i didn't know you were driving the train. that's great. >> thank you. >> you're going to have a blast. >> i want to get some final thoughts. first from you, tony. we were saying during the break, it's been interesting the various chapters we've been in over the past year. pimco sort of led the thinking in the beginning how much government needed to do and how quickly, right? and then how to trade within the umbrella of government programs. and now you guys -- you've gotten a lot more cautious in the last couple of months. >> many months ago pimco felt, and many others did, rising would lift all sales. it did. you could buy corporate bonds and distressed assets and make more money. pimco has earned its keep by paying attention to detail. this is a time again to pay attention to detail. great opportunity to cheer butoff got to manage risk to make money. >> shorter term, jim? >> the dollar is a precarious thing against the euro. if the dollar goes lower we

should see a leg up in stocks. >> was it feel -- when fannie mae leads the volume charge, does it feel dirty. >> i think i can overcome it because you can blame it on august. a lot of traders are out. it's odd, yes, i'm going to compartmentalize it somewhere else. >> mandy, thank you for being here all week long. you're going to be here next week? >> just monday and tuesday. >> join us monday. "squawk on the street" is coming up next. this is cnbc.com news now. >> consumer spending rose .2 of a percent in july aid bid the cash for clunkers program. personal income was unchanged. we'll get a reading in a little under an hour. tiffany shares are higher after the luxury retailer mentioned the latest earnings and raised forecast for the year. that's cnbc.com news now. we're first in business worldwide. i'm courtney reagan.

live from the financial capital of the world, this is "squawk on the street." good morning, everybody. i'm mark haines. markets looking for a higher open to end the week on upbeat results from dell and tiffany. the dow in particular poised to expand the winning streak to -- let's see, this would be nine sessions. its longest run since april 2007. >> i'm melissa francis. personal income and spending data canceling each other out this morning. spending edging higher with help from clunkers but income is a fuel for future spending, of course, were flat. >> let's check out the futures, as we said, market poised to open higher. up 6.70 right now. fair value 6.73. five and change above fair value. 40 points on the dow. >> let's get to rick santelli in chicago for more on the personal income and spending numbers. >> let's start out looking in the rearview mirror. last month was kind of nasty. originally reported a 1.3 drop

on income. of course, we saw that moderated. it was up a couple tenths. still negative, none the less. a couple tenths higher on the spending numbers as well. as we moved into july numbers, clunkers, all of that is i'm hing spending a bit which gives you a couple of tenths. at the end of the day -- and that was viewed as positive. interest rates moved up a bit. we saw the equities move up a bit. at the end of the day it's about jobs and income. you know, cash for clunkers could make you spend. but that only carries you so far. maybe this doesn't give us the whole buzzle but traders found something to play on on the second to the last day of the month. and also a little seasonality here. treasury rates usually go down at the end of august. big refunding, supply. we see it creeping up, like everything. i think speculators jumped in, quiet august. they bought that event early. it's kind of ironic that right now we're sitting at some of the highest yields of the week and pretty much every maturity. mark and melissa, back to you.

>> thank you, rick. let's find out premarket. reporters are standing by. bob pisani is here at the big board as usual. roberto? >> good morning, mark. the dow is up eight days. a quite a record. don't kid yourself. we're churning around here on extraordinarily light volume. four stocks are 20% to 30% of the volume here. churning, light volume, doesn't mean a lot. we need more data. stocks moving. aig is up another 10% here. it's up a 50% so far this week. a lot of traders have noted the preferred shares still pricing in considerable risk. tiffany, numbers good. we did have same-store sales down 16%. beat on the bottom line and raised the guidance for the third quarter although it is still below the analyst consensus here. mickey drexler knocking the ball out of the park. of course, they did have michelle obama. outlook for the third quarter

was risen above analyst expectations. tradertalk.cnbc.com. hot in the nasdaq as well? >> big day for technology shares. dell is why. they exceeded expectations. a number of firms out this morning bumping up the price targets as well. the company also saying it is seeing improvement. here's dell shares in the premarket, up 5%. i hope you saw the headlines related to intel, raising their revenue forecast for the third quarter. now seeing rev at $9 billion. you see a big pick-up in activity. intel shares premarket as well. up just about 3%. all across big cap tech this morning you're seeing a lot of activity. a. le apple is up. marvel is going to be another winner today. likely along with intel to give a nice pick-up to chip shares. marvel up 8%. their earnings beat. of course, the price target bumped up by a number of firms today, 18 bucks is what credit

suisse is talking about. infosy is is downgraded at morgan stanley. bebe posted their second quarterly loss in a row. also see a loss for the current quarter while the street was hoping for a gain. again dell shares strong this morning. intel on that news raising the revenue forecast to $9 billion up from $8.55 billion giving an overall lift to an already positive story this morning in technology. let's go down to matt nesto at the nymex. >> scottie, you know the withhold martian thing like "take us to your leader"? in this marketplace it's difficult to find out who is leading. i'm hear that it's the currency markets leading. we just heard art cashin saying the same thing. that's what's happening here again today. we saw consumer confidence, business confidence in europe rising for the fifth straight month. that gave brent crude a lift. just a point of business, on a week to day basis we look to be still down at last trade just a few pennies on crude.

but for the month, it's going to be positive by 2 or 3 bucks for the october contract. also worth pointing out today is going to be the expiration of both heetdi inheating oil contr. the natural gas continues to be the lone weak contract here today, down again at 309. this is the first day trading the natural gas futures here now into the month of october. that's what we're tracking here right now. mark, back to you. >> thank you, matt nesto. notable numbers out of gentleja overnight. total number of jobless people in that country jumped more than 40% last month. japan also logging a record drop in its own cpi. fresh fears of dedplags. the market reaction overseas, the nikkei higher, hang seng and shanghai composite lower. guy johnson, what's happening in london? >> we are higher, mark.

we have broken a two-day losing streak. we are hearing earlier about the light volume, that continues to be very much the theme running into the end of the week. london is up 1 hoin 4. frankfurt is up 1.7. cac is trading up 1.8%. let me show you the last week in terms of the stoxx 600. as you can see really doing nothing for the bulk of the week. this tidy little rally we're putting on at the end of the week fiends that the ftse 100 will end up probably at the current level up 1.4. cac up by 1.2% on the week. so another positive week for these european markets. let me just show you that commerce bank is one of the reasons why frankfurt is doing so well today. this is a stock that is up by 8%. a lot of chatter during the rounds of the german government is likely to lighten up the 25% stake in this institution. berlin is saying let's not get ahead of ourselves here, folks. we have no plans to do this right now. so different european governments at the moment. different stages are lining up.

the swiss government recently sold out of ubs and a lot of chatter in london both the uk government is lining up, and they're looking at some of the other banks like lloyds may be a story for next year. l loreal up by 7.3 % today. they say they believe the worst is over in terms of big retailers lightning up on luxury products on the shelf. so that stock getting a very nice little pop on the back of those numbers. you guys have a nice weekend, mark and melissa. back to you. >> thank you, guy johnson. up next, we're keeping an eye on intel after it boosted its third quarter revenues minutes ago. and dell bid higher ahead of the open after the company surprised the street. inside those numbers, nek. then the word on the street and the buzz yobeyond the tradi floor. can the dow go for nine in a row?

