and it looks like we were double dipping. >> and then meredith whitney came on our show. >> right. goldman sachs. then also, you know, yesterday what the biggest winner was. >> what? >> 3m. >> and you know why. >> respiratory medicine? >> lcd tvs. >> and respiratory medication. >> and it was the unanimous buying lcd tv. good times, bad times, recession, booms, tv. >> because a pandemic is on the way? >> no. a table, a remote control, a place for your beer and -- >> and then respiratory drugs. >> no. you don't need the respiratory medicine because you don't need to go out. >> oh, that's true. >> 3m is one of the major dow components that outperformed and did so well. but if you look at the earnings season as a whole, everybody is down, but the earnings season overall has been much better

than expectations. according to thompson reuters, 76% of companies have beat expectations. that's the highest on record. >> before we go shopping champagne bottles, shares of three big names were hit hard. revenue missed the mark, the company posting its first ever annual drop in sales. microsoft says business continued be hurt in sales of the pc and warns there is little turn around in terms of technology until next year. they know we had amazon talking about earnings of 32 cents a share. that was a penny ahead. but the company had strained margins, and the shares were lower on the news on that front. then from texas financials, am ex, an 84% drop in q2 profits, hurt by rising consumer

delinquencies. looks pretty good against estimates. but write-off rates are at historic highs and while customers are ooz using their cards, i think that would be a good thing. spending for transaction has come down. capital one was hit hard in after hours after posting a bigger than expected loss. it was the you busiest day for earnings so far. and, you know, usually after the bell has been universally good or mixed -- >> after a 12-day nasdaq day. >> so we play in the celebration at the top, but this could be tend of it for a while. >> the reports are interesting, as we talked about it at the beginning of the show. we need to put it into perspective from the 14,000 we were. but it was a quick move from 6,700 to here. >> it's a huge move. but whether we're talking about moving back up above 9,000, it's been 11 years since we've done that for the first time.

>> but that's our job. if we ever hit dow 10,000, look out. it will be what happened to jupiter this year. >> you mean here? >> yeah. >> oh, really. >> confetti, horns, hats. you have to keep celebrating over and over again. >> i like when you walk around the office, not for dow moves, but you've been excited about things in the past where you walk around, da, da, da, da, da, da, da, da. sfwh oh, yeah, there's fireworks. and it is fireworks friday. and as those disappointing results hit the tape -- as those dis appoiappointing results hit tape after yesterday's close -- oh, oh. the bears were quick to warn that yesterday's sharp gains leave stocks at a risk of a pullback while we were sleeping. overseas markets taking their cue from wall street, as is

often the case. asian markets overnight, this is the way it should be, the tale as the important market here, the dog was the tail. this should happen in europe, as well. pay attention how to do things over there, people. this is how you get a market up. so follow along and maybe your economies will follow along. >> i was going to say, most of our viewers right now are probably -- >> that's okay. then there's more to pay attention to the way it's done. >> speaking of which, equity futures in this country are higher -- actually, i just marginally lower after the news, all the earnings news last night. but asia did have anyone in many almost nine straight. the hang seng is up 40% on the year. some interesting stuff going on on the other side of this planet, at least. oil has had a gain this week of about 5%, at $67.36. bonds, obviously, are the black sheep today. the yield creeping up almost to

3.7% at 3.675%. the euro is doing fairly well, although the dollar index has not cracked 79 despite ek at thes in gold. still around 950, a little more. >> especially after what ben bernanke said this week after inflation being a problem. anyway, we go from earn egg hes to the economy to this market rally. our global team has it all covered this morning. standing by, we have geoff cutmore in lobbed, christine tan in asia, lakshman is standing by and we're going to start things off with jegeoff. and the story coming out of europe, is joe right on this, geoff? are you going watching closely? >> hey, out mere on the dog's tail, i can tell you the markets are definitely higher as we've seen them this morning. but you have to keep asking yourself the question, what is

it that's pushing the markets forward beyond the fact that we've had some higher closes and people want to believe in the story at the moment? so there is momentum. just because companies have cut aggressively enough, we had some bate points that were not that original curving. spanish unemployment coming in at 17.9% for the second quarter. so that's fairly week. erics son is a want we look to to try to gives some indication of what's going on. and i have to say, you know, it's been a bit patchy across the corporates throughout earnings season so far this morning. christine, let me send it to you in asia. >> geoff, most asian markets closed higher today once given driven by quarterly earnings. the nikkei 225 surging up 1.6%.

orders were chip testing equipment doubled in value in the april to june quarter. in south korea, the kospi rose 0.4%, vying for the ninth consector session. hynix semi conductor rose on better than expected quarterly earnings. the hong kong hang seng index rose more than 5%. in china, the shanghai composite finished more than 1.3% higher. sentiment got word that its beijing would help boost growth. pretty impressive. that's the action coming from asia. we are also asking the question what is going to push equity markets for back here? >> we may not know. we'll get back to you on that. let's bring in david garrity and

talk about microsoft and am zone. i don't know, david. maybe for microsoft stock itself, they said negative things. but for tech, it seemed all positive. >> well, for tech, it's very difficult when you see a street miss a number by $1.25 billion. but in the case of microsoft, i think people are very much set up to look at what microsoft is going to do in the second half of the year with windows 7 introduction, they're looking forward to the first half of 2010 with the next update with respect to office. look across the technology. look at the way the average says about the installed people bate base that's out there now. we are in a situation where given a moderate economic recovery, you have a decent shot here at seeing ender rise situation coming back despite

the miss here if terms of the revenue line. nike row soft's struggles with the different are still well known, right? >> this was the first glimmer of optimism about the overall economy in how long? >> they've never said anything positive. a lot of times, investors don't forever on the quart they're ended, they focus on the future. and not in this case. they don't know whether to buy yahoo! or what to do with the internet, right? >> they don't necessarily want the situation to get ahead of itself. fast forward to amazon. the numbers weren't that bad. if you added back the money they paid out to toys r us, they had a pretty decent quarter. but the issue is here, you've got the stories of two different companies, two different stocks,

one where you want to make sure the expectations remain slow and others where the expectations have you ahead of fundamentals. >> if amazon closed at 93 and its high is 94 and its low is 34, it's not set up for any hiccup at all, right? amazon is knocking it out of the park, right? and what they're saying is that high margin video games have weakened a little bit and that's the lion's share of the reason for the -- >> well, the other argument they would say is a man of your perspective would look back over a period of time and look at the three-year chart on the stock, the stock had been up close to 110 or 120. there may be further room to run. when you get into roadway tail business, they talk about the introduction you had a year ago of the nintendo wii and obviously you had a different comparison. but the thing to bear in mind with respect to am zone, consumers are looking for value.

amazon is giving walmart a run for their money. >> and ebay. >> but we go back to ebay, it's a question of expectations being set too low. but relative to am zone, if you look at the stock xhart over the next few months, it looks like the stock never happened. >> this clooimt climbed a wall of skepticism and worry in its entire existence. how many times did barrons say that it was going to ree row? >> frars forecast. they have managed to bear through that. people were very critical of what they were doing with amazon prime. . we'll be lose on pricing and we'll make it up in volume. that was the story for amazon. but it's an economic environment where this works for the consumer. >> our audio guys have so many buttons that are immediate.

and i think jeff baso who is laughing at all of in this morning. we keep that at the tip of our fingers. he's in a position -- >> we went for a long period where we didn't use it at all. >> i don't know if this is the last back, but it kind of is because stocks can go back down. he's laughing at a time of people at this point. >> there's a challenge in amazon's business model, it's this transition between digital media and the fact that they're a little slow in this. the kindle may be an interesting project and they commented about how their initiatives are still at an early stage. google, with respect to their publisher program may say, look, we can give you all the content you want on the internet. who needs the kindle? people will be throwing kindles into the fireplace to start their fire. >> i'm just book how to -- eye

haven't even seens him this week. >> like david? >> well, yeah. >> a real question on mick row soft. this is the first time i've ever seen a drop in seams of windows in the company's history. >> certainly. >> do you worry about what's out there with competition? with i google coming out with its own operating system? is that something that is not going to gain any traction any time soon? >> no. the competition for microsoft will intensify significantly over the next 12, 18 to months. so from that point, it is significant and as a result, they really do need to execute with respect to both windows 7 because when you get into the second half of 2010, you'll have chrome os out there, an droid

down at the low end of the market. obviously, google is going to give this away for fru. time doesn't favor neither of these independence. so if there is a rationale, now is the time. not to move the subject away from microsoft and talk about yahoo! but there is competition that grows on all fronts. >> to know that every quarter over quarter has been higher. i thought everybody had windows five years ago. to able to sell them every quarter is -- >> and then you do upgratdz. are those real or -- one thing that stands out here, we talked about 80% of the installed basis is still using xp. which argues if you have computers that have xp on them -- >> i use xp.

i'll be honest about it. >> you use xp. >> it's stable. >> how would i know -- >> when you had load it up, it should stay on there. >> it is xp? >> yes. never mind. thanks, david. i acknowledged what i was, but thank you. i was going to ask you about forbes because you knew so much about the autos, but that was a past lye, right? >> yes. but you know, ford will have a better day. i hate to compete against subsidies. >> well, we can talk about that another time. >> thanks, david. meantime, how are the earnings going to impact markets today? scott fulmer is with us and

lakshman actson is joining us. are the markets getting to the point where even the skeptics are getting to the point of what's happening and commit cash? >> i think definitely. a lot of people sat on the sidelines pb they haven't been in the market. now they're saying, you know what? this momentum is here. we have to get in. and you couple that with the fact that people that are short stocks are coming in and doing some buying back and pushing the market higher. it's making for a formula or just new fuel to keep the market going for a while. >> but if there's a panic to happen among shorts, has it happened already or is it going to happen still? >> i think a little bits of happening. they're starting to see more and more because we haven't seen this downturn. that could happen at any time. >> sure. >> but the fact is, it hasn't happened. and everybody who has not been in the market or has been short the market has now said, you know what some of i've missed the boat. s&p is up almost 47%.

