back to taking risks. it's in their blood. it's in the nature of the capitalist system. it's going to happen. >> mark, exactly right. wall street is supposed to take risks. i guess the point i'd like to make is does the customer buying the stuff understand what risk they are taking in buying the protects. seems good because you're getting a premium, cash surrender value, and policies would lapse any way because of the age and children not wanting to take them over, but it seems to be awfully rushed. when you ledge it late in a hurry, you reget over a long period of time. >> thank you very much. >> thank you, vince. >> we're out of time. see you tomorrow. we have a special edition of

"street signs." consumer reports says the index has fallen to its lowest since october. shares are up by about 40% as it rejects a takeover bid by kraft. welcome to "the call." 90 minutes into the trading day, rising commodity prices and increased merger activity helping to push stocks higher again. we're going to discuss whether this can continue. >> i'm larry kudlow. melissa francis is flying to vienna. the dollar is under attack. should there be a new currency? it is our "call of the wild"

debate. we are "the call." this is cnbc. with stocks opening high boosted by commodity prices, gold boosting through the $1,000 an ounce level. an increase in merger activity led by kraft also helping sentiments. david faber will have more on that. the dow up, 9502. the s&p 500 also pushing higher. the nasdaq and the vix enjoying time in the sun as well. we have matt nesto at the nyc and scott wapner. let's begin with matt. >> let's talk about that 60-point move. i like to see 100 plus percent moves in this marketplace.

we have two big upgrades today. the best performer is general electric. it's up about 5%. the single best day since the beginning of july. that's up almost 120% from the march lows. they raised the price from 17 to 12 at jpmorgan. ubs raised the price target from 70. and on a downgrade is ibm. morgan stanley is hurting because ibm is still inching higher. 22 of 30 stocks in the dow are trading up. the energy stocks, materials, industrials clearly the leaders. stocks like allegheny and harley. aig a loser, the price target

down to $15 per share. that is the huge getback from the stocks closing at 40 on friday. now to scott wapner. >> thanks so much. a pretty good morning for nasdaq. take a look at the names. oracle, intel, google, cisco and ebay. morgan stanley upgraded the hardware enterprise today. they site faster revenue recovery and specifically mentioned names like aletra. sir ra's up. they also raised the price target on apple to 200. they're holding their big event tomorrow as you know and jim goldman will have more in the show on what to expect. they did downgrade dell to equal weight. however, because of the momentum in the market today, dell is

ahead and cosco getting a nice bump. shares up 2.5%. the story is all about gold and other commodities, sharon, right? >> that's the hot story of the day. these gold traders here will tell you that's definitely the case. they're up around $1009. we're off of those highs right now, but this is still is highest prices we've seen since february. keep in mind, there are a couple of facts pushing gold to these levels. we broke through some key areas last week. that was without any help from the dollar. today, the dollar is definitely playing a role. that is helping gold prices and also oil. oil prices up about $3. above $71 a barrel as we look ahead to tomorrow's opec

meeting. meanwhile, not only gold but also silver up about 30%. copper on fire. it is really a dollar story and these traders here, gold up, thaer taking advantage of it. >> thanks. what does the rising price of gold mean for stocks in  general as investors return? the big question remains, can this rally continue or are we in for a big sell-off? let's bring in tom liden and our bear. hello, gentlemen. tom, start with you since you're the bull. can stocks in general rise as gold rises in tandem as is the case this morning? >> absolutely. everybody's talk about the september, october corrections. if everybody talks about it, it usual never happens. the last time we had a 45%

correction and the next year, 2003, the market stormed. from labor day to the end of the year, the market was up 15 to 20%. so i think we're up for a repeated history here. >> i want to ask you, david, maybe this isn't a gold versus stock story. maybe a gold versus u.s. dollar story. when gold is rising this much, stocks get a bit twittery. the last time gold pushed 1,000 was in february. maybe this is an impending u.s. dollar crisis story. >> with people moving into gold and the dollar being weak, that's a positive for the economy. the fact of the matter is many say that without the massive amounts of monetary stimulus being applied to this economy, this market would be nowhere. mr. bernanke's got to be looking at that price of gold as a forerunner in inflation. he's got to withdraw that and

