good morning. no dog days of summer here. the bulls taking charge, turning in a positive start for august. fed for thought. the central bank preparing for a two-day meeting this week. and a crude comeback as "squawk box" begins right now. >> good morning, everybody. welcome to "squawk box" right here on cnbc. i'm becky quick along with carl quintanilla. joe's off today. he'll be back again tomorrow. that is when we begin a two-day policy meeting for the federal reserve. the central bank is widely expected to leave its key target

lending rate near zero and suggests that it is likely to remain there for sometime. market watchers are going to be looking for signals on the fed's other programs, like its attempt to drive down rates on mortgages by buying u.s. treasuries. carl, this will be something we're watching closely after what we heard from the bank of england last week on quantitative easing. >> why would the bank of england print $85 billion more? >> on a pound basis, $50 billion pounds. >> and the fed program will end in september. we'll see how much they can control the market. >> this was the driving force last week. you saw the dollar start to strengthen when people looked around and said, hey. maybe this was a stronger currency when you held that up relatively around the world. starting to affect the

commodities and stock prices. >> dollar doing pretty well the last couple of days. one of the reasons oil is down today, normally you would have thought with the jobs numbers on friday, oil would trade up. but people are looking more at dollar weakness or dollar strength. that's why the oil markets were trading down this morning. >> a story in the "wall street journal" today about whether the dollar is poised to take off on a rally. they're pointing out that the dollar is starting to take off on fundamentals.. good news that the economy is starting to help the dollar. meant, the bank of england is expected to downgrade its growth forecast saying that the u.s. economy risks sliding into a recession trap. that was one of the main reasons behind the bank's surprise reason last week to extend the quantitative easing program.

remember when the headlines came out? i was watching the headlines. i saw you smiling and i started laughing too. we were talking about governor king. the headlines came out last week. it said "the king told them to go ahead and raise that program." i did a double-take and had to remember it's the queen who's in charge in england. when you're watching these headlines, you have to go, ploosk. >> nobel lauer yet paul krugman warning that the recession may not be over. telling cnbc that all indicators point that the plunge has stopped. as u.s. job losses slow and manufacturing and services seem to be stabilizing world wide. he argues more stimulus money is the key for a sustainable recovery as fears of inflation are overdone. he's got another piece in the times today about how big government saved us from a depression. people like dr. doom, nouriel

roubini praising him in the times. >> in the times, it talked about what if they were all right. from paulson, bernanke, geithner, everyone. it's starting to look they made the right choice. on suspennday, a front page sto questioning paulson's motives. you still have the movement in congress from the liberals and the conservatives to take some power away from the federal reserve. so there are a lot of different questions. most people who have spent a long time following the markets or the economy, either on the right or the left, from krugman to some of the guys in the market for years and years say the fed and all the players acted in the right way. >> we'll have leo crewikrugman.

meantime, mitch mcconnell saying the obama administration should turn its attention to dismissing debt. and saying the administration has little to do with the great economic news we've seen to date. saying, i don't think the administration has had much to do with the jobs numbers. some wanting to give him credit and others, not so much. >> we made it through earnings central. but guess what? this is a huge week for the nation's retailers. among those we'll be hearing from, on wednesday, macy's. on thursday, walmart and urban outfitters. nordstrom and kohl's and jcpenn

jcpenney. who has been able to keep inventories in line and has maintained decent margins? we'll hear about that and get their outlooks from what they expect from the consumer over the coming weeks and months. berkshire hathaway posting the best numbers in nearly two years.s. nearly $1.5 billion in derivatives gains. berkshire's the largest shareholder of wells fargo. we'll be talking about all things warren buffett and berkshire in the next year. >> meant, a check on the futures on this monday morning. it will be somewhat busy with the fed meeting, cpi later in the week, productivity tomorrow, the president is in guadalajara with harper from canada. and calderon from mexico. >> somebody this morning on the radio called it the three amigos

meeting. >> futures are a little bit lower. the world stock index is up four weeks in a row, 19% so far this year.. oil trading down 42 cents. the ten-year note, we'll keep a close eye on what the fed says later this week. again, the yield crept up to 3.8. dollar, relative strength against the yen and the euro. gold, which was a story for a few days and added 40 bucks over four sessions. now down 40 cents to 9.59. >> china said rio tinto is spying on its steel industry cost the country $102 billion in iron ore. beijing detained four rio

workers over the price negotiations. this editorial suggests this is only the tip of the ice berg and said china should treat commercial espionage as seriously as it does the national security threat. that raises a lot of questions about foreign companies and their dealings with china and what's going to change from here on out. also french president sarkozy will will warn the french banks to stop paying big bonuses to traders. he called bank executives to a meeting on august 25th to talk about this issue. >> meant, in early european trade, the ftse coming under pressure as lloyds banking group shares dropped. lloyds is considering a share issue to loosen the government's grip on that company at least. the ftse down 48 points to 4700. in asia, christine tan standing by in singapore. good morning.. >> good morning. asian markets got a boost from the better than expected jobs

da data, fueling hopes that the u.s. can lead the world into recovery. machinery orders first time high in four months. stocks rallied as a result. japan's largest chemical company, mitsubishi chemical surging on reports it's in talks to acquire mitsubishi rayon for $2.1 billion. in kong hong kong, stocks rallying. export-related stocks, those expected to benefit from a recovery in the u.s. also surged. in china, the shanghai at 3%. investors waiting for key economic data to be released this week.k. that's it from asia. sending it back to you.

>> christine tan in asia. let's get to the monday task force. jay bryce and david loomis.s. good morning to you both. david, let me begin with you. everybody on the planet is looking for this rally to somehow pull back or fizzle or flatten out. this morning, it's the lead story in the journal. they say the economy isn't strong enough to support a long-running stock and bond recovery, despite the hopeful signs we've gotten in the past few days. when is the pullback going to come and in what degree?e? >> it will come. you'll get another 5%, maybe 7% gut check here. primarily because in the last month, investor sentiment had gone from being unusually bearish, a good contrarian tail wind for the market to mead ydm. we've only recovered about 38% of the original bear market

decline for the s&p 500. a 45% recovery for small cap stocks. i think there's more room to grow. >> are you in the s&p 1100 camp or 1200 calf? >> s&p outperforming treasuries and korccorporate bonds. i'm in that camp. i can buy solid franchises at five to six times cash flow. 14 times believable earnings. in that time of environment where i've had the most aggressive fed easing, that's a good backdrop to be a stock investor. >> jay, would you agree, or are you worried housing may have stabilized but isn't recovering? people's credit cards are being declined. how does an economy build on that foundation? >> i think we are going to get a

bounce in gdp in the second half of the year. inventory is not collapsing anymore. the real question for us will be what does 2010 look like? in that environment, we don't see employment growing rapidly in that. it's hard to see consumer spending ratcheting up in here. what you're looking at in 2010 is a repeat of 2002. a grind in terms of the economy. i think we're in for a long, slow prolonged sort of recovery. >> david, you mentioned we've only seen a gain of about 38% off of the lows of the market. in the "wall street journal" and other places, they've raised questions about whether we're repeating what we saw in 1938 where we saw the huge rally. the market struggled to 1945 until you saw big gains again. could we be facing something like that again? >> i don't think so. because the backdrop in the

1930s was simply much worse. i don't like some of the trade policy today, but it's not nearly as bad as the 1930s. the fed is very stimulative. in the 1930s, the federal reserve allowed money to contract by 33%. so we have recovered 38% of the bear market decline. 50% rally off the bottom. there is more room to go with the valuations. i think very respectable in a low inflation environment. >> you think the government got it right this time. >> i think they got a "b" right. they would have got know an "a" if they backed off on the stimulus and gotten more on the fiscal side. but i think the government got it right. >> jay, any predictions on what the fed may say in their statement? what their stance may be in

terms of their buyback? >> i don't think we're going to change much at all. i don't think there is a consensus right now on the fomc to increase the purchases going forward. i think we'll get, much like the last meeting. not going to reign back the purchases at this point. i don't see them accelerating either. we're not looking at the bank of england with the fomc. >> do yields creep up? >> the knee jerk reaction probably could be to sell bonds a little bit on the back of that. i don't see bonds going to 4.5 to 5% in this sort of environment. very low inflation sort of environment. if you look at the yield on the ten-year, moving pretty much sideways for most of this year. i think it will probably continue to move sideways. >> on retail sales, we went through them last week for the month. the dynamic was almost all -- traffic was light but margins

were okay. would you anyplaexpect to hear anything different as we hear about earnings this week? >> no. i don't think so. i think august will be interesting as we get to the back to school framework. i wouldn't expect to have great news out of the companies this week. >> david, i hear what you're saying in terms of the path upward. people will say, there's cash on the sidelines. a lot of cash. >> there is. >> that is dry tender. others say the correlation between cash on the sidelines and the s&p is less. what is the relationship between the two? cash on the sidelines, the f significant cash, that will be an effect on stock prices. the sheer level of cash on the sidelines is another catalyst along with valuations, the federal reserve board easing.

those to me are the three most important catalysts -- company have been so good on management of their free cash flow. that's where i get more excited about stocks over the next six to 12 months. i think cash will help. >> i'm sure you know there's no substitute for the top line. at some point you'll need to see that. >> you will see that with significant monetary easing. i think you'll see earthquakes continue to surprise on the next two to three quarters as margins improve and top line revenue improves as well. especially in the small cap area. >> i know you're more bottom up than top down. but you believe there is some sort of in demand on the part of the consumer waiting to receive, waiting to soak up these inventories when they're rebuilt? >> there is. with stocks rebuilding, people's wealth positions near better

shape. that allows them to undertake that capital improvement for their home that you may not have seen or put off in early 2009. that is one example where you're starting to see the consumer modestly come back. and the consumer won't retrench back to 65% of gdp for personal consumption expenditures. we've probably retraced three-quarters of the excessive leverage that's taken place in the consumer sector. >> jai, are you nearly as optimistic as the consumer in the end? >> i don't think quite as optimistic. i believe consumer spending will grind higher. i don't think we're looking in real terms 3% personal consumption growth rate on a sustainable basis any time soon. i think you'll watch the overall savings rate grind higher from here. that's consistent with a consumer spending somewhere in the order of 1.5 to 2% on a

sustainable basis. >> one of the key dynamics to watch. >> 9 out of 10 times the consumer has been one of the best sectors coming out of recessions for excess return generation in the stock market. here we go again. it's been a great sector to be in and i think it will continue. >> jay, david, thanks for kicking off week off. we'll talk to you soon. >> in corporate headlines, blackstone group could break up hilton hotels. blackstone is looking to realize value from the hotel chanl before debt comes due in three to four years. options on the table are said to include public listings for parts of the chain and also trade sales. portfolios of sales to rival companies. the "wall street journal" reports an announcement is expected later today with apache providing natural gas to a terminal it plans to build in

british columbia. the latest on natural gas remaining high for quite sometime. l.s. power buying nine power plants for $9.5 billion. the deal is expected to be announced before the market opens today. >> the president is in mexico today for the north american summit. the main issues are immigration, free trade, swine flu. >> i got worried when i heard that's where they were. >> and the reporters flying there said there were workers lined up with purell. >> will the swine flu come back in a much more potent form once we get into the flu season.

