the settlement in total yield about 10,000 account identities, additional names are expected. irs is -- through the irs is voluntary disclosure program. monetary fine is not part of the settlement with ubs. we're expecting a full release in 30 minutes. we'll make sense of why voluntary with the irs but required for ubs. i know a lot of people are interested in that. we'll get to the bottom of it. okay. time to find out how the premarket is going. we already know not too well. let's start with cool breeze here at the big board, bob. >> good morning. the biggest drop shanghai down 4%, 20% correction in two weeks here. a lot of traders noted that warren buffett's editorial in "new york times" very cautious about the economy with available just around the time that tin decks started to drop over in shanghai. the editorial was made available over there. that may have been a factor in that. deere is down 4% preopen. report earnings above expectation. company noted equipment sales

are going to be weaker in this current quarter. that's their fourth quarter. bj's wholesale club beat estimate. mixed commentary. earnings guidance higher but they lowered their sales guidance. goldman sachs lowered alcoa on valuation. they are concerned that a run-up in a movement of prices may have been too fast too far. how are we looking at the nasdaq, rebecca? >> bob, we are looking lower, like the rest of the overall markets. premarket, the nasdaq 100, premarket is down about half a percent, a little more than that right now. we've got a lot of client metrics out of the brokerages for the month of july. look at the fact that e-trade financial down 3.6% in the premarket reported a record july in terms of its account. 2.7 million accounts for the month of july. meantime, ameritrade said that without anything outside of organic growth as in higher

interest rates, game changing acquisition, they don't see a lot of upside at ameritrade. they said interesting things about technology. they said they see a stabilized market and tech spending has hit bottom. taking a look at big tech premarket. not helping out. 2 1/2% to the downside with dell. microsoft, 1 1/2% to the downside. let's get over to someone with lots of upside, brian shactman standing by at the nymex. >> thank you, ms. jarvis. when it comes to the bearishness in crude it starts with the china equity story. the overall recovery story in china and stronger dollar. down about 66 cents. this is after gaining about 3% in yesterday's trade. and it's a situation where, of course, we're looking forward to 10:30 a.m. eastern time with emi numbers. when you look at the numbers when it comes to crude, it is a bullish number, but yet we're

still down. that's interesting. as eia numbers, see where they are. they go down a lot more. the api number in terms of crude were more than four times greater drawdown than expected. i want to take a quick look at gold because the world gold count overall demand in the second quarter down 9% year over year. consumer demand is way down. but investment demand, mark, is way up. so individuals aren't buying gold, but the investors still are. back to you. >> thank you. still off in asia overnight, check out the numbers. this is where it started at least today. china shanghai composite tumbling 4.3%. hong kong followed suit, down 1.7% to a one-month closing low. japan's nikkei down .7, indonesia down 2 1/2%. guy johnson, what's up or down where you are? >> down, mark. yeah, you guessed it right. european markets really catching the cold we saw out of asia.

that's ill wind blowing out of shanghai. 30 cac and the european markets down .6 of 1%. yesterday it felt like really a bit of a blip in the dow trajectory. seems to be coming out of china over the last few days has been infecting other markets around the world. tell you about what's happening in london. minutes now from the bank of england today, its last meeting suggesting that king who is the boss of the bank of england wanted a 75 billion pound increase in'sing. he was voted down by his peers. so it only went for 50. that's an indication of how farelefar fearlessly this is out there. let's move on and show you the stoxx 600. we are down by 4% on the stoxx 6 600. down early. trading sideways. i want to show you this. this is the biggest automaker in europe. since the deal, this is a six-month chart. since the deal with fporsche,

this stock is down by 16.8%. in advance of that press conference coming up ubs, the stock is down 2 attorn.1%. mark and erin, back over to you. okay. up next, inside the numbers from hp, what do they really indicate about business demand? >> and david digging into the auto. plus, the word on the street and the buzz beyond, did buffett spook the chinese investors? pretty amazing if he did because what he said, mark, as we know, something he's been saying consistently for a long period of time in that op-ed. we'll be back. i'm racing cross country in this small sidecar,

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you're watching cnbc's "squawk on the street," live from the financial capital of the world. >> hewlett-packard announced 19% drop in profit. they blamed it on weak corporate spending on computers. the company still better than expect toend bottom line. ceo mark heard said the business is stable. not ready to call an up turn. he does think things will improve in 2010. that's pushing it out. let's go to ftn capital money markets. bill, good to have you with sglusz good morning. >> i'm not sure whether he used the word particularly business

pertaining to business in china or used the word strong. either way, is that something significant or something that, hey, it's stimulus related, you kind of discount it? >> i think there's two things. one other thing you like to hear from hewlett is that they're doing well overseas because you have local brands. the good news out of china is good for hewlett. we thought it was good overall. we think there's some execution, some execution positives built into that as well. >> so you have faith in management, with we should buy the stock? >> yes. we say that going into earnings. longer term, we do believe in the story, we do believe in the stock as well. the stabilizing demand is confirmation that investors were looking for. we think they're very well positioned competitively in mumt the geographies and services test as well. we like the positions of each competitively. >> what about on the -- there's this issue with kind of individual versus companies. here in the u.s., so much worry about consumer spending back to school. h.p. should give us a goodwin dough on that. what do you see?

>> we do a lot of proprietary survey work. when you look at pc, we see a pretty good start to pc spending here in terms of what you're seeing in notebooks. that's not a surprise. we do continue to see the hp is doing well from a share perspective. two things to look at. what's the macro backdrop. everybody going to college needs a computer, usually a notebook. hp is a leader in that segment. we think they're well positioned here particularly for back to school, both in the u.s. and worldwide. >> this is primarily softness in the corporate markets, right, according to what i read here from the company, consumer spending on pcs is picking up. >> yeah, in the consumer space what our survey work, again, we do a consumer pc work on a monthly basis. the notebooks, multiple pc households and folks buying netbooks as well. buying them for the multiple pc household. for the pc sector you see

consumer demand, myspace, instant messaging, that kind of thing. we think hp is well positioned because you can buy on the website. if you wanted to buy an hp pc you can buy it almostfully where. we think their channel leverage, both notice states and oversees is a competitive in the pc space. >> very much much, bill peernley. >> all right. gets get over to a man who doesn't need no stinkin' computer, his brain is a computer, brian faber. >> yeah. that's right. all right. i just got to remember to hit control alt delete a little more often to log into my brain. mark, wanted to go back to a story that really started almost ten months ago. it was that historic short squeeze that took place in shares of vw. it took place overseas, of course, in germany. but a lot of u.s. hedge funds suffered very, very badly as a result of a short squeeze that

was -- they would say, engineered by porsche. there are have been pretty significant charges thrown around, so to speak, by those hedge funds by what porsche's real intentions were at that time. what resulted was a stock price in vw that went to 900. why am i revisiting it now? well, this morning we learn that porsche has sold a significant chunk of its stock in vw, all of this now a forerunner to a merger between the two companies that has been arranged that will fais take place in two years. they sold this stock at 80 euros per ordinary share. vw stock, by the way, was trading in the 140s. and so as you might imagine, it's down. by the way, also, this is the country of qatar, but stock at 80 euros, ordinary shares, 63 for the preferreds. 17% stake, i believe it's a non-voting stake.