at some point, i have to cut my loss and get -- and close out those shorts. i have to get into the market and get some performance going. that's whag happening right now. >> lakshman, you have been pretty lieutenant on your show  we've made a couple of months  ago. in that time, we've had a bit o a press pit. are you more resolute now than you've ever been? >> yeah, absolutely. leading indicators got up off the floor at the end of '08 opinion the weekly leading index has gone from the end of '08 it was at a minus 30% growth rate now. it's at a plus 7% growth rate. we're going to have another update this morning. it's surging in a textbook fangz about a recovery. as unprecedented as this recession may seem to people, the recovery is following the exact script that you would expect from a range of

forward-looking indicators. and, you know, even company earnings and these announcements are not so forward looking. and so when you see kind of the bearish view and even i was hearing a little bit about the market sentiment, you know, they're trying to deal with the fact that this recession is actually drawing to a close this summer. and what does that mean? i think the bearish story, which i try to keep up with a little bit, i'm really watching the forward-looking indicators is somewhat, well, the stimulus might have given us a pop but that's going to fade and we're going to have negative growth at the end of the year. that is not going to happen. that is a cyclical upturn, persists for many, many quarters. that's what we've got in front of us. by the way, the surge in this leading index is not because of government spending out of the stimulus. that's in front of us. that if anything, will reinforc the upturn. >> yeah. it's hard to -- well, let's hop it's behind us with only 10% of

expense. >> that's the point. when you heard, hey, the stimulus will face, that's not what the leading indexes are  saying. what about when people say, look at shipping rates, look at freight, cargo around the  country. things like classic indicators of commerce. >> first, commerce, actual activity is more coincident. that's not so much forward looking. but as you go up the supply chain and you get away from the end user and you're more near the commodities, the early inputs, you're already seeing quite a bit of activity. and you're actually seeing that globally on the industrial front. and so even a place like, say, continental europe, which is in recession, they're fought lined up with us. we're ahead of them at this point in terms of the business cycle. you're going to see the industrial sector, the trade sectors doing quite a bit better. you saw that in the surveys this morning. >> yeah. so scott, then, is tech going to remain the sweet spot or is the

cyclical trade back, materials, energy, what? >> we'll be seeing a lot of strength in materials and energy. oil is getting back close to $70 a barrel and actually, that's one of the things that concerns me because that could choke off the consumer going forward. you know, retailers, if you look at the retail stocks, they've been absolutely great. >> yeah. >> and that's at a point when people are still cutting back on what they're buying. and the stocks are moving ahead. but again, if we turn around and we start to see $3 gasoline again, $3.5, that could turn around and choke off the consumer. >> you know, on that rate, i know there are different things that can worry people about the potential or choking off the recovery. higher oil prices, high interest rates, high unemployment, you know, all of those things always rise as a recovery is taking hold. if any of them could kind of choke off a recovery, we wouldn't have a recovery ever. so i mean -- >> you're staying don't fear

that is your point, yes? >> well, i actually -- look, i know it begins to be a drag. i understand the basic logic. but it's actually a sign of recovery. that's what it is. >> well, the question is is that when the consumer is two-thirds of the economy and they've turned around, they were impacted severely last year in the second quarter, and we saw gasoline prices really high, people cut back on driving, cut back on going places, whether it was going to stores, they were readjusting their spending habits and we see that people are saving more right now. what i'm saying is that that could hold off the retailers further and that could cause a correction there. i'm not saying it's going to happen. i'm saying it's something we have to watch for because the consumer is so sensitive. >> and i totally take your point. i get it and i semesterize with it. but the big difference from last year is that the leading indicators are soaring. and that's a huge difference. last year they were plunging and

if you throw high oil prices on top of that, you have what we had. this is a very different picture. >> lakshman, scott, good to see you guys. it will she an interesting day. we'll talk to you guys a little later. >> i just want to mention some  headlines that are crossing on cit. cit group, according to a filing, is saying that they're going to increase the delivery for payment to $50 for every 1,000 and the principal amount on the floating rates note offer, talking about -- and they said if the offer is successfully completed, it does intend to seem bankruptcy relief. they're talking about how they're amending the cash offer for the note. ard cooing to this filing, they're going to try to avoid bankruptcy proceedings. this is, again, according to a filing and we'll keep an eye on that very closely this morning. still to come this morning, rumors out there swirling about a new citigroup board member. the well known new york name,

we'll have that for you right after this. taking its rightful place

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♪ good morning. welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick and carl quintanilla. and our top story today, of course, the markets, the dow closed above 9,000 for the first time since january 6th. the s&p finishing the day at its best level since november 2008. the nasdaq chalking up its 12th straight session of gains. the blue chips turning in the best values since 2005. in '82, we were still at 800. but that's what they say, you

can have these cyclical bulls maybe in a long-term vary. we don't know if that's what we're doing. >> 18-year bear market? >> i said we ended up in '82 at 780. go back to march et when the dow hit a 12-year low. since then, we've watched the index go through. we're at 9,000 and as it states so eloquently here, that because it's at 9,000, that means we've watched it go through seven and eight. >>,000? >> yes, on the way to nine. >> there have been a lot of skeptics along the way. >> i just want to point it out. we didn't go from 6 to 9, which would have been mathematically impossible. we did go through seven first and then eight. the blue chips are still down 36% from their 2007 record. i keep saying that january 6th, people wrote in and they thought

i was the -- they thought i was the cancer and you were the capricorn. >> i know. >> and they thought he was the pices. >> i told them, karg is a virgo. they thought you were a cancer because cancer is the crab. >> no, that's not -- >> yes, it is. >> there's a reason you're the cancer. crabby. i like krabby pattis. >> you do watch a lot of sponge bob. >> i do. >> it will be interesting to see what's happens this friday after the week. here is the look at how we're shaping up today. asia had a decent night. europe, a lot of green lights. but after the earnings last night, not surprising, we might take a bit of a rest. oil at last check was positive, on track for a 5% gain for the

week, just above $67. the bond is trying to sweeten the pot for anyone to get interested in that market today. the yield at 3.674. %. the dow is relatively negative, down against the yen and the euro. europe had its best session versus the dollar in four days. the highest in four days for euro/dollar. gold is steady at around $952.40, down a couple of bucks. at the cme, joining us is ben lichtenstein. ben, does this convince you that things are turning around? >> well, i think that is anyone's guess at this point. looking back, we'll be able to know and i feel like it's been an incredible move to the upside. it's been convincing that we've seen an ee norm yumus amount of energy in the markets.

the nine straight session highs have been marked by milestones. 9,000 in the dow, the fact that we have yet to go have a newer low from the previous days. so we're seeing higher highs and higher lows and we have yet to test a low than a previous day's trading session within these nine days that we've seen up. this market has been extremely strong. the test of 872, the breach to have that level and the rejection from those levels have rallied the s&ps over 100 handles at this point. you know, you can chalk it up to earnings, chalk it up to -- and this began with meredith whitney's comments, some regarding goldman sachs and some of the other banks all the way through to intel and ford. and so, you know, i think that it's extremely convincing for the no question at these levels whether we can sustain these levels is a different question. we've seen relatively low volume trade for the most part in this run, summer-type trading

sessions. but with these numbers, it's tough to be a doubter at this point. >> really the news from last night was not as great, what we heard from microsoft, amazon, american express probably will put a damper on things as we head into a weekend, but what's the new resistance level? >> well, i have to say, i think dow 9,500. i'm looking at the s&ps, somewhere around the ,000 level. but i think there's a couple key factors here at play. i mean, we're still dealing with major issues in terms of date state, you know, level. we have a major unemployment problem, obviously, at hand here. many states are dealing with budget issues. obviously, you look at california, illinois just balanced their budgets, but still have many hurdles to overcome at this point. i don't think necessarily things have completely turned around. companies are reporting better profits, but i think that's because they've been eliminating some of the costs. we've seen huge layoffs, obviously, and that's associated with that.

so i think that, again, it's difficult at this point to say that we're completely out of the woods. we've definitely seen a huge run up, again, which beats out the run up that we saw in early march at this point. so ieng it's just something -- i think it's nice to enjoy that we're at this level rather than necessarily have to predict for the future at this point. obviously, i'd like to see dow up to 10,000, you know, because then joe could say that we've run through 7,000, 8,000 and 9,000. >> we had to get through 9,000 first, ben. >> that will be obvious. >> you know, 9,500 is on the way there. >> yeah, i agree with you. but you know, again, i think that the market is at some point going to need to take a breather. it's going to need to pullback a little bit. i always want to state, as joe did the obvious, two steps forward, one step back is healthy for the market. and right now we're going through three or four steps forward. at some point we'll have to take a breather. we're at extreme overbought

levels which as one of my good friends, tom alexander, points out, that's a relative term. so so we're really just trying to enjoy where we are right now at this point and continue these gains. don't get me wrong. but i think we're going to need to see some of the fundamentals kick in and things to continue in this prolonged rally to continue higher. >> ben, thank you very much. good to talk to you. >> 0.more details now on that story becky mentioned earlier involving cit. it is increasing the early deliver payment on its floating rate notes offer. it says if that offer succeeds, it will try to avoid a bankruptcy filing and it may not use the proceedings of the offering for repaying debt if the response is insufficient. cit has been seeking money from a lot of sources since talks with the government about that possible bailout failed and the early take was that they were rescued in the short-term, but longer questions about the long-term. >> what happens with the rest of the bondholders? do they take this group or not?

citigroup could name a new director. diana taylor, current xanor of the new york city mayor, mike bloomberg is expected to be named to the bank's board. taylor was the bank's watch do know dog between 2003 and 2007 and she's been a fannie mae director since december. she's reportedly been in talks with citibank's dick parsons for more than a week. >> i heard the name and i wondered. >> coming up, we've got stocks on the move this morning. then in the next hour, citigroup's chief strategist, tobias levco vich. stay right here. welcome to progressive.com. you must be looking for motorcycle insurance. you're good. thanks. so is our bike insurance. all the coverage you need at a great price. hold on, cowboy. cool. i'm not done -- for less than a dollar a month, you also get 24/7 roadside assistance.

