good morning. the cartel's call, opec meeting in vienna, expected to keep health care unchanged. mr. obama is expected to address congress and the american people in a prime time speech tonight. plus, beatles mania. decades after launching a media revolution, the entire catalog has been remastered and it will be reborn in the homes around the world in the latest rockband game today. it's 9-9-09 when "squawk box" begins right now.

♪ good morning, everybody. welcome to "squawk box" right here on cnbc. i'm becky quick along with joe kernen and carl quintanilla. the beatles, i like this song. anyway, opec is holding court in vienna today. that meeting officially begins at 3:00 p.m. eastern time. influential saudi minister expects the cartel to leave production levels unchanged. a saudi newspaper reports that he plans to telling others that global inventories are high, but they should decline as soon as demand starts picking up. right now, you can see that nymex crude oil is up about 7 cents. $71.17. expectation has been that they would do nothing in terms of either cutting or raising their production quota levels, although there is talk that

maybe they're going to be cracking down more strictly on some of the cheaters behind those production levels. melissa is on the scene and will be bringing us live reports throughout the day. >> are they talking target price inspect. >> i did see a target price yesterday. >> they had better walk softly right here, don't you think? >> i think they say 85? 85 is what they're looking at over the longer -- >> we mentioned 85 would be where it would start choking off the global economy, so they would probably like 85 to get right there. just to get it right before it cracks everything. buno, i don't think -- i think they said they were going to keep production where it is. >> beyond oil, looking at the broader markets this morning, the dollar dropping to its lowest level of the year yesterday. among the reason cited for the weakness, attempts by the u.s. government to revive the 1p economy. traders are selling dorlts to

invest in higher yielding assets elsewhere. the aussie dollar closed to an 11-month high this morning, as well. meantime, low interest rates holding down the return on greenback assets. we're tracking gold, as well, crossed over $1,000. as you know yesterday, settled back today and awfully close at 997.20. in the meantime, u.s. futures are looking lower this morning.d asia had some red action overnight. this would be the first downward action for u.s. markets in about four sessions. and the ten-year, which has been close to 3.4%, 3.2%, just still below 3.5% at 3.471%. we will finally see what's in this president's plan for addressing a joint session of congress tonight. it's the lead story in the journal. the public plan will be part of it. it's a quagmire at this point. he wants a public plan, but now it's not going to be mandatory, but the public plan he is talking about isn't going to be

subsidized enough where it could hurt private insurers. this is going to be a fine line to walk. >> and you missed last week when we had ed rendell, the governor of pennsylvania who said he highways a serious problem with it, too, because it leaves so many unfunded mandates. >> do you remember when they were together? >> this is the guy who used to run the democratic committee. >> and he's a hillary supporter. >> but he's been in line. >> do you remember when they said go before the governors and try to convince them that you're not going to go broke based on your percentage. and it's not between democrats and republicans walking a fine line. it's between democrats and democrats. >> if you get olympia snow, maybe that gets you 60 in the senate. but it's getting the blue dogs. >> it's getting the far left that wants a robust public plan to see whether they're -- >> baucus released this stuff

yesterday from the finance committee, released some -- his plan to some reporters and lobbyists without giving a heads up to the white house which left them feeling like they got left out of the loop and backed into a corner. >> he had to be part of the debate before the speech otherwise he's going to get left in the cold. stenny hoyer says they could pass a how it is house bill with no public option. >> and nancy pelosi says forget it. >> and the lead story in the journal today is the perils of baucus care. so even though the white house is probably mat at baucus, still the right doesn't like -- anyway, it's going to be interested and do you think all eyes will be on it? >> the baucus plan, that caught the obama administration off guard is they're going to be penalized people and families who don't buy health care insurance, a penalty of up to

$3,800, as well. >> and they might tax soda, as well. the sweet news of taxing soda. >> soda is why you're fat. >> yeah, it is why you're fat. >> not why i'm fat. >> soda is why you're fat. >> baucus, the senate finance chairman got meetings throughout the day and he's calling on the so-called gang of six bipartisan group to strike a deal before the president's speech. gang of -- ever since the gang of seven, it's been a -- that's not a good thing to be a part of, is it? >> i always think of the gang that couldn't shoot straight. >> meanwhile, i have right here an intro to bio pharpharma. >> mr. kernen, isn't it true that -- >> exactly. >> mike huckman is here with the details. >> no french coat. >> and no hat. obesity is such a huge financial

burden for health care. >> why are you looking at me. >> i didn't say anything. i only talk about your hair. >> yeah. >> it looks like there could be a new leader in the three-way race to get a safe and effective weight loss pill on the market. the small company vivas is just out with its clinical trial data for its drug called qnexa. patients on this drug for 13 months lost an average of 37 pounds or nearly 15% of their bodyweight. that's about double the weight loss seen so far in big studies done by the other two small companies developing dooilt diet bills. vivus's qnexa is a safer verge of the phenphen. there was no heart trouble for side effects. dr. lewis aroney, with one of

the nation's leading obesity experts and who has patient owes all three of these experimental depression is very impressed by the qnexa results. >> this is really unprecedented. this is much greater magnitude weight loss than we have seen before in a trial of this size. this is the first very large scale trial that's shown a result that's this good. so this is a very, very exciting result. i'm really enthusiastic about it. >> shares of vivus jumped in late afternoon and after hours trading yesterday when the company anonsed it would unveil this data this morning. vivus announced that it will use these results to try and partner with a big company. based on the stats, the majors will probably be banging down the doors. arexogen unveiled its data three months ago. both of those companies'

products are also unpartnered. dr. rooney was a partner with all three drugs. check out our website for more information. >> mike, i've always been skeptical of all of they also drugs. >> weight loss isn't going to come in a pill and it's obviously the media that fans those flames of miracle drugs. you've got to eat less, you've got to exercise more and you can take this pill or any number of these other pills if they come to market. >> does it makes you less hungry? what is the connection, do we know? >> so for years, joe, doctors have been on their own titrating, if you will, these drugs, topomax and phenphen. so they've been coming up with their own cocktails. what this does is puts it in one complete pill. but people have, for years, been

taking, i'm told, topomax, for example, to try to lose weight, as well. >> that's what's bothersome, you know it has some mechanism for epilepsy and migraine, and yet it seems to work for weight loss. that bothers me. it's like when we found something -- what was viagra? it was for hair loss, wasn't it? oh, it also gives you an erection. it makes you word about all the other side effects that might be there. >> i think they were testing it for blood pressure. but they take wellbutrin, the old antidepressant, and then they take an anti-addiction drug called meltrexone. >> and the other one, that leaves a weird taste in your mouth. you can understand why that makes you less hungry. >> but becky, there are so many people who are desperate to lose

weight. >> so this is for people with -- >> with bmis of 30% or above. most of these people were like 225 pounds, 230 pounds. >> if you have an average weight loss of 35 pounds -- >> 37 pounds. >> over how long? >> over 56 weeks, so 13 months. >> mike, thank you very much. let's get to the overseas markets right now. christine tan is standing by in singapore, but we're going to start things off with london with steve sedgwick. he has the latest out of europe. steve, good to see pup. >> good to see you guys, as well. european indices were trading in negative sessions early on. now they've all turned around. bmw had a shot in the arm for morgan stanley earlier this week. now morgan stanley is saying

stocks like it could be there. on the back of that, new highs for the year for some of these indices, the dax trading up 0.5% to 1%. london market knocking on the door at the $5,000 level. one index which is going down, though, is the smi at the moment. and that's because the big luxury goods group, the likes of switch and richemont this morning, who owns brands from cartier and 30 odd percent in the americas, 20 odd percent down in europe, the middle east and africa. that's the european story. now out to singapore with christine. >> steve, thanks for that. asian stocks ended lower today. markets taking a breather after that strong session we had yesterday. in tokyo, the dollar's decline hit the exporters. energy prices rose. hong kong pulling back on concerns that stock valuations there have run ahead of a potential recovery in corporate

earnings. the hang seng lower by 1%. in china, the shanghai composite found it hard to rally after six straight days of rises and is planning on helping support the market. we had market regulators coming in to say the aprovl is down. in australia, stocks slipped a little after a surprising drop in retail sales for july. overall, asia is under some downward pressure today. becky, i'm sending it back to you. >> christine, thank you very much. now let's get to the u.s. markets. the major indices closing in the black for the third straight session. but a rally in gold prices has some investors worried about a decline in the dollar sentiment and whether or not this is an orderly decline. joining us right now is bob doll. it's blackrock's chairman and global cio of global equities. the dollar right now is sitting at its lowest levels for the year. what is happening here? >> i think what is happening, becky, is folks are saying the u.s. has some problems. while cyclely we are recovering,

make no mistake about that. we have these issues of budget deficits and that is causing pressure on the dollar that is unlikely to abate any time soon. of course, the other side of the story is to be negative on the dollar, you have to make a positive case for either the euro of the yen. >> exactly. i thought everybody else was in a worse position than we were. >> i think it's tough to do that and that's why i think dollar decline will be limited. >> so you think what we're seeing is not necessarily a longer term trend? >> well, in the sense of a free fall that the of people are worried about, i don't see that risk, beckdy. i think we could have the dollar drifting in either direction with a bias to the downside. but i don't see any huge changes. >> bob, couldn't it be that as we get more comfortable with the world is not ending and people move out on the risk curve, that that is what is happening, that it's not people voting with their feet on the u.s. economy?