let me check that. but in vw. and -- i'm sorry, it is a voting stake. and this is something that had been arranged previously. porsche was short puts was kind of running out of money and arranged this sale. what's driving people nuts, and take a look at what's happened here to vw -- is the fact that it wasn't that long ago, nine months ago, ten months ago when that historic short squeekz took place that porsche said, we want to own all the stock we can. the reason the short squeeze took place is because they owned 71% of the stock, or said they did. everybody went, oh, my god, they wanted to buy more 250. well, here they are, less than a year later selling it at 80. perhaps a foreseller in some ways, yes. yes, the deal with vw has now been allegedly cemented. it's going to take place in 2011. they are talking about that. as a result, you see the run-up

there you saw to 900, vw. none the less, a lot of investors that got burned nine months ago, came back in shorting vw are both happy today in that part but saying, you know what, porsche was never serious. all this was on their part was manipulation. of course, charges are vehemently denied by porsche. charges were dropped and restarted. frankly, i'm not exactly sure where all of those stand. if you take a look at porsche shares right there. we will keep an eye on vw, well done from that 900 and down another 18% on this news. qatar paid 80 euros for porsche's stake. mark, back to you. >> thank you, david. up next, the word on the street, the buzz beyond, can we shake off this morning's mini-asian. >> and nothing runs like a deere, not even a deer. as ongoing weakness in construction offset, mark, actually higher demand for tractors here in the u.s. it was the big equipment where

they're expecting now more than 20% drop in the fourth quarter versus a year ago. that's pretty painful. we'll get to the bottom of it and see if there's a signal there about the global infrastructure everybody said was to resilient. and what it doesn't cover can cost you some money. that's why you should consider... an aarp medicare supplement insurance plan... insured by united healthcare insurance company. it can help cover some of what medicare doesn't... so you could save up to thousands of dollars... in out-of-pocket expenses. call now for this free information kit... and medicare guide. if you're turning 65 or you're already on medicare, you should know about this card; it's the only one of its kind... that carries the aarp name -- see if it's right for you. you choose your doctor. you choose your hospital. there are no networks and no referrals needed. help protect yourself from some of what medicare doesn't cover. save up to thousands of dollars... on potential out-of-pocket expenses... with an aarp medicare supplement insurance plan...

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you're watching cnbc's "squawk on the street" live from the financial capital of the world. >> all right. we're back. we're on the floor. let's check out the futures for you right now. they're not looking too good, as we've been talking about all morning. the s&ps are down 11 and change. we're looking at a drop on the dow of maybe 65, 75 points at

the open. joining us now here on the floor is terrence, ceo of brokerage. good morning, terry. >> good morning. >> good to see you. >> pleasure. >> first of all, got to ask you the overall view of this, heading up, heading down? >> i've been considering the market to trend down now for some time. i've been kind of wrong, actually. when it first broke above 9,000, i had my clients getting out of the market. scaling out of the market. and i was advised them to go above 9500 to look at getting back in. at the moment i think we're looking at a market that is kind of in a holiday coming up, volatility has, in a sense, coming out of the market and i expect that volatility to break back out again. most of the times you see the volatility break back out on the downside. >> what's going to drive us? i mean, we came to earning

season, top line looked great, bottom line didn't look too good. >> no. >> we're through all that. what's now, data, the health care debate? what's going to drive us? >> i think right now it's a wait and see. i think it might be event trif dren. driven. earnings looked a little bit better. it was a cost cutting standpoint. i expect this to be more event driven. cautious of the market in historic terms as well. a lot of commentaries have been saying. you know if you lived in the markets in the '20s and '30s they had substantial rallies. some of them as many as 22 weeks ral l rallying back 50% before we hit the 30. i think we will see that pattern here without the severity of an 82% drop but we'll see the same pattern. >> got to go. times up. >> my pleasure. let's get the buzz from beyond the big board. joining us to do that this

morning, phil dow from minneapolis, director at rbc. phil, i want to throw up a chart of the shanghai index. we know it's volatile. analysis by agrayson, the brokerage firm, note that it peaked two weeks before the u.s. market in 2007 and then it bottomed a few months before our market this year. so obviously it doesn't necessarily mean that we're going to go where they go, but it is interesting that we have tended to follow the china market. do you think there's something we should be watching closely this time? >> well, the big opportunity economically speaking is global trade. and china is a key player. i'm not sure they impact us more than them right now. i think it might be the other way around. one key point is that short-term lending has been constrained there. the medium term and long term business building is still taking place. our guess is that it's a bit of

a bump in the road there and the rally will continue at some point. >> so does that mean that you're in the camp of a bit of a pull back in the u.s., maybe even up to 10% is a good thing, like pruning a bush. the rally we get afterwards is healthier? >> it's kind of scary that's what everybody is saying. my guess is the one consistent theme here the last couple of months, erin, has been leading economic indicators have been better. we get a view tomorrow on the new july leading economic indicators. my guess ises that will be consistent. the economic consensus for growth. so i think it's very dangerous to not own equities in the midst of what looks like an economic recovery. if you want to change your investment disciplinary based on what the market does, you can do it but nobody has built a good track record doing it that way. >> these are always the toughest questions because they're so immediate. but what is your view of what will happen today? >> yeah. my guess is we're going to have alternating days. today will be down probably down 80, 90 points will be my guess. tomorrow is going to be an

update based on the leading economic indicators being better. >> see you this afternoon. >> good to see you, erin. and the final countdown to the opening bell on the other side of the break. >> i'm ready. plus, the reverend jim bob cramer on the two cs, china and citi, and the big g, the stock which must not be named. >> i was worried you were going to say it. when this hotel added aflac

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announcer: call today to schedule a free investment check-up, or visit a td ameritrade branch. welcome back. "squawk on the street." the opening p bell is going to ring, hey, nobody asked me about my one thing. >> because it's john deere. >> oh. that's too bad because i had a really good one thing. >> you had another one thing. >> deere posting a 27% drop. beating wall street expectations but implies its current quarter will be disappointing. the stock set to open lower.

joining us on the phone to go inside the numbers, eli of longbow research. eli, reach into your quiver and tell us why you have a neutral rating on deere and cat. >> well, we've got a very good beat from deere, much better than cat which is really all junk. this is 20% of tax benefit. 79 cent number coming from better profitability and less losses. there's no follow through. there's no underlying sells improvement. and therefore the fourth quarter has a big production cut. guidance at fourth quarter is half of what people expected, if you x out the charges that are coming put and concerned about 2010, that's the concern with the stock. >> why is this is a surprise? >> magnitude of decline in the fourth quarter is a bit of a surprise. >> i mean, why? is no one paying attention? >> i'm sorry? >> why is it a surprise? the economy stinks. >> but farm, expectation was by many investors that farm was

going to hold up better than other sectors and turns it it's not. it's consistent with us so we're neutral. there's a little bit more optimism. for 2010, we're having big crops just as farmers aren't going anywhere next year. >> eli, we talk about when a decline, you know, dropping 10% instead of 20% isn't going to be good enough when we have to be up. do we read anything into the fact when the world was falling apart, deere is going to be down from last year's fourth quarter. i mean, in that sense, it does seem pretty awful. >> yeah, but nobody expects 2009 to be anything. its production that's being cut, a little late in cutting production. but it's 2010 that people are worried about, not 2009. it's been given a pass for 2,0009. it's 2010 they're worried about and you're not seeing a follow through. it's going to be a tough year for 2010 for most industrials. that's what's being reflected in the market. >> thank you very much, eli. we appreciate your taking the

time. mark, interesting sales in u.s. is only down 16%, one of their better markets. all right, here at the big board, loud, jeff lewis and co-host jenny pumos of docu series "slipping out." nbc universal. at the nasdaq, georgetown university's mcdonough school. >> let's get to our market reporter and see what sell-off we get. only down 40, bob by sanipisani >> down 4%, 20% correction territory right now. declined just as warren buffett's very cautious comments editorial appeared in the "new york times" and that was made available about midnight over our time over in shanghai. that's when the market started to drop over there. a lot of speculation about that. deere is going to open down 42,

just opened somewhere down about 3% right now. the important thing is you just heard the analyst over there talking about this. guidance for the company, equipment sales will be down 21% in this quarter. guidance was 19%. equipment sales was everything for the whole company other than the credit division here. the decline guidance was on the weak side. very good at managing the business but end demand is continuing to show signs of weakness. 10:00 eastern time, there's going to be a lot of questions for that. hewlett-packard is over here, talk about that. better than expected earnings and revenue. the question down here everybody is asking is is that going to be enough to move the stockford wa forward? that's a big move to the upside. bj's wholesale beat on the earnings but the outlook for the full year is mixed. company raised the earnings guidance but lowered the sales. alcoa is going to be on the weak side as goldman sachs downgraded that one. tradertalk.cnbc.com.

