now. >> kraft food did report after the close last night. 56 cents a share and it was a couple pennies better than expected. revenue did fall short slightly as the stronger dollar hurt international sales. the consumer giant raising its full year gooipd guidance saying it expects to see benefits from its recently repeated restructuring, cost cutting and a focus on improving its products. how do you improve, though, on kraft macro neen and cheese? >> they make spirals now. >> cheesier. >> and they've almost remaced the -- >> but you know what's not so great? easy mac doesn't taste as good. >> excuse me, you're in my way? >> you know what happened? the steward, when joe and i were getting off the train in new york, he said, did you guys see ted cappel was on the train?

joe handed him $20 and he said, when you get off the train, ask him did you see joe kernen and becky quick and carl quintanilla were on the train? >> he did a lot of stuff for us. and the guy in front of us gave him -- i didn't know you should do that. i never tipped a flight attendant or anything. >> they did take pretty good care of him. >> yeah, they did. i'm writing it off. posting better than expected earnings and revenue, whole foods, traffic was up as was the size of the average transaction in its stores. whole foods says it's not ready to proclaim a recovery or victory, but notes that it's seeing customers have a tendency to trade down and that is slowing. we may see that in proctor & gamble today. that's when everyone is talking about with p&g's reports, which will show a fairly significant

decline in revenue, which you never thought would happen in p&g. >> at a time after lastly wanted to goose the premium market, right? >> things like tide. people aren't paying the extra. >> head long into the global slowdown. >> and we were talking about a xp last week. the trading down is easier to do on paper products, which p&g is heavily leveraged to, as opposed to colgate which is more leveraged to toothpaste and soaps. >> or kraft. >> yeah. >> microsoft is agreeing to hire at least 400 yahoo! workers as part of this agreement and it's going to pay its partner $150 million over three years in getting this started. the details are emerging in an s.e.c. filing. this packet is still subject to approval by anti-trust regulators. citi plans to sell 20 businesses in the consumer finance area, many of them located in europe. citi's ceo vickram pandit speaks

to the times and says the move is due to a shift in the finance market where there is less funding and less robust. >> a2 and a3, number one, the clunkers, you've got to ramp up your gdp figures for the second had a after the bous clunkers? >> oh, yeah. >> you ramp it up significantly? and it was already positive. if we get 3% in the third quarter, the recession ended in the quarter that we're in. and a2 is that. a3, lean inventories. so is it pointed? as you draw down inventories. then you get unexpected sales from the clunkers and it's off to the races. >> yeah, but you'll still be getting this jobs number on friday. >> we can't have cash for

clunkers forever, either. so you wonder -- >> you're talking about another month's worth of money. >> we'll have craszinzi later talking about the know is up, but then there's the secular overhangs which are going to come home to roost. >> delinquentsies on prime borrowers now. with we fix the problems? >> greenspan says housing, you could be looking at a second leg down. >> i feel like i might be able to do more. >> as a senator? >> yeah. >> i knew it. i knew it when we had our photo taken after the show yesterday, a group photo of the three of us and the senators and you felt like you shouldn't have been with me and becky, you should have the with a sign of mr. kernen. >> isn't there a way to do that

on the web where you move one figure up to -- i looked more -- it's because they were all old -- not senator hutchin so i kno knowson but i fit in better with the old geesers. >> becky and i are not old enough to run, are you? >> you're right. we're not 32 yet. >> yeah, you're not -- well, i could run on my waist, a 32. >> war b buffett accepting the resignation of net jets founder richard san tu lli. he says he's living to spend more time with his family and pursue other interests. berkshire bought the interests back in 1998. socul, santulli have both ben

heralded as possible warren buffett successors. >> he's got a 9-year-old, a 7-year-old and a 5-year-old. and he sold net jets. i don't know if they pay him anything -- >> he sold the company to them for a lot back in -- >> back in the '90s. so i don't know whether he was like bloomberg working for -- why is bloomberg working?  he's got $15 billion. he's in government. we have similar callings. yes. >> government, public service. the treasury department reportedly plans to ramp up sales of inflation protected bonds to help fund the nation's growing budget deficit. china is among investors that have indicated that they want t buy more of the securities. speaking of that part of the world, what's the deal with kim

jong-ii? it's kim jong il. >> every paper in america, there's a picture of him and president clinton. >> and nobody is smiling. it's like this is serious stuff. >> we have to be here. you requested me, i'm here to get back our two journalists. >> but we're mad at them for the -- >> this creates a lot of confusion. by asking for president clinton, you're requesting asking for someone that has a tight link to secretary of state hillary clinton who has an existing tie to the obama add mip administration. >> but he was not sent as an emissary -- >> it's amazing how they crave someone to come and can it kiss the ring, so to speak. >> and it started out with the two hostages asking for this through the negotiations saying to their families on phone calls, we think it would be a good idea if president clinton tried to negotiate our release. >> the last person there was

allbright, right? >> 2000. >> although president clinton had thought about going to meet kim jong il. >> the journal reports there's still 1,000 political hostages being held and 23 million other people being held against their will. >> you call and they said -- >> yeah. >> take a look at the markets today on this wednesday. we get get adp later on this morning. 8:15. in the meantime, the global rally will take a bit of a rally. futures are mixed when you look at the s&p, dow jones and the nasdaq. asia was you've a tiny bit in europe and it's a tiny bit positive this morning. the big trade of oil going higher and the dollar going lower is reversed today.

oil is off nearly 40 cents. the ten-year note is still yielding. the yen has been the big gainer asterisk leaves the market, at least for today's action. gold is getting really interesting, guys. >> gold and the dollar. >> oil, too. gold sup almost 10% since the beginning of the year. that's outpacing the dow, which is up about 6%. >> i love gold! >> let's get overseas this morning. christine tan is in singapore and first to london where we'll -- i think steve loves gold, too. >> thank you. thank you very much. these markets, when they're in a certain mood, will go one direction and stay in that direction. lloyd's is one of the top banks in the united kingdom. the company today under its

chief executive has just announced $22 billion u.s. of losses in the first half of the year. the top gainer on the ftse, they're up about 9%. that's because mr. daniels has said to the market, this is the man who you bought hbos at the maelstrom of the market post lehmans in october. i had a ken lewis moment. now the shares are rallying extraordinarily voidly. the viewers will know this bank because it's the bank that had jerome kerviel, the trader who cost them billions in unauthorized trade. but now the company says it only has a billion worth of losses. let's find out about the asian session, a bit more mixed over

there with christine in singapore. >> hey, steve, the markets here are running out of steam. in japan, for instance, the nikkei 225 slipped 1.2%. shares of toyota in focus. it fell after reporting a third quarterly straight loss yesterday. but better than expected. still, invest everies are not too maep about the company anticipates forecast. hong kong lost 1.5%. but concerns remain about when global demand will actually pick up. and shanghai finished lower, 1.2% with a highlight report in the shanghai daily that said foreign firms would be allowed to list in shanghai next year as part of the city's plans to become an international financial center. the boards would set up a board that will allow foreign companies to sell yuan denominated shares in china for the first time. that's it from asia. back to you. >> christine, thank you very much. let's see how the u.s. markets are shaping up so far this morning. joining us this morning is

lakshman achton and rob morgan. good to see both of you. >> morning. >> good morning, becky. >> we've been watching markets continue to slug higher. rob, what at this point do you think is the biggest issues that the market can get weighing on or is this just a situation where the momentum may be running out of steam? >> 85% are jan thrd 50% moving averages. the market is melting up. whenever that happened, it's hard to predict where it will go. >> and lakshman, we were just talking about the positive signs

that are out there. you take a look at what's been happening for the second half gdp, some of the forecast may have to be raised because of what's happening for cash for clunkers. when you're looking at this from the economic perspective, how does it all add up? >> the real kind of tug of war has to be not so much will we get a firmer economy in the middle of the year or is it sustainable or is it based on cash for clunkers so you'll have this back and forth. maybe some of this will material autoize down into the market as to are we haven't a negative growth or an h-shaped recovery or does the consumer does not will the legs to keep this going? they say this is sustainable,

probably a little longer than most people think. >> i guess the other question is, is there a second leg down when it comes to the housing crisis, as green span says he worries about, and what happens with residential real estate? >> residential housing, we have leading indicator owes that and they're continuing to rise. they turned up in a convincing way in our view by may and we're seeing that note only in the u.s., but also in the u.s. i was listening to the news earlier and that may be part of what's happening out the financials abroad. on the commercial real estate side, we doevent see any great news yet. we would agree with the market consensus on that that is that is goc to lag. that's not unusual. >> rob, we get more earnings out, including cisco after the bell tonight. ledge that be the leader on all

of these things. is there room for the market to be on the upside here or is everything forring for a reason to not bring them back down. >> earnings have been riding since the beginning of the year and part of the reason was the bar was sa low. still with earnings rising, that still tends to be the case. so we think there's still room there. if you look at the overall market, earnings revisions just recently turned positive for the first time in two years. so once again, just tell you -- that just says how low the expect azs were. >> with you they be then there is another article in the carl street jirnl? when you look at the pk for the

s&p 500? >> 16.3, yeah, it's higher than it's been yesterday. but it's still in the historic range. so it's not -- it's hard to make the case that the market is undervalued right now. >> and lakshman, the other numbers that we're watching today, which of these reports do you think are the most important? >> well, i -- you know, wherever you get the die vergence from the consensus. you have the services survey coming out. that's a probable part facility of the rove. johns, obviously, towards the end of the week in particular are very important. >> aep today. >> aep today and the government numbers tomorrow. if we can move back towards these minus 00 levels as opposed to the other direction, that will be consistent. but jobs are definitely going to lag in this recovery. it doesn't mean that the recovery can't be sustained and,

you know, another thing is that it's really about the healthiest new england us. the wealthiest people raekd the almost half on conumer gambling. and whshl when you talk about peopling trading down. >> sure. on the broad market, you'll see lifestyles of the wealthiest haven't changed, even though we've had the worst recession since world war ii. you go back to life as normal, as crazy as that sounds, and that's going to have a huge boost to consumer spending, probably more than people think. and i think you're smelling pieces of that with cash for clunkers or deals confirming

because the prices are too attractive at this point for a lot of people who have jobs or money in the bank. >> lakshman, gentlemen, good to talk to you. >> coming up this morning, why paula abdul is quitting her day job and one big hollywood funeral is holiining out. undefeated professional boxer floyd "money" mayweather

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paula abdul is out at "american idol." the pop star judge writing on her twitter account that she will not be back for the show's ninth season.

she says she'll miss being a part of the show that i helped from day one become an international phenomenon. no word on if abdul was offered a contract to return. >> we kind of saw this coming when they put another woman on the show, right? >> the and they re-signed ryan seacrest. they know simon cowell is going to be expensive. they're going to have to manage their costs in some way, with don't you think? >> she was available when the show began. i know she did a lot for "american idol." i would posit that "american idol" did a lot for her career, you think? >> yeah. >> but now she's okay after nine seasons on the show. but i don't know, i would think that i would have found a way to stay, yeah, i would have. >> yeah. where always are you going to get that kind of math? >> she was definitely available nine years ago when -- you know?

more roll hiwood news this morning, paramount decided not to show g.i. joe to movie critics. it's unusual for a big budget film like this $300 million one. the studio is said to be bypassing the national press in favor of showing the movie directly to the heartland. >> why wouldn't you? >> because the green slime supposedly looks like he drew it on to the film. we don't care. we're going. >> really? >> yeah. we know the date that it comes out and we're -- >> even if the critics are likely to -- >> even more so. >> the kritdices of several popular internet fan sites were permitted to see the movie and all reviewed it favorably. are you going to go on friday or -- >> those who can can and those who can't criticize. theater critics.

