this town, things don't happen. >> and it was -- it marked the news conference as the president's six months in office. he's quick to point out he took office with the economy in the worst recession in half a century. >> in corporate headlines, content is king. >> i'll starts by saying we view technology as a friend, not foe. we look at the potential that it appears us and the opportunity, while there are there's, we far more focused on the opportunities. we are a content company, first and foremost. and so one of the most important priorities for the company is beyond creating great content is using technology to reach more people, to provide better experiences for people. >> the company is working on a disney-bradded website that would make available movies, tv

shows and games that are all going to be available to consumers who pay a subscription. warren buffett's berkshire hathaway slashing its stake in moody's by almost 17%. accordling to an s.e.c. feeling, berkshire sold over 8 million solaris in three days. but remember, it was just a few months ago that moody's downgraded berkshire hathaway from aaa. >> we're going to talk to sally later on in the program about rating agencies in the coming years. but what is it? do you think he just got tired of dealing with -- oh, no. there are a lot of questions about this business model. but i don't know that this had anything to do with that.

there have been dozens of lawsuits filed against these guys for keeping things a i a i a a rating. >> it's classic. a couple of weeks ago in the main part of the sunday times was floyd abrahams, the first -- >> yeah, the first guy who defends these guys. >> because their lousy ratings were free speech. we can be as bad as we want. we're protected by the first amendment for saying these things are aaa. if i say that this dog ex kament is ice cream, i'm allowed to say it. but they've got floyd on their side. >> there's one. >> stan's father. >> is it? >> yes, dan abrahams. and how do us it?

>> like media-ite. it's almost like meteorite. is it going to work? >> i think so. >> oh, you want them to write something nice about you. yeah, it's a great site. i read it every day. >> i'm excited about this deal, and that is bristol myers buying medarex for $2.1 billion in cash. that's a 90% premium over the closing price. bristol myers did not get imclone. they make antibodies, carl. >> any disease that attacks -- >> well, you can do a lot with antibodies. they sort of go and find things that they match with. so there's a lot of different

things that -- >> it ramps up your immune system. >> there's a lot of different uses for it. you make anti-bodies into a mice. and you create transgenic mice. mice, too. i mean, we have transgenic humans, you know. but these are actual -- transgenic meaning -- >> well, these have a huge immune system. they can make human -- well, read about them. you've seen transgenic humans. >> that's what it is to be fully human. >> oh, okay. >> you don't think of mice that way. they have been working on something for melanoma, which is a scary -- because if it's the

wrong kind of medical la nome ma, it can kill you quickly, since 2005, and that's what bristol myers has seen. 90%, according to a lot of poem is not unusual. >> right next door, in sox? >> no. and amazon.com buying zappos.com. there's been a lot of talks about crocs having financial troubles pass economy has come down. zappos will get a boost from amazon. and it was nice to see a couple of deals happen against the misted of the marking action. >> zappos is just shoes and -- >> zappatos. >> i'm surprised you knew that one. i know more spanish than you did. >> do you know what.

[ speaking foreign language snshgs snshgs means? >> shut up. >> lemon is lemon. >> you get a corona with a lemon, yeah. [ speaking foreign language ]. >> welcome -- >> that's mine. >> woke to telecome. the nikkei is up this morning. oil is relatively steady. a lot of the inventory numbers we've gotten out this we'll week have been relatively neutral. we're down 15 cents. that is the september contract. ten-year note, we'll keep a close eye out. the do recall action, we've seen some sdeents moves in the euro/yen cross.

and gold, especially with bernanke talking about interest rates remaining low, $954.30 is the last check on gold. christine tan is in singapore standing by overseas and first let's go to london looking splend yid in orange, here is louisa bojesen. >> i'm leaving for spain in a couple of hours. that's the extent of my spanish. but european bourses are pretty flat at the moment. a flattish mood is reigning on the overall theme, at the moment. however, you've got vw porsche heating up with porsche being cheeky, bringing forward this supervisory board meeting that was supposed to take place today. it ended at 3:00 a.m. last night local time and they've given tock for the sale of the stake in porsche. the potential sale there. they've indicated a capital

increase of approximately $5 billion euros. probably one of the important documents is that ceo and the person in charge of finance. but both of those people are stepping down. it leaves a lot of questions as to what will happen to porsche? what will happen to vw? initially, both shares came off quite a bit. i also want to mention another big story, namely roche. they were out with earnings. these being one of the larger pharmaceuticals based in switzerland. pretty bullish forecast from in one al the next yew areas. however wbl when you look at their forecast, they are expanding their tamiflu drugs. over to singapore now to see

what's happening on that side of the world. hello there. >> hey, louisa. most asian markets finished higher today. strong corporate earnings to provide upward momentum in terms of sectors. in japan, the nikkei closed up 0.7% of three-week closing high. the weaker yen extending shares of sony 0.some of the other ex portsers higher. in kospi kb shares rose. hong kong, a big winner today, up almost 3%. investors scooping up banking stocks as investors bet the surge in lending would boost profits. and in china, the shanghai composite rose almost 1%, a fresh 13-month high, all of this on expectation that ample liquidity will continue to drive this market mier. joe, back to you.

>> christine, thank you very much. let's get a check on the u.s. markets. joining us today is john lonski. he's from moody's investor service and rob morgan of claremont wealth strategies. have you always been there, rob? >> you know, joe, i changed over a little less than a year ago. >> well, now that you're a clarify smont anybody above expectations is green and they're all green. we also got one that shows anybody that had lower revenues than last year, if it's lower, it's red. they're all red. so is it good or bad, rob? >> well, joe, i guess the good news is that we came into the earnings season seeing green shoots in the economy. and it seems like the overall earnings are saying, that could be sustainable. but a lot of it is coming through cost cutting. so we haven't seen much on the

top line into things. and that's going to be the next step of this. we had the relief rally in the spring and now we're getting good earnings. that is good. but i don't think we're seeing that yet. >> all of these companies that have the green, many have earnings that were actually below last year, but above expectations. is that what we should focus on? >> well, certainly. coming into this earnings season, it was expected to be down around 35%, 40%. so it is an expectations games. even though earnings are down, they're beating expectations. >> i have a similar question for you, john lonski. the journal takes two -- puts

two scenarios out, that that could mean rising productivity. we're getting more out of each worker and that could spring load the economy. it could mean that struggling workers that don't consume give us a double the dip. which sitd? >> i think it's more of the former. the reductions in payrolls provide us with a boost of activity. more over, let's not forget that the two weak recessions were followed by the labor markets. whether it came to the election of 1992, the everyone couple bant lost to bill clinton because of the fail markets. i think the good news on the

front is that we'll probably -- this tells me that the monthly contraction of jobs will continue to shrink, though it's going to remain deep enough to be of great concern and warn us that consumer spending is only going to grow grudgingly. >> you saw general electric is exiting the fdic-backed debt. can companies stand on their own now? they can take the training wheel off, john? >> yeah. we're seeing more and more of that. you know, the commercial paper market is at its peak. we have the federal reserve owning something of assets. you're talking here about the fdic for future bopdz. when this program came you, we believed that we would see $600 building to $ 00 billion. well, the last i last, that number is well under earnings

but that better still writ doesn't need to be. wems see evidence of that in the corporate bond market. high yield bond issuance, first half of this year, 17.9 billion versus only 19 billion in the second half of '08. >> rob morgan, yesterday we saw morgan stanley and wells fargo and both of those reports showed continuing concerns about losses increasing, not only peaking at this point. a lot in commercial real estate, credit cards, anything that has to do with the consumer. is this what you would expect, a slow move back to normal city? >> well, absolutely, joe. yeah. we're neutral on the financial sector. obviously, different ends of the sector. but here we are with some other reports on the opposite side. two steps if a urd, one step back and that's going to

continue for some time. >> and what do you do, buy stocks and write covered calls or something? at&t, 6.6%, you know, what kind of -- if buy and hold, if that strategy is dead, what do you do? what does the normal person do, rob? why even bother? >> well, i don't think, necessarily, joe kwb, that that strategy is dead. it sgruft has to be in the ride numbers. last night global capital stopped. international stocks look good and then other themes we like, we continue to like technology here. it's been -- it's -- technically it's good. alternatings estimates are rising. we like also materials for next year with the following dollar and merging market reflation. so buy and hold i don't think necessarily is dead. you just have to be in the right areas. >> john lonski, we had someone

tell us yesterday after listening to bernanke that interest rates aren't going up for months, but easily. >> do you think it can be a matter of years before -- >> no way. i think there's a pretty good chance that by this time of next we're, we'll be looking at a interest rate hike. but short-term, you know, fed fendz is going to remain low for some time to come. of course, that's going to reign in treasury bond yields, benchmark yields like the ten-year treasury yield, telling us that longer term fixed rate borrowing costs would remain relatively though. unemployment will be rising and wages will be intloeg. >> did either one of you gentlemen consider the back drom

drop. what if other tax increases go through? do you think all that will happen, john or rob and would that be seen as a negative or a positive? >> higher taxes would, of course, worsen the already troubled outlook for consumer spending. they're not the best idea at this particular point in time. with cap and trade, we're worried about what does this mean for utility bills and how that might provide an unwanted lift to price inflation. so there are a time of facilities out there surrounding prosupposed laengz where the impact paint -- >> does that mean by an as old as dead -- >> if a ul that was true, would you pull back on your buy and hell? >> no. i think a lot of that has been factored in, the probability eggs of that happening.

but i think we are starting to see a push back on the laengz. >> i can't get an answer on when the market doesn't believe it's going to happen so it's gob up or it down theed that than and you don't know? >> i don't know. i think it's partially discounted. i do think so. >> really? our economy can handle those two things? >> it's obviously going to hurt different sector peps. >> a lot of money. >> did you see what bill miller said at legg mason? he put out a note saying that the market is primed, he pointed out that the amount of money sitting in money markets outwaits that sitting into first time, the amount of money in

equity funds is more than in the other market. >> we pay a relative low level of tax, revive to gdp right now. >> we've done so well. most of that money market funds are ear marked for taxes, becky, so that's not going into the market. thanks, john lonski and rob morgan. but you get something for paying your taxes, too, supposedly. it's an interesting call from miller. >> 90 cents -- you get 10 krebts worth of your money with the new program. >> that's a really good ten cents. >> still to come this morning, we will get to other corporate kornt headlines of the morning. we've got a lot to come this morning. first, as we head to a break, let's take a look at yesterday's winners & losers.