>> scrambling to get the vaccine for the fall. when we come back this morning, need to deposit a check? skip the bank. forget the atm. look no further than your iphone.. first, as we go to break, a look at last week's winners and losers.

welcome back. apple and google reportedly agreed not to poach each other's workers while eric schmidt was on google's board. now that he left the board, that agreement may be often. the justice department reportedly looked into the issue as part of an antitrust investigation. quickly enough, we'll be able to see if anybody gets poached. >> can you imagine being a worker for either company and maybe at one point you hoped to get a rival bid? >> good luck running up the cost on each other. >> speaking of apple. they plan to update the iphone application to introduce a check deposit feature. users will photograph both sides of the check to send the check

to the bank. and they will be told to file or discard the check because it will be handled electronically. a picture of your check, instant money.y. >> i'm still a little -- >> you don't trust technology quite that much. >> i don't. it's taken me a long time to get to online banking. i like going inside.. nice to see a person. i sound like joe. >> a little bit. >> general motors is selling cars in california on ebay. the a.p. reports a trial in is in place through early september at 250 dealers. an announcement is expected today. boy, if you thought the dealers were in trouble before, what happens if they start selling them directly on ebay? >> "gi joe" commanding victory at the box office, 44 million

overseas. a worldwide debut of more than $100 million. meryl streep's julia child tale, g-force, har"harry potter and t half-blood prince." >> gi joe did that without even allowing critics su? usually that is the death knell. >> and toys. huge, huge, hits. >> it's not a season where deep-thinking movies do well. >> still to come, more of the morning's top stories, plus, the picture from the futures pitch in chicago. later, listen up. a summit of hedge fund superstars. leon cooper. and former white house chief of

staff john pa podesta. stick around. 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!

this is humiliating. stand still so we can get an accurate reading. okay...um...eighteen pounds and a smidge. a smidge? y'know, there's really no need to weigh packages under 70 pounds. with priority mail flat rate boxes from the postal service, if it fits, it ships anywhere in the country for a low flat rate. cool. you know this scale is off by a good 7, 8 pounds. maybe five. priority mail flat rate boxes only from the postal service. a simpler way to ship.

♪ ♪ come monday it'll be all right ♪ ♪ come monday i'll be holding you tight ♪ >> good monday morning. welcome back to "squawk box." i'm carl quintanilla along with becky quick. joe will be back tomorrow. the fed begins a two-day policy meeting tomorrow..

they're expected to leave their key lending rate at zero. market watchers will look for signals on the fed's other program, like the attempt to drive down interest rates on mortgages and other consumer debt, by buying u.s. treasuries. the so-called buyback program which expires not too long from now. >> september is when it will be rolled back. >> that will be a big one for the market to digest.t. >> we made it through most of the major companies reporting. the retailers report on a different calendar. this week is going to be a big week for them. on wednesday, we hear from macy's. thursday is an important day. we'll be hearing from walmart. walmart stopped giving out its monthly same-store sales. this will be the first time we hear from the world's largest retailer about what it's seeing right now. also, we'll hear from ur bban outfitters, nordstrom's and

khol's. >> we'll look at the futures. we're looking at the asian markets, up on ten-month highs. oil down 11 cents to 70.82. the ten-year note, we mentioned the fed's meeting and what they may say about buybacks later in the week. the dollar, relatively stable. although it enjoyed a couple of good days after that jobs number. people beginning to think maybe the dollar will not suffer as a result of renewed risk. gold relatively stable as well this morning. in fact, most of the metals are in line, down 40 cents to 9.59. >> let's start with the markets this week though. we want to check in on what's happening right now with george dowd. he's standing by in the futures

pits in chicago. george, we saw what happened with the jobs number. we watched the dollar starting to pick up with some things. this week, we're going to be hearing from the the fed. i guess the big question is will they give us any insight as to what's going to happen with kwan ta kw quantitative easing in this country. >> the retail sales and earnings you mentioned. i think from the fomc, keep an eye on the quantitative easing. the bank of england, you saw last week, and the market wasn't prepared for that. the sterling sold off. >> is this a general thought in

the markets that the united states has made a lot more progress than the u.k. has? maybe that's why you're seeing this big rally kicking off in the dollar and you expect that to continue? >> i think that's right. i think when you look globally, i think that the united states started making some efforts in solving some of these problems earlier than some of the other countries did. i think that's right. you start to see some indications we may be coming out of it. the markets are trading that way. you look at the equity market. we've had fantastic, unbelievable rallies in the s&p. i think technically we're due for a little pullback. the last two weeks of july, we had that rally. it felt like it was real buying. the market would open kind of flat to down in the day and rally throughout the day on buying. that to me is the sign of a strong market. the last, six, seven sessions,

trades are flat to down. 80% of the gains on the open only, whereas previously 80% of the gains were due to intraday market activity. going forward, i think we could be in for a little pullback. we'll see buyers on the way down. i don't expect a washout, but healthy correction. >> george, people talk lately about how far and how quickly this market has run. what do you see on the horizon that could change the momentum though and take momentum away from the bulls? >> one thing that's been -- it's been going around in the research for the last one or two weeks. i've seen an uptick in the concern over the health of the employment situation. so we had the nonforeign numbers last week and they looked good. there is a concern about how many people are starting to run out of unemployment benefits. as we get into september and year end, that number is due to

explode. people who have been on for the maximum number of weeks and starting to roll off. that's a big concern for the economy in general. does the administration extend benefits? i think that's the most likely scenario, but i don't think that's a great solution for the fixed-income market. i don't think buyers will like another spending program put in place. >> it raises questions about the health of the consumer and whether the consumer will lead us out of this recession. >> we'll get an indication how they are doing. >> george, great to talk do you have. >> got any comments or questions, our address as always, squawk@cnbc.com. we'll take a quick break. get news-making headlines outside the world of business when we come right back. plus, hedge fund heros unite. leon cooper, and three living legends live with us.

at 8:30, former white house chief of staff john podesta is hosting an energy summit in las vegas. e 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.

diarrhea, constipation, gas, bloating. that's me! can i tell you what a difference phillips' colon health has made? it's the probiotics. the good bacteria. that gets your colon back in balance. i'm good to go! phillips' colon health.

♪ >> let's get a check on the news outside the world of business. for that we turn to monica novotny. good morning.

>> hi, monica. >> hello. >> you're on television. >> i'm sorry. we're juggling a couple of things here. they were talking to me about the weather channel in my ear. about something we're doing for the weather channel. there you go. >> you want us to come back later? >> no. my apologies. shall we start? we do have serious news unfortunately. grim news over the weekend in the new york city area. seven bodies have been recovered from the crash site where a plane and helicopter collided over the hudson river. nine people died. teams recovered the wreckage but are searching for more pieces of the plane. parts of asia are swamped in rain this morning. hours after a powerful typhoon ripped across the region.. hundreds of people are missing in taiwan. in mainland china, hundreds were forced from the coast. inventors in russia competing. that is actually a flying

competition. they're trying there. they want to see whose flying machine goes the distance. 31 teams using wood and plastic foam. here's my favorite one. just a big talking head basically. big open mouth. i don't know. are they trying? and that, i don't even know what that doll thing in a bikini. i think this is more of an excuse to have a party. >> i was going to say, did anybody make it more than six inches? >> if you don't put wings, are you even trying? oh. yeah, bless their hearts, as we like to say. >> some of those look like pretty bad crashes. >> everybody is fine. it's all good. just a fun party. see you later. >> bye, monica. coming up, the world's most expensive porsche. $16 million. a strong young horse, 5 million on your charge karld. a derby winner, priceless.

we will head to saratoga springs where investors are bidding on breeds. plus, leon cooperman joining us on set for two hours today. then for an hour, starting at 7:30 eastern time, two other industry legends will join him, mike steinhardt and david gerstenhaber. it's fast and small, so it goes places other laptops can't. i'm bill kurtis, and wherever i go, i've got plenty of room for the internet. and the nation's fastest 3g network. gun it, mick. (announcer) sign up today and get a netbook for $199.99 after mail-in rebate. with built-in access to the nation's fastest 3g network. only from at&t.

of the world's most revered luxury sedan. this is a history of over 50,000 crash-tested cars... this is the world record for longevity and endurance. and one of the most technologically advanced automobiles on the planet. this is the 9th generation e-class. this is mercedes-benz.

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.

porsche lovers and racing fanatics are gather at saratoga springs. that's where we find our sports business reporter dacrren rovel. >> reporter: this is really interesting. selected yearling sales. 225 of the top 1-year-olds sold tonight and tomorrow. discretionary spending on horses, just like everything else in this economy has gotten hit. at a basically sale last month, gross revenues 26% as compared to a year before. the average price of a horse down 15.8%. better than expected. the subplot, the stallion contracts for horses negotiated

in 2007, which was at the height of the market. there's a very real possibility that some of the owners may now be underwater so to speak on horses like the housing market. a top-tier company recently purchased by a dubai company.mo most powerful man in horse racing is here. three years ago he went up against john magner. they had a $16 billion horse that didn't do too well. the farm bill, passed in january actually allows for faster depreciation of horses. you can write-off what you buy

here tonight in four years instead of eight. that might mean something. then again, a $5 million horse is still a $5 million horse. >> that is fascinating. there must be something -- i don't know, must be an incredibly emotional buy. almost like buying a house. remember the insoprano's episod. he falls in love with that horse.e. >> reporter: if you're going to spend 3 to 5 million, which might be the top horse to remember, storm cat, which got $500,000 per live foal, that could go to 3 to 5 million. that horse was retired last year. the last yearling. that might be the last number to drop. i'm sure they've done plenty of

research on that. >> i'm sure. >> how many people show up for an event like this to bid? >> reporter: you know, it depends. there were a ton of people last night. i'd say at least 400 people at the party. it's hard to tell exactly who's real, who's not, and how many people are going to bid. the sheikh is here. people saw him walking around yesterday. that was a big nod. he has his buyer usually here. the in fact that he's here, there might be more emotion to it. it might not be the amount of people but just the important people that are here. and obviously, we've talked about this being an indicator. it's an indicator of the people who are extremely wealthy and can spend. i think a lot of people are a little bit nervous about tonight and tomorrow. that's why it's great to see what happens. >> how close do they let you get to those horses? >> reporter: very close. you can get as close as you want. you know, they're really -- i mean, you look at this horse.