then where's the stock market going to be. >> tom, you're bullish, but if we boost the u.s. dollar crisis, can we still see stocks rise? >> american businesses are running lean and mean right now. inventories are down and from a gold standpoint, yes, there might be a threat of inflation, but we haven't seen it yet. there's demand out there. we've got got emerging market countries that are booming and citizens with a great demand for gold. there surely is demands and finally for the first time in a long time, the average investor through etf have a ability to speculate. there's a bit of speculation in this that you have to factor in, too. >> on this gold story, the g-20 meets in london and there's no

exit strategy. gold starts ripping higher right away starting yesterday in europe. is this a reflation play and how long will it last? >> certainly. but if gold's going up, how much further behind can oil be and probably after this terrible, 25-year unemployment rate, the second most important number in the economy is prices at the pump. once that gas goes up, people don't have money to pay for their other necessities. the gas is going to put additional pressure on the consumer. the consumer is 70% of the economy. how can that be bullish for stocks? >> so why are stocks higher? looks like everything, all the asset classes are going up. so in the short run, maybe this is like spectacularly bullish. is that possible? >> it's all about hope.

there was a great story the other day which examined brokers looking forward to 25% next year, but economists at the same firms say it will get better. that's almost a multiple of earnings over the gdp growth of 11. we have never seen that before. >> larry just mentioned the g-20. today, stocks are -- it looks like we're still going to have that for some time. >> the bunch bowl's getting larger. they're putting more booze into it. more ice cubes. they're bringing it to everyone. i think you're exactly right. the punch bowl is now engulfing the bir world's stock market. what does that mean? >> when are we going to get the hangover? >> you're making a great case for gold, but i don't think it does anything for the general stock market. >> there's still $4 trillion on the sidelines.

people are getting back from the beach and looking at the stock market -- >> tom, mandy's point. it may be a ton of worry, but the reality is there's a ton of punch. okay. >> and you committed to keeping that punch there. >> they aren't going to have an exit strategy maybe in our lifetime, i say that tongue and cheek. the monetary experiment is putting stocks higher. it's going to come and bite us the next couple of years. >> it always does. >> in the short run, this thing could blow up. stocks could blow higher, could they not? >> tom. >> there could always be some type of correction, but folks, what if you miss it and that's a key. >> it's like a melt-up. easy money melt-up.

not a meltdown. >> warren buffett is starting to get a little antsy. we better wrap it up, guys. thank you very much, everybody. and keep on adding more booze. coming up, speculation is the name of a game for apple. >> kraft foods reeling from rejection and they're not the only company that could come up with a bigger offer for cadbury.

shares of u.s. health insurance are down across the board. it could have something to do with mr. obama's strong endorsement yesterday of a public government insurance option. take a look at that. kraft food shares are falling a day after the company went public with a bid for cadbury, which the candy maker rejected. they're trading down nearly 5%. of course, cadbury has had a fantastic run the last couple of sessions. >> that's right. kraft today, the first day that stock has been able to trade after yesterday's announcement, which impacted trading in the

u.k. kraft shares down about 5% as you saw this morning. the company's ceo held a conference call with investors in part to try to share with them what they believe are the strategic benefits of this unexpected bear hug from kraft for cadbury. kraft would need a vote of its shareholders if it did go ahead with a formal offer for cadbury as it is currently constructed, gich it would be issuing more than 20% of its shares. cadbury shares trading well above the offer. a possible offer from kraft was about 4.9 billion. about 14.5 times trailing. that is an area where a lot of food deals have been done. but those who say cadbury should

garner a higher premium, wrigley was done at a far higher multiple. somewhere around 18 or 19 times. the kraft side would counter and say, that was at an s&p level. and wrigley has always gotten a higher multiple then cadbury. as for cost savings, one key driver of why this deal will add to revenue growth is because 300 million of operational synergies and about 200 million will be saved. why is cadbury trading where it is? first, obviously, kraft will move to what we call a formal offer. under 2.5 is the takeover code in the u.k. secondly, because there is an expectation perhaps in some

