whether it be long, i think, or short, prepaid legal. Right. That hedge fund blew up. Spitzer investigated it. Then they said were not going to do it. Its not another blood feud. Im going say this about ackman right now and its good, okay . A lots of people think hes cool. Okay. Ill let that stand. Ill let that stand. I had to Say Something positive. Cramer has a lot of other messages as well as we countdown to the opening bell. Youre going to hear whats next in his mind in the mad dash. Lets look at futures before we hit the break. You can see we are setting up for what appears to be a lower open at this point. We have a lot more squawk on the street straight ahead. Right now, 7 years of music is being streamed. A quarter million tweeters are tweeting. And 900 Million Dollars are changing hands online. Thats why hp built a new kind of server. One thats 80 smaller. Uses 89 less energy. And costs 77 less. Its called hp moonshot. And its giving the internet the room it needs to grow. This is gonna be big. Hp moonshot. Its time to build a better enterprise. Together. In a we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. 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I think theyre doing t pretty darn well given that laundry list, the headwinds against the consumer. Thats why dont want to bet against the consumer. Youre softening your stance a bit. Right. The headwinds were so incredible. I cant believe that everybody didnt do much worse. They didnt like flow throw in the weather. Heres the controversy. Have you ever been to seaworld . I have. Have you ever been to disney world . I have. I find them somewhat close to each other geographical. Seaworld talking about far to be dead. I went back to bob iger and what he said on the disney call, they had extraordinarily good results in orlando. So heres my conclusion. Orlando must be under the dome. Right . Kind of like that cbs blow away in the steven king book because it must not have been raining if disney world they had great numbers. There was also a documentary not included in the numbers about orca, you know, i dont want to slam seaworld because i like management here. Just be careful buying this one. When cedar fair symbol fun sand six flags, symbol six, with much better yields and better numbers are better than seaworld. To be fair they do have seaworld in san diego. Virginia wasnt that good. Yeah. But i just thought it was important to point out that hey got good weather at disney world and seaworld talked about it. Seaworld in san diego, disney world in orlando. Thats when the kids were younger. Go to legoland and seaworld and the zoo. Six months . Not for a long time. Did you go on the Magic Mountain . Hey, lets lets go back lets go back to lets end on coors here. So all these things that i mentioned the retailer, sequester, these are things that didnt bother the rich people. Thats why i think theyre still spending on michael kors. The kors bags are so much more expensive than regular retail. If the rich are unhappy, laal, my great, great uncle, its their own darn fault. One of his greatest quotes. Yes, gra rk, agreed. Its their own darn fault. That was not nice. No. Not nice at all in mexico with a ice pick. The opening bell is a few moments away. Squawk on the street with me and vlad and the judge coming right back. Magazines, along with the mayors of those cities, in the fit family challenge. A Community Wide program that offers free classes that inspire families to get out, enjoy moving together, and even track their activity online. Its part of our goal to inspire more than three Million People to rediscover the joy of being active this summer. See the difference all of us can make. Together. [ 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. Youre watching cnbc squawk on the street live from the Financial Capital of the world where the opening bell is set to ring in 2 1 2 minutes or so. One name we havent gotten to yet, interestingly, better than expected perhaps, not expected. Deere. Yes. Now, you would say why did that immediately spike to 86 when that news came out about the quarter . And now back to 84. And the answer is is, anyone who has ever been on a john deere Conference Call is supposed to ride a john deere tractor like the gator that i had is just always agast. The company has been able to talk down the stock consistently. People want to hear the 10 00 call and come in and start buying the stock. Brazil, big brazil zil foreign program. I had agco on mod money and i think theyre going better than deere. The construction and forestry numbers were awful for deere. People just want to wait. Maybe this is the Conference Call where they really get it together. Maybe they finally say the show that youve got to be careful buying the stock. Wait for the call. Maybe they give you a chance. Better quarter than i thought. Deere expectations. A lot of people downgraded, cut numbers last week, deere. Its the opposite of macys. People were negative, okay . And now, well, you know what . It wasnt as bad as pecked. But you still like some of the other names in that space there. I like agco so much more. Theyre going great in europe. Theyre young. Theyre pure ag which i like. Farmers are pretty flush. This group has been on the ropes because of the pot ash, because of the great cartel that broke up. Where was the department of justice in the Fertilizer Cartel which we didnt even know existed until it broke. Also now thinking about corn prices coming down sharp lid and what impact that could have. And deere did have negative things to say about crop price which people are going to say if theyre on the call saying, listen, it cant be as good as it was because crop prices are down. And he would have said why did i pay 86, why did i pay 85. Not really, forestry, construction not good. But, you know, look, caterpillar is engines. Its engines and its china. Whether we like it or not. They dont even have that much china. Everyone decided it was china. I keep going back to somebody on your halftime show who said they bought a company that didnt exist. Devastating. The opening bell here at the new york Stock Exchange. S p 500 back the big board is ring that bell. Provider of medical services celebrating the initial Public Offering today. Over at the nasdaq, baby quest, a charity for those who cannot afford fertility treatments. All right. Here we open. Wouldnt surprise me at all if while were on b the air that apple goes over 500. Its up again. The followthrough on icahn is at 498. 52. Its up another almost 2 this morning after this big move yesterday. You know, when we bought netflix, i mean, that was one where i remember a lot of people were saying, what . Netflix, theyre probably going up with breaking bad on it. That was one of the greatest buys ive ever seen. It made a billion dollars. Still own it. Still holding it. Speaking of that was his son that made that recommendation as was this, i believe. Hes trying to bring brett in, it seems, more of whats going on. Not a oneman shop but all his own money. I thought netflix, why is this guy climbing up the underestimated. Now i think people are saying, listen, if hes in, i want . There was a comment that Larry Ellison had made yesterday or the day before, how apple wasnt going to be the same without steve jobs, how the company was going down. I asked carl about that when i spoke to him yesterday. And he said to your guys point about netflix, he said, yeah, a lot of people thought netflix was going down, too. And it hasnt. I didnt hear that in the interview. Of course, that my bad. Ellison, a man i respect, you respect. At the same time, everyone would expect that steve jobs, jobs at apple is not as good as jobs at apple. Thats what ill thought was so strange. That that comment was as controversial as people thought. Henry ford not as good after henry ford. Sure. Larry ellison can be reputation of being a little bit biting sometimes and n. Some of the things that he says. Maybe thats why it had or at least the it was picked up as having maybe a sharper tones that originally intended. Who knows. I think thats right. Ellison famous for just being mixing it up a little. Controversial guy. Sales force, benny was in a feud over ellison but he said, listen, there really isnt a feud. Next thing you know theyre in partnersh partnership. Ellison speaks loudly but doesnt have a big stick. Hes well liked behind the seat. People like him. Interesting to know as apple does continue to climb a bit, almost up 2 on the session and very close to that 500 level. This idea of borrowing to buy back stock, of course, is not a new one. In fact, i talked object viacom yesterday. Viacom. Apple has done it before with that enormous Debt Offering it did. By the way, at the lows of and then using that to the low of the interest rate. Thank you. Its going to go over five any minute, by the way. As we watch apple yet again. It does much better when we dont talk about it. Doesnt it . 200day moving average. Tim cook was initially not responsive about the idea of doing a buyback. He was. They do have a lot of capital. They dont need all that capital. The dividend as well. A lot of guys respect it on twitter. You like netflix so much. Maybe carl says why dont you get some growth. Why dont you go buy netflix which i have said over and over gad is a good idea in order to have apple. Its like a rounding. Im sure carl would love to see that. Nice premium. I was talking yesterday about google and dish. Buying this is off the record but i think 700 is the right price. The stock did get a little cheap. Why did he stop at 00 . Wouldnt that look like a double top . What is that . Were looking at september 10th, right, for the next iphone or iphones . It comes a few weeks ahead of what is expected to be a big event. It has to be a big event at this point for apple, right . Doesnt the street, the analysts, they all decided that the phones a flop. I havent seen it but its a big flop. Like the old days and microsoft. Microsoft is issuing up sell. The expectations got so slow. 475 and 500, what do you do . Price talking about 500 and just hit 500. Are you going to go out tomorrow and cut your price target knowing that carl icahn is trying to get something done . No. Youll raise your price target. Tomorrow will be another apple on deck. How much is the debt down . A quarter of a percent. Well, isnt that good . Yeah. Not too bad. The ackman portfolio. Jcpenney is down. Air products is up a bit. Down. Havent looked at proctor. Deere is now down. I hope its not because i said wait for the Conference Call. I dont as i said, you know, various times, have been long deere. Okay . And its like, oh, please dont say that. Please dont say that. Deere is a play that bombs every time. Even if the story is a good one, the play is poorly executed. When is the time to do that . After the Conference Call . No, buy adco. Its the company right now. Better financially. Deere makes a great tractor. You guys ever been on a deere tractor . You like deere . Go buy a gator. When was the last time that am was above five do, we know . Its been a while, right . It has been a while. Up what . It seems like forever. We have to now start measuring it versus exxon, in terms of market cap again. You were talking about the size of icahns position. If you took a bic stag stake in exxon. He takes a stake in apple. I dont know if thats the case. I think at this point if he were to take a large position and tweet about it we would be paying attention. Interesting. This is what had been the most loved company on earth. Not only the one with the biggest market cap, the one with the biggest love. Right. If he bought this stock between 380 and 410, the legend continues. Legend. I believe were going to get a press conference from the ntsb any moment now. Were moments away. Ups flight which well remind you from louisville, kentucky, from birmingham, alabama, two crew members and we will hear at least initially from the ntsb on very very earliest reports on what exactly may have happened in that crash. I want to go back to that stock. Cree. Were going to go to ntsb right now. Okay. Here it is. Authorities are investigating the ups cargo plane that crashed outside the airport in birmingham, alabama. Good morning. I am robert somwalt and i am a board member with the National Transportation safety board. The ntsb is just now launching to investigate, to begin the investigation of a ups crash involving a ups airbus a300600. This airplane was plying from louisville at a it crashed while approach to runway 18 at Birmingham International airport. Before i go any further, on behalf of the ntsb i would like to express our sincere condolences to those who have been effected by this tragic accident. We will be launching here from the washington airport iport ina matter of minutes. In addition to our go team, we have an investigator from atlanta who should be arriving on scene any minute now. We will be arriving before noon birmingham time. The ntsb investigation will be led by an investigator in charge, dr. Dan bauer and he will be acompany anied by experts in structures, power plants, systems, air traffic control, human performance, aircraft performance, and a number of other disciplines. Also accompanying the go team also accompanying the go team will be representatives from the ntsbs office of transportation Disaster Assistance who will be assisting with those familyrelated matters. For the latest information on our investigation, we would encourage you to follow us on twitter, and our twitter handle is ntsb and follow us on our website at www. Ntsb. Gov. We do want to hurry and get out to the airplane so that we can get down to birmingham, get our boots on the ground. Before i go i will answer three questions. First question . How is the chief pilot involved in the crash, any other are there any updates on the any information regarding casualties. The information regarding the extent of the casualties will be released by the local authorities. Do you know when it was actually on the runway, do you know . Where did the airplane actually crash, was it an approach or did it crash actually on the runway . We have not been there of actually get there and survey it. Thats exactly what we will begin doing once we get to birmingham. We will be documenting the wreckage so that will be part of our investigation. Ill take one last question. Large fire, do you expect to recover black boxes . Do we expect to be able to recover black boxes . We have not even gotten there to be able to look at the wreckage yet. But i will tell you that the board has very good success rate with being able to recover the recorders. So at this point im optimistic that we will be able to recover those. So we are going to get on our way. Were going to board an airplane. Again, we should be in birmingham by noon their time. Actually we should be there by 11 00 there time. There you have ntsb official giving the initial at least briefing on that plane crash, ups, a cargo plane. Not much to share there. The investigation about to commence really is what it will be, and so did not have a great deal to share in terms of cause or casualties or anything else at this point. You had mentioned when apple had crossed over 500 last. It was back in january. Right. It did just immediately bounce at 500 and go right back down. Thats important. People are busy trying to get it over 500. Its not its just a psychological level. Psychological. It got within seven cents this morning. Then pulled back a little bit. I dont know. Maybe theres a little bit of resistance, right, at five . Im sure theres going to be a backlash about what we said. People will say that is totally what matters is the quarter. But i think what you pointed out, which is did i put in a bottom, i mean, you know, people are never going to look that the stock at 380 again and feel the same way now that icahn took a position. Theyre just not. I agree. You heard the ntsb official say follow us on twitter and mr. Icahn using twitter to disseminate there. I can only imagine how many followers hes added in the last 12 hours. Thankfully carl to follows you and me and we benefited from that. Carl, would you follow jim . You got a million you have a lot of followers. Were trying to get somewhere. We want to be somebody. Sole percentages. Im defriending him. Lets get to bob pisani. I assume that ipo is pricing . Envision Health Care Provider of outsource medical services, 25. 