contract with america and from that point forward i think we've gained a lot of ground in our economy in this country. a good, strong economy based on the balance that occurred by the republicans and democrats working together. >> you mean gridlock in washington is what you like to see? >> not necessarily. the president an the speaker came together on a lot of issues and each would take credit for it, which is fine. the president takes credit for welfare reform, whatever, the speaker would do the same thing, but they worked together and i think in a constructionive way. my wife and i were in the white house in february 1995 for dinner and were leaving the white house, the first time i'd been there for dinner, impressed. went up to the president and tell him good night. don't you think we're doing better since november of 1994? what had happened, he'd come more back to the middle of the road. i think more of mainstream america.a. that's what we need and hopefully that will happen, at least beginning in 2010. >> you're saying republicans, if they don't win back -- actually would have to win back some

control of congress, and talk some sense into the president? that's the kind of scenario o you're laying? >> we have to have a better debate than we're having now. and karl will take that. more seats in the house. >> the blue dogs on -- >> yes. >> around it, and they're like -- you're like, you're like a sam nunn or something. like a southern democrats? >> more conservative and more mainstream. that's right. and a factor that -- >> either way, 2010, do you feel they're -- >> exactly. exactly. >> it's not all lost, carl. >> i know you're coming around, i can talk to you as a -- >> a fellow gop. >> okay. >> i didn't say that. >> fellow middle of the roeder. >> there you go. please come back soon. >> thank you. great to be here. join us tomorrow. "squawk on the street" coming up next. the consumer price index jumped 0.07 trs% in june due to gasoline prices.

core rate up 0.2%. and jumping to nearly neutral for july. anticipating the index measures manufacturing conditions in new york state. and financing mortgage applications rose 4.3%. and the cnbc "news now" for you. live from the financial capital of the world, this is "squawk on the street." good morning, everybody. i'm mark haines. stocks gearing up to follow the global markets higher as intel's results fuel hopes. here we go again for an economic recovery. >> one could be forgiven for getting a little nauseous every day. you know, it's all the world pulling apart. oh! economic recovery. >> make up your mind. >> consumer inflation numbers were closely watched this morning. they rose at the fastest pace in

11 months thanks to gasoline price which is abated a bit. take that out and we don't really fear have an inflation problem, but equally as important you do not appear to have a deflation problem. >> all right. so anyway, we will make some money here today. the futures up, call it 12. needed a point to give it fair value, looking at maybe 70, 80 points on the dao at the open. >> let's get stray to the market reporters find out the names to watch. especially those trading to the up side given the traders side. bob pisani, good morning. >> hello. all about intel today. we'll get the details from bertha. intel news, futures up 11 points. interesting news out of china, the shanghai index at a 52-week high. the dollar is weaker here. in fact, approaching its june lows on the dollar index so commodities are higher as well here. capital one. just got their june credit card data.

looks like charge off worse than -- debts they'll probably never collect. wasn't as bad as some thought. stock is trading up about 4% here pre-open. and a bit of a mystery. thing they'd do better. kfc, pizza hut, they actually reduced full year forecast due to weakness in china and the united states. talk about that more later on. and the lab down 2%, ahead of earnings, abbott labs, internal numbers.s. merrill lynch make as bullish call on ford saying they're gaining market share, they upgrade the stock. bertha, how are we looking at the nasdaq? >> a grand slam. beat on the bottom line if you take out the european, 10 cents ahead. 18 cents, beat on refb nhus offering an upbeat revenue and seeing a rebound in the pc area. intel up about 7.5%.

tips strong. good news from al tieria, an upgrade. and not sure it's a recovery, asml pcht not the len, altera trading. and may be looking at the end of textbook as we know them saying we could give every kid a candle and that way teachers will bring them textbooks much more easily. amazon up 1.5% and j.d. hutt a loser, the trucker is not seeing it. downgrade after its results missed and raymond james. and coppers at a one-month high. commodities rallying. >> on the move. thank you very much. it's not too difficult to figure. stronger equity, weaker dollar and on the move. booties fundamentals, oil for starters, back above $60 a barrel and really commodities up

a cross the board. we're bullish here even though the penchants in nigeria agreed to a cease-fire. ea l ia inventory numbers up, due from yesterday are slightly on the bullish side to draw down crude. definitely more than expected. want to talk quickly about gold ript now. another big story up about, i don't know, about $16 now. on the mark towards 940 now. also want to talk about silver and copper. bertha mentioned both on the move. 3% and 4% respectively. commodity sector, erin is pretty hot on the bullish side right now. >> thank you very much. and today's report on consumer prices, up about 0.7 of 1%. numbers for june, biggest jump in 11 months. volatile energy and food prices out, the core inflation. relatively changed. 0.2 of 1%.

didn't see drop or flat line to indicate a crippling deflation scenario. not expected to be a problem anytime soon. especially given the commodity prices. hold back at least a bit from earlier this year. meantime, an important headline a lot of economists pulled off the gaze of new york state manufacturing called the empire index. posted its highest reading in more than a year as orders surged, market indicators as we look at that all-important thing, inventory. which had been depleted. when will they be rebuilt and will that continue to grow? so far nothing. indicator may be a tinge of something. >> check out asia. gains across the board. big one, too. well, maybe not in japan. they were up slightly. but hong kong and south korea both rising more than 2%. the shanghai composite, 1.4. india bombay, 4. %.

gains in europe? >> we are up, the third day in a row, mark. yes, a story to tell from europe, too. we are seeing bigger gains pretty much across the board. hearing what's happening in commodities. that certainly is driving many of the minors in london, helping the british market up by 1.8%. we've got back in france, paris back in place up by 1.9%. let me show you the stocks 600 chart. you can see since the start of the week, correcting higher. traded down maybe too much going into the early season for the second quarter. the technology story we've also heard about. big impact in europe. tomorrow we'll heal from nokia, the handset giant. today up by 4.7%, on the back of intel, also on expectation q2 delivering better margin that q 1, helping people out. on that story. the other one i want to bring you, stock up by 9.4%, alcatel

lucent. and bank of america, merrill lynch raised stock on its grading system and benefitting from that. it really is, it's commodities and it's the intel affect really driving europe right now. erin, back to you. >> thank you very much, guy johnson. quarterly results from intel, big factor. joe and becky? what's the right word? i mean, is it manning? womaning? >> i know. i can say -- personing. >> recovering. >> yeah. earnings central. >> we are. we had a guy on earlier, erin, fred dixon, talking a genius, like fundamental stock guy. talking about the haines bottom. >> think mark's going to be proven right. >> the mark haines -- this is actually, you talked about it so much, it's become part of the jargon. >> a lexicon. >> a lexicon. >> yeah. >> unbelievable. >> he's a guy we booked, because

he's like, our passport. our market expert and comes on talking about the haines bottom. you've been part of the story.y. we're not supposed to do that and i would never do that, mark, being wa pure journalist. anyway, you're right. intel is the talk of the town today. shares soaring, as the chipmaker posted much better than expected second quarter profits. although it was a loss when you factor in the eu shakedown, what i called it earlier. i don't know if i'm allowed to do it after 9:00. but when you factor in the eu shakedown of the $1.4 billion, the company lost money, first time since 1985. >> strip out, forget about the -- >> what was better, but why does our company have to -- why does a u.s. company have to pay the e eu -- >> they do business with -- >> don't make me argue the other side. i agree with you. >> 18 cents a share. and 10 cents ahead of expectations. revenue fell 15% from last year

but a big sequential gain. >> since 19. >> $8 billion as well above expectations. indell cfo stacy smith spoke with our jim goldman last night. >> our second quarter results and the outlook we've set for q 3 are reinforced the view when he a quarter ago, that we saw the markets, computer markets bottoming in the first quarter.. we saw improvement in the second quarter and expect to see it in the second half. >> intel getting as some arrivals, some just in the same business, sort of. a boost, too, like the shares of amd. and technology, altera, one of them amp the bell xilinx. >> and this is a strong tech

sector which really i think gave a lot of strength to the overall market. you have to say intel is probably the key story today. >> because we have positive news today through the course of the morning, but futures were higher from the minute we came in. a lot of it because of what happened with intel. not just a tech sector on the move this morning. we have other notable movers as well. shares of abbott labs are under a little bit of pressure this morning. coming despite the fact that the company actually posted earnings in line with expectations. revenue was just slightly short of expectations, but most of the major drugs came in with numbers that were right in line. hue mara, the big drug there. conference call going on now. mike huckman is listening in and will bring updates or news that comes out of that conference. >> you know the state of newspapers. on the deathbed, supposedly. for the most part they are on a deathbed. big on a percentage basis. largest u.s. newspaper publisher did much better than expectations. it wasn't really print that helped them.

