it is time for the "squawk" two-minute drill with our guest host today. he just opened up his candy and he's eating it. >> you know what, the old story on wall street, the traders will buy and buy can of sardines the price kept going up and up and

up. finally one opens it up and says this is disgusting. they said, not eating sardines, trading sardines. in this case they're trading chocolate. >> yeah. >> let's talk about why we call you dr. love, why we play that every time you come on. because you're interested in love in the marketplace. >> free market system should allow companies that want to grow and companies that want to reallocate capital to be able to do that. financial engineering. bristol-myers sells a piece of meade johnson, it's going to spin it off. they doubt mederex. that is one of the pearls they're going to have on a string which means they want to buy more. on a conference call they announce they they are ready to do deals. we're going to see a lot of tra transactions for the market. merck and pfizer is in the pipelines, if the government approves them that money is going to be very helpful to the

market. >> mario, thank you for joining us. make sure you join us on monday. "squawk on the street" is next. live from the financial capital of the world, this is "squawk on the street." good morning, everybody.. i'm mark haines. gdp released takes the buzz out of the rally. stocks kind of leaning to the downside after looking like they would open higher. the economy contracting at a slower than expected pace in the second quarter. so the number was not bad. for the fourth quarter for the first time since government records started in 1947. but by the end of the day the bulls can take things back. the dow would need to go, let's see, 57 points. it would be the best july since 1989. >> '89 or '39? i think '39. i'm going to --

>> '39? >> i heard '39 but i will check that again. but the government's cash for clunkers program is the other big story. >> what's going on there? >> all sorts of confusion about it. the reality of the situation is this, it was successful. the white house is working with congress before lawmakers leave town for augusto see if they can add a little bit more money in there so they make sure they have enough to get us through another few weeks of the program. we'll have the latest on the administration's side of this. we have the epa joining us at the national urban league conference that's been going on in chicago the past couple of days. >> the pitches sank on the better than expected gdp news. down to 40. we needed 165 to get to fair value. we're looking at a loss. not much, 20, 30 points on the dow at the open. >> so i believe rick santelli highlighted one of the issues there on consumption, that we did see a bigger than expected drop there. let's find out what might be causing the concern on that.

steve liesman has combed through all the numbers, gdp, and what have you found? >> still combing.. still combing, erin. a lot of combing to do. the combing that i have done shows that it is better than expected. but there was some stuff inside, numbers inside that worse than expected that might cause third quarter numbers to be revised upward. we'll get to the details here. first let's go the overall numbers. coming in at minus 1% second quarter gross domestic product. the consensus had been for a minus 1.5%. stuff that didn't fall much of the economy, how we got there, first quarterfinal was revised down 5%. let's look at the bar chart.. four quarters of consecutive gdp decline. we haven't had that in the post-war era. a lot of hope that this is the last negative quarter that we see. let's see how we got there. consumer spending as i pointed out in the last half hour, worse than expected. they looked for a one. investment, minus 20.5%.

looks bad, right? it was minus 50% in the prior quarter. business investment inside that number, 8.9 percent. both of those bad negative numbers but better than the last month. government turning around, plus 5.6%. let's go to the contributions. add all this up and that's how you get to the minus 1%. consumption, a drag. inventories a big drag. it was minus 150 billion, i think it was, for a minus .9 contribution for decline gdp. net exports, not as big a gain. government turning around adding more than a percentage point to gross domestic product. let's look at consumer spending and see how it's done or not done over the past several quarters. you can see we've had one, two, three negative quarters as well -- even four out of the last six negative quarters. really six in a row of lackluster quarters. the question is whether or not the consumer has adjusted enough and can at least stop dragging

from grks dp in the coming quarters. the savings rate was revised downward, suggested here. revised upward. americans have been saving more money than economists has bought. also, by the way, gdp in 2008 barely grew. up 0.4%. the initial was 1.1%. that information is part of the overall revision, to the growth numbers of the past five years that the government put out today. so some seeds of better growth inside this number, even though the number is still lackluster. it's still a negative number.. in any other environment would have been considered a horrible number. after we did minus 5 and change, erin, minus 1 looking better. >> steve liesman, thank you. pretty good combing for the nick pick for some light. let's find out how this northerning news is playing out. as mark said, we were up. the numbers did turn up to the negative. let's check in with bob pisani. bob? >> better than expected gdp. if it's so good why did the futures drop six, seven, eight

points on this news? a couple of problems that the traders didn't like. metrics that were not good, personal consumption. number two, look at the revisions all of the way through through the first quarter, all the major ones were revised downward. this throws into question of how good are the preliminary numbers anyhow. that's the problems we've had this morning. elsewhere, though, it's been a great summer rally. in july here, 8.4% on the dow jones industrial average for the month. that's the best one-month showing since october 2002. we'll throw up all sorts of metrics talking about how this summer rally has been going elsewhere. disney is down 3%. on the top line, look underneath the hood here for dvd sales. we also had lower ad revenues at espn and abc. same thing with the las vegas sands. look under the hood, serious demand weakness. occupancy dropped at all the casino hotels.

chevron, below expectations. upstream, below. downstream lost money. we know it's been poor, but lost money. that's serious. tradertalk.cnbc.com. we're looking at the possibility of an ever so slightly lower open here this morning. but barring a major a tcatastro today, god forbid, the longest monthly winning streak in almost six years.. during that five-month course of time it's up a who 4%. we're looking at yahoo! to see if there's a bomb of bounce e after the ceo of microsoft made some bullish comments about his new partner in advertising and search. he's scratching his head over the market's negative reaction over the yahoo! side of the deal. up juks a fraction right now. microsoft down half a percent. relatively quiet earnings here today at the nasdaq.

solar is down 11% premarket. drive shift is up 3%. and bearian semiconductor up 6%. farmersmarket@cnbc.com. follow me on twitter at mhuckman. rebecca? >> we are seeing oil prices down this morning $1.50.0. not a major surprise here. they say after yesterday's big run-up almost 4 bucks higher and especially given it's the end of the month, it's natural that you would see some profit taking at these levels. interesting to note that where people are finding a bullish fundamental thesis, i did say fundamental, is in the gasoline pits. where we are seeing things essentially the issue there is that we've heard from all of the these oil companies so far in this earning season. a lot of them are light on terms of where expectations would be and the result is because that taking oil and making a profit on it has been very hard when you refine it into gasoline when demand is so significantly

constrained. so a lot of companies may be cutting back that refinery utilization into the future. that would cut back on supplies. that could at certain points in time become bullish as, also, the cash for clunkers program, a lot of traders are looking at that as a potential bullish as well, with all the demand for r cars, there's going to be a demand for gasoline. it's interesting today, if you were to take the yield chart and yields move lower and you take an equity chart, pr opening dow futures, the patterns are almost identical. so the markets are giving us an opinion after a crazy week, especially in supply, that taking a breather in so many ways from hier yields and higher equities. look a at an intraday chart. for the data we were at 364, now we're in the high 350s. don't want to make a lot out of pit. the dollar index a little bit weaker. we're going to continue to look at chicago purchasing managers survey coming up in an hour.

