economy. >> the only thing i would throw out, i guess, is the preponderance of the news both in the united states and globally is mostly better than expected most of the time. along the way we're going to get reports that go against that. we're certainly open to a correction at some point. but i think it's very clear that we've turned a corner and we're probably very early in that. we still got a lot of stuff positively going to impact us even further. >> on this better than expected issue, the expectations were so dire. we were talking about the depression-like scenarios. it's easy to be better than expected these days, isn't it? >> yeah. the hurdles are going to become higher. we're also getting to a point where the reports will be good. the sim report, next one might be 50%. we're going to need that, you're right, mandy. but i think that's where we are headed. i just think that rather than get spooked out of a 5% or 10% correction and miss another 30%c

move, i prefer to stay focused on what it could do in the next couple of years. >> we never talked about brett favre, either. congratulations in advance of that super bowl. >> we're going to win that super bowl even if we've got to wear green and gold. >> jim, rich, thanks, guys. make sure you join us tomorrow. "squawk on the street" is up next. this is cnbc.com news now. >> bboeing shares are higher. first time claims for jobless benefits fell to the first time last week to 570,000 considering the claims fell four-month low. and 1% annual rate in the second quarter. that's a better performance than predicted. that's cnbc.com news now. we're first in business worldwide. i'm courtney reagan. live fr

capital of the world, this is "squawk on the street." good morning, everybody. i'm mark haines. worries over weekly jobless claims offered up markets still looking for a positive open. after claims declined by a modest amount. gdp also shrinking in the second quarter. no surprise there. better than expected, unchanged from the initial estimate. more evidence the recession may be finally drawing to a close. >> and i'm melissa francis. boeing higher in premarket action after announcing the first delivery of 787 dreamliner is now expected to occur in the fourth quarter of next year. phil lebeau will have more on that in a few moments. >> to the futures, they were up a fraction. 0.70. as you can see, we're right around fair value. it's a modest, very modest positive biased this morning. >> we'll take it. let's get right to rick santelli with more of the job ms numbers and gdp. >> i think it's fascinating. we all know it's very hard to handicap with any major accuracy

how some of the benefits are falling off. the drop in initial claims, continuing claims, may be important in the bigger picture but didn't move the market much, neither did the recision of gdp. however, we did see the interest rates on the longer maturities are a little bit elevated. i'm not talking about much. maybe the biggest story will continue to be debating how the story in the journal pointing out correctly with movements in the markets, drops in libor in many ways towards historic levels is creating, you can borrow the dollar cheaper than yen now. of course, seven years are on tap. the options have gone amazingly well. this morning we'll find out how many bills we're going to auction next week. seems like pretty smooth sailing at rather flat interest rates, although interesting outlooks as we sail through to the end of august. back to you, mark. >> breaking news in the stanford case. scott cohn outside the

courthouse. scottie? >> mark, just when you thought it couldn't get any stranger. cnbc learned that alan stanford, to appear in court this morning, was taken to a hospital in con row, texas, taken to an emergency room. we confirmed this through multiple sources. he was scheduled to arrive for a hearing to discuss who would be his attorney this morning, but he did not make this. this apparently happened in the wee hours of the morning. we do not know the nature of the illness. we do know, again, from multiple sources, sir alan stanford accused on 21 counts in a ponzi scheme is now in the hospital. we'll keep you posted. >> thank you. let's see how things are playing out premarket. our reporters are standing by. we begin, as usual, with cool breeze here at the big board. >> gdp and jobless claims didn't do much to move the market. we have three days where the market has gone nowhere and three days of better economic news. is the rally running out of steam? if you have high volume churning around, then you're worried.

we have low volume and churning around, that is not cause for concern yet here. boeing came out, expecting the first flight of their 787 dreamliner by the end of 2009 delivery by the fourth quarter of 2010. stock is up 6%. phil lebeau will have more on that. toll brothers, mixed news continuing from the homebuilders. some signs are optimism, cancelation rate was at a three-year low. deposit activity was strong in august. up 26%. that's good news. but the prices and the margins decline, so very mixed situation. the odds here, the drinks maker, came out with earnings, full-year profit at the low end of expectation. sales were flat. 3% decline there from them in volume, offset from price increase. tradertalk.cnbc.com. how are we looking at the nasdaq? >> bob, slightly higher this morning. right now the premarket indicator shows a gain of three points or so. we'll have to see how things are opening up on what is a big day for technology. dell is out with the results after the bell today.

the stock is up ahead of that by just about 1%. it's going to be interesting to hear what dell has to say about spending by businesses on new computers. certainly consumers, obviously. microsoft is off to the downside if cutting the price by the high-end xbox by $100. it's now costing $300. dollar tree is up 1 3/4% on an upgrade at barclays. isle of capri is up on an upgrade as well. tivo is getting a list by 1%. they filed a patent suit against at&t and verizon over dvr technology. >> thank you very much. it's interesting here today. we look at the price of crude now. remember, crude is trading on the october contract already. we touch this intraday low of 70, 75 quickly at the open. it looks like we're making a second run towards that level here today. apathy may be there because what we're seeing here driving the trade, lot of traders both here

as we're seeing in the equity market as well really need something new and exciting and big on the economic front to prove that this recovery story is intact.p even good news or less worse than expected news gdp is not moving traders here today. the big story i have to mention is natural gas today. we get the inventories out at 10:30. i talked to ray carbon earlier me said there's active put buying. that's at 10:30 this morning, mark. back to you. >> much in asia overnight. lots of red. nikkei, hang seng, shanghai composite all lower. tokyo lost 1 1/2%. guy johnson in london, what's happening where you are? >> mark, we can't make up our minds at the moment which direction we want to go in. we got some of the main markets up, some of the main markets down. to be honest, flat lining our way into the end of august. waiting to see what's going to happen next.

that's certainly seems to be the feeling here at the moment. frankfurt, fractionally lower. london, fractionally higher. paris, not a lot going on. only up .2 of 1%. the stoxx 600, reasonably choppy. once again, it is an index that is up .1 of 1%. let me tell you about the story in london, it's the clothing. it's an idea that's been kicking around for 30 years. the equivalent to london of the sec started talking about the idea yesterday, and i have to say, it's got everybody chatting. this is an idea you take a tiny percentage of every single financial transaction out there as a way of limiting the overall size and scale of bank profit. watch out for this one. it's going to be talked about i suspect a little bit more. >> thank you so much. i head of the bell, dow component is higher announcing a

new 787 schedule and a change in the -- charge in the third quarter. phil lebeau is in chicago with the details. phil? >> melissa, check out the bid/ask on boeing because it's getting a heck of a pop as soon as the trading begins. trading is expected to be over $50 a share, a gain of almost 5%. here's the reason why. the company coming out this morning announcing a new schedule for the 787 dreamliner. first flight is expected to happen by the end of 2009. by the way, they built some pad into this, so they're fairly confident it will happen by the end of 2009. first delivery expected in the fourth quarter of 2010. boeing has orders for 850 and 60 cancelations. that is the best-selling airplane before delivery ever in the history of boeing. the company will produce ten 787s per month by late 2013. the new schedule will not have an i'm path on the cash going forward but boeing did announce today it is going to take a

non-cash charge in the third quarter of $221 a share. when you take a look at the bid/ask on boeing trading up over $50 a share at the pop of about 5%, and that's the reason that you're looking at dow futures this morning indicating substantially higher. melissa? >> all right, phil lebeau, thanks so much. up next -- >> up next we've got the ceo of diegio. >> do you think they brought anything for us? >> i don't know. i hope so. joining us first on cnbc. always live in london. he's not here. on quarterly results, the world's biggest alcoholic drinks producer by volume. >> and then the word on the street and the buzz beyond. why not a better response to this morning's economic data? plus, is the massachusetts health care model right for the masses? we'll have the executive director of the common wealth health insurance connector, state mandate plan and should be scaled up for the rest of the country. some people buy a car based on the deal they get.

