delay bankruptcy fears, helped delay counterparty risks. they've taken the terms of that. also amended the credit facility that allows them to borrow more money. boom, the stock has doubled this week essentially. 87 cents friday. look at that, it's basically twice as much. aig, a similar story. they used the magic word in the earnings report, stabilized. some businesses have stabilized, and more importantly, the value of their assets have shown improvement. you put the two stories together, what happened here? eased concerns in the financial community about asset quality deterioration, number one. number two, helped people that believe it's going to be a double dip. financials going to deep down later in the year a little more on the back burner here. that's very important. look at the big banks today, they're up again. citigroup up 4%. bank of america up 13. decidioe i

sigh zions bancorp up almost 20%. les moonves, the ceo of cnbc went out of his way to say the worst was behind them, some advertisers returning, and he anticipates a significantly stronger second half of the year for the company. once you start allaying the fears that credit quality is deteriorating larry, you get a nice move up in the financials. there's your leadership. >> let's talk more about the jobs report and the effect it will have on the economy. is the recovery coming onstream? the white house saying the recession is not yet over. are they down playing the economic recovery story? joining us to talk about this, former labor secretary and cnbc contributor robert rice. he's the author of "supercapitalism." and tom higgins, chief economist. and undisclosed location in maine, we have mr. steve liesman. mr. secretary, i want to begin with you. a lot of good news in the

numbers relative to what we've seen. is the recession over, bob, in your judgment? >> no, it's not, larry. we are approaching the bottom, it looks like. we're getting worse much more slowly. there is some cause for -- you know, to be upbeat but not to break out the champagne quite yet. >> no champagne, tom higgins. what's your take on these data? >> i think, actually, what i'm optimistic about is not only are we going to see positive growth in q3, but by qq4, i think we my see positive nonpharm payroll ors. i think we will be out of the recession by the end of q3. >> steve, what was the reaction there? i saw it looked pretty positive at the little fishing boondoggle you're at. you're pretending to work when you're at this fishing trip. isn't that what the scam's all about there? >> tell larry i'm taking offer dick cheney and going to a udl, which i understand there's a lot

of fishing locations. >> it's an undisclosed location, that's the deal, right? >> they're pretty positive with this report. last year they were there and forecasting the end of the world. >> they were positive on the report. i think it's fair to say, melissa, the conversation about whether the recession is ending this month, next month, sometime in the fall, this has moved on from that, and it's all about the character of the recovery. this group is pretty pessimistic about the recovery. we did a survey today. they're looking at 1.5% average growth for the end of the year, nothing to write him about. they're also pretty pessimistic. recession may end the next three months. a lot of them see a "w" in terms of the economy going down, up, and back down. thinking about a lot of folks here. >> why that second leg? >> there's concern about government policy. there's concern about deficit. and there's frankly just they don't understand where the growth is going to come from once the government stimulus runs out. also concern the fed may have to tighten up into a relatively weak economy. >> boy, you could just work

yourself into a terrible state. i'm not buying that. >> especially in this place, larry, right? >> they need to chill out and enjoy the beautiful scenery. robert reich, there's some really good news in here i want to review. the private work week lengthened. we have not seen that in quite a while. aggregate work hours were flat. they have been falling sharply. manufacturing hours up 0.4% at an annual rate. and we may get a positive industrial production read when that number comes out in the next whatever week to ten days. those are pretty strong signals that the economy is healing, are they not? >> yeah. they're strong signals that, again, things are getting worse more slowly, and we're beginning to see the end of the worst of this. i wouldn't say we're close to your friend goldilocks. i would be very, very cautious about saying that we are actually at bottom or that we're going to see a vigorous recovery. i don't -- i kind of agree with steve and all of the people

where he is, wherever he is. there is no reason to assume that there is adequate aggregate demand out there over the next year or even over the next two. i don't see consumers. i don't see businesses. i don't see exports. i want to be as joyful as everybody else can possibly be. the market is very, very upbeat. over the long term, it's hard to be very exuberant. >> steve, go ahead and answer that. >> i don't really actually agree with a lot of the economists here. i was reporting what they were saying. my personal opinion is that i think the economy, even the jobs recovery, can be morrow bust than a lot of these economists here think. i think the cuts were very extreme. i think the cuts were done, a lot of them in panic, and i think things can come back more quickly, especially if we get, as cain said, the animal spirit moving here, and we get a little more confident going in the right direction. i also think a lot of economists are suffering from a failure of

