doing the best for your shareholders. it's nice you have your own political belief, but he's knots serving his shareholders, right? >> absolutely. and for ceos, it's most useful when they talk about public policies that directly effect their businesses. when ceos of industrial companies are talking about the importance of things like free trade, where, you know, that's what they believe, but it also -- those policies directly benefit their companies, their shareholders. i think it's possible, however, to make too much of these boycott efforts. nobody boycotted starbucks. people like good coffee. and i think for liberal people in general when it comes to a choice between good arugula and a good olive bar and their political consciousness, the arugula and the olive bar will win out. >> in one word, dan, should they fire him? >> no. >> no, okay. and susan? >> no, they shouldn't, but he should really focus on making a

difference, not divisiveness. >> thank you boeing very much for joining the debate. you know, i agree with what dan said. you're the public face. susan said it, too. you're the public face of the company, you've got to be careful about what you say, no matter what you believe. thanks for watching "squawk on the street," i'm mark haines. i'll be back tomorrow? >> yes, i will, and back at 2:00 p.m. today, as well. for those of you in europe, "closing bell" is next. >> new home sales rose 9.6 a month aaa says labor day travel will drop this year thanks to both the economy and the holiday occurring after many children are back in school. oil prices remain lower after the energy department reported a $200,000 barrel increase in inventories, much smaller than forecast. that's cnbc.com news now. we're first in business worldwide. i'm courtney reagan. welcome to "the call" i'm

man mandy drury, melissa francis is on assignment. 90 minutes into the day, stocks reverse course on strong economic data. we'll discuss right now in the economic recovery, right, larry? >> thanks very much. i'm larry kudlow. the big question surrounding ben bernanke's next term. will he continue to throw money at every problem, or will he tighten the reins? in the "call of the wild" we'll debate. helicopter ben other king dollar ben? we are "the call" and this is cnbc. stocks lower -- some profits from the recent run-up, but reversed course. new home sales rose at their fastest pace since last september. right now, let's look where we're sitting for the dow, the s&p and the nasdaq, the dow up by 2/10 of a percent. let's look over the boards and take a look, about the same quantum for the s&p 500, holding around the 1030 mark and the

nasdaq gaining again by 2/10 to the up side. 2027 is the score. >> well, diana olick is in washington with more on the new home sales. bob pisani at the nyc and scott wapner at the nasdaq and the market reaction there. kick it off for us. >> mandy, sale ofs of newly constructed homes rose, beating expectations yet again, up 9.6%, and even more poshts, that big jump we saw in june was actually revised up in if real numbers. take a look at the rest of the data, if you will. the all-important inventory number, new construction, fell to a seven and a half month supply from an eight and a half month supply in june, the lowest since april of 2007 and well off its high of a more than 12 month supply this past january. absolute number of homes for sale also fell to 271,000. that is the smallest amount since april of 1993. prices are down 11.5% year over year, obviously driving sales

with the median price of a newly constructed hometown to 210,100 it is. >> we think the market has found a bottom and is bouncing along quite nicely, but there are some risks still out there, specifically the first thing is that the home buyer credit expires at the end of november. we do think that the administration and congress need to look at extending that in the next year to support the housing market into 2010. >> now, another wrench in the recovery is, of course, foreclosures. many foreclosed properties are actual new construction, and they compete with the builders' supply at a much lower price point. but these numbers today show a real trend in growth in home sales, and that inventory number falling down, it's very important. the question is, will it sustain into the fall? let's head over to bob pisani for more from the stock exchange. bob? >> and, of course, the home builders are doing very well here, diana. thanks very much. look at the big names here, all hitting highs for the year. the traders down here do believe that the expiration of the first

time home blir credit by will expire in november was a factor in the big beep in the margins here. look at the nice move up in the home builders, and a move up in the overall marked around 10:00 eastern time as numbers came out. take a look at lennar. what is happening here is some of these builders are now starting to go back to their prelehman bankruptcy days, not just the highs for the year, but back to where they were in september. starting to see this with a number of stocks, particularly with cyclical names. finally, a lot of talk about the economic data improving dramatically in the last week or so. look at today, the durable goods and new home sales, and yesterday the case-shiller home price index, consumer confidence better than expected. last week, the philly fed, the empire state and existing home sales numbers all better than expected. no wonder some traders are saying pessimists, put down your pens, the title of one report i saw this morning. >> bob, nasdaq just showing