>> joe morganstein is pretty tough, too. i like a lot of the movies he doesn't like. >> how did you -- they must have had that ready to go or something. it doesn't matter if there's a decent dialogue or -- >> fancy. >> very fancy. coming up, we will have more of the morning's top stories. "squawk box" will be right back. hi, may i help you?

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we're back. good morning. welcome back to "squawk box." i'm joe kernen along with becky quick and carl quintanilla. on the jobs front today, 7:30, the challenger job report. 8:15, adp polled economists are looking for a drop of 350,000 private sector jobs. then at 10:00, ism nonmanufacturing and factory orders. finally, at 10:30, weekly oil inventories, which as we know have nothing to do with the price of crude. >> every once in a while, you get a bump or a drp. >> lately, anything that they say goes up. you can see the momentum, see the money. follow the money. here are the reports of the day from proctor & gamble, polo ralph lauren, cisco and

prudential will report later this afternoon. >> let's get to the cme this morning. ira joins us to head up the day. >> thanks, carl. >> it's sort of a bit of a revisit to the last couple of weeks. in that, we're going to get a big dow component before the bell. expectations aren't that high for pg&e. but if the news is higher, there reason to restart the market after these past couple of days of mild trading? >> no, i don't think. we've had quite a run here so is there a lot of fuel? maybe we'll get up to the 1015 or 1015 coming off the resistance with those numbers. but yornlg it will go a long way

to do that. >> what is the feeling about what adp might say? >> well, you know, these are the critical numbers, of course. and as much as the nonfarm, which everybody has been focused on, this rate is probably more significant and, of course, the average workweek because that's where the real test is going to be because we've seen that go lower and lower. and the average hourly earnings, there's been no growth at all and these are problematic going forward because you're not getting any type of income growth as we saw yesterday. those numbers were terrible, but yet the market keeps slugging them off. the shorts really have a hard time here now that the s.e.c. has woking unto the short sale rules. going back to aig when people saw these stunning losses, it

was about six or seven months ago, i think there's less people lending their stock out there now that you cannot be a naked short seller. it's difficult to be short this market. >> yeah. and the journal points out today, looking at a ban on flash orders, is the feeling over there that the s.e.c. is finally getting their duck necessary a row or they're overstepping? what? >> you know what? i think that this is from my perspective only, so i have to be careful. >> okay. >> i think the s.e.c. views that they, too, are fighting for their lives here because their recent past history hasn't been that rosy. >> that's an understatement. >> and i think that some people see maybe a power grab from some other regulatory agencies into their bailiwick. so i think it's putting a lot of pressure on others to make sure that they're doing the right things quickly. >> right. >> gold up $40 in the second

section. is it more about the dollar or what? >> i think it's more about the dollar. i think we saw it yesterday when the finance minister of canada was busy trying to talk the dollar down and the u.s. dollar up. so i think the people see this. we've had is swiss trying to talk the swiss currency down, we've had the canadians talking the canadian dollar down yesterday. now we have others coming out saying, we're for the strong dollar and i don't see it when you really sift through all the real details. they have a soft dollar policy here because there are those who believe you can rebuild the u.s. industrial base with a softer dollar. that's absolutely right. we'll see if and when that hold and if it will come in the

future. >> thank you very much. our phil lebeau is in michigan today. are you there? i see you. good morning. >> reporter: yeah, joe. welcome to traverse city. >> thank you. thank you very much. >> this conference is always one of the largest gatherings in the automotive industry. for oki toyoda, this is his first appearance as president and ceo of toyota. oki toyoda comes into the united states in charge of a company that, for the first time in really about 50 years finds itself searching for how to come back. and coming off of its first annual loss that it's posted in many, many years, this is a company that akio toyoda is familiar with since it is his grandfather started the company. he was an executive at the

toyota and general motors plant in california for a number of years and he's very western in how he was educated and his view of the world. but again, he takes over after toyota reported a quarterly loss of $38 million. that was for the quarter that just ended. the head of the center for automotive research says akio toyoda is the right man to take over this company at this point. >> he's the right person to really lead into -- lead toyota into a much more dynamic period. i think instability is going to be a way of life. uncertainty is part of the future. and you need somebody that has the personal and the dynamic that i think he possesses. so i feel very positive about this. if i were a shareholder in toyota, i would say this is the right person for the position. >> and if you're a shareholder,

it hasn't yet forecasted how to come out of the latest slump. we're going to be hearing from akio toyoda, his first speech here in the united states is coming up at 8:00 here this morning. we'll be back with more on what he has to say about the future of toyota. toyota is number two in this country, retook that title from ford. they're neck and neck with ford essentially in terms of market share in this country. guys, back to you. >> phil, we've heard a lot about cash for clurpgers. what has the cash for clunkers meant for these overseas-based companies? >> it's been huge. it's been huge. think about this. of the ten vehicles that people are buying, the new vehicles that they're trading in their clunkers for, six of them are foreign models. four of them are from toyota. so -- or i say three of them from toyota. what you have is -- they're fuel efficient models not

surprisingly are in demand. so this is very official for toyota. the cash for lungers program, al of them are made here in the united states. >> it still would have been know, though, if we could have done it the other way. i would have raised cane, but that's a shot across the bow of pure protectionism. it still would have been nice. >> it's huge protectionism, joe, and i don't think there was ever any chance of that happening. >> no, there wasn't, but i wish there was. if you don't want them, then you don't get your $4,500. >> what are you, smoot holly? >> yes, i am. yes, i am, and i will run on a plot form to bring -- >> oh, the campaign has begun. >> phil, you missed it earlier.

joe was thinking he needed to be photo shopped into the tier that the senators belonged because he felt like he belonged -- there's the picture. >> there's the picture. i want to move that part up in -- but there's no room for me up there. but those look like my peers. you look like my children. well, not carl. not carl. >> i'm your eldest and becky is your youngest, right? >> we look like a nambla shot. but thankfully, becky is between us. >> you did make me get between you, too. >> i did. come on, put the girl in the middle. >> how appropriate that you were on the right and i was on the left. >> anyway, phil, thank you. we're going to be watching later today. appreciate it. if you've got any comments or can we go questions about anything you see here at squawk, and obviously joe is trying to get you to e-mail about some of his statements where the cash

for clunkers program shoo going. >> no. ask somebody in tennessee where they're doing factory -- >> but they don't need help. >> and my platform would -- >> a chicken in every pot? >> yes. >> if i have any comments, e-mail us. chloe is 9 months old.

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time now for a check on the news outside the world of business. and monica is with us, joining us with a roundup of the headlines. good morning, monica. >> good morning, joe. we'll start with police who are trying to police together what compelled a gun man to open fire on a pittsburgh area gym last night including himself. four people were injured in that attack. former president clinton and two american journalists are on their way back home to the united states this morning. clecht clinton won their release on one-on-one negotiations with north korean leader kim jong il. here is video for you. in israel, tourists taking video of some horses and boom, right into the car. drivers is okay, horse is okay, everyone is fine, but that is your video of the day.

can you imagine? what do you think ta -- >> no. >> what would that driver must have been thinking? >> i don't know. slowdown. i think the horse looks like he was paying attention to the camera shot over his leg. >> he just wanted to know if he looked big from behind. he was a little worried about that. he wasn't really focused. >> did that collision make my butt look big? >> yeah, and it did. >> at least everyone was okay. >> i can't believe you guys haven't been talking about this all morning, the "american idol" move. >> we did mention that. what do you think about it? >> you know, i think that as roker said earlier, who is going to bring the crazy? >> she said she did a lot for "american idol." i think "american idol" did -- she was available nine years ago, monica. i don't know. she may be available again. >> that is a good point, who is going to bring the crazy. >> you guys should have her come in one morning.

>> we had her on one night. >> that's right. but then we were subjected to leisman singing and playing the guitar. >> and i'm sure she loved it. >> she did. >> at the top, you said good morning joe. could you say it differently, could you see it differently, the good morning joe as opposed to the bad morning joe? >> i don't say bad morning joe. i say it good morning joe. >> but i'd like you to space it out, like here is the good morning joe. >> like the good witch. >> could you say it like that the next time, monica? >> well, i think i say good morning joe. >> oh, griffin is rights behind you. he's such a -- he's a micromanager. get away from her. thank you. he puts a stop to that, you guys. >> monica is like, this isn't comfortable. i'm leaving. >> i did it. i managed to do it again. >> how, how do you do that? manage to clear a set.

>> presidents of other networks. >> coming up, we'll get to the headlines grabbing our attention this morning. plus, we are waiting for quarterly results for dow component proctor & gamble. pampers, tide, think of a consumer product and they own it. we're going to get a unique read of the u.s. economy today. we've got the cfo joining us live in the next half hour. also, take a look at this man, who is standing by in the squawk board room right now. we're talking about famed economist david malpasse. he's our economist for the next two hours. stay tuned.yo st be looking for motorcycle insurance. you're good. thanks. so is our bike insurance. all the coverage you need at a great price. hold on, cowboy. cool. i'm not done -- for less than a dollar a month, you also get 24/7 roadside assistance. right on. yeah, vroom-vroom! sounds like you ran a 500. more like a 900 v-twin. excuse me. well, you're excused.

