improve their balance sheets. the government has to get their house in order. we have a very hely avy reliancn foreign capital. i think the good news would be if we had, you know, some continued economic growth. the risk would be some people leave this we're going to head down by the end of the year. that's not our belief, but we're watching it very, very carefully. steinhart, i think, said it well, we have to have a heightened awareness here. it's not business as usual. we've just had this meet meteoric rise from the bottom. >> what does that mean for the unemployment rate? we've watched it tick down slightly on friday. >> remain very high for a long time. it's going to remain very high. if the labor force is growing 1% per annum and we're thinking 1% in terms of growth in the economy, and part of that is going to be offset by productivity growth, i think the

unemployment rate remains relatively high. >> you talked about cash burning a hole in pockets. stocks are still your instrument of choice. >> yes, stocks and instruments. i would say that we're not running in to buy a lot of things now. market is up a lot. we're having a 230% kind of year. happy about that.. still not getting paid. i would say cautiously optimistic. if you ask me, i think the market will be higher on december 31 than it is today. modestly so, not dramatically. i think we should make further progress boo 2010, assuming we're right, sustainability to the economic expansion when it comes about.t. i think we're bottoming around now. i wouldn't be shocked from the national bureau comes out and says ultimately august was the bottom of the economy. >> thank you so much. >> my pleasure. >> join us tomorrow. "squawk on the street" is coming up next. this is cnbc.com news now. >> mcdonald's says worldwide sales rose 3.3% in july.

comp store sales in the u.s. rose 2.6%. those are the numbers exceeded analyst's estimates. financial times is reporting that u.s. banks will make more than $38.5 billion this year in overdraft fees, thanks to financially stretched consumers. gmac is out. limited return to leasing on select vehicles. gm retreated from leasing prior to the bankruptcy filing. that's cnbc.com news now. i'm courtney reagan. live from the financial capital of the world, this is it, you're here, "squawk on the street." good thing you made it because, boy, this is going to be some kind of day. good morning, everybody. i'm mark haines. monday morning, profit locking. putting the rally on pause. the s&p, 2.3% gain last week. it looks as if investors are happy with what they made and

they want to maybe lock a little bit of it in. even oil hedging back below $71 a share.e. >> can you blame them psychologically speaking? >> no. >> good monday morning. i'm erin burnett. even with the better than expected jobs report on friday, there are still some real questions out there, nobel laureate and professor of economics telling cnbc asia that the world economy needs a second stimulus if it is to avoid the fate of japan in the 1990s. now, they no longer look like the second great depression. >> good for them. >> interesting. i was wondering if he was going to change his point of view. he had been pretty adamant that we needed a second stimulus in this country. i don't know if he's saying in this country or globally, right, that could be different. but still, it sounds like he's sticking with his view before the data turned up. >> you saw what he's doing, didn't you? >> yes. he's trying to steal -- >> our stage manager tortures me

every morning. as soon as the show begins, he breaks open the ring ding, knowing that i really shouldn't eat anything like that. anyway, let's check the futures. futures right now are down. 360. we needed 148 to get to fair value. 30, 40 points. got it all covered. bob pisani, what's up? >> you see something rare today, fredd freddie's up almost 100%. first real profit in two years. that's if you exclude the dividend payment they had to make to the government here. change in accounting rules was an issue. lower funding cost. bottom line is this, they made money. here's what's interesting. they said they don't need my aid

from the u.s. government at this time but they may need it in the future. it's not clear. positive comment on housing, too, here. fannie and freddie up here. mcdonacdonald's, up 1 1/2%. better than expected numbers here. global sales, 4.3%. on the upside, u.s. sales up 2.6%. rio tinto, hard to know what to make about this. down 4%. china's spy agency alleging it cost them spying from rio tinto cost the country $100 billion. australia's government saying the allegations are not new. this has got to be resolved soon. china stocks fell in the fourth straight day now. china's top economic official came out and said they have no plans to halt easy credit if full-year guidance was raised on the strength of refrigerated foods and the turkey business doing well.

tradertalk.cn tradertalk.cnbc.com. looking at research in motion, for one, down 1 nafrl%. it was downgraded to neutral over at ubs. the target was decreased by a couple of bucks as well. mostly valuation called there. google is under a little bit of pressure this morning. apple is fractionally higher. added to the short-term. target bumped up from $1.60. microsoft is down by half a percent. selling the digital advertising firm. price line is up 8%. profits were up as demand for leisure travel was actually better than expected. dish network is up 9%. earnings down. on the subscriber side, they had a quarterly net subscriber rise, the first one in more than a year. citrix cut to unchanged. removed from the topics list at

citi citing relative performance. below $71 a barrel. we're in this range between $70 and $72 a barrel as traders keep their eye on the dollar. on friday we got that better than expected jobs data.. you would anticipate oil prices would move higher but the strength on the dollar caused a sell-off in oil prices. when you look at the one-week chart you can see that dramatic rise in the dollar and what happened to crude prices. today we're looking at the dollar setting right now. it has been slowly ticking higher. that is going to be a critical level to watch. keep you're eye on the weather.. it is hurricane season. the government is forecasting there is a weather system off p cape verde islands. it could become a tropical cyclone in the next 48 hours. rick santelli, over to you in chicago. >> thank you, sharon. supply doesn't start until tomorrow in terms of coupon

supply. $75 billion. we have 63 -- excuse me, $64 billion in bills today. $33 billion in three-month and $31 billion in six-month. also an announcement today about the one-month pibills. they will be auctioned off tomorrow along with the three-year. we have a fed meeting tomorrow. maybe no better time because we also have a buy-back today. unlike the bank op england which has increased and put forth its quantitate tive easing again. many do not believe that you're going to see similar verbiage in our statement. but it is a wild card, none the less. mark, back to you. >> rick, thank you very much. let's check out asia. nikkei is up 1.1%. highest since october. hong kong's hang seng up 2.7%. highest close in nearly a year. indonesia, jakarta index, up 1.7%. china shanghai composite, lost .

4. and kand ease bombay sensex is down 4%. guy johnson, what supposed in london? >> not a lot. we are trading down across the board, mark. similar thing to you're seeing in the futures right now. london is down by .7 of 1%. paris is down by .9. frankfurt market in germany is over by a percent. let me show you what is stoxx 600 look like. we've been down. bumping along the bottom of the session. not really going anywhere quickly.y. you've heard already a couple of stories. the publicic is up. it is buying razor fish from microsoft. that means that a quarter of the business wants to steal its trans aked will come from interactive or online stars of advertising. they're well ahead in schedule in terms of shiching the ishipp

business in that direction. they were one of the first t. come out and call the advertising market. mark levy did that last week in paris. it's an interesting call. people like wpp have yet to make that call. in fact, we are seeing wpp that the stage remaining quite bearish. want to show you rio tinto. mr.fy san any mentioned that, the stock is being impacted by what is happening and the allegations coming out of china. erin, mark, back over to you. >> thank you, guy. up next, word on the street, buzz dwrobeyond the trading flon this profit-taking monday as we look ahead to the important fed meeting. and later, chief operating officer of continental resources, he is kicking off intercom's oil and gas conference in denver, colorado. that's coming up. we'll be back in a couple moments. eseseseseseseseseseseses

hedge fund post their fifth consecutive month of gains.s. "squawk box" hosted the hedge fund summit with some of the industry's heavyweights. it was great, but if you missed it, becky quick is back with a few of the headlights. >> we talked to the hedge fund gurus today to figure out where the market is headed.d. lee cooperman of omega advisers sat down and said the message of