positive now. big cap technology stocks mostly showing modest losses. yahoo, apple, google to the down side, but the consumer discretionary names that are higher. bed bath and beyond, children's pace showing a gain of 1% as is costco today and buffalo wild wings up big, almost 7%. there was initiated biover at jess up and lamont. i'm watching phrma stocks today, bus there is activity behind myriad genetics, and human genome up 15% on some takeover chatter, and there has certainly been a lot of options action around that stock today. let's send it out now to chicago and phil lebeau who has some developments on the cash for clunkers. what have you got? >> the final numbers in terms of total vehicles sold and how much the government put out there. 690,000 vehicles were taken off the road, clunkers taken off the road, and the government putting out more than $2.87 billion in

rebates. that's money that will be going to the dealers. top five vehicles sold? well, there's an american model in the top five. the ford focus. there you see the corolla, civic, camera and elan extra. manufacturers, toyota moved ahead of general motors in terms of clunker sales, it got the most percentage of sales, 19.4%, followed by gm, ford, honda and hyundai. larry, the transportation secretary called cash for clunkers wildly successful. and i think most people in the auto industry would agree. again, 690,000 clunkers taken off the road. larry? >> phil, it was the only kainsian program i've ever supported in my life. phil lebeau, thank you ever so much. i'm waiting for cash for refrigerators. anyway, in addition to the strong new home sales report that diana discussed, durable goods reported their biggest gain in two years, boosted by a surge in aircraft orders. so where are we in the economic

recovery story? let's bring in stu hoffman, chief economist, pnc financial, and steve rijuto, at mizuho securities, and diana olick is with us. stu hoffman, is the recovery story now coming in faster and stronger thanl folks would have expected? >> in some cases, it is, larry. a little stronger. but it's only one month. i would read it as, you know, we -- this is a clear sign the recession is over. this t-rex of a recession we had is over. we're beginning a recovery. people can debate whether it will be a w and it will relapse next year. but for right now, the home price, the home sales, the industrial production data, the durable goods today say that july was a pretty good month for the economy, and probably august will be even better. >> i mean, steve, some people are saying 3 to 4% in the third quarter in which we find ourselves ending september 30th, and i want to ask you, steve, a., if you agree with the stronger than expected scenario÷

and b., what is your reference to the fed?÷ are they going to have to tighten sooner or raise interest rates sooner? >> basically, i don't believe in the stronger than expected scenario. i believe we've gotten some very, very positive one-time effects that have actually pulled activity in from the fourth quarter of the year. and i think we'll see a double dip down in the fourth quarter of the year. i don't think we have to wait until 2010 to see it happen. and i think as a result of that, the federal reserve is going to stay on hold. allen -- ben bernanke is not going to be forced to move monetary policy anywhere in the near future. >> okay. so basically, steve, what you're saying is all the good news has been front-loaded and all of the temporary and also potentially reversible factors like cash for clunkers, home buyer credit, whatever, all that is going to run out. in the fourth quarter, though. is there anything maybe the government or the fed has up their sleeve to be able to keep the economy chugging along, to give it that extra kick, if you like, a bit more candy? >> to the extent they're willing to run multitrillion dollar deficits on an ongoing basis,

yes, they could come up with things. but the reality of the situation, we go into the same thing -- we don't make many appliances in this country anymore, we do make cars. and therefore, it's not going to help us. and there aren't that many big durable items out there that are going to figure out system way of policing an environment to do incentives. all this has been come might indicated. i think it's in the equation, over and done with. banks are not going to be out there lending money nilly-willy anymore. this economy will not have the upward momentum we have seen in the third quarter on these one-time factors. >> diana olick, let me ask you regarding housing and a possible dibl dip that steve is talking about, it seems like whether it's existing home sales, new home sales, case-shiller prices were across the board, all these cities register a little bit better prices. do you think there is a double dip in the housing recovery or a double dip in the housing stabilization? >> larry, i think it depends entirely on the government.