mark haines, back to you. >> all right, thank you very much. i'm down here on the floor with dr. gordon charlop. >> pleasure. >> congratulations, by the way, on your doctorate. >> thank you, sir. >> has it made you any smarter? >> i don't know if that's possible, mark. i appreciate that. >> okay. gdp number, better than expected? futures sink anyway. what's going on today. >> help me out. i'm getting tired here, mark, overall. it wasn't like they were breakout numbers. a lot of people focusing on this number. for me it's still the bigger picture here what's happened over the last two or three weeks. economy is still weak. but we're seeing a lot of earnings come out. very good, analysts coming in behind him p so we've had this dramatic move here. question ask what happens now. what we've seen obviously from this move is that the -- is it real demand or is as we talked about, government coming in here and supporting this thing. now the trip will be, can the

fed chairman somehow extract the government and will that real demand take hold or will we continue to kind of founder at this level. >> i don't think there's much question that so far it's been government demand, not private demand, right? >> i think it's a little of both. i would say we would go there, mark, mostly that. so the question is how is he going to be able to extricate the government and get the private sector into this thing and make sure that it holds. >> well, are you optimistic or are you, dare i say it, cautious? >> you know, there's a couple of things you have to be wondering about. i think one of them is, what's happening overseas. we have seen tremendous strength tht foreign markets. one thing that concerns me there is the china loan policy has been kind of responsible for that big move over there. so you wonder if maybe we're getting a little bit ahead of ourselves here. so dare i say it, while it may be early to hit the exit, yet i think it's time to heed caution

at these levels. >> all right. thank you, dr. charlop. >> thank you. >> back up stairs to erin. >> thank you, mark. up next, e-team is still working on friday. oh, yes, they are. they have to stick around another hour for us. we're grateful for it, though. chevron, i saw joe making comments there. auto nation on the list. the faber report, plus christina romer from the white house will be here first to talk about the gdp report and to give the administration's take on this clunker's story. today there's a way to save more for retirement,

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they never take his shot when he dances. he seems to know when they're going to do it and when they're not. i just sort of dodge the big arm move chlt, pushing me away. >> not living in -- >> stop. >> -- a state where -- >> i know where you're going. in the last half hour we did have earnings out of chevron. they reported earnings eight cents below expectations. the same story we've heard again

and again from big oil. chevron was hurt by weak demand. revenue was down like $40 billion from over 80. >> also the average selling price. >> right. >> $50 a barrel from $109. >> chairman and chief executive david o'reilly saying, in his words, although our downstream results were better than a year ago, the demand for refined products remain generally weak. i think they actually had a loss in domestic downstream operations. >> the analyst we spoke to said it was the headline number. he was stressed on that. this is a day where everybody is talking about the cash for clunkers program. this morning we heard from auto nations. coming in five cents better than expected. this is the largest u.s. car dealership in america. the chain says it expects gradual improvement in vehicle sales in 2009. auto nation's ceo was on "squawk box" earlier this morning and he

talked a little bit about the economy. here's what he had to say for the economy and the cash for the economy and the cash for clunkers program. >> there's no question that the stimulus program is a kick start that is is extremely beneficial to the industry and to the overall economy, because i believe this economy is not really going to find its legs really going to find its legs until you find a recovery in housing and a recovery in automotive and certainly cash for clunker is an igniter to get the automobile industry moving again. >> i'm over here. she's over there now. as we wrap up this week, we want to show you where we are. where we are so far this earning season, i just read what's there and it gets me all messed up if it doesn't -- let's start with the s&p 500. >> i think you're going to edge over. >> smoothly.. shall we look? 307 components have reported 75% have beaten estimates. 16% have missedst mate. 9% were in line.

which is kind of interesting. 28 companies matched expectations. let's go to the next one and do we have anything else? yes, here we go. there's dow 30. second quarter actual versus estimates. you can see chevron, we just reported the oil is down. travelers missed. mcdonald's was right in line. you can see microsoft was also lower. 18 have beaten and 4 missed. those are the total. mcdonald's, fittingly, is yellow because it matched. let's look at revenue versus estimates. of the dow comcomponent, eight beat, 13 missed, 3 or close enough to call it in line. i like these things now. i think that is helpful. >> notice that we're kind of ending on that note. we've still got four dow components to report but we're through the heaviest weeks of earning central. >> people that report on a normal calendar year.

walmart as a retail their we're -- home depot, a retailer which reports on a different fiscal year.r. if they don't want to report at the right time, they do not become part of earnings central. we've got the draw the line somewhere. or else it would be 12 months a year. >> that's our quick way of saying it's been fun with earnings central. see you again next season. >> the other side of the par parenthes parenthesis. earning central, close. back to you. >> i'm heartbroken. >> i'm going to miss them. >> yes. >> we actually are going to miss you guys, too. >> we're still close.. >> maybe once in a while, mark.. maybe once in a while. >> i'm in favor of anything that -- - >> i know you're going what you're going to see, gets me to work harder. >> that lengthens your -- really, i'm only keding. i have great sympathy because i did that shift for six years. and it's a killer. all right. thank you, guys. >> come on early any time, guys. >> that's okay.

let's get over to david faber at hq with the faber report. >> thanks, mark. yeah, brings a tear to my eye to think that earnings central, earnings central is over. but i'm not done talking about earnings. we've got disney last night. i don't know, they didn't talk about disney there. i'm sure they did at some earnings central. the stock this morning looking down just a bit. not too much. there was a downgrade from jpmorgan, you also had a target increase. let's take a look that if we can, please. it is going to be down but we're not talking -- well, maybe as much as a buck. we'll see. and that was right around where it looked last night in the trading after we heard the numbers. take a look at them. eps was 51 cents. $54 million, down 26%. and revenue decline on the top line, down 7%. as for segment revenues, let's go through those and i'll give you -- try and give a sense of

what's going on here. media networks, abc? of course not, it's espn. espn is the engine that drives the media part of this company, for sure. parks, disney world, disneyland, the studio. consumer products down 10%. interactive media, which is a small part of revenues, none the less, down 20%. you know, there are a number of people looking over this report trying to figure it out. disney can be -- it's been a safe place for investors to hide in media. certainly has been viewed that way. we can take those down if you want. maybe take a look at long-term chart here. at the same time you've got to look at what's going on with the consumer there in terms of the parks. parks are now looking down about 7%.. even though they continue to give away free food, they did stop or phase out that four nights for the cost of three promotion. but the consumer does not look particularly strong. cutting costs is how companies are making the number right now.

and that gdp report, given what we've seen from disney in terms of the reflection of weak consumer, interesting to see consumption down 1.2%. more than had been anticipated. margins are down. keep cutting costs. that's been the story for a lot of earnings central if you will. and the question, of course, is, should investors be paying a premium for cost cutting. when you can actually see revenue growth. the whole part of this story is the up front season during which big media companies sell as much as 50% or 60% of their advertising for the year. that season started way late. it's still going on. and we're not going to get the visibility that media investors wanted from that because so few ads are actually being sold as a percentage of the total. a lot of it is going to moved to so-called scatter market instead of being sold in the up front. that is what i continue to hear. that is going to be active. you may not get some sense in terms of true visibility into

the earnings of these companies or how advertising did until december 1st. we didn't have that full screen, i guess. because so much is going to be in scatter, there we go. you know, just follow along. bio med sold expected to be down adds much as 12% year over year. from what i'm hearing having spoken to a number of people on the agency side and the companies themselves, average gdp declines could be 6 1/2%. nbc looks like it's going to be -- i know i'm a homer here, one of the best performers. viacom down 6% or 7%. turner still negotiating. so we'll see. but we may not actually get a lot of information because so much will come in the scatter. >> david, i have this just in from management of cnbc. in fact, earnings central is not over. >> oh! >> no. becky and joe are trying to public campaign to end it. >> what happened? >> we're trying to end it. >> they announced it was over.

>> becky and joe are hoping -- but it ain't over. >> have they been alerted? >> we've been alerted by management it ain't over. up next, the buzz beyond the floor surrounding the gdp numbers. >> and later, the president's council of economic adviser. christina romer to talk about the cash for clunkers program. in this commercial break we have some of mark haines owe homegrown tomato '. when this hotel added aflac to compliment their benefits package aflac! it made a big splash with the employees yeaaaahhhh! find out more at aflac!... ...forbusiness.com (laughter)

joining us is matt schapiro. i apologize, you'll have lots of energy for us, matt. good to be be you on this friday. gdp, what is your take on the market reaction? better than expected headline.

obviously some of the consumer numbers in tland there. >> we've been building up to it all week, erin. and trading here on the cboe and the volatility futures, they were kind of predicting a correction that we didn't have and it really swept out the shorts with the rally yesterday. so kind of the response this morning, we're a little flat. it's going to be kind of muted. i think a lot of traders down here will be trying to get out of options premium.m. i don't think a lot is going to happen and everybody is going to look to get out of here. >> what is going to happen on monday, the first trading day of the new month. >> i think we're going to look at the attractive assets out there. let's look at the investment perspective. there's so many bombed out balance sheets, erin, that you take a look at the equity value of them. i think that was behind the story of ge's big rally last couple of days.km there's so many, you know, loans and assets out there, especially

in real estate, we're going to start to recover. i think you look at those. >> thanks, matt. the bell is coming. we'll take a brief break.