it's amazing. >> that is incredible. that is an amazing-looking animal. >> reporter: you can look as much as you want. these are the top 235. not this close. i didn't want to get this close here. i'm thinking they're the most t well behaved and very well trained. they looked at 3,000 horses to get down to the top 235 here. it's not like -- all these guys are beautiful-looking animal. it is amazing to be out here. i really appreciate there are people that are willing to -- not people -- that lawyer horth horses willing to get up with "squawk box." these guys have been up for an hour and a half. >> we're glad to have them as squawk fans. we appreciate it. >> racing has had a pretty good year. with all the excitement about the triple crown. there was so much controversy

after the death of right? >> rachel alexandra, the filly, there's talk about zenada, it's been a good year? it's been a pretty good year especially for all the focus that was on mine that bird and another year of nothing happen with the triple crown. we're at 31 years and it's thought of as all or nothing. it's been pretty good considering that it was yet another year without a triple crown, which is how the general population monitors things. >> are you afraid of horses? >> i'm afraid to get up on horses. >> you didn't even want to get close to that other one. >> no, no, to, no. i think that was beautiful. that was a little bit too close for me, actually. >> watch your back. >> you know, you've really got to watch yourself around here.

it's like a nascar race. >> i wouldn't be afraid of the horse's head. >> i know the instructions. you have to be to the right side of them. i kind of know. again, these are really well behaved here. . these are -- i think this is actually a medalodoro colt? this is the stallion, a big horse, big winner, now owned by the sheikh of dubai. this will be one of the biggest sellers out here. and, again, they'll do, you know, half tonight and half tomorrow night. and it's just -- it's amazing. it's amazing. >> that's a good live shot. have fun out there. watch where you step, okay? we'll see you later. >> if you don't see me, you'll know, okay? >> okay. >> joining us from saratoga springs. an interesting economic indicator, wouldn't you say? >> i was afraid of the horses or you'd break it.

a million horse, i'd be hesitant. >> yeah. a couple of good stories we see in the papers today. there is a -- there's a survey out of corn ferry, the big executive recruiting firm. 47% of employed executives are either somewhat or very dissatisfied with their current position. >> what? >> the recession, meaning all the cost cuts, they're having to do more work. sometimes for less pay. 31% of executives, 31% state they don't trust their boss. when asked if their current ceo is the best for the job, only 38% said absolutely. 34% said somewhat. 38% said not at all. they asked, do you aspire to be a ceo? majority said, yes, we do. 56%. 12% maybe. >> we are moving to a point where the recession's been around for a while and it does have an impact. not only on the executive who is are out there but on the rank and file workers as well. we didn't talk about this beforehand but i picked a story

in the same vein. blue collar workers, hourly workers, are feeling the pinch of this recession, too. they're, asked to work longer and harder after hours and it's giving ri giving rise to lawsuits asking, what exactly is work? people are, asked to work after hours in terms of getting messages, on their blackberries, available all the time. one suit, t-mobile claims workers were required to use smartphones to respond to work after hours without pay. another maintenance is working to looking to get paid for the time he spent working after hours on his work-issued cell phone. go you expect to start happening during a recession when employers are trying to squeeze their workers for more and get more time out of them. it goes back to all kinds of questions. in the past they've had courts issued -- court-involved cases that have come up to try to find out if people should get paid

for the time they wait to boot up their computers. they say, yes. for police officers and others, they need to be paid for the time it takes to put them on their uniforms. now new questions coming up, should you be paid if you are forced to go offsite to another location for the time to drive to this other location. >> driving time.e. not just the mileage -- >> but also for your time if you spend an hour, hour and a half in the car, should you get paid for that, too? >> one of the strength of the economy is how flexible our workers are. historically they're usually willing to do that for free but there's a limit at which you say, okay, are you now taking g advantage of me. >> one of the big numbers on friday was the productivity numbers we started talking about that. >> we'll get those, too. >> massive productivity numbers in recent quarters. you tend to see that when employers are stretching. they don't want to hire new people to do the work but don't want to let things go by either. that's when you start to see a backlash. >> would what would he possibly charge -- >> i don't know. >> we're lucky to get paid for

the amount we do work. >> exactly. >> you want to read this quick box office read? >> we were talking about the weekend. "g.i. joe" commanding victory. paramounts movie taking in $56.2 million domestically and $44.3 million overseas for a worldwide debut of over $100 million. you look at the other top five, rounding out, merle streeps/julia childs tale. "g-force" at number three. "harry potter and the half-blood prince" and "funny people." three movies aimed at kid. coming up this morning, we will have more of the top stories of the day. plus, we'll head up to the "squawk" boardroom. we are welcoming leon cooperman. he ran goldman's asset management division before launching a hedge fund.

today we're going to put another notch in his belt when he becomes a "squawk box" guest host. you're watching "squawk box" on cnbc. oh, hi! welcome to progressive.com. are you all right? a ferocious white whale wrecked my boat. well, i'm sure we can help you, captain... ahab. well, it looks like you haven't had a claim in over four years, so you don't have to pay a deductible.

that means you saved $500! $500? i could get an electronic fish-finder. that's the spirit. saving you money on boat insurance. now that's progressive. call or click today.

can this summer rally continue?? stocks rallying for a fourth week sending the s&p above 1,000 for the first time since november. on tap this week, retail sales, cpi data, consumer sentiment and a two-day fed meeting. buffett is back in black. berkshire hathaway third quarter jumps. what these results may be saying about the overall market.

plus, we go over a hedge with some of the biggest names in the business. leon cooperman, michael steinhart will talk strategy and next for the economy. titans of the hedge fund here as the second hour of "squawk box" begins right now. good monday morning. welcome back to "squawk" on cnbc. i'm carl quinta fill la along with joe kernen and becky quick. we'll see where we go from here but for the time, despite a good morning in asia overnight, markets have been relatively mild here. some of the stories we're following this morning, the fed begins a two-day policy meeting tomorrow. the central bank widely expected to leave key target lending rate near zero and suggests it's likely to remain there for some time. a huge week for earnings from retailers. wednesday reporting macy's, walmart, urban outfitters,

nordstrom and kohl's. berkshire back in the black, posting the best quarter in nearly two years. company's results driven by $1.5 billion in those derivative gains. we'll talk all things warren buffett in a bit with larry coates of oak value capital management. also hedge funds posting fifth consecutive month of gains according to hedge fund research. in a special "squawk" exclusive our guest host is billionaire hedge fund leon cooperman, a former general partner at goldman sachs and ceo of goldman sachs asset management.. thank you for coming in today. >> thank you. >> it's great to have you here. we've been watching this market so closely, trying to figure out if this is an inflexion point. you've been watching these markets for a long time. what's the message of the markets. what's it telling you? >> i think it's selling you the post-world war ii period is about ending.

it's been the most severe recession in the post-war period.. typically gdp contracts about 1 1/2% to 2% and this was about a 4 1/2% contraction. and was preceded by the worst bear market on record. typical bear market down about 25%. this one went down about 58%. i think the market's telling us the recession is ending. i think that i would agree with the message that the market is giving out. >> you know, there are a lot of people, though, who clearly are pretty skiddish when it comes to looking that the and saying, is this an all-clear signal? some point back to 1938 when you saw the huge run up in the markets and then the markets didn't do a whole lot until 1945. what's to convince people that this is really over, this is really an all-clear signal? >> basically, for the 42 years i've been doing this, wall street always developed an alphabet of its own. ls and ws and ds, what have you. very few believed that when the

expansion started it was self-sustaining. i think we'll have to see whether this expansion is self-sustaining. myself, i have my own letter to describe the outlook. the loop. >> the down and up and out? >> a slope, but that slope -- in other words, from roughly september to march we had really falling off a cliff economy. then we had all the stimulus coming into fore, fiscal and monetary stimulus, and then cash for clunkers, you'll see automobile production rising and third and fourth quarter gdp rising 3%, 4%, maybe a bigger number once you have coming from underproduction level, underinventory level. i think going out after the snap back we're likely to see an economy that will grow half of its normal growth rate. >> you're talking about a long flat line. >> well, i say that there will be a slope to it. social consequences of having no growth are dire.

i think our political system is not going to allow for that to happen. if you think about it, the population growth is about 1% a year, productivity growth is 2% or 3%. unemployment is already uncomfortably 10%. after three, four years after the snap back you look at the economy growing 1.5% a year, unemployment staying relatively high. what we did the last decade, you can't do anymore. the structured finance market is gone. i think the consumer basically, if they look at the fiscal condition of government, the consumer has to say to themselves, the government isn't going to provide for my retirement, i have to provide for mooip my own. the average savings rate was 7.5%, 8%. we're heading back to that level. it's a slow growth as we unwind the excess of the last decade. >> how is there any growth from a consumer where disposable income and expenditures are that weak? i mean, don't we are to absorb all the liabilities of commercial real estate and the echoes of the credit breakdown?

>> well, i think we have growth coming out of china, out of india, some domestic growth but it will be a slow growth. i don't think there will be no growth but slow growth. there is a risk we turn down later in the year. a lot of -- >> later this year? >> well, i would say into 2010. but you guys and i agree are great fans to warren buffett. he's noted for saying, you know, forecasting the future, tell you more about the forecast than they tell you about the future. once you get beyond the 12-month rice, you're talking politics s rather than economics. it will be highly unusual after fiscal stimulation in the monetary stimulation, injected in the economy didn't have the intended effect. >> over the weekend barron's said you would almost prefer a return that's tepid, because as long as the economy is subpar, less politicians are, they can't force through legislation, you

go along with that or would you rather have a booming recovery? >> no. steady as she goes. >> really? >> give opportunity for the excesses to unwind. same thing for the stock market. our target at the beginning of the year, my vice chairman, a great worker of the market, we've been thinking in terms of an upside target of 15 times, and we're about 1008 or something. we sit here, constructive but not wildly so. i think the market is in a zone of fair valuation. i've always said to analysts, use decimal point to show you have a sense of humor. >> lee, you've made a couple of references to the political back drop, what the government will and won't accept, what they will and won't be able to do. there are people who started looking last week after the jobs number and saying, do we need all the stimulus that's been set in place to be spent over the next couple of years? do you think we'll still need that to keep things going along? >> given the condition of the

consumer, i think we need that. yes, i think that the consumer is still wounded. i think most of the people i speak to have had a very transformational experience in 2008. i don't care what economic strata we're at, by and large, people are 30%, 40% of net worth are scared and come out of this thing very, very slowly. >> there have been some who say the amount of time needed to repair that balance sheet, that household, 15 years, something like that. >> it's a long time. i'm 66. that on would be a long time. >> long time for us. >> i would say it's going to take a few years. but every economic recovery sows seeds of its own recovery. i think what i see going on now is reasonably classical. i would say the government, as much as i would rather have less enter veng, i think the government is doing exactly what we should be doing to bail out the mistakes of the private sector. hopefully we've learned our lessons.