the housing market right now is being completely deuced by government program, whether it's the first time home buyer tax credit which accounted for one-third of all sales in july or whether it's the government keeping interest rates low, it's up to the government now. if they don't extend past the first time home buyer credit -- >> what about the drop in prices, diana? this i think the drop in prices in some of these major markets, as you know, down 40 to 50%. this is a free market at work. you have a collapse of prices, demand comes in. >> you have a collapse in prices and that's why you're seeing activity only on the low end of the market. what you are not seeing is the move-up buyer, the person who has to sell a home and get into another home and that's why the sales drop off the cliff at the $250,000 mark. yes, it's great these foreclosed properties, these distressed homes around $100,000 are getting eaten up by investors, but many are first time home buyers, many are paying cash and that is not a sustained recovery. we need to see that moved up

home buyer able to get perhaps a jumbo loan where that market is pretty much dead right now. need to see that before prices and housing as a whole are really on the up swing. >> and stu let me get back to you because one of the things we haven't touched on is job losses continue to mount. the unemployment rate expected to go into double digits if not before the end of the year at least next year in which case that has got to bein ex tribbly died to housing. might be showing some signs of stabilizing, but do you think it's a gold locks period that might die down? >> i think we'll have an answer tomorrow when you see the initial unemployment claims. if continuing claims which had been steadily moving lower but the last couple weeks moving higher, and the seasonal adjustment problems out of the way. if we get back to rising initial unemployment claims, watch the mind set switch around and focus -- >> actually, that was aimed at ' stu. and stu, to mandy's

tear policy is being ignored, the curve is steeply upward sloping, the base rate zero. doesn't that have a long-term effect going out 12, 18, almost 24 months, stu? aren't we underestimate the power of easy money? >> well, larry, i think it does go out. would i draw exception to what steve was saying that we're pulling everything forward. i agree that economic growth this quarter may be more rapid than the fourth quarter, but i wouldn't call that a double dip. if we get 3% or surprising 4% from this quarter and then gdp, as long as it's growing, and then continues to grow next year, that's the ebb and flow. that's not a double dip. that happens in economies that have stronger and weaker quarters, but falling back in the negative, that might be a double dip. so yes, maybe some of these sales on homes or cars have been pulled forward, and i expect there will be some falloff. but i'm not sure unemployment is going to get well into double digits. we have it at 10% and we might see some job growth helping the

economy withstand any tendency to back dip back. >> up next, market reaction to today's strong economic data and why pimco's mohammed el-erian says stocks are looming. >> and health care reform. we'll discuss senator ted kennedy's legacy and whether it will impact today's national debate. you're watching cnbc, first in business worldwide. a a a a a aa

with stocks now sitting flat coming off their post new home sales highs, indeed we are still around 10-month highs. some wall street observers expecting a krebs. here is what pimco mohammed el-erian said earlier on "squawk box." >> if and when the selloff comes, which we expect will probably happen, then we'll be in a position to take advantage of better values. >> are we headed for a selloff? let's ask our bull, smead capital management and vitti cata lanno, president of managed research. bill, you're the bull. do you disagree with mr. el-erian? >> well, mr. el-erian, he sells bonds. and so they're the largest -- >> you're saying it's in his interest to say this. >> they were saying that at the bottom in march. they were looking for more down side in march. so what we see right now and maybe a transition period from

the enormous surge in economically sensitive things to investors going back to what they should care about, which is how long is a franchise going to last, how well is a company going to do the next three to five years, and appropriate earnings ratios based on quality and duration. >> i'm going to play the devil's advocate here, bill, because obviously what mr.el aaron is saying is we're currently on a sugar high, on a huge amount of stimulus, companies doing a huge amount of cost-cutting. these are all potentially temporary things, and even some of the -- economic data that we're getting also potentially could have a difference. what do you reckon? >> why are the p/e ratios low on merck, at&t, mcdonald's and walmart if the -- if he's correct? they should be the most popular stocks, if he's correct. and the reality is, people have gotten very excited about the economically sensitive companies, and they have neglected the wnz that are

