kans kansas. so you did pretty well. >> yeah, you know, there are upsides to the beat that i have here, which is cover things like talf and taft and you get to go to jackson hole every year and think about monetary policy issues and the balance sheet. that's going to be a big issue. ben bernanke is supposed to talk about reflections on the past year. that includes a massive rise in the balance sheet. we're wondering whether he's going to talk about how to masterfully unwind the balance sheet. there's a lot of talk about economics and central banking here, but also about politics with a major issue here. you know, is this fed chairman ben bernanke's last speak as chairman. depends on whether he is reappointed by president obama. he talked last night with monetary expert jacob frank kel and he said, you know what, obama should put us out of our pain here. >> we are now in august. there is nothing no, new information as we begin between now and the time that the new

chairman of the fed needs to be appointed. there is nothing to be gained by delaying it. if there is going to be a decision, why not remove that degree now. >> take a look at all the issues here that are on the play. bernanke's reappointment, exit strategy full of politics, as the fed gets out before the unemployment rate is down towards more normal leverage. fiscal deficit, how does the fed react when it comes to the money of treasury out there issuing. regulatory reform is on the table. and massive oversight bill in congress. on the economy, we talked to marty feldstein last night and he's optimistic but wondering about what comes next after that. and he's also very down beat on employment. >> the unemployment rate is going to continue to rise and employment is not doing well. we're seeing, continuing to see quarter of a million job loss

every time they report a number. >> we'll be bringing you what the fed chairman says about the economy in just under an hour now. we want to just tell you that coming up after that, at 11:50 eastern time, we'll be with axle, the president of the bank and member of governor counsel of european central bank. that's coming up at 11:50 eastern time. guys, back to you. a lot going on here. we're in the beautiful mountains, but a lot to discuss. >> thank you very much, steve liesman. let's find out how everything is playing out premarket. reporters are stationed at the only important points. and there's bob pisani to lead the parade, robert? >> stock futures are not far from the high. highs for the session, retailers are still lean and mean. same report as always. ann taylor earnings better than expected. revenues in line. they do expect comparable store sales to improve in the second

half of the year. that's a little bit of good news here. better inventory management is ti the issue here. a gas is lean and mean, too. they helped to improve their gross margin. beat by a penny. inventory levels continue to drop here. bottom line here is the retailer is doing a terrific job managing their inventories. finally, gap data, they're ringing the closing bell. look at the traders, all wearing gap jeans as a promotion. gap has been giving out jeebs here, not here, but the other traders are. talk to the ceo of the new york stock exchange about what that's all about. and the history of dress codes at the new york stock exchange. all that in the next half hour. tradertalk.cnbc.com. nasdaq? >> we are going to open to the plus side here at the nasdaq. looks like large cap technology stocks, in fact, are showing modest gains led by apple up half a percent.

estimates increased at thomas wisele that follows a meeting with the management. google is ahead today. microsoft, amazon, yahoo! and dell. good smattering of what large caps look like in premarket trading. intuit is down 5%. downgraded to neutral from out perform at swiss. starbucks, that 30 cent rise in prices for some of the drinks over at starbucks. they are cutting the prices on some other drinks. but none the less, watch for activity in that stock today. it is showing unchanged right now, however. tech data up 2%. fl flextronics is showing an upgrade at citi. i'll keep you updated on solar stock, specifically today when i see at the bottom of the hour when trading begins because a number were downgraded by jeffries. price target was cut as well. let's go to rebecca jarvis. >> i'm watching oil prices tick

again above that $74 a barrel. near the high trading up this morning with the buck. again, in question. i'm talking about breaking the buck. the award-winning economist coming out last night overnight in bangkok and talking about this very thing that so many economists and ceos have talked about in this week. essentially, that the dollar could be weak going forward and that there are concerns of that weakness prevailing going forward into the future. that's been a major theme here driving oil prices higher as has been the idea of asset allocation, that a number of fund managers with equities going higher have allocated some of their assets to the oil complex. on top of that, dennis gartman of the gartman letter says it is likely we could see prices from a technical perspective once they've broken through 75, we could see them back at 85 bucks a barrel. one last thing to follow, the hurricane activity will continue to talk about that throughout the day.

for now, rick santelli is standing by for us. rick? >> rebecca, you hit it. when we talk about the dollar on this trading floor, pretty much half the participants think the equity have a correction, that's a dollar friendly. fiscal picture and the issues, of course, of the day are damaging to the dollar in the big term. hence, we kind of make our own energy crisis to some extent because of the dollar denominated aspect. as far as interest rates, what a wild week. basically we're highly unchanged from yesterday. but on the week, yields are down massively, especially in the longer. look at 30-year bond, it's down 21 basis points on the week. think about that. we have lots of supply. we've had certain numbers, mostly manufacturing doing better. treasuries are pricing as though they are a bit pessimistic about things on the economic landscape. mark, back to you. >> mied picture in asia

overnight. japan's nikkei lost 1.4%. hong kong, down 0.6. china's shanghai composite gained 1.7%. on top of 4 1/2% the day before. india's bombay sensex up 1 1/2%. guy johnson, what's happening in europe? >> mark, we are trading higher. i just want to point out that it is on staggeringly like volume. nobody is out there. just take a look at the clips going through the european market are incredibly light at the moment. so when you look at what you're seeing here on the screen, you've got to bear that in mind. i kind of want to walk you around europe and talk about the stories we're watching. in london, justice blackburn ruled today that english courts do not have the jurisdiction to force creditors of lehman europe to accept the wind-up for them. that's highly significant because pwc, pushing through that wind-up order, now says that it could take a decade town wind the assets of lehman europe.

bear that in mind when you come up this anniversary which we're rapidly approaching of the lehman collapse. let's go over to germany where all the talk is about what happens with gm europe, opel. talk is this board meeting taking place today with gm. the indications are that we're going to see magna taking their business over. that is the consensus thinking now coming out of germany. and looking at the euro zone as the a whole, pmis out today. they stand at exactly 50. but if you look at what's happening in germany, the number is incredibly strong. 54.2. that is pointing toward an incredibly strong third quarter for the german economy. mark and erin, you guys have a great weekend. see you monday. up next, the faber report. david is dabbling in the dollar general ipo. >> all those private equity guys, they do know how to time a market, in some cases. then, phil lebeau up next to

explain how the government plans to yield, and the ceo of shaw group, first on cnbc. after they ring the opening bell, we'll g get the truth about this infrastructure. 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.

over my shoulder there just taking a look at the f-1 that has been filed by dollar general. portfolio company of the leveraged buyout firm kkr. dollar general's ipo had been reported as a possibility a couple weeks back. now we know they hope to make it a reality. you have underwriters like goldman sachs, citi, b of a, kkr itself. of course, they've gotten into that game. now the ipo itself here of dollar general expected to raise as much as $715 million. kkr will pay itself and investors about $200 million dividend. remember, of course, these are the exit strategies for the obo firms, the way they ultimately generate a return either by selling these businesses to other buyer or taking them public. and in this case, they will do that. now, of course, they will continue to own a stake. i want to look through that. but the larger story that i want

to tell you about here the this is just going to be the first. private equity firms, of course, have been extraordinarily quiet and somewhat beleaguered over these last couple of years. they have been unable to do new deals of any real size, certainly not at ratios in terms of leverage that was anything approaching what they were able to get in '05, '06, and part of '07. they've also been dealing with portfolio company that's may, in fact, go bankrupt or at least they're trying to prevent that from happening. so when you look at the portfolio and you see the window open for offerings and see the performance of the s&p over the last few moptsz, they say, you know what, we've got a couple of winners in here, relatively healthy, let's get out. let's get through the window now. and that's what's going to happen. i am hearing from many investment bankers, any number of other professionals that get hired to help with the marketing of a particular company's ipo. they are all going a lot of

bakeoffs, as they say, trying to get the mandates for those. those have not been announced. we will see a flurry of s-1 frz what i'm being told come after labor day. many of them from the same portfolio companies at the private equity firms just like dollar general and kkr is doing with that. take a look at theisted iposthis year. while it's been very quiet. wow. look at that. january, there were none. may, april, may -- but get to august and you'll see, we're starting to get there p 2 attorn. 2.24 billion offerings in put there in perspective in terms of yearly ipo volume, if we can end with those two charts. you can see, it's just been an incredibly sad year when it comes to ipos. but just as the window opened up on credit and secondary offerings of equity, the window is open on ipos. they're going to try and get through it.

