here. the s&p is up 3.8% for the week. but the s&p equal weight index for each company has an equal weight, up 4.7%. that's an unusually large spread. that tells you many companies have been participating in this rally. trend in earnings is the same. many companies beating on the bottom line. top line is on the weak side. black and decker though up 4%. they did very well. significant cost cutting. that's what helped push them over the top. third quarter, a little bit light. full year, pretty good. ingersoll rand doing well, beat on the bottom line. again on cost cutting. making positive comments on full-year guidance. that's a little bit disappointing. down 5% here today because revenues were weak. the company was hurt we weakness in card spending and credit losses. tradertalk.cnbc.com. before i toss it of to you, citigroup exchange preferred

expiring today. that's been quite a mess. we're going to talk about that this morning. tradertalk.cnbc.com. mike huckman, how does it look at the nasdaq? >> i have not seen jason lurking around the nasdaq this morning so i'm not sure we're going to have a friday the 13 day winning streak since we haven't had since before friday the 13th part ix came out. they are spooked by microsoft and amazon. amazon down 6% premarket. also, watching yahoo! to see what the reaction is for the report that its board may have met to talk about some kind of search hook-up with microsoft. it's not all about tech and the internet here at the nasdaq today. ericcson saw profits fall by more than one half. diplomat give guidance. shares are down 7 1/2%. t. row price, profits fell by more than a third. still beat the street. building on the strong week by bio pharma is sepracorp.

on the flip side, risk reward in this sector, they are down 20% because the study showed rheumatoid arthritis drug didn't work much better than a placebo. follow me on twitter at mhuckman. sharon? >> oil prices are hovering right around $67 a barrel. not changed very much from last night's close. oil prices have rallied over 10% in the last two weeks. on the back of stronger equities and with better than expected, though still very weak earnings reports coming out from many dow components. also looking at prices that are reflective of some of the global macro economics. perhaps green shoots that are out there. germany's business content rose for the fourth month in july. welcome here some oil movements that opec's crude oil shipment will be down nearly 2% for the

four weeks ending august 8. in terms of gold, gold prices hovering around $9.50. a lackluster week for gold. looking at perhaps activity coming out of gold market as they look at the regulatory action that may take place in washington. rick santelli, to you in chicago. >> thank you, sharon. a lot of times, of course, we pay a lot of attention to supply in our country. that makes sense. of course, next week bills and coupons and chips are going to tilt $205 billion, not including what we don't know yet. that is a drive-by monday announcement for tuesday, one-month bill option. if you look outside the u.s. it's also been a big week. whether it's noninvestment grade, high yielding rated companies like fiat that is now chrysler related. we're seeing risk type globally, evidence by some extent the rally that we've have been experiencing is something to pay attention to.

rates in the states today are steady. it's been a wild ride. the dollar is down a bit, giving back some of the positive sideways trade yesterday. now, let's hop across the pond to guy johnson. >> thank you very much, indeed, mr. rick santelli. you came to an interesting time here in europe. we are waiting to see whether or not we're going to dip below the flat line with kind of trading around that point at the moment. the markets really split around europe. germany is trading down. paris, fractionally higher. london higher. germany is up 5% this week. gains in europe have been impressive. paris up around a similar amount. london up 4%. the question is, does the rally run out of steam today? we are going to have to wait and see. it really is even steven at this point. let me show you the stoxx 600 earlier on. the climate index, that lifted the stoxx 600 but it is trading flat as we speak. the red line is exactly where we are.

we're going to wait and see how you guys open. vodafone, largest mobile company, coming out with numbers. helped considerably by currency. sterling has generally been weak. when you strip that out, the numbers weren't quite as strong. we were talking about ericsson earlier, it's the outlook that is causing concern for the world's largest maker of network equipment. rebecca, have a great weekend. >> you have a great weekend as well. meantime, the oracle of omaha getting animated earlier this morning on "squawk box." quite literally in another first on cnbc interview, warren buffett talks about a new initiative that will entertain and teach kids about finance, science, and the environment. and, of course, he talked about the markets as well. and becky quick joins us from cnbc global hq with more. hey. >> first of all, the reason warren buffett is talking today is because of a new venture when aol, a deal that is putting out

something called "the secret millionaire's club." it's aimed at kids. they're trying to make sure that kids are aware of finance problems and make sure that they understand that the decisions they make now will affect them down the road when it comes to their money. we we talked a little bit about that. but while he was here we talked a the markets. markets focused on the dow going above 9,000. if you remember, warren buffett wrote that column last year for the "new york times" where he said that he was buying equities at that point and that other americans should, too. we were talking about the dow being well below the levels, even below 7,000. when he's talking about doing this, said he was taking his own money and investing in u.s. equities. since that time the dow has come a long way. back above 9,000. today we asked warren buffett if this is a time when he looks around and looks at equities and thinks they are fairly valued or over valued at this point. here was his answer on what he would be doing right now with his money. >> i would much rather own equities at 9,000 on the dow

than have a long investment on government bonds or continuing rolling investment in short-term money. again, i don't know where it's going to go next week or next month. >> he said he's not making a call on a day by day. he's not saying this is a level that the dow will keep climbing from. but he says when you look at all the issues that are out there that inflation cropping up down the road, he just thinks that betting on equities at this point is still your better bet, even after all the gains that the dow has seen. up better than 35% over the last several months. we also got a chance to talk to him about the other big battle that is raging between main street, wall street and washington right now. we've been talking about health care. that debate on health care, asked him what he thought about the administration's efforts to overhaul health care. and here's what he said on that. >> spending your gdp is already a drag on the economy. that is diverting a lot of dollars that other countries aren't to health care if if we can figure out a better way to do it, it will be beneficial affects regarding the fbsing.

>> he said the question is not whether the bill that is working its way through congress is the perfect alternative but whether it is a better alternative than the system we have today. he points out the amount being spent on gdp, climbing towards 16% right now, is a problem that has to be addressed. brian and rebecca, we'll send it back to you. later in the day we'll have more on what warren buffett said not only about the deal with aol but what he's looking at with the markets and beyond. >> thank you, becky. also fascinating to hear what mr. buffett has to say. you can hear none of it, peter costa. >> i did hear part of it. prior to warren buffett making the statements, march/april, i mentioned the same thing. we had a lot -- >> buy american, buy stocks. >> buy stocks, be involved. get your money back to work. obviously warren listened to my advice. again, i'm just -- >> you're dressing better, i see, too, three different kinds of stripes. let's talk about the stripes of the market. >> yeah. >> listen, we've had a great run. >> yes. >> today we're consolidating amx, microsoft, amazon. what would it say if we added

just a decent day today or even positive. how do you see it playing out? >> i. >> i see the marketing selling off. i do see some money being taken off the table. as i said last night to maria, it's time to take a little bit off. we've had a nice run. 12 days on the nasdaq that we've been up. you know, it's time to take money back. >> are we overbought? have we come too far too fast? >> i don't know. yesterday you would think that yesterday. but up until yesterday i didn't think we were really overboard. i think it was a nice move, steady move. we had a couple of nice days last week. it was picking away, picking away, going higher. yesterday was a little strong. so it's probably getting to that over bought condition. >> today definitely consolidation? >> i think so. i think we will sell off on the opening. we will be down most of the day. i don't think it will be anything significant. it's okay. >> peter costa, thank you very much. rebecca, back to you. >> thanks, brian. coming up next, the e-team and the final stretches of what

has been a jam-packed week of earnings. we'll get more on microsoft and amex. plus, the buzz beyond the big board. the morning after the big rally, and then a first on cnbc, the democratic senator from the great state of new york, chuck schumer. he'll join us to weigh in on all the things we've been talking about, obama's health care push, those proposed financial reforms, secretary geithner will be testifying later on this morning. and jump-starting the economy, beginning with a multibillion dollar computer chip plant breaking ground today in his home state. you don't want to miss it. stay with us.the sa ools the pro, so you can be a disciplined trader. by selecting from eight advanced triggers, your order gets executed, even when you're busy. and with trailing stops to help you lock in profits and minimize risk, you can be confident in your strategy, no matter which way the market moves. find out why more and more active traders