i suspect it will be a decade before some of the idiocy we've done repeats itself. >> when you look around at the opportunity out there now, the last time you were on you talked about the huge cassism between bonds and the stock market. do you see see that -- >> less of a cassism but still an opportunity. i think the point made last march, the high-yield index was 2,000 basis points over governments. that spread is now 650 over. which means effectively with governments around 3.7, 3.8 you can get something over 10% on a myriad of high-yield bonds.s. when you step back and think about it, for the last 100 years the return on the equity market's been can. about 10% per annum, 40% from di de dividends. if you own equity like return it's foolish to turn your back on it. we now fund about 20%, 25% of our investments in the credit area. the truth is they all had a

massive move. you've got to be very, very careful. but we say generally speaking still see opportunity in credit, less pronounced. same thing, the s&p's gone up to 667 to a little over 1,000. i'll give you a statistic. earlier the stock market is correctly, in my opinion, forecasting the end of the recession. the previous ten recessions, when the national bureau of economic research said, the recession is over, 10 for 10, no surprise, the market was always higher than at the bottom.. the average happens to be 25%. we stand today 52% above the bottom. you know, we've had a pretty big rise -- >> but the bottom was a lot lower. >> you could say to rephrase what you just said is the average bear market was 25%. this one was 58%. so we have more to go up. i would guess this is where -- it's an art form. the problems this time around are much more significant than they were in the typical recession. i think we cooked ourselves beginning on wall street and

commercial banking industry doing some imprudent things. we cooked ourselves to a more significant degree. you have to bring judgment to the party. i think 1,000, the market not far from the zone of fair valuations. i wouldn't come here and say, i feel like a kid in a candy store, i have a zillion stock ideas, a zillion bond ideas. the truth is we're having a very good year this year. terrible year last year. i don't want to have michael steinhart tell me i had a terrible year, basically. and we're going to kind of dial it down, look for the opportunities. they come up every so often. it's hard to come on the show and just say, we're in a zone of fair valuation. but that's it. nothing to be hysterical about. >> this is going to be fun. doug cass said two hours with you is equivalent to two hours at wharton. >> i went to columbia. doug went to wharton. >> we have a couple good hours on the way. >> and michael steinhart will be joining us and david

gerstenhopper. if you want to ask any questions of lee or the rest of the gang, e-mail us at "squawk." our e-mail address is squawk@cnbc.com. now, we've been watching the futures this morning.. if you want to take a look right now, you'll see they are still under pressure. of course, you're only talking about down by about 41 points below fair value when looking at the dow futures. remember, we did see some very significant gains all through the week. on friday you saw the markets up by better than 1.2% for the dow there, too. when we return, money manager bob doll of blackrock k will be joining the conversation. we'll have more with him. in less than half an hour we'll kick off our very favorite hedge fund summit, michael steinhardt and david gestenhaber will be joining us. time now for today's aflac trivia question. how old was judy garland when she filmed "the wizard of oz ".

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!

now the answer to today's after flack trivia question. how old was judy garland when she filmed "the wizard of oz"? the answer, 16. hanging with mr. cooperman this morning, leon cooperman of

omega. let's bring in another name, he works for the biggest money management firm in the world, bob doll, blackrock, joins us from new york. good morning to you. >> good morning to you. >> i don't know if you heard our conversation earlier with lee on the program. >> i did. >> let me try to get you to zero in a little shorter term. how far overextended is the rally, if it's overextended at all? >> i agree with virtually everything lee had to say. one thing i would add is a lot of people just don't believe it. there's a lot of cash on the sidelines while some surely has come in on the rally. i think there's a lot of skepticism. that's normal in the early stages. people don't believe there's a recovery. we've come a long way in a short period of time, to get to your question, and a pull back of notable magnitude after 50-plus% run can happen at any point in time. the underlying fundamentals continue to improve for the economy, for earnings, valuations are not extended, policy remains very

accommodative. to repeat, people have a lot of cash on the sidelines inspect any pullback will be met with buying. >> at what levels? everyone want to say 5% to 10%, does that seem reasonable to you? >> 5% and 10% correction can happen at any point in time. i think a 950 number on the s&p is back to where we were just a few weeks ago. and i think in the long run, that will look like a little squiggle on the chart. look, we have a longer correction at some point when it looks like maybe growth isn't coming back as fast as people thought. we get into the top part of that square root. we'll pull back at some point. but i think the overall trend remains to the constructive side. watch inventory levels. watch confidence. watch what happens in the chinese market. it's had a bit of a trouble. it was the first one to come out. maybe the first one to have a correction. these are the, i think, signs to keep your eye on. >> i think one of the points s that's really sustaining the market is this whole issue of sideline liquidity.. if you think about it, pick a

date. january 1, 2008. typical pension fund. they have had an allocation to equities, 70% equities, 30% bond. the next 15 months there was a collapse in the equity markets gloep globally. investment grade fixed income was very stable. so come the end of march of 2009, that 70/30 with less than 50%. the speed with which things were deteriorating were so frighteni frightening, very few had the wisdom and the courage to allocate back to the benchmark. so now all of a sudden you see green shoots appearing in april and may. the market's acting better. these professional investors saying to themselves, my good, i'm at my lowest equity ratio ever. time it's looking like we made a generational low which i think 666 was in the s&p, a generational low. i've got to get invested. and so money's been coming back into the market. that is a sustaining force. i still think if you look at money market fund balances as a

percentage of the market value of the wilshire 5000, cash reserve is still relatively high.. the fed has created a speculative environment. there no return for savings. i called up my friendly friend at jpmorgan and i said, what. i earning in my checking count? he says 18 basis point. i say, buy j&k, yields 14%, pays me something monthly and building in a dough fault rate higher than we're likely to see. i think it's encouraging speculation. you have the fed saying we're going to keep interest rates low for an extended period of time and congress and the executive branch of government saying we're going to do whatever we can to keep the economy if a recovery mode.. it's encouraging speculation. >> bob, when would that moment of clarity come when the market moves beyond a second derivative trade, if that's what we're still in? >> that could take a bunch of time from here. look, these things all play out in longer periods than we think.

the government's not going to turn tail on us any time soon. they want more evidence, the fed's going to want to see the unemployment rate peak before it does a whole bunch. that's a ways out, particularly if growth is subpar on the recovery. so i think that will be some time before we get there. in the meantime, the market's probably going to work its way higher, or at minimum go side ways for a while and digest the big gains we've enjoyed in recent weeks. >> did anything on friday make you think we don't hit 10%? >> no. look, corrections happen all the time in markets. >> i was referring to the jobs number. >> oh, the jobs number. sure, you have to take pause there because a lot of what happened was a decline in the labor force. it's just a measurement that some people have given up. they'll be back looking for jobs. i still think we'll hit 10%. but that's not far from here. and the important point is, i think it will be a while n a sew growth environment, before that rate comes back down in a

significant way. so politically it will remain pressure to keep the economy growing, to try to provide some more jobs. >> are you -- for months, bob, you've been telling us, and correctly, that the economy was in a bottoming process. are you now ready to talk about the recession in the past tense? unequivocally? >> i believe so. we're in the process of ending here. look, it doesn't end in every part of the economy in a given day. it's a process. just like there was a bottoming process for the equity market i think there's a bottoming process for the economy. when the national bureau of economic research gets around to it some time probably early next year, they will tell us the recession ended maybe as we're speaking. >> one last question, bob. i hated to put you on the spot, but six months from now, are we going to look down at back to school season, holiday, christmas sales and say, wow, that was really a lot better than we thought, worse than we thought, about what we thought? >> i think it will be okay. it will be part of an economic recovery. that usually means some surprises to the upside, but we

about back in our history books and look at those particular periods relative to other recovers. we're going to say, not as good as usual for all the reasons we've been talking about. >> good stuff, bob. we'll talk to you soon.. bob doll. when we come back, warren buffett gets his groove back. turning in some big wins later. the ceo of center for american progress, the former clinton chief of staff, his first interview sin the president spearheaded the successful effort to get two reporters released from north korea. podesta was on that plane and today he's holding a clean energy summit. we'll hear from him later in the show.

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.

warren buffett's company, berkshire hathaway, seeing 14% rise in second quarter profit. larry cote runs oak value capital management. berkshire is oak value fund's top holding. thank you for joining us this morning, larry. you know, barron's asked the question this weekend, so is warren buffett officially smart again after berkshire hathaway topped earnings estimate.

what do you think? >> becky, thank you. good morning. it's interesting, we're long term berkshire hathaway shareholders and have owned berkshire since 19 3. it's always interesting to get the quarterly numbers and to observe the commentary around berkshire's quarterly numbers. buffett's probably no more or no less smart than he has been. he, perhaps, has learned some things about the business as he's gone through this period. my guess is, it's not really new learning. it's probably just a relearning of some old lessons he's had d through the way. >> what do you think about a lot of the bets that berkshire has made over this incredible chaotic time in the markets? things like investing in goldman sachs and general electric and making these derivative bet. were they smart bets or smart bets over the long haul? >> well, you're exactly right. you need to think about these

things in the long-term context. buffett said in the quarterly commentary that those investments will add about $2 billion a year to the investment income at berkshire hathaway as we look out. it's really important to think about those investments in that context. it's interesting to use the term bet. my guess is, he would use the term investment as opposed to bet when referencing those particular actions. but in general, i think we'll find those were very opportunistic allocations of capital in the midst of a market that was experiencing some pretty significant dislocation. history has shown those tend to work out pretty well. he had a respectable quarter, as you indicated on the derivative side and on the investment side. the more important thing probably is the optionalty he has, even in those investments, as you recall, he has the warrants that they give him some

significant upside to the equity exposure of those companies. >> you know, larry, a lot of questions raised about who is going to be the most likely successor for berkshire. people are now saying dave sokol is the most likely successor after what happened last week when he was put in charge of net jets. is sokol the most likely investor? >> it's really difficult to handicap a race when you don't know when it actually begins. as buffett has said many times, it depends on when the succession plan is activated. i do know david sokol, i've spent some time with him. he is both a very intelligent gentleman, an intense leader and manager.r. my guess is that he is a good, strong candidate for when the bell sounds and the gate open but we'll just have to -- we'll have to wait and see.

he's done an excellent job of allocating capital at mid-america and on the regulated utilities side. and has done a pretty good job. i think it will be interesting to see how that works out. but i think berkshire shareholders, if sokol happens to get the nod, should feel very confident that he's certainly no warren, but he's a very good operator. he'd do a fine yob on the operating side, if that were to be the case. >> thank you jor joining us today. we appreciate your time. >> certainly. >> if you have any comment or questions about anything you see on "squawk" today, e-mail us at squawk@cnbc.com. when we return, we're going to talk about what some of the big-e names in the hedge fund world are saying about the market rally right now. michael steinhardt of business dom stree, and our guest host today, leon cooperman. stay right here. taking its rightful place

in a long line of amazing performance machines. this is the new e-coupe. this is mercedes-benz.