parts that will be another bidder. that's the key consideration though. it does not appear one that is likely at this point. we'll see. this is early days. it will play out over quite some period of time. the names of course, nestle being foremost among them. it would have to probably divest the chocolate business of cadbury. does it really want to move in this direction? it has been focused on wellness and health, so it's probably unlikely, but we'll see. hershey, we'll see. they're far smaller than cadbury and it's going to have a deep-pocketed partner to help aid a bid. will it go to private equity? could it get that much from private equity? again, a big question mark. finally, pepsi, not going to happen. although pepsi would have

interest, but it is going of its bottlers in two separate deals that are going to cost a lot. it is also focussing more on the wealthy side of its business. this deal now, why, well, primarily because of financing markets. they have opened up considerably over the last year. not a tough one to get from investment-grade companies. >> whether not this is just opening the flood gates. >> cash and stock, no debt. am i reading this right? >> no, kraft will be taking on debts to fund the cash portion, so $8 billion in financing will be required. so, yes. there will be debt as part of this deal. but again, larry, a reflection of what we stand right now a

year after the debacle of l of september 14th. key question is whether they will take down the consideration that includes their stock. if they come up in a bid, it will be more in cash as opposed to more in stock. >> thanks very much. so is m and a activity making comeback. rich, thanks for joining us. this isn't new. we have been watching this activity peak up, but what is new is it's unsolicited and this is the first since the credit crun crunch. >> it's a continuing ray of sunshine. there's been a positive correlation and what we've seen is a little bit of a pick-up

with deals with disney, proctor and gamble. we find that the economy's recovering. >> okay, so it's essentially tracking gdp. to what extent do you think we're going to see m and a because volume is still tracking year to date levels. >> august was a horrible month. the fact is, what's critical here is the deal, unfriendly deal, take only about 25% of deals of that type actually get completed, so unless this deal turns into a friendly offer, it will be very difficult to see that getting done. >> rich, just quickly on the way out. debt. i'm interested in the debt financing piece. as you say, a year later after the fall of the credit markets,

which is mostly a fall of the debt markets. how much is debt going to play? >> we saw that with the six-part transaction. this is a very good year for debt. with all the financials being able to go on the markets and get sources, this is a continuing, positive story going forward. >> thanks very much. when we come back, apple is on the rise ahead of tomorrow's major announcement. we're going find out next only on t"the call." been true since the day i made my first dollar. where is that dollar? i got it out to show you... uhh... was it rather old and wrinkly? yeah, you saw it?

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where if another orbitz customer books the same hotel for less, we send you a check for the difference, automatically. this as traders await tomorrow's opec meeting. melissa francis will co-host "the call" live. that will begin at 11:00 a.m. eastern right here on cnbc. apple expected to make a big announcement tomorrow. many believe it will be the release of a new ipod. right now, apple is trading up nicely. almost 173 bucks.

hello, jim. >> happy tuesday morning to you. we know this will be an ipod event. we're next to positive that apple will not be unveiling a new mac tablet. and there's speculation if they've struck a deal with the beatles or rolling stones. this is the last video of the apple ceo before he left on his leave of absence and when he returns tomorrow, it will be jobs himself who is upgraded after his liver transplant. despite stories of the executive palate, jobs is make in charge, in control and this event will put the exclamation point on that headline. rumors about a new ipod touch

that will include a camera for stills and video. about time. there's talk of an ipod classic, a bigger hard drive or retired all together. that's leading some to believe a library of rolling stones tunes will be coming and there's rumor they may have sealed a deal with the beatles. sources in london and here in the states say it's not going to happen, but the products key to the upcoming shopping quarter, they'll take a backseat. that's what everybody will be watching. we'll have complete coverage of the event. that will begin before 1:00. >> thanks. let's talk more about apple and what it needs to do to stay on top of the tech sector. joining us, roger kay, ryan

marshall. roger, you first. i thought the issue here was i-phone, which might be sold to business enterprises and really expand their apple product line business. where do you come out? >> okay, so the i-pod line has kind of slowed. growth isn't as good. it does need to be refreshed. people are largely moving from i-pods to i-phones and the i-phone is actually making great headway in businesses as well as consumers. >> connect this to the business enterprise. how does this expand apple. besides the halo affect. >> we think the i-pod, the i-phone is for the enter prize. users are telling their i.t.