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all right. they're ringing the opening bells. here at the big board, the cycling team riding in the pan massachusetts challenge for charity. we'll speak to one of the veteran riders in a moment.t. and at the nasdaq, university of texas, welcome horns, and moot corporation. moot. >> our reporters are standing by. we're not fully open. a little bit of a dip here. bob pisani, i know it's hard to foretell the future, but how do you see the day going? >> look, normally if all things were equal and we can eliminate the revisions we would have definitely had an upward buy. here's the problem. yes, it was better than expected. certain little pieces were very disturbing to traders. personal consumption down 1.2%.

it's supposed to be down 1.5% and it was actually up in the first quarter. that's good. all the revisions from the first quarter were so notable a lot of traders revised their attitude about how good their preliminary numbers anyhow when you get these kinds of magnitudes of revisions into the first quarter. so that's why futures dropped like seven points even though the headline number was better than expected on the second quarter of gdp. regardless, don't get too cynical. we've got a great summer rally. dow is 8.4% for the month of july. best one month showing since october 2002. we'll be showing you metrics this month about the summer rally here. elsewhere the story on the earnings is the same. better on the bottom line. top line, look at it a little carefully and you'll see the sales have been weak. same situation here. you looked at walt disney. you got upside on the earnings was okay. the stock will open down. why? dvd sales were weak. lower ad revenues at abc and espn. las vegas sands, same, beat on

the top line. occupancy rates at the big hotels in las vegas that they own. they were terrible. the stock was down 14% right at the open here. i want to go to chevron's earnings. you heard this fr joe. we've been saying this all week. numbers have been very poor. not just downstream which have been poor, refiners all were bad, poor. even the upstream operations were very much on the weak side. tradertal tradertalk.cnbc.com. it's been a great month for the nasdaq as well. >> we had a bunch of bulls or texas laonghorns ringing the bell. this usc trojan feels like he's in hostile territory this morning because that rose bowl still stings, you guys. watching shares of yahoo! to see if there's going to be a bomb or bounce today. the krerceo of microsoft said yesterday he is scratching his

head over the why the stock has done this.. only getting a 1% lift in the stock at the open. few earning stories from after the bell yesterday. nothing to talk about today. first solar, it is the world's biggest solar panel making. revenue up 100%. profit skyrocketed almost 150%. why is the stock down 10%? apparently the company said on the conference call that it's going to have to start giving rebates in germany to try to prop up the market there. obviously investors don't like that. dry shifts, which ferries around commodities, says that business is geth better, beat the street? china. it said the freight business is picking up. up 2 1/2%. in tech, varianconductor which makes parts. that company not only had a smaller than expected loss but this quarter it's going to be way better than the street thought it would. the street was looking for a nine-cent loss in the current quarter. the company says it's going to

tu turn a profit. that's why that stock is up 4%. follow me on twitter at mhuckman. go to rebecca at the nymex. >> we are seeing prices off the lows of the session. a bet of a reversal here in terms of trend. obviously not in positive territory yet. it's important to note the fact that we are seeing the first down month in oil prices since january of this year. if prices were to end at these present levels, 66, 50 or so a barrel, is where we stand right now. on july 1, we settled at $69.31. so a bit of a $3 loss for the month. obviously that piece of the component here.. on top of that, it's been a very volatile end of the month. yesterday we saw a big uptick in prices, which basically canceled out wednesday's major downtick in prices. traders here are focusing on the fact that if we see things down again today, that perhaps there's some added bearishness. chris of heritage energy says

that producers seem to be hedging, which is what he sees as partly adding to the downside here on the upside. in terms of where traders are looking, they're looking at the gasoline area and they are looking at that for any signs of bullishness. erin, back over to you. >> appreciate it. a pan-massachusetts challenge, it raises more money than any single event for charities in this country. ringing the opening bell, 11-year veteran of the cycling challenge, ed gallagher. appreciate you being here.. you have a lot of people on your team, and a bike. pretty nice looking bike. looks like a lance looking bike. you're going 192 miles in two days? >> yes, two days. tomorrow we start out at 5:30. and we're going to go 110 miles, 2500 feet of climbing. we stay over in bourne overnight and go 82 mile, 1500 feet of climbing, a couple of water stops along the way. a lot of cheering people on the

road, supporters. >> a tour de france. >> yes. >> and i know you've been doing this for a long time. how much money have you been able to raise? everyone is always curious, given the economic slowdown, as to whether there has been any sort of pullback of charitable donation. >> well, so far my career doing this have raised $375,000. the pan-mass, over 30 years, has raised $240 mlg. and key point of that is, 100% of the money raised by this group and all 5,000 riders is -- goes right to the jimmy fund. there's a small percentage for administrative costs. that's a key factor. >> when you say the fund, what exactly? >> the jimmy fund is the arm in massachusetts. it's for cancer research and cancer care. >> i know that it was your sister, right? >> my sister got breast cancer in 1999. and that's how i got started doing this ride. my other sister who is with us

here, she's been doing this for 13 years. she had done it a couple of years back. >> weelg get you on. >> once we get news my sister got breast cancer, i automatically signed up to do the ride. and each year it's gotten bigger and bigger. i did it with myself and with my sister and now i have a team of 12 people. >> it's a wonderful store prip interesting. my aunt also fell victim to breast cancer. thanks to all of you and anyone to look, get more information on this on the web. good luck with your ride. let's send it up to you, mark. >> thank you, erin. the u.s. economy contracting at a slower than expected pace in the second quarter. gdp slowing at a 1% annual rate. it dropped 6.4% in the previous quarter. joining us first on cnbc now with the administration's take on the number, christina romer, chairperson of the council of economic advisers. madam chairwoman, thank you for being with us. >> great to be here. >> what do you think of the number? >> well, i mean, it's

certainly -- you gave the important facts. we now know the recession is worse than had been originally reported, so looking at those numbers, how much the economy had contracted, say, from the end of 2007 through the first quarter of 2009 is about 50% worse than the original numbers had said. that minus 6.4% in the first quarter. and then the number for today is minus 1%. it is still minus, which means we are still in a recession, but it sure is a lot less minus than it had been a quarter before. and that definitely is a sign we're on the right track.k. >> let me ask you this. has this report caused you to change your thinking about when and where we bottom and turn around? >> you know, i think for several months now we've been watching the private forecast, our own forecast, and the thought has been that we will start to see positive gdp growth in the

second half of the year. this number, i think, makes that even more plausible than before. so i think that forecast is still correct. >> and what about the labor market? have you got any thoughts on -- because labor, of course, is usually a lagging situation. do you have any thoughts on that? >> absolutely. and you do know that we are going to get the jobs numbers next friday. and the fact that this number, this gdp number is still negative absolutely says that we are going to be losing hundreds of thousands of jobs. that's why the president certainly isn't satisfied with this.. it is the right trajectory. we, again, want to see those job losses getting smaller and smaller. but we'll never be happy until we actually add them. that's still, as you pointed out, is a ways away. >> i realize it's a little out of your bailiwick, but do you know what's going on with the cash for clunkers program? i'm told that the department of transportation within the last few minutes has issued a

