good morning. president obama making his health care reform pitch to congress and the american people. a 10-year plan with a $900 billion price tag. >> the plan i'm announcing tonight would meet three basic goals. it will provide more security and stability to those who have health insurance. it will provide insurance to those who don't and it will slow the growth of health care costs for our families, our businesses and our government. >> but is congress any closer to

a deal? the tension palpable in the room as the president spoke. this morning, from wall street to main street the country reacts as "squawk box" begins right now. >> all right. good morning, everybody, and welcome to "squawk box" right here on cnbc. i'm becky quick along with joe kernen and carl quintanilla. we have much more on president obama's address in just a moment. but first, let's get to a roundup of this morning's other top headlines. first up, it is official. opec is keeping its output target steady as had been expected. but some cartel members are calling for stricter compliance and reserves. the bank of england is expected to hold its key rate at a low 0.5%. an announcement is due one hour from now. general motors is expected to

unveil the fate of opel today. gm has decided to keep the operation according to british sources. foreclosu foreclosures have remained steady. it's noted that the u.s. unemployment picture will stay bleak long after the recession ends. texas instruments now sees earnings per share of 37 to 41 cents. the street was back at 35 cents a share. we'll keep an eye on how that affects the futures this morning. >> meantime, the president's address is the talk of the town this morning. at times during his speech last night, the congressional chamber looking more like britain's parliament, perhaps more so when he promised this plan would not cover illegal immigrants and that drew a shout from

republican congressman joe wilson. >> there are those that claim that our reform efforts would insure illegal immigrants. this, too, is false. the reforms i am proposing would not apply to those who are here illegally. >> congressman wilson, if you can't hear it, says you lie to the president. you see the scowl from the vice president and the speaker. >> it's a lie. it's a lie. >> was that you? >> because it's quoted. >> you lie, it sounded like you lie. >> that's even worse than it's a lie, right? >> the congressman apologized later. >> we're told he called rahm emanuel and apologized, not directly to the president. john harwood is our chief washington correspondent. >> were you there, joe? >> no. i was in the stud crow. but i don't think the congressman's invitation to the box at the kennedy center is coming any time soon. >> i don't know if he's going to

be very friendly with speaker pelosi any time -- i don't want to make her mad. >> but mccain called it disrespectful. it's a shame, too, john. >> we can all agree that shouting you lie to the president is disrespectful, yes. >> and it's a shame because that is the lead this morning on a lot of websites and newspapers. how much does it detract from the substance of the speech last night? >> i don't think very much. when i talked after the speech to both democratic and republican strategists, they thought it was quite an effective performance. and the reason i think so is that the president was calibrating his message for two audiences in a way that worked together. he had a lot of outreach to republicans praising john mccain adopting one of his ideas on provide catastrophic insurance for high risk individuals, medical malpractice, the outreach in terms of demonstration projects.

and the significance is that was not designed to attract republicans. that was designed to try to show the american people that he is being reasonable, he's taking ideas if both sides. he said there are radicals on the left and radicals on the right. the left are single payor advocates. the right want to get rid of insurance altogether. i'm in the center. that's the way he positions himself and that makes it easier for democrats to rally together behind what's moving in the house and in the senate because at the end of the day, the white house knows that it's democrats they've got to hold together, democrats they've got to rely on, and you also had some praise for the speech from olympia snow who might be the one republican, the only one in the congress who helps the president get this through by supporting closure, breaking a filibuster and supporting the package. >> so despite all the talk about partisanship, there is more and more an open feeling that they're going to do this on

their own if necessary, maybe with the help of senator snow, right? >> absolutely. you know, the president had a line in his speech. he mixed messages. he said we've taken some republican ideas. he praised mccain, grassley, orren hatch, friends of the late senator ted kennedy. but he said, i'm not going to waste time with people that have calculated that they want to stop this thing rather than improve it. >> he said we'll call you out, right? >> yes. the white house believes that that is, in fact, what the republican leadership and the vast majority of republicans have decided. so their strategy is not designed at this point to get a lot of republicans because they think that's impossible. but what they are trying to do is show that they are reasonable, that they are incorporating ideas from across the political spectrum, and then trying to move together with the support of their own party and they've got the numbers to do it. >> john, i have to say i was impressed with how he was able to maneuver a very difficult minefield on some of these