the markets is very clear. the markets are telling us we are a either at or nearing the end of the recession.n. he talked about the letter use take and look for it. are we talking about a v-shaped recovery or a w-shaped rerecoco or maybe the "u." he thinks it's the square root, very deep "v" but bottom out. he said the real reason is because of the consumer. listen in. >> 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 strategy you're at, by and large, people lost 30%, 40% of net worth and they're scared. >> there's also the idea of hedge fund gurus there is money on the sidelines but still skeptic. they pointed out the cynicism

is -- the sense of skepticism is everywhere. listen to what he said. >> almost with no exception, no one i know is long-term bullish. no one i know is long-term bullish. >> ah, but mikial steinhardt has always been a contraryian. he does say that over the long haul things will probably be okay but it's very difficult to start telling when you look too many months or years down the road of what's going to happen because a lot of this is in washington's hands. now, we asked our experts this morning what they thought about where the markets were headed from here. and for the most part, they seem to be thinking that, okay, the markets have come and they could potentially go a little bit higher but there are still some concerns out there that you could see a second leg down. we were talking with the gentlemen today, lee cooperman said there's probably a one in three chance you could see them

testing the lows. david said the odds of that are one in -- actually, david said the odds are one in four. david said the odds are one in three, lee cooperman said one in four.. there is a chance out there that you could see the market goes back and test those lows. mark, we'll send it back over to you. >> thank you very much. on the floor with art cashin from ubs. good morning.. you've been urging people to say nimble for quite a while. yet the market continues to climb the wall of worry. are you getting on board? >> not quite yet. i will admit friday's rally caused a lot of people, bright folks who would call that march rally but then stood aside for correction. >> so what do you think? >> i think that this week will be critical. i think friday proved that you can stampede some of that sideline money a little bit. there has been no follow through on these rallies. the last four spike rallies we

had, there was no follow through the next day or two. if they can follow through and make this a true up week, they can do it. but i'm still a skeptic. >> i mean, let's face it, we're, you no know, we're almost halfway to 10,000. >> once that universal acknowledge head and shoulders fail to produce a down move, everybody scrambled in. you can look at the chart and see how that's how that rlly came? >> back up stairs to erin. now let's get the buzz beyond the big board. joining us to do that, steve massocca bright and early from new york, and from wedbush securities. steve massocca, what are you seeing this week? >> probably more of the same. i think this rally has a little bit more to go. we might get a little interruption today or tomorrow, but this has been quite a little move. i think it's caught a lot of people's attention. tlst a lot of money sitting on the sidelines. i think it will attract more

money into the market over the next couple of weeks. >> and so when becky was talking about the hedge fund managers, obviously no one knows really where the market will go, but the probability, some of them saw a real chance, go back and test the lows. what do you think? >> i think that's off the table now. i just don't think -- unless something dramatic happens, i don't see that happening. the policy response from the central banks around the world from washington, d.c. has been such that it's created a wait wave of liquidity and that liquidity is now finding its way into asset prices. it's finding its way into stock now. i just think that continues. obviously that presents problems downstream. that's downstream. that's a year or two years from today. so right now, i think liquidity is coming.g. it's coming in a major way. it's going to see its way into higher prices. >> all right. and it sounds like from what you're saying, that liquidity fueled by the fed finding its way into asset price which maik might make some people literally

shake in their boots because isn't that what happened last time around, but not necessarily a bad thing yet. >> well, no, i mean, i think, you know, listen, this is how we've gotten out of this problem. people were hoarding dollars. hoardal you want, we're going to make a lot more money and a lot more dollars. so people can't hoard anymore and it's starting to find its way elsewhere. you're right, it will make you quake in your boots. but it's a qways from today. but right now, enjoy the ride. >> enjoy the ride. tomorrow is not the problem. what is your best idea today? >> well, i mean, i still think technology looks very good. i still think life sciences in a bull market where you, you know, maybe don't have a really, you know, great economy behind it, some of the things that do well even in poor economic times like life sciences, certain part of technology where businesses need to reinvest. those are the things i would be looking for.

a lot of consumer stuff has made its big move. i don't know if that's going to be substantiated by how well the companies actually do. i think you look at some of the counter cyclical stuff in that money's got to go places and maybe the economy isn't that great and this counter cyclical stocks have kind of lagged here recently. >> thank you very much, steve massocca, always good toto see you. >> good to be here. and next, the fable, fantastic, fabulous -- >> flying faber report. david filtering from freddie mac. and later -- >> your summer rally, cnbc edge, why and how we could see dow 10,500, s&p 1100 in the next 4 and 12 months respectively. >> the high was 16,144 in october. sorry to be a downer. we'll cheer up. 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.

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. futures. still down about 3 1/2, a little more than 3 1/2 points. still pointing to a decline at the open of 35 to 40 dow points. let's go to hq a. >> thank you, mr. haines. nice to see you again, of course, on this beautiful monday

morning here on the east coast. let's start off on some unfinished business. interesting how many companies chose to report on a friday after the close in august. berkshire hathaway, freddie mac. you know last week we spent a little bit of time on fannie mae's numbers, which were not good. freddie mac, a bit of a different story, worth mentioning. 79.9% of the company owned by the u.s. government. there's a look at what is an option on the company in terms of that stub of equity. as for the results, freddie mac reported the first profit in two years. that is right. and it was up last week, of course, like freddie, fannie, aig, cip, a number of short squeezes there. there's freddie, first profit in two years. it earned -- well, it actually lost -- if you take it out before it had to pay the government the interest, it made money. otherwise, it lost 11 cents.

that's still way better than what people expected. look what it lost a year ago. net nrk was $768 million, compared to a loss of what's called a $10 billion a year ago. revenue, $7.74 billion. virtually no revenue a year ago. all of the write downs that took place, they take hits on revenue. now, freddie is paying interest to a dividend payment of 1.is billion on senior preferred to the treasury. and so, ultimately, it lost money but you can see, it has positive net worth of $8.8 billion. why is that good news? we don't have to give it more money for now. we'll see. i haven't had a chance to go into any great detail here in terms of report or understanding what exactly is really working better at freddie's business and fannie's which required $10.7 billion, or will, in new money in september. but, hey, we're take it. there's a look at freddie. fannie, i mentioned. again, that report quite different. and they will require $10.7

billion in new money from the u.s. government or the treasury. there is a look at fannie mae. another stock that we watched last week, and will be interesting to watch again this week, is aig. no doubt about that. there is a look at what was incredible performance over the course of the week. it more than doubled.d. as i reported, it was largely due to a short squeeze. it may have been originally guys short. >> reporter: covering because they were wondering whether that number low on friday was better than people anticipated. that led to an avalanche of coverings. there's a very little borrow available. big negative rebates. okay. short squeeze, but then you get the number on friday and it's much better than people had anticipated. so the stock goes up yet again. there we are, $27.24. perhaps looking better morning. we'll see where it opens in about five minutes. none the less, more than 100% increase. wanted to clarify something from

last week. they are not paying any dividends on the $41.6 billion in series e preferred that they have under t.a.r.p. they're not say any dividends there at all. but they are expensing the interest that hey are pay og the loan that they have from the federal reserve bank in new york. they're not actually paying it. it is being added to the principle balance. they are expensing it. that does run through the income statement. and i made a mistake last week in referring to that. none the less, still so many questions in aig in terms of the long-term future went when you take out all of the different ways it's being supported. and if you were to make it a regular company who actually had to pay dividends, might be a different story. i'm out of time for now. we'll cover more in a little bit. the final countdown to the opening bell coming right up. don't go away.