absolutely, joe. i think risk appetites go up, meaning i want more risk, i go away from the dollar, vice versa. >> how come gold was above $1,000? >> i think gold is all about -- you can win a lot of ways in gold. you can win as a store value. you can win on an inflation concern. you can win because you don't like a basket of currencies and, therefore, people are putting money into gold. >> is that really a better hedge? >> gold is definitely lagged, as you know. this is the third time it's hit $1,000. >> but is this a better hedge than treasuries at this point because of all those concerns you pointed out at the top? >> i think so, plus valuation levels, you know, at 3.5%. treasury over -- for ten years is probably not a great deal. >> you know, bob, the other story that we're focusing on so closely this morning is this speech that we're going to be hearing from the president tonight, talking about his health care plans. there have been so much wrangling back and forth and obviously that creates a lot of

concern about any health care companies because you don't know where anything will be charged to make up for the cost pp of all of these different health care plans. i know in the past you've liked health care stocks. but what do you start to think as you watch what's coming out of washington right now? >> i think the uncertainty is still the opportunity to add to these names, becky. we will get some certainty in x months. i don't know what x is. and when we do, my guess is the sector lifts. also no matter what the outcome, we're not going to get an extreme outcome in our view that doesn't have a high probability. uncertainty causes people to run away. that creates opportunity. so we would be adding the health care stocks. somebody told me it was the president's 27th or 28th speech. what more are we going to add to the story? >> you know, we've got jim chain yoes on a little later. he's joining us at 7:00 this morning as our guest host. he is short some of these health care names particularly some of the pharmaceutical names because of just this. does it make you nervous when

you see someone like jim chain yoes stepping in and saying this is an opportunity to short? >> jim is a smart guy. there are a lot of people short health care stocks and a lot of invest hes only underweight. i think a lot of people are very aware of these concerns and, therefore, have run away. i don't think we'll get a huge lift until we do. >> are there some sectors in the area that are more than others? >> clearly, the ones that get caught in the waves the most here are the hmos and the other health care service names. therefore, when resolution comes, i think they'll be the ones to lift the most. but it's the whole sector, as you point out. >> is chain yoes short the pharma name? >> i thought i saw some of the pharma names.

it was the devicemakers are the margin or -- >> and the devicemakers is where they started putting a particular charge on some of these things yesterday. but hang on a second. >> and some of the -- i think it was something like the home health care. >> and a pharma name, too. i don't know if i'm supposed to say this or not, but astrazeneca. >> we'll see him as 7:00 amg. >> we'll ask him all about his short, mr. shorty. >> don't call him that. >> he likes -- you know what? he likes to give -- >>s sass astrazeneca is heavily exposed to medicare. >> and then all of them -- >> so that is sort of -- that might be a little new for him. because the first time around, he was managed care, a lot of the bloated, the places where he thought the margins could contract. i mean, pfizer at 15 with the -- what's the yield on that thing? you could almost just, you know -- >> make money?

yeah. and pfizer at 6.4%. it's been at 16 for how many years and they make viagra. anyway, go ahead. >> there is no shortage of news this morning. darren rovell joins us this morning with breaking news in the world of swimming. daren. >> that's right, carl. the landscape of competitive swimming has changed within the past wum of months, but speedo, the market leader in competitive performance swim wear is not going to do it without michael phelps. they will announce later today they've signed phelps to endorse their brand through 2013. phelps has been with the brand since 2001 and has won 14 golds in their suit, including a speedo lazer. the innovative full body swimsu swimsuit will not be allowed to

be used last year which basically brings suits back to the mid '90s standards. and stay tuned next hour on squawk, the insiders, michael phelps and warner's ceo will join us. in my ten years of covering the business in sports, this is the most intriguing story i've ever covered with the whole reverse behind the swimsuits. >> well, i remember in beijing a year ago, you were saying how great it was and how ridiculous it was. >> it was technological doping and then all of a sudden, you have the world in rome this past year where it went a step beyond that where paul beaterman of germany beats michael phelps and he comes out and says i hope one day i can beat michael phelps, really, without a suit. >> i'm glad they get rid of the suit. i remember you in that suit. that is part of the reason he's being banned.

>> the story behind the flop that i did was i saw the bottom of the pool and i felt i needed to use my knees somehow to brace -- as i was in mid a, i -- >> what is going to happen to all those records, though? will they stand? >> i think they have to stand. how can you put an asterisk on it? the governing body encouraged everyone to build a suit. >> but everyone could wear it. >> and the other reason why it was a big deal was endorsement deals were being blown up every five seconds. i know i'm being paid a couple hundred thousand dollars to wear this, but i don't care. i've got an olympics every four years. i might only be a one or two olympic. i have to win. and speedo benefited from that. >> if you can't do a full body suit, can you do a partial? >> no. right now, they're not going to be able to do anything below the knees. i mean, it's going to go back to the jammers they call it of the

mid '90s. >> that's the one with the sleeves up here? >> yeah. you're not able to go down your arms. it's totally changed the way. >> did that rovell manufactured goggle controversy, did anything ever come of that? >> it wasn't all rovell. but he still won. >> it would have been more of a controversy. >> thank you. >> see you at 7:30ish. >> in the suit just for old times? >> no, i won't be in the suit. >> just for old times? >> no. i'm retired from that. >> you're just getting started. it's fun. double rovell on a -- right? on a wednesday. that makes it fun. we're just getting started on a wednesday morning. coming up, your bus traveler's forecast. first as we head to break, number nine. revolution number nine. it's like people on acid or something. >> it's 9-9-09. >> and that's "revolution number nine."

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welcome back, everybody. right now, i'm time for our business traveler's forecast. scott williams is here with the weather channel. >> we continue to track that coast low. a very slow mover offshore from north carolina. more clouds into the major cities and also the chance for some light showers moving into the big apple. we have patchy follow around the ohio river valley. heavy rainfall, flash flood watches in effect around wichita, kansas. as we focus in on a few cities this morning, this is what we're finding around the big apple. clouds, temperatures in the mid 60s. a few light sprinkles. a lot of this is not reaching the ground. as we move into philadelphia, good morning. temperatures in the upper 60s, as well. traveling around the nation's capital, the bellway, look for clouds and some wind. right now, no current airport delays and certainly that is

good news. we can see things change due to showers and wind in the northeast. back to you, carl. >> thanks for that, scott williams over at the weather channel. when we come back, we'll get top stories, plus it is a far cry from a prison cell. never before seen video. this is it. inside bernie madoff's manhattan penthouse. we'll take you on a tour of that property now for sale. also, government waste, why one congressman says the billions given to automakers is nothing more than a bailout gone bad. i'm racing cross country in this small sidecar,

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♪ >> good morning. welcome back to "squawk box" here on cnbc. it's 9-9-09. number nine. so we're celebrating beatle mania. i'm joe kernen along with becky quick and carl quintanilla. the futures at this hour are understand indicating a lower opening. we never got that big 100 point pop yesterday, although it was a solid session, all in all. and after a small pullback last week, september is in question. >> better than the seasonality might suggest at this early stage of the game. >> yep. >> commodities prices were higher, commodities and industrials were leading things. >> equity is up, dollar down. >> and since march, it has been a huge shocker for anyone looking for the test of the

lows, the double dippers. they've had it handed to them. you might ask me what. >> what. >> what. >> this morning, we're getting an inside look at the penthouse of bernie mad yau. for months, you saw tv crews parked outside in manhattan. mary, good morning to you. >> good morning, carl. now, the government is hoping the collect between $8 million and $10 million for this 4,000 square foot two-story penthouse. the one bedroom features a

bird's-eye view of manhattan. its walk-in closet is a tribute to his taste. >> he was very meticulous in his cataloging and clothes. these are drawers for his different shirts, all custom made. folding table right over here for the custom made shirts. >> the new york city apartment is one of three madoff properties the government is selling. last week, the convicted ponzi master's ocean home would sit on the block for $8.75 million. like the manhattan apartment, this 8700 square foot home madoff and his wife owned is going to be listed once the broker is selected and that's expected sometime later today. this house sits on a half acre piece of land opposite downtown palm beach. >> this would probably be one of the selling points of this

property, a large house on the water, private dock, great view. >> that 80 foot dock is likely where madoff pulled up. speaking of bull, madoff has paintings and sculptures in both the palm beach and new york city homes. the bull and designer pairs of shoes, they say madoff kept in palm beach are going to be auctioned off at a later today. now, the marshalls won't say what they expect to get, but in total, they hope to get $21 million from the sale of all three of the madoff properties. the money, of course, will go to a fund for the madoff victims. >> mary, some wire copy this morning says there was a desk in which he allegedly tried to hide those checks at the last second. does the apartment come with the

furniture in it? >> no. the furniture is still in there for showing, but again, all the personal effects, the furniture, clothes, jewelry, china, whatever the artwork, etcetera, that's going to be auctioned off at a later date. the apartment just comes as is without the furniture, although it's being shown with the furniture. >> they say the boat, although it does not have a flat screen television, just a regular tv, comes with an elevator that will take you from one deck of the boat to another. incredible. >> no flat screen tv? >> yeah. >> an elevator, but no flat screen. that should have tipped us off, right? i will say, the old -- you guys impression of the palm beach house, we had a crummy picture of the palm beach house. i never thought it was -- >> fantastic? >> no. that was an unbelievable place.

>> that's the first time you've ever been inside. >> yeah. private dock. and the hamptons was unbelievable, too. >> i didn't think it was that unbelievable until you saw the outside and where it was situated. >> to really be lavishing yourself with -- when it's all said and done. >> if you have any comments or questions about anything you see here on zaub, e-mail us at squawk@cnbc.com. still ahead this morning, move over, wall street. "squawk box" takes a trip to one of the other most famous streets in the entire company. this is sesame street video you will have to see to believe. that is grover. we got to hang out with him for a little while. later this morning, michael phelps, gold wear, swimm superstar signing a major endorsement deal. he will join us live on set at

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a congressional oversight panel warns taxpayers that they're facing a huge loss on the bailout. most of the monies paid to gm and chrysler late last year isn't likely to be repaid. congressman jeff penske is a ranking member of the financial on consumer credit. congressman, it's good to see you. just a caveat, we showed a

couple of pictures of ford headquarters when we were talking about this and we're already getting a lot of mail. >> the last i looked, they didn't take any -- >> we can't just use auto industry tape if it's not -- of course, do we want to pick on gm and chrysler? i guess we do. it's going to cost us, huh? >> i'm not sure about picking on them, but the bottom line is that the t.a.r.p. statue was written for, quote/unquote financial institutions. the government crossed the line when they bailed out gm and chrysler. what fortune 50 or fortune 500 company under that definition couldn't qualify as a financial institution? these are companies that unfortunately have been losing sales for years and years and it perpetuates us as a bailout nation. the congressional office says we will now lose $40 billion more than they thought back in march,

and yet there's thousands and thousands of small businesses that go belly up every day in the u.s. economy. no government program for them. >> this all sounds like day gentleman shoe to me. congress said, this t.a.r.p. money was ready to go. we already decided to go ahead and do that. now we're just going back and carping about it. >> i'm not sure about carping about it, but we have to prepare for the future. i don't want to sow the seeds for worse economic crisis in the future by continuing to perpetuate this too big to fail notion. already what we see under t.a.r.p. is lo and behold, the big banks are getting bigger, those that receive the t.a.r.p. funds.

