understates it, don't you think? yesterday we're with he traded higher. >> after watching china. >> yes. and seriously, it is a crowded, crowded position that we need to go -- are we going -- aren't you starting to think we get to 11,000,000 before we're back to 8,000? you don't think. >> becky can is working franticly on something. >> my machine is broken! series hold sg out. i can't tell how that matches up to yesterday. >> i've got 35 cents from 2.. >> that's deere, isn't it? >> no. this is sears holding. 35 cents for q2, fiscal 2010. >> are you checking a loss of -- >> no, a gain of 35. >> this says they came in with a net loss for the quarter of $94 million as compared to net income. oh, wait, the 50 cents is from the year before. so a net loss of $94 million, 79 cents for diluted shares.

>> 79 cents on revenue of $10.6 billion which is down from $11.8 in the year ago period. >> and the comps, comp store sales were down by 8.6%. we've seen pretty lousy comp store sales from just about every one of the retailers because they're not making their numbers based on what they're seeing from the sales. they're making their numbers from the inventory and the cuts in their cost structure. they say the overall retail market remains difficult and its impact is reflected in our results. we continue to take actions to increase the efficiency of our operations. they talk about how they have cut their sg&a expenses by about $1 billion over the last four quarters including an additional reduction of $212 million for this quarter. >> if you really are an earnings central fanatic, we have before the bell this morning gamestop, which i account for at least a couple of pennies a share per quarter. >> permanently? >> personally account for that.

heinz, hormel, so again, a couple of pennies per quarter, spam, ross stores and then we just got sears and if you're interested in how sears' estimate compares to what they reported, i can tell you how sears' estimate compared to cigna's, if you need that. >> i can tell you on here. >> because i honestly hit sears ten minutes ago here and down here -- >> yeah, me, too. but if you have new questions on cigna, i can still update you on revenues. the estimate on cigna, if you need to know, is south side 1.03. the revenue estimate, if you're interested on cigna was $4.64 billion and i don't know how that compares to sears or what it has to do with sears, but that's still -- thanks, thompson. running a heck of a show there. in washington, the obama administration is going to trim its budget deficit forecast for

fiscal '09 to $1.58 trillion. that's about $262 billion lower than predicted in may. an official says the drop is due to the elimination of $250 billion that had been set aside for further possible financial bailouts. the budget office is expected to make the announcement next week and that's about what we need to start sending the dealers to make good for the promises on the clunkers. i read more about it today. there are people, customers that have gone in and made deals with dealers that the dealers are saying, we can't do it any more. we've waited so long, we can't afford to do this. we may never get our money. they will get it, right? >> they will get their money. what did mike jackson say yesterday? $45 million is what they are owed by the government, which is okay if you're a large dealership. if you're a smaller or private dealer, you probably have a tougher time carrying the float. >> i think it's nice what mike

said was it was complaining about the color of the life preserver. the thing he didn't stress is that it was like throwing a lifx preserver to them. oh, i have sears now. 10.73, it looks like, so that was the -- the revenue number was slightly below expectations, 10.5 versus 10.73. i think you're going to talk about the hood right now? >> treasury secretary lahood says cash for clunkers will be wound down soon. the group launched the venture because dealers fear that the $3 billion the clunkers program will run out of money before they go their reimbursements for the discounts they've already given to consumers. it allows a trade-in value of up to $4,500. all working models of 2007 and

older are eligible. the only requirement is that consumers purchase or lease cars that have 2 miles per gallon higher fuel economies. so people that different qualify for that original clunkers program, if it's an old enough car, you qualify here. some people had a 10-year-old car and it wasn't going to qualify. they just missed it. meantime, the about the's much talked about credit card relief legislation goes into effect today. credit cards will be required to give you 45 days' notice before making any significant changes in your contract. companies must mill the bills 21 days ahead of the due date. consumers will be able to reject interest rate hikes. >> what if they say you're going to pay a higher rate you can say

no thank you? >> yeah. we'll see what that means for banks and consumers. >> we know a lot of state pension funds have load at alternative investments and they're neck deep in pe investments, right? so you might not be surprised that a group of the state's pension funds are now siding with private equity in opposing some new rules on takeovers of troubled banks. and it's an fdic issue. it's going to meet next week to vote on a proposal to require pe firms to maintain high capital levels and put a large amount of their own money at stake when investing in failed banks and now the ft reports that state pension funds have written a letter arguing that to require pe groups to maintain a tier one capital ratio is unduly restrictive. we'll talk about the issue with our guest host, don marron this morning, he rain painewebber and is now chairman and ceo of lightyear capital.

>> always good to see don. >> it is. and he was chairman of ubs, but he had nothing to do with the swiss -- you know, he was the painewebber guy, so we're going to say, so, hiding a lot of money for people, weren't you, don? >> he can't talk about it inspect. >> he will say i was at painewebber and the parent, ubs, they do all this. >> that's their reputation. >> good chocolate. >> knew tallty and secret banking. >> make a lot of money in zurich. >> and skiing. >> and skiing, as well. all these people in the united states, could they go to jail based on -- >> well, 4,500 names right now and 10,000 later, perhaps? >> i think 10,000 title. >> for years, you didn't go to jail for that. can you go to jail? and i'm not asking -- >> the irs can hit you up with massive, massive penalties. if you go in and fess up, it

will ka lower penalty. >> you can do time for tax evasion. 4,500, will we know any of these people. >> there's a chance. >> wall streeters. they're the ones that made all the money, right? >> this is an interesting story. >> to pull this back on the swiss bank account, i mean, this is unheard of in 2009. let's get a check on markets on this thursday. as becky and joe mentioned at the top, a lot to come. jobless claims, leading economic indicators and a whole bunch more. china had a pretty good rebound made back when it lost yesterday, the biggest one-day pop since march. nikkei was positive, hang seng, biggest move off that three-day low. repair is being done in asia why and europe. oil is up a little bit. the inventory numbers yesterday were extremely bullish, although we're now down two cents to 72.40. we were looking for a build loss

of 8 million barrels in the eia numbers yesterday. 10-year noed note, 3.472%. the dollar, relative loser. steady this morning, but the yen slipping, as well. a little bit of risk comes back into the market after yesterday. with a relatively firmer dollar, see what gold is doing on this thursday morning. metal complex, up above, 9 $945.90. >> so far this year, continental european banks have raised only $11.6 billion in new equity capital compared with the $48.3 billion in the united states and $26 billion in the uk. now, reasons cited for the reluctance on the part of europe bankers include worries amid concerns that they haven't become fully clean about their balance sheet. >> the way this show flows, we may talk about things that -- >> go ahead, read it again. >> it's not the same story.

the swiss government, they've been aiding and abetting. they're selling their 9% stake in ubs. but having a 9% stake in a bank that maybe did provide secret accounts, kind of interesting. the sale is well over subscribed today. the price range indicated above yesterday's close. i have something to do with finally getting this settingsment out of the way, as well. >> oversea these morning, christine tan is in singapore. china's benchmark index did jump overnight triggered in part by signs of official support for that market. first, though, let's go to london and see how europe is fairing once again with ross westgate in london. >> carl, good to see you. we're firmer today. the ftse cnbc global 300 near session highs. european stock markets as we start to add the u.s. open up 1.2% pretty much across the board. no surprise. commodities, banks are firmer. we've got higher base metal prices and crude prices, as well. which is why oil and gas and

resources are doing fairly well, as well. you were talking about ubs. good demand for the stakes sale from the government so the stock up 4% at the moment. we heard from rio tinto today, as well. it was in line with market forecasts and said it was confident about the future after what's been a pretty tough 18 months. so demand for rio shares today along with the wider market, as well. 50% of whose profits come out of the united states, this company has been going through a deep restructuring before the global recession hit and today their operating profit was above forecasts. we saw revenues down in july. basically cost cutting has helped their margins there. that's the news out of europe. let's get over to asia. >> hey, ross, once again, track can stock market movements in china. the shanghai composite rallying

4.5% on reports that a stock regulator there had approved new mutual funds to help support the market. 2 nikkei 225 rose 1.8%. the japanese market is up, as well. and in hong kong, the hang seng finished 1.9% higher. earnings in focus, shares of china mobile fell after announcing a 1.6% drop in quarter hely earnings the. second quarter net profit came in better than expected, but net interest income, however, fell from the year before. so that's it from asia. guys, i'm sending it back to you. >> christine, thank you for that. christine tan in singapore. >> let's get to our task force for this thursday. scott brown joins us with raymond james, talk about the economy a little bit. guys, good to see you both. serok, just your take on how we have been paying much attention

to shanghai this week. is it a volume thin month? what do you make of that? >> because we saw the demand come from the far east, is that going to help us come out of where we are? we all know, we've talked about this until the cows come home. the consumer for our country is not going to come back for two or three years. unless we see global demand come back, especially driven by the emerging markets, if they stop buying and if they stop growing, then that's really going to affect us even more. so that focus will continually be there and i think that's driven a lot of the rally we've had. for us to go forward, we need the global markets and demand to keep going. >> did it impress you at all that we were able to rally for a second day? >> yes, i think so. china has come back so fast, and so quickly, people know that the amount of stimulus in china is going to keep on going. it can be so vague as to what they're doing, but i think they're driving growth there

until the rest of the world comes back. so we should be okay for a little while. >> it does seem per verse to be talking about, well, if only the officials there would come in and support the market. but that's what we're dealing with over there. >> exactly. they have a lot of issues that unfortunately we don't have to deal here because the middle class there, if they don't get the support for all their purchasing power, that's going to put china in a bad situation. >> scott, serot mentioned stimulus. a big piece in the journal today about how the stimulus is incredibly unpopular in this country although it is doing some good. why aren't people buying into that? >> well, you know, today we've only had a little over 0% of the fiscal stimulus actually go out the door. so, you know, it's not surprising we haven't seen a major impact from the stimulus. although i think that's coming. half of the stimulus will show up in fiscal year 2010. and that's going to provide a

lot of support. you know, we've got a lot of constraints on the economy, particularly on the consumer and for small businesses credit is tight. and it's expected to remain tight. but that fiscal stimulus really should help out as we work into next year. >> are we going to start seeing that in things like, say, jobless claims today? >> probably not today. it's really going to be a while, i think, before the labor market turns around. we are looking, i think, for a gradual down trend in the jobless claims. we're certainly a lot lower than we were in the spring when we were averaging around 650,000 jobs per week. the claims numbers are now around 550,000. that's still extremely high. but i think the overall trend there is going to be lower. >> any doubt in your mind, people always say claims peak a certain number of weeks before the recession ends. any doubt in your mind that we are out of recession at this

point? >> oh, sure. i think there's plenty of doubt. the economic data are always mixed and as you approach a bottom, you're going to have some numbers that are positive, some numbers that are negative. certainly the markets will be running from one side of the boat to the other in reaction to those data. but i don't think we've seen clear of it. it's not going to be 100% certain until well after the fact. >> joe and i had an exchange at the top about whether or not there's all these reasons to think we're going to go further down, so many people expecting the pullback of, what, 10%, 15%? >> this is a sugar high, that there's nothing backing any of this up, no fundamentals. you never know about those when the market is moving. you don't find out about that until later. >> what i hear about that is a healthy dose of skepticism in the market. it's not like we'll go to the northeast corner. >> the bullish sentiment is up. >> but if you look at where we were, it was all about risk when we were at 666 on the s&p and now you're back to close to

11,000, you still have a lot of people believing this. and what you have is a rally that's driven by companies that were second tier. >> lower quality names. >> lower quality names that survived. it was all about survival. it was are we going to go through this crisis and be in existence? and now you're looking to fundamentals. >> is it fundamentals, or is it somebody looking at this thinking, i missed out on this huge run and i want stocks to pullback. people pile back in. >> and they're piling back in to the indexes and i think you can get hurt on that. over the next couple of uses, our view is that if you're not in the specific stocks and you're buying the index, you're going to miss of the a lot movement. but the quality companies, the ones that are going the drive growths, who is going to drive revenue? who has the firepower and the balance sheetsd and the cash flow and can drive dividend growth as well as growing new

products? and that's the key. going forward, that's going to be the case. >> are your allocation equities going to be higher or lower by the end of the year? >> if a client -- it will be on the top of the equity exposure, because we think the flx couple of years is going to give us an opportunity to get back a lot of what we last over the last couple of years. >> scott, we're out of time, but any thoughts as we head into what will be an awfully thin close to the month? do you expect the data in september to be full of land mines, or why not? >> well, retail sales i think are going to be important because we're worried about the health of the consumer at this point. and again, i think the numbers are going to bound alg around a little as we bottom out here. >> that's been the case over the last couple of weeks. good one day, bad the next. guys, thank you for shah. >> my pleasure.