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.

[bell ringing] the way the stock market's been acting lately you may wonder if you've been doing the right thing. is the advice you've been getting helping or hurting? are the fees you're paying really worth it? td ameritrade's fees are fair and straight-forward. their research is independent and unbiased. their investment consultants are knowledgeable and there when you need them. so why not talk to one? announcer: call today to schedule a free investment check-up, or visit a td ameritrade branch. you're watching cnbc's "squawk on the street" live from the financial capital of the

world. the opening bell is going to ring in one minute.. welcome back. time for the count down. the electronic session is closed. and they were pointing to, not much, 30, 40 point decline to the dow. on the open, oil is rebounding. $21.77. gold down ten bucks.s. >> $10. you know, one thing that got to me was the improvement that we need another global stimulus. they came out with a survey on manufacturing around the world. it has been an unexpectedly solid rebound everywhere. not just in certain places. 37 -- or 3,700 eu manufactures, way better than expected. pre-bear. and they also saw the same thing in brazil, india, and china. >> well, you know, there was massive government intervention.

>> right. >> massive, around the globe. here we go. at the big board, javelin investment management celebrating the recent look at jet dow jones islamic market international index fund. i don't get where the -- >> where the jets. >> i'll finger out where the jets come from. and at the nasdaq, the mt. sinai medical center. >> market reporters are standing by. let's get there. opening down 42. not full any open. bob, take it away. >> freddie mac is up here nicely, 122. that's a nice little move up there. 45-cent move. bottom line is, for the first profits in nearly of two years, sited a number of different things. change in accounting, that is kind of important. lower funding costs. gains in the company's derivative portfolio.

fannie and freddie were the two most actively traded stocks. they don't need additional funding or financing from the u.s. government at this time. at this time is very important. they made a point of saying that could change here. elsewhere, dow component mcdonald's. let's walk over here. they had another good comparable report in july. 7.2% in europe. 2.6% in t united states. rio tinto, come on over here. rio tinto, post right around the corner. that stock has been down 4%. china's spy agency alleging the company was spying on the chinese -- on chinese companies cost costing them $100 billion. don't ask me where they got that particular number. australian saying there is nothing new in the allegations. chinese stock is down for the fourth straight day. china's top economic official talking about the fact that they have no plans to halt their easy money policy.

tradertalk.cnbc.com. scott, how are we at the nasdaq? >> opened weaker, down about half a percent or so. most technology stocks, the large ones, are modestly to the downside. led by research in motion.. that comes on a downgrade from ubs to neutral. target was cut by a couple bucks to $88 from $90. mostly valuation call. google is lower. apple is down to the downside even though apple shares were added to the short-term buy list at ubs. price target raised by ten bucks to 170 from 160. microsoft is weaker. selling the razor fish digital ad from $530 million. priceline was out with the numb number. stock up 10%. profit is up as demand for leisure travel were surprisingly better than expected.d. dish network is up 8%. earnings down 81%. results did beat expectation. they saw their first net subscriber rise over a quarter in more than a year.

citrix is up. downgrade jeff frees underperformed. removed from the topics list at citi, relatively perform at target there is 30 bucks. sharon at the nymex? >> oil prices have climbed above $71 a barrel. fascinating to watch the trade in the dollar and as the dollar weakened tightly we've seen oil price goes above that $71 market. we're watching brent crude prices in london. jpmorgan is not overly bullish. they are looking at the maintenance season in the north sea among refineries there winding down in september. refining margins getting crushed there. they're looking at a range perhaps between $55 and $75 a barrel. gasoline prices, on the other hand, the past month have rallied more than 20%. that's why you're paying more at a tump. national average supposed 10 cents higher than a week ago. $2.65 a gallon.

gasoline can be on the back burner shortly because heating oil is really raging on. distillates are going to be the focus this time of year as we go into the winter season and we're seeing heating oil rallying 26% in the past month. keep your eye on the distillates and that they may be the way to get refining margins higher and create more crude demand.d. that's what a lot of refiners are going to be counting on. rick santelli to you in chicago. >> thank you. the two-day chart of the dollar index, you can see we had a pretty impressive up day friday. a lot of that activity d not seem to be carrying through today, nor does the relationship we're closely monitoring. is it possible to have stronger economic data or less negative data and keep a stronger dollar along with stronger stocks? well, remember we also had options expire in foreign exchange friday. we're going to have to monitor the situation. as far as supply, well, it begins today with bills. but in earnest tomorrow along with the first day of a two-day

three-year note option. we also see on this year to date chart of ten-year rates. definitely much higher than they were at the beginning of the year or at the low point earlier in the year. we also did briefly touch 4% in june. is that back in the cards? many believe it is. the real question then becomes, are higher interest rates going to slightly move the punch bowl over to the side in terms of what many believes is a liquidity rally or at least less negative fundamentals in the economy that move equity price higher. back to you, mark. major indices slightly lower the first few minutes. is there even a chance a rally could resume.. or in the words of jack nicholson, what is this is as good as it gets? joining us onset, portfolio manager of the four-star morningstar rated high mark geneva globe fund up 10% this year. in cleveland, home of the ro rock 'n roll hall of fame.

joe, president of dawson wealth management. michel michelle, start with you. >> good morning. >> good morning. >> where are the markets headed? >> i think there's still a little bit more room on the upside. i just saw some numbers from one of the economic coming out over the weekend, $72 for earnings for the s&p for 2010. and as i mentioned the last time i was on, at geneva, some of the work we do, $75 to $80 in 2011.. i think easily if you put a 15 multiple on that you're at 1100. >> you're willing to look past the revenue situation?n? >> well, i think at this point i am encouraged by the fact that all the cost-cut that companies have done has led to earning beating. i do think ultimately we need to see some top line growth.h. two of the companies i'm going to talk about today had real top line growth this quarter year over year. but i do think, yeah, ultimately we have to see revenue growth longer term. i think it's coming.g.

>> i mean, it's coming for sure. if it doesn't come in the fourth quarter we have some real problems. after that, i guess is the other question. what's your view, joe. do you think we -- how high can we go? >> well, i think over by the end of this year, we could easily be over 10,000 on the dow, maybe 10,500. i agree with michelle on 1100 on the s&p. i think it's liquidity, i think we're coming out of recession, and i certainly agree with her that we ultimately have to have top line in growth in these companies, not just cost cutting measures to generate earnings. >> well, also, we could get top line growth, right, and that could bring us up a little bit. but the question then would be when as an economy and obviously as a market do we get back to where we were at the peak, if ever. and obviously that would be dow 14, 164, right, and an economy that is a lot bigger than the one we're in now.

