in terms of the markets, joe, did you know, 39 points down yesterday? the biggest point drop in almost a month. >> it was ugly, bloody. >> 49 points. >> i'm surprised they don't have any pictures of those traders like -- mid day, it was down 85. and i thought maybe this is going to be -- >> one of those days. >> one of those triple digit days that flushes things out. but it was a beach ball, came back up by the end of session. is -- are you -- is everything ready for you here? >> for retail sales, getting ready to go? i have to print the thompson estimate sheet. >> if you need to prepare or get ready or anything because there's going to be a lot of them. >> because when it comes to shopping, you know who to turn to. >> i don't -- hurdle is trying to shop on entourage, and he

can't. >> maybe if -- >> no. there's no company that -- earnings season would -- >> ge, maybe? >> no. if you didn't get in under the wire, it's like the cash for clunkers. if they didn't renew it, it's too late. >> i've already been talking about cisco. >> because of this flow chart that looks like hillary care. do you remember the flow chart from '93? it's n journal. maybe we'll talk about it in chairs. but cisco, they've got 15 -- i've got to talk to john. they have, i think, 59 different internal standing committees that have to, like, anything that they do. different different committees has to decide whether to change somethi something. >> and chambers gave an interview of the times last

weekend who he says he likes to be the manager where he says and you do, right? >> yes. but there are layers and layers and layers of vice -- it looks like teldar paper. john, knowing you as we do, let's talk. 7% drop in fourth quarter earnings, but it did beat the streets by 2%. the ceo says he expects gross margins to fall in the current quart were. but he said something about a tipping point. let's turn to simon leopold now. did you see this article today? >> i have not seen is around yet. >> look at that earnings second.

by the time they got this question through all the markets, hp had already beaten them. are you confident that chaem betters will move? >> certainly. and the company has tried to embark on trying to initiate cultural change. that kind of transition doesn't happen overnight, but clearly, based on the commentary we had last night, the company is at a head and i think they're looking at the next steps for a recovery. i think we need to assess where they've gone and what they've initiated in terms of cultural change. for us, the moves on the company are on cost savings. and that could be long lasting, that when the top line recovers, the team inside the corporation is focused on saving costs --

>> can i read this? mr. chambers said he would soon sdpand the number owes bess that he's starlthing is 50. the people who participate, senior people -- >> making them they'll like they're part of the process. >> that's 3,000 potential successors can be gain. >> what? a lot of people blame him when things go wrong. >> so none of these businesses at this point generate more than $ billion. where is the real -- where is the future for cisco at this point? tv? >> well, i think if we step back, tv is a nice way to phrase it. but we need to think about tv in a broader sense. think about video and don't think about tv sitting at home and turning on the tv to watch

what's being broadcast. think about the way you are searching for your video content, your entertainment. now think about video from a business perspective that you're getting your job done using video, that you're not getting on a plane, but now you're teleconferencing, you're meeting people all over the world without having to fla. so that's think about tido and what that do. >> is long cisco, short everything snm yeah. i can see how they mistake money, but if i can choose anything i want to do, i'll never watt another commercial,

will i? >> i think about my own experience at home. i'll watch a video over the internet and the way it's structured right now is i'll watch appear ad at the beginning, an ad in the middle and an ad at the end. you know what? if they do a good job with, i'll watch it. >> especially if you can't fast forward through it. >> sure. >> is kisco still one of the top three tech names to own if you're abdomen investor? >> absolutely. i think the long-term trends are favorable. this is a company that in passdown turns they've invested, they've come out with new products and we look for the company to expand. when we look at history, they've comp out of downturn. and so now we see kiss sow moving into data centers. these all may same seem a bit

puzzling. but it still comes back to, let's load up the network and move into adjacent. >> and why is he forecasting that margins will not stay where they are? >> and i think that's a great point. if people were going to hone in on something to worry about, that's what they'll talk about is declining sequential growth margin. i think it's a combination of mix shifting into some more of the consumer products. i think we had a very favorable result in the quarter. so we had good strength from japan, a high margin market, good strength in north america, good strength from their products that are high margin. so when you look at the sequential comparison, you see a step down with i think that is going to make people nervous. that's simply one of the things that we think we'll focus on to say, okay, hey, we're not into a complete recovery, but the preponderance of the evidence says that things are better. >> and the stock right now, would you say that it's reasonable? what kind of multiple do you assign it?

$127 billion company, what is $600 billion a couple of years ago? >> a lot of things were a lot higher that know back then, for sure. the metric that we're focused on is the ebter surprise value, cash medicine ragz, metrics. we stell have a little bit to the up side on the stk on the current assumption. >> thank you, simon. the old auto dealer would look is that and say -- oh, why is he on squawk on the street? >> out west, it's -- >> well, john chambers will be on squawk on the street today at 9:00 a.m. eastern. he comes on our show quite a bit, but that's okay, fine.

>> he knew what you were going to say about im had. >> no, he did not. >> let's check on the markets on this thursday. we already told you was coming. there's a lot of numbers in the next couple of hours, but for the time being, markets are holding. s&p has held above 1,000 for three straight days, even though the dow traded down for the first time in four. oil is off a little bit by about 30 cents or so. a lot of talk about the ism wasn't that hot. you couple that with adp yesterday, maybe the recovery isn't going to be as clean as some had hoped. $71.62 on the september correct. the ten-year note, $3.734%. we'll see what the bank of england and the ecb say later on this morning. gold is -- you know, people talk about now five times it has tried to get above 1,000 and stay there. still $37, $36 away from that.

let's get overseas. christine tan is in singapore and first, check in with london. geoff cutmore, good morning to you. >> good morning, carl. for a change, this tail is not listening to the front of the dog. you may have had a weak yen tone to the u.s. session, but we are higher in european trade this morning. let me show you those numbers. we've got good ganls on the board. much of it is on the back of the earnings news. deutsche telekom confirming their guidance. earnings were in line. we had unileaver with a profit underlying expect aegzs. commerzbank is mixed. the food and drink on that unilever story and we had avava

in the uk who say they're going to ipo a bit and the market didn't care that they cut their dividend. they were happy just to hear the earnings news. now over to christine on that in singapore. >> hey, jeff, thanks for that. a couple of things moving the asian markets today, earnings continued to be in focus. in china, the shanghai market slumped 2.1% on speculation china will take more steps to reign in liquidity after the central bank said it will deploy a variety of tools to tweak monetary policy. the other market we're keeping an eye on is australia, up 1.4%. a surprise jump in employment data gave the markets reason to believe the rba will hike as early as december this year. in hong kong, earnings in focus, shares of pc brand lenovo jumped reversing early declines after the company reported a smaller than expected first quarter loss, the hang seng surging almost 2%. finally in japan, the nikkei 225 roads 1.3%. automakers like honda got a boost on hopes of extension of the u.s. auto sales rebate

program. that's it from asia. let me send it back to you, becky. >> christine, thank you very much. christine tan. let's get to our u.s. task force this morning. joining us this morning is bob brusca. also peter chakita of seven bridges management. peter, we were just talking earlier about how the market may have lost ground yesterday when you looked at the dow and the s&p. but they really started to battle back towards the end of the session. in fact, you still got the s&p above 1,000. so what happens on a day where you get disappointing numbers from both adp and the ism? what happens to make the market psychology continue like this? >> well, we have had a heck of a rally. about 45% up off the marleaus. 100 days in duration.

iveng as bearish people got in march, they are bullish now. >> maybe we've run too far? >> that is my view. as i look at what i think is the most important issue, the consumer remains very weak. the gdp number from last week illustrates that beautifully. without 3% contribution from the federal government, that minus 1% is an awful number. the consumption component of that was minus 1.2% and so was the investment component. >> so you're looking at the consumer. bob, we're getting two more pieces of information today. first of all, the chain store sales we'll get getting throughout the morning and we'll get the jobless claims numbers coming out this morning. both of those will tell us more about the consumer. what are you looking for? >> well, the chain store sales are nothing special. they're probably going to continue to be weak. we've seen the costco number, which is -- >> nothing special about them? we take these numbers very seriously, bob. >> well, nothing special. what i mean is, you know, this is not supposed to be a

blockbuster number. we're just kind of still in the quagmire with the consumer. i think the jobless number continues to be a very important report to look at. i think obviously claims drop a little bit. claims give you the best end recession signal. two months after claims peak, typically we're in recovery period. that signal is still in full force. you take a look at what's going on in markets, and although stocks are up sharply, they're down very sharply from their highs and i disagree that people are anything like euphoric about the stock market. people are very unsure of what's going to happen. in fact, the president himself, even after that great minus gdp number. i don't know what the president is doing. he certainly isn't waving the pom poms in the white house. >> wait a second. you can it's his job to be a cheerleader or maybe to say what he thinks is reality?

don't get too impatient if we see a downturn again, people. you're going to see the up employment numbers continue to climb. >> if you go to the michigan/ohio state game and ask the cheerleader who is going to win the game, that's news. this is the magnitude of the problem. you've got larry summers, the treasury secretary, the president, they still want to put the economy on the previous administration. they need to own it. >> bob, things have been worse than they had expected. the initial plans that they had laid out for us, things have been much worse. unemployment is already well above where they told us to expect it. is it their job to say, let's keep whistling past the graveyard or is it their tough time to say we're facing tough sometimes and things -- >> oh, no. how bad things were, how bad

they are, and where they're going. we're seeing improvement. we're seeing job losses being reduced. if you look at this recession compared to past ones, what you find is we're on the track you want to be on. this has been very good news. it's still a recession, but it's good news for a recession because everything is pointing toward the end of it at a turn and it isn't going to help us to have the president say we have months more of recession coming. i don't think that's true. i don't think there is a good basis for that as a factual statement. >> peter, has bob convinced you? no, he hasn't. again, i keep come back to the consumer. why we're seeing the turn we're seeing is because of highly stimulative policies around the world. we've never seen a synchronized global recession like this and as a result, we're seeing synchronized global stimulus. but when i look at the u.s. consumer, which is 70% of our economy, i'm seeing a consumer that's really strapped. i'm seeing homeowners under

water on their mortgages. a report came out from deutsche bank yesterday, believe it or not, that said it could be up to 48% through 2011. i'm seeing every month this year with the exception of january, i'm seeing consumer lening, consumer credit contracting 16 billion in a row, two months in a row which is an enormous number that no one has ever seen before. bank lending is down 2%. i'm seeing companies that can't get more than two to three times leverage senior secured in the capital structure. so when i'm thinking about the stock market and wondering if multiples can expand and i'm seeing leverage come out of the system, i'm not sure how leverage can come out of the system at the rate it has been and still get an expansion in roe, return on equity, and higher eps. >> it's because things are going to improve. you're talking about past statistics. what happens is when you stop losing those jobs and people go back to work, then the income gets a boost and the economy moves forward. this is what happened.

at the end of roadway session, nobody wants to believe it can end. nobody wants to believe it can be a recession. we're constantly being dumped upon in the press as being people who are far too dismal. this is what happens. right now the recession has been so long, it's a synchronized recession, just like '82, just like '73, '75, we've seen these before and we know what happens. i think it's completely wrong to say this is unpress kepted. this is what happens in situations like these. we have a lot more backstopping from governments because of the particular financial problems we had. but that is one of the things that allows you to be confident looking forward. i'm very confident looking forward. i think we'll have strong growth in the second half of the year. i think people are far too optimist optimistic. >> i'll let you have the last word on that, peter. >> if growth is driven by consumer spending and growth in technology, then i would be more confident that the recovery is real, but it's being driven by

government stimulus and that's not a strong basis for growth. >> good to have you fired up today. thank you for coming. >> as we go to break, let's go to yesterday's winners & losers. 

welcome back, everyone. newscorp ceo rub either murdock is warning newscorp could break off its readership with kimmele-reader if it can't get better terms. the company is trying to stem a drop in subscribers.

how do you make money if you're giving away your content online? >> sounds like he's ready to make the leap on that front. meantime, 20th century fox is trying to slow a rival of its dvds and redbox kiosks. fox asked red star to keep its movies out of kiosks for 30 days and offered to keep making its movies available on the release date if redbox would share revenues. fox is telling its distributors to only make its distributors available to the chain after 30 days. redbox filed a lawsuit when distributors were told not to allow it to have its dvds. >> i see these boxes everywhere. it's like $1, you can take them home by the 7-elevens. >> do you have to bring them back? >> yeah. i think you have to put a credit card. i was looking at it the other day. it looks like you have to put a credit card in.