it was some of their other -- >> broadcasting did a little better than expected plus a lot of the dotcom stuff. career builders. >> job stuff. >> career builder.com is there, some of those products and a lot of newspapers are trying to figure out, they have very powerful dotcom entities, but how do you make money off that? >> i said, okay, it's up a to date, $4. a ten-year chart. that's 90 to $3 or $4 today. over a period really of about five years, and you know, that's not all the -- >> talk about a big gain today but, again a stock that's $3.50, maybe $4 today.. >> and amr guys out with numbers minutes ago. the company posting a loss of $1.14 a share. better than the $1.28 loss analysts expected, still talking about a pretty big loss. revenue came in right in line with expectations but the airlines facing a lot of different problems from business people not traveling to consumers feeling pinch and higher oil prices we were dealing with much of the

quarter. >> ron allen on, former delta ceo and he says great things about -- the only one hasn't been in bankruptcy. >> only one. yes. >> and to do well, when you haven't been in bankruptcy, makes it that much harder. this guy we're talking back to, mark you know, like a suit sayer at this point. >> i said before, joe, i guess -- moments of clarity maybe once a decade. you know? so -- >> mark, don't be all -- >> 2018 when i had my ninth idea. >> you come out and say that's right. a little chest pumping. ape scratching. do it. okay. up next -- >> up next, the coo of staples bringing the nasdaq to kick off the back-to-school shopping season. oh, please! back to school already? give me a break. before he does that he'll talk

business with us and another interview you'll see first on cnbc. >> plus, stock futures jumping. intel spurring optimism. speaking to one analyst who says intel's upside surprise is setting the stage for more tech rallies. we'll have about, ideas of trade coming up in a couple minutes. we'll be right back. companies on the planetnfll

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futures trade, wow, mark. there you go. >> yeah, looking good. >> looking pretty good. intel part of the reason of a lack of any sort of price movement in the economy, it's another poort of the reason and by the way look what's below discover financial. net charge off 8.75% in june. looking at the headline same as view es, 8.91% in may, implying a slight improvement. significant. not only in the credit card business, but discover generally in the lower end credit card business. quote/unquote subprime factor. maybe that is something to take away from. nonetheless, fair value, there you go, indicating we are going to have a higher open. its is middle of the summer.r. mark was angry of the fact back to school shopping is on the agenda. christmas they start selling spring clothes. makes you happy.. early summer, selling fall and it makes you depressed.

staples the third largest office products company there up a 35%. look at the stocks. and ringing the opening bell at the nasdaq, mike miles, the coo and president of staples. sitting down with us, mike, appreciate you taking the time. >> good morning. >> it is back-to-school season i guess. quote/unquo quote/unquote, officially, right? >> yeah. my own sons are as upset of at mark i'm here talking about it today. there are a lot of kids who go back to school in the next couple of weeks and a lot of families who like to do their back-to-school shopping early, just like they do at the holiday season and get done before thanksgiving. >> so what are they buying?? you think staples, you're thinking all sorts of supplies and notebooks and folders.s. that sort of thing. are you also selling computers and other items? >> absolutely. technology is a much bigger deal today than it was at least when i went back to school, and the notebooks can mean that notebook that has paper in it or it can mean a notebook commuter as easily. but i think when you think about the back-to-school season and

what people are looking for, erin, is value. and you think about the economy. staples is lowering prices this week on 250 of our core office supplies, and school supplies, and we also have a bunch of weekly specials out. because it's really all about value this season. >> how important is back-to-school to you? >> it's very important, a season, especially for retail business. >> right. >> and -- >> i mean, rank it in terms of other parts of the year. >> for other retailers, the holidays. for us, it's back-to-school. >> so it is that big? >> sure. staples is -- and we're the expert on school supplies, and that's really the reason that we feel like we can declare, this is the week for back-to-school. >> other guys don't know jack. do they? >> well, the other guys tend to come in and out of it. they have their back-to-school set up for a couple weeks in august. then by the first of september they're getting into the halloween -- >> bunch of wimps.

>> got to stay ahead through labor day. >> are people, though, buying lower end computers? or notebooks? what are you seeing in terms of what we heard everywhere else? a trade down. >> the prices on computers over time, fall, fall, fall and you're seeing people, particularly for back-to-school purchases, into the lower priced laptop. >> more so than ever before, though? what can we take away from what you're seeing in your most important season for what consumers are doing right now in this economy? >> i think whether it's in computers or in, you know, notebooks or filler paper, there's no question that people are looking for value, and that's the reason that we've been so aggressive about lowering prices this year. >> what has changed, positively or negatively, in the last year that you were surprised by? >> well, i think certainly we were all surprised by the severity of the downturn in the fourth quarter of 2008, but i

think we're also pleasantly surprised by the momentum that we're seeing coming out of that as the year has gone on. certainly in our retail business. >> all right. mike miles, thank you very much, sir. >> my pleasure. what -- >> what? >> up next, capital one credit. >> we'll explain when we come back. >> we will? okay? >> well, about that. >> david's got more on the favor report of the do faults and delinquencies in the credit card world we talk about. later, psychology should play a bigger part in your investment decisions. this is "squawk on the street" on cnbc. first in business. worldwide. taking its rightful place

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you heard erin mention when headlines hit. discover, we're getting the master trust of new credit card trusts reporting each month in terms of delinquencies and charge offs. not something many focus on. in this environment, the fiscal health of the consumer is so vital to any prospect of a recovery we do keep a close eye on these. why i've been reporting on it so much. start with capital one, which we heard from -- whoa. >> that was cool.. wasn't it? >> want to keep doing that? make people sick at home. necessary chargeoffs, $527.8

million, one of the largest in the country, of course. and annualized net, 9.3 versus 9.41 last month. and delinquency continues to decline. that's latched on to as a good sign. we'll see if that trend continues. it's actually been the case through the spring, and now into june as well. 30-day delinquencies you see there at a rate of 4.77 brs percent. as for auto finance, you want to look there, the numbers are much smaller. we'll move through them more quickly. chargeoff rate, 30 day delinquency, also, actually, not declining there. finally, internationally, again, much smaller number for cap one, but just to give you some sense of annualized net charge-off, similar ballpark as to in the u.s. 30-day delinquencies however continue, let's call it flat.