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comments or questions this morning? we would love to hear from you. squawk@cnbc.com. when we come right back, tgif. but before you hit the road and head to the tahamptons, there's some work to do. we might even go to earnings center. >> no, i'm not. welcome to the now network. currently, thousands of people

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call or click today. earnings central, we talked about microsoft earlier in the hour. joe, we talked about amazon and am ex.

did you know there were other movers after the bell, as well. >> i did. go ahead. >> let's start with sunpower. they beat the street. it's raising gietance above current consensus. with that, the shares popped 23% higher. >> no, no, you can't change it now. this script has all you. i'm here to listen. all right. i'll read it. ooelt ethan chemical. you pay attention to me. >> okay. go. >> did you see easton chemical? >> let me tell you about it. 86 cents a share, that's 15 cents ahead of expectations. revenue fell just short. guidance, though, was positive. did you see that stock? >> i do. that's almost 14% on emn. >> yes. check out shares of chubb, herbings of $1.49. chubb raising its full guidance. you see -- >> i'll do cake. >> you're going to see cheesecake? >> yeah. reported better than expected

earnings and revenue. quarterly comps were down, but not as much as analysts forecast. the company believes it's unlikely to order any additional restaurants this year. we talked about mcdonald's yesterday. same-store sales were lower. but we had chipotle, pf chang. >> restaurants are always interesting to watch as we go in and out of recession, you wonder who is going to do better. the medium and the high level seem to get more week. but p.f. chang's, you would call that high end, right? >> yeah, i think so. i've only eaten there once and that was in vegas and it was good. >> guys, i just realized our producers have all these tricks to try and produce around us. and because joe doesn't want to

go over earnings, we do buddies. >> i wasn't scared. my name is not on any of these. >> i picked up on that. >> and then they tried to put my name on there quickly. >> and i was going to -- there was going to be dead air, i'll tell you that, if you didn't go. >> crickets? >> yeah. >> why can't you educate me and i listen to you? >> i learn from you every day. >> yeah. we're like difficult children. anyway, we'll see you guys back here in just a minute. >> dripping with sarcasm. go ahead. >> if you have any comments about anything you've seen here this morning, e-mail us. when we return, he helps the president keep watching over spending by government agencies. now jim nussle is out of his own but busy protecting the financial interests of the country. (announcer) this is nine generations

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time now for a check on the news outside the world of business. dara brown with a checkup of the

headlines. good morning. >> good morning. after days of tough inside negotiations democrats in congress now say they won't meet the president's time line to push through a deal on health care reform. president obama insists the issue will remain his top priority. and he says he now hopes for passage of a bill by the fall. according to court documents filed thursday the cardiologist who was with michael jackson on the day he died is now, investigated on suspicion of manslaughter in the singer's death a day after authority seized items from dr. murray houston scling. in spain, thousands of tourists gathered to watch dancers in bright costumes dancing down a cobblestone hill in three foot high stilts. it's part of a religious procession honoring mary magdalene. back to you. we're going to start this morning -- i guess it was a couple of years ago, i forgot about this and it's not

mentioned in the article but this is in the journal about chinese scientists reprogramming cells to create mice. they point out heretofor china wasn't a big place where china was a hot bed for cell research and now it is. a couple years ago there was a scandal, remember, with -- >> the guy who did the -- >> yeah. but this was from two separate labs. >> that was git who did the fake one. wasn't that korea or -- >> maybe it was. >> i think it was. >> the two teams of chinese researchers working separately have taken mature skin cells, mouse skin cells, reprogrammed them, the cells have grown into mice. >> what? >> whoa. >> full mice? >> full mice. reprogrammed them to an embryonic state, used the cells

to create live mouse offspring, which is -- we're headed this way, but -- and we all know and we've been told that every cell in your body has the complete complement of chromosomes. you start with one cell, become -- you know, the way the gene regulation works in developmental biology, but to program a mature skin cell back to an embryonic state. the good thing is that this would be a make of waking stem cells, eventually. the bad thing is that, you know, there are sommet cal challenges to, able to -- to create -- >> make copies of -- >> if you could do this with a human, you could need cells for one human to cure them and to basically be creating an individual to harvest the cells. and then just getting rid of the individual -- >> i need -- >> or letting -- >> i need a transplant or a kidney transplant -- >> exactly like mine or -- >> or let it go all the way and we could have a show anchored and co-anchored by you.

we could get a "squawk" all you. that would probably get some eyeballs. >> then i remember stephen king "graveyard shift" the cat -- >> they've done it already. science moves so quickly. >> they loved this cat, they cloned this cat. they went to the graveyard -- >> traders all over wall street are turning up volume and saying, what are they doing? >> the cat came back and it was evil. >> i remember that. >> it's nature/nurture. environmental factors have something to do with what you turn out to be. just because you have the same gneotype -- >> this is the worst market show. >> are we out of time? i guess we are. >> no, we're not. >> quickly, the times has a good piece on high frequency trading. we wonder how and why goldman

made so much money in their trading. "the times" takes one example, took flash points, algos, they call them, the algorithmic traders. they talk about how investing has become on the street, a tech lolg cal ar tech notice logical arms race. >> if you're doing riskless arbitrage that money is coming from people just sitting there -- >> and they will issue orders and then cancel them just to confuse investors. >> here's what the guys on floort have been saying forever. as you move towards more of the electronic trade, as you get rid of the humans on the floor, you'll have more stuff like this. when we come back, more top stories. he ran the government's office of management and budget. now jim nusle is on a new

crusade, jumpstart the economy and save it from financial ruin. our guest host. welcome to progressive.com. you must be looking for motorcycle insurance. you're good. thanks. so is our bike insurance. all the coverage you need at a great price. hold on, cowboy. cool. i'm not done -- for less than a dollar a month, you also get 24/7 roadside assistance. right on. yeah, vroom-vroom! sounds like you ran a 500. more like a 900 v-twin. excuse me. well, you're excused. the right insurance for your ride. now, that's progressive. call or click today.

dow, 9,000 again. but will the bulls keep up the pace? the markets are front and center. where the jobs are. former amd ceo hector on an adventure creating thousands of jobs in the emg pir state. plus a "squawk" scholar from m.i.t. gives us the pulse of the labor market. "squawk box" begins right now.

good friday morning. welcome back to "squawk" on cnbc. i'm carl quintanilla along with joe kernen and becky quick. the dow jumped over the 9,000 level for the first time since january. the dow now up 38.5% from the march low. those gains could come under pressure this morning because of some high-profile earnings number. microsoft, the dow component, 34 cents, 2 cents shy. company posting its first ever drop in annual sales of windows. the company says the business is hurt by the global pc and technological service markets. investors are very concerned about rising customer delinquency from amex. our guest, jim nussle,

former office of budget and management, head of nussle group, with health care reform making headlines, jim says he's worried about what reform plans will do to the federal budget deficit. we've been talking about this for days. now we've got a tone in washington maybe that this thing is either stalled -- at what point do we talk about it, dead, or at least on life support? >> i hope it's not dead. all of us, as americans, small business owners, families, i mean, we know that health care costs are out of control. we know that washington has a huge role in trying to stem those costs. medicaid and medicare is out of control. this isn't news. you have david walker on here. i've been on. there are been many who have been on talking about the need for reform. that part has to get done. i hope it's not dead. i know president obama believes that. i know republicans and democrat in a bipartisan way. the senate finance committee, it may be the last best hope for bipartisan reform. senator grassley and senator

ba backus are working feverishly to get something done. even though it may not get done in august, i think that's the focal point to find a good bipartisan bill. >> you've heard people like chris dodd say, in his words, leadership is right now more important than bipartisanship. they want to get a product out there to keep the debate going. it's like a shark. if it doesn't go forward, it dies. >> the democrats control washington, no secret. they're going to say, leadership has to come to bear if in fact they want to pass a bill. the reason they're not passing a bill because of republicans. >> their own party. >> yeah. democrats haven't figured out what they want yet. >> you would say republicans have backed them up, right? it's not all on the blue dogs the reason they're having problems? >> certainly in the house of representatives the republicans haven't been invited to the

discussion. in senate there's a bipartisan discussion under way where people are coming together, giving good ideas. ideas from the inside, outside, i think that's probably where it's going to come together, if it comes together at all. >> at what point will you talk about it in the past tense like, we tried, or it was, not is? >> i don't know if it -- probably the end of the year is certainly a focal point now as a result of busting through the august deadline. but i'm not sure that -- even if a bill passed, reform of health care is something that's going to be a constant challenge for our country for years to come. it's true, just about every country that's gone through any kind of reform and every state -- >> what are you talking, we need -- there are two very distinct health care problems. one is the cost structure, the number is the number of uninsured. >> and access problems. you can tackle both. but job one, i believe, for the

federal government is recognition that medicare and medicaid are completely and totally out of control. and you cannot just pile on a new, unsustainable, big spending program on top of that. and assume that because the foundation is crumbling, the beautiful new program on top of it is going to be just fine. it's not. that's what david walker has said, i've said that, many others have reported that. and i think it makes common sense. cbo is now saying that. >> right. we're dancing around what the real issue is here and what might be dead and not dead. we're talking about whether the government taking over health care if a public-run system, whether that's dead. we're going to have reform but maybe reform of the current system we have where there's still market-based solutions to a lot of this stuff. >> well, i hope that's dead. >> that's what we're talking about. >> that part i hope is dead. >> that's what i mean. >> what the -- >> how we approach it in the future depends on whether we go this way, with the government controlling a third of our -- or whatever it is, 20%, or whether

we go this way. >> don't miss the point, though. the government already controls health care. >> i know. but they do and they don't. >> well, actually, no, they do. i mean, medicare, medicaid, veterans affairs -- >> my insurance isn't with the government. >> oh, trust me, your insurance and the costs you're paying as a result of their footprint in medicare and medicaid -- >> so you're talking about medicare and medicaid? >> oh, yes. >> we're trying to talk about not having everybody's insurance be medicare or medicaid-like. that's what the right is trying. >> i'm saying i certainly hope the government's solution to the rest of health care is dead. i hope they look for more bipartisan market-based solution to this. i think that's what the senate is hopefully doing. >> last que question before we move to markets. you said the president's presence is the best marketing they have. >> oh, yeah. >> just revifing the news conference from earlier this week, "the times" said he didn't answer -- he didn't make it

tangible for voters, what the changes would mean for them. >> they're finding it a little difficult to believe this is some big rush. it's ironic a president who took six months to name his dog needs to get health care reform done in a weekend. i mean, come on. >> you don't believe his argument that in washington you've got to get it done before the vultures start to pick. >> i understand that's why his -- that's his predicament. but when you've got control of both the house and the senate with 70 vote in the house and a 60-vote margin in the senate, you shouldn't have to rush. and i think it's because they haven't laid out a program that either makes sense in their own party or that they can even sell out in the hinterlands. >> jim going to be with us for the rest of the program. the dow back above 9,000. the last time our next guest was on, he told us stocks would actually rise through the summer. looks so far like he has been right. the chief u.s. equity strategist for citigroup. you did call what we've seen to this point.