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welcome back, everyone. we're going to get to earning but i want to draw people's attention to headlines that have been crossing in the last couple of minutes. bernanke, bair and geithner on the hill today to talk about regulatory reform if one of the ones that caught my eye, a lot of traders talking about this. fdic saying that we should consider off balance sheet as a risk as if it is on the balance sheet. that could be a big mover for a lot of financials today. we also want to get over to joe and carl at the earnings central

command center. for all we need to know before we go into the weekend. carl, kick things off. >> we could do weather, traffic, everything you need to know. it's a lot. >> for the weekend. >> that's right. >> definitely. >> over today. >> after enron, what a concept, you know, to consider off balance sheet, item might affect on balance sheet. >> no risk, apparently. >> yeah, yeah. could be a problem. >> rebecca, you're right. this morning not quite the frenzy that we saw yesterday. just take earnings of 5 cents ahead of expectations, but the oil field service company, again, suffering from a decline in north american drilling activity. company says drilling in the u.s. and canada reached a five-year low. and they reiterated it does not expect a recovery before next year. kind of what we heard from halliburton earlier in the week as well. >> on the morning show, you not only have to do the stuff that happens before that morning but also anything after 4:00, it's fair game and it's ours.

a few stock that did report after the bell yesterday, the big one, the granddaddy of them all, the granddaddy of all tech, microsoft reporting earnings per share that were two cents below expectations. a dropoff of global pc sales weighed on both revenue and profits. also, profits negatively impacted by charges relating to its forthcoming operating system rollout and the stock is called sharply lower this morning. it has been one of the standouts really as it moved from the high teens up to over 25. but we're going back town to test 23 today, mid 23s, anyway. >> amazon.com was another one that disappointed. earnings upper share were a penny above. the stock having nearly tripled since late november. third quarter revenue guide dance was roughly in line with analysts views. they developed this reputation for bucking the discounting trend that we see at walmart and ebay and so forth. and analysts were saying before

the earnings came out that in order to keep the stock going up, you would have had to have had some kind of unprecedented spectacular performance. >> the lows in the 30s. margins hurt because of high-end video games. are the twins, have they discovered those yet? >> they're 5 weeks old, so their hand/eye coordination -- >> with the wii you should put the wrist thing on. they'll throw the wii, you know, across the room. $50, a new wii game -- not that you buy new, you can't buy them used. it's like this big. it's an amazing amount of money and they didn't sell quite as many. here's one. two, we're going to talk about, actually. dow component american express. earnings per share coming in a penny above estimate. revenue fell short of analyst expectations. american express repaid the t.a.r.p., $3.39 billion investment. company said plans to remuches

warrant as many of the t.a.r.p. companies are from the treasury if let's bring in rick shane, senior specialty finance analyst at jeffries to break down the american express numbers and capital one which reported after the welbell. both of these are called lower. my question to you, rick, it seems like the word was out on delinquencies in credit card land. what in both of these reports was even worse than what we already knew? >> i don't think there was anything worse. i think what you're really just seeing is giving the run over the last week, a little bit of retracement. i think they were both good quarters from both companies. >> really? because they're both called down, what, over a dollar, each of them, right? >> both stocks were up a buck yesterday. it was up 10% in the last five trading days. so i think that's really all you're seeing. frankly, we expect both names to continue to move higher. i thought the numbers -- not only were the numbers good, but

particularly the american express, the outlook sounded positive. they lowered the expectations in terms of what loss rates would be, guiding from previously for the second half, 11 to 11 1/2% loss rate to below 10. and for the first time gave a little bit of an indication that spending is starting to -- the decline in spending is starting to moderate. >> you're in san francisco, rick. quickly, brief headline crossing right now. the california senate has approved the budget plan to try to shrink this $26 billion budget gap in the state. remember, we got signs that might be in agreement with the governor earlier in the week, last week. apparently the senate now approved that. >> that's right. >> expected to approve it later on today. you might be getting closure in the near we term on that. rick, back to the financials. jamie dimon said last week he's not going to make money in cards in '09 or in 2010. i guess you're going to wait to see if chargeoffs level off before you get back into these

names? >> no, that's really not our view. we actually -- our opinion is that chargeoffs are going to start to peak in q-4, especially american express. we have seen very favorable trends on the delinquency side. yes, there's normal seasonality that goes on. over the last three months across the board we have seen delinquencies out perform what you would expect based on normal seasonal expectations. the thing i would describe is that we sort of reached a point of termal velocity here in terms of the problems. the consumer behavior is improving. card issuing and underwriting is tightening. e are problems out in the labor market, but what we're seeing is real behavioral shifts that are going to cause an end to this situation. >> all right. you remember -- did you put a buy on amex at eight, rick? do you remember? >> i did not. i did not. >> i was asked from people, you know, it's like going to the

premier american companies of all time, it's a dow component, it's 8 bucks. you don't have to time things you buf got this thing on sale. so do you buy it at $8? i couldn't get anyone to say yes. i did it at $12. i couldn't get anyone to say yes. not you, rick. remember? >> that was a good call. you don't have many, but that was good. >> that's why i stand out. i know. >> rick, thanks. appreciate your time. >> thanks. >> we were going to go to the plaza but -- >> you know who i like? i like the vikings and the capital one. not vikings, i don't know what they are. >> more than the cave men? >> i like both of them. i like both of them. but they're -- you've seen them, the way they're landscapers and they come. >> speaking of good vikings, brian shactman. >> oh, yeah. >> the shac is back. >> we've got to go, guys. >> he's cutting me off again. got to go! >> i don't know what's going on today. coming up next, the buzz beyond the trading floor as looks like a little bit of a

breather from the rally. >> a little bit of a breather but no shortage of things to talk about. the democratic senator from new york and the joint economic committee vice chair charles schumer will be joining us first on cnbc to talk health care, the obama administration, financial regulation. there is so much to talk about. and we'll be doing it in a few minutes. announcer: some people buy a car based on the deal they get. - others buy the car of their dreams. - ( beeps ) during the lexus golden opportunity sales event, you can do both. it's an opportunity today. it's a lexus forever. special lease offers now available on the 2009 es 350.

we're taking the buzz beyond the big board. joining us from the cboe matt schapiro, great to see you, matt. you trade on the big option tip. what are they telling you about today's trade? >> last month when the market was up here, rebecca, the big

volatility of futures didn't like it and they forecast the correction that we did have. now it's a completely different story. the word down here is the rally is going to stick and move higher. >> i'm sorry. we've got to leave it there. we're opening up to the opening bell just on the other side of this break. we begin the countdown. have a great weekend, matt.

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or visit a td ameritrade branch. welcome back. the opening bell is set to ring. we want to bring you attention to breaking news in california. the senate has approved the budget bill, closing the $26 billion senate. all the regulation on the hill that's being discussed. also, will be an important thing for today's trade. and the fact is, we saw futures down a lot more overnight than we're seeing them going into this opening. >> peter costa touched on it. he thinks it will be down for a good portion of the day. a lot of people said it's stronger than they might have expected. >> all right. here on the big board, national

health care corporation ringing the opening bell. ticker is nhc. at the nasdaq south jersey transit authority and airtran. >> don't take our word for it, take our market reporters' word for it. nyse, the nasdaq start at the big board with mr. pisani. you might have thought things would be a little more down than they are. >> look, the market doesn't want to go down particularly. and you could see in the breadth of the ral plip it's very important. 3.8% gain in the s&p. look at the equal weight index. every stock is the same. equal weight and 500. it's up 4.7%. that's a very unusual spread. they usually trade closely. what it means is there's a lot of stocks that are advancing, not just a few of the biggest cap stocks here. talk about other things moving on. by the way, you look over at china, new high. look at the dax index in germany, new high. shy of new high. france, england, brazil, too,

shy of a new high. stocks that are moving here, generally the pattern, the same. beating on the bottom line on cost cutting. top line a little bit light. cautious guidance. microso microsoft, amazon, ingersoll, the whole story here. black and decker, they beat on the top line. they did talk about weak second half. guidance for the second half, very much on the mixed side. third quarter is bo below expectations. ingersoll rand, also beating on the top line -- excuse me, beating on the bottom line on cost cutting. full-year guidance was raised a little bit. that's why the stock is trading up. american express just opened down 91 cents at $28.54. top line beat, revenues a little short. company talking about weakness in card spending as well as credit losses there. so big important thing here today as we talk about this later, citigroup, the exchange is now ending today for the preferred into common. there's been a lot of issues surrounding this. it's a little complicated.

