good morning opinion it's decision day. the markets waiting for an interest rate decision on policy and the federal reserve. is the worst behind us? a growing number of the nation's top forecasters says the economy has already bottomed. today's market decision, the fed decision, trade data, a majority treasury auction and weekly mortgage applications. crude inventories, earnings from major retailers and much, much more as "squawk box" begins right now. >> good morning, everybody. welcome to "squawk box" here on

cnbc. i'm becky quick along with joe kernen and carl quintanilla. the fed is set to wrap up a two-day meeting this afternoon. it has a policy statement that's expected at 2:15 eastern time. the central bank is widely expected to keep rates on hold for now even though a growing course of directors is looking for the fed to upgrade its comments on the economy. different economists say we could be nearing tend of a recession. the fed is expected to announce a program to buy $300 trillion in treasuries will come to an end in september. a new survey of the nation's economists find ben bernanke should be reappointed to a new term as federal reserve chairman. meantime, a majority of them surveyed say that the recession that began back in december of 2007 is now over. those who don't think it's over at this point say it will be this month or the next. on average, economists expect that the third quarter gdp will

show a 2.4% decree in growth at a seasonally adjusted rate. key drivers include manufacturing partly helped by inventory adjustments and strong demand for the cash for clunkers program by by most accounts, the economists are looking for the recession to be over or ending this month or the next. >> have we heard from any that say nope, not over yet? >> nouriel roubini will be on. >> but they're double dippers. >> although i don't understand when that dip is expected to come. is it the second half of this year or next year? they also say 2010 looks like it's going to be okay. >> fine line between a double dipper and a slow recovery guy. there is that camp that says 2010, 2011, 2012, subpar, 1%, slow or very -- you know, minuscule job growth.

>> you've got to have growth. if not, it will just come back down. >> if you've got a sweater, you've got a sweater. if you've got a car, you've got a car. there is that camp that thinks it's not going back to -- >> you've got plenty of dresses. >> who said that yesterday? >> patrick koff. >> yeah. it was not me. easy. >> another key for the markets today will be the treasury's auction of those 23 billion in ten-year notes. the sales in auctions will be announced just before the enof the meeting. some traders expect today's auction to be more disk than the sale of this three-year. the three-year is a pretty easy sale in large part because the chinese have moved to the shorter end of the curve.

but every auction this week has been a nail biter. >> you wouldn't get burned that much in the three year. that's the other concern. maybe we see some shift in the fed about how long they stay at zero, basically. if you have the bottom and the fed does eventually look like it might start moving rates back up -- >> all you have to do is stop buying the treasuries that you've committed to, right? >> yes. but three year is not bad. even if they go back up, you get your principal back in three years. but once you get to seven years, ten years, then it's a different story. australia, they may be one of the first country toes start raising rates because they're so tied to china. who knows whether -- china never really went negative. >> australia is tracking the dollar again.

>> people say it's due for a rebound of 15% or so. it's a key factor, though, in the broader financial markets. lately, equity markets go up when the dollar goes down. it goes up with oil and that's not typically the way it should work. the higher commodity prices make a recovery less robust. so a lot of these weird linkages and we're not sure how they should play out. >> meantime, take a look at futures this morning. we had a difficult night overnight in asia. shank shanghai is off 10% since hitting that 15-month high last week. furchbs here, above fair value. oil has responded to that, the stronger dollar at some parts trading below $70. even though the inventory data

yesterday was bullish from api. we'll see what the energy department says later on today. gold, as the dollar has gotten strong stronger, people are looking for gold to sell off a little bit. it's been fairly steady, off $1 today at $946.60. let's get overseas and find out what, in fact, happened in asia with christine tan. first, martin baccardax can bring us us to speed on what's happening in london. >> it's an odd will i busy morning here for august. lots going on. take a look at the four-story right now. modestly to the upside. i wouldn't say boyance is great. but there's a decent amount of activity. the ftse 100 is up 0.3%. similar gains across the board. i mentioned the busyness. nestle has to be said earnings were disappointing. it was an effective trimming of the guidance from the company. that put shares down on the day

about 3% or more. bhp billiton giving us the effective full year earnings today. net next down 65% in the second half of the year and a relatively cautious outlook on iron ore demand all the way through to 2010. i think you guys will be speaking to marius kloppers, the ceo, later on today. the governor of the bank of england, mervyn king, very cautious on the pace and the breadth of a recovery. he has one eye on inflation, but thinks it will be relatively murted on the short-term. that's the story in europe. over to christine tan in singapore. >> hey, martin. that's the story here in asia, as well. markets losing ground as profit takers brace for what the fed

has to say. the nikkei 225 pulled back from ten-month highs to end 1.4% lower. investors shrugged off data in japan which showed wholesale prices fell a record 8.7% in july. the shanghai composite tumbled 4.6% pap one-month low. yesterday's mixed data made investors fearful about the pace in china. those concerns about china as well as the outcome of the fed meeting dragged down the hong kong market. the hang seng slumps 3%. that's it from asia. joe, let me hand it back to you. >> thank you very much, christine. let's talk to an economist and someone that can help us with the stock market. allan sinai is with decision economics. peter anderson is here, as well.

allan, do you think bernanke should be reappointed and do you think he'll be reappointed? >> i think he'll be reappointed and that makes sense. >> and you think he should be. you give him -- without grading on the curve, is he up in the a minus, a, b plus? how do you rate his job? >> the chairman and the have come on strong here and done a lot of great things to preserve the banking system. the chaos we were headed into. and i think we -- the recovery is baked in the cake. it's still a technical issue whether we actually are in one now or will be next month, that kind of thing. it's staked in the cake. relatively growth will be 3% in the next quarter. bottom line is, tweer out of major trouble and that's where it counts. >> do you think the president is under any pressure to reappoint

him? does he have to listen to what guys like you say and what guys on wall street say? >> no, he doesn't. the head of the federal reserve is the president's choice. the current fed's record is mixed. it wasn't all that good. in fact, it was really quite bad at the beginning and bernanke was appointed by another president. typically presidents appoint someone from their own party. that's a typical choice that presidents make. there are other good kdz out there. regardless of the reappointment of bernanke or not, i think the federal reserve will be in very good hands going forward. >> all right. before we talk to the markets, just give me one more idea about whether we have a double dip, a slow recovery below global recovery for a couple of years or whether we just snap back and have a typical recovery. >> you know, it's still an l

with an uptilt on the bottom. for us, that is not the typical v. we can't have a v without consumers spending a lot on cars and houses. and double dip? no, i don't think so. there's too much to come on the fiscal side and the lag effects on that improvement we see in the financial system happening. so we're going to grow and the question is how fast. the typical one-year growth rate median of 10 past recessions is something like 5.5%. so we're on track to grow at maybe half of that. that's pretty anemic, but it's a lot better than where we were. >> peter, in january or so, if you said 9200, close to 1,000 on the s&p for 2009, a lot of people would have said, all right, i'm sold, i'll take that. do you believe we can keep going or have we seen the lion's share of the gains for 2009.

>> well, joe, i think we've actually been dealt a little head fake here. it's been a bit bewildering that low quality stocks have outperformed in the klattic -- what you would call the snap back rally. but we think that will happen is the high kwaultd stocks should be the leaders in the next half of this year. what's been really surprising to me, personally, is that leverage which got us here in the first place actually has led the rally through the first six months of this year. and it's as if some leveraged investors haven't learned their lesson. i think so far we've had the classic snap back. but what i'm voting for is a correction on that lower quality and the higher quality capital markets to actually rally somewhat. >> all right. so the s&p you'd call quality, i guess, wouldn't you?

>> you would or, you know, if you look at -- if you just rank the returns of stocks based on their credit ratings, what you've seen is the triple c rated stocks, which there are some in all the major indices. those have been the leaders. and the aa and single a and what's left of the aaa have been lagging. >> right. but -- >> and one would think -- >> but what i'm trying to get at, then, you think the s&p goes up from here? >> i do, yes, but i think it will be a slow grind and i think what will happen is you'll see high yield bonds, for instance, start trading off and that will cue equity investors to look a little bit more closely at the balance sheets that they've been -- frankly, i don't think it's too strong a phrase to see a lot of invefrters have been ignoring the balance sheets and not look at the payment schedule. in the high yield markets, most of the easy refinancing hoob

done and now we're doing the hard work, looking at names that might not be able to be easily refinanced. and i think that's going to trickle over to the quality argument on the equity side. >> so even the dow 30, then, might be a place to look at selectively, i guess, with the biggest names. >> absolutely. the dow 30 is a nice place to start. the russell 3,000, even. but in my work, i do a lot of focusing on the debt markets to give us crews about where equities are moving. and even in the russell 3,000, for instance, you have to look carefully, roll up those sleeves and get a sense of what the credit markets are telling you as a hint for which companies are in good shape financially. >> so it's usually allan's domain to talk big picture, but what are you saying about the economy, that the credit markets are not completely healed and that the economy is not, you know, going to be above par as

far as growth goes? >> well, i think there's more healing, there's more vetting to be done on database when you say the credit markets, i'm speaking specifically to securities, bond markets, not necessarily the consumer, okay? and on the bond market front, i think that there is still more vetting to be done, absolutely. and you're going to have a bifurcation of that market where the survivors, there will be some single b rated or even tripel c rated names that will come through. but we're also going to be surprised, i think, to see how many of those trinel rated c sectors are not going to be able to make it and their default rate increases. >> allan, when will the fed make its first move to raise interest rates? >> i think that's after the first of the year. we're going to see their balance sheet wind down some in the areas that are not being used much and they'll probably up the balance sheets in terms of

helping out places like commercial paper. the call on treasury securities, that's a tough one. i would -- i would maintain that through the end of the year, but they may not. we'll see later on. but they're going to have to -- the balance sheet is winding down as we speak because a number of those lines, the ones that are used in the financial system are not being used heavily. the financial system is not totally healed, but pretty well healed right now, within interbank lending is fluid in most of the markets and that's big deal, a big positive. eventually that money will go out to consumers. >> we will meet on a day in 2010 where we say the federationed interest rates today? >> god willing, you and i will have a conversation in 2010, perhaps the first quarter where the fed will start to nudge interest rates up. that's congress tingent on the

economy in this 2% to 3% range, which is okay, but nothing like history. >> well, zero is too low. you can't go down from zero. you know, we want it to go up a little bit because that indicates that, you know, maybe -- remember when inflation, in japan, which was was craving inflation. please give us some -- all right. thank you, allan sinai. peter, good to see you this morning. we'll follow those words that maybe the dow 30, ge is a dow 30 stock, right? >> it is. kraft, too, though. you love cheese, right? >> yes. >> our executive producer does. >> really? >> yes. quail. loves cheese and beer, right that's why he's got to run every day. he runs to break even, like i do. >> he runs a lot. >> in other headlines this morning, the white house is considering allowing consumers

to use the cash for clunkers vouchers towards future vehicle purchases. the journal reports that the obama administration is reviewing the congressional request made by two victims. it could dwindle supply of many vehicles. >> it has to be in stock for you to use the money, right? >> yes. so if you get a voucher -- how far down the road can we use this? are we talking months and months down the road or is it just because i want knit plaque and not in blue? don't look a gift horse in the mouth, you know? >> right. meanwhile, jpmorgan is looking to sell 23 offices across the country. they could raise about $1 billion and take the title as the biggest u.s. retail sale this year.