consistent. and what we're saying is be bullish on the ones that are consistent. and they make up significant parts of the major indices. for example, the dow might outperform the s&p the next couple years, because it's more made up of the higher quality companies that have been neglected while people chase economic sensitivity. the other thing on your economist that you just led in prior to el-erian, last year, we went into an economic coma in between the lehman brothers debacle in about march. so for six months, the economy was in a coma. sometimes economists try to make things too complicated. if our economy doesn't grow this year in the fourth quarter compared to the fourth quarter last year, then the first quarter compared to the first quarter the year before, i will be in total shock. we were in an economic coma. >> hang on. let me go back to vinny. i don't want you to be in shock, though. vinny, let me try a reverse spin on you. what if the economy gross faster, no double dip, just faster through the end of the

year into the winter. is that good or bad for stocks? i have a sense that that scenario, which is a small chance scenario, might be something weighing on the stock market regarding interest rates. is faster growth good or bad for stocks, vinny? >> faster growth is good for stocks, highly unlikely, particularly given the fact that the valuation levels where stocks are at right now are rich definitely ahead of themselves, and the key in all of this is what el-erian said about values. >> but vinny, i don't want to interrupt, just let me challenge you, though. if you get a faster growth scenario, that's good for profits, because the product activity of all of the corporate cost cutting means any increase in top-line sales in the economy nationwide is going to leverage up profits big-time. what's your response to that? >> my response to that is price times unit sales equals top line growth. top line growth is going to drive bottom line growth, and that is everything in a no abdominal to rise price environment, which is where we're at now. i don't know how you're going to get some kind of robust, high

sickle digit across the board. productivity is in the going to get you there, cost cutting won't get through and you need bottom line growth adjustable price earnings ratio. now we're in the 18-plus range. >> real fast. >> i would like to agree with you. the worst thing that could happen would be too fast to growth. we have a crowded trade in oil materials and industrials right now. that's what he is concerned with, and i agree with him. they should be concerned about those, because they have anticipated a great comeback in the economy. >> may already be in those stocks. i just wanted to put that on the table for further and future discussions. thank you bill snead. coming up, bowen ben bernanke suits up for another term, but will he be able to battle inflation? >> and america's health care system. will senator ted kennedy's

legacy impact this debate? you're watching cnbc, first in business worldwide.

crude oil falling this morning on rising u.s. crude

stockpiles. let's see, down $70.87, down 1.5%, a buck 18. crude oil slipping. mandy. >> well, the flags are flying at half mass at capitol hill in honor of ted kennedy who died at the age of 77 last night. president obama calling kennedy the greatest senator of our time. >> his ideas and ideals are stamped on scores of laws and reflected in millions of lives. and seniors who know new dignity and families know new opportunity in children who know new education's promise. in all who can pursue their dream in an america that is more equal and more just. >> senator kennedy spent his career trying to enact health care reform. bertha coombs takes a look back. >> reporter: ted kennedy called universal health care the cause of his life. the cause he championed. >> i believe it is essential that we provide a medical care

program -- >> reporter: for over four decades in the senate, the reason he defied his doctors after brain surgery. last summer at the democratic convention. >> guaranteed every american will have decent, quality health care as a fundamental right and not a privilege! >> reporter: his rerick was impassion impassioneded, but some say he was at heart a pragmatist. >> a lot of people got hung up on the liberal philosophy, and i don't think they understood how practical he really was. >> reporter: the former amgen ceo worked with him in the 90s, establishing insurance portability and the children's health insurance program. in the wake of the failed clinton health plan. >> without his involvement, i'm not sure we would have had a drug benefit. >> ray gillmartin the former chief of merck says kennedy

would provide chief support for medicare part d. in being open to free market approach, even though he would question parts of the 2003 bill. >> he recognized the fact that we did have the larger public interest at the center of what we were doing. that that was very common ground with him. >> kennedy called working across the aisle the hallmark of his career. others call it a gift. >> he always told the truth, always kept his word. and that's not that common in washington, unfortunately, as people are trying to get legislation passed. >> all right. so will senator ted kennedy continue to have an impact on reforming health care with his passing? is we have senator judd gregg by telephone, and greg value yar, chief policy strategist at solay securities, mr. gregg, let me begin with you. we're sort of narrow focused on this. will mr. kennedy's passing have