we'll talk about it more in the next hour. tradertalk.cnbc.com. we're looking down 36 points here. how is it at the nasdaq? >> looking down here, too. down about 1 1/2% at the nasdaq. here at the open, if things were to somehow turn around here today, though, this would be the first 13-day winning streak for the nasdaq since early 1992. but microsoft is definitely going to be too much of a drag here. right now it's down more than 7%. berinni and associates which follows market history like a hawk is telling folks since 2000, microsoft has opened down more than 5%, or 5% or more, i should say, only 13 times. in 9 of those 13 times, it has closed lower than writ opened. it's saying buyer beware. am shon up more than 70% so far this qulaer. it's unbepressure by more than 5% this morn to think back of its earnings report as well. if you're looking for an upside story, bio pharma, sepracor, it

makes the sleeping pill. lunesta earnings came in at 72 cents a share. on the flip side, rival pharmaceuticals down 13 cents because the rheumatoid arthritis drug didn't work much better than a pla secebo in a study. rick? >> thank you. there's that that commercial, when banks compete for your business, you do better. on the trading floor, we all know that we're worried about  over-regulation. but when regulators compete, maybe we're better off as well. that news that cnbc talked about earlier that sheila bair said maybe off balance should be treated as on balance. traders on here have one word for that, amen. in terms of all of these hearings, everybody is going to pay close attention. interesting news from one of the bank of england officials. mr. bean, i'm paraphrasing, just on headlines recently said that unemployment might end up being a bit understated in the future

because so many people around the globe are going to work in jobs with less financial renumerations than the job they left. what does that mean? when you're out of work you're going to take any job. why is that important? because it has a major impact o consumers and their utility to spend. as far as interest rates, they've been volatile this week. they're creeping up a bit. it's been a big week as the  ten-year notes hovering around  370. and the next several weeks will be big in terms of another one word, and that is supply. now, let's go back to rebecca jarvis. >> thank you. stocks stumbling out of the gate, but holding up pretty well. will we get a friday rally to keep the streak alive? you're cnbc edge on the other side of the break. >> and just about an hour from now, treasury secretary tim geithner sits before barney frank to testify on an obama and the administration's regulatory reform proposal. . we already have element of his testimony. the fed is going to get and give a little power up. when the fireworks begin, we'll bring it to you live. today there's a way to save more for retirement,

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welcome back to "squawk on the street." i'm mary tofr son. let's take a look at how schlumberger is trading today. its stockestly right now. the company says north american gas dropped to a low. they're not expecting to rebound this year. ashland's profits are tumbling for things like severan severance. it's a chemicals firm. up 5 1/2%. revenue rose modestly, ashland said demand should remain weak throughout the rest of the year. the property and casualty insured reported an 18% increase in earnings as gains offset underwriting losses. operating earnings of 149 a share beat estimates by 19 cents. the company raised the full-year outlook. on the nasdaq, let's check out ramis, designer of memory

circuits. loss of 15 cents a share. company also said there is a delay in a trial relating to patent royalties. a consistent issue with rambus. stocks under a tiny bit of pressure at the open. take out microsoft, american express, and the industrials, and nearly flat. of course, there's a lot of upside in recent weeks. we talked about, how do you prepare your portfolio for the long term and for right now as well. joseph keating, fifth third asset management. joe, i'll start with you. it's simple. people want to know, where do we go from here? >> well, brian, i think we go higher. but it could take a little while. i mean, we've had a tremendous relief rally off the march 9 low when basically the negative fweed feedback loop between the housing market and the economy and the stock market was broken. so we -- a lot of short covering took place and we rallied off that. now, i think we go higher but we need to see earnings come through.

we're looking for a slow growth economy. gradual pick-up in economic activity. so i think we move higher, but we may have to be a little patient. >> john, talk about that. you say higher but not for the long term. >> yeah, i think you definitely have two strategies here. i think you have a strategy for the rest of the year and i think you have a strategy for 20 10 and beyond. i think the market is up for the most part the rest of the year and there are gains to be had and you have to take advantage of those gains because i think when you turn a calendar to 2010, i think the reality is going to hit and, you know, citizens in the face that, you know, the economy is not going to get that much better. earnings are not going to get that much better. and there's a lot of regulation and increase taxes and a lot of government debt that is going to have to be paid for. and i think 2010 is going to be a disappointment to people and the market is going to be very tough when you look at 2010 through 2012. >> joe, we spend a lot of time talking about fundamentals here.

but there's also the other side of it, momentum, high frequency trading, hedge funds, basically dedicating computer programs to make decisions for them as opposed to fundamentals to make those decisions. how is an average investor do you deal with that and are you at a disadvantage, in your opinion? >> maybe in the short run, you are at a disadvantage. but i think you basically have to ignore it, long-term investor. pick your spots to go into the market. buy high-quality, brand name companies. and put your money to work. so if we took the thesis that it was all driven by computers, we wouldn't be in the game. >> talk about the high-quality names. it seems like that's what a lot of people say and it seems topee. what are some of the things that interest you right now? >> brian, we're dividend investors. there's an unique opportunity to buy some incredibly high-quality companies that have higher than unusual -- higher than usual dividends. take the consumer space. you can go into a company that

procter & gamble, colgate, pa palmolive and pepsi right now. the dividends on the companies are 2 1/2 to 3 1/2%. >> because the stock prices have come down. >> that's right. the earnings remain relatively strong. great revenue growth at these companies. in the telecom space, being a dividend investor i don't have to pick between at&t and verizon. i like them both. over 6% dividend yields of both companies. both are going to win. >> jon, what are some of your picks in terms of what you do with your money right now? >> well, i think to capture gains for the rest of the year you have to look a the sectors that have been performing well since the spring. you're looking at the technology sector. you're looking at energy, materials, and the consumer discretionary sector. i think that's the place where money is going to flow. that's the place where the strongest optimism is as far as capturing the perception of improved economic growth globally and in the u.s. and so i think that's where investors should be directing

their investment dollars for the rest of this year. >> i had this conversation with joe yesterday about microsoft. everybody lumps it in with tech. it's been around for 20 plus years. a company like that should they just start shifting and up their dividend, return a little cash to their investor? >> i would think so. they started it. now i think they really need to view themselves as a company and shift whole harltedly in that manner. it will change their investor base but i think it's the investor base they need for the long term. >> jon, when we look at the investor base in financials, that's one of the groups that sort of hung in the balance here. we've got bernanke, bair and geithner testifying about regulation today on the hill. do you touch the financials at these levels? and what do you need to know to play in them? >> i think in a broad spoke, you don't need to, nor do you really want to be invested in the financial sector. the government involvement in

those businesses, the increased regulatory environment, and just from a balance sheet standpoint, the vast majority of these companies are still financially stressed and still a mess. there are much better investment opportunities in other sectors. yeah, i mean, there's, you know, a goldman sachs or a blackrock. >> you're looking at best in class really names in that sector? >> but i think short of that, just a broad investment portfolio standpoint, i wouldn't spend a lot of time looking for a financial stock to have in your portfolio. >> real quickly, joe. as you evaluate the earnings, so many people focus on weaker top lines. when you look at a company you might want to invest in, how do you view their earnings? >> basically, we're looking at the brands, the power that they have in terms of being able to distribute their products. and so i want companies that have consistent growth in their earnings, where we're not wondering whether or not they're going to be able to grow over time. so we are looking for them to continue to grow and that's why

we want to be in brand name companies. >> lower risk, higher returns in this environment. sounds good. joe, reappreciate it. jon fisher, appreciate it. coming up next, folks, we have a very wonderful interview coming up. a first on cnbc, democratic new york senator chuck schumer, economic committee vice chair. he'll be with us. >> his take on the administration's health care proposals, financial regulation overhaul, providing the economy and actually begins with a four-plus bill dollar computer chip facility in his home state that could generate 5,000 jobs. speaking of health care reform, cnbc hosting a special "meeting of the minds" at 9:00 p.m. eastern monday evening to tackle this very top piic. take a quick look. >> jim, why are we spending so much money on advertising? up of these dollars that are going to tell me who is not a doctor, what drug i should use, shouldn't we be putting that money back into research and