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a lot of places but two russian attack subs were detected patrolling the waters off the east coast in recent days. one came as close as 200 miles offshore. pentagon officials monitoring the sub didn't consider it threatening or provocative but it's very unusual given the weakened state of the russian navy and they hadn't conducted a mission like this in years, in years. so it is unusual but not provocative.

our vice president couple of weeks ago, we were reporting on that, these geese are like a third rate power. their economy is so messed up. >> the secretary of state came back a couple days later and said this is not -- ukrainian women are hot and the russians got no mojo is basically what he came back with. >> it does bring us back to that movie way before your time," russians are coming, russians are coming." russians not trying to invade got off -- >> belushi movie, 1941. >> we think more in terms of "red october." >> "hunt for red october" and i watched "red dawn." >> there's a way now --

>> before and after. >> there it is. >> a tiedown, too. >> for some reason reminds me of when damien grew up and -- looks too -- >> preordained. >> people start dying in strange ways, in danger when they are near you. >> that's the only thing that worries me. that's the one group of guys where i kind of look young compared to them. >> i made progress yesterday getting us closer together on health care. >> you did? >> i thought i did, yeah. trying to get people to cut to the chase. >> you get more and more delusional. i'm going to end up like paula abdul. >> you're already like paula abdul because you bring the

crazy. >> painkillers. >> unbelievable in china, a real estate bubble in the works. they keep having auctions for all this big commercial real estate plots. one company paid almost half a billion dollars tripling the opening bid. all this easy credit the government told banks to make available and local government get revenue back part of the sales, shanghai up almost double this year, already taking place. >> i've nev been. you've seen the cranes and highrises over there. it just pelosi your mind. what, 1,000 cities with a million -- >> two hundred cities bigger than chicago. >> crazy. >> it's over there. i hear it exists. >> might as well be on the moon. >> i have a campaign promise for you. >> you do? >> something you should come along with. you know how we've gotten used to lower and lower prices for tvs. >> big screen tvs. >> it brought consumers out. there's now concern this is

going to be a dimmer light in the future for consumers, because this holiday season you may not be seeing the big discounts we've seen in years past. turns out prices have continued to drop. you can get relatively cheap prices but tv component prices on the rise and supplies have been starting to run a little thin because people have been buying so many of these tvs. turns out this holiday season, thought is, retailers will not be able to offer deep discounts they have in the past. you might not get bargain prices. joe, this could be your campaign promise. >> big tv in every pot. doesn't sound the same. >> holidays will be good. >> i can't imagine you're not going to be able to be okay on a big screen. >> prices are okay but they are saying over the holidays. that may be a slowdown. >> help wanted, the job, "squawk box" guest host, qualifications, quick thinger, wall street

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the final countdown rolls on this morning. we're counting down to friday's government jobs report. today a preview whaf to expect. the most recent data and challenge grand christmas read on who is hiring and firing. >> consumer products giant procter & gamble from tide to pringle we have the numbers and the company's cfo. >> the jetsons meet main street.

♪ george jettison >> the electric car is quickly catching attention from consumers. we talked to one venture-backed fund that wants to make charging stations as easy as gas stations. we're charged up and ready to go as the second hour of "squawk" begins now. ♪ >> good morning, everybody. welcome to "squawk box" on cnbc. i'm becky quick with joe kernen along with carl quintanilla. we've been watching the futures. after many, many days of gains there was tepid gains yesterday. you're going to be looking now at futures above fair value. not by a whole heck of a lot. right now up by 9 1/2 points a lot of stories we're following this morning. citigroup selling 20 businesses in consumer finance. many of these businesses are located in europe. the ceo says the move was due to a shift in the consumer finance

market where he says there is less funding availability. "the wall street journal" reporting treasury plans to ramp up sales of bonds to help fund the nation's growing deficit budget, china is largest holder of u.s. government debt. it's saying among investors it would be interested in buying more of these securities. on the economic agenda coming up at 7:30 eastern time, the challenger job cuts. at 8:15 adp numbers. those are very important because it could give us some indication as to what to expect friday when we get that big jobs report, economists when it comes to adp looking at a drop of 350,000 private sector jobs. >> procter & gamble out, ahead in fiscal quarter sales, $18.66 billion. light. there were challenges for the year. they sold folgers to smucker.

the estimate for fourth quarter -- they must mean first quarter, i think. they are talking about -- i think that's a mistake. fourth quarter 95 to $1, next quarter which is the first quarter. this the fourth quarter. the stip is for $1 for the fiscal first quarter of 2010. i think they are saying 95 to $1. the writer said -- >> let me take a look. >> i don't know if it will be in there. >> they just finished their fiscal year. >> that's above, revenue below. we're going to talk to cfo of procter & gamble to ask questions. one thing that helped was lower commodity prices. one thing that hurt was the global -- the dow was not quite as bad for currency translations but the global recession, people

trading down, other product levels. former bear stearns chief economist, david, it's good to see you. can you believe this ramping up gdp estimates based on clunkers of that's so weird, isn't it? that's bizarre. it's working, no. >> it's working. the government borrows money and gives it to people to buy things, one could wonder if economy is working. it will encourage some production. it can't last -- you know logically that can't go on very long. for one, people will run out of clunkers. also they are just selling something that actually had value and the government is not getting full value for that that can't be positive if you're

taking old cars and pouring the destroyer into the engine. >> compared to other stimulus programs, we've got 780 earmarked for something, billion. it might as well be this. at least we get something. we know what most of it does, ig falls through the cracks. >> i agree.çg if you think about the  multiplier of stimulus negative two percent it's positive one percent. >> is it positive it primes the pump. people think, wow, i'm really driving a beater. >> i don't think. you shift from future sales. you would have sold them sometime. what it might do is build confidence. one of the problems in a growing economy is people lose confidence in the government, in themselves, in the small businesses, and they stop investing. if this causes people to think that the future is brighter,

that will have an impact. i'm not a big believer in that. i think the government has to do constructive program rather than ones that aren't as bad as the last ones. basically you've got a pattern of less bad economic data but also less bad government programs meaning this isn't as bad as t.a.r.p., so are we going to be happy. >> david, some people when we talked to mike jackson from auto nation, the good news is it gets consumers to come back in the showroom. even if they don't qualify, a lot would make purchases anyway. what it did do was jump-start traffic into the showroom. you know what happened september and october when consumers stopped spending. is it a good news scenario if it gets consumers to start thinking about it again. >> it will shift demand from anything to autos. you're not in the refrigerator showroom, you're in the auto. it's good for autos.

is that how we wan to grow out of the recession, get the government to give a big subsidy to buy a car. let's do it or lawn mowers or tractors. >> you said grow out of the recession, you mean the recession we're out of. >> we're clearly coming out of it. whether in the end they will look back and say they ended in june. it's arbitrary end date. numbers are less bad. industrial production might be positive in the third quarter, which would be, you know, a step in the right direction. >> part of the consumer's willingness to spend comes from their belief that the problems are abating, right? >> yes. >> to break that spell is $2 billion a reasonable price to pay. if we can see the recession is over, that hits headlines, equities are up, people feel

better about buying not just a new car for cash but a new refrigerator. can we break the psychology. for that are we getting a bargain. >> no. economic data is clear that it gets you to buy that product. if the government is giving awe great deal on a car and you have an old car in your garage, you take that deal. but it shifts demand from something else. so on that it's not going to work. >> you don't think the multiplier affect from rebounded manufacturing that leads to dealers, their employees, that leads to generally better attitudes about the economy isn't going to help? >> no. i think it's going to come from small businesses hiring people. when you hear your neighbor got a job, that's where confidence comes from. this cash for clunkers doesn't do that. towns that depend on their auto dealer, it will help. there's a little bit of that. in most of the country there

aren't auto dealers. >> is there a possibility that joblessness could peak at a lower level than we thought? >> not because of the cash for clunkers. >> anything on gdp make you think that? >> no. we're going through a rebound in manufacturing, but at the same time remember services are still going down. people are shifting their demand from services into these manufactured goods. so i think we've still got rising unemployment. the easiest number to look at are jobless claims every thursday. they are running 580,000 per week. this is a devastatingly bad -- >> when should we feel better about weekly jobs. >> convincingly below 500,000. it's probably going to do that in the third quarter. but you really get into once jobless claims fall to 400,000 and you see the idea of jobs

grow, you've got a better economy. remember in 2003 you didn't get equity gains until, a, washington cut taxes in a convincing way and job growth started -- actually had gone in positive territory. we're just a long way. look, i'm an optimist. the u.s. is a great country. small businesses actually do work. the problem right now they are not getting credit. the government is not doing anything that gets us in a forward direction. >> we're going to talk more about this. i want you to think about how you'd answer, is the government net neutral on this affect on small businesses right now? are they actually doing something to them. some of these programs -- i know the chamber of commerce is about, cap and trade, health care, raising taxes, they might like that. but some of these macrobig -- these transformations not even. >> doesn't look that positive

for small business or job creation. >> that's right. they are hurting. >> all right. we'll talk more about that later. you might offend some people. >> watch out. >> watch out. >> meantime, energy, 58 cents a share, wants to you take out items, well above analyst estimates. first on cnbc from devin's headquarters in oklahoma city, larry nichols, devin energy ceo. larry, welcome back to the program. good to see you again. >> good morning. >> production awfully good. i guess the pricing is still problematic, is that right? >> gas pricing is problematic. oil pricing has come back nicely, substantially over the first quarter of this year. in fact, our gain in oil prices more than offset the decline in gas prices, shows one of the advantage of devon is the balance we have between oil and gas. as you said the real story is production growth. we hit a record high of our company of production growth. to do that at a time when we