rebec rebecca, how are we at the nasdaq? >> thank you, bob. we have opened to the downside a percent or so lower right off the open. keep in mind here, folks, the shanghai composite being down overnight certainly has a drag on the nasdaq. a lot of chinese adrs trade here. plus, all of the tech names are multinational companies. a lot of folks have been betting that the tech names are going to get and generate some of the revenues in the asian help sphere. speaking of big tech names, dell down 2.7%. perhaps in sympathy with hp. bob told you about the earnings. they do see a stabilized market. tech spending they say has bottomed. the question is is it going to actually grow going forward or is it going to be a flat line type of growth? look at google. no flat line type of growth in this name. since it was born five years ago a little baby goog on this day five years ago, down 1.3 %. keep in mind on this day five years ago the day of its birth, up 18%. birth as a public company. the chip names down somewhat in

sympathy with what we heard out of analog devices. you do see on semi down 2.2%. one name to the positive side here this morning, this in focus is a story stock, perry ellis, hearing out of them the retailer very similar things we've heard out of the rest. beat as far as their earnings goes, but sales is weak. sales to the upside by 1 1/2%. let's get over to brian shactman for more on oil. hey, brian. >> jarvis, thank you very much. we're down 57 cents here. one trader just basically said to me, listen, we're waiting for the numbers. an hour away from the eia numbers. let's talk about expectations courtesy of dow jones, looking for a crude to build 1 1/2 million barrels. gasoline down. distillates up. the api numbers were bullish on price but still down. i want to take a quick look, i will remind you 10:30 a.m. eastern time we will have the numbers for you live from a trader. overseas brent right now is down a little more than nymex.

that spread coming in just a little bit. kuwaiti oil minister coming out saying, listen no, reason for opec to change anything because the price right now is, quote, satisfactory. quick look at natgas on the flat line. we've been down nine days in a row. hanover basically calling it a collapse in price. we'll see if it makes it double digits. mark, back to you. >> thank you very much. warren buffett saying the government has getting the economy ban its feet. perhaps start thinking about taking a few steps back. in a "new york times" op-ed piece buffett writes, quote, the united states economy is now out of the emergency room and appears to be on a slow recovery, but enormous doses of monetary medicine continue to be administered. and err long, we will need to deal with the side effects. joining us managing member of douglas advisers. larry blazer, managing director with may flower advisers.

what do you think? is buffett right? >> i think we do have to pay attention to all the money being pumped into the financial system, not just here but around the world. bad money is going to slosh around and some of it is finding its way into stocks, bonds, other footbainancial assets but of it has the potential to drive up prices down the road. it's not going to be immediate. not even the next year. but inflation is an issue. that's what i read in the op-ed. >> larry? >> yeah, i think i'm generally in safe company to be in agreement with warren buffett. i would say with a few exceptions on this particular comment. that would be i see a very slow recovery in a tepid economic recovery and potentially a jobless or anemic recovery. i grow with the concept of mr. buffett but the words i would use would be a little bit different. i agree with charlie in the sense that liquidity is clearly what's been driving the market, not valuation. as investors would be cd people looking for places to park that money and desperately trying to

find a home. >> charlie, in a sense it sounds like we all know we tried to, for lack of a better word, slate our way out of the crash, right? we tried to prevent housing prices from falling further. it's easy to say that. when you say at some point you've got to pull that back. has any central brank ever gotten it right in terms of get that timing right? >> history is an awfully long book here. so at some point in time, yes, they've gotten it right. there have been chapters in that book where things have seemed awfully wrong and we're bound to step into a couple of those chapters in the course of the next couple of years. there are going to be stretches where we feel poorly about what's going on in washington and the policy arena and corporate profits and so forth. that's going to drive the market down at some point in time. but there's also going to be weeks where it's going to feel pretty darn good, where the stats are going to say, hey, they're getting it right. >> what he said is, it is impossible given the size of the gap we have here between what we spent and the size of our

economy to grow our way out of this. >> yeah. >> then you will have to cut costs or raise taxes. but then he said that's not what legislators ever want to do. i'm not saying he's being defeated. should we be defeated? >> i think it's called medicine. raises taxes, no one wants to see that. the easy part, maybe was saving the financial system. the hard part is what happens from here. getting an economy that's growing again. the emp tags to reflat our way out of this is going to be irresistible. when we look at who owns the debt, the foreigners hold the debt. that temptation is really going to drive policy. and again, i think mr. buffett lays it out in such an eloquent manner today. >> charlie, you have no exposure whatsoever to two things that everyone needs. >> two reasons for that. one, telecom is getting to be evermore competitive and it's squeezing the profits out of the industry. and that, to me, is a recipe for

pretty tepid stock performance over the long haul. utilities, if you believe what buffett is saying in the context of his op-ed piece and there's an implication of higher inflation down the road, long-term interest rates go up, that's typically a challenging environment for utility stocks. >> and larry, you're big on etfs. are you concerned at all about -- there have been a number of stories lately about how etfs are not accurately tracking the underline. >> sure. you make a great point, mark. we have of distinguish the etf world. it's like saying all mutual funds are bad or good. you can't say that. etfs have been the source of criticism and in many cases that is warranted. but generally speaking, when we look at the etf world we look at that as a proxy, proxy for individual securities. it's a basket approach. it's a tax efficient way for investors to invest and cost efficient way. what we see investors wanting

today, maybe not what they need, they want fixed income alternatives. money ten times the number of dollars that have gone into short-term bonds are moving into fixed income this year. etfs present an alternative to that, but not certainly the only place to put money today. >> gentlemen, thank you. charlie crane and larry glazer. appreciate your thoughts. up next, the mad man himself, the reverend jim bob cramer of the church of whatever is working now is in our phone system on hold. i would imagine he's probably just chomping at that receiver. wants to talk about two cs, citi and china, and the big g, the stock which must not be named. how are they all put together? one involves heckling. >> that sounds like something that will come with a criminal charge. >> okay. plus, stock tons move, including green. yes, china still owns the energy sphere.