imagination. >> economists are suffering from a failure of imagination? >> i like that. that's a great point, steve liesman. >> why would not the private sector come back and grow the way it normally grows if we remove the shock? that's what i've learned about economics, and nobody's convinced me that's wrong. >> steve, this is very important. this is back to fundamentals. i think steve is right in one respect, and that is that -- look, there is a lot of -- there are new products. there are new investments. there are all kinds of new things. we don't know what is going to be over the horizon. here's my concern. it has to do with the aggregate demand. it has to do with the demand side of the equation. export markets you can't rely on. consumers we can't rely on. many of these jobs are never coming back again. business investments, again, if there are no consumers out there, it's hard to see. >> this is about productivity. let's get tom to weigh in a little bit. >> we were told we're all going

to starve because there wasn't enough food. there was a brilliant economist that had the technology wrong. >> on the supply side of the economy, tom, the better than expected earnings figures are a big positive. business durable goods orders, which is an important leading indicator, have now been up the last couple of months. let me ask you this. is it possible that in the height of the financial collapse, which was just awful, the dark days of last autumn and this winter and early spring, that businesses simply cut too many jobs and went too far? with respect to the future employment numbers in the months ahead, judging from the jobless claims drop, maybe they're going to start rehiring. maybe the unemployment rate is going to peak out. >> and inventories will set in. >> declining at 10% or slightly less instead of going to 11% or 12%, tom. that's the imagination that steve liesman is referring to, and i want to put it on the table. >> i agree with you, larry. i think there's an uncertainty at all turning points in

economic activity. when you're at the bottom of the recession, it's difficult to see that recovery coming. it's becoming clearer and clearer in a lot of the indicators that we're going to see positive growth. that we're going to see positive payrolls by year end. the question is i think dr. reich makes a good point in terms of the trajectory of economic growth when we come out of it. yes, it's likely to be shallower because there's a lot less leverage in the system. that doesn't mean the economy is going to be growing. >> in your opinion, is it likely to be a "w"? what's the shape of the recovery? >> it's premature to say whether there's going to be a "w." right now we know that out of the $787 billion in fiscal stimulus. $100 billion has been spent. over the next year, approximately $500 billion is going to be spent. that's going to lead to more economic growth. beyond that, then we have to worry about private demand. dr. reich is absolutely right. we have to see consumer spending and business investing come on. >> isn't the "w" about removing government spending too early? i don't think there's any danger of that. >> and the "w" is also about

removing the fed stimulus. the fed is not going to remove its stimulus, for heaven's sakes. let's get serious about that. that's not going to happen. >> the economy has grown at a high savings rate in the past. it has grown when consumer spending was less of a percentage of the total economy than it is right now. >> it's also grown at a high unemployment rate in the past, steve. it has. >> just because things are not going to be what they were doesn't mean -- i'm still waiting for somebody to tell me why my presumption the economy will grow, the private sector will grow is the wrong presumption. >> growth is a natural state. let me ask you, robert, why is the civilian jobs force shrinking? that does concern me. that's a negative in this report. civilian jobs are shrinking. and the participation rate, robert, is not good. and i agree with you, all is not rosy. those are two key points. as former labor secretary, what do you make of that? >> along with that goes the 130,000 new jobs that need to be

createded just to keep up with population growth and the normal increase in the number of people who want jobs. none of this is included here. i think employers are still cutting. i think employers are very, very uncertain about the future. employers are using this opportunity -- and, remember, the cutting is actually -- it is exceeding the amount of contraction we're seeing in the overall economy. that is, the old arthur oaken law is being violated. i think they are using this ss an opportunity to get rid of what they consider to be a lot of dead wood. >> i've got to get out. >> one more quick point about that. your point about 33 hours, larry. employers are going to expand their own work force's number of hours before they bring on anybody else. >> they'll grow hours work before they grow the labor force. that's a very good point. gentlemen, thank you ever so much. as i survey the entire data and this entire discussion, i conclude recovery is on the way. now, president barack obama is scheduled to deliver remarks on