thththththththththththththththts concierge claim centers. so i can just drop off my car and you'll take care of everything? yep, even the rental. what if i'm stuck at the office? if you can't come to us, we'll come to you in one of our immediate response vehicles! what if mother won't let me drive? then you probably wouldn't have had an accident in the first place. and we're walkin'! and we're walkin'... making it all a bit easier -- now that's progressive! call or click today. good monday morning.

welcome back to this special "squawk box" hedge fund titan summit, it says. going to introduce to you our panel in a moment. first, futures are a little off fair value this morning. by about 30-some odd points after a decent night in asia overnight and decent numbers in europe. we're kicking off our exclusive hedge fund summit with three of the industry's most respected names.s. leon cooperman of omega advisers, former partner at goldman and ceo of goldman sachs asset management. michael steinhardt, the founding marry of the hedge fund industry chairman of wisdom tree investments. and a rare appearance by hedge fund manager david gerstenhaber, former manager of tiger capital management. good to see you. >> thank you. >> i guess we begin on the state of the hedge fund industry. it's had a pretty good year so far. michael s the industry rebuilding trust after the rough couple of years they've had? >> i don't think so.

i think it's going to take a longer time than the last few months to build trust. there are all sort of people who are gated and trying to figure out some ways to overcome the pain of last year. so i don't think it's rebuilding trust. it will take a lot longer than a few months glue made some really good point about gating, where they lock in the money, they won't release it when people try to get it back out. what does that do over the long term? >> i think it's a fphenomenon that has to affect investors in a very negative way. if you give a man your money, he doesn't give it back to you, he's contractually obligated to give it back to you, what is that investor going to think? if i gave someone my money and he, for his own reasons, decided that he wasn't giving it back to you as he contractually was

obligated to, i wouldn't be very happy with him. and it would be hardly anything that he could do that would change my mind, frankly. >> we knew we were going to have this discussion, right?t? do you agree with michael? >> yeah. i think we mentioned one of a number of issues. but i would just say that everything is cyclical. i mentioned to you earlier in january of 1970 the very distinguished writer at forbes wrote -- the title was "hard times come to hedge fund" and i would say they are 2,000 times bigger than 1970. my distinguished buddy was managing $30 million, he could make or lose $30 million a day these days. >> managing $30 million and one of the largest -- >> the largest back then was a.j. jones at $2 million.n. this fellow to my right was the only one that made money in the bear market in 1968. as hedge fund didn't perform as

expected and took four, five years to come back. i think gating of capital is one issue that bothers people greatly, key issue. second, frankly s in many cases not honoring high water marks. when you lose money you're supposed to make back the losses before you get a fee again, incentive fee. a lot of people cashing in saying, they don't to want do it. to me, i think that's -- it's inappropriate because an asset of the investor is the high water mark. you're giving back the investor the money saying, i don't want to work if i can't make an incentive fee. that's inappropriate. mr. madoff has cost a shadow on the industry, so lack of transparency, then the issue of how much leverage you use in running your portfolio, then the issue of the lengthy notice requirement to get your money back. if you own a stock, you sell 2678-plus three you have your money back. in hedge fund they want 45 days' notice, 60 days' notice and as michael indicate, you're not so sure you're going to get your money back when you give them proper notice.

all these reasons, when you couple it with the fact they outperformed the market last year, the market was down 37, it's not satisfactory to lose money with all these negatives. it will be a while, but ultimately money will come back because the concept makes sense. >> what's the most constructive thing going on in the industry? >> i think the most constructive thing is people are generating performance for a change. >> no better way to build trust than to give people money, right? >> remember, this is a business designed to perform in theory. the issues associated with last year was that, while the industry outperformed the market on an absolute basis, the industry's performance was subpar. and i think that is one of the issues that the hedge funds in aggregate will have to come to terms with. >> does it make it easier, though, to see others run into a lot of competition? you were talking about more than 8,000 hedge fund that were out there before. the hedge fund industry was exploding. >> but there's a point here that

no one mentions. in the '60s or late '50s when the hedge fund business began, there was an arbitrary judgment to charge 1 in 20, broadly. nothing magical about 1 in 20, but that was the standard fee. it grew as a standard fee into the '70s, into the '80s, until some peculiar degree it grew. it grew as capital grew. some people charged even more than 1 in 20 when they had vastly more capital than was the norm in the hedge fund business. the hedge fund business was not a business until the '80s. it was an art. it was something much less than a business. it wasn't an organization. i used to say those people had the ability to build an organization were not great

managers. they were great organizers. the people who were great hedge fund, great money managers typically did not have the ability to organize businesses. but that all changed.d. and now all sorts of people are in the hedge fund business. banks and other major institutions. and 1 in 20, or the like thereof, has become a standard fee for almost everybody. the idea of performance has sort of been so diluted, so diluted, that it's not the same thing. i would like to make a common about leon in a moment. if you didn't do well, you were out of business. it was over. now i read somewhere that cerebus had lost $5 million, $6 billion in one investment. they're not going out of business. life goes on.

it's like they're a normal entity. it's not that they're a performance entity where if you do well, you're fine. if you don't do well, good-bye. in the '70s when lee was referring to the '67-'70 period, most hedge funds went out of business. not a minority, as is the case now. most went out of business. today you're talking about a very different thing.. you're talking about an industry. you're talking about an industry with trade publications and awards and all sorts of things. it's a whole different world. now i would like to make a comment -- >> lee was shirking away as you were talking. >> he was putting on a helmet to brace himself for what's coming. what is coming? >> nothing terrible, even though he made some comment about my -- he feared what i might say before i got on. he represents the original ethic

of the hedge fund business. not that many people still do. he really believes in a contract. he is slowly becoming geriatric. he gets up at some ungodly hour every morning and is totally committed to this business, more than he should be, in my view. we have lunch a number times a year. and invariable topic of our conversation is why he keeps doing this. because he's a wealthy, successful guy. and he's had many, many great years. and when he's had one poor year, he's going to keep doing this until he makes his investors back every last dime.. because he believes in a high water mark.. he's making it back. most of the other guys don't think as he does. he's an exception. and a truly admirable exception.

>> you have to add one thing to the list. my wife says, don't come home for lunch. so i have to keep working. >> you think absent lee and a few select others, you sound like the industry is a parody of what you remember it as. >> absolutely. >> harsh words. >> i don't want to go in that direction, but all i want to say is money goes where money is treated best. the s&p 500 was 1527 in march of 2000. for the seven-year period and 2007 while the mutual fund industry wasn't making money, hedge funds, could be on both side, were making money. hence the popularity of hedge fund. the talented people in hedge funds, very simple, to use becky's number, 10,000 mutual funds, 10,000 hedge funds. the mutual funds are managing for 1% or less. the hedge funds are 1 in 2 2 or 20. you don't have to be a rocket signist to say, do you want 2 in 20? we brought in talented people.

you had a bad year in 2008, money leaves the industry. it has to sort itself out. i agree with michael. i think there's been a lot of bad behavior in the industry.y. i was quoted in the new york times about six or eight months ago. i believe this from all my heart. they would have to lower me into the ground before i gated kaptd and not honor my high water mark. you know, i believe in the expression, praise by a name criticize by category. as a category i'd say those close up, and there may be different reasons, not honoring your high water mark is unethical. that's my philosophical view. >> when we come back, i want to get more on your thoughts on the market and opportunity out there right now. again, this is our hedge fund summit. we'll be back in a moment with this. later in the program today as well, we have the national clean energy summit kicking things off today. a small select group of high-level leaders from government and business sitting down to talk about how they can fix the nation's energy problem. the summit's host and ceo for

centers for american progress, john podesta will be right here. i'm racing cross country in this small sidecar, but i've still got room for the internet. with my new netbook from at&t. with its built-in 3g network, it's fast and small, so it goes places other laptops can't. i'm bill kurtis, and wherever i go, i've got plenty of room for the internet. and the nation's fastest 3g network. gun it, mick. (announcer) sign up today and get a netbook for $199.99 after mail-in rebate. with built-in access to the nation's fastest 3g network. only from at&t. to its employee storbenefits package at no direct cost to the company... it was a perfect fit.

find out more at aflac!... ...forbusiness.com

this is

we are back with more from our exclusive "squawk" hedge fund summit this morning. with us our guest host, hedge fund titan leon keeperman, michael steinhardt, and david ger st gerstenhaber, former manager of tiger capital management. we've been talking about the broad implications for hedge funds, but i would like to focus more on the markets. lee told us earlier this morning that the market is sending a very clear signal right now that this recession is over. david, i'd like to talk to you about where the opportunity exist around the globe. you are somebody who has been known for the major calls you've made, including on things after the very first person gulf war where you saw oil prices would drop quickly. you always recognized japan was

in for some very big problem.. when you look around the globe now, where do you see the opportunities? >> i think the opportunities are in those economies that can grow on their own, without support from the outside world. and the obvious candidate for that is china at this point. that's not to suggest that the markets may not be ahead of themselves but china doesn't suffer from the constraints that a number of other economies do. running a large e ternl surplus, their fiscal position is in quite decent shape.e. and they certainly have a significant backlog of domestic infrastructure spending and room for growth in household incomes and household consumption that can spur them for quite a while. so i think it's a mistake for people to dismiss china quickly. it's a big place. and i think they can provide significant growth for an extended period of time. the fact that the concern right now about china is whether or not they'll begin to titan

monetary or fiscal policies sooner rather than later is a testament to how well they've gotten their economy back on track. i don't think they'll do anything to derail themselves. but i think they're a lot of growth coming in china on a secular basis. we ought to continue to pay very close attention to it. >> but people worry that the government is just spending its way back out of this in china. they worry the consumer is china is not stepping in. you say it doesn't matter because they're in a different position? >> i think the key issue for china is transi guessing their economic growth model from export-driven growth to domestic demand driven growth. i think that's what we'll see over the next five years. to the extent they have a centrally planned economy they're able to manage this in a fashion that is consistent with remaining in control and doing things purposefully. i think we'll see liblization of the chinese rmb, the yen, and i

think we'll see that as domestic economy is allowed to take up the baton. >> is shanghai in a bubble? >> i don't think shanghai is in a bubble. the property markets go through cycles in china and in asia to a greater extent, i think, than we're used to in the west. there's clear indication that some of the authority in shanghai would like to slow down the aappreciation of property prices again. maybe they've overbuilt. but is it in a bubble? no. it's a very large city that is hub of a significant amount of economic activity. >> people look at the index, though, and say, we're in this global near meltdown. it's doubled in a year. how does that make any sense at all? >> well, it's not extremely inexpensive. it's not radically overpriced. it certainly hasn't gotten back to where it came from. you want to talk about earnings growth, you have significant