i promise you we will be talking about a lot of them if -- and this is the big if -- that baby right there hangs in there. things change in the old s&p and get more volatile or it goes down, all bets are off. erin, back to you. >> david, thank you. a story everybody is talking about, the fate of clash for clunkers. the department of transportation says it will end at 8:00 p.m. on monday. this coming monday. the program's recorded about 457,000 transactions of cars worth nearly $2 billion in rebates. nbc auto reporter phil lebeau is joining us from illinois. phil, one thing there on that headline, they had more money and the ability to do more cars, didn't they? didn't -- i'm just trying to make sense of what those numbers mean. >> it's supposed to be $3 billion, erin. but keep in mind that 457,000, that's the estimate because it's not like they know every single vehicle that has gone through. they want to make sure that they have enough money. when you take a look at the end of cash for clunkers, keep this in mind, monday, 8:00 eastern,

that's the deadline. and the program is ending much sooner than people were expecting. really is only going to be lasting in total about four weeks. again, it's finishing earl to ensure adequate funding. $3 billion was put aside. allocated $1.9 billion. the vehicles have been sold through the program. that was as of yesterday. totaling about 1.9 billion in clunker rebates submitted to the government. but so far uncle sam has only paid out roughly $145 million to dealers. it's only reviewed just over 40% of the applications. they want to make sure they don't have more vehicles sold than they can fund. that's the reason they're going to cut off the program on monday. the clunkers program, however, here's the post-clunker debate. it has spurred increased production from the automakers. generally speaking that's a good thing. fourth quarter production up about 10% in the industry. but, 2010 sales estimates have been reduced on concern amongst analysts that there has been a pull ahead effect, that sales in

the future will be effected. so when you take a look at stocks, like ford, like toyota, all of them have had a nice run over the last four years because clunkers means greater production, production drives revenue. but, erin, when you take a look at the future, the concern out on the street is that the auto industry is going to get back into this cycle of boosting production, sales falling back down, and if sales are weaker than, say, 10.2 million, 10.3 million, is the industry going to get back into the same cycle it was in before where it had excess capacity building too many vehicles? that's going to be the challenge over the next couple of months. >> phil lebeau, thank you. up next, the word on the street and the buzz beyond the trading floor as we await big ben's message from the mountains. >> he kind of looks like -- >> yeah. and he'll be speaking from the mountain top. >> yeah, i mean, will he have some new -- we'll stop there. and later, the ceo of shaw group first here with it after he rings the opening bell.

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we're back. we're live on the floor of the new york stock exchange. the futures actually strengthened there before tend of the electronic session close tond high of the morning, point to a gain of 40, 50 points on the dow. i'm here on the floor with the hardest working man on the

floor, warren meyers, cnbc contribut contributor, pepperdine, i could go on and on. >> but why waste time. >> it is unbelievably resilient. in the face of anything they could throw at us, notch it down a hair and bounces right back. it's just unbelievably strong. >> so should we climb onboard? >> i think you've got to buy -- you've got to -- unfortunately because i'm concerned but you've got to buy the dips until you're proved wrong. i thought we should have leveled off here down a little bit from here every time they've attempted to do that, we bounce right back. we may be a range here on the s&p, let's say, you know, 115 maybe on the high, down to 990? dow, we're talking 93.50. it hasn't breached 9400 by much.

gets down to 9400 and change and maybe that's the range. when you get to the lows, you buy. to the top, you lighten up a bit. i tell you, look at energy. look at oil. it's just in the face, again, of everything, it just keeps going up and up and up. eng energy is strong. certain health care seems to be strong. as much as it gets a little tricky, look at the banks today, all looking strong this morning. they keep inching up higher and higher. it's tough. >> i know. >> i want to say sell all those things but how can you? >> i hear that from everybody. everyone is non-plus saying it won't go down. thank you. have a great weekend. >> you, too. let's get back up stairs to erin. >> let's get the buzz beyond the big board. art hogan is with us, managing director from jeffries. let me throw a couple of negatives out there. debunk them or tell me if you are worried. chinese stocks down for the third week in a row. copper, first weekly drop in

six. down to the chinese inventories. rubber, biggest weekly loss in more than three months, again, due to china. things to ignore or signs of trouble? >> i think you have to look at china and n. separate ways. first of all, we know that gdp growth rates are. we know there's built-up inventory and probably has one of the best stimulus packages in the planet. market went down 20% because it was up 80%. the market isn't their economy. i think the prices are getting more rational in the chinese market. you can look at commodity prices like copper and rubber and the entire commodity complex and say we've gotten to stabilization. i think we're going to be in pretty good shape coming in the fall. a lot more inventory rebuild away from china that we need to do. i'm not as concerned about china and certainly our market doesn't seem to be concerned about china. >> certainly, a fair point. now, ben bernanke's speech at 10:00. steve liesman will have the headlines for us in half an

hour's time. anything you really want to hear from him about his plans and how he's going to get us out of all of this unprecedented liquidity? >> a strange time for him to get into exit strategy. i think people are talking about that. you know, if he does give us a forward looking statement that talks about that, i certainly take much in the buffett's op-ed piece this week. it's a venue for that. another thing i point out, erin, that's not getting enough of the conversation this week, as you look at march high, it's the same. american consumers are much stronger than we're giving them credit for. mall traffic in august is turning up for the first time since october 2008. and a lot of the stories reported over the last week or so are talking about a better august, august is better than july. back to school being much stronger than anticipated. that's going to be a trend as we look back to school in the fall is going to start catching some people's attention. >> art hogan, thank you. mark, art, i don't know if you heard him because you were in

the process of coming up. he brought up your tie. it looks like that you paired it with ecru instead of white. >> probably would have been better with white but it was ecru's turn. >> ecru's turn in the rotation. >> yeah. final countdown on the opening bell coming on this flag friday.

[bell ringing] the way the stock market's been acting lately you may wonder if you've been doing the right thing. is the advice you've been getting helping or hurting? are the fees you're paying really worth it? td ameritrade's fees are fair and straight-forward. their research is independent and unbiased. their investment consultants are knowledgeable and there when you need them. so why not talk to one? announcer: call today to schedule a free investment check-up, or visit a td ameritrade branch.

all right. the bell is sounding here at the big board, engineering nuclear energy company, the shaw group, celebrating its ticker change from sgr to shaw. we'll talk to the ceo in a moment. at the nasdaq, i don't know whether this is tleo or tleo corporation. tloe, provider of talent management software, celebrating its tenth anniversary. what the tech is talent management software? >> software used to determine what you are going to be grazing on in the morning and, you know. they want to make sure, mark, that they have the meat and

salad when you want it. people think you bring it yourself. that's not how it works. >> i haven't had a meat salad. let's start with bob pisani. bob? >> guys, futures ended right at the highs of the day. europe at the highs as well here. so it's starting out positive for the morning here. let's talk about what's going on. by and large it's about retailers here today. look at ann taylor, better than expected earnings. revenues about in line with expectations. expect comparable sales to improve. they're probably going to be on the negative side. aeropostale has good news. that stock is opening to the upside. beat estimates as well. gap is lean and mean. that's what all of these companies are about. inventory levels are down. helped them improve their gross margin, helped them beat a small amount, a penny. up about 3% right now here. the bottom line here is you've got companies that are improving their inventories, improving their gross margins.