6.6 versus the same last month. discover, running headlines on. necessary charge-off, 8.75%. capital one's stock price, of course, versus 8.9. so, again, the rate is better than it was in may. not as good as it was in april. gross charge-off, 9.63%.%. total delinquencies, if we can move to that, 5.27. you can get all the sense you need in terms of what's going on in the credit card industry. things are perhaps improving at the margin but, of course, at highs we have not seen since they started keeping track of these kinds of things. had we looked at the first quarter numbers recently and currently as the second quarter ends with, with the month of june. we'll keep an eye on it. something else we're really keeping an eye on this morning. nothing new to report at this point. if you haven't read newspapers, cit continues to be in

discussion with frod regulators trying to figure 0 way to ultimately create funding that will ensure its continued existence, if you will. the stock's not going to do much today. stocks involve transfers a good amount of assets from the parent to its bank. so then the bank can go to the discount window, relieve the parent of funding needs. we'll see where that ends up. we'll be keeping an eye on that story. if i have developments, of course, we'll bring them to you. mark, back to you. >> thank you, david faber. final countdown of the opening bell, an up opening on the other side of the break. don't go away.

[bell ringing] the way the stock market's been acting lately you may wonder if you've been doing the right thing.

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ties and stars, and we thought he would be ringsing the opening bell. >> but, no. >> but, no. it's the closing bell. and i'm stuck with this -- yellow tie. anyway -- there's the big board. >> oh, well. all right. >> and the management of celebrating transfer. that's it's nasdaq. staples, and as we mentioned kicking off the back-to-school shopping season. >> all right. we are open, not fully up 50 foinlts. a higher open. see where we are headed. our reporters, bob, you first. >> the important thing here is general list across the board, yes, of course, intel, stocks like paradigm and sp micro on the upsite.. also other things are happening. china shanghai, a 52-week high, dollar lower. commodity stocks and commodity stocks trade over here moving to the up side. that's really your list.

several prongs actually moving. not just tech stocks. capital one, david was just talking about capital one. june credit card chargeoffs, not as bad as some thought. delinquencies actually were not as bad as people thought and not as bad as the prior month. numbers from discover go towards charge-off status was actually not as bad as the prior month. so a little bit of good news here in the credit card area. capital one trading up 5% just prior to the open. young brands a bit of a disappointment. came out reducing full year sales numbers because of weakness in china and the u.s. who would have thoughts pizza hut, kfc, famous brand you thought would have done better in this environment. ford, and merrill lynch, interesting comments, raised earnings estimated, did not actually improve ratings but raised earnings estimates on the idea ford was gaining market share. may have 18% of the market within a short period of time.

about 17% right now. trader talk.cnbc.com and bertha we're up here today thanks largely to intel. >> a rally roughly powered by intel. feet on the second quarter, good for the third quarter and projecting a rebound and recovery starting in the second half. intel off of its highs. pre-market highs, in this after-hour type, a dollar up on the day carrying over to hardware. dell is up nearly 1% after the fall yesterday. apple up nearly two and we've got the other chipmakers as well reporting some bullish outlooks and bullish results, altera and as mount particularly yesterday. the chip equipment makers rallying today once again. up about 10%. the transport continue to be under a lot of pressure. j.b. hunt missed on its second quarter, also downgrade this morning. hartland express sees pressures as well, pricing pressures telling me there's still problem there's in the economy yrc is

not up here, but yrc is moving to the outside bucking the trend in transports, having done a deal with its union workers and finish line is up about 7.5%.. the retailer earning its upgrade this morning.. move over to the nynex and brian chapman. >> thank you. efrgs to the up side. net gas the weakest of all performers in the sector but basically profit taking from yesterday's big run-up. when it comes to oil, saying equities of a factor but the dollar is the key today, and we are strongly to the upside at this moment. headed, really, heading back to 61 if we can get there. but 60, 66, brent tracking to the upside. all this could change at 10:30 a.m. eastern time when we get the eai inventory data. the estimates we have, tradition energy says a drawdown of 1.8 million barrels of crude but a

billion in gasoline and distillates, bullish, a big irdrive down than expected in crude. a quick look at metals if we can. strongly to the upside as well. god more than $15 to the upside marches towards $9.40. copper stronger. i will point out energy in the pit is very high today, erin, and it's the type of thing where we could have a big price wing, dollar or no dollar, when it comes to this out at 10:30. very important. we'll bring it to you live. >> thank you very much. we'll look forward to that, a countdown to it, brian. a growing belief uncontrollable inflation is inevitable. at least count the line. let's finds out if that's the case. two guests to weigh if in on different sides. and dominick of credit suisse and from evergreen in1re689 investments. the stock and the bonds side of this covered. dominick, if they say the expectation out there now is that right now inflation isn't a problem, but it will be. then people disagree on how quickly it will be a problem and how massive the problem will be.

is it fair to say that inflation as a real problem is inevitable? >> well, it's already safe to say that it's negligible. the government's spending in the end, large fiscal deficit will need to be controlled. if not controlled in some sense inflation will be a problem, but that's a long way down the road. right now we're facing a big slump, obviously, in the economy, which we're recovering from. the gap is very big. the next few years the concern to my mind, more about the short-term deflation. >> how do you get out of it, though? you focus on deflation until -- you can't do it until you already have an inflation problem. right? >> right. i mean, it's not a question of really getting out of it but making sure that it doesn't become a vicious cycle. because if you've got enough real growth in the system you can manage a low inflation even outright deflation. as long as real growth is above

the rate of deflation, normal growth will be positive. that matches the loss. when you've got a lot of debt in the system as we currently have and working our way through it. the question of recognizing that the potential dangers of this inflation comes deflation, dealing with it having appropriately -- then keeping an eye on the future and saying, yes, we do need to tighten up a fiscal deficit to make sure the long-term inflation is contained. >> what are the -- i mean, why should we have confidence that those long-term inflation risks will be controlled? >> well, for a start you should have obviously confidence in, that the fed is doing the right thing, and i think in the latest meeting and what they did -- >> why should we have that confidence? >> well, because you watch what they do. and -- >> what i mean by that question, i'm not trying to be inpertinent but they entered into an enormous -- why should we be

confident? >> lots of reasons, the most important thing, stay by the financial system. that has been stabilized. now the most important thing in terms of -- credibly exiting these various strategies without destabilizing the financial system and by -- >> i'm sorry. john lynch. >> hey, mark, what do you think of what you just heard? >> dominick makes good point about the fed trying to stabilize the system.m. an argument can be made whether or not they got us into this problem, that's for another show. what we have to keep in mind is that the fed tripled the size of its balance sheet. chairman bernanke, extraordinarily innovative trying to combat this crisis. viewers need to appreciate whether or not inflationary or not, i suspect, i believe inflation is never a monetary phenomenon, just not yet. the bets fed and treasury are making with falling home prices and a rising unemployment rate, they have time to, if you will, prohibit as up money as possible to take care of deflation first,

before the inflation threat surfaces. >> do agree we dominick deflation is a threat? >> short of term it may be. certainly when we got interest rates down to 2% in february, that's certainly the market telling us that. but we've passed that stage now, and if we're looking at cpi, down what, 1.5% year over year basis as of this morning? consumer basis down 1% by year-end '09. could see a 1% gain next year. a bear could say, a doubling of pricing a bull can say, well, 300 basis points below historical averages. what the markets will trade on, pe reflective of market interest rates and the low inflationary measures that will persist probably through 2010. >> what if you wanted to make the bet interest rates were going to go significantly higher, inflation going high jer smart people and may be very wrong but very smart people telling me they're betting we could see rates 12%, 17% like in

the early 80s. if you were in that camp, okay, and may not be, how would you position yourself? >> i don't think we'll go that aggressively high, certainly. certainly not within the next couple of years hopefully. making that bet, you all know, the classic inflation trades will be, you know, commodities. that's what we're seeing now. the reflation hedge against inflation, whether you're looking at commodities or materials, energy, to some extent industrials, because of emerging markets. prospects for improved growth. currencies as well. so i think you're going to see that reflationary trade and stocks, data shows throughout history the best way to stay ahead of pricing pressures. >> dominick and john, thank to both. appreciate you taking the time. >> my pleasure. >> thank you. all right. house democrats putting another bull's eye on the backs of the wealthiest americans. proposing a surptax on families

earning over a certain amount of money. this before the congress breaks in mid-august. and our chief correspondent john harwood with more on what the democrats plan would mean for you. john, we're really in to soak the rich mode. aren't we? >> mark, the house democratic plan set off this debate and moved it forward in a way we haven't seen before. a lot more concrete and you've got republicans out today saying that especially for small business, this plan would be economic disaster. >> this is nothing but a job-killing tax raising measure that will actually take away the quality of care we've become used to, and in a recessionary time that we're in will kill jobs. >> president obama who last night was at the all-star game throwing a fairly slow first pitch said we're only in the first inning of this debate, but as for the warnings from people like eric cantor and others, he said, don't believe it.