the economy in about two hours from now. power lunch is going to bring you full coverage. that's my financial conclusion. the bull market is here, and recovery is on the way. but i listen to all of them very carefully. >> and don't forget you heard it first on "the call yesterday." abby joseph cohen greg with larry this is the new bull market. how can you profit from it? investors share the bull strategies. here to date. what's working for the online jewelry retailer. the company's ceo joining us live. the cnbc exclusive interview only here on "the call." taking its rightful place in a long line of amazing performance machines.

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look at the market now. 9400, coming up on the great jobs number. they said, watch the jobs number come in lighter than expected and the market doesn't rally. that shows you it's not for real. that's exactly the opposite. number came in better than expected and the market is on fire. >> and a strong dollar too is really important. people telling me the dollar is going to sink on a better jobs number. ain't true. somebody told me that dxy is up 1% already. i think that's terrific. better growth prospects in the u.s. is good for the currency. >> remember the narratives after the see the numbers. goldman sachs' abbey joseph cohen told us on the call

yesterday the new bull market is underway. here's what she had to say. >> we do think the new bull market has begun. it may prove it began in march of this year. clearly, many people were looking for better signs on the economy, and we're now getting them. not every sign is positive, but we've seen an upturn in things including business equipment, the labor news is better. it's still not good, but it's better than it was. >> all right. so let's duke it out. are the bulls back in charge on wall street? how can you make money right now? that's the important question no matter what side you're on. joining us now, douglas roberts founder and chief investment strategist for channel capital research.com. and for the bears, we have fred burns, founder and principal adviser of burns advisory group. let me start with you, john. what do you think? is the new bull market on? >> yes. we're definitely seeing we're in the early stages of recovery. we've been talking about being recovery ready since last fall and winter and spring.

the s&p is up about 50%. small and value stocks substantially more than that. typically recovery periods, after severe recessions we've been through, is a three to five-year window. we're early in that. it's the most robust in the early half of that recovery. definitely, i think we're seeing that. >> doug, why don't you believe in this? 's it going to take to make you believe? >> right now what we're seeing is a market-based momentum, a melt-up. essentially, what you've found is things are less worse than expected. we're able to beat earnings targets. that's likely to continue for the foreseeable future. i think a better way to play this. this is going to be an extremely selective rally. the way to play it is what i call the government trade. right now we saw before it was tech that was driving the first rally that we saw in the '90s. we saw credit and homes driving the rally early in the 2000s. right now neither of those are being reflated. what's driving it is really government spending. you're seeing it with cash for

clunkers. you're seeing it with the bailout of financial stocks. you've got to really focus on stocks, focus on areas of the economy which will benefit government intervention. >> doug, i'm inclined to agree with you to some extent about financial stocks, particularly the federal reserve's policies that have led to a very steep curve and a zero rate. i just want to note, you take a look at this week's trading, which has been fantastic -- industrials, materials, and retailers, consumer cyclical retailers. those are not government plays. those are private sector, economic, cyclical growth plays. >> i agree with you on that, larry, but what you're looking at is a lot of that's anticipatory. right now you're seeing retail sales, there's a disconnect from performance versus really what the underlying fundamentals are. that's anticipating it. there could be disappointment there. but right now what you're seeing is with government spending, if it doesn't work, if it's not enough, if we have a pullback, the obama administration isn't going to say, well, we're sorry.