>> that's absolutely correct. but i don't think that america is fading into the sunset. i think it's only a question of when we hit that 14,100 mark again. i'm not suggesting it's over the next 12 or 15 months.. i absolutely believe over the next few years we will see that number again. >> michelle, you like something called concur tack? >> yeah. >> convince me that i should concur. >> that the an on-demand software company that produces travel and expense software, which takes what has historically been a very manual process in planning and booking your travel. i know for me, putting together an expense report and having somebody go through it and issue the checks. what concur software does is automate that process, so it allows companies to have much greater productivity along the process and -- and so they did

have revenue growth in the quarter. revenue was up 13%. signed 700 customers in the quarter. several of those were large customers. and, yeah, in fact, beat on the bottom line as well. >> and capella education convinced me i should sing along. >> capella is very niche in online education phase. they focus on customers or on students that are mainly pursuing masters or doctoral degre degrees. they focus on verticals where, in the end, the student gets a specific pay raise. so for instance, say if you're a teacher and you have a bachelor's degree if you go back and get a master's degree you will get a significant increase in salary.y. they just added a new vertical recently in public safety, and

that -- actually they feel it could be as big as their education component, which is about 5,000 students right now. >> what about you, joe? what is your best specific idea? >> well, we look to add output via sectors etfs. right now we think there's tremendous momentum in the services sector.. we think that will continue in the short term and add some real upside potential to portfolios. >> you also like emerging markets, especially asia. now, just because something has gone up a lot doesn't mean it's going to keep going up. a lot of those markets have doubled. you're still putting money ? >> yes, we are. there's certainly volatile. there's no question about it. but if you look at the growth rate in those countries, they're substantially higher than they are in either the u.s. or western europe, the developed nations of the world. so we think there's real opportunity still on the upside in the emerging market sector. >> all right, joe, thank you

very much. michelle, thank you very much.h. good to see both of you. >> thank you. coming up in the next hour -- but this one is not over yet. >> it's not. >> a pe insider. a pe insider or -- or is it ape insider? join us with his insights on why there should be hope for the market. first, continental resources has more than doubled since the haines bottom. they are with us from intercom oil and gas conference in denver. and we will be back in a moment. 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.

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

no matter how many you have. priority mail flat rate boxes only from the postal service. a simpler way to ship. call or go online now to get started. continental sources, oil and gas conference in denver, colorado. it's an oklahoma-based company. they focus in exploration and production, oil and natural gas. but really in the rocky mountains and the gulf coast they did better than expected in

the fourth quarter. that still is an 89% in profits. joining us here, continental resources chief operating officer. it's good to have you with us. we appreciate you taking the time. >> good morning. >> so, so many questions about energy broadly right now. but in terms of prices today, we look at crude at $71 a barrel. do you think that where we are for energy price, oil and natural gas, is sustainable within this range or are we really off one way or the other? >> i believe the natural gas is obviously low due to the over supply, but we will see that regain as time goes by and we burn supply up and the economy rebounds. oil is getting back to where it belongs in the $70 to $90 range. i feel that will continue to come up as the economy rebounds and transportation fuels are used more. >> and do you believe that we have -- i mean, we keep hearing announcements. last week $2.4 billion lithium

battery announcement. various announcements like that has come out. money to retain people in alternative energy. i keep hearing a complaint from everyone which is we do not yet have a real plan for alternative energy. do we? >> well, there's a lot of debate there. we -- i think the largest thing we have right now is is to bring on the power grid. we can't really utilize the wind and solar power that we're trying to bring on until we get the power grid updated.d. i think that's our biggest archilles' heal right now. >> is that realistic?c? can we generate any amount of electry right now with wind? >> i'm really not an expert on that. from what i've read it's minimal

and it's going to take a few years. in the near term, i think we need to focus on what's working today and realistic opportunities for the future. >> if i read this information correctly, of course now i can't find it, but you increase your cap ex, did you not? >> we did. we increased it 42% if. >> here it is, yeah, 42%. here's my question. here's my question. i mean, in the past year, oil has been $140 and $30. i know you do natural gas as well. but natural gas doesn't bounce around much. how do you plan?? what number do you plan for in terms of oil and natural gas? >> well, that's a great question. and it's very difficult to plan with the oil moving around the way it is. what we do is try to take a

strict price out into the future and build a plan around that. when the oil prices fell from the $120 range it was in a year ago down into the 30s drks what we did was drop rigs, we quit spending money, we went from 32-rig program down to less than 4 rigs. we were planning to be down to one rig at this time, with the rebound in oil price to 70. we're ramping back up. and that's the announced increase in budget you reflected. >> so you can be that nimble, huh? obviously. >> we can be. we were fortunate enough to have enough short-term drilling contracts that we could drop rigs at a very fast rate. we absorbed the cost overruns with our balance sheet. and now we have five grids. four of those are on month-to-month, or well-to-well contracts, one long-term contract. we're very nimble with what we

can do. >> and also paying a higher price than you would with a long-term contract, right? >> that is correct. >> do you think, mr. hume, that when we talk about energy policy, that this administration is -- how would you view their view on natural gas? it's something we have in abundance, but obviously it seems that a lot of policies that we keep hearing about are much more about solar or wind to turbines because they create a lot of jobs. do you think they're ignoring natural gas? >> well, i do. i feel that way. i'm biased, of course, being in the industry. but natural gas creates a tremendous amount of jobs, also. it is a clean burning fuel.. it's been quoted many times as being a bridge to the future. right now we're based on a liquid carbon transportation fuel being diesel and gasoline that can be converted over time to natural gas.

and then in the longer term, i believe we could go to electricity. but that's going to be over a longer period of time than i think we have infrastructure in place now to handle. >> thank you very much, mr. hume, we appreciate you taking the time to join us. intercom conference in colorado. next, david faber is back. he's got his eye -- i'm trying to do this thing they do on their little bug. but first -- >> first, stocks on the move, including best buy and boeing. you're watching "squawk on the street."

the street." i'm matt nesto. last week it was, hey, who is hotter than you, baby, for the retailer. today it's, uh, i don't want to know you. 34 out of 35 members trading lower. none worse than best buy. it is cut from u neutral to buy

at goldman sachs. urban outfitters down at citi group. the best and only gainer in the index, barnes and noble. berkshire hathaway reported results after friday, missed not lot of estimates but $1147 a share. downgrade at ftm this morning. stock is at $103 a share. boeing, second worse performer in the dow. down 2%. am membe amex is the worse but reiterated to sell at ubs. they say this company is going to burn cash like jet fuel for years to come. their credit has been lowered and they're going to continue to borrow. they say sell the stock to $30 a share. merck was higher here, second d best performer in the dow. behind mcdonald's, it is resumed a conviction buy. buy it with conviction, goldman sachs this morning. it was neutral before.e.

let's get over to david faber now for the very latest faber report. >> thanks, matt nesto. all right. yeah, let's start with a deal. i'm laughing. listen, it's august. there's no m and a at all. in fact, i mentioned this deal primarily because it is indicative of just what's going on in m and a, which is zippo. we may we may start to see activity when we get back from summer vacations. perhaps in the fall we'll see i'm hearing conversations have started to pick up. who knows. so we want to let your flow that publicis reached a deal to require the razorfish from microsoft. this was a unit of quauntive, if you remember microsoft bought that firm. huge premium, some time back. now selling this for 530 million bucks. combination of cash, 6 1/2 million of publicis shares. microsoft will sold 3% of the

capital after the closing.g. take a look at m and a. global m and a volume. always love this chart. i continue to talk to bankers. some deals have been out there. is there anything new getting done? i mean, we are going to set a record there. wow. we'll see what the second half of the year looks like, especially the fourth quarter. perhaps, perhaps given the fact that many now think we are starting to see near the end of the recession or beginning of a recovery actually. maybe buyers and sellers will be on the same footing in terms of agreement and that will spark more deals, just too early to say.y. this is going to be something else, boy, in terms of a record. not the way a lot of people wanted it to go. all right.t. let's move on now to another stock from last week that many people may be watching this week. here it is. ubs up another 5 1/2%. it was up over 25% on friday..

