you can see, count them, eight straight months for wages and salaries, but let's look at the personal savings rate because the income numbers are still higher than the spending number, you can see the savings rate has been very elevated during this recession as household strive to get their balance sheets in order. one quick note. look at the year over year inflation rates here. 1.51%, trying to go back how many years here. as far as i can figure out, the year over year inflation rate and headline numbers have been negative now for two straight months. the government naming names of those helping an those not helping when it comes to modifying mortgages and keeping america out of foreclosures. this is part of a treasury program to modify some 3 to 4 million mortgages over time. bank of america is one of the low ones -- where is the percentage here. 796,000 mortgages. the percentage modifications,

just 4%. jpmorgan, these are mortgages that are 60-plus days delinquent and qualify the treasury says for modification programs. 20% modified there. s citi at 15%. the over all average is 9% for all of the bank has were measured by the treasury. so i guess could you call it mark, an attempt to shame the banks into doing more mortgage foreclosures. >> it's not in their financial interest to do that? >> to do what? >> to modify loans? >> right, but i mean -- >> you've got three kinds of delinquent borrowers, the one is they're way over their hesd, even if you modify the loan, they can't keep up. so there's no incentive to help them. another is they're behind but if you cut them a little slack, they'll be able to catch up. so there's no incentive to

modify them. so you don't have that many people you can help. >> well, first of all, two things. the incentive is sort of offset about whether or not you want the keys to the house and actual economic losses are over the lifetime of the loan. the second thing is the government is making money to the mortgagor to incentivize them. the idea that they have somehow managed to get the incentives right to make it in the interest of the servicer to modify the loan. >> i don't believe it. if that were true, the numbers would not be what they are. >> you think they would be moving? >> sure. >> are they actually willing to cut principal now? a big part before to the point mark was making is the banks wanted to do everything but cut the principal, extend the time you can bay it back but not cut the principal. >> my understanding is it's

being done. they're still reluktsant it do that what treasury is touting is in the modifications, that have been done. 230,000 have been done so far since the march. they've all resulted in lower payments for the homeowners but we're not seeing how many resulted in total principal of the loan. >> and i bleach that half all e renegotiated loans failed anyway. >> that's data in the old program, i haven't seen the rates for new program recidivism rates. >> premarket, everybody standing by. bob pisani, what's up? >> weak all throughout the evening, commodities down, dollar fractionally stronger. ubs down 7%. they reported a loss in the second quarter here. i'm reading archer daniels midland trying to figure out what went wrong.

archer daniel midland, earnings well below expectation. agricultural services really poor. weak demand for global commodities and bad hedging strategies a as well. oil processes, lower volume there and margins a tough report to figure out here. v vulcan materials, crushed stone, they're going to be down here because they lowered their guidance here. volume remain poor even though we're waiting for this gigantic government program to kick in in the near future. pepsico reach the an agreement to buy is the remaining shares of pepsi bottling group. remember, they made it all for a while ago, it was rejected. they're improving that offer. david will give you the details on that tradertalk.cnbc.com. how are we looking at the nasdaq? >> we're weak as well. closed above 2000 for the first time stenson 2008 but we will give a little bit back at the

open. we'll see how the day plays out. a few interesting stories. palm and apple. palm is still trying to find a way for the pre to sink up with i-tunes. ebay had had global problems with pay pal unit, a major conduit to online commerce. they're down half a percent. human genome, an incredible story. back above that price right now. this a stock. here, 48 cents on march 11th. it's now at 14.72. they can raise $350 million. earnings, hologic. quick upgrades and downgrades. dish network. credit suisse, upgrade to outperform.

bioscrip, is up. la lamar is down. >> they trade crude option behind me but they're watching the dollar, the dollar is the key part of the kpleblgs to watch today because we are looking at the dollar since the top of the hour having weakened slightly. we are seeing oil well off the lows for the session. we rallied almost a dollar from the overnight lows here, only down about 40 cents right now on the session. the dollar index is the key to watch, the lowest level since last september. yesterday, continues to weaken slightly right now. down about 14% from the march highs and impact there is not only seen on oil prices and energy but across the board in this sector when you look at the crb index and what has dlapd in less than a month's time, we've seen a 15 brs zban there. we're also watching this afternoon for the inventories coming out from the american

petroleum institute, but as you know, it is all about the greenbacks. >> it absolutely is, sharon, the dollar. there's a huge amount of debate around every water cooler, some people think concentrating on the recent weakness of the dollar just crazy. why? because times are getting better. that's why the dollar is moving lower. but think about it this way. if the u.s. has the biggest shelter for the crisis and everybody wants to come into our shelter and they're bringing food and water, that's a good thing, right? and when the crisis abates we don't need to be in our shelter, but leaving and taking their food and water. the dollar sponsorship during the time of crisis had an unintended positive consequence it drew in capital, it drew in sponsorship of the dollar. even though less crisis, less storm throughout is a good thing, the removal of investors from liking the dollar may have negative side consequences. the debate rages on, interest

rates drifting just a little bit lower. mark haines, back to you. >> now to singapore with the asian market recap. >> initial boost of hoepts of a v-shaped recovery in the u.s. hsbc sharps climbed, beating analysts' forecast but the broader market ended lower on the property taking and shipping stocks. in japan, much action was driven by earnings. nikkei rose on the stellar farmer's surge. but shares of suzuki motor slid after reporting an 18% drop. also waiting for earnings from toyota after the bell. australia aen shares rose, the central bank kept rates unchanged. the comments sent the aussie dollar higher on the news that the rate hike could come as soon as this year. that's it from asia, back to

you. >> guy johnson joins us from lon son with earnings from across the pond. our futures, guys, are coming back a little bit. >> we're kind of bumping along the bottom, erin. haven't seen a negative day for a while in europe. we are see fractional pickups in some markets, london has just gone from being down over 1% do it down less than 1%. but still a negative vibe here. it's profit taking, pure and simple. we've seen great runs for many of these markets an people are taking a few chips off the table. xetra dax down, there are a few green spots out there. austria just trading into positive territory. the dj stoxx 600 as you can see. still down 0.8%. bmw made thes the analysts were

looking for but the next income line is down by 76%. luxury cars are still not selling. this company is only doing good because of the cost cutting programs they're putting in place. standard chartered is going to raise another 1 billion pounds. they say they're not going to go 0 on a spending spree but there are a bunch of assets rbs selling in asia. let's stay with the banking theme, let's go to zurich. big story from there. ubs, carolyn. >> thank you, guy. well, it's not a very pretty picture for ubs today. the stock in zurich is down almost 5% but as you said, it's mainly profit taking here in zurich as well. ubs reported a net loss of 1.3 billion dollars for the quarter was actually worse than expected but the focus was on its wealth management division outflows