>> i've seen one only once. >> if you go into grocery stores, there's ones, they've been popping up everywhere. >> how do you get your dvds? do you netflix, buy them? we're still like the old fashioned people, blockbuster. >> i do blockbuster, but there's more and more things coming on demand. it used to be there would be like 12 movies on these through your tv box.=> now you can get -- dozens, even hundreds of some of these things. >> this weekend -- ú9 >> you never have to leave your house. >> this weekend, kung fu panda. that's whey missed the first time around. >> i've seen it about eight times. >> i know. >> i saw g-force last week. >> was that good? >> yeah, it was about gerbils. i was expecting something totally different. they were talking and cute and nothing weird, nothing --

actually, they weren't gerbils. it's -- sometimes they refer to them as guinea pigs, other times as hamsters. and there's a mole in it, too. but some big names. nicholas cage played the mole. >> he sounds like a mole. >> i didn't see it in 3d. >> when we come back, the top stories from the futures pits.dr k has the fastest serve in the history of professional tennis. so i've come to this court to challenge his speed. ...on the internet. i'll be using the 3g at&t laptopconnect card. he won't so i can book travel plans faster, check my account balances faster. all on the go. i'm bill kurtis and i'm faster than andy roddick. (announcer) "switch to the nations fastest 3g network" "and get the at&t laptopconnect card for free". yet a lot of natural gas has impurities like co2 in it.

controlled freeze zone is a new technology... being developed by exxonmobil... to remove the co2 from the natural gas... so we can safely store it... where it won't get into the atmosphere. exxonmobil is spending more than 100 million dollars... to build a plant that will demonstrate this process. i'm very optimistic about it... because this technology could be used... to reduce greenhouse gas emissions significantly. ♪

you all want to run your businesses more efficiently, so we've brought in a team of experts to help. one suggestion is to make your shipping more efficient with priority mail flat rate boxes from the postal service. call or go online for a free supply and up to $160 in offers from authorized postage vendors. shipping's a hassle! weighing every box... actually, with flat rate boxes you don't need to weigh anything under 70 pounds. if it fits, it ships for a low flat rate. ok, but i ship all over the country. you can ship anywhere in the country for a low flat rate.

ship international, too. yes, but i ship hundreds of things, in all sizes. great, because flat rate boxes come in four sizes. call now and we'll send a free supply, plus up to $160 in offers. when you're ready to ship, we'll even pick them up for free, no matter how many you have. priority mail flat rate boxes only from the postal service. a simpler way to ship. call or go online now to get started.

good morning. we're back after the most recent commercial break that we have, right? cnbc "squawk box" and i'm joe kernen. we're always here hopefully together whenever we can be. becky quick and carl quintanilla. that's a very difficult name. >> it is a difficult name to spell, i know. >> did you ever -- >> think about changing it? >> yeah. >> i'm carl quinn. >> you have thought about it. >> that's good. >> no, no, i've never thought about that, to be honest. >> quinn martin productions. who is that in san francisco? >> never was even a passing thought. >> me thinks you protest that. you are carl quinn. >> trust me, i've not done it. >> i'm going to do it and you obviously like it. >> quick is my stage name. >> oh, is it really? >> no.

>> what is your real name, mcgillicuty? >> no. >> in other news, besides carl's secret wish to be called carl quinn, the senate is expected to vote on a $2 billion cash for clunkers program. the name is not -- i feel silly saying it after a while. senate majority leader harry reid says he has the votes to pass the bill. senate leaders plan to introduce an amendment to it. if any of them pass, the house would need to pass the amended bill. the problem there is that the house was already in recess, which is why the market has been going up every day. but senate and democratic aids say they don't expect it to pass. >> the wisdom of crowds. >> you've already shaken off your, like, love of washington from tuesday. >> yeah. it's a one night of sleep.

but i did like standing up there with those guys. >> i was just going to say, that shirt and tie looks like a run for congress. >> cufflinks today? >> no. that's too hard. >> we know you're not that committed the. >> no. if i'm going to run, i don't want to deal with -- it depends on whether i keep them on all day. >> you would have to kiss a lot of babies. i don't know that moms will want to -- >> that is the problem. you do have to talk to people a lot. >> people you don't know and you have to be nice, leave a good impression, not -- >> also in washington today, the white house economic council is going to be talking about a number will have preliminary proposals. they'll be talking about things like setting up back bad, restructuring things like fannie mae and freddie mac. the banks could collect as much as hundreds of billions of dollars in troubled loans and the government could then take the number companies to attract

private investment for mortgage the administration has publicly talked about its intention to tackle gfe reform. this is an administration with a lot on their plate. >> michael gurka joins us this morning. good morning to you. >> good morning. >> we just had a conversation in the last half hour with a economist and money manager and they both have reasonable arguments on one hand why this rally is so overdone and why there's so much to worry about and the other, why we're not taking the hints of optimisms more to heart. is that debate manifesting itself on the floor there? >> first of all, the gdp in itself, if you talk about the cash for clunkers and that could add as much as 0.5 to that number. >> exactly. >> that's significant. but for the same reasons, let look at things from a technical perspective. 1,000 level in the s&p, of course, where the dow got above

9,300 and even more importantly, how about the british pound at 1.44 in the euro and the british pound at these levels right here at 1.70. you're up against resistance around many different markets. at the same time, if there was a starting gun to this race where things are going to start shuffling themselves out, it's clearly going to be that payroll number tomorrow. when you're looking at a significant survey versus where the last number was, if this was really surprised, you might get a two handle here and also it will blow through all resistance levels in equities. for the same reasons, if we get something more like last month where we start to see a higher number, all of a sudden, it's a reason to sell and profit taking from the fiasco with first and fourth quarters of the market is prudent. so it's nice for once to talk about things in an optimistic way, to see that things are recovering. inflationary in the future or not, what we're facing ourselves with here is a massive climb and

let's not forget about what the hang seng did last night. almost 2%. >> 40-month high. >> what% on the year. they've been piling in here with great returns on a daily basis on the index and yet, for the right reasons, the u.s. has had its own agenda. when we're starting to see what i think was the first technical indicator which was the dax, a very good survey showing us how that worked out on a technical per expectsive, it broke out to the upside and, of course, we led. the point there is we're starting to fall off more of europe than we are asia but asia is silently getting the job done. >> yeah. although some would argue maybe overdoing identity that front. wouldn't you agree, though, that ism, durables, adp yesterday showed us that it's not going to be a clean sweep, right? we're not going to carry the ball and run 80 yards to the end zone. >> that's right. and for the same reasons, i

don't want to get caught up in those illusions. there's a lot more out there. really, maybe, the future thought is is it going to be deflation? again, what we see here is the scenario that commodity prices have had a run, they start to come back again here and all of a sudden, they're starting to set a tone for us. one of the other things i mentioned, too, is look at copper. copper has had a great one. what is that going to be off of the housing? is there going to be a rebound in housing and all of a sudden we start to see copper lead for those reasons? i think it's been for the latter and the reason i say that is copper has been more of an o offshoot of the commodity of it rather than the pressure metals. i think it's going to come down to that number tomorrow and, of course, today's initial claims will be the first version of that. but you know, the king james version of this at least is looking at that sterling and seeing if we can hold 1.70, a nice move from 1.35, a great return and at the same time, we all expect it on my end, at least, that the dollar would be the first thing that would start to give it up during this

recovery and it has. now maybe the dollar is the first indicator, at least, that it comes back the other way. i'm bearish crude oil at these levels right here. i think they've had a nice run. but it seems like the boat is tilting to one side. >> interesting. we'll watch, obviously, claims today and that number tomorrow. it's going to away crazy 36 hours heading into the close friday night. michael, thanks. >> thank you. >> see you later. >> fuch any comments or questions about anything you see here on squawk, e-mail us at squawk@cnbc.com. coming up, he has his finger on the pulse on the investing public. mark holbert on the state of the economy. he ran off with his secretary! she's 23 years old! - oh, come on. - enough! you get half. and you get half. ( chirp ) team three, boathouse? ( chirp ) oh yeah. his and hers. - ( crowd gasps ) - ( chirp ) van gogh? ( chirp ) even steven. - ( chirp ) mansion? - ( chirp ) good to go. ( grunts ) timber!

( chirp ) boss? what do we do with the shih-tzu? - ( chirp ) joint custody. - dog: phew... announcer: get work done now. communicate in less than a second with nextel direct connect. only on the now network. announcer: get work done now. communicate in less deaf, hard, hearing and peopith speech disabilitiesit .

g#k today.nouncer: get work done now. communicate in less

time now for a check on the world of business on cnbc's own spice girl, monica novotny. >> you're appreciating my last story. i appreciate it. >> i'm a professional. i prepare. i know what you'll be talking about. go ahead. more that two months after she was nominated to the supreme court, the senate will hold a nomination hearing for judge sotomayor. another two republicans announced their support for her yesterday. lawmakers have agreed to vote on a plan that will add another $2 billion to the cash for clunkers program. and here we go, it's the one you've been waiting for, finding a replacement for paula abdul on "american idol."

it won't be easy, but england sun reports producers are negotiating with victoria beckham, the former posh spice. what do you think? yesterday, i was concerned, could they find someone to bring the crazy, and i'm thinking a spice girl could do it. >> she's crazy. i'm reading how this happened. in the times, monica, they offered -- >> beckham? >> yeah. she signs -- like simon gets $30 million. she wanted $30. they offered her close to $5 million. ryan seacrest gets ten. they felt that that was humiliating, i guess. i keep coming back to what was she doing eight years ago before "american idol." >> she shoots 20 episodes a year. >> and to be an icon. >> ryan seacrest gets 10 million? >> be but that's just for the show, right? that guy has ultimate deals. >> the saddest guy on the planet is that guy that started with -- what was his name, brian

something? >> oh, there were two hosts in the beginning, that's right. >> the guy who was with ryan? >> how would you feel about yourself at this point? >> he's jumping up and -- >> and your co-host is worth $10 million a year. >> the guy fell off. i think he's doing dinner theater somewhere. >> he's jumping up and saying, i'll take that $5 million.o@ >> exactly.o@ i will go bring the crazy.o@ >> monica brings some crazy. >> i do bring. i try to keep my crazy in a bottle, but sometimes -- >> wait a second. she was only making $2 million a year, so they were more than doubling her -- they were more than doubling. by offering her five, they were more than doubling her -- >> she's taking a stand. >> but you know what else? she sells julie on one of those shopping networks, i believe, and i think she would have made an investment in that jewelry business by maintaining that jewelry on the show.

>> she's going to keep that day joe. i've got another network interested in me, qvc. they're beating the path. >> what are you going to sell? >> i'm not -- you know, i'll do wayne's world out of my business, maybe, before i sell jewelry. schwing! anyway, let's go to the market. thanks, monica. see you later. >> bye. >> she left. >> she's out of here. she's like, smell ya! >> what? anyway, the dow rising 42%. holbert, he's a serious guy. we should wait a while before we go right to him. mark, you can handle anything. you track market sentiment. i'm trying to remember back, you're the editor of the holbert financial digest. i remember when the market, according to sentiment and newsletter writers looked like it wanted to head lower and it

didn't. it stayed lower then we were surprised. at that time, did you tell me that these guys had gotten negative quickly because it hadn't continued to move higher? that would explain this latest move on, wouldn't it? >> that's right. when we talked, i think it was april or may i said that sentiment had gotten too bullish too quickly. that didn't bode well from an analysis point of view. the market did sort of go flat, as you know, in june. what was interesting is they did become negative very quickly in june and that at least led contrarians to say maybe the rally had a little more live on it, not to the point of saying a new bull market had begun. now we're back, of course, we had a great july and there is even more exuberance now among the newsletters that we track. in fact, they're more excited now than we've been in over two years and i think that does not bode well for the continuation of this rally. >> it's funny, mark, because they seem to switch pretty

quickly. they got negative when all we really had was some consolidation and flat trading after that big move up from the lows. that happened quickly. now they've gotten positive again quickly. >> absolutely. indeed, what that suggests is that the analysis to the extent it works, and i think it does work and our analysis says that it does, but it's a very short-term indicator. it gives you a hint as to where the trend is. the other way we like to put it, is it tells us where we are relative to the underlying secular trend in the market. it doesn't tell you the direction of that underlying trend. it tells you whether you're ahead or behind where that trend ought to be. right now, it may be the market is going down, the market is going up, but it says relative to that trend, we're probably too far ahead of it. >> if you look at other indicatorers, you look at how many stocks are above their 200 day average, it would not be surpriseding to see at least a pause. do you expect this time from what you're looking at to be another pause where we stay flat