well sharp selling 40.5 millio shares now, raising 810 million overall. the underwriters have the option to raise 1.8 million shares. it will begin trading on the nyse under the symbol stwd. have you ever seen a four-letter symbol on the nyse? >> no, no, wait a second. it's either the nasdaq or that's the wrong symbol. >> i didn't understand what was written at the beginning. it says -- >> disregard that. >> we'll look. >> microsoft and nokia reach ago deal to put microsoft office on to mobile devices. bernie madoff's right hand man working secretly with the fbi. attorneys are portraying him as the man who can unlock madoff's

ponzi scheme and potentially make cases against other defendants. the judge ordered dipascalli jailed immediately. some of the quotes, did you see yesterday afternoon, watching the quotes, the flashes from what he was saying in his words that he was very, very, very sorry. >> there were some victims outside who weren't buying a lot of it. >> no. >> as in the courtroom who were saying, yeah, you're sorry and i've lost everything. >> incredible. when we come back this morning, an early round of analyst calls.

welcome back, everybody. take a look at the futures this morning. they are in positive territory. for the dow futures, we're talking about up by berts than 20 points. we have plenty of news coming out today. at 2:15 eastern time, we'll hear from the. >> narrator:. that's likely going to be the big market-moving event of the day. the fed is expected to keep rates pat. we'll be looking to see what they say about the economy, where we stand right now and what they may or may not be doing with their treasury buying program. >> and since may, apparently, the nyse is now allowing four-letter symbols. >> we were just talking about starwood. >> and the s.e.c. to allow four-letter listings. >> i don't understand. can you do three-letter listing on the nasdaq? is this cometive because of companies that didn't want to  move back and fourth because

they didn't want to change our  syllables? >> it's not just that i hate all change, but it seemed like a good system. >> yeah, i do hate all change. it must be a nasdaq stock because it's a four -- i don't know. they're cross listing now and they trade on both a lot of times and maybe there's a stigma. we just heard about stocks. >> but you would want a three-letter if you're listing on the -- >> right. but you can't assume that because it's a three letter it's on the big board. >> oh, i get it. let's look at upgrades and downgrades this morning. allstate, bank of america merrill lynch upgrading it to buy. they think oou you'd bet in good hands if you were to buy this stock. they didn't really say that. but -- >> dennis. >> yeah. what gets me is that there's a guy that sounds like him that they don't show his pictures on

a lot of commercials and you think it's dennis hazesberg and it's not him but i see him and it's like you're stealing this guy's sdingive voice to shell your product which is not allstate. >> i have not seen that ad. >> yeah, well, it's on. the price objective, no longer 3 32, they think eye going to 3. it's on the radio, too, carl, where you wouldn't be able to see dennis talking. i think it's select quote i think is the name. >> oh, really? >> yes. check it out. >> have you ever thought about doing -- >> voiceovers? are we allowed? >> finally, added to the

conviction buy list. >> busy morning coming up, we'll get top stories after the break. plus, the picture from the futures pits when this fed day continues on "squawk box." if you're taking 8 extra-strength tylenol... a day on the days that you have arthritis pain, you could end up taking 4 times the number... of pills compared to aleve. choose aleve and you could start taking fewer pills. just 2 aleve have the strength...

she is the greatest thing ever. woman: one little smile, one little laugh. - honey bunny. - ( coos ) we would do anything for her. my name is kim bryant and my husband and i made a will on legalzoom. man: it was really easy to do. - ( blows raspberries ) - ( laughing ) robert shapiro: we created legalzoom to help you take care of the ones you love. go to legalzoom.com today and complete your will in minutes.

at legalzoom.com we put the law on your side.

request good morning. welcome back to "squawk box." i'm joe kernen along with becky quick and carl quintanilla. we don't like change, but when we do -- >> i will getaway. >> we don't like change, but when we do get a change, we like -- i like to beat things to death, which i'm going to do right now with this four-letter, three-letter thing. already five companies on the nyse have moved to four letter tickers. pike electric, alexander and baldwin, ciac international. ag co is agco. it costs money to change a symbol. whenever companies try to move between the big board and the nasdaq, it would cost money. it's like someone with a cell phone or your home phone where you don't want to change some things because you can't get the same stuff on them. so both the nasdaq and the big board, the s.e.c. decided to make it easier to move between

the two. >> are there any three-letter symbols on the nax dak? >> yes, there are. and i'm glad you asked that, little led because dtv is a nasdaq stock, directv. dreamworks animation back in 2007 you had some nasdaq stocks with three-letter symbols so now you can have bigboard stocks with four-letter symbols. so we're all fair. you were able to -- you could go one way, but not the other. you could go one bay, but not the other. now you can go nasdaq three letter, but now you can go four letter big board. any questions? any more questions? >> do you want to do a whole segment on this? bring on some guests to talk about it? >> i think weny a pisani 101. you need to do that. tell us what the bottom line of this actually is, notably. anyway, the fed is set to wrap up a two-day meeting this

afternoon with a policy statement. it will be coming out at 2:30 eastern. i was excited that there will be a change from that flat little -- what would you call that? a floor to the right. and you can see that that is the low end of anybody's range, isn't it? isn't that a zero on the y axis over there? that is a zero and we're right on it. sonner or later, it's going to happen. it just depends when. and the question is, they were saying that the market was down yesterday on eventually it could come. it's coming. does the market have to sell off when it sees that the fed is going to go up? that's not fair. >> you have people who have been trading and making money off of the -- >> don't do that, please. the fed fund raise of -- >> it's good for the taxpayer because it's going to cost us

way too much to pay off this debt down the road. >> yeah, but it's going to be harder to raise money to fund all of this spending that you're so positive about. >> but there are these guys in the middle making all this money off of it. they're taking money for free and you can't turn around as a consumer or company and get all that money. >> but you can't run a global economy with zero interest rates. when you lend money, you need to get paid something to lend it, don't you? the spread is zero. >> but it's this wide now. >> please, don't sell off the market if it becomes clear eventually that the fed will raise rates. it's going to be all right. we need tight happen. >> never accuse you of cheerleading. >> it's a knee jerk reaction. you immediately sell when the slightest -- stop it. >> profit taking. no, that's not it, either. meantime, a new survey finds a clear majority think bernanke should be reappointed to a new term as federal reserve chairman. there's a 70% chance that the president asks him to stay on the job. meantime, a majority of

forecasters say the recession that began in december 2007 is now, in fact, over. on average, the economists expect third quarter gdp to show 2.4% growth at a seasonally adjusted rate. key drivers cited include the manufacturing sector partly helped by inventory adjustments and strong demand for the cash for clunkers program which may be sanded to make sure you get the color car you want, even if it's not in stock. quick check on futures this morning, china and asia pretty much got shellacked overnight. the nikkei is down as is the hang seng index. europe, however, is in the positive. oil with a stronger dollar trading below $70. we'll see -- actually, yeah, $69.62. we'll see what happens with the inventory later on today. ten-year note, bonds yield down to 3.674%.

people are wondering whether the levels against the yen have been overdone. and then gold had a four-day losing streak that ended yesterday, down 60 cents to $947. >> jessica hoversen of mf global, i don't know if you just heard what we were talking about, but are you one of those people to blame who start selling ekfys and stuff when you hear that the fed may start to raise rates again? >> i am not that person to blame. i think that the market was more so down on the fact that it looks as though china will be cutting off that spicket of liquidity. i think that in china overnight, the industrial numbers, the trade numbers, the amonthly ga magz of those numbers are due for a slowdown in china and more specifically, the lending numbers. i believe in the move of july alone, the numbers decreased 77%. i think the market has counted on china to be this atlas that

holds us down. with those numbers cooling, i think the market has to take a september back. there is a strong suggestion that's now over. >> yes. they've been hinting for a while they're going to stop stockpiling. i think the market is reconsidering it and relationing that they have been indicating that they actually are going to take a step back here. >> well, and it's not only that, it's what we heard about china going after rio tinto claiming they were overcharging them by over $1 4u7b million, was it snr or is it bigger than that? >> arresting some of their executives didn't help matters, either. >> no. but if you're saying you guys have been overcharging us, i guess it's saying we're not driving the prices higher just by the fact that we're importing too much. i don't think what kind of impact that's going to have on commodities prices everywhere. >> i think overall the market is -- that situation is a horse

of a different color and i think you have to take a look at the larger picture. pardon me. go ahead. oh, regardless, i think that the market is taking a look at this larger picture. in terms of if the oc, i think the market is completely overpriced the fact that the fed could tighten. if you look historically, the fed waits like to to 12 months after the unemployment rate peaks before they start tightening and some 35 months especially in the '90s recession after the industrial production year over year rate bottomed. so i think that the market is completely moving ahead of itself. if you look at the macro figures, trade has gotten better, the manufacturing numbers are better, the inventory retrenchment is slightly better, but the inventory data is slightly poor. so i think the fed realizes snap and they're not about to step in here and try to rock the boat too much because they know that if think tighten too early, they're going to completely eradicate the growth that they

have caused and the benefits that actually have come from the cash for clunkers and the massive amounts of liquidity they've put into the market. and if we look at what the bank of england did, though many criticized the bank of england, i loved them because i think they recognize that deflation is quite a living. if you look at the band lending figures, they are trying to be proactive. they don't want to move into a situation like japan in the '90s. and the fed, once they finish their qe program in september, recognizes that our lending figures still look the same and deflation is a threat, they might look to extend our qe program in september. >> really? >> i think so. because right now we have about $50 billion left to purchase. we have quite a bit left in our mbs purchase program. so i don't think they'll make a move ride now because it's too early. they actually still have some time. but if they move forward and they look in the future and they say, wow, our numbers look quite poor, banks aren't lending, with

it's not so much a function of liquidity in the market any more. it's a function of what does the credit equal look like in our economy? if banks continue to perceive it it as pooh poosh, the ned will have to continue that liquidity. so they aren't encouraging deflation. >> thanks for joining us. >> thank you, becky. >> we're calling this earnings central, but i'm going to make something clear. we're going to stagger the reach here to make this look like tv. i'm going to start with applied materials, carl and becky. the sheers getting a boost after hours posting better than expected third quarter results. >> whoa, whoa. what? >> third quarter. does that make any sense to anyone who knows how a calendar works? when does the third quarter end, mr. q? >> september 30th. >> thank you very much. this company's first quarter ends january 31st. they're all messed up.