this after the company reported earnings, but more importantly its ceom munes said positive things. as i have said during this period of the up front which is really just concluded for the networks, both cable and the old broadcast networks, so much volume that typically would have gone into up fronts has been held back because of lack of appetite or because of the price point on cpms was lower than the networks wanted that most firms are telling me we have no visibility. we'll see what the scattered market look likes when we get to it. frachkly, it can take only two weeks now to get to an ad buy and we simply don't know because we've never dealt with this much volume going into the scattered market. les moonves says, don't worry. is that good enough for a 30% move in cbs?

apparently it is. we'll be watching closely to see how things ultimately progress. again, what has been really unchartered territory in advertise to think broadcast area given upfront down 12% or more in terms of volume. mark, back to you. >> thank you, david. coming up, prepping for this week's fed meeting and beyond. >> that's all the buzz about the friday's job report. should we expect a change in language? especially when we're talking about inflation. >> yeah. >> interest rates.s. we've got a task force to weigh in on that. down about 18 points. this is the aarp...

medicare supplement insurance plan card. you know what's great about this card? wherever you go, nationwide, your coverage travels with you. and that's just one of the many reasons... you need the card you can trust . because with aarp medicare supplement insurance plans, you can apply year-round, talk with personal health insurance advisors... and so much more. if you're turning 65 or older... or you've already enrolled in a medicare supplement plan, call for this free information kit... and medicare guide. these are the only medicare supplement insurance plans... exclusively endorsed by aarp. these plans, insured by... united healthcare insurance company, help cover some of your medical expenses... not covered by medicare alone. this could save you thousands of dollars. want your choice of doctors or hospitals, virtually no claim forms, and no referrals needed to see a specialist?

call for your free kit. yep... this is one great card! live from the financial l capital of the world in the heart of lower manhattan, this is "squawk on the street," the second hour. once again, good morning. i'm mark haines. markets holding moderately lower. on the dow, boeing leading to the downside. but merck just overtaken mcdonald's as the leader to the upside on an upgrade from goldman. western digital, a new 52-week

high. and starwood hotels, up about 1 1/2%. goldman upgraded them. erin? >> mark, so, mark listed a few names that were up.p. yet the market is overall down, not a lot, but there is specifically -- >> 3-1 decline to advances. we had a great week last week on first the financials and then material stocks, retailers, all of the, what we call cyclical names here. so today, they're just taking profits in the names. 2%, 3%, 4% decline. most big names. retail sales last week, most of them were fair, but a few of them actually raised their guidance. macy's had positive things, too. these stocks all down 1, 2, 3%. same situation, they're down 2% or 3%. they were the big movers last week as well. then we had the great transport rally last week. largely on the strength of the railroad stocks. >> we ended above that, $37.37.

>> that was the best week in a long time. all of those are down 1%, 2%, 3%. there's your big haines in the financials. a lot of retail names had a great week last week. most of the big regional names are a little bit to the downside here again. so there is a clear pattern here of -- remember professionals strayed stocks in and out. so we're at a nice move up.. we're up 8%, 9% in a week by some of those names. you take profits today. 2%, 3%, 4%. makes some sense when there's not a lot of other catalysts going on. >> the ratio i saw beating to -- >> it's about -- >> it's about 5-6-1? >> it's about 75%. normally on the order of 60% to 65% will be. so it's definitely higher. remember, probably we're at 30%. earnings are probably as a group 36% be low for the last year.

on the top line it's 15% to 20%. >> all right. well, bob, thank you. let's check in with mr. wapner. one place where we had seen a lot of the rally. talking about things being pulled back in areas that rose. we might be seeing it intact.. are you seeing it in the big names, scott? >> erin, that's one of the places you would see for profit taking. nasdaq is down .3 of 1%. take you to the wall here and you will notice around me, a decent amount of green. it's research in motion which is the drive today. it was downgraded over at ubs. mostly valuation calling the stock itself is down about 3 3/4%. otherwise, you've got modest gain ace cross the board from some of the other large cap technology stocks like apple added to the short term today.y. over at ubs, price target taken up. if not for research in motion, erin, we probably would be close to positive or at least, you know, the flat liner. right now down about five points only. >> what about the price line story? >> it's a great story. the fact that you and bob were

talking a lot about profit taking and the fact that priceline shares alone this year are up 78%.. company was out with earnings, probably the most surprising thing of all is that summer leisure travel better than expected. the company gave a pretty good outlook as well. that's why the shares are up another 12% today. but up 78% through friday a year to date. it's been a really big ride for shares of priceline. they've been taking market share from orbitz and expedia as they eliminated the booking fees. summer leisure travel better than expected. >> all right. scott wapner, thank you very much. and when we talk about whether that will continue, whether consumers will spend, you've got to look at gasoline prices. 16 cents just over the past couple of weeks. still, $1.20 lower than a year ago. none the less, something to think about. let's check in on the oil trade we're seeing and what it might mean for prices with sharoned a the nymex. good morning. >> that run-up we've seen in gasoline futures over 20% is the

reason why you're see that at the pump. but what we're seeing today with oil prices is really reflection of the dollar.. it is all about the dollar. and you can see what has happened over the last couple of sessions with the dollar, and crude prices, that strength that we saw in the dollar index on friday, a big reason why we saw that drop in crude oil prices.. today oil a little bit stronger. still in that 70 to $72 range. natural gas though is really the strongest part of the energy compl complex. that may something to do with the hurricane center forecast 30% to 50% chance this weather system off the cape verde could turn into a tropical cyclone in the next 48 hours. also, the heat is hitting the north east. expected to go up 95 degrees today in new york city.. rick santelli, what's the weather like in chicago? >> oh, hot and balmy, just the way we like it. if you look at the old currency, it is testing its friday lows. so you want to pay particularly close attention here around $1.40, $1.50.

the dollar index has held on to some very small gains today. but i guess the real key is holding on the rather large gains from friday. will it continue? this is a big dynamics a we embark on a week of supply. fmoc meeting. cutting rates, well, not going to happen. raise rates, not going to happen. but what will potentially be in the statement regarding is programs with buyback set to some set in september. if you look at about $55 to $60 billion left, they've done it perfect. it's going to run out of money right at the time the program will run out. will they renew it or not and what are the implications. this is one of the reasons the pound has hat had so much volatility because they upped the buyback programs in the uk. mark haines, back to you. >> rick santelli, thank you. our senior economics reporter steve liesman back from his latest fact-finding mission. a fishing trip with a bunch of

economists in maine. he joins us now with our economic outlook. i bet you sat around discussing the economy until the cows came home. >> we did, mark. and that's where the story was, so that is where i traveled.. >> right, yeah. >> i went to where the story is. >> notice the coincidence that fish happened to be there as well. >> fearless, intrepid reporter that i am. >> yes, you are. >> most fishermen debate the size of the fish and the right bait if me and economists, are money managers, too, they gathered to debate the shape of the recovery and whether the economy is still vulnerable to toxic assets. i think we still have a lot of sort of feedback between the real economy and derivatives. i think the fixed income derivatives market is still huge, outstanding.g. seen some compression in cdfs. but we still have some significant issues on all kinds of exotics.