issues. but in terms of the details, in terms of how you come up with covering this many more people, offering this many more plans without increasing the deficit by a dime, i still am unclear on that. i know he said this is going to come from savings and the existing plans right now, medicare and medicaid. but the devil is going to be in the details, right? >> sure. and it's a challenge. the senate finance committee believes that the congressional budget office is going to score their plan as actually reducing the deficit, not increasing it over the long-term or in the short-term, as a matter of fact. the -- i thought that one of the most significant things the president did was swing behind the idea of that excise tack on insurance companies and away from what the house has decided, which is to tax high incomes, the surtax on millionaires. the reason that is significant is because it raises this insurance tax proposal $200

billion over ten years which is two-thirds of the revenue that the finance committee and the administration have decided that they need from this. but it's also because that proposal is considered by health economists, left and right, to bend the cost curve in the long run. the biggest challenge is the one that you just mentioned, becky, trying to make sure that this thing doesn't bust the budget short-term and long-term and bending the cost curve is something that you do when you have those high-end plans. >> john, i missed it, you now said it's clear that the majority of republicans are opposing this because they want the president to -- they want to hand him a defeat here or because they oppose the plan? >> you don't, you can't separate the two. >> what do you want what do you mean you can't separate the two? >> the -- >> if you are just opposing this just to hand him a defeat for political reasons, with like the demint comment, that's one thing.

but if you're someone who doesn't think that it's the right approach, that's a 180 degree difference between whether you're trying to hand the president a defeat or you oppose the policies that he's supporting. >> there are very, very differences between our parties, right? >> yes. >> so democrats and republicans have much, much different ideas. >> there's whether you think the free market is the way to handle things or whether you should involve the government. >> although we've asked ken conrad this and some of it is denying him a political win. >> absolutely. when demint said it's going the break him, obviously, for senator demint, that's what it's about. but there are how many republicans in congress that you can't throw in and say they're all demanipulates. >> but joe, my point is, you can't disentangle those two things. >> yes, you can, come on, john. >> no, no, no, you're wrong.

>> just to say that you hope your side prevails and therefore you've got a liberal democratic president and you hope that a lot of his things don't -- i can see how you connect the dots that way. but to say that maybe in their mind they think health care reform that he's proposing might be good, so i want him to fail -- >> no, no, no, that's not what i'm saying. no. they have big dinners owes what is the right solution for the country and they also think that the right solution of the country is going to come when their side is in power. so they disagree with the substance and they want to hurt the president politically. >> well, they're all saluting the same flag. >> yeah. it's exactly the same thing that democrats did with president obama. they had a wall of opposition to what he wanted to do on social security reform and they had big substantive disagreements. did they want to hurt him politically? you bet they did. >> i saw a lot of those moustaches on pictures of bush was as well. >> of course.

>> that's the mrig system we've got right now. >> i don't know whether that happened or not, but there's plenty of things that happened. >> we're going to turn to the japanese -- >> do you think at this point that president obama has been more disrespected than president bush? >> no. >> it would be hard to argue that. >> but president obama had more time in office. >> you had a bunch of democrats, rank and file democrats and politicians who made the argument, this is why this van jones has left the obama white house. he signed a piece of paper saying that the u.s. government might have deliberately allowed 9/11 to take place. that is outrageous. it shows how toxic the political environment is. that's one of the things that the president -- >> he was about communist, too, right? >> i don't think so. but i understand what you're talking about. no, no, he -- i don't believe he

was about communism. >> i think he did at one point -- >> it's a good thing that the speech brought us all together. >> guys, i just want to leave you with one thing. you guys are in the business for the rest of the show of setting market expectations. the expectations should be this thing is going to pass because democrats are closing ranks. one of the white house advisers told me after this, i think the fever has broken after this speech and i think the white house believes and i think they're correct that they're on track to get this thing done perhaps by the end of october, maybe a little bit later, but something is going to pass that embodied a substantial share of the white house's goals. >> all right. we'll pop the champagne in the near future, john. thanks. >> and we've got that on tape and we have that ready to play back to you, john. joining us now, former omb director, jim, i guess the devil

