>> what's the ten-year doing? is it back to 4%? we're going right do it. interesting. 3.5%. let's check out the dollar this morning. the dollar is usually, on a day like this, would see some buying as the risk trait trade goes out of the market. but it's up against the year, down against the yen, 94.27. gold, is the ceo of the gold chairman council, i guarantee you're going to hear that i love gold thing. we've on always got that ready. >> i love gold! >> you're going to see that today. ready made, it's in the rundown. we have a master rundown where if we're talking about anything, it will be there ready to go. >> it used to bother you. but there came a time when you decided you liked it. >> because i love god ever since

november of last year. >> i love gold! >> i love gold. >> i love gold! >> i'm wearing a gold shirt because i think you better buy some hard aspects. we have the prospector, walter -- >> yeah, because currencies are in trouble. >> yeah. >> because of monetary medicine, perhaps? >> as we europeanize the u.s., that's going hurt the dollar, yeah, as we make a social net just as large as what causes slow growth in europe, i figure we're going to need some gold. >> do you ever see a big difference in their gdp and ours? >> yeah. when they boom over there, it's 0.7%. >> we would take 0.7%. >> we're down for a little while. we have enough loep to hang ourselves over there. >> he's right behind you, by the way. >> would is?

>> the prospector. >> oh, my god. the greatest thing about that is they said, we have an idea. leave your teeth out for this role. that is on -- that is true. leave your teeth out for this role. >> his son talked his dad into leaving his teeth out. >> the director, yeah. that's one of the classics and it's got it all. it's got the greed that we saw in recent history in the banking system evident there. the men couldn't even sleep because one of them had more than his share of gold. it's all there. >> you are not the only person worried about inflation. the world's most famous investor said the u.s. economy is on a slow path to recovery. that's the good news. warren buffett writes that the united states economy is now out of the emergency room, but he warns, listen to this, enormous dosages of monetary medicine continue to be administered and, before long, we will need to

deal with their side effects. for now, most of those effects are invisibility and could indeed remain latest for a long time. that threat may be as big as the financial crisis itself. this year, the deficit will rise to about 1% of gdp, more than twice the nonwartime record going back to 1920. buffett notes that the nation's debt held publicly is mushrooming. and he writes, listen to this, our immediate problem is to get our country back on its feet and flourishing, whatever it takes. still makes sense once recovery is gained. but congress must end the rise in the debt to gdp patiento and keep our debt and open investigations in line with our remember suss. now, the oracle of omaha ends his op-ed with a call to congress. unchecked greenback emissions will certainly cause the purchasing power of currency to melt.

the dollar's destiny lies with congress. that is a big load to put on congress's plate. you could see the dollar erode and inflation skyrocket. >> although he says it's unlikely congress will fix this because there's little reward for raising taxes or cutting spendi spending. >> by the way, he says both raising taxes and cutting spending is going to have to happen to take care of the huge deficit we're running up right now. we're spending about 185% of the tax receipts we take in and he says that that can't continue. >> but now, i used to think six years was better because they get get in and -- but now i like the two-year plan. >> so you can get them out as soon as they start messing up? >> no. because they have their finger in the air from day one with what their stoints are saying. if you could be an activist senator, it's like, oh, i don't need to listen to what they say. i have the idea of -- >> but you're always saying how

cool headed the senate is because they don't have to worry about that stuff. >> yeah. i've changed. i want their -- like a lot of senators i think are there and they're making their own decisions on whated to not representing their constituents. >> although, joe, the representing of the constituents says anthony weaner saying we will not look for any sort of middle ground. we won't come up with any other circumstances. >> he can look at an nbc poll today and see how his constituents feel. >> the malibu district, he can represent malibu and anthony weaner can represent the east coast, new york city, whatever it is. >> these decisions have consequences over years, right? the house is like weather. the senate is like climate. you don't want us to make global warming decisions based on the weather. >> we are making global warming

decisions based on the weather. >> all right. we are. >> and you think that's a good thing? >> it's so hot right now in new york. if you were wondering about global -- if you were wondering did you see what it was yesterday? 95 degrees. there's a -- the planet has a fever, carl. >> even buffett talks about emissions. >> i saw that. he's taking his -- you know, he has to listen to somebody and he chooses to listen to the ipc or whatever it is. hewlett packard is a stock to watch today. last night after the results came out, it traded higher. then i saw it eventually trading lower. i guess with the overall futures -- there was some concern about revenue projections for the current quarter. >> down for both. >> revenue, i thought it was slightly above expectations.

>> but then it was lower than forecast. 43.65 ask after a 43.96 close. so i wouldn't necessarily pay attention to the bid, but the ask does tell you something, anyway. the final trade was down 96 cents from the close. that's not going to help the dow. they don't have a whole lot of compassion for them. >> they had their chance during earnings central. they're on a weird fiscal year. it's not a retail -- what was it, third? what quarter was it? >> third quarter for them. fourth quarter is the current quarter. >> it was fiscal third ending in july, i guess. that's all screwed up. >> luckily for joe, it's a quiet day on the earnings front today. we will hear from deere before the opening bell. look for results from limited and petsmart today, as well.

>> john deere is at about 7.15. it is? >> yeah. nothing runs like a deere. >> there you go. today marks the five-year anniversary of google's ipo. remember this ipo priced at $8 a share? it rose 18% just on the very first day of trading, jumped all the way to $100. it kubled in value in two months' time. there was a lot of skepticism along the way. people said this idea of this big pop, $85 they thought was overpriced. it was an auction ipo. people had a lot of questions about that. the stock has gone as high as about $740, somewhere around that range over this time. but the question is, is this a growth company now or is this a company that has got so big that you're going to see steady gains. >> nobody knew how to monetize

the internet when it cam out in 1985. >> but your outlook is you still don't spend google any money. >> they charge people for every word, right? >> for every view. >> but if you want to come up top -- it's not the way of selling me -- they don't even have that on their home page. so they did it a totally different way and i think no one understood it. but there was arp of 1,200 and $1,500 targets on google for a while. >> did you know it's not the biggest s&p gainer? >> apple. >> yes. >> the gadgetmaker. >> it's like 15 and change the day before the ipo and is up more than 900%. >> ipod. iphone and ipod. >> that's one of the issues. >> and resurgent mac and

everything else. to the overseas markets, chloe cho standing by in singapore. just tossing to singapore makes me feel like a news man. >> chloe, good evening to you. >> yes. good evening to you. thank you. and before we get to chloe, watch this, i'm going to go to london, which is only whalfway. i'm going across to ross westgate who is so cosmo. the latest out of europe, ross. >> thanks, joe. global equities are lower right now. the ftse cnbc global 300 is down 17 points ahead of the u.s. open later. european stocks are just feeling the chill from asia. chloe will talk to us. xetra dax down 1.2%. the ftse 100 not too much. it's been an interesting trading day today. we had minutes out from the bank of england and there was a shock there that three members didn't

vote to quantitative ease by another 50 billion. they voted to do more than that, 735 billion is what thechtded in kwaubt tafb easing two weeks ago. that's really put the skids under those who think that the bank may be raising rates any time soon. sterling has been weaker as a result. in terms of the sectors today that are weaker, no surprises, it's the banks that are down. autos, resources on the bank of china story. no sectors at the moment that are in positive territory. but we're taking our emphasis from what's happening in asia today and chloe has the wrapping on that. >> thank you very much. certainly not a pretty picture. i hate to deliver this piece of news. but again, it was all about what happens happening to the shanghai composite earlier on in the morning session we saw resilience with north asia, especially japan and south korea. but take a look, it's all pretty much red right across the board.

a couple of key concerns involving the shanghai composite, investors are concerned that the regulators are not going to step in to prop up the equity markets. that's why we saw the shanghai composite losing as much as 5%. but at the close, it did close down down 4.3%. today we heard from bocom, the bank of communications pretty much in line with expectations, but going forward, it's going to come down to those compressed net interest margins. as we know, they had a wresless pace of lending in the first half. but ultimately, how are their major yibs? icbc, that is the world's largest lender, so that's something we're going to keep an eye on. the shanghai composite off 4.3%. as i send it back to you, it

looks like you may be getting a cold front from asia. from where i am, the air-conditioning chills have nothing to do with the weather outside. carl, back to you. whatever it is, it's definitely on the wake. let's turn to the u.s. trading day ahead here. anthony chan and rob morgan, market strategist for claremont wealth strategies. guys, good morning to you both. >> good morning. >> it's been pointed out that china let u.s. equities higher and it appears now they're going to lead us lower. do you see the selling in china overnight and over the past couple of weeks here as irrational in any way or orderly? >> i think it's orderly, carl. the shanghai market had basically doubled and now, just since the beginning of all, they're down 20%. some people are saying it's a bear market. i think that's premature. we've been calling for a here and shanghai is precipitating

that a little bit. but our view is that this is a -- i'd say if we came down 10% to 15%, that's probably what we're looking for here in the u.s. >> and you think that's going to be met with more selling, right? cash on the sidelines is the whole story? >> i think the cash on the sidelines will eventually look at it as an opportunity to get in, sure. >> and anthony, that assumes that the consumer is going to spend. we had decent numbers versus expectations from retailers yesterday, but nor signs that they're not going to be spending in ways that some had hoped. >> wbl i think, carl, that there's some expectation that the savings rate is going to pick up, that somehow sales, either back or school or the holiday sales won't be as robust as people would have hoped. that's likely to happen over the near term. but you have to realize that there's more stimulus in the pipeline, there's monetary

