later they update the key programs. that's what they've done. >> the futures looking pretty weak. as you can see, down $18.40.. we do get a break. fair value is minus 3.60. still, it's going to be a big drop at the open. 130, 1040 points on the dow. >> another thing crossing, on the news alert, foreign buying of u.s. securities, u.s. assets. 100.5 billion of u.s. treasuries in the month of june.. that's the latest we have. net buyers of $100 billion on treasury which is the number people hone in on in particular to see if there is an appetite for foreigners of u.s. debt. rick santelli will have more of them. oil prices though up. we wanted to highlight this on this down day. down 2%. we had been right around 65%. we're off the low of the session. none the less, this is concern about the economic recovery. and also, the new concern, it is the middle of august, mark. that's the heat of hurricane

season. we're watching the radar closely. tropical storm claudette. remaining well clear of the gulf of mexico, as you can say the gulf of mexico not anywhere near the key oil installations. first hurricane of the season in the works. bill racing through the atlantic oceans towards the caribbean islands and expected to become strong. bill. >> is there -- there must be a different naming -- >> for boys and girls? >> i mean, claudette tape firca and bill came second? >> i don't know. investigate. >> let's find out how this morning's news is playing out in premarket action. everybody is standing by to bring you up to date, starting with cool breeze here at the big board, bob? >> good morning, mark. futures are weak but off the lows. gdp grew first time in five quarters. sell-off in asia following through to europe. terms to news on stock.

lowe's disappointed on the top and bottom line. guidance for the third quarter was below expectation. here's the most important thing. sales growth, overall sales growth for stores will be slowed dramatically in 2010. they're not going to open as many stores.. that's good news for them but indication the growth isn't going to be there. capital one financial, they're down 4%. we came out with august -- with the july credit card delinquencies and still seeing an increase in credit card defaults and delinquencies overall. big bank is going to issue $150 million in common stock offering. good news in general to help them improve the common stock position. stock is down 3%. general weakness in bank stock. matt nesto, how are we at the nasdaq? >> horrible, bob. it's going to take a care for cancer to get market to move at the open. take a look the premarket indicator. 1.3% lower on this session. your big guys, apple, google, microsoft, all down 1 3/4%.

right now some of the other premarket active stocks looking at dry ships down about 4%. that's an energy play. huntington and e-trade lower here 5%. and charles schwab down 2% today. the company firing back a letter to new york attorney general cuomo saying they're disappoint we'd the threat of a lawsuit there over option rates, securities. dell down 2.8% here today. it is latest to enter the smart phone market in china, via china mobile. lastly, idcc down 27% here today. a ipc international trade commission judge ruling they did not infringe, nokia did not infringe. the market is voting down now. let's get over to the nymex. >> empire state numbers gave a bounce but we're still down 1.15 when it comes to oil. two days, erin touched on it.

first bill, claudette veering off. global equity sell-off and a strong dollar. that's why we're weak right now across the board when it comes to crude. although i can tell you we have moved better in the last few minutes. i want to look at the whole complex as well. natgas and heat across the board. natgas had a tough go of it for a while now. the bears firmly in charge there. quick look at gold as well.. that more of a firm dollar play in terms of sell-off. clearly that is weak as well. silver, percentage wise, the absolute biggest loser of the day. keep an eye on dollar and equities. the radar here, erin touched on it, when it comes to weather, still a factor. one trader told me just over done, could even though we responded to the upset, could be a route today. keep your eyes on that. rick, how is it in chicago? >> we just saw treasury energy capital flows always two months in arrear which makes this june

data. look at net long term at $90 billion, shows good sponsorship continues in treasuries. of course, look what happens. today the story is equities down. where do all investors aim? what have we been conditioned to see? treasury complex and the dollar being flight to safety.. look at the short-term investments to include things like t-bills, minus $131 billion number. that doesn't upset traders too much but they continue to monitor both net and, of course, including short term. if you look at the empire data, steve's been saying, supply side, improves. manufacturing, fancy way to say when you run out of inventory, you make more. the real story is what happens to those and what's happening in the service sector and that is the consumer just is not aggressive. now, let's hop across the pond to see what kind of currency damage we're looking at on the pound. our guy johnson. >> rick, the pound story is absolutely fascinating. move, governor of the bank of

england indicating the uk economy simply cannot wear a strong pound at the moment. there's a lot of talk about the fact that the central bank is behind weakening process. kind of goes along with what was said earlier on. the the equity sell-off is is a big story. we've got most of the main european markets trading down sharply. london down by 1.7 cac in paris trading down 2% at the moment. frankfurt is down by around 2% as well. let me show you thexx 600. we are trading just off session lows. we've got a liquid in the last hour but never the less the stoxx 600 is still down by 2%. what everybody is talking about is this double talk formation on the chinese equity market. that seems to have got the technicians very, very excited. going to be with christine in a moment. let me tell you as well the bank out of sweden is bracing another $2.1 billion capital raise today. european banks are not done raising capital. the world's third largest clothing retailer missing sales

numbers in july. that's dragging h and m down by 1.9%. the story really started it seems out in asia. let's go to christine for an update on what happened there. >> sell-off here in asia as they react to the poor u.s. confidence data on friday. the tokyo market lost 3.1%, pulling away from ten-month high struck on friday. analysts say the recovery in japan could lose steam once the stimulus package wears out. the shanghai market datanked. all that optimism about china leading the world out of a recovery gave way to concerns of rally has been over-done. bear in mind, this market is still up some 60% for the year. hong kong bore the brunt of the sell-off outside china. hang seng, 3.6%, steepest drop in 4 1/2 months. china led thes loes in the hong kong market.

sok south korean market is down. indian market is down. sending it back to you. >> thank you very much. up next is bon voyage to the travel channel? julia boorstin has the answer. and then, can we kiss that summer rally good-bye or is this just a pause? word on the street and buzz from beyond as we're getting you ready for a very big market monday. dual sector spotlights in that vain. we'll be right back.

you're watching cnbc "squawk on the street" life from the large e.r.est financial capital of the year. >> we're back. the white house is going to drop the idea of giving the americans the option of government-run insurance as part of the new health care system. administration officials are now leaving open the chance for compromise with republicans that would include health insurance cooperatives instead of a government-run plan. under a proposal by senate budget chairman ken conrad, consumer owned non-profit cooperatives would sell insurance in competition with private insurance companies. >> another headline to watch. citi group says two traders are

exempt from government review of top executive pay packages. now, you know what at the end of last week that citi and the other bailout institutions that received 2 or more injections from the government had to submit compensation plans for their highest-paid executives. now, the "new york times" reports citi group told the treasure roy department that andrew call, commodity trader at a subsidiary, that his $98 million pay package and inside trader paid more than $30 million last year were exempt. now, why, mark? >> i don't know why. >> the contracts were signed before the federal cutoff date of february 11th. obviously this is an issue which is not a simple one. how about that? >> pay czar kenneth feinberg says he has broad and binding authority over executive compensation. in an interview this weekend, he says this power includes the ability to, in his words, quote, claw back money already paid but

he adds, his weighing how and weather to use that power. >> oh, the claw back. >> that would be interesting. >> there is going to be much more to come on that front, no doubt. but cox communications is considering acquisition offers for the travel channel. does not mean the company is saying bon voyage though.. let's find out what the story is. julia boorstin joins us with some answers. julia, who is the one that i like there? samantha brown, i love her program. >> well, erin, cox communications made it no secret that it is interested in selling a majority stake of the travel channel and sources tell me bids are due tomorrow. cox is the third largest cable company and official says whether or not it will sell the channel, my sources tell me media giantss from cnbc parent company nbc universal are all considering the acquisition.n. >> cable networks have been the most defensive part of the media

industry, looking at film, looking at broadcasts, and therefore a lot of companies want to focus their capital. i think time warner and skips are best poged to do it because they have the strongest balance sheet. >> time warner has $7 billion cash on the balance sheet and majority of the operating income from the cable networks incruding cnn, tbs and hbo. 93 million subscriber asset the travel channel is worth somewhere between $700 million and $1 billion cost engaged in goldman sachs, evaluated to options. they received unsolicited inquiries into the travel channel media.a. what an acquiring company would do with the travel channel which has been working to bring down the average age and boost the ratings. another challenge for this sell is that they want to obtain a stake for tax purposes a negative for potential acquires. that could drag out negotiations. mark, cox acquired the travel xanlg in 2007 from discovery communications when it valued at