>> coming up, we'll get an update on hurricane bill these days, when you have to spend, shopping online can help save. doing it with bank of america can help save a lot more. up to 20% cash back from over 300 online retailers with our add it up program. just sign up and use your bank of america debit or credit card when you shop online. it's one of the many ways we make saving money in tough times a whole lot easier.

some people like to pretend... a flood could never happen to them... and that their homeowners insurance... protects them. it doesn't. stop pretending. it can happen to you. protect your home with flood insurance. call the number on your screen... for your free brochure.

welcome back, everyone. are you on your way to the airport this morning? if so, listen up. scott williams with the weather channel is back and he joins us right now. good morning, scott. >> good morning, becky. if you are on your way to the airports around the midwest, case in point around the ord airport in the windy city, we are seeing thunderstorm activity moving through, around indianapolis back down through lieyville, all through the midwest here, this activity will continue pushing toward the east throughout the day as we continue to watch a potent cold front along and out ahead of it setting the pace for strong and severe thunderstorm activity later today. we have an area bull's eyedw3 i the extent and that will mean severe weather into places like

the motor still, indianapolis, through little rock. look for wind and hail. that will cause delays in major cities such as boston logan and laguardia. as we look at hurricane bill now, continuing to move toward the north and west at about 20 miles an hour, still a textbook scenario. maximum sustained winds are at 125 miles an hour, so it has weakened, but it will continue to move towards the north and the west and eventually more toward the north and the northeast for the upcoming weekend here. so it will move between cape hat russ and bermuda. deadly rip currents along the eastern seaboard this weekend. back to you. >> give us a sense of the impact of rainfall on the north to mid-atlantic coast. >> all right. it doesn't look like we will see rainfall in association from hurricane bill along the eastern seaboard. but with that frontal boundary moving through, we will see scattered showers and

thunderstorms. but the main impacts will be offshore. we are talking about some swells somewhere starting friday here from the space coast back up through the mid-atlantic. wave heights offshore, 4 to 8 feet. water rises there into saturday, anywhere from 1 to 3 feet. as we go in time here for the upcoming weekend, we will start to see those wave heights increasing along the outer banks, 16 to 22 feet here. even around long island offshore, 8 to 12 feet water rises as far as what to expect there. so very impressive swells there, deadly rip currents, as well. >> so if if you're a surfs, but you can get a tan on the jersey shore. carl is asking this on my behalf, scott. i'm leaving for the beach next week and joe is headed there, too. >> no. he's going to a beach, too. >> going lower, not a jersey

beach. scott doesn't give a rat -- he's like, yeah, okay, i have to work next week. have fun while i'm holding down the fort. sorry, scott. >> it is thursday and we are thursday for the morning's top stories. did you like that? >> that was good. >> you're used the married name. >> ann, what should we do? we'll talk to her after the break. forbes is out with its list of the world's most powerful women. some of the names on this list may surprise you. back in a second. taking its rightful place

in a long line of amazing performance machines. this is the new e-coupe. this is mercedes-benz. ♪ yes, you're lovely... ♪ what do you think? hey, why don't we use our points from chase sapphire and take a break? we can't. sure, we can. the points don't expire... ♪ there is nothing for me... ♪ there's no travel restrictions... we could leave tomorrow. we can't use them for a vacation. you can use the points for just about anything. i know... ♪ the way you look tonight ♪ chase what matters. get your new chase sapphire card at chase.com/sapphire. my daughter was with me. i took a bayer aspirin out of my purse and chewed it. my doctor said the bayer aspirin saved my life. please talk to your doctor about aspirin and your heart. i'm going to be grandma for a long time.

you all want to run your businesses more efficiently, so we've brought in a team of experts to help. one suggestion is to make your shipping more efficient with priority mail flat rate boxes from the postal service. call or go online for a free supply and up to $160 in offers from authorized postage vendors.

shipping's a hassle! weighing every box... actually, with flat rate boxes you don't need to weigh anything under 70 pounds. if it fits, it ships for a low flat rate. ok, but i ship all over the country. you can ship anywhere in the country for a low flat rate. ship international, too. yes, but i ship hundreds of things, in all sizes. great, because flat rate boxes come in four sizes. call now and we'll send a free supply, plus up to $160 in offers. when you're ready to ship, we'll even pick them up for free, no matter how many you have. priority mail flat rate boxes only from the postal service. a simpler way to ship. call or go online now to get started.

what did we find out? the who was definitely there, at woodstock. >> i think spice girls were there. >> doug smith had some of that brown acid. because he -- you know, and remind him and he goes, oh, yeah, yeah, you're right. he was there, but it was 40 years ago. i can't remember -- >> i can't remember last week. >> if you wonder what i'm talking about -- >> you've got to watch every day. >> yeah. cass was in. he was at woodstock. hey, joe, good morning, welcome back to cnbc. i'm joe kernen. that's why we played hey swroe. that other show, they would have to play charles in charge or

something. but becky quick is here. carl quintanilla is here. on the agenda, a number of important -- was there a charles in charge song? >> yeah, there was. that was tony danza, right? >> scott beo. >> similar career paths. the important economic report today, as you would expect on a thursday, we have weekly jobless claims at 8:30 eastern. polled economists see claims expects to fall by 8,000 and continuing claims to fall by 141,000. stay tuned for leading economic indicators, also the philly fed survey, philly fed survey comin= out, right at 10:00. >> you can't wait. >> love -- >> i'm always like where is joe at 10:00? oh, he's waiting. >> i love philadelphia cream cheese, philadelphia cheese steak sandwiches. >> philadelphia freedom. >> i love philadelphia freedom.

>> meantime, federal officials will be gathering in jackson hole, wyoming today for the kansas city fed's annual symposi symposium. steve leisman is on the scene and will be hoeld hosting a live one-hour special from jackson hole tonight. catch the fed, crisis in recovery at 8:00 p.m. eastern time and we'll talk to steve tomorrow morning here, as well. >> that's worth watching to see if the gives me economist humor as only steve can do it. eat got an hour. he's going to have something. >> forecasting. >> yeah. forecasting. there's a lot of -- those economists. after physicists, there's nobody better at -- >> but you could get serious news that comes out of this. >> ee, yeah. >> he's out there with all the bigwigs. >> and once again, they're at a place near a fishing hole. >> if he ever gets name a fed

governor, you're going to want him on your show. >> can that happen? those who can't do this and those who can't do that, teach phys ed. >> we're awaiting job economic numbers today. we just heard from sears holding. a decent picture on the holdings front as china recover overnight. biggest one-day move since march. oil is up 7% over the last two sessions, giving back 9 cents this morning to 72.33. the ten-year note, yield is still below 3.5% at 3.476%. the dollar is slightly higher. yen slipped as more risk came back into the market at 94.27. gold is up mildly, up now 60 cents to $945.40. >> to the cme now, michael gushg

ka, michael, we keep coming ba to this market that has all the reasons, according to the soo-sayers to pull back because it's not supported by fundamentals. come? >> first of all, the budget deficit that this news you got in the uk about an 8 billion pound deficit for july, only a year ago, it was a 5.3 billion pound surplus. so you see that kind move. but that's the largest deficit in the nation over there. at the same time, they're normally get ago boost from tax receipts at this time. it's much like a runner who continuously is asked to put a stone in their pocket and it just starts dragging on you. and much like you introed here, i think it's the unemployment claims on the weekly and monthly nonfarm numbers. eventu what's going to happen is if we don't start seeing these numbers clear up,

down 200,000 is fine because we're going in the right direction, but eventually that's where you'll see the markets moving. granted, maybe you'll see that move in commodity prices, oil and grains. but now, technically, these market res showing breakout material. i know the dow is somewhere between 9321 and 9421 are fundamental for me. eventually, one is going to start to give away and you would have to believe, at least, that the technicals are going to start failing just because of these news stories like we're seeing in the uk which is a country that somewhat mirror what we're seeing here on a lesser scale. eventually, i think that could be a problem and i guess in a technician story comes into resistance. where we come up against the ceiling, we can't plow through it. >> so you think we could continue to trend higher but sooner or later, there is a ceiling that we're going to hit and it's going to coincide with

that horrible, seasonal pattern that we have seen in september and october, that could set something up that's fairly ugly? >> well, yeah, absolutely. that's why i mentioned the payroll number. philly fed and these michigan confidence surveys are vital, especially confidence from where you can see that the mainstream mentality has cleared up from where wall street was prior to that. i think if you start seeing the opposite of this is is that we start surprising and people start getting jobs out of nowhere -- i don't know how that happens -- but all of a sudden you would see a blowout top and personally even a bullish flag formation. but you can't see it radio right now because if they're not creating jobs are showing us that there are problems, i think it starts showing a little bit of a drag. the third quarter is normally where we start trenching in and start making a base for some type of movement. we know historically where october fits in for these people that have these negative

outlooks, i think right now as we start approaching that and we start looking at member some of this material of crude oil possibly up at 75, i think it's going to be becoming very hard for maybe all that money that people have been saving and not spending starts dragging. so again, does your wallet make a difference right here? i don't think the markets are showing us right now that we're setting up for that. but again, it's the whole dynamic that the vix is making a sign for us and at the same time, it's commodities. let's look at wheat and corn and some of the gains right now because we did see a big turn around in some of those prices for america when they started paying for a loaf of bread or a gallon of milk. >> 75 on oil should be at least 10,000 on the dow. they're moving in tandem. when does that stop? >> well, this week, when you start looking at a it on a chart, on a daily, it was very big. the moving in sterling from 170 back down to 163 is showing that the dollar is maybe starting to

get legs here. much like your program showed yet, the weight crude oil moved in almost a matter of 30 seconds on those inventory reports. that was something where all of a sudden, you could see the base and start forming a trickling of prices. as long as volatility starts remaining high and you're at the upper end of these ranges, all of a sudden, it starts showing to me that you could see breakout material in some of these scenarios at least where america is not looking to start paying well over $3 a gallon. and i think the refineries right now are not at capacity. all of a sudden, you're starting to get a different dynamic. my conclusion that would be let's wait and see how philly comes out today. i think the initial claims are enormously big right here and at the same time, maybe that's the key. but again, keep an eye on 93 and 91 in the dow. for me, that's a big level on a closing basis for the month and we're almost near tend of it right now. >> michael, thank you. >> thank you.

german chancellor angela merkel topping the list of the world's most powerful 100 women. forbes out with its latest ranking and fdic chairman sheila bair retains her number two spot on this list. first lady michelle obama makes her debut on the list at number 40. mrs. obama tops other notable names including oprah winfrey at number 41 and britain's queen elizabeth at number 42. >> chair bair was number two? >> yes. >> who was number one? >> angulela merkel. >> the who played 24 songs. >> i was just looking at that, too.rv >> i forgot, tommy must have come out in the 60s. that was rock opera. >> i saw it. >> you did?

>> you were a gleam in your grandmother's eye. >> about ten years ago, i saw the new one on broadway. >> did you see jesus christ superstar? >> well, i saw it in a high school auditorium once. i don't know if that counts. >> that counts. >> here is a change for magazine readers. next month, entertainment weekly will be featuring tv ads. it will be embedded with a video player that will include commercials from pepsi. a three-inch screen will start playing automatically as you flip the page open. >> you know, the car companies got it. why not for washers and dryers? appliance manufacturers looking to a $300 million cash for clunkers equivalent to boost the sales of refrigerators, washing machines and dishwashers that are spewing too much carbon die automatics i'd into the air and

get lousy mileage. most of those appliances get zero miles to the gallon. >> but they're making progress on that. >> congress authorizing the funding earlier this year as a part of the stimulus bill. the money was distributed to the states. states must now hand over their plans to the department of energy by the middle of october. i guess you could get more energy efficient -- it wouldn't be miles per gallon, obviously. the program could offer rebates of $ 00 on some models and trading in older appliances will not be required. you just get a rebate to buying new energy efficient apply yapss. >> you might get your cash for clunker on your golf clubs? >> my driver. my driver. it's old big bertha. it is a clunker, too. my putter is a clunker, as well. i don't know whether to go long, left hand, short, low claw. >> if you have any thoughts about these stimulus programs, if you think it's a good idea,

if you think it's too much, e-mail us, squawk@cnbc.com. we're going to take a quick break right now. then we'll get to the news making headlines outside the world of business when we come right back.es esn't care where you live... ...or if you're already sick... ...or if you lose your job. your health insurance shouldn't either. so let's fix health care. if everyone's covered, we can make health care as affordable as possible. and the words "pre-existing condition" become a thing of the past... we're america's health insurance companies. supporting bipartisan reform that congress can build on.