25. Now they priced at 42 million shares. That was above the share price talk of 35 million. The initial price talk was 20 to 23. Priced it at 23. It opened at 25. 25. This was very am bushes price for this kind of company. Its highly leveraged as well. As you can see, the initial reception is good. 25. 17. A little to the downside here. Utilities are weak. Discretionaries are weak. Telecom, staples, a little bit on the weak side here. Over in europe, the gdp numbers were a pleasant surprise pap lot of people were concerned about germany up. Gdp Second Quarter. France is up. These were very good numbers. There were some disappointments. Southern europe still isnt going anywhere. Italy, down. Theres the weakness in europe. Deere, i know you guys have commented on deere but the constructionary is where the weakness is. Thats 20 of the business. Lowered the full year Sales Guidance for construction but they left the guidance tort agriculture division. Thats 50 of the company there. Thats what matters at deere. Still up 7 . That it didnt change that. They had initial guidance for 2014, whats called cash farm receipt, loose cash flow estimates for 2014. Its down. I know its not good but its better than what some analysts were expecting. Overall, a pretty decent report. Its hard to guild the lilly on macys. The bottom line on macys is the consumer is spending elsewhere. Spending on real estate and autos. Heres one thought for you guys. Macys stopped reporting samestore Sales Numbers in january. Now, we all know analysts a s s lazy. Its easy to do nothing. All you do is plug in the store numbers into your model and you get an updated figure. Once yeah stop, the analyst didnt have monthly guidance. Now all they get is the numbers after three or four months on the earnings reports if up the point is that they missed the Sales Estimates badly. The analysts are the ones who provide the estimates. I think the analysts knew do a very bad job of updating their models because they dont have macys to fall back on and provide them with some kind of support. So heres my way of saying the analysts have got to get a lot better at creating more models and creating more value over all. I know that you guys have talked about this a lot before. Jim, back to you. Thank you, bob. Price target up, price target down. Following the stock. You introduce the penguins a long time ago, david. Very good call. Lets check the bonds and the dollar. Rick santelli is at the cme group in chicago. Hello. Good morning, gym. By the way, gym,jim, i have to you you were among the view looking for positive news early in europe and you are correct. Now the debate has turned to theyre seeing some better gdp growth in europe, up 0. 3 quarter over quarter. We were there one point when we escaped our negative gdp and its been years since. Structural employment is now what europe probably has to look forward to. Rates. You know, theres been a big debate. In equities, all they want to talk about is a taper. I dont think thats been the biggest driving force. The only driving force in rates. I think theyve been pricing in europe. Its been pretty darn accurate. If you look at a oneday chart, todays inflation data really didnt figure in. A twoday gives you the real picture. Move tire yesterday. Lateral distributing some of that sell that pushed rates higher. If you open the chart up to 20th of june, how many times i have i used this chart . We are in a zone that is clearly getting ready to test and with the momentum it seems to be building, that high yield close going back to august of 2011 at 2. 74 on the fifth of july. Now, if we look at europe, hey, theyve popped through. Theyve popped through to the other side. They are now at the highest yield since march of 2012. Doesnt comp as long as us. You can clearly see the spread is moving between tenyear. Foreign exchange. Look at the year to date chart. It turned. Also is pricing in europe because the good news is out and the euro is going down. Maybe the wide range is 128 to 124. Looks like it may have bottomed. Many technicians say the top of the range is 83. Well have to see. Back to you. Rick santelli, thanks. Lets go back to headquarters now. Say nice things. Yes. Of course, have to say me. Kelly at head bauer scott, the u. S. Attorney for the Southern District of manhattan has indicted two former jpmorgan employees as anticipated. Two traders who formerly worked in jpmorgans chief Investment Office in london and the charges on each man are four counts of securities, wire fraud, and attempts to falsify records to the s. E. C. Associated with alleged efforts to mismark the value of positions in structured products they were trading at the time generating losses for jpmorgan. And to essentially hide losses associated with those positions that were actually greater than they wanted to led on. Scott, there will be more details later today. We hear theres a press conference at 2 00 in downtown manhattan. We will be bringing you all the details from that. Kate kelly, thanks so much. Before we go to break, just to tie up what rick was saying. Is 270 the danger zone for the rally . Stocks seem to be sputters with rates around that level or ab e above. I think its going to make you think that housing is derailed as a major engine. Yes. Its really important. Rick has been talking over and over about mortgage rates. Twoyear high. Dp you dont want that, affordability really going down in some of the key earnings. Mortgage aps are down again. Yes. Listen. Pay t attention to this. We dont want to lose that prop. We are losing it. Taper, if people cant even withstand a 2. 7 tenyear and a mortgage thats still historically lower than its over been and that throws affordability out the window. Worried about getting financing. Take a pause and get financing later on. I think its darn weak then. Come on. Hey, yeah, i mean, im not going to argue with that. Im not going to argue with that. Coming up aol Ceo Tim Armstrong apologizing for his firing heard around the world. Keep it here. My mantra . Always go the extra mile. To treat my low testosterone, i did my research. My doctor and i went with axiron, the only underarm low t treatment. Axiron can restore t levels to normal in about 2 weeks in most men. Axiron is not for use in women or anyone younger than 18 or men with prostate or breast cancer. Women, especially those who are or who may become pregnant and children should avoid contact where axiron is applied as unexpected signs of puberty in children or changes in body hair or increased acne in women may occur. Report these symptoms to your doctor. Tell your doctor about all medical conditions and medications. Serious side effects could include increased risk of prostate cancer; worsening prostate symptoms; decreased sperm count; ankle, feet or body swelling; enlarged or painful breasts; problems breathing while sleeping; and blood clots in the legs. Common side effects include skin redness or irritation where applied, increased red blood cell count, headache, diarrhea, vomiting, and increase in psa. Ask your doctor about the only underarm low t treatment, axiron. First time since january we eclipsed 500 but we didnt quite get there. Not yet. 499. Seven centis away and then backed up. Seven cents away and then backed down b. Stock is up huge. Up huge. Were going to have 6 and 60 coming up after this break. This man is about to be the millionth customer. Would you mind if i go ahead of you . Instead we had someone go ahead of him and win fifty thousand dollars. Congratulations you are our one millionth customer. Nobody likes to miss out. Thats why ally treats all their customers the same. Whether youre the first or the millionth. If your bank doesnt think youre special anymore, you need an ally. Ally bank. Your money needs an ally. Golden opportunity sales event and choose from one of five lexus hybrids thats right for you, including the lexus es and ct hybrids. This is the pursuit of perfection. Its that time. 6 in 60. We havent even talked about the airline deal. Stunning. Even europe said this was okay. It could be 1,000 different routes. This deal is over. Its over. Its going to be a nasty battle. Done. They brought the kitchen sink. No, done. Lets move on. We dont have a lot of time. Cree. This is led. I thought they were having a great quarter. So did everybody else in the world. They said theyre gloomier than i thought they would be but at some point, buy it. Immediaty. This is a little guy. Mobile media. This just shows you not everybody mobile is going. Missed again, basically. Missed again. Very high revenue growth. Barclays, hold to buy on marble. I had them on last night. Saying store components are doing great. Flash is doing great. Disk drives. Be careful. Thats the inside. Dell sells us out. Bby, holy molly. Increased the price target big. Not shopping at macys. They are buying hard goods. Stunning. Lbo, they thought 16 if they could get it done. Finally, gardner, q2 smartphone sales. Microsoft passed blackberry as the number three smartphone. Meanwhile, blackberry goes up a little bit every day. People feel the patents are worth a great deal. Lets talk about what weve got on mad tonight its a company that has a radical not carpet but targeted anticancer. David, we talked, you and i, about these biotechs all the time. This company has done a lot of things right. Everybody loves biotech this year. Great job on this show of highlighting some of these companies. They all come on, thats a biotech show. Actually its mad money. 6 00 and 11 00. Weve got more, of course, coming up on squawk on the street including a bull and, yeah, a bear on apple. Join us right after this break. Announcer where can an investor be a name and not a number . Scottrade. Ron im never alone with scottrade. I can always call or stop by my local office. Theyre nearby and ready to help. So when i have questions, i can talk to someone who knows exactly how i trade. Because i dont trade like everybody. I trade like me. Thats why im with scottrade. Announcer scottrade proud to be ranked best overall client experience. Time to have new experiences with a familiar keyboard. To update our status without opening an app. To have all our messages in one place. To browse. And share. Faster than ever. Its time to do everything better than before. The new blackberry q10. Its time. [ male announcer ] ive seen incredible things. Otherworldly things. But there are some things ive never seen before. This ge jet engine can understand 5,000 data samples per second. Which is good for business. Because planes use less fuel, spend less time on the ground and more time in the air. Suddenly, faraway places dont seem so. Far away. Welcome back to squawk on the street. Our road map for this hour starts with macys. A rare miss for the retail giant. Ceo saying consumers are worried about the uncertain economic environment. Could it be something bigger though . Are we witnessing the fall of the Department Store . Plus, apple getting the icahn boost this morning nearing 100 a share once again. Is it time for you to buy . We have a bull and a bear to battle it out. Forbes is out with the list of the most pin know vative companies in the world. You will be shocked to find out not who made the list but who did not make the cut . Well bring you the full laist later. We start with macys reporting in the red. Richard is retail analyst with steve full and matthew joins us, retail analyst with jpmorgan. Gentlemen, good morning. Good morning. Good morning. Let me kick off with you, richard. I got your note here and its rare that something something really hits you that perhaps hasnt been discussed before. In your note you are suggesting broadly across retail that with cleaner Balance Sheets, consumers are increasinglying looking to spend money on bigticket items, homes, cars, hotels, rather than smaller impulse items. Is that really true in your view . Absolutery. I think were seeing evidence of that across the board and i think we will continue to see that through the holiday season. So what does that mean for stocks like macys . Well, it means macys has a more challenging fight. Assuming apparel sales are essentially flat this second half theyre going to have to fight that much harder for market share. We think theyre well positioned to win that fight but its going to be tough. You