$1.2 billion.n. part of a larger transaction. we'll see if they end up selling this at a profit.. back over to you. >> thank you, julia. up next, the word on the street, the buzz beyond the trading floor. >> and the biggest event of the year for federal reserve insiders, steve liesman must be shaking in his underpants. ben bernanke and friends meeting at jackson hole this week, from washington to wyoming. we'll tell you what's being heard on k street. this is where steve gets to see the moose. >> i know. >> we'll be back.

you're watching cnbc's "squawk on the street," live from the financial capital of

the world. >> all right. let's take a look at the futures. right now they are down significantly. 20 points. we've sunk a little bit since the last time we checked. we are looking at a decline of 125, 130 points on the dow at the open. and here to tell us exactly why, art cashin, ubs. what's going on? >> chine? >> china? >> china. i think the big push is the strong dow is developing about the validity of some of the chinese data, whether it's apples and apples and whether you can compare it and whether it's change fpd shanghai index was down 150 points on the dow. that makes it the focal point of interest to me. add on the fact that the chinese need the american consumer who looks like he's gone on strike. so we have other problems in the wings. i think it's primarily out of

china. >> i saw the same-store sales from lowe's and they were certainly atrocious. >> with all due respect to lowe's, i don't know that they would cause 150 points. we were down well before those sales came out. >> coming on top, i think why i find this significant is it came on top of some disappointing consumer sentiment numbers. that side of the equation is starting to kind of lean a little negative. here's the question though. is this a squall or is this the beginning of the correction that many, many people have been calling for?r? >> for now it looks like a pullback but there are certain indicators that tell me volatility is going to increase and possibly increase very sharply over the next four to six weeks. so we'll know a little bit better by the end of the week. ramadan comes on the weekend. we'll look out and see if there's any geo politics or currency war or trade wars. >> volatility, at least it makes our lives interesting. >> all right.

thank you, art cashin, from ubs. have a great day. let's get back up to erin. let's get the buzz from beyond. steve whmassocca is with wedbus morgan.. volume may not be so hot given where we are in the month of august. that could mean of any downward drift becomes rather dramatic, right? >> well, yeah, i mean, you're playing with sort of 3/4 of an audience between now and labor day, for sure. so that will heighten the volatility in the market. and you've also had a massive move in the market from, you know, early july to today. so getting some kind of pullback here seems very natural to me. >> and natural but to what extent? >> well, you know, i think it's fairly healthy, you know, correction probably, i don't know, 10%, something along those lines. maybe a little bit more. i mean, it seems pretty certain that things are slowing down china.

china has been a big part of the engine that's driven this. you have the shanghai index down multiple percentage points again today. gdp miss in japan. so, you know, the good news coming out of china seems to be coming to an end. and that's a lot of what propelled us off the lows in july. >> and so between now and the end of the afternoon when i know i'll be talking to you and art cashin to check in on this big market day, what are you looking for? >> well, i'm looking for the market to go down. it can continue to go down. we're going to open somewhere down 150 on the dow. i imagine we'll stay there. we may even get to down 200. i don't know what news will is between now and the middle of the day. but looks pretty clear to me we're going to have a down day today. >> well, we'll see you this afternoon. steve, see you this afternoon. steve massocca from wedbush in spra san francisco. people expect august to be quiet. this is not quiet.

>> don't wander off. this is going to be an interesting morning. 

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all right. we're back. you are watching cnbc's "squawk on the street" live from the financial capital of the world. the opening bell going to ring in, carry the two, about 2 1/2 minutes. >> say carry the two and just do a little flash multiplication? >> it's a 60-base not a 10-base, so it's a little harder. anyway, the futures are down. they stopped trading, down 19.30. and it's about 120, 130 points on the dow. >> we'll see where that goes. a couple of things i'm looking at, when we were talking about the purchases of u.s. assets. now, rick santelli noted the key

point which, of course, is data is always a bit dated, pun intended, that would be back in the month of june. one thing was in it. overall, you did see foreigners buying u.s. treasuries, which was the most important take-away. the breakdown is the two largest holders, china and japan, china dropped and japan popped. >> dropped. >> they actually net sold u.s. treasuries. 25 billion of them. a drop of 3%. japan, though, an crease of 5%. they don't own as many as china. netted out to be about the same. nothing to be concerned about probably when it comes to china. looking within the da you get a sense. on that shanghai market everybody is talking about, i think it's fair to point out, mark, a lot of people have been talking about this for the past couple of weeks. remember we were talking agent the ipos and how they had been over-subscribed and what was it, hundreds of times?? >> yeah, 150 times, yeah. >> pretty amazing. we raised the question of concern there that market had

double sod fd so far for the ye. yes, today was the biggest single day drop on a percent sage basis for them this year. >> looks like a double top. >> it's off 18% over the past two weeks. is this is not something which started today. it started bit by bit. now finally attracted the notice of traders around the world. >> check out what's going on with the u.s. dollar.r. bring up the dollar index. you see how it kind of bottom there's at the beginning of august? has since started to rise. many traders kneel that there's a correlation between the dollar index and the dow, as it came down, the dow went up. >> right. >> march, april, may, june, july. now they're afraid the dollar is going to rally off that august bottom and so that is also contributing to the anti-stock sentiment, if you will, because a stronger dollar. and don't ask me why, it sounds like good news to me.

but stocks have been trading contra the dollar for the last six months. so, anyway. >> here are the bells. >> here at the big board, ersa, ticker irs. that's not a good ticker, guys, irs? >> oh. >> and celebrating the partnersh partnership. we just linked up with the irs. and at the nasdaq, the cme group, ticker cme. interactive brokers group. >> that is one of those things where, you know, you don't always realize what an acronym stand for. i'm sure we do it in other countries all the time. to the market reporters, we are open just about 120 points. bob pisani.