>> there's going to be a major debate over the next three weeks and don't be fooled by folks trying to scare you saying we can't change the health care system. we have no choice but to change the health care system, because right now it's broken for too many americans. >> so, erin, right now the democrats have decided that they're going to risk the class warfare argument in the interests of getting something through the house. i don't believe this house plan is likely to fly in the senate.. we've got a long way to go in this debate.. we're just getting warmed up. >> all right, thank you, john harwood. and a programming note. tomorrow on "squawk on the street," former treasury secretary henry paulson is going to be sitting down in front of congress. >> oh, that's right. >> i know you'll be listening to every word. he's going to be testifying.g. the house committee and oversight government reform about his role in the banks of america merrill lynch deal. >> he's been criticized for

allegedly exerting undue pressure on people. >> phone calls that have expletives telling people get you know what done or you know what will happen? leez going to get to say what he did and when he did it and everyone will be watching tomorrow. you'll see that here. up next, the analysts at fdr capital markets raising his price target on intel in the wake of that upside earnings surprise. steve will join us straight ahead. and later, affordable escapism. call it what you want. while the economy is suffering this business is booming, and shares of the company in the business up 170%, nearly triples since the haines bottom. the ceo of rick's cab ire joins us live. we'll be back. today there's a way to save more for retirement,

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i think it's a continuation of what we saw in the second quarter. partial inventory pipeline in the second quarter as well as some pockets of in demand strength. as we go into the second half of the year we expect a seasonal uptick, which you almost always see in the second half, and i should say that's off of a relatively weak first half, but we do expect the first half to be seasonally up. >> intel's chief financial officer stacy smith talking to jim goldman. intel setting the tone for this morning. that's sent through to a 125-point gain for the dow at this moment. our next guest says intel's results set the stage for the next leg of the chip rally. writing a price target on intel's 1850. you can see, 1793. not much of a move there. a market perform. so let's get to the bottom of it. tech analyst with capital markets. craig, saying set the stage for the next leg of the chip rally, but not looking for much more

upside from intel. can you explain? >> sure. intel's done a great job and stacy smith, the cfo noted, demand strength out of asia some out of the u.s., really from the consumer side,en venner to is out there and the channel is very low. for intel the stock is about 16 times earnings. where it's been the last few months. earnings estimates have moved up. as lie look across the semiconductor landscape i see better growth prospects and lower valuation and other more preferred stock like a broadcom, marvel, two bigger cap names, two smaller cap names, a fairchild semi or onset all report to give earning and results should be really good. >> so you're saying, i guess to put it down to the trade here, is that intel is already sort of priced in this but other chip companies have not and you think those stocks could go significantly higher? >> yeah. i think what we're seeing with the broadcom, you can pay the same 15, 16 times that intel

trades at but the company is a better structural grower. growth has been a little hard too come by for intel and while recovering nicely off the bottom, they're serving more mature markets with less growth opportunities versus a broad marvel, smaller companies with much better growth opportunities in a variety of end markets. so i'd rather by the growth for the same valuation. >> plus, doesn't intel face the problem -- you know, the prices the computer retailers, computer manufacturers can realize are coming down? >> absolutely, mark. >> that's a huge squeeze back to intel. >> absolutely, mark. in fact, hp in the most recently reported quarter saw about 50% price compression in their notebook pcs on a year over year basis. for intel one of the longer term concerns that keeps me on the sidelines, their adam processor, a much cheaper processor they're serving these low-end notebooks and netbooks with. everybody's excited about the

growth prospects. i'm actually concerned about the cannibalistic impact of selling let expense iran chips instead of the more expensive, profitable mainstream chips historically sold. you're hitting it right on the head of the nail, mark. >> the commoditization, if you will, is not abating and in fact is getting worse in their business? >> that's my opinion. in the near term business is reflating and a lean supply chain inventories are dentally keeping a solid bids to intel and the rest of the chipmakers. >> netbooks, we've talked about, a big push and cheaper foreconsumers smaller, et cetera. thoughts they'd be the next big thing opinion the problem is they don't work very well and are slow. i'm wondering, do you think people will keep buying them because they're cheaper or say these things don't work well. i'm going back to something like a dell? >> we'll see the performance improve over time. one company that's trying to do that is nvidia, selling chip

sets and processors, their pitch is we make any intel adam based pc good enough for 90% of the world. >> if i'm betting on netbooks in the future staying popular and getting faster i buy nvidia? >> they have exposure to that segment, certainly and will benefit from near-term strength in the pc supply chain as intel is. good derivative play. >> thanks for taking the time. mark, did you get a netbook? >> no. >> they're small and ge on wireless. you play a monthly subscription to wireless but you can take them anywhere. the problem, they're slow. so convenient. throw them in and out of your bag. if they can make those fast, speedy, then it's much more than a pda, but -- >> yeah. i didn't realize they were slow. because i was slow and -- >> still a little slow. >> becoming aware they were even out there. >> as michelle says, we're being slow getting to commercial.

slow! >> next, in favor of ford. >> and a programming note. testifying about the role of fetch funds in the financial meltdown and regulation.n. going to join us from congress this afternoon, but he'll be our guest on "street signs" before that, 2:00 eastern. we'll be right back.

hi, folks. realtime flash here. check out gannett, best stock in the s&p 500 having a best single day move since first quarter results in april. dave will tell us month are about that in a second.. take that intel. amd is riding more thanks to your good results. doesn't make sense but it's true. look at las vegas. report out there from bloomberg saying the company may be able to reduce commission. it's having a big day today. this is in mccow area and janice down six. the ceo leaving the company. interim takes over.