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a significant bind of oil and gas in california. occidental believes there are between 250 million gross barrels of equivalent there. the company plans to drill wells to exploit the findings during the next five to ten years. >> that is so exploit afb of them. >> they found they need to -- >> exploit it? >> well, they need to drill wells. they don't want to just know it's there. >> get to it. >> they have to get to it. >> when we come back this morning, phil lebeau with ford's results and then the futures from the pits, as well. and then she was one of the most powerful women on wall street. former top citi executive, salli

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♪ ♪ we didn't start the fire >> good morning. welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick and carl quintanilla. ford is also one of the notable names reporting quarterly results before the opening this morning. our phil lebeau is at the company's headquarters in deerborn. is it going to be earnings or a loss today, phil? >> i think we're going to see a loss, joe. >>er you're going to see a loss. >> we're going to see a loss. they're not quite to the point

where they're back in the black. they're moving in that direction. the second quarter earnings were eagerly anticipated by wall street. here is what the street is expecting. a loss of 48 cents a share. revenue coming in a little over $24 billion. that's what the street is expecting. two things will be the focus on the second quarter. liquidity and debt level. it is expected that they're going to see cash on hand, if you will. it doesn't mean ford is running out of money recently. check out what happened of the last three quarters. they have essentially cut the catch rate in half. down to punching to 3.7 last yarer. and then don't miss it, 12:10 today on power lunch, first on cnbc, ford's ceo allan mulally will be talking about the cash

burn rate and about the projections of ford of when it will go back in the black. i know, joe, you would like to see this company make a profit. we're not quite there with ford. again, numbers coming out in about 30 minutes. >> how do you know i recalled like to see ford make a profit? because you're right, i would. i would love to see ford succeed. >> joe, i think you want to see every company make money. >> that's true. but do we have a soft spot for force? they're doing it on their own and we're hoping the uk banking industry can come back and have jobs and make good carts and we want all those things, right? >> lightly. people do want all of those things. that's why the debt will be will be crucial to check out with ford. >> have you been in a flex? >> i have been. >> do they a third back seat? >> they do, joe. joe, i was driving it in boulder

last week, your old stomping grundz. sfwlrp you, really? >> people were checking me out. >> the chicks were checking you out in a flex? >> hey, good looking! pick us out later. >> what, you don't think the chicks are checking me out when i'm driving these cars? >> i do, indeed. i don't think it's the car, the either, buddy. thank you. you know what i got from porsche the other day, phil? a bike let of the pamamera and i'm not sure what i think of it yet. i thought you were going to say -- >> porsche is entering the final instruction of negotiations to create a combined auto group with volkswagen. porsche's board of directors wrapping up an all-night meeting and will now endorse talks to sell a form of the auto matter to qatar. >> qatar? >> now you're going would qatar?

>> i like to go back and forth. meantime, porsche's ceo of and cfr are out. >> the e in had opposed a merger. the ancestors founded both companies and they're like cusps and they're trying to run and trying to take each other other. only in germany. it's a bizarre story. >> so now can we say that you drive a porsche wagon? >> she already slammed me for that. >> the engines are both in the back, right, in both cases? >> yeah, that's true. >> i like the way the jet ta moves around. the company used part of the asset sales of collateral later this week. the lenders would have to

approve a transaction involving the aircraft oornts. i saw people keeping a very close eye on cit. the stock was down about 11 cents yesterday. >> it will be interesting to see what happens long-term. microsoft says windows 7 is ready. windows 7 is on track to go on sale as expected on october 2nd and microsoft promises switching to it will be smoother than the transition to the previous version, vista, which got a lot of at least bad reviews when it first rolled out. we'll see what happens when we can microsoft numbers later on tonight. in the meantime this morning, futures looking okay. asia overnight looked okay. europe has been mixed a little bit, but with decent action, some good report out of credit swiss this morning, roche had a bullish outlook, as well.

later on today, we will get exiting home prices later today. gasoline has been down. >> who is air-conditioning their houses, too, at this point? >> or traveling on airplanes, right? >> yeah. you would think that it increased the number of people who need gas at the pump bass they're saying vacations, they're going somewhere where you can drive, to the local camps. >> interesting. the ten-year note still hovering around 3.5% and we'll see if we get knit direction either way later on today. dollar, there's been a little action in the dollar and the yen, but mostly steady aft after-bernan after-bernanke's right around the range. >> you know what took a big move? wheat and corn, under pressure

down by 2.5%, maybe even more after the heads of the commodities group testified and said they're going to crack down on what they see fllt futures markets and what they see in the long-term. >> calculate ers. . thank you very much. if you have any questions or xlents about anything you see here on squawk, go ahead. you know what summer means, barbecues for the family, guess what? joe is keeping us tuned into wam troet the most favorites we'll round up after this. maybe president obama doesn't win and doesn't get his health care reform. but he really doesn't need congress for immigration reform. he can decriminalize the process of hiring illegal aliens at big companies and factories.

i think he will. we will have a wave of immigration and therefore, a wave of reitance. to stay on top of my game after 50,

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welcome back to earnings central, everybody. it is time to run through the stocks around the moon. we've been watching earnings season. >> you noticed? >> yeah, i noticed. did you know stocks are up like 8% since this time last year? >> the dow. >> the dow is up 8%. it was finally down yesterday

for the first time after eight sessions. the nasdaq has been on fire, though. a lot of that is bought of what we've been hearing from these technology companies. if you hear from ebay last night, earnings came in better than expected. revenue topped consensus. if you look right now, there's the earnings per share. the current quarter guidance falls within the analyst' expectations. >> but i don't think -- do we have a chart of these? >> it was up pretty sharply yesterday. >> yeah. but i don't know, that business model, at least in terms of a long-term chart on ebay, you wonder what's going on long-term. >> well, they've gotten back to some of the basics, right? >> oh, really? >> yeah. which is probably something that does well in this environment. >> it's not the only game in town, though, isn't it? >> ebay has all these things where you can go to an ebay store.

>> do we have a longer term chart? it was one of the -- i think we're going to bring one up. >> one of the ones that was under pressure? >> no. that's not long enough. >> part of the business model, too. it was $50 or $60 about a year ago, wasn't it? i don't know. there were big hopes that meg whitman is going into politics, right? >> right. running in california. >> there it was. remember the tech bubble, it burst and that was going to be one of the best companies in technology. tech. >> anyway, strong earnings. if you want to check out sandisk, as well, the company blew expect ages out of the water. they reported earnings of 36 cents. analysts had been looking for a loss of 16 cents. >> is that really right? that's unbelievable.

>> that's what it says on the chart, so it must be right. >> yeah, exactly. and then the shares dropped after hours. maybe it was the forecast. >> it was the forecast. also some comments that new supply could actually appreciate why you pricing. and then they read about some of the details and heard about that. >>all come beating the treat. the shares came under pressure as revenue, the outlook missed estimates. now to breakfast burritos. >> your favorite. yeah. chipotle. not enough of these around. revenues fell short. same-store sales disappointed. as a result, the stocks were down after hours. >> i have not made it to one. >> what's the other one, something fresh. >> baha fresh. >> had that stuff. a little too fresh for me. >> how can it be -- oh, wait. i know how it's too fresh. what did you eat? taco bell that was three days

old and you stuck it in the microwave with the sour cream on it? >> the scary thing is that the tomato tomatoes and sour cream were warmed up with it. >> are we going to talk about the taco bell dog? >> that's a sad story. she was 15, 105, right? whoa! >> in dog years, seven years for each one. i thought that was untrue, though. i thought they've discounted. >> i still use it, though. what about lucky, carl? >> he's okay. >> let's talk about it later. >> they were very similar. lucky could be related. >> lucky is much -- >> she was an idol to him. he grew up watching her on those commercials, so it's tough, you know? >> first the twins now -- i

mean, things like that happen. bad news seems to -- >> it happened in three. when we come back this morning, guys, we'll check in on more earnings season. there is still to fwauk earnings season can i get in on that? are you a safe driver? yes. discount! do you own a home? yes. discount! are you going to buy online? yes! discount! isn't getting discounts great? yes! there's no discount for agreeing with me. yeah, i got carried away. happens to me all the time. helping you save money -- now, that's progressive. call or click today.

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>> i've got to tune in. we're looking at the giant -- flying around. >> ahh! it's like king kong. >> the bug that ate midtown. >> it hurts. >> you have to stick around later on this morning. a very rare, very exclusive interview with one of the most powerful women on wall street, stally krawcheck, the former citi ceo and the former cfo over there. we haven't heard from sallie at least on this program for a while and we'll begin with sala sallie at 8:00 a.m. eastern time. becky and i were just talking about the nasdaq. a lot of this had to do with the great results from intel. if you back out the big charge that the company had to take to pay the eu and what a lot of people think was a shakedown, intel is deciding to use in

b-1 of "the journal" they're going to argue their human rights were violated by the eu. i'm going to tell you how right now. there are several arguing this way. there are a growing list of companies raised the charge that the eu's vigorous antitrust watch dog is running afoul of the protection for anyone in europe. because the companies argue that when the same body investigates a case, and then decides -- renders judgment on the case, that you're not even getting a fair trial. they decide to investigate and then she decides whether you're guilty or not. people say because the fines lately have been so big, in this case it was $1.4 billion, that would probably mean there was something criminal going on to be that big. in it's criminal, you need a fair trial, or at least most -- >> due process. >> yeah. you don't end up as an enemy -- intel is not an enemy combatant

down at guantanamo. so a lot of these -- a lot of companies are taking the very strange notion of saying that their human rights are, violated. i agree -- >> that is an ingenious argument. >> intel is going to fight this, hard. >> wipe out their entire quarter profits. >> you've got a bureaucrat, the eu's practicing of -- practice of having a political appointee, she is a political appointee -- >> appointed by -- >> appointed by the eu. and a bureaucrat, she decides who to investigate and then she decides whether they're guilty or not and then she decide the punishment. >> you want a jury of your peers, like a judge -- >> can you imagine, can you imagine, you know, arrested and the cop deciding whether you're guilty or not? >> certainly happens at harvard.

i'm guilty. >> did you hear what obama said? >> obama said the cambridge police acted stupidly. >> he also said if he tried to break into the white house, he would be shot. >> when you have to last in an otherwise serious news conference. we mentioned the taco bell dog passing away, gidget, her name was gidget, she was 15. she was discovered, actually, at a kennel and was not considered show-worthy. she was hard of hearing but she otherwise was in good health up until the end. she flew first class, opened the stock exchange once, made appearances at madison square garden, was in "legally blond 2," made a commercial for geico. the campaign was widely popular, although some critics did accuse the campaign of increasing racial hispanic stereotypes. >> but you're okay with it? >> i'm fine with it. taco bell said our deepest

sympathy out to her fans and owners. apparently she lived a very pampered life. a diva up until the last moment -- >> you bought a chihuahua increasing racial stereotypes. >> that's true. oh, the split. >> look how cute. >> they could get another chihuahua if they wanted to keep up -- they obviously don't -- >> we are ready. we'll hire william morris and get her signed up, get lucky signed up. >> how old is she? >> it's a he. he's 3. >> lucky get together with gidget. >> they were an item for a while. they were spotted kanoodling. >> he wanted to begs the question, did they do it doggy style? i'm sorry -- >> oh, this is is the morning! >> i'm sorry. >> let me tell you about my story this morning. in the new york times there's a brand new take on summer camps in 2009.