>> 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. >> these are the cyclical recovery, the "v," is it a secular trend, long-term? i think not. is it a "w," risk of a "w" is high. >> lackluster recovery. lackluster. >> gdp will be strong.g. big jump in inventories. a lot of government spending.. but not sustainable over the longer run. >> here's the official outlook from the survey they did up there. fed funds rise 0.7%. the ten-year goes up to $4.39. s&p looks good but really 3 1/2%. this is a year from now when they expect it to be gold rise as well. gdp goes up modestly 2.6%.

the euro is about where it is right now, but the yen ends up weakening. the dollar strengthening.g. not much progress there. cpi does rise. home prices still fall but not as much. not nearly as much as they have in the past. among the side bets, larger next year than this year. citi group will be liquidated this time next year. two said no. >> 50/50 on citi getting liquidated? >> the idea came up, will citi be among us a year from now. two said no, two said yes, given t size of the trade. >> all right. steve, stay right therthere. with all that in mind, what can we expect from the fed? it starts tomorrow, right? >> starts tomorrow, right. >> conrad, senior economist with rdq economics. sam stovall, standards and poors

chief strategists. those gentlemen join us now along with the aforementioned senior economics reporter steve liesman. sam, what do you think the fed is going to do? >> i don't think the fed is going to do anything. they might soften their commentary to investors when they conclude their meeting on wednesday. but i think what they want to do is they want to make sure that the unemployment rate does not peak above 10%, which we think it will. and probably will stay above 10% for all of 2010. and they don't want to makee mistakes like in japan and pull away the stimulus too quickly. >> so the drop in unemployment rate last month was a fluke? >> i think, well, following with steve liesman's fishing expedition, possibly so. >> or rirsorry, didn't mean tha >> it won't abe a hook-shaped recovery, either. so basically when we have a lower participation rate, meaning more people saying, i'm not even going to play in this game, i'm not going to be looking for a job because it's

so hard to find, i think once they see that, gee, maybe we can start to get a job, that participation rate will increase. and as a result, the unemployment will increase as well. >> conrad, this puts the fed in a very, very difficult position. when, when should they actually start increasing rates? traditionally, right, you would do it before employment started to improve. do you do it when employment is still 9%, 10%? >> well, since the fed has been reporting its interest rate moves, they have not moved the funds rate lower until the unemployment rate peaked. we don't think that will happen until well into 2010. i would be very surprised to see the fed move the funds rate higher before 2011. i think we're going to have a very flat profile in the funds rate through 2010. i'm skeptical the fed will be able to move the funds rate higher while their balance sheet is very large. a lot of people are looking to see does the fed talk explicitly about reducing the size of their

balance sheet or add to that programs. i think they will leave their options open. they won't say anything specific on any changes. >> so, steve, does that sort of fit with what you were thinking? >> yeah. >> they were supposed to have this stuff done by the end of the summer. by not updating it, they're done, right? >> i want all investors out there and everyone listening to this conversation to get hip to what matters now. i think the feds fund thing is not what matters. if your waiting for the fed funds to move, you're going to be too late in understanding what the fed is doing. conrad put his finger on it. it's the size of the balance sheet, in my opinion, one of the predominant ways in which monetary policy is operating. will the fed balance sheet a year from now or six months from now be bigger or smaller is more important. i tend to think that we need to hear from the fed maybe as soon as this week about what happens, as rick pointed out, $300 billion that's on tract to expire, run out or be used up in

seven weeks. there's a lot of uncertainty there. but the fed's balance sheet, to my nind, is one of the two important keys. >> conrad, if they say that they're thot going to do more and expendant that this in terms of size or in terms of duration, i guess that would -- would you interpret that as a sign that we are -- they really do believe we've turned the corner? does that mean a lot of things for both rates and inflation, if they do that? >> i think they'll also sound more upbeat on the economic outlook. in the last statement they said that it seems like the pace of the decline in the economy has slowed. this time they might talk more about stabilization. i think the data we've had since the june meet willing give them room to do that. one of the reasons i don't have to say much is the balance sheet can expand a little bit with the programs that are in place. we may still only have $50 billion left in the treasury program but $70 billion on the mortgage buy program. so the balance sheet -- >> conrad, how does the market react if the fed stays mum this

week, say the bond market, if the fed stays mum on what happens to the treasury program if it expires? it's not going to meet between now and when it would expire. >> there is chatter there about the potential for the fed to exand if that program that may result from what the bank of england did. there's a possibility of a bit of disappointment. the fed has sounded skeptical about that program. i would be very surprised to see them expand it. >> sam stovall, how optimistic, or maybe that's the wrong world, how confident should we be that the fed the execute an exit strategy and we don't wind up with some really bad inflation a couple years down the sfloed. >> i don't think we should be overly optimistic. the questioning that bed chairman bernanke got from the government indicated they're going to be taking a peak at the action more closely. i think it implies that there's increased political activities in whatever fed decisions might be occurring.

so there could be a lot of reluctance on the part of congress to allow the fed to start removing itself and, therefore, possibly have negative repercussions on the general feel on main street. >> with my investment, should i be playing a replace in strategy? >> a replacement strategy? >> reflation. >> reflation strategy, sorry. i would tend to say it's going to take a while before inflation is a big concern. when we have unemployment above 10%, as we forecast, and since wages are the biggest component of inflation, that's going to keep a damper on things as well as the capacity utilization down 68%, close to the record low, it's going to be a while before inflation becomes a major issue shoe. >> all right. john, sam, and senior liesman.n. thank you all very much. quick programming note. we have been hoping to kick off our young and successful series,

but i gotjealous. no.. our first youngster has successfully caught a bit of a cold this morning. so we'll just start the series tomorrow, featuring self-made millionaire entrepreneurs sharing the secrets to their early success. but coming up, forget bringing sexy back. is something bringing private equity back? find out why it means more ipos. >> and then why business school is perhaps not the best thing, according to the author of the "business management."

we're seeing the economy begin to recover. asset to credit definitely improving. inning gentlemen now to discuss is the editor of "pe hub.com" and editor at large with thompson route i. welcome. >> thank you. >> you know, i've been reporting, i assume you have been. it's going to be a while until we see any large pe deals. there is some light at the end of the tunnel, i guess, dan, when it comes to potential exits for pe firms. tell me about that. >> yeah, there is. you know, pe firms, there haven't been many private equity backed ipos.

we've started to finally see some. you had a last week do well after it went out. it actually sold more shares in the ipo than it planned to. this year we had some going out. you are getting a sense from the private effect questionity firms there might be a an ipo light there. your hearing reports, kkr is privately talking about getting a lot of companies prepped for ipos. blackstone in the earnings call last week, james said the same thing. seems like firms are ramping up. going to get the s-1s out and hope the market responds. >> that being said though, dan, you know, the '05, '07 period where we all all of those record deals in terms of size, you're not going to take an hca public at one time. this is still going to be a process, probably take years for them to completely exit some of these incredible large names that they've acquire. >> yeah, it does. it's a long bleedout process. two things about that, david.

first, the big deals, '05 to '07 deals. ipo is probably the only exit for the private equity firms there. you're not going to find a strategic inquirer. the deals are too big. i remember going back a couple years ago, a couple of the privating quitity firms that were going to do that deal dropped out. one from carlisle group in a speech said, look, not only were we uncomfortable with the price but the bleedout is so long on this, that tunnel was too long for us. you're right, just because you go public, it doesn't mean you've exited. it does mean though that the investors can start to get distributions or see the way to at the time distributions. >> and see some sense as to whether the valuations actually make sense in terms of where the firms had these things marked. that being said, a lot of these funds are going to take their full ten yairs to generate a return, right?t? >> yeah, they are. but none the less, just what you're hearing from prooi vivat equity firms has been they've had a hard time raising capital.

not only because their institutional investors are getting hit but because it's been hard for the private equity guy, pension fund and endowment, they've got no checks coming in and it's completely i'll liquid. if they had some shares, a couple shares this month, a couple shares next month, go to their bosses and say, look, they've got cash. >> they're ulz going to be out there looking for more money. in terms of more money, what i continue to hear is if you want a $2 billion or $3 billion deal done in your private equity firm, you might have a shot. anything beyond $3 billion or $4 billion, it might be tough. >> it's basically impossible. $2 billion to $3 billion is extimely hard. the largest deal we've seen this year is in asia. most of them in asia and the u.s. is either all equity or really hi equity, 80%, 90%. you cannot do a $10 billion leverage buyout. they don't exist.