development? it seems crazy to me that i can turn on -- do it on the tv and they're advertising for cealis or whatever. >> i'm not a doctor. >> he can make a speech. >> taxpayer dollars are going into advertising when it's not -- >> a billion dollars in 12 years to get one drug. not guilty going to be defending the drug company. one four star . two identical rooms. so why does this one cost so much less on hotwire.com? when four star hotels have unsold rooms they use hotwire to fill them, so you get them at prices lower than any other travel site, guaranteed. h-o-t-w-i-r-e, hotwire.com

and welcome back to "squawk on the street." i'm darren rovell. ben roethlisberger has been accused of sexual assault in a civil suit yesterday. he did deny those charges saying they were false and vicious and he would defend them. interesting float in this dick's sporting goods began running an ad with roethlisberger. they say that ad will continue to run and run in heavy rotation throughout the weekend. he's always been a great spokesman from us. this is from jiff hennie. and until something in the legal arena has changed they will continue with this campaign. it is also a commercial for

nike's air cleat. and nike said that roethlisberger will continue to be part of their roster. we decline to comment on pending legal matters. the dick's sporting goods/ben roethlisberger ad will continue to run in heavy rotation throughout the weekend. this really the first big week of the ad despite the charges of sexual assault against the pittsburgh steelers quarterback. rebecca, back to you. >> thank you, darren rovell. a $4.2 billion computer chip facility is coming to upstate new york. and it's expected to bring 5,000 jobs to the state. this news comes at a time when the national unemployment rate stands at .5%. it is expected to rise. here to discuss the good news and the state of the economy in a first on cnbc interview, senator chuck schumer of new york. also the vice chair of the joint economic committee. let's talk about unemployment, because you're doing something or here in new york we're doing

something to address that issue. but still unemployment at the current time is at its highest level since 1992. the fed at a national level is looking at it going up through the rest of the year. and then staying high through 2011. on a new york basis, where do you expect unemployment to be at the end of the year? and then on top of that, will it lag or lead as far as the national picture goes going forward? >> okay. well it will be too high. i'm not going to predict a number. that's out of my expertise. but it's too high and higher. it's lagging. it's probably the anchor that's dragging the economy down. businesses are adjusting to these difficult times with cost cutting and others things. but unless unemployment goes down, if employment doesn't go back up, there's not going to be money in people's pockets to really get the economy nicely rolling again for a while. but what we're doing here is the future. this is the most modern chip fabrication plant in the world. the chip fabs used to be done in

asia and now they're coming to upstate new york. why? we have a well educated labor force. we foresaw this way in advance and did in our universities here in albany, expertise in nano technology and engineering and chip fabrication. and when the money wasn't available from u.s. institutions, we have abu dhabi actually investing here in global foundries as well. so this is the future. and lit will create lots of job. starting right away, construction jobs and others. and it relies on the best of what we have, not only in upstate new york but in the mid west and elsewhere. >> there's been a lot of focus on stimulus creating jobs. 698 stimulus initiatives throughout the world right now, according to the isi. but yesterday headlines emerging ability corruption. here in new york, in new jersey, brings to question, is this a way to protect those stimulus dollars from protection, senator

shumer? >> well, first, i would say there is significant oversight. the president has put a strong czar for oversight, a former whistle-blower over the money. and -- >> so you don't think -- >> stimulus money so good. what happened in new jersey is part of the fabric, unfortunately, of political life in parts of new jersey there and is not related to the stimulus money. those -- the crimes that were committed were even before the recession started. >> senator schumer, brian shactman here. i want to shift gears a little bit to some of the talk about the health care program, because there was a lot of speculation in the markets that some of the rally had to do with the fact that people thought it was going to go away, even though it's going to be delayed. since you had some comments earlier in the week about it, where do you stand on the prospect today? >> well, we're going to get health care done. the president has made that a commitment. and the american people want it. the reason is very simple,

because things are going to get worse and worse and worse. and the longer we wait, the worse they're going to get. people who now are worried but have good health care, know that every year they pay in more deductibles and co-pays, get less back. we're going to hit a wall in five years. and so we have to deal with this problem now. but we have to focus on the middle class. we have to make sure that the average middle class person continues to get their benefits and gets them at a lower cost as we wring out the inefficiencies, the duplication, the wastes in the system, mainly by changing the way health care is delivered, different delivery system, away from the fee for profit system. >> how do you placate those that fear public option will crowd out the private sector event chewly and that seems to be where the biggest push-back will be? >> there's lots of push-backs in many areas. i will say this, right now there's very little competition in most areas.

94% of most markets in the country are highly concentrated. the public option is not a mandate. it's simply an option for the consumer. and if they want to stick with their private company, they can, but there will be an alternative for people who are not happy with the private company. based on the good old american model of giving the consumer a real choice. in too many places in this country the consumer, whether it's an individual buying insurance or a business, has no choice and the prices are too high for that reason. >> senator schumer, in his remarks about the state of health care, president obama was asked a question about compensation on wall street. we're seeing bonuses on wall street potentially returning to pre-crisis levels or even better than that. what do you propose or think the government should be doing as it pertains to private institutions paying out bonuses? >> well, what we should be doing is giving shareholders a much more say over executive compensation, with say on pay and others.

companies that get government money, obviously the government will put some limits, and should. but for private companies we really need to empower shareholders. and i am proposing a 5-point shareholder bill of rights that will go into the financial services bill that would allow shareholders to pull back excessive executive compensation. >> it seems, though, that we've talked about shareholder rights and we've had all this clamor into these shareholders meetings, yelling and screaming. and the vote comes and nothing changes because there isn't enough of a system to get them to galvanize, whereas institutional holders can. how can you possibly change that? >> that is exactly what we're going to change. we're going to get those, mandate votes on say on pay. and we are also going to give those who want to challenge things a greater access to the list, to the proxies and everything else, and we're also going to make it easier to elect

independent directors. >> senator schumer, we're sorry we have to wrap it there. thanks for being with us. >> nice to talk to you. the friday trade, the rally picked up thursday, popped the dow up for the first time since january. will be renewed focus on financial regulations lags on the hill later this morning kill that momentum? announcer: some people buy a car 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. it's a lexus forever. special lease offers now available on the 2009 is 250.

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live from the financial capital of the world in the heart of lower manhattan, welcome to the second hour of "squawk on the street." i'm rebecca jarvis. the dow is trending to the downside. majority of dow components are lower. microsoft, major drag on things. down plus 10%. axp, american express out with earnings yesterday after the bell. that one down 3 1/2%. over at the nasdaq, amazon, a big drag thanks to its earning story. that one down plus 8%. joining me to break it down, bob pisani. >> what i think is most important about the rally this week is normally, you get a rally and the s&p is up 3.8%. and one of the things you look at is how it goes against other indexes. >> right. >> there's an equal weighted index on the s&p 500.

and normally that tracks very carefully the regular s&p 500. the s&p is the market cap weighted index. but that's not happening in the last few days. it's been an unusual out performance here of the equal weighted index. five-day of the s&p and equaut weight on the top of that yellow line. rebecca, what this means is there's a broad market participation that many, many stocks are moving up. and this kind of out performance, it doesn't look like much, is very unusual. it's a good sign. that's the point. it's a good sign. you want to broad as possible rally as you can be getting here. >> not only that, the volume pointing a good sign. at least a better sign, more positive spin on things out of yesterday's rally. >> the technical breakout above. now we're getting a lot of stock breaking out new highs for the year. as well as indices. we're seeing, for example, germany hit a new high. not just china. but germany hit a new high. today or monday we might see england or france hit a new high.