earnings growth in china. in addition, the parts of china that people are most concerned about, the low value added export regions in southern china are doing better than expected at this point. and i think that what you need to recognize is that there's so much room for china to grow on an ongoing base with the domestic population the size that it has. simply transitioning away from an export-driven model. you contrast that with a country like japan, which is rapidly becoming, in my opinion, an unfortunate old age home. here's an economy with a declining population, has an uncompetitive exchange rate, yet manufacturers high value added good for exports, declining domestic demand, declining labor force and how are they going to get out of the rut? how do they jumpstart growth? >> is united states the next japan? there are people who wonder that all the time. >> i don't think so. we have very substantial amount

of net inmigration. we are groeding old, the world is is growing older but we're not like japan. we don't sustain limited periods of no growth. david, in terms of china, is there a serious investor issue in terms of transparency? >> of course there is. as there is with any emerging market. i think this is something that will improve as time passes.s. but this is a caveat market, if you're going to invest in their securities, no question about that, michael. >> rio tinto is going through a hard time, or is learning lessoning about what it's like to do business with the government.. politically are there -- do the risks -- is the opportunity outweighed by the risks? >> i think it is, but it's very helpful if you want to think as an investor to think, if you can be on the side of the government

or against the government, it's a lot easier to be on the side of the government. this, by the way, is the case in many emerging markets. you it take a look at russia where rule of law and, you know, treating investors are extremely low on the list.t. and you think about how companies are -- you know, do you want to be with the companies that the government's backing, that putin's behind or the ones he's going after? they may look cheaper but that's the wrong place to be. >> it's like banging your head against a wall. >> or do you not want to be in russ russia. >> that, too. a lot more from our hedge fund titan summit coming up. welcome to progressive.com. you must be looking for motorcycle insurance. you're good. thanks. so is our bike insurance. all the coverage you need at a great price. hold on, cowboy. cool. i'm not done -- for less than a dollar a month, you also get 24/7 roadside assistance. right on. yeah, vroom-vroom! sounds like you ran a 500. more like a 900 v-twin. excuse me. well, you're excused. the right insurance for your ride.

now, that's progressive. call or click today. 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

we have much more to cover here on "squawk box." we have our special hedge titan summit. also former clinton chief of staff turns ceo for the centers for american progress. john podesta. we'll talk to him about what he thinks needs to be done. 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.

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. a "squawk box" exclusive -- hedge fund titans steinhardt,

cooperman and gerstenhaber. making sense of the market, finding opportunity. >> today you're talking about a very different thing. you're talking about an industry. >> former white house chief of staff under president clinton, john podesta, from freeing the two journal-is from north korea to creating jobs from clean energy, we talk to him first on cnbc. ♪ take a load off steve liesman back from the fishing hole. the catch of the day, economic forecast. "squawk box" begins right now. ♪ you put the load put the load right on me ♪ ♪ right on baby good morning, everybody. welcome back to "squawk box" here on cnbc. i'm becky quick along with carl quintanilla. joe's out today. he'll be back tomorrow. we just heard from mcdonald's, the company out with the same store sales number showing global comps up 3.4%, better than expected. the street was looking for a gain of 3.2%.

also in the united states, comps coming in better than expected, up 2.6% versus the 2.1% the street was expecting. again, mcdonald is a dow component. we'll keep an eye on this. you're talking about the futures, the s&p futures, down by about four point below fair value. the dow futures down by 28 point below fair value. let's get to some other top stories we're following. french ad giant is buying microsoft digital ad agency paying $530 million as it seeks to expand digital ad revenue. it is one growing during the recession. warren buffett back if black. berkshire hathaway reported the best quarter in almost two years, thanks to a recovering stock market and some big gains for some of berkshire holdings, along with derivative holdings. we're bach to our "squawk" hedge fund summit. leon cooperman, former partner

at goldman, michael steinhardt, founding father of the hedge fund industry. you know him as chairman of wisdom tree investments as well. and david gerstenhaber, president of julian tiger capital management. let's pull it back to the rally we've seen. david, it's overcome things like beari bearish healed and shoulder pattern, hiccups here and there. people say the cost cuts we saw in q2 earnings are temporary, they endanger the consumer long term. he's still deleveraging. housing may have stabilized but it's not on fire. can it continue? >> it might continue for a while. the real issue is, how sustainable it is in the medium term. the question is is, can the economy get become on a reasonable growth track? and i think that that's a very difficult question to come to a strong conclusion on. >> what does it depend on?

>> it depend on whether or not you have income growth, , employment growth, which we don't have now in the consumer sector. all we've had is the government stepping in, providing a lot of cash, some stimulus and changing sentiment. but the real point is that the output of goods fell so much more dramatically than final demand did that now there's a bit of a catch-up occurring. people referring to this as an inventory cycle or restocking cycle. it's similarly normization. if you cut production 50%, demand goes down 20%, at some point you have to bring production back up. that doesn't mean you don't want to build your inventory and demand for goods is going to go back to where are it was in 2007. that's not going to happen. we've had had the cost cutting, right? that's this quarter's story. you can't keep cutting your way to prosperity. at some point you have to pay people, employ them and generate some ongoing mode for growth in

the economy. right now that's limited. >> i guess the question for the market is, do you expect, as we go into 2010, that the economic expansion will become self-sustaining, that the consumer will kick in and there will be other areas of contribution, economic growth or do you think we turn back down? >> that's the question. >> well, i think the answer is, i've used the phrase with our investors that we're in what i call contained depression, which means we should expect an extended period of subpar growth, possibly with -- >> square root. >> i was going to draw that out, the square root, is what lee was telling us. forget the qz" or the ww," it's the square root. >> consumer's attitudes have changed. we're not going back to rampant credit card use, even if it's available. we may have changed from an aspi aspirational society but to the

society of status quo. the age of the population will drive that trend as well. so i think the medium term outlook is far less rosy than thor in term market rally would suggest. >> michael, you agree with that? >> what i think is that almost with no exception no one i know is long-term bullish. no one i know is long-term bullish. >> warren buffett. >> buffett will say -- >> i don't know warren buffett. i say buffett is also very clear, he says, i have no idea what the market and the economy going to do for the next 12 months, 24 months but i have no doubt -- which i realize is a different academic. >> are you bullish on america? >> i would say, very concerned long term. >> i couldn't get him to simply answer yes. he couldn't simply say, i'm bullish on america. he had to give me a more reasoned answer. >> what i said this morning, michael, you probably were

sleeping -- >> i probably was. >> but basically warren buffett, which i quote because i have enormous respect for him and i speak with him periodically. he says forecasts of the future tell you more about the forecasts than they tell you about the future.. when we start talking 1, 2, 3, four years out you're talking as much philosophy as business cyc cycle. you don't know the answer. you're one of the great c contrarians of all time. contrarians would tell you, something is wrong. if you want to be contrarians, you have to be bullish or bearish. >> the point here is there are so many negatives that one can focus on. it becomes sort of boring after a point to talk about the impact of the savings rate and the uncertainties created by this administration, which are myriad. what's this guy talking about

with tax rates and taxing the rich and health plan. you go on and on and on. what did he really do to the auto industry?? where was the vision of creative destruction where you had opportunities to change things here? what really happened in this great recession that we had. was any good really done? >> you mean d we learn a lesson? >> did we learn a lesson? who are the villains? wall street has changed.d. you can sense people are the same people -- >> the front page of "the times" this morning, above the fold, a story about the guaranteed bonus and how it's back in vogue. >> exactly. so you have a political administration that is is clearry going in a very different direction than we've seen in a long time. but you have the same players in the business community, particularly wall street community, who want to do the same thing and make the same money.

you have a consumer who is constrained, who has no overwhelming desire to buy the 2010 models of automobiles. there's nothing so exciting about that, is there? i don't think so. or any other new consumer products. you're in this particular r circumstance. lee and i were speaking -- lee mentioned earlier that the government took the idea of a depression off the table. >> the three of you were argues back and forth about that during the commercial break. >> the idea of a depression off the table and they did it by this vast amount of spending, , blah, blah, blah. what he's saying makes some sense in the immediate -- >> a lot of sense, not some sense. >> some sense in the immediate -- the immediacy of it. people don't talk about a depression anymore. >> you're glad about that. >> once upon a time, though, we're talking about once upon a time, a matter of months, people talked about what happened in a

depression, and then they talked about the 1929 experience, where there was a huge 40 or 50% rally before it went to lower lows. you don't hear that talk even now when you had this big decline and rally. no one is suggesting there is analogous to the first rally after the great depression because the government has spent all this money. but, but, one wanders, there's no consumer excitement. everything is really fragile. as i mentioned earlier, we are all a product of the last tick. we all think, based upon what we've seen in the last few months, and, therefore, our long-term projections, as a again ralty, has to be viewed with great limitations.

>> i think there's a useful point one can put on valuing securities as well. during the period prior to 2007, when we had what was referred to as the great moderation, equities were able to perform reasonably well with a low equity risk premium. i think the critical issue now that few people understand, the medium outlook is so uncertain. are we in a v-shaped recovery is will everything be fine? it seems unlikely to me and to the other guests here, but it's possible. the flipside is that, you know, we get this little normization of production and then we sputter. because we've never been here before, the 1930s were the last time we had anything comparable in terms of the devastation we've seen, we need to accord a very high uncertainty premium, a risk premium to securities prices. that is one of the things that should truncate the open-endedness of a rally in both credit and equity at this

stage. >> have the markets already run too far when you look at equities? >> i think they've gone fairly far. on a near-term basis they will respond to positive news in much the fashion that michael suggested. they're focused on the next tick.. if we get positive news, we only lost 250,000 jobs, which previously would have been a bad employment report, then the market's can move higher. but the question is, how long can we sustain that positive news? what i'm submitting to the group is that this production normization which started in asia will be over fairly soon, perhapsly the end of the year. and then the question is, what's going to drive growth? >> are you basically suggesting we're not going to have positive gdp growth in 2010? >> i think we'll have -- >> moderately positive growth? >> that's below trend, that doesn't bring -- >> all i say, if ime interrupt, is basically the stock market got to a dramatically

undervalued level. got to a dramatically undervalued level because the speed of economic decline was so dramatic it scared the hell out of people. all of a sudden we see signs that it's not just u.s. economic still laying, it's global. trillions of dollars. chinese, western europe, india, latin america, america, enormous amount of stimulation injected into the economy. if you look at today's interest rate levels and the probable interest rate levels over the next couple of years, t-ratios on equities are not high. they're basically -- you know, we keep talking about warren buffett, but the truth is when he wrote his editorial piece on october 17th, the s&p was -- i've never seen warren, he can be wrong on individual stock.k. he's human like the rest of us. we went from 940 to 666. we went down like a light. we've bounced back to a normal level. for the stock market to make progress from here, we don't