we tried. they're going to spend more and do whatever's necessary. that's what precedent has happened. that's even when we saw during the '30s, during the great depression. when they found out there wasn't enough stimulus, they simply piled on more. you saw that with the speech or flip by joe biden, saying a second stimulus plan may be necessary. >> i think the cash for clunkers is the second stimulus plan, and conservatives are trashing me left and right. i continue to believe, at this moment in time, if you're going to stimulate, this thing is going to actually work. john, come back to you on all this stuff. regarding today's jobs report and linking it to the stock market, for retailers and other consumer discretionaries, you had improvement in the work week and improvement in average hourly wages. the first time we've seen this in several months. i've been very worried about where the heck the income is going to come to spend. what's your take on that? retailers really hot as a pistol even though the actual numbers have not been. where do you come out? >> i think the report today is just -- you know, certainly an

improvement. we're going to continue to get numbers over the next several years. and employment numbers aren't necessarily going to look great. but coming back to the retailers, i really believe that those stocks, energy stocks, financial stocks, were hit so hard and so cheap that they've become very good investments simply because they were oversold that way. >> go ahead. sorry. >> sure. and the real key there is that they were so oversold. we were able to buy those industries for pennies on the dollar on book value. so it can be a wonderful investment even though their top lines aren't necessarily where they want them to be. surely over the next several years we'll start seeing improvements across the board there. >> real quickly, if you were going to make one move, if you were sitting on the sidelines and missed this move up so far, what would you do today, john, real quick? >> i think money in cash and treasuries isn't destined to do very well. in the end, it doesn't provide a return over inflation or taxes. whether you're an individual, an

institution, or a company, that can't work well. taking an ownership position in the american economy and really the global economy is an intelligent play. we would certainly tilt the portfolio towards value in small companies to do the best in this recovery. >> all right. thanks very much, gentlemen. when we come back on this jobs friday, question is who's hiring and who's firing in silicone valley? jim goldman is there with the lowdown. >> while many small businesses have gone away in this economy, an unlikely group of americans is going to an entrepreneurial boot camp believing that the worst is over. jane wells is on the small biz jobs picture only on "the call." at 155 miles per hour, andy roddick

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this is the official card... of the world's largest airline. oil briefly hitting a six week high on the jobs number earlier today. you can see it's unchanged in the session. larry? >> we've been telling you all about the better than expected july employment report. now we're going to be digging deeper and looking at who's hiring and who's firing. for that, we take you out west. jimmy goldman in silicone valley with a look at the jobs picture in that region. and then jane wells in southern california with the unique look at small businesses and the labor markets. whatever jane does is unique,

but i'm going to start with jim. hello, jim goldman. what's silicon valley doing? are they hiring? >> larry, it's a tale of two generations as far as technology is concerned. doing less with more is the mantra here in the silicon valley, not necessarily here at solyndra. but among the others, it's about top lines being hit by swilling bottom lines. cisco just this week showed the power of job cuts, reporting only a slight li better than expected top line but beating by 2 cents on the bottom line swelling gross margins to 6%, cutting expenses by $1.5 billion. it's the key strategy employed by intel, microsoft, google, national semiconductor, and dozens of others, leading to 50,000 job cuts just since last year here in the valley. that's not the case here at solyndra, an up and coming solar

start-up preparing to hire 2,000 new workers, and 2,000 others to build the sprawling campus, a direct beneficiary of federal stimulus. >> we were the first recipient of department of energy loan guarantee, and we'll be using that to build our second factory down the street here in fremont, california. i think that green technology does represent a great opportunity for a new source of jobs in the u.s. >> indeed, green tech is where the investments are going. 50, about 50 venture capitalists investments last month, $500 million. that's a huge pace, and doesn't include the $300 million investment by exxon in a biofuel company called synthetic genomics. and legislators ear marking $3 billion for solar industry investment. promise of 40,000 new jobs. 75% of the nation's solar

installations are in this state, and solar installers alone could mean 4,000 new jobs by 2015. and all of this speaks to the importance of retraining as far as tech is concerned, never been more important than right here in the silicon valley. larry, back to you. >> thanks, jimmy. now let's go south to hard hit southern california, where unemployment and housing have been a toxic mix, but where an unlikely group of people are choosing now to become entrepreneurs. here to report on the animal spirit of entrepreneurship in southern cal is jane wells. jane, what can you tell us? i need good news. i need to be upbeat. >> you're going to like this, larry. the bad news is the firm has laid off half its staff. the national federation of independent business means job cuts are enclosing, and some people believe now is the best time to start a small business. >> the cash flow i did in year one needs to be brought back by some rate of return. >> this is an entrepreneurship boot camp for disabled veterans at ucla's anderson school.