is in the details of what passes. something about pass, jim, right? >> well, i agree with john. i think something will pass. i don't think it's going to be what the president proposed last night. i think what the democrats did earlier in the day is they met to sdut not the specifics of the plan, but the specifics of how are they going to go alone and basically pass this through the coming. and there is a nuclear option that they have out there called reconciliation that basically allows the president to go into a speech like that and speech to really two audiences. olympia snow and the blue dog democrats. i mean, he's basically got to be able to cobble together around some proposal those factions. so he was speaking to his own party. he was speaking, really, to the factions within his own party and trying to bring them together around something. so i agree, something will pass. i don't think it's going to be as comprehensive as the president tried to set out and

outline or goal form last night. but i do think something will pass. >> what is going to be missing? what is going to go -- what is going to go wrong for him? >> well, i -- you know, and john mentioned this, too. and it's really hard to add all this up and see how in the world they're going to pay for it. i mean, first of all, the president's number he used last night of $800 billion does not jive with anything that the congressional budget office has put together yet or the luen group, anybody who has looked at the proposal, anyone who has tried to score it or add it up says that 800 is not even going to scratch the service and that's just in the first ten years. the out years the luen group said is going to be another trillion dollars to the deficit. i think that is probably the biggest sticking point right now, particularly since the president put it out there, that he is not going to add one time to the deficit. >> that seemed like the biggest hurdle to my, as well.

but he also said that the cvo agrees with him on some points, but then said if it was going to exceed the cost expectations, he would just stop it. i didn't understand what he was referring to there. >> well, nobody did. there is a lot of road kill on the road to trying to interpret what cvo is going to do with a piece of legislation. first of all, i don't think you can interpret that ahead of time. the proposal that he says that if, in fact, it doesn't add up at some point in time, that he's going to send up cuts or he's going to send up savings measures in the future, that's betting on the calm. i have to tell you, the president proposed in his budget this year, $650 billion worth of savings out of medicare and medicaid and out of entitlement programs and the congress janned at it, basically said we're not going to put that in on ur

budget and didn't earlier this year. so it's one thing to say you have to pay for it up front. it's another thing entirely to say, oh, trust us, we'll pay for it in the future if it doesn't as up. >> the other thing i thought was interesting is that everything gets to keep everything they already have. if you like medicare or medicaid, you get to keep that. if you like your existing plan, you get to keep that. >> that's not what he said, though. he didn't say if you like it, you get to keep it. he said there's nothing in this bill that requires you to change. >> that requires you to change, but what happens if employers decide that they would rather see you going ahead and joining this public plan than paying for it themselves? >> that's right. >> even if there are penalties to employers, it might be cheaper than keeping your workforce on the existing plan. >> and the same is true with taxation. if you say the way i'm going to pay for it is tax companies and

pharmaceuticals, but the costs of health care won't go up. >> it's not literally in the legislation. but it's an obvious consequence of the legislation itself. >> no question. no question. >> i mean, you add things up, jim. the reason that some people are wondering, if you're going to add presumably $47 million people -- >> 30. >> all right. you add 30 million, the government is involved and it becomes bigger and it's actually going to cost less. it's going to be better than it is now. and that just doesn't sound -- i've never seen anything like that ever happen. >> it doesn't seem like there was enough tough love that came through on this message. obviously, there are big problems on the cost structure right now. it didn't seem like there was a message of what are you going to do. >> either it's an insurance industry bureau accurate or a government bureau accurate that's going to decide you're not going to get a -- >> he is right, though.

there's about 60%, 70%, 80% agreement on a lot of the different proposals in the bill. that's why i say, coming back to your first point, will something pass? i think it can. but i think how they're going to pass it with this nuclear option rec sill age, the last time it was done, i wrote that spec legislation. are you saying they're their only option? if so, why all the fuss about senator snow? >> i don't think it's their only opening. but what could happen is two bills, one that they use for reconciliation only, and another one that can garner enough support to get it through. they may actually look at a two-bill structure to get this through. that's been done before, as well. >> the other thing i didn't quite understand is this idea of saying insurance companies are going to be required to accept