where a lot of investors pinned their hopes on. in that front, that's where the numbers disappointed. wealth management america's division alone outglows reached the $6 billion mark. this is where the tax dispute with the u.s. is taking its toll. let's look at the outlook, equally bleak. ubs does not seen a return to the new money flow, overall the bank is very cautious for the coming quarters. so silver lining maybe in this one. a strong tier 1 capital ratio. that is expected to stay strong because judging by some press reports in zurich, ubs may not have to pay a huge fine in that settlement with the u.s. authorities. back over to mark and erin. >> all right. thank you. up next, the faber report. the brands -- the brain has pepsi on his noggin. then the word front street, plus

art laffer is going to throw us a curve. >> or a wedge. >> the health care wedge. >> a new shape. we'll be back. esesesesesesesese

welcome back to "squawk on

the street." i'm david fab aer. as we first if flashed to you on "squawk box" this morning at 8:00 a.m. evening, pepsi has reached an agreement to acquire both of the bottling companies that it owns parts of but had made full bids for, they had been previously rejected. raised those bids and now we have a deal. in fact, finally the press release announcing this deal again that we told you about an hour and a half ago is out. take look at pepsi. this will be an important barometer of the market's perception of this deal. looking pretty good. there will be a conference call, we'll get more sense of exactly was going on in terms of dilution potentially and accretion which i'll get to in a minute. there's pepsi bottling, that's going to be up sharply. well, it should be. it's going to be up sharply. 36.50 is the price there. pepsi me, 60% is done by pepsi bottling group. so that's the much more important part of this

transaction. pepsi america also made a bid for it. everything is going to be up. most importantly mepsy itself, let's get to those deal term, one reason we showed you pepsi. $36.50 a share for pbg. $28.50 a share for pas. the combined deal $7.8 billion. this is for what is not currently owned by pepsi. they do own sizable stakes in both their bottlers. as for synergy, what they say in the press release, by 2012, they expect, they expect that to close late this year, early next. they expect synergies fully realized in 2012. so of course the question i'm sure they will get on the conference call will be well, are you going to dilution

between now and then? or is it going to be flat? but that is the look at it, 2012, 15 cents a share. now the original proposals if you remember led to a complete standstill, nothing was going on. there were no negotiations. it was $29.50 a share in cash and stock for pepping bottling. $23.27 for pepsi americas. they also had this cross conditionality which made it hard to get a deal done, so they sat there and sat there. but then talks began after returning from traveling. on friday, talks between the principles and the head of peppi bottling, for example, they agreed on advice and gut it a deal. what does it mean? it's a 45% premium to pbg's unaffected stock price. it also represents a $1 billion

increase in the bid. it's 8.3 times ebitda. for the last 12 months. as for pas, 22% increase in that bid. so pepsi came up, but the hope for pepsi is we're willing to pay up here, now we have full control of our bottling or 80% of our bottling and that they say in the press release will enable them to bring innovative products and packages to market faster and react more quickly to changes in the marketplace much like they do with their food business. that's a quote from the chairman and ceo of pepsi. we'll have more as we go ashlgs mark. but don't expect a lot more m&a. this one is out there and got wrapped up today. >> up next, the word on the street and buzz beyond the trading floor as investigators pause to consider those multi month highs. >> later, the president and ceo of hasbro joins us to talk about

consumer are spending and what they're actually buying right now and whether sent meant is still cutting prices. we'll be right back.

>> time for the buzz from beyond the big board on this tuesday morning. joining us from the cboe, pat kernan. what's your take on the day? we are right now, really the best we've seen for futures. although we industrial a lower open. >> well, i tell you what, it looks like we'll have a little

bit of a lower open, but the one thing down here, serve looking at the fact that yesterday not only did we break through 1,000 but closed above it. what does that mean for the individual investor? people who are not in the market and people who are in the market are looking at 1,000 as the level we need to hit before we're going to have a selloff or the level we need that's going to be a stepping stone to go higher? if you look at the activity in the s&p 500 index, we've seen a lot out of the money call buying over the last several days suggests that people are nervous this market could still go a lot higher. >> right. so i mean what's your bet? do you think there's just going to be momentum, people jumping in to catch up, that could take us to the end of the year by some estimates? >> at some point, we have to get a pullback, but right now, it feels as though we could push higher over the next couple of days. vix trading around 25, basically suggesting we'll we'll have daily moves of over $15 a which

is still historically pretty high. i would say over the next two, three week, we're probably going to be anywhere but right now. >> any particular names stick out to you, pat? >> the banks repaying the t.a.r.p., i still think the financial sector is dangerous and they have had an incredible rally here of late but i'm still bullish on the banking sector. >> pat, thanks very much. we have the final countdown coming. >> we do indeed. we'll check out the opening bell, the futures routed a little bit, got off their lows. don't go we, opening bell coming right up.

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the futures were weak. most of the morning. then they rose a little bit. we were down about seven. we ended undown 5 1/2. so maybe things are going to be nearly as bad as we thought they were going to be. >> two interesting things. one just getting under way, hearing senate banking committee is meeting today to talk about supervision. you can see them talking there. they've got a list of witnesses, fdic chief sheila bair will be there and comptroller of the currency john dugan. we'll bring you any relevant headlines as they cross. another story that everyone is talking about is that -- bill clinton is now heating up the phone kim jong-il. which is an interesting thing, because we don't have relations with them, but they did get a former president in. >> trying to win the release of

the journalists. all right, here we go with the big board bell. hasbro and paramount pictures celebrating the release of "gi joe, the rise of cobra" this friday. at the nasdaq, the executive board doing the honors. >> let's get to our reporters standing by. we're marginally open. >> stocks all through the evening here, europe as you heard was weak. ubs was down 7% earnings. actually reported a loss here. so commodities also weaker. dollar just fractionally stronger who i just want to note that caterpillar came out reaffirming their full year guidance. $1.15 to $2.25. you can drive a forklift through that one. the consensus is $1.43. archer daniel midland just around the corner here, i don't

think we can get to it. there's a crud here. rather strange earnings report, well below expectation, despite the fact that their rival bungee had positive comments. agriculture service about s about half of their sales. they're at a loss. so weak demand for global commodities. and poor hedging. oil processes about a third of their sale, also saw lower volume as well as lower margins there. a little bit of a question mark about what happened there. vulcan materials which makes all the crushrd stones, theoretically going to be a big beneficiary of the u.s. stimulus package reported earnings that were a bit of a disappointment, volumes were poor. shipments plunging 31%. the story in theory they're going to be helped by the system but it hasn't shown up to any great extent yet. pepsi bottling up just prior to the opening. you heard david's report there. finally being bought out by pep sichlt they did increase the price three months after their

initial discussions there. so those stocks are all opening to the up side. tradertalk.cnbc.com. how are we looking brian shactman at the nasdaq. >> we are underperforming the other two major indices make below that 2,000 mark. google and apple giving half of their gains back today. they can probably both agree their major rival is microsoft down 0.9 of 1%. s cisco down 0.4% of today. ebay citing internal are issues with pay pal. cognizant very strong earnings up 8.5%. saviented yesterday, that disapproval of the gout drug, they're going back to the drawing board on that one. they gut a downgrade today to underperform, they're down another 6%. human genome just an incredible