tens of thousands of these disabled vets are returning from war and starting businesses. they may have an edge because of the discipline and leadership they've learned. >> you and i maybe don't have the luxury of understanding what it is to be in an arena of what it is when somebody's shooting at you. that gets you pretty focused, i think, on things you need to do to survive. business today is not unlike war. >> 20-year army veteran edward rubelcalva has been in both gulf wars, severe respiratory problems from the fires in desert storm possibly. he has started a janitorial service, and is learning at this boot camp things like his pricing is all wrong. you think you've been too expensive? >> no, i think i've been charging less because i do provide very good quality service. that's, again, my nature of serving my country and believing that i'm just being humble and

things on there. i'm learning different here, that if you're not profitable, you shouldn't be in that type of business. >> why have a small business or start a small business or ratchet it up in this economy, which has been so tough the last year? >> jane, i'll tell you one thing, it's been my family. being away from them. >> it is hard starting a small business, but not as hard on a family as when you're away at war. ucla is one of five top universities offering this boot camp to disabled vets for free. melissa, they're learning what a lot of entrepreneurs are believing right now. it's a great time because you can get good labor for cheap, and the worst may be over. back to you. >> and they're natural liquer a -- courageous. that's what it takes to start your own business. >> hats off to ucla's anderson school of business. god bless them. talk about red hot stock shares. the blue nile have doubled in price this year. can the online jewelry retailer continue to shine?

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welcome back to "the call." i'm melissa francis. let's get you caught up on the bull market this jobs friday.

take a look at the dow. up 140 points. 1.5% on the day. it is sitting right near the 9400 mark. the s&p charging higher right now, up 1.66%, about 16 points, sitting above 1000 also on the blockbuster jobs number. obviously, more people lost jobs. we don't like that. it was better than expected. that's why we're seeing the markets go higher. nasdaq trading higher as well. >> is this the new bull market? >> i believe you said that before. >> i seriously believe it. >> i think the recovery is on. that's for sure. >> i think this is a major turning point. it ain't perfect. it never is. but it's a major turning point. >> online jewelry retailer blue nile reported quarterly earnings last night. reporting in line with estimates but better than expected on the outlook side. the stock has doubled the past year. right now it's trading slightly lower. down more than $2, that's about 4%. pretty significant downturn there, but year to date, look at that. up 100%. joining us now on a cnbc exclusive, diane irvine, blue

nile's president and ceo. first of all, a lot of questions. year over year decline in sales is only 5%. i was surprised given the fact that you sell expensive jewelry online. seems like people would be buying a lot less jewelry right now. how did you stay profitable? what are consumers doing? >> i think our proposition is one where in normal times we're 20% to 40% less than a typical jewelry store in terms of our pricing. we're selling a very high quality product. diamond prices are at levels we've last seen three-plus years ago. a great time to buy a diamond, and consumers are finding incredible prices at blue nile. our model is one that really speaks to consumer ins an environment like this, when people are looking for value, consumers are much more discerning. when you can go to a place like blue nile and find very high quality products for half the price, let's say, in a typical jewelry store, i think we're just gaining market share significantly at a time when

many jewellers are closing their doors. >> diane, what we're surpriseded about is that anybody is buying any jewelry. we're seeing the jobless rate go up. the economy is struggling. people are out of work. people are coming and buying expensive items. are they buying cheaper items? how has their shopping changed in all this? >> in our engagement sector, our diamond ring average is $600 in terms of price point. that's down slightly. our best performing items are diamond rings and diamond bands, wedding bands. people in these times are still getting married, providing anniversary gifts and special occasion gifts. so if you're in the market for a diamond, it's a fabulous time to buy because there are incredible values with prices having come down so much. >> diane, if you're cutting your retail prices 40%, what's the spread between wholesale and resale? are you take a haircut and making it up in volume? how does your business model work? >> the way our model works is that we do not have the infrastructure of stores. you're right.