china touching bear market territory briefly, 20% decline pulling global and u.s. stocks down along with it. this comes as warren buffett warned the public debt in america is becoming unsustainable. mad man himself jim cramer with his take on the news of the morning and more, jim, i know you've got the two cs and the g on your mind. >> i do. >> let's start with c-1, china. what do you say? >> i don't know how much to fret about a market that is under 80% and boon market territory when it's still up 60 plus. my problem with that is if you try to take your cue if that you're talking about our market being up 6%, 7% rather than 8%. i'm not willing to panic over the idea that china is in a bear market. how about a correction after the greatest powerball move we've had in our lifetime? >> how does that copy over here? i mean, do you subscribe to the theory everyone keeps saying which, is hey, 10% correction

here in the u.s. would be a good thing, froth and then the rally continues? >> no, i think that's too sev e severe. remember, i've been saying 3% to 5%. anything contained there is meandering right here versus china, which isn't so bad. also, you've got to remember that there's 15% of our s&p that is directly related to chine nap 85% that isn't. what does china have to do with bristol-mye bristol-myers? >> jim bob, what's up with citi. >> look, the lead story in today's financial times is regulators urge citi to replace cfo kelly. here you've got a story that is two months old. kelly is running citi's holdings. in the end, citi is going to be valued by book value. tangible book value is 45 4 35 but most people are using the -- just the non-tangible book value to value banks, which in this case would put it at 5 quarter. worst banks are 90% of book

value. you can see this stock is not expensive. what you have to focus on is does the government really want to own the stock after september 10th after it can start selling? it feels like chrysler to me in the early 1980 wrz the government got a good deal but the shareholders, the people who bought, got a good deal. >> mark, jim said yesterday one of the arab sovereign wealth funds could come in and buy 90%. >> we've seen that before when i think that citi was an equal or perhaps worse shape. citi was technically bankrupt when greenspan arranged that. is citi bankrupt now? no. it's the way chrysler was in 1981, the but that worked out pretty good for everybody. >> got to ask you about the buffett beat in the "times." >> look, i think the biggest surprise story here is what the heck is the dollar doing here? i don't expect a zimbabwean -- they're incredible because the value is a trillion times over the course of the last year, but i do think the dollar is too high which is one of the reasons that the colgates and the cokes work here.

especially because they are not exactly challenged by china. they're not going to cut back on drinking coke zero in beijing. >> what do you think is the most likely outcome here us? inflation, tax cuts or cost cuts? >> for which -- for our country? >> for washington. what do you think is the most likely pack here? >> gridlock has always been produced good things. we seem to be on the pattern of 1992 to 1994 when clinton came in all gung ho and ended up being the greatest opportunity to bye merck and pfizer i've ever seen. they came in to i'm immasculate the drug companies. >> the pharmas in the '90s were awesome. >> it wasn't just because of new drugs. what happened is that we all thought that waxman, same guy now then, was going to make it so the government was going to negotiate prices. that seems to be history now.

i don't see the government doing it. and what it says to me is multiple expansion time. and the hmos are selling at 2 percentage points below where they typically do on a multiple basis. it's time they got pumped up. those businesses have huge cash flow. they turned out to be the winners just when we thought they would be the losers. >> all right. jim bob, thank you very much, sir. >> see you on "street signs" at 2:30. >> great. we have breaking news. sorry. mary thompson. >> mary thompson. >> thank you. just listening to the conference call that's being held by the irs, commissioner doug shul man talking about the agreement that's being reached between the u.s. government and swiss bank, ubs. demonstrates the world of international taxes has dramatically changed. essentially what is happening is ubs is handing over 4,000 names of its clients to the irs. the irs says that it's been pursuing these accounts, expecting that these people were trying to evade u.s. taxes. also, those accounts, according to the commissioner, over 5,000

of them he says at one time or another held more than $18 billion in assets. now, there's another element to this. the customers are being urged by the u.s., the swiss -- u.s. and swiss government by the bank to come forward if they were trying to evade u.s. taxes. they believe that's going to yield an additional 5,000 names. again, the irs will get substantially all of the u.s. accounts of interest in this settlement, and the u.s. is going to be submitting a treaty request to the swiss describing the specific accounts sought. most importantly the irs feels that this is basically a game changer for how they approach trying to get money that has been moved offshore in order to evade u.s. taxes. back to you. >> all right, thanks, mary. we want to bring your attention to some stocks on the move. el nesto grandee at hq. >> game changer here in terms of equity calls on southwest airlines. there was a time when nobody

would dare put a sale on that. but lamont goes from sell to hold. it's down 3% here today. it's the third downgrade to sell or underweight or underperform that i've seen in the past two months on southwest air. now, jim cramer just mentioned a positive opportunity in cigna credit suisse, neutral from out perform. the stock is down 3% on the news. the chinese angle is still making i think vesters nervous. greene energy, solar panel maker had loss, but x item, get to 14 cents which was better than the 4 cents or sequential, add revenue growth was up 50% but down 25% from a year ago. that stock is giving back 12% here. it's wovt $1.5 billion. abercrombie and ann are heading in different directions. abercrombie cuts a neutral, ann taylor raised to buy at ubs. erin, back to you.

>> thank you, mr. nesto. coming up, the latest survey, 400 executives in technology, retail and financial sectors, most of it their businesses were caught off guard by the downturn but the whmajory feel more optimistic. and most agree one sectler lead all others out of recession. we'll go inside the numbers and find out which one. >> which one? >> i don't know.

kb and g surveying 400 ceos from financial sectors to gauge whether the economic recovery is really going to come through. and what these ceos see in terms of their specific business challenges. tech executives appear to be the most bullish. financials believe. retail right in the middle. what does all of this mean? joining us, gary mususac. good to have you with us, gary. we appreciate you taking the time. looking at, i guess, the big question here for the market has been, well, when are we going to see revenue grow? that's the best sign of a growing economy. and i know that you took a look at what ceos see on that front next year. why is it that tech companies are the most optimistic?

>> well, i think there's a couple of different reasons. first if you look at historically the tech sector and many of the segments within tech are at the front end of the supply chain. take the semiconductor equipment industry, a lot of what we're seeing there, very quick to drop off in late 2008, but as consumer demand and corporate demand continues to grow, we're going to see that front end of the supply chain picking up. so the component manufacture, semiconductor manufactures, we'll see that picking up. the second thing that we've seen is that as companies across all the sectors took a look another how do we manage our way through this economic downturn, p many of them input large capital expenditure projects on hold. those included significant number of i.t. and i.t. capital expenditures. across all of the sectors that we looked at, one resounding answer we got is that as companies say, okay, how are we going to improve coming out of this economic recession, they're

looking for ways to be more creative and more cost effective and oftentimes involves creative and new i.t. solutions to help them manage their business better and control their costs better. >> not to be a wet blanket, but don't most tech people look at the world through tech, techie glasses? they're used to accomplishing the impossible and, therefore, they have a mindset that may or may not be connected to business reality? >> well, but i think that as you look at what's happening with some of the recent earnings releases, i mean, there are a number of companies where we are already seeing improvement. and as we look at finishing out 2009 and going into 2010, i think the feeling is that, you know, we've hit the bottom and that there will be continued improvements and increases in productivity and manufacturing pull through primarily both by corporate customers and corporate demand as well as consumer applications picking up

through into late '09 and into 2010. >> interestingly, when asked to identify the biggest challenges, this is everyone in the survey, not just tech, raising capital was 5 for third, far ahead of raising capital was managing risk, find anything sources of revenue growth. i find that interesting. you know, because everyone else is talking about how tight credit is, not according to people in your survey. >> well, if you look at the companies, particularly in the technology sector which is the one that i track the most closely, many of the large technology companies have ample sources of funds. many of them, you know, 15, $20 billion in cash reserves, and so their primary concern was, number one, how to manage their way through this economic slowdown through cost control early on and now trying to figure out, okay, how do we improve the top line because we can't save our way out of on economic recession. clearly looking at ways in the

corporate i.t. environment to implement solutions around cloud computering. if you look at it in the consuming market there's a lot going with respect to taking digital content and move that digital content both into the household as well as into the office. and so it's really trying to find those creative source of revenue to pull us through the economic recession, not cost control. capital -- raising capital by and large for the large tech companies is not a major concern. >> thank you very much, gary, we appreciate it. he is with kpmg. next -- sglup ne >> up next, high school students perform community service. so why shouldn't doctors with mandating pro bono work. a street fight minutes away. >> and later, we continue to debate health care, former chairman of the white house economic advisers under reagan. op-ed in today's journal, the topic, special guest at 10:30

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evading taxes. the energy department weekly data on oil inventory is 30 minutes away. dow component alcoa is down 5% after being downgraded to neutral at goldman sachs. that's cnbc.com news now. i'm courtney reagan. live from the financial capital of the world, in the heart of lower manhattan, here we go, second hour of "squawk on the street." once again, good morning. i'm mark haines. markets modestly lower. not bad for the futures we had this morning indicating a big drop. alcoa leading the dow to the downside. but, not all bad. georgia power company hitting a new 52-week high. "new york times," a newspaper company leading the s&p on the upside. erin? >> mark, thank you. newspaper company leading the s&p on the upside.