so this is not your typical earnings central. we do this year-round. earnings central would be permanent and it can't be because our productivity, we would be burnt out at the end of the year. >> maybe they're on the chinese calendar? >> who knows what they're thinking. anyway, the company announced that it would at least break even this quarter tlanks to new orders and cost cuts. so this is the fiscal third kwarter. what? i just -- okay. go ahead. let me check this one out. >> check out shares of bob evans farms, the restaurant chain operator -- >> first quarter. >> and meat products producer reporting first quarter earnings in line with expectations. >> they're all confused. >> sales did fall slightly short. the company says it will not build any new restaurants next year. it's announcing its share buyback program will be suspended in the third quarter.

if this is the first -- >> the first quarter ending july. totally messed up. >> between the quarters and -- >> hang on. we've got a four-letter new york stock exchange stock that's going to report first quarter -- it's like we're in a time warp. >> do you want some more? >> another one? >> yeah. >> which quarter? we're going to go from food to housing. toll brothers, tol, reporting preliminary third quarter results earlier this morning. >> that could -- preliminary, though. >> preliminary. >> all right. >> the nation's biggest luxury home builder says it sold more units for less money. contracts signed rose by 3%, but the value in terms of dollars felly 5%. so you're continuing to get more than you used to for your dollar. >> this is a third quarter ending in july. comments, questions about anything you see here on squawk, e-mail us squawk@cnbc.com. a quick break and then we'll

have the news making headlines out the world of business whether we come right back.

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.

g#eeeeeeeeeeeeee. it is the time you've all been waiting for, or some of you, or some of you, at least.

it's time for the news. what would you say, carl, a lot of people, news outside the world of business? >> three of us, for sure. >> some of us are waiting. we don't know what the first story is, but monica, thank you for joining us with a roundup of the headlines. >> it is great to be with you. we'll start with public meetings on health care being disrupted around the nation. president obama managed to hold a civil meeting in new hampshire and now the president is heading west, all part of an effort to take on what he calls wild misrepresentations of his plan for health care reform. and the u.s. marines have launched an attack on a town in southern afghanistan that has been under the grip of taliban for years. this comes days before the country's presidential election. at least seven militants have been killed. and in jerusalem, 30 waiters jogged down a street balancing fully loaded trays as part of a waiter's race. they were competing for a chance to run in a similar event in

paris next year. there was one winner and he gets the trip to paris. now, guys, when you saw this video, i actually thought that those were just the greeters who go out to meet carl every morning when he smoes up because in that first shot it looks like he's in a parking lot. >> that's generally how i work, right there. >> and i know that's dark. >> is that obvious that he is kind of a pre-madonna from where you're sitting, monica? >> well, you know -- >> that was in his contract. >> and who else but carl would have thought to have that in his contract? i would i want to be greeted each morning, 3:00, 4:00 in the morning with a night glass of cabernet? >> you have to be treated right, monica. >> there are some perks and i see that you've thought of those. >> thank you for picking carl, monica. >> it's my turn today, i guess. >> somebody already e-mailed in wanting to know why we drink out of these styrofoam cups and it's

because the real mugs here don't get washed so you can't put coffee or tea in them -- >> whoa, whoa, whoa. we? >> are we getting into gaerm conversation again? >> except for joe. >> i get my coffee before and i have a plastic cup -- >> and you get your coffee that you get in the morning and drink it from a mug? >> no. but i -- that a cardboard thing i throw away. it is not using styrofoam, which is i think -- >> that is what the company provides. >> i don't think you have an excuse here. >> because they don't wash our mugs. >> you can't -- >> did you know that? >> you can watch them. >> i forget and i leave them upstairs. anyway -- >> bye, monica. >> thank you, monica. we'll see you tomorrow. when we return this morning, we will get the headlines beyond the front pages of the papers. all the the things we're talking about this morning. and then the man of the morning, his commentary is credited with moving the markets last month. now he is coming to the squawk

board room to defend his decision. nouriel roubini, known as dr. doom, will be joining us on the stet live at the top of the hour. reading about washington these days... i gotta ask, what's in it for me? i'm not looking for a bailout, just a good paying job. that's why i like this clean energy idea. now that works for our whole family. for the kids, a better environment. for my wife, who commutes, no more gettin' jerked around on gas prices... and for me, well, it wouldn't be so bad if this breadwinner brought home a little more bread. repower america. i hope our senators are listening. 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. "what do you mean homeowners insurance doesn't cover floods?"

"a few inches of water caused all this?" "but i don't even live near the water." what you don't know about flood insurance may shock you. including the fact that a preferred risk policy starts as low as $119 a year. for an agent, call the number on your screen.

is the clock ticking on a rate hike? the markets are watching closely, so are we.

all eyes on the fed decision. instant analyze situation. pga starts this week. tomorrow. we're going to have the president in on friday as well. we're corporate hosts. we're corporate hosts. where are you? we're here. we're corporate hosts but don't tell. don't say anything. there are still sponsorships, which i would hope there would be. there are guests at some of these tables. the tables cost $50,000 each but no signs. >> anonymous? >> yes. >> they got rid of all the corporate signage. >> goldman paid two tables 100

each, its merrill subsidiary -- two tables cost 100, bank of america took eight, 400,000, morgan stanley. no greeters at the airport for guests coming in. one of the guys who didn't want to be identified, a volunteer at one of the clubs said, clearly they didn't want to be identified. i thought maybe i'd put up a generic tarp recipient sign at each table. the one thing that irritates me is that, you know, i love politicians. more recently, senator john kerry, democrat of massachusetts, i have a plan. he introduced legislation to ban banks that receive any relief money from being any type of corporate sponsor. the question is, if a bank deems that this type of advertising is

productive for keeping clients, who is he -- >> it's ridiculous. >> do you have a plan? >> it would be worse if congress hadn't figured out that making these trips to malaysia to see how they manage immigration reform, if they hadn't -- >> most are to london and paris. >> exactly. >> he wasn't trying to hide it. >> a longtime supporter of gulf stream. he put it in. now he's really mad that people figured it out. i don't know. >> unbelievable. at least there are -- the lpga just lost another one, because they only got one in the entire month of september and october. >> i wonder if the corporate sponsor ships for this year were already set in place and they said just take our names off of it. i wonder if it actually affects the professional golf tour next year. >> i can tell you when i went to the bob hope last year, it was

bob hope, not classic. >> when we get this morning, top stories plus "squawk" spotlight, please. there's a market rock star in the house. nouriel roubini. mr. doom and gloom himself starting to see a bit more sun in the market forecast these days. he's our guest host for two hours when "squawk box" continues. >> you're watching "squawk box" on cnbc, first in business worldwide. he ran off with his secretary! she's 23 years old! - oh, come on. - enough! you get half and you get half. ( chirp ) team three, boathouse? ( chirp ) oh yeah-- his and hers. - ( crowd gasping ) - ( chirp ) van gogh? ( chirp ) even steven. - ( chirp ) mansion. - ( chirp ) good to go. ( grunts ) timber! ( chirp ) boss? what do we do with the shih-tzu? - ( crowd gasps ) - ( chirp ) joint custody. - phew! - announcer: get work done now. communicate in less than a second with nextel direct connect. only on the now network. , hard of hearing and an people with speech dischities accessac.sprintrelay.com.

a day on the days that you have arthritis pain, you could end up taking 4 times the number... of pills compared to aleve. choose aleve and you could start taking fewer pills. just 2 aleve have the strength... t 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.

storm prices rising a speculative wave, oil prices

shocking consumers and we were headed for a recession. he was right. nouriel roubini, coined dr. doom on wall street, is here. is there more rough weather in the forecast or are the clouds of economic uncertainty starting to lift? our guest host, economist nouriel roubini is here with his latest forecast and his perspective on the economic recession. this deep, dark hour of "squawk box" begins right now. good wednesday morning, welcome back to "squawk" on cnbc. i'm carl quintanilla with joe kernen and becky quick. the fed set to wrap up a two-day meeting, policy statement at 2:15. central bank expected to keep

rates on hold, looking for the fed to upgrades comments on the economy. expected to announce the program to buy $300 billion in treasury will come to an end in september. another key to the market, treasury announced at the end of the meeting. some expect it toob tougher than the three-year sale. microsoft and nokia putting software on mobile devices, announced at 11:00 a.m. local time. >> oil prices off lows, initially dropping $69 a barrel after u.s. and opec said global crude consumption will slump as economies try to emerge from recession. energy department says global crude demand will fall by $1.7, more than a forecast of the drop of 1.65 barrels. we've been watching crude. right now we're watching the

futures market. crude below $70, up $0.21, trading $69.66. british selling to melon $386 million as part of the a shake-up of management units. they lost to black rock bidding for barclays investment unit. deal expected to be completed in the fourth quarter. "wall street journal" reporting jpmorgan chase is looking to sell 23 office properties in what may be the largest real estate sale of the year. according to the report the property offer could raise more than $1 billion. >> after months of secretly working with the fbi, bernie madeoff's right-hand man emerged in federal court tuesday and pled guilty to conspiracy and other charges. mary thompson in federal court for the hearing and she is here with us for more. >> a fascinating hearing to say the least. frankie passically said he knew what he was doing was criminal

but he was loyal to a fault helping his former boss and unnamed others to carry out what he called a catastrophe. he pled guilty to ten charges, falsifying books and records for his role in the $65 billion ponzi scheme. the charges carrying a combined max sentence of 165 years, the judge denied him bail saying he had ample chance to flee. dipascali. >> there is that nanosecond of pleasure you get because you've been suffering for so long. but then, of course, you realize it doesn't really mean anything because you are left with a hard life i've been left with. >> since january dipascali cooperated. they helped him locate a half of floor of documents.