statement saying that program is not suspended. i was wondering if you could add anything. >> i can reiterate that. we just got a note from our legislative folks that absolutely if people are going out, want to buy a car this weekend, that program is still there.e. it has not been suspended. i can tell you there's a flurry of activity this morning working with the agencies, working with congress to make sure that there is the funds for it. you know, the good part of this story is how much people are responding to this program. we think it's great for the environment and great for the auto industry. so this is good news. >> i'm sorry. okay. i will continue. someone just said something in my ear. i have no idea what that was about. all right. so it sounds like we are on a track that will not require any more significant stimulus from the government. is that fair? >> the important thing is that

we got the first stimulus. and certainly all of the private analysts are saying that this number that we saw today would be a whole lot worse if we hadn't had this stimulus. numbers like 2% to 3% points, that stimulus was adding that in the second quarter to the gdp growth numbers. you know, that said, we're going to be watching this economy going forward. again, minus 1% is a whole lot better than minus 6.4%. but it's not the kind of positive, good growth that we're going to need to bring the unemployment rate down and creating jobs. we're going to watch to make sure that happens. we absolutely think we've done the right thing, but we're going to monitor it. >> david faber. >> thank you. a number of positives and negatives on the report. on the negative side, perhaps, con spumer spending down 1.2% and it had been up a bit in the first quarter. consumer is such an important component of the economy, the focus in part of any recovery

has to be on that spending.. is that disturbing to sglou. >> i would draw the distinction between -- think about what's happened in both the first and the second quarters versus what we saw happens at the end of last year, right?t? and the third and fourth quarter of last year, consumer spending was plummeting, minus 3%, minus 4%. i wouldn't make a whole lot of distinction between a plus 6% and minus something. you're right, the consumer needs to spend. that is going to be a part of getting us going. but businesses also need to spend an invest. that's where we saw the biggest change from the first and second quarters is that business investment had just been plummeting, falling at a much, much smaller rate. and that is the big part of why we have seen this change. >> thank you very much, ma'am. appreciate it. >> great to be with you. >> christina romer. up next, your cnbc edge in the summer rally. is it still chugging along? the dow actually up on this final trading day of the month.

we turn positive a few moments ago. will the dog days of august be good to your money? stick around. plus -- ♪ who let the dogs out ♪ who let the dogs out ♪ who let the dogs out >> that's an oldie. i happen to remember it was the baja men. >> inside line on health care. as you can see, three of the blue dogs. stephanie hersergeant sandlin and allen boyd and jason altmire. that is next hour. g b

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that's right, 105 meals absolutely free. call or click now. guys, you can do this. just pick up the phone and call. you will lose weight. welcome back to "squawk on the street." rick santelli here. hey, let's take a quick summary. everybody is looking at consumption number today. down gdp. first quarter yesterday, first and second quarters this year, three out of the four consumption did better than last month. it's all about the end of the month.

what's the dollar doing for the month? down a penny. the yield curve this wild for the month, it's virtually unchanged. low 240s. it's been a wild ride here. specifically on the month, each down half dozen basis points.. i'm going to feel like it's been more? the road to on stain has been a v volatile one. back to you. >> thank you, sir. okay. after a dip on that gdp number the market is working back to the plus side. can the bulls get the dow best july since 1939?? we've already got the best one since 1989 which was a very good year. joining us portfolio manager of the hour growth fund and ceo of core space capital advisers. bob, what do you think, are we going for the record here? >> i think so. i think it's going to be an up day. and the bulls are totally in charge. if it does pull back, as we said before, people are just niping

right at the heels to get in. too much cash. i have not verified it but a news letter i get claims there is still more faith money liquidity than the total market cap of the s&p 500. that's a lot of dry powder. >> given how many people ran for cover, that wouldn't surprise me. bill, what's your view here? >> steady as she goes. we're climbing the wall worried. we may have a 10%. august, i think, will be back-to-back a big run, a big win. >> is it sustainable? a lot of people are saying, you know what, come too far, too fast, yes, some economic data is turning up. >> yeah, yeah, yeah, yeah. >> that's all because of f government spending. now private demand. what do you think? >> mark what did they say when it fell 10% a month or three months in a row, it fell too fast? we're going to go back to equae. the only thing that could make

me turn negative is the people in washington. if they start too hard with the spend side and trillions of dollars in deficits, then that might cause me to pause. if they go home without passing the health care bill, add another 3 or 400 points immediately. >> it possible that this just goes on for a while? i mean, you know, you look at the comparison, we're going to get growth probably for the rest of the year. next year, stimulus. you could hypothetically get four straight quarters of grot fu growth funded by the government. you would have it to spark real economic growth. next year, gdp growing, does that just mean the market goes up? >> i'm not an economist, so -- >> yeah, that's why we like you. >> what i'm looking for is can i exploit any great stock. and so we're looking for stocks with explosive earnings, that we can get like below a 12. >> have you found any? >> we found a lot.

i had one i wanted to talk about. >> bring it up. >> it's very noteworthy. there's a company sald amed, it trades in about $40. this is a very timely stock because health care is on everybody's radar. and what this company does is comes to your home and treats you. if you just had a surgery, too you're a diabetic, if you need cancer treechatments. and this is a lot more efficient than being in a hospital, it's a lot safer than being in a hospital because of the super bugs. >> infection. >> infection. and this company just reported three days ago, the analysts were at $1.02 for the quarter. they came in at $1.27. they beat the last four quarters, boom, boom, boom, boom, analysts are raising estimates. yet, the stock, which has an estimate of about $4.40 a share, is less than ten times earnings. and i'll add one other thing.. it has earnings tightness.

and what i mean by that is the range of the 15 analyst who follow it is very tight. when i was a stock broker, you used to get a good premium like eli lilly the earnings range was $4 to $4.25. general motors was $1 to $5. nobody could agree. this is a tight earning range beating every quarter and the analysts are raising the estimates. >> we assume you bought this for your fund, right? >> we do own it in a fund. >> bill, what's your best idea, then? >> well, i think that when you look at the valuation in most of the domestic high-quality, multi-national companies, there's a rich number of stocks you can add to your portfolio here. i think going forward, we are going to recover. the key success is to have dissimilar assets, stocks, bonds, currencies. there's great opportunities.

a long short approaches i think is what will give you the best return for the least risk. this is not going to be a straight-up move. and you'll probably have cess-backs of 4%, 5%, 6% that will be scarier than hell. just when you think it's going to be the beginning of a big down drift, it will end and the markets will move higher. we saw that after '87 and that's the model i'm following p. >> thank you very much. coming up -- i don't know what, but david faber is up next. david, weighing the financial performance for july versus the overall market. that's next. 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.

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welcome back. while many of you may still have your head in andrew cuomo's compensati compensation, you may want to look up and notice that, hey, it may be paying a lot of bonuses and still having lost a lot of money in 2008, but so far 2009 not too bad in terms of the stock prices. certainly the month of july continues to have been a good one for the financials. even against what has been a very, very strong broader market. for the s&p for the month, what are we talking?

up 8? a little ram there. goldman sachs, there's the s&p, yeah. we'll take that, too. unprecedented slows, by the way. bob pisani has probably talked about this. there's a look at the s&p. as for the financials themselves, goldman sachs will end the month up about 10%. jpmorgan will end the month up about 12%. and bank of america will end the month up about 9%. there's a look at goldman, of course getting heat lately for all the money it earned and all the bonuses, money or compensation money it put aside. and there's a look at bank of america.a. man, ken lewis is still the ceo there. that's amazing, isn't it? all the heat he's taken. as for citi, not so. not so. the big bank owned by all of us. at least 34% of it owned did not have the best month. couple of things to point out on citi, by the way, as well. the exchange offer having taken place. there's going to be a rewaiting for various indexes that track

citi, or i'm sorry, that track the russell and the s&p and citi is a part of these. is going to have to be reweighted. i believe it's 190 million shares that need to be bought by indexes that track the russell and 623 million shares will be bout, i believe, next week by indexes that track the s&p 500. so perhaps some buying coming in there as a result of reweightings because of that exchange offer that citi finally, more or less, completed. and finally want to enden comments from deutsche bank ceo, joseph ackerman, speaking yesterday, late yesterday, and saying a number of things. you may have seen. deutsche bank reporting or provisioning a lot more than had been anticipated earlier this week. he went on to say yesterday, the crisis that we're in is not over. when one looks at the developments of global economic growth and it can be expected starting in the second half of this year we will slowly into

move positive territory but still moving on the low level. and he talkeds a well about the next wave of the financial crisis being delinquencies among consumer and corporate borrowers. mr. haines, back to you. >> mr. faber, thank you very much, sir. coming up, drilling down on this morning's gdp numbers. what they say about the fate of the economy. the market, okay. >> that's right. we're up now. epa administrator lisa jackson will be our guest to talk about the cash for clunkers program. we got news from there christina romer continuing to say it's not suspended. but they do need more money. they'll get it. the question is, how much.