brazil is just shy to hit a new high. technical breakouts are going to be very important. still a lot of issues out there. amex was a typical one. credit deterioration, still not getting a lot of revenue glorow, top line growth, that's down. yet when you get companies that make vaguely promising comments like black and decker. black and decker full-year guidance is higher. black and decker is anticipating they're going to be do better in the fourth quarter. subtle promises are being made right now. if we don't get that, come september/october, then we're going to see things move down again. that's the risk the market has right now. >> the further we go out, the year over year is going to look better because it's going to be reflecting on a weaker quarter as we go forward. wool see what happens. we've got to go down to the nasdaq where mr. huckman has the latest here. glon demonstrative weakness. >> it looks like i get to be here on the day that the big winning streak may come to an end. right now we've got the nasdaq down almost 2%. and as you mentioned, it's pretty much all because of this.

microsoft is down a whopping 10% right now after the company said that for the first time ever, sales of windows went down. and berrini and associates is out with a note this morning, telling investors in bold face type that based on microsoft trading history, i'm quoting now, traders should not expect a swift recovery in microsoft shares. even yahoo! is lower on the report that its board met to talk about some kind of search hook-up with microsoft. on the heels of amazon announcing its purchase of online shoe retailer zappos.com. the other shoe is dropping on amazon.com this morning. those shares down 8% on the back of its earnings report. ericsson, the world's biggest telecom equipment maker, profits fell more than in half. what's really killing those shares this morning is the company didn't give any financial guidance. t. rowe price saw its profit cut. investors not impressed. stock is down 4%.

sharon, at the anymore membenym? >> price action in oil has not made a lot of sense. decline in crude supplies and oil prices fell. yesterday oil rose on what existing home sales numbers. really of course it was about equities. that is what the story is. traders are to focusing on oil as the asset class falling, another asset class stock. that's why you see the correlation around 70%. a lot of traders here on the flo floor, though, say some of their customers, barrel of oil from a barrel of water, doesn't matter to them. they're just trading on whatever the fund close and where they're going. in terms of flows for gold, the etf flows for that have come out of it in the last week or so. we're looking at that having gold price hovering around the $9.50 mark. adam at deutsche bank says he sees near term risk at gold because of the regulatory action that's being discussed in washington. and some of those investment lows and activity coming out of that market.

brian, back to you. >> sharon, we have breaking news on home ownership vacancy rates. let's get out to diana olick with the latest. >> that's right. there are two parts to this report from the census. there is the vacancy rate and home loaner ship rate. first of all, the homeowner vacancy rate has dropped to 2.5%. that's good because it means there are fewer, vacant homes. the bigger issue is how much inventory are the banks, that is foreclosed properties that they've taken back, how much of that are they holding off the market? the new results of vacant rates were actually seeing the for sale bucket drop. that is the number of homes for sale and vacant has dropped. the number of homes listed as simply other has actually increased. that means as we were saying yesterday in the existing home sales numbers we aren't seeing the banks hold on to more properties, keep them off the market. they don't want to push tell v them on the market because they're afraid that will push

prices down further. how much is the bank holding on to? in the sense of numbers we are seeing they are holding on to more and more properties, not putting them up for sale. one other part of this is the home ownership rate, which interestingly has gone from the first quarter of 2009, has gone from 67.3% to 67.4%. now, we had seen home ownership dropping since 2000 of, the height of the housing boom. now it's up a little bit, ever so slightly. not a huge jump but it says that perhaps some people are getting into the market. >> thank you, diana olick. interesting. keeping inventory as well at the banks. billionaire investor warren buffett says that bernanke and the fed's actions may have negative consequences but they were necessary. >> i don't think you can do what we're going to -- 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 going to wrong thing. i think he's going the right thing. >> buffett also says business is still flat but you can't wait until it comes back to invest. you've got to take advantage of

this moment in time. above 9,000. friday strayed, always popular. of course, always popular. alan valdes here with us in the floor. i will be in boston at fenway, by the way. rob, i'll start with you. a lot of people want to come to equi equity. they feel it might be topee, but you want to go over seas. >> yeah. i'm very constructive on the markets today. $3.7 trillion sitting on money markets earning zero. we've had almost 12 years of 0 return in stock. we have to be bullish longer term. it's going to be backing and filling but overseas, there's plenty of growth ideas. the first one is the energy area. we're looking for real production growth. it has it. they have the two big fields which is really an exciting field with lots of potential growth down the road. we think that should increase their reserves maybe 50% over the next two or three years.

so we think it's a great place to put money today. when you compare it to exxon, it's actually higher profitability, about two or three times the growth pile and cheaper today than exxon. >> alan's trade, south jersey industries. interesting you picked something with jersey in the name with a day like today. >> that's right. but it's right across the river. south jersey energy, smart company. 350,000 customers in south jers jersey. you know, involved in that, you know, that's the hot spot. it's not russia, it's not china, it's right there. at first i thought they had 168 trillion cubic feet of natural gas. now it's over 900 trillion cubic feet of natural gas out there. they're involved in $2 million worth, 30% of that deal. that's their profit. >> dividend as well? >> nice dividends. pay 6 to 7 -- last year they paid 10%. lately profits have been down, their profits are up. last year, $61 million.

this year, $70 million. >> also improving sales? >> always i'm proving sales. you saw the housing numbers. >> rob, quick. talk about something in china. >> yeah, in china we like the emerging middle class theme. this is something i've talked about for many years. and the key company there is cn insurer. this is an insurance agency. in china, only 5% of the population has any insurance today. we think that's going to rise dra gnatically in the future. this company, great margins. 20% to 25% growth. we think an excellent company with a great way to play that theme of an emerging middle class using financial services. >> alan, let's look at things out here more macro. we have seen an amazing run here. what drives it going forward, in your view? >> that's the problem a lot of people are concerned about. a lot of traders down here. it still comes down to basics, we think. unemployment. i mean if you look at your network, every day they'll have someone from harvard who is

saying the market is going to 20,000. after the commercial break, they say it's going to 3500. so even the experts, the real experts don't know. our major concern is basic. if people aren't working, they're not spending. that's it in a nut shell. >> alan m a great weekend. rob, you, too, as well. thanks for coming on the program. coming up next, earnings central. you want to know the winners and losers from this week, but you also want to know what's coming up next week. so they're going to give you the go-ahead with that for next week. also, the ceo of federated investors, they've had a pretty good run in terms of getting more money on their books. his insight on the markets and managing client money in this current environment. and then allstate's ceo joins us exclusively with the results of the hart land monitor poll. what does middle american think about the economy, about president obama, we'll ask why health care was not a feature or at least a predominant one in the survey. (announcer) this is nine generations

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folks, just a quick look. these are live pictures from inside of what we believe is the international space station. pictures, how cool is this? they are clear as day. and it's just so amazing what technology can do. >> take your first $20 million, rebecca, and go to space. >> that will be a long ways off. however, speaking of amaze,

let's get to the amazing rick  santelli. >> yeah, those pictures look better than my hd tv. if we're talking about what happened at 10:00 eastern, and  many traders are, look at the train day chart at the s&ps. it had a sell-off right at that time. what happened at that time? well, i saw one reuters headline that said the fed is going to gradually reduce the size of taft options moving forward. maybe that process is negative. here's what many traders believe. we are looking around 65 on michigan. came out at 56. better than expected. that's only benchmarked against the preliminary july, which is 64.6. many traders, july final, which number was to the june final. and the june final was 70.8. if you look final to final, there was deterioration not only on the headline but on present conditions in future outlook. that's what traders say caused the move. interest rates that moved up a

lot on it. slightly elevated levels on the day and very elevated levels from the lower rates that we saw earlier mid week. rebecca, back to you. >> thank you. of course, we're wrapping up a very big week for earnings. we're going to get over to joe and carl for a look at how we're doing so far this earning season. carl and joe, you both have really been working overtime, as have becky. >> yes. >> we appreciate it. >> becky is doing some buffett stuff today. >> backbreaking. >> sometimes you actually have to sit down. so it takes such a toll on your aging body. >> i'm glad -- tgif. >> that's right. there's been a lot to talk about this week, rebecca. look at the dow components so far this week. according to the heat map, all the dow components reporting so far have beaten expectations. on the bottom line, only one. if you bring that up one more time. you see mcdonald's is the only one that missed estimates. >> one-time gain. >> and microsoft, yeah, mcdonald's was ahead by a penny