90s slacker hip-hop. ♪ that can strain your relationships and hurt yourody 'cause we'pride ♪ng a ride ♪ ♪ it's the credit roller coaster ♪ ♪ and as you can see it kinda bites! ♪ ♪ so sing the lyrics with me: ♪ when your debt goes up your score goes down ♪ ♪ when you pay a little off it goes the other way 'round ♪ ♪ it's just the same for everybody, every boy and girl ♪ ♪ the credit roller coaster makes you wanna hurl ♪ ♪ so throw your hands in the air, and wave 'em around ♪ ♪ like a wanna-be frat boy trying to get down ♪ ♪ then bring 'em right back to where your laptop's at... ♪ ♪ log on to free credit report dot com - stat! ♪ vo: free credit score and report with enrollment in triple advantage.

g#ick today. time now for our check on the world of news outside the world of business. look at that smile. alex witt joins us with a roundup of the headlines. >> good morning joe and the gang. turnout appears to be low in avg amid perilous conditions there. while there are reports of violence, local media has been

directed not to cover it. the scottish government is expected to announce today that they are releasing the only man convicted of the 1988 pan am bombing on compassionate grounds. lawyers for the 57-year-old say he is dying from permanent prostate cancer and will return to libya to die. he is convicted of a bombing that killed 275 people. here is a shocker, harvard and princeton sharing the top spot in the latest edition of u.s. and world news report university rankings. carl, i'm looking at all this and i'm trying to see if there's anything like best party school. >> joe and i went to colorado. >> we can take credit for that. >> i think right now it's penn state. i think we reported on that a while back. >> really? >> yeah, i think so. >> i would have thought arizona state. boulder is a classic. >> classic. >> madison. ann arbor. >> yeah. >> see ya. when we come back, the

stories that have us squawking this morning on camera and off. plus, former painewebber ceo don marron is our guest host at the top of the hour. tdd#: 1-800-345-2550 if i'm breathing, i'm thinking about trading. tdd#: 1-800-345-2550 i always have my eye out for a stock on the move. tdd#: 1-800-345-2550 doesn't matter if a company sells computer chips tdd#: 1-800-345-2550 or, i don't know, fish and chips. tdd#: 1-800-345-2550 i'll look at all kinds of stocks before i settle on one. tdd#: 1-800-345-2550 if i think i'm onto something i'll check it out, tdd#: 1-800-345-2550 you know, see what other traders are up to.

tdd#: 1-800-345-2550 when everything feels right though, tdd#: 1-800-345-2550 that's when i get serious. tdd#: 1-800-345-2550 and the minute i get into something, tdd#: 1-800-345-2550 i already know when i want to get out. tdd#: 1-800-345-2550 of course, every now and then i'll talk with somebody tdd#: 1-800-345-2550 who knows what i'm trying to do. tdd#: 1-800-345-2550 (announcer) switch to schwab today. tdd#: 1-800-345-2550 you'll get the tools, the technology tdd#: 1-800-345-2550 and the support to trade your way. tdd#: 1-800-345-2550 go to schwab.com/trader tdd#: 1-800-345-2550 or call 1-800-540-7304 tdd#: 1-800-345-2550 right now. tdd#: 1-800-345-2550 but opportunities can vanish like that... tdd#: 1-800-345-2550 ...so most days, i'm right there tdd#: 1-800-345-2550 when the market opens.

reading about washington these days... i gotta ask, what's in it for me? i'm not looking for a bailout, just a good paying job. that's why i like this clean energy idea. now that works for our whole family. for the kids, a better environment. for my wife, who commutes, no more gettin' jerked around on gas prices... and for me, well, it wouldn't be so bad if this breadwinner brought home a little more bread. repower america. i hope our senators are listening. but i've still got room for the internet. with my new netbook from at&t. with its built-in 3g network, it's fast and small, so it goes places other laptops can't. i'm bill kurtis, and wherever i go, i've got plenty of room for the internet. and the nation's fastest 3g network. gun it, mick. (announcer) sign up today

and get a netbook for $199.99 after mail-in rebate. with built-in access to the nation's fastest 3g network. only from at&t. welcome back, everybody. take a look. the futures are higher.

right now, up about 24 points. >> we have lots of newspapers and we all decide something we look through most of them. it's weird. >> here's -- >> no, i know what i want to say. it's weird, even you sent something me something about th french. i almost said -- it's because they like fog. i'm allowed to say that. about out of all the countries in the world, who works the least? >> the french. this is something on cnbc right now. the french work the least. >> now, in defense of that -- isn't that what life's about, seriously? >> yeah, quality of life. >> isn't that a thumbs up? >> sure. >> you're jealous. >> right. why chase your tail that you'll never catch through your own entire? why not smell the croissants and -- >> i mean, become your own man, your full potential. come on.

innovate. >> and then die of a heart attack because you're a type "a" person. the egyptians tried to do that, remember? >> the story we're talking about -- >> this may be a consideration for ben bernanke. there's a story on the new york times saying, he's finally been able to get some sleep. for the first time in two years he took two days off to go to his son's wedding. there are all of these questions, he's in jackson hole and he'll be hailed as a hero there for saving us, pulling us back from the brink. you go to congress and more than half the congress people have signed off on this bill that strips authority away from the fed because of what they see on bernanke's part. >> congress doesn't like him. he's seen as a friend of big business and wall street and the bad guys. you haven't heard -- the obama administration hasn't said negative things about him. they've said some -- >> he's done a fine job. >> nominally positive things but

they have not given him any indication as to whether they'll reappoint him. my conspiracy theory is that all administrations suffer from arrogance. you would say that with w.'s administration, and i think they won't -- why would they? if they've got -- >> why wouldn't they? >> reappoint him. if they have cover with the populous anger, cover in congress, why not put one of their own guys in? >> the other argument would be -- >> why put a republican-appointee in? >> guy this got us through -- >> they deent care about that. >> he got us through the worst and let's have someone take the baton through the next phase. >> my big-e concern is starting politics in fed, it's supposed to be an apolitical cbody. if you have a political appointee who feels he owes something to the administration in charge, they'll be more reluctant to start pulling the

strings. >> why do you do -- >> nobody gives you power. that goes with the arrogance i was talking about. if you have the right to appoint your own fed guy, and even though it's not supposed to be political, everything's political. look at -- >> in the past that hasn't been necessarily the way the fed was run. greenspan was there for how many turns, with presidencies on both sides. >> clinton that reappointed him as a democrat when he was appointed by a republican. i have a feeling there will be pressure from progressives to put their own guy -- and i'm just -- i'm just taking -- sort of just taking the more insendary take on this. but i bet, i'm going to take the side they don't reappointment. >> no good deed, right? >> that's true. >> whether you agree with hank paulson or not, he was there when it was really tough, then he gets raked over the coals in congress. >> i think it's ludicrous not to reappoint him but i'm saying that's what's going to happen. economies across the country

struggling to stay afloat. cnbc's very own home state among them. jon corzine will be joining us to talk about what's happening here and what they expect in terms of help from the national level. we'll be welcoming don marin to the set. he's a private equity power mrai player and a "squawk box" guest house. carol, when you replaced casual friday with nordic tuesday, was it really for fun, or to save money on heat? why? don't you think nordic tuesday is fun? oh no, it's fun... you know, if you are trying to cut costs, fedex can help. we've got express options, fast ground and freight service-- you can save money and keep the heat on. great idea. that is a great idea. well, if nordic tuesday wasn't so much fun. (announcer) we understand. you need to save money. fedex

♪ yes, you're lovely... ♪ what do you think? hey, why don't we use our points from chase sapphire and take a break? we can't. sure, we can. the points don't expire... ♪ there is nothing for me... ♪ there's no travel restrictions... we could leave tomorrow. we can't use them for a vacation. you can use the points for just about anything. i know... ♪ the way you look tonight ♪ chase what matters. get your new chase sapphire card at chase.com/sapphire.

wall street riding a two-day winning streak. later don marin helps us break down the increasing volatile market and try to figure out if the bulls or bears will prevail. john corzine of new jersey

drops in for a look at health care reform, cash for clunkers program, the state of the financials and much more. and speaking of financials, the obama administration trimming its budget after scrapping money for bailing out more banks. former fdic chair bill isaac gives us his outlook for the industry and whether or not bank failures are starting to slow as the second hour of "squawk" begins right now. ♪ good thursday morning, welcome back to "squawk" here on cnbc. i'm carl quintanilla, joe kernen and becky quick. in student joe don marin. lots to cover over the next couple of hours. first, a check on the markets. futures rebounding a little bit. dow put together three straight after china got back most of what it lost yesterday. biggest pop in shanghai since about march. and asia, europe, having a pretty good morning as well. oil's relatively flat after gaining 7% over the past couple

of days. down 17 cents, $72.25 after some very bullish inventory yesterday. ten-year note hovering below 3.5. dollar's relatively steady. yen slipping a little bit this morning. gold's relatively flat as well. it was up or down a buck earlier this morning and right now down -- or up 30 cents to 945.10. let's head over to becky with the headlines. >> thank you very much. let's get to some top stories. the obama administration will trim the budget deficit forecast for 2009 to.1.8 trillion. that is still a record. the new estimate assumes congress will not have to be asked for more bailout money. the administration is making plans to wind down the cash for clunkers program. it could announce by tomorrow when the incentives will no longer be available. auto dealers have used $2 billion of the $3 billion set

out. victoria's secret operator limited brands reported a 27% profit drop as sales slip. but the company still beat expectations and boosted it's outlook for the year. that's a look at our top stories. i know you're heading back to the set. joe was like, why is she in the control room? >> just switching things up. >> do you have an answer? >> i don't. >> what's your answer, becky? >> this is something new we're trying out. like run the headlines through. we'll all take turns doing it. >> no, no, no, no, no, no, no, no. >> it's you'll run through the -- >> if i asked you to go find the control room, would you know how to get there? >> i'll leave a trail of bread crumbs for you, joe, so you can find your way back there. >> you've got so many screens behind you. i'm like, whoa! you look like a fly's eye. it's too weird. i'm not, no. >> it's interesting in here. >> don't tell him where we are. >> i'm not going.

>> it's fun. >> what do they do there? >> they're watching us. come take a look around. >> that is cool. >> we have three rows of people who are actually watching us do all this stuff. and look at all the -- wow. you would not believe what you can see on some of these screens. i see other people getting ready for other showings. it's worth checking out, joe. >> are they doing our show? >> yes. >> the people who tell you to wrap -- >> yeah, now i know what you mean. well, come back. >> i'm hurrying. go ahead. >> it's all men here. not that there's anything wrong with that. >> peeking of which our guest host is donald marin, ceo of lightyear. joining us, robert albert son, former goldman head of bank research. nice to see you. now that we've unlocked the mysteries of television. what strikes you as most interesting this week? it's been -- we're in a volume-thin environment but the news flow is nothing like summers we've seen in the past, right? >> not at all.

a few guys seem so happy, it's a sign of optimism. the market must be up today. >> yeah. i don't know, joe. we haven't caught the bearish bug, have we? >> no, we haven't. and so for as we move through 9300 toward 10,000, we have been vindicated to some extend. >> you have been. there are two things going on. there are a lot of things that can predict the market. one thing is clear talking to institutions around the country, a lot of people have missed this market. they're in agony as to what to do. liquidity is extraordinary high. what's important is probably 2 of 4 trillion is money that shouldn't be there. it's money that has to get a return. it was put there because of safety or because they were scared, there was no other place to do with it. both those things suggest there's strength in the market. finally, when you go around the

world and talk to sincesters, te u.s. is is still the place to invest and the dollar is still the place they want to be. >> we've heard from some who are in agony for missing this. others say, i don't feel bad because i know secretly the house we've built on banks is on a foundation of sand. commercial real estate's going to be a problem. there's still overvaluing assets. fdic is running out of bullets. is that going to come back to haunt us? >> there's much more to the movie, unfortunately. we're maybe 30, 35% through this in terms of actual losses. . started in the mortgage market. that is a huge market. the last time that happened was the depression. and, remember, the last time we had a real estate bubble caused by an external influence was emerging market savings, bernanke brings this up, it's 160 years ago. the market, i think, is short term kind of looking at recent history and saying, this is over soon. this is month 19, it must be.

the fundamentals don't show it yet. what i'm worried about is the consumer, how much longer the consumer spends because if you look at the income numbers -- sorry, the employment numbers, they keep going down. we're down 5%. that hasn't happened in 60 years. so i worry about the underbelly of this. the banking system is solid. they fixed the patient six times. they never created the credit crisis problem which is a secondary market. that's a trillion dollar program to fix it. we're a year later only at $80 billion. so we got the wrong patient -- >> it's going to be okay. >> i hope it works. >> don't you think, in fact, that shows that the program worked with credit card and auto loans but they found the first couple deals were high rrrs and private capital came in quickly and took the government's place. that's the best case for these programs. >> no question. that's the part i don't think the government accepts, that the

private capital nooeeds to do this, not new liberals with their idea of competition and capital markets, because they don't have any. let the private sector come in. we've got the banking system looking for more capital. if we're going to grow on you of this, the banks have to do it, not the secondary market. where is that money going to come from on the capital side. why charge them three times the capital to do that? why are they so evil? >> what's the concern. what is the concern from the regulator's point of view? why would they require this? >> the concern is, number one, we don't want to be embarrassed in case they make a mistake. number two, seeing anyone make a profit while we're in there helping is the wrong message. and that's unfortunate. they should not have gotten into the problem in the first place. initially, they had to. they did fine. they need to get out of this stage. >> so are you looking for a -- everybody says the next wave. are you looking for a new wave of news, positive or negative, in the near term?