stimulus slushing around. eventually, some of the stimulus will gain traction and the economy i guess over the next six months in my view will be okay. >> anthony, what do you make of buffett's op-ed? i'm not sure if you had a chance to read it 37 it's not anything he hasn't said about his own views of inflation. does the fact that he's putting it in the times means something significant for us? >> well, i did read the article. and one of the things i came away with is that yes, there is concern about monetary policy. but you have to remember that today, when you look at the doubling of the monetary base and the relationship to the money supply, that money multiplier has collapsed. until that relationship gets fixed, we don't have to were about all that raw monetary stimulus. the second stage is the relationship between money and overall gdp, namely the velocity of money. that's collapsed. so we're going to have a lot of

early warning signal else for the market to correct itself. i think the fed has the expertise to get the job right. what i'm more concerned about is whether heavy the political will. for that reason, i do agree with warren buffett that there is a risk of inflation. but it's not going to creep up on us, right? we're going to know when it's coming or when it's imminent? >> i think we're going to know when it's coming. once that relationship twn the monetary supply gets fixed and the federal reserve doesn't take steps -- and there are many steps that they can take, they can start raising the fed funds rate, they can do reverse repos, in fact, they can use a very blunt instrument that they don't like to use and that is raise reverse requirement. that is millions of tools that they can use to get the job done. the problem is will they have the political will to get it done. >> rob, i guess it's hard because you look at cpi and it's so cool and then you look at buffett and his words are not nuanced in any way. he's worried about inflation. if you side with buffett and you

were worried about the dollar, inside words, you would say you have to be. >> stocks, right? >> absolutely. and i would agree with anthony that there's a lot of slack capacity out there. a lot of pundits say, hey, it takes a -- if you don't start raising rates now, you know, inflation is going to be a problem in two years. but there's just so much slack capacity out there to believe that's going to happen. and yeah, i would say being in stocks is a good place to be right now. >> anthony, turning one last topic and that is health care, the times today saying that the democrats appear to be or the white house appear to be willing to try to camera this through by themselves, is that a market negative? >> well, i think that the market certainly doesn't want to see an aggressive health care program come through. but if somehow the democrats decide to tone down or make the numbers smaller, that will be positive for the market. the market is not so much democrat or republican sensitive. they're more sensitive as to what the implications are for the budget deficit.

historically, every time the government tells us something is going to cost x, it ends up costing 2x. >> x squared. >> it's not so much whether it has a democrat or republican label, but how much it ends up costing and what's the implication for the government. >> insurers looks like perhaps they were going to dial back the public plan. we really do not know what's going on. but that's probably a sign that you don't want to play this sector near term, or does it? >> i would agree. we're neutral on health care overall until we get more details. and this thing is so much in flux right now, it's hard to determine what the ultimate plan is going to be. >> interesting. there's so much going on, guys, it's hard to believe it's a -- they call it the dog days of summer, but it's really not. >> a new nbc poll today suggests americans are still skeptical about president obama's health care reform plan. only one in four surveyed approve of the president's handling of this issue. president obama's approval

rating right now is 51%. that is a two-point drop from last month and a ten-point decline since april. some say they're concerned that the government will go too far. 41% say they are worried about reform not going too much to cover costs and cover the ininsured. but it defines how quickly attitudes are changing on this. >> i don't know whether they're changing. people have reisted -- >> over the last two months or four months, you have seen big changes in what this poll itself has come up with. >> so you think that the people that are at these town hall meetings have been convinced in the last two months that it's wrong or did they always think it was wrong? >> i think people have gotten more worried that something with a was going to happen. >> i mean, if we can go back to truman and realize how hard it was since then, there's an undercurrent here that is less

inclined to go the route of the safety net that you see in europe. >> and what would you attribute the changing poll numbers? >> i don't think they're changing that much, what, three or four points out of 100?0 >> well, not his approval rating, i'm talking about only health care. the approval ratings come from what -- remember when jewel annie was on, it was 70%. he said one the policies become clear, the approval rating will start to drop once these policies become more widely -- >> and people think it's going to happen now they're paying attention and now i have to figure out what i think about these things. >> i mean, i think that the public plan is a real problem for most people. and i think it's -- >> for people who you know? >> who do i know? >> people whom you may not know personally who don't have health insurance -- i mean, you're trying to put the american populous into this category. i don't think -- >> you have the poll number. what is the poll number -- >> 54%.

>> no. 48% against public. >> half the country. how can you say that the country feels one way or another? >> because the democrats have all -- you can do this if you want. go ahead and do it. they're saying the republicans are holding back. you've got democrats in the house, democrats in the senate, the clear majority. go ahead and do it. you can't do it. you can't do it because of the blue dogs and other democrats because of their constituents. >> well, i mean, you -- but if people want it and the constituents want it and you've got majorities in all the houses, then do it. >> they got stimulus through. you've got the budget done -- >> you know what it looks like is going to happen here? it's going to be co-op probably and that the republicans region the only reason they're doing

co-ops is to get the democrats in line to the extent that they can pass something. >> conrad has said co-ops are all he can get through the senate. >> the republicans aren't going to go for co-ops, either. the republicans, you can read graphs, they are sort of -- their body language is they don't want co-ops at this point. >> well, they think it's the camel getting its nose under the tent. >> but the only reason to abandon howard dean and everything else and throw them under the bus is because you can't even get your own guys on board unless you do co-ops. >> well, they clearly prp -- >> but you know what would happen. the 100 guys, what if they follow through and don't pasta because of the cost? then the whole thing blows up at this point. i mean, this is a -- this is a minefield. >> politically, you would rather say we lost on this one because of the republicans, not because of our guy -- >> if you're the administration you would rather see that. but if you're in the house and

you're representing -- >> you don't need to qualify. >> don't put me in harwood's camp. >> it's the foo -- oh, no, if the shoe fits. no, okay. we still have the chairs? >> yes. >> if we still have time. >> maybe i'll talk about ted olson, conservative for gay marriage. love this guy. >> when we come back this morning, we will make a visit to our friends at the weather channel. as joe said, it's been hot. ththh

welcome back. if you're on your way to the airport this morning, scott williams of the weather channel is back with us. >> good morning to you there. we continue to talk about a lot of weather stories there. number one is the heat that has been taking place around the big apple. a string of 90 degree days. you have another heat advisory, as well. this will last until 7:00 p.m. eastern daylight time there. dress appropriately. if you have travel plans, we will watch for strong and severe thunderstorms around kansas city. st. louis, also in oklahoma, as well. as we look at our severe thunderstorm rift, the potential for some damaging wind, also

some hail and isolated tornados exists. anywhere you see this red shading here. that does include portions of oklahoma, getting into kansas, around kansas city, also st. louis. so be mindful of that. it could cause some problems at some of the airports especially. chicago and volume delays around new york's laguardia and also the world's busiest airport in atlanta. now, if that wasn't enough, we have a strong category 4 storm right now. hurricane bill, maximum sustained winds are at 135 miles per hour. back to you. >> scott, thank you very much. we have reached the midway to this week. coming up, we'll be talking about the day's top stories, including warren buffett's warning to washington. plus we'll get the futures pits from chicago. when people say,

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♪ . >> good morning. welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick and carl quintanilla. the futures this morning pointing to about 67 points of downward pressure in the industrials. did snap back yesterday from those losses that we saw on monday. there is the reason why. the nikkei is bad enough. but then look at the next one, the hang seng and shanghai both down significantly this morning and european stocks taking their cue from asia, as well, all down between 75% and 1.25% between the ftse and the xetra and the cac 40.

>> is that in france? >> yes. >> they have a stock market? that's amazing. >> warren buffett is likely to be the talk of the markets this morning. the world's most famous investor says that the u.s. economy is on a slow path to recovery. in an op-ed in today's "new york times," buffett writes the united states economy is now out of the emergency room that he'd been telling us we were in. but he's warning that enormous dosages of monetary medicine continue to be administered and is before long we will need to deal with their side effects. for now, most of these effects are invisibility and could indeed remain latent for a long time. but their threat may be as ominous as that posed by the financial crisis, as well. he also writes our immediate problem is to get our country back on its feet and flourishing. once congress is gained, however, congress must end the rise in the debt to gdp ratio and keep our growth in obligations in line with our growth in resources. so he is warning that inflag

could be on the way if we keep spending at this pace. let's get to the cme right now. evan horter is standing by at the cme. evan, you hear this warning from warren buffett who talks about the risk of inflation coming even though we haven't seen it showing up in any of the numbers recently. how big of a concern is that in the pits? >> right now, i think we're far away from the rebound in the consumer. i think that's going to be the moving in forward momentum in the inflation argument. we're seeing a big tug of war now between the investor and consumer sentiment that moved the markets forward in the first half of the year and back into the focus of what's going to happen on a fundamental side. so i think that argument more so comes into 2010 or at least the end of the fourth quarter this year and not just right now. >> this morning, the wires are attributing this sell-off we've seen around the globe this morning to concerns about this rally we've been watching over the last six months. is that what you think is happening this morning? >> i think right now what you're looking at is there's been a

massive amount of stimulus and especially if you look at what happened in china overnight. what's really going to take place? what's the exit strategy towards tend of this year, towards next year? are the fundamentals going to catch up to what investor sentiment is? so i think you're seeing that portion now where we've tested the highs and people are wondering if we can get higher. >> to that point, the wall street journal's lead story today is about what we've been seeing from the retailers over the last several days. retailers are coming out with earnings and even author many of them have beat expectations, they haven't been doing it because the shoppers have been out in full force. that's what the journal point out is the reluctant shoppers out there. how big of a concern is that? >> 70% of the economy is made up of the consumer. what we're looking at is when earnings are coming out, people are beating expectations due to cost cutting. it's not on the revenue and it's not on the sales. unless we can get the sales to recovery going into the end of the third and fourth quarter of