now you need to see sales improvement. speaking of what's going on with gas here. i spoke to the boss here, ceo of the new york stock exchange. look. look. gap jeans here. they're all wearing gap jeans. turn around. how do you know i'm not wearing them underneath my suit? turn around. er down here is wearing them down. 1969 premium jeans. what's this all about? >> i think part of it is consistent with doing a lot of other companies. we're looking for co-branding opportunities. looking for partner tubts. gap is one of our great companies. we knew what they were trying to celebrate. not only did we extend it to the trading floor for a summer friday but the whole company today. the whole company is wearing jeans today. >> i haven't worn gap jeans since directirexler got fired. are we seeing more of these promotions? >> i would call them partnership

opportunities. some of them will feel like promotions. we have other things going on around the back to school campaign with a number of firms. it's really a message to our companies that we're not going to break with tradition here but opportunities to do creative things that are co-branding opportunities. we're going to seize them. >> i can't wait until victoria secret rings the opening bell. what do you think? >> leave it to you to say that. i tell you, three day nsz brazil, they're cut pretty nicely. >> you know, this is very unusual, folks, to allow jeans on the floor because the history of the floor of the new york stock exchange has always been very formal business attire. we have the old pictures here. used to wear hats down here at the new york stock exchange all of the way into the 18 -- there are the boiler hats. look to the right. that is art cashin there actually to the far right. you can see jimmy mcgwire out in the back to the left there. they've always wore whatever the best quality clothing is available here. we have a shot from the 1920s. that's what the old posters used to look like.

those are probably clerk there's and those clerks had to wear uniforms. >> uniform in the '20s and switched to suit and tie in the '50s and relaxed it only very occasionally. we thought today was an appropriate day to relax it. >> you just got back from brazil. brazil's market out performed our market. commodities based market. would it be fair to call them in a recession still, out of a recession? >> i would say the economic crisis for brazil is already in the rearview mirror. they're poised for a meaningful growth in 2010 that was quite clear. i met with great brazilian companies that are thinking multinationally now. i met with government officials and regulators. they're already looking ahead to a very solid '010 and beyond. their challenges is infrastructural. economy is humming along. >> this happened before they were on the verge of become aggregate super power on their own today and slipped back. do you think the market driven economy, they're in the sweet spot, they're in the commodity

markets now? they understand that? >> i think they absolutely understand it. and i actually think one of my impressions was they learned from the lessons of the early '90s because they had a near death experience in the earlies in poi'90s. it positioned them much better now and they figured out they have a lot of natural resources. they have a lot of commodities. that makes them an important global player. that was very, very clear. >> thanks, bob. >> interesting point there. >> put on a pair of jeans, will you? >> i'm in a suit. ceo of the new york stock exchange. thank you. scott wapner, let's talk about what's happening on the nasdaq here. >> these are the start of things for nasdaq and technology in general. focus on apple, thomas has taken the estimates higher following a meeting with management. the shareses are up half a percent. google is higher 1%. most large caps are to the plus side. microsoft, amazon, yahoo! dell among them. intuit is going the opposite

direction. down almost 10% on a downgrade at credit suisse. starbucks is up 1%. big news, we've been talking about, they're going to increase prices or they already have increased prices by as much as 30 cents on some drinks. they've slashed prices on some of those easier to make beverages at starbucks. tech data is upgraded at citi. flextronics a upgrade at citi. solar stock is on the move today. downgraded a number of them by jefferies. we're talking first solar, sun power, energy solar, energy con ver general. let's go to rebecca jarvis at the nymex. >> crude oil rallying. what's happening here? essentially the story isn't new, even though the price action is. as the buzz burns, everything that is priced in u.s. dollars reflats and oil is a prime example of that. heritage energy says the

question is now, could we see another repeat of july in terms of price activity? prices in july bounced and then they stood still, or, in this case, does the rally have legs? he says he's watching technicals as far as the dow goes and the stock momentum goes. if stocks continue to reflate we may see oil follow or oil could reflate and stocks follow. last week, positive economic data out of europe overnight as their business sentiment rose to the highest levels in two years. rick santelli, over to you in chicago. >> thanks, rebecca. you know on fridays i always like to take a weekly perspective. this week it is really interesting what you see. of course, i don't even need to show you the chart. you know the s&ps and the dollar up smartly on the week in terms of price. look at the dollar index. not only is it down today, it is now down close to a penny on the week. and get this, only a half cent above its first week in august.

very significant lows. half to have the dollar index. and this made sense after you see the dollar. what do you think yields are doing on the week? down a lot, especially on the long end. 30-year bond rates down. 20 base points. less inflation, less activity, maybe safety? maybe all of the above. back to you. >> thank you, rick. >> thank you, rick santelli. down here on the floor with spanky and our gang. >> this is a skull cap that goes underneath the hard hat. i would like everyone to know we were given one and i put mine on and mark did not want to because he thought it would mess his hair. >> it's not big enough. >> thought it would mess his hair. many people saw that go down. >> looks great on you. >> let's bring in jim, ceo of shaw group which obviously is the skull cap. >> good morning, sir. >> good morning. >> erin and i were talking about

this just before this interview. there's a lot of buzz these days that we have to go nuclear again. >> right. >> we've got to more seriously consider it. and assuming that you can overcome the construction problems, which was a huge problem the first time around, the constantly changing construction and you wound up with a monstrosity like the nuclear plant which was literally rebuilt as they built them and it became a goldberg. assuming we can get past that, what do we do about the wait? >> let me talk about the construction cost because i think that's already been addressed. the construction cost back when those plants were built, first you had a construction permit to build a nuclear plant. then you were 90% finished they would go and see if they would give you an operating license, no, you have to change this. >> everything was constantly changing. >> now they give you one license, to construct and operate all at the same time before you begin. that's done. i think what we're doing on the waste is a step in the right

direction. we're taking on a new look at not depositing everything out in the nevada. why is that good news? the rest of the world reprocesses wastes, france, et cetera. if we reprocess our wastes from the operating plant, 75% of it simply goes away and is reused. i think that's a big step in the right direction. under jimmy carter he stopped the reprocessing process in the united states. now we're taking a new look at it. in fact, with have a $5 billion project that we're building, a taking weapon grade plutonium and putting it together and usesing it for fuel. >> this is a complication that we have. step in the right direction if. france recycles 3/4 of it. then you're left with a quarter of it. when you see it go nuclear, it was a great mistake. >> last week the nrc came out and ruled that the nuclear waste on-site is good for 100 years.

now they're looking to 120 years. it's a long way to where we are and where we started. we've come a long way since we used to dump 55 gallon drums of radio active wastes in the ocean. we have come a long way in a short period of time. if we could get rid of 75%, we're a long way there. >> and don't you have to build an equally inherently dangerous plant to process the wastes? >> first of all -- >> to wind up with two plants that have inherent dangers? >> well, you know, the nuclear wastes we're reprocessing plutonium, one could say that we're decommissioning weapons and reprocessing. we're taking an inherent real danger out of the process. using the fuel to power nuclear power plants. nuclear power plants are not inherently dangerous. they are inherently safe throughout the world.