>> it pays to be right once in a while. >> the question is what now? now that you've seen the nasdaq higher for 12 sessions in a row, the dow and the s&p up, what happens? >> i think we still grind somewhat higher here. irrespective of the tech companies last night who didn't hit the mark, we still have an environment where people doubt  that stocks can move higher, that earnings are going to be going higher. the big discussion right now is it's all cost-driven. revenues are not really generating. that's true. we've lost 6.5 million jobs so far in this downturn, that's three to four times what we lost the past two downturns, so, yeah, it's supporting margins. we're at a point where production has to kick up because we've been destocking at such a rate. companies will produce more to put out on the shelves. by the way, you will not increase inventory doing that. you're going to destock at a more moderate pace, margins do better and stocks go up. >> if you were to ask people, and people we have on or people

on the street, what's more ? likely, that we just keep going, that we're at 11,000 in a month, from here to 10,000 and then right to 11,000, i mean, i think about that and that sound like the most preposterous notion in the world. but if you told me, oh, we're at 9,000, go back down to 8,000 an while around down there for a while, that sounds plausible. i don't believe we could go to 11,000, which means it could happen. >> two responses. one, i said we're going to grind higher. >> i know. is it impossible that we just go -- we're at 10,000 six weeks from now? >> what's more likely? >> certainly possible. let me give you one revens point. we surveyed our clients two weeks ago and we asked them, what's your cash position? 16% on average. when we asked them on in april what the number was it was 12%. in order despite this rally they brought up their cash positions because they don't believe. >> those are your institutional --

>> institutional clients. >> why people look at their 401(k)s and say, why is the market up and i'm in such trouble? >> remember, the incremental buyer is not that retail investor out there. it's the pension fund. it's the hedge fund. they're looking at their cash positions, looking at their portfolios. many of them missed this rally in the last two weeks because everybody was with worried about the head and shoulders formation forming two weeks ago. >> when you talk about restocking is it likely companies will do that but with productivity at five, do it without higher -- >> almost for certain. >> unemployment stays high? >> ceos don't have the confidence to go out and buy -- or hire people and buy a lot of stuff in their businesses themselves so they're going to do this in a very pedantic, cautious way. you hate the word cautious optimism, putting those two together, but that's where they're at. we look at the ceo confidence index. when it's really poor, you should buy stocks. when it's really high, when ceos are really excited, you should sell them. they're great inverse

indicators. i always say ceos don't really know that much. >> tobias, if the dumb money over the last weeks and moneys has been the pension funds, the hedge funds, who's the smart money? who's been winning? ? >> the pension funds have done pretty well. it's the hedge funds in some instances have got short here. they didn't put enough to work. it's not that they have not made money but the guys like mutual fund guys get up, if they're lucky, 5%, 6%, 7%, cash positions and the other 95% is essentially invested. >> they ride the wave? >> they enjoy the wave. the guys who are trying to be that good tactically allocating and come out and quicker, it's harder in this type of trading environment. >> with the earnings we've seen, again, you go back to the idea that, okay, we're going to be restocking, but we also hear from so many people that this is going to be slow, slow, slow growth. but when you're dealing with unemployment at these levels,

you're never going to get back to the -- the old normal. >> well, i really dislike the term the new normal. every time we're in the midst of a bad environment we always think, this is the worst possible environment around. and i want to correct one thing. i'm not talking about restocking. we're talking about destocking at a more moderate pace. let me give you the simple example. we're producing in north america 3.9 million cars on an annualized basis. final sales of north american built product is 7 million. once we hit the inventory levels you want you literally have to raise production 75%, for just that many more vehicles, and you won't increase inventory one stitch. >> right. >> so that has a huge implication in terms of the ripple effect. you need more steel, aluminum, copper, more plastic, glass, et cetera. yeah, it will moderate and actually probably eliminate job losses, which takes away some of that concern. the other thing is the stock prices go up, people feel more confident and they have more money in their portfolio.

their 401(k) that quote/unquote became the 201k goes up to the 301k. second quarter '07 was the peak of household wealth. since then through the first quarter of '09 we lost $14 trillion, about $10 trillion came through the securities market. not housing. two-thirds has come through securities. we've just recaptured $4 trillion of that debt. >> we've gotten fhfa, the home price index -- it has a pulse there, right? does that mean that the deleveraging notion, the consumer deleveraging notion will be mitigated somehow? they won't have to delever as much? >> probably not. let me give you one statistic nobody wants to talk about. we looked at 2003 through 2007, the housing bubble. what was happening to consumer income, disposable income, what was happening to pc, personal consumption expenditures, the gap between the two cumulatively in that six-year period was

$2.685 trillion of money not spent. so the idea that we've spent everything we have, plus wie taken it out, broken the houses, atm, taken all the money out of that bank and spent that is so flawed and so false, but it's the most mythical argument, put forward day in and day out. >> what about the leadership? it sounds like materials would be leading. others say it's got to be financials, technologies. >> we think it's the energy complex. as much as we hated them a year ago, we've been loving it for the last couple of months. think it will probably go guard. we like certain areas in financials, the bibig diversified financials and insurance. i'm not so comfortable with regional bank because of commercial real estate and things like that. >> tobias, thinks. you've been right for a while so thanks for joining us. >> which means i'll be wrong

from now on. >> thank you. >> if you have any comment, and you have had comments here, you look at "the new york times" every day and look at the corrections. you need to come close with krection. it wasn't "graveyard shift" where the cat comes back -- >> "pet semetary". >> yeah, spelled with an "s." what does that mean? >> "kujo". >> "graveyard shift" never really scared me that much. people think i have a dye job, becky. they're so pathetic. they're the ones that get me. i either have a toupee or dye job. what's the problem? look at the gray. look at the gray. they said i'm the worst commercial for just for men that they've ever seen. >> because you don't need just for men. >> no, i don't but this person

apparently does. >> e-mail us at squawk@cnbc.com. futures are indicated 30, down about six points from fair value. the nasdaq is feeling the effects of amazon and microsoft but has had 12 straight gains. coming up, a "squawk" -- this is so hard to say. a "squawk" scholar on the prospects for jobless and housing recovery. why innovation will save the day for corporate america. and then we have the former ceo of advanced microdevices on his latest venture. glad he got out of amd. that will create jobs in the empire state. time now for today's aflac trivia question. on this day in 1911, american archeologists skord discovered what now famous settlement? c! you really need it these days.

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now the answer to today's aflac trivia question. on this day in 1911, american archeologist herman bingham discovered what now famous ancient settlement? the answer machu picchu. unemployment may be a lagging indicator but there's plenty debate over how high the

nation's jobless rate will rice. joining us is david schmidtline. we like to check out and check in with you every once in a while, dean, about the prospects for your grads. and i -- any improvement at all that they've seen as they try to go into this uncertain environment? >> well, you know, our grads are doing fine. i do think overall in the economy this is likely to be a pretty jobless recovery. but the opportunity for particular individuals is going to be widely different. there's some companies doing well. they've been very aggressive in coming after m.i.t. sloan's graduates this year. we've had, in fact, almost all of our graduates have job at this point. they are typically with companies who understand the importance of innovation. and, you know, we continue to have great relationships with those kind of firms in lots of different sectors. >> the last thing we need,

though s a jobless recovery at this point. it almost is an octiximoron. given the tone in the nation given the back lash with what's happened, if we don't work on the job problem and all we see is a stock market recovery and corporate profit, that's just going to make income disparity, you know, more of an issue. it's just not what we need, dean. >> that's wonderfully said. you know, there's still a lot of fear among corporate leaders with respect to where the economy is going. and, you know, your previous guest talked to this issue as well. it's going to take a lot of cautious optimism before those numbers -- those employment numbers start to go up again. there are a couple of other factors limiting the growth in employment as well. one, as you all know, the fed has put so much liquidity into this system and needs to pull it back before inflation kicks up.

that's going to be happening. that's going to put a brake on employment growth and credit availability all by itself. and, you know, thirdly, companies have really changed the way they've done business. in so many different ways. there's a company i've worked with that has changed the way it distributes big life science testing equipment. it doesn't package the equipment anymore. it's found a way to get those products to customers with no packaging at all. that's the kind of employment that's really not going to come back. you know, they could have more products available for more customers. those people are not going to be coming back to repackage those product. the companies love having a low environmental footprint. and the company loves the cost savings that it gets. so all across the economy, in places like taking print and putting it online, there are jobs going away that aren't coming back. conditions are still going to drive innovation. innovation is going to be key for people looking for great

employment opportunities. but overall, this going to be a very slow growth or even jobless recovery. >> we posed the question yesterday whether the productivity that maybe as a productivity gains that have added to the jobless recovery, does that springload us for when demand picks up for a better recovery and more jobs, or does it mean -- or for better recovery, or does it mean that there's not going to be consumers because of the jobless rate to keep the recovery going? is it good or bad this productivity? >> it changes the kind of jobs that are going to be good jobs in this country. that's been happening for a long time now. and so, you know, i think your question is really one about the adaptability of the american work force. and whether, you know, the administration can help with that adaptability as well. the needs going forward for organizations are not in the next ten years. it's going to be the same kind of need as in the last ten years. we're already seeing the effects of that.

>> carl did a big -- a big documentary on harvard business school. i mean, have you talked to dean about -- >> we do e-mail from time to time. >> they're both in cambridge. both good schools. >> the dean of harvard is a friend of mine. they're graduates are doing just fine, by the way. >> no, no, i got it. you're down in -- >> there's no pot that joe will not stir, i'll tell you that. >> that's right. i do like stirring things up. thank you, don't. good to see you this morning. we're going to take a quick break. the early morning action coming up neck and the stories driving equity futures all right here when "squawk" comes back.me e bur based on the deal they get. others buy the car of their dreams. during the lexus golden opportunity sales event, you can do both. it's an opportunity today.

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any comments or questions, send us a note at squawk@cnbc.com. when we come back friday's top stories, picture from the futures pit. the clock is ticking on health care reform. one democrat point people in congress, congresswoman allison schwartz. we'll talk about this topic. (announcer) this is nine generations of the world's most revered luxury sedan.

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welcome back to "squawk box," everyone. let's take a check on the markets. the dow heading above,000 yesterday. this morning the s&p and dow future are under a slight bit of pressure, down eight point below fair value for the dow and down by two points for the s&p 500.

the nasdaq is under quite a bit of pressure. the nasdaq down by more than 18 points mroe fair value. this comes after a major winning streak for the nas ddaq. it's been up 12 weeks in a row, the longest in years. let's take a look at what happened to tech component and microsoft. two cents below expectation. revenue missing by a long shot. they posted their first drop of windows and that has put some pressure on the shares. microsoft says they continued to be hurt by global pc market. amex hurt by rising customer delinquency. again, a little pressure on that stock after hours as well. check this out, by the way, warren buffett getting animated to teach children about

investing and financial responsibility. he is now part of the secret billionaire's club. they to feature some iconic personalities. the webisodes are to entertain, teach kids about finance and science. this premiere of this new cartoon will give us a chance to talk to the man himself. warren buffett will be joining us live at 8:30 a.m. eastern time. we'll talk about financial, education, the economy, markets and stocks and talk about health care as well all coming up this morning at 8:30 eastern. one hour away. >> does he do some voiceovers? >> he does. >> his own voice, right if. >> because if he's not available -- >> you can do it? >> no, no, no, no. >> only warren can do warren, i would think. >> shall i pitch it right down the middle and you're not going to -- >> he's going to be on at 8:30. >> he likes when do you it. >> he does? >> yeah. >> i can't answer that question. i just know fair value.

the economy's like an apple. >> carl can do everyone. >> that was good, the economy is -- >> do you do joe? >> no, joe is hard. i slam the table a lot -- >> you did someone -- >> by the way, the kid spelled semetary, right, and it looks spookier. we called some guy herman and his name was hiram on the trivi question. they're asking for us -- >> we need our own corrections -- >> yeah, we do. >> i'm the -- it has been a wild week on wall street as traders fielded everything from earnings to the economy. scott nations is president and chief of nation shares standing by at cme. tgif but with action like this

you almost wish weeks could go six or seven days. >> we had a bunch of bad news yesterday and the market could have taken it on the chin. you've already talked about microsoft which missed the top line by a ton. and then the relative strength index says the s&p is way over. it would be easy to think the market is is going to retrench a little bit, consolidate a little bit but it's saying, no, it's a little like george patton, it doesn't want to pay for the same ground twice so it's hanging in there. >> is there anything to suggest to you that next week will adopt a tone of caution? >> only because this week has been so euphoric. yesterday we saw an interesting trade in spider options, a huge trade that was bearish. people -- obviously some big institution bought some protection and sold some downside puts. so they're willing to get long if the market is down about 16%. they want protection if the market is down, say, 2% or 3%.