story. here's a stock just a few months ago under $1. they raised a secondary offering at 14 a share. above that mark right now. hologic looks good on the top and bottom line but they did get a downgrade from citi to hold from buy. finally, lamar advertising downgraded to a sell from goldman sachs making a major impact today down 7.5%. let's go to sharon at the nymex. >> well, keep your eye on natural gas right now. colorado state university hurricane forecast, they have lowered their expectations for this hurricane season once again. they're now expecting ten named storms as opposed to 11 in their previous report and they're again saying it will be a bow low average hurricane season. you can see natural gas futures coming off as a result of that report. we're also looking at crude

prices pulling back a little bit here from yesterday's high again. the high for 2009 was hit yesterday just under $74 a barrel. we continue to see oil prices here at the nymex pull back from that seven-week high but again as we are down about $1 after that colorado state university forecast as well. the metals market continues to see some momentum there. looking from the surge we've seen just in the past month, even less than a month, since july 8th, going up a about 5:005:00 5% and copper up 25% just in less than one month's time. sugar, on the other hand, looking at raw sugar, that continues to tear as well. ice raw sugar posting the highest levels we've seen almost since 2006 nearing that 2006 peak, concern there about the effect there. rick santelli, to you in chicago. >> sharon, of course reports this morning, one has to ponder, you know, you need income to

support consumption. an even though our consumption economy, two-thirds may be better off heading towards more of an export type of a economy, especially if you think the dollar weaker is that one of the positive offshoots? there's a lot of negative ones, maybe it is. these are all important. the income surprise on the weak side as we have been reporting. "l.a. times" had a story today about how employment in china is something we need to pay attention to. just like our dynamics, there's improvement in their economic metrics, but the unemployment rate is lingering and many officials quoted mr. wang, one of the government officials on job borough motion coming up with ways to keep ladz off workers employed. it's a big issue. friday of course with the employment issue, it's even big nert u.s. dollar stable but not bouncing, mark back to you. >> thank you very much, rick santelli. hoping to make a big splash this

season toy maker hasbro partnering with paramount pictures to produce -- "gi joe the rise of cobra." joining us first on cnbc, to ring the opening bell, brian goldner, hasbro president and ceo. you brought some cast members. >> i did. some tremendous actresses. steve summers our direct here did a tremendous job during that time of the writers strike and made this movie happen despite all. >> that really? this dates back to that. >> yeah. started two years ago. >> holy cow. does the toy company need this? >> absolutely. our business is all about reinventing and reimagine our brands. our consumers and audiences around the world want to experience our brands these

kinds of ways. they grew up with our brands an this is a logical next step for some of our brands. some in television, some digital game, somewhere great toys and game, but no matter how you think about it, consumers today are sophisticated and they want to be involved in all these forms an formats and we owe it to them to provide it. >> i want to ask you a question, if i could. we keep talking about different sorts of media, traditional movie, youtube, twitter, does that change how you look at your career and where you're going to make decisions to put your brand and your face? >> i've never really thought of myself as a brand, to be perfectly honest with you. it's always been more creative. and the internet has opened up a huge market in a very different way but for me personally, my job is turning up on set and making a film and then you hand over responsibility pretty much to these guys behind me. >> so are you seeing, brian, we talked first about the economy, everyone saying it's getting better. that's the take out there.

the feeling is it's getting better. in the toy business, what would you see and are you seeing it? >> we said in fourth quarter and first quarter really the two most challenging quarters during this recent economic cycle for us. we reported second quarter are earnings last week. revenues were up and earnings were up. y you know, our expectation for the third and fourth quarter is that people are still going to watch inventories around the world. there are still credit issues we redalers around the world and distributors, but overall we feel better about where the consumer is going. the price point has change but our value orientation has changed as well. getting better at innovation and lower prices. >> any of formula for to you determine or guesstimate how much you're going realize out of the tie-in? like if a flick does $100 million you'll get about 5% of that in your action or what? >> it all begins with great stories an great characters f we have that like we did for the

first transformers. we reported in 2007 $484 million in toys and licensed sales, which was up from about $100 million in 2006. so clearly had a significant impact in 2007. as we go forward in 2009, transformers, ii, gi joe, can have a significant impact, but it all comes back to making great movies. they've made a tremendous movie. they just came back from a world tour, loved this movie, so for us it's about those characters and great stories first. >> how many screens are you opening on? >> we're well over 3,000 screens. any possible place you're going to be, you can find this movie. >> not going to be able to avoid it. >> we hope you want to come. >> well reviewed. >> very happy. >> all right. well, thanks so much to all of of you. we appreciate t good luck. everybody knows we get more of a crowd were we have the likes of siena miller here with us. >> everybody loves hollywood. >> yes, they do.

>> what do we have, a tease, mr. haines? >> a tease and i don't have it. >> are you on? >> no. >> we'll be right back with more of whatever it is we do. don't go away.

all right. welcome back. you're watching "squawk on the street." on the phone with us is donald trump. >> over here. >> sorry. back in control of the casinos buying back $100 million of a few casinos, do i have it right, donald? >> we're in the process of doing that it's a tedious process. it's a long process, erin. i made an offer a number of months ago bond "american idoho

rejected the offer. we received a vote of approval from the board of directors of the company t took a long time, the bondholders were very actively involved in that and they were not accepted. so we were happy about that but it is a process. >> how much money has been lost in trump entertainment over the years? >> well, it was very suck sussful, mark, when i had it as a private company and i took it public years ago. >> big mistake. >> that was not one of the great things because i became much, much less involved and as you know for the last number. years i haven't been involved in management at all. but when i had this as a private company, it was very, very successful. the world has changed a lot in the casino business as you know because every day i watch you and you're talking about different companies in the casino business having difficulties and what we're doing is reducing the debt very

st. louis lane and beelbank is restructuring their first mortgage and that going to be extended out to the year 2020 and right now it comes due in a little bit more than a year. so we're getting beautiful debt. we're getting a wonderful partner in beel we have. a lot of great things going and i think we're going to make the company extremely success philadelphia along with ivanka and the family and management again and we're going to do a terrific job. >> about thoughts about what you can do about the casino business itself, donald? as you yourself say, the world has changed. there's a lot more competition for the entertainment dollar, people can play poker online. how do you deal with those challenges? >> the biggest thing is many of these companies have debt that's sort of obsolete. that's a sad thing to say but it was put on years ago when there

was atlantic city and las vegas, there was no other competition praeshlgs todayive a different w0r8d. when you look at the debt of the casino companies, i don't think they have any choice but to totally restructure the debt. deals made three or four years ago, i won't mention specific companies, they have no chance, they have absolutely no chance. they're going to really i think doing the same thing we're doing, the difference is we are doing it early, we want to have it private. when i ran this privately, it was like i run trump to you, just very, vur very successful, now it's a different world. not only that the money you save in being private it terms of legal fees and all of the costs of being a private company is tremendous. we want to invest a lot of money in the company, starting off with $100 million and could be well above that as time goes by, but with a totally different debt structure. >> all right, donald, thank you for the briefing. >> thanks, mark and erin.