we're selling at a much lower margin. the typical jewelry store will buy a diamond, let's say, and mark it up 100%. they're operating off of 50% gross margin. in our case, we have 175 employees, and we're selling $300 million in sales a year. so a phenomenal sales per employee average. because we don't have that expense, we can offer a great price to the consumer. >> diane, i'm going to interrupt you for one second. we have breaking news right now from michelle ka caruso-cabrera. what do you have? >> a delay in the settlement between ubs and the department of justice. a conference call going on right now. the attorney for the justice department said, can we have another week? we've got issues we want to deal with. can we come back? continuance to the 17th. the judge says, that's okay with me. let's have a conference on the 12th to see where you guys are at. that's with this case related to tax havens and what the u.s. government would like to hear out of ubs and the swiss. there is a delay until august 17th at a minimum.

back to you. >> michelle caruso-cabrera, thanks so much. let's go back to diane. diane, i know the largest sale you made online was $1.5 million online. and you sold an item for $300,000. i'm going to assume both of those are diamond rings. i'm kind of surprised people are willing to spend that much money online? >> we've done a significant amount of business over the years in $20,000 and $50,000 plus transactions. the $300,000 was a couple weeks ago with 6 carat diamond ring. and the $1 million sale was over 10 carats, a beautiful ring as well. >> can you tell us what kind of consumer bought a $300,000 ring recently? that's a bull market. >> those rings, we do a lot of business with corporate executives, professional athletes, the occasional celebrity, professionals in the investment community, legal and financial world. >> diane, i just find this whole

story fascinating. i think it's a wonderful story. buying diamonds -- let's take your high end buys that melissa just mentioned. do people get to see it, touch it, feel it, inspect it? it's a little different than walking into tiffany's. you've got to do this online looking at a picture. how does this work? >> that's absolutely right. what we find is we have for sale on our website, over 60,000 high end independently certified diamonds. the customer coming in is really look at the specs of the diamond, and we're providing all of the information in terms of the specifications of the diamond. it's more like looking at all of the quantitative specs. most people have shopped in the stor stores. so in effect they know what they're looking for and know what they're going to see before they see. . they are purchasing sight unseen, and they're talking to our customer service team in seattle and getting a lot of information. what we hear from our customers when they receive their product, we are exceeding their expectations. the diamond is beautiful. i think this is a very research

intensive product. it is remarkable. this really works for consumers, and we've shown that as we've grown over the years. >> it's an amazing story. diane irvine. >> thanks so much for joining us. >> great stuff. aig, the company that received $180 billion in government bailout money, it's now reporting its first quarterly profit since 2007. the stock up more than 70% this week alone. >> up next, david faber with an in depth look at aig's results and what they mean for the embattled insurer coming up only right here on "the call."

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check out the knick story. it's a croc. maker of ubiquitous brightly colored plastic shoes beating earnings reports this quarter. on track to return to profit next year. right now up $1.40 on session. $5.67. larry? aig, the insurer that receives $180 billion in federal bailouts, well, it made money. that's right. it had its first profit in seven quarters. as a result, its stock is trading up very nicely. another $4 today. 18%. it's had a heck of a run in the last week. our own david faber is going to try to explain what is going on here. hello, david.

>> hey, larry. trying to explain it is not the easiest thing. i can get to the earnings theflds. the reason they earn some money here largely due to rebounds in any number of the different asset classes in which aig plays. mark to market marking up the value of a number of its assets certainly helped. and the insurance business itself, while outgoing ceo edward liddy said, it's not doing as well as it might, it's still stabilizing. that has been a help here. this was obviously not expected. the $1.8 billion in net income also gets confusing. it's not like it runs all the way down to the common shareholders. $1.2 billion of it goes to the holders of series c preferred. you know who the holders of series c preferred is? it's the u.s. government. melissa, very good. you're paying attention. that is -- you get $1.2 billion left. what's left for the 134 million outstanding common shares? $311 million.