that sort of thing, we might see more of that because volatility is cheap. we might see people boig puts today in advance of disappointments next week. >> rahm gave an interview to national public radio, the white house chief of staff and says he expects a final health care bill by the end of the year and negotiations are now focused with congress on controlling costs. in his words, we'll have a bill by the end of the year for the president to ion. the controls cost expands coverage and provides choice. has that had anything to do, this walk back, on a public plan, has that had anything to do with this week's rally? >> well, to a certain degree. we have worried about what it's going to do to insurers. we have not worried so much about what it's going to do for pharma company and device makers. they may be a little under the gun. he need to talk to harry reid -- he need to talk to harry reid because they're evidently not on the same page. mr. obama said they were going

to get something done before the recess and mr. reid said it did not like like it was going to happen. >> the.backed away. >> you had the whole making sausage, making laws thing. this has gotten a little messy. i think traders are throwing up their hands and saying, this is not going to happen as quickly as we might have thought, say, a month ago. i don't think they're as impressed with that as an issue for the stock market, again, as they were, say, four weeks ago. >> good to see you. have a good weekend. >> thank you. the debate over obama's health care plan raging on on capitol hill. as we've been talking about this. here now with more is congresswoman allyson schwartz, the vice chair of the budget committee and a member of the weighs and means committee. thank you for joining us. >> good to be with you. >> i'm not sure if you heard what we were talking about but carl mentioned rahm emmanuel giving an interview where he says the debate in congress is

now containing costs. is that your sense now? >> we were always concerned about containing cost, for government, businesses and for families in terms of their health care benefits. it's always been a part of the discussion. and it's always been this dual goal of containing those costs for all of us and also making sure that every american has access to meaningful, stable health coverage. so continues to be -- the conversation as we work through the details. >> congresswoman, i guess the question becomes, how difficult is it to focus on containing costs? how much of it is lip service? how much of it is real? there's a front page story this morning in "the wall street journal" that follows peter orszag around, the white house budget director, talks about how he was focused on containing costs, too. he had gone in to meet with democrats on capitol hill. the meeting started very well. it says every lawmaker went around, one after the other, echoing his message, talking about spending controls, critical. then one member said her top priority was winning higher payments for oxygen suppliers.

it says mr. orszagh was taken aback by this because the oxygen suppliers have been criticized all along for having way too high of prices that have gone in, yet when the competitive bidding process was beginning to set in and take place, this is the type of questions you had coming from congress. it goes to say the aarp will not accept medicare cuts unless it goes toward extending universal health care. it lays out that things are so political sized, is there any way to contain costs? what's your sense? >> this has been a discussion we've had always it's one of those things we do in congress, is represent our constituents and make sure they have access to services. at the same time as looking at the broader goals. we're, called upon to really do both. particularly in this moment in time, it is to say, it is time for us to tackle this incredibly important issue to american families, american businesses and, yes, to containing the growth in costs for government

as well. so it's a balancing act for all of us. we represent our constituents, our districts, those interests and we also take a broad view, i hope, of what's going on for the country and all americans. so this one of those delicate moment when we certainly are working on the details to make sure that, as you pointed out, we are going to contain those costs and, really, we're talking about containing the growth in costs. you know, the rate of growth in costs. that's really been so much the issue, double digit inflation for health care benefits, those premiums that our businesses and many individuals pay, that is really just unsustainable. as is that growth in health care costs. the way we want to do it is by insent vizing and moving towards quality and making sure we get efficiency in the health care services that we are provided by the doctors and hospitals we reimburse. at the same time, making sure we have the very best health care medicine that is available to everyone. >> but isn't there --

>> it's a complicated goal. >> isn't it able to say no to the constituency -- >> i certainly hope so. what we're trying to do here is get the right reimbursement and make sure people have access to quality health care. it's not just to make cuts to hurt medicare beneficiaricies. we want to make sure medicare continues to be strong, available to all of our seniors and cost effective. >> we've seen -- the blue dogs seem to have gotten emboldened, congresswoman. usually when that happens, their offices are getting a lot of calls from constituents. can you tell me whether the tone of the calls to your office has changed in the last two weeks? >> no, not -- well, not really. i can say this, certainly i hear from constituents, that the status quo is simply not acceptable. we hear stories have day in my district office from people who say, i have insurance but i can't -- well, they want the public plan. >> they want the public plan?

>> they want the competition. they know they want to have access to private insurance. there's no question about that. so you also don't completely trust insurance companies and they want to make sure there are other options for them. that there is a public option. again, this is in a competitive marketplace. we're not looking to -- well, let me say it positively. we're looking for those choices and options for americans. that's what they're saying to us. they're saying, don't just sit on your hands. don't stop this process just because it's difficult. plow ahead, make it happen. and i think that's what we ought to do. >> jim nussle here. we understand you're part of the leadership. one of the things that i'm picking up is that because there's about 50 votes short on the bill that's passed, that the leadership may try to rewrite the bill over the weekend and try to get something done before you go home. are you picking up anything like that? because we're hearing that, you know, out here, those that are trying to follow what's going on on capitol hill. >> well, jim, let me say this -- hello, good to hear you. in fact, i don't hear us

rewriting the bill. what i do hear is there are a number of members who say, i just need to know more about the details. i need to get -- i want to get to yes. help me understand, what are the delivery system forms, how are we going to do cost containment in a way that makes sure we get stable health insurance and maintain our commitment to medicare. let me understand it better. let me take a little bit of time. walk through the bill with members. of course, there's still a few details that remain. you know how that works. sometimes a deadline helps us get to some of those details. that's what we're working through. and we certainly hope and expect to get there. >> representative schwartz, thank you very much for joining us this morning. >> you're welcome. a lot still to come today. it's a tall task, bringing jobs jobs back to this country but hector ruiz opening a new tech operation in upstate new york. the venture expected to create thousands of new jobs. hector ruiz will join us after a break. then as becky mentioned, in less than an hour, this man,

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next week's lineup on "squawk box," former mayor rudy juliy julian citigroup says diana taylor and the current companion of mike bloomberg expected to be named to the board. she's been a fannie mae director since december. she's reportedly been in talks with citi chairman dick parsons for a week or more. so some additions to the citi

board. i think earlier this week we got some additions -- or in the process of naming new members to the gm board. >> okay. and this morning we're looking where the jobs are. there is one bright spot. it's in upstate new york where global foundries, the foundry spinoff of amd is breaking ground on a new facility. here now with a first on cnbc interview with hector ruiz, chairman of global foundries. good morning. it's great to see you. why did you pick new york? how many jobs are we talking about? >> well, you know, first of all, we picked new york because it's an outstanding place to bring together the confluence of, for example, the investment in nano technology that started over ten years ago in new york, the tremendous educational institutions such as rpi and the albany area and the work force ethic in this place is outstanding. we have found this place to be so similar to what we find in dresden where the people here

are totally motivated to do a fantastic job. and, of course, not the least of which is also the state of new york's attitude towards business and the incentives they provided for us to locate here. >> i was wondering -- go ahead. >> the question you asked me about jobs, you know, the factory will employ directly in the factory about 1,500 employees. and the people that will support that factory, which is quite a few, will be at least 5,000 other employees in the area. so we have a total of about 6,500 plus people in the next three years. >> we hear a lot of things about, you know, high-tax states and sometimes it's counterproductive because corporations move and we know that governor patterson is loathe to rays raise taxes. the incentives given by new york, did it offset the perception that maybe it's a high-tax environment, mr. ruiz? >> well, you know, it is a very

competitive space to be able to find a place to locate a factory. we had many opportunities to do it around the world. and when you look at the combination of things, this is the ideal place. the experience we had in dresden, i'm going to go back to that experience because it's very important, is that the return on investment that was made in dresden, which is very similar to what's, done in new york, has been paid back many times over already in germany. >> tell me about the technology that you're going to have highlighted in this new foundry, and why it's important for amd, why it's important just for the chip industry. what does it do? how is it different? >> sure. the foundry will go into production at 32 nano meters, the most aggressive lithography in the country. the most advanced semiconductor factory in the world when it

goes in production 2012. the semiconductor industry is at the foundation of everything we do. if you look at the three initiatives of the administering, education, energy and health care. the only way they can occur is through advances in technology, which are founded in the semiconductor industry. so it is really important for our country, which is probably as most people know, we own 50% of the semiconductor market in the united states. that's pretty amazing when you consider we're only 5% of the world population. this is a position that has been achieved over years of investing in r&d and our country and we need to do everything we cannot to lose that position. this is an attempt also to bring jobs back into the country which for 20-plus years have not existed in this country. as you probably know, this type of jobs have been migrated to asia for the last 20, 30 years. this is the first time we're having an opportunity to bring jobs back. it's very critical for our

country, for the initiatives of our government, for high-pai paying jobs in this country. we'll provide a $300 million payroll in this area. you know, the jobs in our industry average over $100,000 per person. so it's really an exciting opportunity for us, for me personally, because i believe strongly in a strong technology foundation for our country and i'm very excited about it. >> thank you and thanks for coming on cnbc first to bring us the info. good luck. see you later. >> thank you very much. coming up, stocks to watch. we also have earnings to explain this morning. joe's got all the names and we'll let you know about that right after this. and then at 8:30 eastern time, the conversation of the morning, warren buffett live. we have the world's most famous investor turning his attention to the next generation. he is starring in a new cartoon teaching kids about money. we've got the world premiere of that cartoon at 8:30 eastern time. if you think you've seen it all, think again. we'll talk to him about that, what's happening in the economy and much more.