raise $300 million through stocks and convertibles and caterpillar gets an outperform even though saying earnings out next week will miss. go figure. david faber. what do you have? >> not going to follow-up on what you just mentioned about gannett. one of the largest, of course, newspaper companies in the country, and the world. 84 daily u.s. newspapers and not dead quite yet over at gannett although they still continue to take their lumps. 30 cents a share when you put up eps item, you get 46 cents. and it was above what people are expecting. revenues at 1.4 billion. net income what we're talking about, making $70 million in a quarter. hey, they made money. look at revenues year over year things continue to deteriorate. maybe not as quite the same rate that they had previously, but

listen, you know, your publishing revenues down 20%. advertising revenues, that's by the way combined. uk worse than the u.s. in terms of advertising revenue.e. that's what you get now. 32%. digital, consolidated career builder. that's why you're seeing a huge increase in digital revenues and broadcast also down sharply.. you see it there. down over 20%. obviously the company needs to reverse in some fashion those disturbing trends. one reason why the stock continues to trade right around $4 a share. nonetheless, the deterioration not as great as some anticipated. a look at the event. just puts it in perspective. doesn't it? classified advertising of course continues to suffer immensely. in terms of its revenues down about 45%. 38.5% here in the u.s. so you're thinking at this point you'll see the company has done a very good job of cutting costs

including unfortunately cutting a lot of jobs. that continues. one reason they've been able to post a better than anticipated perhaps earnings per share or earnings numbers overall. look at that, a look at the "new york times" which did some wqxr actually in the new york area. a famed classical radio station. a look at five years there. getting depressed? why not. mcclatchy. 44 cents. sorry. 45 cents. yeah. that's a five-year chart. and finally, news corps. it still has an awful lot of newspapers including one called the "wall street journal." here's a look at what news corps has didn't over the last five years. finally, before i end, back to yous mark and erin, a cpi number this morning. 33% of cpi, you know, made up of costs for shelter. can you explain this to me, though? that's the rate of change. so they're still saying that cpi

for shelter including rent and the cost of buying a home is up 1% or so year over year. how is that possible? what is that number missing? i don't get it. >> i -- >> we're's steve liesman? >> where are's liesman when you need him? rents down, home prices up. come on? >> well, you know what, i bet some sort of seasonal -- >> adjustment. >> throws it out of wack. >> the question would be, if you accounted for it accurately, david, would you really have a negative price situation? then have to move it? >> right. >> i don't see how it could possibly -- >> no way it could be. >> i agree, david. can't be. what's next? inside today's market action and our task force has named, you may want to buy, now, before we get any deeper into earnings season. don't miss the original

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capital of the world in the heart of lower manhattan, welcome to the second hour of "squawk on the street." i'm erin burnett.t. mark is trumping down to the no right now. the markets are higher, and we're right at the high of the session. intel part of the reason.. solid economic data, at least right in line with expect aces. another part ever reason we are up 143 -- women you can see ticking down. almost 2% for the dow, 2% for the nasdaq and 2% for the s&p 500. mark? >> all righty. now, the story last week was, oh, my god, there's no recovery, there's no recovery! the story this week is, hey, there's a rovy. hey, there's a recovery. >> you know, the bulls -- >> this place a bipolar. >> i know. but the bulls scenario is

simple. if we get any kind of revenue recovery at all, these companies, like intel, that have become cost-cutting champions, are going to see a notable improvement in their bottom line, because the distance they have to travel from the reserve noo and bottom line is smaller because they become efficient at cost cutting. that's the bulls scenario. you have to admit, there's truth to that. the question is are re clul buy going to get any robust recovery at all? that's the debate. any time you get noise from a company like intel thaets a little better.r. it was better than most expected. you greta nice move to the bottom line. interesting about today, mark, is it's not just the tech stocks. it's 7-1 advance in declining stocks and largely due to the industrial and cyclical stocks out there.e. if you look at your caterpillars, big industrial names, alcoas and usual suspects, they're all flying again today, and they're the ones that are actually leading the market forum. let's not take anything away from intel. talk about cost-cutting

champions? mentions gannett. here's a company that has been simply a disaster. we all know what's going on here. top line down 18% for them, but they cut costs so effect lively that the bottom line was better than anticipated. the cost-cutting champion. >> bottom line. >> cost-cutting can only go so far. that's when you cut yourself right out of business. thank you, bob pisani. let's get to the nasdaq. bertha, the aforementioned intel leader in way, i guess. >> interesting talking to traders this morning. it seems to be getting some of those folks off of the sidelines. we saw the downturn all last week, the decline over the last two weeks, no volume. we got a bit of volume this morning. look at the indices, talking about the head and shomplds patterns, the s&p. things looking they're moving to the down side. one trader pointed out if you look at the stocks we're actually the chip equipment, the chip sector, it's moving back up towards those may highs, where

it was about 285 now, at about 280.0. we get a little more momentum like this, we could see a little bit of a move to the outside. intel definitely leading the rally. the chip equipment makers are doing pretty well, mark, despite the fact that intel, although it says it's going to spend more so the capital budget will get trimmed a little. nonetheless, the chip commitmentmaker is boosted today. >> excuse me. ah! something went the wrong way. a goofy downgrade? >> yeah. interesting yesterday, one of the big stocks was farm siteiccals, bought out by a japanese pharmaceutical and treatments for hot flashes. this morning a company is downgrading stocks to a neutral. i guess on valuations but really does that help folks after the stock has already moved way up and you know this company is being sold? seems goofy and after the fact, but i guess you know, they have to put out a report.

>> thank you very much. i hate when my coffee -- >> are you all right? >> yeah. my coffee is cooled off to exactly 98.6. it confused my throat and went the wrong way. thank you, bertha.. up to erin. >> a wrong pipe problem. happens to all of us. quick alert, one-month low for the dollar index. see that reflected in the market. a little more appetite for risk. who knows. on any given day, opt mitch today. you can see. at a one-month low. markets just off the high up 135. as we get deeper into earnings season what should you do to set up your portfolio to make money and trade in names that are going to pop. joining us, president of asset management along with rod smith, the chief investment strategist with river front investments. go to have you both with us. >> thanks. >> nice to be here. >> let's get it out here now. you are a defender and believer in the haines bottom? >> i'm sorry? >> yes, you. right? not headed for another bottom?

>> not at all. i think mark haines, give him a lift if you want, not coming close to any bottom at all. at best, maybe fall maybe 5% or 10%. we'll never see that bottom again. talking the great depression. remember that? banks nationalized. that stuff is gone. >> i'm relieved on many levels to not see that again. bob, would you agree those lows are behind us, or not? >> i would. i think you're going to have to get used to the kind of schizophrenia that mark was talking about earlier. >> yes. >> because we're in unprecedented economic territory. so people are looking at every bit of data. i think the recent weakness in the data came from the auto shutdowns. the couple of months ago. that worked its way through the systems. as the summer guess on, as the companies are starting up you'll get more kind of green chutes.. most importantly, the correction has been contained. >> yes. >> and what we've called the

resistance. that is 878, 880, 940, 9450 on the high. it it continues to do that, that's encouraging. >> straight to the earnings trades. brent, i apologize. i'm having trouble this morning. if i was going to buy names ahead of what you think will get a pop. give me example what's i should do. >> sure. look at biogin, trades on earnings. up year observer year for 2009 by 11%. get the stock down 40% in the 52-week high. that's a great buy. look at genuine parts. another company a lot of people are using more parts for their cars, buying new cars. gosh, this company, their is 12, 9.9 times cash flow. and also look at syntex, reporting earnings tonight. trading at 0 .85 on the sales. uniforms, look at earnings. missed estimates the last three quarters in a row, but that

generally does, pushes down the current estimate and much likely to be one. this one probably at well. >> what would be your best? if doing something in the market in the next few days? >> i like to look at the groups that are showing leadership and show that even in the downturn, i'm not a stock guy. i'm a macro guy but see that in technology and particularly i continue top see that in emerging markets. they've given a pullback -- >> a believer. looking at markets, 60% to 80% so far this year for big emerging markets. you still go in? >> no question. we are still very overweight. this is a long-term story.. you've got zero loan growth in the u.s., and a 500% increase in clone growth in the last 12 months in china. you have to understand, we're looking at a depressed economy. they're looking at recovering one.e. the merging and commodities patch is the thing you want to buy on this correction. >> thank you very much. brent rod.