any particular impact on the health care story? >> well, the impact's already occurred in that he hasn't been around to basically help in the negotiations. i think i've said a number of times, if he had been in the senate and active -- he's obviously in the senate, but had been his usual active self over the last few months, we probably would have reached some sort of a consensus agreement, because ultimately ted wanted to legislate, came from the liberal agenda and strongly defended the liberal philosophy. but he also understood that there was a time for theater there was a time for action, and he always was willing to reach an agreement if it was reasonable to try to move things along. because he knew without a bill, we made no progress. >> and greg, i believe you think this could essentially be a turning point that it might give the democrats a little more backbone to try and steam roll something through in his tribute. >> it might. this could be a win one for the guardianshiper moment. it could give the democrats the testosterone they haven't shown. i think the real key here is

whether the democrats decide now, since it looks like a compromise is unlikely, to use the ultimate weapon, and that, of course, is budget reconciliation, which needs only 50 votes. they can ram a bill through the senate, and i think it's a tribute to kennedy, they may be thinking more seriously about that this morning. >> senator gregg, let me ask you about what greg val year is saying, and what joe lieberman said over the weekend, he basically said not now, this is not the time. if joe lieberman is going to walk away, what does that mean? >> well, i don't see that they will use reconciliation, because it is a weapon that would basically shoot themselves in the foot, i think. basically, you can't put most of the policy in the bill and you're going to make members -- senate members who vote for it and house members, for that matter, vote for the taxes and vote for the spending cuts in medicare, and probably for very little of the policy, because it

won't survive the third rule, which is the technical rule. so i'm not sure that reconciliation -- although a lot of people beating the drums for it in the house and some press people and some people who generally don't have any idea what happens in the senate are generally saying the same thing. but as a practical matter, i don't see it working. >> you know, greg, i would really like what you're saying to come true. i mean, it would be really great if in fact they did manage to push something through on the back of sentiments swirling us at the moment, but it seems unrealistic that sentiment will continue through whether you consider how heated and passionate and bitter this has become. >> i thought over the weekends on the talk shows it was significant, not just senator lieberman, but many republicans say well the economy is weak, let's pause, let's go back to the drawing boards. it's almost a sign they seem unwilling to do anything. and if that's true, yes, it's a very harsh weapon. i agree with the senator. but i didn't hear a lot of

republicans complaining when george bush used it for his tax cuts. >> senator gregg, just last word. how can you have real health care reform without some kind of tort reform for medical liabilities without more choice and vouchers for individuals? i mean, isn't this bill really -- it doesn't have all the ingredients for a true compromise. i guess that's what i'm asking you. >> oh, you're absolutely right. not only does it not have any of the ingredients for a compromise and it's a purely partisan bill, it definite have the ingredients the president asked for. the dodd bill leaves 37 million people unemployed, costs $2 trillion in new federal spending over the growing -- growing the government by $2 trillion, and it basically means that tens of millions of people will lose their insurance. they'll lose their private insurance and have to move over to a public plan. so it's a disastrous idea, driven by a partisan view, which is very liberal. and basically, it's your single payer group who wants the government to take over health care, and they're wrong.

and the practical matter, the american public know they're wrong and that's why they're rebelling. >> senator greg, thank you very much for your time. coming up, the company whose stock is soaring over 200% this year, despite calling for the ceo to resign. we'll tell you all about the whole foods story. the whole story -- >> whole story about whole foods. another term for ben bernanke, but can he fight off inflation? find out next. a great debate. king dollar versus helicopter ben. you're watching cnbc, first in business worldwide. he ran off with his secretary! she's 23 years old!