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live from the financial capital of the world in the heart of lower manhattan, here it comes, straight at you, the second exciting, fun-filled hour of "squawk on the street." good morning, everybody.. i'm mark haines. check on the markets for you. we have slipped back into a negative territory. up a little, down a little, up a

little, down a little. right now dow down 4 1/2%. nasdaq composite is down 3 1/2%. the s&p is down about 2%. we're not really, you know, it's not bad, it's not good. it's in between.n. let's find out, oh, let me tell you, bank of america and travelers leading the dow, well, they were leading it higher until we turned around. lamar ads the strongest.. up 5%. let's see how things are playing out behind the scenes. got it all covered for you.u. and bob pisani, what's going on here at the big board? >> good news and bad news. headlines gdp for the second quarter better than expected. personal consumption was disappointing, down 1.2%. the traders said, heck, how good are these preliminary numbers anyhow? that was a little bit of a problem. the markets working through that. month of july is going to be very important here because we've had one of the best months in many, many years. this was the month where traders were convinced, folks that the

economy is recovering and cyclicals are going to be where to be and the place to be. look at the cyclical index versus the consumer index for the month of june here. look at the chart. there is your white line there. that is the cyclical index, up 20% for the month. consumers only up 5.4%. if you wonder what the cyclical is industrials and commodity stocks. consumer stocks as well. pepsi-colas and procter & gambles of the world. they started playing this game in march. when the march bottom, we came off, there was a bias toward cyclicals. for the last few months it's sort of been even. cyclicals from only been higher but only in the july did things start to explode. we will sew you other metrics. the thinking of traders for the next quarter in the next hour. tradertalk.cnbc.com. mike huckman, how are we looking at the nasdaq? >> we are seeing some weakness creep into the market here at the nasdaq. but it is still on track to have its longest monthly win streak

in almost six years at the close today. and during that five-month period, it has jumped a whopping 44%. so yesterday microsoft ceo steve ballmer came out in support of yahoo!. nobody gets it, it's a win-win deal. but so what. yahoo! is down. microsoft just went south a fraction as well. bio chris pharmaceuticals down a fraction. swan doubling the price target to ten bucks on the assumption it could win a government prakt for 400 million bucks to stockpile its experimental food drug for the swine flu. and finally, this morning after earning stories, companies out after the bell yesterday, first solar down 10 1/2%.. drive shift is up 2%. varian semiconductor up 3 1/2%. rebecca, what's going on at the nymex? >> thanks. prices are still to the downside. a loot of folks here pointing to the dow, to equities and saying that oil is taking its marching

orders from the dow, from equities. and in particular, peter of hanover says that the thesis goes that if stocks go higher, than eventually, well, we're going to see an improvement in employment numbers and that will lead to improvement in demand.. that is the thesis that continues to pervade these pits. on top of that, they say that what we are seeing here in oil to him appears to be outside moves. versus the moves in the stock market. so he sees the swing as being more dramatic. one swing i want to point to this morning. it has turned to the upside. gasoline in the last couple of moments has turned positive. there's some think that refinery utilization continues to drop off. a lot of these refiners, we've heard, has really been back on the profit side of things. so perhaps less supply will be coming on board in the future. and if demand ever does pick up, that will be an issue. mark, back over to you. >> thank you. >> we do have headlines crossing

right now. christina romer told you that the program is intact, like the department of transportation. >> cash for clunkers. >> they were trying to get more money. latest, a fluid situation. they are going to introduce a bill to add $2 billion for the program. you know -- >> if you look at the paper, every page.. cash for clunker headquarters. authorized government cash for clunkers dealer. cash for clunker, government authorized cash for clunkers dealer. the interesting thing is, the dealers are on the hook, okay? >> yeah. >> they then collect from the government. so it's the dealers who stand to get hurt here if this thing doesn't get straightened out. >> the obama administration obviously supports this legislation for another $2 billion. 16,000 dealers in the united states are actually participating, according to the national association of dealers. we spoke to them this morning.g. and it appears all of the numbers, it's very unclear

whether there would have been an issue. whether they would have gone above the 250,000 initially allotted. to your point, they were afraid because no one had a clear count, that they might go above it and not have it honored. it's clear if they triple the size of the program, that is a huge win for the dealers. >> yeah. and there's no question that uncle sam wants you clunker in every single page. you know, hey, they have a wildly successful government program that works. enjoy it. enjoy it. meanwhile, the deal has been struck between the united states and switzerland's ubs. let's go live to zurich. cnbc karyn joins us now. what is the latest? >> the latest is just about an hour ago the u.s. justice department officials have announced that they have reached an agreement in principle with ubs. that's really a milestone in the

negotiations with ubs.s. talks have been dragging on for the last couple of weeks.. as far as the specifics of this deal of concern, we do have very little detail at this point. one thing we do know is that the court hearing which are scheduled to begin before next monday, they are postponed until august 10th. even before that, the two parties will get a chance to find on out of kou-of-court set because next friday, one week from now, judge allen gold will have another status call with the two parties and that's when most people are expecting a settlement pmt let me update you on the reaction out of switzerland. shares in ubs are higher by more than 4%. and swiss minister meeting with hillary clinton in washington this afternoon, she says she welcomes the deal. where that, i'll send it back over to you. >> thank you, carolin in zurich. second quarter gdp coming in better than expected. minus 1%. what does this number tell us about the overall economic picture? are we getting better, worse,

stagnating? dick burner is chief u.s. economist with morgan stanley. bob babara, johns hopkins. gentlemen, i will start wi with --ly start with dick.. what does the number tell you? >> well, actually, mark, the number tells us very little about what's happening in the third quarter because we could essentially have a flat, final demand. we had a drag from inventories. i think what's really important here is what we already know about the third quarter. what we know is that we're going to get a significant boost from what's going on in motor vehicles and we also are likely going to see some other things contribute to third quarter growth. so we think there's the potential for signature kanlt provement in third quarter growth. but the key issue here is whether that will be sustainable as we go forward. >> bob, what do you think? >> yeah, no, i think if you look

at second quarter number you've got residential investment at an all-time low, 2.4% of gdp. inventory, 1.1% decline. motor vehicles at 1.7% down from 3.4%. so super depressed, it does set you up for a pretty snappy couple of quarters.. >> just an update here on our cash for clunkers. i know you all heard, the program has been successful.l. now they're going to trip it from $1 billion to $3 billion. the house could vote today. the senate will maybe vote on this next week. question for you, dick. it appears that with the right incentive, people are buying cars, right? i know they're stealing car sales from the future, so it's not a plain and obvious positive. maybe if they had done this six months ago maybe we wouldn't have had to bail out the auto companies it. >> certainly would have helped the auto companies, erin, if they had done this six months ago and they're getting a lot of