delinquencies, foreclosures -- >> on the banking front we've come over the top on the delinquency rate but we're looking at the tail of the subprime and early problems. now we have prime mortgage which is getting as thick in terms of dollar amount damage. then we all know we have commercial real estate. last time we had commercial real estate there was a problem. it was a southwest-northeast office building. this is national. we had to go through that. then cni, business lending, levered lending. there's a lot to chop through here and calm heads would be useful. >> can it be offset by just theatericly, can problems like that, the onset of problems like that be offset by a labor market? >> absolutely. that's the solution. employment go up, we're done. is that going to happen? is anything in the stimulus package doing that? more importantly, is anything in the consumer psychology really going to last or work here? for the first time since the

depression, oh, my gosh, 1 out of 4 houses are worth less than their mortgage. they may be able to pay the mortgage, service the mortgage, but that sensibility has been hammered. >> and why would you sell if you -- you can't collect your equity for a downpayment on a nicer place. >> i think that's right. most people in their houses, they have a family and they want to stay there. the key thing is consumers are very smart in time around. in september they stopped spending and started saving. that's had a couple of effects. one is it's shouldered the economy more quickly but on the other side it's put consumers in a growing better position. not good but better. how do you feel where the consumer is now? how will they act over the next six months and year? >> smartest entity in the united states, the american consumer. they started saving. they're almost back up to their historical average, during the sevens, going to ten. stimulus package went straight into it. i have great faith in them -- >> to spend when we need them

to? >> to spend. they have to delever further and save more. mychal clags is it's about $2, $2.5 tril that has to get delevered and then they spend. >> kind of dead, episodic. >> like the cash for clunkers spurs them to spending and then -- >> too many artificial stilmuli. >> christmas season, you're not looking for great things? >> no. >> don, i think what you've got is i much more involved xhur consumer. this is the first 401(k) crash. they're seeing firsthand what's happening. secondly, their principle asset is their house, third, clearly worried about their job, but they're more aware of these situations. they can manage them better because they're more involved on

a day-to-day basis. they're watching for signs. the biggest sign will be when the obama stimulus plan affects them. they can say i got a job or a student loan or help to buy a house or in this case to buy a car. it isn't just the help. it's the fact that the old saying, i'm from the government, i'm hear to help you. in this case, it may be true. >> right. in the journal, it's a program that didn't result in new taxes for them and it's still unpopular. if you can't sell that to people, how do you sell something that actually does require an increase in revenue, right? government revenue? >> i think a final note, just look how quickly they responded on the cash for clunkers. this is basically an optimistic country. when offered a deal and an opportunity, they jumped in. that's how this economy has to be managed. they're very smart consumers all over so much smarter. the stimulus programs have to be things that are practical and that people can feel. >> that sounds like an argument

for the appliance makers getting money back for every washer and dryer. are you in favor of that stimulus? >> no, i'm not in favor of appliances. it's a good sign people responded quickly to a program or not. other programs, no response at all. >> why would you not be in favor -- >> are you? >> yeah. >> there's earmarks for that. why would you not be -- >> i know how to drive a car. i don't know how to run an appliance. >> so you're like 41, you go through a checkout stand, you can't believe they've got those scanners? what the heck is that. >> no, i know how to do that. i have small children. >> you know how to turn on a dispos disposal, right? >> but when does the money run out and when does the natural income base take over? you can't have that happen with this much damage in the employed base. that's what needs work. that's what -- that's where we should have gone. most people favor tax incentives for business to get the employment numbers moving. we're in kind of biblical times

here in terms of drops of changes and shifts we haven't seen in so long. and i hope it's -- i hope it will continue. i hope they find something else to give to the people. but when they give you money to spend, no matter how they do it, they take it out of your back pocket. it has to balance. >> but i think in the end it's the housing crisis that got us into this and solving the housing crisis has to get us out. the bottom's coming in housing, probably in the fourth quarter. do you agree with that? >> i do agree with that. prices have come down now to normal ratios to income, which is wonderful. the problem is, there's no refinancing capability out there that can really handle it. going forward. people really are angry at wall street for causing this problem. it wasn't wall street that caused it. wall street joined in the end and made it a bigger mess. wall street found 80% of the mortgage money for america. 80% of people are in their homes because of this evil shot. now you shot wall street, cut it in half.

where's the new refinancing coming from? ditto, we got that on commercial real estate. can't get the financing. secondary markets, sorry, we haven't dealt with that patient. >> good to see you, robert. don will hang around for the rest of the show. if you have any comments or questions about anything you see on the program, go ahead and e-mail us at squawk@cnbc.com. when we come back, he's in the middle of a heated race for governor but new jersey's jon corzine has taken time out of his busy schedule to join us to talk about the financial crisis, cash for clunkers, so much more. bill isaac will be joining us, former fdic chairman.  time now for today's aflac ia question. who is the youngest winner of a noble prize? the answer when cnbc "squawk box" continues. aflac!

you really need it these days. how come? well if you're hurt and can't work it pays you cash... yeah to help with everyday bills like gas, the mortgage... ...and groceries. it's like insurance for daily living. so...what's it called? uhhhhh aflaaac!!!! oh yeah! that's it! aflac. we've got you under our wing. a-a-a-aflaaac!

now the answer to today's aflac trivia question. who is the youngest winner of a noble prize. the answer, william lawrence bragg, who won the prize for physics in 1915 at the age of 25. welcome back. fed officials will begin

gathering in jackson hole, wyoming, today. jackson hole, wyoming, for the kansas city fed's annual symposium. i guess i don't -- you know, kansas city is chopped liver compared to -- i mean, it's not even that close, is it? it's in the migd -- >> you think they could go to lawrence or something and hang out -- >> there's plenty of nice places in missouri. you know, the ozarks, independence. i don't -- jackson hole. anyway, fed chairman ben bernanke scheduled to speak tomorrow. we'll be listening for commentary to trickle out from other attendees a. steve liesman will be on the scene. he'll be hosting a one-hour live special from jackson hole tonight called "the fed: crisis & recovery." new jersey broke through unemployment slump, breaking a seven-month streak of job losses. not all news in garden state as

an schwarzenegger 8 billion budget deaf looms ahead. we're joined by new jersey's governor, jon corzine. if you were going to -- would you plan something out of state if you were going to talk about new jersey's fortunes? don't you have the sense to keep it here? >> we'd go to long beach island. there's no question. >> you'd run into becky. >> we'd run into becky on her vacation. >> governor, do you give a state of the state? >> we do, in january. >> you do. can you give us a preview? what is the state of the state? >> i think the economy is actually beginning to turn. i don't -- i don't think it is a sharp "v" turn but i think we're seeing positive movement in employment beginning to happen. i probably will see -- y'all probably see weekly claims again show diminished layoffs on a national scale. as you said in your opener.

13,000 new private sector jobs in construction and manufacturing and hospitality and leisure and services. we're seeing some signs that i think you're beginning to see a turnaround going on. while everybody wanted instant gratification out of the president's stimulus program, i think you're beginning to see some of the starting points of people going back to work. you know, particularly in the construction trades. now, the housing market continues to be weak and it's troubling. with unemployment at 9.5%, 9.4%, whatever the number is here nationally, it does put pressure on individuals' balance sheets is in the housing market. there are some good signs. and i'm a little more optimistic than i've been in quite a while. by the way, an old university of

chicago guy, don knows this, efficient markets, and we don't have perfectly efficient markets, but there's a reason the markets are up as much as they are from march. they're saying something about expectations over a period of -- >> i agree. >> is it earnings or just the idea a total collapse is off the table? we avoided -- >> well, i think there's multiple things that drive markets. some of that is that total collapse is off. some of it, the market went overshot on the downside on there's some correction but there's some expectation that people have controlled employment, restructured their businesses and that earnings will grow over the next couple of quarters and year because you've reset the economy. for you, that doesn't mean all the imbalances are settled. commercial real estate market is still got plenty of troubles ahead. >> the more you've missed in this market, the more you say, it's not based on fundamentals. that's something i know is a fact for the guys that come on.

the more that the people weren't on board, the more they say this not justified by any of the -- >> well, i wasn't on board. since we're precluded from getting investments. i'm telling you, the signs are real. >> yeah, i'm with on you that. >> as long as the fed continues to be as supportive as it has been with money and you have fiscal stimulus weaning its way into the system, you're filling some of the gap that the private sector isn't doing, which is the plan. and i think it's actually working. >> so many things to talk to you. just a quick one. do you think -- that bernanke gets nominated by the president, renominated? >> i think he should. >> but will he? >> and he will. >> you do. >> i think the story's real. i mean, we were on a precipus -- sgr but we're not so put your own guy in. >> i think we have enough imbalances i think that a continuation of the consistent

thought process that i think the fed has brought to bear on this is a good thing to have. as a matter of fact, the president indicated that when he chose geithner as secretary. >> that's true glee wanted some continuum -- >> and he was the only republican he appointed. >> that's right. i think it makes nice chiter chatter, but i think the guy's done a pretty good job. >> he's from new jersey, so what the heck. >> well, that's true, too. the headlines i see say the governor is running against -- not running against his challen challenger, he's running against a recession. >> absolutely. the issue is jobs, jobs, jobs and the quality of the economy. and, you know, we received an -- even a macro economic event in new jersey, just like any other governor, and if you look at the approval/disapproval on governors, people can identify some of those problems wi

their governors. the people in new jersey didn't create this problem. i say this over and over again. my republican critics will stand back. this recession's been in place since 2007. it wasn't created by the policies we put -- >> a lot of new jersey people commute to be bankers on wall street. what are you talking about? this is a bedroom community. i'm sure there's some blame to go around. >> we're not saying we've done everything right in new jersey, but i'll tell you, i think we'll get out of this recession sooner. we had the first in the nation stimulus program. we're spending more, investing more in our highways, bridges, tunnels, school construction than any other state in the nation per capita. you know, we're building that new mass transit tunnel under the hudson river. we're getting help from the federal government. port authority of the state of new jersey. we're putting people to work at a time when there is a sharp need. we're -- by the way, it's not all blue collar jobs. it's not just guys on the end of the shovel.

it's engineers, architects, people doing the design work to make these things happen. there's good stuff happening out in the economy. the people talk about the green economy, i can tell you, we are putting more wind turbines offshore than any state in the nation. we have installed more sole are panels in the state of new jersey in the last three years in any state other than california. toes are jobs. people are weatherizing, all that stuff. it's easy to be a critic and a lot of good stuff is actually happening. >> do you wish that you could focus on that for the next 75 days without having the weight of health care around democrats' ankles? poll numbers are coming down in large part because of that. >> in an ideal political environment, maybe that's the right thought. i'm telling you, this country and our states and local governments are not going to get

through long term without a fix in the health care system. we have growth in postretirement medical benefits, we have growth in the cost of public employees' health insurance, we have costs in the uninsured and medicaid that are growing 7%, 8%, 9%, on a continuing basis, just like the nation is and it's undermining the fiscal stability of state and local governments. you mentioned something about the budget deficit. about half of that is from health care. >> is public plan the only way to fix it, though, or do you see other options that would work as long as there's some sort of change -- >> well, there has to be some greater element of competition. in new jersey we have certainly an oligopoly, some would say a monopoly of a single provider having a market share, they essentially control prices. that's true in most of our states around. so all this debate about public,

private and choice, most places don't have the kinds of choices that i think the debate would imply they do. and there's no question that we need to have private options, but i personally believe, and you could do that through a co-op, i could imagine how you could get to a cooperative that was competitive with the current setup we have in the market, but i'm not as afraid of the public option as i hear all the debate. the va's probably got the best delivery health care system in the country. they do pretty well. they're not squeezing out everybody out of the business. so i think as the whole debate on health care have gotten slightly overheated with regard to crazy comments that come around. i think this is one of those things that we ought to stay the course, get a serious reform on both cost control, access and --

and i hope, actually, on safety. you know, our health care -- >> but you don't want the government quite as involved in all aspect of our lives as it had to be recently. and it doesn't need -- >> you need to be way as soon as we get -- >> health care, the financial system. i mean, it would be nice, something we've learned over 300 years, is that, you know -- >> joe, you know that if the government hadn't taken action -- >> i know. i'm talking about exit strategy. >> we need an exit strategy. that's one of the good reasons i think actually having chairman bernanke stay in place is a good idea. >> joe -- >> he knows how we got here. >> a follow-up question. you've been in the senate. the health care proposals have polarized congress more than anything else. >> uh-huh. >> two questions. one is, does that mean whatever we get is going to be as good as it could have been? secondly, is this going to carry

over into all these other big issues? is this the issue which brings back the extreme in a partisan and eliminates obama's statement about working together? >> well, i think that the statement about working together was probably a little more idealistic than practical with regard to what's reality in the political world. whether it's in trenton or in washington. by the way, it's on both sides of the aisle. people try to set up for the next election almost immediately after the last election. and, you know, i'm -- the flipside of health care debate hurting, we actually passed something on health care before november 3rd in new jersey. i'm in the bill clinton mode. that's going to set a tone that will be very positive. because i think as long as it's not the last day. if it's -- if it happens three, four weeks in front, i think that will be very encouraging to the public that something can

get done. now, do i think it's going to be as bipartisan as you would ideally like to see it? i think that's very, very doubtful at this stage, this public option or some derivative of that. i mean, i hear republicans backing away from a co-op idea is just almost as rapidly -- >> you may need to do the co-op just to get the 60 from the democrats. >> that may very well be the case. but getting something done and getting started and then coming back and revising, you know, that takes 20 years to get to a better plan. we have to control these costs. you cannot have going from 16% to 25% of gdp. people know this. it's crazy. and it is going to crowd out every other economic activity in the country. we've got some other demographic flows that are going to make that happen anyway because all the old guys like you and me, you know -- or at least me -- >> you and joe. >> all the baby boomers retire -- >> you're looking right at me.