when you divide that, you do get $2.32 a share per common share. so a nice number on that front. i'll get to why it may be a bit misleading in a minute. let's get back to aig itself as it tries to transform the company. it does appear, at this point at least, the capital structure it has in place and all the different ways it's being aided by government money are at least working to stabilize the situation. one key part of the company, of course, is unwinding that financial products unit run by joe cassano that run swaps on pretty much anything to anybody without reserving, of course. losses were only $132 million. there also, they benefited from gains in the securities held in the portfolio during the period in question. notional amount of their derivatives is now $1.3 trillion, down 17%. and their trade positions have declined from 36% from what had been 35,000 to that current trade positions of 22,500. as for funding at aig, the

federal reserve bank currently has $40 billion of net borrowings. and this is important, $4.8 billion has accrued in interest and fees. they're not paying any interest on any of this incredible amount of debt they have outstanding. it's simply occurring. on the preferred, on the loans from the federal reserve bank of new york. if this was a normal company, they'd be paying their interest. that earnings number would look a lot different. >> that is incredible. >> and then you've got the funding here, series f preferred, they still have a lot available. important to point out. the $180 billion, they're only using $130 billion of government money. series e preferred at $41.6 billion.88 again, not paying dividends on that from what i understand. you do have to remember that. yes, they had a quarter in which they earned money. the basic insurance businesses are doing fine. they are also putting alaco and aia, their huge foreign subsidiaries in a separate spv.

the government is going to own a part of that. with preferred, that will reduce the loan from the federal reserve bank of new york. at the end of the day, we're not paying interest on the incredible amounts of interest on the debt. what you need to look at is what aig will look like when it pays everybody back. that's the key here when we watch a stock with a huge squeeze lately and up better than expected today on the numbers. >> also, what is the plan going forward? the complaint from other people in the insurance industry is these guys continue to go out and write new business with the government backing. so they're out there actively competing as if they're a company that's going to stay in business. is it fair with the government backing them to the rest of the industry? what's the plan going forward? are they really unwinding? >> they are unwinding any number of businesses, melissa? i think the plan, as we currently see it -- and, again, a new ceo coming in in a few days, robert benmarche, and a new board.

but the foreign operations, which had been huge. aig started, remember, all that business it did in japan as the largest life insurer in that country. those go to a separate subsidiary. they continue to sell assets. what you're left with is largely a u.s.-based insurance company with an incredible amount of debt, one would anticipate. that continues to be the key question. >> dave, maybe this is inc incalculable. you love off the financial products. >> which they are winding down. >> it's a toxic asset and the derivatives. >> and the toxic assets are in something called maiden lane. it's another government funded thing. it's so complicated. >> are you left with something that has value? >> you might be. >> would that be the bottom line here? >> you're still left with a strong u.s. franchise in a lot of ways. but what the earnings power of that is and what the capital structure looks like, i think, is way too early to say, larry. >> david faber, thank you so much. "power lunch" is coming up at the top of the hour.

bill griffeth is here with a preview. >> get a handle on the economy in light of the jobs report. we love doing this. talked to a couple of mayors in different parts of the country about what they're doing to deal with the recession, to protect jobs. you know what a tough job it is on the state level these days and metropolitan areas. also, the president's discussion of the economy will be on our watch. that comes around 1:30 eastern time when he talks to the press about the jobs report this morning. and an exclusive with the ceo, co-ceo of california pizza kitchen. tough time for casual dining. we'll ask rick rosenfield what they're doing to cut costs and protect dining right now. >> i hope they bring that chopped barbecue chicken salad. >> i love california pizza. that is great stuff. >> i'm hungry right now too. >> up next, pearls and wisdom from the floor of the new york stock exchange. stocks are hot, and things are  looking better. >> and art cashin joins us with his take on today's better than expected jobs report and what it means for the new bull market

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let's talk more about the markets and this morning's better than expected jobs number. joining us is art cashin, floor director of floor operation. and from the cme group in chicago, our own rick santelli. rick, what was the reaction to the number, and what do you think the guys around you say is going to happen now? >> it was huge news, and we're not sure what the outcome is

going to be. today we saw the dollar respond like stock in the country on better data and improved. this is a far cry from what has been the model. >> rick, who told you that last night? rick, who mentioned that? >> we're also talking about what the dollar will do with the 150,000 number, that's not important. >> we talked last night. i said, if the number beats the street, the dollar is going to go up, not down. >> you were ahead of your time, larry, because it has been a flight to safety trait. that is important to watch mainly because the ecb and the bank of england were pessimistic. we need to pay attention. where do you think the three-year lows closed last week, they're at $3.86. >> $3.50. >> so it's twofold. dollar not flight to safety related. but exit to flight to safety, big selloff. >> can i stay with this on the dollar trade because i think this is so important, art. can you have rising stocks with a rising dollar?