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we are back. tropical storm watch in place for the north carolina coast

this morning, even as that storm danny weakened overnight. the weather channel's jim cantore has more on that. jim? >> we're up here in new england where they've been hit by tropical storms and hurricanes. interesting, as danny has weakened from tropical status it's become more of a nor'easter for new england. we had a storm july 23rd like this that looked more like a nor'easter. we had wind and rain and trees and power lines down in the cape. this will be a similar scenario coming up on saturday. of course, all eyes are certainly on paying their respects for senator kennedy and what's going on businesswise, what has been an abysmal summer across many of the east coast beaches, will continue to be this weekend with whatever this is, tropical storm danny or the nor'easter. so the problems currently right now aren't too bad. it's a beautiful day. it's expected to continue to be

that way. as we go into tonight and tomorrow, heavy rain, wind, and another battering for the beaches expected here on coastal massachusetts. back to you, melissa? >> all right. on the auto front, the automakers say it sank last month. toyota dropping 20% marking a 12 monthly decrease. honda's output falling almost 16%. we have breaking news. we mentioned just a minute ago on intel raising their third quarter revenue estimate. they say on stronger than expected demand for chips. in the second we're going to dig deeper for what this could mean for the rest of the computer makers after dell's earnings yesterday. meantime, toyota is shutting down a california factory. this is the first time ever the japanese automaker is closing a major assembly plant. gm decided to withdraw from the 50/50 joint venture in may. toyota said it will move

production to other plants in the u.s. and canada and japan. >> chrysler now accepting product liability claims on vehicles built before it exited bankruptcy in june. while in chapter 11, the automaker had abandoned all of its product liability claims. the detroit news reports the new company is now accepting warranty claims, lemon law claims, safety recalls, but not for lawsuits filed before june 10th, the day it exited bankruptcy. up next, more on intel, and the word on the street and the buzz beyond the trading floor. futures getting, oh, yeah, getting higher after intel raised that third quarter revenue and gross margin forecast. later, why you might not want to write off the consumer or christmas just yet. "squawk on the street" on cnbc. we'll be right back. upbeat rock ♪ singer:wanted to get myself a new cell phone ♪

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you're watching cnbc "squawk on the street" live from the financial capital of the world. >> okay. it is the big news of the morning so far. intel raising third quarter revenue and gross margin forecasts. at the same time, dell is reporting better than expected earnings after the bell yesterday. what does this say about consumer spending on personal computers? the stock trading up more than 5% this morning on the news. joining us to dig in deeper on the numbers is randy, senior research with crest securities. andy, thanks for joining us. >> you can find that news together, also, though, dell saying one of the most interesting things they said is that the consumer is spending

money again but companies are not. how do you reconcile all this news? >> it paints the picture of an improving pc demand environment in general. certainly i think we've seen steady improvement in the last few months. this is suggesting that we're going to continue to see gains throughout the pc supply chain. dell's numbers, i think, from a demand perspective, from a top line perspective, weren't necessarily quite as surprising as the intel raise this morning. so i think the two actually matchup and what we're seeing right now is strength on the consumer side where dell isn't quite as strong. the hope is that that will be followed by strength on the corporate side later this year or probably more likely in 2010. >> you said you were surprised to hear that intel is raising revenue -- raising estimates based on improved demand picture. >> well, cover intel so i have to be a little bit careful. the magnitude of the increase is significant. they are raising the high end to

what looks like about $600 million over where the street is. that's a big number. so, yeah, i think it's certainly a good sign. >> where is the strength for intel coming from? >> well, you would have to ask them, i think. i'm not really sure. i think when you look at the pc demand that we've seen so far, it's certainly coming from the consumer. consumer unit -- go ahead? >> isn't that odd? consumer is supposed to be dead, not out there spending anything. at the same time, the businesses are supposed to be, you know, cutting costs but they're not making any money. it's surprising. >> it is surprising. but what we've seen is pretty incredible. elasticity. we've also seen pretty incredible government fundsing in markets such as china and the combination of those two mean lower prices on notebooks and some aid in terms of stimulus, is driving unit demand. it's a lot higher than i think what anybody would have thought a few months ago. and since intel's primarily -- or from a pc demand perspective

in the unit play, certainly plays into their favor. >> is windows -- windows 7 has got to be a boost for them in the coming months, right? >> yeah, that's the expectation. you know, windows 7 from a consumer standpoint, the boost is probably going to be relatively small. from a corporate standpoint, it could be big, especially when you combine it with some of the new chips that intel is coming out with and with office 2010 that will launch later next year. when you have all three of those things and an 18 pc fleet, yeah, the expectation is that that will be a pretty good boost. >> okay. andy, thank you so much for joining us today. appreciate it. >> glad to be here. let's check the futures again. they are pretty much at the high point so far of the morning. in fact, they closed. they closed five minutes ago on the electronic exchange at plus 8.80. more than eight points above

fair value. worth about 60 on the dow. time to get the word on the street, on the floor, dr. gordon charl charlop, managing director of rosenblatt securities. >> we had a boost in asia and now the intel guidance. it had a goodwining streak. can't deny it. you step back and look at what's happened with u.s. treasury, interesting story. weak dollar, massive issuance, but no threat of inflation. the only place you're seeing inflation i guess is in stocks, right? and some of it is just fighting and some isn't. i think maybe the financials are getting ahead of themselves a little bit. you're seeing interesting stories around the floor. of course, aig, interesting side bar there is that when there was all this pressure on that stock, and there was regulation buzz of the bear rate, doesn't seem to

be much of a driver regulatory action here on the short squeeze. so i guess all was fair down here when it comes to free markets. >> i'll take that as a yes. what part of this market looks best to you, gordon? >> well, obviously the tech sector is important right here. you would hope that any kind of rally be driven by financials, technologies, financials have done their part. now technology getting behind it. if this is really consumer driven and is, you know, significantly driven by top line revenue, then you will start to see the risk of the consumer segments getting discretionary in staples, then you will be able to go on tv and just shout to me that i was wrong and i'll have to agree with you. >> doctor, take two aspirin and we'll see you next week. >> thanks, mark. >> gordon charlop, rosenblatt securities. >> now let's get to the buzz around the big board, art hogan, managing brecht ter at

jefferies. art, what would you do for the weekend? >> you have to look at a few things. the economic data stream is better than had been expected, especially all the data we got in residential real estate this week. so i think that's constructive. i also think that in terms of technology and tech spent, we have seen it pick up in consumer, you heard from dell last night and intel this morning. understand that there's a big upgrade cycle both in hardware and software coming in the fall and 2010. we expect the price has been lackluster because you're waiting for that upgrade cycle. think about the fact that you've got windows 7 coming out. you're not going to upgrade now. everybody is running on xt. nobody shifted over to vista. you've got 8-year-old systems and 8-year-old computers waiting to be upgraded. that may cause more technology spin coming into the fall and into the first part of next year. you have to be careful this week and next week, only in so much as all of the volume has been in the top five stocks and a lot of those top five stocks are zombi stocks like aig and fannie mae

and freddie mac who shouldn't be trading as high as they're trading. >> it sounds like you're buying into the weekend opposed to taking profits. >> stay away from the financials that had quite a run and the technology names which probably play out well over the longer run. take a look at companies like mike rosen and microsoft for an upgrade play in dell computer, intel, across the board i think you're seeing strength that's probably going to be long lasting. it's been a while since we've seen enterprise step up and have robust i.t. spin. i think look at that. upgrading cyclicals and you'll probably save in stentechnology >> art, next week is the last week of summer. >> we're going to have crazy volume and wacky stock. like this week, low overall volume. doesn't make a lot of sense. you really have to be careful. let's wait until after labor day and wait until we have the market and make better decisions there. >> art hogan, thanks so much for

joining us. have a great weekend. final countdown to the opening bell coming right now. once again, futures point to a higher open.