>> he didn't give me or -- >> don, didn't even glance at you or don -- >> baby boomers are going to eat up even more of that medical charges and they're going from, i don't know, what is it $30 to $75 million over 25 years. i can only imagine what would happen if we don't get this revised. >> is it your understanding the public plan is not eligible for reconciliation the way some people fear? >> you know, i learned when i was in the senate until the parliamentary ruled on individual actions, you really don't have an absolute answer to that. i'm not following it as closely as i should, maybe, but i see this discussion about splitting in two, costs versus public option versus the cost control elements. you know, that may very well be a strategy. all that arcane, internal,

parliamentary stuff is hard for the public to follow, even if you're a former senate -- >> governor, isn't the -- sort of the hostility, can you imagine doing something like this through reconciliation, what that might do to what is already a really polarized population? can you -- do you really think the democrats will do that? >> i think getting something done is a very -- >> so the democrats -- is it to the people in the middle of the country? >> i think to the people in the country ultimately. they understand. we can't stay on the course we are. the president in a press conference two or three weeks ago said, if you tried to create a system and you went out and advertised what we had today, people would run you out of town. you know, 8% increases on a compounded basis over the last decade. don knows this.

you know, if you were in business and you had this kind of business plan, you wouldn't be the chairman of anything. this is ridiculous. and by the way, we're not getting the results we are -- by comparison with other societies. >> you know that that's an apples and oranges comparison based on lifestyle and based on a lot of things. >> no, there are a lot of things -- >> but where do people come from health care around the world? >> are you talking about -- >> those that can afford it -- >> those that can afford it come here. >> that's the point. >> you have a catch. >> i understand that. >> that's the same problem we have on a lot of things in this country. and i'm not sounding on the well to do. i've been blessed with a great opportunity to do well in this country. but the fact is, is that there is a growing concentration of access at most of the really great things that go on in this country. >> how many people -- jon -- >> do you know how many -- >> how many people are already

covered? 80%? >> 80%. i think it's higher than that. in the mid-80s. but you have -- >> they don't want their health -- they don't want their health insurance to suffer -- their health care to suffer. >> the other thing happening in our system is who are those 47 and 50 million people are that are uninsured changes all the time. you're one pink slip away from not having health insurance. from living in short hills to no insurance and the dropoff in your job compensation is dramatic. the same thing, obviously, for people in the manufacturing sector and other things. so it's not only the people who aren't insured, it's the people that are uncertain about whether they're going to continue to have insurance. and then the other thing is that, you know, this preconditions and all this -- conditions that are on it -- >> the industry has already agreed to deal with that. >> right. there are real problems -- there are real problems with making sure that what you buy is actually what you think you get.

health insurance that doesn't cover anything ain't that good a deal. >> how about making sure the best people come into health care? technology is important and also tort reform. there are so many doctors i hear about -- >> that's another reason why. >> rationing who they do business -- >> most people think that's a much smaller element. >> they don't have that problem in the uk or -- >> i believe in screening boards so that you get out crazy lawsuits. there are -- there are ways to deal with that issue that i don't think take away egregious mistakes. >> but there are some people who will say, i won't be a doctor, i won't practice because of the environmental -- >> there are a lot of doctors that decided to be analysts on wall street. slightly better pay. >> and it didn't work out too well. >> governor, we want to thank you for joining us. >> great to be here. >> we hope to hear from you -- >> have a good time down -- >> i will.

thanks, governor. we have a busy morning on "squawk." a lot of ground to cover. don't forget, jobless claims coming out in under an hour's time. making his way to the set, former fdic chairman bill isaac. very a lot to talk to him about. don marron, the state of the banks and much more. take a look at widely held stocks. tdd#: 1-800-345-2550 if i'm breathing, i'm thinking about trading. tdd#: 1-800-345-2550 i always have my eye out for a stock on the move. tdd#: 1-800-345-2550 doesn't matter if a company sells computer chips tdd#: 1-800-345-2550 or, i don't know, fish and chips. tdd#: 1-800-345-2550 i'll look at all kinds of stocks before i settle on one. tdd#: 1-800-345-2550 if i think i'm onto something i'll check it out, tdd#: 1-800-345-2550 you know, see what other traders are up to. tdd#: 1-800-345-2550 when everything feels right though, tdd#: 1-800-345-2550 that's when i get serious. tdd#: 1-800-345-2550 and the minute i get into something,

tdd#: 1-800-345-2550 i already know when i want to get out. tdd#: 1-800-345-2550 of course, every now and then i'll talk with somebody tdd#: 1-800-345-2550 who knows what i'm trying to do. tdd#: 1-800-345-2550 (announcer) switch to schwab today. tdd#: 1-800-345-2550 you'll get the tools, the technology tdd#: 1-800-345-2550 and the support to trade your way. tdd#: 1-800-345-2550 go to schwab.com/trader tdd#: 1-800-345-2550 or call 1-800-540-7304 tdd#: 1-800-345-2550 right now. tdd#: 1-800-345-2550 but opportunities can vanish like that... tdd#: 1-800-345-2550 ...so most days, i'm right there tdd#: 1-800-345-2550 when the market opens.

welcome back to "squawk." trying to rebound from the selloff. europe having a good morning as well. sears shares going to be under pressure as the company reported an unexpected loss for the quarter. the housing downturn has hit sears brand particularly hard because of its impetus on appliances and tools. kmart fared a little better. tomorrow government may end a specific date for cash for clunkers as it drains it's funding faster than anyone had anticipated. the end is already come from another promotion that was more

popular than suspected. jetblue has ended that endless travel promotion that sold that $599 pass entitling customers to unlimited travel between september 8th and october 8th. the airline said it wanted to make sure everyone who got the passes, guys, could actually get seats. i guess it was oversubscribed. >> i can imagine why. carl, we'll see you back in a second. up now, though, the fdic is meeting next week to talk about tougher rules for private equity investments and banks. joining success fdic shachairma bill isaac, and our guest host, done marron. you were head of fdic back in august of 1981 to october of 1985. up to this point that was one of the most chaotic times we have

seen in the banking industry. now almost every weekend you're talking about another bank failing. where do you see this finally failing? >> i think we're going to continue to have an increasing number of fail you'res over turt two years. even if the economy stabilizes, we still have two years of banking problems ahead of us. if the past is a predictor. these are lagging indicators. it takes a while to work the problems through, even after the economy recovers. so i think we'll have an increasing number of fail you'res over the next two years. not anything like what we dealt with in the 1980s where we went through 3,000 bank and thrift failures. it's not going to be anywhere near that magnitude. >> although you're talking about some pretty big bank failures. colonial of the fifth largest. what kind of stress does that put on the fdic's funds? >> the numbers are bigger today because everything's bigger today. but the fact is, we lost, for example, in the 1980s we lost 9

out of 10 of the largest banks in texas. we lost continental illinois, some large banks in new england, southeast and west coast. i don't think failures are any larger today proportionate to the economy than they were back then. i haven't done the study but i would think we would find if we did a study the failures were larger due in relationship to the economy. >> somebody showed me yesterday a three-month rolling average chart of bank failures. it's beginning to creep up. do you think it will be that way for the rest of the year? are we on the leading edge of a new wave of bank failures, regardless of size? >> i think it's clean-up time. for the next couple of years we'll continue to have a steady flow of bank failures. i'm not expecting anything that we -- >> can't handle. >> can't handle object that's extraordinary in items of size, but we will continue to see a steady diet of bank failures for

the next couple of years. >> you think about bank failures in items of what happens after they fail. the best way for this to work is for a stronger bank to take over these banks. that's why this whole question of capital in the banking system is crucial. what you want is more capital. we've called on, in the course of our private, the management of 120 banks in the last nine months of all sizes. there's a common theme. most of them believe they get some capital, they'll get their real estate problems out of the way and they'll go back to lending. the key is lending. so the question here is, how do you get capital into the system in a practical, fair way? that's what the fdic is dealing with. my view is what's proposed is going to be modified because you can't have double the capital for saving a bank and for operating a bank. the basic issue is, how do you get these banks thinking about the future, not about the past. >> the concerns i hear are, the lending base, year over year, is not any stronger.

when the fdic does step in, they're taking a hit, which suggests at least the banks -- people say, look, we tried to get these guys disciplined to start valuing their assets realistically and they obviously are not otherwise it wouldn't be hurting so much. do you agree? disagree? >> no, i think everybody's making an attempt to value the assets properly. it's not he's is iscy to do because you have moving targets and things are changing. i would say that -- i would agree with don that bank failures are not necessarily a bad thing. i'm not -- i'm not saying we should have more -- >> that's the headline. >> but what i mean by that is that we -- when a bank fails, we've got a deeply troubled institution that cannot lend money. and so if we go in and resolve the failure, the clean-up of that situation, putting that into a stronger bank or into a new company that's some investors have formed that has adequate capital, we'll enable that institution to get on with lending. the fdic cleans out problem

loans and so it really does cleanse the system and help us get lending started again, which is what we need. >> you see, bank failures, the bank failure has already happened. the bank just hasn't taken the final writeoffs. one of the reasons, they'll tell you in washington, is they don't want it to happen until there's enough capital in the system, enough other banks to be able to take these things over. the rest of this is management. you've got to have a number of management teams that are willing to commit to the banking industry and are able to run these things. you must have found that -- >> oh, absolutely. capital and management. >> what do you think's going to happen next week when the fdic considers this? >> i don't know. i haven't really tried to follow it that closely. i think they will liberalize what they propose. i think it was pretty strict. i understand what the concern is. the concern is that you're letting people into the banking system who haven't been in it previously. i want to make sure they're quality people, that they own a lot of other -- in the case of private equity firms they may own a lot of other investments.

you need to make sure they don't have con fliblgts and they'll deal with the bank in a straight way. also, there's a limited amount of capital they're raising. you know, you -- they're not public, and so you want to mick sure when they take over a bank they have enough strength to deal with whatever's coming. so those are the -- those are the issues they're trying to deal with. i think they should be dealing with them. and i think they'll -- they've gotten a lot of comment. they'll come up with something that's workable, i think. >> bill, we want to thank you very much for joining us today. >> my pleasure. good to be here. >> don's going to be with us for the rest of the program. when we return, we have a preview of today's jobless claims with kevin standing by at the cme group. reading about washington these days... i gotta ask, what's in it for me? i'm not looking for a bailout, just a good paying job. that's why i like this

clean energy idea. now that works for our whole family. for the kids, a better environment. for my wife, who commutes, no more gettin' jerked around on gas prices... and for me, well, it wouldn't be so bad if this breadwinner brought home a little more bread. repower america. i hope our senators are listening. dan marino influenced me and he really pushed me to get on nutrisystem.

yeah, i'll take credit for peter jacobsen. introducing the all-new nutrisystem for men, flexible new programs personalized to meet your goals. get on the program, eat properly, you're going to lose weight. it's actually easier than you think it might be. that was really good. thanks. i had awesome results and i've kept it off for three years. for a limited time, get an extra three weeks of meals free. that's right, you can get an extra 21 breakfasts, lunches, dinners, desserts, and snacks. that's 105 meals free. that's what guys like. "tell me, 'do this,' i do it, i lose weight." with prices as low as $12 a day, you'll save hundreds over other weight-loss programs. order now and get an extra three weeks of fantastic meals. that's right, 105 meals absolutely free. call or click now.