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time warner testing tv on your pc. julia boorstin, what's it all about? >> that's right, time warner cable will be the latest cable provider to deliver cable and

broadcast content to a group of subscribers online, inno vating to preserve one of the most valuable revenue stream, cable subscriptions. this morning time warner cable will announce a test of so-called tv everywhere to offer content from programmers including time warners's tbs, tnt, hbo as well as cbs, sky fi and discovery communications. the protected content will be available through time warner cable website and programmer-observed websites which include hulu. today's news is similar to a test comcast launched in july dubbed the on demand online and with subscriber's accent content through password protected program to incentivize consumers to continue paying cable bills. they're looking to prevent subscribers and ad dollars siphoned away from the web which is one reason newspapers are in such trouble. the bankrupt tribune company asked a judge to allow an

investigation of the leverage buyout of the company dell led in 2007. bond owners alleging jpmorgan and others knew that lbo would result in the company's bankruptcy. a bigger stake of the restructured company, bondholders want to prevent the banks from assuming ownership in exchange for for giving debt. the tribune company has responded to a request for comment. but industry watchers question whether tribune newspapers could generate cash flow to sustain this kind of deal. back over to you. >> thank you very much, julia boorstin. futures up 0.80 right now. that's a little bit, maybe half a point or so above fair value. so we're looking at a quiet open, but with a slightly positive spin to it. up next, the word on the street and the buzz beyond the trading floor. >> then later, the power of positive thinking and the need for less negative talk, in your cnbc edge. "squawk on the street" on cnbc will be right back. we are first in business worldwide.news f people with t2

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welcome back. diageo bid lower ahead of the open, warning that the coming fiscal year will be tough to fight posting a 7% rise in net profit. here now live from london is the ceo of diageo, paul walsh. paul, you think it's going to be a tough year. aren't people drinking more because they're depressed about the market and the economy or just switching down to cheaper product. what's going on? >> i think neither of those things. i think the numbers that we posted today shows that we're quite resilient.

but in many markets we are seeing not treading down, per se, but a switch from on premise to off premise, a little bit of trading down as well. but i think the major factor is we looked to the year ahead, is that the real crisis only hit our company in november. so we still have some very tough numbers to lap in the first fiscal quarter. so we're factoring in that hill as we look at the landscape over the next 12 months. that said, we are seeing some encouraging signs coming through. but, i'll be more content that we have recovery under way when that trend is a bit firmer. >> you know i'm not completely clear on what you're saying about what is going on with the consumer within your brand. you did say that the coming fiscal year was going to be tougher. what did you mean by that? you said they are trading down or drinking off premises? >> no, what i'm saying is the major trend in developed markets is a contraction in the on

premise, the bars, the restaurants, and growth in the off premise. so you do see some channel switching and you do see some more popularity at lower price points. the great news for our company is that we operate across the board in categories and we have a very broad brand range which allows us to compete at different price points. >> anheuser-busch and miller coors announced last week they're going to cut prices. i'm sorry, they announced they're going to hike prices which is a little bit counter intuitive in a market like this when you have people switching down to cheaper brands. do you have a plan to hike prices as well? >> we have seen some price increases. i think the pricing environment is going to be more challenging. but we will be taking price, yes, in certain categories and in certain markets, yes. >> so what can you do to manage through this period? what can you change? what can you do differently that

will bring your company through this slowdown better? >> well, first of all, i think as these numbers show, we've proven to be pretty resilient. even in these tough times, we've grown our profits organically and we've generated 1.2 billion pounds of free cash flow. and our confidence is such that we're increasing our dividend. but what can we do? i think we need to be very agile in how we respond to consumerships. so, for example, offering smaller pack sizes so the consumer doesn't have to buy the liter bottle. they can buy a half liter bottle without giving up on the brand that they love. the other thing that we're doing quite in a focused way is cost reduction. we have announced some major cost reduction plans that will actually benefit us by 120 million pounds in the current fiscal year. so, aggressive drive on cost,

flexibility on our brands to continue to appeal to consumers, and continuing to invest in emerging markets. that's the recipe in the current environment. >> real quick before you go our partners want to know in india what's your game plan there. >> first of all, we explored how we could work together. the reality is that we didn't get a. agreement on, you know, vj's price expectations. having said that, we pass a very good friend. i think he admires our portfolio. i have a huge respect for his business. but today, nothing with all discussions. >> paul walsh, thanks so much for joining us. we appreciate it. >> thank you. all right. let's check those futures once again for you. we're just kind of hashing around here close to fair value. dow supposed 1.20. right around fair value. no big deal at the open unless something changes dramatically.

>> something exciting could happen. >> yeah, you never know. >> never know. >> someone can issue a press release or make a statement and we could be -- >> we could try and do something exciting. >> -- off to the races. >> we might have something really exciting planned. no, okay. anyway. >> i don't think we have anything planned. anyway, time to get the word on the street. here on the floor is warren meyers, cnbc market analyst, pepperdine, hardest working man on the floor. warren, how does it look? >> unfortunately a lackluster opening ahead of us and appears that way, much like yesterday's trading. we had some economic data that came out fairly benign. the positive news we've seen over the last couple of days hasn't efrkfected the market in the positive way it has the few weeks. if i had to just make an opinion, the market feels tired right now. >> can we all take a vacation, come back after labor day? >> i don't know about you but i'm out tomorrow and next week,

mark, feel free to join me if you would like. >> i tried. they wouldn't let me. all right. warren, thanks a lot. >> my pleasure. >> warren meyers. let's get the buzz beyond the big board. joining us from midtown manhattan is brian kelly, president of conundrum research. thanks for joining us. so we know volume is going to be light. we know mark wants to go on vacation, everybody else does, too. there's got to be a way to make money in this environment. >> yeah, and i would say, you know, i don't know if everybody is asleep at the switch necessarily. in this day and age of the blackberry, i don't think there's in people out there not watching the market now. but i would take this opportunity to try to lighten up on any profits. maybe even get short this market. i'm a little surprised that the market hasn't responded better to the economic news over the next two days. >> yeah. so what do you think is going to happen next here? how do you think we're going to finish out the week? >> if i had to bet, which i do since that's what i do for a living. >> yeah, what is your bet? >> my bet is lower. i think we head lower. i'm going to be watching boeing

today, not that boeing is the leader of the bellwether of the market but it seems to be the only thing holding the market up this morning. i would bet we close this week lower. >> temporary move or do you think we reached the near-term top? >> i think it's very possible that we reached the near-term top. you see a lot of this news -- yesterday in particular, the new home sales came out, and it wasn't as great as expected. the margin of area was plus or minus 13% which means we could have been down 4%. the market should have been up yesterday and wasn't. that starts to tell me there are sellers out there even in this slow week. >> yeah, brian, thanks for joining us. we turned the lights out on you there. we were trying to make something exciting happen or maybe somebody didn't like you trade. >> yeah. >> thanks for joining us. >> all right. okay. final countdown to the opening bell just on the other side of the break.