this year, i think that's going to say what's going to happen coming into 2010. unfortunately right at this moment, i don't see the consumer letting go of their pocketbook and saying, i'm ready to make big purchases. >> that's a tricky time not knowing what's coming up next. >> very, very tricky. coming up on the horizon, what's going on happen with the third quarter numbers when they come out? are we going to be able to see benefits related to the cost cuts that happen or did revenues fall or increase? we did see a 30% fall in revenues. do we continue to see that? if we don't have that rebound, what does that do to the investor's mind? do we have this rebound in place that people have thought within the first half of this summer? >> evan, that you can so much for joining us this morning. >> thanks. in other news this morning, a pair of house democrats are seeking detailed financial records from dozens of large insurance companies. congressman henry waxman & say this is part of a investigation into executive compensation and

other business practices. at 10:00 eastern this morning, congressman secretary gary loch, janet nepolitano and jewel yaus sebelius will discuss helping employers and businesses deal with the upcoming flu season which we talked a little bit about yesterday, joseph. >> yeah, we did. it's coming. it's coming. the summer is gone almost. not quite. >> don't say that again! >> it always goes so fast. and you get up there and you saturday counting, what's the maximum number of summers -- let's not talk about it. >> i'm i'm like john ritter's age. >> good morning, everybody. >> a new record on guardesill, helping avoid death. but two studies found by federal and academic researchers show low rates and side effects with the blockbuster cervical cancer

vac even. but questionable tactics by merck. next month, advisers will term whether to approval guardasil by mouth. there's hpv transmission. global corporate bond issuance is rising above the $ trillion mark. this is the first time it's broken through that threshold in a single year. the jump can partially be attributed to companies that have a hard time obtaining bank loans. >> all right. if you have comments or questions about anything you see here on squawk, e-mail us at squawk@cnbc.com. a quick break now and we'll have news that is making headlines that aren't necessarily business related and we reserve the right to talk about anything. if you're going to write in,

stop talking about politics because we're not going to do it because it's about business. we'll be right back. chloe is 9 months old.

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time now for a check on the news outside the world of business. alex witt joins us with a check of the headlines. >> good morning, everyone. officials in afghanistan are urging voters to head to the polls defooit spite all the ongoing attacks by militants. just this morning, police exchanged fire with several gunmen who took over a bank in kabul. in an effort to the government has banned media from reporting on election day violence. california officials now believe a wildfire that has burned almost 88 acres n was started in a marijuana field. about 30,000 marijuana plants and an ak-47 assault rifle were found near the origin of that blaze. and a newborn panda was.

it's a red panda. how cute, huh, becky? >> that is adorable. >> he has no name yet. >> i saw what your last sorry was. >> i thought about that and i didn't quite get to it. >> waits taking me a while and i don't know how to say it, but alex, thank you. >> all right. >> coming up, we have pouring through the morning papers and we've got the stories we need to know before you head into the office. before we head into a break, let's take a look at the futures this morning. they have been under quite a bit of pressure. you were talking about the dow futures down by about 70 points, following trades in the red in europe and asia. we'll be right back. he ran off with his secretary! she's 23 years old!

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welcome back. the ft is reporting u.s. regulators apparently pressured citigroup to oust former cfo ned kelly. fed, fdic and office of currency are expected to have urged the bank to nicks him before kelly's departure. back to health care, i'm going to go, carl, just so i'll encounter less resistance. i'm going to go to the "new york times." >> oh, good. >> the paper of record.

>> so the op-ed pages from the "new york times" because there's a quick piece down at the bottom that crystallized something that i've been thinking about and it's sort of irritating me and it's called keep off the astroturf. and it that a lot of these things happening are not really grassroots, they are manufactured, astroturf. the gentleman's point health care, it's split down the middle object what wants it and who doesn't. to sway people by saying it's not real, manufactured is not true. why decry old-fashioned political organizing. goes to point out years ago, which guys you talking about, sam adams, not the beer but a guy named sam adams long before the beer, he used to rally opposition to the brits then publicize who showed up.

the last paragraph, here is the rule, organizing isn't cheating. doing everything in your power to get people to who up is basic politics. if they believe what they are saying new york city matter who helped organize them, they are citizens and activists. the language at the town hall meetings may get ugly and rough but it's not astroturf. >> i just want to make the point in a nice way if i k i know there's three or four people that have something to say about this. they will be mad, kernen, go get the gap in your teeth fixed. you're bad. you're stupid. you're old. >> i don't know how anybody can argue. >> the tables were flipped democrats wouldn't have any complaint. it undermines, takes the argument away from the debatish makes the whole thing look cheap. you're arguing about the technicals rather than the substance. >> exactly. admittedly 50-50, just like everything else in the country. like you talked about yesterday,

put all the polarization behind us in the last election. >> happy days are here again. speaking of astroturf, a lot said about brett favre's two-year contract of $25 million. it does raise the question at what age are you legitimately allowed to walk into the sunset. all of the columnists say he transitioned from a quarterback to a tired pathetic figure tarnished his legacy. he said for those that criticize, don't watch. those are his words. you don't have to watch that i do. he's going to go to minnesota, his first game against the packers, the fans are going to let him have it. we'll see how he does. >> he's not the first athlete to get tarred. when you finally -- you get to a

point where you can't come back. there's guys that came out gracefully. >> or hung around. cal ripken. the journal looks at his last season, lead leading 22 interceptions, half the opposing past defenses he faced were ranked in the bottom ten in the league. they call it the easiest pass defense -- the easiest time for an nfl quarterback versus the pass defense. >> it's got to be tough every time you switch teams. new players, new play book, get to know everything around you. >> i know. he's got to meet the catcher and figure out which signal. >> catchers in baseball. >> i'm going talk about something, going from sports to another subject you both care a great deal about, the waiting lines in grocery stores. it's an issue. shopping. >> this is true. i never buy more than tinnitus

ever. >> so you can go to the express lane. >> buy ten go to the car, come back. >> waiting times in the grocery stores is on the rise across the country. in fact the longest waiting times on average are in washington, d.c., 8 minutes 23 seconds. st. louis has it over anybody, only wait about 59 seconds in st. louis. but across the country it's on the rise. in new york, 3 minutes, 34 seconds, just on average. the grocery store companies are working hard to cut down line times. the easiest solution would be to hire more people. that also happening to be the most expensive solution. they are working on other ways to get around. turns out in this ballots, all the studies, psychology is much more important than the actual time you're waiting there. if you feel like you're waiting a long time, that's a problem. if you can be distracted that's a good thing. if you see another line moving faster and you've been there longer and it's moving faster that really ticks people off. >> so washington longest lines?

government running -- >> get used to it. >> 8 minutes 23 seconds, which is about double everybody else. >> at least grocery stores you've got magazines. nothing is worse than a bank or drugstore. >> no, toll lines. now that there's easy past. >> it's kirstie alley. >> oh, my god. she can't continue like this. i read the article. it's cutting years off her life with the thrust of the cover. >> you had such high hopes. >> she gets really thin, you know. she's got to chill, you know, really. >> valerie bertinelli still looks good. >> she does in those jeans. >> top stories this morning. also we'll welcome guest host

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click today. warren buffett says the u.s. economy has left the emergency room and is on a slow path to recovery. is the government stalling on cash for clunkers. dealing complaining about not being paid fast enough, slowing down the process and ultimately losing customers. going under the hood with auto

ceo doug kass. a frequent e-mailer and one of the few to come out and stick his neck out. he weighs in on whether we're seeing a correction or whether the bear is back. the second hour of "squawk" begins now. good wednesday morning, welcome back to "squawk" on cnbc. i'm carl quintanilla along with becky and joe. a lot to talk with doug about over the next couple of hours. futures here are negative. rough night in asia. china officially in a bear market down more than 20% since it hit that high on august 4th, futures will face some weakness in the open here. oil is down despite some bullish inventory data yesterday down $0.48 to 68.71. >> you talk about the highs on august 4th, we're not to the end of august and talking about a

bear market. we think about major moves happening over a matter of months. going from a bull market high to a bear market in a couple of weeks, you've got to be in china for something like that. >> only in china you could argue. ten-year note having a back up. dollar a relative winner and yen as well as risk aversion back in the market against the euro and pound. stronger dollar, gold in the last hour or so was a little lower down four bucks to 935.60. not necessarily what the market is doing but in the newspapers, op-ed. >> the nation's investors say economy is on the path to recovery. warren buffett saying the government has done its job getting the economy back on its feet but needs to take a few steps back. warren buffett writes --

the nation's debt is mushrooming creeping by one percentage point a month. he writes, our immediate problem is to get our country back on its feet and flourishing. what it takes still makes sense. once recovery is gained, congress must end the rise in the debt to gdp ratio and keep our growth in obligations in line with our growth in resources. before we get to doug, i don't know whether this stock is immediately higher, $1.50 on a bid after reporting $0.99 would be well above the $0.57 stem. the revenue number, though, is

below 5.88 versus 6.187 and louisiana year's number above 7, 7.7 billion in a year ago period, 5.89. the fourth quarter will be affected by significant production cutbacks. so the move is moderating as you can see now 46.50 -- i've got 46.50 on my machine. >> revenue was -- >> really in i've got an estimate. yeah, you're right. yes, it was, well below a year ago. >> they do make comments about the market, we have continued to benefit from strength in the u.s. market from large farms and machinery. then they also talk about reining in costs and inventory.