>> excuse me, but they are inherently dangerous, just as gasoline is inherently dangerous. gasoline can explode. nuclear wastes, nuclear material can kill you. i'm not commenting on the quality of the plant. it's just that an inherently dangerous thing. >> everything has different levels of danger and acceptable risks. >> that's what i said, gasoline. >> just as x-rays are -- used radio active material to see whots wrong with your broken arm and things. i think the safety record of nuclear plants in the united states has been impeccable. just like on militaries, submarines, aircraft carriers are impeccable. once these young men are trained, then, only then, that's the main source of employees for operating a nuclear power plant. these are well-trained individuals operating these plants. you know the record is impeccable from all safety

aspects. >> before we go because we are obviously over here. the u.s. stimulus plan infrastructure, everyone that i know and we talked to you about it, have complained they haven't seen the money. have you seen it? are you optimistic? >> seem likes the same people haven't seen the money from katrina. it takes a while to move the battle ship and get the dollar flowing. the infrastructure money is going to be over a per yofd three years, not three months. to spend that amount of money in new jersey, they increased our traffic force but it's over the next three months, not three years. it's a stimulus to be sfent in three to five years. >> give it to her, she would get it in the economy in three minutes. thank you very much. >> thank you. >> we appreciate it. i'm sorry i was putting on my hat here. mark? >> what have we got coming up? >> mark was going to go home. up next, stocks on the move, including smuckers. >> a favorite of mark's. >> and radio shack.

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welcome back to "squawk on the street." i'm mary thompson. look at smuckers, up 5 1/2%. recently acquired folgers coffee and strong sales resulting in earnings, excluding the 90 cent a share, 12 cent ahead of estimates. foot locker is down, retailer broke even in the second quarter missing analyst's estimates. six cents a share. cost cutting sales decline in revenue. radio shack, board approved additional $2 million share buyback. up 11%. maker of design software reported unexpected profit once you exclude items. said third quarter earnings should beat analyst estimates.

and communications is lower. fiscal third quarter revenue rising 35%. and the stock down even as earnings excluding items beat estimates by a penny. erin, back to you. >> thank you, mary. markets opening higher. investors wait to hear -- i don't know. sorry. that was my bad. no one's bad but my bad. chairman ben bernanke, things to calm people down. will he do it? will we see a rally if he expresses optimism or lays out an exit strategy that makes people happy? joining us phil orlando, chief equity marketing strategist, and bob portfolio manager cabot money management. good to have both of you with us. >> good to be here. >> it was interesting, art hogan said before, phil, that everyone is saying they want to hear ben bernanke laying out an exit strategy. they don't want to hear him talking about an exit strategy at all. we're not near a point where that should be the main point, the main goal. what do you think? >> we agree.

we're nowhere near an exit strategy from the perspective of interest rates. historically, you don't see the fed start to move rates until the rate of unemployment peaks and starts to recede. we think that could be the middle of next year. the rate of unemployment could be up in the 10%, 10 1/2%. the fed has already signaled it's started to think about reducing the quantitative easing at the last fmoc meeting. i think they're on pace. i don't think we need to hear anything from dr. bernanke in terms of an exit strategy. i think it's pretty well laid out. >> les, do you agree? pretty well laid out, we have the clarity we need and we should be calm? >> i think we have enough clarity for now. i don't think we can expect much more than we're getting. the important thing for equity investors right now is you need to start getting engaged with the equity market. we've got a terrific opportunity. there's only been three period where's you can enter the market where the hen-year return has been negative, early '30s, and

late '70s and right now. keeping you out of the market is probably going to make constructive strategy for the next three to five years. >> phil, i'm sorry to see you are in the camp that is expecting a pullback. isn't it awfully crowded in that boat? >> i suppose it is. we thought the s&p would get up to 1,000, discounting second quarter earnings. we got that. 18 level a couple weeks ago. we may hit that again today. we may see a pullback. fundamentals are in place. earnings will improve. and we do expect the market will be 1100 plus by the end of the calendar year. >> that would be -- >> 10% or so higher than here. so we're still bullish. we're just reflecting the fact that we've got, you know, a little bit of a trading vacuum here in late august and lerlly september. we could very well see a healthy correction. >> unless you're bullish on the financials? >> i am bullish on the financials. it's been a very long time since i've been on record being constructive on the financials.

times are very different now than the last few years. a few reasons. number one, financials are still despised. four-letter word on the street. a lot of equity managers are underweight financials and they may be for a long time. number two, the phase acute write-off, toxic asset write-offs are over. that's a very good thing. number three, there's going to be a lending unemployment keeps and once consumer credit quality begins to improve, which i think will happen in the next six months. >> they said we had to go. thank you, guys. appreciate you coming in. up next, because you clicked we started this this week. and you liked it so far. if you're one of the people who clicked, over 35,000 times on some part of the ford section of cnbc.com, this one's for you. hopefully you didn't click all 35,000, one person. >> wall street takes us behind the wheel of the only american auto make whole has really got it in gear.

cash for clunkers may be coming to an end but your interest in auto companies is not. ford is one of the most clicked stocks on cnbc.com. so let's look at ford's stock. see what kind of opportunities

holds for investors because you clicked. because you clicked. joining us is david silver, research analyst with wall street strategies. david, what do you think of ford as an investment. >> i still have it rated as a buy. by tend of the year it will get up to $10, $10.50. recent run-up lately and pulled back a little bit from there because of all the cash for clunkers deal come fog an end. we heard that announcement yesterday. >> right. >> and also i think their production may be getting a little bit ahead of themselves. hey, it's the best american auto manufacture that you can buy on the new york stock exchange. >> you know, there's an interesting irony or wrinkle, it seems to me, i mean, on the one hand, you've got to hand it to ford. they didn't file for bankruptcy. they didn't take government money. they did it through, oh, my goodness, good management. okay. so you've got to say, bravo

ford. on the other hand when you think about investing, gm and chrysler did go through bankruptcy and have advantages now over ford because of that. >> they definitely do. they have much less debt. gm and chrysler compared to ford. with ford, i do think they had a debt for equity swap earlier this year. i think they're going to lessen the debt load. decreased it from the beginning of the year from $160 billion to $130 billion. that's a huge difference. i mean, just straight-up dollarwise. gm and ford are down at $50 billion to $30 billion in debt. as you worked, as ford does another debt for equity swap, as they continue to really see these efficiencies and cinergys that they're having, not just in the united states and canada and mexico but also in europe and china and russia where they're not a very large player in china and russia, they're growing and reworking their operations there as well, just at a much slower pace. >> very little time left. should we worry that cash for

clunkers have stolen sales from the future, is distorting things, are they going to rafr up just in time for another dropoff? >> i think that right after, you know, next monday, cash for clunkers ends, i think the last week of august and september are going to be very bad months for auto sales. you're going to see it go back to below $10 million range. but by the end of the year i expect that to be back about where we are with cash for clunkers. >> david, thank you very much. appreciate your input. david silver. got two market moving reports? >> that's right. coming up in a couple of seconds. and breaking headlines. ben bernanke, we're going to ben bernanke, we're going to have the headline in a moment. during the lexus golden opportunity sales event, you can do both. special lease offers now available on the 2009 es 350.