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welcome back to "squawk on the street." the opening bell is going to ring in two minutes. it's time for our -- >> you going to go first? >> my one thing is the wall of worry. we have been -- we took off from the bottom in march. we got up maybe 1,000, 1200 points to say the high 7s. we're now in the mid 9s. so about 2,000 points and people have been whining every step of the way way. >> things have been whining quite a bit. >> it's over valued, over extended, it's this, it's that, it's ahead of the latest in the

fc today, are the world's stock market getting ahead of economic reality? folks, all of this sket tichls tichl skepticism is a positive sign. this continued skepticism is a very good thing. >> meanwhile, you missed 17% on the s&p. i mean, if you jumped out anywhere along the way in march, i mean, everybody, that was the, you know, the bottom of -- >> worst thing you could do. >> -- sentiment. my one thing is crude oil, my favorite thing to watch. crude oil is a very interesting point. made a run for $75. top of the range. didn't get there. has been sold off dramatically since then. take a look. trying to breakthrough $70 again. the bulls can't get this up and out of this trading range. this is good for the consumer.

we go a little lower here. but i think this is a pretty significant sell-off here. i want to watch this today an see if it breaks back down below 70. >> below 70? >> yeah, because then we start singing, market gets happy, everyone down here takes the market sentiment. >> people keep moving the bar though. >> yeah. >> just yesterday we had an expert on that said watch $71. >> you're right. >> we've broken $71. >> okay. yeah. i hear you. >> i think we always declare a victory and retreat from the field, i think. >> okay. >> all right. here comes the bell at the big board. actor jim carson from the cbs show "the big bang theory." at the nasdaq, silicon graphics international, ticker sgi. >> market reers are standing by at the new york stock exchange, the nasdaq, the nymex, the cme group. let's start with bob pisani down on the floor. bob?

>> good morning, mem lisa. gdp jobless claims number didn't do much to move the dial. yesterday after the close, three days of generally better economic news and markets have gone nowhere. i don't think it's a big problem. if you get a lot of childrening on the high volume, you've got an issue. churning on the low volume, not indicative of much. let's talk about stocks moving. boeing, you heard from phil, that stock has been up premarket 6% or 7%. they're going to get that 787 dreamliner, first flight by the end of 2009. bottom line, fourth delivery, first quarter of 2010. toll brothers, right around here the corner, come on over here. toll brothers had mixed news. bob toll said he saw some signs for optimism. the positive activity in august, which is what you care about now, very strong. much stronger than reasonably, up 20% year over year. still we've got pricing declines, margins were on the downside. that stock is going to be

opening to the downside this morning here. let me get a fresh quote from toll brothers. indication still 22 to 23. let's talk about the odd show, bottom line here, drinks maker pricing increases offset volume decline. sales still very much flat. tradertalk.cnbc.com. >> mixed open from a tech perspective. opened lower three points. you'll see that it's mixed. dell is higher ahead of earnings after the bell. key report to get a handle on what's happening from technology spending. intel is lower. apple is higher, microsoft is lower. microsoft is cutting the price of its top line xbox conceal by $100 to $300. that's the xbox elite. dollar tree is up 1% on an upgrade at barclays capital. they were ahead of expectations. isle of capri is up. tivo is up, they filed a patent infringement case against at&t and verizon against dvr technology and time warping

technology. they posted a. >> narrator: rower than expected loss. open table is down 3%. they had an ipo a couple months ago. they're going a secondary offering as well. 3.3 shares there as well. downgrade at jeffries as j and j is halting development of a key drug that uses their technology. let's go to nesto at the nymexn >> melissa and mark were talking about breaking $70. i'm looking out at some of the futures chain. you have to go all of the way up to may of 2010 now to get a $75 hanle. traders are not giving much of a time premium anymore for the price of oil and they're not going to be moved by a lot right now. until we see leadership from the stock market buying into the economic recovery story. we're going to get natural gas futures coming out at 10:30, an hour from now. what's going to be interesting

there is not necessarily so much the actual amount. it's going to be the storage capacity because there's so much gas in storage, losing places to put the darn stuff, that's going to be a problem. there is a speculation that there will be a report that some new found storage space has become available. the story of natural gas is a seven-year low and traders telling me they could see with active put buying at $2 a share testing lowe's further down. we're at last trade here at 278 on natural gas. down across the board on the big four energy commodities. back to hq and rick santelli doing it from the headquarters today. >> absolutely. thanks. what do we have going on today? hey, there's no more fbuybacks until tuesday. $270 billion of that $300 billion allotted to buy treas y treasuri treasuries, that's spent. there's been a delay on the sunset on that particular asset purchase program by the fed. when we find out more probably

at the september fomc meeting. as far as the data today, yes, there was a small drop in claims. didn't move the market much. and indeed there was no revision to our first look down 1% on q2 gdp. what's interesting is long rates are creeping up just a bit, not much, four or five basis points on the ten-year. and fed lacker, i don't want to use vigorous but not to describe the economy but the hint it's his opinion that the fed may have to tighten before it's obvious the recovery in the economy are vigorous. mark, back to you. >> thank you very much, rick santelli. markets starting off with a mixed open. looking for some inspiration after earlier economic data came in pretty much as expected. joining us now with their insights, jeffrey saw, raymond james chief investment strategist, and doug, dover management chief investment officer. jeff, i'll start with you. where do you see us going, say, over the next few weeks? >> i think you're in the process of making a short-term top here. i think you get a pullback.

but i think it is a buy on that pullback. and i think we'll end up higher by year end. >> buying opportunity just on the horizon. doug, what do you think? >> i wish i had a strong view on the market, mark. i've been one of the worrywarts. i've been wrong. i think i've been wrong because i've been hit by a wall of money. basically from the federal reserve. you know, they've been buying -- they're on, what, $1.7 trillion asset buying program this year. and, you know, a lot of that money, buying bonds, buying treasury bonds. people are buying it with turn around and buying stocks and buying commodities. i think what's really going to dictate where this market goes is if the fed extends that buying program into 2010. they're not buying treasuries and suddenly the market is not moving anymore. >> jeff, what do you think, do you agree with that and do you think they will extend the program? >> i don't think they will extend the program. i think the economy and the

numbers coming out recently are bretter than most expect. i think the third quarter and fourth quarter earnings, when you compare them against the stinko earnings we had last year are going to look good. i think that's the carrot in front of the horse. a lot of the money managers i have talked to to a large degree missed this rally and are sitting on too much cash. as you come in on year end they have not just performance risk but bonus risk and job risk. >> doug, go back to the earnings, the thing everybody keeps saying is it's only because of cost cutting and not top. i understand you were nodding when they said the comparison was going to be fantastic. does anyone really care if you're not growing revenue? >> right now it's okay. every earnings recovery starts with a margin expansion before top line grows. i think by the end of the year we're really going to need to see revenue growth. and, you know, at the end of the day, the united states, to have revenue growth, you need consumer spending. >> right. >> you can get a lot of revenue growth in asia without consumer spending. here at home, you know, we're still stuck with the american

consumer being 70% of demand. >> yes. jeff do, you agree with that? everybody always brings it back to the consumer has to go out and spend. is there another answer out there? >> well, you know, typically these things start off in the negative nay bobs say it's going to be profit recovery and when the profits materialize they say it's going to be a jobless recovery. as the profits increase, people get hired. then you get a capital expe expenditure play in there and then the naysayers say that it's unsustainable. i am more worried about 2010 than i am between now and the end of the year. i'm pretty constructive. >> yeah. that's great because we're pretty far through that cycle. we've heard three out of four of those naysayers. >> doug, what part of the market is going to treat our market best? >> mark, we've had an incredible move in august cyclicals. we're hunting around now on utilities, pharmaceuticals, where you don't need a v-shaped recovery next year to make current valuations make sense.

we're going to use a lot of electricity. we're going to keep buying pharmaceuticals. we think there's some great value there now. >> all right. doug, jeffrey saut, thank you both very much. >> thank you. >> up next -- where are we? >> i don't know. >> up next, could tempting stocks being an insane purchase right now as the economy starts to recover? businesses might be loath to add staff, but spring for freelancers. we'll take a look at the topics. >> and all-star series continues, sit down with one of the top american players in the men's yam, james blake. you are watching "squawk on the street" right here on cnbc. we'll be right back. some people buy a car based on the deal they get. others by the car of their dreams. during the lexus golden opportunity sales event, you can do both. special lease offers now available on the 2009 is 250.