>> now you know how strange the world is. >> here we are in various shades of salmon. >> salmon, i know. we match. >> a little shocking. >> we didn't even plan it that way. >> all right. the ag equipment, john deere, reflective of retail. >> notice what the retailers have been saying. great at inventory control, great at cost management control, and no top line. well, deere is basically seeing the same thing. different industry but industrial companies are having the same problem. the conference call is starting right now for deere. let's get on here and get some comments here. but the bottom line is, they're managing the business terrif terrifically, great. no top line growth. that's a problem for these companies here as many of the analyst estimateses have been raised here quietly over the last couple of months. if we get no comments here, they're going to have to stop, or as the stocks have run up, you're going to see what happened with alcoa today. aluminum prices. more up site is, run-up in the

price. and no commentary on the business improving. sales improving. so it's going to be an issue. meantime, you see slightly more definsive taupe in the market the last couple of days. again, you get some of these drug stocks that are doing a little bit better overall. that's going to, i don't know, that doesn't get people terribly excited. it's a nice place for people to sort of hang out for a while. >> the shanghai market, you raise a fair point. you know, something that's up 100 and down 20. it's hard to read much into it. it's interesting if you look at the peak, october of '07 and the bottom of this year, it did hit the peak and the bottom before anybody else. it doesn't mean it leads -- what do you do with an index that drops 100% in a year from its peak. then it rallies -- drops 70%, excuse me, you're right, drops 70%. rallies 100% in nine months. and then drops 20% in two weeks. that's what the shank ghai did.

middle point in the middle where you don't have anything. and you have a break. warren buffett's comments came out right in the middle of the break. as a session in the afternoon resumed, shanghai market just fell apart. a lot of traders feel it's because of warren buffett. >> thank you very much. we'll have a lot more on that. let's get to the nasdaq. rebecca, what are you looking at? >> one of the few names here with a positive sign in front of it. take a look at shares of perry ellis. this is a small cap stock. the market cap less than 200 million. but the stock's up 7.1%. apparel maker reporting earnings in a very similar story to what we've heard from a number of retailers here. cost management is working in their favor. they reported a less than expected loss. they say they expect to turn a profit by 2010. what's important, i think, in all of this to look at is with the retailers, as i heard from bob pisani with deere, all of these businesses are disciplined. they are finding ways in the economic environment to make ends meet. and to do it in a way that is

essentially more disciplined with a bigger look at costs, with a bigger look at expense management, and their inventories. so if and when things do turn around, erin, it will be interesting to see how these companies run and operate because they certainly learned discipline in these tough times. >> all right. thank you very much, rebecca. now, oil as we talked about the u.s. consumer and demand for commodities, people thought they will see a sell-off, brian shactman, at first on the back of what happened in china but now we're back up. >> we are back up, erin. because san telly not here, it has a lot to do with the dollar. fascinating trade already. take a look at the intraday. we were down because of china fears and china stock market and recovery elements. of course, the dollar shifted and we're leading into the eia numbers which are less than 30 minutes away, which will have a definite price impact. if you look at the dollar intex, santelli is not here so i'll look at it. it has taken a turn to weaker. we were stronger earlier on. that, of course, may impact on

oil. but gold, look at gold right now. it has shifted as well. silver and copper, still to the downside. but gold has seen a shift from negative to positive as well. mark, i will say in 25 minutes, a lot of traders coming after me saying, hey, no matter what you see right now it's going to change when those eia numbers come out. >> all right. thank you. the oil markets, we'll be keeping an eye on hurricane season as it picks up steam right now. hurricane bill, dangerous category 4 storm. but not really any threat so far. carl parker at the weather channel, what's up with bill? >> well, i tell you, this is a very troubling storm by virtue of the fact that it's such an intense storm. a category 4 hurricane right now. it's moving along long towards the west northwest at 16 miles an hour winds of 135 miles an hour. it looks like a fairly large system. a lot of this, of course, is high cloud and out flow. so it is going to miss the islands entirely. that's the good news. we've been watching the leeward

islands and even though you have the high cloud spreading out to the north and to the south, the business end of the storm is right there, right around that little eyewall there. that's going to be well off to the north of the islands. now, we think it will continue along towards the west northwest. then more northwest and then more north. we've been watching bermuda carefully in the last couple of days. a lot of the world's reinsurers based in bermuda and it may come close to bermuda here getting into saturday morning. possibly moving up towards the northeast coast of the u.s. there could be a clip here in new england but it's probably going to take the center line of the track and largely stay offshore. it has been behaving reliably thus far. mark? >> thank you very much, sir. a new nbc news poll suggests americans are skeptical about the president's proposal. hanson pearson is here. >> maybe we have a health care missing metaphor. the latest nbc news poll shows that in the last month the

ground has really shifted in the debate over the so-called public option. when pollsters were asked this basic question, would you favor a poll favoring a public health care plan administered by the fernl government that could compete with private insurance companies, respondents, 43% favor the idea now, 47% now oppose it. a month ago the results were almost the opposite. 46% liked the idea, 44% did not. undecided and nod not sures at 10%. drilling down further on the public option question. pollsters are hearing now today 45% say they agree that it would lower costs and provide health care for all. 48% believe the exact opposite, that it would limit access to doctors and medical treatment options. a months ago 41% believe the public option would lower costs while 52% said it would limit access to doctors and options. 15% of americans believe the health care system needs either

a complete overhaul or a major reform or a month ago that combined number was 70%. a couple of big picture numbers in the latest nbc poll. the president's job approval rating has now dropped to 51%, down two points in just a month. however, congressional republicans are getting a 52% disapproval rating from the public on how they are dealing with the health care issue. erin? >> thank you very much, hans. various health care solutions are being tossed around. one of our next guests saysal truism can go long toward fixing our health care system. in an op-ed from sunday's "los angeles times" he suggests mandating a week or two of pro bono work as a condition for medical licensinlicensing. is it fair to require all doctors to do some community service? sounds like time for a street fight. david lazarus wrote the op-ed.