>> and futures were lower earlier in the morning, believe it or not. important thing here is gdp in japan, was up for the first time in five quarters. japan was weak, china also down nearly 60 cents. we're down 15% in china. here's the crowd for lowe's. opened down 10%. down $2.75 right now. more important, store growth in 2010 will not be as strong as s some people anticipated. also, comparable store sales for 2009 as a whole, now expected to be down 7% to 9%. that's that important where are you going to get the top line growth from. can't keep cost cutting all the type. comp store sales 7% to 9%. previous guidance was 4% to 9%. capital one is down a little bit here. they came out with a credit card numbers for the month of july here. sequential increase in credit card default and delinquencies is opening down.

tradertalk.cnbc.com. how are we, matt, at the nasdaq? >> a little worse than you. a little bit liquid and early today. we're down a full 2% on the nasdaq composite index. bing, bing, bang, boom, four to six days lower here today. definitely headwinds in the trade in the market here today. apple, google, microsoft all down a little bit less in the market in the case of microsoft here today, but apple and google clearly lower. look at,-trade down 6.7%. that's interesting because schwab clearly ready to do battle with andrew cuomo answering back a suit he's threatened to file. the language isn't pleasant. it's holding up fairly well given the magnitude of the financial sell-off today. interdigital down 25%. international trade commission law judge ruled nokia did not

infringe on the patent. they're going to appeal and protest that situation. dell is going to enter the handset market. all very vague and loose right now, but china telecom spokesman said they worked out some sort of a deal here, china mobile, excuse me. mini 3i will be the newest handset. weakest in the nasdaq was garmin, down 1.8% today. they are in talks chasing a company called way marine which does gps, as you would expect.. let's get down to brian shactman at the nymex. >> we weakened 30 cents since mark gave an interesting take in the correlation of the equities and the dollar. the dollar is a factor here. equities, the storm, empire state manufacturing gave us a little bit of a reprieve. generally speaking, the last two days, down 5%. at the moment, down $1.79. it's a situation where traders say, see how that $65 level is defended. we might know a little bit more

about that in a little bit. overseas, brent not getting hit quite as hard, although down. that spread between brent and nymex widening just a little bit. natgas, seven-day losing streak. at one point it was going to end but trended positive and now back in negative territory. a lot of traders are saying that is tread trading on fundamentals. metals in general all in the red. gold around that 930 level. keep an eye on that. silver is getting hammered.. dollar index all over the place. rick, how you stand? >> i think i disagree with the market but i think i don't thin that you want to be looking at the dollar to figure out where the dow is going to go. you want to look at the dow and figure out where the nervous investors are going to go. when they're going up, they're brave. when they're going down the dollar and treasury and sovereign debt internationally look much better. indeed if you look at yield in the u.s., a ten-year for a while was making a dash for the major

trade under 3.50 but not the case now. as a matter of fact, 3.50, we've been there within the last few weeks. we've been close to 330 level the last couple of weeks in britain. excuse me, in the euro zone. it's about a 5 1/2 week low yield in the uk. and that makes sense. they have a lot more issues regarding their government dabbling in their sovereign markets.s. it's going to be very interesting to see how the spreads move because when treasuries rally because of the equity downdraft, you're seeing all the spreads, corporates, junk, everything, isn't keeping up so theed sfraeds are widening. >> rick santelli, thank you very much, sir. stocks down at the open. dow down 155. 28 of the 30 dow spots are lower. is this the end of the summer rally? lord knows we've had enough h people telling us that we came too far too fast and all that stuff. joining us, bernard beall and

tom lee, u.s. equities strategist with jpmorgan. bearish? >> well, i'm teddy bearish, i guess you could say that.. >> that's a new technical term. >> you know, i think the market has gone a little too far. if you look at where we are right now, we're about halfway back from the high of march of '08 to the low of march of '09. we're about halfway back there. kind of like a u-shaped recovery. we're going to see a little retracement back if this may be the beginning of it here in the summer. i know that my colleague, tom lee, has been bullish for quite some time. i respect him very much. but i think that consumers are still sitting this one out. we need them in order to have a full recovery.. >> tom lee, where do you stand? >> you know, i think this is a very healthy correction.. for those investors who aren't fully invested, as you know, that's really the majority of the asset managers we speak to

and a lot of the hedge fund. this is a good opportunity to really leverage towards a cyclical recovery. as you know, we think there's going to be a pretty big smokestack recovery in the u.s. >> pretty big smoke tack recovery in the u.s. what's going to drive that? i mean, who is going to buy the stuff, tom, or is it just you don't really need them to buy them, inventories were so depletes? >> there's a big final stores story already taking place in emerging markets. we saw that with not only emerging asian companies but also with japan in the quarter. that's going to help drive a global industrial production recovery that's already looking very, very v-shaped. i think that eventually spills over into u.s. to a self-re-enforcing gdp recovery. so we're pretty early in this stage. i know investors are doubtful, they look at the consumer sentiment numbers and get worried. you have to look at corporate profits. earnings estimates for 2008 -- i'm sorry, 2009, have actually increased since q-2 reported.

now we're seeing a steady creep to another consensus of $45. >> where does that come from, though? i know you don't necessarily disagree. we're going to get earnings s though this year. that's for sure.. we could even get it well into next year. >> yeah. >> when do you get at the top line demand? >> that's the problem. we're not seeing things coming out on the top line. i mean, if you really look at what's going on right now you saw the july numbers for consumer spending and it was down .1%. autos, it was up 0.6%. when you really look at that that's really not consume spending. it's really government transfer payments. it's really government spending, desguysed disguised as consumer spending. we have ten seconds, reminds me when my kids were young and we would go out on a country drive and they would say, are we there yet, are we there yet, i would say, no, we're not there yet. one thing i know is the ride is

going to be a little bumpy, so we've got to buckle up. i don't have a gps system, i don't like to ask for directions just like the market, so we're going to make a lot of small turns. and we're going to need more gas. the gas we're going to need is consumer spending, not the cheap gas of government spending, which is what we saw. >> the government spending is bump climbing. and why do you think that it's not -- that it will not suck the consumer back into the game, so to speak? >> because i'm looking at what is actually happening.g. let's take probably the most easy to review example of government spending, the cash for clunkers. the cash for clunkers was government spending disguised as consumer spending. it pushed up auto prices. >> i got to talk about that for a second because, you know, we've had cash for clunkers globally and as these programs sort of wind down or wind into their third or fourth months, global auto sales are near their

2007 highs.s. so it's actually helped motivate auto sales to a higher level even as the incentives are rolling out.t. cash for clunkers, the u.s. is actually the last country to do it. so it pumps the prime but now it's helped stimulate the pent-up demand.d. >> i think what it actually did is pull off inventory. >> another important thing is remember is there's never been a recession where corporate revenue sequentially rose. q1 to q2, they grew 3%. there's never been a recession where corporate top line grew. it show yos the global final sales is recovering. i think the real test will be in q3, if sales are up sequentially in q3 for s&p companies, shows you final sales expanding. >> revenues grew? >> q1 to q2 3%. >> we never dropped off as quickly as we dropped off in q4, right, tom? >> correct. but what's important to remember is that the level of sales is

going to determine the level of corporate profits. if gdp profit forecasts -- jpmorgan and bruce morgan's forecast is right, nominal gdp in 2010 will be pack to the peak prior to the recession. it really does imply that profits are going to be potentially at a run rate much higher. >> bernard gets the final word. >> i would say that's probably great up on the 53rd floor of jpmorgan but down closer to the street, i think people are really still feeling the impact of the recession. i don't think that this is over yet, not by half. >> thank you very much bernard beal and tom lee. >> thank you. 11 minutes into trading. the dow down, oh, 180 points. up next, the economic event of the week takes place friday in jackson hole, wyoming. find out what fed chief ben bernanke is expected to say about the economy and your money. >> plus, volatility is back. it makes things excited but it can make things painful.

which measures that is higher. 13% higher this morning alone. 15% at this moment. so what is it setting us up for? aren't volatility surges before, well, you go one way or the other pretty dramatically.