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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 this morning's precap, massachusetts top securities regulator wants more information

from goldman sachs about company's weekly traders pick meeting. william galvin says he's concerned the company may be giving some clients preferential treatment. president obama's pay czar feinberg. robert is slated to receive $10.5 million. the "wall street journal" says feinberg is likely to approve that before other rulings at aig. solar panel prices plunging. the nrk times report they dropped 40% in the last ten months, partly because of increased production of a panel element in, guess where -- >> indianaia, china? >> india. >> had to be one of those two, right? >> that's right. get your sole lan pan 234e8s now, the deals are hot. as first time jobless claims drop the ten agency stocks including manpower are on a roll, who are more room for

these stocks to run. let's have managing director, jeff covers staffing and educational companies. jeff, thanks so much for joining us. >> thanks for having me. >> what are you hearing from these companies in terms of what's going on? are a lot of temporary workers being hired, not really, what's going on? >> i think the worse is over. we're still seeing a year over year decline in temp hiring. but the rate of the year over year decline has been getting less worse, so to speak for the past few months. so the sector's not booming by any means. but definitely the worse is behind us. >> are temps the first thing that companies add back or do they go for, you know, maybe the solid workers are going to keep for a long time? how does it work? >> in most sectors, temp tends to be a leading indicator for full-time employment. if you look over the last few cycle, both in an up turn and a downturn, temp tends to lead full-time employment by anywhere from six to 12 months. we may have hit the bottom yet in temp land but we're close. >> manpower is up and pretty

much on pace for the rest of the market. do you think it's fairly priced, is it a buy here? >> we have a market perform rating on the stock. i think it is somewhat fairly priced. the stock had a great run since the bottom. i think since the market bottomed in march, this stock is up well over 80%. it's had a real good run. >> yeah. >> isn't this kind of the sweet spot of the economy for these companies i mean, you know, employers hesitant about committing until they're sure of the economy, are going to want terc temps. >> i would say that's true. we're not there yet. we're still seeing declines in temp hiring. we're getting close to where we're going to start to see some increases, but we're probably a few quarters away. so i wouldn't say we're in the sweet spot just yet. it's a little early. >> that suggests then that a really good job market is quite a ways off. >> yeah. i would agree with that. we're not looking for year over year increases in temp hiring. probably not to take place until

the latter half of 2010. since full-time hiring tends to lag that by a little bit, i'm not looking for robust hiring, maybe until late 2010. again, the worst is over. but we're still heading in the wrong direction. >> yeah, manpower, let me correct myself, up. i was thinking the march lows. year to date is way ahead. robe roberthath is up. is there any in this group that you would buy, that you think is undervalued? >> it's a company called true blue tbi. it's a relatively small market cap. it's about 600 million. but they're most famous for their labor-ready brand. they do day labor. this company tends to be the canary in the coal mine, so to speak. they're going to trough and peak before anybody else. we've seen that the last couple of cycles and i think we're see that now. they had an upside surprise this last quarter on a revenue beat. i know the last folks you were talking to were talking about upside surprise maybe from cost cutting. this is one of the few temp

staff companies to beat on the top line. that's a good indication. revenue is declining on a year over year basis but getting less worse. this is our favorite name in the sector right now. >> i bet you were on that call. i mean, you say the canary and the coal mine and seeing more revenue. >> yeah, in most of their businesses around the country, the decline started getting less worse at a faster rate than what we're seeing everywhere else. their tied to the housing cycle last cycle. they really generated strong growth from that. we're not expecting the same kind of thing this time. this could be a slight play on the infrastructure spending. these are the type of folks do day labor, the unskilled workers, the blue collar workers, they'll probably benefit more from an infrastructure play than robert, per se. >> thank you so much for joining us. interesting insight there. >> thanks so much. up next, stocks on the move, injuding joanne stores and co coldwater creek.

>> i'm a little bit bummed on how far out he thinks the recovery is in the labor market. anyway, massachusetts mandated health plan. as the lowest number of uninsured nationally. >> but. >> but it still has the most expensive premiums in the country. could it bring down costs, could it be a model for the rest of us? we'll talk to the man who runs it in a moment.

welcome back to "squawk on the street." the earnings continue to roll in in the wake of this joanne stores is higher today. retailer fabrics and crafts pushing to narrower than expected loss. 26 cents better than expected. raised the full-year forecast and stock is up $2.05. coldwater creek, little change but it does see results improve ppg women's apparel retailer up 5 cents a share. genesco is getting a boost

today, retailer of shoes and hats. two cents less than expected. it's cautiously optimistic about the second half of the year as well. stock is up $1.49. royal bank of canada is rallying after the third quarter earnings rose 24% beating expectation. the bank held by strong capital market results and solid performances in the wealth management and insurance operations. stock up $3.11. mark, back to you. >> thank you very much, mary. the state of massachusetts didn't wait for the federal government to reform health care in 2006, the state enacted an ambitious set of reforms and now has the lowest rate of uninsured people in the country. 2.6%. that means 97.4% are covered. but at what cost? can massachusetts be a model? if not, what have we learned from it that can help us to actually bring down health care costs? joining us now john kingsdale,

managing director of the massachusetts common wealth health insurance connector. that is an exchange that allows consumers to comparison shop for health insurance. thanks for being with us. >> my pleasure. thank you, mark. >> now, if my information is correct, you have dramatically reduced the uninsured but the premiums are still pretty high, is that true? >> i wouldn't characterize it that way. we have succeeded in massachusetts's main goal in two years of getting health insurance coverage to 3/4 of the uninsured down from 10% uninsured to a little under 3%. massachusetts being a very wealthy estate with a lot of academic medical centers actually had pretty high premiums before reinitiated this reform and it still has high premiums. reform didn't cause it. on the other hand, we're now positioned to try to address the high costs. >> how do you do that? if that's the next step, how do

you do that? how do you bring down the costs? >> well, it's a complicated question. we've had a study commission that the legislature authorized about a year ago looking at this. and they've come back with a very strong recommendation in just last month, in july, which was to change the fundamental incentive in health care from what we call fee for service, meaning the more you as a physician are going to do the more we all pay you, to some kind of overall budget so that we're paying for quality and outcome rather than pay just more for more services. >> okay. but you say that you haven't caused the price of insurance to go up. but getting more people insured is supposed to help bring down the price. this is one of the features of the national plan that everybody is hanging on to, but yet that hasn't happened in your state. i think that's what mark was getting at. isn't that prop blematic? >> of course, it costs money to insure hundreds of thousands, or

in the case of the united states, one-sixth of our entire population. and eventually, certainly we need to reduce the rate of increase in health care. i actually think that you need to get most people covered. frankly, we only have one national cost container policy in this country, which is every recession we throw another 5 million people on to the roles of the uninsured. we have to make a commit to the cover all americans and then we can actually idaho oh actually more difficult issue of how do you contain costs. i think here in massachusetts we've made that commitment and now we're following through just three years later on the most sophisticated ambitious effort to contain costs anywhere in the country. >> jon, companies in your state, if they don't insure their gl employees they face a penalty, right? >> yes. >> wait. >> have you seen more companies cutting their insurance plan and having people go out and have to buy insurance for themselves, or having few eer employees becaus