and it's a time sort of correction? or do you expect a break of 5%, 10%, 15% eventually? >> well, i could make a guess, but it would only be a guess. contrarian analysis, it doesn't make a prediction as to whether it will be a flat or more of a downside reaction. what it does say is we've got to look carefully as to what the analysts and the advisers do in the wake of whatever happens. if we have a replay of june where we have a flat market and they quickly run for the exits, which is what they did in june, that would suggest that the rally has more life to it. if they stub bornly hold on to their bullishness, then that would suggest that we're getting closer to a top. >> all right. yeah, but other than the newsletter writers, have you got any other evidence for us in other areas of sentiment or -- i mean, are you looking at, i don't know, advanced decline,

market internals, anything like that? >> well, contrarian analysis doesn't really get involved in those other indicators. what it does is looks at how the analyst es interpret those indicators. the difference is not the domestic decline itself. it's rather the mood or the sentiment or their action that the analysts give to this underlying data. >> is there a long-term indicator that you can talk to us about? because for a while, i thought that it was almost consensus that we would test 8,000 before 11,000 and that seemed to be -- almost anyone would have said yes, the market is definitely getting way too ahead of itself and it would have surprised more people to go to 11,000. are we now at a point where it might be 50/50 that people think we could go there versus going back to 8,000? >> the problem is i'm not aware of any sentiment tool that has really long-term significance. all of the statistical work i've done on sentiment shows that it's -- you know, it's look out

one to three a year's time fram doesn't tell you much. i wish there were a sentiment indicator that had long-term significance. i'm just not aware of what it is. let's say the consensus is it will go to 8,000 before it hits 11,000, that may be the consensus and contrarian analysis may be that consensus wrong. i would bet it's wrong. the problem of using that as a prediction of what will happen is there are an incident number of ways that consensus could be wrong. it could go to 8500 and then 11,000 or 7800 and then 10,000. there's so many ways it could be wrong. >> it almost looked on the charts that we just -- for a while it looked like it was head and shoulders, that was one of art cashins commentaries. now it looks like a reverse head and shoulders. can you give a monitor there? >> again, as i say, i look at what the analysts do in reaction to a formation rather than whether the formation itself. i don't hold myself out as any

expert on reading a chart formation. >> that's a reverse head and shoulders right there. you can look it up in the dictionary and see one of those. that locks like it wants to go higher. >> analysts, the potential head and shoulders topped in late june, early july -- >> that didn't work. >> some people were saying that was a textbook definition of it. others were saying, no, there are aspects that weren't perfect. >> we talked about it too much. >> that very well may be the case. >> thanks, mark. >> my pleasure. >> we'll watch for you -- sunday time normally? >> yes. >> we'll watch for you then. coming up, the stories that have us squawking this morning. let's check in on the "squawk" boardroom this morning. on any given day you don't know who you'll find. today, our guest host, stuart schweit sdwlchlt er will join us.

tdd#: 1-800-345-2550 i want everything right where i can find it. tdd#: 1-800-345-2550 anything that makes trading easier.

tdd#: 1-800-345-2550 i want to be right in the middle of the action-- tdd#: 1-800-345-2550 you know-- i have to see what's going on. tdd#: 1-800-345-2550 and when i pull the trigger... tdd#: 1-800-345-2550 ...i've got to get the best price out there. tdd#: 1-800-345-2550 (announcer) try the new schwab.com tdd#: 1-800-345-2550 for yourself. tdd#: 1-800-345-2550 call 1-888-4schwab tdd#: 1-800-345-2550 or visit schwab.com/trader today. tdd#: 1-800-345-2550 'course a trade doesn't always work out my way. tdd#: 1-800-345-2550 but when it does... tdd#: 1-800-345-2550 ...man... do i love that feeling.

when we come back, this morning's top stories. stuart sh would iter is in the house when "squawk box" continues. i'm robert shapiro. over a million people have discovered how easy it is to use legalzoom for important legal documents. at legalzoom, we'll help you incorporate your business,

file a patent, make a will and more. you can complete our online questions in minutes. then we'll prepare your legal documents and deliver them directly to you. so start your business, protect your family, launch your dreams. at legalzoom.com we put the law on your side. the gold delta skymiles credit card... from american express... it's the official card... of the world's largest airline. and it's the only credit card...

that earns miles on delta. miles that take you... to more places than ever before. over 350 destinations worldwide. so switch today. get up to 25,000 bonus miles-- good for a free flight. call now to apply. there's no annual fee for the first year... and you can redeem... with no blackout dates or seat restrictions. these are just a few of the benefits... of carrying the official card of delta air lines. switch now and you can earn miles... on delta with your purchases: groceries, gas, entertainment, and more. get up to 25,000 bonus miles... with the gold delta skymiles credit card. call 1-800-skymiles to apply. this is the official card... of the world's largest airline.

hacking into the tech rally. the nasdaq gaining more than 25% year to date, but is it too late to get on board? >> the countdown is on to jobs friday. so who's hiring? the ceo of job placement giant adeco will tell us where the jobs are right now. do you know your fico number? the number behind your credit score has a new study on consumer credit conditions. the company ceo will tell us all about it. "squawk box" begins right now. good thursday morning. welcome back to "squawk box" here on cnbc. carl quintanilla along with joe kernen and becky quick. futures moderately higher.

pretty good night in europe and asia. some stories we're following this morning. cisco, better than expected 4q earnings, revenue in line but shares were hit after ceo cautions he expects gross mar n margins to fall in the current quarter as cisco moves moves into a new quarter. rupert murdoch wants his company to start charging by all news websites by next summer. also warns newscorp could break off relations with kindle. to vote a $2 billion extension for cash for clunkers. harry reid says he has the votes to pass that bill. bank of england leaving the bank rate unchanged to 0.5%. bank of england leaving the rate unchanged, 0.5%. we'll get news later today from the european central bank. bank of england leaving things pat. let's say hello to our guest

host, stu schweitzer. stu, it's great to see you here. >> great to be back. >> we have watched a huge run in the markets over the last five, six weeks. and it seems even when the markets get disappointing news they manage to power through it. yesterday down but not by a whole heck of a lot. you're still talking about the s&p above 1,000. so you think things have certainly bounced off the bottom but are we really seeing a recovery here? >> i think we're seeing a temporary recovery because we're going to get this inventory related push to growth in the second half of the year. factories have to start back up just because there aren't enough things on the shelves or on the dealer's lot. we'll get more production. i think with costs having been slashed to the bone, profits should drop. any increase in revenue should drop straight through to the bottom line. we'll have a good run on profits, i think. question is, what happens after that? do we get any hiring? that will be the key question. >> what do you think?

will companies turn around and bring people back in? did they lay off too quickly during the downturn. >> i don't think they laid off too quickly. i think you could argue having cut costs so aggressively they'll be in a stronger position to rehire. we haven't seen much evidence of that yet. even though initial claims have come off the top and we'll get more numbers later on. they're not down hard enough to tell you there's going to be net hiring any time soon. but i think that's the hope. that costs have been cut so sharply and profits are going to be decent enough that maybe they'll be a little net hiring sooner than people think. not evident yet. without that, how are consumers going to participate, because they can't get credit, and so if they can't get credit and they can't get wage increases, they can't get job increases, just how do they increase spending? that's the big knock. >> are we through the worst of the credit crunch? will there be a time when credit conditions ease up significantly? >> i think you have to distinguish between the credit crunch for the financial

institutions, for the banks and so on, and for the consumer. for the banks, i think we're through the very worst of the credit crunch. look at what's happened to the fed's emergency credit facilities? they're, wound down because the banks don't need the money. funds are flowing more normally. the fed has made up, as emergency credit stuff's komg come down, the fed has made up for that by buying treasuries and mortgage-backed securities so they're keeping the liquidity up there. so plenty of liquidity. the question is, can consumers qualify for new money. that's the rub. without jobs, how can they? >> yet you have been increasing your exposure to equities a bit. >> we have, yes. >> how much? what are we talking? >> a few percent. not a whole lot. we're not ready to bet the ranch on the idea of a sustainable recovery but i think this is a playable rally. we've added to small cap stocks in particular because off the bottom, small typically outperforms large by much more than it has already.

and people are pointing to the fact that it's up on a relative basis and that's true, but it should have a lot further to go. >> where did you take that exposure from? was it from cash or bonds? >> from cash, from cash, yeah. that's the problem, you know, joe, so much cash on the sidelines. >> where is -- so normally what would your allocation be, cash, bond, stocks, and where are you now? >> we're still underweight stocks. a little more cash than normal. where we've put money to work is in corporate credit. high yield, which has done amazing. high yield year to date, up close to 40%. stocks are up, call it 10%. so that's -- and we started putting money in high yield at the jpmorgan private bank back in november. so we were like a few weeks early. boy, have we made up for it. >> so when you look at that breakdown, what is your average he exposure to equity versus cash and bonds? >> we have a lot of money in alternatives. if we put that in, we have 77% of portfolios in risk assets of

one sort or another. which is a pretty good slug. >> yeah. >> again, cash of -- earning practically zero is like burning a hole in a lot of people's pockets. we think it's prudent to keep excess cash on the sidelines, as much as for the opportunity to pick up distressed assets at attractive prices as for protection. the really critical call is going to be when to take some money back off the table if this market gets too high. i don't think we're there yet. but we are going to face that risk. >> yeah, when do you start to think, okay, this is a little too high? >> when i'll start to think about it when i hear people say, i think we're back to normal. i don't think we can get back to normal. right now you talk to smart, sophisticated people. the smarter you are, the more negative you sound. when i started hearing more people saying more positive things, i'll think it's getting fully priced. >> how about emerging markets, china in a bubble? >> i don't think china's in a bubble, carl.

>> china has almost doubled this year. >> okay. but china is -- you know what, in the last -- if you go back just a few years ago, the increase in gdp here warped that in china. 2008 the increase in gdp in china was more than double that in america. >> right. >> china is the big kahuna. the question s can they keep it going? there's a lot of debate about that. i think they can keep it going at least for a while. and then it will be a question of whether we are able to start buying more of their stuff. so for now, i think non-japan, asia, boy, between these rally, technology-led and i think we'll talk about tech later in the program, between this rally, technology-led, technology, the key enabler of cost cutting in business today, and asia, techno centric, i think non-japan asia should do well. >> stu will be with us for the rest of the show and we'll have more. >> tech has been one sector

doing well. '09, nasdaq up 30%. joining us is david katz of matrix advisers. i usually think of you as a guy that buys quality stocks normally. you don't go out on the risk of too much. and then you sort of a long-term guy, buy and hold. would you say that's true? >> that's correct. we try to buy them at discounted valuation. good businesses, cheap prices. >> in 2008, i would imagine that you had a rough year. >> we got the stuffing knocked out of us. down a touch more than the s&p. tough year for everybody. this year we've had a very sharp rebound. part of that is that we had a pretty significant overweighting in technology going into the year. we're starting to reap the rewards of that. >> is this a market that -- is it eventually will reward the old style investing? are you going to stick with it at this point, buy and hold? sooner or later the cream rises to the top. >> we're long-term investors and

we like buying and holding. if a stock reaches a fair valuation we're happy to sell it and go to something else. we're typically holding stocks for two to three years and looking for 80% upside. when stocks get overvalued you want to take the money off the table in individual securities. >> the tech story at this point, that's what we want to talk about, the tech story is well known. is that still a place to make new buys? >> we think there are opportunities. tech has vastly outperformed the market this year so we're not expecting that type of outperform going forward. we think it will be a good place to make money but not up another 25% if the market's only up 5%. >> would this be the big ten tech companies we think of or are you looking for bottoms up at other situations? >> it wants to be bottom-up stock by stock. we like some bigger companies. we i think it's a pc-centric rally. we think microsoft windows 07,

dell would be one we like, also like microsoft. cisco came out with good numbers yesterday. they didn't blow people away, our up guidance which is the hope, which is why it's down. we think after a short breather cisco is poised to do better and we think the stock is worth in the high 20s. >> david, are these -- this is stu schweitzer. are these companies going to make money on cost cutting or increased revenues? >> the first step is making money on cost cutting. that's what you're seeing this quarter. business has been dull and poor but companies are meeting or beating expectation. cash flow is the great. there's going to be a revenue cycle six to nine months out. when that happens we think a lot will fall to the bottom line, more than expected and that will drive the next leg up for these companies. >> we were talking a minute ago about the question of whether companies were going to increase hiring. are they going to start -- tech companies going to start increase hiring if they see better than expected revenues?