fed chairman ben bernanke heading to jackson hole this week. first, i wanted to show you this chart. we put this up here, health care. they're not all higher but you have seen some soft of the insu move higher. it's very unclear. >> i believe they're opposed to cooperatives. >> what would the difference really be between a cooperative and a government plan other than a semantical word choice. >> i don't know. not all of them are going to be impacted the same way. aetna is on board with the obama care but others aren't. >> yep. >> so you can't paint them all

with the same brush. >> very good point. not all of them have come out with the public option at all. fed chairman ben bernanke heading to jackson hole this week. it's a central bank's annual economics symposium. mr. bernanke will be reflecting on what he learned during a year in crisis.. steve liesman will probably try to steal yet again the name tag on his seat, which he has done before. i believe it was alan greenspan. john hilsenrath with the wall street journal. >> erin, i was sitting in your green room earlier and drinking my coffee, minding my own business and you start talking about steve liesman shaking in his underpants. steve is one of the best business journalists out there but the image of steve in his underpants changed my morning. >> i'm sorry about that. >> it was a bit jarring, yes. >> it's the excitement that steve feels for this event, he really does love going. what do you expect to happen?? i mean, this is at the end of the summer, they're all getting together.

a lot of serious conversations and significant ones happen there. >> yeah. you know, one of the important things about this one is what is not going to happen. the last two meetings bernanke was hold up in conference rooms while a lot of people were hiking in the mountains trying to figure out what is going to happen next because in august of 'of 7 and august of '08 it was about to get much worst. now we're at a point where the crisis is about to stabilize.. that's the point of the whole conference. one of the lessons we're going to take out of the conference this time is that when you step back and look at what happened, monetary policy, the fed, is a very powerful institution. i think it's worth remembering that at a point in time like this because, you know, in past recessions, people talked about the fed pushing on the string being unaffective. the fed was very aggressive and they stabilized the economy. >> one thing i saw, may have

been on bloomberg, but somebody did an analysis of one bank that did it dercifferently. it was the australian central bank. they tried to control asset prices. our fed said steadfastly they didn't want to do that. they would rather clean up the aftermath. do you think there would be any discussion as to whether we're going to change the way we deal with bubbles in this country?y? >> well, you know, the whole point of this conference, i think, is to finally take a step back and reflect a little on what we've been through.h. and this is very much been kind of at the edge of the fed's agenda. when you listen to people like don cone speaking over the last couple of wears years, they're talking about this. they've been so entrenched and engrossed in crisis management they haven't really started to think about it. but, yes, that's one of the issues that's on their agenda, is what do we do about preventing the next bubble? they used to have a hands off approach. obviously doesn't work. and one of the things that they got to start looking at, maybe

bernanke will talk about that. >> is that a way to prevent the next bubble? >> that's the big question. there's two. is there a way to prevent it, but can you even identify it? if you go back and look at what they were talking about in the august 2006 conference, they were all patting themselves on the back for what a great job central banks had done in stabilizing the financial markets over the last 20 years. they did not see this thing coming. all the way up until may or june of 2007, they did not see this thing coming. so, you know, to say thatter woo going to be more aggressive in preventing it might not be any good if you talk yourself out of being in a bubble when you're in one. >> imagine the political fallout if someone had stepped in the subprime market, said, no, you're going to stop in come on. that was being touted as the way to expand home ownership. would not have done it. >> there's always official buy-in to a bubble, though, right? >> not only that. it's always hard to know where it is. when there was a tech bubble, you know, people were talking

about we'll never have a tech bubble again. we immediately went into a housing bubble. it took everybody a while to figure out that that was where the next one was. you know, which one do you target and how do you know where it's going to be? >> all right. jon hilsenrath -- i hope they ask us, though, because we're pretty smart. >> the interesting thing was from alan greenspan and george bush. every party, every role, they all helped inflate this bubble. and by the way, it was reuters who did that analysis. credit where credit is due. up next, back to back sector spotlights. travel stocks have led the -- up about 160 zent since the bottom. who is traveltraveling. we're going to talk about that. >> the buzz around commercial real estate being the next shoe to drop. reits lows over 40%. can these continue to live above the fray? top-ranked analysts mix it up. you're watching "squawk on the street."

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travel is up significantly, about 150% since the march

bottom. and reits are up about 30% since the start of the summer rally. at the same time, hearing buzz about commercial real estate being the next shoe to drop. that buzz has been going on since the beginning of the year and it hasn't happened yet, but we'll see. we're going to begin with travel. michael olson is was and internet travel and tourism.m. good to have you with us, michael. i keep talking about all of these deals for traveling. i know they say more people have traveled this summer. maybe i'm just bad at looking for the deals. i haven't been able to find any traveling overseas. do you really see an improvement in business for these online booking companies? >> yeah, we're definitely seeing it. i don't know if i could call it a rebound but we're seeing things improving. a big part of that is all the discounting going on and corporate travel is still weak and weekend travelers are benefitting from that. >> so this is all leisure, obviously if you're looking at

flights like expedia and price line, most of that still is leisure booking, right? >> yep.p. the majority are doing leisure bookings. we're seeing what those guys are essentially doing is aggregating all of the discounts that are out there and consumers are flocking to those sites. what we're seeing is with corporate travel being weaker, the inventory is there and consumers are the ones to benefit. >> are these companies -- are there any changing in pricing whatsoever? i mean, are they able to pay the -- what do they pay the hotels and the airlines, right?? >> yeah, what we're seeing there is that the margins are basically staying steady for the online travel agents.. the margins for the airlines and hotel companies are slipping a little bit because of the discounting that they're having to offer to the online travel agents. and again, the consumers end up reaping the benefits. >> what does this mean for the stock? look at the group that has more than doubled since the march 9th lows. would you get into these names now? >> i still think price line is

one to own here.e. they have a couple of things going for them. definitely gaining share in the u.s. because of the name your own price offering which really appeals to cost conscious consumers. and secondly, they have, you know, growing market share in europe really leading market share there. and that's a much less penetrative market for online travel, 30% of travel is booked online in europe. 60% of travel is booked online in the u.s. >> michael olson, thank you very much. as you heard, there's still value in priceline, mark. now, on to the reits as we mentioned earlier. sector gained over 30% since the start of the summer rally. 70% since the march low. >> otherwise known -- >> other wise known as hanes bottom. is there more room to run? paul, director of real estate research with lehman james joins us now. paul, good morning. thanks for being with us. >> good morning. >> according to my notes, you're

cautious. >> we are cautious.. you sort of summed it up. we had a great run. to some extent driven by the credit markets more than fundamentals. but the economic data points play a part in that, too. you know, we're getting up toward the top end of our comfort range. trading about 15% above our navs. so historically as you start to price in an upturn, that's about as pricey as we like to get. >> so you think these stocks are going to just trade on economic data, right? >> we think they are going to trade on economic data. the fundamentals for commercial real estate are going to lag. it's going to be a while before you actually see it in the numbers for the companies and the leasing trends themselves will start to turn a little bit, but you really won't see any direct earnings impact for a year or two. it's going to be that far out. >> i'm confused. i have here a list of four reits, and you say buy all of them. where's the caution?n? >> well, for the longer term

we're still bullish.h. those are long of term buys. we have a couple of shorter term buys on names like digital realty and corporate office properties which we think are going to still turn in the best numbers of the sector. so we think there's still decent momentum for those names. the buys you're looking at for the most part are longer term. >> no, i'm looking at digital realty, corporate office, health care reit and national retail. another thing that strikes me is this is a very broad one, you're willing to buy a lot of different kinds of reits. >> we are. but there's some real commonity. all of those names have some element of defensive cahair characteristic to the cash flow. they have all done well this year. going forward, we're starting to lean more toward the growthy side, which would be digital or

corporate office. >> the what? >> the growthy side, names with more ffo growth. >> are you watching too much colbert, or what?? >> i'm sorry. i didn't understand. >> never mind. the growthy side.. all right. >> yeah, we feel like going forward here that some of the more defensive names, national retail, health care reit, those stocks are both more in the defensive category because we've been pretty cautious about this whole recovery. the stocks have done extremely well. they've got very attractive dividend yields. that's one thing about those particular names that have held them up through this rally. but as we get further into this, you know, we're probably going to start to shift more toward names that have a little more leverage to the economic growth. that's maybe a few weeks down the road. >> all right. we've got to go. paul, thank you very much for

your spot. >> thank you. erin, i don't want to be a doom and gloomer, but i feel that i have to point out that down volume -- >> oh, look at that. >> -- is 40 times up volume? that's a stampede out of stocks. coming up, continuing a climb higher over the past month. >> and september typically a cyclical negative for the market. we're coming into a frightening time. are investors setting up to be prepareford sell-offs or something more occurring?g? we'll be back. task force on volatility in a moment.ng a your diabetes properly. it's very important for me to uh check my blood sugar before i go on stage. being on when i'm feeling low can be like a rollercoaster. it does at times feel like my body is telling me to do one thing... and, my mind, my heart