guess what, guys? swine dmroflu. you know this, after everything that happened out your direction. swine flu has taken over the summer camps. there's a picture of what's happening in maine. it has over 100 summer camps. turns out kids showed up, and from day one they have had issues. they've been wearing masks, using purell, canceling the social events, keeping kids outside, separated. it becomes a big problem when kids show up at camp and come down with a fever or the flu. they're quarantining them. other kids they're sending home. it's a big problem for parents off on their second honeymoon -- glo it says we are buying clorex wipes you can buy within driving distance. >> there's another picture inside with a kid at camp who said '09 and a swine -- >> ever since it wasn't as

serious, i mean, what's the story with swine flu? has everyone had it now? >> i want to -- >> people aren't dying immediate -- >> it's a huge problem. is it going to come back twice as bad in the winter in. >> my kid had something. did they have it already? did they not get the next one? do we know? inquiring minds want to know. >> i went to the pediatrician with the girls the other day. she said, you're going to get the flu shot. anyone who comes in contact with the kids will have the flu shot. they hope the vaccine this fall will -- >> we were in queens yesterday and the first thing you said yesterday is we're in ground zero for the swine flu. we're in a car. >> he said, yeah but this is where it all came from. >> joe did -- >> i did good. >> sesame street. >> which we'll talk about. when we come back, detroit's lone survivor ford has quarterly numbers at the top of the hour. deal or no deal, the

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welcome back to "squawk box." i'm phil lebeau with ford third quarter numbers. ford posting a loss of 21 cents per share, $609 million pretax, a loss of $440 million. the street was expecting a loss of roughly 48 cents a share. q2 revenue, also much better than the street was expecting by nearly $3 billion. ford reporting second quarter

revenue of $27.2 billion. the street expecting a little over $24 billion. second quarter cash, this is going to get a lot of optimism on wall street, second quarter, ford ended with $21 billion cash on hand. the street was expecting ford to end with $19 billion. the cash burn rate, company continues to bring it down, improving it to a loss of $1 billion cash burned in the second quarter, compare that with the first quarter when the company burned through $3.7 billion. q2 north america, $851 million. guys, back to you. we'll have more on these numbers throughout the next hour. clearly, these are much better than expected results from ford as it's building momentum throughout the second quarter. back to you. >> phil, don't go away. we want to bring in some more insight, solei securities michael ward is on the "squawk box" news line. a detroit bureau chief joins us on the set, his book widely

anticipated is due out in january. let me start with -- let me start with you, paul. of the -- the different metrics, did you hear what phil said and what is the most impressive to you? >> i didn't hear all of what he said, carl. i think the cash burn thing is really, i think, a key thing right now for ford. look, the economy's not good. the car business is a feel-good business. the economy's not good. but the trick for ford is, they're really doing all the right things. the question is, will the economy get better and really improve their bottom line before their cash really gets to be a lot weaker? looks like there's good progress this quarter. >> you see, that's a function of joblessness or income confidence, what? >> consumer confidence is the critical thing for car companies. that's the really -- i mean, you know, unemployment is -- and joblessness is important, too, but the real critical concurrent indicator, if you will, is

consumer confidence. >> michael, how about -- how is the stock going to react to all of this today? >> i have to believe the stock will react positively. there were three things we were really looking at heading into the quarter. the a quarter. so it's an un -- it's an unaudited result so you have to take it with a grain of salt. net debt finished better than most expected at about $5 billion on the automotive side. cash burn was $1 billion, much better tan can people expected. loss in north america was more than i expected but bottom line, ford is restructuring, cost structure is in good shape. now they're positioned to take advantage of an improving revenue environment. their product is the best it's been in decades. >> there's been some talk in the last couple of days that if the industry brings back production to a level that will stabilize inventorie inventories, that could add as much as two percentage points to gdp in the third quarter.

is that going to happen? >> some economists are using a seasonally adjusted rate for production looking at the month of july versus june. june historically because of vacation downtime, july is typically down 40% versus june. this time it will be up 17%, but part of that is because of some unusual circumstances, including the timing of some vacation days at ford where they pushed it from july to august, trying to rebuild inventory. it is up, no question about that. but i don't think it's as strong as some have suggested. >> phil, from a product angle, what do you think is driving this? >> from the product angle, what's driving it at ford, obviously fresh product coming out, tourists coming out this quarter is going to be huge. you know, you heard michael talk about the product, the best it's been in decades. that is so important for ford right now. we're hitting a point where some believe at some point we are going to see this pent-up demand that's been built up by people holding onto their cars longer. at some point people will go back into the showrooms.

when they do, you want the freshest product out there. that's what ford has going for itself right now, especially with the tourist going into showrooms this quarter. >> yeah, michael, i heard you say -- what product you were you talking about, michael? because the taurus, that might be a quantum leap from where they are right now. >> it's a big plus. as phil mentioned, across the product line. ford has the drive train technologist, ecotrain boost is going to be the one of the best engine platforms throughout the industry. that will give them a lot of strong -- competitive advantage just on the drive train front. when you look at the new focus fiesta, global small cars should be positioned properly. the small van they're coming out with right now i think could be a surprise hit. their entire product lineup has been revamped very quietly. >> paul, the trajectory that chrysler, gm and ford are on. are they running parallel? is the gap widening?

relative to each other, paul. >> oh, well, i think the gap is widening right now. >> with ford ahead? >> yeah, ford is definitely pulling ahead. look, they've been able to -- first of all, what they've been able to do is do a lot of the things outside of bankruptcy that it took general motors and chrysler going through bankruptcy to do. they reduced dealer count, took a dip on debt, shed brands and did a lot of things gm and chrysler have done through bankruptcy without all that disruption. there's a real consumer perception advantage to not, you know, on welfare, let's put it that way. >> is there a step that ma law we has missed or has he played every card right? >> he's played the big cards right, let's put it that way. he got rid of jaguar, landrover and he focused on a very simple strategy. instead of trying to do six things at once or three things at once, he said, let's rebuild

the core brand, the ford blue oval brand. they put lincoln on a back burner and other things like that. and so i think that, you know, he's basically played the big ones right. >> michael, you agree with that? >> when he came on board in 2006, i believe it was, i think he was a fresh pair of eyes for the industry and it's worked out extremely well. >> can we take anything ford is saying today and extrapolate it -- apply it to what we might be seeing in the quarters to come from their rivals? >> i think as it relates to ford, one thing they've done very successfully, if you look at the results in the first six months of 2009, it looks like they have a break-even point in north america of somewhere around 2 to 2.5 million units, that's a 30% reduction from where it was a few years ago. so they are pretty much at break-even in north america. it looks like in the second half it's going to be pretty close. so they're probably ahead of where they've been telling us where they've been as far as progress on the cost front in north america.

as phil mentioned, when that revenue starts to ramp up and you have pent-up demand, i think ford is in a great position to capitalize. >> we start hearing the cash for clunkers program. about a billion dollars later this week. what does that do, not only in terms of stimulating demand but how much does it take from future sales? >> it take from future sales, becky. it's going to be a one-time boost. i think given the depressed state of the economy and depressed state of car sales, they'll take a one-time boost in car sales. it's not a bad thing. but i think you can't extrapolate too much into it. it will pull from future sales. >> michael, do you get involved in the business of price targets and where things could go? give me a best case scenario. the economy comes back. people like fords, the taurus works. it was $1, the stock, now it's $6.5. in two or three years, what is possible if everything were to fall into place, in your view? >> based on where they're going today, i mean, i'd be

disappointed if it's not a $15 stock. >> so $15. i mean, some day could this be like a regular stock again, $30, $40? could that ever happen? you remember gm went to $90 in the last ten years at one point. >> from an analyst's perspective it would be nice if there was a regular stock to follow. >> yeah, it would be. some day you could see something above the teens? >> to me it's very similar to the cyclical recoveries in the 1980 and 1990 period where you go through a typical restructuring in the auto industry. this is much more severe than in those two periods. and the company has restructured its costs. now you wait for the revenue part to kick in and ford is in a great position to capitalize. yes, i think you'll see another rebound like you saw back in the 1980s and 1990s and ford was one of the best performing stocks in the 1980s. >> i can't think of anyone that would hope against that, for what reason, other than you -- >> paul, a big story in "the

journal" today about the productivity at some big manufacturers, caterpillar saying when revenue does come back they don't need to hire a whole wave of people again and retrain them, which the dark side of that is the lingering problems for the labor market overall. is ford part of that camp, do you think? >> well, you know, sure, carl. companies that have gone through this terrible wrenching restructuring are not going to sort of open the flood gates right away. the truth is, in any business when things get good, you know, people start feeling better about their prospects. they want to -- they want to have faster growth in their company and they will bring back more people. the question is, how many more people? >> right. phil, any final thoughts? >> i'm most interested in seeing how ford handles the debt position from here on out. remember, they had one equity for debt offering in the second quarter. what did they raise? they raised $1.6 billion, issuing another $345 million. they took that cash, put it towards paying down the debt. they have to do more of that in the quarters to come.

how much does that potentially weigh on shares of ford which have had a heck of a run so far? i'm sure michael and other analysts will be talking about that throughout the day. don't forget, guys, coming up on "power lunch" first on cnbc we'll hear from ford ceo about the second quarter, much better than expected numbers. >> michael, are you still there? >> yes, i am. >> you've never run a railroad, have you? yeah, because we've got a picture of the guy who runs csx. so you'll probably hear about that at some point. he's not a bad looking guy, but it's not you. but it's a small -- it's a fine point. i hate to bring these things up, but just in case you hear from your friends -- >> i actually got an im from somebody on that. >> you did? we try. we do our best, but, you know, there's -- i think we're on a roll. three straight in this hour. having the wrong picture of the wrong guy. the wrong picture of the right guy. >> this week has been -- gary

kelly was the other one, right? >> yeah. >> michael, thank you for your time. phil we'll see you on "power lunch" and paul, always a pleasure. we look forward to the book. we'll talk more before it comes out. >> there is a lot going on. earnings keep rolling out. listen to this, bookings were up from a year ago, they're talking about bookingings of $7 billion versus the $6 billion from a year ago. they see earnings per share from continuing operations higher. raising the range of their guidance $460 to 4675 that they had previously told the street. street was above that at 473, right in the range where they're currently telling people. also you should check out hershey today. a stock already indicated higher, sharply higher, from where it closed yesterday. they came out with earnings better than expected, 43 cents on an adjusted basis versus 35 cents the street was looking for.

raised their outlook for 2009. they say it will be slightly above that 6% to 8% range. this is another company that saw big gains in net sales and profits. gained in profit share and tir advertising was up sharply, 46% as they did big proceed moergss for easter, the smoerz promotion. if you have any comment or questions about anything you see on "squawk," e-mail us at squawk at cnbc.com. more earnings reports on the way. three dow components out before the bell. you'll hear from microsoft, american express. weekly jobless claims are on deck this morning. right now the futures are a little above fair value. you're talking about those dow futures up by 12 points above fair value. when we return, the man who is leading the republican charge in health care reform, senator jim demint on coverage and costs. also coming up, we have heard from wall street's banking

giant. what about the smaller banks serving americans across the country sdm we'll take the pulse of america with kelly king, our guest host after this short break. time for today's aflac trivia question. a jiffy is a unit of time. how long is it? the answer when cnbc "squawk box" continues. aflac! you really need it these days. how come? well if you're hurt and can't work it pays you cash... yeah to help with everyday bills like gas, the mortgage... ...and groceries. it's like insurance for daily living. so...what's it called? uhhhhh aflaaac!!!! oh yeah! that's it! aflac. we've got you under our wing. a-a-a-aflaaac!

now the answer to today's aflac trivia question. a jiffy is a unit of time. how long is it? the answer, 0.01 of a second. >> can't really do anything in a jiffy. you say, i'm going to do that in a jiffy, it's not long. joining us for the next two hours to discuss the fed is kelly king, ceo of bb&t corp. good morning. >> good morning. >> we have to start with what's on everyone's mind and that's credit quality. what we saw with wells yesterday and even when you reported, still concerns, your stock was down that day, still concerns about, in your case, i guess, commercial real estate and real estate investments? >> well, not so much in commercial. that's the general concern in the industry. us was more focused on residential.