the jobless claims data is due out in about an hour from now. actually, at this point, we're talking just about 40 minutes from now. we're going to be watching these numbers very closely. for more on the markets right now, let's get down to the cme where kevin is standing by. kevin, these jobless claims coming out today, how important is this going to be for setting the tone for the market? >> good morning, becky. i think it's going to be good. the thing is that the market's put in a pretty impressive performance over the past 24 hours already by hanging in

there. so i think the number's important because it was the stabilization and small declines we saw in claims that really started to change the tone around the country for people to talk about a sustainable recovery or the first seeds of a sustainable recovery. so it's going to be a big number. the other thing i would say, you know, you're talking about some really important, big macro things here in the last hour on your -- half hour on your show. we're going to go a little more microhere. jackson hole's going to be huge. anything they want to get out about exit strategy, we're going to be watching over the next 48 hours for that. and the other thing is, the gse and the agency, that's been a big kind of stealthy problem in the market when we talk about risks popping up in the market. that's where it seems to be centering over the last 48 hours. gse reform, anything that comes out about that going forward. there's been a lot of talk about health care, not enough talk about fannie and freddie. so the markets are watching that

very closely. >> although, you point out that the market's going to be watching the jobs number very closely because that's what originally set the tone. we're expecting to see a drop in jobless claims. what happens if you see it build? >> well, i think they're you're going to have to see how the market holds up against support. i think the one thing we're pointing out on tuesday is that the market was reacting more down to overseas news. this will be the nirs piece of domestic news where the market's in a pretty good spot. so i think -- if it starts to drop from there, watch out. right now, you know, equity markets has been impressive relative to other risk metrics we watch that are starting to shake. we're going to watch that. the other thing i'd point out is the fed yesterday put some stuff on the website. we thought, watch it during the fed meeting. yesterday they put out that they're going to start to tweak margins on the t.a.f. tncht and discount window. keeps the banks liquid, shows they're getting ready to pull

the system off all this extra added help. >> kevin, great to talk to you. thank you. >> when we come back this morning, preferred hotel group chairman ceo john will join us for a closer look at the luxury hotel market and how the consumer is faring as we head into the fall. up next on "squawk box," don't start your day without knowing the names that will make you money. joe has your list of stocks to watch right after the break. (announcer) illness doesn't care where you live... ...or if you're already sick... ...or if you lose your job. your health insurance shouldn't either. so let's fix health care. if everyone's covered, we can make health care as affordable as possible. and the words "pre-existing condition" become a thing of the past... we're america's health insurance companies. supporting bipartisan reform that congress can build on.

time for a look at some stocks to watch. i'm sure we're going to include the first on the list, sears holding. let's take a look at sears, which the last i looked it was going to trade lower based on reporting a loss. it wasn't supposed to report a loss. i think the loss was 79 krenlt a share or so. i've got it at 66.02 to 66.17 on sears. that stock now trading down eight points. that is ugly. a little bit of a surprise on the revenue side as well. bottom line was below. revenue not as bad. but that's been a very volatile stock. it got down to 25 this year.

>> there was a time when people didn't care about comp store sales or earnings. >> heinz was a nickel ahead of expect takings. revenue was above expectationses and reduced sales by 9%. the company affirmed first quarter guidance. hormel reported five cents ahead of expectations. i don't have time for dick's, apparently. i do? okay. i do have time. 36 cents a share. was a nickel ahead of expectations. and you can see the bid is up, the company reporting revenue of $1.13 billion and i frequent dick's now. i bought my basketball court there. and bought a junior basketball. it's a huge, mega super store. you probably haven't been to one. >> i've never -- >> do they have one in the city? are you still -- >> i have no idea.

>> are you still making plans -- >> to move to jersey? >> yeah. >> you're selling it hard. >> i can't believe -- we have trees out here. your kids will be shocked. what is that? you don't step in dog doo the minute you walk out of your apartment. >> what are the other things? >> you may have to drive to pick up chinese food. >> we'll continue in a moment. we are at crossroads of washington and wall street right after this. congresswoman allyson schwartz and scott garrison will both be here. fidelity, traders learn from the pros. say you want to backtest an entire portfolio of stocks. market experts show you how through fidelity's extensive trading knowledge center. and fidelity gives you free research from 15 independent firms, with accuracy scores... to help you decide which analysts to trust. find out why more and more active traders are turning to fidelity for a smarter way to trade online. trade like a pro. trade with fidelity.

concierge claim centers. so i can just drop off my car and you'll take care of everything? yep, even the rental. what if i'm stuck at the office? if you can't come to us, we'll come to you in one of our immediate response vehicles! what if mother won't let me drive? then you probably wouldn't have had an accident in the first place. and we're walkin'! and we're walkin'... making it all a bit easier -- now that's progressive! call or click today. introducing the all new chevy equinox. with an epa estimated 32 miles per gallon. and up to 600 miles between fill ups. it's the most fuel efficient crossover on the highway. better than honda cr-v, toyota rav4 and even the ford escape hybrid. the all new chevy equinox.

why is dick butkus here? i hired him to speak. a lot of fortune 500 companies use him. but-- i'm your only employee. we're gonna start using fedex to ship globally-- that means billions of potential customers. we're gonna be huge. good morning! you know business is a lot like football... i just don't understand... i'm sorry dick butkus. (announcer) we understand. you want to grow internationally.

fedex express "squawk box" on the jobs. ♪ working in the coal mine the most up to date report on the labor market about to be released. weekly jobless claims breaking at 8:30 eastern. spending sticker shock from stimulating the economy to overhauling health care. >> we're seeing some sign that i think you're beginning to see a turnaround. >> congresswoman allyson schwartz faces off with republican congressman scott garrett. >> there you go. there you go. there you go.

the pulse of the wealthy american consumer. >> this is the hotel presidential suite, gentlemen, normally reserved for royalty, visiting dignitaries. >> we'll take it! >> the chairman and ceo of preferred hotel group john ueberroth tells us how he's handling this economic downturn. >> paging mr. herman, mr. herman you have a telephone call at the front desk. >> check in with us as "squawk box" begins right now. ♪ at the hotel ♪ at the hotel >> welcome back to "squawk box" here on cnbc, first in business worldwide. we had peewee herman in. >> he don't make the call a lot. >> i'm joe kernen, with becky quick and carl quintanilla, along with guest host don

marron. the futures indicating again a positive tone to the open. actually, yesterday was negative but we closed higher. on the agenda, a number of economic reports, as you'd expect if it's a thursday. it means weekly jobless claims at 8:30 eastern. that's about 28 minutes away. polled economists, claims falling, 8,000 to 550,000. 10:00 eastern watch for leading economic indicators as well, carl, as the philly fed survey. >> we had empire state already. looked pretty good. >> that's new york? >> uh-huh. we'll see what philly says. meantime, fed officials will begin gathering in jackson hole, wyoming, for the kansas city fed -- which drives joe crazy. >> kansas city, jackson hole, wyoming. what's wrong with kansas city? >> their annual symposium. chairman bernanke is scheduled

to speak tomorrow morning. we'll listen for other commentary as others get there ahead of the chairman's preng. our steve liesman is on the scene and he'll be hosting a live one-hour special from jackson hole tonight. you can catch "the fed: crisis & recovery" at 8:00 p.m. eastern tonight. meantime, let's get a check on what traders are focusing on. jim, good to see you again. >> thank you. >> as joe was saying about the break, i think, what does it say that we were able to look past china's downward action yesterday and put something together? it looks like we'll try to do it again today. >> think what we're looking at. yesterday kind of reaffirmed something to me. the crude inventory numbers got all the credit for the stock market rally. i think it's a little more complicated than that. img the rally in the stock market coincided perfectly with the weakness in the dollar. i mean, that's been the trade for many months. you can make the argument -- i learned those two things are tethered closely.

then the comments from warren buffett, the most dramatic commented was the dollar -- the destiny of the dollar lies in the hands of congress. very dramatic, very scary and very true. we're going to know in the next few months if they can exit gracefully from all that stimulus which, you know, i have my doubt whether or not they can. still today, when the dollar weakens, we buy stocks. true this morning as well. >> jobless claims in half an hour. i don't know if we'll see you then, but if it comes in cooler than expected, will that offset some of the renewed fears we had about joblessness in this country? >> yeah. if it comes in worse than expected -- remember, up until yesterday it was believed we were due for a correction, we'll take the s&ps back down to 950, 955 area. i think if we get a bad number out of jobless claims, that's back intact. if we get a good number, we'll look more at the dollar. i think a bad number could push us down a little bit. >> we'll see what happens in about 26 minutes' time. talk to you soon. you can catch jim on "options action" every friday night at

it's new time, 8:30 p.m. eastern time right here on cnbc. in washington, the obama administration will trim its budget deficit forecast for fiscal 2009 to $1.58 trillion, $262 billion lower than expected back in may. an officials the drop is because of the elimination of $250 billion that had been set aside for further possible financial bailouts. the budget office is expected to make this announcement next week. the american taxpayer is reaching a boiling point over the health care overhaul plan and ballooning deficits. barney frank had a town hall where he faced angry constituents. >> my question to you is, why do you continue to support nazi policies? >> on what planet do you spend most of your time? having a conversation with you would be like trying to argue with a dining room table. i have no interested in doing it. >> some of the appearances on

"squawk box." with more right now on what they're hearing in their districts, representative allyson schwartz, vice chairman of the budget committee and member of the weiays and means committee and scott garrett. thank you for, here. congressman, why don't you tell us what you're hearing from your constituents. >> i've been hearing, not just during august, but back in july, they're upset and rightfully so. it seems as though congress -- whether it's barney frank or speaker pelosi, they to want rush this through regardless of what the american people want. you have the freshmen congressman, mesa who said the other day, he doesn't care what his constituents think, he want to vote what he wants to vote for. barney frank is insulting his constituents. you think you have a give and take dialogue by going out in these forums and yelling at them, doesn't seem to be what americans want. >> congresswoman, what are you hearing from your constituents

while you're back? >> i'm certainly hearing from my constituents questions about the legislation that we've been working on for many months. and, of course, for years. what i'm hearing from them is don't let the arguing and actually there is quite a bit of shouting at these town hall meetings, really get us away from and distract us from the real debate we ought to be having here which is, how can we seriously contain costs for health care coverage, how can we help all americans have access to meaningful health coverage. the issues remain very much the same, which is the 14,000 americans a day losing their coverage, almost 50 million americans without insurance. and so many millions more underinsured. we're not, as smart as we should be about getting health coverage to americans and making sure that we can contain the rising costs. double digit inflation on health care every year is unsustainable for our businesses, our families and for government. >> you know, we are been hearing

from people over the last several days. there are been articles in the new york post, the new york times, in "the wall street journal" about how the administration may be willing to compromise. now, if you were looking for some sort of compromise, congresswoman, where would you be willing to give? i know you don't draft this legislation. one of the things you put in was not letting insurance companies exclude preexisting conditions. but where would you be willing to give ground to reach some compromise on both sides? >> well, let me say that we have been through months of debate and discussion, hearings about the health care reform legislation that we have coming out of the house. we have three major committees that have already voted on this legislation. and we have had that discussion across the political spectrum. and this is a very moderate reasonable legislation that we are looking at. it builds on what works in america. the a -- builds on employer-based health coverage. and private insurance based

health coverage. and it does so by, as you point out, really basically ending some really unfair insurance practices. excluding preexisting conditions is unacceptable. we're going to end that practice. having insurance companies look for reasons to deny your coverage, we want to be smarter about this -- >> so basically you're saying you're not looking for ways to compromise, you think the plan out there is the right plan. >> oh, i think -- let me say, i think it's a very reasonable plan. i think it's a good plan. but i expect that as it comes to the floor of congress, we are going to see some additional changes. that's the process. and, of course, we need to have the senate also weigh in on this. they've been having a more difficult time. we've always looked to make this a bipartisan bill. there are many legislators who like elements of this legislation but in the house and increasingly in the senate, they're saying we really don't like any of this. they want to keep the status quo. that's not going to be acceptable to the american people. >> congressman garrett? >> i don't think i've heard

anybody describe these plans as a moderate bill. quite the opposite. the bill she's talking about must be completely different bills than i've seen and that the american public has seen because she says we're building on a system that workings right now. the system we have right now doesn't work right now in the private sector or public sector. the public sector what we're talking about doing is just taking the medicare system, which a lot of seniors like, but we know from all the experts, the cbo left to right, anyone you come to budget committee says it's a failing system, unsustainable. they're taking that failing system and saying, we're going to expand it. that's not going to work. as far as the system with bipartisanship, i wish that it was. basically it wasn't bipartisan through the committee's process, what have you. the republicans weren't able to give any input, get any amendments. had they had the votes, this is something to remember, had they had the votes on thursday before we left town, they would have voted on it, this would have been a done deal and all the town hall meetings would are come after the fact.