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welcome back to jackson hole where fed chairman ben bernanke is making opening remarks. he's offering a retrospective on the past two years to the financial crisis and offering only limited and very guarded remarks on the outlook for the economy. he says we're only now beginning to emerge from a deep global recession. he says without fed actions, the outcomes for the economy globally could have been decidedly worse. says that unlike the 1930s, fiscal monetary policies were aggressive and comp my menry. he said we avoided the worse but

difficult challenges lie ahead. among those, we must urgently address structurally financial system, that's a boost right there for regulatory reform now in congress. the new regulatory framework, bernanke says, should ensure that future crises won't be as costly as the ones of the last two years. the use of the fed liquidity facilities, he says, has declined sharply and that signals to him that markets are normalizing. it's a retrospective. go back and read what the fed chairman thinks of the last two years. let's go to diana olick for the latest on existing home sales. >> big number, existing home sales rose 7.2% in july to 5.24 million units. annualized, that is the highest pace since august 2007 and sales are up 5% year over year. that's a fourth straight month of sales increases. why? because of lower prices. prices for median and existing homes down to $178,400.

inventories in real numbers rose 7.3% to 4.1 million units. that the month supply remains unchanged at 9.4 month supply because of that higher sales pace. breaking it down regionally. up 13.4% in the northeast because, again, of falling prices down 15% there. run troublesome spot. in the west sales fell 1.7%. even though prices there are down year over year, a whopping 28%. now, first-time home buyers were 30% of all buyers in july. 31% of all sales were foreclosure sales. interesting number, 16% of buyers paid cash and normally it's 10% or lower. rick santelli, what do you have to say on that? >> i tell you, it's interesting, diana. looking at that number, of course, listening to the steve in the headlines, the market paid most attention to the surprising strength in the fourth in a row better improved existing home sales.

they also are interested that there was no revision. what happened? interest rates moved up and they moved up a lot more aggressively in the long maturity. remember, it's been a week where long maturity yields have dropped rather precipitously. we were going into that number with almost 20 basis points lower yield on the 30 and we see that its yield is up four or five basis points since the data released. equity, just to give you an idea. stocks went up close to 100. so it all makes sense. now, whether existing home sales is truly the canary in the coal mine for the entire industry, well, that's probably still left to the final chapters or the epilogue. how are we on the floor? >> rather sharply higher after the jump. triple digits up more than 100? why? home sales are better than expected. >> five months in a row. it's still not clear whether we're at a bottom on prices.

at least sales are picking up. that means we will slowly be eating at inventory levels. that's the key here. today if you notice financials are still leading here. we have nice move. these financial out liars, i keep getting calls, why is aig up, fannie mae up, freddie mac up? they're up again today because retail investors like to play them because they're big momentum names. that's why. aig has a short squeeze going on because the number of shares are small and trading is huge. 130 million shares traded yesterday. >> uncle sam doesn't really trade. >> that's right. there's probably 26 million shares that don't trade. 134 million that are publicly traded. 20% is the government. very little available to trade. that creates real issues here. by the way, citi group was out. citi supposed 15%, 18% this week. i don't know if you put up criticizedity group. ubs put out a note this morning that was fascinating. they converted their $25 billion in preferreds to $3.25.

look at the stock now. $4 and change. they have made, that's almost a 40% increase. the treasury has made $10 billion since the conversion to the common shares. this is ubs put out in the note, doing the math this morning. thank you, ubs, for doing that. >> the treasury is the u.s. taxpayer. >> for everyone who says it's a waste of time, let them all go under, that's in the black, $10 million. >> look at all the morgan stanley, american express, every single one of them, taxpayers made a lot of money. bob pisani, thank you very much. let's get to scott wapner at the nasdaq. the rally there, too? >> absolutely. in fact, erin, we picked up just along with the nyse, broader markets as well, nasdaq is now a good for better than 1%. we've been focused on that apple story today. it's been on of the leadership stocks among big cap technology issues today. it's up 1%. the estimates were increased over at thomas wizell.

they liked the company's long-term outlook. starbucks, there's been a pick-up in activity. shares up better than 2%. company raising prices. raising prices in this environment, as much as 30 cents on some drinks, cutting fries on some of those easier to make beverages, erin. i've been focused and mentioning it throughout the morning now. those solar stocks are an interesting story and getting hammered today. first solar, 3 1/2 sell-off. evergreen solar is down 3%. energy conversion is also under pressure. jeffries downgraded a number of stocks. we talked for months about the pricing issues that solar companies are facing now. prices for solar plummeting. supply/demand issues no, real sign that any kind of demand is going to pick up for solar companies. that is definitely having an impact on the share prices, erin. >> scott wapner, thank you very much. crude oil prices are higher.

i believe at the highest levels of the year. let's get to rebecca at the nymex today. >> hello, that is crude oil prices are at the highs of the year right now in trades here at the new york mercantile exchange. i'm joined by tim jennings, president of advantage trade. what do you think is driving this market? >> i think the market is really responding to a couple of things. first of all, the market is responding to the equity markets higher. the dollar is lower. i think also we're looking at the fact that technically the markets are poised to rally some more. and fundamentally with the crude oil inventory numbers coming out on wednesday, i think that's a big driver of the market as well. >> a lot of things working in the bullish camp. you said the dollar and the stock market is really what's going to push things forward here. what's your short-term view as far as the pricing goes on that front month contract? >> i think obviously, we're going to rally. i think the key thing there is whether it will be rallying off the front end orallying off the back end. i think that the market is looking for any kind of sign of economic strength, renewed demand. i think you might look at the bigger demand in the back

months. i think that's going to be a little disparity between the front and the back end of the market. >> how important is the weather right now? does it look like hurricane bill is going to hit the gulf or the production sites as far as oil is concerned? does that play into your thesis at any point? i know it's a friday. traders tend to want to get their positions ready for the weekend on friday. >> i think that's going to be a little selling in the market. the big thing to look at is the fact that it is the hurricane season. this one isn't on the gulf coast. it's not as big a concern. that's something in the back of the traders' minds. >> great to know. thank you so much. have a great weekend. mark and erin, back to you. >> okey-dokey. still to come, our econo round-table. tackles big ben's future at the central bank and what the fed must do next. >> and shares of intuit on the move this morning. the company warning next year is going to be pretty tough. ceo, our special guest after this. and later, mark, sometimes it truly does pay to play. sometimes, many times. recreation a stocks almost up

30% over the past month. more than doubled since the infamous bottom. another sign the worse is over. we'll find out. we'll be right back here "squawk on the street." big market friday. 124 up. these days every penny counts with everything you buy. every head. every bite. every gallon. every shoe. every book. every cereal. well, maybe not every cereal. but every stem. every stitch. every tune. every toy. pretty much everything you buy can help your savings account grow because keep the change from bank of america rounds up every debit card purchase to the next dollar and transfers the difference from your checking to savings account. it's one of the many ways we make saving money in tough times a whole lot easier. introducing the all new chevy equinox. with an epa estimated 32 miles per gallon. and up to 600 miles between fill ups.

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in this morning's sound

check, a and b on the state of the consumer and well-known expert on why he's bullish on of all things, natural gas. >> price really has a lot to do with value, so it's not just because the price is higher. if you've got the value and people do recognize value. but it really is, today, it's so much more price driven consumer. >> i like the idea of buying natural gas. certainly in preference to oil. it's right now at a record high ratio of like 23-1. usually it's like 8 or 9-1. i like the idea of buying it. it's just there's no place to buy it yet. the fed chief's comments also a positive. says the global economy is now beginning to emerge from recession. let's bring on our econo round-table. maria ramirez, fmr president and ceo. jeff, ltl market street analyst

and, of course, our senior economics reporter steve liesman. >> shaking in his underpants. >> yep. >> maria, good morning? >> good morning. >> do you think we are coming out of a recession? >> yes, i think that it may not be a v-shape, you know, a strong recovery to start with. but i do think that we are going to see it going forward. i think it's going to be in fits and starts. never the less, i think that the worse has been behind us for a while. the numbers that came out this morning have same sales, same sales are going to be up. if you look at states like florida where prices are down 75%, you know, it's fine and i think it will continue to spend some on money but it's going to be cautious because people have do have more income before they spend more money. very simple. >> jeff, do you agree? >> i do. i mean, i think that we have certainly seen a lot of healing

taking place. i'm in kind of the qurt w" camp. maria talked about the letter "v" or "u" or "l." we're in a down draft and getting a bounce back. there are issues that could lead to another dip in the next 12 months given the fate of the fiscal stimulus and, of course, now the withdrawal of monetary stimulus as we look out to the next year as well. that's going to be a real challenge. i'm not sure how we can back off from supportive commercial paper, the treasury market, the banks, everything without seeing some ramifications in terms of another dip in terms of economic and profit growth. >> steve liesman, were you surprised at all when you looked through this that it was so retrospective? i know there were some who were hoping it would be proer prospective, maybe laying out more of an exit theory, shall we say? >> i was not. it was not a place where a fed chairman typically lays out forward looking ideas or policies. there is a paragraph in there where he says he thinks employment will be slow to rise,