everyone, no matter what their existing pre-existling conditions are. you can tell the insurance companies did on to do that, but unless you're telling them how much you can charm them for that, as well -- whether it le 18 times what they're charging someone else for that. >> and they're going to be targeting health and wellness which, again, i agree with. i think it's probably important. but to say you're going to add all that and they're going to do it for free, and we're going to tax them, and they're not going to pass any of this on to the consumer? i mean, they have to in order to save and be able to use their cost structure the way they have. which basically allows everybody to say, fine, that may be what he's betting on, but it's a way

to look at it. >> thank you. >> we never got to play hear the nussle. >> did we do that the last time? >> we did and it was in our ears this morning before the show started. >> that is not enough of a reason to put that -- ♪ . >> what do you prefer, that or la squeak? >> i would prefer country, like sideways. we're going to play that. ann, will you get that for me? okay. >> it's our own personal jukebox, the show. >> someone the other day said we were trying to influence the religion of our viewers by playing a johnny cash song. i'm afraid to do anything right now. >> you look afraid. >> i'm throwing caution to the wind. i'm going to do everything. >> let's get to the markets right now. dave ba bahoric, good morning.

>> good morning. >> join the party this morning, dave. we just heard from john harwood a moment ago who said the message to the markets this morning should be that something is going to get passed by washington. obviously, we don't know exactly what. the devil is going to be in the details. but what do the markets think of a message like that? >> the markets are not thinking too much lately. they're very thin, it's been a quiet trade. the only sellers that are in the markets are short-term long, short-term bulls that are getting out. the volatility is just not there and the equity markets there in the last four trades, everything has been up side and it seems that, you know, when you have that kind of support and that kind of backing, you're not going to fail. so we're going to continue to be pushed higher. everybody is talking pullback, but everybody keeps citing history. those history books are no longer any good.

we could do anything at this point and certainly higher is the direction of the path of least resistance. >> four days in a row higher. >> no reason. why not five, becky? jobless, we're expecting a number lighter out of there this morning. the talk around the pit, you get these as john harwood would like to call us, us no-minds down here talking about theoretical zero and unemployment. as far as the job cuts are concerned, you know, i mean, who knows where this thing is going to go. >> we are used to the idea of after labor day, everybody is back in full force after a relatively quiet summer. and the few first days since the labor day holiday have not necessarily felt like everyone is necessarily back in at this point. what's going on? is there a sense that people are on the sidelines? are they truly back or are they waiting to see a decisive push before they decide how to weigh

in? >> i think you've got a lot of investors out here looking at the markets. the short-term money is tight, the intermediate to long-term cash is a good idea, but you still need to be very selective and nimble. i went to bed early last night so i could get ahold of you guys. global green shoots. we're not looking for just green shoots here in america, but it's a global green shoot mentality. >> what is early for you? >> what is early for me, to go to bed? 6:00. >> 6:00? wow, that's the same time joe went to bad last night. >> 7:15. >> but he's an hour -- >> we're in chicago, you get up at o'clock, you work out a little bit. by the time 6:00 comes around and my son was at football practice, i wanted the chance to dive in. >> there was another nail in my bed. >> if i could, i'd like to make

one comment about the partisan, bipartisan, you wanted it, so you're going to get it. >> who did, who asked for it? >> joe, i heard you out of the corner there. but at any rate, the political banter that's going on, it reminds me of my reading of benjamin franklin. the dealing of the 13 colonies and the cry for a carpenter. we all have issues, we all have different interests. there needs to be shaving and coming together. and that's the point, joe, i believe you were trying to drive home. we're in a real cross-section, i think, as far as the concept of nation state is concerned. and it seems to me that we're all being turned into assets by government inc, which is exactly what we wanted. think about that one for a while. >> i am going to think about it. >> my sandbox is full of stuff, joe. >> you know, i think there are

ways to make things a lot better. >> i do, too. >> and a lot of people say you get back to the drawing board. but you know what? the democrats got elected. the president got elected by a wide margin. they got the house and the senate. >> agreed. but we're in there for public service. we're not in there for salary for income, for opportunities for our own personal interests. an ambitious president or politician is certainly one to be concerned with. i like ambition, but overambition is not good when you're serving the public. now, you're on a white ski that's running the direction, so i'm not pointing a finger by any means. this is something that you could go back to nixon and maybe the last energy policy that we've had. but nonetheless, we're headed down a gauntlet. there are things changing dramatically. the samoans are driving on the other side of the road today. >> no, no, stop there.