let's get thoughts from dog kass, contributor to thestreet.com. i've been making the point the market is on a sugar high. we've been hearing from a lot of people. fundamentals don't validate how far the market has come to this point. we're due for a pause. you were early on this now it seems crowded. are you comfortable with that? >> i think just to digress, you did a promo on where everyone was with google, ipo and i was thinking taking the taxi, had that applicability k getting to a music lyric to question about the stock market. i remember what i was doing five years ago but 40 years ago this morning and actually within this hour, i was listening to joanie mitchell, covered in mud. >> you were there? >> yes. >> in the dairy farm in new york. >> you can remember, you weren't

there. >> i was there. i was a good boy. >> started afterwards. >> estate at the el monaco. i think that we should start viewing the market from both sides now, right now. >> wow, that took a while to get to that but i like it. i need a few more facts before we go on. you were there for how many days? >> i was a counselor in the summer camp i attended as a kid. my mom wen to the same camp silver lake, camp. i think i arrived a day before. >> you saw everyone. >> first song ritchie havens

singing freedom and ended with jimi hendrix. >> he couldn't go on and somebody had to stop. >> it was really serendipitous. it was the first official concert given by crosby, stills and nash. young was not -- it was a sensation. go to youtube. they were nervous as hell. they were sensational. it was sensational. as jerry said, what a long, strange trip it's been. >> what do you mean by both sides. >> i look at life. i look at the market from both sides now. i think that when i -- >> wow. >> cue. ♪ ♪ ice cream castles in the air >> what a great song.

there was a time i called for a generational low. in fact, i said by the end of summer, early fall we could see 1050, which was a ludicrous forecast with the s&p at 666. >> where did we get. >> 1028 or so. the planets were aligned, fundamentals improving, beginning to see a second derivative recovery, china up two months in a row, despite consumer retail was good. inventories were weak. we were getting large cost cuts from corporations which ultimately led to second quarter better than expected earnings despite tepid top line. and evaluations were obviously stretched to the downside. i remember saying two or three times, you know, guest hosting in late february, two or three times ago that stocks were trading at a discount to replacement value and the median

was 140% of replacement value. also sentiment was at an extreme. those conditions are much different now. seems to me the consensus is one should stay bullish until the bills up higher interest rates, inflation, higher taxes come due. >> oh, no. >> the positive earnings cycle will dominate the secular and chronic concerns that i have and i share with warren buffett. you know, i'm less optimistic and look at the cycle, hock us pock us, borrowing, lending, 35 to one leverage of domestic economy likely to haunt us and compare it as kevin did to lindsay lohan and britney spears. very cute as children, messy as adults and unlikely to stable a comeback. >> looking from both sides, too tough to make a call.

>> the yin and yang. they could co-exist. particularly with a perspective of 50%, some advance in the s&p, there are differing outcomes. there's a great of uncertainty in economic and profit projections. i remember the poet william yates once wrote the best lack of conviction, the worst are full of passionate intensity. i don't think it's time to have passionate intensity in either direction. >> what was i going to say. i lost my thought already. a lot of your analysis, i think, is based consentment, though. i really listen closely to what you're saying. >> i give this -- i give -- i call this recovery in earnings a

statistical recovery. the consensus is the recovery in 2010 will be shallow but self-sustaining. i give it very low points. inventory replenishment, cost-cutting are low stock point and not pe expanding events. >> you remember the terrible period in the 30s. that's what i was going to ask you. in between selloffs, there were big moves. >> funny you mention. >> are we in a period like that where the really nasty problems are going to keep resurfacing? >> yes. all these non-traditional -- i said back in march, i said that will be it. we'll have this advance which will shock everyone. pension funds very skewed toward bonds because of the outperformance vis-a-vis equities would be forced to reallocate in the next four or five months which happened. i said at that time people will -- since everyone worships

at the alter of price momentum, basically, people will be encouraged. we've had a flip-flop from bearish to bullish. jason made the point to me yesterday afternoon in the office that there was a 372% rally in the dow in '31 in the face of a period when the marginal tax rate went from 25% ultimately to 88% in 1943. but i made the appoint to him, and he agreed, that the trailing multiple when that event started was only seven. today we're starting with a trailing multiple closer to 20. so to get back to what buffet said in the "new york times" article, the s&p is probably around 40 s&p points higher than his october op-ed piece by american im. i think we're in what i would describe as a very choppy,

uneven period of economic growth which will be very hard for both investment managers and corporate managers who no longer have pricing power to navigate it. and that's -- i think we're in a period of substandard performance. i am slightly net short for the first time in a long time. >> it's more dangerous to be long than short right now. >> yeah. i think we're in an environment i would describe as it's best to lose opportunities than capital perspectively. >> we could -- >> it's not only sentiment. >> the financial crisis could be a long lasting phenomenon that is multi-years. >> that's doing to haunt us for a long period of time. secular non-traditional head winds warren buffett points out, i love to go over my nine or ten concerns, are going to account as a governor to economic growth and stock market performance. >> doug is going to be with us

for the rest of the program. we'll have more as we go. also a new nbc poll today suggests that americans are skeptical about president obama's health care reform plan. only one in four surveyed prove of the president's handling of this issue. president obama's overall approval reagan in the poll is now at 51%. that is a two-point drop from last monday and a ten-point decline since april. 54% of those surveyed are more concerned that the government will go too far in reforming the nation's health care system. 41% is more worried that the reform will not do enough to lower costs and cover the unin sure. if you've got comments or questions about anything you see on "squawk" e-mail us at cnn.com. "squawk"@cnn.com. when we come back, google is celebrating five-year anniversary of ipo. back in 2004 the web giant said it wanted to make the world a better place. we're going to take a look back and forward with our internet analyst jordan rowan. later cash for clunkers may

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sony introducing a slim model of ps 3 and reducing price of current. it's been rumored be available with a 1 gb hard drive.

current will drop to 229, down from 329. price cuts worldwide. retailers started to ties reduced price. sony ceo will join "squawk on the street." that's jack treton. you meet -- >> i wrote a memo ironically mitchell was holed up in a hotel room watching on television. >> she was on the dick cavet, who later had a show on cnbc, currently writes for "the new york times." >> in twilight years before dennis groden and dennis miller we had -- >> did you see him? >> i did. >> you know, tom snyder had a talk show. conan was just repeats over here. >> all right. google shares going on sale for

the first time ever. ipo price was $85 a pop. stock closed yesterday at $445 and change. rowan one of the leading internet analyst during google ipo. he now runs investment banking firm clear metal partners. also with us guest host doug kass. jordan there was a lot of naysayers when it was priced at 85, jumped for $100 the next day, doubled two months later. people were saying the whole way along how can you possibly come up with justification. >> they weren't just naysayers, they were angry that google went public. if you look at what google has done in the five years since it went public it's amazing. to consumers google is at the center of the internet. arguably the only other platform that approached that on any dimension is facebook. but facebook doesn't have the

revenue generating capabilities google did. to the advertising world it turned on its head. what's your roi, the last time someone on madison avenue was worried about what the return on an investment was. google had advertisers bid on key words, hundreds of thousands, asking what the value of each click was. finally to investors google employees and people who owned real estate in the bay area, $150 billion in wealth has been created since that company went publ public. it was higher than that before. even today, we may not see $150 wealth generation in the period of five years. doesn't come along very often. >> ipo was born out of instability. originally indicated 110, 120. it was a dutch auction, came at 85. it wasn't -- as we discussed in

the greenroom, in a hostile value. >> called overvalued, going to be a huge -- blow up. >> sworn from barons. >> yeah. >> didn't think it was going to go well. >> did you say no? will you speak up? are you afraid? >> look, jordan, there was search done when yahoo! was around? >> sure. >> did they search for words? putting a little ad never has driven me to anything. charging for words so you hit it, that really put -- that's how they made money. did the other search companies do it that way? >> yahoo! had purchased the company which at one point had come goto.com. that said, overture pioneered

the business model -- overture which yahoo! owned, the intellectual property behind charging for click. >> they did? >> they did. in fact they got 4 million shares of google, which they later sold -- yahoo! owned, later sold in the ipo for a handy profit. >> will they ever make money on youtube? >> they will make a little bit of money. >> not a profit center? >> not today. the problem with youtube, the vast majority of the intellectual property, that content, rich media goes onto individual content," like cnbc.com. they aren't distributing stuff advertisers want to be associated with en masse. they have the entire long tail. >> what woulding the next transitional acquisition for them? would they buy facebook? >> i don't believe so.

i don't believe so. that would certainly be transformational but i don't think they would do that unless their fortunes were turning another direction. google has guerrilla growth ahead of it, massive growth in mobile search. we don't know how that will play. >> blackberry on cell phone. >> the whole world's transition to smart phones, and smarter than a few years ago. people figure out searches via codes. >> what about stock now? >> fast forward to today. >> the stock is diagnosed and understood at this point. the growth is low. we're now talking about low- to mid-singles squens growth if that. when it was going public it was 20 to 30% a quarter, over 100% a year. it's a lot less exciting than it was today. i use a cash-based yield approach to value like i would any traditional media company. when it cheap below $400 a

share, makes sense -- >> what would free cash flow yield be. >> cap ex reduced to much -- if you're getting that for something with the option vol, anywhere in the globe returning to growth, dominant market condition, that would be growth. you have to be opportunistic. it's time to be precise. not everything going up and everything going down, now is the time to identify things that will outperform relative to other sectors. >> jordan, we want to thank you very much for coming in today. good to see you again. >> thank you. >> doug will be with us the rest of the day. >> the ouster of citi ceo, interesting story behind that. or cal of omaha speaks and says economy is out of the kmrg room on the slow path to recovery. some warnings. we'll talk more with doug kass. in the meantime, take a look at crude despite bullish then numbers yesterday. we'll get more today.

dow down 31.

former ceo ned kelly, fed, office of controller said to have urged the bank to make a

change just weeks before kelly's surprise departure. i want to talk to doug more but after the break. >> comments or questions we'd love to hear from you. squawk@cnn.com is our address. futures and what investors are focusing on. as we go to break, the performance of the most widely held stock back in two minutes time.