managers, you're supporting my blackberry and i want you to support my i-phone. we think complete penetration will have an uplift affect on n apple's mac or notebook sales. we think that's going to be the key driver. >> in terms of the rumor mill over what could be in the announcement tomorrow, is there anything that you think could be a game-changer? >> everybody is waiting to see whether steve himself will arrive. i think these announcements, no matter how good they are, are going to be pretty ho hum. tablet's not going to show up tomorrow, but it has to be seen in a larger perspective on the i-phone that's going to extend and make apple a more prominent

player in the computer business. >> ryan marshall, what will the i-phone do for a business? >> it will improve productivity. that's the key. >> why? what's in their system that's better than anything else out there? >> application support. for example, if you're a sales rep at oracle and you want to login to your system realtime to give some price quotes to a potential customer, you can do that without going to your notebook or office. if you have that productivity on your i-phone, that means you're very mobile and can diz business any where. one year later, is the u.s. financial system really any safer? we'll discuss whether or not you should be invested in u.s. bank stocks. and the united nations.

they're looking to replace the dollar with a new, global currency reserve. what's the impact on gold? it's all ahead. i've been growing algae for 35 years. most people try to get rid of algae, and we're trying to grow it. the algae are very beautiful. they come in blue or red, golden, green. algae could be converted into biofuels... that we could someday run our cars on. in using algae to form biofuels, we're not competing with the food supply. and they absorb co2, so they help solve the greenhouse problem, as well. we're making a big commitment to finding out... just how much algae can help to meet... the fuel demands of the world.

the newly created financial crisis commission stopped work this month, how the banking system came to near collapse last fall, the ten-member committee comes with much skepticism over how effective the panel can be. one year later, we want to know if it's safe to be invested in bank stocks. gentlemen, thank you for joining us. matt, my question to you, even if it might be safer, has all the easy money been made in banks? >> i don't know if it's not worthy of investing, but there are some that have run too far too fast and that it would be time to trim some of your gains, especially in more speculative names. since august 1st, citigroup is

up almost 52.5%, but some others are up over 200%. i think it's questionable to see these names running on low volume. i think it's worthy of moving some assets to the sidelines, but i would look to higher quality names and ones that pay a good dividend deal. >> david? >> we're pretty neutral in the banks, actually kind of negative because commercial loan quality continues to get worse. the bigger banks, we're probably more neutral on. i would agree. >> is this a potential washington witch hunt banking investigation, whatever it is, have any impact at all on your thinking about buying or selling banks? >> i think it's going to be a grand political side show, larry. when you look at how the make-up

is and how they want to have 22 points, i think the decisions have been predetermined and anybody who works on wall street is going to be painted with a bad brushed. i would be interested to see how they look after some of the political community, senator dodd and frank, to see if that comes up. if that ends up in there, i'll give it more credence. >> you still have a steep, upward slope in treasury curve as far as the eye can see. is not that bullish for net interest margins and bank profits and working through toxic assets? >> yeah, absolutely. it is. the banks certainly have some positive outcomes from this. not to mention you know, less in competition, but if you look at what the treasury put out last

week, their guidelines for new capital requirements for banks, that's just all negative. you know, you look at consumer financial protection agency, which we think will be one of the few things to actually come to pass. >> matt, back to the safety issue. is it actually safe to invest in banking stocks. to what extent do investors feel it's okay because investors have our back or is the ability to bail out banks actually diminishing? >> i think there's no political backing to keep bailing out other entities. with all the issues administrations have, they're low to go back and inject capital. i think really if investors are looking to buy into banks, do your homework and find names that don't have as much exposure