i mean, again, they can go out in the markets because of the explicit government guarantee, not unlike fannie and freddie, if you want to talk about deja vu all over again. i mean, at some point, you can't have capitalism on the way up and socialism on the way down. and again, there are just so many other firms, the auto companies did not have any monopoly on suffering in this economy. >> i know you could do lodging, you could do restaurants, you can do a lot of industries that had even more employees than the auto industry. but -- and i'm with you. i understand what you're saying on that. >> well, and you haven't even touched upon what happened to the uaw in the sweetheart deal they got from our government vis-a-vis any pipe fitter who bought $50,000 worth of gm bonds for their 401(k). the government is picking winners and losers and they favored union sized labor over anybody else. >> and you're a republican from texas and you're using this to

some extent to bash the obama administration. the obama administration really just extended the policies of the bush administration on -- >> no, i'm not sure i agree with that. i disagree with what president bush did and i was vocal at the time, check the record. but once obama got here, he didn't have to continue on and put in billions and billions worth of money that we're not likely to recover. >> kicked the can down the road and it was president obama's problem. at that time, it would have been hard to pull the plug. >> well, i don't know. we just pulled the plug on at least $40 billion of taxpayer money that they could have used to capitalize smault business, so you tell me. >> well, we pulled the plug on lehman and we've got about 15 specials on the next week for the repercussion for what happened there. a lot of second-guessing. i don't know. it's been a tough year, tough 18

moss for everyone involved. but here we are, at least. your atm machine is working, right? >> i well, i suppose. i haven't checked it lately, but i suppose it is. >> we appreciate your time this morning congressman hensarling, see you soon. >> very good. elizabeth is warren is going to join us like at 8:00. >> when we return, the president of bmw north america races on to our set. we will get his take on the state of the auto industry, the luxury market and the global economy.

hi. it's elmo from sesame street, and you're watching "squawk box.",0 elmo likes saying that.,0 >> elmo and his other furry friends are tackling a topic a 0 bit less warm and fuzzy than usual. they're airing a special aimed at dealing with the economic crisis. we were invited and we had a chance to interact with some of the cast. >> five were four, three, two -- ♪ sunny days sleeping those clouds away on my way to where the air is free ♪

♪ can you tell me how to get how to get to sesame street ♪ ♪ come and pray everything's a-okay ♪ >> we actually did speak to him, grover. >> yes, we did. he was sitting on a little plate that resolves around, right? and he -- it's weird. he doesn't -- >> you mean the puppettere. >> yes. >> he doesn't look anything like grover. it was confusing to me because the puppette that was talking and then the other thing that got me was when the puppets were not on the hands of the people doing them, they were so shrimp and dead that it was disconcerting. these puppeteres breathe life into them. >> they go like this. >> and when they lay on the table, it looks like road kill almost. it's horrible.

>> and he's in the board room, too. that's in the process of getting just a simple scene shot, right? >> yeah. >> because the puppets, it's hard if you're beneath, you don't know exactly where the camera is and where the other puppet is in relation to you. they must have done how many takes? ten? >> very glad that squawk box is live. >> yeah, very glad. and kevin clash, unbelievable director. what got me, a lot of times he would do his thing and watching him, he would walk away laughing and i thought he was pleased with himself but it was still part of the elmo laugh and i thought wow, he's a weird -- it airs 8:00 pm eastern on pbs tonight. later on we'll be speaking with gary nell about why they're airing this and what that's going to do at 8:45 am.

that's kind of in a sesame street neighborhood. what was that, queens? is that where we were? >> queens. >> i guess when you go to the person letting you into the building and -- >> joe and i walked -- >> i said can you tell me how to get to sesame street? >> they didn't laugh. >> they didn't laugh at all. >> they've heard that before. >> apparently many times a day. >> perhaps. go ahead. >> that's coming up in our 8:00 am hour. meantime, championship at coghill kicks off thursday, third leg of the fedex cup, purse south dakota 6 million. with the president of bmw north america, jim o'donnell. good morning. >> good morning. quite a day here at coghill. >> and we'll talk to you about your chance to play with tiger woods in a bit. first i want to ask you about the luxury auto market. your sales dropping 25, 26% last

month. but you believe -- you guys have kind of turned the corner here, correct? >> i think so. we suffered the first seven months of this year. what we saw in august on the back of cash for clunkers, it's almost legitimate to buy a new car. we had the best months of the year. we're going into september with a good bank, saw an increase in september. i think we've bottomed out and we're going to rise again. >> are we to the point where you start to increase production yet? >> we have increased production of seven models. for example, diesels, another thousand diesels in the back end of the year that we haven't planned for on the x5. so, yeah. >> it brings up the question of where the demand is from the consumer. a number of people look at the luxury market, bmw in particular, and say you have a clientele that wants smaller

vehicles and will demand smaller vehicles in the future. do you have to rotate more to the smaller end of the market? >> you have additional cost coming in at the bottom end of our portfolio. however, look at this year as a good example, our strongest selling cars have been the 5 series followed by the x-5. i don't know that they're necessarily seeing it play out in the marketplace. >> people are still going to want the larger sedan down the road. >> absolutely. lifestyles haven't changed. >> this event here, you've had a number of years where you have been the sponsor, one of the sponsors for the fedex cup. the purse is $7.5 million. there's been a fair amount of talk about the purses becoming too extravagant, especially in a down economy. have you ever thought to yourself, maybe we need to rein this in? maybe this is not the best expenditure of our money. >> not really. the other side of the coin is we will generate something like $3.3 million, at least that's

what we did last year, for charity. so, i think in terms of buying for your buck, it is great, great investment. >> you still believe, in part because of tiger woods and the draw that he brings on tv, you still believe this is worth your investment as opposed to something like, say, formula one where you say we're pulling out of formula one. it's not worth the investment? >> we get worldwide coverage. particularly chicago. probably our weakest market. we're delighted it's here in chicago. we think we can build upon that success. it includes our dealers here. we include some of the spectators, if they go to bmw, they get special privileges. it's an ideal opportunity for us to showcase cars. >> you and i were talking about diesel demand. you believe if you can market it on the basis of fuel economy, people will start to come around to diesel. they haven't in the u.s., though, have they? >> no. it's been much harder work than

we anticipated. within five years, i predict at least 30% of x-5, x-3 sales will be diesel. >> your business continues to hold up well? >> month on month, we're seeing increases. so, we're very comfortable with that. >> jim o'donnell, president of bmw north america. by the way, guys, tiger woods, he drew tiger woods to golf with him today. what a gentleman. he gave up his spot to his son. how is that? >> wow! >> he was afraid. >> he was afraid. i asked him earlier, are you excited to tee off with tiger? he said i think i would be a little nervous. >> i would be. i'm more comfortable walking with him. thank you. >> thanks, phil. phil lebeau and jim o'donnell. still to come, he's taking the morning off from the pool. golden boy michael phelps.

also, taken on some of the best-known companies in the world and usually they lose. today he's challenging squawk, the manhattan, the myth, the legend. welcome guest host jim chanos, loves to be called mr. shorty, when we come back. please help me welcome a long-time friend of glencoe baseball. a man who played second base here some 45 years ago. actually, 47. ladies and gentlemen, mr. larry mccarthy. amidst today's financial turmoil, our sophisticated wealth transfer strategies... and philanthropic expertise ensure your legacy... is passed on to family or your favorite pastime. ♪ northern trust. wealth management. asset management. asset servicing.

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call or click today. members of congress fighting it out and former fda giving us

his opinion. jim chanos will have had his chance to tell us about market opportunities as our guest host today. going for olympic gold. keep swimming. we want the guy that won 14 gold medals, michael phelps out of the pool and in our studio to talk business, competition and london 2012. "squawk box" begins right now. good morning. welcome to "squawk box" here on cnbc. i'm here with becky jarvis and carl quintanilla. jim chanos joins us. everything is open, we with talk

about anything we want, right? >> my life is an open book. >> fantastic. guy meet with his oliver stone to talk about movies, movie stars, want to know what it's like to be a real wall street guy, if you were going to make wall street -- >> you're not gordon gecko. you're the anti-gecko. >> i hope i'm not gordon gecko. >> although he was cool. he still says to this day, michael douglas, people come up to him and call him mr. gecko, like you rock! he said it was supposed to be a negative character. >> the first movie was a great movie. >> it really was. what do you say about the second one? >> i hope it's a great movie. >> so do i. anyway, let's check on the markets right now. as indicated, to open a little lower today. not a whole lot going on. let's go. labor day is over. some people were still out yesterday. >> laxidaisical.

>> we've been in a flat line. let's get to carl with more of today's headlines. he's gone. he's somewhere else. >> i'm over here. you're going to be doing these. >> no, i'm not. i'm too hold. meeting begins at 3:00 even. expecting the cartel to leave production levels unchanged. saudi-owned newspaper says they plan to tell other ministers. direct reform pitch to legislators and the public. white house press secretary robert gibbs says the president will not present new legislation in that speech. some high-profile properties up for sale this week, luxury homes belonging to bernie madoff, homes in new york and florida will officially be listed by the end of the week. u.s. marshals hoping to raise tens of millions of dollars through those sales to reimburse

victims of madoff's ponzi scheme. michael phelps re-signing with speedo, signed on to endorse the brand through 2013. phelps will join us on set with the ceo of speedo. we have all the chairs set up. >> i know it looks like a school bus waiting to receive us over there. our guest host this morning, short-seller hedge fund manager jim chanos. he is also the chairman of the coalition of private investment companies. jim, there are so many things that we want to talk to you about today. carl was just talking about the president's speech tonight. but now he's going to be talking about health care.

what do you think about the plan that's out there? what makes you think that there's a lot at stake here? >> a couple of plans out are out there right now, becky. the president has to put forward a plan. we'll get a better idea tonight. in terms of profit margins in the industry because, quite frankly, profit margins that are twice, some people think three times above the s&p 500. so you have an area where i think the u.s. health care industry, corporate america cry government invention in health care. although government is a huge part already in the health care, over half.