that's another concern we all have. >> we haven't seen neither of those. actually there's been an increase of about 44% of the 430,000 newly insured come through purely privately purchased insurance. some by individual house holds, but mostly by employer sponsored. there's been an significant increase in that. >> so your program has been done almost entirely within the private sector. your personal opinion, after your experience, would you favor a public option nationally or would you oppose it? >> i want to correct one thing, mark, if i gave you that impression. it has been a shared responsibility. >> okay. >> so government is definitely a piece of this. at 44% -- >> i did not know that. >> about 56% of the 430,000 newly insured are covered through private insurance, but subsidized by the public, by the government. >> okay. now, so there is a public option

in massachusetts. >> no, it's not -- i'm sorry this is all very complicated. >> i missed the subtlety, obviously. >> public subsidies for private insurance. but not a public plan. >> would you prefer having a public option? >> well, it's interesting. we don't really need it here because we have something already just as good. we have a set of non-profit, low-cost, low-administrative overhead health plan that most of the publicly subsidized enro enrollees are in now and they function very effectively. >> we're going to leave it there. >> those are apart from the major insurance companies. am i correct? >> this is a distinct segment, and they don't exist everywhere in the country so i'm not say other parts of the country don't need it but we have functioned pretty well without a new public plan. >> well, wow, mr. kingsdale, thank you very much. i think we learned a bit today. >> my pleasure. >> executive director of the

common wealth health insurance connector, which is part of the reform of -- pay for health care in the state of massachusetts. coming up, because you clicked. fannie and freddie, why are you so interested in those two? is it a momentum thing? >> the chief drif tive strategist with sink or swim will tell you whether you should dare or beware.

welcome back to "squawk on the street." i'm hampton pear son in washington where we're getting the latest health report on the state of the savings bank institutions. the fdic saying the 15-year high, 416 institutions with combined assets of $299.8 billion. 24 banks failed in the second quarter. the fdic insured banks and savings had net aggregate losses of $3.87 billion. two out of three reported lower quarterly earnings than a year ago. 28.3% now they say are

unprofitable. the net charge-off rate is setting a quarterly record, $48.9 billion versus $24.4 billion a year ago. the noncurrent loan rate is a record level, $24.4 billion, up 14% in the second quarter. as to the health of the fdic insurance fund, deposit insurance decreased $2.6 billion, down 20%. the reserve ratio declined by 5 basis points. the fdic also saying it is extending a couple of its liquidity guarantee programs, the transaction account guaranteed program is extended another year through june 30, 2010. the debt guarantee program, october 31, 2009. we all know already that there have been 81 bank failures and counting, including 17 through the month of august. mark? >> hampton, thank you very much. let's get the action from the floor. bob pisani here at the big board, robert, you know, we started out kind of hemming and

hawing but we've since been doing more hawing than hemming. >> there's no bids around. it's been a problem for the last couple of days. better economic numbers but not going anywhere. churning on light volume. i wouldn't worry about it. the weak stocks, market leaders are weak. homebuilders, great run recently. a little positive here today. great move up, so there were highs for the year here. financials, you know the big numbers, freddie, fannie aciti group. the volume has been declining every day for the last last three days. fannie and freddie losing steam. citi group is on the upside. yes, i got calls yesterday at the close, what's going on with aig? we had a nice little pop. there's a two-day chart of aig just before the close yesterday. there was talk hank greenberg, the founder of aig that left several years ago, may be brought in. the ceo acknowledged in an

interview wi interview reuters that he was talking to greenberg giving credence to theorys that somehow maybe mr. greenberg can find a magic formula and be brought back in. i know, it's a long shot but that's how the stocks are played. momentum trade. tradertalk.cnbc.com. scott, how are we look agent the nasdaq? >> bob, we've pulled back rather considerably frst last time i saw you a half hour ago. the is now half by 1 1/2%. you can see the pullback in the big caps which opened mixed but dell was higher by 1% ahead of earnings after the bell today. it's now down by almost 1%. a big swing there. intel lower by 1%, as is apple, microsoft, starting to get the drift here. microsoft cutting the price of its top line xbox elite by 100 bucks to $300. 3/4 of 1 mrs down. yahoo! is under pressure though. some of the stocks opened to the upside, dollar tree came up the earnings yesterday positive. the stock upgraded today.

you'll see a gain now which is mostly a fractional move. definitely a bit of a pullback in this marketplace. isle of capri up 5 naf1/2%. tivo is down 4 1/2% on that patent suit against at&t and verizon over dvr technology and that time warping technology. they did post a narrower than expected loss. let's go to matt nesto at the nymex. >> thank you. we just broke $70 a barrel for crude. last trade, $69.94. the low of the day is $69.83. i would say we haven't seen it yet. we're 25 minutes away from the natural gas inventory report if you will, from the eia. what traders are going to look at is the storage capacity number. they need more storage. that's a problem because the industrial demand and usage of natural gas is so weak that they're just stockpiling the stuff and it's becoming a problem. if you look at economic data it's not moving markets.

if you look at the equity market, it's not moving markets. if you take a looks at the weather forecast, even things like tropical storm danny, even if he becomes a hurricane this weekend, comes into the coast, east coast, still not what traders are looking at here today. let's get to also for the latest from him. not at the cma but at the ce. >> thank you, senior nesto. the blog here, good info out there sometimes. quoting some brown brothers, harriman research. could be bullish on the yen versus a dollar. remember several years ago there was the u.s. homeland investment act, where domestic companies would repay foreign earnings at a better tax rate? the japanese have passed their own version of this. the japanese press is all over this thinking it could be something big and it might be a real boost for the yen. something to pay attention to early heads up. also early heads up, 28 billion seven-year options have been going pretty well.

the story of the day and it's been somewhat the story lately, equities seem to find strength. but today they're giving up a little bigger. that's pushing yields and treasuries back down closer to unchanged levels. mark and melissa, back to you. >> all right, thanks so much. big moves in fannie mae and freddie mac. the stock one of the most clicked on cnbc.com. what's causing all the interest? joining us now to discuss joe, chief directive strategist with sink or swim. there are a couple of different theories we found on fannie mae and freddie mac. interesting action. tell me which one you think is true. one is that a lot of people think we're going to see the government extend the first time buyers credit and that's one reason why they're playing these. do you think there's any accuracy in that. >> that's been the greatest rumor out there right now. i think the rumor may be losing a little bit of steam as you just had bob op right now saying how volume has tapered off a little bit in the names the last

couple of days. the other part of that rumor that i think was more interesting and caused a lot of the action last week is that not only is the government going to extend it, they're going attorney crease it up to $15,000. again, it's a great time for rumors because congress isn't in session yet. >> yeah. i mean, another theory is that is the low cost way to play the housing recovery. >> absolutely. i think what you're seeing a lot of retail traders, rather than playing the homebuilders themselves, $20 stocks and above, this is a great way in real money terms, it's a way for people to play it. the one thng i would ask people to consider if they are going to play it this way, maybe to sell a put like the january of 2010, $1 put for 20 cents. your net cost if you have to buy the stock is 80 cents. you don't want to get caught in this rumor mill. as we've seen many times, melissa, once the rumor fades, the stock tends to go back from wence it came. >> what's the long-term future of the company?

>> mark, if this tax credit is extended i do believe that they will do well. and let's face it, there's still quasi-government agencies. if the government is going to bail out gm, i find that hard to believe they're going to let fannie and freddie fade into the sunset. they may be reorganized in one way or the other but it's hard to believe that the government would let them fail. if they they'll, what about all the other companies the government helped along the way. >> they're doing the same thing they did before. they're out there making loans to people to try and get the market moving. you know, with as little as 3 % and 5% down. you know, it seems like they're keying up for the same problems they had before. >> i think they could in the future. i don't think people as a 3% and 5% down are getting these loans quite as easily. the nice thing right now, the credit quality on these loans will be higher. >> okay. >> so i think that actually that bodes well for them. the problem is going to be long term. we know that people have short memories. in two years it might be back to

no money down, things like that. that's what we have to watch, i think, is a future risk. >> all right. joe, thanks so much. >> my pleasure. thanks for having me. up next, cash for kiddie clunkers, yeah. will the new trade-in program for toys and baby gear get shoppers spending? >> then, it's been 150 years since we first struck oil in this country. jeff hofmeister is on here on where we stand when it come to oil dependence. plus, the economy is stabilizing, the stock market is up. no one is talking about overhauling our financial system any longer. have we lost the political will for post-crash reform? a street fight coming your way in a minute. some people buy a car based on the deal they get. others by the car of their dreams. during the lexus golden opportunity sales event, you can do both.