let us digest that and we'll come back to you. dave, always good to talk to you. >> take care. have a good day. >> let's get our business traveler's forecast this morning. scott william of the weather channel is here this morning. scott, good morning. >> good morning, carl. we will see weather troubles here across the northeast and the mid-atlantic thanks to that coastal low that we continue to track here. seeing showers continuing to move on shore right now, mainly south of the i-80 corridor. so new york city, fairly quiet, clouds and wind right now and we'll see na wind picking up, especially along the jersey shore. center city, philadelphia, no current airport delays as we check on the scenario. quiet conditions, but later on around laguardia, philadelphia, new york, look for delays up to an hour. so certainly call ahead there. so as far as the forecast along the eastern seaboard, atlantic city, chilly and breezy. temperatures are only in the 60s as we move to ashville, north carolina. 70. atlanta, scattered showers and

storms developing during the afternoon. now back to you. >> thanks for that, scott williams, over at the weather channel. when we come back, if the u.s. open went too late for you last night or if you were watching the president, we have the tennis that you missed. we're shopping for car insurance, and our friends said we should start here. good friends -- we compare our progressive direct rates, apples to apples, against other top companies, to help you get the best price. how do you do that? with a touch of this button. can i try that? [ chuckles ] wow! good luck getting your remote back. it's all right -- i love this channel. shopping less and saving more. now, that's progressive.

call or click today.

♪ good morning. what do you think? i like that. you're like the seasons, you know? >> i do. i change. >> sometimes you'll go through a hard core punk rock or beatles phase. now you're in your country phase. >> i am. >> you go down south and you bring the south back with you. >> you know, i have heard the rock funk before. i need something new. i'm craving new content. that's why pixar has to go on there, too. good morning, welcome back to

"squawk box" here on cnbc. i'm joe kernen along with becky who -- what's his name? >> david allen coe. you missed this conversation last week, carl. i told him there's a huge amount of country. >> i like some country, i do. >> a little bit country and a little bit of rock and roll. we've hit 6:30 at this point on the east coast. futures at this hour -- yesterday, they were kind of down a little bit. at one point yesterday, we were up 70 or 80 points. didn't close up there. >> solid session again yesterday. 9547. we'll see what finally happens there. >> futures haven't been a good barometer of how the day is going to end, in either direction. >> no. it's quiet, carl. the moves have been small. the volatility, and you wonder which way. i don't know.

i don't know which way. >> we'll find out eventually. we've been talking about the president's plan most of the morning. we were watching last night. if you went to sleep early, you missed quite a night in sports. 17-year-old medically oudin losing to caroline wozniacki. that cinderella story coming to a brief ending. on the men's side, roger federer did eliminate robin soderling. djokovic also advancing. derek jeter of the yankees, finally tying lou garg's record of 721 hits. he gets the chance to surpass the number tomorrow. that despite all the news and we've got the president speaking last night, we've got health care on the docket, that is the big story for derek jeter.

no pete rose. i know you'd argue that. >> but he is. he's either on track or ahead of where pete was when he was 35. but you know, pete played until he was 45. and i don't -- i can remember hardly any injuries throughout his career because he was such a -- you know, just like a -- >> a bull. >> a workhorse and a bull. and derek would have to play until he was 45 with no injuries and who plays thil they're 45 any more? >> it's not out of the question. >> no, definitely, not if for runs, scored, to beat ricky henderson, he's ahead of that, as well. it was great. yesterday or the day before, the new york papers were like, you know, is he folding under the pressure? here is a guy who his entire career has been all about pressure. so he comes back three hits, i think, last night, right? >> there's his answer. >> yee, exactly.