we think from a more regulatory point of view, profit margins are going down. >> the standpoint to this point is that people will pay more for health care or the government will pay more for it, as long as you're talking about making it healthier, there are very few questions asked. you think that has to change? >> health care is 18% of gdp, growing at about 10% a year in nominal terms. the economy is growing 2% to 3% a year in nominal terms. that 7% differential, that health care will double as a percent of the economy every ten years, which means in another generation, half of us will be doing operations on the other half of us. and i just don't think that's going to happen. >> despite the margin compression, though, if there is a manned date to improve access across the country, doesn't that increase the number of subscribers, pensions, customers, clients, revenue? >> it might. those people are already getting

health care, too, to some extent. they're getting very expensive health care. i'm not so sure that the revenue drivers that people are expecting to get are going to be as profitable. it's already a pretty profitable scene with the exception of the hospitals. >> you make an interesting point. we talk about how bloated the system is, how expensive it is. we call it a private system. it's not a private system. >> it's not. >> do we add to the -- what is causing it to be -- private or public component? >> i think both. although the administration wants to expand coverage from a social point of view, and i agree with that socially, what we need to do is on the -- >> who could better do it? >> we seem to worry that the free market does it better than government, but the free market has been at this now a long time. >> you just said it was half government anyway. that's the point i was making. >> it's the worst part of both

almost. >> the worst of both? >> that's why our system is getting the outcome. >> i remember all of the china infrastructure, early on that, health care was one of your new ideas about a year and a half ago because of the bloated marg margins. you said pfizer had a big yield, already had come down a lot and we had this discussion earlier that now some pharmaceutical names are showing up. that's a switch a little bit. >> yeah. >> why? >> we've broadened out our list, as we've done more work in the area. done some good work in this area and we think companies like astra-zeneca are at risk. we've broadened the companies and hmos and now we are in some capital equipment areas. there's all sorts of ancillary areas, as we've thought about this, that may be affected.

for example, staffing companies which owe their existence to basically people not wanting to cover health care for employees and temp workers. you can begin looking at the second and third derivatives of these things. >> lay out your case for astra-zeneca. what have you seen that concerns you? >> over 30% of their revenue stream is subject to generic competition, one of the larger amounts. >> 35%? >> yeah, the next eight years, and they also have a very high component, 25% of their revenues are coming from medicare plan d, which is also very, very high. >> george ball was on yesterday and mentioned that revolutions in drugs tend to come in waves and that some argue we're on the cusp of a new one. >> yeah. >> does that make sense to you? >> yeah, but a lot of them are coming from the biotechnology area, which is a different dynamic. again, we look at the prescription drug industry in

the u.s. and we rail against what we're paying versus what the rest of the world is paying for drugs. in effect, we're also subsidizing the rest of the world. and that is an important to -- big thing to keep in mind. >> it's scary about -- you hear about the way it's done in the rest of the world. and the problem is that it has hurt innovation in the rest of the world and it's left to us to come up with a lot of it. >> we're footing some of that bill. >> what do you mean capital equipment? >> we are short seaman. >> ge? >> we aren't ge. they're a big player. >> that kind of capital equipment? >> more specifically, companies doing specific radiation machines and all kinds of huge players. >> who is that? >> i'm not going to get into names because they're smaller cap. we don't want to mention the smaller cap names because they're liquid and i do like to

keep my -- need some competitive advantages. but companies that are involved in big capital equipment that hospitals spend on. >> anything long that -- like diagnostic companies or something that would benefit from trying to get rid of all the expenses? >> i'm sure there will probably be software companies. >> you don't do that? >> with but we don't spend our time looking for such investments. >> astra-zeneca, the downturn that you see by doing something like buying one of these smaller biotech companies -- >> the problem is that it has to be a scale big enough to make a difference. usually, the companies growing by acquisition anyway. you don't want to be short the companies being acquired. >> what's interesting about the call is that -- your call is that it flies in the face of what has been called this generational trade, right? because the boomers will get zbloeld yeah. >> and they will need a lot of

health care. >> again, it gets back to the large numbers. health care valuations are already there. and we can't get much bigger. the system is so bloated it's going to start bankrupting all kinds of entities, not just businesses, but the government. and so we have got to get costs under control. it's going to happen one way or another. probably not legislatively. that would be my gut feeling, but certainly from a regulatory point of view, the white house is going to go after this from a medicare reimbursement from congress. my guess is that there will be a pretty big backlash and maybe even worse if it fails. >> before we go, are you going to make a cameo on wall street too? seriously. you've been in the enron movie. are you going to be in this movie, yes or no? >> i've not been asked. >> you just might be? >> i've been asked for advice. >> you're comfortable wearing makeup. >> i wear makeup almost all the time. >> because in the first wall street, all those guys that -- remember making the speech, buddy fox walks into that

office, a lot of guys were actual lehman guys and wall streeters that got little cameos from oliver stone. >> i have a face for radio. >> you were good in enron. >> joe will be with us the rest of the show. we'll talk about health care and a lot of other things out there as well. shares of a small biocompany that will soar on significant weight loss seen in two big studies, 37-pound average weight loss. i don't want to lose 37, i don't think, mike. >> 37 pounds, a lot of people who do, probably million that is do want to lose that much. you were just talking about drug innovation. they're taking two old drugs and making a new one.

i'll have the details coming up when squawk box continues. on this day in 1883, what first lady gave birth to a daughter, esther, in the white house?t' the answer when cnbc squawk box continues. aflac! is that different from health insurance? well yeah... ...aflac pays you cash to help with the bills that health insurance doesn't cover. really? well, if you're hurt and can't work, who's going to help pay for gas? ..the mortgage, all kinds of expenses? aflaccafcccc! it's the protection you need to stay ahead of the game... exactly! aflac. we've got you under our wing. aflac, aflac, aflac... aflac, aflac, aflac

now the answer to today's aflac trivia question. on this day in 1883, what first lady gave birth to a daughter, esther, in the white house? the answer, frances cleveland, the wife of president grover cleveland. >> welcome back, everybody. taxpayers are facing huge losses on the government's $81 billion automobile bailout. given to gm and chrysler last year likely is not to be repaid. we're speaking with the chair elizabeth warren, coming up 45 minutes away. investors are feasting on a new test result for a promising experimental diet pill. mike huckman is here with those details. >> against the backdrop of the health care reform effort, vivus is out with news that could help to cut a huge burden, centers for disease control estimates

obesity costs $150 billion a year to treat in this country. vivus says patients on its new drug dropped 15% of their body weight, about twice the weight loss seen so far in big studies done by two other small companies, arena in the final stages of developing diet pills. the so-called good fen from the infamous fen-fen phase. companies say the most common side effects were altered taste, dry mouth, constipation, but no heart trouble. one of the nation's leading obesity experts is somewhat uncharacteristically effusive about it. >> this is very significant weight loss. this is weight loss that approaches the kind of weight loss i think that everybody has been dreaming of seeing from

nonsurgical therapies. when you look at the overall results, the average person who took it for one year lost almost 15% of their body weight. they're happy. their doctors would be happy. this is a very effective treatment. >> so, vivus plans to file for fda approval by the end of this year. not just as a diet drug, but as a diabetes pill, because it resulted in lower blood sugar levels, too. and the company will use robust results to help sell the drug. shares up 66% premarket right now. also watch trading today in shares of arena also in the final stage of diet drug development. wall street likes to handicap a winner, of course, and patients in all three studies and analysts believe there is room for all three in the rapidly expanding obesity market. leland wilson will join me later

this morning on squawk on the street shortly after the opening bell. back to you. >> can we get more on your blog? >> of course, always. pharmasmarket.cnbc.com. >> and follow him on twitter. >> you twit? all right. president obama is headed to capitol hill tonight in what some are calling his closing argument for health care reform. dr. scott gottlieb residency fellow at the american enterprise institute, former fda deputy commissioner, partner at an investment firm, venture partner at nea and practicing physician, american enterprise institute is a conservative research group and you are a practicing physician. so, we are -- the disclosures are all out now. some of your most interesting points are that the discourse has been muddied by all this

static, like death panels. and instead of that doing a favor to opponents, it actually does a disservice to the argument that legitimate opponents of the policies can make. >> right. when you look at the end of life provisions in the house bill in particular that gave rise to so-called death panels, they're very prescriptive, very intrusive into medical practice issues in a way that will obviate what congress is trying to do. so many requirements on what doctors need to do and what kind of patients can be eligible for this counseling and a lot of doctors are going to look at it and say my patients aren't eligible, i'm not going to engage in it. there were easy ways to do this other than a very long bill. >> the point that maybe you're trying to make, correct me if i'm wrong, but when i read bob

herbert or watch certain other 24-hour cable channels -- i won't miss any names, but i think we're owned by the same corporate parent. you will hear that the opposition is really led by liars, dissemblers, distorters and wing nuts and people are distorting what's trying to happen here. and maybe there are some legitimate policy concern that is reasonable people might have about the plan. >> these are complex issues. they get the sound bites it's often an distortion. the president is going to euthanize old people and create death panlts is not true. >> what is true? >> the achilles heel of this legislation is how descriptive it is of medical practice and on doctors, what they can and can't do. it does set up rules about what they need to do in different medical practice settings. that's the problem with the legislation. when people start talking about these out of bounds ideas that

don't exist, then the media focus goes there and it's easy to distort and dispel what people are criticizing. >> opponents will say the ends justify the means and it gets people focused on the negative side of it. >> it has had that effect. >> yes, it has. >> the people that are in the house, controlling whether this goes, or in the senate, the democrats, are hearing from some of their constituents, giving some of them pause. >> that's right. and guilty of this on both sides of the aisle, trying to get these complex issues down to sound bites which sometimes don't approximate -- >> all of this talk about looking to expand health care is one thing, but the cost side is where we really have to be paying attention, no matter what. would you agree that there are all sorts of issues when it comes to cost and cost controls? >> yeah. listening to jim before, the reasons for the rising cost isn't in spite of medicare and the government programs, it's precisely because of it.

it's an 800-pound gorilla in the market right now. a lot of inefficiencies in the way we buy health care is because of the government programs. look at medicare, for instance. there's no correlation between what medicare pays in outcomes or quality in terms of physician fee schedule. that's only going to be perfect pet waited under what the president is putting forward. he doesn't have plans in there to change the way medicare buys services. he's just going to expand it. >> it's held up as, look, you love your medicare, don't you? you love medicare, you already have a government program. it's held up by both sides as a poster child for what's right and what's wrong. >> people love medicare today. it really hasn't been an active purchaser in health care in terms of saying what you can and can't have. that's going to change. medicare in recent years has become much more involved in saying what patients can and w can't get access to. in the trajectory, that's going to increase, especially under this legislation. >> what are we going to hear tonight? is it going to be the president

and baucus have similar talking points? >> the president won't change his position. the baucus plan won't get bipartisan support. with the president remaining where he is and the finance bill not getting bipartisan support, we're going to be talking about reconciliation, 50 votes in the senate, because nothing is going to change after tonight. the president will back away from the controversial measures like end of life provisions and repackage what he's offering, but still sticking to the core components. >> there will be a public plan? can they get that through the blue dogs? if they took it out, could they get it through the other hundred guys on the other side? >> the senate is where the action is. the question is, can they get 50 democratic votes in the senate with the public option? they probably could. if it's still unpopulated, to ram it through with a procedure like reconciliation is a very high political price. >> we'll continue to cover this. i think it's -- >> i think that's a safe bet.