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all right. in this morning's sound check, all things retail from back to school to a kiddie version of cash for clunkers. >> well, i think that, you know, price is still important but it's starting to be not the only thing that's driving behavior. all the stores are saying that they need some promotion in order to really get people into the stores. >> i think as we're getting closer to back to school, getting closer to labor day, you certainly are beginning to see a little bit more traffic, you're

seeing stores being very price targeted, the prices are right. i think august is a little bit better than july so far. >> we're glad cash for clunkers was a success because we think that will feed interest and excitement about this program as well because it's a very difficult logistics challenge. we're thrilled about this. we're excited about this. you can bring in as many as you have, day care centers can bring in all of their products. >> that was the ceo of toys "r" us talking about his company's trade-in program. it starts tomorrow. customers will be able to return used baby products like kricrib and car seats in exchange for 20% off any item. they're doing it to highlight potential safety but might help stimulate business. let's ask the consumer strategist and chairman of america's research group on consumer behavior research firm.

britt, what do you think of this toys "r" us thing? >> mark, it's going to work, i think, because consumers now want it, 88% of consumers are driven to stores with a big special offer or promotion. i think it's going to get some store traffic. i think they would do better if the discount were 25% or 30% off. certainly they will get the traffic in the stores. right now, mark, store traffic this summer in toy stores have been down about 16%. you know they've got it, this would be a great opportunity to get the traffic when they really need it. >> richard, what do you think? >> i think it's good. it's very specific. it will be good for toys "r" us because it drives bigger ticket item sales, 20% off on a bigger ticket item is a goody's count. it's not like apparel where 70% off would still convey relatively good margin. also a problem for the consumer in a lot of safety product problems with children's hard line products like these, there's no place to donate them and get a tax deduction, nobody will take them.

so this might solve problems for some consumers. and i think it's good for toys "r" us. definitely will help them for late august and early september sales. i do think so, yes. >> britt, isn't this a little bit of a gimmick? not that there's anything wrong with that. but i get coupons from toys "r" us all the time for 10% or 20% off. they're just telling you to bring something in, you know, if the consumer sees this as a gimmick, does it matter? >> well, everything in retail is really a gimmick because when you look at it they're all trying to come up with ideas every week to get someone in the front door with some other message. i think what does make this different though is this, it gives you a chance to get rid of the items you want to get rid of and, therefore, toys "r" us is going to general eight a lot of products in their store that they can donate to charity or whatever else. the bottom line is, give the customer who's had that crib underneath their master bedroom bed now for 11 years a chance to get rid of it and they may very well take them up on it. i think that's irrelevant.

it isn't just 20%, it's being able to get rid of that item at the same time and getting 20% off. >> richard, do you see any other retailer following -- will this work for any other sector besides, you know, kids products? >> well, you know, when i saw the automobile clunker thing happen, i said to myself, this is clunker -omics, that means that is going to apply to many things. appliances is coming up soon. other retailers playing in the same space with these products, and that would be walmart, target, k mart would be big in this area. they're going to watch closely. probably imitate it or do something on a bigger scale. we'll probably see something like this from the private sector again. that's good. later on and closer to the holiday season, yes. >> don't we already know it works? didn't china do it? >> you know, i think that they get very strategic from top to bottom and it's very organized. this is the first little

clunker-omics i've seen from the private sector. >> no government. >> i'm sorry. yeah, okay. >> hopefully we'll see a little bit more of this, you know, over the next couple of months. this will also be good to do again closer to the holiday season. i think that toys "r" us would benefit even more if they do another program like this. they could do it again for another three weeks, you know, let's say right around black friday. >> okay. we're going to leave it there. thanks so much for joining us. it's just a coupon. nothing wrong with it. it's just a coupon for 20% off. but nothing wrong with that. it will work. >> i like his term though, clunker-omics. up next, we're firing up the adviser network to show you how to inflation proof your portfolio. >> and then darren rovell on the tennis beat getting ready to serve up acers with one of the game's best players. >> i don't know about that literally. but james blake is live in the studio to talk about the u.s. open. his new field me glekz and how much economics he really learned

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you know what? it is never a bad time to find a junior 401(k). the next guest has all the things you need to inflation proof your portfolio. let's get over to the adviser network where we find cofounder and managing partner. thanks so much for joining us. do you think inflation is going to be a big problem on the horizon, how soon, how big and how soon? >> i think in the short term, melissa, it's not a problem but along with a lot of people, you know, we think it's going to be coming into play probably over the course of the next couple of years. and a lot of people are concerned about it. >> okay. would you position yourself right now and what would you do? >> there are definitely some things you can do in the 401(k) world. it's usually a little bit more difficult than in the regular retail work with your brokerage account because fund menus are limited. but certainly you can position yourself into commodity funds if

they're available, only a little bit. i wouldn't take too much of a chance there. they are still sector funds. but also dividend yield ending equities. most retirement plans have some kind of an equity income fund or reit or real estate funds. >> would you do this slowly, over time, would you start right now? >> yes, i would definitely dollar cost average in over the course of the next year or so, and i don't think you want to get too big of an exposure. you don't want to find yourself 80% exposed to equities just in case inflation shows up. but certainly you don't want to make any big moves right away. definitely dollar cost average? >> good advice. thanks so much for joining us. >> you're welcome. bye-bye. the u.s. open begins on monday. our top seed business reporter darren rovell is talking to some of the game's best. darren? >> why are you laughing about me being in the top seed? >> you're definitely the top seed business reporter. i'm not sure how many we have. that's what made me chuckle. >> that's true. james blake doesn't have your

typical tennis player profile. he spent two years in harvard majoring in economics, named as one of the hottest batchelors b "people" magazine and top ranked on the tour for years. and james blake entered 22nd in the world. joins us this morning in studio. a lot of people remember that 2005 epic five-setter with agassi. could have gone either way. you made it back to the quarterfinals in the '06 u.s. open. where is you're tennis world taken you since? >> well, all over, doing a lot more, playing all over and still enjoying it, loving the game. but i dropped a little in the rankings lately. i've had a few injuries this year and most of the summer was out with a broken toe. feel great now. able to get in the pool, get on the bike. my legs feel strong. just a matter of getting out there and playing hopefully. >> harder to win now? ever before, some people say it's the best era in men's tennis when you think about obviously the nadal, federer,

roddick even, is it harder to win now than ever before? >> it is very tough. i think it is probably about as deep as the talent pool has ever been. the game keeps getting better which i think is tough to compare, federer and sampras and all that stuff. i think and difficult roddiy ro now than when he was when he won. the game is advancing. >> one of your endorsement deals is with fila. you started the reynolds collection. it starts tonight. >> when i started fila i was excited they gave the this opportunity. they wanted me to start my own line. i wanted to do it in recognition of my father. he taught me about my goals and morals in general. as much as him, i want people to remember and i want to do something that wasn't just a james blake line or something that's clearly just self serving

and ego test call. i wanted it to be about my father. i hope people really like it. i want to make sure that it's a quality product. something else my dad preaches, make sure you've got quality. >> it's going to go beyond the tennis niche? >> yeah, it's going to start out with tennis, limited edition collection for the u.s. open here. and then starting next year in the spring it will be golf, lifestyle, casual, and hopefully fitness as well. so we're going to try to get people wearing it around all over the place. >> what's your sense of the economics of the game in ters of people showing up despite what we're dealing with right now? it seems like the u.s. open has ideals of maybe beating next year's -- last year's revenue. >> yeah. i know the economics of the game is tough. sponsorships are tough to come by. and tournaments have taken a little bit of a hit. i think the big events like the u.s. open and the other grand slams, i think they're going to be okay because people just have a sense of history and they realize how much we care about them and how much is on the line for us. so i think they're still going to come out.