ear, nose and threat specialist who has been doing pro bono in his private practice for 18 years. david, start with you. why is a mandatory pro bono going to fix our health care system? >> i tell you, mark. contrary to what many, many doctors e-mailed to me, i am not a endenture servitude. we're a group called remote area medical offered free health care clinic at a sports arena. 6,000 people showed up. these are people who do not have insurance or underinsured but thousands more had to be turned away. i talked to the founder of that group. he said the problem here is we do not have enough doctors, dentists and opt tometrists to meet the demand. it would be great for other states to come in. when i talked to federation of state licensing board, they said no way. states like that have control

over this. they do not let doctors and other medical professionals cross state lines. the problem is how do you get more local health care practitioners to volunteer? there aren't enough. all i'm proposing is that, let's say if you're not meeting, say, a tenth of your clients on a pro bono basis or volunteering your time in a free clinic ordealing with the underinsured, then you would be required as a condition of licensure to do maybe a week or so in a free clinic or of some other facility. >> dr. mays has been doing pro bono work. you don't any mandatory is a good idea? >> i don't think cow can mandatmandate al al truism. let me congratulate him for bringing out this point and bringing out good proposal, extending good samaritan laws to volunteers to attract physicians

to be more willing to come to clinics or come to their office. we agree with that in argueized medicine. crossing state lines is a much bigger problem. we want quality care. states, medical boards have a right to make sure that care is quality care for all patients, end je indigent and otherwise. i don't think you can mandate altruism. charity being given in the communities, private clinics as well as public clinics, and expand those programs appropriately. >> mandatory pro bono work is not at all uncommon in the legal profession. in new jersey, for example, where i am licensed, or was licensed until i retired, the -- it's mandatory. >> it's mandatory -- >> let me just finish. an awful lot of lawyers meet that requirement the same way you do, they're already doing

it. >> awful lot of doctors are already meeting and break that requirement as well, but not because they're mandated. >> i didn't say that. my point is -- my point is, isn't that a good baseline to have? that you got to do something. >> no. 10% is an exceedingly high baseline. 10% is pretty much unattainable in pry vait practice, to give away 10% of services. rather, look at better solutions that involve incentivizing doctors to participate in that care such as tax incentives and maybe we need to look at properly aligning the resources. in the long term, what we need to do is make sure there is universal access. your proposal would actually decrease access for those who already are receiving care by taking doctors like myself out of our office. >> if all doctors were charitably minded as you. they are not. we are facing a crisis in the health care system right now. 47 million people in this country do not have insurance, they're not getting the care they need. clearly, judging from the southern california event, the

largest one in urban environment, there aren't enough doctors volunteering their time. >> i'm going around the issue though? >> i'm not saying this is the be all end all. >> we have a shortage -- >> it seems like -- i'm not trying to criticize your point. seems like a fair one and you want people to be more altruistic. you're dodging the issue that it's too expensive. doing things for free will not solve the problem. >> you're right but this is not addressing all of the core and fundamental problems of our health care system. this is a stop gap. it is a band-aid that is meant to get us over the hump at a time when people who require health care are not getting it. >> this is about as realistic an approach as jonathan -- jonathan swift's modest proposal. there was a problem with how do we deal with resource and burdens on society. he suggested eating our young. >> listen to this. the medium income for a family practitioner in los angeles is

about $180,000. you donate a week of your time to a free clinic, that's about 3,000 bucks. you're telling me -- >> wait, wait. $3,000? >> it's not going to help us deal with our quurnt problem? come on. >> it will take me and my colleagues out of our practices, away from what we're currently doing, taking care of patients. better we should mainstream those patients into our offices like many of us are doing now than set us up to go outside. the concept of saying if i'm doing 10% already, think about the cost. >> we're talking about uninsured people and underinsured people. you don't mainstream those people into your office. you need to get out there and give them access. the problem is we simply don't oi co accommodate these people. >> i disagree with you. we domain stream those people. the uninsured, medicaid patients. san diego has a pram called project access. other cities have as well. uninsured getting medical homes, getting specialty referrals

without getting one episode of care put into the system. >> you say they are we would not have 6,000 people in los angeles turning out for free health care. >> who mostly -- >> okay. david, by the way, you're not alone in having that reaction to one of those health fairs. >> right. i know some of the people who have seen them and they all have the same reaction you've had, something is seriously wrong. we have no more time. >> you've got to go fast to get out before they start. >> thank you very much. chance to make some points. up next, a look at two etfs, one soaring about 40% over the past month, the other dropping 33%. no surprise there. they are some of the most searched items on our website. we'll take a look at the debut of our new segment "because you clicked." >> it is sort of amazing the

amount of doctors that wouldn't do pro bono. >> i see no reason with not having some sort of baseline, you know, lawyers do it, why not doctors. >> what about making medical pool free, that the something that would reduce a lot in the system. >> then they have to go work somewhere where we need them. >> there are all kinds of issues. we're going to tackle whether that's a probable solution. that's coming up on "street signs." this might not be the best time to sell a home. but we just can't wait for the market to heat up. (woman) need to sell? re/max agents have the experience to get the job done. nobody sells more real estate than re/max. where do you want to be?

street" has been taking a close look at what's getting the most buzz on cnbc.com. in the last couple of days two leveraged etfs has been searched more than any others. the direction financial bull and bear. so we thought we would do a little homework, bring you the details from the excerpts because you clicked. joining us now is tom wide, etf trans editor, and cool breeze, bob pisani, in-house etf guru. what's all the fuss about, tom? >> basically, they started in 2008. what a great time but three times leverage. both long side and short side, park. during the volatile time we've had this past year, especially in financials, you could come up with three reasons why to be bullish or why to be bearish. they ballooned in assets from a little over 100 million at the beginning of the year to both

having a 1.5 billion right now. so today, based on your thoughts going forward, whatever side of the fence you're on, here's a way to play this sector in a very leveraged way. >> three times. >> three times leverage. >> okay. this is just -- this is like -- this is gambling. this is not investing. people are gambling. and that's okay. >> well, it's okay. it comes down to the subject that we've been talking about for months about inverse and leverage etfs, are they warranted. there have been some warnings. but for sophisticated strategies and educated investors, as long as they're monitoring actively their portfolios and keep their allocations in line, they're perfectly fine. >> mark, i agree with your point that it is gambling to a certain exte extent, although i think by and large people should be allowed to gamble. here's the problem i have. >> gambling to a complete extent. and, yes, they should be allowed to gamble. but don't mistake it for

investing. >> here's the problem i have. number one, as we have discussed before and they have warned about this, warned yesterday that inverse and leveraged etfs do not track their underlying indices over time. they track them on a daily basis but not over time. investors need to understand that. number one. and number two, these are sort of derivatives, in a way, mark. der ri tives that you have seen, they increase complexity and increase role volatility long term in different industries and they don't decrease. that's one of the things i have a problem with philosophically. >> are we going to see a bigger shift, tom? when i spoke to mary schapiro from the fcc seemed like she was concerned about the concept of leveraged etf. now they put out a warning about the risk. but is the next step going to be just not to have them at all? >> i actually think the opposite, erin. i think by seeing the fcc come together with a joint statement and basically put on a warning

label saying they're not for everybody. and at this point in time, if you're buying these etfs and you don't know how they're corrected or how they work, you've had your head in the sand. there's a warning label. if you look at q-tips, they have a warning label on them but millions of people use them every day. from that standpoint i think we're going to go forward understanding that there's a certain type of investor or there are since constitutions, hedge funds that use these very successfully. they do exactly what they're supposed to do on a daily basis and now even finra and the s.e.c. combined has come out and said for some strategies, over longer period of times, they may be appropriate. >> and the industry is gearing up -- i would agree with you this the industry is gearing up for more complex product, mark. this is the problem i've got here. for example, i've seen etfs floated around that are going to be involved in pair trading of different etf products. it's going to get more complicated now that all of the basic etfs have been covered even globally.