>> you were nodding a lot at this conservative's comments. i never know where the heck you are on it half this stuff. you're like an enigma. >> i'm just thinking about who i should be shorting. dust off my weight loss center shorts. i'm sorry. i think he makes good points. >> medicare sounds horrible. >> medicare, as he said, is a claims processing. so is the private insurance industry. after the '93, '94 failed initiative, we saw hmos be the preferred private payer. and people were pushed into them. and the reality was for a while from '93 to '98, they were pretty good at controlling costs and i'm not going to say rationing, but really questioning a lot of procedures. from '98 on, last ten years, they've done nothing more -- >> they've been regularitied. the reality is that if you're going to engage in that kind of activity, look behind the

services and decide what should and shouldn't be paid for, that's very hard to do from washington. it's much easier to do if it's more delivery of care. >> to my point is that it hasn't been happening the last ten years. >> they were regulated. >> talk all the way to the address. >> i would. exactly. thanks, scott. a reminder, you can watch president obama's speech, joint session of congress right here on cnbc or take your pick. >> watch it here. >> 8:00 pm eastern time. >> all right. when we return, we have a very busy day for the markets. ceo of goldman sachs, talking about how regulators need to avoid confrontation and turf battles, obvious lessons learned from what's been happening about how fair value accounting is very crucial. we'll talk about that later. waiting for the feds read on economic conditions around the country. quick check on equity futures straight ahead. at the bottom of the hour, one of the world's most famous sports stars teaming up with one of the world's best known

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let's take a look at the markets now. we've been watching those futures. after three days of gain you're seeing futures down by about five points. mortgage applications actually jumping 17% last week to the highest levels since late may. mortgage bankers association says that comes as interest rates fall to their lowest levels in months. applications for new purchases rose by 9.5% to the highest level we've seen since early january. new york and florida properties belonging to convicted ponzi schemer bernard madoff will be put up for sale this week. they're hoping tens of millions of dollars will be raised to reimburse victims. prices will be set once brokers are selected. nbc universal general electric, goldman sachs raising

its price target, maintaining a buy rating. jp morgan upgraded the stock and ge was up by 4.5%, the best dow component in terms of percentage gain. >> that's right. any comments or questions, we would love to hear from you. our address as always is squawk@cnbc.com. when we come back, an olympic champion and cnbc's own gold medal winner, darren rovell. what's up? >> michael phelps is signing with speedo through 2013. that's next on "squawk."ae 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...

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an olympic-sized deal for 14-time gold medal winner michael phelps. 2004, 2008 all of them in a speedo. he's going to win more at 2012 at the olympics in london and will be wearing the brand again. they will continue their partnership through 2013. michael phelps and joe gromek, ceo that owns the speedo brand. michael, a lot has changed in

the swimwear world. how tough a decision was this for you? >> if you think about it, i've been with the brand since i was 16. and it's been the only suit that i've ever worn in my life. a and, you know, i always felt like it's the best and that's what i want to continue wearing. i'm glad to continue this partnership for the next couple years and going through 2012, that's my next big thing i'm looking forward to. so -- >> a lot of people who follow swimming, very confused over the past year. they obviously saw the records with the speedo laser racer, but also saw in rome some 43 records set with these new suits, including paul bieterman who beat you in the 300 free and after basically said i hope one day i can really beat michael phelps in a suit that isn't technologically doped maybe. that's my words. but what has it been like being on the inside of this?

>> you know, i've sort of seen everything change. you know, i remember back in the day when, you know -- what was it, the fast skins and, you know to be able to get back, work as hard as we can in the pool to get to where we want to be. >> on the flip side, joe, it's obviously a big challenge. >> sure. >> speedo might say that the governing body for swimming maybe went a little too far. we'll be returning back to these suits of the '90s almost where they're banning the full

bodysuits, which was the speedo laser racer. give me the sense on what the exposure was for warneko when all of a sudden they say you can't have these suits. on speedo.com, these suits are 50% off. what are you doing with the retailers, being reimbursed in any way? >> bad news, good news. bad news, we could never meet demand for the suit. turns into a good story. we didn't have many. we had typically sold -- we obviously stopped production on the suit and will try to make the distributors whole in this situation. again, there's opportunity here because the lead swimmers will need new uniforms and we will be able to provide new uniforms. we're working on innovative technology today that will be launched over the next couple of months and it will be the most extensive line of speedo we've seen today. >> is fina going to be part of

that, kind of giving the money back? >> of course not. the interesting thing -- michael worked with the aqua lab at speedo and in everything that we did was approved by fina along the way. i think we just got caught in the crossfire between these basic wet suits. and our suits are tech styles. tech styles are the correct thing for the future. >> as a guy who is making these suits, how confusing is it? do you worry about pushing the boundaries again? >> again, i think we would work collaboratively with fina to get things approved as we go. unfortunately rules of engagement were changed along the way. >> was fina seeing how these -- >> i think it had more to do with the wet suit concept. they've come back to textiles and that's what we produce, textiles.

>> was there ever a goggle gate? rovell manufactured goggle gate as a -- we had an argument. >> he won the race. he won the race. >> can't you put them on? they might not be on perfectly, or during the dive might it move a little? was there ever any question about whether there was a manufacturing flaw in those goggles? >> no. it was just how i put them on. >> thank you. >> it's not because joe is sitting here either. does this finally lay to rest -- does this finally lay to rest goggles? >> back to the business of it, the swimsuits, is this a game changer in terms of going back to the mid 90s in that nike basically said they were out of the business, partly because probably they thought this was getting into a niche business. does this bring the business, make it a little bigger so you have the competitive swim wear market getting closer to the retail market?

>> i think the elite suits that we produce is a very small part of the business, probably a couple of percentage points for speedo. but it does create the halo effect for the brand. it's very important. that's why it's so important to have michael as our lead spokesperson for the brand as well. best swimmer of all time in the world. connected with the best brand, speedo. to us, that is absolutely the most important aspect. >> do we have my divers? >> i don't know. did you cue the tape? >> we're going to end this with your doive? >> no. >> feet first, that's good. great way to dive. >> see, what happened -- i keep saying this. i saw the bottom and thought it was pretty shallow. so, bringing the knees up enabled my knees to get the exposure. >> you can see, you don't automatically -- in one of those suits either. >> that was china weight, 168 there. >> you were not eating anything.

>> no, rice and chili sauce. >> people think of 2012 as being far off, but is it too early to really start training in earnest? >> no. >> when does it start? >> i'm in the process of getting back in the pool right now from worlds. but you really need about three to four years to really fully train both physically and mentally to get ready to have a real olympics. and, uh-uh know, that's one thing that i want to prepare myself the best way i can, because this is possibly my last olympics. and i want to go out and finish some of the goals that i want to accomplish. and i know that's going to be challenging. i have very high goals for myself already and my coach and i are going to start working on those. >> joe, real quickly, the consumer right now, how are things over the summer as you were selling not only speedo swimwear to people, but broader? how are things shaping up right now? >> in the united states it's still very challenging, seems to have been a bottoming out. compare sons into the next

quarter will be considerably easier. this is when things really tanked last year. but in terms of regular price selling, we're seeing basically a bottom and it's not back to normal yet. >> gold medals, gold was over 1,000. >> going to sell one? >> no. >> darren, thanks. michael, thank you, all you guys. congrat layings once again. >> thank you. when we come back, president taking his health care reform pitch directly to congress tonight. we'll get a preview from linda douglas. first, as joe mentioned, take a look at gold. it was over 1,000 yesterday, just about. nice. 999 .30.

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president obama will address that joint session of congress tonight on health care reform. linda douglas is a communications director for the white house of health care reform. she joins us this morning. good morning to you. >> good morning. thanks for having me. >> we're all curious as to how this will move the ball forward, lots of reports of about what he will or will not endorse. have you seen the speech and can you give us the specifics? >> we'll let the president give

you the specifics. what is very clear after this august -- you even heard this from republicans who spent a lot of time talking to constituents at home, how insurance premiums are going up three times faster than wages, hearing stories about people who were being denied health care simply because they got sick and their insurance company yanked their coverage away, steer stories from people who try to buy insurance on the private market and simply can't afford it. what the members of congress have realized, both parties, republican, too, is that doing nothing is not an option. what you're going to hear from the president tonight is how we're going to get there. >> how we're going to get there. some say that he will, in fact, endorse a public option. but we've heard him repeatedly say he would prefer a public option, but if others have better ideas, he's open to those as well. will it be a rehash of that message? >> rehash is certainly the wrong term to use. we've had many months of congressional committees who have been building health care legislation upon the president's principles. four out of five of those

committees have finished their work. there's 80% agreement among these bills built on the president's principles of lowering costs, of providing more affordable options for people who don't have health insurance, making sure it's deficit neutral. what it is time to do now is pull those pieces together and demarca tch demarcate a clear path to how we're going to get to the very end game. that's what you'll hear from the president tonight. >> you make it sound so simple, linda. you mentioned the committees. this baucus proposal, does the white house consider that a template? >> senator baucus, democrat and republican senators with whom he has been meeting over these many months, are trying fo to finalize details of a plan they have a draft as you've seen reported in the media. there's no final version. that's yet to be determined. senator baucus and other senators have been working very, very hard to come up with a bill that's built on those principles

i just described. >> we've been hearing from leaders on the house side. steny hoyer, the argument between hoyer and pelosi is if they can pass something with public option in the bill. they seem to be on different pages. what does the white house make of that? >> most important thing, clearly, the president has talked about the public option and having such an option be available in an insurance exchange that is for those people who don't have health insurance, who are buying insurance on the individual market, who may work for a very small business. that is where the public option would be available. not for most people, the 165 million americans who get health insurance through work, but for people who don't have had health insurance or who are buying insurance through the individual market. there would be a marketplace with many, many options. among those options, the president has said he believes a public option would be a very good choice to drive down costs and produce competition, keep the insurance companies honest and make sure there are more affordable options.