a task that would be made more difficult if he's jailed. during the two-hour hearing, an emotional dipascali told how he falsified investor statements and madeoff lied in 2006 to throw them off their tracks. he said clients' money wasn't invested but went to an account directed by madoff and madoff directed him to transfer $14 million, money madeoff said he earned from commission on trades. trades he said never happened. lawyers declining comments after the hearing. judge dismissed the bail agreement without prejudice meaning he may approve a new one in the future. now dipascali is following in the footsteps of the man he worked for for 33 years awaiting sentencing in new york metropolitan correction facility. sentencing tentatively scheduled for may depending on future cooperation with the government. >> we talked with the author of that new book who thinks more

indictments will follow. that's different than finding out where this money is or went. >> that's true. you expect that more people, again, given the information that dipascali has given them will be indicted. after that, it's just a continuing process of trying to unravel where the money was put and if, indeed, it's still out there. >> twenty years he knew -- >> for 20 years he knew what he was doing wrong. he said at one point he said i don't know how a kid from queens who at 18 was looking for a job, he went to madeoff right out of school, ended up like this. the judge wasn't buying that. given what you did and how long you did it -- >> and how much you profited. >> at one point he was transferring money to buy a boat. they tried to portray him as a family man. people look, here he was trying to help his daughter move in, starting brooklyn law school, when there are victims out there who could no longer afford to send their children to school or

grandchildren to law school yet last weekend he was doing that. >> you've been on this beat. are you trying to get an interview with madoff or dipascali? you should. right? are you getting anywhere and a half no. i actually haven't attempted to have an interview with madeoff. i mean, we've asked their lawyers. >> sooner or later that will happen. why not cnbc? >> good question. i think my colleague scott cohen has been. >> the scam of the century. >> if he would -- if madeoff would say anything else. obviously dipascali in saying there are others, he has names. everyone is interested in who those names are. the government is still working on that. >> mary, thank you. >> sure. >> our guest host used to go by the nickname, dr. doom. he didn't make it up for himself. we called him that in the media. he wants a different name now.

he sees himself as dr. realist. you could have kept that all the way through it. obviously you were a realist a few years ago and now. you see an end to the global recession by the end of the year. nouriel roubini chairman of rbge.com, professor at stearns school of business. >> good morning, joe. good to be here. >> good to have you. we think of some of the forecasts that you made. before all this terrible stuff happenedish obviously, they seemed very pessimistic. many of them came true. but for some reason, i seem to remember you being even more pessimistic. am i wrong there, or have you actually adjusted some of your forecasts? >> last year the debate were those that argued this would be a short and shallow recession, lasting only eight months like the one in 1991 and 2001.

it's been 24 months and near depression. the pressure has been eliminated by massive fiscal stimulus and the financial system. we're already in the 20th month of the severe recession, the worst we've had since the last 60 years. this was not eight months. if it was over by december it would be 24 months, meaning three times as long and so in that time i was quite consistent what i was saying. >> no one thinks -- you don't need to be omniscient to be a great c economist and forecasters. would you admit the policy responses that worked, that you weren't particularly enthralled with at the time, is it fair to say you thought the banks should be nationalized, destroying all equity, because they are walking

zombies. that didn't happen and a lot of people say thank god it didn't. were you at least wrong about that? >> i always argue first of all we need a massive fiscal stimulus, get rid of the mortgage problem and the banks. a number of them are still in trouble. after all, citigroup was not fully nationalized but now effectively owned by the government and many others are under control of the government. there can be the argument specific parts of the program. massive monitoring, helping through liquidity, recapitalize them. let's see what happens. i can still see downside for financial institutions. >> i remember one other thing. i didn't say you had jumped the shark but i was questioning whether you had a right to forecast equity prices. i said, you're an economist, what are you in the business of

forecasting equity prices. that was when the s&p was down on its lows and the dow was down. you thought it was going to go lower. i said, why are you in the business of forecasting that. you were so right about everything else, i think you thought you could do that now, you were wrong about new lows from 600. >> well, i said that we are close to the bottom. >> that's what you said at the time? >> yeah. we were close to the bottom. now there's been a significant rally. that's partly justified by fundamental avoiding the depression, people are going from government bonds into equities. there's been also an improvement in the global economic outlook. there's light at the end of the tunnel, whether the recession is over today or six months from now there will be a recovery. asset prices should go higher. the question is whether too much too soon too fast compared to the improvement -- in my view, a correction. >> is housing a bottom? you were looking for as much as 40% down, the trough in housing.

will we not go 40? >> 2006 was the biggest on housing. demand would fall 60% and home prices 20%. i was way too optimistic. from the peak they fell 80% and also 27%. quantities are so low, they are bottoming out. the government supply and demand is so large, stop producing homes for a year now, take a year to get rid of the inventory. existing home sales, a third of them are distressed, short sales and sales of for closed homes. for closed are going to increase because now there's a moratorium for foreclosure. in my view price judgment will continue for a cumulative of 40%. up for a month but be adjusted, correct for the seasonality, prices are still falling. gap between supply and demand so large, see further adjustment. quantities are bottoming out, price adjustment has to continue.

>> unlikely a double dip or still a chance? >> argue that first of all a recovery, 1, 1.5%. a risk of a double dip because of two things. >> is there a high probability? >> low probability. i think two double digits. first large budget deficits monday advertised by the fed. at some point the bond market especially next year would worry about large fiscal deficits and money division. long-term bond could go from 4% to 5.5 and more, leading to mortgage rates going higher, crowd out the recovery. two, price 30 to 70, demanding back to 2005 level. why? part of assets and commodity all were to go to 100, shock to the global economy would be singular to all at 145 last year when only 145 in the last was a

tipping point for the global economy. massive shock to u.s., europe, japan, china, industry and all. those are the two risks, runaway fiscal deficits, oil prices, energy and food going up too much too soon. i'm not saying that's going to happen. >> we had hedge fund managers on earlier in the week who said the likelihood of breaking those lows on the s&p, one and four, one and three, would you say you're more optimistic than that or not? >> in my view, the crash priced in march has been significantly reduced. >> not eliminated. >> very low given fiscal to financial system. the current level of the stock market, this recovery, the lows pricing in the depression, prices gone up too high too fast and a risk a correction downward, the market on the downside if the earnings

improvement is good, financial institution likely to not show more losses. >> if the depression risk is lower, you think it's unlikely we revisit 66. >> that's unlikely unless there's a severe double dip. if there was a double dip, everything on the table again. >> we're going to have more with nouriel throughout the program. he's going to be joining us for the rest of the show. if you have any comments or questions about anything you see on "squawk," go ahead and e-mail us at squawk@cnbc.com. we've been keeping track of the futures at this point above fair value, not the highest levels of the morning. those dow up 18 points above fair value. when we come back, it is day two of the fed meeting. what are the markets expecting from bernanke and company, go to the future in chicago and find out what the traders are watching. stay right here. p >> time now for today's aflac trivia question. what famous economist said

inflation is taxation without legislation? the answer when cnbc "squawk box" continues. c! 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 aflac trivia question, what famous economist said inflation is taxation without legislation? the answer, milton friedman.

>> let's get a check on the market this morning. ahead of today's fed decision, ire, a harris watching futures and waiting for this announcement. ira, tell us what you think is going to happen and the consensus on the floor. >> the consensus certainly is stay the course. but carl, i think the most important part is going to be what they do going forward. yesterday we heard your program we were talking about the tnbs et and if that market is in as much stress as we're led to believe and i think that it is. and of course the unknown, how high the unemployment rate will go, which will pressure the commercial mortgage-backed market that much more. if the fed moves to push for another year, i think that will be a signal for the market, in fact, to get ahead of that and if they are very concerned about the cnbs and believe there's a lot more stress to come. >> it's hard, 8% delinquencies

by the end of the year. hard to find your way around not extending that. what about language that would thread that needle between saying we see signs of hope but don't get worried about interest rate hikes too soon. >> i think that's exactly what you're going to see. nobody around the world, every central bank holds the course, except for bank of england surprised everybody last week. i think the fed will have to certainly look at that, this is, of course, domestic issues. i think the fed is more domestic centered to most central banks. bank of canada talk about the global situation. everybody else talks about the global situation. i don't think they have enough traction in this economy. i was listening to professor roubini before hand. there's just not enough growth out there looking down the road to warrant any type of move here. >> if, in fact, they let qe expire, the automatic knee jerk

from bonds and equities is what? >> well, looks like most people think the curve is going to steepen out on the long end, that's where whatever buying is taking place. march 17th, march 18th, ten year has only gone higher in yield anyway in its impacts. that to me as a trader i'm going to look to see what happens. the knee jerk will be that. then i went to see where it finishes out. if the bond futures were to rally after that initial break, that would be a pretty good sign as to what the market is feeling about where the economy is really at. so yeah i think you're 100% right. that's where it's going to be. >> quickly, the ten-year note set for sale if people want to stay today? >> you have the auction. so it's held up pretty well. i did some work before i came up here and we're back above the highs that we saw prior to the

unemployment number on friday. so that's doing to be the real test. where she settles out at. i'm looking to see if they announce qe, that's doing to be interesting to see if there's a rally that takes place. >> three cliff hangers a week these days. thanks. we'll talk to you later. >> pleasure. >> when we come back this morning, white house considering a strategic shift in that cash for clunkers program. we'll tell you about that plus why organic growth has gone to sell for nestles. >> publisher of gloom and doom finding opportunities and his outlook for short-term market moves. 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.

so now we've turned her toffee into a business. my goal was to take an idea and make it happen. i'm janet long and i formed my toffee company through legalzoom. i never really thought i would make money doing what i love. robert shapiro: we created legalzoom to help people start their business and launch their dreams. go to legalzoom.com today and make your business dream a reality. at legalzoom.com we put the law on your side.

welcome back, everybody. the white house is considering allowing consumers to use clash for clunkers vouchers toward future vehicle purchases. obama administration reviewing the request made by michigan republicans. it could address concerns about dwindling supply of popular replacement vehicles because people have been going in trying

to trade in, not finding the color they like, make they like. in any event this could address that problem. >> nestle boosted sales forecast with organic growth, paird two-year outlook saying it only sees faster growth in the second half. the weakest ling for the company, bottled water. the division saw volume fall 3.7%. >> the environmental argument. >> comments or questions this morning, drop us a line. our address is squawk@cnbc.com. when we come back, the largest miner, a 30% slide in annual profit excluding writedown, company's first fall in seven years largely on that slump in metal prices. we'll talk about the results and get outlook for commodities, where are prices going, can you do business in china about getting arrested. be right back. mobile broadband.