well, congressional democrats are launching an offensive this month using the august recess to sell health care reform to their constituents. the next guest said it would harm both patient and doctor and i'm assuming the government and everybody else. so joining us first on cnbc is art laffer. he's releasing a new paper today. it's got a new shape and an alternative for health care reform called the prognoses for health care reform. you're famous for a curve and now you're introducing a wedge. >> oh, a wedge. >> don't you love it. >> i thought it was a wedgie. >> that's another one, too, by the way, mark. >> maybe that's what the current health care reform would cause. >> he's the one who comment ant wedgie, i didn't. >> boy the government give us a lot of wedgies. >> and this is another one. >> lay out your case. >> it's going to cost a lot more. p.j. o'rourke's phrase was the best. if you think health care cost a lot now, wait until you see what

it costs when it it's free. when you separate the product fat doctor, you don't care what it costs, obviously costs are going to go up a lot. you look at the costs. remember the $1,000 toilet seat as in the military? >> sure. >> that's exactly what's going to happen here. people are going to lose access to their doctors. it's like going to the dmv or the post office. have you ever waited in line, isn't it wonderful. if you like the dmv and the post office, you're going to love the democrat democrats' health care proposal. then the quality. if you were to send something by mail, if you had to get a package somewhere, would you use u.p.s. or dhl or the post office? now seriously. you're going to create this, but it's so obvious, it's so straight forward. and the study i did was nothing more than basic economics but die it for the texas public policy found air, which they, just very straightforward econ

1. >> the swech an image between the consumer and the provider. >> and the doctor, right. >> and that's what this public option would do, is that your -- >> that's exactly what the public option would do. >> i understand if i have to pay for health care myself, i care about my costs being low. >> and you've also got a personal relationship with your doctor and your health care provider. what they could have done in this bill to make it good is done serious tort reform, reduce the fees and all that stuff and done alternative health care providers to give you shots and stuff that now other people -- >> what do you, give them an allowance and let me choose how to spend it? >> and if you have a poor person, of course you're going to help them out. but you don't want to stop that poor person from making the decision as to what he or she wants and needs from the doctor. that should be a joint decision between the doctor and at patient, not the government. and you know they're going to run out of money.

and when they run out of money because it's going to be way over expenditures. >> wait a minute. are you saying you not believe the government can run something efficiently and at low cost. >> i'm sorry, yeah. forgive me, mark. >> hold that thought. >> thank you. >> i had a barbecue sunday to give you an idea the level of discussion at my barbecue, this health care thing, went on and on about it, that's the point i made to them. >> that's exactly correct. we'll be right back. we'll be bringing back art back for a discussion on health care reform with "the washington post" columnist steve pearlstein. >> in between the camel weeds that you are eating. we'll be back. this is the aarp...

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all right, we're back with art laffer talking about why he's opposed bit health care legislation. joining the conversation now is steven pearlstein. i know you heard what art said about his wedge between the consumers and the provider of health care and his deep skepticism, i may be underestimating it of a public option. i know that you look at both

sides of this issue. how can a public option make sense? >> well, let's just remember that a public option is one very small part of the plans that have been proposed by the house and senate. they're not the same. there's lots of different proposals. so the idea that art knows what the public option is, i'm glad he does, but he's the only one in america who apparently knows because they're still fighting about it and whether there even will be. there's probably a 50/50 chance there won't be a public option in the final bill, but a public saupgs just an insurance plan. have you ever heard of medicare? that's a government-run insurance plan. it covers a lot of old people, most of whom really like it. and as a matter of fact, when it competes against private medicare plans and there are some of tell me them it does as well or better in terms of cost containment. so i don't know all this stuff about the post office, art, but first of all, i don't know what you're talking about. and it's a very nice, everyone should understand that art

laffer wants to get rid of medicare and medicaid and employer paid health insurance. he wants to basically blow up the entire system. so if you really want radical change, art laffer is your guy. >> let me ask you, steven, if i can, seriously, do you think medicare and medicaid is a good fiscally sound programy have you seaver the unfunded liabilities of those programs? have you looked at any of these numbers? >> i have, art. >> you know they're terrible. >> for you assen economist to talk about the unfunded liabilities of a plan that you know is a pay as you go plan, what you know that is just outright fraud an lying. >> come on, steven. goodness, gracious, do you have to go to the floor right away. come on. >> let's not have an accounting argument, right, art. >> you would lose on that one obviously. >> let me just say that everyone agrees if someone doesn't deal

with health care costs including medicare health care costs but tear not unique, if we don't deal with that we will bankrupt the government and do great damage to the economy. >> you think this will help medical costs? you think medicare will now be solvent because of this silly thing? i don't think so, steven, you're going overboard at this point. >> you have equated a public option which may or may not be in a large plan and the whole plan. >> do you think obama wants an option? did you see his campaign speeches and what he said he wanted to do? i mean these are the things he wants and his administration, pelosi wants it. reid wants it. maybe it won't go through, that's what we're hoping to talk about today is to stop the congress from putting this silly public option through. we all know it hasn't passed. >> if you want to talk about stopping the public option, that's fine. but that is not -- >> do you gray grae with me on that, steven? >> could you have a good one or a bad one. >> seriously steven, you're on the line. you ma make a cull.

>> i've made the call on this show before, art. >> what do you think j, say yes or no? >> a good public option that is a good option that isn't fee for service medicine, which by the way, you conflate in your paper with government medicine, fee for service medicine in the root of the problem. you're right about that. >> thank you, thank you. >> but that's not government medicine, that's the kind of medical care and health insurance most people have now in the private sector. fee for service. you've conflated government with fee for service. they're not the same. >> i beg your pardon, they are the same. can you imagine if we did the auto industry that every time you got an oil change it was free. can you imagine the cost of that program? it would go through the ceiling. >> most private insurance, you go in and insurance pays and you pay very little if anything. >> and private insurance isn't for everyone for everything. you don't want to have private

insurance for your food, otherwise you would be in a smorgasbord or cafeteria line and be as fat as i ma. >> a art laffer believes he doesn't believe in insurance. >> no, not everything. >> art laffer believes everyone should insure himself. >> there are things that should be insured. when it's a catastrophic thing that happens rarely. of courseless a huge case for national insurance on that but to be insured for cleaning your teeth, i don't think so, steve, come on. >> that's fine. if you don't want do. >> that it's a tax dodge really. >> but you want time pose that view on everybody else. >> i don't see any reason people can't buy insurance for cleaning their teeth, go for it. >> that's what's happening now. >> that's not what the government is doing right now. this is a government program to take over the health care industry, you no that. >> it is not, art.