see, matthew, we had actually a Hedge Fund Manager on earlier in the week who is even more dour about what is happening within retail, suggesting if you look at retail growth in this country, retail sales growth, half of it is actually going to the likes of samsung, apple, and amazon and therefore not through the tra additional means such as macys, would you agree with that . I think we saw a shift over the june, july period here in terms of spending as richard talked about with housing and with auto sales strong. Clearly, we didnt see the same strength at macys and i think the other Department Stores in all of retail is going to show the same thing. Look, i wouldnt give up hope yet. I think the comments from macys in their release about august and i think we will hear more about that in 30 minutes on their call. I think thats encouraging. So you know, the question is, do we see a leader back to school in but i dont know that i would give up hope yet on the consumer, therichard, does this macys may not be capitalizing on jcpenneys paying as much as we thought . The customers are very different. The jcpenney customer being price and valued oriented and macys customer being value but on premium brands. I dont think it flowed to macys over the last year and we dont think it will be a big impact on this year as well. You in your note ren. Reiterating the buy and the comments that you made to simons first or second question, you certainly sound like its more up for grabs and that its no guarantee at all that macys is going to be able to get things back on track, that its going to be tough, i believe, in your words, yet why the reiteration of a buy. It sounds like its anybodys guess. I have an investment thesis that is over a 12month time horizon that they can leverage their fixed cost basis through sales growth and by being the biggest apparel retailer in america take that strength to the next level to be that much more important to the consumer. Matthew, can you take us briefly on a quick trip through your universe. Where does macys fit in the other Investment Choices . Yeah, weve actually identified four key stocks which we call our four horsemen, macys, nike, vf corp. And dollar tree. We think those four companies fit the mid teens earnings profile Balance Sheet. Best in class. I would agree with richard. I think what we saw today is a sales shortfall but illustrate that algorithm of a strong company, macys earnings growth, 18 in the Spring Season here. Sure. I think when you put it all together its actually wasnt a terrible print and especially as you look forward i think theyre well positioned if back to school does come later. I was under the impress they brought in fashion earlier because back to school was earlier in some parts of the country. Richard, before we let you go, is macys your top choice for investors . Today its my top choice. Yes. Good to see you both. Thank you very much. Thank you, guys. Thank you. Now speaking of the share that tech may be winning a consumer wallet, lets look at apple here. Strayeding near that 500 mark. Thats a level we havent seen since january of this year. 490 lets see if it hits 497. 496. 99. Up 1 1 2 . Not a huge move considering the disclosure or the tweet, should we say, from carl icahn that hes buying shares of this company and pushing tim cook to do, what a to buy back more shares to increase the investor payout . The follow through is light. 2 is nothing to sneeze at. Yesterday the stock had a very big move. We came season seven cents this morning. The first time we havent closed above five since january. Stocks got a nice bump. Now belief that maybe carl, if nothing else, at least at this point, has put a floor on apple. You can argue that certainly. Very interesting to see what transpires from here, as you pointed out, stock. Already got a paper profit of lets call it 6 , 7 on figuring about a billion and a half, somewhere in there. Thats a pretty good days work. At least its public. Thats true. Interesting. Couple of interesting questions. Move on to a developing story in alabama. A ups cargo plane with at least two people aboard crashing just outside the airport in birmingham. Phil lebeau is live in chicago with details on that . It will be some time before inve investigators know what happened. Early this morning in birmingham, alabama, a ups plane in route from louisville to birmingham crashed as it was approaching landing. It wasnt landing but it was on approach, killing the pilot and copilot. Airbus 300600 in route from louisville to birmingham. A statement by ups says we place the utmost value on the safety of our employees, our customers, and the public. We will immediately engage with the National Transportation safety boards investigation, and we will work enhawesively on response efforts. By the way, as you look at shares of ups we should mention there is an ntsb go team on its way to alabama. Also, u. S. Officials are reviewing the cargo on the plane. Thats standard. According to a senior Counter Terrorism official talking with nbc news, there is no indication at this point that there is anything related to the cargo that caused this crash. Again, thats very preliminary. Heres the ntsb talking about the next step in the investigation. The board has very good success rate with being able to recover the recorders. So at this point im optimistic that we will be able to recover those. So we are going to get on our way and board an airplane. Again, we should be in birmingham by noon their time. Actually, we should be there by 11 00 their time. We will update you as we find out information. Again, getting the black box is one of the first steps as they look at exactly what happened with this airbus a300600 uns cps cargo plane t crashed. Scott, one last note. This is the sixth ups cargo crash in recent history. But youve got to go back a ways when you continue all six of those events. So we will be following this and have more throughout the morning. Back to you. All right, phil, thanks so much. Phil lebeau for us in chicago. Lets send it over to dominick now for a market flash. First and foremost. Welcome to the family. Its good to be here, scott. Thank you. Lets find out whats happening with steinway. Moving higher, the shares will be acquired by paulson and company. That topped colbert and companys 35 per share bid. Now, he is refusing to match the pulse and offer which means steinway will pay him 56. 7 million termination fee. Kelly, back over to you. All right, dominic, great to see you. Suggesting youve had a 80 return on steinway for investors because they abandoned their jewel class structure. The question is should other ceos do the same. Facebo facebook brings to mind. Apple getting the icahn boost after the billionaire investor revealing his large position in the stock. The question is after a 40 increase should you be guying it . The debate is coming up next. Later, new list of most vating companies in the World Without facebook or tesla at the top . Squawk on the street returns in two. [ indistinct shouting ] [ 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. If youre like me, youve been working youve been working like a dog all year. But you dont need to camp out til labor day to reward yourself mattress discounters labor day sale is on now rest those tired bones on a queen size sealy gel memory Foam Mattress for just 497 get 48 months interestfree financing on the entire tempurpedic cloud collection. But this sale wont last long mattress discounters the ceo issish y shoeing an apology. Julia boorstin has more on that. Thats right. Aol Ceo Tim Armstrong is apologizing for the way he fired director lentz who was recording an internal Conference Call last week. In case you havent heard the clip, heres what he said to able lentz. If you think whats going on right now is a joke, and you want to joke around about it, you should pick your stuff up and leave house today. The reason is, and im going to be very specific about this, is past from an experience able, put that camera down right now. Able, youre fired. Out. Armstrong took responsibility for the way he handled the firing. Saying in a note to employees, quote, it was an emotional response at the start of a difficult discussion dealing with many peoples careers and livelihoods. I am the ceo and leader of the organization and i take that responsibility seriously. We talk a lot about accountability and i am accountable for the way i handled the situation, and at a human level, it was unfair to abel. Ive communicated to him directly and apologized for the way the matter was handled at the meeting. In explaining why he had such an emotional reaction armstrong says in this letter to employees that hes determined to keep internal meetings confidential so employees can speak freely. Kelly . Okay. Julia, thanks very much for the latest on that. Now, shares of apple are approaching 500 after carl icahn revealed a large position in the company yesterday. Icahn tweeted that he spoke with apple ceo tim cook about the possibility of an increased stock buyback. The question now given the rally and shares is what to do with him here. Joining us now is an apple shareholder and an apple bear david trainer, ceo of new constructs. Good morning. Good morning. Timothy, i would ask, why not take profits here but im curious about what price level you actually got into the shares. Weve owned the shares for almost a decade now. We have a lowcost basis on the shares. Weve owned it since before the iphone existed. Were happy with where things are. If the question, is you know, where would one buy it or where would one sell it, we just think were looking for a fair valuation for the market which we dont think were getting right now. What is fair value and are you not bothered by weve been having this debate for weeks now as to whether apple has lost its magic, lost innovative Touch Without steve jobs at helm. Are you not concerned . Well, i think theres a few parts to that. One, the product mix they have now are things that were conceived under steves watch biological weapon expect you probably have a few more years of call it a steve jobs effected apple and tim cook has been running the operation for a long time so were comfortable with his management of the operation as well. When you ask what a fair valuation is, 12 1 2, we dont see why a company with its Balance Sheet, its growth, earnings shouldnt at least get a market multiple we think theres plenty of room on the upside here even without some crazy new product or a watch or a television. David, it appears from the notes this morning that you have a more bearish tone on youre out look for apple. Even after carl icahn is in . Is that a game changer for a share holder . No. Im positive that carl icahn agrees with my longterm thesis. His strategy to me is shortterm oriented. Hes looking to get the cash out of the company, getting a quick pop. If i can make stock move by typing in twitter that i owned it. But hes not a quick pop guy. Come on. Really . I think thats his play here. I dont think he would disagree with the longterm thesis. At 500 bucks, the stock price implys a pro pen chul return on capital at 50 . Thats not possible for a company to do that into perpetuity. P wh when you look at a long term on capital that makes sense, 250, 300 range. Tim, whats your response to that . I think that theres some concern that apple cant maintain the margins that theyve had. Greater than industry margins for better than, you know, ten years. So i just disagree with the other, you know, the other guests that somehow apple has to participate in lower margin products and kill their margins when they have a premium product that sells at a premium price. For someone who sat on this stock for a long time are you prepared to give icahn the crit critic . You buy apple because you believe in innovation, this is the time of year where they innovate and they showed the market what they have. Icahn is coming through and talking about who is being who is seeing the dividend, boosting the return that vow have to shareholders. We went through this in april of last year with another Hedge Fund Manager who took a lot of glory then. Spent 16 billion in the Second Quarter buying back stock as a result of that. The stock ended lower than it was at the beginning of the quarter. I mean, this is a sprooet complete nonsense, isnt it, this trail of activist shareholders from your point of view, inner Growth Company moaning about dividends. I would have to agree with your other guests in that carl icahn taking a position, we wont know what carl icahns position is until hes long gone from the stock. Longterm investor looking at valuation, looking we would love to see more cash return to shareholders but not because somebody is making a lot of noise. We would have to say we just want to continue to see apple go down the path where they are. Over the last two years they continue to increase that return to shareholders. We dont think this goes out to both. You dont think at the very least that icahn has put perhaps a floor on this stock . It might be a shortterm floor but i dont think its a permanent floor. Mature and have a lot of cash and essentially he wants to get the cash out of the company and, look, hes not make anything operational changes. No focus there. Let me say one other thing about margins. Im not saying that apples margins are, you know, just a little bit too high. Im saying theyre three, four, five, ten times higher than the industry average, okay . So thats the part thats not sustainable. Theyre headed down, theyre going to get a lot lower. I think they still may be able to maintain a slight edge over the competition but not the four or five times the margins that the other firms have. Okay. Guys, well leave it there. Tim, david, keep tim, quickly on margins . Well, simon has asked what we thought of carl icahn. You know, these types of people tend to rent the stock for periods of time. Longterm investors want to hold it. I just happen to disagree on the margin call. For growth. Thank you very much this morning. Apple shares as they near that 500. Why do you think icahn has put a floor under the stock . Because i think a guy of his heft who comes into the stock is going the perhaps try and shake things up a bit. I think people will view that as a big positive for where the stock goes from there. Im not suggesting i think it simply signals the trade is on. He doesnt have to do anything. Everybody else will simply follow him in in the belief that thats where the momentum is now. With netflix. I think apple well, weve got to go. Okay. Forbes is out with a list of the most Innovative Companies in the world. And guess who didnt make the list . Well reveal that after the break. 