>> all right. it's just underline that people must do their homework and fully understand what it is they're buying and selling, especially in the case of etfs. tom, bob, thank you both very much. >> okay. >> and again, we're not criticizing the product, the etf, it's just that as bob pointed out, they can be very complex and you need to understand what you're doing. >> all right. darren rovell with breaking news back at hq. der reh . >> michael vick coming back and being signed by the philadelphia eagles on friday. his jerseys are selling everywhere. not everywhere. dick's sporting goods is not selling the michael vick number 7 philadelphia eagles jersey at this time. their cmo jeff hennie telling us they're evaluating the reaction of eagles fans before we commit to buy it, to set it in our stores. right now we're not sure how much demand there is. if there is a demand for it, we will sell it.

just an interesting story because dick's is actually the first to pull michael vick items from their stores two years ago when the dogfighting ring charges became public. dick's will be reporting tomorrow before the bell. guys, back to you. >> it got one for you. >> go ahead. >> i haven't kept close track of it, but as soon as i heard the favre news, i checked the pre-season schedule. >> yep. >> and the minnesota game was not going to be televised on friday. they were going with a different one. >> now it is? >> i don't know. >> oh. >> yeah, there could be a change-o now because the vikings sold 2200 season tickets in the last, what, 14 hours? >> i'm guessing if you call up fox or the nfl they may tell you they have changed their tv schedule. >> i'll get back to you on that one. >> talk to you later. up next, the ceo of sony entertainment america on the drastic steps his company is taking to bolster sales and stay

competitive. and op-ed in today's journal says obama cares about rationing that will destroy quality, in his view. he will be with us at 10:30. i'm racing cross country in this small sidecar,

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just a few months ago analysts were describing the video game industry as recession proof, well, bigger than hollywood. not anymore, though. sales of video game hardware like the sony playstation 3 and xbox and anyone tend to wii is down. sony is taking some action to get a leg up on competition announcing it's going to cut the price of the playstation 3 by $100. joining us now is president and ceo of sony computer entertainment america. good to have you with us. appreciate you taking the time. >> pleasure to be here, erin. >> slashing prices. you know, some people might say, gosh, people do that when they're very worried and desperate.

you're going to say instead of a position of gaining strength, make your case. >> well, we've done this two generations in a row now with the original playstation and playstation 2. we sold 24 million playstation 3s. we achieved production milestones that have allowed us to pass those savings on to consumers. great news for consumer. >> mr. tretton, right now we have breaking headlines. brian? >> looks like we have build of 2 1/2 million barrels in crude and a drive down of 1 million in gas. so we have new numbers. whoa, it just rolled over. we have a drawdown of 8.4 million barrels in crude. gas drawdown of 2.1 million. and distillates drawdown of 700,000 barrels. we are now up $1.40. we were dealing with equities and dollar and now dealing with the ati giving us a signal of expectation because build and we have minus 8.4 million barrels

of crude. up $1.55. back to you. >> thank you, brian. mr. tretton,straight back to you. big gamers out there, nintendo wii is dominant in this category. pricing at $250. your new price is still above that. what makes you think this is low enough to really help you get market share? >> well, we're really talking apples and oranges there. we design our platform to be future proof, to live for ten-year product life cycle. playstation 3 is less than three years old and we're on track to reach our numbers. we sold 140 million playstation 2 toss das to date. we consider this to be a marathon, not a sprint. playstation 3 is a multimedia device that goes so far beyond gaming. once consumers have the opportunity to buy this at $299 we're confident we will sell 13 million units this year worldwide. >> how is back to school? >> back to school is an important period for us.

you know, it's interesting, people talked a lot about the numbers early in the year, up through july. july is a couple of days during the holiday season. we always refer to it as being similar to football. we're in preseason right now. playing games but they don't count. the season starts in the fall. it's no different for us. we do the majority of our sales during the holiday selling season. it's great to be positioned for back to school and be on the front end of the holiday selling season. >> so what happens if nintendo cuts their price again which is still $50 lower than your new one. cuts it again for the holiday season, are you potentially going to be doing more cuts as well? >> we've always exited against a business plan that has worked for us. we're still selling our playstation 2 fire years after our competitors have thrown in the towel if we tend to plan our business and execute against our business plan and it's worked very well for us for the previous two generations. we're confident it's going to work on playstation 3 as well.

>> president and ceo of sony computer america. we want to bring our attention to stocks on the move this morning. matt nesto monitors all of them. how are you? >> take two, right? a lot of people feel that way right now. let's look at the market. closed into almost unchanged on the dow. big movers here today. more and more positive stocks in the s&p 500. mtb, sienna, all on the move here today now as we see some lift in the market following that energy data. the market again, there's a tug of war between equity traders and oil traders in terms of who has a better read in terms of the overall recovering economy. target one of the best performers today rated overweight from neutral at piper jeff free. it's hottest stock in the s&p 500 this week. it's up 8% versus 1 1/2% for the s&p 500. royal caribbean, they see better margin on cost cuts and higher efficiencies. bernstein takes it to an out

perform from an underperform. that stock stronger here today by a buck on an $18 stock. eaten vance, two miss on the third quarter. lower here today even though the assets under management grew sharply about 13% on a quarter and quarter basis. back to you. >> thank you, matt nest tonchts co . coming up, that is next. you don't want to miss it. this is "squawk on the street." market trying to crawl back to positive territory. we'll be right back.

let's take a look at the market and the internals. they're not bad. an hour and a half ago it looked like we were heading into the tank. and we're down only five points and the s&p is up a bit. what is advance/decline tell us? okay. that's not too good. all right. so most of the action is to the downside. but again, the index is not getting hit that hard. will the president's health care plan lead to rationing? on op-ed in today's "wall street journal" said, yes, it will. but again, that's the "wall

street journal." here to explain why, martin feldstein, professor economics at harvard university. professor, why would it lead to rationing? >> because that's what the administration's strategy is. they've said that they're going to cut the projected rate of growth health care spending by 30% over the next two decades. that came from a white house study released in june. and the way they're going to do that is by setting rules for doctors and hospitals, what they call cost effective forms of treatment. and that will limit the kinds of things that can be done. >> and we don't have rationing now? >> we have some of it, but this is -- >> we've got it now. come on. you have profit motivated bureaucrats making rationing decisions. >> but i can talk to my doctor. i can talk to my hospital and say, should we do this or not do that. >> right.

>> and people with insurance today have those kinds of options. >> and then the insurance company then has the final say on whether it actually happens, right, rationing the gift. >> they turn down very, very few things. and again, it is not the government that's doing it. so if my insurance company doesn't allow certain drugs or doesn't allow certain kinds of treatment, i can choose a different kind of policy. and the idea, as i see it in the obama proposal, is to force us all into a certain kind of spending pattern because the government is concerned, the administration is concerned with how much the government is spending on health care for medicare and medicaid, but in order to control that, they want to change the kind of treatments that you and i outside the medicare and medicaid system, can get on our own. >> i'm sorry. how are you being -- how are we being forced into anything?