with a penny gain. >> a gain. >> microsoft is the only real red one reporting, that is below expectations. but overall, joe, if you had said at the beginning of earning season that the map would look like this after a couple of weeks, you might not have believed it, radio it? >> no. >> come. >> thank you, carl. for inviting me. you might have said, wow, that happened, the dow could be at 9,000. that's what happened. right? >> that's exactly right. >> it was, you know, first intel, then you had things like at&t. this baby yesterday was a big part of that gain. so, i mean, you would have to be pleasantly surprised, although most earnings are down and most revenues are down from a year ago. it's all about -- people always write in, why do you try to sugar coat it by saying it's above expectations. what about versus last year. >> they do say that. >> they do. analysts gauge -- we follow it based on expectations. not year over year. that's the way it's been done. >> this is year over year. >> this is year over year. >> revenue, right? >> on revenue. but you can see that it's a rare

thing to see revenue up on -- one, two, three, four, what, five out of the ones that have posted so far. interesting. >> so you wrap up the week. look at the s&p 500. this data, by the way, is supplied by thompson reuters and does not fatter in this morning's earnings report. we'll get you those numbers updated later on. 154 components of the zch are out. 76% ahead offest it mass. 16% have missed. and 8% are in line. that's a pretty good scorecard. >> is it a credit to companies doing better or the way you can massage numbers? >> ruthless cost cutting. >> and the analysts are able to come to some conclusion that some less than what you can deliver, which is an art in and of itself. let's look at sector by sector. i guess we're going to look at there are the financials, right? six companies beating, two missing. health care is another one to

look at. eight companies beat. one company met. that's yellow, that's abbott. and then in technologies, you had seven companies beating. we don't have amazon there. but we do have microsoft missings, as you can see right there. we're wait for cisco and dow component hp. one stock we haven't gotten to this morning, federated investors. it's one of the largest money market fund managers in the country. it posted an 8% drop for the second quarter. the company was out with earnings after the bell on thursday. and it cited lower equitys a sets and few waivers on some of the money market funds. joining us now first on cnbc is federated investor ceo chris donahoe. chris, it's your family who owns this company. i guess we'll talk about earnings. i just need -- i haven't spoke to you since september or even before that. what were those days like in september for a company running money market funds? did your life pass before your eyes at that point?

>> those days were very, very, very exciting and challenging. we had meetings here late at night, 9:30 at night where we had portfolio managers, lawyers talking with people at the fed, talking with people at the s.e.c. and at the treasury department. the beautiful thing about what happened there was a triumph of successful action by the fed in terms of the facility they gave money funds, the treasury in terms of the insurance which runs out in september. and then the s.e.c. in giving the hall pass to the putnam deal. so despite the tough times, the regulators performed. >> did you -- sorry. did you think you were going to break the buck at one point, of your funds, chris? would that have happened? >> no. >> never would have? >> when hank paulson was grilled on the hill last week, he did face questions, chris, from some who thought that if the whole drama of last september/october/november wasn't exaggerated, what dow you

say to those people? >> i don't think it was exaggerated, at least from our seat at the table. there was genuine fear. there was a lot of disruption inside the market. the markets were basically frozen. you could not make maneuvers. and i think it was very, very wise by the fed, in particular, to issue that lly liquidity facility because it was needed to keep the money market fund business going. that was peculiarly the main function of the central bank. >> the stock is pulling back a little. it was in the high teens not too long ago. it made a big move. lower fee income, is there some concern that that could even be lower if the regulators take certain more punitive measures or something? what's the worry with the business right now, chris, in your view? >> one of the worries is with the waivers that are occasioned by the fact of low rates -- and we went through that on our analyst call this morning --

that basically our waivers have been about $11 million for the first part of this year and could get to as much as $30 million to $33 million by the total year. so you can see them ramping up. but then we would also see them leveling off at that point, going into '10. >> it is waivers because rates are too low. chris donahoe, thank you very much. i'd like to talk more sometime. maybe some on "squawk box." >> thank you. >> am i allowed to do that? >> sure. >> good to see you, chris. that does it for thus week. brian and rebecca, we will be back on monday, of course, with a lot more earnings. >> nice job, guys. >> it's been good to have you all week here. coming up next, allstate's ceo thomas wilson joins us exclusively on cnbc with the results of the insurers heartland monitor poll. welcome to the now network. population: 49 million.

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insurance giant allstate out this morning with the heartland monitor poll. 87% of those surveyed still believe america is the land of

opportunity. but only a quarter say they're living comfortably and are able to put aside money for retirement. hear for more oint, exclusively on cnbc, wilson, chairman from a allstate. you talk about how it's been, this economy has been a game changer for americans and without going through this, where is that most in graphic relief in this survey? >> i think where you see it most is in the risk aversion. consumers are more risk averse today and are being more frugal. so if you look at where they would like to work, more of them want to work for big companies than be on their own independent consultants. if you look at their savings behaviors, the comment you just made about the number of people struggling to get by, consumers are saving a lot more and we should encourage them to save more because they need to bring their debt levels down. >> there's caution and optimism there. >> there's great optimism. people believe in america. they believe in their own individual accountability. there is some concern about the

role of government and business in helping chem achieve that opportunity, though. >> tom, when you talk about people wanting to work for larger companies, a risk averse to starting their own. the survey is a bit limited in terms of how it approaches health care. but one of the things we've heard from small business cess that health care on the table as the current proposal stands will weigh on them and they'll weigh on their decisions about growth. >> well, rebecca, this is a series of polls. in the first poll we did look at health care. 2-1 people thought that something differently should be done to health care to improve the situation in america. this was really about opportunity. we did not see people saying that absceence of health care helped them achieve. >> was that before the current dialogue was ramped up to speed in it almost sooe seems like we should go back to it and see what they say know. >> what we want to do in a third poll, because this is a series of them, we will look at health care. this is about do you believe in the american dream.

people really do. >> and they also, in smaller numbers, at least, compared to april, think the economy is on the right track. >> people do believe the economy is on the right track. the reason we do this is we want middle income consumers to have a voice. these are the people we represent. there's no real special interest group that represents them. trying to get above the noise level. they do believe the economy is getting better. a large percentage of them believe the world is going to be better for them in the next five years. >> what about the role of government? a. >> about 50% of the people in the poll believe that government created more barriers to get in an opportunity than opportunities. only about 40% said the government helped enough. they felt the same way about big business. they thought about 50% of big business did not invest in the employees well enough. so i think what these consumers are telling us, our customersry sag is that we need both the public and private sector to step up and do something to help us, but absent that, we'll do it on our own. >> mr. wilson, we appreciate it. tom wilson. have a great greekd.

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welcome back to "squawk on

the street." i'm hampton pear son reporting live on capitol hill where we are awaiting testimony from treasury secretary tim geithner before the house financial services committee on the regulatory reform bill. in his prepared testimony geithner is prepared to tell lawmakers there will be area where's the parties disagree. we look forward to refining our recommendations. on the issue of a consumer protection agency, quote, the case for consumer protection -- financial protection agency is clear, nonbank and mortgage brokers, credit companies and the like operate under no current federal supervision. the proposed cfpa would fix that, says geithner. on the issue of the fed, systemic risk regulator, quote, current loopholes that allow some institutions to shop for the weakest regulator is why the administration proposal evolving the federal reserves authority to create a single point of accountability is a potential solution for that area. this afternoon he'll be followed by federal reserve chairman ben bernanke. bernanke and geithner are on the

same page as far as the fed becoming the systemic risk regulator. bernanke saying in his testimony it would be incremental and a natural extension of the fed's responsibilities. but the fed is reluctant to relinquish consumer protection responsibility. regulating financial products is a function of systemic risk and the fed already has lots of expertise and things like mortgage and credit cards, retail payments and banking. also joining bernanke this afternoon, sheila bair, fdic boss, she and the fed chair disagree on whether the should be a strong systemic risk counsel with teeth as part of financial regulatory reform. rebecca? >> thank you so much, hampton pearson. let's look at the markets, internals, dow, nasdaq, s&p 500, all lower right now. but where we do see the majority of the pain base is in tech land. the nasdaq composite down 1.3% versus the overall market down half a percent right now.