31 are streaming a sales conference from the road. eight are wearing bathrobes. two... less. - 154 people are tracking shipments on a train. - ( train whistles ) 33 are im'ing on a ferry. and 1300 are secretly checking email... - on a vacation. - hmm? ( groans ) that's happening now. america's most dependable 3g network. bringing you the first and only wireless 4g network. sprint. the now network. deaf, hard of hearing and people with speech disabilities access www.sprintrelay.com. 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.

welcome back to "squawk box."

take a look at the markets thiss morning. see that the futures have been above fair value. right now they are trading higher by about 17 points above fair value for dow futures. don't forts at 8:30 we'll get a look at data that's international traded da data. people are looking for the trade deficit to widen to $28.7 from $26 billion back in may. also later today we'll be hearing from fmoc that comes out at 2:15 eastern time. that could definitely be a market mover. mortgage applications fell by 3.5% according to just released figures. the average 30 year fixed mortgage rose a fifth of a point to 5.38%. toyota will start selling next generation prius in china according to the "wall street journal," despite the fact older versions have sold poorly in china partly because of the car's relatively high price tag. new survey of nation's

economists find clear majority believe ben bernanke should be repointed to another term as federal reserve chairman. the poll suggests there's a 71% chance that president obama will ask him to stay on the job. meantime a majority of those surveyed forecasters say that the recession that began back in december of 2007 is now over. on the average economists expect third quarter gdp to show 2.4% growth. includes manufacturing sector, partly helped by inventory adjustments, strong demand for the cash for clunkers. >> nouriel roubini called dr. doom by some. another soothsayer who earned that moniker, mark faber, gloom and doom report. good to talk to you even from halfway around the world. last time you were with us was

in july. you had just written a letter talking about how the ultimate crisis is still to come. this summertime rally notwithstanding. i assume nothing in the past few weeks, ism, job numbers, productivity, has done anything to change your mind. >> not really. we had a very big move from the march 6 low to over 1,000. the emerging economies we had strong moves to a market have gone up 100% from their lows. but more recently the american markets have become -- in particular russia down, china actually bottomed out on october 31st of last year. in other words before the s&p

has now recently shown weakness. i think this weakness may continue for a while. what we may have is very personal. march to august we have essentially strong asset markets, commodities and equities. but weakening the dollar and now a move liquidity tight somewhat and markets come down. >> it's hard to do this. the connection via the phone just isn't strong enough to hear you clearly. we'll try to hook this up again. i hope you won't mind if we cut this short. it doesn't make sense to talk if we can't hear everything you're saying. we'll redo that. >> marc faber joining us from another planet practically he's so far away. unusual. >> exactly. hong kong, right?

>> all over. >> coming up, we will have more market talks from our guest host nouriel roubini. as we head to break we'll try to reconnect with faber. take a look at the dollar, just talking about it, sounded like he expected a fountain. stay tuned. tomorrow the cure for america's health care crisis. a diagnoses and more than a few second opinions from politicians, practicing physicians and insurance industry at the center of the storm. a "squawk box" summit tomorrow at 6:00 a.m. eastern.

hi, may i help you? we're shopping for car insurance, and our friends said we should start here. good friends -- we compare our progressive direct rates, apples to apples, against other top companies, to help you get the best price. how do you do that? with a touch of this button. can i try that? [ chuckles ] wow! good luck getting your remote back. it's all right -- i love this channel. shopping less and saving more. now, that's progressive.

call or click today.

all right. welcome back, everybody. we're here to get more insight from our guest today. nouriel roubini, professor of economics at nyu's stearns school of business. professor we've been talking an awful lot about how you're looking at the future. you're not nearly as pessimistic as you used to be. we have some questions coming in from viewers. frank from california writes in and says there are some signs china's internal stimulus growth stock market and purchasing of industrial commodities may come to an end. we saw the market fall off a

little bit on concerns of that yesterday. does the country by itself have the ability to throw other world economies back to the brink of recession or at least prolong the recession. >> i expect the slowdown in china. stimulate too much on the supply side, produce more, buy more, situation huge amount of excess capacity, that's a factor in china. the growth sprt spurt us unsustainable for private demand, growing public demand of that's a risk on the downside. first half of the year, maybe a contraction in the second half, push lower commodity prices. certainly there was talk but china driving asia, emerging market, driving market exporters, a slowdown on china everything going to be an additional risk to the global economy. i see a slowdown on china coming up next year. >> the idea of decoupling very strong a few years ago. people convinced decoupling

exist. have the global slowdown and people were convinced there was no decoupling. there is a linkage or a point where the emerging markets go ahead and boom and the rest of the world still have either very slow growth or negative growth. >> the potential growth of emerging markets around 600% are -- they can grow higher than we do even if you are in a weak economy. the economy actually opens a month ago. so dependent on that export so far -- how much they can go is constrained by what's happening. i see them recovering, doing well. unless there is a return to potential growth in advance economies, i think there's going to be something of a limit of the emerging market. >> in other words, we're not there to buy their stuff, in other words, there's a cap. >> yeah. china's model was one of growth,

ore merging market economies, i see weak consumption in u.s., consumption, export, recovery, constrain the growth of china until they switch to domestic private demand. right now that's not happening. they have social security, things that lead them to save lives and spend more. that will take years. >> let's bring in once again marc faber, editor and publisher of gloom and doom report who joins us by phone. i think the connection may be a little bit better. marc, i apologize can you recap your macrocall as you were saying it last time? >> well basically what we had is a bull market in assets in 2002 and the end of 2007 early 2008 and a weak dollar during that time. 2008 was the opposite, strong dollar and all asset markets went down except for bonds.

now 2009 we bottomed out on the s&p at 666 in march and since then have rallied strongly and emerging markets even more, but the dollar was weak. and i expect now maybe for the next couple of months a period of recovering dollar and a correction time in asset markets. >> as the dollar strengthens? >> correct. a strong dollar means global liquidity is tightening. >> is the dollar rally -- is strength continued because the fed -- people will see the fed tightening down the road or because the u.s. is the best? >> well, i don't think it's the best but the u.s. is the least cyclical economy. as professor roubini pointed out emerging markets are more cyclical than u.s. economy they

are like a warrant on the u.s. economy. i think in a scenario where growth will be disappointing, as the emerging markets are kind of vulnerable they became the favorite investment destination by momentum players. and i think we had huge increases in stock prices. a lot of markets have doubled in price between march and just now a couple of days ago, so a correction is possible. but having said, that i would also argue that the worst the global economy is, the more stocks could go up. because we have all these central bankers who are nothing else than money printers. they are dangerous to the health of the global economy. they created first the nasdaq bubble, then the housing bubble, and now they want to create another bubble to bail them out. that's not a recipe for healthy

sustainable growth. >> on the one hand, you can ask marc a question, money inflating new bubbles, you're saying that stimulus was necessary and apparently sufficient to get ussous of the mess we're in. >> in the short-term it was absolutely necessary because the risk of depression. the key is going to be the exit strategy from monetary overhang and fiscal stimulus. if we do the contraction too soon, recession way too long, then expectations next year, you can expect inflation. in the short-term we needed it, now we have to think ahead, when and how and how fast we do it. >> do you have a question for marc? >> marc, you talk about the crisis, something different than the correction. when you think about the crisis, what do you mean by that? >> i think that usually an

economic and financial crisis leads to some fundamental changes and the essential that prevailed before. that's the purpose of recession over depression, to clean the system. but what has happened under mr. bernanke and the treasury in the u.s., it's made the transparency even worse than before. it's bailed out people that have nothing to do with essentially demand on the street and the real economy. it's bailed out the financial system. what does the simple man gain from bailing out all the derivatives market? let the derivatives go bankrupt, then the system is clean. in my view, the big crisis is ahead of us. it may come in four or five year's time, maybe inn year's time, but the total breakdown of the system is ahead of us, and it will devastate the global economy. >> isn't there a chance, though, marc, central bankers could play

this the right way and end up pulling back from all of this spending just in time to prevent the bubble like that from happening? is there any way to smooth out the rough ups and downs you see in a market cycle? >> no, i don't think so. because if we look at the action post 2001 when she slashed interest rates from 6.5% to 1% and left it at 1% until june 2004 when actually the recovery began in november 2001 and after june 2004 they increased interest rates but in baby steps lagging behind the market. and so my view is that the feds and the other central bankers will leave interest rates far too low for far too long and that actually the budget deficit of the u.s., the household deficit will increase from this

year approximately $2 trillion next year, could be $2.5 trillion. >> nouriel, it's easy to say it's hard to teach an old dog new tricks and the fed has been checkered when it comes to this scenario. but bernanke is not greenspan, right? why do we automatically assume he's going to make the same mistakes especially when the memory of this mess is so fresh? >> you would try not to make the same mistakes and he has learned from the past that when we have to normalize, do it faster, not just with baby steps. the trouble is going to be the economy is going to grow weekly and grow weekly, for the fed to normalize too fast would lead to a recession. if you do it too slowly, a risk of another credit bubble, the mistake was done in 2004, 2006. he's going to try to avoid that mistake, but the recovery is weak. too slowly. i think it's a valid point. >> mark, i know it's very

difficult to play the what if game, where do you think we'll be if central banks did not step in and tried to help stop it? >> i think the s&p would have gone down a bit further. in general the system would be cleaned out of the excesses and some investment banks, aside from bear stearns and lehman would be bust. but i think in general, the system would be healthier because the burden on taxpayers would be reduced. so my view is actually either you check the market mechanism or you don't. for the central bankers, particularly mr. greenspan and bernanke, the market mechanism is all right as long as prices go up, except for crude oil. that's the object. but when it goes down, they feel

they have to intervene with the market mechanism. >> would we be looking at major companies gone? would we be looking at an unemployment rate of 15, 16%? >> we have already an unemployment rate of around 16%, discouraged workers are counted in. >> but i guess would we be looking at a much worse scenario or slightly worse scenario? >> personally i think it would be a better scenario. but temporarily we may have a bigger decline in asset markets and no rebounds since march. other than that, i think that actually the system would be cleaned. i'd also like to point out concerning central banks policies, today employment in the u.s. is lower than it was in 1999. so it's basically a lost decade.