have slashed our budget in half, budget for drilling, we're delighted with that result. >> how long can you keep up that trajectory for production. >> we don't intend to keep it up very long. we know gas prices are weak. we're going to actively retrain gas production, not putting as much money into that. gas prices will cover going into next we're and we want to be poised to take advantage of that, which is where we'll be. >> where do you see oil going in the months to come. people want to talk about $70 as being some kind of resistance level. do you agree with that? >> it's hard to say. $60, $70 is a good number. it might do a little above that. i don't think it will during the rest of the year until the world gets out of the recession. but that's a good number for devon to work with. >> are you feeling when you mention recession and some argue how we're coming out of it, that's clearly becoming the consensus view in a hurry. are you on board? >> well, we see the decline

stopping but we really don't see much growth in natural gas consumption in the united states. natural gas is used to make so many products we use, you'd think we'd be seeing it. natural gas demands from the industrial sector is not rebounding very much, if at all. >> speaking of which, the cftc is trying to get a hold on some of these speculators. there's testimony today that argue, in fact, pension funds, other investors should be bard from trading these things just because of the volatility they bring to the futures market. that is a reasonable argument. >> well, it's always easy to blame unknown hidden nameless speculators for problems. we look at it as basically supply and demand. it is a volatile commodity but it's volatile because demand is volatile. recession has caused a huge amount of volatility. but if the government would allow these markets to work,

natural gas production is coming down. regardless of whether you think the recession is going to end or when you think it's going to end, natural gas prices will be in balance sometime this winter. not because of an increase in demand but a decrease in supply. as we stop drilling, supply will come down and keep coming down until it finds that equilibrium in prices. that's where devon wants to be well positioned, as our oil properties continue to do well, gas properties are poised to rebound and grow next year. >> you might have heard joe mention cap and trade and climate bill and so forth. some articles written about the amount of money. you and your competitors spent lobbying on the hill over the past few months. it's obviously going up. do you feel like you're getting money's worth, cap and trade as we know it, the threat of it may be abating? >> cap and trade in theory can be a very straightforward bill. but the way -- because of the

house, it was a feeding frenzy for every special interest group to go in there and plead their case. as a result coal industry, corn-based ethanol industry, those fuels that are not our cleanest burning fuels tended to win. cap and trade really does little for the environment. it's a huge tax. $1.9 trillion by white house investment, a tax on the american people. and that makes no sense to do that in the time of a recession. >> larry, good to talk to you as always. good quarter. congratulations. >> thanks. >> from oklahoma city. >> all right. if you have any comments or questions about anything you see on "squawk," go ahead and e-mail us, "squawk"@cnbc.com. futures hanging insofar. in line with fair value when you look at dow futures. still to come this morning, though, there's going to be plenty of things that can move the market, including what you can expect from add report on jobs. up next products are found

in virtually every household across the nation, toilet paper to dog food to toot paste. ceo of procter & gamble next on cnbc right after this break. >> time now for today's aflac trivia question. which american president weighing in at 330 points and 6'2" tall was known as big bill? the answer when cnbc "squawk box" continues. you really need it these days. how come? well if you're hurt and can't work it pays you cash... yeah to help with everyday bills like gas, the mortgage... ...and groceries. it's like insurance for daily living. so...what's it called? uhhhhh aflaaac!!!! oh yeah! that's it! aflac. we've got you under our wing. a-a-a-aflaaac!

which american president weighing in at 330 pounds and 6'2" tall was known as "big bill"? the answer: william howard taft. >> bill clinton was 6'2". he didn't way 330 pounds. he loved mcdonald's. big bill walking tall after developments yesterday. >> big bill. all right. procter & gamble out with latest quarterly results. earnings per share, to use a nongaap number, three or four cents ahead. the number reported, company's cfo jon moeller joins us on

cnbc. jon, thanks for joining us. i'm looking at some forecasts for next year. bottom line numbers, i don't know if you've made previous forecast but numbers are in line with where the street is. organic sales number you're giving, flat to down, is that new? >> that's for the first quarter. that's not new. organic sales estimate on the fiscal year is one to three, which it's pretty much in line with what we deliver this fiscal year we cleted which was plus two. that's entirely consistent with current expectation. >> used to be three to five when clayton came on. >> that was a different world at that point, as we all know. >> that's what we're talking about with the company. commodity prices a tail wind for you. the dollar wasn't as bad. what were the head winds? the move to the trade down we've

heard about so much? >> there are really two head winds on a year on year basis. fx is a stiff headwind in the quarter we completed and will be in the first quarter next year. as well we continue to see market contraction in some of the more discretionary categories we compete in like fine fragrance and salon hair care. both from consumer standpoint broadly and macroeconomic stand points and fx there are still significant headwinds. >> the shortfall on the revenues, where did the analysts miss it? it wasn't a forex shortfall. was that on hair car products. >> organs two to three we delivered two. we were on on that. forecast for the quarter was flat to three, we missed by one point. that's primarily due to price gaps that wyattened some of the

competitive set and that's obviously something we're currently addressing. >> will you change your long-term view of what businesses -- the luxury goods area. will you from here on out sell things that maybe aren't quite as expensive and try to have more volume, unit sales than price. >> i say a couple things. as you know, we're a very old company, just completing our 172nd year as a company. we plan to be around another 172 years. we think very much in the long-term. if you think in the last 75 years, 25 of the 100 have been characterized by some sort of recession. 75 have been characterized by expansion. as we design the portfolio we're designing ourselves as successful 75% of the time and not 25% of the time. having said that, we're also very focused on improving the lives of consumers all across

the world in all price tiers. so we're significantly increasing the number of lower priced offerings that are available to consumers. >> another ceo that started at p & g said this is not a recession, this is a reset. i wonder if you reset your expectation for the luxury goods market based on what you see? >> again, the luxury good market is a relatively small part of our business. if you look across the broad consumer space we compete in we conducted a survey with consumers recently. it's crisis and form. almost half, 45% of shoppers indicated they are currently placing priority in our product categories on performance over value. so that set of consumers is still going to be paying a premium for better performance, and that's why innovations like i-phone, blu-ray, sirius radio continue in this recessionary

environment, tide total care, fusion, always infinity -- >> prices are coming down not going up. sony introduced a new e reader today that's $100 cheap are than the kendall. even in those high sectors we're still seeing inflationary forces. >> we'll continue to offer as good a value as we. consumers define values across multi-variants both performance and price. we're focused on addressing both of them. >> you know, jon, are you kind of telling us what we're hearing about the consumer trade down is overplayed. you don't see it in the reality of the numbers. >> there's some tradedown. you have to put in perspective. last quarter private label sales were flat. there really isn't a huge movement. >> beauty is down 4%. >> that's a very good example.

tradedown and beauty is something we benefit from, because consumers are moving out of department stores into mass channels. so it's not a single variant equation as we look at our strategy going forward. >> can you tell us about the nfl deal, jon? >> tough products for tough players. there ought to be some real synergy there. >> yeah, you're right. so locker room-type stuff. talc, deodorant, extra strength? >> a lot of our products are used in nfl locker rooms and bathrooms all over america. >> it's in the news today, that's why i brought it up. is it material to earnings or sales? >> no. >> okay. all right. something -- gives us something to talk about jon, thank you. appreciate your time this morning. >> see you later. >> still to come on "squawk" this morning, breaking news on

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♪ take a look at some stories making headlines now. procter & gamble as you heard, shares fall lower following company's quarterly earnings number. the numbers beat wall street estimates by a penny. but as joe said the revenue was a little light. mortgage bankers association says mortgage aps rose 4.4. average 30 year fixed fell to 5.17 as compared to 5.05 a week before. meantime a look at futures, tight range although slightly above fair value. asia had a pause overnight. nikkei down, europe mildly positive for most of the morning. nothing like the triple digit gains we were seeing as earnings season kicked off.

remember that? >> we have seen big gains. people say momentum slowing down, people waiting for a turn, at least waiting for the next inflection point to see which way it will push. one coming up when we get the job number friday. we are getting hints of what to expect. what we're hearing at 8:15 is the adp number. that will give us some insight as to what to expect. >> david, we had economist from ubs earlier in the week and i said off the cuff, what's the best case scenario you can imagine for friday's number. he said it's possible we're getting into the area that a positive number would be in the realm of crazy deviations. >> remember, it's a small survey of a big universe there's a lot of noise in it. when you say, what's possible, you could have a positive number. that's not what i'm expecting. >> other indication is challenger gray and christmas. latest reading on jobs just

coming out. here to talk more about that is john challenger. he's ceo of challenger, gray and christmas. planned job cuts looking at increase of 30%, this is the first increase in monthly job estimates since january.@ what's this telling you? >> well, becky, it does say that the job cuts certainly have not@ disappeared, were not the level@ we were last year, down 6% from@ july a year ago.@ we're off the average for this @ year, up about 135,000.@ 97,000 not bad.@ it doesn't say that cutting of @ jobs or laeg off on the part of companies in any way has @ stopped. this economy is still under @ pressure.@ that means many employers are still being forced to push people out the doors. >> back in june your survey shows it was a 15-month low for job cuts. that gave a lot of people hope thinking we were coming through@ to a bottom.@ does this negate that idea? >> i don't think so.@

it certainly is up off that @ bottom. that is one of the reasons for the 31% job.@ we're still on the decline certainly from the big job loss numbers we saw in the fourth @ quarter, first quarter of this year of the economy.@ it's still continuing to get slowly better, but certainly from a job standpoint we have a long way to do. >> john, david malpass. do you have color whether small business or big business is planning layoffs? >> it's the big businesses that cut most of the jobs that you see in the headlines.@ small businesses are responsibl@ for the job creation, much more@ nimble. the industries where we're starting to see some strength, certainly health care and @ education, we know that's been going on.@ retail they get ready for the season, we are seeing more higher end. >> retail, there are other area@ where you're saying higher end as well. >> those are really some of the@ areas, again, aerospace saw som@ hiring in this latest monthly @

report, but the big area right now is get back for school @ season and that means retail. >> where are big cuts coming in@ july. >> interestingly the cuts -- th@ usual suspects of this @ recession, automotive and finance weren't really anywhere to be found, just 2700 cuts fro@ automotive. we are moving on to new areas.@ now it's about transportation for 27,000 job cuts as consumer@ cut back on spending, businesse@ on transportation, followed by telecom, which also saw heavy layoffs in the month. >> what happens in the month of@ july for telecom?@ what were some of the -- >> telecom was led by versus.@ over 17,000 cuts, big cuts ther@ as we see the shift away from traditional telecom to wireless technology. >> john, you haven't mentioned government. they are a big hire.@ do you track them? >> we do track government.@

they are also a big cutter, @ though. the government is under @ pressure. the third leading industry fourth year in terms of job @ cuts.@ so all of thetates especially @ and local its right now, not washington, d.c., that's a @ growth area with the new administration coming in. there's a lot of retirements going on in washington, d.c. @ which is leading to replacement@ hiring.@ but state and local government under pressure to balance @ budgets, cutting jobs and programs and that certainly is a big change going on this year. >> john, thank you very much. good to talk to you. see you again next time. >> thank you. >> comments or questions this morning, we'd love to hear from you. address is squawk@cnbc.com. still to come on "squawk," jobs, jobs, jobs before we get friday's big government number we have challenger which we got. adp ahead in 45 minutes time. stay tuned.