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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. Because what you dont know can hurt you. Urance, what if you didnt know that its smart to replace washingmachine hoses every five years . What if you didnt know that you might need extra coverage for more expensive items . And what if you didnt know that teen drivers are four times more likely to get into an accident . sup the more you know, the better you can plan for whats ahead. Talk to farmers and get smarter about your insurance. We are farmers bum pa dum, bum bum bum bum welcome back. Forbes is out with its list of the 100 most Innovative Companies in the world. It will be featured in the magazines september issue. You may be surprised when you see who didnt crack the top 50. Joining us now with more is bruce, managing editor at forbes. Welcome. Thank you. First of all, who is at the top of the list here . Who are the most Innovative Companies and why . For the third year in a role is salesforce. Com and alexion, vm wear, a lot of tech, baio tech up top. Youre looking at specifically at research and Development Spending levels but what else . No, unlike a lot of other innovation lists its not about patents specifically its what investors say. We look at the fundamental cash that a company can make from existing business as if it just stopped doing anything new. What investors are paying above that. Thats your innovation premium and we rank them by that. So a couple of pharma names up there. Is that new . Is there are they moving to the top of the list . The ones that have been up there have been up there a while, like alexion. Things like apple, you know, we saw a huge drop. Apple went from 12 to 20s to 70s now. Thats interesting. The headlines come from the names you dont see up there. Where is apple, tesla . We need to have public cli available financials of five years and market cap greater than ten billion. So no facebook. Howe is apple the 70th interest innovator of a company . After steve jobs left a lot of investors collapsed their confidence, if you will, in the companys ability to come out with amaze anything things and thats what this list is about. Faith that xcompanies will come up with something great. They still might. They still might. But by putting them 70th youre buying into the noise and the hype thats been out there, the negative hype that apple somehow has lost its way, lost its edge, cant innovate anymore. Yeah, i think there is hype out there but the markets are pretty efficient processor of pricing information. And the future. And what else can you i dont want to sit around with a bunch of editors picking favorites. With a case of a company like apple you almost by definition dont really know what theyre going to come out with. Right. How can you officially price it . I mean, its its momentum. Millions and millions of people are making those guesses. Its not momentum, its a statement on what the market is of momentum, not an accurate reflection of pipeline. We look at five years of trailing data to field the fundamental so its based on track record. Apple has done a great job. It might come back. Its still in top 100. Elite. As a tech company you might expect it to be somewhere on the list. But things like philips is not or sony is not, samsung is not. Also an innovative company. It is encouraging a lot of u. S. Names at the top. Does that tell you something about the innovation coming out of the snus. U. S. Is second to none when it comes to innovation. Northern california, amazing hub. Great p gre greata tent laws that keep them on the shores. A lot of Innovative Companies in food and beverage on the list. Where is samsung ranked . Not on there. Its not top 100 innovator . No. We stop at 100. We looked at the worst, the biggest discounts and you had Companies Like intel and johnson johnson. Great companies but investors dont believe in them. Thats for sure. Some confirmation from that and analysts notes this morning. You can read more about it in the issue of forbes. Where is google on the list . 27th. That tells you something. Dropped a little bit. Its best of the best. Rush out and buy copies. Its not a stock pickers list. Its not where the premiums are. It seems to be one of the primary innovators in the entire technology space. Its not priced for that so its not on a list. Its a bit like heading into the nightclub, if your name is not on the list, youre not getting . Thats true. If you say so. Up next, we have breaking news on crude oil inventories. Find out what that could mean for prices at the pump. Later, could the Justice Departments move, merger end up creating the same outcome the agency was hoping to avoid . The world is changing faster than ever, creating new opportunities for those who stand ready to seize them. In a time when the biggest risk is playing it safe, we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, our flexible, collaborative approach helps forwardlooking companies not only run better, but run different. To give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because now more than ever, the future belongs to those who challenge the present. Welcome back to squawk on the street. Im Bertha Coombs at the nymex. We have a much bigger than expected draw when it kams to crude and gasoline. Crude stockpiles down 2. 8 Million Barrels. That was well ahead of the expectation of a drawdown of 1. 5 million analysts surveyed by plaks had expected. Also gasoline is the big surprise. We actually saw a drawdown in gasoline of over a Million Barrels. That contrasts with what we heard from the industry yesterday. There was some kerch that we were seeing the end of the season and seeing a buildup in gasoline. As far as curbing supplies, once again, cushing down 1. 4 million bears. Cushing, oklahoma, of course, the delivery hub of nymex crude. At the moment, nymex crude coming up a little bit from where it was ahead of the number but we are seeing a rally here in gasoline. Were also seeing strength, guys, in natgas as were expecting to see warmer weather here at the end of the august. Back to you. Thanks so much. Bertha coombs, thank you very much. Breaking news in the jpmorgan, scott cone is joining us now. Widely rumored, now its true. Theyve cut a deal. Nonprosecution agreement with the u. S. Justice department which means he is not going to be prosecuted for the 6 billion plus in loss necessary that derivatives portfolio but he is going to cooperate with the government. And this comes on the same day that the u. S. Attorneys office in manhattan, as we reported, has unsealed charges against two derivative traders at Jpmorgan Chase for allegedly concealing the extent of those losses. The u. S. Attorney has scheduled a News Conference for 2 00 p. M. Eastern time. We will keep you posted on all of that. Back to you. So, scott, i guess it appears that, you know, from kate kellys earliest reporting on this story that this gentleman, the two most senior folks involved in this, or at least two of the more senior people are going to skip charges. It appears that way, as long as they cooperate. And, of course, in the nonprosecution agreement, and this is kind of boilerplate, if they find something in the course of that investigation that implicates iksil they can go back and charge him. For now hes going to cooperate. The issue seems to be separative between the losses which were lo massive and where they were covered up. They are charged with covering up the extent of those 6 billion in losses. All right. Scott, thanks. Okay. Lets take a closer look at the markets now. The dow, s p, and nasdaq are all in negative territory. We continue to drift down from the record highs, of course, that we struck earlier in the summer. Lets get zone some analysis about what you should do now for the second half of the year. Steven wood is chief Market Strategist with Russell Investments and alan lance joins us, editor of the lance letter. Gentleman, good morning to you. Let me kickoff with you. Over the last 24, 48 hours weve had a shock selloff in the bond market. Its driven the yield on the ten year up maybe 12, 13 points. Thats a big move. It is. Why is that happening and why is this stock market more not more effected by it . I think the market had run hard and appropriately so if you look at a lot of equity markets. Correct. There was a radical movement coming postbernankes speech on may 22nd. There was the taperitis, the taper t er tangent, whatever. But there was a spike in Interest Rates. But that spike came from looking at fed policy. This is very different from 1994 in the fact that that spike in rates was given by fears of inflation and a very aggressive fed. This is very, very different. So were calling this more of a yield norm algization process. Good. The yield to r. Going out because we believed in growth. We believe that growth is stabilizing in a modest if not great pathway. We believe the fed will begin to dial back some of the stimulus but that is not the same thing as having an inflation scare drive yields up. One is more controlled. The other one is less controlled. This is somewhat dissimilar to 1994. Yield ksz s can go up and th stock market can go up at the same time. Yes. If its a function of health its not nearly as bad. Alan, is he correct . Yeah, definitely. I think, you know, its the reason Interest Rates go up. And its a situation where, you know, theres many parts of the market, simon, that, you know, are getting fully valued, you know, you look at health care, consumer discretionary. You know, financials. Up 25 , 30 . You know, so some profit taking is in order. But on the other hand, you know, there are some, you know, great bargains still out there. Investors are very forgetful and fickle. I think a disciplined investor just has to take advantage of it. Eventually people will lose money in their bond funds and that money has to go somewhere. Most of it is going in cash now but erchtd chully, you know that might even bring back to the equity markets any kind of increase in Interest Rates as long like he said as its controlled, you know, might even be favorable or conducive to higher equity rk quitity valuat im sure your focus here is on the United States but i think its imperative to people that facts abroad to make their own decision. Sure. In fact, the French Economy and german xhi xeconomy grew mo rapidly than the u. S. Economy president if you look at the Merrill Lynch survey released, professional investors are increasing the overweight in europe and will over the next year, they say, have a greater overweight on europe than they do on u. S. Equities. Do you think the people at home now should be diversifying into european equities . Its good to see the market come into the position weve held for some time now. If you look at europe theres a bottom in process and we think they have probably bottomed if you look in the northern countries. The southern country, different story. Its going to be years in some cases depressionary conditions. Looking at europe, bev been liking equities around specific names and europe, the value vas are attractive. Strong Balance Sheets. Do you think people watching now will be able to assimilate that and buy that . Work with the professionals. Actively managed. So managing the europe Systemic Risk and allowing stock picking to get some good securities sand good valuations thats how an m . To your earlier point, i think people are are underestimating the taper. I think the market is tell you over these last several days where we ended if six weeks of gains and clearly as rates rise, having a bit of an issue with stocks which seem to be sputtering. I dont think the market is yet ready to accept the fact that the fed is going to pull away even a little bit. I think initially theres going to be a tantrum. Im not saying long term or whatever that thats going to be an issue but if you put that together with the fact that stocks are up so substantially this year, what is the impetus for people to remain in the market given all of those factors . Dp ywe think the market is g to be up a little bit between now and the end of the year with volatility. We dont think its going to be great. But thats why you look at stock picking, security selection. Correlations are coming down. Stocks are behaving differently. You need to have good active management i discerning between those companies that can out perform in a revenue senselengi. I think the fed is going to be more data dependent. People might suspect. Even the hawks and fed do not think inflation is too high. Thats an important point. Alan, were out of time. Seems only fair to give you one last comment there. Yeah, you know, i totally agree. You look at apple. We sold some at 700 in september. A couple of months ago everybody hated it and we started buying again at 400. So i think, you know, take advantage of those moves spop steves right. Its a situation where, you know, take advantage of the market fickleness. Theres a lot of good quality companies. A year ago we were buying xerox and dole and dell and look whats happened to all three of those. Take profits along the way as the markets move up. Alan, i know weve got to run but you said youve been buying apple. Icahn is now in the stock. Are you more comfortable now than you were two days ago with apple . Not really. Its a fundamental story whether icahn is in or not. I dont think in a company that size theres going to be a factor. But our buy limit, scott, was 429. So were not buying it here. Havent bought it in the last few weeks. Were buying a lot as it went belb be429, and below 400. Again, everything is condensed. Its back to 500. I thought that would be a year move with a 3. 