that's what there's been discussion of in these many, many weeks. that's what the leaders are talking about. of course, you've been hearing the president talk about that as recently as his labor day speech to the afl-cio. >> has the white house taken any lessons from the speech? >> the lesson that this administration has taken away to what happened to the clinton administration is that the special interests that are against trying to change the status quo on health reform, health care and the way health care is delivered and paid for in this country, those special interests will fight very hard to keep any change from happening, to keep costs from being lowered, to keep insurance from being more access ib. that has what was happened every time. we are much closer now than we've ever been. the president is very confident that members and the country understand that change is necessary and that it has to happen now. >> lastly, linda, it's been such a long battle watching this. in baseball terms, what inning do you think we're in? >> i heard senior adviser david

axelrod say we're in the eighth inning. i'll go with that. >> all right. i guess hopefully the bottom of the eighth. hopefully it's not a doubleheader, linda. we'll be watching tonight. >> thank you. >> linda douglas from the white house office of health care , reform. 8:00 pm eastern time is the address right here on cnbc. stocks to watch, names you want to know before the opening bell rings. plus, throwing a block party. from wall street to sesame street, some well-known names are attending. it's all about teaching future generations about financial responsibility. the ceoo of sesame workshop joins us with the details, still ahead. bbbbbbbbbbbbbbbbbbbbbbbbbb

let's take a look at stocks to watch. goldman sachs. i wanted to finish my point. stocks to watch, goldman sachs rating from 18 to 15. i remember back in july -- >> what's that behind you? >> i don't know. >> i remember back in july, goldman sachs had that upgrade. yeah, they put a $15 price target on it when they went to buy. yesterday jp morgan went to overweight with a $17 price target.

goldman comes back today and goes to $18. raises their price target, right near $15, just moving it up. dupoo nt downgraded. the company believes the shares of dupont are fairly valued. ups upgraded from overweight to neutral. jp morgan, $70. ubs downgraded from neutral to overweight, jp morgan and kraft foods has laid out targets, talking about productivity as a percentage of cost of goods sold, greater than 4% by 2011. all this, i guess, in some ways in response to -- >> talking about potentially -- i looked that guy up, that wrote the heard on the street column yesterday basically saying cadbury was right to say this was nothing of an offer and snubbed their nose at t he's from wall street europe or dow jones europe, based in paris. on holidays, they're always

looking for a heard on the street. so, throw in something else. it seemed like it was a little different tone. >> yeah. >> saying that rosenfeld from kraft, a woman who has had a string of successes. don't underestimate. >> the heard on the street column said kraft is less than where it was when it was spun out had and her management is obviously in question. so how can she -- but it was classic. >> it's very strange, jim. i don't know if you saw any of this stuff. it's been odd to see the back and forth, people rooting for the home team, it almost seems like, for these two companies. kraft shares were down 5.5%, and moody says they'll be essentially looking at downgrading the company if they extend their bid. >> is it yoplait? >> right. no, it was dannon. >> that would be like selling the eiffel tower. that will never happen. sacre bleu. no way.

>> it happened with hershey's, when they were thinking about selling out three, four years ago. we were talking about this yesterday. pennsylvania attorney general got involved because they didn't want to lose jobs in pennsylvania too. i know this isn't exactly your wheel. >> hershey park is a pretty cool place. you have to go there in a few years, take the twins there and there's something there for you too. when we come back, t.a.r.p. tell-all, elizabeth warren will speak out on the use of government funds. later, the president preparing for that speech to congress. we'll hear from bailey hutchison on what she wants to hear from the president in a moment. fide, traders learn from the pros. say you want to backtest an entire portfolio of stocks.

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elizabeth warren, chairman of the congressional oversight panel tells us how government funds are being used in the auto

bailout. inside the house of lies, bernie madoff's new york city penthouse, west palm beach home and everything inside all on tape, all for sale. is anyone lining up for a piece of the scam of the century? wall street meets sesame street. >> grover, do you own stocks or bo bonds? do you have a portfolio? do you trade? >> what is that? trade? >> yeah, trade. >> i have traded my lunch before. >> carl, joe and i got a chance to meet some really big stars to talk about a serious issue. economic insecurity. >> things are very slow. >> sesame workshop ceo gary knell will be our guest. >> "squawk box" starts right now. welcome back to "squawk" here on cnbc.

along with joe kernen and becky jarvis, i'm carl quintanilla. >> elmo's world was my favorite part of the -- >> did you prefer elmo to grover? >> i like elmo best, and cookie. >> you're on a first name basis. ta es not cookie monster. it's just cookie? >> i like all -- compared to the other muppets, i do. super grover. mcdonald's same store sales. >> how was that? >> global up 2.2, u.s. 7 and europe 3.5. over time, they've gotten smaller as we've gone along. >> but that's because that gets harder and harder to beat the comps you posted the year before, right? >> apmea.

stop story this is morning, becky is in the control room. >> i am. the interesting part is i get to hear what they say when you start going off script and ad libing. interesting place to visit. the meeting officially begins 3:00 pm eastern time. saudi minister expects cartels to leave the levels unchanged. on the scene, bringing us live reports throughout the day. president obama is preparing to address a joint session of congress tonight on health care reform. senate finance committee chairman max baucus is calling on his so-called gang of six, bipartisan group of senators to strike a deal before the president's speech. news you first heard on "squawk box" this morning, speedo brand parent warnaco endorsing michael phelps, endorsing the speedo through 2013, one year past the summer olympic games in london.

carl? >> thanks for that, becky. bernie madoff stole billions of dollars from people to finance his lavish lifestyle. mary thompson joins us from outside the former penthouse in manhattan with a look at where madoff spent his last days of freedom. mary, good morning again. >> reporter: good morning, carl. u.s. marshals releasing videotape of the penthouse here on east 64 street as well as the madoff's home in palm beach. neither one of the homes are on the block yet. a broker will be selected for each one of the properties and that's expected to be announced some time later today. but what these videotapes do basically is give us a glimpse inside the private life of bernie madoff and what we can tell from these videotapes is that he really liked great views, and a pinchant for shoes. it only had one bedroom, the

main residents. his and her studies and a dining room with one of the apartment's four fireplaces, wrap-around terrace offering secluded seating and eye-popping view of manhattan. custom closets had held madoff's 60 plus suits and custom monogrammed shirts. the government thinks it will list between $8 to $10 million. >> apartments like this listing in the ten millions in this area. we're not going to skimp out. we would like to get, you know, market value for this. >> reporter: madoff's 8,700 square foot home in palm beach not yet known. five bedroom, seven-bathroom house features stellar views, overlooking the intercoastal waterway to downtown palm beach. 80-foot dock is likely where he tied up his 50-foot yacht while inside the custom closets held

mado madoff's collection of shoes. >> where he had a nice -- again, nine shelves that would accommodate the 40-plus pairs of handmade belgium shoes he had in his closet when vacations down here in south florida. >> those shoes as well as the madoff's extensive collection of sculptures, paintings, furniture, clothing, all of the clothing, all of this will be auctioned off at a later date. the government is also selling one property in montague island. all of that moncy expected to go to victims of madoff's ponzi scheme. back to you. >> okay, mary. thanks. you get the feeling there's a stigma? not sharon tate's house or anything like that, but do you want to live in one of madoff's houses? >> reporter: what's interesting,

there's a report that said there's been a lot of interesting in the montach house. because of the bad connotations of the name, people would steer away from it. realtors are optimistic. >> i don't know if you want to live in the one that we had on madoff watch every day with our cameras up on those windows, right? you must dream about that place, mary, you looked at it for so long. right? >> reporter: i don't know. i dream about living in a place like it. as you said i'm not sure i feel comfortable living in it. >> maybe not his. bad karma on those walls. >> although mary has put in a bid. >> mary put in a bid? >> reporter: not true. not true. i don't make the salary as you guys, you two will have to make the offer for this house. >> all right. thanks, mary. congressional oversight panel warning taxpayers they're

facing huge losses on the government's $81 billion auto industry bailout. the panel says most of the $23 billion given to gm and chrysler late last year isn't likely to be repaid. the panel's chair, elizabeth warren, good to see you, miss warren, as it always is. we had congressman on earlier. and congress couldn't get it together on what to do with the autos and the t.a.r.p. money was already okayed. we made a decision at that point -- i say we, i'm almost serious when i say that. we came to grips with saving these guys and using that money. was it a mistake? do we need to revisit it at this point? >> no, i don't think it was. i don't think we have evidence that it was. the real point is that we put some money in early, you remember, last december, and that was in a time of enormous crisis. we had the problem then january, february and the new administration came in and said,

you know, we have two choices. you can walk away or put more money in and see if you can really salvage something here and make this go. and the administration decided we're going to put more money in. they were tough negotiators, and they really cracked heads. they forced some real concessions, put down a big investment and they'll get some of that back. they're just not likely to get back the early money that was put in. >> so, do you see any of this as just washington business as usual? you can use it for your own reasons to, you know, talk about what happened. as the commissioner of the panel, you don't have a problem with it, though? >> i'm going to say it slightly differently. what's interesting to look at in this case is that how treasury behaved with the auto industry is very different from how treasury behaved in general with the banking industry. in the case of the auto industry, they said there are

real terms and conditions for getting this money. and you're going to have to have an entirely new business plan that you can persuade us as a good and successful one. you'll have to get rid of some top management, wipe out your shareholders. you're going to have to force your creditors to take a cut. you're going to have to force labor concessions. in other words, you're going to have to completely reshape this business in order to get the taxpayers to put some money into it. contrast that with what happened in the case of the banks, where we said take the money. >> yeah. >> and so i -- this is certainly not business as usual. if anything, the infusion of the money into the auto industry is extremely unusual and done in a very different way. treasury really behaved differently in this case. >> what would you say -- again, taking another side here. what would you say that, you know, we need comfort inns or the las vegas sands or any of

the casual dining company that employ even more people than the auto industry, are they eligible for t.a.r.p. if we do it with strict regulations or strict oversight? >> it's a very fair question, to say where are the boundaries on where the money can be spent. and i would start by saying that's a decision that congress should have made more clearly. they wrote a statute that is somewhat ambiguous. because it is somewhat ambiguous, it left plenty of room for treasury to say, look, we think this one is systemically important, the same way we decided that aig was systemically important, the same way that we decided that is significantly important, saved the economy in a time of enormous crisis. whether they made the right decisions, they put -- forced some evidence and the companies themselves did. the real point is that congress