>> residential. >> some consumer lot portfolios. >> what was the metric in your result that caused some people to have concerns? >> what happened was we reported that we had a $1.8 billion consumer lot portfolio. this is where, like, frachl, your sale was up three years ago. you bot a lot in hilton head, planned to retire there so we did you a three-year or five-year bullet loan. now you decided not to retire, 401(k)'s down. what do we do with that loan? and so that gets to be somewhat of a problematic portfolio. in most cases say, let me renew it, ammortize it, works out. some just walk away. you get extra deterioration there. that's what caused a spike up in the charge-off ratio. >> i would think that, you know,

maybe it's a different part -- a different kind of loan or maybe there's a different asset we're buying. every bank in the country -- >> everybody does it. >> -- has things like this, getting worse. >> well, so, the general -- >> is it peaking? >> well, yes, yes. i think you're within a couple quarters of kind of peaking. so what's happening to the general -- not the commercial, we'll talk about that separately but the general portfolio, residential portfolio, is prices are still declining but at a slower pace but sales activity is increasing at a material pace, tarlly at the lower end. and interestingly, when you get to houses $300,000 and below, the $8,000 tax credit really matters. which is, of course, another point. but we should have had a different kind of tax structure incentive for the housing situation. but in any event, so you're seeing sales activity. actually beginning to see builders look for inventory to build the smaller houses because that inventory is clearing out.

higher-end houses, still a problem. >> the jumbo market must be the flipside of that. >> the flipside of that. because when you get to $500,000 up, certainly $1 million up, people are just not moving. >> why is that? what's it going to take to change that? >> well, there's no tax incentive. people still think there's going to be additional price deterioration, so we wait. and, frankly, a lot of the higher income people who would buy those houses are unnerved now because of all this rhetoric out of washington, you're going to raise my taxes for health care, raise my taxes for, you know, 35% or so, and i am i ready to make a decision today with all that uncertainty. >> to lever up as i'm facing potential tax increases down the road. >> yes. >> what do you make of the argument the major banks are buying their rivals, right, getting bigger so their incentive to give a higher savings rate or broaden the conditions of a mortgage is

lower, that they are essentially, stingy and will increase our risk of going into a double dip, let's say? >> i don't think that's true. i think the larger banks are getting larger. this is a trend that's been going on for a long time. i believe that trend will continue. the supposition is if you end up with a few large banks they all take advantage of the client. >> fees, all that. >> that would only be true if you had one national oh. as long as there are multiple players, you'll see ruthless competition. you know, in our market, and i've been in it 37 years, we've always been up against b of a, wachovia, the old first union. we were the dominant players all these years. control a major portion of the market. ruthless competition. so i think people should not worry about a lack of competition in the financial services industry, even as we have consolidation. we still have 8,000 banks in the country. we don't need that many. >> right. there's still some warfare going

on. we're going to continue the consideration. but i do think we have to go to phil lebeau who has information correct me if i'm wrong, phil, regarding ford? >> and alan mulally. >> i just got off the phone with ford ceo mulally and had a chance to talk to him about the second quarter numbers, better than anybody expected on wall street. two things i talked to mr. mulally about. the first one, listen, they're within spitting difference of turning a profit. they say 2011 is the goal. i asked him, do you move that up because you're making so much progress? he said simply we're on target to meet our profitability and cash flow targets, which is to be positive by 2011, although i think wall street has thrown that out the window. wall street is expecting it to happen much quicker. al mulally sticking with when he always does, underpromising and overdelivering. he said he will continue to improve their balance sheet but he will not commit whether there

will be another equity offering to raise cash to pay down debt. first on cnbc coming up on "power lunch" with mr. mulally. back with you. >> thank you very much. we'll check in with you a little later this morning as well. also coming up today, president obama making his health care pitch to the american people last night. this morning, congress responds. republican senator jim demint leading the charge against the president's proposal. he'll join us live. later, sallie krawcheck in her own words. the wall street power player no longer tied to citigroup. she'll join us on set and speak her mind. we'll be talking citi, the financial crisis, the global economy, what happened, what went wrong is the conversation you will only see right here "squawk." undefeated professional boxer floyd "money" mayweather

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coming up, double the dow components, double the earning excitement, quarterly results expected within minutes from 3m and at&t. we'll get you the numbers and the analysis from some of the sharpest minds on wall street. also, the politics of health care getting nasty. >> if we're able to stop obama

on this, it will be his waterloo. it will break him. >> senator jim demint comes out swinging in this dnc web ad. he'll tell us why the obama health care plan is all wrong.

welcome back to "squawk box," everyone. let's take a look at the markets. we have seen futures a little above fair value. yesterday the dow traded down for the first time in eight sessions but the nasdaq has been higher for 11 trading segs if a row. you're talking about the dow futures up about 18 points above fair value. as we continue to get these earnings rolling out through the morning. ford shares are called higher after the company posted a smaller than expected loss for the second quarter and reported revenues well above expectations. as you can see right there, that stock up by about 45 cents this morning already. that's a massive bid. that's a better than 6% or 7%. in other auto news, toyota will begin talks to exit from general motors in california. toyota wants to liquidate its stake in the freemont assembly plant. it is still possible that the operation could be sold to another company.

going to be waiting on earnings, we're still waiting for at&t and later we'll get american express, amazon tonight, microsoft. a lot of people are talking about, the nasdaq's had -- >> it's been 11 days in a row and future are indicated higher today. >> the take is that the 12th up-session for the nasdaq is in microsoft's hands. >> american express will be out a little later today as well. after all we've heard from the financials, people have some high expectations. big question going to be, what type of bad loans the company is seeing with and what sort of consumer patterns american express is seeing as well. a lot of people still continuing to use their charge. >> 3m, $1.20 is the nongap number and 94 cents looks like the estimate. so that looks pretty good. i think at&t is -- is at&t slowly coming out here? i've got a revenue number, i think it's -- it is slowly emerging. we'll try and do both as quickly

as we can. let's see what i can get on at&t. at&t looks like $30.73 billion on the revenue number. whoever is going through the press release at reuters right now hasn't found the bottom line number yet. let me just get telephone over here, too, and i can tell you -- >> 64 cent difficult luted earnings per share. >> the revenue is -- >> sounds like the earning per share is above, too. 54 is the earnings per share, diluted earnings per share. >> yeah, we'll see whether they say nongap somewhere. but at this point it would be ahead. i was shocked at that market cap number we gave, $146 billion now at at&t and a 6.6% yield on at&t. and it looks like it's initially going to trade higher. bid's up 11 cents from where it was. let me go back. >> some of the questions -- some of the questions for at&t is

what happens with their wireless subscribers because wire line, a lot of people look at, is a slowly dying business but wireless subscribers, they say, $1.4 million net gain in total wireless subscribers putting them at 79.6 million wireless subscribers up 6.7% over the last year. talk about churn. they say they saw a record low post paid subscriber churn at 1.09%. churn is where people drop out of them and switch to someone else. very low churn numbers. >> the 3m numbers, they're saying in a word, improved demand for consumer electronics is what did it. it's a 1.20 versus 94 on 3m. sales fell to -- you're talking about 3$300 million more in sales. they gave an outlook, a 397 estimate. so 410 to 430.

remember, it had been 94 cent number in the second quarter and they did $1.20. you already got an extra 26 cents. if you add 26 to the yearly estimate you're up there somewhere between 410 and 430. do we see 3m -- yeah, look at that. immediately it looks like it may trade higher. >> that's going to add to the dow. >> how do the futures -- the futures probably reacting? >> it should have picked up. >> someone is asking $2,000. >> that would be overbought. >> they're not going to get that. >> that would be a rich multiple. >> it would be. i don't even think there's options on the 3m $2,000. >> you can see padres future are up. let's look at the dow. dow futures up higher as well. >> let's get some reacts to at&t's earnings. joining us on the "squawk" line is managing director at arega usa, shandon. looks like a decent beat on the bottom line. >> the overall revenue number

was basically in line. i think the biggest surprise here is actually on the wireless side, how well they did on both subscribers and churn. >> the net gain, right, of 1.4 million, record low churn. we knew these were going to be decent after hearing about iphone sales from apple. is that what's doing it? >> that might be part of the explanation. we're still a bit surprised here at the overall numbers on net ad, especially since the u.s. wireless market looks like it's pretty close to saturating here. we really thought there would be a slowdown and this would be the first quarter we would see it. that has not happened. >> you were looking for about 900,000, right? >> right. >> they beat it by 140,000. is this true, 85% of the total u.s. population has a cell phone. at what point would we really expect wireless subscriber growth to flatten out? >> we predict that something in the very low 90% range is probably the maximum. keep in mind, this includes everybody in the united states, from babies to very, very mature

people that are not going to have cell phones. so this is basically, we think, getting very, very close to the end. >> this is kelly king. how dependent are they on their iphone exclusivity relationship? do you think they have a great risk as that exclusive arrangement wears down? >> they have the exclusivity through 2010, no one knows the exact month it will expire. it certainly moves the needle for them much more than they thought before they signed up. i think if you look underneath these results, this is more than just the iphone. i think they're holding onto their market share, on the high end and low end, better than i was expecting. the iphone is definitely material for them. >> all right. interesting, though, that it goes beyond the iphone dynamic. appreciate your time. thanks. chandan at auriga.