the senior economics reporter steve liesman fishes for answers facing washington and wall street. "squawk box" friday from grand lake stream, maine. mr. evans? this is janice from onstar. i have received an automatic signal you've been in a front-end crash. do you need help? yeah. i'll contact emergency services and stay with you. you okay? yeah. onstar. standard for one year on 14 chevy models.

all right. welcome back. we are watching futures above fair value this morning. in fact dow futures up 20 points above fair value. for more on the markets this morning we're joined by lincoln ellis, standing by. today is our guest host david malpass. lincoln watching futures hang in there. just got jobs numbers from challenger report. we're waiting. just a little while to get that adp, inside on jobs number. what's the market set up tore? >> the market a little overbought here, a lot overbought, anticipation of this jobs bonanza. jobs report starts to shed light

into some rather dark corners as we move to the middle part of this year. we got through the first quarter or so of '09 knowing what the headline numbers and layoffs are going to be. now we're coming through the middle part of the year and seeing, in fact, i don't know that john alluded to it, i do think joe's question earlier is right. middle and small-sized businesses are having to make a second round of cuts. those cuts good morning to have long lasting affects into the economic growth people are expecting. not so much in the third quarter but in the fourth quarter. so the market will tread very lightly here as we go into these three days of job numbers. >> david, how do you put this all together? >> one problem is the personal income slowdown, so we've got fewer people working and pages are coming down. so even though the cash for clunker can get people to buy a car, what it can't do is give you income you need to really

make longer term purchase budget decisions in the family. we've got after all nearly a 10% unemployment rate. i think it's going to take quite a bit of time. of course that's consensus now. so equities have the issue of this lower revenue growth. you know, it really should be quite a concern that each company is coming in with better earnings but less good top line growth. >> right from cost-cutting measures. >> that means they lay off workers whose income go down. you need to bring into the equation the income loss for those workers. that goes with the income gain for the corporation. clearly that's not a sustainable growth program. >> the other point we've talked about this week, watch the hours worked. weekly hours have been coming down to about 33, which is an incredibly low number. if you start to see that tick higher, does that tell you that companies could be poised to

start hiring again? >> yes. that would be good. except this week we may see that the auto companies, one of the big factors in the hours were what was going on in the auto industry. so i think there might be an uptick. people should rightly take that as good news. auto companies making more cars this quarter. in order to have people buy cars in the next quarter, you have to have small business job growth. that gets into government taxation. we're basing already on the book, the law in 2011, we have the biggest tax increase ever because of the expiration of the bush tax cut. so that's basically small business because they all pay that. many small businesses get the top marriageal personal income tax rate. that just means you're going to hire fewer people, buy fewer machines. >> david, thanks very much. david will be with us for the rest of the show. thank you for joining us. >> when we come back, housing

market looks like it may be bottoming. what about commercial real estate? we're going to hear from ceo commercial real estate company plus ceo of office depot on results. talk about back to school season shaping up to be good or not. >> when we come back, the picture of the electric car. one venture-backed firm wants to make swapping batteries as easy as swapping a credit card. charging stations as easy to find as a gas station when "squawk box" returns.

serious questions you deserve real answers

nation of electric cars would cut down on gas and pollution but where would you charge up all of those cars? our next guest may have the answer. joining me, head of oil independent policies for the venture backed firm. good to see you.

welcome to the program. we profiled you in israel a few years ago looking at this idea having electric vehicles supported by infrastructure in a company that small where you could pull into the gas station, replace the electric battery and be on your way. this new mini part of that plan? >> it's not part of this plan. this is a program bmw has putting electric cars in the hands of real consumers. i'm lucky enough to be part of that program. the better placed cars will not only be able to swap batteries, we're putting in denmark, other countries, there's a plug in every parking lot. >> bmw has these things. give us specs, mileage, acceleration. >> the acceleration is more than the ordinary mini. >> the ordinary mini has a reputation for having a little -- it's a good car if you have a leadfoot.

>> yesterday i was on the highway and buzzed by a regular mini. 100 mile range on the battery. it drives terrificr terrific. quiet, clean. >> there's a fast charge unit, about four hours. overnight you get a full charge and ready to go. when better places are out there you'll be plugging home, downtown, retail, like a contract with chevron every time you leave your car someone tops you off. >> ability and pricing. someone wants to get ahold of these things, are they all spoken for. >> overspoken for. i was lucky to have one. >> say one were available, what's a lease run? >> the lease that customers here are paying about $850 a month. but it's somewhat misleading, a better place we think the electric car will become the cheaper car.

less oil and reduces carbon emissions. joe thinks carbon emissions are a good thing. bad thing is it will be cheaper to run. our cars will be significantly less on operating leases. >> carlos thinks eds could be 10% in basically a decade. >> he's really a visionary in the auto industries, renault, making compatible. >> can you hop in and do a circle and show us whether or not this actually -- it's hard to demonstrate pickup in the parking lot. >> you want to join me? >> i don't think to run over the cable. >> we'll try not to run anybody over. >> here we go. doesn't make any noise obviously because it's electric. >> exactly. >> hold on, brother. geez. we're going to slam into the side of the building. very nice. >> it really does work.

>> i think about seven seconds on this. >> really? >> 0 to 60 in under four seconds. electric cars can perform just as well as gas cars and are cheaper so that's why they are the future. >> cd player, all the accouterments, right, all the toys of the regular mini. >> absolutely. >> for those who would be interested, how long before these are available on the mass market level? >> that's a good question, really a question for automakers. they all have electric car programs. the key is separating the battery and the car. not just so you can do switching on a long trip. we'll buy all the batteries and electricity and sell miles to the consumer. that's the model under which it ends up being less expensive or at least -- at a maximum at par to operate an electric mile. paying us less per mile for gasoline. >> i think becky and joe might have a question. >> most golf carts they have the

little place in the back where the golf clubs go on. where do the golf clubs go. >> there's room for the clubs. >> that's a car. >> it's a real car, joe. >> you guys are spending a lot of nasty co2 talking about. it's the carbon footprint we're worried about now. >> the interesting thing is when you cut carbon emission from cars, 25% of the emissions. if you do it on a mass scale and connected to a smart network, which is what better place is building, allows you to use those cars as storage where intermittent renewable electricity for wind and solar. we think electric car is enabler for renewable electricity revolution. >> real quick, is the electric grid ready for hundreds of thousands of americans to plug in a car overnight? >> it's ready for millions of americans to plug in a car. the key is to have a smart network. that's what we're being at better place. israel at this, they found if

it's plugged into not just a regular plug but one that communicates with the control center that determines how many cars are plugging they don't have to add an ounce of capacity to run all the cars in israel. >> carl, what does it feel like? >> we have a crane going by. >> what does it feel like when you're in. >> it felt like a real mini. i've been in a mini a couple of times and it didn't feel different. >> except no noise. >> no noise. >> better place. >> we look toward to putting charge spots in all these spots here. >> joe, becky, you guys get one, you can still park in the handicapped park. >> if you want to drive to washington, you can get there in four days. i don't know. >> that's until we put our battery switch stations in. >> okay. >> guys, thank you very much. carl, we'll see you back in in a second. still to come on "squawk," counting down to big data. adp report, due out shortly.

the markets will be watching. we'll bring you the number and instant reaction. plus he's back from washington. president with stocks to watch holding a key hearing yesterday with key senators. today he's back at the oval desk and he is working making money. 

take a look. 66 members. the producer of this hour promoting space book animal appreciation page. >> started it. >> started it. are you one of the 66 that have joined? >> no. no i have not had time. been busy. >> there's still room to join. let's look at some of these. start with procter & gamble. we had the cfo on. tried to figure out exactly what was happening with the lighter than expected sales, because the stock is going to be down a little bit today as you can see there. traders, investors, somebody was not thrilled with something because the fourth quarter number was above expectations. it may be this.

according to some wire service, 7 to 10% drop in sales that has been forecast. the street was at 7. a 7% drop. maybe widening the possible range for the sales drop over the next year over year, maybe that had something to do wit. for whatever reason, it's a tough environment p & g is operating in globally and a lot of consumers trade down to less expensive items. second quarter net of 33 cents in line with expectations, revenue slightly below at 2.63 versus 2.76. dean foods reporting second quarter net of $0.43 cents a share. third quarter $0.34. second quarter net of $0.83,

expectations of $0.51. can you see what happened with that stock. trading up $6 to $0.34. devon energy reporting $0.85, had the ceo on, expectations of $0.59, much better than expected. they are doing -- even though natural gas down much better in terms of oil. rr donnalley $0. 34, last on the list. above expectations of about $0.31 and revenue slightly below. >> a lot of stuff coming up this morning. we have been waiting for adp report, last hurdle of the jobs finish line friday. we got the adp unemployment at 10:15 eastern. in the boardroom, barry gossett, one of the largest independent commercial real estate firms. we're going to find out how the economy is treating his business next right here on "squawk." >> you're watching "squawk box"