>> would you go along -- congressman, would you go along with the idea of cooperatives as is discussed in the senate right now? >> i don't see how that really changes the playing field any. we've heard what barney frank said early on, a month ago or three weeks ago, this is just a plan to get us to a single payor system and the cooperatives would be maybe one step back, one step to get us to this bill and then this bill would get us to the single payor system. the cooperatives has no difference in the fact that the government would still be able to initiative and subsidize the private sector, and the private sector would be squeezed out. >> if the co-ops and public plan are one in the same, just different terms, then why does the hard left want to vote for one, not the other? >> i think a lot is in the dynamics of the name, what have you. so the hard left want to go as soon as we possibly can -- >> take a few more years -- >> straight to employ, collect $200. >> take a few more years to get

to all single payor. >> congresswoman schwartz, let me ask you the same question. we've had plenty of people on the program this week, starting monday with congressman anthony weiner who said there's no way he would vote for a program that did not include the public plan. would you vote for something that included something like cooperatives instead? >> not instead. you know, let me make clear here that the reason for the public option, and it is to address one of the most difficult parts of the insurance market. and the most difficult parts of how we can -- one of the answers to how we can actually help americans, particularly individuals and small businesses who have the hardest time buying private insurance at an affordable rate. if we leave it completely to the insurance sector to say, wait a minute, you've not been able to take care of this population at all, we're going to leave it to you, even with some new rules, we need to make sure that if we're going to say, all americans ought to have health insurance and they should, and they should all participate, we need to have a public option

that is there for people to be able to buy affordable, meaningful conch. and secondly, we do expect that we can drive the costs down for all of us by making sure we're paying reasonable rates to our hospitals and our doctors that we use innovative approaches, to really incentivize quality -- >> all right, we -- >> and that's what we're trying to do here. it's not about right and left -- >> we're out of time. i want to make sure i'm not putting words if anybody's mouth. congressman garrett would you would not vote for anything with cooperatives and congresswoman schwartz, you wouldn't vote for anything without a public plan? >> that's correct. >> we have a way to go to get to the plan before we vote. that's why we're talking to the public, to each other and we should be. >> we appreciate you joining us and we hope to see you both very soon. >> there you go. >> the saga continues. >> i don't even know why we're

talking. you've got president, the congress is democrat, the house democrat, just do it. just do it. go ahead, do it. the cash for clunkers program takes another turn. we check in with the high-end consumer, john ueberroth on the luxury economyl , but i've still got room for the internet. with my new netbook from at&t. with its built-in 3g network, it's fast and small, so it goes places other laptops can't. i'm bill kurtis, and wherever i go, i've got plenty of room for the internet. and the nation's fastest 3g network. gun it, mick. (announcer) sign up today and get a netbook for $199.99 after mail-in rebate. with built-in access to the nation's fastest 3g network. only from at&t.

transportation secretary ray lahood says cash for clunker will be wound down soon. last night the national automobile dealers association started a privately funded new program. the group launched the venture because dealers fear $3 billion clunkers program will run out of money before they get reimbursements for discounts they've given consumers. the auto stimulus plan allows trade-in value of up to $4500, all working vehicles older than '07 models are eligible, regardless of fuel efficiency. the only requirement is consumers purchase or lease cars that have two miles per gallon higher fuel economy. so if you couldn't get in under clunkers, joe -- >> hold onto your clunker. might still get in. >> yes. you've got to get used to starting after that music. i was doing a little music

before you, the nightly news, and you look like a 3-year-old a little bit. >> i see what you're talking about. let's get to economy, economy taking a toll on commercial real estate, particularly the hotel industry. we're taking the pulse of the luxury hotel market with john ueberroth. mr. ueberroth, famous name, that's your brother, right? not that you're not famous, but mr. ueberroth, famous from the olympics and selling my old firm, e.f. hutton, and we're glad he did. i don't know if you remember that. >> i do. >> give us an idea now, you cover the gamut. actually, you could describe both the type of hotels that preferred is involved with and the geographic -- you're all over the entire world, not all  luxury. how many hotels and what is the breakdown? >> we have approximately 700 hotels as of today. spread out throughout the world we probably -- we would have

more in north america. they run the gamut from the very deluxe, which we call preferred hotels and resorts and our preferred boutique which is smaller, under 100 rooms, but very luxurious hotels. we have a brand called summit, which is 4, 4 1/2 star and sterling, the 4-star brand. we have what's called historic hotels of america, which is -- they have to have history but they can be from the waldorf astoria to a little hotel in tennessee. >> wow. so you go from five stars at the top and -- do you have three stars? >> well, our sterling brand would be high three, four. stars are hard to -- we have trouble totally defining but we would not have any roadside inn.

i would say most of our hotels are at least $150 or more, if you want to put it into rate. that would be the lowest rates you'd see at our sterling brand. >> and in this environment, describe what you're seeing, how it plays out. the highest end are having the most trouble, is that a fair  statement? >> i would say the high end and especially the resorts, the major resorts. we have a lot of major resorts, pebble beach, properties people would, i think, know are having the worst effects. the golf courses, big spas. in the industry we call it the aig effect. i think people familiar with al the publicity of how could these executives be taking government money, playing golf and having  massages. a major part of the resorts

money was from automobile  industry, resorts, golf, all stris not doing well, or weren't. and those are all down. they relied on groups. high-end hotels in the major cities are doing fairly well, but they are down. a lot of their business is  corporate business. a lot of corporations are looking at the cosmetics of where should we be staying if they're doing cutbacks of personnel and they're doing hiring freezes, how can you be staying at -- how can executives be staying at top hotels? so you're -- they're off 15%, i would say, if you wanted to put a number, 10% to 15%. both in occupancy and rate. so it's a double whammy. >> as a manager, what do you -- how do you manage through a time like this? your long-term goal is that -- would you cut back on that segment or do you expect

eventually that it will come back? and what do you do? do you try to take market share what do do you in environment like that? >> take market share. the pie has shrunk, so you have to take it from somebody else. that's aggressive sales, especially at the corporate end we've actually been adding people, so this is a time to -- luckily we happen to have a  pretty good balance sheet, so this is a time to add. this is when hotels need you more than ever. we also have the loyalty recognition program, so we have about 500,000 members and  growing. we work closely to try to stimulate them to stay at these properties with advantages, different upgrades -- >> will the comeback -- or do you think this is a reset and it's never going to be the same

>> oh, i think it will come back, for sure. i believe it's a year and a  half, two years away from where it really starts to come back  because all the tightening of the belt. corporate america, i'm using them as my main -- as they  tighten, it takes them a couple years before earnings are big and all that and then there's pressure that -- you know, star letting us fly business class,  let us start going back to the  five-star hotels. but i think it's a year and a half away. but people like luxury. >> like to, pampered. i mean f you have to say up for a couple years, you still might want to do it. we appreciate your time. hope to see you for an update and maybe next time it will be even better, hopefully before a year and a half. thank you, mr. ueberroth. thank you. weekly jobless claims are on the way. we'll get toes numbers at 8:30

a.m. eastern time. a message from democrats about big labor. you either support this government-run health care plan or else. we'll talk to the secretary treasury of the afl-cio in the next hour. he's not messing around. when people say, hey mike, why ford, why now? i say brace yourself. that gas guzzler in your driveway, just might be, a clunker. but don't panic, it could be a good thing. your ford and lincoln mercury dealers are cash for clunkers specialists. they'll recycle your ride, and get you a big fat juicy rebate from uncle sam. you can get all the details, charts, graphs, etc, at ford.com. why ford, why now? why not? visit your ford or lincoln mercury dealer. i'm thinking now would be a great time.

it doesn't cover everything. 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... insured by united healthcare insurance company. call now for your free information kit... and medicare guide and find out... how you could start saving. next up, we've got some

breaking economic news. the weekly jobless claims report is on the way. from the trading pits of chicago to our set, we have joe from think or swim making a special appearance right here with us. we have the markets, the economy front and center. reading about washington these days... i gotta ask, what's in it for me? i'm not looking for a bailout, just a good paying job. that's why i like this clean energy idea. now that works for our whole family. for the kids, a better environment. for my wife,

who commutes, no more gettin' jerked around on gas prices... and for me, well, it wouldn't be so bad if this breadwinner brought home a little more bread. repower america. i hope our senators are listening.

got some breaking news this morning. weekly jobless claims. rick santelli's at the cme group in chicago. rick, consensus is 550,000. let's see what we get. >> we're all expecting a small drop. the survey says, wrong. 576,000. this is up from a revised 561,000. so up 15k. you know, it's definitely not the direction many were looking and it all lends to that argument that maybe the stabilization is because of end of benefit cycles. if you look at continuing claims, 6.241 million. that is up just a smidge from a revised 6.239 million. remember, that revision is actually pretty large. originally reported at 6.2, so we move from 6.2, 6.24. this move just a smidge higher than that.

these numbers are showing a bit of a run up in price and drop in yield on the treasuries. and they've taken away all the early morning gains in the dow futures. so one would think on the surface the markets have it right. they don't like to see these numbers increase. at the end of the day, it always seems to be about garnering an income through a job to continue to consume. back to you guys. >> rick, stay right there. chief economist stu hoffman is with us, also on set. joe kenahan and don m aarron. joe, you were talking about the volatility. this comes as a surprise, wipes out a lot of the gains we've seen in the market. now what? >> we're right back to where we were yesterday, really. so the s&p's unchanged. and, one of the things we were just talking about, there are many conspiracy theorists think we'll go with the highest opening interest strike, that's tomorrow. 1,000 on the s&p 500 cash index.

those who believe that must believe we're not going to move at all for the next two days. >> okay. the expir rigs, is that what you believe, too? >> no. i believe we're going to rally and test the highs on the futures which is 1012. >> but right now, though, stu, jobs with the expectation those job losses would start to improve, that's what's been driving things. i know it's only one set of numbers, one week, but how do you look at this in the grand scheme of things? >> if you look at -- it was a little disappointing if it moved up. if you look at the last four-week moving average, it's still about the same, maybe a little lower than it was in mid-july. it does indicate we're going to get job losses in august when we hear about it. but i would say this does not take away from the idea we'll get a smaller job loss. we had 247,000 in july. we'll probably get a smaller job

loss than that in august. but you probably would need to see claims below 500,000 a week for a few weeks in a row before you'd see jobs actually rise. clearly, we're still aways from that. >> but do you think we've seen the peak when it comes to jobless claims and unemployment? >> yes, i do. i think we've seen the peak in terms of jobless claims not the unemployment rate. jobless claims peaked in early april and almost 100,000 above where they are even this latest week. yes, i think we've seen the peak there. the unemployment rate, no. it did dip to 9.4% in july. but i would say we'll see the unemployment rate in our forecast, it still just tops 10% and we expect it to get there late this year, plateau and probably not start coming down until next summer. >> don, you talked about earlier in the program how you think it's really the idea of housing. that's the market that has to improve before we can see a turn. but housing is obviously very closely related to what's going

on in terms of are people employed or not. >> housing prices have come down to the point where the government needs to stimulate housing purchases. unemployment is a serious issue but you heard the talk that maybe it stops around 10%. only a couple months ago people were talking about 12% or even higher. housing is not just about a house. it's about a degree of optimism and participation in the economy. we need to find a way now to give people the opportunity to buy houses. we're not going to turn this market without that. that means we have to fix the banking system. we talked earlier about making sure all the community banks are strong so they can lend. unemployment's a serious thing. what you're seeing now, while unemployment is high, employment is high, too. most companies, most smart ceos, have cut back everywhere they can. so most businesses are running lean. i think the next move after this flattens out, any time there's growth in the returns.

>> i think we could see hiring return late this year, late next year. layoffs have slowed down. a lot is related to the auto industry. but there's no hiring. we're seeing less layoffs, less churn in the market but we aren't seeing any hirings. i do think we'll start to see rises in the payroll numbers by the first quarter of next year. that wouldn't be fast enough to bring the unemployment rate down. that's what the market's looking for. the market's seen lots of signs the economy is turning around. later today we'll get the coincident indicators at 10:00. that tells you what's happening right now in the economy as opposed to the leading. and i think that could be flat to maybe up a little. but the market needs signs of recovery. they need to see rising consumer spending. if they saw the small declines in jobs or got a surprise increase in the fourth quarter, i think that would be the kind of sign that would say, yes, we've not just stopped falling, we're actually starting to rise

and maybe building up a little self-sustaining momentum. >> rick just mentioned the leading economic indicators coming out and the philly fed survey. what's the floor thinking when it comes to those two numbers? >> i think the floor looks at philly fed survey and anything to do with manufacturing is probably going to be more optimistic than the service side. that's a bit depressing considering the breadth of the ladder and some influences like cash for clunkers. you know, the fact that manufacturing just seems to be doing a bit better. but at the end of the day, they still believe in a "w" which means as you form the ready of the "w" and follow all the money that's moved from money markets back into more ricky asset classes, the real question s will employers hire on the right side of the "w" or are they employing to be cautious thinking it's the right side of the "w"? that's key. >> joe, we've been talking about lighter trading volumes, people on vacation, not there as often. how much trickier does it make it to handicap all that?