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welcome back to cnbc's "squawk on the street." opening bell is set to ring in two minutes. but first, jim "gigaby"gigabyte goldman is on the phone with us, from intel. >> talk about a tgif present for tech investors. this is really important news. it's not just because intel is raising its revenue guidance. it's that margin guidance also. in other words, we knew that netbooks were doing especially well in the industry, low cost, low margin devices. what we're seeing now is a transition to the microprocessor, a new chip from intel. michael dell was talking about

this particular device on the conference call yesterday. sees particularly strong interest in that chip, and particularly strong business as well. so this isn't just about low cost, low margin laptops out there anymore. this is about that tech transition, the upgrade cycle. if intel is seeing this amount of increase in revenue expectations, this is that rising tide that could float a lot of tech boats. if intel is seeing good news, it stands to reason that hp, dell, mikest microsoft and likes of google and apple and others will also see good news. can you see it with me, tech rally? this is the kind of news the investors were hoping for. >> there's the element of surprise is what i find interesting. i mean, dell, first intel, of course, this is a surprise. and dell itself, six weeks ag they were warning us. >> right. i think that's an excellent point. you just wonder about the market dynamics and why these companies can't get their arms around it. we saw it with dramatically low

expectations for the last quarter reported. people were just way off as far as earnings and revenue expectations were concerned. now we're seeing companies start to get, you know, more of a realistic look at what's going on and that's important. >> jim, you give them a lot of credit. you think it's a realistic look or are we getting sandbagged like we do with a until. >> apple is the historically great sandbagger. >> yeah. >> but intel has been rather conservative as far as guidance is concerned. when you see intel raising the guidance to this degree at this point in the midst of this claim climate, this isn't sandbagging. this is companies saying these really are improving. this is not bad news, this is good news. >> thank you. here at the big board, silver springs consumer foundation. ringing the bell. at the nasdaq, jerry lewis, mda telethon previding at the opening bell. >> market reporters are all standing by, the new york stock

exchange, nymex, nasdaq, cme group. let's start with bob pisani at the floor. >> two things are going on today. jim, great report there. number one, intel raising their q3 forecast that pop futures at 9:00 eastern time. that helped the market. the other thing moving is the high beta financial stocks. we have seen aig, citi, fannie, freddie, bank of america all up 5% here. there's ibm opening up 40 cents. ig has been up 10% all morning on very high volume here. just opened up 12% here. of course, you heard the story all this week. a little bit of short covering. a lot of momentum trading. and a little bit of real news as the ceo acknowledged he has been talking to the former ceo hank greenburg. a lot, of course, is moving aig around. tiffany had good numbers. yes, same-store sales were down 16% but they bleeat on the top line. again, good cost controls. more importantly, raised their full year guidance. it's a bit below analyst

expectations. j. crew, you got a great combination here. mickey drexler, legend in the business, managing the company well, great store, great inventory. michelle obama also helping out, too. that stock moving to the upside here. profits better than expected. outlook for the third quarter also strong and above expectations. tradertalk.cnbc.com. scott, i'm sure we got tech stocks moving nicely. >> absolutely, bob. up better than 1%. by now you know the story. dell is up. dell was up 5% the last time i saw you. up better than 8% on the better than expected results. after the closing bell yesterday, a number of firms coming out raising the price target there as dell sees some improvement in the overall business. and then there's the intel news which broke this morning raising the revenue forecast for the third quarter from $9 billion from 8.55. definitely given a lift to all of the big cap technology stocks this morning. intel itself is up 4 1/2%.

it's lifted apple, microsoft, research in motion, and google, all the big names are to the plus side. it's set up to a. good day. now with intel news on top of that you're looking at a pretty good day for technology. as i said, we're already up better than 1% across the board for the nasdaq. marvel is helping as well, certainly from a chipper expectative. it's up 7 1/2% today. earnings beat the forecast ahead of expectations as well. infosys is lower this morning on a downgrade at morgan stanley. the overall market has pulled higher and it's gone into positive territory. bebe stores post their second consecutive quarterly loss. >> thanks very much. up for a second day here as far as oil is concerned. the thing we're looking at right now is maybe we can turn it into a positive week. crude up to $73.89 just to tie where we closed things out a week ago. on the month it looks to be a winner. if we look at the bigger picture

here today, crude, natural gas, trading in opposite directions. just like we saw yesterday. the gas trade continues to be weak. reading something earlier that suggested that that's going to pose problems for coal because the glut of natural gas is going to see utilities swapping to the cheaper fuel and putting their coal in the bin where they want to store it. so if you take a look at the natural gas trade, again, this is a trend heading lower and one that could set some new lows here today. new month contract, october for natural gas starting today at the same time. heating oil and gasoline contracts for september expiring today. we look at the next month out there with the trade there seems to be pretty much stable. but the big trade continues to be look at the dollar, look at the stock market. all of them looking at each other. and daring to push this rally forward as long as they can work in tandem and work in the counter trend towards the dollar. let's get down to rick santelli.

>> thank you very much, matt. you know, in about 1920, minutes, we're going to get the final august read on university of michigan sentiment survey. now, remember, what's the streak? you know, eight days. that's like a beatle song, you think that these numbers considering a run of equities isn't probably going to be better, at least that is the assumption traders have. a neat thing going on, wolf man telling me all week yesterday it was april fed fund futures make an all-time highs. when they make all-time highs, that basically says we're going have zero rates for a while and we want to pay particular close attention to that. in terms of the income and spending numbers, could have been worse. of course, we see that treasury rates have crept up a bit. some of the highest levels in the week, on a week where we're supposed to see mostly buying. remember, this is the second to last day of the month. adjustments probably coming today in treasuries but many markets. mark haines, back to you. >> thank you. it's been a lot of trading

action in stock of aig. a lot of confusion surroundsing them. by the sheer volume of clicks on cnbc.com, we can see you are looking for clarity. have no fear, our mary thompson will make it all clear. mary? >> certainly hope i can do so, mark. trading volume is heavy again in aig today, already 11 million shares have changed hands. traders cite a number of different reasons for the run up. a short squeeze, high frequency traders jumping in, improving fundamentals and recent comments from the company's new ceo saying he's in no rush to sell assets. he said he's going to wait for the right price for these businesses. the price for aig is looking to a lot of investors right now, up over 262%. there we go. 313% actually with today's gains. in the last month alone, a run-up of company by huge trading volume. still, keep in mind on the split adjusted basis it's down 96% over the last five years. back to the present, though. the 147 million shares traded in

aig yesterday was four times the average over the last ten trading days. and that nears the big volume in stocks of other recipients of significant government assistance. citi, fannie mae and freddie mac, add them together and you get 30% of the total trading volume on the nyse on thursday. on hook to the company it has plenty of people scratching their heads. look at the average size of the trade in aig yesterday, might give you a clue as to who is behind it. average size of the trade being 244 shares, smaller, momentum players are a big reason for the rally with institutional rallies with the smart money staying on the sidelines. now, along with heavy action in aig stock there's been a lot of action in options as well. and those thinking about getting into the stock may want to look at what's going on in the options action. that's because more people were selling aig calls yesterday, a bearish bet, than buying them, which is a bullish call. this suggests that they're not convinced the rally is going to last. mark, back to you. >> thank you, mary tofr shompso

up next,intel's impact on the broader market and how it ties to the consumer. >> and later, first on cnbc, double fault, extravaganza concludes with andy roddick and his new endorsement deal.