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welcome back to "squawk box." the futures have been under pressure. futures down by almost 50 points below fair value. this comes after a morning we've seen across the board in asia and europe. warren buffett with comments encouraging and cautious. buffet said the u.s. economy is out of the emergency room and appears to be on a slow path to recovery. eventually we will need to deal with side effects of what he calls enormous doses of monetary

medicine. national hurricane center said bill has maximum sustained winds of 135 miles an hour. first hurricane of 2009 season. dow component lower. company did beat earnings estimate with both the earnings and sales, but it said while consumer spending on pcs appears to be recovering that is not the case with computer spending from corporations. >> did i miss the tropical storm? >> yes, ana. >> ana was here. it's coming after bill. do we have to go? we have to go. all this stuff in about woodstock. people are interested in it. don't stay away from the brown acid. do you remember that. >> that was wavy gravey from the hog farm. >> he announced that. >> stay away from that. did you meet anyone? outside the mud and everything,

did you -- >> i went with my girlfriend at the time, toby. and how do i put this? >> that's what i'm asking. how do you put it. it was 40 years ago. no one cares that much. >> yes, i met a lot of friends. >> just wondered. >> i missed out on that. i was 12 or 13. >> it was remarkable. the rain was remarkable. on the third day when the crowd yelling no rain, the thunder. >> people also saying neil young did join for an electric set. were they wrong about that? >> i don't remember that. >> it was 40 years ago. >> it might have been the case but they did start as a threesome in the concert. he might have joined them later on. >> back to toby again. time for a check on the markets this morning.

for that we head to the cme group. jessica, a fan favorite of ms global. >> good morning, joe. >> good morning. monday it looked like we were in the throes of something, yesterday, another one-day thing. these are head fakes. are we in the throes of something, a pullback? >> i think we are in the throes of a pullback. the market right now is very sensitive to what's going on abroad. chinese markets got shellacked overnight. futures are responding. a pullback would be healthy. the market has to question the next catalyst. we did receive earnings from home depot and target and the financial sector but i'm not sure if that should properel to where we are. see the cash on the sidelines, reenter the trades and go higher. however, if people become more cautious about the outlook for the global recovery i think we

could try lower. >> i'm trying to figure how the market could shake out a little bit of the optimism but not go down enough to let people -- maybe gets so scary people don't come back in. >> people don't want to miss the leg higher. they saw their portfolio creamed the first part of the year and they would like to make money back. there are head winds, consumer sector. funds data, consumer -- pardon me leverage in the consumer sector is 100% of gtp, the growth. china questioning their move forward. i think as the chinese government tried to turn off that spigot of liquidity, the rest of the world is fearful that's going to impact the global consumer. they have done a good job of stimulating their own economy but they can't do that much more

to stimulate global. exports down 23%. there is economy -- that being said, we have to look out for washington. the policies coming from the hill are still presenting a threat to the equity market. i think that investors are still taking a cautious approach because they are not really sure what's going to happen in the coming weeks. >> all right. jessica, thanks. >> thanks a lot, joe. >> thank you. see alcoa, goldman down. >> coming up, general motors ramping up thanks to cash for clunkers program. dealers not so happy with reimbursement process. under the hood of the auto industry after this. as we take a break, top auto manufacturers.

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kind of morning. the more we talk about that, get our mind off what happened 40 years ago. >> good times. >> at the time it defined it. subsequent ones like alcoa, what was the other one. >> altamont was december of '69, four or five months later. of course the held. hell's angels were defending the dead. someone died. >> and the stones. >> then i believe in may 1970, we had kent state. so it was a tumultuous period. >> the month before a little bit -- squeaky just got out. >> becky and i remember '70 because the baby formula. >> you weren't born. >> september of '70. >> i have this vision of joe in elementary school with test tubes. >> 1975. >> tried to kill terry ford, a

manson accolade. >> now we could have her on the show. >> that would be weird. she's got a squeaky voice, hence the name. >> let's talk about cash for clunkers programs. i can't think of a transition. cash for clunkers is hitting a rough patch. phil lebeau with more on that story. >> reporter: good morning, becky. if you talk with dealers, you hear one thing, cash for clunkers isn't great f great fo not great getting money from government. we've talked to a number of dealers around the country. we've heard complaints they are not receiving rebates. informal survey of 12 dealers, not dealers. >> it appears as though they are not going to -- claims for cash. four out of five claims was rejected because of errors.

>> that's a steady complaint from a lot of dealers. applications were filled out and sent back, told they were not complete. general motors boosting production by 60,000 vehicles. in the process of boosting production, the company will recall 1,000350 workers, adding shifts and hours at two plants. when you thi about this, cash for clunkers has been good for all the auto manufacturers because, carl, they were adding production, low as far as inventory, cash for clunkers has spurred them to increase production. we're going to see that in the third and fourth quarter. dealers, they are saying enough with the wait. give us the rebates we deserve making these transactions and filling out the paperwork. >> phil, do you have a total number, just an estimate of how many of these deals, just a ballpark? >> it's funny you asked. total dollar value is about $1.5 billion, 360,000 transactions.

that doesn't mean all of them went through and there haven't been any rebates. we're hearing from overwhelming number of dealers we talked with, we haven't gotten our money yet. >> watching the government in action, 360,000. >> the latest number, as of yesterday, last night or yesterday morning, 411,000. >> 411. >> okay. we want to cover 47 million uninsured. is that how we're going to do it? we go -- we have a little trouble with 400,000. >> see how easy this was. do it 100 times. >> listen, guys, i think part of the problem here is when they set up this program they were told, listen, germany has a similar program, modelled after that program. they were told fraud is rampant or very easy to happen in these types of programs. you have to make sure that doesn't happen. perhaps the federal government has gone onoverboard to make sure there hasn't been, not too easy for dealers to recycle

cars. >> what happens in the meantime, dealers have to hold it off? >> they are essentially loaning money, sitting and waiting for rebates to come back. the car is gone. keep in mind, you don't get the money until you send the car off. it's not like they are saying we're not getting our money let's turn around and sell this car, it's gone. >> more from the dealer perspective, mike jackson, ceo of auto nation, largest gm ford and chrysler dealers joins us. are you guys getting paid or are you guys getting stuck? >> carl, good morning. how is everyone today? first, phil's report is completely accurate. we're probably owed about $45 million at this point. but i'm a bit sanguine about it. to me it's a little like you throw a drowning man the life preserver and you complain about

the color of the life preserver. this is a fantastic stimulus program that's working on every level. it is so successful beyond everyone's expectation that the department of precipitation was not prepared to deal with this unbelievable surge. they are on it. they are adding more resources every day. they are worried about fraud, being absolute perfectionist about every submission. that's tough. the rule book is 136 pages. they want to get it right. that's understandable. they are protecting taxpayer dollars. i think in the next few weeks they will break the logjam and get the rebates flowing. you're right. dealers have advanced the money on behalf of the customers. that's money out the door the industry is now trying to collect from the u.s. government. >> a website reported yesterday

the program is fading fast. they look at auto purchase intent, a pretty good predictor of sales, down 31%, most eager shoppers have gotten in. prices are climbing, inventories lean, giving consumers who haven't already done this more reason to sit back. are we already at the end of the road on this? >> well, i think end of the road is, again, an exaggeration. there was a tremendous surge at the beginning. imagine we've beenb talking abt this program since december of '08. so people ha been listening about cash for clunkers for six months, preparing for the launch of the program. then the word went out that the program wouldn't last that long so you had a double surge. now we're getting down to a more normal pace. but it's still driving traffic and here is the important point. it has coat tailed -- it's driving traffic beyond cash for clunkers. hate been a green light to american consumer it's safe to

come back to the market, that the worst is over and doing exactly what a stimulus program is supposed to do. >> mr. jackson, good moing. doug kass. >> good morning. >> one question, are you concerned this is a one-time event and that we're taking away from 2010 sales. so you'll see a double dip in automobile sales let's say in the spring of 2010? >> there's no question that this is incremental shot in the arm, non-recurring business. these are basically non-buyers. people have bought these cars ten years ago, they are going to drive them another five years. they are conservative. they are frugal. they have excellent credit scores. by the way. one of the reasons the program is so successful, we can get these customers financed, because the down payment in essence is coming from the government. they have good credit stores, no

negative equity in the trade. beyond that, here is the point. it has coat tailed. it's driving traffic beyond clunkers. it's non-recurring, buyers in the marketplace. but the program will end. but you have lifted the sales rate out of the below 10 million unit level and going into next year we'll be tracking 11.5. you won't be able to sustain the peek we'll hit in august, which in my mind will clearly be over 12 million. so it will fall back to something less, but it's going to -- this abysmal under 10 million unit figure we struggled with will be behind us. >> carl and joe, something to nykeep in mind what he's talkin about there's a churning of the market. i'm sure he's seeing this in his dealerships. i've talked to a number of dealers, somebody came in, i'm

interested in cash for clunkers. because of vehicle they have it doesn't quite work to make the transaction. they have now gone into the showroom. now in their mind they are saying maybe i can't do cash for clunkers but i am interested in moving into a new vehicle. that's the benefit from cash for clunkers. in fact, i hear from a number of dealers, the churning of the market we'll see the residual affects for the next several months. not a huge surge like wee seen in the end of july but you will start to see auto sales on a monthly basis start to slowly gradually build. >> phil is absolutely right. we were stuck at 9.5 million basically since september 15th with the collapse of lehman brothers. something from a stimulus point of view had to move us off that. if cash for clunkers were strictly clunker business, i would say it's all going away. it's a false dream. that's not what's happening. it's driven traffic beyond that and has moved this market above 10 million and set the stage for

a gradual recovery. >> mike, what we were looking at a minute ago the top ten new vehicles purchased, as of august 149. toyota has three in the top ten. honda has three as well. i think ford has two and honda and nissan bringing up the year. is it helping gm or chrysler at all? >> they have their proportion ate share of clunker business. there's no distortion there. the majority of clunkers are domestic products. if you think back to 10, 15 years ago, at that point they had 70, 75% share of the marketplace. the program is more successful in the heartland of america, where the domestics has strength, where the clunkers are, less on the coast. as far as achieving a fuel economimprovement, it is a full 10 miles per gallon

improvement on paper. if you look at these clunkers, they are not getting what they originally said they were, it's probably in the real world a 15 mile per gallon groochlt in fuel economy. the program is succeeding on every level except for this administrative logjam, which we have at the moment, which i'm confident they will resolve. >> interesting story. mike, thanks for bringing that perspective. phil, areciate your reporting as well. see you later. >> coming up, warren buffett making waves after writing an op-ed that says whatever it takes method makes sense to get this economy flourishing again. he warns there could be a hangover. details in a bit. as we head to break, let's look at dow futures. still talking about down but at this point 54 points below fair value for dow futures. we have seen much worse levels earlier this morning. continue to keep an eye on it. stay right here. up next, before you make a trade, you need your daily dose

of stocks to watch. we break down today's movers and shakers right after the break.