obviously microsoft, amazon, some of the big stories. we're going to show you charts on that in just a minute, but let's look at the advancers versus the decliners. the market as mark would say internal internals right now. the advancers certainly out numbered by the decliners. it's not twitquite 2-1 but it's ing there. at the nasdaq we really see a much greater extent of the decline versus the advancers. it's about half and half, rather 2-1, as far as theed a vanners to decliners go in that world. we want to look at specific names, too. >> everyone talks about amazon and microsoft. what about broadcom? they came out with some difficult earnings. got a downgrade from goldman sachs, back to neutral. they're suffering by about 9%. sticking with that exchange, of course, joy global also getting hit hard. better than 5% to the downside today. rebecca, how is microsoft? >> we should mention on joy global there's analyst commentary on that as well.

microsoft, this is a big drag not only on the nasdaq, but also on the dow in terms of its weighting. weighs in at about 2% of the dow. one of the things coming out of microsoft that spooked the market, that spooked investors, is that windows sales were down. for the first time ever, really. and sales across business lines at microsoft were weak there. that was a concern. it's one of those big names that people watch as a bellwether. it's certainly weighing on things in tech land. look at the actives. >> citigroup down six cents. cit, the volatility on that stock is unbelievable. trading like an option, basically at this point. ford consolidating a little bit as well. any time something trades above the qs in terms of volume, it's significant. the volume on microsoft is extremely heavy today. we would just started talking, rebecca, about maybe they can get to 30 again. >> right. >> it's not going to happen any time soon. >> it might happen. you never know. you can't call that. but one thing that is interesting to note about the

nyse most actives, we didn't get a chance to really talk about them. a lot of those are financials. >> right. >> and with this regulatory reform -- >> high frequency trading is part of what drives it. when the share prices are low, volume is hulk. citigroup is in immense volume for months and months. let's go to congress right now where i think, is -- >> oepening statements. >> opening statements from barney frank. >> unbridled access in dangerous speculation of an earlier safely steer our financial markets through the rocky seas of capitalism. all good things must come to an end. those antiquated roles fail to respond to today's realities in which financial engineering and innovation surpass effective oversight. for our economy to flourish once again, we must fix this problem. the administration's diligent efforts to reform our outmoded

and flawed regulatory system have resulted in a white paper and subsequently specific legislative proposals. in particular, i am pleased that the administration calls for establishing the office of national insurance. an idea i first originated and for which i strongly advocated for some time. also, i commend efforts to regulate the advisers of hedge funds and other private pools of capital. similarly, derivatives and swaps markets will finally face a suitable level of scrutiny under the administration's plan. these reforms are long overdue. while the administration's proposals for credit rating agencies represent a good start, we must do more, much more, in this field. by sprinkling their magic dust on toxic assets, rating agencies turn horse whmanuer into fool's gold. we must regulate this problematic industry. instead we must consider radical reforms aimed at improving

accountability, reliability, transparency, and independence. we could, for example, promote better ratings quality by establishing a fee on securities transactions to pay for ratings, forcing a government quality assessment of rating agency methodologies. changing liabilities standards for rating agencies and altering business structures. additionally, i must reiterate my dope and profound kerp concerns about the selection of federal reserve as primary entity in charge of systemic risks. i believe that we need someone with real political accountability in this role like the treasury secretary. on the whole, however, the administration has produced a very thoughtful approach to financial services regulatory reform. i applaud the administration for its hard work. congress has now begun its hard work using the administration's promising foundation as our guide foreign acti enacting new putting in a place that will last a long time and help to

ensure american prosperity for many years to come. yield back my time. >> gentlemen, three minutes. >> thank you, mr. chairman. when you have the wrong diagnosis you will, in turn, offer the wrong remedy. that is exactly the case with the administration's proposal before us. for economic turmoil has not arisen from deregulation but more so from dumb regulation. that and regulators who did not lack adequate regulatory authority but may have lacked adequate judgment. although i have a number of concerns about the plan, i'm simply taken aback by the lack of reform fannie mae and freddie mac, the epicenter of the financial crisis, not to mention the suggested creation of an agency to abridge consumer rights. rather than taking on the current status quo for these gses they institutionalize the problem. when president obama referenced sweeping reform i didn't know he meant sweeping fannie and freddie under the rug. worse yet, his plan gives the

federal reserve power to create more systemic risk by establishing tier one financial holding companies which can simply create more fannies and freddies and signals to the market that the biggest institutions among us will always have a taxpayer safety net. in other words, the proposal enshrines was is a perpetual bailout nation. one of the more troubling components is the creation of a new consumer product approval agency ruled by five unelected bureaucrats. based upon their subjective determination of, quote, unquote, fairness, they will be empowered to decide which credit cards we can receive, which home mortgages we are permitted to possess, and even whether we can access an atm machine. proposal represents one of the greatest assaults on consumers rights i have witnessed if renlg lags will stifle innovation, perhaps the next online banking service or the next frequent flier mile offering. and worse yet, will contract credit to our small businesses at a time of historic unemployment.

there is a better way. the republican plan under ranking member bachus' leadership creates a new chapter of the bankruptcy code to enhance the resolution of large non-bank financial institutions. puts an end to taxpayer-funded bailouts and too big to fail. market stability and capital adequacy board will be established and tasked with monitoring the interactions of all sectors of the financial system and identifying risks that can endanger the stability and soundness of the system. republican plan focuses the federal reserve on its core mission of conducting monetary policy. and all though we preserve the powers we do not leave them unlimited. once the housing market is stabilized we will phase out taxpayer subsud difficults of fannie mae and freddie mac. for the proposal creates an office of consumer protection to empower them with disclosure and enhance the penalties for fraud.

there are choices for more bailouts and no bailouts. consumer empowerment or the loss of consumer rights. let's hope this committee and this congress chooses wooz isel >> i recognize myself for 2:40. i want to address a startling misconception that somehow we are ignoring fannie mae and freddie mac. >> we're awaiting, of course, treasury secretary geithner's testimony himself on the administration's financial regulatory reform proposal. we'll bring it to you live when he starts talking. taking its rightful place

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"and get the at&t laptopconnect card for free". our chief washington correspondent speaking to senate minority leader mitch mcconnell exclusively thursday evening. the economy, health care, it's all on the table. the highlights in this morning's

harwood file. hey, john. >> rebecca, you know, there are multiple issues on the table in terms of health care reform. one is the details of the issue itself. the other is how it relates to the economy. the third has to do with the competence of the government to really handle this issue. that's front and center in the state capitol behind me. i'm in sacramento, california, where california legislators are voting on a plan to close a $26 billion deficit in their budget. they've been struggling with it all year. mitchcconnell struggled a little bit in arguing with president obama on this push for health care needs to recognize the need to slow down. >> we had to get it done almost immediately. if we didn't do it, unemployment would go over 8%. we did do it, unemployment is now going to go over 10%. it's 11% in my state. i don't think rushing this job is smart. and i think the president seems to me to be accommodating himself to the fact that this is going to take longer than he had

originally anticipated. >> the republican leader also referred to the state in terms of the fiscal problems they're facing and the fact that health care reform might make them worse. he pointed to the experience, the resistance, rather, from governors who recently met in mississippi to talk about health care. they are fear that washington's going to pile more costs on them. so mitch mcconnell said it's not just republicans saying no. >> look at the reaction you're getting from governors now about the suggestions that medicaid, which is about going in the tank, has to be expanded further because the standards for eligibility are being raised to cover people who make six figures a year, would be eligible for medicaid. we're being wildly extravagant here. >> and finally,this may be most significant to that hardening republican resistance as unemployment remains at 9.5% and

heading higher. senator mcconnell completely rejected the link the president of the united states makes between solving that and fixing the economy. mcconnell says the are entirely unrelated. >> what we need to do right now is get this health care proposal right, and the assumption that doing health care is going to help the economy, which the president's been selling, is utter nonsense. it's a whole separate issue. >> and, rebecca, i'm going to later this morning be interviewing governor schwarzenegger who, himself, tried to reform health care in california a couple of years ago. couldn't get it done. some people say the lesson there is that california is ungovernable right now. the question also on the table is whether washington is governable and whether washington and this obama administration, even with the big majorities in congress, can move the legislation agenda. >> good timing on the schwarzenegger interview. >> the dow is down 34 points.