we're back. the fed is updating investors on weekly borrowers. average $29.9 billion in the last week, down from a week before. borrowing by commercial banks did rise. the fed's balance sheet grew during the week as central bank bought more assets. could interest rates be taken negative? they have in sweden where in july the central bank had negative rates, charging

depositors to leave the money with the institution. that's crazy, right? the bank of england's governor has hinted he may do the same thing to avoid a liquidity trap. but the ecb and u.s. fed are thought to be less likely to move to negative rates. could you imagine the impact that would have, mark, here in the u.s.? >> it's a concept that is so foreign to most of us. >> i had to pause for a second. this can't -- i can't be reading this correctly. but, no, that's what it says. >> they get the use of your money and you pay them -- i don't get that one. >> wouldn't you just leave it's, you know, on your bed stand? >> mine is buried in the backyard. >> i wouldn't tell people that. >> don't worry. i have three dogs. from the economy to the markets now we have seen an increase in bullish sentiment. they gauge the stock advice of news letters and other aid market advice outlets. the index shows the portion of stock advisers increased to 51.6

in the past week. that is the highest level since december of '07. bearish sentiment has fallen below 20% for the first time since october of '07. one lains quo analyst quoted in today's "journal" saying breaking 20% is one sign that stocks are making an intermediate top. another sign, intel raising revenue forecast, sending stronger demand. how is that going to ripple through the rest of the market. joining us for the cnbc edge. charles canner, and in pittsburgh, linda dissle, equity market strategist at federated investors. lynn dar linda, you first. what about this intel news? >> i just think it's more news that the economy is getting better and we think at federated investors we're in an economic recovery. if we are, there's still more room to go here in the market. possibly a lot more on the upside. >> and charles? >> i would agree with that.

i think aggregate demand is stabilizing at a level higher than most people thought. and so we look across numbers more broadly, i guess the numbers just look too low. and the businesses that we sat down with have done an incredible job at taking our cut, we feel good about that, feel good about the capital markets opening up, and i think operating leverage is very hot to predict when you have wild twins. >> linda, isn't this the final element that everyone keeps clamoring for? we say we've cut costs across the board? the thing that we're missing is the consumer is not out there buying. businesses are not actually selling things. that's what this news was. intel saying we see an increase in demand going forward. >> absolutely. even before this news, what we thought was really interesting was how they ran out of cash for clunkers money in one week when they thought it would last until november 1. how july sales of homes were up very, very strongly. even if it is the first time home buyer, they're only giving

them a an $8,000 credit if you think about it. a couple who look at on average $178,000 price on home say they will take that $8,000 is not a couple probably that's worried ability their jobs. i think these two pieces of information, along with the government who will not stop spending, is really bullish for sales. that's all we need now with the margins to goods. >> and yet we keep hearing that the outlook for the labor market is very poor until the middle of next year. >> i think the labor market is a lagging indicator. business ves generated a lot of profits to take ourg cut. and any day now, maybe starting as soon as september, i think the dialogue inside companies is going to change. the first quarter isn't going to be about how many bodies to take out. it's going to be about investing for future growth and making good capital investment. >> certainly in the past the labor market has been, as you say, a lagging indicator.

but not so in the sense i was using it is how do you get a strong recovery in housing if labor markeds are going to continue to deteriorate? >> well -- yes, thank you. if i may, labor continuing to deteriorate, the first sign that labor starts to get better, temporary employment. this week we saw the first news that temporary employment is going up. as you know we've seen a handful of companies announce that they're going to bring people back. the fact of the matter is that corporate america planned for a depression and so did consumers in their spending. >> yeah. >> the depression did not materialize. they're going to have to start hiring people again. and they will -- they'll continue to give these credits to get housing going. you don't seed so much housing. all to consumer spending going on after sales dropped to levels in line with depression. it's not a depression. that at least for the next six months has to be bullish for sales. >> linda, now take care of high net worth individuals.

what are they doing right now? are they still hoarding cash or starting to invest again? >> excellent observation because when you started off the discussion, you said that the advisers are very bullish, as bullish as they were in late '07. that's not so great. what are the individuals doing? they are putting at least ten times as much money into bond funds as into equity funds. they're still very worried. again the high net worth person is the one who lost the most money. these the one closest to retirement and needs to figure out what do i do now? he's resident to go out the risk spectrum but he'll go there next. >> it makes it seem like sentiment is more negative all of the way around than it necessarily needs to be. would you agree with that? >> it's hard to judge sentiment. i mean, we manage, like linda, many high net worth individuals. every individual is different. i think the risk out there is to be focused on inflation. the bond market pricing in around 2% inflation on the long end. it's hard to imagine inflation could be much lower than a. it's easy to imagine the set of

circumstances where it can be higher than that. we talk to our clients about those who want to protect capital, you know, treasury index inflation bonds are very interesting place to go. and for those the longer time horizon the equity discussion is back on the table in a very meaningful way. >> thanks for joining us. >> charles, linda, thank you both very much. up next, stocks on the move including american eagle and boeing. >> plus, from worse to first. wedgewood mortgage taking the barron's stock picker ranking list by storm. the head of equities tells us how they did it and how you can, too. you're watching "squawk on the street." some people buy a car based on the deal they get.

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"squawk on the street" realtime flash. intel is providing a nice lift on an otherwise dreary august friday, raising the revenue in guidance. above analyst expectations at the upper range of the previous guidance of 51% to 55%. intel reports results in october, october 13th, but looking at strong semiconductor sales. it got us to wondering about the consumer stocks with consumer

spending up. american eagle outfitters yesterday reported down, down big, down 52%. weak margins, tough sales. we had a number of analysts still saying the stock is a buy even as they lower their estimates. the estimates now averaging 21 share for the second quarter. that's not helping the stock at a all. down again today. boeing, morgan stanley and jeffries raising it. heading to 60. morgan stanley has 54. you see it 51 and change today. this after yesterday's announcement of the dream line we're all the problems it's had finally could be taking off year end. boeing stock is down a little bit on the session thus far. >> all right. scott, thanks so much. every six months barron's ranks the stock pick of u.s. broke ranlg firms, the loser for the back half of 2008 straight to t to the top of the heap. here to explain how they went from worst to first and giving winning picks for the rest of the year.

wedbush morgan is the largest independent securities firm and investment bankhead quartered on the west coast. thanks so much for joining us. tell us how you did it. >> well, starting in january, we made significant investments to our research capabilities. we tripled the number of analysts that we had on staff. we are actually the largest research -- equity research provider headquartered on the west coast now. we expanded the breadth of our coverage and got into new verticals such as life sciences and rounded out the other four verticals of coverage that we had. and that gave us a lot more stocks to choose from. additionally, we've been supporting our analysts better and making investments in things that are allowing them to do better research. and the bottom line is i think we've got a great group of talented analysts in our research department that gave us this performance. >> really? that's it? you hired more people and threw more money at the problem?

>> we invested in things that enabled them to do well and had great stock picks. we had monolothi krirc on it, u therapeutics up 31%. so our stock picks were certainly speaking for themselves. >> did you get rid of anybody? >> did we -- actually, we have not. we've hired a ton of people. >> you're out of here! >> get out! >> that didn't happen? >> we got rid of some of the stocks. i think we over-stayed our welcome in some. but we kept some that were just down significantly in the back half of the year. >> you know, you talk about you're giving credit to your staff and i'm sure the people who work for you appreciate that. is it easier to be an analyst today or harder? because, i mean, in the old days, analysts couldn't really

issue sell recommendations because then management would get ticked off and the management of whoever they were recovering and might deny them access. is that tension still out there? >> absolutely. i think it is -- it's definitely harder but i think that is easing a bit here. companies are getting used to the fact that wall street needs to have more sell recommendations or underperform recommendations. there's definitely still tension there, though. and, you know, a lot of times analysts won't put the rating on -- as negatively as they are, but they will write about it. and i think you really have to read the research and see what they're saying at the margin. and that's what's most important. it really doesn't matter what your rating is. it's what the incremental information that you're providing to the investor. >> i'm glad you said that. that's an excellent point. you can't sum this up with buy,

sell, or hold. you need to read everything the analyst is saying about something. >> and i want to know what your analysts are saying about what to buy right now because now our audience wants to follow suit and make money. >> well, i think, given the market run-up, i think some of the more interesting names are some that haven't really participated and have done things to position themselves for an economic recovery and have some catalysts ahead of them to get the stock moving, like electronic arts or clean harbors, also secular growth stories like eric center are attractive. >> and what would you avoid at this point? >> avoid. >> yeah, what do you guys selling, what are you done with? >> i think -- >> you can do it, come on. you can do it. you can say sell. >> given the fact that we've had a significant amount of -- i would definitely take some profits, specific news are not at the tip of my tongue at this

point. we definitely have. >> what were you just saying about sell recommendations and -- >> sheri, we've got to go, thank you very much. >> i appreciate it. >> okay. at wedbush. straight ahead, because you clicked, chesapeake energy, is all this loyal gas click talk have you intrigued? you got to be. you know, you've got to be thinking to yourself, gee, how low is too low for natural gas should i be looking at it, or stocks that benefit from natural gas. but check piesapeake, is that a way to capitalize on this difference? mcquarry research, equities analysts will tell us because you clicked. plus, is the luxury label over, are consumers in an irrevisable pullback, leaving you with only one option, which is contraction?