in the meantime the financial sector has made billions of dollars and has compensated what i would call largely useless finance years and dealers, which give huge rewards. the simple man in the united states, the typical household is no better off than ten years ago. >> all right, mark. we want to thank you for joining us. nouriel roubini is here and we're going to get his thoughts in a moment. more throughout the show. >> when we come back, ceo of one of the world's largest natural resource companies on his outlook for coal, iron, ore and aluminum, scholar, trader black swan theorist on the economy, markets and where we stand in this economic recovery when we come right back. çñç up next on "squawk box." don't make a trade until you know which stocks are making headlines. joe tells you all the pretrade news you need to know in stocks

to watch right after the break. (announcer) illness doesn't care where you live... ...or if you're already sick... ...or if you lose your job. your health insurance shouldn't either. so let's fix health care. if everyone's covered, we can make health care as affordable as possible. and the words "pre-existing condition" become a thing of the past... we're america's health insurance companies. supporting bipartisan reform that congress can build on.

we have some stocks to watch this morning. start with sara lee. in this case a fourth quarter report, two cent loss includes items so it's not comparable to the $0.24 estimate. the revenue number was just slightly below, actually $3.16

billion, reuters $3.27. reuters at $0.90. the guidance does include $0.19 of contingent sales proceeds on the sale of tobacco business. so we'll see. revenue guided to 12.9 to 13.2. that is below where the guidance -- the reuters was at 13.3. get an idea where sara lee trade. reports preliminary third quarter revenue above expectation 461.3 million versus estimates down to 367 or 377. the stock sharply higher this morning. chairman and ceo bob toll says it appears those looking to buy today have more confidence than a year ago and the price is no longer the overwhelmingly dominant factor, although toll

is not comfortable offering any earnings guidance or updating other guidance. applied materials report add loss of $0.02 a share versus expectations for a loss of $0.08. a revenue number of 1.83 versus $953 mil for an estimate. guided revenues up 10 to 20% sequentially which applies 1.24 to 1.36 above where the street is. that's just over a billion. the company is guiding earnings per share to break even or $0.04 versus an estimate of a loss. common stocks finally, gods maintaining a buy rating following meetings with the ceo and cfo. the target that goldman sachs carries for umbrellas is $180. management remains committed to

the overall business model. this is actually ubs talking about goldman. firm remains admitted to growing business model growing asset model priority given stability. the company continues to have widespread on liquid products and market share gains have not slipped. in the near term ubs thinks buy, consensus to upside, book growth should be strong. ubs adds it does not expect a repeat, though, of second quarter results that goldman had, which were so positive. >> former fed insider on what ben bernanke has in his toolbox. the black swan squawk. principal of universal investments. the author of the black swan will tell us why he thinks the fed chief needs to be. "squawk box" will be right back. . fithe same tools the pros use,ca

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. 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. 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.

doom and gloom to rays of hope. >> it's going to be over, i believe, by december, exactly 24 months. >> will the feds see it that way? a former insider gives options for ben bernanke and company. calling for economic crisis, now calling bernanke to go, the author of the black swan tells us why he thinks the president's economic team has the wrong stuff. ♪ wrong wrong wrong >> prospects for a global mining giant. ceo will give us the outlook on everything from the dollar to measures metal. "squawk box" begins right now.

♪ > welcome back to "squawk box" here on cnbc first in business worldwide. i'm joe kernen along with becky quick and carl quintanilla. chairman and professor at stern school of business. feds wrap up the two-day meeting where nothing is really expected except a policy statement we're doing to look at closely, expected at 2:15 eastern. central bank will keep rates on hold. that will be a shocker. a growing chorus of investors is looking for the fed to upgrade its comments on the economy. fed also expected to announce its program to buy up to $300 billion in treasuries. that will come to an end in september. quantitative easing, lest the controversy, when does the fed pull back on all these extraordinary policy initiatives. futures right now are flat, flat

as can be now, looks like opening up after a 95 point downdraft yesterday and threatening to be the first down week in five. so what a lot of people have been waiting for and hoping for, expecting. that is have you even seen cartoons where the guy -- a portrait, a bear sitting in a chair and he's got a painting of a beautiful bull, almost as if it's a facade, something you want to see but doesn't really have any of the fundamentals supporting it. >> try telling that to money manager to ho got in at 666. >> also sent pernls of people turning bullish. has got almost 50, percentage of bears lower, declining. that's something you should at least pay attention to.

what are you doing? >> looking at macy's, company reporting earnings of $0.02, restructuring charges of $0.18 a share, you could read in $0.20. $0.15 a share. the $0.20 is what they earned versus the $0.15 the street was looking for, does include structuring. chairman and president of ceo of macy's said they dpeeded expectation with strong earnings and cash flow despite lower ; sales. what we've heard from so many companies they made bottom line numbers without meeting their top line numbers. there continues to be very difficult. economic environment continues to be very difficult. in particular they talked about how they lowered inventories and managed expenses to try and line up a little more closely with the current levels of business. second quarter same-store sales we heard about were better than

most department store retailers. most of the transition work in terms of the restructuring is now behind them. >> okay. in the meantime a new survey of the nation's economist say believe bernanke should be appointed to another term as chairman of the federal reserve. polls suggest there's a 71% chance that president obama asks him to stay on the job. meantime the majority of surveyed forecasters says the recession that began in september is now over. on average the economists expect third quarter gdp to come in at 2.4, adjusted annual rate. citing manufacturing sector helped by inventory adjustments and strong demand for cash for clunkers, speaking of which the white house is considering allowing consumers to use cash for clunkers vouchers toward future vehicle purchases. the obama administration reviewing the congressional request made by two michigan

republicans. the vouchers could address concerns about dwindling supply. hard to believe we're even talking about that on some of these popular replacement vehicles. i think gm has a 60 day inventory down from 80 in june. >> no one was ready for it. shar truce and pinks are all they have left. >> i can't see you with a pink car. >> i have a purple car. >> you do? >> a purple cadillac. i don't drive -- i drive it sometimes but it's not my primary vehicle. >> do you put on a dress when you drive it? >> because it's purple? you know the purple one from minnesota -- >> it's a manly kind of purple. >> manly. >> let's take a look at the options the fed may have on the table. we'll hear at 2:15. senior economics reporter steve

liesman is here. what happens? we know they are not doing to mess with the federate what will we hear about the economy, quantitative program, we think it will end in september. we have trader that said she doesn't think they will say that, that they will extend it beyond. >> the survey was four days ahead of the journal. 56% of our respondents said the recession was over or would end in the next three months. >> zero percent chance -- >> i did that specifically -- carl, would you back me up on this. >> he was the hole in the door. >> i said specifically this was the outliar guy that gave us something to think about while 66% of our respond ebts said bernanke would be repointed. essentially, over, we were there on all that stuff. i brought him up -- i couldn't have done it more. i said, look, this is the outlier. >> you're free, you're easy, you

take your jacket off, wild and crazy. >> i'm excited about the fed meeting. in answer to becky's question, thank you very much, i do believe they will -- could end that bond program, projected out. they are going to end this in the middle of september. i don't think the fed thinks they got enough out of it. >> not enough bang for the buck. >> influencing the private economy. >> capital market in the world. >> i mean, it's a really good point. come in with $300 billion. in general as mccully told us, has adopted overwhelming force, 1.25 trillion into mortgages which relative to the total issue, overwhelming force. $300 billion in the context of, a, outstanding bond market and issue was just not enough. ended up being 8 or 10% of different issues and small percentage of total outstanding.

does not qualify for bernanke/colin doctrine. >> knows when to run the other way. >> the guy has the sword. >> push him into a propeller. >> actually the plane came around on its own. >> didn't say look out. >> the guy turned around. >> it was too late. want to get in front of the guy. >> just on part two on the economy, i think they do upgrade outlook for economy, financial conditions which really have tightened a bit, more favorable. the market is up 11% since the june meeting alone. something like 80 basis points tightening from certain bond spreads from the march lows. they have to upgrade that. the question is do they also change their inflation? i think not. i think there are some people that are going to use this upgrade to the economy, say,

okay, inflation is nice. but i think what the fed is going to say unemployment going up for a long time, not change places. i think the idea of being on hold for an extended period remains. one asterisk. the fed could be tightening in terms of drawing back accommodation long before it ends up ever raising rates. two pieces to the puzzle, interest rates and balance sheets, tightening or going neutral. >> when do we get -- in your view, when do we get that first group up from there. >> i was going back and read ag speech from greenspan 2004 in san diego just for fun. he reys the very question, how does the fed do the initial tightening without the market pricing in the terminal rate. in other words, all future tightening is to come immediately, right? that's what this market does. bernanke still has that problem. he's done nothing to solve that problem. the first little bump will cause the market to price in all future and subsequent bumps.