had the opportunity to say no, you can't do that. here are the restrictions on how we want the money spent. congress didn't go there. congress seems to content to have let the treasury spend the money in this way. given that's the case, there's not likely to be a serious legal challenge. >> jim chanos. i agree with most of what you're saying. we also saw the cash for clunkers program come out of congress, which was, in effect, a backdoorway to continue to support the industry. and how would you juxtapose those two items? >> i would say it this way. congress passes lots of things to support different industries. cash for clunkers is certainly one they've done to try to help out in the auto industry, though certainly didn't limit it to the american auto industry or limit it to the two companies within the american auto industry that are receiving t.a.r.p. funds. but this is a pretty standard thing for congress to do up and down the line, to do it in

agriculture and other parts of manufacturing, software. congress passes laws that help support different business areas. the only point i can make there is it's a reminder that that is a combined economic and political decision. the only question that we are responsible here for in a congressional oversight panel is how are the t.a.r.p. dollars being spent? and at least as we analyze it, the t.a.r.p. dollars are being spent, at least arguably, within the range of what congress is permitting. >> you have to be agnostic in a way. >> in a way. >> that must be frustrating. >> you bet. do you know how hard that is for a lawyer, a law professor? yeah, it is frustrating but we do the best we can. we have oversight of the t.a.r.p. money. as i said, the part i really want to emphasize -- i want to

make sure nobody walks away from this without observing it. that is when treasury wants to get tough, it knows how to do so and did it in the case of the auto industry. whether that will ultimately be enough to get all the money back for the american taxpayer, i don't know. this industry was in a lot of trouble long before the t.a.r.p. money came along and before treasury made this investment. but they cracked heads and, you know, they've done their best in these circumstances with the auto industry to see if they can produce something meaningful here. >> elizabeth warren, appreciate your time this morning as always. >> thank you. always good to talk to you. when we come back this morning, what goldman sachs ceo

thinks about payback packages to market and sesame street takes on the economy. >> do you know what the economy is, grover? >> i have no idea. i think -- i do not think maybe people have a good idea about the economy. >> excellent point. >> grover and the gang are about to discuss the economy in a special. we'll talk to ceo gary knell about this heavy topic for the legendary children's show when "squawk" continues in a moment.e 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.

goldman sachs says that the worst, in his words is off the table. finance industry let growth and complexity in new instruments strip their utility. he tells congress he spours a broad move to central clearing houses, saying those will enhance transparency. in other note worthy comments r, he admits anger in many respect sincere understandable and appropriate. there's little justification for big paydays when an institution is losing money. probably some of the lessons you would expect some of the big banks to have learned after what we've been through. >> the take of our guest host this morning, hedge fund manager jim chanos of kynikos.

there's been some arguments over the past few days that if there's going to be financial reform, it's going to come on executive pay, but not so much on systemic risk or taming derivatives, because those are two arcane and subject to lobbying and are lost in the shuffle. are we going to get anything? >> disconcerting that the less initiative there seems to be to really enact real reform. executive pay, while it is a hot button issue, it's the symptom. it's not the disease. we have to get at the root causes of the excessive risk taking and the poor reporting, which led, in some cases, to the excessive risk taking. you know, whether it was true radiating agency reform, making accounting standards more transparent, not morrow pak. >> is there a way to sell that in this crowded legislative calendar? >> it's increasingly going to be difficult. i mean, some legislators are diligent down there, trying to

keep it focused. it will be tough. >> jim, why would you say a mortgage guy that it got paid on how many mortgages he wrote or the ceo of an investment bank that that's compensation was based on products generated from fees that -- how would you say that's not part of the cause, part of the symptom? that's part of the cause, one of the causes. >> again, financial institutions got into the moving business, not the storage business. so, suddenly we worried about volume, not credit. and the problem there was that all along the chain, people were retaining pieces of paper that weren't saleable. >> but it was all about compensation, all about generating compensation all the way down the food line. >> except there wasn't really profits and that's the problem. >> right. ando it was other people's money that you were -- >> that gets back to accounting and transparency. they weren't accounting for the stuff properly.

so, therefore, they were fooling themselves and fooling the shareholders and fooling the system and the ratings agencies into basically believing that this stuff was profitable. >> it was profitable when they were using the formula that their compensation is based on to take the yearly bonus. >> it was profitable on paper. if you had to really truly market to market all the retained interest that these institutions had to keep, people like me wouldn't buy them. i think we would have seen not as many profits. >> market to market accounting is a huge sigh. a year later, have we really learned lessons? are things different? >> we've gone the other way. market to market accounting for secures was loosened this spring. i mean, things have gotten morrow pamore opaque, not more transparent. we've taken a step backward. too big to fail, institutions become bigger. >> my eyebrow went up when he

said yeah we think the worst is probably over, considering the record quarter. it sounded kind of -- not that i'm -- i want goldman to make a lot of money. i want financial firms not to be in the position they were a year ago. i'm not saying it's a bad thing, but sounded kind of funny. we're dealing as best we can with the hand we're dealt. >> challenging environment? >> $4 billion or whatever. >> i want to give you a chance to mention, a new website is going up. is it today? >> yeah, last night or today. >> what is it called? >> hedge fund facts.org. we also have financialdetectives.org, coalition five investment companies, hedge fund advocacy group i head up. they both have gone up to dispel some common misconceptions about short selling, specifically, there were so many misconceptions last year into this year and more broadly about hedge funds. and what they are, what they aren't, why they weren't a big part of the crisis. >> are you feeling heat?

it's been a while since we've talked about hedge funds in that way. >> yeah. i think the hedge fund industry has done a pretty good job in the last year in getting its message to regulators, getting two congress and making the point that hedge funds were not the problem here. and i think that with a lot of advocacy and a lot of time the industry has done a much, much better job in getting that message out and i think people do understand it. we've got a lot more work to do in the uk and eu where that misconception is still ripe. >> good luck with that. >> yeah. >> "times" story about wall street, too, reported yesterday that you advised stone to divert his script away from hedge funds and more toward banking. is that true? >> that's accurate. i wasn't the only one who did that. he got that piece of advice from a number of people who saw the early treatments and i can't divulge a lot more. but sufficed to say it was -- the original plot was kind of out there.

>> we can't go into it. >> it's been reported but i can't -- >> it's online. i've seen it. >> it was that maybe you got a short seller who knocks off ceos to -- when, in fact, normal the stock would go up. >> yeah. i don't think i -- >> and he said yeah, you're right. >> i don't think i'm breaking confidence to say i did point that out. normally when the ceo gets brutally murdered by anybody, you know, it was sort of silly. >> a lot more from jim later on throughout the show. >> that's good. all right. we'll have much more -- i love when chanos is on, guest host over the next 40 minutes. coming up, republican senator kay bailey hutchison tells us what she needs to hear before even thinking about saying yes. is there anything that senator hutchison -- i'm going to ask her. it has to be scaled back, i

know. we talked to her in washington in front of the six senators. i know how she feels or have an idea. "squawk box" will be right back. i've been growing algae for 35 years.

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reform speech. understanding the economy on "sesame street," picking up the economy insecurity. talking to us about the message that grover, elmo and the gang want to send to viewers. >> hi. it's elmo from sesame street and you're watching "squawk box." elmo likes that name. 

welcome back to "squawk box" here on cnbc. first in business worldwide. one hour away from the opening bell. we've watched futures turn around this morning, dow at this point and s&p futures in positive territory. dow component mcdonald's, restaurant chain reporting a 2.2% gain and 1.7% increase in u.s. sales, both were below analysts' expectations. mortgage applications soaring, highest level we've seen since late may, refinancing

led the way. applications for new mortgages jumped to their highest level for more than seven months. shares of drugmaker vivus soaring on news of its diet drug. talking about weight loss in some cases over 35 pounds. it's something that's being watched very closely today as well. ahead of president obama's health care address tonight, senator christopher dodd says he will not be taking over as chairman of the health committee following the death of senator ted kennedy. he has decided to remain as chairman of the senate banking committee. joe? >> thanks, beck. president making a pitch tonight. not before congress gets served with the largest policy petition it has ever seen, more than 1 million americans have joined forces with the national center for policy analysis and salem radio network to protest government-run health care proposals. joining me now, senator kay bailey hutchison.

senator, it's great, as always, to see you. >> thank you, joe. great to be with all of you this morning. >> when we went to break, we said we'll see what would need to be in the bill for senator hutchison to support it. i remember our discussion down in d.c.,y we hope to do again at some point. we had such a great time. and some of us said i don't know if there's anything. i'm sure there's something you could support. in the current form is there any way that any republican is going to vote for this? >> that's two different questions, in the current form and is there anything you can support? the current bill and proposal that is seeming to be now on the track to come out of the senate finance committee, no, i could not support it. but there is a bill i am supporting. i'm a co-sponsor of a bill that does have a new plan and it would be to lower the cost by having medical malpractice reform. it would give every american a

tax credit, voucher, if you will, to buy their own health insurance so that every american could afford then to have that option. and we could bring the costs down by lowering the costs that are built into the system through medical malpractice reasonable reforms. i think it's a good bill and that's what we ought to really be passing through here. >> a lot of people that -- mostly on your side of the aisle, obviously, that are urging the government to go back to the drawing board given the response from some corners on this. what are the chances that that will happen? it seems small. if something is going to get done along the lines of what the democrats want to do. would you concede that at least? >> yes, i would, unfortunately. i don't see any signs that they are ready to say, hey, let's start all over. this is not selling to the american people. and the more they find out, the

worse it gets because the bill that was revealed just yesterday by the senate finance committee -- although i know they're trying very hard, but it has a $3,800 fine every year for a person -- for a family that doesn't take health insurance. and that's if you make over $66,000 a year for a family of four. so, you're talking about now taxing more the insurance companies at the same time you're saying cut costs, giving them a $6 billion tax, every american a $3,800 a year tax and everything is cost and nothing seems to be addressing the issue of bringing down the cost and keeping the quality of health care. >> we just heard -- i think it was dr. gottleib earlier that said probably what will happen, they'll be able to get 50 and will do reconciliation and there will be a public plan. is that what you think the end result will be? >> if it goes on the track where