>> of course it is. there is the public option there and they do want that. go look at his campaign speeches an what the congress people are saying. that's what they want. >> i read the bills, you didn't. because if you had -- >> you're better than any congress person then. >> maybe i am but you didn't read it because you think this is a government takeover of the system, which it is not. and for to characterize that is frankly malpractice, economic malpractice. >> i think you're incorrect. >> steven. >> yeah. >> i agree with many of the points you've made, some of this has been misrepresented but what about at fear fact, steven? i mean it isn't a government takeover but a lot of people fear it's step one in that process. how do you respond to that? >> exactly. >> how do you respond? people say that are doing this, they don't want the government to on the hospitals, they don't want the government to set a universal budget that that's not in there. they dent want it, they want to

keep as many people who like their current insurance, they want them to be able to keep it as private insurance, but for some reason, if you want to say that we're not going to take a good idea because it might lead to a bad idea, well there's a lot of things you wouldn't do in the world. art laffer never would have approved medicare or medicaid. >> point made on both sides. gentlemen, thank you both very much. memo to steve's bosses, bring back the damn business section. >> yes. >> okay, let's go to rick santelli with breaking news on pending home sales. >> june pending home sales, up 3.6. this is four or five multiples of the 0.25 of 1% they were looking at. last month was revise the significantly higher. year over year, we know it's an easy comp, but even this was

much hotter. up 9.2 year over year. last look. 4.6 revised up 5.4. so listen, we all know green shoots have been interpretation and there's still issues out, there but some of these housing numbers indeed are making a positive dirns. maybe it's crawling before we can walk but nonetheless this is much stronger and reflected in the notion that equities are running up a bit and started creaturing up before the number and interest rates creeping up as well. but i don't want to exaggerate the breadth of the move. it's a start. we're talking two or throw bointsz in higher yield since the number was released on long maturities like ten-year notes. mark, back to you. >> sir, we will be -- >> i think we should just muff out of the chairs and put pearlstein and laffer here. >> we'll be right back.

live from the financial capital of the world in the heart of lower manhattan, welcome to the second hour of "squawk on the street." good morning, everybody. i'm mark haines, along with erin

burnett, a quick check on the market, the dow has just slipped positive, up 1.25 points. we were saddled with soggy futures earlier this morning but we have overcome that at least as far as the dow is concerned. as you can see, the nasdaq and s&p are still down about 0.25 a of 1%. meantime erin is done on the floor. mulling the brilliance of being saddled with soggy futures. >> the alit ration was amazing there. >> that was an ad lib, i want to emphasize. >> home sales were better than expected. we didn't do anything at all. slipped about 10 points on the dow. slowly, we're getting incrementally positive points on housi housing. that's very important. the problem is data points still don't quite make a whole picture. they're still very, very spotty out there. >> maybe in the market might be up here. >> the market is really expecting better data points at this point. the bears have gotten killed. a week and a half ago they tried desperately to take the market

down. because last people feel the market is overbought, but the shorts got their headed hand to them a week ago, week and a half ago. they're still hurting from that last attempt to bring the market down. here's a little good news, united, continental. >> i saw that. >> load fact certificate percentage available seats filled. so for ual, we were talking about 86.9% of available seats filled versus 84% a year ago. continental also had better numbers than a year ago. they were around 80 i want to say. >> they were around 80. >> they were higher than the same period last year. there's a little bit of good news for them. they've had nothing but bad news for a will now. on the other hand, you keep looking at signs of a bottom in the construction industry and nothing. vulcan materials, which is the company that makes probably the biggest crushed stone company in the understand, they're the beneficiaries of the stimulus package, they haven't seen it

yet, although they will be seeing it soon, they are hopeful left-hand they indicated there are good signs of that if you look at their guidance it's terrible and volume are way down. all these stocks while they've ris an little bit in july, they're still dramatically underperforming the markets. so spotty numbers. >> here we are almost at break even for the markets today. let's check in with brian shactman. we continue to have tech wars, but this oneson a interesting one. that palm wants to be able to get i-tunes. >> palm wants to sync up the pre with i-tunes, a lot of people think the way they're doing it won't hold water. they've gone to a trade group to rectify it. it's simple, palm wants pre to sync up with i-tunes. apple wants to protect their

turf. palm is big player here but the truth is apple could come off looking ugly so that's something you want to keep an eye on. >> lots of money being raised -- stay on that side. one quick question for you, is there one name in particular, human genomes stuck out to you. why is that one important? >> it's important for two reasons. one is this was a stock trading for pennies earlier in theier. you don't see many stocks go up hundreds of percent, but basically with the inflation in the stock market, you see the power to raise money. now it's up over $1.33 over what it offered at. it's the strength of the market coming back up. but more importantly, when it comes to by wroe pharma, the reason it's this high is because of the breakthrough drug that might happen for lupus. it shows you the ip credible market and earning power if this goes all the way through and can

beat this illness. so that's why were you want to keep an eye on this stock. that's why their ability to raise $350 million is huge. they can dominant the market and go from a 58 cent stock in february to who knows how high? >> brian shactman, thank you very mump. looking at oil, i suppose you can call it a same day but i look at the price itself, 71.07 is high. >> it is high, well off the lows we had earlier today that were looking like we were going to push towards $70 a barrel. we gut a bit of a dip after that colorado state university forecast came out, both in crude oil and in natural gas and again they lowered their forecast for this hurricane season in the atlantic that will last through november 30th. they're saying it's not going to be so stormy this year. named storms and two major hurricane, the long-term average is for about six hurricanes. toe is a below average season that they're expecting. but the real focus again is on the dollar. and the fact that the dollar has

weakened is why oil is off of its lows of the day. mark? >> all right, thank you very much. let's move on to the markets. the stock market and s&p broke 1,000 yesterday for the first time since early know. can we expect that to continue? joining us now is tommy william, president of williams financial adviser advisers and janet engles, director of private client research with rbc. what do you think? are we off and running here or have we reached the top? >> i think it's exciting. 11 out of 12 times since 1950, we've had bear rallies, we've had a pullback. we need to have a sell discipline right now. buy hold and hope is a dead philosophy. you better be prepared for some pullback, but i think the end of the year looks good. the economy numbers are looking great. pretty exciting time, don't you think? >> you've confused me. you were speak of bear market. is this a bear market rally in

your opinion? >> i think it has to be. what we've come through this yes, you've got to look at it as a bear market rally. but it's a great rally. earnings are looking good. most of the companies reporting earnings so far have exceeded expectations, a rally is a rally, but i don't think we're out of the woods yet. >> janet, are you nodding your head? >> i agree. this is a bear market rally. it's got further to go. the earnings numbers are coming in better than expected. we think that will continue for the rest of the year. we've got further to go before a pullback but we expect it at some point. but anyone looking, chase, calling for a pullback, it never comes when everyone is calling for it. so we've got further to go in this rally. >> part tst is just that it can't be this easy and you fell off the cliff and the world ended, then in march, the world started getting better. it just seems too good to be true that it will get better on a straight line.