to commercial real estate, credit cards. >> like? >> i would avoid them. >> which ones in particular, matt? >> we like northern trust. it's a regional bank. we also owned bank of nova scot scotia, which has a 43 yield. the bottom line is i would avoid some of these t.a.r.p. entities. the curve does help, but i think it's already helped and it's time to move your profits and go to some other stocks that haven't had their pop yet. >> you mentioned as a throw away, but it's important, some regulatory problems coming down the road. are those negatives? how big? >> the well capitalized, tier one, 6%, the treasury said it's going higher. most people believe it's going to be 8%. >> you talking about capital?

>> is that a good thing so -- >> but it does reduce your earnings growth and reduce your return on equities to investors are probably not going to pay the same multiple. >> what do you like? >> we like wells fargo, the purchase accounting helps there. the loan write-offs. they have banks with big scale which are tougher to squeeze out. >> thank you very much, gentlemen. cnbc will be holding a town hall meeting with tim geithner about the crisis a year ago. that is this thursday at 7:00 eastern time right here on cnbc. talk about getting kicked when you're down. the u.n. is looking to create a new, global reserve currency.

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we're up by about 36 points on the dow. s&p and nasdaq also in the money. a radical report from the radical u.n. says the u.s. dollar played a major role in the economic crisis and it's time to create a new global reserve currency. this as the dollar hovers at a year to date low against the euro. should the markets listen to the u.n., or is it just a way to kick the dollar while it's down? let's bring in david gillmor and rick santelli. who cares about the u.n.? is that why the dollar's rising today because the u.n. said it's time to ditch the dollar? >> i think this is another classic example of news chasing

price. the move started last week with the big run-up in gold and we were getting back to more normal levels. the market just had a run at it and you've got to look on the news wires and find a story when they call the reporter, happened a number of years ago when a good domestic economist talked about the end and it just had a huge move. i think that's all it is. >> it is a whacky group within the u.n. the u.n. general assembly the pretty whacked out. they also came up with an international language that really went nowhere. >> china and many others in emerging markets have been asking for an alternative to the dollar for a long time so is there any weight to this

argument? >> he's the head of the u.n. conference of trade and development. he's who made these quotes. he's also the previous head of the world trade organization. another very beloved organization. the u.n., the same group that brought you oil for food programs, that went flawlessly, didn't it? and his comments are really in regard to not only global warming, but of course, the dollar. but there's one thing in his comments that triggers are talking about. one of the rationals for his suggestion is the game being played by our government. many traders would think it was our government and of course, the whole notion of the credit crisis and institutions not taking responsibility for being buyers of dumb derivatives. the weakness in the dollar starting long before the three-days of the gold market

last week. >> dave, the g-20 mapped no exit strategy. the u.s. is priming the pump. there's no end to it. and china. a chinese official in a conference over the weekend said we need a new currency, said is fed is pumping too much money. do you recall the old statement, where there's smoke, there's fire. >> where there's smoke, there's fire. >> i'm trying. >> i don't think we can take the chinese very seriously on this count. >> whoa. how can you possibly say that? they own the world. >> they're going to blow themselves up. you don't like the way your house looks, you want to redecorate it. you don't set it on fire first. they're still accumulating massive amounts of dollars every day and we're talk about maybe

an sdr being a currency. and they're going to be able to dictate monetary policy across the spectrum of central banks. >> you're right. it would really shoot themselves in the foot. maybe this is sort of a process over a number of years. we're already seeing central bank diversifying away from the dollar. just accumulating for example, more euros, more australian dollars. >> more gold. >> maybe this is not so much like let's get rid of the dollar and find something else. let's just gradually diversify over the years. >> let's put a face on it. prior to 1999, there was no euro curren currency. one should expect that with a new world currency in europe, there is going to be some

diluti dilution. there's a lesson here, viewers. that is unless many governments, including the u.s., get their debt fiscal house in order, we're going to be the target of many attacks by chose who say they're our friends, but as larry pointed out, if our house is smoldering, they're the first to sneak in and try to steal our furniture. >> there's a lot of talk in the market of a chinese put under gold. china is a gold buyer. they won't let the gold price fall and they're trying to quietly buy it without driving the market sky high. give me a take. >> it's absurd. there's speculators driving the price of gold up right now. the chinese are not buying gold as a hedge on their gold position. >> makes perfect sense. that's what they're doing.