♪ ♪ i don't want to live my life this way ♪ the animal orchestra. what's the other music? ramone's "pet cemetery." we've been talking about "pet

semete semeteray" a little bit today. is that enough for you, can carl? >> our producer just said, you should tell joe you want those animals in the pet cemetery. >> that's nice. you like when they club the baby seals, too, is that one of your faith -- >> all right, no, no. >> -- one much your favorite days? >> don't put words -- >> is that your favorite joke, a baby seal walks into a club -- >> terrible. awful. >> take a look at stocks to watch. microsoft reporting fourth quarter of 34 cents, 2 cents below expectation. revenue was also light. positive comments from microsoft aren't helping the stock today. overall, they gave the first optimistic macro comments that was seen for a while -- seen for a while but it was the first time windows revenue actually declined. amazon, a similar picture here, 32 cents a share, above expectations.

however, revenue was a little bit light. and it was the third quarter revenue is a problem, too. they're talking about games, not as many games, sold. they are high margin items. i can tell you they are because if you buy them new are 50 bucks for a wii. the revenue was well above all for sepracor. maybe that is a real number, although it does include $16.9 million of deferred license revenue. black & decker reported second quarter earnings of 63 cents a share. that included a favorable insurance settlement. it's not directly comparable to the 37 cents. but that stock is called sharply higher. guiding full year earnings per share to $1.65 to $2 versus expectations of $1.58. fortune brand, i add to their earnings every quarter.

that was seven cents ahead of expect takings and the full year is guided to $2 to $2.30. t. rowe price is guided ahead. bank of america taking the opportunity today to upgrade 3m. now they go to a neutral, up about four points yesterday. >> all right. thanks, joe. when we come back, dow's at 9,000 but is it going to stick around? art cashin will give us his market wisdom after the break. financial power players on the hot seat. tim geithner, sheila bair, ben bernanke all go to congress. and we'll talk to representative spencer bachus. and then at 8:30 the world's most famous investor, warren buffett live. more and more acs are turning to fidelity

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♪ there's no business like show business ♪ ♪ like no busy know ♪fy sing about it it's a feeling ♪ friday, july 24th. walk to "squawk" here on cnbc, first in business worldwide. i'm carl quintanilla long with joe kernen and becky quick. our guest host, jim munestle, chairman of the nussle group. we got a lot of good work and more to come. future are negative after some

pretty disapointing earnings last night from microsoft, am zone and american express. the s&p has recovered half of its losses. fastest recovery since 1975. the nasdaq's up 25%, year to date. >> there's news out from citigroup. >> the outside director at citigroup, diana taylor, we've been talking about, tim collins, chief economist at ripple wood, they were involved in the maytag/whirlpool deal, and we always played ripple, and robert and philip knight, professor at stanford graduate school of business, former ceo managing director of west pak and are our new group of individuals.

like others who join the board each brings deep and valuable experience with the mayor of new york -- oh, no, no doesn't say that. brings deep and valuable experience and valued experience in financial services. >> brings the total number of directors to 17. >> it does not list her relationship to the mayor on her biography. >> sounded like it the way i read it, doesn't it? anyway. we got that news. quite a couple weeks for the market. the dow now trading above 9,000 for the first time since early january. up nearly 39% after hitting a low of 6547 on march 9th. with it hit a 12-year low. joining us is art cashin director of florida operations at ubs financial services. we passed the eclipse, art, and a big comet hit jupiter. so we got that in the rearview mirror now, too. can we just say at this point are you ready to say that it -- the reverse head and shoulders

did finally tell us it was higher from there, not lower? >> yeah. widely accepted pattern turned into a whopping rally. you guys get some credit, when you had meredith whitney on, that began the thing. we had said before that that we wanted to wait until the 17th to see if the market could identify its move. then we stretch it until today. and we've had pretty much nothing but rallies. the problem s we're overbought now. so we'll probably have a pullback next week, i think. >> okay. so maybe a pullback next week. but we were trying to figure out, you know, what you always say, art, that the market's going to make as many people look foolish as it can. boy, i sure could see a move back to 8,000, anyone could see that, or 8500, consolidation. i mean, you could probably get 90% of the people to say that. i bet you couldn't get 2% to say we're going to 10,000 or 11,000 near term. >> i think 10,000 is not out of the realm of possibility and a little above 1,000 for the s&p. some of us are still concerned

that you -- the rally's going to continue, but at some point, maybe a month or so from now, and i bought some extra ice cubes, so i'll try to figure this out over the weekend, but i would say maybe a month or two from now you might see a sudden reversal of this. so we'll have to let it kind of play out, measure the legs. this looks like the early stages. you've got over 80% of the stocks now above their 200-day moving averages. that gives some legs to the rally. so it's there. but i just think the overbought will have a pullback next week. >> there are cynical people in this world. i am not one of them. this is not me speaking here. but did you hear anyone down there say that the market rallied a bit yesterday because health care looked less and less likely for the reform package that's on the table to finally come to pass? >> that was one of the contributing factors. i mentioned it in my written comments this morning, that they thought if congress was not going to be an automatic rubber

stamp for every administration proposal, while the deficit, while it will grow, may not grow totally out of control. so that was a bit of a factor. but mainly it was, you know, once the market began to spike above the former highs, then the shorts began to cover, the underinvested had to come in, oh, my god, the train's leaving the station, picking up speed, i have to get in. those were the primary -- >> are the shorts finished co r covering or still that big rush for the exit to come? >> oh, no, the shorts are still out there. i would suggest that short covering maybe was 40% to 50% of what you saw yesterday. there's a lot more out there. the skepticism is thick enough that you have to cut it with a buzz saw. just one other note. it was nice to hear ethel merman at the beginning. she once said she could hold a note longer than the chase manhattan bank, and i suspect she could. >> wow, i like that. yeah, we -- carl's a huge broadway show tune guy.

you love -- you love ethel merman. >> she has no equal. >> it's not true that i dated her, but, yes, i -- >> you guys are -- >> you guys were spotted kanoodling and that's it. >> that was you and mae west. you went up and saw her some time, didn't you? >> yeah. >> too much of a good thing is wonderful, she said. ♪ you'll be great >> thanks, art. >> have a great weekend. >> oh, i will now. ♪ start a cow >> see, you know the words -- >> everybody knows the words. >> come on! >> you know the words to every show tune. >> "gypsy". >> i didn't know that. >> okay. treasury secretary geithner meeting with house financial services committee this morning on regulatory reform proposal and joining us on the hill representative bachus. great to have you back today. >> thanks, carl. >> it's been a while since this white paper's come out. i guess people still have --

we'll see what the secretary says today, but does congress have any idea how this might even begin to be put into a bill? >> well, i think we do in certain areas. we all agree that we need to close the gaps in the regulation. i think we all agree that we need a resolution authority for our nonbank financial institutions. i think where we separate is on things like how we best protect the consumer. and, of course, the democrats and the administration want to form an all new agency, sort of like a new homeland security, where we believe that you shouldn't separate the safety and soundness function from consumer protection. >> you know, your view, and it's an interesting one, you say the key theme of the administration is rationing, cap and trade, rations energy use, health care, obviously, which is -- a dynamic thing right now, rations health care and choice in your view, and then rationing credit to

consumers and businesses through these regulations, right? >> that's right. whether it's health care or energy, it's sort of the micromanagement. they do that with financial services. they'll take a look at every product and they'll determine whether it's appropriate for a consumer. well, carl or joe or becky, each of you know what may be appropriate for you may not be appropriate for someone else. but they will actually try to force everything into what we call a plain vanilla envelope. and it's sort of like saying we're going to decide which doctor you go see. you know, there are a lot of sophisticated investors, things are very appropriate for them that they may not be for someone else. either the individual makes that choice or the government makes that choice. and in america, the individual does. >> joe's ears perked up, and so did becky's. >> whenever a major congressman or senator knows who i am, i

just stick my chest out. >> and jim nussle -- >> jim nussle's here, too. he was a little hurt. >> what about me? that's what i want to know. >> i didn't know jim was there. i can't see you live. i'm just looking into a camera. >> thanks for your leadership on this. your thought piece you wrote was a great kickoff. my question is, it's kind of popular to attack big financial and the complicated instruments that are out there. are you worried at all about kind of a sarbanes oxley snap back effect by congress where they just -- you just go too far? as a result, make it more difficult in the financial sector to do the job that they need to do? >> yeah. jim, i think you can't demonize wall street and you can't demonize profits or our free enterprise system. you know, really, a lot of what's, proposed is almost like profits are bad. you know, i hope, and i think the federal reserve and most

investors on main street hope our corporations are profitable and they then reinvest that. you know f they lose money, we all lose. >> is the goal transparency, is that -- i mean, that to me seems to be the number one goal. can we make this more transparent. >> well, you know, you need transparency in disclosures. you know, there are -- contracts are so complicated. i'm talking about contract, consumer contracts, mortgages and things of that nature. where you have to really -- i guess the complex thing about transparency is when you deal with the fed. you know, i'm forgiving the gao audit authority, particularly when they start bailing out individual companies and naming winners and losers. but, you know, you don't want them to lose that independence. so you have to be careful what you do when you throw that process open. and, of course, you know, ron paul has his views. i have similar views but, you

know, there are differences. >> congressman, you mentioned health care. that's not why you're on. we had congresswoman schwartz on and i asked her whether calls coming into her office, what they were like in recent weeks given, you know, all the things we've seen with health care going back and forth. she told me all the calls going to her office were that the status quo can't stay, we need a public option. you're in alabama, maybe it's different from pennsylvania, but are the calls coming to your office, everyone want the public option and no one wants private insurance anymore? >> no. i think the calls both in alabama and pennsylvania are saying, you know, i want to choose my doctor. i don't want the doctor choosing what procedures i can get. and like they do in oregon or in most countries that have nationalized health care, i don't want sanctioning. i don't want them to tell me because i'm a certain age, i don't get a certain care. people say scare tactics, let me just say that we have a documented case in oregon, where

an elderly lady applied for a certain procedure and she was told she couldn't get that but she was eligible for assisted suicide. we know in canada, we know in europe they ration care. so i -- you know, i'm -- i'm a little surprised -- >> you say it with such a straight face. it's incredible what you just said. >> well, but, you know, that actually happened. you know, but it happens in canada. it happens in europe. all the time. they say that some people, you know -- in fact, you know, it's this idea we're just going to make an economic decision that you don't get that operation or procedure. but i'll tell you the calls -- calls are really going to come in if this thing passes and people lose their employer-provided health care and they go to something less. >> congressman s there a real sense -- i mean, we hear about these horror stories on both

sides, people who don't have insurance, who who have had horrible things happen to them, people who have insurance that has not covered them with both of these problems. is there a commitment on both side of the aisle to make sure there is some sort of reform that does two things, one, cuts back on costs, two, extends coverage to people who don't have it? >> beck y thanks for saying that. i think that's all of our greatest concern. that's an area i think we're all concerned. i know shadic has a bill bill, we have worked on bills to aallow bool, to have some coverage for the inuninsured, those who lost their jobs, those with preexisting conditions. that's an area you need to try to address. i think we say let private insurance provide that as opposed to government. and that is -- that is the hardest nut to crack. that is the greatest need today with health care and the rising

costs. chairman said even the cost -- if the costs don't increase, we're on a collision course. our spending, even today, has to come down. that's with all the baby boomers hitting retirement age. you know, our deficit and our spending are unsustainable. >> yeah, it's -- anyone who didn't doubt -- or anyone who doubted it was a very complex problem probably has been humbled by just the past few weeks, congressman. thank you for your time. >> thank you, carl. let me say this. we have to do something about those that lose their job and lose their insurance. maybe an extension of cobra. >> we'll be looking for that down the road. we'll talk to you soon. >> thank you. up next, from the wireless world to the boardroom, the former ceo of australian telecom company will give us his view from the top. warren buffett as a cartoon character, part of the secret millionaire's club, a series of webisodes produced for aol.