slow to fall, and he talks about there being a gradual recovery. like one paragraph on the economy, another paragraph a little later on. that's very typical here. this is a place where fed chairman take a step back, try not to make a whole lot of news to over-shadow the conference. >> jeff, one thing i wanted to ask you about was, you were actually pretty optimistic about profit growth. even in the absence of government spending. so when government spending is done, you still think we're going to get it. why is that? >> well, erin, it's interesting. investors often expect there's a one-to-one relationship between gdp growth and earnings. there really isn't. right now we've got costs cut to the bone in corporate america. some cases they cut through the bone, they cut limbs off. costs are so low that even though very modest revenue growth, very powerful earnings rebound. we are seeing that reflective in the index here lately, probably the best leading indicator of profit. just getting rid of the

write-offs, manufacture activity. with costs cut to the bone so much in corporate america, i think we could see a 20% profit rebound in 2010 over 2009. that's a real key support for this market here keeping us going around 1,000 on the s&p 500. >> maria, what about the thing that was -- we talk about cash for clunkers and a lot of our viewers have been asking about that and the impact on growth. that program is going away. we find out there's $3 million in he bates for washing machines, dishwashers, you name it. that's going to come in the fall. do you have a since of whether that's something that might matter for the economy or is it too small to matter? >> okay. speaking about, you know, personal poorexperience with ca for clunkers. it took us three weeks to get one. the paperwork was unbelievable. we thought we would never get one. it was a test for us to figure out how the system works. i do think that they've got some clinks out of it. i do think that going forward, that any stimulus to get the consumers, you know, to go and spend some money is going to be

more efficient. i do believe though that car sales are more sustainable and maybe 11 million annual rate or a level like that. i do think that we got quite a pop in cconsumer spending in th third quarter because of cash for clunkers. i think that going forward it's going to be very difficult to sustain the same kind of government support for one business or another to try to get spending up. but i do think that any stimulus that's effectsive to get the consumers out and spend some on any and financing has been very cheap. should help the economy as we get things kick started going forward. >> okay. your phone rings. you pick it up. you hear a voice saying, hello, maria, this is president obama. should i reappoint ben bernanke? what do you say? >> we spend a lot of tax dollars to get some of these people educated in the last two years in how to deal with big crisis. and i think if i were president obama, i would keep the people

that i have because we spend a lot of money getting them through resolving some of the problems we've had in the last two years. so i definitely will give them another term. >> jeff, what would you tell the president? >> i would tell the president i would have to give him an incomplete grade so far since he's only done half the job. he's used a lot of innovate i6 ideas to pull this economy back from the brink but that's only half the job. he's got to be able to pull that back over the course of the next year. less optimistic but i think that bernanke is still the man for the job. >> all right, maria, jeff, thank you both very much. of course, you know, mr. sunbathing in the grand tetons who also joined us. >> yeah. up next, stocks on the move, including pacific sun and something called zoomies or something? plus intuit is the stock to watch this morning after forecast for next year was weaker than expected. ceo will be with us to talk

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welcome back to "squawk on the street." welcome back to "squawk on the street." i'm mary thompson with your realtime flash. looking at key retailers. pacific sun wear is down after reporting a second quarter loss. weak same-store sales is a contributing factor. the firm is expecting the losses to continue into the third quarter. different story for zoomy, up 14%. like rival pacific sunwear lost money in the last quarter but the loss is narrower. speaking with the retailing theme, sports is down 8%. the economy's second quarter earnings 4 cents a share lowered the full-year profit outlook. scan source is up 11% after bar code readers reported a 14% decline in earnings less than

expected. the company also provided revenue guidance for the first quarter that's ahead of analyst estimates. lastly, salesforce.com supposed 14%. software firm second quarter profits more than doubled helped by strong revenues, raised the full-year forecast. back to you. >> thank you, mary. stocks popping the s&p right now at a ten-month intraday high. we are right near the high of the session. gain of 150. right now it's 141. the reason for it was that unexpected strength in existing home sales. existing point i wanted to mention for miller, they say that the reason that you didn't see turn expected jump in existing home sales is due to inventories and drop inventories. even the sickle family home inventories dropped, more people put con s do on the market. interesting way to look at it. internal fact that might matter. another stock to watch today is intuit. it is the maker of turbotax software and quick books. the company issuing weaker than

expected outlook for next year despite the quarter that just pended where they beat the street. the loss was not anywhere as wide as people. >> reporter: looking for. stock was down 11% today. it did in part because of that forecast. joining us now to talk about it and the read on the pulse of small business, their key customers, intuit's president steve smith. good to have you with us. the headline appears to be people worried about your forecast for 2010. do you really see broad weakness in 2010? what are you trying to convey? >> good morning, erin. thanks for having me. first, what we try to communicate yesterday is we're enterihe year even stronger than we did this past year. we had more customers, grew share, setting our guidance for next year. this year's ceiling is next year's floor. but the headline is, we don't see a recovery in the economy. i wish i could tell you we see some leading indicators that suggests that the business is getting stronger. if you look at the shopping patterns, consumers that shop

with them, it's down 9% year over year for the last three quarters. until we start to see a strength thanning in consumer spending, we're not going to build any upside in the economy. that's why you saw the guidance we gave for next year. >> and now, what you're saying about small business, obviously is significant. we know they account for 80% of the jobs in america. it's small business isn't doing well, the economic situation isn't going to go from leveling out to recovery. >> that's the way we see it, erin. the good news about the small business owner is their optimists and sure vivivalists. the real question is are they growing, more small businesses starting up? right now the trend suggests half the number that people get started every year are being started today. until we see lines of credit loosening up and small businesses getting back into the game. you're not going to see a resurgence in terms of growth. >> what about, now, obviously small business because they account for most of the jobs are

linked to just regular people across the country. what do you see there particularly in terms of tax trends? >> well, what's interesting is every year the irs typically sees about a 1% to 2% increase and the number of tax filings they get each year. when you see a recession hit you see that number level out. it will be flat year over year. it's primarily a lot of people coming out of college don't get their first job. you don't need new tax filers coming into the system. that has an inimpact as will. >> if i want to gauge where intuit is going, there are many things i could look at. small business formation and unemployment number? >> yes. and also take a look at consumer spending. if you start to see people using their credit cards again, look at visa, mastercard, you will have a pretty good peel for what's going to have in small business and pac. >> brad smith, thank you very much appreciate you taking the time and giving us the headline that he's not seeing the pick up in small business, which we know is instrumental for a broad economic recovery. up knicks, it pays to play.

recreational stocks, over the past month, gained 30%. does that pull out their wallets and maybe give a little bit of color to what brad just shared with you? sector spotlight after the break. some people buy a car based on the deal they get. others by the car of their dreams. during the lexus golden opportunity sales event, you can do both. special lease offers now available on the 2009 es 350.