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stocks taking their biggest tumble in well over a month. sell-off comes after a rally on the s&p 500 rise 50% in six months. the fedex tenned the talf program to mid 2010 hoping to boost lending in the commercial real estate market. t treasury says capital has grown in june from $65.6 billion in

may. that's cnbc.com news now. i'm courtney reagan. five from the financial capital of the world, right here from the warm and lovely heart of lower manhattan. welcome to the second hour of "squawk on the street." i'm mark haines. the dow down 2%. right now all 30 dow stocks are lower led by alcoa, home depot, bank of america. nasdaq off more than 2%. and leaning s&p lower, lowe's. they reported very disappointing earnings this morning and very poor same-store sales for the previous quarter. >> bob pisani, here is the conundrum. market is down off the lows. as market pointed out, the up volume, down volume -- >> 20-1. >> is -- is a pretty shocking ratio.

>> it's been a while since we had a 90% downside day, 90% of the volume and 90 $of the stock on the downside on point as well. it's been a while.e. so perhaps this is due and they've been trying to do this for a while, folks. three or four weeks ago they tried to drop them and they couldn't. on an intraday basis stocks are opening generally lower here. there's a real bifurcation in the market here. there's the ones that have the risk assets the most, cyclical stock, international commodity names, freeports, alcoas, the same big names we saw that are the weakest ones that are down 5%, 6%, or 7% on top of some of the big industrial names as well. if you get out of that, look at the retail group in the united states, mark is right. it's not the earnings so much that's the disappointment. it's the lower same-store sales outlook for 2009 that's really a problem. they are now talking about sales down 7% to 9%. prior guidance was roughly 4% to 9%, 4% to 8%. the top line growth isn't going

to be there. home depot is going to be tomorrow and i can't imagine they won't have the same problems. bifurcated if you look at the more defensive names like proctors and pfizers. look at the declines here, they're really rather fractional. tradertalk.cnbc.com. we're also off to tlows at the nasdaq. >> we take a look at the composite index down 2.3% here today. google is down 2 1/2%. it's its fifth anniversary of the listing. you don't want to be a financial, you don't want to be a chinese company. what if you were a chinese insurance company, down 15% today. cn insurer. four dirchtsz stocks and sectors getting pounded in the nasdaq 400.0. foster wheeler is an industrial. down 6%. steel dynamics in the material sector down 7%. discretionary wynn resorts down 6%. lastly in tech, electronic arts, these are some of the worst

performers in the nasdaq 100 right now. dell is down 2.4%. announced a deal with china mobile to create their own handset called the mini i-3. charles schwab is in an out and out fight with new york attorney general andrew crow uomo. i fought the law and the law won, is what they're saying here today. the lone gainer of it in the nasdaq 100 here today with a, what 31 cent move higher.. let's get down to the nymex for the latest from we should call him phil shactman today, i think. >> storm is getting stronger but nobody is paying attention to me today, matt. thank you very much. commodities is down across the board. talk about crude, we boast $3.01 on friday. now we're down another $1.82. definitely trending to the downside. one trader said we went through the downside a key support levels and with the dollar stronger and above some resistance here, it's not a good recipe for oil prices today. want to take a look at bill,

actually, season's first hurricane. not trending in any direction toward oil elements, rigs and what have you. claudette might have been a threat but much weaker.. the storm is back but it's the first hurricane of the season, not bearing an impact on pricing. i want to talk about gold quickly. $1,000 off the table clearly for now at least. we're down right around that $930 level. entire complex is down. silver, the biggest loser of the day. a lot of guys down here, rick, they cannot stop talking about the u.s. dollar.. >> well, you know, it's a good place to probably dwell considering that maybe the dollar was, you know, kind of vibrating at its lower levels a little over a week ago. that was expressing anxiety about, you know, dabbling the riskier assets, whether it was equities, junk, corporate securities, mortgage backed securities. indeed, the safety that moved into the treasuries and the dollar coordinates with today's

robust move as equity globally starting in china, moved lower. we have a buyback today, maturities 2013 to 2016. we extended the talf on the fed statement. they punted on the asset purchase program. doesn't sound like an organization that's going to remove liquidity any time soon and add in what's going on with equities.. it's going to be interesting to watch the government and fed and treasury behavior at a 250i78 when equities were deemed to be the all weather, all clear sign when they were doing better. mark haines, back to you. >> thank you, rick santelli. looks like the initial selling squall has passed over. the up volume, down volume has gotten more reasonable. and the dow is down 170. it's off the lows. doesn't mean another squallous is coming in. one thing for sure, we've got volatility back. cboe volatility index is up 16% this morning. is this telling us something

about where the market is headed? joining us now dan deming with equities, trades vix options. and brent rc with c bus wealth management. how does it look? >> certainly seeing a boon town kind of monday down here. they don't like mondays, this monday in particular. but seeing elevated volatility. one thing wanted to point out was the elevated back month premium in like the september/october future, trading a premium over the cash value of the vix. there were some hints that this might be a possibility. one day does not make a trend. certainly we're seeing today the vix, the cash up 16%, but the back month futures up my where from 5% to 4%, so we're seeing this mean reversion take place which is the basis of the vix anyway. >> what do you think? >> i think it was the vix down

in the 20s. i don't think we can necessarily say for sure the market is going to be down. at these levels if you do the math, it implies about a 5% to 10% move in the markets over the next 30 days. i think that's something we can live with after we've come up about 50% off the lows. >> do you think we're heading into the summer doldrums here? >> no, i don't. you know, i think some of the axiums we've used this year if you sold in may and stayed away you would have missed quite a run. i think if you look at september in a historical context,i think it's not going to do well, i think you're going to miss it again. you know, that's about the time i think people are going to put on their investments for the end of the year. >> dan, what are you looking for to give you direction? >> well, right now, what we're looking for as far as the vix is concern concerned, i talked about that mean reversion. let me explain that. what i'm saying is that like the -- let's take a look at the

s&p here at the cboe. it was running about 50 points over a 50-day moving average. the 50-day moving average is 945 on the spx. so certainly a 5% give up would keep the up trend in place. we're seeing the vel lossity of this move elevating the vix. and the vix is a measure of uncertainty. it's a forward looking index.x. you know we've got to make that clear to your audience. it's not an historical realized volatility measure. it's a for regard looking measure. right now for regard looking is expecting more volatility over the next couple of months. we'll see. we'll see if wet get down that that 50-day moving average and then come out of volatility quickly as we've seen before when the market is able to stabilize. >> brett, you are underweighting energy, correct? >> absolutely, yes. >> and overweighting technology? >> absolutely, yes. >> and u.s. health care. interesting. >> right. >> why would you weigh into health care right now? >> i think it's been beaten up because of all the pending legislation. i think it's a great time to get in and buy some of these health

care names. but also, there's this common thread between the technology and the health care, and that is that the lack of credit that they require to run their business. hi cash flow type companies. those kinds of companies in those industrys will do well as these banks still are reluctant to lend money. >> all right, gentlemen, thank you so much for the briefing. we appreciate it. dan deming, trader of vix options. and brett crbc at cbiz wealth management. up next, another twist in the alan stanford alleged ponzi scheme. why two big banks are under fire. and then off to norway to talk to the oil fund and economic outlook with the executive director of norjis bank live from oslo. and is renting the new american dream in is owning and