gives you an idea of kind of environment we're operating in. stocks to watch. deere, $0.99, estimate $0.56.

revenue above 5.98, estimate of 5.2 higher. fourth quarter equipment sales down 34%. full year guidance has been updated. equipment sales down 21%, had seen it down 19%. so full year net income is now targeted at 270 million versus previous 250 million. so the stock you can see the ask about $0.10 below yesterday's close.b.j.'s wholesale, $0.02 a. revenue above exptations. full year guyed to a range that includes where the street is. hewlett-packard, revenues slightly above fourth quarter guided 112 above expectations. however, revenue growth is 8%. that implied 29.6 billion, which is slightly below 29.8.

that stock at this point is called lower. alcoa indicated lower after goldman sachs cut rating from neutral to buy with a $13 price target. cigna downgraded, credit suisse, disadvantageous cost structure compared to peers. taylor upgraded to buy from neutral, ubs, target increase. target overweight to neutral and piper going to -- >> almost 8%. when we come back this morning more market commentary from doug kass, sea breeze. later in the hour, robert schiller, economics professor at yale. talk about animal spirit, state of economy, behavioral economics and whether or not this market is really in recovery. don't go away. fithe sameooes you >> stocks to watch -- so you can be a disciplined trader.

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schiller. paging dr. buffett. another diagnoses of the nation's economic recovery. out of the emergency room and ready for rehab, will the dosage of monetary medicine be too much for the patient to handle? the prospects for gold.

now. good wednesday morning. welcome back to squawk on cnbc. first in business worldwide. i'm carl quintanilla with joe kernen and becky quick. guest host doug kass from sea breeze management. good work over the last hour, one hour to go. a quick look at the markets. futures are negative after china officially in the bear market. august 4th they hit their high for the year and have come down 20%. >> when we talk about bear market swing we talk about the course of months, high from official start of the bear markets. not in the case of china. a faster time scale. >> happened in a hurry. meantime most famous investors said u.s. economy on the slow path to recovery.

op-ed in the "new york times," warren buffett writes -- this year the deficit will rise to 1% of gdp, more than twice the non-wartime record. buffett notes the debt held publicly is mushrooming increasing more than one percentage point a month. he writes our immediate problem is to get the country back on its feet and flourishing, whatever it takes still makes sense. must op-ed with call to washington --

joe, he does not have high hopes for even congress to do something about this? >> no. i don't think, you know, we have to read between the lines. remember cap and trade and some of this other stuff. i kind of from reading his body language, i think he was urging the administration to really focus on the financial crisis. it's kind of funny he uses the global warming analogy, when at the same time i'm not sure he thought it was the time for a tax, or whatever, given -- >> don't overreach. >> i think he likes the term -- >> i do. >> what would have been the harm in saying that this is not the time to tackle big public policy. >> he always doesn't want to weigh in, doesn't know enough about make of the issues. he knows what implications will be if we kept spending like this. >> jason gave me this chart.

you can focus on the bottom chart. >> show it to henry. >> henry. total federal spending percentage of gdp through 2079. this is the real issue. provides a governor or headwind for the economic growth and market participation. >> are you satisfied with the accounting on berkshires s&p -- going to make money. >> good yes. >> end up with him making a ton of money. >> critical of it. you know, he was so anti-these derivatives calling them financial weapons of mass destruction. and i thought it was a contradiction. but he's going to end up making money. the stock as you know, $145,000 march 2008 he covered the stock,

actually went long at one point down to $82,000 a share, $98,000 a share now. i thought it was somewhat of a contradiction in strategy and in theory. however, he is going to make money. >> not all derivatives are created equal. selling a put is not that esoteric, even long-term. >> your question is a valid question. there was understatement of the unrealized loss, that's why increasingly bearish. >> if we were in a ten-year period, god for bid, like the '30s, he may not -- if we ended up five or six years down 1,000. >> some dreyfus tifs were like 18 year derivatives. >> shottened them up. >> ten years from now, aren't they? >> i think he'll end up making money. >> i do, too. >> premium on the puts was $4.7 billion. >> talk hp checking into

earnings central. says here dow component reported third quarter earnings beat the street by a penny, ahead of consensus, fourth quarter earnings guide above expectations. forecast of 8% sequential growth on revenues is falling slightly short. management says the business i stabilizing, may see weakness down a dollar. the company report add blowout, $0.99, $0.02 ahead of revenue. revenue ahead of expectation. company lowering expectations. that stock is lower. find out what is driving market action. richburg, performing capital partners at the cme group in chicago. i asked our last market player the same thing rich, monday throes of a pullback, tuesday looked like a one day thing. again today with china calling the shots are we in some type of

corrective mode here? >> you asked me last month, i came up with the same answer. i think we are in a pullback. it couldn't surprise me if we pulled back 10%. we ran a long way quickly. you can't have a healthy respect for scepticism and fear and volatility after seeing what's happened in china in literally three weeks. i think the market has been ahead of the fundamentals. that's pretty common. it wouldn't surprise me at all if we pulled back. i would expect a pullback especially going into the month of october which always tends to bring a lot of surprises. >> so that will give some of the people that missed the train, missed the 45%, that will give people an opportunity to buy if they want to. will they have the fortitude, the intestinal fortitude to step into this as it gets scary? >> good question. again, i'm going to go back to i'm surprised we are where we are. take what i say with a grain of salt like everybody else. there is that underpinning that

people who missed it might look to get in. at the same time people do look at the trend lines and chart lines of the 30s. they saw that we had big rallies and big selloffs, big rallies and big selloffs. it wouldn't surprise me if those play into the factors and the emotions of the market. i think we discounted how much emotions play into the market. it's not all about facts, fundamentals, trends. it's about what did i just hear, feel, and what would my knee-jerk reaction be? >> all right. that sums it up, richard. good to see you. >> thanks. good to see you. >> a pair of house democrats seeking detailed financial records from dozens of large insurance companies. congressman henry waxman say the move is part of the investigation into the industry's executive compensation and other business practices. right now they are not moving with subpoenas, they are just asking for cooperation. a lot of people watching this very closely.

also americans are still skeptical about the ability of the white house to overhaul the nation's health care system. according to a new nbc health care survey, 47% of americans disapprove of the job the president is doing in handling the issue of health care reform. about 41% approve. that is unchanged from last month. 36% believe president's reform plans were a good idea. 42% think it's a bad idea. that is also unchanged from last month. joining us with gop reaction to the poll and latest on the health care battle is senator jim demint, member of congress joint economic committees. senator, thank you for joining us today. >> thanks for having me. it's good to be out of washington and back in the real world. >> we know you're opposed to any public plan. the lead story of "the new york times" talk about how the democrats are ready to do this themselves. everything happen with the republicans strident tone during

the congressional recess is part of the reason. what happens if the democrats try and do this by themselves? >> first of all, that's not true. for years a lot of us are working on reform. the democrats won't talk about anything but a government-run plan. they won't talk about ways to make insurance companies complete against state lines, fair tax treatment for those that won't get insurance at work. they want to talk about a government plan. they screamed and hollered about us changing rules to pass something they were against. that's what they are talking about now. instead of the 60-vote threshold in the senate to pass mainly legislation, they are going to change the rules in a way that allows them to do it with 51 votes. i think the american people are already outraged. if we get into this kind of back room shenanigans, i think the american people will throw them out of office and they should. >> you came into the spotlight after you made comments about health care reform.