6 dividend. Turns out its a few months. Yeah, sure. Guys, were going to leave it there. Thank you. We all run through where europeans for those that were listening. Europe close. Thanks, guys. All right. Lets send it over to dominic shu now. Cree is falling after analysts and estimates here. Earlier today it matched estimates with 38 cents a share. Thats excluding certain items. Cree is a maker of lighting equipment, leds, light emmitting diodes. Watch the preshares, killy. Thank you, sir. The American Us Airways merger in jeopardy. Up next, the pilot and Union Official about what the move means for him and for customers. Well be right back. Stay with us. Shark week may be over but chart week is just flexing its fins. Cramers diving in to find you stocks you can sink your teeth into and spotting the dangerous predators you need to avoid. Its chart week on mad money. Geoff im the kind of guy who doesnt like being sold to. The last thing i want is to feel like someone is giving me a sales pitch, especially when it comes to my investments. You want a broker you can trust. A lot of guys at the other firms seemed more focused on selling than their clients. Thats why i stopped working at my old brokerage and became a Financial Consultant with charles schwab. Avo what kind of Financial Consultant are you looking for . Talk to us today. Make it happen with the allnew fidelity active trader pro. Its one more innovative reason serious investors are choosing fidelity. Get 200 free trades when you start using active trader pro today. To experience the precision handling of the lexus performance vehicles, including the gs and allnew is. This is the pursuit of perfection. 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 welcome back. The Justice Department filing a lawsuit seeking to block the planned merger of American Airlines and us airways because of concerns that travelers would have to pay millions more for fares and fees. Amp on the pearson is live at Reagan National airport with latest there. Hampton . How are you doing, scott . Yeah, its the morning after the Justice Department moved, if you will, to try and ground the proposed americanu. S. Air merger. Were here at Reagan National airport because american and u. S. Air, between the two of them, control Something Like 69 of the takeoff and landing spots here, Something Like 63 of all the nonstop flights in and out of this airport. But in random conversations with travelers, we found, frankly, not a whole lot of awareness of what the consequences are, for the Airline Industry or, frankly, for consumers as travelers. We did, however, find a fair apartment of amount of awareness about American Airlines bankrupt problems. Probably one of them will be bankrupt. You know, because, you know, theres still a lot of competition from people like delta, spirit, blue. I think a merger would, you know increase routes and maybe it would be a good thing in the long run, certainly for american, you know, they declared bankruptcy. You might lose the air miles that many were nonending before and now they may end and you may have to use them by a period of time, according to who they merge with. You could use some of the number of planes that fly to different areas. Now, travel evers we talked to get a lot more animated when you talk to them about higher fares, higher fees, and the lack of not enough flights to their favorite destinations. They dont, however, seem to connect all of that to the mega merger airline environment weve been is n. Since starting back in 2008. And by the way, both the attorneys general for virginia and the District Of Columbia have signed on to that Justice Department lawsuit, along with texas and arizona. The home states respectively for american and u. S. Air. So we will now see what happens next as far as what looks like a looming court battle. Kelly, back to you. Hampton, thanks very much. I believe we will be speaking with arizona on this issue a little bit later on the program. I will let you g from now and bring in first officer tom, American Airlines pilot and communication chairman for the allied pile t Lots Association which is the pilots union for American Airlines. Thanks for joining us. Good morning. So whats the pilots perspective on this . Were you as surprised on the street yesterday when the doj said they were going to block this deal . We believe justice is unfairly singled us out and is attempting to impose a double standard on our attempt to merge with us airways. It doesnt make sense. What do you think is behind the decision . You know, we really dont know. We had some issues regarding slot divestitures at washington, reagan. They can bly out of dulles or youve got market dominance by southwest and united. There are plenty of travel options. If thats the issue, we believe that theres a resolution. Tom, just to quote the journal on this this morning theyre saying, look, the challenge from the do jorks could throw a wrench into americans plans to emerge from bankruptcy for protection because this merger was the basis of the bankruptcy exit plan. The two airlines were hoping for washingtons blessing ahead of a court hear for thursday to confirm the exit plan. So where does this leave the pilots, where does this leave american now . Well, in a sense, were in a position awaiting for the trial date which we anticipate will be scheduled in the next several months. In the interim were going to bargain with doj and compromise on this issue. Weve been longterm supporters for this merger. Its a good fit for both carriers. Its going to add competition in the marketplace. Doj facilitated and supportered the mergers between delta and northwest and united and continental. Why they are attempting to roadblock this right now is just unfathomable. In order for us to compete with those two mega carriers weve got to have the Critical Mass to do so. And we obtained that Critical Mass by mergering with us airways. It may be that they regret having approved those deals and looking at the pricing for the routes in question and what consolidation has done there. You say unfathomable and doptn understand. Why is that, they are trying to block a merger that they say has the likelihood of stifles competition and therefore raising prices and fees . We simply dont agree with it. The cats out of the bag on consolidation here. Youve got what is in effect two carriers that are now in the process of carving up the domestic and interNational Marketplace. If you want a third viable competitor in it its going to take the form of an american and us airways combination. There really is no alternative to that. It may seem grossly unfair from their point of view they are not going to let happen to american that has happened to these. There are other people watching the industry and the New York Times makes this point today that would say auk chactually t Airline Industry is uncompetitive. You raise prices, do international deals. You know, keep passengers through frequent flier miles. Its one of the most uncompetitive industries around and still trades at very low margins. It isnt an industry that has competition blowing through it in the way that it should have. They would say. I would vehemently disagree. This combination with american and us airways would offer our passengers a great deal more options in terms of travel and would allow us to compete on a level Playing Field with the recently merged delta, northwest, and united continental. Its cheaper to travel now than it was in don drapers day. What happens to american is in fact you guys are not able to win in court and the deal is blocked . What happens to the airline in which youre a part . Well, were back at square l option, and u. S. Airways is in pretty much the same picture. What we dont want to do is seen these two respective carriers wither on the vine in the shadow of the two remaining mega carriers. We believe its in the best interests of our shareholders, employees, and customers to execute this merger and sooner rather than later. Thanks very much for your perspective this morning. Thank you. Still ahead on the program, the full season is slated to come a little earlier than usual this year. Well find out why a chilly fall could mean a very hot back to School Shopping season. Were back after a quick break. [ 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 ] [ telephone ringing ] a quarter million tweeters om is beare tweeting. T a room. And 900 Million Dollars are changing hands online. Thats why hp built a new kind of server. One thats 80 smaller. Uses 89 less energy. And costs 77 less. Its called hp moonshot. And its giving the internet the room it needs to grow. This is gonna be big. Hp moonshot. Its time to build a better enterprise. Together. Having bucked the down trend yesterday, were heading in a negative direction again today as you can see. Johnson johnson, home depot, and boeing leading us lower. Lets get to Rick Santelli in chicago. Thanks, simon. You know, i found some very interesting information on the fitch website today, and it was about etfs, specifically corporate etfs, you know, high yield, investment grade, but whats interesting about this is that the Federal Reserve bank of new york has allowed fitch and many analysts and economists and strategists out there, they have a much more granular look at things like dealer inventories in corporates and etfs and their huge growth cycle. Why is any of this important . Lets put it in context. The Corporate Bond market in the u. S. Is probably a 9 trillion market, and what im about to show you with these etfs represents slightly less than 2 of that market. So theyre not overtaking the actual securities market, but think dodd frank and all the issues that affect primary dealers and even more so just anybody that has an inventory in corporate securities, and the issue is simple. Theyre going to hold less. Theyre going to participate less. Theyre not getting involved in Balance Sheets, set aside capital, haircuts, all of that. Its going to be less. Weve talked about how that could make the markets a little bill mo bit more volatile. Weve taken some shock absorbers off. Investment grade etfs, the five largest, well, they had about 6 46 billion roughly in assets. Deal eer inventory, about 9 billion. So what weve seen is dealer inventories are going down and most likely that trend isnt going to change anytime soon, and etfs now, this isnt a negative assessment or a positive assessment. What it means according to fitch is if you get redemptions or you get these markets moving where theres a liquidation of 250 million or so, youre going to see a boat load of movement, something to Pay Attention to. The other big news of the day, of course, is europe. After six quarters aggregate eurozone gdp was positive. Forget in the old days more than four quarters was called a depression. I dont know that anybody called it a depression, and one positive number isnt going to necessarily change everybodys minds but lets be real here, its wonderful news. Now the issue is dealing with the structural issues that have been avoided so even in europe time heals some wounds. The real issue is who is going to haeal the unemployment wound . Scotty, back to you. Thank you so much. Many of us are watching apple. We have someone who says ciscos report tonight will be a key indicator for the sector and well explain why coming up. announcer scottrade knows our clients trade 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. Weve been bringing people together. Today, wed like people to come together on something that concerns all of us. Obesity. And as the nations leading beverage company, we can play an important role. That includes continually providing more options. Giving people easy ways to help make informed choices. And offering portion controlled versions of our most popular drinks. It also means working with our industry to voluntarily change whats offered in schools. But beating obesity will take continued action by all of us, based on one simple common sense fact. All calories count. And if you eat and drink more calories than you burn off, youll gain weight. That goes for cocacola, and Everything Else with calories. Finding a solution will take all of us. But at cocacola, we know when people come together, good things happen. To learn more, visit coke. Com comingtogether welcome back. Were taking a look at shares of apple. Theyre up about 1. 6 . Scott, i know we have to let you go so you can prepare for your show. Are you guys going to be debating apple again, whether to get in at these levels. Whether icahns buy is establishing a floor . Well definitely discuss the stock. See if it hits 500. Well also talk with a Top Executive of pandora as you look at the growing competition on pandora from people like apple, spotify, google, and everyone else and well talk about the impact of the market. The leg down weve taken, its not like thats coincided with a move higher in the tenyear. Were down to about 2. 7 . Maybe 2. 7 is the psychological level. Certainly was yesterday. Dont forget cisco reports tonight which increasingly people believe is the bellwether for capital expenditure. Well trade ahead of that as well clearly. We might squeeze it in the next hour of this show. Im sure you will. Thanks very much. Here is what you might have missed if youre just tuning into us on squawk on the street. Welcome to squawk on the street. Here is whats happened so far. Weve gone through two years since steve jobs passed, right . Almost two years in october. So this realization has now set in. And this is kind of the Inflection Point for apple. Its now just a stock. It is no longer macys earnings that are out, theyre weaker than expected. Macys in with earnings of 72 cents a share. Street was looking for 87 cen cents. My first take away wasnt how disappointing, what are the numbers going to be at jcpenneys if macys is this bad . Here we go. Its one thing when David Einhorn comes down the road with a stick. Carl has the biggest stick on the block. If carl wants to shake you up, carl doesnt care, hes going to shake you up. You know, the question is do we see a later back to school . But i dont know that i would give up hope yet on the consumer, the Department Stores, and all of retail. The product mix they have now are things that were conceived under steves watch. We expect you probably have a few more years of call it a steve jobs effect at apple. U. S. Is second to none when it comes to innovation. We have northern california, great patent laws that keep Pharma Companies on these shores, and we have an amazingly wealthy middle class that can buy packaged goods. And a very good morning to you. Were live at post 9 at the new york Stock Exchange. Lets get a quick check on the markets. Negative territory and just edging lower as you can see, down 93 on the dow. Earning season at an end. A lot of people focused on what the fed will do some september and big moves this week in the bond market. Shares of brocade surging. The Third Quarter profits more than doubled after a 76 million gain from a litigation settlement. Third quarter revenue at brocade was down yearoveryear but earnings beat on the top and the bottom line better than analysts were expecting. Me meanwhile, shares of seaworld are sinking. Seaworld says the loss is related to expenses from its initial ipo. The company lowering its revenue outlook for the rest of the year. Here is a look at the road map. A tough day for macys as the retailer misses on earnings for First Time Since 2007. Well tell you if this is the start of a trend or just a blip for this retailer coming up. And in a surprise move, the department of justice and several states are suing to block the merger between amr and us airways. Well talk to the attorney general of arizona to find out why he thinks this merger is a bad idea. And shocking pictures out of egypt this morning where dozens of people have been killed after clashes between Security Forces and supporters of former president Mohamed Morsi. Well go live on the ground in cairo for the latest. Lets kick it off with Steve Liesman back at headquarters with some breaking news. Steve . Simon, thanks. The new york fed reporting that Consumer Credit improved in the Second Quarter. Deling quen sis falling to 7. 