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welcome back to "squawk on the street." i'm bertha coombs. in this down market we're finding strength in health cakc names. take a look at covetry health, the health care managed name providers, hierarchy on the bottom of the administration seems to back off that public plan. meantime, tick kennisdickinson

getting a ber shi ating ating boost. and take a look at this one. american's dairy is the leading instant formula and milk provider in china, posting a 59% quarterly sales increase. that was late friday after the close but is still gaining a bit today. and gardner is higher today, they were raised to an overweight from neutral by j jpmorg jpmorgan. and that's good for a business of a boost in the down market. erin? >> thank you, h. authorities of investors try to unwind stanford's alleged ponzi scream. scott comb is here more with more, scott? >> how could their regulators not have known given the money involved? it's filed with the court on the

s.e.c. civil case against stanford. the regulators including the s.e.c. has maintained one of the biggest obstacles in uncovering the alleged fraud is the certificates of deposit. at the heart of it came from stanford's offshore bank in atigua. almost no investor money actu actually went to antigua. the money went to directly to stanford's accounts at banks in the u.s. and canada. last year $2.1 billion in deposits to toronto dominion bank and another to a trust bank in mississippi and about $800 million went to the bank of houston. none of the banks has been charge with wrongdoing. we haven't been able to reach anyone thus far to comment.t. they haven't returned our messages nape wa messages. they want to know why none of this raised eyebrows since investors and employees had been raising concerns about stanford for years.

employees like laila whiler who told a panel in 2003 that her employer was running a ponzi scheme. she lost the case but the ponzi scheme apparently got lost along with it. what about the more than two dozen other stanford employees who raised concerns over the years, according to records from nsad and frenra. a t. banks, all of this, the subject of the senate banking committee hearing being healed in baton rouge today. we have a team there. among those testifying will be troy lilly, you let meth him in our documentary "secrets in the night night." he has gone back to work. 59 years old and in failing health, troy was able to get a job in an offshore drilling platform. leaving his wife home alone while he's gone. hardly the kind of retirement they wanted. mark? >> thank you very much, scott

cohn. up next, former insider fred mishkin has something to say about ben bernanke's helm at the bank. plus, the biggest equity investor and the head of the biggest welsh fund in the world. executive director of norges bank is talking about where they are putting norway's oil money. we'll be back. the world is full of priceless things and amazing deals. find them, share them with mastercard's priceless picks app. download it now.

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you're watching cnbc's "squawk on the street" live from the financial capital of the world. >> in n. this morning's sound check, mishkin giving ben bernanke a vote of confidence and health care and the employment situation. >> to be a pointing ben ber nan bernanke was absolutely the right thing to do. one of the key issues right now is that people actual li trust that this man ask going the right thing. he has a confidence of economists. we have seen that poll after poll. the markets have confidence in him.

most people agree that the problem is that so long as you have 40 to 50 million americans who have no insurance and we are paying for that cost in the terribly inefficient way when they walk into the emergency rooms you're not going to solve this problem. people are still feeling very insecure about their job. and i do think that over time what we're going to see is the secret or the success to any economic recovery is going to be a return to confidence on the part of the private sector.r. >> sell-off today is truly global in nature. the dow is down 183. norway's oslo stock exchange lost 2 1/2%. joining us now exclusively is ceo and executive director of norges bank. he manages norway's government pension fund, $400 billion invested around the world. good to have you with us again. and let me get straight.. i suppose to the main question of the day, and that is, as a

manager, and i know you are focus tond long term, but do you believe that overall, global markets will keep moving lower and that we may be for a double-dip recession? >> well, as you know, we are a long-term investor so we focus first of all on longer horizon. certainly are some challenges ahead on the macro side but we feel confident that longer-term equity will be less. >> i know that you have been in the process over the past couple of years of increasing your exposure to stocks as opposed to bonds. and you pretty much completed that now. any changes in that going to come as a result of the past six months in the market, or not? >> we feel our reallocation in the higher equity weight in may. in june, in total we have been buying just about $175 billion of equities, which $50 billion

has been in u.s. but since may we have more or less been on the sideline. >> what about on the treasury side of things? today we just got the latest data of how much treasuries foreigners were buying.. and obviously we saw a drop from china and a slight increase from japan. looking at your holdings i can see u.s. treasuries on the bond side are near the top, not the biggest holding that you have. are you buying more u.s. treasuries? >> no, i think for the moment our purchases on treasuries are quite low and it's by nar our largest underweight in our portfolio just now. >> is that because you are concerned about growth picture, inflation picture in the west? >> no, we don't necessarily see the month supply picture as favorable at the moment. that's why. >> and on the equity side, one thing that i noticed, and in norway, you take the time to

look through things.. sometimes in a different way than others do. i wanted to highlight on this. looks like about 11% of your equity holdings are your fund overall, which perhaps is a more significant statement, are in water related companies. why is that? >> well, you know, we have been having a big explosion in that area. and corporate efforts, water management is one of our focus area for that work going forward for the next few years. and that's an area we look more closely into. >> is that because you believe we're going to have a shortage of freshwater or we look here in the u.s. it's amazing how cheap water is when you just look at your own home, compared to heating your homes? do you think that water will start to have a much higher price? >> no, i think it's the company's profitability in the long run are l. be effected by the bigger factor. so given the kind of investment horizon we have 30 years plus

and given the broad exposure we have in the market, more than 8,000 holdings we certainly look into that as an issue with that will affect companies revenue stream and operation the way we work if the future. that's why i put more for focus on it now. >> thank you very much. always good to talk to you. lovely got to see your lovely city earlier this summer.r. best to the end of augusto you. the manager of the norwegian sovereign. you heard what he said, not buying u.s. treasuries. just ahead, more on this monday morning market pullback and home ownership turning into a nightmare for millions. is renting really the new american dream? this is "squawk on the street." we're down 175 off the low. still continuing to see down volumes exponentially outpacing up.

welcome back. in the headlines at half past the hour, markets moving back near session lows. session low is 191, we're now down 180. home depot and lowe's is the biggest decliners. merck and pfizer, half an hour ago none were up. so are some green shoots. starwood property trust hitting

a new 52-week low. some of the highlights. mark, you're up/down is better than it was. >> yeah, let's take a look at the market internals, advance to growth. here's the market itself. as erin said, near the session lows. down almost 2% on the dow. 2 1/3 on the nasdaq. 2.1% on the s&p. advance/decline, oh, really, better than 10/1. i kind of like 12 or 13/1. on the nasdaq, not as bad. 7/1. up volume, down volume, almost exactly in line with advances and declines. about 13 or 14/1 negative. since the second quarter of 2006, u.s. home values have fallen by more than 30% over 1 million homes were lost to foreclosure in 2008.