>> we don't think so. hiring and employment doesn't drive the overall stock market. ultimately earnings and revenue does. we think the first step of this recovery will be a slow economic recovery but the stock market is priced in a perennial depress n depression. six, 12 months down the road we think it will be better hiring, the next leg up for the economy. >> that's one of the problems, the difference between main street and wall street. you know, makes it hard to talk about. we could have the stock market  back to 11,000 or 12,000 and have these horrific numbers on fridays once a month, right? >> employment is a lagging indicator. so it's going to take some time for the employment to get better but the stock market is the leading indicator. that will lead by six to nine months. that's what we think is happening. >> isn't there a threshold level where the unemployment number becomes the leading number again, a leading indicator when you start looking at numbers that could get above 10% or something? >> we don't think so. we think some trends are a little better. unemployment has been worse than

expected. american express said credit trends are a little better than expected. the employment numbers will not be as good early on. >> seems like you need someone to buy stuff from people that -- to generate the revenue and profit growth. you need a consumer, right? you need a vibrant middle class consumer. >> eventually you'll need a consumer. the first step of the recovery is business spending will be better, inventories are very low, consumers are saving much more than they have for the last few years. ultimately pent-up demand. consumers do want to buy. they think they have a right to own things. people feel more comfortable about the employment situation we think the consumer will step in probably a little better than people expect right now. the credit card companies, which are not offering credit right now because we're in a recession, ultimately are going to start lending more easily. that's how you get an up cycle. >> are you doing individually managed accounts? how do you -- >> we do individually managed

accounts for high net worth individuals and a mutual fund. >> what are you managing total? >> we're about $1.1 billion. >> all right. great to see you today. >> nice to see you. >> a long-time "squawk" guy and cnbc guy. be sure to tune in today to "squawk on the street" because john chambers is going to be on at 9:00 a.m. from cisco. actually, 9:10. i may watch that, too. >> me, too. >> i'll have to see what he says. he's a really smart, good guy. that was a little bit surprised at the article in "the journal." you think it's okay to go from 750 senior managers to 3,000? >> the more the better. wage inflation, consumer buying power, all those managers. >> considering the incredible managers we have here at cnbc, nbc and ge -- >> all the way up. >> all the way to the top, you're right, there should be more. >> any comment or questions on that or anything else, we would love to hear from you.

our address is squawk@cnbc.com. futures are looking pretty good. i told you at the top of the hour the bank of england did maintain their interest rate at 0.5%. says the world economy is still in recession and that spare capacity will likely grow for some time. we'll see what jobless claims bring us in a little more than an hour's time. oil's trading down a little bit. still responding to that worse than expected adp number yesterday and some relatively weak ism data we got yesterday as well. in the boardroom, ready for action, it says, mark green, the ceo of fair isaak, the number behind your fico score will tell us about what he's seeing on the consumer credit front. give us a preview of a new study they've done. time now for today's aflac trivia question. who was the first nfl receiver to have 100-plus yard receiving games in his first three starts with a new team? the answer when cnbc "squawk box" continues.af

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!

now the answer to today aflac trivia question. who was the first nfl receiver to have 100-plus yard receiving games in his first three starts with a new team? the answer, randy moss, who accomplished this feat with the new england patriots in 2007.

fair isaac, the company behind your fico credit score soon to be out with an extensive study on consumer credit situations. joining us for a preview is mark green, fair isaac ceo and also from the st. louis fed. >> board in washington. >> thank you. good to have you back. the bottom line with the study is people's available credit has come down, right? >> that's right. >> by more than you would have expected given the cycle? >> more than normal. in some sense this is a consumer-led recession. consumers have never accounted for more portion of gdp than these days. we wanted to touch base and see how consumers doing today. the short answer is they're sort of stabilizing, doing a better job paying off their bills but we're not out of the woods by any means. i think you said it right, stuart, consumer access to credit is quite constrained. 20% of americans in the first

half of this year had their credit lines decreased by credit card companies. much higher amount than usual. more credit taken away than typically did. $5,000 decrease for the average consumer. that's double the number as well. it's clear consumers have limited access to the kind of credit needed to empower them to expand the economy. >> the people, affected aren't necessarily those with risk triggers, right, where all of a sudden they behaved badly somehow. >> right. 5% of the population did have something in their record that caused lines to be decreased. 15% of americans didn't do anything. the banks decided on their own to cut their credit lines, for good reason. when the bank reduces its line, it frees up regulatory capital so good for the bank's balance sheet. and sometimes it affects the consumers, sometimes didn't. high-end consumers, very good credit scores, and so maybe the impact on them is not so great when their lines are cut. >> why would a bank want to bring in risk from a high --

potential high net worth client. >> to clean up the balance sheet so they don't have to encumber regulatories. what's interesting as a result, how have thee affected the average fico score? people at the low end of the score range have been in trouble recently. their scores have gone down. whether or not their credit lines have been decreased. the high end, consumers have always done a good job of managing their credit are doing an even better job. their scores are going up recently. we see a flattening out of the distribution curve. more people at the low end and high, few in the middle. >> what do you consider the low end? >> the fico score range from 300 at low to 800 at the high. anything under 640 is considered low quality. above 7 on 20 or 740 is high. average score in the mid-600s. >> is it affecting people who have active credit or are those who are inactive spenders? >> well, it's a little bit of both. particularly the inactive ones, dormant accounts are the ones

banks are looking at first. here's our tip for consumers as on how they can stay out of trouble here. by the way, they can find these tips on our myfico.com website. only apply for credit when you need it. use some but not all. pay your bills on time. that's the number one success factor in this economy. and keep saving. consumers are doing a good job of saving. they still have a starkly high debt to income ratio. that's beginning to improve. the savings we see going on is a good thing for the long-term economy. >> do you see this reversing? at what point wilbanks say we're going to loosen or open the spigot. >> your guest host probably has a better view than me. it's starting to happen. the banks are not going back to the days of anybody can get a loan without any documentation. this is very prudent ó underwriting we see happening. >> i think that's right. the banks have better access to funding themselves but they're not going to make loans to people that don't appear to be able to pay it back. >> that's right. i think we learned something from the events of a few years ago which is back to the basic of sound underwriting, get

collateral -- >> no more ninja loans. >> no one is talking about that. it needs to be loose enough where a consumer who has the ability to pay off a plasma television, right, can finance it, or a car. >> that's right. we have to be cautious because while we need that access to credit, remember, we're not done with the existing problem. the mortgage problem is yet to peak. credit card delinquencies are continuing to rise and probably will as the unemployment rises for the six, nine, 12 months. the cautionary note from our study is sdurmz are getting a handle, banks are getting a handle but we have a distance to go. >> the banks say it's not their fault consumers feel pinched. they are loaning money. it was the shadow banking system that has disappeared. that it's the shadow banking system that's gone but they are continuing to loan money. >> i think you'll have to see how that plays out. what we understand from the banks is they are beginning to open spigots. the shadow banking economy is harder to get a read on. >> to your point, 30 years ago

the banks comprised 60% of all credit extended. now it's down to like 20%, 25%. >> in what quarter or maybe in what year do you think we can say the delinquencies and ow foreclosure, that has peaked. you say you don't think it has. >> i think we're six, nine months out. i learned my days at the fed. you can give a day or number, but don't give both. >> not both. >> within a year but probably towards the outer edge of that. >> in february you wrote a piece about the president's plan to help modifications take place.w they have obviously stepped on the gas. their tatle telling on some banks. are they doing it the right way? >> i think they are. we have a mortgage relief online.com website that helps people apply. i think we've helped 15,000 people get loan modifications so far. as the administration said the other day, only 10% of eligible applicants have yet gotten a

loan modification. we have quite a ways to go in mortgage, too. good program. time to step on the gas. >> they started naming names of the banks that have done better and worse. have you seen the same things? >> we see the same numbers. we're not in the business of naming names but we see similar statistics. >> thanks for your time. >> thank you. good to be back. coming up, is it too late to try to take advantage of the summer rally? we'll ask barry knapp, the u.s. equity strategist at barclays.

the gold delta skymiles credit card... from american express... it's the official card... of the world's largest airline. and it's the only credit card... that earns miles on delta. miles that take you... to more places than ever before. over 350 destinations worldwide. so switch today. get up to 25,000 bonus miles-- good for a free flight. call now to apply. there's no annual fee for the first year...

and you can redeem... with no blackout dates or seat restrictions. these are just a few of the benefits... of carrying the official card of delta air lines. switch now and you can earn miles... on delta with your purchases: groceries, gas, entertainment, and more. get up to 25,000 bonus miles... with the gold delta skymiles credit card. call 1-800-skymiles to apply. this is the official card... of the world's largest airline.

when we come back we'll get a check of the markets and this morning's top stories, including the countdown to tomorrow's jobs report. speaking of the job hunt, the ceo of job placement and human resources giant adeco will be here and he's ready to get to work, tell us where the hiring is going on in this country. tomorrow "squawk box" live at leen's live from maine for the most important number of the month, the government's read on jobs. 30 economists, money managers and business leaders gather to discuss whether green shoots are growing and if we'll see a rebound in the economy later

this year. senior economics reporter steve liesman fishes for answers to the issues facing washington and wall street. that's "squawk box" tomorrow live from grand lake stream, maine.

welcome back to "squawk box." let's take a look at the market. we've been watching closely this morning. at this point you're going to see the futures are well above fair value. you're talking about up by 28 points when looking at the dow. again, this is coming as the bank of england this morning decided to go ahead and hold its rates steady at 0.5%. but it made some comments that have the -- sent off a few sparks in the markets. they raised the size of their bond purchase, their quantitative easing purchase, to an unexpectedly large 175 billion bounds up from 125 billion bound. that has had some markets moving this morning. we'll keep an eye on that. some other stories we're following, the senate is expected to vote today on additional funding for the cash for clunkers program. senate democrats and republicans came to an agreement yesterday that will allow the vote to go ahead and go forward. the house has already approved $2 billion in additional spending. those two bills will have to be reconciled. a judge so far is refusing

to sign off on the proposed settlement between bank of america and the securities and exchange commission. the bank agreed to pay $33 million to settle charges it misled investors regarding the acquisition of myrerrill lynch. you can check out the bid/ask, slightly high are for bank of america this morning. our next guest thinks it's time to get selective with stocks. joining us from new york is barry knapp, head of u.s. portfolio strategy. you think stocks are off their bottom. they're not going to be going to those low levels again but you also say it's time to be very selective. why is that, because of the big run? >> definitely. in part. we've had a huge liquidity-driven rally across the entire capital markets. i wouldn't say there are signs they're fraying but we've had a

big move and valuat are starting to get scratched. agency mortgages to parts of the investment credit market and parts of the equity market as well. >> but some of the ones we've seen the biggest runs with, areas like technology, those are still -- that's still a sector you like, right? >> we do. our positioning is essentially focused on some of the longer term secular trend, the rebalancing of u.s. growth away from consumption towards investment, global growth away from the developed world toward the developing world. within that construct we think that, you know, areas like technology, industrials, energy should do reasonably well. we're also trying to position for the recovery and manufacturing the inventory restocking this fall. so, again, sectors like industrials will have to do fairly well within that theme. >> where do you think the sectors that are going to come under some pressure lie? >> well, the big question, obviously, is what happens with the consumer, what happens with

the consumer discretionary sector. at the bottom, back in march, that sector looked decidedly cheap. you know, everyone had completely written off the consumer. the sector had a huge move. we've progressively downgraded it to the point where we're now at an equal weight. if you just think forward for the next month or so, the big question is back to school sales and what does that say about holiday sales. we get the manufacturing recovery, but will we get a consumer -- consumer follow through to that. is there another leg lower to house prices that puts pressure on consumer spending. so for me that sector is still a huge question mark. and going forward, there's no doubt the consumer balance sheets, you know, need to be further repaired. the gdp report last week showed us that savings rate didn't increase as much as we thought. it's got further to go, no doubt. so those -- you know, that sector for sure needs further balance sheet repair. >> barry, you said valuations

are starting to get stretched. this is stu schweitzer. you said valuations are starting to get stretched. doesn't that depend on the earning power of corporate america? >> no question. >> i think with companies having cut costs so close to the bone that there ought to be a lot of profit growth that drops out of any revenue increase that companies -- that companies experience. do you agree with that? >> i do agree with that with respect to areas like the industrial sector where you have seen, you know, a pretty good sequential expansion in gross margins. certainly in the technology area, that's true. the issue, though, is that the typical drivers of an earnings recovery out of s&p lows coming out of recessions are the financial sector and the consumer discretionary sector. those sectors generally, their earnings rebound 65% and 55% respectively in the year following an s&p 500 earnings bottom. this go-around we think both sectors face these gale force head winds, deleveraging force,