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breaking news on the way. another snapshot of the labor markets ahead of friday's jobs data. adp employment report is minutes away. "squawk" has the numbers and instant reaction. riding the bull, avoiding the bears. pimco's new guide has today's strategy section. >> hey, folks, on me. shakespeare for everyone. >> back to school. that's right, parents. it's that time of the summer. will retailers pass this early test? the ceo of office depot on the back to school jitters. "squawk box" begins right now. >> welcome back to "squawk box" here on cnbc, first in business worldwide. i'm becky quick along with joe

kernen and carl quintanilla. senator kernen's two pages. >> couldn't they make this like l.a. -- >> they made my two pages. >> our guest host is david malpass, founder of encima global. adp report will be the last report to show us some indication of the jobs market before we get the official government numbers come friday. right now dow futures are right in line with expectations. it has been a real push back and forth morning. we've watched the market. this huge momentum we saw through the entire month of july trying to figure out whether to continue to forge ahead or pull back. right now futures in line with expect as. we do get jobs report in less than 14 minutes. >> procter & gamble earned $0.80, ahead.

revenue fell short of consensus. we had cfo jon moeller on on "squawk" and this is what he said. >> our organic sales estimate on the fiscal year is one to three, which is pretty much in line with what we delivered this fiscal year we completed, which was plus two. that's entirely consistent with current expectations. >> stock is lower, forecast down seven to ten. stocks coming back. this is a company that in recession you think is going to fare well because of inelastic demand globally for products. there's always a wild card. in this case people can trade down, maybe not buy the more expensive personal care products, detergents. >> they did make gambles on the upside when times were good. >> exactly. with higher end. not like -- i don't know this

stuff, hand cream, nivea. >> talking about clinique, you've got bobby brown, you've got all the department store brands. when consumers get squeezed they may not pay $30. >> whitney houston's husband? >> a different bobby brown. >> you trade out of the department store and go to the drugstore to buy lotion, $10, $12 instead of $30 or $40. >> wouldn't buy from that guy. he's a nut case. he's not a nut case. i like him. trading day, ubs financial. arthur, maybe now we get some sideways trading and maybe a correction. just goes with the energizer bunny. >> rallies, pauses, rallies again. not much of a pullback. even if the soon to be bulls looking for an entry point have

been denied that i think has given extra life to the rally. we are clearly overbought here. the s&p is up again, very serious resistance from 1,007, to 1,020, then 1,050, everybody is looking at. you've got to think they are entitled to a pullback. next several days will be critical. >> i want to know has the 7,000 dow train left the sfags? maybe you'll say yes. has the 8,000 dow train left the station? >> i think the concern here, joe, among the skeptics is naturally could consolidate here or even move further. as we move into the fall, there may be the realization that this whole thing was not sustainable relative to the economy. it's all based on government stimulus. you take the clash for clunkers routine. there's anecdotal evidence that not only is the government

borrowing to give you the $4500 but you're taking in a car that was not very efficient but fully paid off, nonetheless, and incurring an auto loan to get that $4500. the debt is spiraling up again and that may come home to roost in the fall. >> all right. appreciate it, arthur. see you probably again this week. >> our next guest, head of one of the largest independent commercial real estate firms. if you want to know about commercial real estate in this country you have to talk to barry, ceo. he joins us with our guest host david malpass. good to have you. >> good to be here. >> anyone who is a bear and trying to build a case why rough times are ahead, point to commercial first. are you in that camp? >> well, starting with the good news is, a little better than the first quarter. at least businesses are more

competent to make business. leases are signed, rents are significantly lower than where they were. that's pretty good news. pretty bleak first quarter. but the banks have an enormous amount of assets still on their balance sheets. there's $4.5 trillion of this stuff that's out there. the question is what's the impact and the declining values, rents, different underwriting standards. most of this stuff out there isn't really qualified to finance. >> you think that is the question, how do you refinance this market? well, it's a a real problem. it's a problem in the fact that in addition to real estate, banks are concerned about consumer lending, revolving credit. with everything assaulting the banks, her still hording cash and they are not going to easily

roll over this loan. the loan to value ratios that they are using now are far lower. the coverage ratios are significantly higher, with declining rents in the marketplace, an enormous amount -- there's going to be an enormous amount of turmoil, real estate at the beginning. >> so what happens if they can't get loans to refinance. what happens in the market? all this stuff get dropped back on the market? >> really a lot depends on what the government does with respect to rules, how they allow special servicers, might take some of this back to play with the owners, keep the owners in place and wait it out. there are many cycles where some of the unregulated passengers were able to hold onto their assets for a period of time. after a few years earning money they put these assets back on

the market and they came out whole. the question is really how quickly will this adjust. when will rents come back? when will cap rates reduce? when will the fear be out of the market? part of the problem in the real estate market, fear is a more powerful emotion than greed. if you control greed to a certain extent but you can't control fear. >> self-preservation. >> i'm hearing also the terps of the loan, could get a bank interested in some kind of rollover, they ask for bigger guarantees, personal guarantees, a whole different concept of loans for the next round of financing. >> yeah. this is a classic case of the baby with the bath water. the guys that actually did a good job and were very conservative in the early part of the decade, financed 50, 60 pours loan to value, if you have a declining value of 35 to 40%

and originally you finance at 75% loan to value, you're already -- the loan is already impaired. so it's now under the present underwriting, stingyness of the banks, financing at 50% loan to value, really at 35%. the guys who did a conservative job and have to say who is going to finance it, they are either going to have to go to med lenders, have to get money from other equity sources and solid real estate guys might be squeezed by guys who have equity come in bridge the gap to what they could finance in this market and what they need to raise in equity. >> so basically your take is, though, somewhere in your notes, the market was disconnected on the way up and will be disconnected on the way down and we have not begun to feel that yet. >> the market, rising rents were never connected to real demand. values were driven not by

underlying demand. they were driven by liquidity, cap rates, desire to invest in real estate. on the way down, our view is that the rental market has relatively stabilized. how far do you go? >> stabilize? what's their levels. >> some of the cities where you had a tremendous run-up, 50%. the rest of the country where rents are lower, 15 to 20%. so when you look at that, the rents have set but now what's happening on the investment side. the investment side is trailing because we're just going into that black hole of how do you deal with all this value, how do you get the banks to open up. >> how are you going to make money in that kind of market over the next five, ten years? >> well, you know, there are always opportunities in bad times. we offer advice to special

servicers, managing assets, managing relationships with creditors. property manage. i think there will be opportunity to buy debt. smart people will figure out how to make money in this market. i would bet on wall street again to be back in the game. they are all lining up. everybody has a fund, stress fund. so it will be interesting. >> barry, we hope you'll come back. we have adp coming up otherwise we'd talk more. >> good to see you. >> we're going to take another step towards jobs data, adp that employment report will be released in a few minutes. we'll have that number live. we'll get the instant reaction in the market. "squawk box" will be right back. tdd#: 1-800-345-2550

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all right. we are just moments away from the report we've been waiting for this morning. the adp employment report. we've been watching those futures ahead. right now the futures are up by about 16 points above fair value. anything could happen, though, because this is one very good indication of what we could be seeing come friday when we get the government's official job

numbers. right now, let's get to steve liesman, he has the numbers of the morning, adp report, steve. >> private company adp estimated the government will show this friday a decline of 371,000. they revised by the way june of 463,000. let's put this in context, economists or consensus of economist government plus private did he fault by 467,000. this is about half of the worst number that we've had, which was march for adp minus 738 and the fourth month of improvement. in this number, it's still way down, still forecasting big job losses in the economy. as i say, half of the job losses we had in the worst of the recession which was march. joining me, mask advisors. no one wants to be happy when you're forecasting these job losses but put it in context.

>> the adp report shows losses across all job categories, across all firm sizes. that's a continuation of a trend we've seen. as you've noted already, the good news is the pace of job losses is slowing, down 371,000. be great if we do a little better. it was close to what the consensus numbers were out there ahead of this release. it does suggest that total employment losses, that is including government, will probably be in the range of down 350,000 for july. but we are on track from those big job losses that we saw earlier in the year of over 700,000 to something that is going to dwindle to close to zero by the end of this year, early next year. >> start with the categories. i don't see any particular difference among the decline of job losses of the small, medium or the large size. they all came down about the same. so the improvement we're seeing,

looks like it's across the board here. >> that's right. you know, the good news is pretty much widespread. the bad news is pretty much widespread. at this point we're not really seeing any differentiation of any significance across the categories either by firm size or by job type. >> but when i look at goods producing versus service producing, the goods producing has been incredibly hard hit. they improved. >> this is reflecting slowing job losses in the manufacturing area. we know that sort of early straws in the wind we're seeing the economy is putting in the bottom have been centered around housing and manufacturing and so we would expect to see that if there is an area that's going to show more buoyancy in the near term, it would be in the manufacturing sector. that's probably where we will see the first upturn in employment. that could be still even in the second half of this year we might see a positive number in the manufacturing category for a

month or two. >> david. >> oftentimes we see an improvement in temporary workers to help lead, so companies call back some workers temporarily. can you get any pickup, any sense of that in these numbers? >> not in the adp report. we don't have those temporary service, breakdown by type of employment whether permanent or temporary. >> hey, chris, i'm looking at a chart here of job losses month to month. and the letter it looks like to me, david, tell me if i'm wrong, what letter is that? >> looks like a v. looks like a v. that would be the pessimistic way to look at it, carl, if you're really going to strive and look for the alphabetic pessimism. right now without the extension that carl is putting on it, it's

a v. dare we hope that we might have a rapid jobs recovery, chris? is that just lunacy. >> i wouldn't put it in the category of lunacy. >> we've known each other long enough. >> i think what's important here, when we talk about the alphabet soup of the shape of the recession recovery episodes, i think we can sometimes get confused about whether we're talking about the level of output, level of employment versus growth of output and growth of employment. it's easy to see these shapes in the growth numbers even if the level chart looks abysmal. i think the confusion here in this episode, yes, we're going to have a recovery. in growth rate, fairly v shaped, but it's still going to be a subpar recovery. steve, our view, above consensus on growth rate and we still think it's going to be a miserable subpar recovery.