>> it never works that way you've got to is to have 0 a sell discipline. we learned that buy, hold and hope is a dead strategy. if you don't have a sell d discipline, you're not going to make money f you're not going to make money, why would be the in stock market? >> i stand by your argument that queer going to have a pullback but i don't know when. we look at emerging markets, they're back to where they were before. i want to pullback now, do i put that money into cash, re-allocate what do i do? >> lieu act your total asset allocati allocation, we're still saying overweight slightly equities. 60/30/10 is where we would be. in terms of portfolio positioning now, improve the overall quality of your portfol portfolio, take the profits you've had this sector rotation that has been inkrebld and quite dramatic, we've had some huge runs, take that money and put that a little bit on the sidelines right now looking for a better buying opportunity but we're not going to be too fussy about that buying opportunity. >> do you think the economy will definitely show growth in the

fourth quarter and may show growth in the third, right? >> absolutely. >> no doubt about it. >> what leads you to that view? >> you want to start? >> yeah, i'd love to. if you look at how the fourth quarter and second quarter turned out and you say that the numbers weren't quite as good as they are they were but you have consumer spending up, retail sales up, you have 250,000 automobiles sold last week. when you see all of these numbers stacking up and you come through what we've come through in the first and sex you've got to have a third and fourth quarter that are strong. people are already preaching that we are out of the recession. feels like it to me. >> strong is an interesting word. you're looking at a tough comparison. so you don't need to be strong to have a green arrow, just need to have a pulse, right? >> six months ago everybody thought we were dead in america. i don't think that's the case at off. i was in the apple store the

other day, i couldn't buy a product, couldn't stand in line. up here in new york, your restaurants are full. come to louisiana, we're selling cars down there like crazy. looks pretty good. i don't know where all this bad stuff comes from. >> but isn't what you two are talking about a result of government spend, not private spending? and how long can that sustain? >> so here's the key. we've come through an incredibly deep and protracted recession. your initial kickback is fairly fierce in terms of the economy, hence the v. there are many, many head winds. in the absence of additional fiscal stimulus, which i don't think anybody is expecting, where is the oomph? is it now a self-fulfilling prophecy in the economy? i'm not sure i can dumb doum that conclusion. our issue are or comment is a return to growth is not necessarily a return to help for the u.s. economy.

so the headwinds after the initial v shape leads us to believe this is a slow, slow recovery for some time to come. >> let me give you a take away on that though. the $11 trillion sitting in cash. if you think you can keep 76 million baby boomers down for long without spending money. they've been risk averse, hoarding cash, but the cash is, there that makes it different from prior recessions and of course the depression. you give them a little bit of feel good and the baby boomers are going to spend money, house, car, children, they're already doing t the numbers will prove that out in the third and fourth quarters. >> thanks so much to both of you. we appreciate you taking the time. >> glad to be here. >> everybody talked about energy today. >> where are we? up next, the faber report, the brain taking a closer look at ubs. >> steve liesman, with a rare interview with ford motors chief

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hi, folks. welcome back to "squawk on the street." checking out stocks moving here today. are you seen penn power and light? which goes by ppl. down 10%, the worst performing stock in the s&p 500, their second quarter eps missing by 7

cents. they lawyer their full year 2010 below consensus as well. downgraded to hold from buy. also rdc down sharply here today, the second quarter number coupling in better than expected but they see continuing pressure on their day rates. it's had a nice run alongside the price of oil up 30% in the past four weeks. the auto parts stocks have done a lot about this hated sector and how well they've been performing but both trw up very strong today. 13% at a one-year high. this symptom is up 450% on a year-to-date basis. they came out with a third quarter revenues at top c consensus, also raised their full year estimate. then polti and cente skechlt on the verge of merging. saw revenues down 49, both saw

selling price of holmes down 10%. finall finally, herballife, their full year and quarter years forecast, as big as big lots. that's why i tell you. let's get to david faber. >> i wanted to start off with ubs. you heard our reporter earlier talking about the global giant bank, of course, well, wealth management being its key business. and a business where it has been losing ground of late. take a look. shares of ubs down 8%. we talk so much here about citigroup, about the travails at merrill lynch, lehman bear stearns. sometimes we forget that ubs

lost as much as they did. the swiss government coming to its aid. you can look at a two-year to see what the stock has been doing of late, like so many other banks globally, it has had a nice move. yes it lose money, loss per share was 36 cents. the net loss about 1.3 billion or so for ubs. like there has been with so much other investment basics and larger banks there's a lot of noise around this. operating income $5.2 billion but had to take a charge as a result of tightening of their credit spreads, we've been dealing with this volatility quarter to quarter with so many bank. they also took restructuring charges of $509 million and a good will impairment charge of $460 million. the full screen here is a little bit behind me. but we're just about to catch up, that being said, wealth management is interesting because throughout it all, all of the problems that the investment bank, the question

was will it bleed over? will people lose confidence in wealth management? they have been seeing outlook and that will be a key as we watch ubs into the future, what it ultimately decides to do in terms of the u.s. investment bank continues to be a part of conjecture, but they say they're not thinking about doing anything other than keeping it and running it. they say the business was being, quote, rebuilt and they also say they were taking a conservative view on risk taking. that's ubs. real quick, let's look at pepsi. pepsi bottling. big m&a deal today. don't expect to see a lot more for the month of auchlg this has been out there for quite some time. there was not a great deal of conversation between the parties as pepsi was trying to gain control of its two largest bottlers. pepsi bottling group being the largest in the pepsi americas. they talked a few weeks ago, took a break, came to a deal

over the weekend. here we have it this morning, all the stocks up nicely, sharply. of course, huge premium from the unaffected stock price, pepsi came up a lot and by the way, they ditched this cross conditionality now, now it's only -- they'll only do pepsiamericas if they get pepsi bottling group done. but if they do pepsi bottling group, at this point, they're not going to worry about pepsiamericas. it's not cross conditioned one way or the other. they expect to close the deal by the end of this year, early next year. had the call, nothing particularly note worthy. kn nothing about synergies an costs. whether they're coming in low on the synergies number, they're going to have a fairly large meeting, indra nooyi will take more questions of that type. back to you. >> next, the return of the -- wow, that's right. i forgot, it's supposed to be the sexiest car of the year, the

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. toyota is cautious. ford is bringing back that best selling taurus which frankly, phil lebeau, had has a whole lot of buzz around it it. >> as it should. this is a huge car for ford and an improvement over the previous edition of ford, the 500 was a dog of a car, a terrible car and even ford executives behind closed doors would say we

shouldn't have built that thing. now you have the new taurus. let me show you on the assembly line here in south chicago. biggest improvement. updated styling outside but the interiors have long been a bugaboo for domestic automakers, this one has been dramatically improved. there's a love/hate relationship americans have with the taurus. the love part is the brand recognition is huge. 87% of the people out will in the auto market recognize the taur ru, so you have instant brand wreck knicks unfortunately 50% have you an favorable view of the taurus because the company let it wither on the vine and was terrible towards the end of its first go-round. now when it goes into showroom, ford is hoping this gives them a further boost. sales are down 28% this year, but compared to the rest of the industry, that's not bad.