and several large investors groups and two former sec chairman making news by urging the creation of a "independent body." that would examine risks in the financial system. sounds like a whole lot of rhetoric, but this is who would lead the group. it gives um ever. bill donaldson and arthur levitt. two former sec chairmen and say the fed should not got the job of systemic regulator because they've been tarnished by easy credit and laxed oversight. he made his case this morning on "squawk box." >> the feds have got a specific responsibility, which is in oversimplified terms, to keep prices level and to keep unemployment low. keep full employment. when you get away from that responsibility and get the fed into all sorts of other things you start to get into a political arena. >> so you have the two former sc

chairmen advocating investor group and senior figs from cal pert, out of california, black rock and legg mason, yob obviously included the largest manager in the country.y. important to think about it, though, if you have an independent agency, who's going to give it the authority? who's going to win the turf wars? get the authority from somebody who's already got it and then who's going to run it? not to say you shouldn't tackle it, but real questions out there still. and earnings central. nerve center for more intel. and becky mentioned briefly. then preview cnbc's original documentary we've been talking about this and talking to the ceo of ricks cabaret about the status of the gentleman's club, and how neuroscience holds the key to better decision-making. we'll be back.

in full swing this morning. wait a minute. that's the music we use to play for -- no. "sound check." >> yes. >> it's got that disco flavor. appropriate, because here are two kings of disco. joe and carl. >> i requested "it's raining men" for when we do it together. >> they turned us down. >> they did. >> they said save that personality for "squawk box."." they said, don't give them too much.. who knows about "it's raining

men" with the two of us standing there. "raining men." are you doing the yellow thing, mark somewhere is that why erin's wearing that yellow thing? >> we were deceived.d. we were duped. they were handing out yellow scarves and ties, and we thought that sponge bob squarepants was ringing the opening bell. turns out he's ringing the closing bell for the tenth anniversary of -- >> right. the tenth anniversary. >> eight new episodes coming up some weekend. >> ah, can't wait. >> who doesn't love, on the old "squawk" mark, i don't know if you know that, i got a disc of the guy saying, joey, the guy who does -- right at beginning. he did that song and put up our names in it.t. i still have it at home. ♪ who lives in a pine am under the sea ♪ >> that guy. that guy. >> yeah. >> love it. >> howho's your favorite character? >> what? >> patrick, squidward? >> this is too -- >> i've got to admit, i haven't

paid that much attention -- >> plankton? >> you like spongebob. >> better do -- only have two hours on this show. we have three. a whole hour. >> intel is the big name of the day. the dow components earning 18 cents a share. revenue down 15% from the year ago, but add more than $8 bp. that also beat expectations. stock now is i believe up more than a buck, joe. strength came from consumer, strange came from asia, china. margins near 51% and said long term, there's no reason why the margins can't go back to their record highs of almost 60. >> i think, supposed to have been 40. wasn't it? >> yeah. >> current -- beating that, then beating revenue. great number for intel, but you know, 2 was a $60 stock at one point. $30, going lower now, able to get out of the $15 for a while.. need to get back into the $20s.

>> airline parent amr posting a loss of $1.14 a share better than the $1.28 loss analysts expected. roughly in line shares at this hour, up four cents or so. a 1% move on a $4 stock. >> yeah. abbott labs, watched this across the tape earlier before the bell. the company 89 cents a share. in-line. revenue also in-line. mike huckman's has been listening to the conference call about some of the individual products, in fact, let's check in with him right now. mike? >> yeah, carl and joe, they are just now answering the final analyst question. this call is about an hour and 15 minutes now old at this point. i don't know what it is.a whether the ceos all go on vacation at the same time. yesterday the ceo of j & j wasn't on the call. today the ceo of abbott labs wasn't on the call. quoting the cfo who says it's the largest negative impact we have experienced from foreign currency exchange in many years

regarding the full year financial guidance you talked about. a range of 365 to 370 to 369. the cfo said, quoting now, we held our guidance steady. upper end is 370. there's plenty of room to overdliv eer. i think in this environment we've chosen to keep our powder dry certainly the possibility of dropping more pennies to the bottom line is there. then finally a question, of course, on the call of mega mergers. and he said, "we have always said that we have no interest in mega mergers" and he shot down essential slay story in today's "financial times" abbott labs might be interested in the farmer unit of a pharmaceuticals company saying they don't appear to be interested even though they don't comment on rumors and speculation, stocks down more than 4% as we speak. >> thank you very much. mike huckman. we'll keep a close eye on that.

interesting anecdote, the ceos not on the call. speaking of a company where the ceo is usually on call, jpmorgan. see if they're on the call tomorrow. let's hope he is. if he isn't, a lot of people will be upset. michael cavanaugh, chief financial officer exclusive guest of the call. speaking with him tomorrow. >> and high school prom picture? >> looks like it. be honest, doesn't really look like that anymore. i mean, i don't mean that negatively, but -- doesn't quite look like that. up next, stocks on the move, including cisco. >> and the later, this. underarmor kales it recharge for you to wear after your workout, and it's $200 for the set. >> that's what i look like after my workout. >> now, you know, i know that -- mark's son matt is an incredible athlete and probably -- >> nothing but under armour. >> and now the director of product creation, find out why

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hi, folks. matt with a "squawk on the street" realtime flash. what is working today? materials are back, cyclical plays are back. today, illinois, stock having a nice jam today, this after upgraded to buy from neutral and our friends over at bammal, bank of america, merrill lynch. intercontinental chased by barkley. a stock that shed 25%. 6% pop on the upgrade to overweight to equal weight. think it's got another 30% and headed back to 116%. i mentioned material stocks. look at steel maker worthington. in the russell 2000. it missed and yet the stock is going higher caught up in this cyclical craze and lastly, an

internet play, double initiation of buy on cisco and juniper at citigroup. look at those moves. back to you. >> all right, thank you. sports apparel time, underarmour made a living constantly pushing the limits of caters to the athlete. and we have an exclusive luke of one of the most interesting innovations that's about to get into stores what is still a challenging retail environment. >> right, mark. proposal athletes long accustomed to using extensive and expensive postworkout gear. bringing it's first of its find postworkout body suit to weekend warriors around the country. joining us, under armour's director of products and our model. how does this thing work? >> as an innovation leader in the space we've been outfitting athletes on the field over ten years. research and innovation came upon the opportunity to help eth leets when they were off the field.

the science behind it is simple. two elements of. compression, or squeeze of the garment against the body doing two nings one helping stabilize muscle tissue after workout, practice or a game. two, helping keep the swelling of 9 muscle fipers at a microlevel at a manager level creating an ideal and optimal area for the muscles to rebuild themselves after workout, game or practice. >> i saw an ad for this and immediately thought, who is this for?r? what's the market size on this? >> well right now we're seeing it on athletes across major, all the major sports leagues. nhl, nfl and mlb. it can benefit all athletes. from the guys and gals just getting off the couch, going out for a run and feeling aches and pains, as much for them as it is the world-class athlete. >> tell me about you being nimble as under armour, but tell me about the fact this is $200

in this economy? >> we look at the opportunity for equipment, making equipment better for athletes in all economies. we look at running shoes, how they look at things that make them better. whether talking about that world-class athlete that isn't necessarily paying for that product or those looking at the price tag saying, what will $200 get for me? advertising over the life of this garment, it's more than going to bring your money back, and taking away the aches and pains the next day, a huge advantage there. >> tell me about the claims. how exactly you back them up? >> sure. innovation and research doesn't really just stay in-house. we partnered with academic facilities making sure they really hold water. a decade of research about the benefits of compression around recovery. we weren't satisfied with the research out there and went out and partnered with university of connecticut to really bring tha research up-to-date and find its

way into this product today. >> what's the rick if it doesn't work out? >> no real risk. we're able to scale. you mentioned being nimble.. that's what it's all about at underarmour. we can scale it as it grows and help it in its early introduction phase and as it reaches new customers scale it to provide to all athletes. >> thanks for joining us this morning. erin, back to you. >> thank you very much. so you convinced? that's going to launch, get that? >> matt wants everything. >> coming up, breaking news on oil. why didn't darin put that on, i want to know? >> because he doesn't look at >> because he doesn't look at good in it as i do. can give youe financial advice you need? where will you find the stability and resources to keep you ahead of this rapidly evolving world? these are tough questions. that's why we brought together two of the most powerful names in the industry. introducing morgan stanley smith barney. here to rethink wealth management. here to answer... your questions.