this would be, as rick pointed out. rick and i disagreed about this last night. i'm trying to figure out what it all means this morning. stocks up, including cyclical recovery stocks up, art, with the dollar up. can this hold? what's this mean? >> that's the key. will it hold? you're right. this is truly an anomaly. every time the dollar weakens, stocks rally. every time the dollar strengthens, stocks and other asset classes went down. so far they're holding their own. either they believe this is a temporary move in the dollar, or late today we may see a reaction. that's why it's critical. the s&p broke through early resistance. it's holding nicely here. the worst thing that would happen for the bulls is if they give up the gains towards the bell. it's an important day. >> art, what's your feeling what's going to happen? >> so far the jury is still out. the bulls seem to have the ball and are moving it down the field. we'll know in the final two hours if that holds together. it is remarkable, as rick and

larry just said, we're able to do this in the face of a rising dollar. that hasn't happened in quite a few weeks. >> traditionally, a better economy is good for the dollar, and i wonder about federal reserve policy, rick santelli. how is the fed impacted by this story? i'm not expecting them to tighten overnight? that's not my case. but is it tightening or snugging or exit strategy now a month or two closer as a consequence of this morning's stronger than expected jobs report? >> well, you just nailed it.q that is the issue. if the dollar's responding like it did in the old days, when there was totally free markets, governments weren't involved inq industry, that's a good thing. we really need to pay attention moving down the road here because i'm not sure if the dollar can maintain, as art said. no question. just observe, let's see how it  looks monday. >> we've got to go. thanks for joining us. we're going to be back on "last

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it's time for last call. the recovery is on.

new bull market i heard on "squawk box." watch the market won't rally and that will tell you the bears are in charge. no, that's not what happened bp >> this is a transformative period. we're turning from recession to recovery. we are in a new bull market. that's why it's here to stay. economy will continue to show better numbers. it ain't always clean and perfect, but that's what's happening here. deal with that. >> you'd better tune in. >> plenty left for investors, by the way. >> that's it for "the call." i'm melissa francis. i'll see you later today. >> and i'm larry kudlow. "power lunch" is up next. the white house says president obama still expects the jobless rate to rise 10% this year. the president has signed into law the bill that gives the cash for clunkers program an additional $2 billion in funding. and aig shares up another 20% today on top of the 74% gain the last two sessions.

the insurer reported its first quarterly profit since 2007. that's cnbc.com news now, i'm courtney reagan.  becky quick, how the heck are you? >> i am great, you guys. thank you for inviting me today. >> fun to have you here while sue is off. >> thrilled to have you. welcome to "power lunch." i'm bill griffeth. the dow, the s&p touching highs for the year on track for a fourth straight week of gains along with the nasdaq. >> and i'm michelle caruso-cabrera. investors like what they see in those jobs numbers. what do you do now? is it time to take profits off the table, or should you jump in? we're going to gather our "power lunch" task force. >> i'm becky quick. not every place is bleeding jobs. in fact, today we're going to speak with two mayors who are doing whatever it takes to grow jobs in their cities, and it is working. here's what else is on the menu. >> i'm steve liesman live at

leans lodge in grand lakestream, maine, where the weather is unbelievable, scenery is unbelievable, and all the economists are decidedly downbeat about the pace of recovery. i'll have a special guest formally of the federal reserve. >> i'm john harwood in washington. it's been a long time since the white house regarded a 9.4% unemployment rate as good news, but this one does. and president obama is going to come out and talk about it in a little over an hour. >> i'm darren rovell. twitter is back up and running today. that's good for the new york jets who are telling their fans they want to be followed. even jets owner woody johnson is in on the act. >> doesn't hurt to look at the screen today. latest jobs report giving a shot in the arm to investors. s&p 500 climbs back above 1000. and the dow is hovering around 9400.