>> 1,010. >> i think it could be the end -- beginning of next year, earliest possible it could happen. but i need to see how much the balance sheet runs off before i can tell you rates rise. >> last time recession over in november kept on cutting risk, two years and a half later, a recession. tightening maybe towards the end of next year, beginning of next year. so it's not going to happen, the economy is not going to bottom out. how could they tighten. >> the new important interest rate not the fed funds rate, the level of interest on reserves. that will be the key that determines how easy or tight the federal reserve is. we have to watch that. we can do a whole bit, explain what that's going to be. i'm not sure the fed figured ow who use it yet. i'm sure they talk about it now. >> steve, thank you. by the way, the decision on interest rates coming on street signs at 2:00 p.m. eastern time, 2:15 is when we get the numbers.

>> our next guest is a big critic of president obama's financial team and thinks bernanke needs to go. nassim taleb, author of "the black swan" making his way to the set as we speak. "squawk box" right back. fideli, 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. 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 have been a tight range, flat as can be, although seen a little pop in the last few minutes as we await the fed decision, 2:15 eastern time. bernie madeoff's right-hand man pleading guilty to conspiracy and other charges in federal court. frank dipascali has been working secretly with the fbi. attorneys are portraying the former finance chief as the man who if anyone can can unlock the ponzi scheme and potentially make cases against other defendants. the judge ordinaried dipascali jailed immediately because generally they let them go, come back for sentencing later. this was a high-profile white collar case and they think they will sentence sometime in 2010. >> jpmorgan chase reportedly looking to sell 23 office properties across the country. the portfolio could raise $23

billion and take the title as the biggest real estate sale this year. >> recent poll putting approval rating behind irs as fed chief bernanke is debated. here "the black swan," principle of universal investment, author of "the black swan" with us. your book has become autonomous, you when you come down. >> time for me to write another book. >> i think the "the black swan" is a cool name. before we start to talk about bernanke and your thoughts there, when you've been on, one of the things that you have emphasized is that what needs to be debt needs to be converted to equity otherwise we've got serious, serious problems still remaining. in the meantime we have seen improvements across most markets. credit markets and especially the stock market up 50% or so. is it all a big -- is it air built on nothing?

>> let me tell you one thing about stock markets. i was a trader for 21 years. anyone taking the market seriously needs to consider the following. you remember the day when liquiditied, the trader. >> the hero. >> the hero in france. they sold $50 billion worth of stock, okay? how much capitalization drop worldwide based on that? >> how much. >> markets went down. the market was $50 billion order dropped markets by 12%. >> okay. >> we lost, $7, $8electrical, a huge amount. tells you don't pay attention to stock market. they are driven by the marginal buyer. it means nothing. short-term markets mean nothing, okay? >> have you moderated your pessimistic view at all since the last time you were on?

>> i'm sort of like a victim of the same thing nouriel, people think a pessimist, just people who see risks and warn against these risks, not necessarily a pessimist. it's a matter of risk and rational stability. i think that the risks that were there before these problems are still there. still have a high level of debt. we still have leadership that's literally incompetent, and i'll explain why later. they did not see the problem. they are not -- they don't look at the core of the problem of there was an elephant in the room they did not identify. they are not doing structural to remedy the problem. the risk is still there. now we're probably worse off than before. let me tell you why we're worse off than before. people talk about employment numbers worrying about month to

month changes with seasonal adjustments. think about it, we have much fewer people employed today with almost the same level of debt than we did before the crisis. okay? blue now we're converting private debt into government debt. okay? so we have more problems today, okay? now, it's not pessimism, i'm warning against a lack of understanding of the disease. the disease is there. okay? now, sometimes you see patients doing very well and they have cancer. long-term i'm not comfortable, okay, treating a patient for his headaches when he has lung cancer. >> the policy officials would argue we see your point but this is a process. if you want to drain a room that's filled with water, you don't bust down a wall, you open

a drain and wait for the water to come down. why can't that deleveraging process take time. i understand -- the problem has been recognized, just take time for it to carry out. >> i don't think the problem has been recognized. i truly don't think it has been recognized, no more than lip service. i don't think structural changes have been addressed, okay? nouriel warned a high level of debt, so on, they seem to understand the high level of debt. at the same time we're converting private debt into massive government debt, with more and more reliance on forecast errors. can you imagine if we have gdp growth, what will happen to government deficit as a result of gdp? doesn't look like they are fully aware of the problem or  overlooking it because -- >> talk about spending they are doing now to try and offset this massive correction and this

massive downturn in the economy. you're saying it as they are not going to know to pull back. they won't stop spending, free money. >> they are not doing the cure. they are not working on a cure. when you have cancer, sometimes it hurts to remove the tumor, okay, they are not working on removing the tumor. i don't know what nouriel thinks -- >> i agree this was caused by over leverage and we need deleveraging. we're socializing private losses and now we have massive deleveraging of the public sector. the fiscal policy and monetary policy we talk about the recession we'd be talking about a depression. the problem i have as you correctly suggest, these monitors cannot go on forever. that was a mistake in the great depression. we're now having to pay the cost of all these fiscal stimulus and

monetary overhangs. it will be painful. part of the response was a correct one, correctly saying deleveraging of the private sector. >> why don't we get more aggressive. i disagree with nouriel on small points. he sort of has a weakness. he likes bernanke too much. other than that we agree. why don't they start the process of converting debt to equity? >> that's important. i would reduce the value of the mortgages and get the upside to the banks to get the convergence. i would have done more of taking secured debt of the bank and converting liquidity as opposed to government capitalizing banks. we need more impressive infrastructure in the corporate sect or, part of the deleveraging. still we need more than the fiscal. >> let's talk about bernanke, then. you saw nouriel's piece. a lot of people were surprised, we saw pro and con for

reappointing bernanke. i said let me read nouriel's reason for not appointing him. i had to read again. you were the opponent for reappointing bernanke. >> who was on the other side? >> anna schwarz. >> that was pretty compelling, too. nouriel said a lot of things the government did avert add depression. >> that's not the way i look at it. we have to look at who got us here. the problem with the obama administration is they have been rewarding people who got us here. you have summers, geithner and bernanke. let's talk about bernanke. bernanke supervised -- people blame greenspan. you have not seen what bernanke did with his great moderation. he supervised the build up of hidden risk in the system. financial derivatives, all that, he supervised. he completely ignored it, okay,

when some people, including nouriel were warning him. he completely ignored it, doesn't understand the mechanism. bernanke belongs to a school of economics that's not in sync -- probably never in sync with anything but not in sync with a complex system. so he did that. the problem with the current administration warning the feds who got us here, giving more power to the fed and increasing dependence on the fed, to me is a huge mistake. you're like rewarding failure. we are -- by having bernanke there, you're rewarding-e ½010,

okay, you have a bigger tax break for those who make mistakes are rewarded, those who did okay are penalized. is this capitalism or not? finally they are rewarding the bankers. the bankers are playing a larger role than they did before, the bangers are playing a bigger role instead of penalize them. the obama administration has been setting a horrible example with bernanke. i'm sure that anyone in place would have done the same thing, if not a better job, in the subsequent, you know, unfolding of the crisis that you know. >> editorial "new york times" i spoke about the mistakes bernanke made including his approach to the greenspan deal, many mistakes made.

after 2007, actions were very aggressive, conventional, and he's learning from the great depression experience to avoid another great depression. i give him credit for doing that. he made many, many mistakes, with those policy options avoided it and in march we were in a situation. give credit. too little too late, but eventually they got it right. >> it's like saying here you have someone who drove a school bus blindfolded, then had an accident. and then after the accident, he did not have an accident, all right, because he did the right thing. then you're rewarding him for not having had an accident. >> we have to be out at 24, 35, can anyone run the fed in an answer. >> we've got to go. >> volcker, why, 82, i trust him

more than bernanke. >> we've got to get out at 24. thank you. we'll see you again soon. >> thank you. >> when we come back, futures check and breaking economic news. 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.

we've got breaking economic news coming up. international trade data numbers in just about three and a half minutes. hot commodities, ceo offering

his unique outlook into the state of the economy. "squawk box" will be right back.

all right. breaking economic news on the way. international trade, rick santelli and john brady in

chicago, also steve liesman here with us in the studio. again, we're looking for the trade deficit to expand. about 28.7 billion dollars. why don't you give us the actual number. >> 27.0. in between an unrevised $26 billion, which by the way was really like $25.9 and it was the smallest deficit in about ten years and the expectations of close to 29. so $27 billion is the number. response in the marketplace, to the too much, hovering around 366 for a ten-year yield, up slightly in dow futures and s&p futures. exchange dollar under a little pressure, no move. plenty of things to make the market move, options, fed, statement, quantitative ease, yes or no we'll see a lot of this happening today. back to you. >> rick, stay there.

let's get more reaction from steve and john. anything jump out at you? >> i need the inflation-adjusted number. wholesale inventory data yesterday that suggested gdp would be worse. this may end up being better than the expectation in terms of what the bea dialed in. might mean an improvement. it will wash out a little bit. got to find the adjustment number. i am looking imports were higher, exports were higher. it suggests perhaps a stabilization in world trade. what's happened with the recession about the in the united states and being global is world trade one of the engines of the economy fell off the cliff. what we're looking for is some slight growth or stabilization to say, you know what, it's not worse. nouriel wants to weigh in here but the idea that maybe we're

getting a little stability in world trade is a positive. >> that's the positive, definitely, imports global in asia and europe and so on. i would say they are sending up the trade balance to continue over time likely going to go out be a negative contribution to economic growth. just because minus -- that's going to be a signal that trade is not going to be adding to growth looking ahead. >> that would suggest, rick, we solved nothing. we go through the whole process, come out of a process where global imbalances really helped get us into the mess we're in. we come back and go back to old ways of drinking and smoking and womanizing, rick, which you know all about, importing capital, importing goods and everything else. we go right back to that old thing and got it solved. >> i don't know if i would use the word "solved." i completely understand what

you're describing. >> good. i don't know if anybody does. >> i don't know if there's a problem. these things tend to work themselves out. not that many years ago most economists were so upset about the huge trade deficit. be careful what you wish for, the dynamic to shrink it almost 35%, 40% of what it once was at its worst level. was it worth it? >> i guess i dispute these things work themselves out. i think the huge u.s. deficit was a result of policies, government policies around the world. for example european wanted to run an export-led economy. so does china and arab. the big question for ten years, who is going to eat the u.s. trade deficit. the question i'll pose to nouriel -- >> spend less, trade deficit,