6 of all loans. Consumers continue to shed debt but in a sign americans are still cautious, demand for credit is still weak. Here are the numbers. Mortgage debt falling by 1. 1 . Revolving credit declining. Auto loan, credit cards, and Student Loans are up. The total also declined by 0. 7 . Now, for the first time that i could find since the beginning of the data, which goes back to 2003, delinquencies declined in every single category. You cannot find negative numbers for delinquencies, these are 90plus days delinquent for all credit going back to 2003. So thats a sign that things are improving. How about some perspective here . Take a look at how things looked into the best of days. 2005. Were upwards of 95 of all debt was current. Then you could look at the worst of days. In 2009, when it was down below just below 85 , and now you can see were creeping back up with improvements of the percent of all loans that are current and a decline of all loans that are late. There was a rise in bankruptcy filings and foreclosures. That appears to be maybe somewhat seasonally related, but it does bear watching. One of the negative reports, guys, a measure of demand for Consumer Credit was flat. Thats a sign consumers are still repairing their Balance Sheets and dont feel comfortable enough to take on new debt and spend. Thats a shortterm negative, guys, but maybe longterm thats a positive. Steve, i just want to tag one thing onto what youre saying today for people who are just tuning in. What weve learned this morning, this is from a note from stifel nicolaus, that people are using that clean Balance Sheet now, they believe, to help funding big ticket items, spending on big ticket items like homes, hotels, and cars rather than discretionary items, and that is one reason, they say, why macys has missed on results. Thats a neat way of tying two interesting news stories from today. The macys numbers come amid a challenging time for the consumers dealing with that tax hike that happened at the beginning of the year, but also incomes have been relatively flat and it seems like to the extent that consumers have some money, they repair their debt, but they also seem to be spending more on big ticket stuff where, by the way, auto lending is one of the few categories, simon, thats back to its prior prerecessionary days. Absolutely. Thanks, steve. Sure. Now we turn to more on the developing story out of alabama where two people are dead after a ups cargo plane crashed outside the parent in birmingham. Fi phil lebeau joins us. Investigators are just arr e arriving in birmingham and within the next hour they will be at the crash scene. When they get there, this is what they will see. A plane that has been severed into a couple pieces still smolder in some areas, particularly by the tail of the plane. The u. P. S. Flight killed two, the pilot and copilot. Once the investigators get there, one of the things theyll be doing is reviewing the cargo list. It was quite the scene when this plane crashed early this morning just before 6 00 a. M. Eastern time. The plane involved here is an airbus a300600. It was delivered ten years ago, had about 11,000 flight hours and the flight was en route between louisville and birmingham when it crashed. Take a look at the fleet of u. P. S. And how many planes it has, how many it flies around the world, and how many incidents there have been. They own 235 planes. They lease or charter another 293. They make 1,931 daily flights and according to the aviation safety data network, this is the sixth accident or incident for u. P. S. U. P. S. Says two of those are hard landings but clearly a developing story as you take a look at shares down franctionaly today, but the bottom line is were still early in the stages of this investigation. Kelly and simon, back to you. Thank you very much. Lets get to some corporate news. It was a surprising miss for macys this morning sending the shares around 4 . The last time they missed on their earnings figure was way back in 2007. Many retailers are struggling to attract consumers to their stores and that brings us to the question of the Department Store model. Is it dying . Lets bring in robert lewis, ceo of the robin report and the coauthor of the new rules of retail. He was formerly at Goldman Sachs where he launched a consulting retail practice. And evan clark joins us, the Business Editor for womens wear daily. Thank you for joining us. Thank you. Evan, i like Terry Lundgren. Hes a great ceo at the head of macys. Lets deal specifically with what theyre saying today. Its fascinating the way the negatives are said to come externally, cold spring, and they take credit for the positives like bringing in the new fashions early because back to school may be earlier, spending a lot more on marketing. Evan, what is your commentary on the quarter . What is macys doing wrong . Well, i think retail is a very difficult business where theres a lot of things to balance, and season in and season out youve got to be right all the time. Im not its hard to tell for any particular season what went on, but i dont think the death of the Department Store is something, you know, that is happening right now. I think macys has been strong. This is first miss in 25 quarters. And i think that theyve said that the backtoschool season was starting off strong. So it seems to be a blip on the radar, but they were supposed to be the bright spot of the Second Quarter earnings season here for retailers. So i guess well have to see what comes. Is it fair to say in the absence of a compelling fashion trend, they are flailing around a little bit, all of them flail around . Certainly. If you dont what were seeing with consumers today where theyre being very careful with their dollars given everything from unemployment to incomes is that theyre being choosey, and they go to the stores that give them what they want, and they buy the fashions that they want. So if you miss it, theyre very unforgiving for retailers. Robin, you say this is probably going to be bittersweet for jcpenney perhaps pointing to an opportunity that they could have taken here if they werent distracted by Management Issues . Well, i think that the jcpenney issue, of course, is quite a bit different from whats going on at macys. Jcpenney is not positioned, in my opinion, as a direct competitor to a macys. Macys has had tremendous success in bringing in more contemporary brands, building an exciteding shopping experience. A lot of things that ron johnson was trying to do at jcpenney in terms of his overall vision, which he, unfortunately, in his implementation was not able to control youre saying this is not whats happening at macys is not reflective of a broader problem for retail. Its macy specifically . Yes, i think this is a speed bump for macys, but if its a speed bump for macys, its going to be a speed bump for the rest of these guys who are going to be coming out with earnings reports over the next week or two. Yes, i think it is across the retail sector. I think the consumer has been, you know, mumbling, kind of trudging so its not macy specific. Youre saying its a Broader Consumer retail problem. I think it is. You know, robin, we had david berman on the other day who is a Hedge Fund Manager who invests solely in retail, and he was making the point that actually the retail growth that were getting at the moment is going half of it is going to apple, samsung, and amazon, and, therefore, it will be a horrible earnings season for a lot of these Department Stores, that traditional retail is having a real hard time behind the figures. Would you agree with that . I think its a major factor. I think that will continue, the Online Business will continue to accelerate and take great share away from physical stores, but the physical stores are not going to go away. I do think a lot of the money is going to the internet, but i also think as somebody said earlier, a lot of the disposable income is going towards big ticket items right now as well because the housing situation is recovering. But there is always going to be room for physical stores, what they need to do, however, and which macys and bloomingdales are doing quite well, is they have to give the shopper compelling reason to tear themselves away from the internet to go to that store. So theyre elevating the shopping experience. Arguably that was what done johnson was trying to do at jcpenney. Guys, with he have to leave it there. Ron johnson. Thank you both for joining us. Evan clark and robin lewis. Thank you. Thank you. Well, theres already a chill outside, and the question now is whether cold weather could actually be a saving grace for the backtoschool season given the broader tough retail environment thats out there right now. Courtney reagan back at hq with more on this. Good morning. Its been a cool summer for many regions of the country, especially us in new york. While we all sort of roll our eyes when retailers say weather for poor sales there is some validity to the reason. Retailers have reported weak summer sales. That could partially explain the lack of enthusiasm for shoppers. Its hard to sell swimsuits when you have goose bumps from the cool air. The good news though for retailers, the cool weather now and forecasts ahead could spur sales of the fall merchandise. So the weather channels forecast this fall, the weather will be more typical than what we saw last year when it was relatively warm, remember, an extension of the hottest summer in 110 years . A normal fall will be welcome news for the gap, macys and kohls. Today macys noting early strength for back to school in childrens ware and other apparel. I think it does drive a mindset towards back to school, and i think it will actually be beneficial to backtoschool sales even though backtoschool sales arent directly weather impacted. Its all about that sentiment. Kohls might especially need a cool fall. Morgan stanley and mkm partners expect to see a negative weather impact show up in kohls earnings report. Back to you. Courtney, thank you very much. Courtney reagan there as we get ready for back to school. Huge news for the Airline Industry in the last 24 hours. The department of justice suing to block the merger between amr, American Airlines, and us airways. Well talk to somebody directly involved in that lawsuit in a moment. First, Rick Santelli working on the next edition of the santelli exchange. Rickster. Yeah, simon. Were going to bring our muni guy back. Yesterday the department of justice put the kibosh on a merger and our muni guys. In 7 1 2 minutes well talk to new jersey, illinois, and detroit. You dont want to miss this one. Tdd 18003452550 playing this and trading. Tdd 18003452550 and the better i am at them, the more i enjoy them. Tdd 18003452550 so im always looking to take them up a notch or two. Tdd 18003452550 and schwab really helps me step up my trading. 