>> i think it makes it a bit trickier because it's been a light summer. we've rallied big on very light volume. i think the interesting point is, now we're coming coming up to a september cycle, september expiration. that's one of the quarterly -- triple witching hours and things like that. so as we go there, we should start to see volume pick up, we should start to see a truer picture if people are thinking of the economy as they gear up for year end. you know, just the retail public as well as people in the business world start to gear up for what they're thinking for year's end, planning for 2010. i think the september expiration, the next one will give us a truer picture of the economy. >> thank you for coming in to see us. >> a pleasure. >> rick, stu, thank you very much. don marron will be with us for the rest of the hour. one of the country's most powerful union may pull support for any democrat that does not go for the government-run insurance plan. we'll talk to the treasury secretary on the afl-cio on why

he's playing hard ball. take a look at future. jobless claims came in a little higher than expected and the four-week moving average did tick higher as well.

take a look. the stock market futures paring their gains. the dow and nasdaq turning negative after the weekly jobless claims. the dow futures have turned into

the negative territory. still above fair value. you're talking about up by six points. the market had been significantly higher earlier this morning, though, because they were expecting the number of jobless claims to drop. the number of people filing new claims, though, rose unexpectedly, up 15,000 to 570,000. economists had been looking for a drop in claims. one of the country's most powerful unions with a warning shot. they say they may pull support if they don't fight for a government-run insurance plan. secretary treasury of the afl-cio joins us from washington. good to see you. welcome. >> thanks for having me on. i appreciate it. >> so you gave an interview to the huffington post and the way they drib it it is the a 236789 l-cio is drawing a line in the sand for lawmakers who aren't fully behind this public plan. what are you going to do to them? >> well, what we said was, there had to be three or four elements in that plan in order for us to

support them. if they didn't support the plan with a public option in it, with an employer mandate and no taxation of benefits, that we would tell our members and let our members decide, look, every 30 seconds american declares bankruptcy because of medical bills. millions of people don't have health care. you have millions of small businesses and large businesses that are struggling because health care costs are out of sight. insurance companies have a stranglehold on us. the only way to break that stranglehold on the health care industry is to have a public option. we said, the american people are demanding that you do something. the republicans have offered nothing. they've said no to everything. and the democrats have sort of been negotiating with themselves. we finally said, look, this is the minimum. if you're going to do and that boshgz, if you're going to have health insurance reform, you must have a public option in it. if you don't, don't expect us to

support you. >> so i'm a lawmaker, i'm not behind the public plan, i can count on no support, no financial support, anything like that from the afl-cio, right? >> we'll look at your entire voting record, of course, like we always do. we'll put the fax out to our members. i think it will be hard for them to get support if they don't support that. that's absolutely correct. >> this is kind of like when the national rifle association says you vote sotomayor, we'll put this in your voting record. >> the people say they want the public option because the only way to drive health care costs down is to have the public option. they said to us, this is our working members, and nonunion members alike, have said without the public option, you can't break the stranglehold of these companies. look, they made in the last five years, their profits increased 1,000%. costs to workers have gone up over 300%. we're in crisis in this country. >> that's understood.

>> and rather than posture back and forth and the republicans say no to everything, and the democrats continue to water theirselves down, they're saying, take action to so we can move forward. >> why the public plan? why has that become the end all, be all? now you have the white house putting out anonymous quotes saying, how did this become the litmus test for any solution? why is nothing else acceptable? >> 94% of the insurance markets in this country are highly concentrated. that means there were just a few insurance companies that control the prices and control the product in each one of those markets. 94% of them. there's only one way to break that stranglehold. and that is to have a public option where you could walk away from that stranglehold and you could go to a public plan that will give you great benefits and say to them, you're going to have to get more efficient. you'll have to get more effective or these people will walk away and go to the public

plan. the essential for health insurance reform. that's why it's become an issue. >> you're becoming more aggressive at a time where support for the public plan is dropping. you'll acknowledge that, right? >> no, i won't. i mean -- >> you will not acknowledge that poll numbers, people who believe this will hurt the system are rising and people in favor of a public option is dropping? >> first of all, it's amazing that they are where they are. because of all the mistruths, because of the outright lies that are been talked about them. that's why we're beginning to talk out now. so we can set the record straight. we could tell people what's happening. the new poll that you referred to is in the margin of error. there was no change. even with all the lies, a vast majority of people still say that the public option will drive down costs. >> right. >> that's what they say. that's what we need to have done. >> so some -- >> the idea of health insurance reform is to drive down costs to make the system more efficient, you must have something that does that. >> the -- >> the public option will do that. >> some would argue the reason

there's been so much misinformation, because the white house did not effectively communicate what was essential to them and what was in the legislation, the few pieces we have to go on right now. >> no. no, the misinformation didn't come from that. the white house didn't talk about death committees and all that nonsense used to scare people. that's simply lies. that wasn't part of the white house's plan. >> they haven't been able to walk us back, though. >> this is a concentrated effort by the insurance industry that likes the system. profits have risen 1,000% in the last five years. they like the system. they want to keep it this way. they'll do anything and say anything to keep it this way. that's why the misinformation's out there. >> do you believe the outcries we've heard at town halls are the outliars? you said a lot of these protesters, volunteers have been fake, or is that democracy at work? is that not as a constituent having a voice to face the person you elected to public office. >> no, i think everybody has a right to talk about it.

when it's orchestrated and whenever it's lies, it's misinformation, when it's myths and you see some of the same people at different ones of these things, it's more than coincidence. this has been an orchestrated effort. they've tried this. i applaud those people that go out and really want to listen. that really want to talk about it and really -- >> don't you think your membership -- but don't you do the same with your memberships, trying to get out the vote and support by telling them what you see happening and trying to get them to go to the same events? >> we give them the facts. >> but you --. >> we don't give lies. >> they give facts and the others give lies. >> there's a lot of difference. whenever you tell somebody there's a death squad out there, a death committee, that's a lie. we don't tell our members that. we give them the facts and urnl them to go exercise their democratic right. there's only one way you can talk to or persuade a congressman or senator that doesn't live up to what they said they would. that's with your vote and with your voice. we encourage every american to do that. union and nonunion. >> there's a lot of people out

there who think union members would benefit from things like tort reform, from more electronic records and that the democrats, the far left, the unions, are going to cut off their nose to spite their face because you'll accept nothing less than that. what do you say to them? >> here's what we say, what you have to have is a system that will really be health insurance reform. it will lower costs. and without a public plan, a public option, you're not going to lower costs. you beat around the fringe and it will another 15 years before you muster up the courage to do anything else again. that's not acceptable. >> can we tax some of the benefit? >> one person every 30 second is declaring bankruptcy because of medical costs. we can't wait another 15 -- >> to pay for this can we tax some benefit of the plans? that's off the table because that would hurt the union, right? we can't tax anything? >> no, no, that wouldn't hurt the union. >> can we tax it, then? >> that would hurt everybody who

has health care. look, it's a stupid proposition. >> but we'll have a public plan by then. >> you're going to say, we're going to tax people that have health care, to give to people that don't have health care, so the people that have health care lose their health care. then who do you tax? >> we'll have the public option. >> well, the public option will drive down costs. it will break the -- >> but we won't -- >> it will break the stranglehold on the 94% of the markets that are highly, highly concentrated today. >> do deficits -- quickly. do deficits or fraud in medicare, any of those things maude matter at all to the afl-cio? >> absolutely. every piece of dollar wasted in every form should be eliminated. you won't drive down costs significantly without a public option. >> you guys are digging in. we're going to watch the fight continue. thanks for coming on and sharing it. >> thanks for having me. >> the secretary treasurer of the afl-cio. >> loved him on monday night football. does he not look like dan a

little? >> yeah. >> what's wrong? >> nothing. >> markets got an energy boost yesterday. what will drive today's market action? we have the traders edge with c. "squawk box" will be right back.

time for the trader's edge. joining us is art cashin, director of floor plaoperations ubs. ended up and looked higher this morning. i don't know about this claims number. whether it overcomes that or not. >> it's going to give it something to struggle about. yesterday the market got help from a couple of things. the weakening dollar and pimco and buffett leaning on the dollar. you also had a rule their the white house was preparing a second stimulus package. that came out shortly before noon. they'rely being that was the poll numbers beginning to fall. they wanted to get maybe a second stimulus, get people back to work, stop the unemployment drop increases. and that helped the market, but it was mostly short coverings, joe. it spiked through some of the resistance. and then just stopped.

>> we're industrial skramping our heads. have you given up on the oil/equi oil/equity linkage, yet, art? >> no, it's all about the dollar. if people don't have a decorrect dollar index, watch oil and see that it's working inversely. if oil starts going up you can assume that there may be bidding in stocks, too. >> no culture has ever flourished debasing their currency? how long does this last where it's seen as a positive? >> well, not by me, it's not seen as a positive. i mean, this is one of the great invisible taxes of all times. others have remarked about it that the eg is waiting for the politicians to get out of anything. basically debase the currency. now, while we're seeing the dollar go down versus other currencies, we're not really seeing inflation yet. that's because the tons of money thrown at the market is neither being spent nor lent.

so we're not seeing any real inflation kick in yet. >> arthur, thanks. probably see you tomorrow. >> thank you. all right. up next, the final round with our guest host today. first, though, a look at gold prices this morning. check it out. down by about $2.90. $941.90 an ounce. "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. finally, good news for people with type 2 diabetes or at risk for diabetes. introducing new nutrisystem d, the clinically tested program for losing weight and reducing blood sugar. hi i'm mike, and i lost 100 pounds on nutrisystem d

when i was first diagnosed with diabetes, that first step was more like a giant leap. till i discovered nutrisystem d. in a clinical study people on nutrisystem d lost 16 times more weight and reduced their blood sugar 5 times more than those on a hospital-directed plan. plus a1c was reduced .9%. choose from over 140 menu options, there is no counting carbs, calories or points. i lost 100 lbs. and lowered my blood sugar level. nutrisystem d changed my life. mike is one of many who have lost weight and controlled their diabetes with new nutrisystem d. backed by 35 years of research and low glycemic index science nutrisystem d works. satisfaction guaranteed or your money back! new! nutrisystem d. lose weight. live better. call or click today.

guest host is chairman and ceo of light capital and paine webber. don, thank you very much for joining us today's. we've been watching the markets and trying to figure out what's next. it's a difficult time to be in the forecasting business. >> it is. we went from exhaustion rally in the beginning. people were just tired. then to the feel that crisis was over. people weren't worried about going out of business anymore. where we are now is at the most difficult time, which is the crisis is over, there's a market. now you're talking about fundamentals. the fundamentals are different now than they were before, unemployment and issues like that. big thing is government put 2 or $3 trillion into the economy. some of it's working, some of it isn't. when will the congress and the president have the means to

reallocate the stuff that doesn't work or are we going to institutionalize all of this spending in the marketplace? one reason things aren't going faster is it's taking much longer for the money to have an impact than people thought. you try to say the housing and foreclosures, you have to go through bank bureaucraciebureau services bureaucracies, much slower process. if you're going to have the will to stay with these things but to stop the things that don't work? >> right. >> that, i think, is the issue right here, right now. and that's the key for the economy going forward. and that's going to be the challenge for all of these people we're talking to. >> don, we thank you again very much for joining us. it's been great having you here. >> nice to be here. >> always good insight from don. are you off tomorrow, joe? >> i'm off tomorrow. >> see you soon, i hope. >> you'll see me again. >> make sure you join us tomorrow. "squawk on the street" is coming up next. this is cnbc.com news now. >> first time claims for jobless benefits rose last week, up 15,000 to a total of 576,000.

continuing claims also rose. more economic reports on the way at 10:00 a.m. we'll get the latest philadelphia fed survey as well as index of leading economic indicator. h.j. heinz is higher. the estimates that retailers fears under pressure after it reported an unexpected loss. that's cnbc.com news now. i'm courtney reagan. live from the financial capital of the world, oh, it doesn't get any better than this. this is "squawk on the street." good morning, everybody. i'm mark haines. an unexpected jump in jobless claims quickly put investors back on the offensive. futures were treated on that news, gains in china, and earlier inspired what would have been a nice upside to the open but that jobless claims number kind of -- >> inspiration can be fleeting. >> yes.

it was today. >> yes. it sure was. >> maybe something else will come along. >> the moment as it flies, i'm erin burnett. sentiment not the only thing causing a little bit of the pullback. the obama administration is expected to trim its budget deficit forecast up for the fiscal year to $1.58 trillion. that's $262 billion less than predicted in may. that number, $262 billion, is coming from money that was available for bank bailouts and is not being used. it's worth a mention. >> i feel so much better, only $1.58 trillion. >> $262 billion is -- >> pretty sad you're talking about real money. future is down .10. we were up five or six a couple hours ago. fair value is minus 219. we're still above fair value. >> let's get to rick santelli