mid to last year. you talked earlier about, you know, the bank losses to come around the mortgage market, around the consumer market. we don't think that that really plays out or peaks until the mid-2010. so those two sectors will hold the earnings recovery back to some extent. >> well, this isn't the normal -- hasn't been a normal recession at all, so there's no reason, i think, to expect that any recovery in earnings would take -- would fit that normal profile. i do wonder what you think about small caps. >> well, small caps have -- you know, small caps and a number of other sectors have really followed the recovery playbook to a "t" and small caps have done exceedingly well. you know, those trends, having watched small cap foss are a long time, when they start in their periods of outperformance relative to large, it can go on a long time, multiple years. so i would be inclined towards, you know, giving them the benefit of the doubt with respect to that. however, there is a very heavy

exposure to consumer discretionary within the small caps sector. and a fairly heavy exposure to financials. you know, while i think that it could last for a period of time, i am somewhat concerned about the sector exposures of the small cap group generally. so small cap industrial, small cap tech, yes. small cap, you know, consumer discretionary or financials, no. >> okay. barry, thank you for joining us today. >> thank you for having me. we're going to play this or i'm just going to say it? the final countdown. >> yes. >> steve's not even here to appreciate this. >> no, he's not. the final countdown to the july jobs report is on next. we go on the job hunt with someone on the front lines of hiring globally. company of adecco group, north america tig gilliam is walking toward set with a great walk.de floyd "money" mayweather r

has the fastest hands boxing has ever seen. so i've come to this ring to see who's faster... on the internet. i'll be using the 3g at&t laptopconnect card. he won't. so i can browse the web faster, email business plans faster. all on the go. i'm bill kurtis and i'm faster than floyd mayweather. (announcer) switch to the nation's fastest 3g network and get the at&t laptopconnect card for free.

♪ we're about 25 hours from the release of the employment

report for july. my next guest is on the front lines of labor force, tig gilliam from adecco. it's great to see you. adecco worldwide, you know about the job market almost in every country, but you're the north american president. >> north american head. yeah the job market is remarkably similar around the world, except what we've experienced here over two years in north america with slow job loss, 2 1/2 years now temporary job loss in north america. we're now seeing that across the globe. some countries hit much more dramatically than the u.s., like spain and italy where the decline in jobs has been very rapid. >> the order of the day is that the declines are slowing. last time we were on, a month ago, whenever it was, you were seeing some of that, too. >> yeah. i think we're still going to have, you know, a big negative number in the jobs report tomorrow. we're still going to see unemployment increase 10 or 20 basis points and this will take place over the course of the rest of the year.

even in a good scenario. the fact we're losing jobs at a slower rate is a good sign. and i think we also have to remember that even though the economy overall is losing jobs, for people who are looking for work, there are millions of people every month who are getting new jobs. and there are companies out there that are hiring today. even in a tough economy. >> is work week going to expand tomorrow? >> you know, we haven't seen much good news in average hours worked or in the wage rate. i think that's why we're going to be in for a slow recovery. because even though companies have cut a lot, there's still some capacity, they've got people on furloughs, people working part time, 9 million americans working part time for economic reasons. we see more clients investing in technology, trying to improve productivity in the business. so i think even as they come back into the market, they're going to come in maybe a little more slowly than they have to hire people than in past recessions. and we see a lot of clients now talking about, boy, these cycles were greater than we expected. we really need to plan on a much higher level of flexibility as we come back in this time.

so i think they're rethinking their work force strategy in terms of how they're going to -- >> is it possible we stop before 10%? >> i think we could go over 10%. >> so you don't think that we -- we go over it, but by the end of the year we're back to adding net jobs? >> i think we could be adding net jobs by the end of the year, yeah. >> i was just going to ask, tig f you look inside the unemployment statistics what you see from the government's numbers is that the number of people who have been laid off temporarily is up but it's not up nearly as much as in some past vicious economic downturns, like '74, '75 and '81 and '82. what's really up is the number of people who have been laid off permanently from their jobs. >> sure. >> do you see this changing? >> well, i think we've had a remarkable run at that. an adecco group company that special ices in placement. they've had a record-breaking run over the course of this recession compared to their past all together.

although the sentiment among many clients is turning from how many heads are we going to cut this month to, okay, maybe we need to now start think about adding back. there are large companies out there who are going to come with big announcements still. we're not past the large announced layoff process yet, even in this cycle. >> the challenger figures yesterday were a little lighter than a year ago but not much. >> i don't know about those figures. >> a lot of people don't. we have them on every month. i think his method might be a little less scientific than others. how much do you worry about people's whose benefits are running out and the likelihood of those being extended? >> i think we've gotten to the point where a lot of people who were in the job search, they had expectations for what they might find for a new job and they're rethinking that. they're improving their education, going back to school. they're looking for volunteer or temporary assignments to give

them introduction into a new industry or skill set so they're improving their attractiveness in the job market. you have quite a number of people who are past their benefit time frame. now they need to work. >> right. >> tig, can you give us any insight into small businesses? >> small businesses, you know, obviously in the recovery are going to be the place where we add jobs. >> do you have any actual addition you do fortune 500 companies. >> we have 45,000 companies. >> are they fearful of the future? >> i think they're very cautious. the economic numbers you get one good one, you get one bad one. unless an individual company is in the position where they're really seeing their business pick up, they're very cautious about adding back. >> i mean, with the political backdrop, stu will probably argue with me, but the chamber of commerce thinks small businesses are under assault with the way -- tax policy, i mean, if they have to shoulder

health care responsibilities, cap and trade, everything else. >> i think what you're saying is there's so much uncertainty -- >> i'm not saying about uncertainty, whether these programs go through, that's the only uncertainty. >> >> and to what degree. >> if i were a small business owner, that would be paramount. >> very tough for them to get credit. they're very cautious about adding back. but, you know, our professional staffing business focuses on the small and medium sized intrer price companies. they're engaged with those companies that need that one specialized person. it's been even more difficult time in that business than in the large enterprise business. >> tig, thank you. >> thanks for having us. >> this is good to before every employment report. the ecb just out, leaving its rates flat at 1%. it's standing pat, just as we expected. we heard from the bank of england today, it held pat at 0.5%. but the bank of england is

shaking things up a little bit where they talked about raising their quantitative easing program. they extended it to $175 billion to $125 billion. that caused chaos in the markets. kevin ferry let us know about that. he's standing by at the cme. what happened? >> good morning. it was pretty hairy, becky. i think you have to put it in context that yesterday here in the states the afternoon trade was all about the qe ending and winding down into august, early september with what the treasury and fed are doing here. so by upping their program over there rather unexpectedly, a dramatic fall in the pound, the dollar rose against -- across all the currencies. about a 20 basis point move in the bond market over there helping pull our market back up some, too. >> so dollar's going to see a little strength after getting pummeled recently. >> right. >> what kind of pressure do you think this puts on the fed? >> well, the fed's spot is

getting tighter and tighter because of the equity markets' rally. so there is a contingency people betting against the fed's ability to hold the rate down, becky. i would put it this way, the volatility in the currency market is really what's driving things. inside the notes, the bank of england noted that the export sector was beginning to stabilize the economy for them. that's based on when the dollar was strong and the pound was weak. since that time the market has moved dramatically in the other direction. so i think reducing the volatility overall in the currency world would probably stabilize the entire system better. right now we're nowhere near that. >> i'm surprised at the bank of england talks about extending the quantitative -- >> not extending, easing. >> housing is doing better, their economy is feeling a little better. >> to kevin's point f it's all based on exports, maybe you're

okay with having a weaker sterling or a weaker pound. >> i think the real issue is whether central banks everywhere, having put in some much liquidity, are going to be able to start pulling it back as their economies look better. that's going to stoke inflation fears if they don't. >> exactly. that's the delicate balance we're heading to. $2 billion for cars quickly but doesn't seem to be any more money here for coupons. the boe found 50 billion pound for coupons out of nowhere. >> kevin, thanks for alerting us to that. thanks for joining us. >> thank you. the retail rush is about to begin. the next hour or so will be very busy. we'll pick out some winners and losers as same store sales come out with dana in just a minute. up next on "squawk box," don't start your day without knowing the names that will make you money. joe has your list of stocks to watch.

(groans) a lot of people are gonna be kicking themselves for not buying in this market. (woman) visit remax.com where you can see all the listings in thousands of cities and towns. where do you want to be? she is the greatest thing ever. woman: one little smile, one little laugh.

- honey bunny. - ( coos ) we would do anything for her. my name is kim bryant and my husband and i made a will on legalzoom. man: it was really easy to do. - ( blows raspberries ) - ( laughing ) robert shapiro: we created legalzoom to help you take care of the ones you love. go to legalzoom.com today and complete your will in minutes. at legalzoom.com we put the law on your side.

♪ >> boe -- you have to pull -- honestly? >> it's just easier. >> no.

you can listen to that? >> i can listen to it. >> i crave it and look forward to it every day, especially with that english music. it puts the kybosh on the overly pretension, important -- yeah, let's take a look at stocks to watch. cisco reporting 31 cents, 2 cents ahead of expectations. revenue also ahead. the book to bill was comfortably above one. but full year revenue is guided to be down 15% to 17%, implying a range of 8.57 to 8.7, which is also where reuters was. but, you know, the stock has made a move. they're talking about a 3% indication lower today. people are waiting to see whether a lot of these new initiatives that the company has undertaken, if you want to check out the "b" section of the journal highlights a lot of things john chambers is trying to do to keep growth lying like it is or reignite growth.

you can see john will be on at 9:10 today on "squawk on the street." >> how much cash they have. we have a lot of cash. >> that's right. >> cash flow. >> he's southern. he hasn't lost that southern gentility. comcast, second quarter with 33 cents a share. favorable settlements and related to taxes. so the 33, i don't know if it's comparable to the 26 cents. the company reporting revenues of $8.9 billion. american express upgraded from buy to hold at citigroup and added to the top picks live list. it's more comfortable, citigroup is, that credit has stabilized at american express. the target is 36. look at that, 31 now. >> a long way from nine. >> a long way from $8 or $9.

limited brands was looking for it down 11.3% that's -- >> woo hoo. we have dana tellcy joining us in ten minutes and i'll talk to dana about what we're seeing. we heard already today from costco as well. >> don't need to be here for that? >> yes, very important. >> you still want me here while you're talking to dana. >> yes. >> does carl has to be here? >> yes. >> costco was down -- salary, carl quinn. >> have i ever opened my big mouth? >> you thought about it. >> the point s i never thought about it. >> what about joe kern? >> we could do kernan with an a-n. >> when i search my name, they spell it with a lot of nasty stuff. anyway, july komps at costco down 7, worse than the street

account but in line with the first call. and then finally, king pharmaceuticals, 32 cent, above expect takings and revenue was also above. >> so when you look around sector by sector at the s&p, this time there's been a rough balance between the number of sectors that are underperforming on revenues, but revenues are coming in light, versus those that are coming in above expectatio expectations. so that's actually an improvement. yeah, they're still down but an improvement relative to the first quarter. if we can keep that going, that would actually be positive. >> all right. >> good stuff. when we come back we'll get a flood of breaking news. retail sales, as joe mentioned, also weekly jobless claims in about 35 minutes. and senator republican jim demint want to leave the cash for clunkers program on the side of the road. we love having the senator on. always a firebrand. a lot to talk about. we'll see him in the coming hour. fithe same tools the pros use,

so you can be a disciplined trader. by selecting from eight advanced triggers, your order gets executed, even when you're busy. and with trailing stops to help you lock in profits and minimize risk, you can be confident in your strategy, no matter which way the market moves. find out why more and more active traders are turning to fidelity for a smarter way to trade online. trade like a pro. trade with fidelity. the gold delta skymiles credit card... from american express... it's the official card... of the world's largest airline. and it's the only credit card... that earns miles on delta. miles that take you... to more places than ever before. over 350 destinations worldwide. so switch today. get up to 25,000 bonus miles--

good for a free flight. call now to apply. there's no annual fee for the first year... and you can redeem... with no blackout dates or seat restrictions. these are just a few of the benefits... of carrying the official card of delta air lines. switch now and you can earn miles... on delta with your purchases: groceries, gas, entertainment, and more. get up to 25,000 bonus miles... with the gold delta skymiles credit card. call 1-800-skymiles to apply. this is the official card... of the world's largest airline. finally, good news for people with type 2 diabetes or at risk for diabetes. introducing new nutrisystem d, the clinically tested program for losing weight and reducing blood sugar. hi i'm mike, and i lost 100 pounds on nutrisystem d when i was first diagnosed with diabetes, that first step was more like a giant leap. till i discovered nutrisystem d. in a clinical study people on nutrisystem d lost 16

times more weight and reduced their blood sugar 5 times more than those on a hospital-directed plan. plus a1c was reduced .9%. choose from over 140 menu options, there is no counting carbs, calories or points. i lost 100 lbs. and lowered my blood sugar level. nutrisystem d changed my life. mike is one of many who have lost weight and controlled their diabetes with new nutrisystem d. backed by 35 years of research and low glycemic index science nutrisystem d works. satisfaction guaranteed or your money back! new! nutrisystem d. lose weight. live better. call or click today.