once they do i th they're going to enjoy themselves. you never know which match is going to be another one like my match with agassi. up until 1:30 in the morning and hopefully talking about it at the watercooler the next day at work. >> i was there. i was sleeping actually. finally,obviously you were an economics major at harvard with two years. what do you learn at harvard, in economics. >> i think i learned i'm a better tennis player than i am an economics professor. >> i read that you said if you go back to finish it up you would switch majors. >> i would. economics was useful. i planned on going to business school but i don't know if i'll go there anymore. it wasn't the most exciting thing in the world. no offense to all the economic professors out there. sociology and african-american studies and anything like that is going to be a little more interesting i think when i go back and finish. i'll have a little more fun with. >> james, thanks so much for joining us. the u.s. open draw comes out at 12:00 noon. we'll see who your first round is. guys, back to you.

>> all right. you know i was an economics major at harvard. i thought it was pretty exciting. that's okay. i guess tennis is more exciting. weekly natural gas inventory report is minutes away.

okay. welcome back to "squawk on the street." we're just down here at the nymex, waiting for the weekly

inventory report on natural gas storage. you just heard the number up 54. that's pretty much in line with consensus. all day long we've been watching the price of natural gas struggling here today. ray carbone told me earlier it was a put buying at the $2 level. we're already looking at a contract fallen from 14 bucks down to 270, 280 for contract. so it's a big, big pressure here. joining me on the floor to talk about the number and inventory and storage of natural gas is john woods of integrity energy. john, it doesn't seem like no matter what your market, traders are getting enthused about the whole economic recovery story now. not getting much of a bid in anything. >> we have a glut of gas at there. we have a number as expected and come off on it. as far as recovery, still people losing jobs. industrial demand is virtually nil. as a result of that you're seeing low gas prices. storms are nonexistent. have a storm on the atlantic coast which is not going to do

anything but give kids a wave to surf on. >> this time of year typically you're going to see a bid in natural gas, especially if you're heading into the gulf coast into some of these storms. >> that's going to have to happen. you're going to have a storm prove itself. by that you're going to have to go into the gulf and desrupt production. that just hasn't happened. so far you're betting against the storms. so far they've been right. the bears are controlling market right now. >> appreciate it. thank you very much. just to repeat, up 54 billion cubic feet on natural gas storage. guys, back to you. >> thank you. it was exactly 150 years ago today a well in titusville, pennsylvania, struck oil. that moment marked the beginning of america's complicated relationship to crude. today's u.s. imports is roughly two-thirds of the oil supply to foreign countries. what will it take to make the u.s. energy independent? is that goal even possible? here to weigh in, dan ergin,

chairman of ihs cambridge energy resear research, and cnbc global energy analyst, wrote the cover story of "the future of oil" in the current edition of "foreign policy" magazine. and former pet of shell oil u.s. operations and founder and ceo of citizens for affordable energy, a non-profit aimed at promoting u.s. energy security solutions. john, you first. is energy independence achievable? >> not for liquid fuels. not in the way we traditionally define them. i think it's a false goal. i think we're part of a global world trading system. and i think that will always be the case. i think we can improve our import/export balance by a large measure if we focused on it but we don't seem to want to focus on it as a nation. >> what is achievable? just today there's an article, i

believe in the "wall street journal," on the trouble in biofuels have run into, biodiesel is failing, ethanol is struggling. what can we do? >> i think there's a commercial -- there's a commercial problem right now with biofuels. and that is, what happens in the laboratory does not yet happen at mass manufacturing levels where you're trying to drive output to scale. >> right. >> so you don't have the cost relationship that you need in order to really produce something commercially. >> you know what? i've got to disrupt you guys and look at the bottom of the screen. stanford cfo james davis pleads guilty to three felony counts. he's going to get a more lenient sentence because of his cooperation there. back to the discussion. dan? >> i was about to say that what mark just brought up about the problems of biofuels, we keep looking at this miracle solution out there that will transform

the situation. and mark started talking, obviously this anniversary of this idea that was considered totally crazy, which was to drill for oil and even the idea of using oil for anything was considered crazy. but it took a long time and it was innovation and it's the same thing here. our energy system is so big and so complex, the notion that you're going to push a button and find some solution that's going to get us into some much better place overnight, just doesn't work that way. >> john, you know we're looking at oil at $70 a barrel here. it was double that, you know, a little more than a year ago. did you believe in peak oil and, you know, do you think that has any merit? >> no, i don't believe in peak oil, unless some day we look in the rearview mirror and we see that we're producing less than we used to. i think there are huge resource basins yet to be tapped. we haven't really approached unconventional oil in any meaningful way yet. we're a long way from the peak period of hydro carbons. i believe we can still produce tens of millions of barrels per

day, more hydro carbons if we put our mind to it and put our capital behind us. >> is that the most economical solution? do you think we should be doing that? >> well, i think we've got -- look, we've got 150-year-old infrastructure and we use it fully almost every day. we're building new infrastructures and nations like china and india. they're going to rely upon it for decades to come. so let's not kid ourselves. we are in a hydro carbon era. we're testing alternatives. we will continue to be in a hydro carbon era for decades to come. >> melissa, the way to think about it is, energy independence is incredibly attractive politically but i doesn't, as john said, accord with reality. if we think of it in terms of energy security, what do we need to be resilient in a global trade system, i think we get better solutions and it's diversificatio diversification. as john said, diversification in terms of oil and natural gas

supplies and putting money into research and development and developing a wider range of alternatives. >> what about using coal in whatever form, clean coal, gas, whatever, is that realist lick? >> well, first of all, you know, half of our electricity today comes from coal. there's lots of talk about clean coal. particularly if we're going to be in a carbon-constrained world, there's going to have to be improvements in using coal to bring down the carbon emissions. but, you know, people, you know, two years ago, a year ago people talked about carbon sequestration, it's there, but it's going to take time and money to develop it. but coal is part of the mix. >> john, on one hand, talking about energy independence is talking about economic independence. we're all depending on each other economically. it's kind of the sam thing with energy. when you talk about electricity, at least, you look at france and they harnessed the power of

nuclear power. >> they have their mind behind their strategy and executed it. we could do the same thing in this country if we chose to. we do have a mix, as dan points out, it's a big mix. we have nuclear, wind, solar, geothermal yet to come. we have a big mix to choose from. what we have to decide in terms of national energy security is a set of policies that give us guidance as to the future of nuclear. the future of clean coal. keep in mind, energy investments go out for decades, not two-year or four-year political cycles. we have to be able to make decisions as a country that support investments over 1020, 30 and more years, and that requires an investment model that you can rely on and you're not going to change political direction because an election came along. >> right. thanks so much for your discussion. >> thank you. >> that doesn't sound like it's

made for our model, but getting the political will for something ten years out, good luck with that. coming up, the nasdaq 100 having its best six-month run since april 2000. unfortunately that was the end. should you be putting your monday ni into tech stock? plus, as the economy stabilizes and the market moves higher, have we lost the political will to overhaul our banking system? is that a good thing? are we setting ourselves up for another crisis? when this hotel added aflac to compliment their benefits package aflac! it made a big splash with the employees yeaaaahhhh! find out more at aflac!... ...forbusiness.com