just need positive gdp growth in q3 and q4, we need growth into 2010. we're all saying we may be wrong, is that we expect growth but moderate growth. the stock market's in the zone of fair valuation. we're not saying it's terribly overvalued or undervalued. >> and i think we're also saying you're going to have to have revenue growth for that. >> absolutely. >> the profitability that's been generated recently has been a function of cost cutting. >> i think i'm saying something a little different from that. i'm not saying we're in a zone of reasonable valuation.n. i'm saying we're in a period where it's very difficult to know what the future's like. and i don't think my confers would strongly disagree with that. >> they clearly have not. >> therefore, you can't talk about valuation so readily. you just can't speak about it. and -- and the market is a little bit that way well. would anyone here, i ask david

and lee, would anyone here imagine a serious market retreat toward the old lows? >> it's quite ponl if we have a disappointment in economic performance. >> what possibility would you put on it? >> 1 in 4. >> i would put 1 in 3. >> we go back to 666 or below? is that what i heard? >> less than that. >> less than that, okay. >> will do you this again? will you come back the three of you and do this again? >> sure. i like getting up at 5:00, it. >> thank you for your generous amount of time this morning. with we come back, he was part of the delegation that helped free u.s. journalists n from north korea, john podesta, we'll talk about that trip and his next project creating clean

energy jobs. steve liesman is back from maine but not before getting some more economic forecasts. we'll see just how bearish or bullish they were at leen's lodge. i'm racing cross country in this small sidecar, but i've still got room for the internet. with my new netbook from at&t. with its built-in 3g network, it's fast and small, so it goes places other laptops can't. i'm bill kurtis, and wherever i go, i've got plenty of room for the internet. and the nation's fastest 3g network. gun it, mick. (announcer) sign up today and get a netbook for $199.99 after mail-in rebate. with built-in access to the nation's fastest 3g network. only from at&t.

our senior economics reporter steve liesman is back from that assignment of reporting from grand lake streams, maine, joining us with the economic outlook from the economic analysts that were there at leen's lodge. how was it? >> it was a blast. we worked a little bit, we talked a lot about the economy, did a lot of fishing and a lot of everything. you can also enjoy yourself while you do your job. >> did you talk about financial armageddon. >> financial armageddon and chernobyl ant, which is -- it's a foam pattern. so armageddon and chernobyl ants -- >> what did you catch? >> smautmouth bass. some guys got salmon. the rain made everything cooler. let me tell you what the outlook is. very similar to what you were saying, mr. cooperman. gradual improvement but no barn burner. on saturday night they wagered together on economic outcomes for next we're.

also side bets that go on. citigroup will be liquidated, even money on that. whether or not bernanke will be reappointed. >> even money on citi, liquidated? >> yes. also the size of fed's balance she sheet. they see fed funds raising to 0.71, the s&p will be higher but not a lot. >> over what period of time?? >> this is when they come together next year. >> next year. >> so 3.5% high other the s&p. gold is higher but you'll see on the next green, by the way, that inflation is also higher. there's inflation concern. look at the euro. the euro is about flat but the dollar's strength is pretty well against the yen. unemployment stubbornly high, 10.1% this time next year. there was hope maybe from the jobs number. they didn't change it after the jobs number. cpi, .3. it's now negative.

and case-is shiller, negative in item of houses but much less negative than now. we went to the lunch grounds and we brought a camera. here's some commentary from the gathering. >> i think we still have a lot of sort feedback between the real economy and dertivetives.s. i think that the fixed income dertivetives market is still huge. outstanding, we've seen some compression in cds but still some significant issues on all kind of exotics. >> i think we're well into the process of dealing with our bad assets. we go back to shortly after we were here last summer in september, october, november, it wasn't about bad assets only. it was the fact that all assets were trading at pawn shop prices. >> it's better than it was last year because last year was a deep hole. and we were bleak. this year we're on the cusp of a decision. is it a cyclical recovery, the

have the "v", secular, long term? i think not. is it a "w"? high. >> why? >> there are a lot of structural problem that take a long time to work out, commercial real estate, unemployment is going to be high for years, and we have huge policy issues. higher taxes, massive deficits, big structural change, massive issues. >> lackluster recovery. lackluster -- >> i think third quarter gdp will be strong. mostly a statistical recovery, big jump in inventory, a lot of government spending, but not sustainable over the longer run. >> i don't believe there's a double dip because i think the economy recovery will be slow enough. there will be maybe a quarter that almost feels like, we stalled out. but i think we'll look back a year from now and say, economy grew around 3% by gdp, started

to add some jobs, unemployment rate's coming down a bit, corporate profit should be good. i'm not a double-dipper. i believe we'll have a slow upturn but not a double. >> i caught up with author randy spencer about the economic impact this group has on what is a very economically poor but culturally rich region of maine. >> i dedicated my book to david because he has almost single-handedly revived the guiding culture in grand lakes stream with these huge parties. >> what's it meant for this area here? >> it's a huge boost every time he brings these parties to the entire local economy. >> spencer's book "a cool water's flow." i kind of bring that up because if i wasn't doing this, man, would i like to be doing that. musician, guide, author, poet, voiceover guy. he's got a gig. he's got a gig.

thanks, guys. >> and tomorrow? >> oh, tomorrow we're going to talk about a lot of interesting doubts about bernanke's reappointment. i thought everybody would be like, he's going to be reappointed. one guy who thinks outside the wall street box is thinking about bernanke and what obama might be thinking about that. >> you look at congress right now. there are some pretty tough bills on the fed. people from both parties have signed onto. >> right. think about -- what i was thinking about is the politics of reappointment and how much some people think bernanke is blamed for what's going on and how angry americans are are at the fed. >> lee, you made the point you think america did the right thing. >> i think they were late coming in but they did the right thing. i want to know who's regulating congress? i'm a citizen.n. we pay taxes. we had an energy crisis in 1973, 36 years later, where's the energy policy? "the wall street journal" every six months wrote about the mistakes, made by freddie and fannie. nobody in congress seemed to care. they wanted everybody to own a

home, whether they could afford one or not. 2005 warren buffett wrote about the financial weapons of mass destruction. nothing was done. villains of hedge funds. congress has a lot to answer for, in my humble opinion. there's an absence of leadership. >> they need a good mirror, right? >> steve, thank you very much. coming, we're going from freeing u.s. journalists in north korea to finding solution for cleaner energy. former white house chief of staff john podesta is keeping very busy but is making time for us at 8:30 eastern time. medicare.

it doesn't cover everything. and what it doesn't cover can cost you some money. that's why you should consider... an aarp medicare supplement insurance plan... insured by united healthcare insurance company. it can help cover some of what medicare doesn't... so you could save up to thousands of dollars... in out-of-pocket expenses. call now for this free information kit... and medicare guide.

if you're turning 65 or you're already on medicare, you should know about this card; it's the only one of its kind... that carries the aarp name -- see if it's right for you. you choose your doctor. you choose your hospital. there are no networks and no referrals needed. help protect yourself from some of what medicare doesn't cover. save up to thousands of dollars... on potential out-of-pocket expenses... with an aarp medicare supplement insurance plan... insured by united healthcare insurance company. call now for your free information kit... and medicare guide and find out... how you could start saving.

up next, president clinton's former chief of staff, john podesta. he was part of the delegation that helped free laura lee and euna ling. now he want to proceed more jobs by promoting clean energy.

this is humiliating. stand still so we can get an accurate reading. okay...um...eighteen pounds and a smidge. a smidge? y'know, there's really no need to weigh packages under 70 pounds. with priority mail flat rate boxes from the postal service, if it fits, it ships anywhere in the country for a low flat rate. cool. you know this scale is off by a good 7, 8 pounds. maybe five. priority mail flat rate boxes only from the postal service. a simpler way to ship. today's people, planet and profit report. >> we take care of polymeasures. >> people from all over the world send post-industrial plastic for three reasons. >> landfill aversion, and they can take it and put it back in their manufacturing business and

have someone else use their manufacturing scraps in manufacturing process. >> they match buyers with sellers in pennsylvania.. whether it's a product that's not up to spec or plastic no longer needed, everything from plastic crates to wallpaper is ground, pulverized or emulsified. what comes out at the end depends on the needs of the e manufacturer that will reuse the plastic. maintaining the integrity of the material is key in allowing them to close the loop on recycling. >> this hose end up in this stage and end up in this tile. >> for more, check out sustainability.cnbc.com. f ity, 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.

welcome back to "squawk" here on cnbc. for a monday, first in business worldwide, we're about an hour away from the opening bell on wall street. our guest host today, what a treat, leon cooperman of omega advisers has been joining us. we got some good stuff done on

that summit, didn't you think? >> absolutely. only concern would be general agreement amongst the three of us and that's usually not a good sign. >> right. get a check on markets, futures have been tepid after weakness in europe. relative strength in asia overnight. nikkei at a ten-among high. the hang seng back to levels we saw when lehman failed toward the end of last year. for the time, futures are negative. mcdonald sales came in 4.3 for global comps and 2.6 for u.s. comps, above expectations. they're citing the mccafe coffee and gourmet menu. >> you have to wonder what that means for competitors. are they taking market share from dunkin' donuts or starbucks? >> other stories we're watching, one of this week's highlights will be the two-day fed meeting beginning tomorrow. ben bernanke and company will undoubtedly keep interest rates where they are, although investors will be listening for

details on winding down or renewing the extraordinary measures the fed put in place to deal with the financial crisis, namely the buy back program on treasuries. hor mel foods is one stock we'll keep an eye on, known for spam, boosting outlook for 2009 thanks to stronger than expected sales, particularly in its jennie-o turkey segment. >> you have no idea what jennie-o is, do you? >> no idea. >> me neither. the topic on tap this year at the national clean energy summit is more jobs, how to make more green jobs in particular. here now with a first on cnbc with a preview on john podesta, president and ceo for center for american progress and former chief of staff under president clinton.n. by the way, mr. podesta was part of mr. clinton's delegation that went to north korea to free euna ling -- euna lee and laura ling.