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all right. big debate regarding ben bernanke's second term as fed chief. will he continue to have loose monetary policy or tighten the reins? in our "call of the wild", question is helicopter ben or king dollar? hello andy and director of currency research at gft for ex. hello, hello. andy bush, start with you. i just want to know. he has got two sides to him, helicopter ben, sprinkling money down or to bend the dollar and stop an inflationary bubble. what is your current expectation? >> well, he's monetizing the debt of the u.s. government. he's never been king dollar ben as far as i can tell. so that really only leaves us that he's going to inflate our way out of this eventually, and is maybe already doing it. you know, there is money showing

up in real estate from china into, you know -- into places in the united states. i'm sure some of what the ben has been doing with money is showing up in the stock market. so already, he's engaging in this, and longer term, as we know, most people realize that this is a very dangerous situation, and historically, it's always ended with the currency devaluing. >> do you agree? >> longer term, yes. the only place we have inflation is the stock market and oil market which are financial markets that are speculatively driven. if you look around everywhere as far as price levels, not just the united states but across the g-10 universe, they look like a swan dive falling off a live. basically no pricing pressure anywhere across the world. ask right now, the fed is basically trying to replace the credit. not necessarily be -- in front of inflation, as far as it goes. so i don't see any inflationary pressures. >> not even if the u.s. dollar continues to weaken? >> yeah. i also don't see the dollar continuing to weaken substantially from this point onward. even if the dollar does weaken a

little bit, i don't see too many inflationary pressures, simply because there is no final demand. >> interestingly, bernanke has had a good year helping in the recovery of the financial markets. but he is also greenspan's co pilot in the helicopter story in the early 2000s or the inflationary bubble. so if you're targeting -- if you, be andy bush, were running the fed, and you're targeting the unemployment rate, aren't you going to be late to pull the inflation trigger and why wouldn't the bubble reappear in a couple years? >> exactly. you can already make the case it's appearing in the equity markets and in the united states to some extent, you've got to have leakage into the equity markets a little bit going on right now. so down the road, that's the problem with ben bernanke. he's going to keep his foot on the gas for a lot longer until he sees unemployment come back. because ultimately -- oh, ultimately, the fed is a very political position, and they will come under unbelievable

pressure with unemployment at 10%, and the fed starting to pull back raising interest rates. >> okay, andy. what if we continue to see this better than expected data? don't you think there will be some point at which the market will start demanding, look, the economy is getting back on its feet and we need to start an exit strategy and take our foot off the gas, off the pedal, perhaps earlier than the market is expecting. >> well, the market will move way ahead of ben bernanke, i guarantee that. watch the you're owe dollar curve. i think that's where it will show up. and i think, you know, to some extent, he will cause a scare in the bond market by keeping his foot on the gas well beyond when the market's already moved. >> let's stay with that, boris. former federal reserve governor larry lindsay, i interviewed him last night, he had two thoughts. number one, we'll see the fed tightening from long-term rates first and number two, bernanke's handy cap is going to be the huge budget deficit in federal borrowing. can you briefly reflect on those things? bonds and borrowing? >> yeah.

borrowing, though, actually andy had a great note about this about a week ago. borrowing is not really as big a problem as we think, because while the chinese and japanese may have pulled back from financing u.s. deficit, the americans have stepped up. and i including myself am happy to get ten basis points per quarter. so we really stepped up our own internal savings and that's the inflationary impacts keeping the trend down. now, i will say the only factor that matters, forget gdp growth, it is going to be employment. but the moment employees turns positive, that's when the fed really needs to stop the -- >> right that secretary. i mean that month, they should stop right that month, is that what you're saying? >> yes. >> andy, would they? do you think bernanke would be that aggressive or is it the unemployment rate which could lag months? >> well, it's certainly going to lag. but again, this is a very political fed, regardless what anybody thinks. i mean, i don't know if he had a

quid pro quo with obama andter rates, but with the new regulatory power the fed is getting, they come under the guise of banking. absolutely. i think that's a huge risk going forward. >> boris, real week. fed independence? what do you think? real quick? >> i think the inflationary risk is a failed treasury auction. that's when you have a problem. until then, not a problem. >> both of you, thank you very much for your time. coming up next, a problem he hasn't slowed down this stock. the whole foods boom and why angry americans are calling for the company ceo to resign. >> all right. plus, the governor nater's garage sale. you're watching cnbc, first in business worldwide. taking its rightful place