. "squawk box" begins right now. ♪ i wanted a new drug ♪ sfchlt one that won't make me tick ♪ ♪ one that won't make me crash my car or feel three feet thick ♪ >> welcome back. >> you said it, joe. >> no, i did not. welcome back to "squawk box" here on cnbc, first in business worldwide. i'm joe kernen along with becky quick and carl quintanilla. our guest host this morning, stu schweitzer.

informing us of all kind of stuff, personal and public life. global market strategist at jpmorgan private bacnk. we see why he works at the private bank. some things should be kept private. ahead of the weekly jobless claims coming in -- >> you're insufferable, joe. >> we're up 46 points, 47 points after a brief respite yesterday. is it respite or respite? >> respite. >> depend which side of the pond, joe. >> really? i think people who say respite don't know how to say it. >> me, too. >> cisco posted better than expected fourth quarter revenue but shares were hit after hours as ceo chambers cautions he expects gross margins to fall in the current quarter as cisco moves into new markets with lower margins. the mix may not be as good. you can hear more comments at

"squawk on the street" at :00 a.m. eastern and stock is called down 2% or 3% but it's had a pretty good run. we've been watching same store sales. now here with her analysis is dana, chief research officer. good morning. we've had a few reports that are been trickling in. maybe the one that surprised us the most is the limited. they came in with same store sales down 7% but quite a bit better than the street expected. what do you think that's going on? >> one thing is you had clearance sales at the beginning of the month. i think that helped drive the month. inventories are getting cleaner. swimsuits, some of the seasonal merchandise, definitely cleared out. now we're bringing the transitional goods in. overall retail same store sales for the month of july come in a bit better than expected, except for the buckle.

>> yeah, discounters have outperformed the most. when you see costco coming in with numbers right in line to slightly disappointing, does this tell you it's a co problem or maybe the discounters aren't going to have the juice they've had? >> i think that given the promotions, held at all retailers, even discounters are beginning to feel it a little bit. traffic has been a bit weaker. we'll get target's number in another half hour. we're looking for them to be down around middle single digits. >> macy's coming out, down 10.7% versus down 9% the street was expecting. department stores have had a very tough road to hoe. >> yes. democr department stores are down double digits. we had the anniversary sale at noe nordstrom and that will be a key number to watch. we think inventory levels are getting leaner. that balance between inventory levels and, in stock is something to watch going forward. we think online sales will be

the other key trigger point if you're not in stock at the stores. >> we had the ceo of office depot on yesterday and he was talking about how they're planning a lot of big promotions to try to get people into the stores for back to school. about how even next week they'll start giving away free backpacks. when do you think when you're an analyst looking at these numbers in terms of what it means for margins and the bottom line? >> i think we're seeing margins do a little better than top line. but they don't have a lot of inventories. you definitely have less goods to sell, more should sell at fuller prices and product cost should come down. we're in the middle of our back to school shopping. we did four cities and we're seeing lower prices than last year. as a result of that we're seeing, hopefully, some more full price sales. but where is the traffic? that's one of the key elements. we're just not seeing the levels of demand. >> dana, thank you very much. as you mentioned, we'll be getting target later in the program and we'll check back in with you. thank you. >> thank you. the senate in washington will vote on extending the cash for

clunkers program today. the measure is likely to pass but the debate over who's going to pay the tab continues to rage on. joining us this morning with more on that, senator jim demint, member of commerce banking and joint economics committee joins us from the hill. welcome back. good to see you. >> good to see you. sounds like we need cash for department stores, too. >> somebody's drawing that up in committee, you know that. let's see. minority leader mitch mcconnell said there will be a vote, and "the times" said demint will not block it. is that true? >> we don't are the votes to block it. all we could do is maybe delay it a few more hours. so we're going to have a vote on it, but i said we have-h to have a debate and have a roll call vote so americans would really know who is supporting this centrally planned economic scheme we're working on here. this is just an economic earmark for one sliver of our economy. now at the same time we're

talking about raising taxes on small businesses that create 70% of our jobs. it doesn't make any sense what we're doing. >> you sounded pretty committed early on that you and mccain would put up a roadblock here. why the change of heart? >> well, a few republicans indicated they were going to vote for it, which meant we had no chance at all of stopping the bill. so all we could have done is cause the vote to be on friday rather than thursday. if we get some ample debate time and a roll call vote, that's about the best we can do because apparently too many people want to give away money. we can't stop it. >> senator, when we were down there the other day, you didn't join us, i don't know why. it would have been nice to have you on the panel as well. but judd gregg said it wouldn't be nearly as -- you know, that republicans wouldn't hate it quite as much if it would come out of the originally agreed upon stimulus. he was worried that's going to be -- you take another $2 billion from that and then you'll replenish it so it's like

another $2 billion. >> that's what nancy pelosi said she would do. we pretend we're taking it out of the stimulus and then borrow more money and backfill the stimulus fund. >> this is -- if you didn't do it that way, if you just did -- i mean, this is probably a pretty good -- you already got to 780. would you agree at least if you used what you already had earmarked this is the lesser of a lot of other evils? the stimulus package? this is actually working, it's going to help gdp, taking cars off the lot, helping autoworkers. i mean, this is -- as far as stimulus goes, this isn't a bad way to do it. >> it's still a horrible policy. we've gotten a number of calls this week from used car dealers who no longer have inventory because these cars are, destroyed. some perfectly good trucks and suvs are, destroyed that could be used for small businesses and other people. there's always unintended consequences we get into here when we think we can plan the whole economy. it will do a lot more harm than

good. we've seen one analysis that says we'll probably spend $45,000 for a new car sold when this thing is all said and done. >> bottom line, you think by the end of the week this thing will happen? yes? >> it will. in time we're spending money it's hard to get people not to vote on it. >> health care, hold anything town halls next week? what do you expect to hear? do you believe these disturbances around the country at other town halls have been motivated by political operatives? >> i think it's been astounding the president would call these people mobs. you can send a few people to a town hall to disrupt but not the whole crowd. i've never seen americans so upset and anxious about the direction of our country. this isn't republican or democrat. this is americans standing up, trying to tell the politicians that we're going in the wrong direction. and -- >> some of them, senator, to be -- to be frank, some of them are angry because the congress hasn't moved fast enough on health care. wouldn't you agree? >> very few that i've talked to have -- are angry because we

haven't moved fast enough. the seniors are worried because this bill cuts medicare. people who have insurance at work are worried because they see reports they'll eventually lose their health insurance at work. there's not too many americans who really like this idea of government-run health care. >> well, maybe the trick is for republicans -- i mean, the more the president seems to talk about it, the more the negative ratings in the polls go up. maybe the idea is to let the president speak more about it while you're all on recess and let the party hang themselves. >> well, i hope he continues to sell his government plan because he has several versions of what he says is a government and what's not. but the key is, as republicans, is that we go out and say there's a better way to do this. we need interstate competition between insurance companies, which the president won't allow. we need to give fair tax treatment to people who don't get their insurance at work. we could give every family in america $5,000 a year to buy

health insurance if they don't get their health care at work. there are a lot of things we could do to make the system work. it makes no sense for our government takeover. the biggest problem with health care today is that medicare and medicaid don't pay their fair share and shift the costs to private insurers. >> you know, the dynamic when we speak is usually the same. you don't like the way government has spent money, is spending money. we had those kind of conversations as well with governor sanford over the past few months. his personal traveils said. i wondered that was endemic to the part of the country, your party or what? >> it's a constitutional view. our only oath of office is to protect and defend the constitution. that limits what we can do. there is to way you could extract from the constitution a cash for clunkers program or the type of spending that we've got going on here in washington now. as judd gregg said the other day, we're headed for banana

republic style economy with the government control of so much of our economy. free enterprise can't work in the context of what president obama has planned for this country. >> do you believe that we, as we asked the senators earlier in the week as well, that when geithner or summers go on television and don't want to answer one way or the other whether they'll raise taxes on families that make less than a quarter million, that that will, in fact, happen, they'll use the deficit as an excuse of why they had to break that promise? >> well, they'll try to say it's not broken, they're taxing small businesses who they say are rich people. i've been a small businessman and i've seen the gross amount of money that goes through that looks like my income is high when i'm taking home $30,000 a year to try to make my business grow. they'll disguise it. they'll tax soft drinks, they'll tax everything they can think of, just like they're looking us in the eye right now and saying they're creating jobs when we're still losing them.

i think they can use a lot of flowery rhetoric to say they didn't break their promise. they already have when they raised the tax on cigarettes. they're going to raise a lot of taxes and it's going to continue to hurt our economy and this country. i'm glad americans are standing up and speaking out because we're going in a terrible direction economically here in america. >> well, if that is all true, then 2010 must be a pretty good proposition for your party. every president, except for george w. bush, lost seats at the first mid-term. how many can the gop get back next year? >> i think it depends on what the gop stands for. i'm hoping we'll get back on those principles of limited government and personal responsibility. >> can you get -- if you net 41 in the house, you get majority back. >> we need enough so that at least we can stop things like cash for clunker. that's going to be my goal, is to pick up enough seat, hopefully just strong, conservative pro-business

republicans who understand that we can't manage the economy from washington. we just have to have goo good laws and allow the free market to work. >> we'll see. that's a ways off. we'll be watching to see what happens with clunkers this week. senator, good to talk to you as always. >> thanks a lot. take a look at gold prices. there have been markets that have gone hey wire this morning. gold is one of them. there was a big spike where the price of gold shot up by $11 over the course of a few minutes. that's come back down. you'll see it up $4.70 at 971 but there have been weird movement this is morning. it came after we heard from the bank of england earlier today. it held rates steady at 0.5% but raised quantitative easing program substantially. raised to 175 billion pounds versus 125 billion. some people have been looking for bond-buying programs to get pulled back in but the bank of england confounding traders in the market today. it's had a big impact on things like the pound, put pressure on

the pound and that has improved the dollar. you're seeing interesting market moves throughout many of these areas today. also want to show you shares of gap right now. sharply higher. the company came in with same store sales down 8%. that was only slightly better than expected at 8.5%. but the margins are well above a year ago and the company says they see earnings as 30 to 32 cents for the current quarter. that's better than expected. that stock has been higher in premarket. >> cost cutting, right? >> cost cutting but you're not offering the big sales. it says to me they're selling at same price. >> their inventories are down so they don't are to liquidate the stuff. coming up, the most up to date report on labor markets. the weekly jobless claims. may not be part of this number friday but a gauge that's become more and more important as time has gone by every week. that's at 8:30 a.m. eastern. first, the world's biggest diabetes care company, novo

novonordisk. the cfo will talk to our blogging reporter who has a blog name apharmasmarket, do you get based on the deal they get. - others buy the car of their dreams. - ( beeps ) during the lexus golden opportunity sales event, you can do both. it's an opportunity today. it's a lexus forever. special lease offers now available on the 2009 es 350.