bang for their buck out of this program, much more than we would have expected. i think that is not just the cash for clunkers themselves but the fact that the dealers are here to sell vehicles and they put some money on the hood themselves. so you've got, you know, a lot of incentive for consumers to come in. plus, the fact that everybody knew that there was a limited scope to the program. and i think it was a use it or lose it nature to the program that made people kind of snap it up. if they do add two more billion dollars to the program, that will be add significantly to the sales picture when we look at the third quarter. as you point out, then it will borrow from the future. >> bob, how optimistic are you that we can segue from the current government sending primarily driving the economy to the private demand? can we do it? >> yeah, and it's not all government spending.g. you know, you're going to have that big snap back on both

inventory and i think some improvement on residential.l. so what we found out from the data is the recession was much deeper than initially advertised. i think everybody in a bar knew that. now economists know it. and this sets you up, i think, for a better rebound second half. we all know that consumers are probably going to take a backseat in this expansion.. but for at least a couple of quarters i think 3 1/2 gdp is a reasonable forecast. 3 1/2 second half based on the last year and a half is going to feel awfully good. >> thank you, dick berner and bob barbara.a. up next, epaed ed ed a a administrator is here with her take on cash for clunkers. and the ceo of arizona diamondbacks join darren rovell in keeping attendance in a down economy. and who let the blue dogs

out, mark? three of them join us us on harwood for the the latest on the health care bill compromise and maybe we'll find out their view on cash for clunk. welcome to the now network. population: 49 million. right now 1.2 million people are on sprint mobile broadband. 31 are streaming a sales conference from the road. eight are wearing bathrobes. two... less. - 154 people are tracking shipments on a train. - ( train whistles ) 33 are im'ing on a ferry. and 1300 are secretly checking email... - on a vacation. - hmm? ( groans ) that's happening now. america's most dependable 3g network. bringing you the first and only wireless 4g network. sprint. the now network. deaf, hard of hearing and people with speech disabilities access www.sprintrelay.com.

the house chairman waxman, i forgot what committee it is, powerful committee, says the

democrats agreed on health care bill amendments. that's the headline we just got. not clear what amendment. this health care thing is going to go on for quite a while as the two sides, you know, actually more than two sides in this one. there are four or five sides. as they try to work out the major concern, which is that about the cost of the program.m. but they are making progress according to representative henry waxman. >> of course, john harwood will be talking to the blue dogs in a couple of moments. now continued discussion about the cash for clucnkers. it was unclear but possible they burned through the dollars. the white house is working through congress to get potentially another $2 billion, triple the amount. and according to what we are hearing now, you can get a vote all of the way through the senate next week. the administrator lisa jackson joins sharon epperson from the national urban league conference in chicago. sharon?

>> well, of course, cash for clunkers program is very successful. and probably few people anticipated it would be this successful. the epa is the agency that set the guidelines for the cash for clunkers program. did you expect it would be this successful and are you going to push the administration to make it continue? >> well, we're pleasantly surprised. you know, it's nothing like being pleasantly surprised.d. of course, this once again illustrates that we can do things for the economy and the environment at the same time. so we're all for it. >> this is the exact incentive program that you've been pushing for. where is the money going to come from to extend it if we do need another billion dollar or $3 billion as some are saying is needed in. >> i think it's good news that the white house and congress are saying they are going to sit down and try to find that extra money. the american people are voting with their pocket books and saying if you want us to do this, we understand the importance of moving to cleaner vehicles. it's something that the president certainly supports. we're all for it. now we're looking forward to

congress doing a little bit of work to try to find the money for the american people. >> one reason you're here today is to talk about green jobs and green industries and how to find those jobs. you just announced yesterday funding coming from epa to train workers in green jobs. where are these jobs and why is so so important to ask americans to find jobs in these industry sths. >> i'm here today to make sure that all people, and afri african-americans understand that this green energy economy, when we talk about green energy, we're talking about millions of potential jobs for americans. we're talking about everything from home weatherization all of the way to research and development, high-tech jobs to find the next renewable energy sources for our country. >> we've been talking about health care reform, of course, just talking about what senator waxman is doing and what is happening on the hill. but we want to know about, what's happened with the climate but we haven't had as much discussion about that recently. where does that stand and where do you think that legislation is going to go? >> the energy and climate bill passed the house of representatives last month. of course, right now everybody's

eyes are on congress looking at health care and we certainly think that's important as well. we know in the next few months eye will turn back to the senate as it considers its version. >> the epa is already doing things in terms of regulating emissions through the clean air act. you've taken some stringent stands on that all right. >> two years ago the same court ordered epa to make a determination on whether or not the current clean air act could use with greenhouses gasses.s. we said, yes, they meet the standard that is called for in the clean air act law. now, i join the president inle aing for new legislation. i think we need energy legislation for our country a also addresses the pollution and climate change. >> what about cafe standards? where do we stand there?? and california is leading the way there. >> that's right. not long ago epa announced with the -- actually the president announced but we joined him, that epa and vot would join together to make new cafe and greenhouse gas standards for vehicles.

we're working hard in the coming months on putting out now not only will you know about miles per gallon for your car but you will know about co2. >> the final question is, as we look at all the differentrollin particularly the cash for clunkers, a lot of people want to know, is my car going to qualify? how do they know that they can still ste still take advantage of that program? >> economy.gov and we have the cars that qualify. few that don't as well as mu perimeters of the program.m. sounds like there will be breaking news on this. >> thank you very much. administrator jackson. mark, erin, back to you. >> thank you very much, sharon epperson. up next, our darren rovell is going to sit down with the youngest ceo in baseball. arizona diamondbacks chief derrick hall. >> talking about keeping us in ties when people's income is not so high. undefeated professional boxer floyd "money" mayweather

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welcome back on "squawk on the street." rick santelli here. you know, we have weak gdp in the form of revisions. weak consumption. you know, we had a pretty positive chicago purchasing survey for july. a little better in a headline. but new orders index at 48, the highest level in ten months. now, if you look at the charts, the big story really is the dollar. in the last 40 minutes it's deteriorating. you can see by the series of charts. more importantly, the end of the month, july has been a wild one for equities. the dollar index considering the recent move will be down about a penny and a quarter for the month. interest rates are categorically lower. they're only down 2s, 30s, 10s, the same in the vicinity of half a dozen basis points. >> thank you. there my be no greater challenge in this sports world, in this economy, than having to sell the number of games that baseball

teams have to sell. darren ha darren rovell is joined by one of the insiders in getting people to the park. >> that's right, erin. it's been tough in the state of arizona. they're among the leaders in job losses. phoenix has the lowest per capita income in any city with a major league baseball deem. that's environment the arizona diamondbacks are trying to sell tickets in. they're holding up well with fans. talking about this is derrick hall, president and ceo of the arizona diamondbacks. let's talk about attendance to start. you're down about 15%. how would you kind of evaluate that against the background of what we've been dealing with? >> knowing our performance and the economy coupled together, i think that 15% down is pretty good. you know, in this environment. i think it could have been a lot worse. what we've seen lately, too, in the last home stand is it's gone up. we've seen a lot of fans walking up and buying tickets just before the game, which tells me that staycation theory is coming

true. rather than going to san diego or to the mountains they're finding alternative entertainment option at our place. >> diamondbacks had the cheapest ticket in the majors for the third straight year. average of $14.31. how much of it is about price if. >> i think a lot of it is price. the team has to play well. but we focus so much on the experience. so much of the experience in the ballpark is affordability.. we have kids items, $1.50 hot dogs, sodas, pot corn. $8 t-shirts. $7 caps. walking around the ballpark you can find the value items throughout the concourse. $4 14.ounce beer. you've got to get the people in and not gouge them. >> you're going the first team next week to start season ticket renewals, believe it or not, which people think is crazy. 83% renewal coming into this season. what i'm interested in, the no financing but you're also extending the ability of fans to be able to pay for their tickets. >> that's the whole point.