in the headlines, markets accelerated to the upside. existing home sales number, the

reason for that. dupont beat cat. ge leading the dow. the overall leader on the s&p. that stock right now, the ticker up about 15%. and megco and wyeth, three of the health care claims at one-year high. >> let's check the markets. dow up 127. 1 1/3%, it will not go down. let's check the brent. oh, yeah, the markets took some listerine this morning. we got great market breath. almost 6-1 positive. nasd nasdaq. >> focus on recreation and leisure. dow jones recreational projects, atvs, sea doos, polaris, 130%,

more than doubling since the haines bottom, more than 30% just in the past month. as we know, consumers don't appear to be buying clothes and groceries. you heard the ceo of intuit saying he doesn't see any improve in the small business or improve in the individuals either. so what is really going on here. are people really buying this stuff or just investor hopes that they're buying this stuff? rbc capital market, he's in denver. what do you see, edward? getting conflicting signals on the consumer and recreational products are there. is there real strength in buying? as far as the spending recovery, so far we don't see it. you know the one opportunity that we know looking out in 2010, some of the companies in this group is that, you know, dealers have been depleting their inventory. it's supply and demand comes into balance, might be an

opportunity in some cases for the companies to raise production which obviously will help the earnings numbers a bit. we don't see spending recovery just yet in the category. >> so why do you think the stocks are gone up so much? >> first you have to consider the fact that the base that they're come from. they went down 80% or more between 2005 and earlier part of this year. coming off a pretty low base. they're classic, early cycle stocks. beta in this group. going to out perform in the market in the environment. the question is whether the fundamentals will ultimately follow and we're -- that part is just a little bit more difficult to figure out because the businesses have changed fundamentally so much throughout this downturn that it's pretty difficult to really say what they're going to look like coming out the other side. >> as i read your research, it appears you think polaris has done a great job at managing the situation. >> we've been selective with the group. that's been our stock of choice.

we think it's essentially a less risky way to play. but we consider to be a still high risk group. they have a strong balance sheet, a low cost structure. they've been investing in product innovation through the downturn. as a result of that, they've been gaining market share and actually making real money. so that just gives us a much better ability to really forecast the earnings going forward and the stock is still relatively inexpensive on the numbers that we see out there. even if we don't have a really big consumer spend recovery over if next six to 12 months. >> what's your view of harley, especially after their analysts today? >> we're warming to the story. not because we see anything changing in the positive but they have a new ceo in place who we think is going to be able to take a lot of cost out of the business. and ultimately improve, you know, the earnings of the company. but short-term, you know, stocks had a nice run and it's tough to say whether we're going to see enough benefits from that cost cutting on a short-term basis to

really make the stock timely right here right now. ed. >> edward aaron, thank you so much. appreciate it. >> you've got jet skis and things like that and boats. you know all these products, right? >> yeah. >> kind of like a whole bunch of brands if you're into that, especially water sports and things. you start to learn them all. >> they're toys that you get when times are good. >> toys that you get when times are good. and then you go put a bid out on a boat when times are bad and you can get a really good deal. coming up, the faber report, david's watching aig go up, up and away. ♪ it's peanut butter jelly time ♪ ♪ peanut butter jelly time >> it is. can we go 4 for 4 for the s&p? we'll be right back. getting your money ready for the weekend. you're watching "squawk on the street." (announcer) illness doesn't care where you live...

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well comb back. i'm david faber. the market, of course, very, very strong. and, well, two key stocks that we've watched for quite some time, even stronger. citi group and aig. let's start with citi group, shares of which were up about 7% right now. look at the move in that company's stock. this after it announced the ruts of that exchange offer that we reported on time and time again, that is not fully completed. we'll get to that in a minute. citi is up over 8% in the last month. there you see it right there. and another 6%, 7% today. incredible move in that stock. somewhat unexpected by many of the investors. some of whom were watch that exchange offer very closely. and there's a look at aig, the same story.

up, up, and away. i talked a good deal about a short squeeze. that does continue. i'll come back to that if let's start with citi. one of the key things that investors of citi need to understand is that when all the exchange offers for the preferred into common are concluded, helping of course to bolster the tier one capital ratio at the bank, it will have approximately 23 billion shares outstanding. that is not fully accounted for right now. if you go on your system or look at finance or cnbc.com and go on there and take a look, you won't see that share count because it hasn't ultimately concluded, or just concluded but it will in a few weeks. you get 23 billion shares out. you know how to do the math. 23 times 475 or so where the stock is and you get 109, $110 billion market value for citi group. that's a market value that company had when things were going fairly well. not necessarily when it was making $20 billion a year, but you get the point. yes, there may be lots of earnings power yet to come at citi group, but as the company

restructures, as it continues to shed jobs and units, it's very much unclear where the earnings power is going to be. you can be sure that losses are still going to be taken. to that point, i just refer to the company's 10q. as i point out time and again, when you look at commercial real estate exposure or exposure to alt-a mortgage or citi corp. as well, you get some very big numbers. commercial real estate, for example, well, let's take look. subprime, they still own the super senior traunches and ceos. enough of that may said made of of what crushed them in the first place. super senior, we don't have to worry. as for all day, take a look. 10 billion, of course. alt as not doing that well. you see the charts when i bring them up. 9 1/2 billion.

they don't have to market. help them maturity. market real estate, talked a great deal about. many people believe will continue to decline in value. $26 billion was the ultimate exposure there. most of it held to maturity again. the point being, we'll see what happens on citi. but remember, $110 billion market value, many, many questions. and losses to come. but we'll also certainly be some gains and some businesses that are doing well. all right. on aig, what more can you say there? that stock is just continued to rally. it is up another 5% today. it is largely believed to be a short squeeze. 134 million shares outstanding. listing is trading almost its entire float in one day. incredible. and it is not that hard to borrow but you've got to pay a lot to do it. there's a negative 31% rebate. do you want to borrow the shares? makes it difficult. this continues, listen, you know, the company did earn some

money. but just be careful. that's all i'm going to say on that one. you know, they owe a lot of money to a lot of people. not $180 billion. it's about $135 billion. it's hard to imagine what the equity value ultimately will be worth if and when they ever rid themselves of all of the government aid. very hard to understand exactly what it will be and if it will be anywhere near where the market currently has it. all right. hey, i'm out of here for a couple of weeks, erin and mark. you guys be good. enjoy. i'll miss you. >> we are going to miss you. >> yeah. i'm sure. >> thank you, david. >> you, too. mark, i've got a few little things. i've got two bad things and a good thing. i like to end on the good thing. >> yes, please. >> this is -- i don't know whether it's bad or not. rubber, biggest weekly loss in 14 weeks. people worried about demand for tires, cash for clunker programs expiring. you know, rubber is an interesting indicator. something to keep in mind. and from there i go to my other

"r", which is rail. they came out with their data. this says a lot about where we are. now we have -- they are still saying 17 point something percent drop. that's the improvement. so it's still plunging. just not by as much. but this is where i think it really makes that point. motor vehicles where we have seen these production increases and cash for clunkers. that's where you start to see improvement. and you are. down 50% and now only down 22 1/2%. even with this big surge, you're still running 20 plus percent below where you were. so, you know, you got to start somewhere. it does go to show you how quickly are we going to go from leveling out and stabilizing to growth. these numbers give you some food for thought. >> that's the good news? >> no, that was the bad news. that was still bad. i have good news. >> okay. i was hoping you had better good news than that. >> maller mersk.

>> mersk? >> yes. >> the names plastered all over the ports. >> that's right. and new jersey. they were the biggest container shipping group in the world. >> huge. >> we know they had that heroic captain who got out of the jaws of somali pirates. bottom line here there, ceo says world trading is improving. >> good for them. >> they did have a bigger than expected net loss and, yes, they did say the second half is going to be about the same. isn't at if it's going to be a p panacea. they did say world trade is improving. >> that's good news. >> i'm sorry. i had to put the rails out there because you've got to be honest, the rails -- rails don't say anything too nice. all right. up next, we're getting your money ready for the weekend. >> where's the little dancing bananas? he's next.