you would be allowed to keep your private insurance. what are you talking about? >> but what the administration is talking about, what they describe in this white house report, is what they call comparative effectiveness research. in other words, their studies will say whether a particular kind of treatment is worth the money. and that's what concerns me. >> wait a minute. whoa. you want to be able to have anything regardless of its cost versus its effectiveness? >> no, i want to make that decision. >> how are you qualified to make that decision? >> i and my physician together will talk about whether something is worth spending the money to do, whether the risks associated with not doing this test or that test are risks that we want to take. and i think that individuals

ought to pay more out of pocket. there ought to be higher co-payments. but i think individuals and their physicians, rather than a bureaucratic process, should be make that decision. >> please, first of all, the private insurance companies are a bureaucracy. so this bureaucrat argument is nonsense. and second, pardon me, sir, but your argument is a very easy one to make by someone who has money. >> 85% of americans have insurance. so it's not that we're talking about a small handful of people who have insurance. and one of the nice things is, there's choice. i can and here in boston i can join any of a number of plans, and they're going to deliver in the kinds of hospitals i would have access to and the kinds of limits on various things. so there's choice. and it seems to me that's one of the things that has made the american health care system so good, that it has stimulated

research, it has stimulated new technology. >> i'll say again, sir, you have these choices because you can afford them. a lot of people can't afford them. and we're 29th in the industrialized world in infant mortality. we spend 2 1/2 times what britain spends for worse outcomes. no, i'm sorry. >> well -- what would you do -- you're making the point -- i just want to -- i know mark has been passionate about talking to you about this. >> i just want his rationale. >> if you're talking about rationing and you're going to acknowledge that can happen with any kind of health care plan you're going to have, right? mr. fell seedstein, doesn't it down to money? people with money will always get better care? isn't that something you say we need to acknowledge? >> i think that's true. i think that is true about our system, it's true of the british system. but i don't like the idea of saying to the overwhelming

public, the overwhelming majority of the public, we're going to limit your care to what we think is, quote, cost effective. >> again, i am aware of no part of either bill in the house or the senate that does that. >> and what do you think the cost effectiveness research is for? >> for the government to decide what it thinks the money is best spent on. >> that's right. >> you know, which -- >> that's right. >> i mean, that's simply rational, sir. that's simply rational, to make a decision based on what history has shown as effectiveness of a therapy. >> yes. but you and i may have different faiths about how we're willing to -- do i want to get another test or do i want -- >> again, if you have the money you will still be able to get that. >> well, that's a question. i have to -- if i want to buy insurance, will the insurance plan be allowed to offer that.

i think that's the direction in which i hope we are not going to go. >> all right. sir, thank you very much. we appreciate you're being with us. we'll have you back. continue this conversation. >> all right. coming up, the faber report. the fader is handicapping the sar. >> tracking the fastest growing companies of 2009, a sneak peak inside that list is coming up. we are still down by only by 12 points. fithe same tools the pros use, so you can be a disciplined trader. by selecting from eight advanced triggers, your order gets executed, even when you're busy. and with trailing stops to help you lock in profits and minimize risk, you can be confident in your strategy, no matter which way the market moves. find out why more and more active traders are turning to fidelity for a smarter way to trade online.

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you're watching cnbc's "squawk on the street." >> welcome back to "squawk on the street." i'm david faber. new administration obviously new

anti-trust regulatory regime, so to speak. new heads at the doj and the ftc. not really been tested because there have been so few significant mna transactions, period. still a lot of questions as to how different the approach will be in the obama administration, antitrust policy versus what was largely a lassez faire in power. a number but very few deal stops in the antitrust concerns. that being said, some people getting a little nervous about a deal that wouldn't seem to have any true antitrust ramifications. and that is oracle's plan purchase of sun microsystems. a $7.4 billion all cash deal that was announced on april the 20th at $9.50 per share of sun micro, ticker symbol, of course, jaba.

there you have it. remember, net of sun microsystems cash. there were not a lot of overlap, yet there was a request from the department of justice, which is overseeing this deal, or going to rule on it. and as you see, very, very tight. $9.50. you see it there, $9.23. that being said, still nervousness, you never know. what i can tell you is this. having poked around here, people close to the situation indicating to me that approval on the antitrust front here in the united states, so-called hsr, will be forthcoming, let's call it shortly or in the not too business tant future. does that mean as soon as this week? it seems surprisingly, that might be possible, though difficult to say, certainly, given that, you know, you are dealing with regulators at the department of justice who are doing something some things for the first time in some ways. so that can have an affect of taking longer. to those who seem to be concerned perhaps and something

would come out of nowhere and throw this deal off track, that does not appear to be the case. again, people close telling me not too distant future, they do expect to get approval here in the u.s. now, as eu, there had been a divergence during the bush administration's years between policy here in the u.s. and the eu. of course, those of us who are employees of ge know that well, and remember ge honeywell at the beginning of the millennium. there doesn't appear to be that divergence any longer. from what i'm hearing, eu and us are much more on similar tracks, and so there does seem to be an expectation that once you get hsr here in the u.s., you will, in fact, see the eu follow with an approval. not too long after that. that being the case, in the eu, it is a different process, it's an administrative process where you need to write a decision for something to be cleared as opposed to here in the u.s., where they simply do nothing. the effect of that is it takes longer. we'll see. but it would seem that before

the end of this summer, or certainly by the end of september, may have oracle officially owning sun micro. erin, back to you. >> the hair lock is back. and that means all is right with the world. >> the what? >> david's little hair lock. >> oh, that superman like forelock? >> yeah. >> we're checking the fastest-growing companies of 2009. and next we go inside that list. but oh -- >> but first, oh, trish? >> so david's hair, wow, that's an economic indicator for you. coming up at the top of the hour, we have a first on cnbc interview. i'm going to be talking live with the ceo of ing direct. the company is out with a brand-new survey on holiday spending, the results of which are happening first on cnbc. we're going to find out whether or not americans plan to spend this holiday shopping season. today is the five-year anniversary of google going public. certainly been a great run so far, but should you consider buying the stock now? we're going to debate that. we have all that, plus the

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a survey from the t.a.r.p. inspector general's office shows

most firms are making a concerted effort to apply for executive compensation restricti restriction. but in the form of ever-evolving regulations regarding compensation. mark are, keep in mind, they did sign off on the $7 million comp. for aig. so it seems they're fighting now for market-based compensation. >> all right. we may be in a recession, but some companies are still prospering quickly. they're playing games with my teleprompter. "fortune" magazine and cnbc revealing the fastest-growing companies, one of which is dekker outdoors. >> that name, mark, may not be familiar with the many consumers, but i'll betcha you know their products. teva sandals, and if you've got a teenage girl in your house, ugh boots. not necessarily teenage, either. they have made this company millions in profits, and now the question is, how will they fight off imitators and competitors?

>> teva is the heritage brand. >> it's the brand that invented the sports sandal. >> i call mine the jesus sandal, because it looks like something jesus would have worn -- >> when he was river rafting. >> or walking on the water. >> companies in footwear, in fashion, can sometimes get very, very hot, and your company is hot. how do you stay hot? >> you have to keep pushing forward to excite the consumer. who now has an understanding of your brand. >> in the early '90s, teva's became popular on college campuses and with the outdoorsy crowd. but the company stock price took a hit when rebook, k-swiss and merrill all developed their own sports sandals. nike executives even vowed to squash dekkers with their sports sandals. >> so nike doesn't scare you or rebock doesn't scare you. >> no competition scares me at all. i've never been that way. >> and one of the reasons is he

did a lot of time at rebok and knows how to compete. you can see our other 100 fastest-growing companies tonight at 9:00 p.m. eastern time on cnbc. watch, you might even make a little money in the bargain. mark? >> alrighty, thank you very much, tyler matheson. up next, final check on the markets. hey, if you were with us at 9:00, and are just coming back, guess what? the sky didn't fall. don't go away. we'll tell you what's going on in a minute. 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.

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>> the obama administration is about to announce new federal guidelines to help businesses prepare for the upcoming flu season. the joint press conference led by hs secretary kathleen sebelius and commerce secretary gary locke will address swine flu and vaccination limitations. we will be bringing you all of the details as they develop. and you can also hear directly from kathleen sebelius and gary locke live on "power lunch" beginning at 12:00 p.m. eastern time here on cnbc. before that, let's get to the markets now. it looked like it was going to be a pretty tough day for investors as stocks did open lower, prefaced by the selloff of the shanghai market, and also warn buffett's op-ed in the "times". >> let's look where we're