given the risks associated with buying a home does it make more sense to rent? joining us now to discuss that greg mcfly, senior financial an looiss and diana olick, cnbc's real estate correspondent extraordinary if. greg, what about it? went, don't buy? >> there's nos right answer for everyone. the shift we're seeing now is the people are moving along way from the notion they had during the housing boom that housing is a get rich quick scheme and that is financial security. the fact is renting works just fine for plenty of people. particularly if you're young in your career and you want the flexibility to pick up and move. renting allow use to do that. the key is having to discipline to save and invest and achieve some of the other financial goals, even without home ownership. i think that's readily attainable but it's going to take some discipline. >> diana? >> i think it all comes down to numbers as everything does, mark. you have to look at affordability and the difference between renting and owning.

what is so sbris iinteresting, report that shows the rental gap, how much more does it cost to own a home on a month-to-month basis than it does to rent. that's interesting is that on average the rental gap is $376, which means it cost you $376 a month more to own a home per month than to rent. today that gap is just $70. if you go local it actually costs less to own in cities like ft. lauderdale, florida, las vegas, costing you $100, $200, $300 less to own a home than to rent. on the flip side, one more thing, there are so many rental properties out there that there is so much pressure on rental prices going down because all the condos that couldn't sell and all the people speculating are trying to get in and rent. rental prices are coming down. find where your number is. >> greg, is there a -- i don't know, a rule of thumb where you usually see rental -- the rent/own numbers get to a certain point that you indicate

a big spurt in home buying? >> it's hard to say. a lot of it is so localized. i think the really important thing to look at is what's your time frame, what's your financial situation. i think those are the first two bridges you have to cross before you come to the fork in the road and determine whether you're going to rent or buy. i think you have to assess some of those internal characteristics. sadly during the housing boom not be m. people did that. they just viewed it as an automatic way to print money and maybe purchased more than they could afford or something they were ill prepared to take on that type of commitment. >> diandiana, do you see any ch in -- usually when you rent you can choose to sign a length of different time length, month to month or one year or two years. do you see anything direction aa directionally in that trend? >> a lot more plexibility and competitive for people trying to own and rent out their properties. especially our large apartment buildings that are trying to get the renters back in there and they know that there are renters

out there but there are so many properties vacant.t. they are giving you better properties for less price and giving you better deals on your month to month or how long your lease has to be. one thing we should not underplay here, and that is the role of emotional feeling of owning a home versus renting a home. remember, during the housing boom and even now we got so used to upgrades in our home and renovations and all the things that we were doing, just look on hgtv and the popularity of these shows of people who own their homes and can do upgrades to them. you don't get that with renting. again, that's got to play into the equation because home ownership, sometimes we forget, especially during the housing boom, is a very emotional purchase. >> something else, greg, you don't get with renting and that's the government subsidy, right? >> very true. there's a lot of debate about that. especially the ability to deduct interest from your taxes, property taxes from your income taxes as well. that's something that tends to skew more heavily toward higher income and deeply pocketed

incomes and not necessarily the first-time home buyer. absolutely. whereas renting, there are no similar tax advantages. >> so, as long as the tax code stays the way it is, advantage homeowner. >> advantage homeowner, mark, to the point of except for still falling prices because we just got another report out last week from first american core logic that shows that 32% of american borrowers are underwater on their loans. when you look at the prices that have not stabilized yet that's going to be another factor, are you quickly going to become one of those underwater borrowers. >> greg, advantage homeowner? >> you know, i think this is one that from affordability standpoint to the standpoint of low mortgage rates, yes. you're going have to clear hurdles in terms of cash intensive nature of costs, down payment, entitle underwriting in order to get into that ownership and longer time horizons is where it's going to pay off. >> thank you both very much for

your input. coming up, we are putting on the market -- putting the markets on the couch and we're asking how does that make you feel? with your market psychology task force, there seems to be a lot of free floating anxiety out there? >> yep. it's not free floating, it's out there. >> before we do that, go to the floor to see how the traders are dealing with the monday morning global sell-off.. we opened down, i would say, mark, pretty quickly, 150. the low was 199. i said 191. and we sat right here at 180. is that a good thing, the stability or not? we'll find out. we'll be back. having the right tools is crucial to being able to manage your diabetes properly. it's very important for me to uh check my blood sugar before i go on stage. being on when i'm feeling low can be like a rollercoaster. it does at times feel like my body is telling me to do one thing... and, my mind, my heart is telling me to do something else. managing my highs and lows is super important. with my contour meter i can personalize

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♪ well i was shopping for ♪ which one's me - a cool convertible or an suv? ♪ ♪ too bad i didn't know my credit was whack ♪

♪ 'cause now i'm driving off the lot in a used sub-compact. ♪ ♪ f-r-e-e, that spells free credit report dot com, baby. ♪ ♪ saw their ads on my tv ♪ thought about going but was too lazy ♪ ♪ now instead of looking fly and rollin' phat ♪ ♪ my legs are sticking to the vinyl ♪ ♪ and my posse's getting laughed at. ♪ ♪ f-r-e-e, that spells free- credit report dot com, baby. ♪ we're back. we're on the floor of the new york stock exchange. the dow down triple digits. 181. we've been hangen around that

minus 180 level. let's bring in a pair of market experts, get their take on the rest of the trading day. here on the floor with us, dob pavlok and steve, i'm not as good looking as lou, grasso, director of institutes for sales.s. >> wow. >> that begs to question, do you have any handsome people in your family? >> oh! >> as well as a cnbc market analyst. >> no one with as good as a derriere. we know that. >> when we comes out and draws that line, i have to fight back. >> i can't wait until tomorrow because i get better looking every day. >> what do you think about this market, bob? >> normal pullback. market has been off 14% since the july lows. you saw some, you know, a little bit of disappointment out of japan this morning. a little disappointment out of the lowe's this morning. people have been looking for an opportunity or a reason to take profit off the table. i've done it. i mentioned hartford on your

channel. i don't know how many countless of times. 100% profit. i took profit on a hartford financial. took profit on caterpillar. 40% on caterpillar, 40% in cummings. it's normal to take some money off the table here. even if we pull back 875, i don't think we go much lower than that. >> 875? >> 975. >> now to you, brother. >> i think -- by the way, that tie looks great on you. >> oh, many i gosh! >> i think the levels, we're all in agreement. i think the levels are different. i think so we can trade down probably to 950. >> 950. >> becomes worrisome because people are locking in profits.s. where does the mentality change? >> people are starting to get all nervous and freaked out about september and october. having a little bit of extra money on the sidelines as you head into september and october, i think, you know, doesn't warn a, you know, anything wrong with that. and i think if you --