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i'm scott cohn at the u.s. district court in houston. alan stanford accused of an $8 billion upon ponzi scheme is in hospital near the federal detention center where he was being held. he was hospitalized this morning

with an irregular heartbeat. his attorney or at least his current attorney told uss a much when he walked into court this morning. let's listen. >> all i know is he he was rushed to the hospital at 30 this morning with a rapid heartbeat. that's all aknow. >> apparently extremely rapid heartbeat, according to the judge. the proceeding that was supposed to happen today where they were going to work out who is going to represent alan standford in the long run, that has been postponed. in the meantime, the chief financial officer, james davis, has become the first fern to plead guilty in the stanford scandal, agreeing to a $1 billion forfeiture. he will cooperate and testify against his former boss. back to you. >> thank you, scottie. even the chairman of the fed can fall victim to financial fraud. court documents show that's exactly what happened to ben bernanke last year after his wife's purse was stolen. a few days after the theft,

checks not written by bernanke or his family were cashed on their bank account. bernanke says, quote, id theft is a serious crime that affects millions each year. our family was but one of 500 separate instances traced to one crime ring. i'm grateful for the law enforcement officers who worked to solve and prevent these financial crimes. a group ring leader pleaded guilty last month to conspiracy to commit bank fraud. >> can you imagine, they're like, oops, it was the federal reserve chairman. up next, the nasdaq up -- nasdaq 100 up roughly 57% since the haines bottom, biggest since april 2000, right before the bursting of the tech bubble. what does that say about your tech investments today? but first, mandy drury with what you can expect on "the call." hey, dru!

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as apple prepares to sell the iphone in china and sirium tune into satellite radio programs, it's clear that technology may be less than discretionary items for consumers and more of a necessity. how you might be able to profit from this is portfolio manager with fifth third asset management. mark, it's a convincing story the way we told it but at the same time supposedly the consumer isn't out there buying anything. how do you reconcile those two things? >> well, i think that, you know, for the most part, i think that tech spending has not been as bad as maybe people would have thought it would, could have been given the recession that we're in. i think that heading in the recession i think people would have thought, hey, handsets, pcs, tech spending, tvs would have been down a lot more. but in fact, what we've seen is, i think, people have been out there spending money on this stuff and what that tells you is that, in general, i think that, you know, tech items are much

less discretionary than maybe people thought. it's becoming much more engrained in what we do in everyday lives. i think that's a great -- that's a great road driver for this cycle. >> what about back to school? how much back to school plays into tech? >> well, you know, it's important. it's a big area for pc sales. but, you know, what i think people are looking for now is they're looking for how back to school is going to go, we'll start to see the reorders from some of the tech companies here, probably over the next couple of weeks. that will give a good indication of where production is going to be heading towards the end of the year. and then obviously like everybody says, back to school is going to give some indication of how the holiday season will go. so obviously over the next couple of weeks we'll watch really closely what are those order patterns, pc orders, handset orders, how the orders are going to come in. that should show us kind of where tech -- how strong or weak tech may be heading into the

holiday season. >> mark, talking about the stock, the nasdaq has been the biggest percentage gainer since that bottom back in march. you heard the people the last couple of days have made the point it's same run it ran before the bubble burst. any danger of something similar? >> tech has been a good out performer since the bottom. i think technology companies, you know, kind of recognize the magnitude of the recession before everybody else, cut production, inventories came down. so they're very lean. investors gave them credit for that. they've been beating earnings estimates. tech has been underperforming the market over the past month. as you had the good second quarter earnings. people are simply going to wait and see how see how back to school comes in and how production rates are going to look for the second half of the year. i think what you want to do is, i think tech spending consumption will be good enough. you probably would look to buy some of these stocks, you know, as we head into september. >> like what?

do you have specific recommendations? >> yeah, we like the smart phone area, the two big volume drivers within tech are doing pretty well. notebooks, smart phones, hand sets. i think you want to look at the handset area. we think r.i.m. is going to be a good performer through the end of the year. i think qualcomm is going to be a good performer, and apple, a lot more good news to come with the iphone. and then in the semi conductor area, i think you want to look at varian semi conductor. >> thanks for joining us. >> thank you. >> up next, the economy showing signs of stabilizing the dow, up 45% since the march bottom. and now that we're feeling a little bit better, is the political will to overhaul the financial system gone? we have a street fight coming up next. >> and we'll try it again. oh, mandy? >> oh, m and m, hello, i'm looking forward to "street signs." also, as oil prices rise and natural gas prices fall, that got us to thinking, should

natural gas be the country's energy of choice? and with the fdic just out with its quarterly report on the state of banks, we look at a another sector. and tom rodgers, his company just out with earnings. all that with the market news and reaction, only on "the call" at the top of the hour. but first, "squawk on the street" is back right after the break.

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i'm phil lebeau with breaking news in the auto sector, specifically ford, which is increasing production, actually adding more shifts, one in kansas city and one in michigan. no impact on the stock so far this morning, but the importance of this announcement from ford is that it will be increasing production at the plant that builds the f-series pickups, as well as the plant in kansas city that builds the ford escape. both of those models are seeing increased sales, and when you look at the f-series pickup, it goes hand-in-hand with the construction and the housing market. so more indications of improvement at ford. guys, back to you. >> great news. thank you, phil lebeau.

a couple months ago, overhauling our financial system was all we ever talked about. now that things have gotten better and more stable, perform doesn't even register. have we lost the will to reform? joining us, director of financial regulation studies, and doug, economic studies fellow at the brookings institution. i think i'll go with brookings. doug last. have we lost the will? >> i think we have lost some momentum, but i think there is more than enough momentum to carry us through to some bills passing next year. >> mark, what do you think? >> well, i agree that we have lost some momentum.w in some extent, i think that's probably a positive thing, because most proposals put forward by administration, i don't see as actually being a real fix. unfortunately, the things we actually need to do to fix the system are not being talked about. >> like what? >> well, you know, first of all, we should be talking about monetary policy. what was the role of the monetary policy in creating the housing bubble?

does anybody really think that having three years of negative interest rates from 2002 to 2005 was a smart move? >> yeah, but monetary policy is not something you can fix. >> sure it is. inflation targeting, perhaps. there are lots of things we should look at and talk about. doesn't mean we shouldn't talk about it even if there is an easy fix. but we need to talk about inflation targeting and fannie and freddie. the administration completely punted and said we'll get back to fannie and freddie later.w they were a huge part of this problem.w and let's talk about our tax code. the after-tax costs of debt is about historically about 4%, where the after tax cost of equity is about 12%. so we have set up a tax system where we subsidize debt, tax equities. >> so you are in favor of doing away with the mortgage interest deduction. >> o i think in a budget-neutral way, yes. i wouldn't tuesday to pay health care. >> what do you mean in a budget-neutral way? >> well, if you just got rid of

it and you raise taxes overall, i'm not in favor of that. but i think if you've got a simpler tax system where you got rid of the mortgage interest deduction and you got rid of interest expense across the board for corporations as well, but you lowered rates so that you had a simpler tax system so that the overall tax burden was the same, i would be in favor of that. and i think we really do look at -- >> yeah. let's get doug get a swing in here. what do you think we should be reforming right now? >> i think if we focus more narrowly on the financial reform itself. there is some very important things that will pass. we're going to have significantly higher capital requirements for major financial institutions, which will have a real impact on how they operate. we will have a broader, so-called resolution authority. so that the -- the regulators will have the ability to force changes at the bank holding companies, perhaps in some of the larger insurance companies. and avoid some of the problems we had in the crisis. where they didn't have all of the powers they needed to