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down here on the floor. the latest eia inventories, drown towne of 2. million barrels, gasoline, 1.5 million barrels and fuels 600,000 barrels. and our expert in area trading. that draw down is bigger than expected. is that enough to further enhance the markets? >> crude and technical markets, held and, and about 6150, $60, $65 by the end of the week. >> a bullish number for the price of crude, especially with what you have with the dollar and equities? >> equities are moving higher.. the dow held, s&p held, gold held, crude held. i think there's no place to go

but higher as we can see right here. >> is the thesis continuing to be fundamentals that don't really matter now and when the rich appetite is here the oil trade is on? >> technically trud looks great. elementary, horrible. plenty of gasoline, but you've got to look at technical crude on a very technical market. looks we'll go higher. >> the gas, on the down side, the only one. is that from yesterday's big move? >> support in natural gas. $360, $370.. love to see it above $4. love it. >> actually appreciate it very much. area international trading, again, draw down of 2.8 million barrels but a build of gasoline. 1.5 million in builds and 600,000. relatively bullish numbers when it comes it crude oil. back to you. >> thank you. a look at the markets and their internals now. the dow is up 160 points. looking good. the naz is doing better up 2.5%.

s&p gaining 17. back above 900. check the internals. look at that. that's better than 8 to 1 winners over losers. 1800 is a good thing. nasdaq also -- about -- 5.5, 6 to 1. looking good, erin. >> there you go. back to hq. what is the favor looking at? >> man, looking at. >> the faber looking at. >> all over the place. not any one thing. quite a market. an interesting morning from that perspective. cit, xart with that. afraid i don't have -- we don't have a deal as of yet on cit or any news specific whether it will be saved, so to speak. we can step back a minute from cit and say, listen, it's not that it has to happen today. talking a lot about the ritz there being the $5.3 billion and

unfunded commitment to company and the idea those companies would pull down on their revolvers. don't forget that you can't just pull down on the revolver without actually getting cit, usually, under many agreements from collateral, receivables, whatever it might be. seen this morning, published reports, almost $800 million in capital in line pulled down. but not the $5.3 billion. it's certainly something they want to resolve near term. especially with as much as a billion in securities coming due in august. nonetheless, if it doesn't happen today or tomorrow, it's not as though cit's going to run out of money right then. the bonds by the way, pretty y firm from what i hear. equity is not the story. it's in the bonds. where a lot of investors are speculating right now. your longer term trading in the 50s. shorter term trading in the 80s. that's where the, where the

story is on c icht t. again, we will certainly tell you if, in fact, we do learn that they have reached some sort of accommodation with the various regulator. to cover all bases here when it comes to the trust data we get on credit cards, let talk about jpmorgan, because we got that just a few minutes ago. i've lost it. it was in front of me. here it is. net chashg off 8.07%. you can see may was a better month. i'm sorry. excuse me. june is a better month than was may. but right around what april was. april, may, benefited from -- i'm not sure. delinquencies you see it there. that's the key. 30 day delinquency for all data we've gotten this morning on the decline month to month to month. important, no doubt about that. there's the payment rate as well. so just to cover that, discover, capital one and there's jpmorgan. by the way, we're getting

earnings from jpmorgan and that will give us a broader sense as to the health of the consumer. home equity, jumbo, prime mortgages, credit cards across the board. very important report we'll get from that bank. finally, did we get gm or not? i don't know that we did. on friday, i did a blog on this. a lot of people talking about it. you had gm shares, which had no relation to the company we now call gm trading up sharply.. it was sad to see, because, of course, they are worthless.s. they continue to be worthless. they at least have now done us the service of listing the actual equity that remains from the liquidating motors company under the 363 bankruptcy. still worthless, by the way. it's not worth 63 cents. that equity will get nothing, but at least shareholders are not being confused as they were on friday. that's how it was suss suspended friday. back to you. >> thank you, david. coming up, giving us a sneak

peek at a documentary that premieres tonight. yes, mark, keep reading. >> plus -- you skipped something there. plus, the ceo publicly traded rick's cabaret, joins us to discuss the exotic dancing business in a down economy. and how his company continues to thrive. >> that's woman's got nothing on the haines bottom. fithe same tools the pros use, so you can be a disciplined trader. by selecting from eight advanced triggers, your order gets executed, even when you're busy. and with trailing stops to help you lock in profits and minimize risk, you can be confident in your strategy, no matter which way the market moves. find out why more and more active traders are turning to fidelity for a smarter way to trade online. trade like a pro. trade with fidelity.

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the health care volleys are at the beginning of speaking there in washington. we are getting now a republican response, though, where as you can see, they're saying a long

ways from approving a health bill, mark. interesting, on the republican side they're saying quote/unquote wealthy tax is a quote/unquote dead issue. wealthy tax, not sure whether that applied to anyone making over $350,000. where the democrat tax increase would start applying or just those making over $1 million. 5% plus tax. that's what they're saying. 9:00 eastern, the newest production views, "porn pleasure" is what it's called. nothing is up a limits when it comes to an industry which aims to please but offends many. porn studio ares spending big bucks on big productions. a big story there. and talking to the most interesting characters out there and what are we going to see tonight? >> characters is absolutely right, erin. certainly there is pressure on profits in the porn business. the number of studios in fact

slashing budgets as well as scripts, yes, there are scripts and others going in the opposite direction hoping higher quality movies will cut through the clutter of all that free porn. >> reporter: this is the making of run of the biggest budget foreign movies ever. an 80-foot pirate ship built on a hollywood sound stage.e. sword fight training for the agenters. sets and costumes.s. computer generated fighting skeletons and killer monster, and there's even a plot. >> my name is -- edward brinham. >> reporter: to go along with the sex.x. this breaks records when released in the fall ever 2008. its budget according to the studio, $10 million. 500 times the average porn budget and the cost of the dvd, $49.99. double the cost of the average adult film. from the looks of it, you'd never guess that it's the toughest period in the porn

industry's history. >> let's not be nice, though. you're in production of a movie where you thought, am i making the right kind of movie for this time? >> definitely. i mean, there is agents bit of a fear factor there but we will to go with it. >> find out what digital playground produced "pirates ii." yes, a pirates 1" as well. how it made a dozen versions of the movie including a g-rated one to increase sales. tonight, inside the adult entertainment porn business of pleasure tonight at 9:00 p.m. and again at 10:00 p.m. right here on cnbc. mark? >> did you just say there was a g-rated version of a porn movie? >> yes, a g-rated version for sale in japan. >> okay. >> yeah. >> don't know what the target audience would be there, but i have a piece of all entertainment trivia, i'm told. they gave it to me.

where did "playboy" playmate anna nicole smith meet her billionaire husband j. howard marshal? do you know? >> i believe i know. >> in a club? >> anna nicole exotic dancer at rick's cabaret in houston. >> cabaret club. >> rick's is a chain of gentlemen's clubs across the u.s. you'd never know we were in a recession. a jump in revenue for the quarter and stock up over 170%. since the haines bottom. >> one bottom, not -- >> president and ceo of rick's cabaret. thanks for being with us. >> thanks for having me on the show. appreciate it. >> to what do you attribute this success? >> well, you know, we just, with our core business plan and continue to you know, cater to our customers, provide

first-class adult entertainment, and create a place where you can escape the real world for a while. >> all right. you have 18 clubs now in 10 different markets. right? >> correct. >> and your plans for expansion are -- >> you know, we're continuing to look. we did several acquisitions, two last year, four the year before that and four the year before that. we've taken it -- we've basically taken off 2009 so far. haven't purchased anything this year. our last aquaization was in las vegas in september 2008. but we're starting to look again. main reason we slowed down, we buy on a trailing month and a lot of businesses, you know, that are sales are slow. we want to wait and sigh see how this slowdown was going to affect their numbers and bibased on those number, the eent ta number eeb ta numbers.