it is right now, yes. i think that they have -- harry reid and nancy pelosi have said they will go without any republican support if that's what they have to do to push this through. they're both still talking about the need for a public plan, which is the government takeover. so, i think they are prepared to do it. so, we are hoping for the best, but preparing for the worst. >> it's a major, major undertaking and initiative. and a lot of people would say you can't do that through reconciliation, that the country won't stand for it, if you do it that way. but then they can say we got no support from republicans, the party of no. who can win the pr battle if it goes that route? >> we have alternatives we're putting out there. we're not saying no. we're saying let's look at this start all over. let's drop the concept that you're going to have a big government takeover of health care and drop the concept that

every person is going to have to pay a fine if they don't take some coverage and drop the idea that you're going to increase taxes on the insurance companies at the same time that you're requiring them to lower their cost. and then if we start again, i think we could come up with something that the president could declare victory over. but that's not the plan that is coming out of congress right now. and if they use reconciliation, then i think they will just have to let the people decide in the upcoming elections what is the right approach. >> senator, what are you in favor of, if we drop all those big ideas? those are basically the major ideas that have been discussed over the past several months. >> i am for individual tax credit so that every person can buy a policy, $5,000 credit for every family so every family can have a policy with their own money and it's affordable, which means that people can change jobs, but they know their

doctors, know their systems and can choose what they want and keep it throughout their lives. number two, we have to have tort reform if we have any chance of bringing down the cost of health care. tort reform and medical malpractice reform in this bill. neither of those proposals are on the drawing board today. we are for something that really could revolutionize our health care system in a positive way. >> there's been a lot written in the past few months, senator, about how to run an effective opposition party like the republicans are in right now. a and, in general, people say you don't win by playing with the ruling side. right? you pose an aggressive opposition front and let whatever they want get through, get through and hope things can change during the mid terms. is that the strategy for republicans? >> not at all. i think republicans really want health care reform that brings

down the cost of health care and provides more access for coverage for more families. that's what we need. we need that kind of reform. and we don't want to stop everything and then say, okay. well, let's play the political game and go to the elections. that's not our choice. we are being shut out from any responsible kind of dialogue that our ideas would then be able to come together. we're not in the process now, even though if there's some republicans at the table, 2 of the 3 are being completely shut out and one is trying very hard and she's very much against the public plan. but she doesn't seem to be getting anywhere. and so i think it's very frustrating to be the minority party and to have such control by the democrats and have no say in what's going through. >> it is a little bit eerie,

some of the similarities to the early '90s, right down to the address to the joint session and then the elections that came a couple years later. i mean, we hear you. glad i'm not down there in office and we can just report on it. thank you, senator. >> next time we'll talk texas, too. >> next time we do need to talk texas. >> lot going on in texas. >> right, senator. great to see you. >> thank you. >> reminder, you can watch president obama's speech to the joint session of congress here on cnbc 8:00 pm eastern time. exactly how many years ago? >> china town or clinton? >> 17 years ago. >> that's right. >> all this started with the truman show or started trying to do this back -- >> truman show.

>> yeah. amazing. let's take a quick look at the markets. after three days of gains you saw the futures under a little bit of pressure earlier. things have turn around. you're talking -- barely at this point. futures up 9 points above fair value. anything could happen today. we're watching this very closely, though. again, that's what you're seeing right now. up next, economic insecurity on "sesame street". >> are times tight on "sesame street"? >> things are very slow, yeah. things are slow at charlie's restaurant where i work. i stubbed my toe the other day. it's kind of limp. >> it is serious business for the ceo of "the sesame work shoppe." gary knell, we'll talk to him. i'm here on this tiny little plane, and guess what...

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crisis on wall street has made its way to "sesame street," tackling economic insecurity in a prime time family special that air this is evening. the producers invited us to visit the set during the filming and caught up with one of our favorite friends, whose blue fur matched the mood on "sesame". >> are times tight on "sesame street"? >> times very tight, things are very slow. >> grover, tell people about the

special. >> the special is all about the economy. >> do you know wat economy is, grefr? >> i have no idea. i do not think many people have a good idea about the economy. >> that's an excellent point. >> do you have a portfolio? do you trade? >> what is that? trade? >> yeah, trade stock. >> i have traded my lunch before. >> have you ever thought about doing business news on television? we could use a fourth anchor. >> i already have a lot of jobs. but -- but i will do a favor for you. i will be your consultant. how about that? >> joining us right now is "sesame work shoppe" president and ceo gary knell. >> you should never get portfolio advice from grover. that, i can tell you. >> he had sound tips about how to trade for the best lunch. in all seriousness, this is an

incredibly serious topic. how do you take it, bring to children? why the special tonight? >> we're doing the special airing on pbs called families stand together, focusing on kids and the negative impact that 5.5 million parents that have lost their jobs since june of '08, which means you have millions and millions of kids who people are not really talking about. this is a way to give parents coping skills to deal with circumstances that a lot of families are finding themselves in. >> did the idea come out from experiences of people on your staff and cast members were experiencing or was it letter that is you heard from viewers, e-mails? >> well, the recession has impacted everybody. we had done some serious work around military families and dealing with deployment and soldiers coming back with injuries. we knew we could take on these tough topics using the "sesame street" iconic brand to promote

learning lessons of coping with tough economic situations. since we were all wrapped up in the economy, why not take this on as an issue? >> a nonprofit organization, obviously you must be feeling the pinch of some of this as well, you rely on funds coming in from donors. what have you seen the last year, year and a half? >> we're not immune, like everyone else. media industry and charitable donations are all getting hit by this. we had had some reduction force ourselves earlier this year, which was different for us. we had big expansion plans that we had to pull back a little bit. but we've done focus and are seeing some real potential to do great projects like this one. thanks to funders like the corporation for public broadcasting, who decided to support this, we're very fortunate and optimistic about our future. >> talk about funding the

special itself. where is the line between making it speak to young kids, the seriousness of the topic and not talking down to them? it must abe delicate balance. >> it is. this is focusing a lot of parents in co-viewing and coping skills, teaching kids life lessons about needs and wants. adults can take a lot from these points as well. you need to eat at night. you want a toy. and those kinds of differentiations. those kinds of things are critically important as uh-uh go forward. and simple things about families like going to the playground. there are a lot of thing that is families can do together and tell their kid that this is a temporary situation. we can pull together. we will get through this. kids feel the stresses of parents. and if the parents are showing an attitude that we can get through this, the kids will pick that up, too.

they're pretty resilient. >> right. what's amazing, too, we all think back to watching the show with kids. you are shaping their views about money, and how we view money for years to come. it will affect them for years. >> look, you know better than anybody the issues around financial literacy and even kids as young as 3, 4 and 5 can be taught certain things. mom and dad go off to work, they bring home money, and that money pays for food or a toy. the difference between difference coins, the difference between -- you can't always get what you want. you have to wait and have patience. these are really important lessons, frankly, that then can be the building blocks for financial literacy later on. we take this very seriously at "sesame street" as an educator, to make sure we're building in the proper messages for the kids. >> elmo is one of the hosts for the show tonight. is that a way to reach out to the youngest kids? >> absolutely.

in the episode eelmo's mom has lost her job. you're never home on a tuesday. then she has to explain to elmo she's not going to work anymore at the same place, but she's going to go out and try to find something new and things will be okay. and that's the most important message, i think, that families can give their kids. >> gary, it's jim chanos. it's too bad that most members of congress will be listening to the president. some of them could probably use some lessons as well in financial literacy. >> we could work on that next. we're not going to do it with a public option. that, i can tell you. >> you could sell some outtakes, too, gary, having been there. those guys are -- elmo's father was -- remember how funny he was? i almost said look, there's a pirate theme park. you think we can go? and they didn't have -- couple of outtakes, not in your lifetime. there were some -- i don't know if i'm allowed to say that, but

there were some great moments. >> those people are talented and funny. >> thank you. the show also has four families, real families that have been impacted and documentary footage about what they've done to get through this and tremendous messages for other folks that they can learn from who are in this situation. >> gary, thank you for joining us. >> thanks for letting me be here again. >> we were a little star struck. >> you're welcome any time. >> thank you very much. >> i didn't watch it as a kid, even -- >> carl and i did. >> you two kids did. i would have been a sophomore in colorado watching "cess sesame street." >> romper room? >> the family is called family standing together, feeling secure in tough times. hour long hbo special hosted by al roker, as becky pointed out,

elmo. >> al roker is not a buffett. >> no. >> although at times he almost resembles him now. >> our thanks to gary now. coming up next, jim chanos will give us the short view of the markets. 

far with our guest host of jim chanos. talked about the financial regulation, health care, shorting ideas. we haven't talked china. >> now i'm not the only guy sort of crying in the wilderness about the data coming out of china. you're seeing a lot more articles being written about it. we're skeptical voices being heard about just how accurate some of this data, the showing the chinese miracle. and the fact of the matter is, i don't think it's very accurate at all. >> the data being massaged or what? what part of it -- >> well, first of all, you have

to keep in mind the last command economy that really saw this kind of growth was also the union. and what happened was there was a lot of misallocation of resources into inefficient plan, dams that burst, nuclear plants that had accidents and so on and so forth, as well as fairly large defense budget. china's heading the same way. i mean, we're seeing increasing signs that production, investment in production immediately are idled. buildings that are crumbling. >> counting a durable sale of a washer even though it was given to someone? >> exactly. and then we saw some about how they're doing unemployment statistics. and there just seems to be a wholesale fudge factor, which is all good but if you're making decisions based on those numbers, global investors are making decisions based on those numbers, you know, you've got a problem. >> is it a matter of them not growing at all and them saying they are or it's just over state

what is -- >> as i keep saying, economic activity isn't necessarily building wealth. if you have to keep putting up the same bridge every five years because it falls into the river you're going to show a lot of gdp growth as you keep rebuilding the bridge. you're not generating any wealth for your countrymen. i think that's what you have the risk of on these large  construction-based economies like the old soviet union, like china today. >> that's next. we'll have this morning's top headlines. tion: 49 million. right now 1.2 million people are on sprint mobile broadband. 31 are streaming a sales conference from the road. eight are wearing bathrobes. two... less. - 154 people are tracking shipments on a train. - ( train whistles ) 33 are im'ing on a ferry. and 1300 are secretly checking email... - on a vacation. - hmm? ( groans ) that's happening now. america's most dependable 3g network. bringing you the first and only wireless 4g network. sprint. the now network. deaf, hard of hearing and people with speech disabilities access www.sprintrelay.com. bringing you the first and only wireless 4g network. sprint. the now network. so, what's the problem? these are hot. we're shipping 'em everywhere.

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