and it's going to look v shaped in growth rate, a little bit more u shaped when we look at levels of output and levels of employment. >> rick, let's get a comment on the market. selloff of futures. >> if this is the good canary in the coal mine for all the positions that will morph between today and friday's number. you can tell the market is disappointed. they are looking for better. interest rates moved down three or four quick basis points. dow futures went from virtually unchanged to down 25 or 30. granted all of that is moderated. we're almost right back to where we started. but it does give us a glimpse that we moved from phase one, which is oh, my god job losses are horrific to now job losses are slowing. we haven't gotten to the zero line and we certainly haven't gotten to the creation of jobs. so the market is very sanguine

about this, a good indication of what we're looking at for the rest of the session. >> i remember when the market would trade higher when it wasn't horrifically horrified by numbers coming out. i guess market expectations are getting higher here. >> i don't necessarily agree with the pricing structure of equities and what kind of economic landscape we're going to have but there's very little doubt that some of the goodwill inequities has been this dynamic of less job loss. a lot of this may be priced in equities. it's interesting to see how brave traders are going into the big show on friday. >> did you have at question? >> looks virtually unchanged. lower on s&ps? >> it was up above -- dow futures up above 15 points before then back down. >> came down and popped back up again. >> you know, almost background

noise. >> i'm looking at this thing, i don't know that the market has expectations. if the market hat expectation that it would be faster, i think what chris is saying and we've been reporting for months now, it's not going to be. >> the good point, traders will be hesitant ahead of the jobs number friday. >> in case it's really bad. >> we've got light volume and after days, four in a row -- >> it's a small move. >> let me get chris in on another question. >> everything going well. it's lagging as we keep pointing out. it's hard to imagine anything really great happening when we're losing 400,000 jobs. >> i hear you on that chris, your numbers for jobs, for growth, you guys had been more optimistic in february. apparently kernen scoffed at you. is that right? was it kernen who scoffed? >> february 24th when i said

2.5% growth in the second half. as you reported yesterday that seems to be a number -- >> i was scoffing? >> joe was scoffing. >> you know i'm going to get you at 8:30. >> actually, joe, we were all scoffing. >> i was not. >> becky and i were with him. >> here he is, now it's more the consensus. we have to go to break. thank you, chris. we just wanted to point out you had what was now the consensus back in february. thanks for coming on. >> you're welcome. >> you'll be back. >> it was becky and joe. >> a moment where nobody wanted to say anything negative about it. the flip side of the february moment. remember you guys were trying to get somebody to say something positive and nobody would. >> now nobody will say anything negative. >> now carl sees ws where there are vs. >> we've got no time. the new guy at pemco, we have

him coming up. what's going to happen friday, now and then, we'll be r back. announcer: some people buy a car based on the deal they get. others buy the car of their dreams. during the lexus golden opportunity sales event, you can do both. it's an opportunity today. it's a lexus forever. special lease offers now available on the 2009 is 250.

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live better. call or click today. calling all parents, hard to believe it is time for back to school shopping already. will retailers pass the test this time? ceo of office depot will give us his lesson plan for the rest of the summer when "squawk" comes right back. ththththththththththh

good wednesday morning.

welcome back to "squawk" on cnbc. adp number just got released a few moments ago and futures did go negative, treasuries began to pierre losses. slightly more jobs lost than the markets expecting. the june drop reported at 473,000 was revised to show 10,000 fewer job losses. it is the smallest decline we've seen from adp since october of last year. jobs numbers will be released 48 hours from now on friday morning. yes, there it is. we didn't even have to ask for it. steve liesman will be fishing, forecasting with the nation's top economist as the banjo plays, steve. >> i thought it would be interesting to look at tape last year. very hard to do with a straight face. a close-up on joe, if possible. he's dying to chime in. he wants to make -- it's a

bucolic setting, serene. there are 30 to 35 hedge fund managers, economists. >> sweaty. >> several cabins. within the cabins, joe, are several rooms. do you get that concept? >> no bunks. >> no bunks. >> no, there were separate rooms in the cabins. >> we've had viewers write in that the numbers like so many economic numbers don't add up and there's musical chairs. there's not enough bunks. >> what's interesting is your concept that the viewers write in in a vacuum not prompted by the host on the show. a complete vacuum. let's go back and get serious here and listen to some of the economic forecasts these guys made last year. >> i don't know yet how one finds a bottom. >> no one here is really upbeat.

there are no cheerleaders here. >> give us an outlook on next year when we come back. >> oil prices primary driving factor, subpar economic growth in the first half of 2009. >> 11th and 12th will be number of bank failures. >> making sure we have reached a bottom in home prices. we're going to be behind the barn, if you will, being spanked. >> get this on, this is a special fly i designed. it's a brokeback fly. really, it's a broken back. something i've designed just for you. >> wow. we are interested. these are pretty heavy hitters. david hasn't been invited, i

don't know why. >> you don't care. >> sounds great. >> last year they were pretty negative. >> pretty negative but not negative enough. i went back and looked, they were looking for feds to raise rates 2.5%, ten year at 4.9%. they saw recession coming, but they didn't see the magnitude. almost nobody saw the magnitude of what happened, called a month later, complete meltdown. matt middle of the credit crunch but nobody foresaw the next phase. >> good point. a lot of people see we avoided armageddon, if you go back a year ago and say we would have an unemployment rate of 10%, this really is a very bad outcome to the bad situation. post lehman bankruptcy, lots of job losses. so as we talk about recovering, i think there's got to be more policy to get us going. >> we characterize their forecast of a rise of

unemployment to their number as very, very bearish. their number was 6.9%. so i think that was interesting. the question as to whether or not we need a second round of stimulus is -- >> i didn't say that. i think that would be another harmful step. >> when you say policy response, what do you mean? >> i didn't mean fiscal. government spending is just suck it out of the private sector and give it -- they get it from producers and give it to consumers. that's not a good solution from growth. >> savers, david. >> we heard a guest talking about the regulatory policy problem that banks are still being squeezed not to make loans in commercial real estate but also in the residential mortgage area. >> a regulatory issue, that's a business decision these banks are making. >> i think heavily regulatory. the banks have been flogged for ending up with not enough

capital. we have a wild regulatory system. when things were great, they kept telling banks they couldn't reserve against the possibility of bad loans. now they are going the opposite way. the banks are squeezed to delever, cut off small businesses. that's still a big problem and washington's problem. >> who puts the list -- is it part fishing, part economist? >> who puts amateur fishermen out there. >> it's kotock. it's his gig. >> hedge fund -- >> blog writers. >> i do say -- >> negative things about bloggers? because i like bloggers. i love bloggers. >> that's right. i can't even use the word. even though it's a plant,

seaweed but i'm not going to yit. >> can i say richard weed. >> rich weed. >> i'm sorry. find out who puts -- a weird eclectic group up there. >> he's done it for years. >> i think joe is more excited about this fishing trip than you are. >> he's going to sit here all morning long on friday, one homophobic joke after another. >> it's not homophobic. >> what is it? >> it's deliverance, one of the greatest. >> why isn't crescenzi going. market strategist, portfolio manager, he's with pimco. i think it's a compliment. sometimes i think it's good you're not going, tony. that's neither here nor there.

let me try to summarize some of your latest musings and tell me whether i'm wrong. there's momentum here. things have improved a little bit. there are secular challenges and some trouble on the horizon long-term. is that about it? >> let's not call them trouble, let's call them constraining influences. we could have growth, it's just slower. the direction of change is definitely up, but the magnitude of change is something we'll have to assess. how much of an increase. i hope you have three charts i sent over. it's clear to see in those charts. >> i hope so. do we have them? yeah, we're going to. >> first, income growth. we all know about the jobs story. there are a lot of jobs lost currently because of the restructuring in the economy. a measure from the bureau of

labor statistics show the amount of people lost jobs on a permanent basis has gone up 4 million to 7 million. so you see that in the chart. it's quite extraordinary. many of these jobs won't come back. took two years last recession. given this time with restructuring occurring it will take four to five years. because of the will to work being strong and competitiveness we should see downward pressure on wages. secondly, wealth destruction will ab factor for a long time. household lose about $15 trillion of wealth down. there's the chart. that's payoff. on wealth, a hit. as a rule, federal reserve, four cent hit for every dollars in wealth. an increase on savings. that's what we've seen. we haven't seen the increase from deleveraging, so there's

probably more impact from the impact on wealth construction. lastly third constraining influence, credit availability, a chart on bank loans, consumer and industrial loans which show, and i hope we have it, whatever the case, steadily down. we haven't seen any increase in lending. assets and liability commercial bank you see lending has not picked up. credit availability will be a problem for sometime. these are retraining influences that affect the magnitude even if the derrek is up. >> we have this huge, great economy, the normal u.s. economy. no matter what we do to it, no matter what we hit it with, it seems to keep chugging along. is there some merit to that argument? >> yes. you know, innovation. if you want to look, be watching patents and things of that sort. if suddenly there's a new

industry that crops up, maybe the green economy that really pushes it this time, we could start to change our attitude a little bit. these other influences are quite strong, overwhelm new industries for a little while. that would be the thing to watch, then, to see creative destruction. in 1995 when the technology shock hit. >> tony, david malpass, hi. the government is growing rapidly. how do you factor that into what the potential growth could be for the economy. we're going to end up with fewer private sector workers and more government workers. does that matter? >> yeah. i think it crowds out and i think it's less efficient spending, reduces product savings, could boost the inflation rate. there's limits to how much government can do, because we see our lenders like china and others saying, hey, watch it. watch your spending. so fiscal stimulus will turn to fiscal drag beginning the second half of next year, more so in

2011. it's a big influence, from productivity standpoint and because it can't be sustained. >> tony, you talk about constraining influences, does that mean inflationary fears are overdone, people starting to eye gold once again, looking at the dollar's action. does that mean it's another head fake, yet another head fake. >> keep in mind studies will show and seems to make sense this time, inflation rate lags the economic cycle up to two years. the spring, inflation rate won't bottom. i think what fear you have is of course from the monitorist camp looking at federal reserve's creation of money. i would look more -- put it in context of the velocity of money because that money is not turning over. i think it's excessive here. but the market fears are important and we should watch tips to see if they are becoming

significant because it could affect policy. i think federal reserve has given lip service to inflation story. that's why nancy had a town hall meeting, of course. i think the fed will do its job and keep inflation under wraps and all these other influences will keep there as well. >> tony, would there be an argument, talking about inflation two years down the road, would there be an argument people should not -- would there be an argument that people shouldn't be investing in longer term bonds if they are looking at this as the average investor, like 30 years or something like that? >> well, expect inflation rate to fall, that would be helpful to long-term bonds. long-term bon now seeing downward pressure, upward pressure on yield because of cyclical. there is a lot of open questions still to be seen, to be answered regarding foreign involvement, the extent to which they will give us money, continue to give us money. we'll have to watch that as we go along.

that will affect the market rate a great deal. >> do you want to talk or ask him a question? >> ask him a question, a quick one. tony, how do you mesh the bond yield with people saying the dollar will weaken. why don't they go into foreign bonds, what do you think? >> oddly the flow of funds has changed a little bit. households are saving more. we saw in the fourth quarter households added $400 billion of direct holdings, treasury to their wealth, holding of financial assets to $650 billion. so the increase in savings i think is a factor and the dollar is the world reserve currency, even though it's falling as a percentage, 70% in 2002 to 63 right now, it still is taking in dollars, the treasuries net net. china, of course, is a big example of that. big increase in their reserves recently. they increased treasury purchases. again, we don't know the limits to this. >> you live in newport now? where did you buy?

did you move your whole family? how is it going? >> i'm here. i'm kind of bicoastal, here most of the time. why not, fashion island? >> preaching to the choir, i just don't like the traffic and deficit out there. thanks, tony. maybe you can help with that. >> thank you. we will. i'll try. come on over. >> we'll hear more from david throughout the rest of the show. >> thanks a lot. >> up next, back to school, that's right. the shopping season has begun. pre-k to premed, ceo of office depot is going to tell us if he's ready to pass the consumer spending test. "squawk box" will be right back.