remember ford posted its first monthly sales increase yesterday for the month of july. take a look at shares of ford. if you had bought this stock, aaron, back when it was $1 a share put 10,000 you would be sitting at $84,000 right now. for more on why the taurus is so important. check out the blog behind the wheel, that's cnbc.com. just for a point of reference, everybody talks be how the camry is the best selling vehicle in the u.s. and it has been for a number of year, what was the other vehicle that was best selling before the camry? the taurus. it was the taurus, ute butt you've got to go back a number of years to find when it was number one and then of course the company let it die. >> when was it? like the mid '90s or early '90s, feels like? >> when they started letting it die. they stopped investing in it in the mid hae 90s, rode on momentum for a number of years,

but by 9'99, the camry had passd it up. >> thank you, phil, real men do drive minivans lebeau. >> a rare interview, ellen hughes-cromwick will be our guest. ford was the company who said if the one week clunker sales for the industry is where we're going, we an annual selling rate of 15 million to 16 million vehicles which is right back up where the peak was so we'll get more on that when i was told i had diabetes,

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let's take a look at the markets for you now. you can see the dow has slipped back into negative territory. the way the futures are setting up this morning, this is not bad at off. down less than a quarter of one% on the dow. nas is down 0.4 as is the s&p. internally, how do we look? not bad at off. 500 more losers than inwerers. on the nasdaq, only 300 more losers than winners. we're down, but not much. >> we were just talking about the ford taurus and its timing in the marketplace. let's go to steve liesman with a

special fwest from the automaker. i'm very interested in this interview. >> me, too. there's a lot of controversy over the cash for clunkers and economics around it. does it pull forward future sales a. let's have a serious discussion about this. joining me now is the chief economist at ford motor company. thanks for joining us. >> hi, steve, how you doing? >> great. let's talk about first the numbers you guys estimate. according to some data you sent along, how many units have been replaced toe sew far? >> well, we're getting close to the top. the d.o.t., the department of transportation indicated they've got about 80,000 already registered. well see what they come up by the end of the day, but clearly this has been a home run. the program has done exactly what it was designed to do, stimulate the economy. >> let's talk about the economics of this, with whether or not you feel like we're pulling forward future sales or are they new sales or is there any way really to know? >> well, i think, we are seeing

some incremental benefit, steve, as you know just based on econ 101 tax is hard to estimate. maybe one out of three or five is an additional vehicle that people are buying because they're stretched out for that higher fuel economy. you saw the results on that. people are looking to get that $4,500 voucher. the focus has been the number one selling vehicle. people want fuel economy, they want great quality and they want good products. >> let me read you something that the "the wall street journal" wrote yesterday. and i quote, this is crack pot economics. the subsidy won't add to net national wealth, it merely transfers one money to one tax p payer's pocket to someone else and destroying a perfectly serviceable asset in return for something he might have bought anyway. how do you respond to that? >> oh, gosh, i love those kinds of quotes. go back to the macro textbook.

fiscal stimulus is all about stabilizing the economy. we just went through a really severe financial crisis, gosh, we lost a lot in that collapse in the fourth quarter of last year. what these programs are designed to do, remember, steve, this is a temporary program, nobody is looking for permanent cash for clunkers. it's just to put a floor under economic activity and that's exactly what it did. from a practical standpoint, it's shovel-ready. >> let me ask you about the impact on auto production of this program and also on the impact of auto production on gdp in the third quarter. is going to be part of the reason auto production ramps up in the third quarter? >> great question, steve. in the third quarter, wards automotive has estimated that production is going to rise, get this, at an annual rate of 456%. compared to the second quarter.

so we know that auto outlet is going to really juice gdp growth in the third quarter. it looks like the fourth quarter production schedules are not released yet but based on the fact this program has been so successful, stocks have been drawn down. we've got very lean inventories. so even with a reasonable pickup in sales, excludeing cash for clunk, production should be rising again quarter on quarter in the fourth quarter. >> is there a payback though in coming quarters where you think oug auto sales will downshift because of what was pulled forward? >> another really good question. you know, in europe, they've got about 12 scrappage programs running. and historically, they've had dozens and dozens of scrappage programs. so one of our economists has really done a deep dive and looked a at that. in the economy is recovering, most of us think we are going to get a recovery in 2010, get a

little bit of a tail wind so it tends to mask the pay back, but we should be looking at potential payback. we're factoring that in, everybody is. >> i have to ask you one question before i let you go. we've gone as long as 9 million units in annual rates. we just bumped up to 11.36789 what is the right run rate for the auto industry? >> well, i think, steve, when you break it down, we're actually producing, this economy has about 2 million, 2.5 million new drivers every year and then vehicle sales peaked out in 2000. so we've had no growth in sales but 2.5 million or so new drivers every year in the last decade. so that's going to be adding to sales. and replacement demand is probably around 12 to 14 million units. so you've got a lot of thrust

there, we think. but we're being really cautious. so we should see sales come back. 9 million is an unnatural level of demand. >> okay, ellen, thanks very much. ford motor company chief economist, to mr. haines at nyse. >> to these who build our bridges and roads and more. kpmg takes inside a new study. >> then big spenders who want to get married. why tight wads and spendthrifts tie the knot. no update on the divorce rate of couples. it was a perfect fit. find out more at aflac!... ...forbusiness.com

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breaking news desk the the s.e.c. filing civil fraud charges and others against general electric, parent company of cnbc, saying it misled investors by reporting false and m misleading results in its financial statements. without confirming or denying guilt, ge agreed to pay a $50 million fine concerning events that occurred in 2002 and 2003. the s.e.c. alleges ge used improper accounting and reported negative financial results including ge's commercial paper funding program, the failure to correct a misplkz of financial accounting standards to certain ge interest rate swaps and in 2002 and 2003 reported end of year sales of locomotives that had not yet occurred. again, ge settling those charges paying a $50 million fine accounting issues occurred in 2002 and 2003.

mark, back to you. >> thank you, mary. incomes getting worse. this latest round of data. personal spending increasing. there's a disparity there. i thought we learned that lesson already. now you've heard all the theories but what about when it comes to spending habits. a recent study by professors at northwestern university and penn's wharton school of busine business, finds that big spenders tend to marry big savers. joining us is the lead author of the study. scott rick, who is now a marketing professor at the university of michigan's steven ross school of business. and dr. nancy irwin a cognitive behavioral therapist in los angeles. both new faces to cnbc. my wife happens to be a cognitive behavioral therapist so i will start with the doctor and ask her, it sounds like big

saver/big spender would ultimately lead it a lot of argumenting about money. >> you would think. actually, opposites do tend to attract and men and women are perfect proof of that. but what's so exciting about this study is that it shows both of these extreme polar opposites are trying to seek balance and find a place in the con tin yum in the middle. >> i'm not -- i just want to save every dime i ever get. >> let me guess, are you married to a spender? >> my wife is not a spender, not a big spender, no. but i'm cheap, i'm cheap. professor rick, what do you make of this study? >> well, just to recap our major findings, so it's not big spenders and big savers, per se, a tightwad is someone who spends conservatively but wishes they could spend more. they feel they're

underindulging, the spendthrifts have the opposite problem, they feel like they're overindulging and they tend to attract one know, leading to arguments over money and this in turn diminishes marital satisfaction. >> so, i mean -- >> what's next? divorce rate? >> we do not have divorce data yet, although that's something we're sort of very eager to look at. we're only surveyed married people. >> all right, so does this tend to be broken down by gender? i mean in terms of who's the spender and who's the saver? i personally am a very intense saver. i know that obviously people might make jokes about women being spenders, that might offend a lot of women, but how does it break down men versus women? >> there's not that big a difference. >> nice save, professor.