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the university of michigan consumer sentiment indegs came in at 65.7, little changed from the july reading of 66. intel shares are up by more than

58% after they raised the revenue forecast for the third quarter. personal income was unchanged last month while consumer spending rose 0.2% helped by the cash for cluchk nkers program. this is cnbc.com news now. we're first in business worldwide. i'm courtney reagan. >> still live from the financial capital of the world in the heart of lower manhattan, this is the second fun-filled, exciting, enlightening hour of "squawk on the street." and once again, good morning to you. i'm mark haines. markets turning negative. oh, well. but intel still about 4% higher. raised their revenue forecast and their forecast of profit margins, they say demand strengthening. posting what an fdr capital market analyst is calling blowout second quarter earnings and boosting sales guidance.

milan labs, expedia among those stocks hitting new 52-week highs today. melissa? >> all right. mark, thanks so much. i got bob pisani here with me on the floor. you know, yesterday i went back to global hq and, you know, all hell broke loose on the market. should i get out of here again? >> no, we're fine. we've got very low volume. let's put up the high beta financial names we've been talking about all week. there may be a little bit of fundamental news. they're attracting investors, buyers and sellers, simply because the volume is there for them. those stocks that you got and looking at here, 30% of the volume on the new york stock exchange for most of this week. so when you get that, take the volume out of that, you've got churning around on very light volume which doesn't mean an awful lot in terms of where the market is going. we need more data point. look at other things out there, look at the big tech names out there, great news from dell, great news from intel overall, maybe get a little profit of

s.t. micro. but the rest of the tech sector is drifting slower here even though opened higher. even with good news the market is having trouble because this is not a lot of volume, not a lot of bids out there right now. at it's a product of the seasonality. >> is it seasonally? i'm surprised. intel news, more the manned for the chip. >> undeniably good news. >> dell saying the consumer is buying something. i thought the consumer was dead. it's kind of amazing to me that we're not seeing more buying. >> again, the part of the problem is the fact that a lot of these stocks have been market leaders all throughout the summer. so this news was anticipated in partly built into the stock and also there is very low rol volume. it's a seasonal time. another thing is natural gas is down another 4% here today. big natgas stocks, they've been having a terrible time. all lagging the market. energy has been a real lagger. >> i'm going to have nesto with that on n. a bit. >> we agree with that sentiment

on tech? >> it's interesting, melissa, i do because it's not a powerful rally even though technology shares are higher. internally the nasdaq not all that strong today. ratio of up stocks to down stocks is basically 1-1. you've got pullback after a couple of really good days and starbucks down about 1%. clearly the technology news that we got today obviously is good, dell better than expected, intel raising the revenue margin forecast, stock is up 5%. you have gains across big cap tech in apple and research in motion and microsoft and cisco. the marvell story, comment with fr one of the firms of the blowout numbers that marvell did post as well. as i did mention, internally, melissa, it's not that powerful of a rally. we've seen some of the pullback in the sectors that have seen good gains over the last several days. back to you. >> scott wapner, thanks so much. oil is trading right now over 72 bucks a barrel higher on the day

after a big race into the close yesterday. let's get over to the nymex where matt nesto is standing by. >> we are higher for a second day but off of earlier highs. up nearly 20 cents right now. both you see the dow weaking up here today, dollar index, little changed. that is the story. also this magical $75 per barrel contract figure. yesterday you had to buy all of the way out to may or june to get $75 on the board. today you're seeing that in january of 2010. so it's moved in by about five months. that doesn't mean that there's a huge bullish demand and belief that demand is going to go higher. reality is we have seen a move sharply higher. the other side of the trade here is going to be the weakness -- continued weakness in natural gas. 303 is the low of the day. remember the september contract for natural gas which expired yesterday finished around 275, 280, so we might see this contract bust at $3 level again,

melissa. that can be very disturbing. we just a lot of gas out there, or a glut if you will. >> yes, that's a huge story to watch for the rest of the day. thanks. let's go to the hardest working man in the bond pit, my idol, rick santelli. >> thank you. it's interesting, you highlighted it. when you look at 65.7 against the mid-month read, which is 63.2, it doesn't look too bad. it's even better than expectation. but it is down .3 from a final to final to final perspective considering a july final is at 66. couple other points that are interesting. embedded in that there's always the survey for one and five-year expectations for inflation. each one of those moderated .1 of one year at 2.8. the five-year at 2. 9. does any of that matter? maybe. we're still debating, is there going to be any grab to spending which gives a grab to maybe higher prices. the dollar, as matt talked about, is basically down a bit. but remember, it's down a bit on

the week and it's hovering just above a major low that we tried to take out many times. every time you chip away at those technicals like a pac-man, got to be on guard. mark, back to you. >> thank you, rick santelli. natural gas, boy, the price may be sliding but just energy stock is up more than 60% since the bottom. one of the most clicked stocks on cnbc.com. so, because you clikcked, we're going to look and see if you can make money down the line. joining us, jason gammel, energy research analyst. jason, why the interest in chesapeake, do you suppose? >> i think it's a couple of things. i think the natural gas co commodity has been a big underperformer in oil. i think natural gas is poiszed for a big fundamental rally in 2010. chesapeake is one of the names that has the best leverage to a big upper move in the gas prices. i think you can find that with a stock that looks cheap.

trading 3 1/2 times next year's cash flow and 8 1/2 times next year's earnings. great value stock in an environment that can be strong next year fundamentally. >> why do you think natural gas itself is going to rally? they're -- apparently there's so much gas we may be running out of places to store it. >> yeah, that's right, mark. i think that's the short-term weakness is what leads to the medium-term strength. what you're doing by driving prices down right now is taking liquidity out of the hands of the companies that invest in drilling new natural gas wells if natural gas is a declining asset. if we don't invest, natural gas decline 20 1/% a year. what we're seeing is a 60% drop in drilling activity. i think natural gas production will be down 10% year over year by the time we hit the second quarter next year. the glut is going to be scarcity by the time we get into june of 2010. >> jim cramer was telling me yesterday about big policy change in washington, the whole thing that boon pickens has been

pooring to use natural gas as transportation fuel and we're going to see a big announcement, big change on that in the very near future and that's going to push up natural gas prices. do you believe any of that? >> it happens, it's very bullish for the medium to lunch outlook. i don't think it helps the situation we have with high storage and inventory levels right now. certainly natural gas is abundant in the united states. clean fuel. it would wean us off foreign oil over time. i think it's makes sense and washington policy should be encouraging. >> but you haven't heard that chatter, though? >> no. i'm not necessarily tight into washington as much as wall street. >> okay. chesapeake energy is one. could you give us some other names that you believe will benefit from this natural gas rally when it comes? >> yeah, i think chesapeake would be my topic. i think it has a chance to double. the other names we like here are xto energy, south western, and

petro hawk. all names are leverage in natural gas prices and can generate growth. i would be comfortable under any of those names. >> jason, thank you very much for your input. >> thank you. >> because you clicked, we talked to him about chesapeake energy. up next, tiffany beats the street despite profit falling 30% on lower sales. lower sales at tiffany. melissa is not holding it up. high-end retailer, successful pull back in spending. new data showing the rich getting poorer. is luxury retail changing for snefr. >> it's the guys that are supposed to be in there buying presents for significant others. it's not my fault. then, andy roddick rounds out our week of tennis superstars as he does battle. and later, we may be light on the volume but a handful of stocks are heavy on volatility. find out how it will play out on today's friday trade. "squawk on the street" will be back after this break. um bill-- why is dick butkus here?