you said this would be president obama's waterloo if health care blocked. what happens if they pass it with the democrats? is that the same situation? >> yeah, it's going to be a big problem for them if they use legislative maneuvers to pass something the american people don't want. i want to stop the bad policy so we can force the president to sit down and talk about ways to make the health care system better. there are a lot of aspects that work well. we don't need to replace that with government management. we need to make insurance more affordable and more available. we need to deal with pre-existing conditions. there are ways to do that. i've introduced a plan that gets at a lot of it, so have some other republicans. this idea the democrats are putting forward the republicans don't want to do anything is completely false. in fact, barack obama when he was in the senate voted against just about every piece of legislation that would make it less expensive and more available for people to have insurance. >> senator, your comments, some

people could say that backed the president into the corner where he has to, to save face, he needs to get this done in some fashion. that's one thing. my question to you is -- my question to you, will the final thing that's signed, will it have to include a co-op, rather than a public plan, just to get the democrats to pass it? >> that's just a different word for the same thing. barney frank said the co-op will lead us a better system. they are playing with words. that's why americans are increasingly angry. they wanted to pass a bill last month before anyone read it. now that people are starting to open this up, tab pages as i have, what's in this legislation is not what the president is saying. if he passes this without any republican support or really american support, i think it's going to hurt his presidency,

democrats in next election. my hope is republicans will continue to talk about real options that work so the american people can see which side is really working on health care reform. >> senator, when you start talking about cooperatives, that has been the idea that most people have pinned their hope on some sort of cooperation between both sides of the aisle. when we were not too long ago at capitol hill with senators, we had senators from your side of the aisle. judd gregg, kay bailey hutchison, lamar alexander who all said that's the type of idea you might be able to see some room for compromise. >> we have to understand, this is a government-sponsored enterprise they are talking about. this is fanny med in every state they are talking about. we see what it's done to our financial markets. we cannot afford the same concept applied in health care. if we want competition between insurance companies let's take away the barriers for interstate competition. it makes no sense to create a government plan to have

competition when we won't let insurance companies compete across state lines. >> i guess my question, where are you willing to give. if you're looking for a compromise, where would you be willing to reach out? >> we don't need to sit down and compromise about what type of insurance plan to have. any republican that does that should not be a republican. we need to talk about how to get health care in the hands of every american. no american should go uninsured. there are ways to do that. but the fact you can look at this legislation and there's no reform of lawsuit abuse tells you that this is not about fixing the health care system, this is about government control. >> we're trying to figure out what's really going to happen. as a realist, do you think -- what will the final plan look like? will a co-op, if they do it that way, will they lose the liberal sized their own party? if they want to do it themselves they could do it. maybe a co-op could get the blue dogs on. will they lose the nadlers and

wieners if they do it that way. they seem to be in disarray. co-ops take power away from federal government. it's been the holy grail for liberal democrats for years. that could split the party if they go to co-op. they will look at federal mandates. it will essentially be a cash for clunkers at every state level that the federal government is trying to manage from a distance. so they don't seem to have their act together here and they are changing their words every day but so far the legislation hasn't changed. >> you just argued that co-ops and a public plan are really the same using different words but you're also saying there is a difference because it would alter the way blue dogs vote? >> theoretically the co-ops have more state control. but if you have the federal mandates on it like -- >> senator, it looks like we're losing, having trouble with transmissions. again, like to extend thanks to

senator jim demint. like to speak to them soon. >> they pulled the plug on that. someone over at nbc news. >> if you would like to write in about the conspiracy theories feel free. it's squawk@cnbc.com. >> you're out of here demint. enough! enough! >>. >> housing bubbles, markets, warren buffett's take on the recovery. coming up at 8:30 eastern, robert shiller. prospect for gold, find out if demand is holding up for the precious metal. "squawk box" will be right back. when people say,

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let's talk about some corporate headlines this morning. u.s. regulators pressured citigroup to oust cfo. they are said to have urged the bank to make a change just weeks before kelly's surprise departure from that position. >> the world gold council out

with trends for q 2. gold up 46% from a year ago despite higher prices and a struggling jewelry industry. joining us george stanley, managing director from the gold council. good to have you back. people are watching. prices of gold, see if they can break 1,000 after five times getting to the resistance. do you think trends are pointing to that happening in the near future? >> i think even though the numbers are not that great for q2, better than the three quarters when the economic crisis was at its worst. some grounds for optimism. jewelry is beginning to pick up in one or two markets around the world. we expect that to get stronger. investors still like safety and security of gold. i think some of the promising signs are out there right now quite definitely. talking about consumer demand, down 22%. china had a net increase, is

that right? >> yeah. china has been relatively immune, i think, to the worst affects of the global economic crisis. their economy seems somewhat insulated. we've seen throughout the bad times we've had enmany other countries in jewelry consumption, china has been the one area of major strength and that was the case again in the second quarter of this year. >> for those who look at it as a hedge against inflation, is it a hard sell when you've got cpi running at lowest year over year since the '60s. >> cpi core figures exclude food and energy. last time i checked people have to eat and drive. there's a perception inflation is coming, not that it's necessarily showing up in the numbers right now but perception of what inflation might be coming, people moving into gold as an inflation hedge, buy it before inflation comes. best thing to do. you buy insurance policy before

your house burns down not when it's alight. warren buffett's op-ed points to that how about central bank buying and selling, more gold onto the market or people hording it. >> less than the last 20 years. second quarter numbers were more or less imbalanced. in fact we showed very, very small net central bank buying for the first time in 20 years or more. i don't know whether that's going to continue, but i think the point is the appetite for selling among big european holders seems to be dwindling and appetite for purchasers among small holders of gold in the developing world, china,  russia is actually growing of that's good for gold going forward. >> in some governments they are actually running out of storage space, housing space for bullion. that is true? >> no, i haven't heard that. every once in a while a scare

story there's not enough room for gold. there's an awful lot of room. most central banks have deposit others, there's room at those, fed in new york, bank in england. i discount those toers completely quite honestly. >> the vocal nature of gold bugs and we hear from them a lot at  our headquarters, their e-mail, does their incessant call for gold to rise help or hurt the case for gold overall? are they too bombastic. >> there are people monotonous. there are people on the bear side that say it's going to come down. it doesn't. people on the other side that says it will move up. that's not true up. it moves up and down and that's why people like it as a trading vehicle. >> demand numbers are interesting. see what futures tell us. we'll keep a close eye. hope you'll come back.

>> thank you. >> you are waiting for the prospector to play. >> he's ready. i love gold. there's nothing like it. the feel of it. the weight of it. the safety of it. >> they aren't making it anymore, not that much. >> a few local.x i see a tug-of-war between the large output gap and the inevitability of inflation creating a stalemate for some time to come in commodities. >> you love the movie. >> love the movie. >> coming up next half hour robert shiller creator of housing index, economic professor at yale, housing management. is he in the buffett camp on economic recovery? we'll find out. "squawk box" will be right back.

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let's look at the futures. as you can see at this point you're talking about relatively steep losses, weakest levels of the morning. dow futures down 96 points. up next, the word from the trading floor of chicago and wall street. also warren buffett's op-ed in the "new york times" about the economic recovery is generating buzz. what do the trader thinks about it? next on "squawk." %%%%%%%%

welcome back to "squawk" for a wednesday on cnbc, first in business worldwide. an hour away from the opening bell on wall street. spending the moment with doug kass, guest host of sea breeze

partnership manage. talked about woodstock, the market, inflation, a little bit of gold a lot going on. futures lower. the big splash is buffett are making comments encouraging and cautious. in a "new york times" op-ed, buffett said u.s. economy out of the emergency room on the slow path to recovery, but eventually we're going to need to deal with side effects of what he calls enormous doses of monetary medicine. >> how would he -- if he were on today on a phoner, he would have said it -- could he -- can you say -- if you won't do a -- i can't do it. you do it. you just read a quote from him. >> i have too much respect for warren. i'm not going to mimic him today. help me on this. >> i can't go anywhere. >> he can do anybody. >> you watch the show. you can

do anyone. that's kramer. >> he gets me. >> nouriel rabini. >> can we move on? just trying to showcase your evil talents. housing market heading to a second bubble. >> work on robert shiller. >> slow road to recovery, here he is from new haven, connecticut, robert shiller, economics university professor, co-founder of macromarkets doug kass is here. i don't know if he could do you or not, doctor. you're pretty straightforward. have you been thinking about how -- >> i'll listen closely. >> listen closely. >> doctor, we were excited about what we saw in the housing market basically on some of your numbers from case-shiller. was that unwarranted or normal up three back two up three back two. >> we're not in normal times. we have a high fraction still of sales that are foreclosures.

that probably affects the market. so it's hard to know how to -- how much to extrapolate these little wiggle. i'm thinking -- we have a forecasting market with umm which we talked about before. that's predicting right now in five years our home prices will be about 4% higher than in may. that's a very unexciting forecast. it's a forecast that we're not coming back into a bubble. that seems to me, you know, i won't second-guess the market but the market is saying that it's going to be just kind of flat. >> so we won't be on that roller coaster that we were on where things head higher. >> that's what the market is saying. it could be wrong. i think the economy is much less forecastable than we thought a couple years ago, right? and so there could be another

bubble. absolutely there could be. the scenario that the market is favoring is uninteresting brand, nothing is going to happen. >> do we need the housing market to be sort of a roulette wheel? the overall economy can do well. we just live in our homes. we don't need that to be like the stock market. doesn't that take the worst case scenario off the table if, indeed, housing prices are higher, even though it's only 4%. >> you have to remember the housing bubble that occurred in the early 2000 was really unique in u.s. history. we've heifer had such a big boom. all the other recovers were often based on return on the construction industry but not in booms in home prices. >> yeah. so that seems like -- that's not necessarily bad. at least not 50% lower in four or five years. >> that could happen. >> maybe we should start ruling things out. what couldn't happen. >> that's what economics is very

bad at. i'll tell you what couldn't happen. they won't fall 100%. >> great. doug. >> bob, doug kass. >> nice to see you here. >> remember the real estate boom special on cnbc, bob and i were the bears. >> we felt kind of isolated. >> we were isolated at that point. >> is that another top we called. >> that was bill griffin's special. let me talk about a potential green shoot. after i graduated wharton, i cut my teeth at a housing analyst. as we have learned unlike prior cycles, it wasn't employment or high interest rates which served to precipitate the downturn in housing it was other issues

before affordability and speculation. now in august 2009, affordability is at a 40-year high. more importantly the cost of home ownership vis-a-vis the cost of renting is back to 2000 levels, which is a very big positive after being as much as 70% higher the cost of home ownership, the rentals. so if we do get a self-sustaining economic recovery, which i am uncertain about, i wondered if we won't be surprised to the upside by housing. >> i think we could be. i was serious when i said we could have another bubble. you're right, the low interest rates, affordability leaning that way and ratios back down. i get glimmers of excitement among some people. a high inventory of unsold homes, a lot of wariness because of recent experience. i would say well under half