traditionally teams like ourselves would put out the renewal kit and that's our bread and butter, season tickets.s. our base. we put them out in november and december. we wanted to do it now in the middle of the season while e baseball is atop of mind. and it gives fans flexibility for payment. our market to have the ability to pay over ten months, for example s-1 of our plans. >> no financing. so you basically are losing a little money. >> we take the hit. no interest no, financing, that's okay. we're trying to add value to the season ticket pricing. >> got to ask you about this. david ortiz, manny ram rirez on that 2003 doping list. this seems to be affecting fans a lot and it seems like the opinion is that this is just going to keep coming out and out and and out. protected list. we know this is a confidential list.. what do you think the solution is here? is this going to continue to hit baseball? >> baseball has done a good job of trying to put it behind us.

as long as names keep coming out, it's going to be difficult to close that door. i would love to move on. i think we've now got a tough, tough policy.. the commissioner is committed to make sure it is a part of our past and no long area part of the game. i know there's litigation involved, confidentiality with that list.t. if that list was out it would probably put it behind us. it's not going to be. as long as names come out, it affects the game and affects us. we're in a different situation.. we have a lot of young baseball players on our team that we know are clean and they do it the right way. our fans know that. baseball has to look to the future, look forward and put this behind us. >> derrick, thank you for joining us. good luck tonight against the juggernaut mets. erin? >> i'm still a rays fan. he says he's a good guy. i'm sure they get along. coming up, health care on the hill. harwood sits down with the blue dogs, as promised.

in the headlines at this hour, it's friday morning. stocks are swinging back to the plus side. travelers leading the dow. i keep forgetting travelers on

the dow now. up more than 2%. it's profit for the insurance company. itp is the overhaul leader for the s&p 500. linked to earnings. ford, though, ford hot on its heels. on the nasdaq, lamar advertising topping the list. 4% gain for that one. let's look at the markets and their internals. right now as erin mentioned, dow to the plus side by a 30 of 1%. nasdaq up about almost a quarter of 1%. s&p up 0.18%. internally, not a bad margin there considering dow is not up much. we're about 16-10, 8-5 positive on the nasdaq. we're slightly positive. the summer rally getting back on track here on wall street are jane wells joining us to highlight one high-flying sector. >> well, mark, it has been a great july for the "travel and

leisure." stocks mostly but not so much for the industry. let's look at the dow jones u.s. "travel and leisure" index for the month. in the real world they are down on average 16%. that's not what you want to show right there. there you go. with the high end taking even bigger hit. high end has the best occupancy rates in the mid 70s. let's go to the other chart. marriott plummeting 20%. earnings even more. starwood's revenue down nearly 28%. look at the shares. blame part of this, of course, on h1n1, which has not gone away. web bush morgan says beware of the double dip, will bottom next year. recovery will bin in 2011 and last a while. while the stocks currently are not that expensive, web bush says, they are heading ahead of trading. there is no need to rush back in. starwood offers the most compelling upside potential. on the casino side, tough week for las vegas sands and wynn. wynn manages a surprise with a

profit though mostly thanks to cost cutting. then in the cruising industry, well, not as much of a sharp summer rally there though. actually on the fundamental sign, webbush morgan says it's starting to ease. beginning of next year are up. quote, improvements in recent weeks suggest the worst of declines may be behind us. and the analysts reports of carnival has been, quote, the most aggressive in pushing up prices. mark and erin, the most interesting thing i read, guess which hotel market in the u.s. is strongest and which is the weakest right now. guess, strongest and weakest? >> oh, wow, i wouldn't even begin to know. got any guesses? >> any guess? >> what is it, jane? >> the strongest is new orleans. the weakest is new york. >> i never would have guessed that. >> no. >> that's according to them. up next, handsome john

harwood live with those blue dogs. we'll get their take on what congressman waxman is saying about democratic agreement on health care amendments. plus -- ♪ peanut butter jelly time >> back an bd better than ever.

we're back. the markets hanging in there. dow is still up 21 after a seesaw morning. >> now, we'll see if we end on a high note. as you noted, 56 or 57 points on the dow. if we can pull that off, then we have the best july since 1939. the way it is now -- the way it is now, nearly since 1989.

among some of the best gainers for the dow this year -- i'm sorry, overall market, s&p 500, the chinese company, 169%. early tripling. xl, which i believe is a lot of reassurance, insurance. nearly quadrupled. >> based in bermuda, i believe. >> 269%.. and american express is one of the best stocks. it's up 52%. they have successfully told their story to the market that they are less exposed to some of the broader credit problems than their competitors. and also potential reform in credit cards. visa, mastercard are higher as well but only half the gain of amex. >> what is oil doing?? down 14 cents. that has been almost a chaotic market. and this is the calmest day we've had in quite some time. ten cents on oil. >> yeah. >> i believe it's time for another commercial break while we wait for john harwood to

assemble -- trying the herd the blue dogs together. >> those dogs. blue dogs or cats? we'll be back. welcome to the now network. population: 49 million. right now 1.2 million people are on sprint mobile broadband. 31 are streaming a sales conference from the road. eight are wearing bathrobes. two... less. - 154 people are tracking shipments on a train. - ( train whistles ) 33 are im'ing on a ferry. and 1300 are secretly checking email... - on a vacation. - hmm? ( groans ) that's happening now. america's most dependable 3g network. bringing you the first and only wireless 4g network. sprint. the now network. deaf, hard of hearing and people with speech disabilities access www.sprintrelay.com.

blue dog democrats striking a compromise with other democrats in health care. john harwood sitting down with three of them right now in a very special harwood file. john? >> i've got three of the people here who are at the center of the action in this health debate. jason altmire of pennsylvania, stephanie herseth, three of the blue dogs we talked about. before i get to the health care. i want to ask you about this cash for clunkers program which has been so popular in the last few days that it's already blown through the billion dollars that were allocated for it. i know all of you are concerned about fiscal responsibility. but do you think in light of the popularity of this program that, in fact, congress should step up and provide more funding so more people can participant? >> we do, we have to pay for it somewhere else in the budget. that's something we believe in. it proved that the economy is ready to turn around. people with a little bit of pride are willing to go out and spend money. i think this has been a

successful program. i'm optimistic with what the future holds. hopefully with can make it work. >> both of you voted against this program. are you confident that congress will, in fact, in light of the public response, extend it, come up with more money and pay for it as congressman altmire suggested? >> very likely to do that today, john. it will be a transfer from another program. it will be deficit neutral which means our criteria. you're right, it's been an incredibly successful program.m. hopefully there are good signs today as we speak the markets are turning around and so this thing probably headed in the right direction. >> you don't think it's going away? >> i don't think it's going away. i wish we would have time to find an intergovernmental transfer. but to maybe make modifications before we adopted this program. i agree it's been very popular, successful on some fronts. there could have been some modifications made that would have been able to make the money we initially allocated go in a

direction that wouldn't have caused it to lose money -- not lose money but go through the money so quickly.y. >> all right. let's switch to health care, the topic of the moment. you have a reputation of invising on fiscal responsibility, but one of the accomplishments that your members claimed in negotiations with the leadership was protecting world hospitals. isn't that protecting pork, special interest spending for your district as opposed to the fiscal responsibility goal that you talk about? >> not at all. for decades, and this isn't just a rural/urban issue, this is a regional issue and disparities throughout the medicare and medicaid program cut far and wide here. it's not just a blue dog issue. but, this is about preserving the health care delivery system in more rural parts of the country. i think that people who pay in to medicare, whose taxpayer dollars may be used to set up a new system of benefits for middle income americans, need to be treated fairly.