president obama used his latest prime time appearance to try to gain momentum on the health care appearance. >> i do think it's important to get this right. and if at the end of the day i do not yet see that we have it right, then i'm not going to sign a bill that, for example, adds to our deficit. i won't sign a bill that doesn't reduce health care inflation, so that families as well as government are saving money. >> here now with the republican reaction to the speech is senator jim demint, a member of the commerce and joint economic committees. senator, thank you for joining us this morning. >> thank you for having me. good morning. >> you threw down the gauntlet the other day when you said, this is the president's waterloo. if this doesn't get passed it's going to change everything. do you still think that that's the case? >> well, the president was having to dance around the facts last night. unfortunately, he's been on a stampede to increase spending and debt and taxes and take

joefs of various aspects of our economy. and i think the health care industry, if the government takes over the health care industry, i'm afraid it might push our country over the cliff. so this is a big battle for us here. we can reform health care. we can get more people surinsur. we don't need the government to take it over. i've probably introduced more health care reform proposals than more democrats. the president voted against all of them when he was here. so i really question whether he wants people to have insurance or whether he wants the government to take over health care. >> senator, the president laid out in one line, he talked about how he said, if somebody told you there's a plan out there guaranteed to double your health care costs over the next ten years, guaranteed to result in more americans losing their health care and that is, by far, the biggest contributor to our federal deficit, i think most people would be opposed to it. that's what we have right now. you talk about change but is there any sort of consensus you think could be built around to

actually come up with significant reform? >> well, again, the president voted against reforms when he was in the senate that would have helped individuals buy health insurance if they didn't get it at work, that would have helped the unemployed get health insurance. i've introduced proposals, as have other republicans, that would give people a -- families a $5,000 a year voucher to buy health care if they don't get it at work. the heritage foundation says within five years we could have 23 million americans insured for a fraction of the price the president's talking about. so what we need to do is focus on getting more people insured, not this idea of thousands of pages that have to be passed in two weeks. you know, i'm amazed to hear him say we have to get this right and then he turns around and says, we have to vote on a bill that we haven't seen within two weeks. we've got to put the brakes on this. we've got to slow things down. the language in the bill doesn't take effect until 2013. so why the mad rush to totally

take over a health care system at the federal level? >> the president has said that the health care insurers have behaved badly for years and not pulled back in line when they've been given opportunities. he says there needs to be a public plan that forces them to get in line. how do you think any sort of successes or overspending or undercare coverage -- >> there's no question -- >> could be fought? >> there's no question the health care industry need a lot more competition and scrutiny. but the president voted against a proposal that would have allowed americans to buy health insurance anywhere in the country instead of, trapped in their own state often with one or two insurance monopolies. we need competition, but we don't need the government to come in and create a plan. we need to let americans buy health insurance anywhere in the country like they can buy anything else. but the fact is, that president obama and the democrats have tried to block this kind of competition for years. so what we're trying to do right

now is just expose the truth. the biggest casualty of this debate has been the truth. the president makes promises but the policies don't carry out those promises. that's not just a partisan view. that's a view of the congressional budget office, of outside groups that are looking at this. they're saying, 80 million americans will lose their health insurance if we carry out the president's plan. >> if the public plan proposal is dropped, let's say that happens, can you work with the president and the other side on crafting something that would help, that would reform health care? >> i would love to reform health care in a way that made health insurance more affordable and accessible to every american. that should be our goal, that every american has a health insurance plan they can afford and own and keep. but i don't want a plan where he says, okay, we won't have a public plan but we're going to put mandates on every policy that it has to cover abortion and every other thing that is on their liberal agenda. >> would you require all

americans to pay for health insurance, like they're required most of the time to carry car insurance? >> that shouldn't be our first step. the first step is to make sure it's affordable and veilable. later on if we find out we need more incentives for people to own health insurance, we can do that. the fact is, we haven't tried yet. the democrats have blocked everything that has been propose add over the last few years that would make health care more affordable and accessible. i have a whole list of things i could give you. they would not even allow it to be deductible. if the cost of health insurance for an individual who buys health care, just like we give to businesses. so i'm just confused about what the president is trying to do here, if he's against real reform of health care, it appears that all he wants to do is get the government in control of our health care just like it is of general motors and aig and our banking system. >> but what i'm hearing you say, senator, is that even if he drops the public option, that would not guarantee support from

republicans like you. >> we want to work with him but now he's trying to jam something down the throat of the american people in secret. we don't know what this plan is except they're changing it every day. we have over 1,000 pages we're trying to rifle through to see what's in it. we want to work with the president. we tried to work with the democrats. i've introduced bipartisan health reform legislation before, with democrats. but what this president is doing is not health care reform. it's a government takeover. >> i guess i'm saying, though, dropping the public option would not be some sort of panacea to getting something done. >> not necessarily. what we need is a real focus on getting americans insured. >> understood. last night there was some reports that said he dropped a reference here or there to the public option. people want to read into that that he's maybe open to a policy shift. do you think that's what happened last night? >> well, he was dancing around.

he didn't give us any new information but he, again, giving promises that aren't in the policy. and he seems to be waivering on whether or not we have to finish this in two weeks. if he wants to get it right, we need to sit down down at a table and work together and come out with something that will get americans insured. that needs to be our goal. a government takeover should not be our goal. >> senator, i share your concern about getting the truth out. you know, one of the issues here is that we're hearing all of the potential glamorous positives but we mayan be looking at the negatives. i was talking to a friend recently who talked to a father in canada whose daughter had just been diagnosed with terminal cancer without immediate treatment. he was sharing that under their universal health care government control system, they had to take a ticket, stand in line, it would be nine months before his daughter could get treatment or she would be dead. the only option, thank god, is he can come to the u.s. and get

treatment. are we really hearing the downside of this in your view? >> no, we're not hearing the truth. the president is trying to make this about him. he's trying to say this is partis partisan. it's not partisan for me. i had a small business for years. i had to buy health insurance for my employees. i know what we need to do in order to get more people insured. >> senator, in order to say it's not partisan sort of flies in the face of you saying you want to break him. or that this will break him pip know you've -- you haven't backtracked on the waterloo comment but some of this is politics, not policy, right? >> this is all about bad policy. it has nothing to do with republicans or democrats. republicans have a lot of different plans -- >> but why rhetoric like that, senator? >> well, it had the desired effect of getting people's attention that this is a very important debate. it's very important for our country. if we allow this to go through, we could break our country financially. as far as the debt we're creating and this health care system, that's the best in the

world could become a medicaid system for everyone. it's a real important issue. we cannot allow the president to push something else through -- >> senator. >> -- with glowing rhetoric that -- >> can i just ask you, though, you said that you think this is an issue that is all about him. i mean, personally, i look at this as an incredibly confusing issue that a lot of people are coming at from different perspectives, probably moss of them with the best interest at heart of trying to get to a solution. you don't think that's the case? >> well, there are a lot of good intentionings here. there are some folks who honestly believe that the government can run the most personal and private service that americans want today. i'm not questioning good intentions. again, it's not personal. it's not about politics to me. it's about something that really works. and i've worked in health care years before i came to congress. i have a little bit of knowledge about it. and i know that the proposal that's on the table will destroy our health care system. >> we had senator voinovich on the show yesterday. we asked what percentage of all

this disagreement is about declawing the president and how much of it is just avoiding bad policy. he said it was about 50/50. i'm sure you would agree that if republicans succeed in killing this plan, it will be good for your party, right? >> no, it won't, unless we get a proposal on the table that the americans can see that helps them get insured. we want people to look at our proposals. we're the ones who have been introducing health care reform in congress for years. the democrats have been blocking it. now they're throwing up their hands and saying, look, the system doesn't work. the government needs to run it. >> all right. senator, thank you. we appreciate it. we'll get to 3m. carl, there is -- senator, if you look, there is an editorial, op-ed page that clinton, that president clinton, didn't find his mojo until hillary care was defeated. >> because they -- >> it moved him more to the center where he was able to work on things -- >> and became a new kind of

democrat. >> and that's where all the progress was made. so, you know, by saying that this is -- senator demint could be saying this is the best thing that could happen to president obama. tough love. >> i don't think that's what he's saying. >> he may be saying it. we don't know what's going on in his mind. we are talking about 3m. 3m reported results way above expect takings. i want to mention a couple things. it was $1.20 versus expectations in 94 but below the $1.32 from last year. revenue above expectations however, once again, revenue was below last year as well by about $1 billion. good numbers, but kind of what we've seen everywhere else. both earnings per share and revenue down from last year but above expectations. we have the director of global industrial infrastructure at stern, ag and leech. well known name, nick haman. nick, they said -- did they say

consumer electronics, connect the dots for us. what the heck does 3m make that end up in consumer electronics? >> optical cells for optical tvs. this is a very volatile business. inventory swings are, you know, very frequent. and these sales in the optical films, graphics and displays were up 32% from the first quarter. that's where your big driver for the earnings surprise was. >> yeah, that's interesting. the company didn't really say anything that great about the economy, did they? >> no, no. you didn't see too much about the visibility going forward. you did have a change in vacation policy, two or three cents. you had more favorable fx two or three cents. the biggest driver, in addition to strong sales for res pir raters and masks due to the swine flu was lcd sales. >> that's amazing. so lcd sales and swine flu masks. and a change in vacation policy? >> you can no longer bank it

there. you have to use it. that allowed about 100 million over the last three quarters -- >> i find that here, too. france could make it. every company in france could make a little more money if they change their vacation. nick, we've spent a lot of time with senator demint. we appreciate your availability for us today. we'll get to you the next time we have a company in your universe. thank you. >> thank you. >> good beat out of 3m, out of ford, out of at&t, three for three on the big guys today, pretty much. >> yeah, i think so. >> a lot of the smaller guys, too. raytheon raising guidance. >> when we come back, more on earnings. she fought on the front lines of the financial crisis as a top citi executive, sallie krawcheck basically saw it all. now she's out on her own and speaking out. a unique conversation with sallie at 8:00 a.m. eastern time on "squawk."

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wow. let's take a look at just one stock to watch, carl. one that's not doing -- that didn't seem that great? it's that one. 49 cents. that was in line. however, revenue of 10.83 was below 11.83. how about this?

the guidance for third quarter -- >> don't tell me. >> the estimate's 59. they're saying 45 to 55. that's not -- >> isn't their guidance historically conservative? >> i think that's true, too. wouldn't you be if -- >> it's hard to -- >> and this is the most sensitive, you figure, if you want to measure commerce. some people measure cardboard boxes, packages. coming up, we are waiting to take a bite out of the quarterly results from dow component mcdonald's. plus, she is one of the most recognizable faces on wall street. former top citigroup executive sallie krawcheck. she's with us. 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

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welcome back. been a busy day for earnings. you had good beats from ford, at&t and 3m. mcdonald's is out with what looks to be another beat. looks like second quarter results 98 cents and the street was looking for 97. but the real story comes in same store sales which have been good over the last couple of years. again, up 4.8% in the second quarter. global comps up 4.8%. and pretty much, beck, i think

in every region you were saying -- >> across the globe, stronger comps. >> asia-pacific and so forth. they say they expect july same store sales to be similar or better than june. currency, another big deal with all the multinationals, 2q eps cut by 9% because of the translation. jim skinner in the press release talk about the company's plan to win, as they like to call it, says in today's economic environment our performance speaks to the strength of our plan and mcdonald's -- >> i'm not sure why the stock is trading down. the revenue came in lighter tha expected but facing currency headwinds. there's nothing in terms of negative comment coming from skinner and his comment so far sdpoo we'll talk more about mcdonald's. between that, joe, 3m and at&t -- >> a hat trick, yes. >> some decent names and results out of the big dow guys. let's take a look at the futures now that we have heard

from four dow components this morning. all four beating expectations. three look like they'll be trading higher in the premarket. you can see the dow futures up by 34 points above fair value. remember, the dow was down for the first time in eight sessions yesterday. nasdaq was up for the 11th session in a row. we'll see where things head this morning. we also have jobless claims on the way. that comes at 8:30 eastern time, less than half an hour away. our guest host is kelly king, the ceo of regional bank bb&t and he is with us for the next hour. you know, one of the things we mentioned earlier and haven't had a chance to talk about on air, kelly, is cit, the situation with cit, if it went under, there was an argument that small businesses and medium sized businesses would not be able to find financing. the other banks would not step in. what about bb aempt t. >> no question that bb&t and all the other financials would be able to step in. you know, there's a myth out there that the banks are making loans and that the banks don't have capital to make loans. there are a handful that may be in that situation but the vast

majority, thousands of institutions, have plenty of capital. in fact, we're eager to make loans. we have hanging on all of our 1500 branches banners that say, still strong, still lending. >> we hear anecdotal evidence in e-mail from people saying, i'm a small business owner, i'm a consumer, i can't get credit. what do you think that's a reflection of? is it a situation where the standards have gont a lot tougher and maybe they don't qualify? >> that's monday mentally what happens. i'm sure there may be a rare situation where there's a lack of communication and the story doesn't get completely conveyed between the client and the banker. by and large, the bankers are motivated to make the loans. most loan officers are on incentives to make loans. so if it's a qualified candidate, why would the bank not want to make the loan? and so you can understand when you're talking to this client who's had their loan turned down, they'll give you their view. but the truth is, it's generally a situation where they simply

are not qualified. many small businesses have great ideas. and they're the heart and soul of america. i love dealing with small businesses. but a lot of small businesses do not have reasonable capital. in many cases they have a linear type of experience, diversified experience to run an operation to encompass the kind of risk they're trying to take on or they have two best friends and trying to add two more. >> the bottom line is it's going to be much tougher for entrepreneurs. >> it's the nature of, first of all, about small business. you hear about it now. this is not unusual. even in the great times, lots of small business loans are not approved. >> kelly will be with us for the rest of the hour. now is on a special "squawk" exclusive we're joined by sallie krawcheck, first live tv q interview since leaving citigroup. it's tough, i know you can't address citigroup directly, sallie, but we want to we will cop you onto the program. >> thank you.