bernie madoff caught on tape talking about how to dodge the s.e.c. >> and he was able to dodge the s.e.c. for a long time. so we'll take you back to 2005. the s.e.c. is looking into bernie madoff's investor. madoff and the fund company get on the phone ahead of time to get their story straight. and the first words out of madoff's mouth pretty well set the tone. listen. >> obviously, first of all, this conversation never took place. okay? >> we obtained the audio from the massachusetts secretary of state's office which just settled a complaint against green witch fairfield group. madoff tells them whatever you do, don't tell the s.e.c. you have anything in writing. >> the best thing to do is not get involved with written instructions, if fobl because anytime you say you have something in writing they ask

for it. >> okay. >> so the best thing to do is just say it's a phone call. >> not that bernie madoff is worried, he says, because he knows how these s.e.c. guys work. >> it's a fishing expedition. that's what they do. okay. so they typically, you know, we run through this all the time. the guys come in to do a books and records examination and they -- they watch ma call it, you know, they ask you a zillion different questions and we look at them and sometimes we laugh and we say, are you guys writing a book? >> this is an vgz the almost three years to the day from that investigation, madoff confessed to the conzy scheme. the whole conversation is on cnbc.com. >> scott, two questions on this. first of al, how did they come up with this tape? was this a phone tap from the authorities or was this fairfield guy taping the conversation? does this tell us that these

feeder funds are all completely in on this whole scheme, too? >> the massachusetts secretary of state subpoenaed it from fairfield greenwich. >> well, it may be in the course that they tape conversations, but it was there. and it certainly casts suspicion on the feeder funds. >> and they're still under a grait great deal of suspicion. this isn't over yet. but you listen to that conversation, and clearly, they're talking about how to hide from the s.e.c. the idea that bernie madoff may have been an investment adviser when at the time he wasn't registered and they go through all the details of what he's doing. not that it's necessarily a ponzi scheme. you don't get that they're complicit in the fraud necessarily, the overall fraud, but clearly they were talking.q >> 2005? >> 2005. >> could have been a random cheney wiretapping phase, one of

those tens of trillions that we've got on file at this point just laying around. >> probably. patriotic act. >> thank you, scott. let's get to the markets this morning joining us to talk markets is anthony chan, rob morgan of claremont wealth strategies. anthony, we'll get jobless claims like we do every thursday, but we'll continue to hear from a lot of the bears out there. they wake up, they see the nikkei up another 2%. emerging markets, again, above pre-lehman levels and they shake their heads because of the warning signals, the inflationary signs we're seeing in things like the dollar and in gold. they say it's almost a mirror image of what we saw back in march. >> well, i think, carl, what we see here is a global economic recovery in progress. we're starting to see that even in the united states. the beige book yesterday basically telling us that 11 out of the 12 federal reserve districts are either seeing some

sort of stabilization or maybe even small improvement. the achilles heel, of course, is a labor market and when you see the initial claims numbers, they're still at very high levels and still not consistent with the real strong expansion in labor market conditions. that's one of the reasons, carl, why we've seen productivity so strong. as you get economic growth picking up but labor markets are not expanding, you're going to see productivity a lot stronger. that's one of the things that alan greenspan focused on yesterday. >> are we relying on numbers too much to tell us that the labor market is coming back? >> i think we are. if you look at the arcane data that is coming out, the hirings rate, the number of people that are leaving that unemployment pool, is still much lower out there and that is where the problems are. in fact, in this labor market cycle, what you see is not so much that people are getting laid off, and that's captured by the initial unemployment claims

data. what you see is that people are not getting rehired quick enough. until you see that rehiring taking place, you're not going to see that in the labor market. historically, we've relied on that to signal the initial claims in the market. but they're not as important or perhaps as informative as they have been in prior cycles. >> rob, you couple what anthony said about the jobs market, if they're going to warn about the quarter, they're going to start doing it about now. seasonally, we're headed into another rough couple of months. why not take the money off the table here? >> it probably makes sense, carl, to be wary of a pullback because we do feel like stocks have gone a little too far too fast here. and i am agreeing with anthony, that we've got the global economic recovery and in the long run, stocks are going to be a great place to be. but for the short run, for those reasons that you mentioned, probably does makes sense to be cautious. one positive note here, though,