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our next guest has been the ceo of a major telecom company on three continents, former ceo of australian telecom company telstra and former ceo of u.s. west and france telecom. it's good to see you. >> good morning. >> now i've got moreñ?o worry about here in terms of government intrusiveness, you're telling me, with telecom? >> you know, around the world there's this mags si movement -- >> to wireless. >> where people are wanting to control where investment goes and how it should go. you know, somebody has a better idea about what companies should do. and i think the greatest example of what's happening in the world is wireless. 4 billion people around the world, india, china, developing markets, developed markets, where it's evolved without any real government involvement. there's nothing more pervasive today anywhere in the world, tvs, pcs, whatever you want to talk about, than this whole

wireless phenomena. it's going to 6 billion over the next maybe half decade or so. so let markets work, is kind much a philosophy that i have. because there's lots of proof that says when you facilitate and catalyze, that's good. >> where are the warning signs in this country about telecom overregulation? are you seeing that now? >> well, no. i think over the last, probably, five or ten years there's been a lessening of regulation. it's allowed for a lot of things to happen. you see cable competition in the u.s. versus telecos, you saw wireless blooming. wireless is much bigger than fixed line which was the old core part of their business. you see the iphone. you see, you know, blackberrys. you see all kinds of things flourishing. the most important thing is it's

affecting the economy, affecting productivity in the positive sense because you now can do more things in more places real time with less infrastructure, fewer people in certain areas, than what you used to have. >> what are you worried about, then, if it's -- >> i'm worried about people now starting to talk about controlling investments, deciding who the players are or are not -- >> what are some examples of that? >> you see it where there's broad band strategies. people are talking about trying to invest capital and trying to decide who gets it. maybe issuing more licenses. trying to decide who gets them and who doesn't get them. well, you let the market work. the markets always should work. >> i heard this about, you know, derivatives, too. you know, deregulation's a dirty word now. i don't know how wireless can -- there's no subprime wireless ventures, are there? it's not the same thing, l obviously, but these unfettered markets we've learned a bit of a lesson. what about antitrust?

do you see new teeth in the u.s. antitrust action? >> well, i've only been back for about a month, month plus. >> that should be plenty of time. >> but there's been conversation now about this antitrust move where in the u.s. you have two big players that have evolved. they've consolidated a lot. these two big players are pretty dominant. so people are saying, is there enough competition? >> at&t and verizon wireless. >> yeah. and the question is, is do you start adding more legislation and doing more things? my answer is, there is plenty of existing infrastructure in terms of regulation, laws, that perhaps you might want to rethink and relook, but not in terms of introducing more. >> but what about the idea of some of these wireless contracts? for example, at&t having the exclusive contract with the iphone. does that make sense to you? >> that's how markets work.

if you're in europe and you're a football fan, the soccer fan, there are companies that have exclusive agreements with football clubs, certain agreements with delivered media and content. well, you know, then the other company has to figure out how they create an advantage with something else. again, you know, it's letting markets work. now, there are some times some extreme agreements that, perhaps, should be looked at. but again, it's all about competing. and others will figure out ways to offset what somebody else might have as an exclusive agreement. >> we've got -- sal, you know, while you're here, we don't have much time, but are people in sydney, they want you to make some news, i don't know, slam the government down there or something. you've got producers -- you're big news in sydney for some of the stuff you said about, a ceo down there, about the government, about the media, back woods -- you didn't mean outback, you meant back in the

time, right? >> the blooming onion? >> that was relative to some of the attitudes they have about outsiders, nontraditional people within the nation. but, you know, the people of australia are great people. they're fun people, all that sort of thing. how the media and government operates are different things. >> you don't want to get into that. >> but that's not really -- my point. my point is there's so much growth now that every nation can move forward on an aggressive agenda. fundamentally every conversation you have with every guest is always about the economy. the global economy, you know, nation's economies and there's so much productivity now, i think there's another wave coming. if we create the right policies, the right environments. yes, there are no funny activities with this wireless if he phenomenon. >> we could ask you about other

things but we have no time. at 8:30 this morning we'll talk to warren buffett live, part of a new club, the secret millionaire's club and he's turned into a cartoon character on the web to help kids learn about money and investing. we'll talk to him about that and a lot more in a few minutes. don't go away. today there's a way to save more for retirement, with annuities from fidelity. turn your savings into income -- guaranteed, and get a retirement "paycheck" for life -- guaranteed. call...

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welcome back, everyone. the most famous investor of all time is now a cartoon character. the oracle of omaha himself, warren buffett, is starring on the web. a-team has teamed up with aol to feature the most iconic of all time. the webisodes are expected to entertain and teach kids about finance, about science, about the environment. and joining us right now with the "squawk box" world premiere of "the secret millionaire's club" is the chairman and ceo of berkshire hathaway, warren buffett. good morning. we're going to run a clip of this "secret millionaire's club" right now. this is a clip where mr mr. buffette is helping the team out for the omaha candy company. >> this is the world premiere of warren buffett in "the secret millionaire's club."

♪ the secret millionaire's club ♪ ♪ the secret millionaire's club ♪ >> hi, mr. buffett. >> hi, everyone. ♪ mr. warren buffett is going to help us have fun ♪ >> what do you think about the candy business? >> everybody loves candy. >> now we're getting somewhere. this meets one important criteria of an investment. people use and want a company's product. the art of making candy is not significantly altered with time. you still need cocoa and you still need milk. >> let's save omaha candy! >> now, can any of you think what the downside of the candy business might be? 40% of all candy sales occur in the last three months of the year. october, november and of course the big one, december. if you miss that seasonal window, you miss almost half your yearly sales. >> so, club members, what's the

plan? >> let's contact mr. bar immediately. >> right. >> sound prospect. >> let's go. ♪ the secret millionaire's club ♪ >> there you have it, the world premiere of "the secret millionaire's club." thank you for joining us. we appreciate it. >> my pleasure. have some candy. >> that's something we hear from you often, something we hear in the webisode also. how did you get involved in these webisodes? >> i have a friend, andy heyward that started producing cartoons for the berkshire annual meeting ten years ago. he did it just out of the goodness of his heart. did a terrific job. we have become good friends. and then a few years ago, he did something called liberty's kids that was a cartoon animated arrangement that really taught history from around the time of the revolutionary war. i was really impressed with the product. i found myself enjoying the episodes myself and an 8-year-old could enjoy they will. he knows how to tell a story.

and he wants to do something beyond tell a story. he wants kids to come away smarter or with better habits. soy love working with andy. >> what's your hope that kids will take away from these episodes? >> one way or another you develop financial habits when you're very young. and the habits you develop live with you the rest of your life. so if we could get through to some -- to some young people that it's better to be a little ahead of the game than behind the game, that watch out for credit cards, most important message is that the best investment you can make is in yourself. but -- and you know, teach them if something's too good to be true, it probably is, so on. if they learn those things the easy way, through these stories early on, it may save them learning it the hard way later on. >> the webisode we just watched was something to help save the omaha candy company. what other sorts of episodes can we expect to see? have you done them yet or --

>> no, we haven't done them yet. andy may be well along yet but i haven't done any work myself. andy's the guy that delivers the storylines. but what we're really trying to get through at least to some of that young audience some messages that will help them later in life as they start facing choices as to whether, you know, they run up a big credit card bill or, like i say, the most important message you can deliver to a young person is that everything you invest in yourself you get back ten-fold. nobody can tax it away, nobody can steal it from you. we'll be trying to deliver those messages. you have to do it with a good story. i mean, they're not going to watch it to get a lecture. they're going to watch it to get entertained. in that entertainment we hope there can be a good message. >> warren, i've always been told that there's huge money in voiceover work. and i'm just wondering, is that what -- what drew you to this? you don't really are to -- they don't show you. you see all these hollywood

types are in there, they're in the room, they got the big microphone with the muffler -- >> improvising. >> was that it, big money in voiceover work that attracted you here? >> joe, you'll have to talk to my agent. no, i'll tell you. no, obviously, no, i'm not getting paid for this. there was a time when the market was, you know, hitting 6600 or so i thought i ought to renegotiate but thing have come back enough so that i -- that i'm doing this. i'm open to ideas though, joe. >> i know. i was wondering, you know, what is now a present piece in "the journal" about buying american -- >> the new york times. >> the new york times. i was wondering where the averages were at that point because i think you're now -- now it looks impressive. but you said long term, you didn't say this week, next month or whatever but it's hard to short america long term. >> no, it was not designed to be

a one week or one year market forecast but it was designed to tell people who are keeping their money in short-term investments where they thought cash was king, i taught if they were investing over the long term equities would do way better tan cash investments. if you've held cash investments since that article you've received virtually nothing. if you've held the index, you've done modestly better and gotten a yield. i would have been very surprised if five years from when i wrote that article that stocks hadn't vastly outperformed cash investments. >> well, it happened pretty fast. i think it was only about a month ago, was it during berkshire's release? i don't remember. you said, this still is awful. and across the board, none of your businesses were -- seemed to be improving at all. now, the market's improved a lot. is it as bad as it was a month ago? are you seeing -- i can't call

them corcuses or green shoots. >> i said, if you wait, robin spring will be over. you can't wait for business to turn up and be very clear about the fact. you'll probably figure it out three or four months later. the market is very, very likely to turn up before business. i don't -- but i don't try to time stocks. try to time stocks. stocks were a decent value when i wrote that article. they got to be an indecent value some months later. but it's a mistake. in fact, maybe we'll work it into an episode of "the secret millionaire's club," the people who think they can pick the market day by day are probably making a mistake. >> if you get laryngitis carl is available to do voiceover work for you. >> i'm going to try to teach kids how to write algorithm ims and cdos. >> that's an idea. >> but in mr. buffett's voice. >> we'll save you for a later

session. >> you said markets got to an indecent level. i guess you were talking below 7,000. but when you see the dow above 9,000, is that a decent level or less than decent? >> i would much own equities at 9,000. i don't know -- again, i don't know where it's going to go next week or next month. >> pretty good answer. >> you still think equities is the place to be? >> i own them myself. >> warren, last time you were with becky, i believe it was during -- >> a month ago. >> yeah. at the time i recall you talking a lot about inflation, not any time soon necessarily, but certainly a couple years down the road. cpi is running at the lowest level since the '50s. berman i c bernanke doesn't seem to concerned about it, considering his testimony. is your concern on the wane or on the rise? >> on the rise. very simple answer. not becausist going to happen

next week, next month, ten months from now. but ten years from now the dollar will buy a lot less than it buys now. it will be the consequence of what we're doing now. it doesn't mean what we're doing now is wrong at all. we're doing the right things, but what re are doing have consequences. some of the medicines we're delivering, it will be very hard to deliver a total offset. >> and is that change in the dollar's value, it's going to be disrupti disruptive, obviously, but violent in fany way? >> who knows. i didn't know what was going to happen the last two years. why should i know what's going to happen in the next two years? stay tuned to "the secret millionaire's club" and maybe we'll let it out. >> we could have one on the dollar collapse. >> yeah, that's it. we won't do it until the fourth or fifth episode but we want to get you hooked. >> warren, you talk about your views on inflation, very long-term timele frame. right now versus ten years.