and so i think that that is an inappropriate and unfair criticism, that that is any way pork. i think it's important that we also make sure that certain parts of the country, because of seniority or leadership positions, don't get to continue increase or reimbursement rates for their part of the country and continue to expand the disparities breaking the system and they are causing medicare to become insolvent faster than what was predicted just a year ago. >> some of the blue dogs are e also opposed to employer mandates in health care reform. i'm employer mandate, of course, are part of the way that your colleagues in the house want to pay for reform.. if you care about producing a deficit neutral health care expansion of coverage, how can you oppose employer mandate sdms. >> i know you weren't implying that people in rural areas don't need or deserve good health care. we do. continue to be a great economy

and a economic leader in the world, we have to have an a. healthy and educated population. listen, currently about 60% of americans are insured through an employer. either their own or a family member. that's a good base to start to figure out how to access everybody -- allow everybody to have access into the system. so this is part of what we are working through. how do we do that? how do we bring in those 48 or 50 million people that are uninsured? and employer base is a good place to start. >> quick question before i let you go, let all of you speak on it, about how to pay for health reform. leadership in the house has talked about taxing million dollar incomes. there's also been talk about taxing employee benefits as a way of restraining costs and to raise money. which of those two do you prefer and do you support either one? >> i support neither. i think you should squeeze out the inefficiencies in the current system, achieve as many savings in the current health care delivery system you can and that's what you have to work

with. you bring as many people into the system under the familiar amount you can. i don't think there needs to be outside revenue. i think we can find the savings we need in the current system. >> even though the poll this week shows 68% of americans support taxing million dollar income, do you oppose that? >> i don't know, i don't want to interrupt you but the space shuttle is landing returning from a 16-day mission in space. there were some questions about this, erin, because they suffered a foam hit. >> that's right. >> at takeoff. >> they did. they had a foam hit. they discussed whether they were able to fix it. they did. this crew had 16 days. spacewalk. now has safely landed. this is the "endeavour."." >> they went up to the space station. i believe what they did, among the things they did was they fixed the screens on the space station porch. >> yes, i think you're right about that. and there it is. look at that, big parachute. i love watching them land. >> home safe and sound. and let's get back to john harwood.

>> we cut away for the "endeavour" just as i was asking you. the nbc/"wall street journal" poll shows 60% of americans support taxing million dollar incomes. are you saying that's an unacceptable way of financing health care? >> i'm not saying it's unacceptable. it's difficult for congress to say what they support or oppose until we do far more on containing costs, squeezing out savings, as jason just stated, before we look at what revenue we might have to come up with to cover any shortfall in achieving reform. >> how do you want to pay for it? >> john, first of all, you have to recognize that over the last 20 years, health care costs nationwide collectively have increased at the rate of double inflation. 4% to 5% above inflation. we all know that we have to stop that. so we have to wring those costs out and figure out how to reform the system so that health care costs don't increase that much or else we'll squeeze out everything else. rent and education and all those

things. >> what about taxing million dollar incomes? i'm guessing that your constituents in north florida, million-dollar incomes in your district. >> in the end, when we determine -- this nation determines it has to go back to fiscal responsibility. those who benefit most from our economic model, and is it's the best economic model in the world, should be asked to pay. and ultimately, that's what we'll have to do. >> it sounds like you might be able to vote for that. >> well, it depends upon on how structured. we're no not going to waste money. as a government, we have to be accountable in how we spend it. >> john, the policy will determine the pay force. 41 blue dogs in the last congress did support some sort of additional surtax on millionaires to help pay for modernizing the montgomery gi bill. and so we may get to that point, but we were more comfortable at this stage, as we should be, focusing on the policy that will help contain costs before we determine what the most

appropriate pay for will be. >> thanks for joining us. >> thank you. >> mark and erin, there you have it, blue dogs are resisting a lot of provisions in that leadership bill, but not uniform opposition to that tax on million-dollar incomes, erin and mark. >> thank you very much, john harwood. >> okay.y. now it's time for our fan-favorite, friday trade. shoes have blown -- mark harris is with us with rbc capital markets and peter anderson. good to have you with us. mark, you're with us, you have three ideas. let's start with disney, though. some people were disappointed with the company's numbers last night. >> sure. look, people were expecting as one of the big media conglomerates, they like everybody else would show the margin and cost cuts and i think they did a pretty good job. but the net is, you're not buying disney as a long-term trade for what's going on right now. you're buying for the recovery. you're buying for the idea that this one of the big media con glom rats.

not as bad if you dig into the numbers. it wasn't that wad near-term and long-term, a lot to like. >> peter, you've got three, as well. let's start with metro cps, pre-paid cell phones. what's the buy there? >> the buy is our wireless society is actually cast in two categories, two casts. you've got prepaid and post paid. pcs is a pre-paid plan, erin, and it's all you can eat for about 45 bucks a month, requires no credit screening and no long-term contract. it's an area that is definitely growing. metro pcs has added subscribers at an astonishing rate of about 50% a year since 2002, looked like a great acquisition candidate. >> you're all over wirelesses here. you've also got american tower, which has the towers, and roper industries, which makes a

wirelesses meter reader, among other things.. >> that's right, mark. and, you know, i think, frankly, to get this equity market restarted, maybe we could offer a cash for clunkers program just to buy equities. and what i would tell you to buy is definitely amt. the talf industry is very, very strong. the economics are really appealing, because once you host just two dishes on those towers, the third dish, the money -- the rental money goes right to the bottom line. american tower has one of the best balance sheets out there. it's growing overseas. and in this market, when you are looking for some reasonable growth, the growth is driven by the need for increased band width for the smart phones. every time a smart phone has a new application, you need more band width or real estate on the tower. >> and mark, you mentioned smart phones, and obviously palm is your trade. >> absolutely. by the way u i have to mention on disney, the one other thing,

30-year troughs in salvation for next year's numbers. palm, a lot of people are questioning can it go further? i think the story is, there is still a lot among them, pre, their new prod just lurveged, and we expect potentially 10 million next year. they are grabbing a small piece of a market, a million for the august quarter, a lot of momentum, and just the start of their story. >> caterpillar up 33%, dupont, 21, cisco, 17. >> what do you say? do you see those numbers and get nervous, or do you see them and say go? >> frankly, at this point, i say go to a great degree. look, i think the lower quality trade is the one that's probably going to work here, even more, going forward. if you look at the history of how earnings have worked and how the stocks have worked with them, when you're in an s&p up period and irngs accelerate like now, for the two or three quarters it's happening, lower-quality stocks tend to do better. but smaller cap, mid-cap means

that are maybe i call them lesser quality, but i think the rally continues on here, because we're at that point where double digit employment means the market continues to rally, believe it or not. >> peter, are you optimistic about the market? is. >> absolutely. i think there is no harm in a little sugar high. i think that sometimes a little sugar high actually will get you to the finish line. and that's exactly what we're seeing now. >> all right. gentlemen, thank you very much. peter and mark. and we'll be right back with the final look at the markets. oh! but first -- >> first -- >> this is a first. >> standing over there -- >> good to see you in person.. >> good to see you. >> what's up on "the call?" >> oh lots coming up on "the call." you didn't get to do your voice thing. we have the latest on the gdp numbers and what the market reaction is. we're going to discuss whether or not risk appetite is back in this market. plus, chevron, the latest big oil company to report weaker than expected earnings. we're going to listen into that conference call at the top of the hour, and we're going to

talk about just exactly where the price of oil is heading. we're going to have all of that, plus, the latest on the "cash for clunkers" program. it's all coming up live on "the call" at the top of the hour in a couple minutes. but first, "squawk on the street" is coming back after this break. where will you find the stability and resources to keep you ahead of this rapidly evolving world? these are tough questions. that's why we brought together two of the most powerful names in the industry. introducing morgan stanley smith barney. here to rethink wealth management. here to answer... your questions. morgan stanley smith barney. a new wealth management firm with over 130 years of experience. has the fastest hands boxing has ever seen. so i've come to this ring to see who's faster... on the internet. i'll be using the 3g at&t laptopconnect card. he won't. so i can browse the web faster, email business plans faster. all on the go.

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