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someone is drinking the beer. a first strong half of the year for hein ken, reporting better than expected operating profits of 13% boosted by price spikes and cost savings. and sears will do more cost cutting and price hiking going forward. the stock up 29% year-to-date, right now at 21.27, up by a

really nice 7.5%. >> price hikes, very interesting. all right. a day before the grand opening of its newest store in manhattan, the whole foods controversy is getting louder surrounding this ceos position on health care. but the stock is up more than 200% this year, check out the year to date chart. vroom. that is hot as a pistol. rebecca jarvis has details on this controversy. hi, rebecca. >> hey, larry. the official response from whole foods on the controversy itself is that john mackey's words in his op-ed are his alone. now, the response from employees, 89% of them, are already on the whole foods health care plan. in fact, they have been pretty supportive of this company in general. in fact, they said it's one of the best companies to work for. they actually vote on their own benefits. and as larry you mentioned at the top of the show, whole foods stock investors, they are giving it high marks, as well. bidding up the stock just in this last week alone, about 5%.

as far as the customers go, they are also giving it high marks. they're responding very favorably to whole foods' new value proposition. >> this is something honestly we were somewhat skeptical about, their value campaign. but it's actually been pretty successful at keeping the traffic come in the stores. >> also says customer service has helped whole foods. they have managed successfully through the tough environment and just to give you a sense of how successful they have been, here in new york, the average whole foods store does about $2 million in sales on a given week. that's about $100 million in sales over a year, while the average store is doing about $20 million in sales. so a huge disparity there. and whole foods is clearly a winner. plus, while other stores are losing customers, analysts say whole foods business is definitely stabilizing. >> one of the reasons that we're seeing, you know, that their

sales results are slowly improving, is that i think that they began to have an attrition of some of their marginal customers earlier than others, and they've kind of hit the bottom and their core customers have stuck with them at this juncture. >> now, who is that core customer? the analysts say generally speaking, they're health conscious but also educated and that makes a lot of sense when you look at this store. 60,000 square feet on new york's upper west side in the neighborhood of columbia university. so a lot of potential customers right here in the neighborhood. as far as future growth, larry, whole foods, analysts say it could double its presence in the united states and also some expansion opportunities overseas that it's looking into. but one thing you might look at as far as new whole foods stores goes is the fact that they're probably not going to be the mega stores like this one, 60,000 square feet. they'll be more in the neighborhood of 30 to 40,000 square feet. that's slightly smaller store concept has been generally speaking more favorable.

back over to you. >> rebecca, let's have some fun with this. i've got to ask you a question. john mackey is not bashful. he is a free market libtarian, and he is not bashful. this is a free country. now, if the employees like it, if the customers like it, and if the shareholders like it, as you have just described and narrated empirically, what the hell is the problem? >> you tell me, larry. >> i don't get it! >> some people in chat rooms have issues. but generally speaking, investors aren't taking this seriously, and analysts -- i've talked to the analyst community today and said honestly, what do you think of this, and they have come back and said essentially john mackey is key to this company but said employees continue to give high marks so they're not really concerned from an internal position that things are going to go north. >> the guy wants health care choice, he wants markets not government to run health care. it's a free country. yes, i agree with him. we can have 20 different

disagreements about that. but a ceo can have opinions about public policy issues and still run a great company as you've described. i just think this mackey thing is off the charts. that's all. >> that's why we're talking about it right here, harry. >> i know, you nailed it, rebecca. the customers like it, the stock market holders like it, the employees like it. what's not to like? >> just saying, that's all, right? okay. time now for our "call to action." the stocks you need to watch for the rest of the trading day. mary thompson is on the case. >> hi, mandy, keeping an eye on retailers, several reporting stronger than expected results. williams sonoma up 1.58 after surprising the street, analysts looking for a loss and the home furnishing raising its outlook. kirkland, a 17 cents profit in the second quarter. up 1.37. dollar tree is higher, as well, like williams sonoma raising its