super countries, china, japan, asia, global economic growth, over savers spend more, others less. asia, china, occurs, drop capacity globally -- >> john, i want to get you in, too. obviously the market reaction is a little muted to this. there's going to be a lot of attention paid later today. what are you hoping and expecting to hear? >> two things, becky. first i want to address steve. i think steve is a bit mistaken here. if you look at data, dollar imports especially regarding imports in the month of june, it looks like import goods, are softer than what policy matters and economists are expecting. with regard to fed, consumption, consumer spending is the

upstated but large element in the room. there's been lots of joint financial markets recently regarding a rather mixed employment report at best last friday with consumer spending and consumption will lag and lag tremendously. really the folks on the market today we think will be on the fed easing. set to expire around september 5th. next fed meeting is september 22nd. in the spirit of openness and transparencies brought forth by dr. bernanke, the fed will address that. given the balance of risk, both in employment and consumption, we think there's a possibility that they may extend quantitative easing in a measured and modest way. >> steve, you probably disagree with both things john said. >> it's an interesting thing he brings up, non-oil imports, which is the number i'm looking for but can't find it. that has been relatively weak. john's point if it's from energy it doesn't count. all we're doing, picking up on

what nouriel is saying, we end up having the same saver versus spender imbalances we had before. there's a theory that says a lot of this whole financial mess started with that global imbalance. the whole idea was to reintermediate funds of saefrs back into the un. reminds me of what the head of risk management for deutsche bank for derivative said one time, we got done lending to everybody who was creditworthy and we still had money left over. that was a result in part of the imbalances globally. what i'd like to see is progress either if it's oil or non-oil, put progress put us back into shape, into balance. >> who do you think will make this, congress come up with the perfect rule to change these balances in a way they see proper? >> i actually don't think the on us is on the united states but on other countries when it comes to them running policies that would tend to spur internal

consumption, china, japan, europe. i don't know if nouriel agrees with that. >> talk about turning a barge in a small waterway. you're turning china from exporter to importer. that's going to take decades. >> more than broken down, consumption u.s. unless sweep growth model from export to private demand, there is a growth problem ahead. that's the challenges in china. >> create the social net that would make them comfortable enough to spend. >> the private plan actually says we're doing to have social security, health care, public infrastructure spending, education. you do all these things, chinese will feel safe to save less and consume more. it's a five to ten-year plan. they can do it, they need to do it because the u.s. consumption won't be there. >> i would add to dr. roubini i think policymakers are cognizant and aware for the potential for

retrenlgment in china, what that would mean for global as well as domestic growth in the u.s. if china has a recalibration, lower equity prices, bank lending continues to constrict and china consumption pulls back there are somewhat dangerous affects that could over take the global economy 2010. mix that in with higher fiscal and tax policy in the u.s., a weak consumer, perhaps a weak labor market, i think policymakers will remain concerned. >> john, thank you very much. rick, good to see you. nouriel with us for the rest of the program. >> quick check of futures as wets that trade deficit number, did edge up slightly for june as imports rose in this country for the first time in 11 months. some taking that as a sign that the worst recession since world war ii is beginning to loosen its grip on the economy. meantime php out with preliminary results for 2009. joining us from london is marius

kloppers of bhb billiton. over the 12 month period you've gone to where you couldn't supply rapid demand to can't give products away. where are we in between on that spectrum? >> i think we've seen a dramatic pickup in china fairly early on. part of that was restocking. part was real consumption based on very loose monetary policy. in the rest of the world, u.s., europe, japan, i think we sort of stabilized but starting to see a little luck but not much yet. >> going to be, obviously come in fits and starts. people are now looking at the baltic dry in deck, down nine out of ten or so sessions. lending in china is looking a little worrisome. to the degree china was, in

fact, stocking the shelves, do you think they are done? if so, for how long? >> our view is that they basically are done restocking. from our perspective, though, as a commodities producer we do see japan, europe and the u.s. starting to restock very, very low base. but that restocking will happen when the rest of the world is not destocking. we're actually looking for some stability over the next 12 months. >> where is your outlook on the dollar? we're obviously worried to some degree about what the next 1 months bring to the green back. have you got a forecast? >> not a lot of insight here. but what i can tell you, just saying the weight of money into commodities, the way the commodity prices have reacted does seem to indicate to me a further weakening. >> you think a year from now if we have you back on this program and we talk about pricing, you think it may be lower than it is

today. >> feels that way. >> we're all obviously watching the soap opera that continues between china and rio. i'm not sure how much you want to weigh in here but it's hard not to ask you if doing business in china right now is dangerous, whether or not it's about your own executives being arrested or having the country say you're overcharging us by $100 billion. you can say that because we're the biggest buyer? >> yeah. obviously something i wouldn't say, we're not watching very closely. on the ground, though, ironically i would have to tell you that it's basically business as usual with us continuing to sell product at a good rate over there. now, obviously it's a situation that we continue to watch with interest. >> mr. kloppers, this is nouriel roubini. while you can be bullish about commodities, the global economic recovery, isn't there a risk there will ab correction in the second half of this year,

stocking or destocking, bought too much at low prices, softness of demand in the economy, could there be a short correction of commodity prices? >> yeah. mr. roubini, we probably share the view and we said in february that china was going to start restocking. a couple of months later, restocking is essentially complete. in the commodities business, people don't pay enough attention to what is underlying demand and what is purely restocking. i definitely believe china will pull back on the restocking because it's basically done. what we've got to think about is how if europe and the u.s. does start buying a little bit because they have destocked as well, how that plays into prices against a backdrop of where nobody is actually destocking anymore. i'm probably not as pessimistic but i certainly don't see any po

tense for dramatic sparks or anything like that. i would say it's steady from here onwards would be our view. >> i'm sorry to go back to a point on china and rio. you said that you are still selling at a very good rate to china. was there a significant difference in the price you were charging and -- >> not really. if you look by and large at our financial results as far as i've analyzed, prices might have differed by a dollar or two. but by and large the company has the same price. from our perspective that doesn't seem to be a factor here. >> why aren't you more worried about what they might tell you. if they have basically accused rio pinto of espionage, do you think they will drop calls and claims or are you worried they will come after you next? >> difficult obviously watching

this with some interest. but quite difficult for me to comment beyond that. >> especially since we know they are watching right now. at least we're on the air in beijing. marius, good to see you. thanks for stopping by. marius kloppers head of bhp, head of london stock exchange. more companies checking in to earnings central, including macy's, cash, his view from the floor and the fed when we come back.

how things change. welcome back. check out macy's, initially up 3%. a lot, you read the commentary today, they see shares up after reporting better than expected results on better guidance. now the stock is indicated lower, $0.20 a share, a nickel ahead of expectations, raised full year profit forecast from $0.78 to $0.80, analysts at 79. we'll see. the market hasn't opened. toll brothers reporting preliminary third quarter results this morning gave us some revenue numbers, luxury home builder said it sold more units for less money, contract rose, but value in dollars fell

5%. initially i thought toll brothers was called up somewhere around -- clearly should have used, didn't ask, 22 and a quarter bid, 22.35 ask. showing that charge, indicated up about $1.70, which is worth noting obviously. >> all right. the bell has yet to ring this morning. already the traders are buzzing about the fed's decision coming this afternoon. we'll get the view from the nyse floor next. before the break, a quick look at the dollar. down but just barely for the dollar index. "squawk box" will be right back.

here's a story. electricity prices are plummeting in this country. the front page of "the journal" today, demand across the country falloff in large part because of the economy. the sharpest demand drop in more than half a century. as a result, spot market prices were down 40% during the first half of the year. so, joe, we can do cap and trade. i mean, it might raise people's electric bills, but they're coming down, so what's the harm, right? >> you know more about the

rationale than i. it's a toothless bill at this point, right?ññ >> i would say it's not really very constraint what they're doing. it's soft. >> the bigger concern about energy prices coming down, electricity prices coming down, is that deregulated markets in the midwest and the south will stop building new plants because it makes no sense to build when prices are so low. >> then at some point -- >> the collapse in price suggests how the economy -- we're using commercial and residential. the weak economy -- >> the price of oil is based on natural gas and facts like this. it seems like there's something rotten in the market, $70 a barrel. >> $30 to $70, 2005, inventory at an all-time high. it doesn't make sense. it's part of the bubble, that's what i'm worried about. oil prices rising too soon. >> let's take a quick look at the futures.

dow futures just about nine points above fair value. we've been watching these numbers ever since we got the trade deficit numbers which were not as light as expected. $27 billion, higher than the $26 billion in may but not as high as expected. joining us from the floor of the nyse is art cashin, director of the floor operations at ubs services. art, we're already talking about what to expect from the foac, what they're going to say about quantitative easing. some people will say they will tell us to if get it. others think, no, they're going to say that they could extend beyond that. what's the handicapping on the floor? >> let's touch on the lie detector test industry slump. we've had cooler than normal temperatures with no sunspots around. air-conditioning is not being used as much. that's also a factor built in there. i think everybody is of equal mind with our good friend kevin ferry who thinks that the

statement is too tight a format for the fed to get across a full message. so they may invite people separately to go over to the fed website and get a hint of where they are. away from that, i think much of the crowd down here leans with steve liesman, that they won't be too quick to move things off the table. they may cut back on some of that bond buying, and that they will also say some things about paying rates on reserves that may be more meaningful. >> you seem to be implying that the sun has something to do with the climate here, art. you're not one of them there deniers, are you, flat earthers? >> listen, i'm in the christopher columbus society of the flat earth group. sun spots have a multi-thousand year record of being in collaboration or coincidence with changes in temperature. >> we pumped a lot of co2 in the air in the last eight years without getting much bang for

our buck in terms of warming, art. >> well, i think it would be pretty simple to do given the billions of dollars being thrown around, to put up a couple of $100 million satellites and semi synchronize orbit and get a feed coming off from the sun and the other one up there testing the general global. 1997, it seems to be slipping. sun spot maximum. >> you may find something out. that would be against the religion. you don't want to do that, art. >> okay. >> art, good to see you. talk to you tomorrow. when we come back today, final forecast in our guest host. is it going to be partly sunny or mostly cloudy with a chance of showers?

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.