that the money managers who have been on the sidelines and have had a lot of cash, we're coming up to the end of the year, bonus time, you know, they don't want this market to get too far away from them. >> it's interesting. we have big bears like allan ableson and barons over the weekend says, all right, i admit the market may go up another 10%. then you have bulls coming on to the program saying, we believe the market has probably a 10% correction. nobody has conviction coming into this market, right? >> i think you're right and probably of the reason is that stocks have moved as much as they have in the positive direction. >> guys, a short conversation this morning. i apologize for that. there's so much going on. we'll see what jobless claims bring us. good to talk to you. >> thanks, carl. coming up, we'll get to this morning's top stories, including how wall street is reacting this president obama's health care pitch. natural gas is a cleaner burning fuel,

yet a lot of natural gas has impurities like co2 in it. controlled freeze zone is a new technology... being developed by exxonmobil... to remove the co2 from the natural gas... so we can safely store it... where it won't get into the atmosphere. exxonmobil is spending more than 100 million dollars... to build a plant that will demonstrate this process. i'm very optimistic about it... because this technology could be used... to reduce greenhouse gas emissions significantly. ♪ every head. every bite. every gallon. every shoe. every book. every cereal. well, maybe not every cereal. but every stem. every stitch. every tune. every toy. pretty much everything you buy can help your savings account grow because keep the change from bank of america rounds up every debit card purchase to the next dollar and transfers the difference from your checking to savings account. it's one of the many ways we make saving money in tough times a whole lot easier.

♪ yes, you're lovely... ♪ what do you think? hey, why don't we use our points from chase sapphire and take a break? we can't. sure, we can. the points don't expire... ♪ there is nothing for me... ♪ there's no travel restrictions... we could leave tomorrow. we can't use them for a vacation. you can use the points for just about anything. i know... ♪ the way you look tonight ♪ chase what matters. get your new chase sapphire card at chase.com/sapphire. was it really for fun, or to save money on heat? why? don't you think nordic tuesday is fun? oh no, it's fun... you know, if you are trying to cut costs, fedex can help. we've got express options, fast ground and freight service-- you can save money and keep the heat on. great idea. that is a great idea. well, if nordic tuesday wasn't so much fun. (announcer) we understand. you need to save money. fedex

welcome back to squawk. i'm monica novotny over at msnbc. president obama laid down his plan for an overhaul of the nation's health care system last night. the president addressed not only policy, but what he calls the impact by the opponents. the president asked lawmakers to remain open to other ideas. a bolivian fanatic is under arrest this morning after trying to hijack a plane. he used a can what he called a bomb to hold passengers hostage

on the tarmac wednesday. ellen degenerous, who dances daily on her talk show will be "american idol's" fourth judge. as i get older, i'm making changes to support my metabolism. i'm more active, i eat right, and i switched to new one a day women's active metabolism. a complete women's multivitamin plus more for metabolism support. and that's a change i feel good about. new from one a day. but i've still got room for the internet. with my new netbook from at&t. with its built-in 3g network, it's fast and small, so it goes places other laptops can't. i'm bill kurtis, and i've got plenty of room for the internet. and the nation's fastest 3g network. gun it, mick. (announcer) sign up today and get a netbook for $199.99 after mail-in rebate. with built-in access to the nation's fastest 3g network. only from at&t.

g#click today. still to come this morning, we're going to be talking about health care reform's bottom line. ceo of cardinal health spin-off carefusion will be joining us right after this with his reaction to president obama's speech. later this morning, "fortune" is unveiling its list of the 50 most powerful women in business. stay tuned to find out who leads the list. tdd#: 1-800-345-2550

tdd#: 1-800-345-2550 i want everything right where i can find it. tdd#: 1-800-345-2550 anything that makes trading easier. tdd#: 1-800-345-2550 i want to be right in the middle of the action-- tdd#: 1-800-345-2550 you know-- i have to see what's going on. tdd#: 1-800-345-2550 and when i pull the trigger... tdd#: 1-800-345-2550 ...i've got to get the best price out there. tdd#: 1-800-345-2550 (announcer) try the new schwab.com tdd#: 1-800-345-2550 for yourself. tdd#: 1-800-345-2550 call 1-888-4schwab tdd#: 1-800-345-2550 or visit schwab.com/trader today. tdd#: 1-800-345-2550 'course a trade doesn't always work out my way. tdd#: 1-800-345-2550 but when it does... tdd#: 1-800-345-2550 ...man... do i love that feeling.