probability we emerge into another housing bubble in the next five years. >> we're just trying to figure out, professor whether we need to talk about the '30s. we see that all the time. some type of reference to not a repeat of what happened but maybe it rhymes, whatever they are saying. are these feelings that were coming out of it? are our hopes doing to be dashed again and again over the next few years with a chronic malaise? >> i think the great depression is a very relevant example because so many -- there are many parallel with that period. the big difference is we had a huge bailout. then they didn't. they let all the banks fail. i think it's good to think about after roosevelt got elected, after he took office in march of '33, the stock market doubled in a matter of months. then it was on a bull market

until '37, that was four years. there was a definite recovery. the recession was over after '33. but it didn't restore prosperity. that's what we have to worry about. years went by in the great depression and people started asking, we've had this recovery, where are the jobs? why didn't the unemployment rate ever fall below 10%. that's what i worry could happen. we'll have a recovery and it will be exceptionally weak for years to come. >> are we in control of our fate whether that happens or not and how do we make sure it doesn't? >> i think we have to be ready to do more stimulus and we have to be ready to continue the support of the credit markets. and that's just reality. it's not clearly over yet. unfortunately. because the animal spirits are

beaten down. you know, we just saw disappointing retail sales numbers. it's not obvious that people are really ready to spend again. that may take years to rekindle that sense of normalcy. >> a lot of people say the stock market is ahead of itself. the fundamentals don't want where it is, it's on a sugar high. can we have animal spirits if we don't have fund men's. can we fake it and things do get better or do we actually need -- >> this the subject of my new pook. >> -- my new book. >> how convenient. >> animal spirit refers to the sense of confidence that comes back -- it's kind of a social epidemic, a feedback mechanism. it's something that is hard to predict.

is it hard to predict will the next motion picture succeed, because our culture is changing and stories that amplify our accepts of confidence or pull it back are vulnerable. they change in a kind of s.e.c. events that economists are not very good at understanding. >> well, then i would say if we need to choose to be half full or half empty, you can make a difference by being at least looking on the bright side and being more optimistic, no? >> are you telling me to be more optimistic? >> kind of. not really. but i'm interested you do seem to be saying that the animal spirits may not be justified by the fundamentals, but it can be self-fulfilling anyway. fundamentals could improve after the animal spirits come back. >> that's the whole issue. it's the self-fulfilling prophe

prophecy. >> you've got to talk to doug kass. you hear what we're saying? it does make a difference, but you're negative. >> yes. >> you're not going to cooperate and a half no. >> with enough government stimulus, you put enough fuel and you can light a fire in a hurricane. >> next time they say we're cheerleaders i'm going to say i'm just doing my part. >> i don't think cheerleading is what does it. it's creating an environment that's applausably better. herbert hoover became a cheerleader and he became a laughing stock. >> it's a fine line. it's a little esoteric. do you agree? do you think --

>> i think sentiment can change overnight. we have a very resilient economy. go back to world war ii. you look at the plight of germany and japan and see how quickly they became world economic powers coming out of world war ii. so things will get better. please say hi -- bob, say hi to martin. >> he's a great inspiration to me. >> a lot of people have gone broke, the big usa. at the very least -- >> look at reverse of equities in '09. >> thank you dr. shillor. see you later. >> rolling out quarterly results. will shareholders reap the rewards? will they -- >> feel good. >> words of wisdom. futures not quite to the session

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u.s. government will release

details 9:30 eastern on agreement to end the ubs tax evasion case. that will be made public after it's signed of the settlement in total expected to yield 10,000 account identities. heard from deere & company. shares all over the board after numbers release. numbers beat expectation but company lowered sales expectations for some segments. closed 45.09 bids at 44.07. we have seen this stock having some pretty volatile moves this morning so keep an eye on that. dow component hewlett-packard, low as well. company came out with better than expected earnings. made comments about pc buying. corporate sector, questions about revenue, guidance it's giving for the current quarter. again, that dow component called lower today.

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♪ >> well, sinatra didn't know how right he was. talk about a category four storm. bill has maximum sustained winds 135 miles an hour. the first hurricane of the 2009 atlantic season. we're talking cat three now. so relatively serious and the people in bermuda, maybe a four. might have get rain along the east coast coast, hopefully not enough -- >> a long way off.

>> yeah. >> east coast beaches. speaking of hurricanes, let's speak to art cashin, director of ubs floor communications. >> is that the big wind floor? >> it's not hot air. we know that. you've been say for weeks you've got to watch china, you've got to watch china. certainly over the last two or three days, are they telling us where we're going to be eventually? >> well, they certainly did. they topped out before the other markets. they had their rebound at the end of '08, long before we had our march bounce. and they had a bit of a sharper rally. they seem to have peaked out before we did. so they're a bit of a leading indicator. there is a good deal of concern about the validity of some of the economic statistics coming out. people are checking it out. as i said the other day, we're going to revert to watching the baltic index to see if there really is trade or whether they're just buying these things

and putting them in a front lawn like some old country farm house. >> hey, art, my old friend. >> hi. >> quick question. what are the probabilities of the following scenario. that we're in a period of nothingness, where the market has no memory from week to week and really makes no progress to the upside and is not vulnerable much to the downside? >> well, i think that's a distinct possibility, and the fact that people are very uncertain. i have never seen -- you've got a great deal of experience, too. i don't recall a period where some of the brightest people around were on poles apart, arguing of whether we're going into a recovery and it's going to be credible and others saying it's just inventory rebuilding and it's not going to go anywhere. i'm a little concerned, doug, that we have some kind of eclectic winds coming together. i'm going to watch the next

eight weeks carefully. i told joe last week i wanted to hang back. let's see what happens when ramadan starts. there's a lot of geo political pressures out there. i would be very happy to have your little seesaw market for a couple of weeks. i just think that there might be something a little bigger out there. >> art, you talk about the clunkers today in your notes. we had mike jackson on earlier on the show and asked him whether or not this apparent fainting interest in the program is a sign that these government-led programs are short lived, and once they're gone they open up and show the total lack of demand. is that an example of how we might wind up in a so-called double dip? >> yeah, you recall way back when everybody was looking at different things, and i talked about a "w." the other day i said that we may be cresting in the middle of that "w" somewhere in here. so we've got a lot of things to watch for.

the course of action of the dollar is going to be spectacularly important. pinto says it's going down. there are a billion at the fed trying to get it to go down to try and stimulate things. yet at the same time on the chart it looks like it might be forming a bottom. this is going to be a very critical six to eight weeks to watch. >> one stimulus runs out, what is it replaced with? >> yeah. he did. a critical six to eight weeks to watch cnbc, art? did you forget -- is that what you meant, basically? >> joe, doesn't that go out without saying? the only place they're going to find out what i think is to go on cnbc. >> and they probably are watching right now. >> and just tell him his reminisce sense prompted one of the guys here to bring the original program from woodstock here. he's got one of the original ones. >> amazing. >> doug was too distracted to collect any souvenirs, right? >> watching out for all of those people to make sure they got

back to the hotel. >> art, talk to you later. art cashin. our "squawk" two-minute drill is next. . "squawk box" will be right back. 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 is 250.

♪ >> woodstock theme continues because our guest host doug is partners was there. he remembers some of this was the last song atwood stock, it was august 19th. >> this was the last thing -- did hendrix, he was the last to play? >> he was the last act. this is the last song. >> yeah. >> incredible. >> and dana was there, too. the dead, the who, 34 groups in total. >> on how many stages? >> multiple. >> multiple stages. >> you would just go from stage to stage? >> yeah. >> three days.

how much was it raining, half? >> it rained on sunday, i believe. and then we had the famous no rain chant. >> where did you sleep? >> at the el monaco bungalow colony, which is, as i said, is where taking woodstock, the movie that comes out this weekend, where it all takes place. >> for a 20-year-old, and then you join nader's raiders. >> the next year. >> the nader. >> so we've got maybe a minute left. you're expecting a 10% break? >> i don't know. i think the message from warren buffett today and the message from some other pretty learned people like byron yesterday is that it's different this time. you know, in the prior two recessions, we came out of them, and within three or four quarters, we were turned to peak economic activity. so i have ten -- i've done the work. i have ten quickly head winds.

>> pick two. >> i would say that municipalities have historically provided economic stability, no more, they're all messed up. and i think that federal, state, and local taxes will be rising as the deficit must eventually be funded. and high tax health and energy bills also loom. >> not to mention the cost cuts that are going to help companies perhaps but not so much the consumer. doug, always a great time. >> great being here. and rock on. >> make sure you join us tomorrow. "squawk on the street" is coming up next. this is cnbc.com news now. >> mortgage applications rose by 0.6% last week on a big jump in refinancing as interest rates fell. just treasury will release details of the tax agreement with the government in about 30 minutes p the journal says it will yield 10,000 alerts. mike jackson says the company is still owed $45 million in cash for clunkers rebates but he says the program is a good one.

that's cnbc.com news now. we're first in business worldwide. i'm courtney reagan. live from the financial capital of the world, this is the one and only "squawk on the street." good morning, everybody. i'm mark haines. for the second time this week asian pessimism circling the world to sink sentiment. who wrote that one? stocks poised for a lower open here at home, following a modest rebound tuesday that, in turn, was just a day after the markets took their biggest tumble in six weeks. i hope you followed all that. >> good morning. i'm erin burnett. we've got a couple of earnings reports out there that are not contributing to a positive view here. hewlett-packard, disappointing a little bit. john deere saying that equipment sales are going to be even worse in the fourth quarter than they had originally said.

not a lot worse, but still worse. that's dampening sentiment. we're going to go inside the numbers. overall, mark, futures are at their lowest level. >> not looking good. down 1030. get a lit bit of a break because we closed 163 above fair value. nine below fair value, maybe 70, 70 points on the dow? >> now, mark, i don't know where your bank accounts are kept, all that gold bullion you were burying in the backyard. lucky thing it's not at ubs. we have breaking headlines. "wall street journal" reporting ubs produced more than 4400 names as part of the u.s.