>> thank you for, with us. the first question is, at this point, given where we were a couple years ago and where the banking system is right now, how has it changed and can we take sal solace we're in much better -- >> there's a lot of lessons learned from the downturn. if you had smart people before, they are smart people who have learned a lot of lessons going through the downturn. we're certainly in better shape because we've got as an industry that much more experience. there's still leverage there, clearly but less than before. what we're certainly seeing is an economy we're going to debate, is it improving, you know, fast enough, is it improving -- a jobless recovery, a profitless recovery, this recovery or that recovery. there's no doubt we've come to the bottom, bouncing along the bottom but there will be a recovery one day. these institutions, there's less competition than there was before, which means there will be maybe not quite as much

business but quite a lot of business to go to fewer players. so the business is going to be in good shape over a reasonable period of time. >> but the myth -- the really cut-throat competition that we saw a couple years ago -- i guess, even from europe, the banks where they look ascance at us because we weren't levered enough. >> i don't think there's anyone at goldman saying, we should be careful with those fellows at morgan stanley. >> morgan stanley didn't take enough risks. >> in hindsight in this quarter they did not take enough risks. we'll see what the next quarters bring. certainly, a very good competitor. i think the competition will still be very intense. what we are seeing, however, is that we've lost a few players. so i think what a lot of industry observers miss is they talked about the death of the investment bank and the death of the financial services. earnings pool is the fact that when you do have competitors leave, you have spreads broaden

out. everyone said the roes are going to be down forever. yeah, they may be more muted than before, but you've got the spreads widening, which are offsetting some of the -- you know, some of the business that's gone away. >> do you think that every bank executive now needs to look, though, at the rest of the industry and say, look at what this firm's earning or look at what they were able to post here, and look what they're focusing on, whether it's mortgages or whatever it was from a couple years ago. is there still that pressure to make sure that you can deliver the same bottom lines as peers? there must be, right? >> well, yeah. look at what y'all do for a living, right, and look at what all the research analysts -- oh, you know, we should be -- we should be more gentle on these guys. i -- you know, yesterday morgan stanley got creamed, right, in the press because they weren't delivering enough. so there's certainly that pressure. you get the pressure from the mutual fund companies, from all the investors, from tv, from the press.

you know this -- >> from other banks. >> you get it from everyone to try to continue to drive results. i think what the industry needs to do and step back, though, is there's a big desire to say, oh, thank goodness that's over and we can sort of get back to business. i think what people need to step back and recognize is that i know the individual investor pretty well. and they're sort of standing back and saying, hold on, guys. we had the research scandal a few years ago. we've had this downturn. the research scandal i felt like i was underperforming the market a bit. in this one i got scared for a while, i was going to lose my safe money. i've got trillions of dollars of investments. i'm not sure i trust you guys anymore. there was a study by a small firm last year that said, 90% of individual investors were thinking about pulling some of their money from the wall street firms. so there's a real level of skepticism and anger out there. i think wall street needs to be quite aware of this. >> this is the point you made in the ft yesterday regarding credit agencies. if you don't trust equity

research, that's one thing. if trust in other markets -- bond markets, so forth, the trust goes there, we've got real problems. >> i make a pretty broad point about this. if you talk to the individual investor and look at the obama white paper on transforming financial services, they don't really understand a ton of it, right? i mean, what is a credit default swap anyway? a lot of people don't understand the nuts and bolts of that market and what changes in some of these markets. they get the credit agency conflict. they get it. the fact we're now talking about just more disclosure when there's already so much disclosure that they don't read already, they tell us. you know, we pledged to do a better job with the conflicts of interest. there's a risk they look at that and say, you know what, not enough. if you're not fixing that, how can i extrapolate about fixing w the whole rest of the issue? >> that's an argument wall street needs to be policing itself, though, or they're not going to get the business back.

there's so much the administration can do. but do you think there's a real sense inside the industry that there needs to be some sort of change or the idea that the american public will forget this, too? every few years they forget. >> i think the intentions are in the right place. this caricature of wall street, evil people, right, you know, we're going to take advantage -- >> you do that very well. >> thank you very much. eyed a lot of practice at home with the hee, hee, hee. i think these are good people trying to do well who are under enormous pressure, right? the pressure of delivering the earnings, the pressure of the next innovation, the next leap forward in technology. and so they have to balance those pressures. you know, in extreme, you know, clearly they take more daisht industry has taken more risks than they should have. >> you said you know yourself you know individual investor and wealth management pretty well. at this point i think people are looking for something that create a lot of opportunity. if you google your name, how

many -- do you know how many industries come out for that? >> no. >> 151,000 industri entries. >> is that a lot or a little? >> i can't look at them all but the most recent has you tapped to run some new type of entity, like at ubs or even better -- i don't know, con sorting with former merrill guys to maybe buy merrill back to buy -- >> turning down offers from geithner, treasury. >> all kinds of interesting things that i know i'm going to get a big no comment on. my question was going to actually say all the things i wanted to say but what's going on? what are you doing? >> thank you for the question. i appreciate it. and as much fun as it's been to nag my husband for the past many months, and i know he's enjoyed that as well, i do think there are some really interesting opportunities in the -- in the investor space, the wealth management space, the individual investor space. and so i am taking some time to

look at some initiatives or opportunities there, which is a longer way of saying, no  comment. >> this is a longer way. >> makes it sound like you answered the question. >> i thought i zigged through there okay. >> i could almost draw a scenario, you get mccann at ubs, they loved him at merrill so you have a sales force of 15,000 guys that may or may not be unhappy at this point. there's an opportunity to create a premiere wealth management firm from the ashes of what we've been through. >> well, look. i think -- i think there are opportunities, putting inside, you know, personal -- >> names. >> yeah, the names and all that stuff. when you step back to the core and look at the investing public. you know, the investing public feels like there's an insider's game, that they just didn't get the joke for it. and they're many years behind in saving for their retirement currently. they're questioning whether these things they grew up

believing, such as, you know, invest in equities and hold forever, you know, whether those things actually work. whether, in fact, asset allocation worked the way it was supposed to. where was the diversification that i as an investor was supposed to get? i think there is an opportunity given the broken trust. >> an opportunity from a washington perspective or new york perspective? >> everything, everything. >> but isn't the real key, you know, that there's just a huge opportunity in wealth management globally because it's still a global growth business. we have the baby boom generation really moving through the final accumulation of wealth, the distribution of wealth. and so however it is done, whether it's sallie running whatever, the opportunity there for people in the financial services industry is really, really wonderful. and seem to me one of our / challenges as financial services people is to paint a bit of a more positive, optimistic view out there. a lot of what has happened is that banking's bad, financial

services is bad, wall street is bad, there have been mischievous activities and we can improve, but fundamentally the financial services business in the united states is sound. would you agree? >> i agree. none of us are getting any younger but most folks have gotten -- most of us have gotten poor. so there is a great opportunity to help people save the money they need and put away the money they need for retirement. you know, there is a special -- really sort of a special responsibility when one is dealing with the individual investor that i think we in the industry need to be aware of. >> how much time, though, did you spend assuaging or dealing with concerns with the collapse of the dollar, ram apant inflation, breakdown of society, that would make you not want to spend a dime, bury cash outside your house.

>> which creates the opportunity. panic. at one point when i was back at citi, i was on three calls a day with our advisers and clients, right, when we looked like there was going to be the big run on the money fund. so certainly there was a lot of pain and anxiety out there. and i think now the individual investor is suffering a bit from post-traumatic stress syndrome. something that hasn't gotten much attention in the obama white paper is quite an important point, is having the wall street firms who deal with the individual investor takefy dishary responsibility as opposed to the broker/dealer responsibility. f broker/client, i do the best for you. >> that's certificate filed financial planners. >> right. there's been the difference between the two that the investor didn't realize was there. particularly when you have the investor worried about the conflicts inherent in the diversified financial services model, to have the adviser stand up and say, i'm doing the best for you, right? and in theory you're going to

pay me as your portfolio gross, as you do better, as opposed to just commissions for advice. then you've really got, i think, a business model that is a very strong business model. >> it is an important piece you've written about that america needs to understand better and that is, you know, from 30 years ago we basically detached a lot of asset production from the banking system through the securitization process, which could not have happened without the rating agencies, which in my view are at least substantially coupleable in terms of what transpired. what do you think we could do to bring more transparency and realistic rating so that people can have a renewed sense of confidence in various securities? >> first of all, i think one -- one point we should make is that, you know, people can be wrong and be honest, right? and so the fact that the rating agency upgraded this, downgraded this, changed their minds, look, that happened -- >> a lot of guys at aaa ratings, even while they had massive

adjustable rate mortgage -- >> absolutely. you know, they made mistakes on the securitization. heck, they made mistakes in aa ratings for the banks, ge and so on. that was a -- may have been the bigger mistake, quite frankly, as opposed to rating securitization. what you have to do in order to give the confidence back is break the conflict that the issuer is paying them for the rating. by the way, you can say, okay, we're going to sign this and put that asset up. i think what people forget is there is sort of a behavioral reaction that if you're spending time with these folks and you're debating with them, you end up -- you end up at the end of the day, it even if you think you're doing the right thing, you might just because you like them and they're paying you, sort of tilt them one way or give them a third chance. as we break that, as we did with research analysts, which was part of the spitzer -- you know, the spitzer agreement that worked very well.