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time for the friday trade. up 135.

get going, get ready for the week ahead? it's peanut butter and jelly ti time. you're here next to me, bob, so i'll start with you. 134 on the back of existing home sales. volume is light. does it make it excited to get in or do you say, no, i'm nervous, waiting for the pullback? >> longer term, there's going to be a bit of a pullback. the market is trading up light volume, just like you said. we're not over sold but i think that's what's drawing some people into the market. there are a lot of stocks that continue to move up in positive action if without that volume, though, there seems to be a little bit less conviction in the market. i think longer term, we continue to up trend. i think the economic records like manufacturing, personal spending, you know they all indicate that the economy is continuing to improve. >> here's the thing. if i listen to everybody who kept telling me this market was going to pull back, i would have missed out on a lot of good profit. >> right. >> i mean, and you're not alone.

a lot of people have been saying what you're saying. but it's still going up. >> well, exactly. and that's why, you know, for being partners we have a lot of cash, not that much cash, we have a lot of stocks in the market. we're heavily weighted in the stock market. we have 90% in equities right now and 10% in cash. maybe a little bit less that some areas. and so as the market continues to go up, we continue to participate. but yet if the market does pull back we have the powder there to, you know, step back in and pick up some bargains here. >> let chartly get in here because we are running short on time. charlie, you say quality is very cheap now? >> that's right. what's run so far cyclical names. people trying to participate in the recovery of next year. what hasn't run is the high quality, in particular, health care. health care is very much out of favor. we like johnson & johnson, imf health, out of favor health group. >> what do you think, charlie, over the next couple of weeks?

everybody is scared about september. are you scared about september? >> yeah, what i've learned at this point is nobody knows about what's going to happen in the next couple of wooekeeks. j and j is trading at was 1994, and it went up five-fold over the next four years. >> five-fold for j & j. >> well, the '90s -- second half of the '90s, you could make a fortune in any phrma stock. >> well, that's exactly right, but that was because phrma was out of favor because of hillary care. we've got the exact same dynamic right now. >> oh, that's an interesting parallel. bob, i know you have a few names in it particular, as well. you like fluor. >> i do. i think fluor continues to go up. they're positioned for a global economic recovery. operating in five segments, but getting orders from all over the globe right now. good management, been able to control costs. second quarter earnings grow by 49% over last year. you know, they're trading above their 20-day moving average, just brought that, 5% above the

50s. 23% above the 200. 14 this year's earnings rate. my second name is in the material sector. >> quickly, it was at 56 today. of you think it's a big jump. i'm highlighting, so people if they can't see the chart. >> this company makes soda ash, hide general peroxide, lithium, agricultural chemicals, they have been able to raise prices on soda ash, the company getting increased orders for agricultural chemicals, increasing profits margins, earnings expected to grow by 15%. of 4% above the 50s, 9% above the 200. it's 10.5 times next years earnings, $71 on that stock. >> mark, one thing you mentioned that is interesting, soda ash. to prove your clunker is dead to get your new car. the government has mandated the way to kill it is a certain kind

of chemical, and you can't do it without soda ash. so soda ash is needed to kill the clunkers, because you've got to prove they can't drive. otherwise you might try to cash in your clunker and keep your clunker. >> that is not a long-term thesis. >> no, it is not a long-term -- and you are accurate on that, certainly. >> now, in the past, charlie, you picked dell, aflac, accenture, some have done well. are you still in them, gotten out of them? >> all three have done well. they were out of favor at the time i recommended them to you. they ran a long way, really not the same kind of safe values at this point. still great-quality companies, we do still own them, but they're not at ridiculously cheap values like they were. >> so it sounds like you would use them as a source of funds, if necessary? >> no, there's other cyclicals that i would use as a source of funds. there are other stocks that have alleyed more than aflac and dell, so i would be selling

highly retailers, lower quality highly leveraged companies. those are the ones that have run too far. >> thank you very much, charlie, bob, we appreciate you coming in on this sweltering friday. we are holding on to the gains. keep in mind, the high was 150. >> we're almost to 9500. up next, final check of the markets. don't go away.   um bill-- 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...

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welcome back to "squawk on the street." coming up on "the call" at the top of the hour, two first on cnbc interviews coming out of jackson hole. glen hubbard of columbia business school saying the feds' independence is at risk. and then steve liesman talks with the president of germany central bank. we're going to get his take on the global economy. and get this, if you believe boutique beers are taking off in the recession? let me tell you why. lots ahead for you, all coming up, only on "the call" at the

top of the hour. but first, going to go back over to mark and erin. >> thank you, trish. i have something on home sales i want to delve into, but i know he has something. >> to the brain. >> get to the brain before he runs and scurries off on vacation. >> i was talking about citi and aig earlier, but fannie mae and freddie mac also, a lot of moves in these options stocks as i like to call them, stubs, fannie and freddie owned by the u.s. government, largely. they really are options. and yet look at the moves they've had. up well over 100%, a very short amount of time. good time of year to gun these kind of things. and i think we're seeing that happen right now. not sure it's sustainable, but worth mentioning. >> all right. thank you very much, david faber. >> existing home sales, mark, and i don't know if david is still there, but two things stuck out from these numbers. one, you didn't see a change in that inventory number, even though you saw the -- you know, the jump in existing home sales, so you might say why. the reason was, single family homes, you did see an

improvement. but it was condos. people put more condos on the market and that could be a sign of strength. they think they could sell them and we have a glut. one thing they noted that i haven't heard a lot of conversation about was that there's an $8,000 tax credit right now. that you get through the end of november. >> for first time buyers. >> for first time buyers and that has hemmed the market bottom. but that is set to expire at the end of november. so when that goes away, what happens to that buyer, are we through the bottom, does it get extended? starts to be something people will be thinking about. >> the problem with divining the bottom or the turning point in the real estate market from the inventory numbers or whatever -- >> yeah. >> -- is you don't know how much is waiting in it the wings. people who would like to sell but aren't bothering to put their stuff on the market, because it's such a buyers'. >> that doesn't count, but should be. >> the problem is, it could show up. you could think, oh, things are

getting better, and then when they do start to get better, you get a second wave of sellers. so -- but i don't think there's any question that -- >> there is improvement. >> well, i guess there is a question, but i don't have a question. i think there has been improvement. >> definitely improvement. >> i think the worst is behind us. >> yes. >> how good it gets from here, how quickly it gets good, i don't know. but i think the worst is over. >> and the statistics from the national association of realtors in this data that we saw, 30% of the new buyers were those first time buyers who were eligible for the $8,000 credit. >> listen to them. >> so now it really is -- you've got to look at the prime market and see what happens with the delinquency data, especially as interest rates -- >> that's another worry, isn't it? afraid of a new wave of foreclosures. >> but it's time for a summer weekend, mark. you don't have any worries in the world. get on the jet ski. >> see you monday! >> this is cnbc.com news now. new highs for the years, home sales rise better than

expected, and the fourth monthly gain. federal reserve chairman ben bernanke says, quote, prospects for a return to economic growth in the near-term appear good. and crude oil rises to above $74 a barrel. that's cnbc.com news now. i'm courtney reagan. good morning, and welcome to "the call" on this friday. stocks leading the charge here, up 130 on the dow. strong existing home sales numbers. that certainly having an affect on things. also, some positive comments out of fed chief ben bernanke. all of it leading to a bullish day on wall street. coming up, we're going to talk about whether or not the fed needs to start raising rates soon. hey there, mandy. >> hey there, trish. i'm mandy drury, hello, everybody, in for melissa francis and larry kudlow today. two first on cnbc interviews live from jackson hole. we'll talk live with dean hubbard and whether feds' independence is at risk and the president of germany's central

bank, axle weber on where the industry is headed. this "the call" on cnbc. happy friday, everybody. some good news on the economic front today, sending stocks high this morning. existing home sales rising at their fastest pace in two years, and ben bernanke saying we are n emerging out of the global recession. more on both of those topics in a few minutes time. the dow up 1.4%, and pushing further above to 1023, and the nasdaq 1.3% in the black. trish, what's on your end? >> hey, mandy. a lot of traders this week have fretted about whether or not the stock market has gotten ahead of itself, ahead of the overall economy. so you can see, judging by this gain, triple-digit gain of 132 points, that they are pleased with both fed chief ben