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we're back. we're talking at tiffany. by the way, you know, the point at the break you said, it's the guy who is supposed to go to the -- >> that's right. >> let me tell you how it works in my house. >> oh no. >> my wife comes home with a little blue box and says, would you like to see what you bought

me? that's the way it works. >> clever. that's clever. >> yeah. tiffany beats the street despite posting a 30% drop in profit on lower sales. julia boorstin in los angeles with more on the luxury retail market. julia? >> well, mark, things are looking up for the high-end purveyor of little blue boxes. tiffany stock trading higher today of 39 cents, beating analyst expectations. the company results were better in the second quarter than the two previous, increasing the company's full-year forecast to 165 to 175 per share. recession for consumers to shut their wallets tiffany certainly suffered. income fell nearly a third in the quarter as compared to a year ago. to protect the brand they refused to move down scale, avoiding major purchases and slower tourism. now, wall street sees upside in tiffa tiffany's and seems like the company's new lean structure.

tiffany reduce marketing spending in marketing cost and early retirement to some employees. lower in jewelry stores shuttering con so indishutter ing consolidating and discounting. also this morning, 70% drop in profit in the first half of the year missing expectations but the famous scarf maker will open and renovate at least ten stores in the second half of the year. product giant loreal stock getting a boost in the first half earnings. ceo saying the worst is over for luxury products. melissa, it seems lack that cost cutting and protecting luxury retailers' bottom line while maintaining image concerned that consumers don't ever associate these brands with a sale. back over to you. >> interesting strategy. let's get our retail panel in for another look at the luxury market. we have david schick, luxury retail analyst with steeple nicholas. also, scott krugman of national

retail federation. thanks to both of you for joining us. david, what do you think about tiffany strategy, refuse to go down scale, not going to cut prices but cut advertising trying to cut costs here or there. is that the way to go? >> if they can show that the business can get a little less bad now, which they did, and that the customer is mixing well, so you're seeing all the lines of business act as you would expect them to, then i think these are expenses that deserve to be cut and we'll see where they take it, you know, as they keep growing the business. i think they positioned themselves well and kept the brand sort of classic. >> scott, do you agree it's the right strategy? >> absolutely. i think this is a matter of taking a scalpel instead of a hatchett. you don't want to destroy an entire brand in order to adjust your business model for a short-term period. and the thing about the luxury consumer right now, they have been stressed. they need more proof the economy is going to coming be ining bac.

ultimately they will return to shopping. there's a lot of pent-up demand from customers which could show companies like tiffany benefit in the fourth quarter. >> it's a matter of good management, isn't it, more than anything? we had a story about a month ago about -- i forget which luxury retailer. they sell $20,000 handbags. and business is booming. i mean if you -- if you're smart in your salesmanship, you can still do this, can't you? david? >> yeah, i think so that's right. let's think about tiffany for a second. they've been through u.s. civil war, world war i, world war ii, great depression, 2008 into 2009, we add that to the list. how do they do that? it's about a conservative management team in a sense of not betting on fashion, conservative on the balance sheet, and then sticking with what you stand for. and i think, you know, you add

the last couple of years to the list. there's been a lot of question is today's consumer changed, new generation that doesn't want luxury. >> oh, yeah, right, right. >> big discussion. and sort of today we can talk more about that. >> no, i think when they get older they're all going to want luxury. i'm not sure their taste has changed forever. scott, another thing our reporter said was that tiffany believes the worst is over in luxury. do you agree with that? >> to a degree, yes. you're going to see the consumer slowly come back. we have to see where they're making their discretionary purchases. we think at first it's going to happen on the discount level. you're going to start seeing probably walmart and target benefit in terms of folks going out and buying big screen televisions. that's going to slowly makes its way into the market. i think the fluent shopper needs more proof though that the economy is coming back. we see more sustainable gains in key economic indicators. i think you're going to see them make that leap and start loosening the purse strings a

little bit. >> all right. not much time left. david schick, your favorite -- by that i mean your opinion is the most effective luxury retailer. >> effective in running a brand, tiffany and coach are both very effective at running the brand and growing and protecting the brand. really different businesses. we have a buy rating on coach. we think that they have a little better business than people think right now. that doesn't take anything away from our point of view on tiffany's brand management. >> scott, same question. >> i couldn't agree more. also continue count out saks. there's a lot of pent of hup demand right now for consumers. they've been saving for the last two years. they've been paying down their debt. and i think we could see a nice fourth quarter surprise if all things hold. >> david schick, scott krugman, things. >> i'm telling you, ladies, it works. go out, you buy, come home. >> no, that takes all the romance out of it! no! i don't like that.

takes all the romance out. >> trust me, when you get older, the romance is gone, it works. next up, big interest in a small group of stocks. find out where the fast money is flowing and if you should get in or get out. >> and the parade of tennis all-stars continues on "squawk on the street." our darren rovell is in new york with another ace. darren? >> that's right, melissa. america top rank dennis player andy roddick and the ceo of the company who makes the shoes and racke rackets. that's coming up next on "squawk on the street." 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,

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welcome back to "squawk on the street." i'm darren rovell. andy roddick wimbledon final against roger federer was the most watched in ten years. although he didn't prevail, he's certainly top of mind coming into the u.s. open. one company that's happy about that is babolat, makes his shoes and his rackets. joining us now ahead of a photo shoot today is andy roddick and

eddie babolat. andy, obviously this was an epic final against roger federer. to me, it seemed like you didn't know how big it was here maybe until days later. how much it was really talked about. >> yes, sure. you know, obviously when you're in london you're in your bubble and you realize it's a big deal there. i was actually in new york city for a doup of days afterward and i couldn't really walk anywhere without people wanting to talk about tennis, which was really cool and unique and really kind of helped the process of wanting to get back out there. >> we spoke to james blake yesterday. he said that you perhaps are better now at number five in the world than you were at one. this could be the great esther a for men's tennis. how much has the game changed in the six years since you've won the u.s. open? >> it's changed a lot. certainly when you look back at videos from eight or nine years ago, i feel like, you know, it's a little bit of a different level now. you know, i've had to work hard

to keep up with the guys that keep pushing the sport, like roger and murray and so forth. so it's been a fun process, but it's certainly challenging. >> eric, obviously andy has been a part of babolat brand for a long time. racket, pure drive roddick, what's been the sales of that. can you see incremental increase when he plays at wimbledon final or, you know, wins a tournament? >> yes, i think such attention is great for sales, but more for our net worth of dealers which are 1200 in the u.s. and they call us to say, okay, we need more product. >> and you're a niche tennis company. you've been around for 134 years. it's only about tennis for you guys. i guess it's good that in the u.s. the sport has really grown. what can you tell me over the last year about your business? >> i mean, our business has increased 30% last year. we are already indicated to

specialize tennis players, so i think it's a bit effected by the rest of the course. >> andy, you're a top -- you're the top ranked american. you have a lot of deals with french companies, lacoste, babolat, you're represented by lagadiere. is that strange at all? is the company a good company is good company, doesn't matter? >> i think a good company is a good company. it just speaks to the kind of globalization of the game that we play. it's a worldwide sport. it's not kind of pigeonholed to one area of the world or the other. it's global so therefore i think sponsors and companies supporting tennis might reflect that. >> how many rackets and shoes do you go through a year, would you say? >> actually, you should ask robert. but somewhere around 120 rackets a year. 40 pairs of shoes. i'm not sure if all 120 get used but those are in play. >> thank you so much for joining us this morning.