full year forecast at 63 cents a share, stock up $2.88 and the good news from that discounter giving a lift to rivals, family dollar up $1.48 and big lots which reported a 9% jump in second quarter profits yesterday is higher, as well, up 85 cents. sticking with the discount theme, the operator of design shoe warehouses is up $1.13 after earnings of 17 cents a share, we're 6 cents ahead of estimates and even the high end getting help today. jewelry retailer tiffany up 59 cents after being raised above average. the outliar is haynes celestial, lower after it reported weaker than expected third quarter results and lowered its forecast for the full year. off $1.25. mandy, back to you. >> thanks very much. "power lunch" at the top of the hour. bill griffith? >> larry, we have a board member from whole foods coming on who wants jack mackey out because of

the public pronouncement. we'll talk about it and get your thoughts, as well. a couple analysts are looking at the charts and what are they telling about this rally since march. is it over done? we'll find out. and the fdic is about to vote on private equities' ability to buy on banks. further clarification. and pud malacne is with us, the host chef on bravo channel. we'll have that at the top of the hour on "power lunch." >> thanks, bill. up next, california is cleaning house. jane wells, what's going on? what does this mean? >> you know, my brother bought me this springstein album so many years ago. he said you want to hear this album -- i don't think i'm going to sell that. but i'm here all day, the state here all week. up next, take the state merchandise, please. your chance to help us out. after the break. 

in a new and fairly creative effort to balance the california budget, governor arnold schwarzenegger is cleaning out

house and having a garage sale. cnbc's jane wells has the details on california for sale, and it looks like she is out there in her own garage. hi, jane. >> oh, man de, your pronunciation of garage is getting more american every time you say it. >> i got hit by the producer for saying ga-rage, saying that's not good in this globalized economy, apparently. >> oh, well, good enough for me, young lady. anyhow, in a world of hurt out here, and like many americans trying to raise extra cash through garage sales, the state of california would like you to come browsing through its stuff. if we roll you the tape, hundreds of state surplus items going up for auction friday and saturday. but we got a sneak peek yesterday, surplus items they no longer need, lovely furniture, computers, blackberries, i hope the memories have been erased and then the cars. lots and lots of cars, former highway patrol cars, state vehicles, impounded cars. we have had cash for clunkers.

here in some cases we have clunkers for cash. about 500 cars being sold off, or 15% of the state's fleet. and is to get americans not in california interested in browsing and maybe bailing us out, many of the items have gone on ebay and craigslist, including a honda hybrid with 99,000 miles, the latest i saw was only 5,500 bucks and you getting to in the carpool lane with this car. so come on down! other weird items i haven't figured out, surf board, the food saver home packaging or this set of 12 dental chairs. not sure of their history with the state, but they were on craigslist, since have been pulled, which is kind of a bummer. jewelry has been confiscated, including a pearl ring which has a diamond chip in it, and the ebay listing says the diamond sensor indicates the stone is real. only 52 bucks. to enhance the value of some of the items, there is one thing we've got nobody else has. a movie star governor, arnold schwarzenegger has autographed

several sun advisors in an effort to boost sales prices. one auctioneer reportedly suggests that could add $400 to the sales price of the car. now, will raise a few million dollars, not enough to make a difference, but certainly doesn't hurt. again, you can bid online now guys, but the actual sales won't happen until friday and saturday. >> you know, if arnold schwarzenegger was really serious about putting a debit in the deficit, i reckon he should get out here and sell every single item for sale, including the dental chairs. you tell me it's not going to make much of a debit dent in california, but any estimate how much it might make? >> not yet. but i've been trying to run numbers. $5,000 a car, $2.5 million, so you throw in the dental chairs, all the computers, blackberrieb, flat screen tvs. i have no idea. maybe -- maybe $10 million. >> not a lot.

>> that was my question. >> oh, i got i can't! >> jane, i can't resist. i know you're always shopping for furniture. you have shown us some of the ugly evident furniture i've ever se seen. tell us the truth, did you buy one of those dental chairs? >> i tried to go back on craigslist this morning. it has been taken down. i have to investigate why they have been sold because who wouldn't want a state surplus dental chair. >> you're absolutely right. thank you for the report. terrific stuff. i love the shades. we'll be right back for the last call. i think we're going to talk a little bit about the kennedy health care legacy. you're watching cnbc. first in business, worldwide. 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. i've still got room for the internet.

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