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it is back to school time. retailers are likely to give this season a less than stellar grade. according to a new survey, average family from kindergarten through 12th grade will spend about $548 on school purchases. that's down by 7.5% last year. joining us, ceo of office depot. steve, obviously american consumers are trying to pinch pennies right now. they have been through difficult times whachlt does that mean for back to school season from your perspective? >> well, everyone knows the economy is tough. all of our customers are trying to save money.

i think what it means is that people would be looking for values. office depot is ready. we have values planned every week of the year throughout the season. for example on sunday we start with a promotion that gives a free back pac with $10 minimum purchase. throughout the season, core office supplies continuously under $1 apiece. every week of the season we're planning new values for our customers, lots of promotions. we have a foot locker promotion where we'll give away a coupon for foot locker purchase, for the locker is giving away an office depot coupon purchase. >> what does that mean for the market? maybe getting consumers in the door but what does that mean for the bottom line? >> it's a shorter season. back to school is later, districts have pushed it back. compressed into a shorter period of time.

we're going to be ready. we've introduced new products this year, too. we have star teacher program where any teacher can come in and register and get special deals at office depot. the other thing, a whole new line of classroom products and teacher products that were only available in specialty stores. these new lines will be helpful to our margins. >> stay with us for a mom. we're getting video in now. >> this the plane carrying euna lee and laura ling, the two journalists arrested by the north korean government on march 17th, now heading home after president bill clinton went to pyongyang earlier in the week and secured their release, meeting with kim jong-il, touching down in burbank. >> in l.a., better bank. >> they are expected to make some remarks along with former vice president al gore. unclear whether or not

journalists and vice president gore questions. not sure what president clinton's role is going to be, but they are almost home. >> there were questions originally to whether or not al gore would be the person who went over to negotiate the release, because of his relationship with the company and it ended up being president clinton. it looked as if north korea was push fog that. you can see the plane setting down right now. >> of course, raising a lot of questions, though people around the country are happy for the families of euna lee and laura ling. questions about what the u.s. may have given up, whether or not once again the north korean government dangles a carrot in front of the u.s. government and gets us to treat them with some legitimacy, and whether or not we give up something down the road as the multiyear task of trying to demilitarize the country. we'll continue to monitor the flight, and whether or not -- or how they deboard the plane liter

on this morning. >> steve, thank you very much for sticking with us. i just asked you before about the promotions you're offering and what that will mean for margins at office depot. >> it's offering all sorts of new products, which ought to help our mix. we've introduced a whole line of teacher's products, which have only previously been available in specialty stores, but they're helpful to teach necessary building classroom plans and so forth. we also give 5% back to schools when customers buy in our stores, so we have the philanthropy end to it as well, but i think this is going to be a promotional season. the values are there for our customers. this is a great time for office depot, because it's a time where we get a lot of volume and traffic in our stores, and office depot is ready. >> how do you compete with the $4,500 cash for clunkers officer, being the consumer has limited dollars. aren't they shifting those

dollars towards cars and the giant subsidy from the government? >> i think it's clear when you have programs like this consumers spend. i think that means they're look fog values. that's why office depot has come forward and we have values every single week. we know consumers need school supplies. we know this is a compressed period of time, we know the season is shorter, so we're ready with products. you know, if you look at technology, that's our big-ticket item is technology, and technology production today are as much as school supplies, pencils and papers, so we're ready with great values on laptops and calculators and flash memory, so forth, and we also have tech services in the store, so we'll set them the with software, clean viruses and prep the exhumers for back to school. >> are there more promotions, more of these bargains than a year ago?

>> i think we're making sure we're ready every single week, because everybody's trying to capture a share of traffic. that's certainly the case with office depot, as we plan week to week during the season. >> i've ever seen back-to-school sales at targets and other places where they're focusing on value. just to get to that idea, if can you hold onto the market share, do you think you can make up for the margin pressure with the other high-end items that you're selling, some of the teacher items that you were talking about? >> i think it's the strategy, that we build the basket or complete purchase here. that's why weeb doing the partnerships to make sure we have the cross-promotions, but we're one of the largest backpack sellers and we have specials on the backpacks, and build the basket with calculators, score school supplies and the technology

supplies. usually our customers are coming in for value, but we're building a complete line of purchases. >> does that mean you'll sell fewer backpacks than a year ago? >> well, we think it will build traffic and we'll sell more of anything else. it's a great time for customers to come out. i like this teacher line, and we hope to capture more share there. >> thank you, steve. we appreciate it. >> thank you. we'll continue to mark this unmarked plane, president clinton's plane that's just landed in burbank carrying euna lee and laura ling. apparently clinton's plane refueled in japan and alaska, and everybody wants to know, in addition to what their experience was like, what it means for the former president. hillary clinton in kenya told

nbc's andrea mitchell this morning he was so relieved and so happy, it's in a way more personal that we have a daughter approximately the same age an the secretary of state was asked whether this marks a breakthrough in relations with pyongyang, and she said it's certainly not something we're counting on, but i hope north korea makes the right choice. there's been talk whether it's a new chapter with president clinton, he's prone to controversy, some say, david, this certainly is an unparallel success for him. >> i think it's wonderful. my concern is that a rogue nation may want to kidnap an american to get a visit from president clinton. how do you avoid that conflict of interest? north korea has been doing this stunt for decades, where they do something bad and then get something out of it as we turn

around. we need to be clear in this that north korea was at fault for having imprisoned them in the first place. >> do you think just getting the picture taken with president clinton, putting that on the cover of requests the new york times." is that enough? would they make demands beyond this? we're not geopolitical experts by any stretch. >> we want them to stop launching missiles. the issues that the u.s. has wanted and we want china to be involved in are clear and have been for a while. it's hard to see this is going to progress those issues. a lot of times what north korea is try to go do is get more food aid. remember, they've stopped their people from being able to grow food. they'll be asking for more, that's probably clear. unclear whether we can stop them from being a danger to their neighbors and to their own people, really. >> the families of laura ling and euna lee have said they've been counting the seconds down for these two to arrive on this

plane that's standing by right now in burbank. >> we saw some of the stories from where these two young women were going to be held. it wasn't cushy, you know, resort prison. it wasn't camp cupcake. >> the sentence was for hard labor. >> hard labor, and just awful conditions. this is good. >> apparently a clinton adviser has told politico this morning that the former president is ready and eager for more assignments. so he could turn into what carter did during his day, george mitchell did during his day. >> that would be good. it would be an assignment that would help consumers would be lower open prices. remember, as the dollar weakens, american companies and foreigners are taking their money out of the u.s., to get away from the weakening dollar. one of the thing i'll propose to president clinton is that he

intermediatate this weak dollar policy that has been in the bush and now obama administration. remember, clinton presided over a stronger dollar. that was better for the u.s. and maybe he could fix that problem, too. >> whose plane is that? who paid? >> it's just identified as clinton's private plane, an unmarked plane. >> i think it's a boeing -- we're getting some e-mailers writing in that they're looking at the tail number and, you know, obviously -- i haven't confirmed it, but i wonder whose plane it is, because obviously it's a pretty big price tag on that, and i don't think the obama administration paid for it. >> hard to say. >> could have been donated. >> could have been, i think it was. >> david, it does raise one thing. that's whether it's americans who were held, whether it's trade, dealing with the north korean military, it does get back to the relationship the u.s. has with china and whether or not we can see some common

ground. they see this government much differently than we do, do they not? >> that's right, china and north korea obviously neighbors. you would think china would want north korea to stop this behavior. i think the u.s./china relationship is excellent. we're seeing it in commerce, and an issue is can it grow into china being a strong leader globally? north korea would be a good spot for china to start. they could fix that probably pretty quickly. >> we'll keep an eye on what happens in burbank later on this morning. we do think the journalists are going to speak and potential vice president gore, who is already at the burbank airport, comes in a morning when we've gotten a number from adp that sees job loss numbers, that gives you a clue about what friday may bring, and we have challenger with a few more planned job cuts. >> mo are more job cuts above

97,000, that's back up from june when they saw thing moderating. that does it. for now we turn it over to "squawk on the street." live from the finance capital of the world, this is "squawk on the street." good morning everybody, i'm mark haines. stocks look like they'll open a little lower, no big deal, following this morning's adc report showing a slightly larger than expected loss. >> good morning, everyone. i'm erin burnett. the treasury's quarterly numbers are coming out, and we're looking to see if there are more tips. rick santelli have more. literally i have 45 headlines. it's a record in overall refunding of the treasury. in terms of how that breaks down, we will get much more, but

we will be getting $23 billion in ten-year notes today. >> the futures down 270 on the s&ps. again that's not a big deal. the -- i'm sorry, unless they put up fair value, i don't know what it is, but it looks like fair value will be a minus number, so down 27 -- >> the picture you are looking at is the burbank airport and the arrival of the plane with former president bill clinton along with laura ling and euna lee who crossed the north korean border and he negotiated their release. so that's what we're look fog there. >> let me just check my list. today is wednesday. we have a lot of data coming out. a lot -- we have the challenger layoff report. then later this morning factory ordering and