>> so does that result in a -- an increase in business? >> yes, it has. like our new york in 2005, one of the top locations in new york city now. tootsie's in miami. we left the name on it, because it was so pap lar an was really one of a kind.. not a 100% that rick's format, you know, revenues were about 1.5 million a month when we took over.. averaging about $2 million a month now. we've got a very nights increase in revenues at that location. of course, in vegas our revenues went down because the vegas market was affected by the recession so much, but we believe in the long run that that location will seen an increase at that location as well. >> according to -- according to the revenue breakdown i've gotten, 38% of your revenue comes from alcoholic beverages. 48% from service revenues.

what would those be? >> service revenues are like the cover charges, the v.i.p. room rental. >> oh, i could rent a v.i.p. room? >> yes, we have room rentals v.i.p. passes. in certain locations we have basically a private party room.. you wanted to bring your party into a more private area, where you know you don't have the gentlemen crowd bumping into you, or staring at you and whatnot, you can do that as well, yes. >> only 12% from food. i guess people aren't hungry when they come to your place? >> food's kind of a -- we discount our food at lunchtime and run specials or certain nights. new york city we have a lobster and steak dinner wednesday nights for $40. stuff like that. so -- >> tough to chew your food when your tongue is hanging out. >> yeah. >> eric, thanks a lot. appreciate your time. >> you bet, thank you. >> eric langan from rick's --

what is it? rick's cabaret. up next, mind over matter. neuroscience could lead to a better understanding of risk taking and better investment decision. you know what, mark? it's better to move right along. >> i agree. first -- ♪ oh trish >> hey, you guys. lots coming up on "the call c" the top of the hour. whether this recession is over and what that means for your portfolio and the stock market in the short run. the government is thinking about given cit a temporary loan and we're going to debate whether or not the government should really be bailing cit out, and the house financial services committee is holding a hearing on financial regulation reform.. we'll talk to a democrat and republican, michelle bachman and well as greg meese about that. lots ahead for you only on "the call" at the top of the hour.ty mark and erin are back right after this break. faster than anyone else.

together, we're helping to shape the exchanging world. nyse euronext. powering the exchanging world.

i'm sorry. i can't hear you very well. announcer: does someone you know have trouble hearing on the phone? dad. dad, let me help you with that, okay? announcer: now, a free phone service shows captions of everything a caller says. i'd like to make an appointment to see the doctor. announcer: to learn more about captioned telephone, call 1-800-552-7724 or go to our website. i'll see you at 3:00! announcer: captioned telephone - enjoy the phone again! our next guest has a new and rather unusual approach to trading. it's best on psychology, as well as her understanding of neuro science.

she says this is a strategy which can help traders make better trades. joining us here an independent trader, as well as the founder and president of trader psyches, a consulting firm for traders, speaking for 200 traders on psychology of risk at the nymex tonight, and a new face here at cnbc. good to have you with us. >> thanks, erin. >> one thing we know, this concept of the economical man and everyone makes rational decisions is a load of hogwash, because in our own individual lives we often do not make those decisions. that's one thing to say. but how do you gauge what the psychology reaction will be in a market to make money? >> well, first of all, everyone forgets that all we care about is who is going to pay more next year. everyone gets lost in the numbers and forgets that it's a human game. and you're really betting on other people. first of all. and if you remember to ask that question, you usually come up with a better answer than if you only look at the numbers. >> so what -- what do you see right now in the market?

>> maximum uncertainty, which will probably surprise people that i say that, because uncertainty is supposed to equal fear, and fear is supposed to equal a down market.t. but basically, there's probably like a 50/50, some people think we've made it and other people think we're going to touch the bottom, like me. so there is all this uncertainty, but without -- sorry, without so much fear. so here we are, we're in a range, basically, and i think we'll be in a range for a while. >> what's wrong with all you people who think you're going to try and violate my bottom? it's not going to happen!! >> i didn't violate. i said test. >> all right. okay. it's it's just going to be painful. >> very interesting -- area of thought and study. i think it underlines how difficult it is to be successful in the markets that there are times when you must go the opposite way of everybody else.

when everyone is running in one way, you've got to have the chutzpa to go the other way. on the other hand, you can't have that as a constant philosophy, because 90% of the time, the is right. how do you --3 >> the irony is, you learn to analyze your own emotions. everyone tells you to ignore your emotions and be totally in your head. if you learn to listen to them and understand them, that's actually your clue. like fear -- a little bit of fear will tell you that the pattern is not working out. and the big one is regret. the research actually shows that regret or the potential for regret is much more motivating than agreed. so everyone says, oh, gosh, all these guys -- >> or afraid to lose. >> right. and afraid to be left behind. so you can always be asking yourself, am i like afraid i'm going to be left behind so i better jump on this rally right now, and then in august and october we go test the lows.

>> right. >> but that one right there -- there's a whole series of questions you can ask yourself.. >> a lot of times you're dealing with men, all right?? and men are not always the biggest -- >> careful. >> all right. oh, and you're going to make all kinds of comments about women. >> careful -- >> men stereo typically are not usually in touch with their emotions.. >> oh! i can't believe this sexist rap you're laying on us. >> mark is so in touch with his. >> proceed, proceed. >> going to be giving a presentation to traders, a lot of whom are men. you're going to tell them that psychology matters and emotions matter. how do you make the case to them specifically about how and what they can do about it. >> well, for one thing, they actually love it when i talk, because it's their own private experience, but in that male culture, they haven't been able to say it. it's the women -- i actually have more trouble with. >> oh, yeah, there you go! you tell 'em. you go, girl, tell 'em! >> because women aren't ready to hear that -- women afraid they

may seem weak if they acknowledge the emotional component of trading. >> exactly. the best results i've ever gotten in a talk i gave was in an all-quant hedge under talk, and i thought, i'm nuts, i'm going to tell these guys they have to listen to their emotions and their quants, i had more people wait in line and get my card that day. because they thought, hey, if you can get me how to make my brain work better, i will listen, i don't care what it is. so it down to emotion analytics. you can't decide what to wear in the morning if your emotional circuits are destroyed. scientists prove that. >> some people suggest that the way i dress suggest my emotional circuits are destroyed. >> i've been watching you. you dress just fine. >> here is an important point to make. because i think many times, especially where we work at

cnbc, this point doesn't get made. if you examine these details, it's perfectly all right to reach the conclusion that you just shouldn't be managing money. >> yes! >> but you don't have the psychological make-up to be successful at this. >> that's true. or you can call us and we can teach you. >> how can you teach emotion? >> well, what you do is teach a way to be aware of emotion.n. everyone has got it. and so it's a matter of learning to use it as data. and valuing it as data. because your brain does.. >> well, that's hard for me to do, because as erin has explained, being a man, i'm not really in touch with my emotions. thank you, denise. >> thank you. >> sounds like he is getting in touch with them now. >> up next -- a final check on the markets with the lovely erin and the doltesh mark. taking its rightful place

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