thank you for joining us. >> good morning, becky. it's nice to be back. >> we want to talk to you about the energy summit. that's the reason we have you here today.. before we get to that, let's talk about what some of us have been watching and focusing on. that was that trip you made to north korea. we saw you on the front of the newspapers everywhere. and just wanted to ask you what it was like to be part of that rescue mission. >> well, look, it was a great honor to accompany president clinton to north korea and to have such a happy ending. it's such a great feeling when when we got back to the united states and we were able to reunited laura and euna with their families, particularly that scene when euna was hugged by her 4-year-old daughter. that was really, you know, a moment i'll remember for the rest of my life. >> we all watched that as well, obviously, incredibly moving moments. it's something that meant an awful lot to us. but when you take a look at what it's going to mean for diplomatic relations from here, how does that change our situation with north korea? >> well, as you know, becky, that was a humanitarian mission. we went to try to get these two young reporters back to the

united states. we did have an extensive meeting with jim jong-il. it's really for our government to state our policy and i think we tried to reiterate what u.s. policy was with respect to denuclearization of the korean peninsula. i won't get into the details of those conversations. again, i think that this was primarily a -- really, it was a humanitarian mission in which we were trying to get these young reporters back to the united states. we were successful in doing that. now it's up to the -- it's up to the administration to take whatever steps forward that they consider are appropriate. >> john, let's talk about the energy summit and why you're in las vegas. what's the focus this time around? green jobs in particular? >> yeah. last year we focused on renewable energy and transmission. we've seen some movement on that front with the stimulus package that passed at the beginning of the year. transmission legislation that's moving forward. this year we're focused on two

things. one, retro fitting buildings in the united states, which could put a lot of people back to work. we estimate by retro fitting 50 million buildings in the next ten years, which is very doable, about 0% of the building stock, we could put -- create 625,000 permanent jobs in this country. and reduce overall energy bills for consumers. so it's a win-win in this context. we're issuing a report today on how we rebuild the building stock in america.a. as i say, reduce energy use, reduce energy bills and put people to work. we'll also take a look at vast supplies of natural gas that are now accessible in these so-called unconventional finds, oil shales in the country and the need to use natural gas as a bridge fuel as we move towards clean, renewable energy in the future. >> how much money would it take for this retrofitting, though, from congress? because people are watching the

amount of money that's gone out the door and i think watching closely to see when the administration can actually pull back. >> well, it's interesting because we estimate that most of that money really needs to come from the private sector. there's a role for the government to -- particularly in low income weatherization, there's some money that needs to be spent there, but probably $500 billion of investment that's needed. the vast majority of that has to come from the private sector. but the government has a role to play in orienting policy towards getting the financing right, getting -- you know, using the facilities they do have. there's legislation moving in the house and the senate to create what we call a green bank, a clean energy deployment administration to really take these low-hanging fruit, to get people doing what probably they ought to do but the business mechanisms, particularly the financial instruments to get people to get these quick

paybacks on energy efficiency, retrofits, aren't there. so i think the government does have a role to play. we'll hear this morning from governors schwarzenegger, california's been a leader in this, and secretary chu from the energy department, secretary solice will be here. >> the criticism is that the green bank would take and focus an awful lot of money at one area. they say that could be starting down the same path that got us into the trouble with the housing crisis where you had so much money that was going to fannie and freddie. what do you say to those critics? >> this is an underinvested place in our economy. there's tremendous gains and tremendous productivity gains that can be had from energy efficiency. there's a famous mckenzie analyses that came out a little over a year ago which showed that in terms of our path

towards getting the reductions we need with respect to even to global -- reducing global warming pollution, 40% will actually make money, if we could just get those investment dollars flowing. so we don't see this as really, a permanent instrument or a permanent feature of u.s. policy, but one that needs to kickstart the jobs and the investment. again, to leverage private sector money. most of the money that would go out would go out in the form of loan guarantees or loan support so that we get the financing flowing to what could be a very productive part of our overall economy and get growth going again in our economy. >> this is lee cooperman of omega. if i could ask you a question. i recently returned from dubai and abu dahbi. you visit the sheik's mosque and can put 15 football fields in it

or the arab emirates hotel, very posh. i was visualizing in my own mind and i filled up with $3, $4 a gallon gasoline, if this wealth transf transferrenc is taking place, what about the supply side, drilling at the continental shelf, clean coal and relying less on foreign energy sources? >> we think that's absolutely necessary. one thing i think we'll have a good discussion about today, boone pickens will be here is the vast supply of national gas we have in this country.y. it's a resource in america. and that is -- that is exploitable now because of new technology, american technology, which can get after and extract the gas from oil shales. those are distributed across the country. they're in arkansas, michigan, ohio, pennsylvania and other places that can't be exploited. indeed, we can move a good deal in our view, our heavy-duty

trucks, bus fleets, vehicle fleets in cities from gasoline to natural gas.s. that will keep the money here at home and the production here at home instead of sending that money overseas to what are some friendly regimes but many unfriendly regimes as well as we transfer that -- our wealth to oil producing countries. so we think there's a very major play there to produce the kind of net-net gains. again, to use -- to exploit american resources instead of resources overseas. keep the money at home, create jobs here at home. and that also has a very profound and important impact on reducing pollution, particularly global warming pollution. >> thank you. >> thank you. >> mr. podesta, we to want thank you very much for joining us this morning. >> it was great to be here. thank you. when we come back, the busy season for the real estate

rental economy should be starting soon. check out future. we'll start the week lower. raz has the rally gone on vacation? we'll find out this week.

we are heading into what is traditionally one of the busiest

time for real estate rentals. our next guest is trying to capture more renters by making that process easier, president of the related companies. if there's a high profile property, especially around new york, l.a., vegas, they have a piece of it. good to see you this morning. >> thank you. >> this is a new website.e. i think it's national, right, that is aimed at making rental almost a paperless process, is that right? >> that's correct. we have implemented an online leasing process where our potential renters are able to go online, see all the availability in our portfolio, see the unit types, the lay jops, read about all the buildings and they can sign a lease legally binding online with an online signature. that's the first time that that's ever been available. >> is that atrelated.com?m? >> it's www.atrelated.com. >> take the offer price, have the negotiations -- >> do you negotiate online? >> no negotiations online.

we do have im chats with our leasing representative so we're still committed to customer service to all of our residents. people can come in and we arrange move-in coordination. we take american express and credit cards so people can get miles, leasing apartment. we're making that process much easier than in the past. >> it says something about the housing market -- or i guess the economy in general, right, that there's much interesting in renting. household creation is a hard time to come by. >> renting has been a lagging indicator, we're always dependent on job growth, but the move toward rental apartments has been stronger. we have seen -- although we did see a dip probably 10% to 15%, we are seeing a flattening out and the market has gotten stronger in recent weeks. >> there's been a doubling of the delinquency rate in commercial mortgages, over $30 million.n. are you seeing any signs of bottoming out? >> i think the commercial -- the

commercial market for financing is going to be difficult coming up. we have a lot of maturities coming due, the securitization markets are effectively closed. the banks' balance sheets are tied up right now and not a lot of capital to refinance commercial real estate mortgages. so i think in the next coming years, as those maturities increase, we'll see real difficulty in the commercial real estate sector. >> how severe do you see those? we had new mark on last week and the issue of how to refinance this market came up. does it -- does it spell doom to you? how would you characterize it? >> i think we'll be dependent on the banks and their balance sheet for the next couple of years. i think we're a long way from putting securitization back to work. i do think it will eventually recover but there will be significant changes in how that market operates. i think the originators will have to hold portions of the loan balances. there will be some real changes to the system. >> there's an old expression, a rolling loan gathers no loss.

i lot of renewals and rolling of loans. >> exactly.y. >> in terms of price points, what's recovering fastest, slowest? is luxury at the top of the list, bottom of the list? >> on the for sale market we're seeing the more affordable priced homes are moving faster in the major urban markets in which we operate we're seeing the upper-middle market, not the super luxury really recovering first. and the market has become very price-sensitive, as you can imagine. >> yeah. "the journal" had a piece saying the pain and luxury, we've barely begun to feel it. that's bad news because high net worth individual in this country account for a disproportionately large part of spending. how concerned are you about luxury? how much further bleeding is there? >> i think that's true. more moderate priced purchases

have been leading the pack. i think we'll see the recovery there first. >> do you feel good about -- i mean, in terms of cities, new york, vegas, l.a., what -- put those in order? >> all very different. i would say by far new york is the strongest of those markets. >> why is that? >> we're still a great city here. it's the financial capital and although the financial sector has slowed down quite a bit, we are more diversified than those other areas. i think markets like florida and vegas, where there are second homes, a lot of speculators. those are the hardest to have sales increase at this point. new york, it's primary residences, not a lot of investors second homes. people actually move into those apartments. that's very different from the other areas. so i think you'll see the recovery happen first here. >> is it naive to think that bank earnings -- if the last couple of quarters are hopeful indication, if those hold up for the year and if goldman is, in fact, paying their average

employee a $700,000 bonus s it naive to think new york real estate can stabilize here and not fall? >> certainly bank profitability will have a dramatic effect on real estate prices. we are a lagging indicator. job growth and bonuses have a tremendous impact on the new york real estate market. >> i think it's a quarter of wages -- or accounts for outside of the concentric circles of banking. >> correct me if i'm wrong, you guys are making moves overseas. what economies do you find most interesting? >> we spent time in the middle east. i understand you were just there as well. i think, you know, there we've opened up an office and in china we opened up an office where we see two areas. we see significant growth, the middle east as you just said, tremendous transfer of wealth and cash overthere. and the building cycle there is is unbelievable. just to watch what's gone on in dubai and other areas, like you mentioned.

really some opportunity there. >> well, we'll keep an eye on the rental website. jeff, thanks for just to watch what's gone on in dubai and abu dhabi and other areas, there's really some opportunity there. >> we'll keep an eye on the rental website, jeff. thanks for bringing us that information. all right. we still have much more to come on "squawk box" this morning. including more hedge fund wisdom from our guest host, lee cooperman. first, though, let's check the dollar. it's unchanged. remember, the dollar had some major gains. up by about 9 basis points on friday on that better than expected jobs number. "squawk box" will be right back.

tomorrow on "squawk," former majority leader bill frist and former national economic kounsville larry lindsey is talking about jobs, cash for clunker, health care and a lot more. when we come back for now, hedge fund lee cooperman on the evolution of history and where the markets may go from here. first, check out gold. started out the morning relatively flat with a decent

dollar today. down 11 bucks.

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. our guest host today, lee cooperman of omega advisers, we've been talking a lot today about the market. you said the message of the market says this recession is over.. but are you relieved to see it take maybe a little bit of a pause when you watch today's numbers? >> yeah. i like the slope of the rise to

give me a chance to figure out which stocks are cheap, which stocks are expensive.e. if it's not ever, it's ending. if you step back, it began at the bureau of economic research in december of '07, the average recession historically is less than a year, 11 months. this is an 18-months. so as long as the 735, 3,000, 2,000, long and deeper than anything we've experienced. i think the climax will be slower because of the structured finance market and inability to do a lot of finance transactions that we did in the last decade.. that game is over. >> you talked about how you see this as a different letter than just about anybody else we've talked to. people talk about the "v" and the "w" and the "u." you call this a square root. you call it a "v" with an incli but not an inlie with that period. >> deleveraging. basically, the consumer has to lift, the savings rates hav