>> the leverage ratios have come in. dan, thanks for being with us. appreciate it. >> thank you. up next, our phil lebeau u goes behind the wheel of the new general motors one month out of bankruptcy, are they truly focusing on customers, cars and culture? phil is live in millford, michigan.

one month out of bankruptcy general motors is trying to steer a new course. how are they doing? phil lebeau has insight from millford, michigan. hi. >> this is what you might call customers, cars and culture day here in millford where the gm test track is. later today we're going to here from fritz henderson talking about the changes in the company. the big one that will be announced today, general motors hooking up with ebay to test out a program where they're going to be selling new gm vehicles on the ebay motors website. this is only for people in california. again, this is a program that's going to go through september 8th. the idea being that although dealers in california will be delivering the vehicles, general

motors trying to reach people in different ways and this is one way to look up with ebay. at the same time they're using the internet in other capacities. fritz henderson, ce organizat ce company, has been doing twisting and texts. as i said, fritz henderson has done several webcasts, twittering with people on a regular basis. they're also instituting what they call a culture change committee. fritz henderson and several executives, a group of ant 20, meet at least a couple times a month, talk about whether or not they are reaching the public and are more responsive to what customers are looking for. this is all part of general motors trying to be more in tune with people and ultimately sell vehicles because, erin, at the end of the day that's what this comes down to, selling more vehicles. we're going to hear more from gm executives today. this ebay deal will get a lot of attention. it's only for california at this point. if it's a huge hit, look for them to spread it around the

country. >> trying to figger oure out yo price. thank you, phil. coming up, so-called accidental consultant who says that biz schools are bogus and partly because of the financial crisis. what does he suggest you do, two years, get contacts, and hang out on the beach. we'll find out. >> i say hard labor. >> that might do it. >> you know. or working on a ship yard. >> learn how to make a bet. >> there you go. >> we'll be back. esesesesesesess

lets take a look at the markets. the nasdaq, the s&p all down. as you can see, the worse is the s&p, down .1 of 1%. it's not like we're suffering here. let's check the internals. any tea leaves here? no. pretty much reflecting indices. and the nasdaq is slightly positive by 22 issues advancing than declining. quiet. >> that's right, big fed meeting. >> today. >> today. our next guest says if you think you need an mba, think again. last year the number of

admission tests taken by business schools jumped by 10%. a lot of people were worried about losing their job. t two years out of the job market, not bad. are those degrees necessary, do they help you or are they over-priced? joining us now, matthew stewart, author of "the management myth." matthew, good to have you with us. >> great to be here. >> one thing i'm hearing is about mbas and, you know, we all know a lot of people who have gone. most people tend to admit the one thing they get out of it is contacts, it pays off down the line. that is worth it for some of them. is it worth, what is it, $100,000, $150,000, for those contacts, or do you get something else for the money?y? >> i think that is the main thing that you it may well be worth it. the question is, is that the best way to organize education? is that the best way that we can prepare people for a future

career in business? i am skeptical. >> what did you find? what made you -- examples of sort of what would have someone thinking, are you kidding me? people go and pay money to learn that? >> look, i was a human guinea pig in a sense.e. i was hired by an enlightened firm that decided to look for people that they thought would do the job without paying any attention to what kind of degree they had. i had a doctodoctorate in philo. for me, the experiment lasted ten years. i was able to hire people so i hired a beginguinea pigs. a number of consultant firms did the same thing. the bottom line turns out to be that non-mbas do just as well as mbas in the kind of jobs you expect them to do. so it's not that an mba is necessarily a waste of time. it's that you could also be studying philosophy.

or if your concern is the contacts, maybe we could arrange a cruise ship and, you know, put the people who are admitted to business school on that and have them all get to know each other. >> like a booze cruise? >> i'm in favor of sending them out to do some hard labor. when i was a kid -- national when i was a kid i wo the ship yard. send them to the mines, send them where it really hurts to make a living and maybe they'll have more appreciation for the people who work for them. i like your point, or maybe it's -- well, it is your point. a good manager is nothing more or less than a good and well educated person. right? >> that's right. >> i mean, good manage fer you majored in philosophy or if you majored in history or, you know, just as easy or just as well. >> sure. i don't care fundamentally what you study if you're going most

business occupations. i care about how you study it. if you study it with some passion, you going to learn something. if you don't, you're going to have fun. but not necessarily get much out of your education. fundamentally, the most reliable teacher in business is experience if a experience. it's good for some things but it's not good for directing you. >> we've only got 30 seconds left. here to me is the clear question. even if we can agree that there's not much point, okay, then it's benign. but is it benign or are people learning some wrong things in these schools? >> there's a tremendous amount of pseudo-science. the basic idea behind the business school is there's a general science of management that you can apply, like calculus to business products. that's just not true. i think it's harmful to the idea

that ethic and trust that is required to manage a business effectively. i think it is harmful. we've made a huge investment in this. we have seven or eight times as many mbas coming out now than 40 years ago. it's isserious concern. >> matthew, thank you very much. amazing what he just said there at the end, mark, about that. something to think about. another thing he tackles in this book, by the way, is real perspective on why ceos make so much money. we have obviously seen an explosion in the past, same time frame as explosion in mbas. you can get the book. it's on shelves today. coming up, do we need a second round of stimulus? paul told cnbc asia for just more time the first round to work. plus, zero horsing around.

i was there last summer. what a beautiful place, saratoga, new york. >> isn't it gorgeous?s? >y is. >> it really is. i might be horsing around, but there are horses around me. i think that's more accurate. we're here with the auctioneer, yearling sale. we're going to come back with him. robertson, take it away. >> be back in two minutes. how about three? see you in three minutes.

i'm darren rovell. welcome back to "squawk on the street." on the next two days we'll be where $35 million of horses could be sold, 235 horses, we're standing here with walt robertson, who is the chairman of basic tipton and also one of the auctioneers.