pretty much staying in a very tight range on this friday. we'll be right back.

it's 10:50 a.m. time to get a quick check on what's making news. >> good morning and thank you. president obama is meeting with top senate democrats today. this after suffering a setback on his battle over health care reform. democrats in congress said they will not meet the president's august deadline to push through a deal. the president yesterday shrugged off the delay, saying the reforms would still be approved by the end of the year. meantime, president obama is standing by his criticism of the cambridge police in the arrests of harvard professor henry lewis gates jr. at his home last week. the president said though he has extraordinary respect for law enforcement, cooler heads should have prevailed and gates should not have been arrested. sergeant james crowley, the argue officer counters, saying he supports the president 100%, and feels he was way off base, commenting on the incident without knowing all of the facts.

the cardiologist who was with michael jackson the day he died is now being investigated for manslaughter. this one day after items were seized from doctor conrad murray's houston clinic. and a minnesota woman got a shock after she returned home after picking up milk and eggs at the store. her credit card had been charged over $23 quadrillion, and even got hit with an overdraft fee. it was clearly an error, and the charge quickly disappeared. now, why that helps on bills and not paychecks, i do not know. back to you. >> thank you so much. we appreciate it. quick check on the markets, trending to the down side, technology with microsoft and amazon getting hit. we're going to geithner who has begun right now. >> to provide greater protection for consumers and for businesses. we share a responsibility to get this right, and to get this done. on june 17th, the president outlined a proposal for comprehensive change of the basic rules of the road for the financial system. these proposals were designed to lay the foundation for a safer,

more stable financial system, one less vulnerable to booms and busts, less vulnerable to fraud and manipulation. the president decided we need to move quickly, while the memory of the searing damage caused by this crisis was still fresh and before the impetus to reform faded. these proposals have led to annual important debate about how best to reform the system, how to achieve a better balance between innovation and stability. we welcome this debate, and we will work closely with the congress to help shape a comprehensive and strong package of legislative changes. my written testimony reviews the full outlines of these proposals. i just want to focus my opening remarks on two central areas for reform. the first is our proposal for a consumer financial protection agency. we can all agree, i believe, that in the years leading up to the current crisis, our consumer protection regime fundamentally failed. it failed because our system allowed a range of institutions to escape effective supervision. it failed because our system was

fragmented, fragmenting responsibility for consumer protection over numerous regulators, creating opportunities for evasion. and it failed because all of the federal financial services regulators have higher priorities than consumer protection. the result left millions of americans the at risk, and for what i believe for the first time in the modern history of financial crises in our country, we face an acute crisis, a crisis which brought the financial system to the edge of collapse in significant part because of failures in consumer protection. the system allowed -- this system allowed the extreme excesses of the subprime mortgage lending boom, loans without proof of income or employment financial assets that reset to unaffordable rates that consumers could not understand, and that contribute to millions of americans losing their homes. those practices built up over a long period of time. they peaked in 2006. but it took federal banking agencies until june of 2007, after the peak, to reach consensus on supervisory

guidance that would impose even general standards on the sale and underwriting of subprime mortgages. and it took another year for these agencies to settle on a simple model disclosure for subprime mortgages. these actions came too late to help consumers and homeowners. the basic standards of protection were too weak. they were not effectively enforced, and accountability was diffused. we believe that the only viable solution is to provide a singl enty in the government with a clear mandate for consumer protection and financial products and services with clear authority to write rules and to enforce those rules. we appropriate proposed to give this new agency jurisdiction over the marketplace. this will provide a level playing field where the reach for oversight is extended for the first time to all financial firms. this means the agency would send examiners into nonbanks, as well as banks, reviewing loan files and interviewing sales people. consumers will be less vulnerable to the type of race to the bottom and standards that was produced by allowing

institutions without effective supervision to compete alongside banks. we believe that effective protection requires consolidated authority to both write and enforce rules. rules written by those not responsible for enforcing them are likely to be poorly designed with insufficient feel for the needs of consumers and realities of the market. rule-writing authority without enforcement authority would risk creating an agency that's too weak, dominated by those with enforcement authority, and leaving enforcement authority divided as it is today, among this complicated mix of supervisors and other authorities would risk opportunity tuchts for evasion and uneven protections. our proposals are designed to preserve the incentives and opportunities for innovation. many of the practices of consumer lending gave innovation a bad name. what they claimed was innovation was often just predation. but we want to make it possible for future invasions of financial products to come with left risk of damage. we need to create an agency that

restores confidence of consumers and the confidence of financial investors with authority to prevent abusive and unfair practices while at the same time providing -- promoting access to financial products. the second critical repair active to reform is to create a more stable system. our regime, our regulatory framework prevented an excess build-up of leverage both outside the banking system and within the banking system. the shock absorbers that are critical to preserving the stability of the system, shock absorbers in the form of lick witty requirements, were inadequate to understand the force of the global recession. they left the system too weak to withstand the failure of a major financial institution. now, addressing this challenge will require very substantial changes. it will require putting in had place stronger constraints on risk-taking with stronger limits on leverage, more conservative standards for funding and liquidity management. these standards need to be enforced more broadly across the financial system overall,

covering not just all banks, but institutions that present potential risks to the stability of the financial system. this will require bringing the markets that are critical to the provision of credit and capital, the derivatives markets, the securitization markets and the credit rating agencies within a broad framework of oversight. this will require reform to compensation practices to reduce incentives for excessive risk taking in the future. this will require much stronger cushions or shock absorbers in the critical, centralized financial infrastructure, so the system as a whole is less vulnerable to contagion and better able to withstand the shocks and the risk of failure of financial institutions. and this will require strong authority to manage the failure of these institutions. resolution authority is essential to any credible plan to make it possible to limit moral hazard risk in the future, and to limit the need for future bailouts. now, alongside these changes, we need to put in place some important changes to the broader oversight framework. our patchwork antiquated,

vulcanized segmented structure of oversight responsible created large gaps in coverage, allowed institutions to shop for the weakest regulator, left authorities without the capacity to understand and stay abreast of the changing nature of risk in our financial system. to address this, we propose establishing a council responsible for looking at the financial system as a whole. no single entity can fully discharge this responsibility. our proposed financial services oversight council would bring together the heads of all of the major federal financial regulatory agencies, including the federal reserve, the s.e.c., et cetera. this council would be accountable to the congress for making sure that we have in place strong protections for the stability of the financial system, the policy is closely coordinated across responsible agencies. that we adapt the safeguards and protections as the system changes in the future, and new sources of risk emerge. that we are effectively cooperating with countries around the world in enforcing strong standards. this council would have the power to gather information from any firm or market to help

identify emerging risks, and it will have the responsibility to recommend changes in laws and regulation to reduce future opportunities for arbitrage, to help ensure we put in place and maintain over time strong safeguards against the risk of future crises. the federal reserve will have an important role in this framework. it will be responsible for the consolidated supervision of all large inner connected firms whose failure could threaten the stability of the system, regardless of whether they own a depository institution. the fed, in our judgment, is the only regulatory body with the experience, the institutional knowledge and the capacity to do this. this is a role the fed largely already plays today. and while our plan does clarify this basic responsibility, and gives clear accountability to the fed for this responsibility, it also takes away substantial authority. we propose to take away from the fed today responsibility for setting, writing rules for consumer protection, and for enforcing those rules, and we

propose to require the fed receive written approval from the secretary of the treasury before exercising its emergency lending authority. now, we look forward to refining these recommendations through the legislative process. to help advance this process, we have already provided detailed draft legislative language to the hill on every piece of the president's reform package. >> mr. speaker -- mr. secretary, we have -- if you could wind it up, then we'll come back. thank you. >> just 30 seconds? we welcome your committee and the counterparts in the senate to pass reform this year, despite this crisis, the united states remains in many ways the most productive, the most innovative, the most resillient economy committee world. to preserve this, we need a more stable and resilient system and this requires fundamental reform. thank you and we look forward to working with you. >> we will return and continue questioning. >> all right. let's break in. they're going to take a little break. i think there is a house vote. we'll have some instant analysis here with us.