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One of those attorneys general is tom horn, attorney general for arizona. Mr. Attorney general, good morning. Good to be with you. I watch you almost every morning so its an honor to be with you. Thanks very much. Then you saw the reaction yesterday to the news. A lot of people here and a lot of the people in the industry shaking their heads and saying we dont understand why because American Airlines, by the way, is still working through bankruptcy court. If this doesnt go through do they have a real chance of coming back . Well, they just made Something Like a 5 billion profit, so it looks like theyre going to be doing very well, and their plan to come out of bankruptcy was to expand, to compete, but if they merge and you have an oligopoly of four r ier carriers, then the ten dden would be to pull back. Ever since 1776 when adam smith wrote wealth of nations weve known the more suppliers you have, the more competition you have, prices go down, and service goes up. And when the market consolidates and you have only a few suppliers, then prices go up and service goes down. Can i ask, what is the arizona specific concern here . The dominant concern is the same as the rest of the country, that the National Market should not be dominated by only four carriers. You know, really the specific market thats applicable is a given route. So we might say there are four carriers nationally but on a given route there may be only one or two. If they have that monopoly power you will see prices go up. Historically we have seen routes served by one or two carriers with fares a lot higher. Why wait until now to come forward with this with these kern concerns . Investigation and decisions on something as complex as an antitrust case take time. But the problem that weve had, i think all of your viewers have seen prices go up, baggage fees go up, as theres been consolidation and that consolidation probably should not have been permitted in the first place. Wait a minute, youre saying there should look, sir, the problem is this is a private enterprise. So if the government is not willing to backstop the airlines in order to keep prices down for the consumers, then in order to get profitable, what theyre saying is we had to go from ten in 2000 to maybe four in 2013. Unfortunately, you cant have it both ways. Well, no, i dont think the government should back anybody, but it has been a traditional Government Role to enforce antitrust laws. Those are part of basic economic theory in order to have a flourishing free market, you have got to have competition. You cant have monopoly or oligopoly and have a good free market. So the role for government is to be sure we have a free market, that we have competition. The government should not mr. Attorney general let me just say the consolidations were allowed because they expected competition from lowcost carriers, but now many of those have been acquired or have gone out of business, and so that theory didnt work. And we need to be sure we have as many carriers as we can so we have competition in the market and not a market dominated by a monopoly i think for many people were out of time but i want to get this in. I think for many people it seems cruel and unfair to the shareholders of american or certainly for us airways which is based in your patch that you have allowed the others, delta, northwest, united, continental, southwest air trans to go through. You have allowed them to bulk up and be powerful in the marketplace and now the other two you could potentially prevent from doing the same. That seems very unfair to those who have equity stakes in those businesses. Why should they be treated differently . Well, i think that the permission that was given for the consolidations was a mistake. We need many more carriers in order to have competition, not an oligopoly of four carriers dominating 87 of the marketplace. Thats not good economic theory and its not good in practice and i think your viewers have seen that the prices have gone up and more fees have gone as the industry has consolidated. If it was a mistake, which you just said to me, it was a mistake to youre an attorney general, youre saying its a mistake that the other deals went through, dont you have to have an all encompassing collusion for the industry rather than simply punishing these two businesses . Nobody is being nobody is wanting to punish anybody. I love my Hometown Airline and i choose them whenever i can, whenever i have to fly some place. But my job is to enforce the antitrust laws. The antitrust laws were passed because of classic economic theory. Were not pushing the edge of the envelope here. Four carriers dominating 87 of the market and many routes which is the applicable market only one or two carriers is not a good Free Enterprise system. Thats what you had when russia went off of communism, they deregulated prices, but they didnt foster competition so their prices went through the stratosphere. You can see in practicality that whenever you have a system where you dont have enough suppliers to have competition, the prices go up and the service goes down. Thats not good for the capitalist system. The capitalist systems relies but the capitalist systems was also weeding these airplanes out. Mr. Attorney general, we have to leave it there. An important issue we will continue to follow. Thank you for joining us with your input. Tom horne, attorney general for arizona, one of the states suing to block the American Airlines merger. Thank you. Its good to be with you. A scary scene in egypt. Dozens of People Killed after slashes between the army and supporters of the ousted president Mohamed Morsi. Well bring you the latest on the ground in cairo in just a few minutes. Before Global Opportunities were part of their investment strategy. Before they funded scholarships to the schools that gave them scholarships. Before they planned for their parents future needs and their sons future. They chose a partner to help manage their wealth, one whose insights, solutions and approach have been relied on for over 200 years. Thats the value of trusted connections. Thats u. S. Trust. Weve been bringing people together. Today, wed like people to come together on something that concerns all of us. Obesity. And as the nations leading beverage company, we can play an important role. That includes continually providing more options. Giving people easy ways to help make informed choices. And offering portion controlled versions of our most popular drinks. It also means working with our industry to voluntarily change whats offered in schools. But beating obesity will take continued action by all of us, based on one simple common sense fact. All calories count. And if you eat and drink more calories than you burn off, youll gain weight. That goes for cocacola, and Everything Else with calories. Finding a solution will take all of us. But at cocacola, we know when people come together, good things happen. To learn more, visit coke. Com comingtogether welcome back to squawk on the street and welcome back fabian from muni market advisers. Thanks for taking the time today, matt. No problem. I guess where id like to start is Steve Liesman had an interesting report from the fed on credit, Consumer Credit, and default rates are falling. In your most recent pieces, youve also talked about falling default rates, but from the muni perspective. Tell us about that. For sure. I mean, we are seeing current the rate if youre counting up the number of bonds that are defaulting for the first time, meaning not continuing to default year after year, were at roughly half the rate of what we had yesterday and end of the year before. So, i mean, the effect of the recession, you know, that put a lot of pressure on these smaller and weaker credits is really beginning to abate. So were at probably the lowest yeartodate number of defaults that weve seen since we started surveying issuers. You know, now, lets switch gears. When we all look towards detroit or think of some of the chapter 9 bankruptcies in california and other spots around the nation, it certainly doesnt seem very easy to understand those default sliding. Lets separate out detroit. Is detroit teaching us anything . Is there a prognosis for detroit . Is there anything to be learned by muni investors based on the horrible detroit experience . Well, i mean, detroit, i think that what it shows is obvious situations are, you know, an obvious thing to avoid. Situations like detroit which has been coming for 50 years is really in the end an actual problem for the market. You know, it could have other effects. I think the governors plan with respect to detroit is to set some kind of precedent to induce other cities in the state to file. I dont think that thats actually going to happen. Filing for bankruptcy is probably one of the very worst things that can happen to a city. So its hard to see. Ive talked to a bunch of mayors. Its hard to see other cities and mayors wanting to follow detroit. Nobody wants to be detroit, but as an investor, it just makes you think a little more clearly about what exactly it is youre buying and the kind of situation you are getting yourself into. All right. Lets now jump into my own backyard. You know, the mayor, mr. Emmanuel, is going to have some issues. Many believe hes going to have a billion dollar deficit gap to close, but if you look at illinois in the macro sense, they have 100 billion underfunded pension, the governor has stopped paying legislators until they come up with a solution. Whats your prognosis for illinois paper in the muni land. Illinois i mean, the overall Pension Funding problem is an issue, but worse is their inability to really address it. And, you know, thats coming right up against a new system of accounting and also a more systematic approach towards pensions in the investment community. So, you know, you have a city like chicago which for a long time was given a pass because its a big, healthy city otherwise, but it had poor Pension Funding issues. That pass is no longer applicable. Youll see more cities like chicago and illinois lose their doublea ratings, sort of that pass and being judged more critically about their pensions. It should in theory put more pressure on policymakers to do something, and doing anything, nick at all will help the value of those bonds tremendously. Investors are just looking for some kind of willingness momentum. Well, thanks, matt. You put it in perspective. I guess now, you know, they just pay these guys to show up, but it seems as though no paycheck, maybe it will make a difference, maybe it wont. Thanks for taking the time. Kelly, back to you. Its an important theme. Rick santelli, thank you very much this morning. Now we turn to egypt where things are getting worse. Dozens of people have been killed this morning. This after Security Forces launched a raid to clear protest camps of supporters of ousted president Mohamed Morsi. Were joined live from sigh r cairo with the latest. What many feared would happen did eventually materialize after several attempts to resolve the political deadlock between supporters of ousted president Mohamed Morsi and the interim government. Now the Security Forces making the move even though it seemed they were reluctant to the very last minute in the early hours of this morning. Now, there were two squares that they were hoping to clear. One of them two miles out from here in that direction has been cleared successfully and is in control of the military and the police. The other square is more complicated. Its larger. There are more people there. And the clashes are still under way. Here is the takeaway. Other clashes are also under way in different parts of the city and not just in the city, across the community in alexandria, in suez. It has forced the government to announce a state of emergency that will last for a month and a curfew that starts at 7 00 p. M. Local time and ends at 6 00 a. M. In the morning. Its a dramatic set of developments and has serious ramifications. On military assistance, we understand just a few comments were made in that regard a few minutes ago, and also perhaps on an economic front. Thats interesting because we had this whole story about the exchange, the Stock Exchange closing two years ago. That could probably be another real possibility because now we understand that the central bank has ordered the commercial banks not to open tomorrow for security reasons, and as a result, the Stock Exchange cannot operate tomorrow. So they will remain shut on thursday. Also interesting to note, over the last seven or eight trading sessions, weve seen a rally but now we have to wait until the exchange opens to really see how investors feel about the latest escalation in violence. Kelly . Yousef, thanks very much for that. The death toll may be upwards ever 95. As apple moves towards 500 a share, weve got someone on next who says cisco is actually the best indicator for Technology Moving forward. Of course, cisco reports tonight. Hell explain why. Thats next. And experience the connectivity of the available lexus enform, including the es and rx. 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Let me show you the results of the latest bank of america Merrill Lynch fund manager survey. They are 17 overweight for the eurozone. This is the highest theyve been in 5 1 2 years. 20 , a net 20 say they will further overweight during the course of the next year. That compares to a 30 overweight on the United States. So whatever you do with your money, i can tell you that the big money is increasingly going into europe. Have a look at the gdp data for the Second Quarter at an annualized basis and you will see, hard to believe, but its writ large, germany and france grew faster in the Second Quarter at an annualized rate than did the United States. Oh, yes. Fresh data today. In the meantime, you will see the eurozone overall grew 1. 1 . Obviously implicit in the two cylinders firing so strongly is other parts of the eurozone is not doing so well. In the meantime, you see treasuries or the bunds coming back up. You see the rise in the yields the same as in the United States. So moves on all the major markets. For the regard mark carney, the canadian who is running the bank of england was unable at the last meeting to get a full sweep unanimity on forward guidance. There was one detractor, one defector, which people didnt think would happen. Mark carney not quite doing as well unifying the bank of england as we thought. Meantime, lets check on energies and commodities with Bertha Coombs. Thanks very much. We are watching oil here continuing to trade a little bit lower, notwithstanding what was a surprisingly strong inventory draw as far as crude. We saw a drawdown of 2. 8 Million Barrels well ahead of what analysts were looking for. Of that 1. 4 million came from cushing, oklahoma, the nymex hub. We continue to see oil moving through there and that bottle neck really no longer an issue. Meantime, gasoline was the big surprise. We saw drawdown of 1. 