obviously a down market, about 30% down in terms of horse sales, tracking with the economy. have you had a sense of anything that's been going on here that would change that? >> well, everybody is concerned. i don't care what game you're playing. they're concerned with the economy at these times. but we've got some superior horses and we're really proud of our horses. buyers from around the world are here. we're hoping it goes very well. >> tell me about, is it the look, is it the breeding? i mean, you see these charts, obviously that go all of the way back to grandparents, even farther up with these horses.. how much of it is about look and how much of it is the breeding? >> well, you know an athletic horse with good confirmation. you wouldn't pick me out to be a basketball player. but you also need pedigree. and to get all the money, you need it all. you need the pedigree, sire dam and a well conformed horse that looks athletic. >> there were 3,000 horses and

this is down to 235. these guys are pretty good. the sheik of dubai is here. he has not been at one of these sales, i understand, in more than a decade. >> it's been a long time. >> so what does that mean that he's physically here? obviously he's the most powerful guy in horse racing. what does that mean? >> well, we'll see tonight. hopefully he's active. >> tell me about how the call works, how your call works, what you're looking for and how you survey the landscape and make sure that everyone is putting in a bid? >> well, a horse wauks into tlk ring and you look at the crowd and see who's in there.e. if the right players are even in the room, you know they're going to be live. and you can feel a certain amount of electricity when a big horse walks into the ring. >> give me your call. give me a fake call of what one of the horses would be. >> all right. and who will give 500?

i've bit $1,000. ready to give $50 now gift. $300. $350. $400? $500? $600. $500? sold to it you, $500,000. >> wow that is is amazing. i pish i had that skill, but i don't. i'm sure it would come in handy. guys, let's go back to you. >> that was just amazing. >> it's an art. i mean, it's an art. >> yeah. truly. >> he's a performer. he's an artist. it's great. next, paul krugman telling cnbc asia we need a second round of stimulus.s. do we need to listen or does he need more patience? >> yeah, chillout, paul. first, oh, trish! >> oh, trish. >> hey, good morning, guys. happy monday. we're going to talk about that editorial as well. just exactly do we need a second

round at this point in time?? that's our "call of the wild" today. plus, priceline.com without with strong earnings. what is this saying here about the company's future? we're going to talk with a first on cnbc interview and how his company managed to beat the recession. we have all that. plus, the latest market news and reaction as the consumers get, going to derail a stock rally?y? we'll debate it for you. it's all coming up on "the call" at the top of the hour. 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.

okay.. we're back. getting a lot of buzz this morning. noble laureate paul krugman out with an op-ed arcing that we need a second stimulus. this to avoid a loss decade, current situation to japan in the '90s. krugman spoke to our cnbc asia this morning and said this. >> we have the stimulus packages but they were all inadequate.

in the united states it was clear from day one that it was not going to be big enough. we should have a second one. it would be nice to have some serious inflation carting, higher reits than people are now building in. that would help. most of them would really like to have some driver for investments. >> joining us to debate tissues, keith volcker as well as a cnbc contributor. former white house deputy, cnbc con tributer. i'm a little bit confused here by krugman's remarks because he knows full well it takes a long time for the stimuli to work its way into the economy. i don't see how you can decide 2 today that the first one didn't work. >> that's right. we could have a problem with the first stimulus and one of the first problems of nobel prizes, guys getting nobel prizes for some arcane work and somehow it makes them experts on everything.

i think paul is just wrong on this. look, we still have more than $600 billion of the current stimulus still to i could argue it's not designed properly but that's coming through. that's doing to be spent well before congress could debate and consider and put in place a second stimulus. you combine that with a huge amount of monetary stimulus out there and it doesn't make sense. it's a kooky idea. >> keith, you're from the instant gratification generation, aren't snu i want more stimulus, i want it now. i want it to work right away? >> i thought that was a conservative viewpoint. they want some sort of quick fix. that's actually not what happens in an economic crisis like this. the problem is paul krugman is a very brilliant economist. he's won the nobel prize. the issue here is the stimulus is working. that's the argument paul krugman made in the "new york times." it's not about the need for the

second stimulus, but the fact we have lower unemployment now. for the first time we had a monthly decrease in unemployment. auto sales are up. the banks are making money. record profits, paying off t.a.r.p. money. we see economic conditions improving, the stock markets rising. the stimulus has had an impact despite them saying the economy is going to the tank. >> why do you want to press the gas pedal harder? >> i'm not saying that. i don't think we do need one yet. i think we need to see this one. it was designed to put money in people's hands, middle class americans, also spending for state and local governments given out immediately, to keep the firefighters and police officers in work. infrastructures, it will take a lot of time to spend that money. >> now, the numbers we have so far -- by the way, consensus economist view is stimulus contributed about one percent to

the growth of the second quarter. we had a lot but it helped it. the administration would say two to three percent. that's romer. she said $100 billion in the next five quarters. tony, your point, that we have quite a bit of time. is it possible that what paul was saying was less about u.s. specifically and more overall around the world? or do you think it's fair he's saying we need more? >> no, if you take a look -- i do think he was talking about more in the united states, the world's largest economy, but he was talking globally about huge amounts of fiscal stimulus from other countries as well. i don't know that there's a capacity for it. look, clearly in this country, we look at our financing needs, we're talking about having to finance up to $2 trillion this year and a trillion and a half next year. the capacity to buy all that debt is very limited. you don't want to pour more on top of it. in terms from a monetary policy standpoint, there really is an

inflation threat down the road here. >> keith, one thing he didn't say -- by the way, it wasn't an extended back and forth, so i'm not saying it was his omission. it does appear very unclear from some of the things he has said as to where this -- what he would spend excess or more stimulus on. >> yeah. i'm not sure. i remember back in the fall, late fall and early winter, paul krugman was arguing whatever the number the economists were providing for the stimulus, the obama administration should take that number and double it. you can never anticipate exactly what has happened. i think what has happened, and i think what he points out in the "new york times" column, the government's response from the great depression, there was a concerted effort, a government effort at the global level and the united states to prevent this, to rescue the financial system so we didn't have banks, so financial institutions could

survive. make sure there was relief, not only for middle class americans but all americans. that was government intervention. a lot of critics on the right were decrying. that's working now. that's the point they are making that the government efforts do make impact. >> tony and a half there has been a role for government. we've seen some positive roles for government. what we're seeing with the stimulus largely is sugar that we're pouring into this economy, and that goes along with monetary stimulus, too. it's not lasting we're going to burn it up and it's going to go away. we would like to see longer term restructuring that would help p the economy grow long-term. what's interesting about krugman's example, japan's lost decade. what they did was exactly what he's proposing. >> stimulus package. you're not going to get it with pouring sugar, you need

structural reform. that's what we're advocating. >> i don't see how you can't say it's going to work, be long lasting when it's just starting. that's your very argument. if it's just starting, how can you say it's not going to last long. it's the cycle the stimulus designed. it wasn't supposed to happen all in february -- >> you can't say it's having an impact now and it's going to have an impact forth long-term. we know that the way this is designed it's going to have an impact for the duration of the spending. that's all. it's not making any kind of structural reforms that would lead to long-term growth. it's just not there, the sugar. >> these not true. first, we're changing economic policies. we're not spending our money solely on tax cuts and wars as we did in the past administration. we're spending it in a way it will build long-term sustainability for the economy and american industry. there will be a difference from the past presidents. >> tony, before we go, can you give us an example of an

opportunity we're missing, long-term change. >> one of the crises we have in our economy is business investment. what obama administration is looking at doing is increasing taxes on the business community we'd like to see that, if anything, go down to zero. >> you would make changes in the tax code, investment tax credit. >> absolutely. >> capital gains tax, things like that. >> absolutely. >> thank you both very much for adding your voices to the debate. up next, final check on the markets. not doing too bad.

the world is full of priceless things and amazing deals. find them, share them with mastercard's priceless picks app.