eric babolat, andy roddick. andy will be playing bjorn in the first u.s. open, they will likely put him at night because it's a big draw. >> thanks so much. up next, the prognosis for health care reform after the passing of senator ted kennedy, the capital agenda from our main man on the job in washington, john harwood. tdd#: 1-800-345-2550 if i'm breathing, i'm thinking about trading. tdd#: 1-800-345-2550 i always have my eye out for a stock on the move. tdd#: 1-800-345-2550 doesn't matter if a company sells computer chips tdd#: 1-800-345-2550 or, i don't know, fish and chips. tdd#: 1-800-345-2550 i'll look at all kinds of stocks before i settle on one. tdd#: 1-800-345-2550 if i think i'm onto something i'll check it out, tdd#: 1-800-345-2550 you know, see what other traders are up to. tdd#: 1-800-345-2550 when everything feels right though, tdd#: 1-800-345-2550 that's when i get serious. tdd#: 1-800-345-2550 and the minute i get into something, tdd#: 1-800-345-2550 i already know when i want to get out.

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in our headlines right now at this hour, micron technology, bmc software and western digital beating 52-week his. intel still hovering around 4 1/2% higher. mark? >> all right. let's take a look at the internals and the markets. right now we're to the downside on the dow and the s&p. but the nasdaq, that tech strength is still there. internally on the big board, that's not too bad. about 400 more down than up. on the nasdaq, could be the reverse, right? oh! a little surprise there. about 400 more down than up there, too. >> all right. the passing this week of senator kennedy has some wondering what impact -- what impact will be on president obama's push to overhaul the health system. chief washington correspondent john harwood is opening the harwood file for some answers.

john? >> melissa, you know, the story of the year politically is that fight for health care. and the story of this week and this month, the season really is the passing of teld kennedy. everyone is wondering as this motorcade moved across the state of massachusetts to the jfk library yesterday, what effect his death might have on the debate. don't assume very much because the senate is not ultimately a very sentimental place. we're talking about an institution that's driven bipartisan ship, political calculation, by both parties and the same republicans fighting obama's plan while ted kennedy was battling brain cancer are not likely to turn around and be embracing them now that he has lost that fight. but there are other reasons to think that this health care effort by obama is in much better shape than a lot of commentary would suggest. now, let's take a look at what's happened during august. there has been august fallout for this plan. we had the town halls that were widely publicized a couple weeks ago. first of all, you see the

bipartisan health talks, so-called gang of six in the senate finance committee. those appear to be failing decisively and nobody expects that to present much fruit. there has been some erosion in the house of representatives as a result of those town halls. modest erosion, perhaps 20 house members are now -- house democrats, that is, are now opposed to the obama health plan. and thirdly, you've got these rising forecasts for long-term deficits which make the broader public sentiment about embracing universal coverage more problematic. don't forget that obama has huge assets in this fight as well. first of all, barack obama has got very strong good will among the american public. even though his own approval rating is down, people tend to root for obama, they like obama. the polls show that. second of all, he still has strong majorities in both the house and senate. even if he's got 20 democrats opposed to him, he can lose 35

and still pass this bill. finally, democrats have got memory of what happened in 1994 in which they decided that bill clinton's health care plans were too controversial to pass and ended up losing control of the congress anyway. that memory is burned on the brain of a whole lot of democrats in washington. so even if the polls get dicey for health care, as they have to some degree, members think if they fail to act after all the build-up, after all the emotion of the 2008 campaign they're going to pay a heavy price in 2010. i think at the end of the day, melissa and mark that is likely to ensure that something passes the congress. the real question is going to be how much of obama's goals are met on cost control, on expanding coverage, and on that public option. we'll see, but my bet is still that you're likely to see health legislation pass in a significant way, guys. >> john, any way to gauge yet the impact of those town halls?

>> most of the people who turned out for the town halls, mark, were people who were not for barack obama in the first place, were not strong allies of the democratic party. so that gets discounted to a considerable degree. there are some members -- and i mentioned per hahaps six or eig democrats by the calculation of strategists for the obama health plan on the hill and in the white house, have peeled off as a result of that sentiment. people who are in marginal districts who are very concerned about the sort of heat in this debate, even if it hasn't changed their view of the substance. some of those people have fallen away. but as i mentioned, democrats have got 257 votes in the house. they need 218 votes to pass a piece of legislation. you can't filibuster in the house. and that means they can lose a significant more number of democrats without losing their ability to get a majority for this bill. >> all right. john harwood, thanks so much. we have a little market stat for you. sugar has hit a 28 1/2-year peak. people out there getting cheap

thrills right now. can't buy luxury stuff but you can make more cupcakes, buy some sweet tarts. i don't know. what do you think? make a little bit more sweet lemonade, something to sweeten up the day when things are up? >> it's going to have more of an impact on india where they consume huge amounts of sugar. in this country, first of all we pay twice the world price anyway because of the interference of the united states government. >> i love that. yeah, great. >> industrially, you know, processed foods, most of them switched over to high fructose corn syrup decades ago anyway. >> it's not you pouring sugar on those strawberries over there. >> that's minor. >> i love sugar. >> on the strawberries? >> major sugar person. there you go. i like splenda on my strawberries. >> spenda? >> i love it. tastes just like sugar. it's great.

tastes just like sugar. >> i'll give eight shot. >> all right. coming up, wild moves in a handful of stocks this week. following that trade, following the momentum plays and getting your money ready for the weekend. and stay tuned to meet a small business owner who is beating the big boys at their own game. the owner of a local hardware store is seeing a boost in profits, even hiring in this economy. our small wonder series kicks off in just minutes. you're watching "squawk on the street." reading about washington these days... i gotta ask,

what's in it for me? i'm not looking for a bailout, just a good paying job. that's why i like this clean energy idea. now that works for our whole family. for the kids, a better environment. for my wife, who commutes, no more gettin' jerked around on gas prices... and for me, well, it wouldn't be so bad if this breadwinner brought home a little more bread. repower america. i hope our senators are listening.

in this morning's sound check, the ceo of the american

petroleum institute on oil and the economy, plus representative paul on the strong leadership and the keogh oh is the key to the recovery. >> what's more important here in the fundamentals longer term is the broader economic situation. when we look at it on a global basis, remembering that oil particularly has traded on a global marketplace. >> i think this is a very good time for strong presence of national and state leadership all over the country. and we have to start exacerbating the good feelings that we can do it, we can develop our own destiny. >> so busy dancing. kanjorski, of course, that is. but i was having a good time. >> that music was so disco. not that i like disco. but stocks on the move, scott cohn at hq --