7 Million Barrels. That was the direct inverse of what we had seen yesterday afternoon from the American Petroleum institute. Gasoline was rallying here. Interestingly, despite all of this geo political rirvsk were seeing, it used to be when we saw that kind of trouble in egypt, wed see a rally. Were not seeing it here. Nat gas is one of the big players here. Thanks very much. Lets turn our attention to the floor. Bob pisani joining us with a look at whats moving. Why did we take that leg down. Every day for the last eight trading sessions since august 1st, europe we go down going into the european close, and we sort of come off of the lows after europe. Theres a Conspiracy Theory going on, not a Conspiracy Theory, but take a look. Its happening again today. The theory is money is coming out of the United States, going into europe, and thats been this has been a regular chart pattern for a number of days now, since about august 1st. I want to talk home building. Taylor morrison just recently came public. Highend home builder. New orders were well below expectations. Its bringing down some of the home builders. They had a very interesting comment on the Conference Call. They came out and said the higher mortgage rates, its not affecting us. I think the reason is if that is true, theyre very high end. 381,000 their average priced home. Horton, the entry level, 252,000. Folks, leave me, the slower orders, some people think that it is, in fact, some concern there. Lets move on, talk about some other things that are going on. The macys Conference Call, 10 30, should probably be ending now as parts of it i was listening in on. Bottom line is the company came out and tried to soothe nerves a little bit. Its off the lows since the Conference Call started but they did reiterate there was weakness throughout the whole quarter. Didnt just happen the last few weeks, but they are and they made a big point of this saying the last two weeks have been good on the backtoschool season. Thats been moving the stocks to the upside. Take a look at some of the other material names here. Again, for the fifth, sixth day, coal stocks are moving up. This is the china play. Steel stocks, slx, also moving up again. This has been a pattern now, up about 10 in the last six or seven trading sessions, and emerging markets, again, money slowly keeps coming into the stocks. Theres the eem, sixth day in a row on the upside and even gold stocks moving to the upside as well. Fourth or fifth day. Theres little sectors of the market that are catching a bid even if there are beaten up sectors. Thank you very much for that. Bob pisani. Its a big day for this show. Dominick has joined the team. Hes back at the markets deck. Thanks so much. Americas biggest Money Managers are reporting their holdings. One of the latest from leon coopermans omega adviser. Hes taken new tech stakes in apple and oracle. On the flip side, hes cutting holdings in google, merck, and aig. , the insurance giant. Hes completely out, sold all of his stake in the spyder gold e 236789 f and hes completely out of all of his Facebook Holdings as well. Great to have you on board. Carl icahn is mad about a huge i beg your pardon. Lets go back on that. Carl icahn made a huge bet on apple yesterday, but when it comes to the best gauge of the tech sector, cisco might be your better play. Well explain in a moment. My mantra . Trust your instincts to make the call. To treat my low testosterone, my doctor and i went with axiron, the only underarm low t treatment. Axiron can restore t levels to normal in about 2 weeks in most men. Axiron is not for use in women or anyone younger than 18 or men with prostate or breast cancer. Women, especially those who are or who may become pregnant and children should avoid contact where axiron is applied as unexpected signs of puberty in children or changes in body hair or increased acne in women may occur. Report these symptoms to your doctor. Tell your doctor about all medical conditions and medications. Serious side effects could include increased risk of prostate cancer; worsening prostate symptoms; decreased sperm count; ankle, feet or body swelling; enlarged or painful breasts; problems breathing while sleeping; and blood clots in the legs. Common side effects include skin redness or irritation where applied, increased red blood cell count, headache, diarrhea, vomiting, and increase in psa. Ask your doctor about the only underarm low t treatment, axiron. No doubt about it, cisco is going to be big news today reporting after the bell and its one tech stock we should be keeping a closer eye on according to our next guest. David seeberg is head of sales at cowan. You think this is the bellwether for technology that people should be eyeing now. Well, i think currently thats exactly what it is. I mean, just to give you a quick backdrop of whats been happening in tech, really since earnings, we saw 78 of Tech Companies have reported report upside surprise. So it makes the tech sector essentially the number one upside surprise as far as the earnings in the s p 500. You know, whats been the response from the street . Weve seen, you know, earnings revisions for 13 and 14 and, you know, i got to tell you, just seeing that move in that direction is a very, very positive sign. So i think, you know, earnings revisions trending up, that coupled with relatively low valuations, i think were just getting going here, and i think cisco tomorrow could really help point the direction of this tech tape. I think its hard to paint with a broad brush because there are disrupters within the sector that are, frankly, elbowing some of the stalwart names. If you look at an intel and ibm and the way theyve behaved, what do you recommend for people here . Should they get involved in the sector broadly . Should they look for the beaten down value plays or should they jump on board with the outperformers . Look, i can tell you this, i think that in general, i think tomorrows Earnings Announcement is so important mainly because of whats going to be said in the Conference Call. I think given the fact that cisco is such a global, you know, company, chambers is going to get on that call and take comments about global tech demand. If those comments are positive, i think the entire sector we could see a nice move up. What i will say about lets talk about the networking sector in general. Weve seen a lot of institutions really interested in owning that sector. A lot of money on the sidelines keeping a close eye on it waiting for cisco. The vanilla guys or on the sidelines waiting for the quarter. If its a good quarter, it will force people into the stock. Were going to be talking about business or Government Spending when it comes to cisco as opposed to Consumer Spending on hand sets or whatever, where the margins are obviously under huge pressure and we see that in general day by day. Just to the Central Point that youre making though, which of the other stocks that you think will move on cisco and that perhaps now people should position for . Well, i mean, not to get stock specific, i would tell new sector specifically, its the networking names id be looking at. Our analyst Paul Silverstein previewed cisco. He made a comment saying that the conversations that hed had, they have expressed a level of confidence that he hasnt seen in years. I think thats a pretty interesting comment to make and i think its a pretty telling comment of whats happening. So tomorrow again were going to get the numbers. Well get commentary, and were going to see sort of what direction this tech tape goes and hope it will be a very bullish commentary. One thing to add, i think you guys and investors should have their eye on really the rotation and whats going to happen in health care. You know, weve seen a lot of generalists play in health care, biotech specifically. And thats pushed biotech to astronomical levels. What weve since facebook is a lot of people start to take money off and get back into technology. Well debate it when we come back. Right now, 7 years of music is being streamed. A quarter million tweeters are tweeting. And 900 Million Dollars are changing hands online. Thats why hp built a new kind of server. One thats 80 smaller. Uses 89 less energy. And costs 77 less. Its called hp moonshot. And its giving the internet the room it needs to grow. This is gonna be big. Hp moonshot. Its time to build a better enterprise. Together. The most Free Research reports, customizable charts, powerful screening tools, and guaranteed 1second trades. And at the center of it all is a surprisingly low price just 7. 95. In fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and etrade. Im monica santiago of fidelity investments, and low fees and commissions are another reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Welcome back to the program. We welcome scott back to set with breaking news. Much is being made of carl icahns new position on apple, but from the filings weve learned that Lee Cooperman has taken a new position. Hes back in apple. I just got off the phone with him. He told me the following. He agrees with carl icahn that apple is cheap, said they have a new modest position, got back in in the low 400s. Lee cooperman thinking that the new iphone is going to create some buzz. When talking about the entire space, he says he still thinks that qualcomm is the best play in that overall space, but clearly making it known that he agrees with carl icahn that apple is cheap in his words. They got back in in the low 400s and thinks the new iphone is going to create some buzz, and, you know, apple was right on the cusp of 500. Well see what happens. Everybody wants to be seen as the cheerleader for apple to take credit for it moving over 500. Lee cooperman had been in, then hed been out. Now he says what he says is another new position so hes back in. All remember, this was the most owned share going back to 2012 among hedge funds, apple was. They piled in, they piled out. Now you have cooperman, you have people getting back into this name, and, again, to the extent that signals they see the bottom and think they can ride it for another 10 upside, thats what people will focus on. Plenty more to come on halftime. Well talk about this and much more. Want to draw your attention to breaking news out of egypt. The Vice President has stepped down. He was an important voice calling for moderation. Again, wire reports suggesting that he has stepped down. This coming as nbc news has confirmed 145 deathins and up t 1,400 injured. Coming up on the program, Tim Armstrong at aol apologizes after the very public firing. Well have more next. Res one th in this life. You cant escape your demons. I thought i hung my tire chains up for good. But i cant shake this bad feeling. That i havent seen the last of my old friend. Quattrooooooooooooooooooo [ heartbeat ] 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. A talking car. But ill tell you what impresses me. A talking train. This ge locomotive can tell you exactly where it is, what its carrying, while using less fuel. Delivering whatever the world needs, when it needs it. After all, whats the point of talking if you dont have something important to say . But when it comes to investing, i just think its better to work with someone. Someone you feel you can really partner with. Unfortunately, ive found that some Brokerage Firms dont always encourage that kind of relationship. Thats why i stopped working at the old brokerage, and started working for charles schwab. Avo what kind of Financial Consultant are you looking for . Talk to us today. Welcome back. Aols ceo apologizing after he publicly fired an employee. The whole thing was caught on tape. If you missed it earlier, here is what happened. If you think whats going on right now is a joke and you want to joke around about it, you should pick your stuff up and leave today and the reason is, and im going to be very specific about this, is patch from an experience put that camera down right now. Abel, youre fired. Out. Pretty abrupt. The question now is whether ao ls Ceo Tim Armstrong should have apologized because after that took place, he sent out an email to the company saying he was sorry for the way it was handled. Lets ask edward freeman, a business professor. Thank you for joining us. Good morning. So what do you think was first of all, did Tim Armstrong make a mistake and was the mistake firing the employee or apologizing for it . Well, i think i would say if theres a mistake, its the way it was done, abruptly and in public. Theres never a reason for humiliating someone. Now, i say this not knowing a lot of details about what came before. So i think when he apologized, you know, he realized that he had done this in a way that would not be good for the company or the employee. And certainly this has gotten a disproportionate amount of attention, the fact it was picked up by the media, the fact were all talking about it, and he appears to have been pretty cold about it. But i guess i cant help but wonder, Tim Armstrong reacting, maybe there was a history with this particular employee or something, if it wouldnt have been better for him to just stand by the decision as opposed to going back on it. Well, the problem when you do something what ceos do is often symbolic, and sometimes you do things and you dont realize the symbolic nature of what youre doing, and, you know, Tim Armstrong is responsible for the whole culture at aol, and he has to understand what the impact, and i think he did, what the impact of this very public act would be on the culture, and in particular on the trust of other employees. Or alternatively this is a man that seeks public profile, that seeks reputation, and he didnt actually realize that his discussion with the staff was being recorded and that it would then be subsequently played out by news outlets. I suspect that also factors into his decision, and perhaps changes weve seen how policing has been changed by the way in which people have camera phones and record every movement of the police and then they dont engage in certain situations. I wonder if ceos will change their behavior as well. Well, i think thats a really good point. The world is public now. You live your life, especially as a ceo, pretty much in public. Theres really nowhere to hide, and we dont know what the impact of that really is on things like corporate culture. Okay. Edward, interesting, fascinating discussion. Thank you for joining us on cnbc. Its good to see you again. The discussion continues, of course, about aols ceo. Thank you very much. Final thoughts. Were basically going to watch shares of apple. Can they crack the 500 mark. You know thats the focus on halftime. You know halftime will be talking about apple as Lee Cooperman joins the fray of hedge funds getting in. Arguably, this is the time of year to get into apple. This is when the products come out in advance of the holiday season. I dont know. Its a great debate to be having. Thanks for joining us. Thats all for us at squawk on the street. Now well hand it over to scott and halftime. Thanks so much. Welcome to the halftime show. Four hours until the close. Right here is where we stand on this wednesday on the street. Dow is down some 80 points. Theres the s p and the nasdaq in negative territory as well. Here is what were following on the half. Summer swoon. What should you be doing . The traders have your best plays. Pandoras pop. The streaming radio stock up more than 120 already this year, but can that momentum keep going . Well debate the stocks next move. First, our top story, techs comeback. The sector may be lagging, but dont tell that to facebook and