>> no, but -- >> you subliminally described the chinese strategy. >> the chinese are buying companies -- >> we go out and buy gold to drive the dollar down? that doesn't make sense. if they bought $50 billion in gold, the kind of move in gold would be extraordinary. the move in the dollar would be much bigger on their bottom line because they have so much more holdings in dollars. so it's not a hedge. >> rick, you were trying to get a word in edgeways there. >> while we're all pontificating about some rejiggers of etfs showing up in gold, the chinese are buying rare earth mines, they're buying the actual mining businesses. they're not wasting their time playing around with gold. >> rick, rick. they're not buying lithium. they're buying valium.

valium is the ant ek dote to their dollar worries. look at the chinese minister over the weekend at a conference in italy. he said the fed is printing too much money. you know it and i know it, that spells gold. >> it spells politics. >> it's the investment of retail. come on. >> "power lunch" is coming up next. bill griffeth, what do you have in store for us? another fight? >> oh, you bet. coming up, only on "power lunch" could this happen. dr. david kelly, the chief market strategist at jpmorgan funds and 50-cent. i just like to say his name. this guy has the midas touch in the business world.

also, we're looking back one year after the beginning of the meltdown in our markets. soul searching about investing. does buy and hold strategy still work? diversification? plus, oliver stone's back on wall street today as he begins filming the remake of his cla classic film, wall street. up next, sales for the ultra luxury automakers may be down, but they're not counting out the u.s. consumer yet. and releasing new models new out this fall. you're watching cnbc, we are first in business worldwide.

the world's producers -- much larger than wall street's estimate. this due to low prices and weak export demand. right now, the stock is off about 2%. smithfield foods, on the downside. the news on gm and chrysler have been dominating. they're getting ready to introduce some new models out this fall. >> there's a market out there and they're going to have a lot of choices.

people who are wealthy enough to afford these cars. let's take a look at some of the models coming out. porsche. it is a four-door sedan, it goes on sale this month. that's getting a lot of attention. so is the new jaguar. starting price, $72,500. bentley has one going on sale next year. it was introduced earlier last year overseas. $300,000. bentley officials admit, yes, even the wealthy have felt some impact because of the recession. >> overall, the market has been affected the same way. nobody has been immune. >> nobody.

including the ultra luxury automakers. superluxury is what they're referred to as. they're sells down 40%. so, why would an ultra luxury company still make these vehicles? because there still is a market out there worldwide. >> they're not going to build big numbers of them. maybe 1,000 globally. if you look at emerging economies like china and india where the rich there will want the cars, there maybe enough demand. >> for more on the market, check out the blog on cnbc.com. larry, in this market, the superwealthy, it's a worldwide market. the u.s. may be down 51%, but there's red hot demand in china and india.

>> and i'm sure in the middle east as well. up next, the call to action on the afternoon trading. mary thompson has the list of stocks to watch. ncial partner... who is unusually prepared to help. the meeting with northern trust went well, didn't it? yeah, they get it. they really get it. a little more stability would be nice. northern trust offers the strength and expertise... that can only come from a 120-year track record... of thriving even in difficult times. they understand. roller coasters are for kids, not money. ♪ northern trust. wealth management. asset management. asset servicing. most people try to get rid of algae, and we're trying to grow it. the algae are very beautiful. they come in blue or red, golden, green. algae could be converted into biofuels... that we could someday run our cars on. in using algae to form biofuels, we're not competing with the food supply. and they absorb co2, so they help solve the greenhouse problem, as well.

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