the world's biggest diabetes company novo knorrdisk, beat the street, raised guidance for the full year in part due to strong influence sales growth in north america. cnbc's pharmaceutical reporter mike huckman joins us with another cnbc exclouss ive. >> thanks for the blog plug. novonordisk invinners about the first one a day shot for the diabetes disease, awaiting fda approval. joining me is chief financial officer. good afternoon to you and thank you for, here. many big drug companies have reported in the second quarter either declines in sales of their drugs or flat or little

sales growth. so how is it that in this recession, when presumably more people are out of work, they're uninsured, that you're seeing a big pick up in insulin sales, in particular, here in north america? >> well, it's really linked to the pandemic of diabetes. we're seeing more people catching type 2 diabetic because of unhealthy lifestyles leading to the diagnosis of diabetes. through that, over a couple years, people typically turn to insulin as the ultimate and best treatment for long-term -- for people with diabetic. >> mr. brandgaard you live in a country that has government-run health care. what impact, if any, do you think if health care reform goes through here in the united states will it have on your company's business? will you see possibly an increase in sales because more

of the underinsured will get coverage, go on diabetes drugs and stay on their diabetes drugs? >> well, i think in the near term it's most probable, although it's still, debated. i think it's probable there will be a negative pricing effect generally in the pharma industry and in particularly for the diabetes care industry. that, said there could be a long term indication of getting better cover for people with diabetic uninsured, the 47 million people uninsured. long term this should lead to lower costs for u.s. society as it's been demonstrated in a number of countries that good diabetes control with insulin has cost savings for society at last. longer term use by society if we can get better coverage for people with diabetes, long term, that should reduce costs. >> you're saying that even though your profit margins might get squeezed you can make up for at least some of it in sales

volume? >> probably not in the near term. longer term, of course, getting better care through the ininsured and ensuring more get on insulin treatment should lead to long term higher volume growth overall in the u.s. then with a significant 40% plus market share we should have a chance of getting some of that. that will require for us to continue to develop even better insulin, leaving lower risk for people with diabetes to stay on diabetic control. >> let's talk about victoza, waiting for fda approval of this first one a day injectable for diabetic. tests shown it not only lowers people's blood sugar and reduces their weight as well. when do you expect the fda to make a decision and how soon after that can you launch the drug here in the states? >> we hope the fda will make that decision within this quarter. and it should be weeks after that that we should be able to roll it out throughout u.s. we have produced the drug. we have educated the sales

force, et cetera. so we are ready to introduce it to the american people with type 2 diabetes as soon as we can get an approval. >> are concerns over evidence of thyroid tumors in lab rodents possibly holding things up at these super-safety conscious fda? >> i think overall the fda is looking at all the data. largely we have been able to prove in humans that that doesn't seem to be any incidents of rick here. there is a bio market who demonstrate there is no increased risk in humans in longer term studies up to two years with our product of using to reduce the blood sugar and reduce weight. we believe we have proven for the humans, society at large, the rick of this new product is not different. bear in mind, people with diabetes are dye dying by the day. it's a significant number of

patient in the u.s. that are dying from getting inadequate treatment for diabetes. i think this is a product that could be well used for the american society at last. >> very quickly, though, how much control of the market are you going to have with lily, amalin on soes cloes on your heels with a once a week version of this trug? isn't a week a week going to trump once a day? who wants to shoot themselves up once a day when they can do it only once a week? >> well, there you have to look at what are the details of the individual products. we believe we have one in a very, sleek, simple injectable device. having a daily habit is easy. we know from insulin treatment, here we believe we can get people into injecting themselves once a day. once weekly carries some advantages and also disadvantages. it's not as simple a device. it has to be used. they also have to get through the regulatory meetings as we have been challenged with over the last 18 months or so.

>> thanks again, the novo nordisk chief financial officer for joining us exclusively on cnbc. >> thank you. when we come back, breaking news. retail sales, state the nation's market, jobless claims at 8:00 a.m. eastern time. we'll cover that and look ahead to tomorrow's main event, the big jobs number which is going to be exciting. >> it is. also coming up this morning, on the call, abby joseph cohen of goldman sachs at 11:20 eastern time. at 155 miles per hour, andy roddick has the fastest serve in the history of professional tennis. so i've come to this court to challenge his speed. ...on the internet. i'll be using the 3g at&t laptopconnect card. he won't so i can book travel plans faster, check my account balances faster. all on the go. i'm bill kurtis and i'm faster than andy roddick.

(announcer) "switch to the nations fastest 3g network" "and get the at&t laptopconnect card for free". fidelity, traders learn from the pros. say you want to backtest an entire portfolio of stocks. market experts show you how through fidelity's extensive trading knowledge center. and fidelity gives you free research from 15 independent firms, with accuracy scores... to help you decide which analysts to trust. find out why more and more active traders are turning to fidelity for a smarter way to trade online. trade like a pro. trade with fidelity.

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.

let's take a look at target this morning. target just out with the same store sales. coming in with comps for the month of july, down 6.5 %. the ceo company says that this is in line with their expectations for the month but it is below what the street was expecting. street was looking for a drop of 5.8%. again, down 6.5% versus 5.8%. if we can get a look at target stock and see how it's reacting to this right now. they say they continue to see a very challenging sales environment but that they're experiencing favorable gross margin performance. again, look at the gross margin, see what sales they were offering, how their gross

margins held up. we'll keep a look on that. one more key number to go before friday's key jobs report. next up, weekly jobless claims. we'll have the numbers and instant reaction. oof! i hope he has that insurance. aflac! 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!

welcome back to "squawk." rick santelli. the data is out. a drop in jobless claims of 38,000. we're through the seasonality tunnel. this is, indeed, fairly good news. so 58 revised last week. 550 this week. continuing claims, a bit of a different story. revised upwards from under 6.2 million to close to 6.25 and then take that revision and ramp it up to 6.31. so we get a different split look here. continuing claims, the ones cumulatively behind us ramped up, a rather significant drop post most seasonality. we'll let the economists debate if there's any other influences. it gets kind of difficult. you have to really scratch down. the dollar came in better. the surprise of the day. mpc monetary policy committee bank of england wasn't straight

with the marketplace. they've been hinting about no more quantitative easing funds and, boom, they throw another 50 billion pounds, about 84 billion u.s. dollars in a quantitative easing program. their currency getting hit a bit. pre-opening equities didn't move much on this number. they were up solid and still up pretty solid. back to. >> you rick, i know this number isn't part of the friday report but if you just extrapolate what we're talking about here, could there be -- maybe a number not as bad as people are expecting on friday, given this claims number? >> you know what, joe, i think the answer to that is yes. we overcompensated or overpriced in what that better, less negative number is? probably yes there as well. the unemployment rate off to the side calculated difference going to be important but the end of the day, negative jobs, big losses, moving toward zero line

at some point in the future. that's all pretty good. the real green shoots is when we go from zero to positive. i think the equity market's big run prices in a lot of the less negative so it will be an interesting number tomorrow. >> rick, don't you have a garage full of clunkers? >> indeed, doi have a garage full of clunkers. >> 1936 aston martin a clunker. >> no u.s. clunkers made in the u.s. in the grand years of the '60s. >> couldn't you take ten or 15 down to the dealership and walk out with 50 grand? >> as much as i like a lot of cars out there and american cars out there, there is no car on the planet that has the quality and the chrome of a '60s car. we can't trade in those clunkers unless they pay me by the pound. if they pay me by the pound,

i'll think about it. >> they pour the acid into the engine, you couldn't watch that. >> they get rid of all the auto parts. some of the parts on my clupgers are rare. we don't want to get rid of any of those either. >> if they ever have a cash for clunkers hold, traders on the cme, we're not trading you in either. you're a clunker we're keeping. >> you know what, the median age of floor traders in the last 15 years climbs rather dramatically, yes. the world has changed. . the revolving door into other areas of the business is slowed but, you know what, it seems as though this bunch is trying to do what they do best. turn a profit, keep their head down and work hard. it's not as easy as it looks. >> if you live in chicago, and you look out at the lake on a saturday and you see all the boats, all guys from that floor, as far as you -- rick included. >> where are all the customers? >> the only vote in my house is the little one in the tub. we're not into boats.

>> all right, rick. we're going to move on here. thanks, buddy. we'll get to stay in chicago with jim, who is -- i don't know why we have these titles for him because he's really -- you're just like a media god at this point, aren't you? we'll just call you mg, tv star? chief economist josh and guest host stu schweitzer. since the claims number isn't part of the friday number, can we draw something -- can we say it was better than expected, therefore, we might get a friendlier number on friday? >> i don't know that you can draw that conclusion necessarily. i think the general trend in claims over the last month or two is favorable. we were up around 650,000 in new claims. we're down into the mid-500s. still a high level but notably better. that points to some improvement. that corroborate rated and will be corroborated again by tomorrow's report. the rate of job decline is slowing. we're still shedding jobs.

but we're shedding them at a notably slower pace than we were earlier in the year. >> i think josh is right. basically, the claims numbers are telling us this recession is over. it doesn't mean that the expansion is necessarily getting started, particularly from the standpoint of american workers. but the worst of it's behind us. we're going to have growth in the second half of this year. >> i agree. >> so when do you have the recession -- do you have a date for when it ended? >> probably sometime around the second and third quarter, so over the summer months will probably be somewhere in that zone. but i think importantly -- more importantly, we are likely to going to see some growth in the second half of the year. but that doesn't mean we're completely out of the woods. i mean, we still have significant headwind to get through. the residual effects of the housing and credit bubble bursting. i think that will restrain the vigor of the recovery. >> all right, jim, moving on to you. the equities, you can't even --

i don't know what you tie the move in equities too. they're either so far ahead of the economy or anticipating something that we don't know about. can it continue, though, jim or -- >> absolutely it can. >> we're not ahead of ourselves? >> no. i think we can definitely continue. i just read an article on the cnbc beb site about a wealth manager of the super rich and talked about where they're investing their money, in fixed income and not chasing the rally. that's where the fuel for this rally will come from. if you want to make a fundamental argument against the rally it's easy. every day it closes positively. meaning the late money is is coming in. we continue to draw people in. there's one thing you didn't mention, too, perhaps this stock market rally and stabilization in home prices, that actually creates the economic boom. we're we're talking about a panic consumer who won't spend his money. when he's not losing money with a cascading home price or cascading stock market value, you know, perhaps that guy's going to be a little more confident and start spending

more. >> people think that's why we're up 50%, jim. >> no question about it. but that's also -- remember, we're up 50% and now the market is rallying because it's rallying. nobody wants to miss the move. there's a million hedge fund managers out there who have lost a ton of money who can't afford to miss this move. we've been saying that for a few months but it holds true. >> jim, i wanted to point out what we're putting across the bottom of the screen and that is morgan stanley is announcing it reached an agreement with treasury. it's going to be buying back the warrants, the outstanding warrants for the t.a.r.p. money it was issued. $950 million, the price that's they'll pay back. wie seen the banks getting to the point where they buy back their warrants. the question how much they would pay the government. goldman sachs jurp jumpeded in and paid it back quickly. bank of new york mellon joined in yesterday. they point out by buying back the warrants with this $950 million, it brings the total to what they've been paid to the

u.s. government is $1.26 billion. when you add up these warrants and also what it paid back, including the dividends. >> this is what we hoped would happen, right? this is the best of breed showing their colors with goldman sachs, jpmorgan, morgan stanley. this is good news. >> unless they get the money off the aig fix as well. you saw that story. >> but it costs money to do what you need to do to aig to get the taxpayers' money back. >> 20% annualized return on their investment in the company. >> and there are people -- i watched the last hearing. the congresswoman from ohio, 20% will not be good enough for her on a return. they figure the government should be gouging these guys because they needed help. they say we should be getting  60%, 70%, 80%. >> i would say 20%. >> i would take 20% on anything. we were -- we held our nose

trying to help the financial system. >> you have to remember, we were trying to help the economy. >> i know. >> we're trying to help everyone. >> and the economy -- >> if they pay back 20% i don't see how you continue to hold all of wall street in disrepute and disregard if they pay the money back with interest, you've got to let it go. >> or to question whether this was the right thing to do. there were questions at the time whether we would get a lot of this t.a.r.p. money back. to get it back with 20% interest is a pretty good deal to the u.s. taxpayers. >> i think the decision that was made on the t.a.r.p. program back in the fall, to put money into the banks in this way, looks like it was -- >> rick, are you shaking your head? what do you think is a fair price for these things? >> anything that's market driven. i think everything ought to be market driven, warrants, every aspect, because no single individual should have the authority, and government is a czar, to create any pricing. markets do it better. are they perfect? no. but a lot more perfect than the

alternative. >> you're okay with this? >> yeah, i'm okay with this. you hit that 60% number, i just think they've been hanging out with the irs guys. that's everybody's favorite numbers. >> yeah. if you're a new york or new jersey taxpayer, 60%, that is the number we're talking about here. i know, i wish i was in my thirty so -- >> and everybody's this optimistic. jim, you really think these equity prices are going to paint prosperity in metrics like output over the next handful of years? >> yes. i think there's a chance of that. >> i have so many clunkers i'll sell you, buddy. >> no, i think there is a chance -- i think there is a chance that this stronger equity market makes people feel a little better and starts spending money. >> absolutely. but feeling better does take -- listen, confidence is huge. anybody who's traded understands it's correlated with liquidity and all of those things. at the end of the day, revenues and profits and bottom line growth are only affected up to a point on optimism. the rest of it is if your

friends are getting fired in a less aggressive way, it still doesn't make the consumer's aibility to spend -- >> you have to remember, animal spirits drive this economy. companies start hiring people. we don't have that yet, not nearly. >> i agree with that. when companies start hiring, lagging indicator are not, when i see 250,000 jobs starteding to be added two or three months in a row, i'll buy in. >> josh, you're listening patiently. do you have a comment? >> yeah. i think it will be a while before we see a couple hundred thousand jobs a month created. >> australia added jobs overnight. >> i think the best we can hope for is a slower rate of decline for a while. >> it's a change -- it's a link in the chain. we have to have a more confident consumer before we have them spending money, before we have people hiring people. >> i agree, jim, but confidence is -- confidence -- listen, i can started a company and have a good product.