until we do that you'll have that underlying issue. >> you talk about the lack of trust that's out there, the concern that americans have about putting money back into the stock market. and bill mueller had a note he put out that talked about how he thinks we are ready for a bull market run again. one of the reasons he pointed to is because the amount of money sitting right now in money markets, he said it's equal to the amount of money sitting in equity funds for the first time in the last 15 years. if you go back to 2007 there was three times as much money in equity funds as in money markets. the point you bring out makes it almost undermine his idea that people are going to be getting out of the money markets and back into equities. >> it can go two ways here. if you can have the individual investor say, oh, thank goodness that's over, let's move back in, that's one way. then there's the other way, sort of the post '87 crash, the post-traumatic stress zosyndrom where people freeze up for a while. thank goodness we're not going bu a depression so you have a

little rally and then you have the potential investor step back for a period of time because they're confused. it can go either way. >> doesn't that make you worry whether it's an investor or bank, that skiddishness, doesn't that make you worry about us potentially going into what they call a double dip? >> sure. sure. >> it's possible? >> yes. >> likely? >> it's -- well, i'm not an economist. but, you know, anything's possible here. look, in my opinion we're going to do this for a period of time economically. we'll have two steps forward, two steps back, half step forward, two steps back and we're going to work through it. but if you look again at what the banks are reporting, what you're seeing is pretty classic here, which is you had the securities that the institutions held, were looking forward and discounting a -- everyone sat around and said, oh, couldn't possibly, right? now you have the consumer in that downturn. then you'll have the commercial real estate follow third. so it's really sort of working as per plan, isn't it? >> that's a little comforting, i guess.

really quick on compensation. you're the newly appointed head of compensation on the dell board, is that right? >> it's been three days now. >> congratulations. >> thank you very much. >> we're convinced you have an entirely new plan you can lay out for us three days into it? >> the president this week said wall street hasn't learned -- they haven't changed their stripes. they haven't learned how compensation is viewed publicly in this country. goldman could pay an average of 800 grand per employee this year. have they learned anything? >> well, look, i take it back to the point of view of the perception there of the individual investor, right? if the perception is that these guys don't get it and have gone through this and haven't learned a lesson, and if compensation is viewed of, an example of not getting it, then they can extrapolate that on to the rest of things happening in the industry and incorporate that view as they think about making their investment. so i think that's sort of the broader and bigger point. not is this guy going to pay

this or that, but instead are we doing the things to sow the seeds of confidence in the system. >> it is a question, carl, what is the lesson they're supposed to have learned?o >> we have had this discussion, haven't we, joe? you have to retain talent but -- >> the lesson they should have learned is if it's opm you don't deserve $50 million. your money wasn't on the line, right? if we've learned that. if it's other people's money, ramping up the risk, going 30 to 1 and going in -- taking on all this risk and suddenly your compensation is tied to a formula based on these profits that aren't there two and three years down the road, you know, there's guys that have retired with $150 million that didn't do anything other than risk other people's money. >> true. >> that's the lesson -- >> that is an important lesson that should be learned. >> i think you should eat what you kill. i think that makes sense. you have to make sure that what you kill stays dead. >> but here's -- >> i was with you on the first

part. >> there are very talented people in investment banking. and what are the costs of doing business with you're a financial firm? it's not aluminum. it's i.t. and people, right? and it's -- i guess you have to rent a building or something but after that you can't be surprised when you pay people. >> but here's the lesson that is not meant to be learned. just because people make a lot of money isn't bad. are we concerned about entertainment people that make a lot of money or sports stars that make a lot of money? >> no but if you're taking risks with other people's money -- you know, they're not even entrepreneurs. when you start your own business you're worth $1 billion, you should be successful. >> i agree with that. >> sallie, we want to thank you for your time today coming in. >> are you going to come back? >> i'll come back. i'll come back. >> we'll ask you on the air about that. i didn't ask you directly whether you talked to ubs. i get the same -- >> you know, blah, blah, blah, blah, no comment. actually, no, is the answer. >> >> thank you very much.

we're counting down to the most important economic report of the week. jobless claims in eight minutes' time. the president brings his case to reforming health care directly to the american people. senator judd gregg will talk about that battle.iv the 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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busy wednesday morning. still ahead, jobless claims after the break and senator judd gregg taking apart the president's health care plan. we'll also talk to diamond offshore ceo about earning central and profits when "squawk box" continues.

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let's take a look at shares of 3m. the dow component sharply higher this morning on the bid/ask after the company came out with earnings well above wall street expectations. street was only looking for 94 cents. revenue came in better than expected, $5.7 billion versus the $5.4 billion the street expected. get this, they came in because of strong demand because of a consumer electronics lcds, as joe and carl pointed out earlier, but also because of the masks they make for swine flu. that was a huge driver for

consumer demand. let's take a break from earnings for economic breaking news. the weekly jobless claims report. rick santelli. >> reporter: 554,000, so that's up 30,000 from a slightly revised 524,000. so these numbers below 600,000 are signally from this metric alone a bright spot. there's so many as riterisks. seasonality, normal automotive layoffs, cycle closing for plants those were disported by a lot of the bankruptcies and interventions that occurred. if you look at continuing claims, which should be a little better gauge, it moved down as well. it moved down rather dramatically in the last several weeks from 6.31 million to 6.22 million. there's also the issue of who's falling out of the system. continuing extended benefits may have run in part their course as some of these numbers have peaked.

now, the aftermath in the marketplace, we see a pretty nice continuation of positive numbers in the equities and futures pre-new york opening. we see that interest rates are moving a little higher but they came in a little bit lower. the take has stepped back. we're at 352 intraweek, intrahigh we were in the 37 0z, they be moved into the 340s. 355 is now considered home base. of course, we have existing home sales, but in my opinion, maybe one of the biggest stories of the day will be 11:00 a.m. eastern when we learn we'll auction next year, two five seven year notes in cumulative total, $113 billion and then we have the august funding. so supply is what i'm going to be paying attention to. >> rick, stay right there. we've also got steve liesman with us on set. kelly king, the ceo of bb&t. steve, what numbers do you see popping out from that report? >> we broke the string four in a

row of improvements in joblessness. rick was right when he said there's been a lot of seasonality. there was an expectation in the jobless numbers number of automotive layoffs that occurred later than they actually occurred. it was june or so when they laid off a lot of the workers there. it didn't happen in july. there was a bump up. in fact the nonseasonally adjusted numbers rose. a little complicated. these numbers are going to be -- call them noisy or polluted over the next several weeks as we work this out. it is worth saying we have remained below that 600,000 level. the downshift from the plus 650 level to the minus 600 level remains in place, i think, despite the changes. rick is also right, there's a little noise that comes from e the -- people dropping off the rolls. that's important. continuing claims also is going to remain. i want to talk about two things quickly. the first is that we have a guy here who is free. our guest host is free, just like they are at goldman sachs. we reported yesterday that goldman sachs settled it's

warrants. the warrants are the things you get with the government -- that you gave the government in addition to the preferred stock when you got bailout money from the t.a.r.p. and our bb&t president is -- you paid it off yesterday also. tell us about that. >> we did. last three -- three weeks ago we paid off the principle t.a.r.p. of $3.1 billion and yesterday we bought the warrant back from the treasury. we bought it back at $67 million. which basically i thought was higher than it probably should have been. >> what did you want for the government -- >> we started at 20. >> three times higher than your initial offer? >> yeah, but it was a negotiation. you always start low. >> what did the treasury start at? >> they would never tell you what they started at. remember, they hold all the cards. >> i've heard that. they don't negotiate. they go through the process -- >> this was not negotiation. this was a fishing exploration of trying to find out what level would they accept. >> what does it mean for your bank that you're free of t.a.r.p.? what can you do you now that you

couldn't do before that you can now do you? >> there's several things. first of all, we are free from the restrictions on compensation. a lot of people think when you're thinking about that, you think about our top guys. it's your producers out there who are in the insurance area, the capital markets area that, you know, under a t.a.r.p.-restricted program, the banks are at great risk of losing those institutions. we're free from that. there were a lot of things that may not seem important but like holding meetings to recognize top performers, we had to cut that stuff out. we can do now what makes sense to run a business. the biggest thing is we can continue to pursue lending from a rational objective and not worry about it, politicized, which was my biggest fear about t.a.r.p. investment. >> thank you, very much. steve, thank you. rick, thank you for getting those numbers out to us. as you know, the president's making his case to the american public for health care reform. he did so in that news conference last night.

>> this is about every family, every business and every taxpayer who continues to shoulder the burden of a problem that washington has failed to solve for decades. >> and here with his reaction this morning to that and a lot more from capitol hill, republican senator from new hampshire, judd gregg of the budget committee ranking member. senator, good to are you back. good morning to you. >> pleasure to be back. >> did the ball move in either direction last night? >> well, it would be nice to say it did but i'm not sure. i think the president's language remains very good. i mean, everybody agrees with what he's saying but when you look at the product that's, produced by the house and the senate, the house generally and the senate committee -- the kennedy committee, it really doesn't meet the language because it doesn't cover everybody. it dramatically increases the cost of the government by over $2 trillion, close to $3 trillion in the second ten years. and people will lose their insurance. as a practical matter, both plan are aimed at getting a government-run plan which is in

my opinion a step toward a single payor system which is counterproductive to solving the problems which leads to delays and rationing. >> his poll numbers are down, below 50%. groups like the mayo clinic say the house bill is not going to do anything to improve the quality or the affordability of health care. and yet speaker pelosi says she has the votes. does it feel like it's going to happen? something's going to happen in the house before recess but not in the senate? >> well, the house does have the votes as you know, in the house the rules dominate and the majority can do whatever they want. i wouldn't be surprised at all if they pass their bill in the house before we left in a week or so. but in the senate things are a little different. in fact, in the senate there still remains a very constructive bipartisan effort going forward here led by senator baucus, senator grassley and a number of folks that want to see something done but done right. the big issue in my opinion is not only how you get everybody

covered but how do you bend that out of cost care so americans can afford the health care system. that requires fundamental reform. i mean, real reform of the reimbursement system we use today, especially in the medicare accounts. we have that old joke in new england and new hampshire and maine especially where you can't get there from here. when somebody asks for directions, well, you can't get there from here unless you're willing to -- which is health care reform, unless you're willing to step up on the issue of changing the benefit structure and changing the reimbursement system. you just simply can't get there. >> senator, i'm not to the right of you, number one. you said that -- i know you were kidding when you said that last time. >> i have to find somebody to the right of me so i picked you as a possibility. >> i don't think you're that far right. a simple question. i think i've heard president obama say f you like your plan, you can keep it. i think i've heard him say that,

and i'm not exaggerating, maybe 20 or 25 times. i've heard everybody on your side, you included, say you will not be able to keep your plan. you'll be forced into the government plan. those are mutually exclusive statements. so someone's not telling the truth. now, whoever's not telling the treu, i'm not going to trust from here on out. tell me who's telling the truth here so i know. >> well, it depend on which proposal you look at. if you look at, for example, the house proposal, it's structured in a way so that you don't get to keep your plan, for probably two or three years. but then there will be a sequence of events which will happen which will basically force your employer probably to choose and no longer give you a health insurance plan, especially if you're a medium sized employer because the costs will be going up so much. and because the regulatory atmosphere will be so extreme that it will be cheaper for the employer to actually move you over to the exchange and pay the penalty. now, that doesn't necessarily mean you're going to end up in the government plan. i don't think i've ever said