>> it does tend to be environmentally biassed, more than gender biassed, i might say. >> what does that mean, environmentally? >> we tend as a general rule, we tend to model the behavior of our same-gender parent are. by that same token, we tend to attract a mate with the traits of the opposite gender parent that is an environmental influence. and it's extremely powerful. much more so than a gender bias. >> so how can companies take advantage of this? i mean how can you identify a spender, a saver? i guess you want it know who's the spender, right? >> yes. in healthy couples will acknowledge what their pat strerns been, not make the other one wrong and then find a place again to get into the middle of that continuum of fiscal responsibility. so it's practical and honor both. >> thank you both very much. >> thank you. >> suddenly i feel like sticking

a few more dollars into the savings account. >> up next, what's the infrastructure holdup? this was highlighted as one of the big benefits of stimulus plan. we have insight from a new study about where the money has gone. >> but first, oh, trish. >> hey, you guy, good morning. we have stocks taking a bit of a breather after that recent are run-up, but in fact is there a question here that needs to be answered? are we in a new bull market? is this the new row at? we'll debate that for you. also steve blankstein telling his employees cool it on those lavish expenditures. does this mean making money is out of favor? we'll debate that coming up in call of the wild. we'll all the action from right here opt floor of the new york stock exchange. but first, mark and erin are back right after this break. the algae are very beautiful. they come in blue or red, golden, green.

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the cash for clunkers gnks program seems to have helped at least some people. whatever happened to all that infrastructure investment that was talked about? thousand we might get a million more cars. will we have the roads? there's so many potholes.

steven may have some insight. good to have you with us. i know originally the administration at least had seemed to put even more money into intra structure, they put a little bit more into tax cuts to sweeten the pot and get the stimulus plan passed. but there has been from every company we've talked to really slow deployment, shall we say, of the infrastructure money. what's been the hold snup. >> it's hard to get infrastructure money out particularly the harmg erlarge s projects. the stuff targeted was the short time. and it's done a pretty good job of getting money out the door at that level. the problem is that they haven't been able to get out the big dollars on the big projects. they just take too long to get out. >> since when does the government have a hard time spending big money? >> the decision making process to get things out really paralyzes quick action on very large projects.

>> unless you're going to go to the same old suspects and have all sorts of accusations about who is getting the contracts, is that what they're trying to avoid? >> i think more than that the approvals process to get it through the environmental approvals and public consultation is really a lot harder than people imagine. there just aren't billion dollar proper corrects sitting there waiting to happen. >> keith, that's an interesting point that i've heard a lot, which is that there are some necessary approvals that need to get done, but we have sort of built in the most red tape z bureaucracy filled process for approval in the developed world. is that a fair criticism? >> i'm not familiar with all the rest of the countries, but i do think there is a certain level of bureaucracy. you're talking about $11 billion. we've only had less than six months, so we still have time before this starts to work out. but it was never intended to happen immediately.

a lot of the investment for the stimulus was speaksed to happen for state and local government. that was $144 billion. much of that was paid out almost immediately because we wanted to prevent them from having to lay off policemen and firefighters. but this is money that will take some time to be spent. >> you know what, i mean, keep talking, okay? because i'm still not convinced. i have been reading for decades that the nation's bridges are all falling down and we need to repair a gazillion of them and you mean to tell me that they don't know how to go with doing that quickly? they've been studying it for decades. >> it's not that they don't know how do it quickly, it's as quickly as you can possibly do it efficiently. yes, the bridges are collapsing. we saw that with minneapolis. >> every time we have a tragedy like that, and it's been going on for decades about.

>> but we're talking about a heck of a lot of money. $111 billion that was budgeted for infrastructure and less than six months that have passed since the bill was signed. so these things won't happen immediately. look for example at the transportation department. i looked at the website just a few minutes ago, recovery.gov. they have $23 billion sitting in the department of transportation from stimulus funding that they have not yet spent. only $1 billion of that money has been spent. the good thing about that is that you can track where the money is going and see how fast it's going. the bad thing is that it takes some time to do it. this is the nature of the beast. >> i love it. in other words, the bottom line here is the government spends too much money and takes too long to do it. >> that's not what i said. that's your characterization of it. it just takes time to spend that kind of money. if i had $23 billion to spend, i couldn't just go throwing it away immediately. i would want to make you are that i used it wisely. and you had a contracting

process that was fair. >> very quickly, before we go, how do we compare around the world when it comes to this bur rat tick delay issue? >> i think we are in not bad shape. there are some country, britain in particular, gets things out very quickly. i think we will get better as we get more practice doing it, but this is new. it's a very different world today than it was four or five years ago when there really wasn't money for infrastructure. >> thank you very much, keith and steven. >> up next, a file check on the markets. i'd spend that money. give it to me. i know how to get it out the door. meet jack.

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they're calling me a mizer? >> and not patriotic. >> i'm sorry. but give me that ghoechlt monov money, i'll spend it. >> ye of little faith. mark will happened it off on time. we have something this afternoon i wanted to tell but. the president is going to elkhart indiana. >> the rv industry is in so much pain. >> and we'll be talking to the chamber of commerce and also the

mayor of braddock, pennsylvania, one of the hardest hit cities in the. >> "washington post," terrible story. we'll see you tomorrow. good morning. welcome to "the call." i am trish regan. 90 minutes in to trading here at the new york stock exchange, stocks taking a little bit of a breather after the recent runup we have seen. and yet this is in the face of that positive economic data on home sales. is this suggesting a real bottom for housing? we'll discuss it. good morning, larry. >> good morning. i'm larry kudlow. it's been a nice run for stocks lately and while some think it's about to end, i think we're in a new bull market run. we'll discuss and tell you you how you can make money on that call. >> goldman employees are are told to cool it when it comes to flashy purchases. now is not the right time. is making money out of style in this is the call oig on cnbc.

investors taking profits in the midst of larry's new bull market? the dow has turned positive here up about four points. but out of negative territory that's what we care about. the s&p, i'm going to call that flat because i want to. and the nasdaq, that's almost four points on the day. >> little pull backs are healthy. little bull packs are healthy. but i'm looking at green. it looks green to me all of a sudden. >> i'm waiting for you to this up and get things going. we just crossed in to positive territory. so maybe you're have something effect there, larry. pending home sales data very encouraging. certainly we're seeing that despite the rise we saw in mortgage rate, people are stim going out there and they're taking advantage of these lower prices. they're taking advantage of