>> i still think as we're in both agreement, i think we're going to 1100. >> right. i was just saying -- >> we have to get through the sleepy august days for us to get there. i think the shorts are capitalizing on the lack of volume. >> i was saying to steve, 1085 on the s&p, so i think if we get up to around that low, i think that's going to make a heck of a lot of sense going forward. >> at what point though do we need next month to get some improvement? we only lose 200,000 jobs. >> right. >> and retail sales are flat or barely up. we start -- at what point do those sorts of data points just not -- they're not enough so sustain a 50% rally? >> the whole rally was based on recovery and not earnings. >> not stability, not leveling out. >> right. >> recovery. >> so people that are talking about recovery are talking six months out. so i think we're talking about six months out, to answer your question. >> the gut is going forward over this past quarter, though, we had had improved. you know, the earnings, you know, started to show a little bit of pick-up.p. you know, some of the discretionary areas like lowe's, always going to be a little bit

weak, a little bit questionable. if you look out, the going forward with positive. q3 earning season is going to be a little bit more positive going forward, a little bit more guidance and clarity. >> the benchmarks that they're beating is not that great year over year. >> q4 is going to be tremendous. weakness in october/november, that's going to be your buying opportunity. >> always great to see you, mr. haines. >> steve grasso, on his name plate "governor." allowed him to do it again. >> i'm not getting involved in this. i'm just not going to get involved. let's get a quick check on what's making news outside the world of business. hello, contessa. >> obama still thinks the public option is the best plan for health overhaul. but a lot of questions today about whether the president is willing to drop the government-run insurance option in an effort to compromise on health care reform. health and human services secretary says the

government-run alternative is not the essential element. she says competition for private insurers is the key. forecasters are keeping close tabs on hurricane bill. right now bill is churning about 1100 miles east of the western antilles and moving west northwest with winds around 75 miles an hour. national hurricane center says bill could become a major hurricane by wednesday. the first named storm to make landfall has been downgraded to a tropical depression. claudette came ashore dufring heavy rain this morning. it's going to move south western alabama and mississippi today but not expected to cause significant flooding or damage there. and, erin and mark, i'll send it back to you. >> mark, you know, we look, as contessa talked about claudette, at the names every six years they rotate the names through, the names of the hurricanes.s. we're going to see a name again for six years. but the names need a little updating. >> why?? >> because there's an odette or something. >> what's wrong with odette?

it's a nice name. the only exception -- >> a little bit of modernization. >> bad storm, remove the name. >> like andrew or katrina. >> or katrina. yeah. we definitely will not see another katrina. up next, up down, sideways, we're breaking out the rorschach test, mr. haines? >> our market psychology task force coming up next. some people buy a car based on the deal they get. others by the car of their dreams. during the lexus golden opportunity sales event, you can do both. special lease offers now available on the 2009 es 350. special lease offers now available [bell ringing] the way the stock market's been acting lately you may wonder if you've been doing the right thing.

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welcome back. coming welcome back. on "the call" at the top of the hour, lots of action in these markets this morning and we have it covered for you, bob pisani at the nysc, mr. nest toe over at the nasdaq, stackman at the nynex and mr. san teleon bonds. the question here is whether or not the sellout could actually be considered a good thing. also, can care lines overcome this recession? we will take a look at that one and how you play it. in "call of the wild," should the government rescind a $100 million apackage for andrew paul. lots at the top of the hour. but first, back to mark and erin. >> thanks very much, trish. [ inaudible ]. >> happens to everybody.y.

>> are investors living confident or come too far, too fast. get to the market psychology task force. here is a consulting firm for traders, traders psyche, and a chief market strategist as well as a market analyst for us. okay. thanks to both of you. mark was upset. he likes denise. he does feel a little sad about what you have to say which is we may not be in such a good place. >> may not be in such a good place. there was this key level, s & p 106, 108, talking futures, only a point or so from the cash, november highs. we tried the last few weeks to get through them on the upside and we clearly didn't make it. now, there is one little ray of hope. if we were to close above 985 today, i think we could say we still got a ray of hope, otherwise, i think we are looking at the next most recent low, the july lows. >> kevin, what do you think?

>> i think that those are levels tra traders will talk about on the floor but the real picture, mark, you have to be willing to do your homework in this market and stick to your convention. this is not the old momentum market where people lever up a big trend, we are in a violent and large range and we are going to be in it for a long time. >> trader and a market psychologist person. >> a market psychologist. so, why is the market delusional? the only way i can describe it. if you are right, we are heading back down. >> markets have a memory and have a memory because they really are just people, right? everyone can see those most recent swing highs which were november, right after this election. the longer term players saw

those november numbers, up where we were the last couple of weeks, they start selling and because we stayed there so long, the shorter term people get involved and all of this activity, reis cyst tans, a lot of people on the other side to make it through. we didn't get enough people this time. >> all of the people hoping, kevin, missed a little bit of the rally or maybe got in on it and said i have made 50%, not back to where i was but i will cut my losses. there is the psychological thing you want to catch up or play break even to where you were. >> i think that is a very big point and it is not going to go away any time soon. that is very typical of the housing, too. think of it as overhanging supplies, certain prices where people are going to say i have enough of this back and i want to go become to the sidelines. >> all right. and you -- you may make an

interesting point the level of the market is less important than the risk and you think we are back to a point where risk is undervalued. >> that is correct, mark, the way we term it. we think you have to evaluate your investment dollar in terms of that foreign risk now, where before, there was major dislocations,s aal dislocations, odd dollar to invest, you can make a turn on it. turning back towards a more conservative view but not away from the view the fed is on the right track, done a lot of good things just we are not going become to a 30 times leveraged market and that's where we came from. >> we are coming to the end of the year, denise, when people expect, don't always get a rally, obviously, would expect, you are going to get one, everyone missed it, they want to play catch up. easy to make the case to get a pop at the end. at the end. through september and october first, which is traditionally a down aid rena, a downed couple

of months, the market has memory, people know that, they see the old highs, see we are coming up to september and october, why not get out? hey, go back in in november. also, you really have the leadership being the russell, nasdaq, the four-letter stocks, the young, aggressive traders want to trade those things, whereas the dow, the s & p were lagging, maybe the more con sec vattive long-term play. we got to the key numbers and just not enough oomf. >> mark she did not say that your bottom would be penetrated, which is important. >> we talked about this last time, tested. difference. >> my bottom will not be tested. >> mark, trying not to chase everyone away. >> thank you very much for your input. we remain stuck about minus 180,

190 on the dow about 10 to 1 negatives on advanced decline. oh, yeah. >> rhonda farr row big truck struck company. you know, 57% of americans, mark, say the stimulus is not working, "usa today" pretty incredible statistic, every economist, left or right, says it has contributed something, we are talking to the ceo of tar rex about that. is there spending? we will find out. >> okay.. up next, a final check on the markets. you are watching "squawk on the street." don't go away.

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all right. we are back. and we are bad. down 92 again. >> michael jackson song? >> yeah. a crucial trading day the next hour on "the call." well, could go either way, that's the thing. stocks are selling off, health insurers are among today's best insurers, following reports that the administration

may drop the public option from health care reform. shares are down almost 9% for lowe's after the home improvement retailer reported lower-than-expected earnings and made cautious comments and ci st. is down 10% after the company said it successfully completed a tender offer of $1 billion. that is cnbc news now. i'm courtney reagan. welcome to the call, everyone, 90 minutes into trading on the floor of the new york stock exchange, i'm trish regan. we are off almost 200 points s right now on the dow. quite a selloff based on disappointing earnings out of the likes of lowe's. live reports from none other than the nyse, the bomb pits and oil pit, big day, melissa. >> thanks, trish. i'm melissa francis. larry kudlow is off today. account airlines overcome the recession? have you noticed there aren't any empty seats on the planes? should you invest in the stock? in our "call of the wild," " should the government rescind andrew hall's $ 00 million pay

package? stay tuned. this is "the call" on cnbc. buckle up, stocks pressure from the get-go. look at the dow, down almost 200 point opts session, 190 points, better than 2%, 9130. the s & p the downside, dow down 23 points, about 2.75 percentage points, nasdaq trading lower as well. it is really getting slammed, down about 2 1/2%. look at oil. sinking as well today, slider low, down 2 bucks. we are starting to head toward the lower end of that range, down about 65, 3%. trish, what's going on down there? >> big day. 190 on the dow. basically, a lot of people are questioning whether or not the stock market recovery has gotten ahead of the economic