that. but you will easily probably not have the plan you have today. you'll be in the exchange and have to sort of make choice as to what you want to buy. is that bad? well, people really do like the plans they have. they're about 160 million americans today that have an insurance plan they're reasonably comfortable with, supplied by the employer. we really don't need to disrupt their lifestyle in order to get to the insurance reform and to the health care reform we need in order to address the issues, which are at the core of this question, which is how you cover everybody and how you control costs. >> i'm getting used to politics. the real truth is somewhere in the middle. the president's not, you know, he's not -- >> a liar? >> right. >> no, the president is -- has basically set out a purpose. he set out three purposes, all of which i agree with. one, everybody gets covered. two, get the costs. three, if you like your insurance, you get to keep it. i like those purposes. but when he -- when he endorses a bill like the house bill, all

three of those purposes fall. none of those purposes are met by the house bill. and two of the three purposes weren't met by the kennedy bill that was reported by the health committee. in fact, just the opposite. the costs go up dramatically to the government. about 34 million people would not have insurance under the kennedy bill. >> i mean, you could believe that covering everybody and all these people that can't get insurance, you could believe that that is a noble end where maybe you want to -- maybe we don't deserve -- a lot of people that have plans, maybe you make a calculation that one is worth the other, overrides -- i just want to hear from him that we're headed with the long-term intent of a single payor system. i would like it to be an honest -- >> there is no question there is a fairly strong sentiment within a significant number of the members on the democratic side that they want a single payor system. i mean -- >> president has -- >> senator hernandez from

vermont is open and senator brown is very open -- >> the president has said he's not going in that direction. he has denied saying that. >> well, if you put in place a government plan and you create a playing field which tilt dramatically toward the government plan and the government plan essentially leads to a system where you're going to save money by controlling costs through price controls and rationing, you're on a single payor system probably within ten years. >> just by default. >> well, it will be the only thing standing because nobody else will be able to compete with them. >> do you believe, for instance, this study that says of the 160 million covered, 103 would go to the public plan? >> distinct possibility, depending on how the playing field is structured. because, as i said, if you set up a penalty system where basically you're saying the employer, you can pay the penalty and it's going to be less than what you're going to have to pay to keep the employee on your insurance and the regulations which are coming -- keeping the employee on your insurance will be own russ and

risky, then you're going to say, i think i might take that penalty and let the employee go over to the insurance plan that's offered by the government. >> senator, just gets more and more interesting every day, doesn't it? and more complex. >> it gets more complicated. >> we'll talk to you soon, senator. thank you for your time. >> thank you. >> you always feel like you get an answer from him. >> i do. and with -- with the -- >> no talking points. >> he doesn't want to go that way, but you know he's on the record saying, if he could start from scratch designing a system in this country, it would be single payor. he has said that. >> it's a hypothetical. i mean, that's clearly not going to happen. >> i know, but -- >> and if i rn the queen of england. >> my preferred way of doing it, if i could start from scratch s single payor. why would you doubt this is maybe a way of getting there eventually? >> he's walked it back. that was a question, theory -- >> i'll give you perspective. i listened to the speech last night. i asked myself honestly, how do i feel?

i thought, this feels really good. but i thought back on the last 36 years where i've been involved in taking loan applications. almost always the loan application looks great. but when you peel back the layers of the onion, a lot of them, when you get to the truth, don't look really good. >> that's my concern. i have not heard enough of the details. i would like to know exactly -- i don't want these big flowery proclamations on either side. i want to hear the actual -- >> right. >> if we knew we'd end up with the government handling most of the health care in the country, you would not want -- i mean, we can at least agree you would not want -- >> that's true. >> a lot of people think we need to do that. so there's a fundamental ideological difference about who should be providing health care. some people think the government is not very good at trying to do really big things. >> some people think private insurers haven't gotten everything right. >> that's true. earning central goes drilling for results next. the ceo of diamond offshore tells us if the recession has cut into the business of oil and

gas exploration. these are great big jack-up rigs and cool thing we'll talk about.

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lose weight. live better. call or click today. here i am. earning central. a few stocks -- no animal orchestra all day. that's like ail morning without orange juice. here are some of the stocks to watch. carl, obviously, has some influence. it's all about mcdonald's today.

he is mr. mcdonald, knows everything about it -- >> the doc ran last night. >> it did but you squelg the animal orchestra out of spite? >> until you put ronald mcdonald in the animal orchestra, it can't run. >> the shares are under pressure. the second quarter results were in line because they reported 98 but a penny gain in there. what people may be keying off of, and you can't tell where the stock is going to open from -- now you can. now you can see it. june same store sales were a little bit weak, down in the twos versus, i think, estimates that were up in the fours. a fellow dow component 3m did much better than expectations in the second quarter. way above. and the stock is going to be higher. revenue also beat the street. interesting that both revenue and earnings were down from last year but well above expectations which is something we're seeing. then thepany raised it's full year earning guide and said ahead of consensus.

3m makes optical film for lcds and also make surgical masks people are buying because of swine flu. second quarter meeting expectations. revenue fell a bit short. current quarter guidance has people concerned. they're, i think, about a nickel below theoretically from where the street was with the range they gave. we've got diamond offshore reporting second quarter earnings of 2.79 a share, 16 cents ahead of consensus. revenue also beating the street. noining us is larry dickerson, president and ceo of diamond offshore drilling. larry, it's good see you. welcome. >> good morning. >> can you just give us a brief sn synopsis of what your business has looked like since we went from $40, $150, $30, back to $65. how much do you see -- is utilitization rates is the

metric we would follow? >> i guess so. we have a healthy backlog of nearly $9 million. it doesn't show up on the quarter but on the margin when we're trying to put rigs to work, the price of oil and our customers' expectations does impact that. i mean, today we have one big rig that is idle in the gulf of mexico and we haven't been able to find work for that. that clearly wouldn't be the case if we had oil over $100 a barrel. >> if you didn't have long-term contracts in place, do you think you'd have even more that weren't, used right now? i mean, are we selling drilling activity? there's a bit of a lull because of $65? >> yeah. i think so. if we didn't have long-term contracts the whole industry and we were repricing the rigs at the moment, then it would be a very short-term market likely and we wouldn't be having the utilitization we have. at the same time, there is still strength today. there's demand in

water and we're seeing now contracts going forward there. anything that's gas influenced here in north america that has been negatively influenced, there's only 15 jack ups at work in the gulf of mexico and there were over 100 probably two or three years ago. >> that's purely because of what the price of natural gas at this point? >> well, price of natural gas and then just probably the maturity of the gulf of mexico fields has been impacted a little bit. >> we seem to keep finding more -- for the ultradeep water, what does oil, what's it cost to get out at that point? it. >> varies depending upon the size of the reservoir. but typically i think, as oil started getting above $70 a barrel we were hearing lots of positives from our customers. so i think that was a good number. other companies like petro in brazil tends to take a longer-term view and is less i'm patted by what the short-term

fluctuations in price are. >> in your gut, do you think oil is cheaper or expensive than where it is right now? >> you know, i guess the market makes it fairly priced. despite everything going back and forth, the underlying factor that oil is linked to economic growth, and although we don't have a lot of growth going on right now in the western world, china and india are on a long-term path for growth. i'm one that thinks that the price of oil will move up from here. >> i love that shot behind you. we appreciate your -- it looks to me like a discovery channel opportunity for like what goes on. is there already something like that? why isn't there? i'm going to talk to him about that. why isn't there some kind of jack-up rig, biggest catch type thing. i appreciate it. >> there have been a couple of programs on that. >> yeah? >> yeah. >> there ought to be a weekly one. dangerous, rough necks, the women demo watching these guys,

right, they're sweating. anyway, thanks. we appreciate it. becky, you would watch. you would watch that. >> i would. i love that stuff. >> rough necks, rough necks, man. >> all right. anyway, coming up, we'll check out the futures on the top headlines moving the markets today. i hate traffic. i must spend about an hour or two a day in traffic. 20 minutes. at least an hour and a half. americans waste 4.2 billion hours a year stuck in traffic. nobody likes traffic. every year, traffic congestion wastes 58 supertankers of fuel. what can you do about it? i heard stockholm put in a smart toll system.

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coming up next, we'll close the vault on "squawk box." but not without the parting talk of kel king who has been great this morning. first, check out futures, responding to some pretty good earnings from the likes of at&t, ford, mcdonald's, and a few others. today there's a way to save more for retirement,

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our guest host is kelly king. kelly, when people look at the financial system right now there is a lot of concern. what do you see from your perspective? >> well, i think there is a lot of concern. and rightly so. i mean, we've been through a really difficult period. and lots of people have been hurt, lots of jobs lost, lots of asset deterioration. understandably people are looking around saying, what in the world happened? my concern is that we don't further go out with a bad quarter. no doubt, there were a lot of mistakes made. you know, the banks made mistake, the government made mid takes, consumers made mistakes. my view is let's not sit around blaming each other. let's look going forward.

the fundamentals structure, the banking system is sound. we need some regulatory reform. wall street is not all bad. there are some things they can do to improve. we will all learn our lessons and improve. that's the capitalistic way. what we need to be sure we protect is the freedoms that have made this country great. after all, we still live in the best country in the world. it is the best country in the world because we have the freedom to do what we want to do, create, innovate, develop. and so i hope that out of this people will just take a breath. it doesn't have to be fixed today. it won't be fixed today. we got into this mess over 25 or 30 years. it will take a few years to pull out. we are pulling out. things are going to be okay. >> all right. kelly, great to see you again if thanks so much for coming in. join us tomorrow. "squawk on the street" is coming up next. cnbc.com news now. >> first on claims for unemployment benefits rose by 30,000 last week to 554,000. the data is partially distorted by an unusual pattern of auto industry layoffs. fresh numbers on existing home

sales at 10:00 a.m. eastern with economists expecting an increase. dow components beat estimates with their latest earnings report. while mcdonald's matched consensus. that's cnbc.com news now. i'm courtney reagan. live from the financial capital of the world, this is "squawk on the street." good morning, everybody. i'm mark haines. the bull is looking to take back the reins after yesterday's winning streak. disappointing banks behind them. investors concentrating on upbeat reports from ford, at&t, and mcdonald's. >> mcdonald's was in line with expectations. i'm rebecca jarvis. optimism void bi-weekly jobless claims, coming in smaller as some had feared. the seasonal adjustments, auto plant closures, that sort of thing playing into these 

numbers. >> that really made them less than reliable the last couple of weeks. they need to get past this period where they keep doing the seasonal adjustments. futures reet now as you can see, not great. we're up 260. needed 1.50. that's a relief. flat to slightly positive. >> now, as everybody knows, cnbc is earnings central. but this morning, "squawk on the street" is ceo central. check out the lineup. live, first interviews for our morning beginning at 9:30 a.m., qualcomm ceo paul jacobs joins, greg donahue will join us, and at 10:00 a.m., doug parker. he is the chairman opd ceo of us airways. he will be with us. jordan ce dorks is up next. and at 10:30, jim young, union pacific chairman and ceo is up with us. mark, of course, not only are we going to talk to them about their businesses but we're going to talk to them about their outlook for u.s.