>> also dancing. he's dancing. there you go. >> you've got do get up and dance. >> scottie. >> all right. keeping an eye on the cable company, ruling just in from the the u.s. court of appeals threw out some ownership limits or subscribership limits. there's comcast getting a little bit of a bump. cablevision has been a little bit higher than that. we'll see as they start to react to that. just looking at the halo effect, if there are any, from the earnings news like intel's guidance increase. stmicroelectronics and merrill lynch raises the outlook saying semiconductor growth next year should be up 21% versus 16% decline this year. stm is a big percentage gainers on this august friday on nyse. j. crew, consumer stock, beating the street on the fiscal second quarter earnings. we've got lots of focus on the consumer today but that is not helping bebe stores posting the

second quarterly loss in a row. now, projecting a loss this quarter as well. that was not what the street expected and the stock is getting hit relatively hard today. melissa? >> all right. time to get a quick check on what is making news outside the world of business. alex witt is standing by from msnbc. alex? >> good morning to you. here's what's going on. a second day of public viewing is under way at the jfk library museum. on thursday, full 25,000 people passed by his cassette, aket, ay their respects. the mow motemorial service begi tonight. president obama will be there to deliver the eulogy at the mass. the casket will then be flown to washington for burial at washington national cemetery. this horrific story. 29-year-old california woman reunited with her mother nearly two decades after being

kidnapped by an 11-year-old by a registered sex ander. jaycee was held hostage in a backyard enclosure and has two children by her captor. he and his wife were questioned and later arrested after his parole officer spotted him with those two young girls on the campus of uc berkeley. firefighters are battling raging wildfires in los angeles. 100-acre fire burned across the coastal city forcing at least 2,000 people to flee their homes. apparently, you guys, the weather is not at all helping in the firefighting efforts. back to you, you know what, mark, keep on dancing, pal. just keep on dancing. that was the best part of my day so far. >> yeah. up next, how to profit in a low-volume market. answers in today's friday trade. but first, what can we expect on "the call"? >> mandy, larry kudlow just called me to let me know he was running a little late. >> thanks for the message.

okay. thanks a lot for that. coming up at the top of the hour, intel revving up the issuing guidance. two analysts will be getting their views on our show and weighing in on that. also ahead, nobelreate says saving the world and necessary to aid economic recovery. is he right? well, we're going to debate that in our "call of the wild." one retail analyst breaks down her winners in the back to school world. lots and lots ahead at the top of the hour. but first, "squawk on the street" is back with their dancing shoes right after the break.

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we are back. it's time for the friday trade. today's theme is how to earn a profit in a low volume subject to "wall street journal" today. joining us on the floor, peter costa, president of empire executions, cnbc market analyst and well-known wall street eye candy. and in boston, peter, floor manager of asset management. peter. >> yes. >> good morning. >> good morning. >> friday trade here for a low

volume environment. >> wow know, in this market, and this is very, very difficult to find anything to trade. and we're looking at low volume, as you said. i'm looking at ben franklin and resources or franklin resources. it's a money management firm. one of the things about that whole area is they did fairly well in the financial crisis, well positioned, good cash flow. their pe is a little high but overall, over the long term, they will do very well. $96 a share, but a lot of room on the upside on that one. also, there's going to be consolidation in that industry. i think ben franklin be the acquirer, not the acquiree. it could be an interesting fight. >> peter anderson, what's your best trade now? >> for low volume environment, i think what we have to look at is remembering in low volume, sometimes price movements get exaggerated. so if you're an investor looking at a name that you would like to be able to position in,

sometimes it's a good time to get a position established if there's some negative news. lows, for instance, a nice play on the recovering homeowner. and recently it disappointed in earnings and it traded down about 10%. that's some good volatility to get into. so if you're looking at lowe's, and we own lowe's, we like that name, this might be a good entry point at this point. >> look at how much it's moved off that march low. >> well, still, when you compare it to, say, something like the s&p 500, which is up about 16% as of yesterday, lowe's is up only about 2% or 3%. it still has room to run, especially compared to home depot i believe double digits. it's cheaper on a price to book basis than home depot. >> peter costa, on low volume, is that telling us anything, significant or simply a product of the time of the year? >> it's a time of the year. that would be my number one excuse. second excuse is i think the

market is tired. i think it's more tired than people want to give it credit for. you see any moves there. you know, although there's some volatility in individual stocks, very little volatility in this market. it has a rally. the rally falls short. everything is running out of steam. it's selling off, it runs out of steam. it's just, you know, with low volume, you would expect a more volatile market because there's less players in the market. it's not that. >> how do you interpret that? >> i think what we reached is we're getting very close to a top. near-term top, not long-term top. near-term top, the market is 9500 on the dow. that's about it. we ran out of steam. i thought we were going to get to 9,000 in august. we 9000 in august we did, this other 500 points is bonus. i don't see it going much higher. i think it will be a long, drawn-out process before we get higher. >> peter anderson makes a good

point here. every year got last 20 years, i hear wait until labor day when the big boys come back. and as we all know, more times than not, september is a really lousy month for stocks. >> right. >> are you expecting another lousy september? >> here's what i say, low volume, high volume, mark. i really don't think it matters that much. if you like the company that you're looking at, and they make sense to you on some type of valuation metric, either price to book or price to earnings, most cases of volume won't impact your ability to build those positions. so i say regardless of what volume is happening, if you find attractive value out there, buy them when you see that they're at a buying point. >> okay. >> all right, peter costa, peter anderson, thank you very much. >> and we have a programming note for you later today on the "closing bell" chief economic strategist calling for 1043 by

labor day. we'll hear about that on "closing bell." >> plus, rising profits, hiring staff, sounds like something that happens during a boom time, not a recession. >> but we found one who is thriving in the downturn. meet him when our small wonder series kicks off. you're watching "squawk on the street." 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 es 350. but i've still got room for the internet. with my new netbook from at&t. with its built-in 3g network, it's fast and small, so it goes places other laptops can't. i'm bill kurtis, and i've got plenty of room for the internet. and the nation's fastest 3g network.

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we are kicking off a new series on "squawk on the street" called small wonders, speaking with small business owners who are beating the odds against tough economic times. leading off for us is bill deer, owner of deer hardware, an independently owned hardware store that has increased its profit every year for 63 consecutive years. bill, welcome to our show. that's an amazing stat. what do you credit for your success? >> what do i credit for our success? using management techniques rather than marketing techniques. we take the balance sheet and

profit loss sheet, and we work forward. of we don't use, just to advertise, we take what it takes to make the profit run. >> i understand that you saw the recession coming four and a half years ago? >> four and a half years ago, we have indicators that we saw that two years from that, the recession was going to hit. >> like what? >> we all knew it was going to hit, it was just a matter we stepped forward and did something about it. we saw the charge cards in our store going from 60% of sales to 82% of sales. you all reported the bubble was coming. we saw our -- we were doing wholesale electric supply at that time, our accounts receivables went from 30% pay to 90% pay. we realized it was time to react rather than wait until something happened. we went in and analyzed the whole business, the wholesale electrical, we eliminated it, which was a third of our business, also a drive-through liquor store and hardware store which was unique, a low profit margin, we eliminated that. plus, it wasn't family-friendly.

we looked into what was really going to happen in the future, and the hardware chain, 52% of the females was the percentage that were coming into the hardware stores at that time, and we saw a trend. we went back to the balance sheet, and figured out how to come forward with profit in the future. >> you are in jeffersonville or jeffersontown? >> jeffersontown, kentucky. >> jeffersontown, kentucky. >> yeah, the largest city in metropolitan local. >> oh, you are a city within the louisville metropolitan area. >> yes. >> so i assume there is a home depot or a lowe's nearby. >> within a quarter of a mile, we have a home depot, a lowe's, a target and another hardware store. >> is there anything you do specifically to -- as a result of their presence, or would you be doing what you do anyway? >> we -- we love competition. but the more competition you have, the better you sharpen your tools, the more we can

outmanage them. we just -- we see and thrive on competition in our market. we don't run away from it or are scared of it. >> how? >> how do you outmanage home depot? >> how do you outmanage? you go back to the principles of management. most business owners don't understand management. you would get 100% of something, once you spend 100%, if you want to stay in business, you don't go above it. if your advertising budget is 2%, and you raise it to 5%, you better find a place to get that 3% or you're not going to be there next year. home depot, lowe's, they're looking for a way to survive tomorrow to make their stock look good. >> wow. what advice would you give to other small businesses struggling right now? >> number one, know the difference between management and marketing. number two, have a five-year plan. don't just plan for tomorrow. if you want to be in business, plan for five years. and third thing is have fun. >> what can i get at your store that i can't get at home depot? >> personal