when ben bernanke was speaking to congress he spoke about these, too. he said, this is not necessarily something we need to worry about in the near term. he's talking a couple years down the road. are you in sync with what he was telling congress? >> i don't think you could have anybody better than bernanke in the job. he understands all the issues. the time to worry about something that's going to happen in the long term is in the short term. i'll guarantee you he is thinking about that. but he needs to do what he's doing now. the fed needs to be doing what it's doing now. and it will have -- it will have aftereffects and we'll be facing those and they'll be addressed at that time. i don't think we can do what we're doing now and are going to be doing without having real inflationary possibilities down the road. but that doesn't mean i think he's doing the wrong thing. i think he's doing the right thing. >> thinking about those puts, warren, you didn't have to mark those to market, necessarily, but just thinking about this week, you cleaned up this week

on -- >> yeah, but that's -- >> i know, i know, but we're talking billions this week, are we not, in those puts? >> we moved the numbers around but no cash changes hand. we got $4.8 billion, we'll hold onto it for 15 or so years and see what happens. >> you had a billion dollar week, i think. you can say that. you can celebrate a little. it's friday, too, right? >> well, i'll have a cherry coke later on. >> yeah, wow. >> like that would be any different. >> a wild man. have two of them. >> he knows to the penny. >> like becky said, i bet you do know to the penny but you're not going to tell me. >> how about moody's, can you shed any light on it? >> no, i can't shed any light on it. we're straying from "the secret millionaire's club." the famous senator, hubert humphrey, who i admired gave advice on speaking, said never talk about father on mother's day. this is mother's day.

>> you love this. you've given us time in the past and we try to visit everything. we're going to -- shall we go to break and come back? i do have one question i definitely want to ask you when we come back from break. should we go to break and come back? >> okay, good. here it is. here it is. you're an insurance guy. you've done well with insurance. do you think it's possible to have private insurers co-exist if there is a public plan in health care? >> well, they do co- -- they co-exist with annuities right now with social security. you could buy income for your old age, or my age, with -- either with -- i mean, you get it from the social security and you can buy it from the government. i think the whole -- listen, i'm not an expert to health care reform. i mean, there are millions of people that know a lot more -- >> then you could be in congress. >> well, that's true. maybe i could even be chairman of a committee. >> exactly. we'll put you up for that.

you know what i'm asking. i mean, should reform have a public option or is it better to keep it market-based to try to hold down costs? >> reform is -- i mean, it is -- when you try to rearrange one-sixth of the economy, that is huge. it's an enormous problem. i don't think i bring special knowledge to it. i think it's needed. what we're spending -- the percentage of gdp we're spending, something has to happen. and what we get out of congress won't be perfect. the question is, whether it be an improvement. i don't know the answer to that yet. >> warren, jim nussle is here, the former head of the omb. >> warren, sticking to your secret millionaire's club and the principles you have there, the concern i think so many people out in the country are having, are we adding to the credit card bill with this health care reform? are we just going to add more deficit and debt?

at what point in time is it unsustainable? i mean, it seems like the deficits are just going up and the health care bill doesn't do anything to reform the already unsustainable growth in these health care programs. at what point in time is it a complete and total drag on the economy and we can't lay off that debt if some of the international markets? >> spending a sixth of your gdp on -- is already a drag on the economy. i mean, that is diverting a lot of dollars that other countries aren't to health care. if we can figure out a better way to do it, it will have beneficial effects regarding the financing. we just need to figure out a way to pay for people staying well rather than, you know, on what's prescribed for them and the amount of prescriptions and -- that take place. it's a tough problem to reform the whole economy on something that huge. but the real question is whether we can come up with something better. in terms of the debt question -- when we came out of world war ii

with the national debt at 120% of gdp and there were all kind of dire forecasts. this country works over time. we are in a movie, kind of an unpleasant movie, we haven't seen this movie before, and i can't toll you how long it's going to last but i can tell you it has a happy ending. this country works. we make mistakes along the way, but they get addressed eventually. so i'm not worried about the long-term future at all. on the other hand, you don't to want see debt as a percentage of gdp just continuously increase. fortunately we started from a pretty low level, in the 30% level. so we can take more. but you don't want to get addicted to huge deficits. >> you know, warren, you're talking about the economy. you mentioned that business really hasn't turned. it's remained flat. but there have been a lot of predictions about what happens to the unemployment rate. we had meredith whitney on our show. she said unemployment could go as high as 13%. you said in the past you've had

big concerns about where unemployment is headed. does a number like that fit in your forecast? >> well, i think if we have 13%, people will be watching cnbc all day. i don't know what's -- you know, i don't know how bad things can get in terms of unemployment. i don't know how bad things can get in terms of the economy. i do know we'll come out the other side and it will be better than ever. but there is no -- there is no way -- yeah. there's no way -- there's no way to predict how high it can go. it's going to go higher than it is now. you know, i do not see when that ends, but it will end. >> you're doing this -- you're partnering up with aol to some extent on this, warren. >> yeah. andy is the -- you know, i'm just a bit actor in this thing. >> oh, you are? >> yeah. like i said, again, i'm hoping for big things, obviously. >> we're back to the voiceover

proceeds we're talking about. yeah, we figured that out. but you have an idea about the business? people have written off aol in the past. it looks like they're trying to move to some type of content-based organization, much more content-based. do you have any idea how that's -- i mean, is that going to be successful? >> very few people ask me about my advice on the internet and those that do don't pay any attention, joe. i can't really help you much on that. i just want to say, thanks for having me but i can't tell you what any company in the internet's future is. >> warren, we want to thank you very much for your time today. we really appreciate you coming by. again, thanks for showing off the new webisodes here. if you want -- >> okay, thank you. good-bye and thanks for having me. >> by the way, if you want to catch "the secret millionaire's club" you can do it on a pc or mac near you. again, it's "the secret millionaire's club". got to sneak in a quick break. when we come back a lot more "squawk" continues. you can be

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futures have steadily lost some ground on this friday after the results from amazon, american express and microsoft were a little disappointing last night. dow still above 9,000 for the first time since january 6th.

the fastest stock recovery we've seen, really, since 1975. the s&p has recovered half of its losses. we'll see how we end up on this friday where there aren't as many earnings as there has been. when we come back, more with jim nussle, formalerly with omb.

take a look at futures this morning.

we have lost a little bit of ground here this morning. standing by at the cme, it raises the question, dave, whether or not we are going to raise anything we've gotten anything we've gotten in the past 12 sessions. >> let's not talk about erasing. we've had a good run here. it's not a bad thing to take some money off the table on friday. the key to the whole deal is being able to play on monday. there's been a good run. we've had disappointment here with mr. softy. >> yes. >> that's okay. we had good leadership in the tech sector for the most part earlier in the week. we're still moving forward. there's money coming into the market to work. you can see that the 30-year is up 1932 or so. looks like things are the other way. they've been sliding. they're taking a little profits, also. >> okay, dave. we're going to keep it short. appreciate the insight on a friday. you raise some good points. we'll probably talk to you next week. >> i hope so. take care. have a great weekend. >> you, too. we've got a few parting shots with our guest host jim

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our guest host jim nussle, fofrler office of management and budget director is with us this morning with the nussle group. we talked about earnings and the macro economic picture. in terms of the way policy is shaping up in washington, where do you think we are in this health care thing? are we topping out here in terms of the ambition of the administration? >> well, there's a couple of things happening. congress wants to be able to demonstrate it's doing something. that's why august was so important. they're going to go home for four weeks, talking to their constituents. they want to be able to show them something. this is what i did, this is what i accomplished. >> maybe it's what we didn't do. >> there's going to be a lot of them that will feel a lot better a by not having voted on something that massive based on the calls we are hearing from spencer bachus and others coming

in saying, don't let the government take over my health care and choose my doctor. so i think it's kind of a mixed bag. that's the reason why they were hell bent to do something before august. >> do you think cbo played a huge role in this? >> oh, yeah. >> they say -- >> i brought the letter. and i read it a couple of different times. it is just amazing how devastating the evidence that they put forward on losing your choice of health care and the fact that it really doesn't bend the cost curve over all of health care. doesn't bring down the cost. >> you, like david walker, are worried about the current state of medicaid and medicare and what happens down the road. i mean, that was walker. >> oh, yeah. >> is there a way to reform health care, cover all these people, and cover what you're worried about? >> the choices are so tough. i mean, you heard allison schwartz say, oh, we're going to reduce the growth in medicare.

while they used to accuse republicans of cutting medicare whenever we said that. i mean, that's what it comes down to. are you going to limit the amount of resource has are going into the program, or aren't you? and whenever that happens, something is going to screen scream. it's seniors themselves. it's going to be a tough sell. >> there are a lot of lobbying groups out there, aarp, as you mentioned, one doesn't such port one single side of this. is there an a way to make this a better place? we had somebody the other day who came in and said that scooter payments, you rent these scooters, medicare pays to rent these scooters. you end up pay for five times, eight times, ten times over the lifetime of the rental, you could have bought the thing eight times over. >> i don't think there's any way to do it unless you can get the 50 million seniors actually helping. for that matter, the rest of us as consumers, actually having more choice, more management of the plan, because letting the bureaucrat manage the cost, i

mean, the post office managing costs? the government managing costs? >> the post office does a pretty good job. less than 45 cents to pick up a letter from my house and deliver it to anywhere in the country. >> that kind of situation you've also know you have other choices like fedex or ups to deliver your packages. i think you probably will see people continue to be concerned about this whole issue of cost control of health care. it's out of control, unless you can bend that growth curve somehow, there's almost no way the government can have a bigger footprint in this and actually make it work in the long term. >> george was on the show earlier in the week. he said that for years politicians were elected based on what they could promise and deliver to their constituents. but now, and in the future, they will be judged on how disciplined they are with federal spending. that's a "c" change in you he view washington. >> i don't think george is right. i think that's maybe his hope.

i don't think he's necessarily right about that yet. it's still, what have you done for me, what have you done for me lately, what have you done for my district, my community, my town. people are demanding that. they're not saying reduce the costs in my backyard. they're saying reduce it across the street in somebody else's backyard. that's why when it comes to the earmark battle or health care or whatever, it's got to be across the board and fair for everybody. that's why this tax the wealthy or cut somebody else's cost or whatever, they never seem to work really well because it never covers