if nobody's buying it, confidence isn't going to make that part of the difference. you need it to grow but it doesn't guarantee growth. >> of course it is. a confidence -- >> we have to make sure we're fair and balanced here. there's a big chunk of americans who don't own stocks, who want to feel better about what they really do. that's what i'm looking at at the moment. >> those people sell stuff, too. >> i think we have to remember that these job cuts have been terribly painful, the human toll's been incredible. >> huge. >> one consequence is american productivity growth is going to be the strongest in the world. productivity is with drives growth ultimately in the broad economy. >> i agree. >> leave it there. josh, jim, what about if they offer you paula abdul's spot, would you -- >> i'll take it. >> you would? >> just let them know that. >> no, he definitely brings the crazy. >> he brings the crazy. just one of the shows he's the star of that we're showing you there "options action" friday at 11:30. i just said that.

that was in the promp. i'm done. >> bye, guys. >> see you later. >> i know what i've been watching today. >> kern, quick and quinn. >> kind of like dewy,chetham and howe. it's been a cruel summer at the mall but there have been a few retailers shining in the sun. we'll go through winners and losers after it. take a quick look at futures. they've been picking up steam. dow up by 57. that is about 65 points above fair value. 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.

♪ it has been a big morning for the nation's retailers. monthly sales reports coming out through the morning. coming out is dana telsey, chief research officer at telsey advisory group. we have many more retailers that have come out. one is nordstrom, down 6.9%, but quite a bit better than the street was expecting. the consensus was for a drop of 1 1.1%. what's happening? >> i think the promotions are out there. i think the retailers didn't have to promote as aggressively as expected, therefore, they moved merchandise. we're hearing of earnings

estimate revisions these companies are giving on the upside. that will come from better growth margins, getting better cost on the goods. not that the sales are so great. they're not great. the margins are coming this better than expected. we still need more traffic in the stores. >> i think probably one of the biggest surprises has to be gap. they came in same store sales, again, down about 8%. that was almost in line with what the street was expecting. they're talking about earning more money. they say for the second quarter it will be between 30 to 32 cents versus the 28 cent the street was expecting. does that mean they're not marking stuff down as much? >> we meant with glenn murphy six weeks ago, the ceo of the gap and we were hearing of lower product cost, the old navy division, they're getting better balance there. check out the denim jeans at gap because the relaunch of that brand we'll see over the next two or three weeks if that begins to gain momentum. >> i was telling carl that. i bought jeans at the gap for the first time in ten years a couple weeks ago. they just changed their style? >> they changed the styles,

premium denim jeans as 59 to $69 and stores are beginning to see uptick. in our shopping tour around the country we're seeing more goods, sold out of gap in terms of premium denim than they've sold in jeerz. >> target's numbers looked disappointing when you looked at saldz. they talked about how margins were improving. what's happening? >> down 6.5% on the comps, basically the need base consumable items, watching store payroll and market pentagon. these retailsers are reacting faster to cut expenses. now will they have any inventory for christmas? >> the lesson out of all these guys is the same store sales numbers don't matter nearly as much. they've gotten their shobz in in ord order. >> we've been talking about having margin recovery before a sales recovery. that's what ware seeing. margins are improving, getting

better earnings, now we need demand. >> appreciate your time. when we come back, market wisdom from the floor of the nyse, art cashin on expectations for jobs number tomorrow and what that means for today's trading. first, let's check on the dollar. been a pretty interesting morning as we've gotten some data so far this morning. jobless claims and so forth. take a quick break. "squawk box" continues in a moment. since re/max first opened its doors back in 1973, we've helped millions of families buy or sell a home. through good times and bad, including five previous recessions, re/max agents have provided the kind of experience america relies on to get the job done. today, in the worst housing market most of us have ever seen, that experience is more important than ever. find out what re/max can do for you. nobody sells more real estate than re/max.

tdd#: 1-800-345-2550 if i'm breathing, i'm thinking about trading. tdd#: 1-800-345-2550 i always have my eye out for a stock on the move. tdd#: 1-800-345-2550 doesn't matter if a company sells computer chips tdd#: 1-800-345-2550 or, i don't know, fish and chips. tdd#: 1-800-345-2550 i'll look at all kinds of stocks before i settle on one. tdd#: 1-800-345-2550 if i think i'm onto something i'll check it out, tdd#: 1-800-345-2550 you know, see what other traders are up to. tdd#: 1-800-345-2550 when everything feels right though, tdd#: 1-800-345-2550 that's when i get serious. tdd#: 1-800-345-2550 and the minute i get into something, tdd#: 1-800-345-2550 i already know when i want to get out. tdd#: 1-800-345-2550 of course, every now and then i'll talk with somebody tdd#: 1-800-345-2550 who knows what i'm trying to do. tdd#: 1-800-345-2550 (announcer) switch to schwab today. tdd#: 1-800-345-2550 you'll get the tools, the technology tdd#: 1-800-345-2550 and the support to trade your way. tdd#: 1-800-345-2550 go to schwab.com/trader tdd#: 1-800-345-2550 or call 1-800-540-7304 tdd#: 1-800-345-2550 right now. tdd#: 1-800-345-2550 but opportunities can vanish like that... tdd#: 1-800-345-2550 ...so most days, i'm right there tdd#: 1-800-345-2550 when the market opens.

tap into trader's edge. art cashin director of ubs financial operations. art, tomorrow, three possibilities. better than expected, in line, or much worse. what's the market do under those scenarios, do you think? >> why does it have to be much worse? why can't it be a bit worse? >> by saying that you're implying that people are expecting it to be a little better? >> yeah. i think they looked at the adp number. the fear down here on the floor is that adp rose off its number based on private payrolls. so they probably, if they're going to miss anything they're going to miss government layoffs. we think they're accelerating. there's a chance that it could be a business worse than

expected, if you're extrapolating from the adp number. >> government layoffs aren't bullish? >> well, in ordinary times, joe. you and i would be on the same side in that. but some of those people are actually consumers, and they're not going there. as becky just extracted from dana, the margins change, not the sales. that's another case of better earnings through cost improvement, not through growing sales. that's not going to be sustainable. that's a one-time event. >> with what you've seen in the past, art, how long can the market continue to advance when everything is above its moving average? everything is above a 200-day moving average almost across the board? what's the longest you've ever seen where that just keeps happening and people finally throw in the towel? >> i'll fall back on john maynard haines who said the market can remain irrational longer than you can remain

solvent. the market wants to keep embarrassing people. got to watch the action over the next couple of days. the s&p has resistance of real import between here and 10:50 and it's going to start right at 10007 to 1012. see if they can get through that today and maybe have fireworks next week. >> is it impossible that we could see like a blow-off? not necessarily a blow-off, but something really gets people feeling like the train -- that they got to get in and get 3, 4, 500 points quickly? no? >> well, i will tell you i talk to a great many traders. you hear things in the conversation people saying, look, don't get me wrong, i'm not a perma bear, i'm just waiting for the proper entry point. got all of these people who have been burned and opportunity lost. they're waiting. you could get a spark to set everything off, but i'm not sure it's going to be the payroll numb bess. >> art, thank you. >> see you tomorrow. >> see you tomorrow.

when we come back, this morning "squawk" at work. we are into the final countdown to the jobs number tomorrow. first, check out gold today. we put some 40 bucks over the next few sessions. up another three today. finally, good news for people with type 2 diabetes or at risk for diabetes. introducing new nutrisystem d, the clinically tested program for losing weight and reducing blood sugar. hi i'm mike, and i lost 100 pounds on nutrisystem d

when i was first diagnosed with diabetes, that first step was more like a giant leap. till i discovered nutrisystem d. in a clinical study people on nutrisystem d lost 16 times more weight and reduced their blood sugar 5 times more than those on a hospital-directed plan. plus a1c was reduced .9%. choose from over 140 menu options, there is no counting carbs, calories or points. i lost 100 lbs. and lowered my blood sugar level. nutrisystem d changed my life. mike is one of many who have lost weight and controlled their diabetes with new nutrisystem d. backed by 35 years of research and low glycemic index science nutrisystem d works. satisfaction guaranteed or your money back! new! nutrisystem d. lose weight. live better. call or click today. recently turned 65. glad he's now got medicare on his side. but jack knows that medicare part b covers only... 80% of medical expenses. so, he got himself an aarp... medicare supplement insurance plan --

insured by unitedhealthcare insurance company. a medicare supplement plan... lets you to keep your own doctor, helps you budget medical costs, and it picks up some of that 20%, potentially saving you thousands of dollars... out of your own pocket. if you're turning 65, or are 65 already, call now for this free information kit... and medicare guide. learn more about aarp medicare supplement insurance, and its wide range of coverage options, competitive pricing, and, plans that travel with you nationwide. so call now, just like jack and millions of others have done. because when it comes to medicare, we should all be on a roll. call now for your free information kit... and medicare guide. ♪

♪ tomorrow, not do we get the jobs number but steve liesman and his gang of economists of mario oh. >> economists. robin hood gang, all in tights. >> they make some great calls last year. great calls on the economy a year ago. >> negative a year ago. >> yeah. >> lousy economy. >> things were pretty negative. i mean, so they were negative. >> we're going to see what they say tomorrow as we get the jobs number. wrap it up with our guest host of jpmorgan private bank. you want to tuck about inflation. we showed gold before the break. >> yeah. >> should people be build that into their portfolio? >> i think you need inflation protection. right now everybody has been worried about deflation. look at the retail story.

margins are strong. why? because they're not having to discount the stuff asieh gresively. imagine when we get real growth. inflation is going to be an issue. you need an inflation hedge in your portfolio. that means inflation protection security, commodities to a degree and commodity currency. look at the canadian dollar recently. >> they're trying to talk it down up north. >> they are now. boy, a couple of months ago, it was a great buy. >> always good to see you, stu. see you for the big show tomorrow. "squawk on the street" is coming up next. this is cnbc.com news now. >> first time claims, jobless benefits fell 50,000 last week. that comes one day ahead of the highly anticipated july jobs report. morgan stanley is buying back t.a.r.p. related warrants from the government for $950 million. previously american express, goldman sachs and bank of new

york mellon took similar action. both the bank of england and the european central bank have left key interest rates unchanged. that's cnbc.com news now. we're first in business worldwide. i'm courtney reagan. live from the financial capital of the world, this is the one and only "squawk on the street." good morning, everybody. i'm mark haines. stocks set to open higher but facing headwind including cisco systems, profit drop and, shall we call them damp, same store figures? just call me john chambers, coming up live in a few minutes. >> damp, a new word. >> damp. >> very damp summer. good morning, everyone. we had a bigger than expected drop in jobless claims. that is the little bit of positive news. seasonality important there.

and it's helping us out just a bit. >> all right. let's check the futures which are up four points. get an extra little boost from fair value being a negative. so say we open 30, 40 points higher on the dow. >> let's get more on the jobless numbers because you've got the one week and the four week, rick, where i know it wasn't the best since the end of january. what do the numbers tell us about tomorrow's big number? >> i guess if we want to be totally objective and rise above all the noise, there was a point not that long ago where 500,000 was the benchmark. we're above that. however, we spent time over 600,000. the fact we had a 38,000 drop definitely is less bad news. it shows a little different picture than the challenger report but less claims may ultimately be a positive. the real question is, tomorrow, are we going to see less job loss. and when we get to the zero line. the one fly in the ointment today is