people, they do it because it's proper. as one former insurance executive testified before

congress, insurance companies are not only encouraged to find reasons to drop the seriously ill, they are rewarded for it. all of this is in service of meeting what a former executive called wall street's relentless profit expectations. >> president obama making his health care pitch, this time to a more prestigious audience in washington. are they prestigious. >> you've got the entire cabinet there. you're looking at the entire political world sitting in one room. >> that was an interest sound bite. we have dave slaughterback. a recent spin-off of cardinal health. i was thinking that's true. when you are trying to make a profit, you do try to run the business as effectively as you possibly can. if you have a competitor -- if you're running a monopoly, you

don't need to do this. that argument doesn't really hold that much water, does it? >> well, frankly one of the things was bringing patient safety to the forefront. what i liked about that was the fact care fusion as a new public company really is the largest company in the world focused exclusively on patient safety. >> so there's things about the plan that you think would help. are there things you think will not help? >> i think many things about the plan will help the company. in many discussions i've had with hospital ceos, they have mid it very clear as access increases and they expect their reimbursement per patient to be

down, they need to step up their focus on efficiency and quality this is exactly what my company does. >> so you're a spin-off from  cardinal, a lot of people probably don't know what your company does do. what are the main areas of business you're involved with? we focus on global leaders, automated medicine, decides pensing of iv drugs, ventilation of patients, preventing hospital-acquired infections and surgical instruments. your industry thinks at this point errors cost $20 billion. that's $20 billion we could save there if we had a better way to manage those costs. >> the top two errors, which are

medication errors and hospital-acquired infections cost just the united states over $24 billion a year. so if we can get those under control, that's a pretty significant savings. >> all right. we appreciate your time this morning. i know it's a recent spin-off. we'll be keeping an eye on your company. thank you. >> when we come back, top stories. plus financial analysts are a dime a dozen. few are more famous or more successful than this woman. we welcome meredith whitney as our guest host when "squawk" continues. could someone toss me

an eleven sixteenths wrench over here? here you go. eleven sixteenths... (announcer) from designing some of the world's cleanest and most fuel-efficient jet engines... to building more wind turbines than anyone in the country... the people of ge are working together... creating innovation today for america's tomorrow. thanks! no problem! you want a financial partner... who is unusually prepared to help. the meeting with northern trust went well, didn't it? yeah, they get it. they really get it. a little more stability would be nice. northern trust offers the strength and expertise... that can only come from a 120-year track record... of thriving even in difficult times. they understand. roller coasters are for kids, not money. ♪ northern trust. wealth management. asset management. asset servicing.

"what do you mean homeowners insurance doesn't cover floods?" "a few inches of water caused all this?" "but i don't even live near the water." what you don't know about flood insurance may shock you. including the fact that a preferred risk policy starts as low as $119 a year. for an agent, call the number on your screen.

the time for bickering is over. the time for games have passed. >> "squawk" will hear from both sides of the aisle. the reaction from the corner office. cbs chairman and ceo thomas ryan. all that plus influential financial analyst meredith whitney and her latest call. "squawk box" begins right now.

good morning. welcome to "squawk box" on cnbc. i'm joe kernen along with becky quick and carl quintanilla. our guest host meredith whitney. president of meredith whitney advisory group. where did you get that name? >> consultants helped me come up with it. >> what did that cost you, half a million. first a check on the market, first indicated a low. we see this once in a while. see. >> dow was down 1% for a week but up four days in a row. >> four in a row. >> time flies when you're having fun. >> friday was up, then tuesday, wednesday, thursday. >> carl? carl? >> i'm in here, joe. >> did you see bank of england?

>> they did? you're in there hearing that stuff. that's where the news comes in. that's why we go there to show you. that's where the news is coming in. >> speaking of which, our top story, president making health care reform pitch to a joint session of conference. the big controversy came when he promised this plan would not cover illegal immigrants drawing a shout from republican congressman joe wilson. >> there are also those who claim that our reform efforts would in sure illegal immigrants. this, too, is false. the reform -- the reforms i'm proposing would not apply to those who are here illegally. >> you lie. >> congressman wilson apologized. coming up more reaction to the rest of the speech. u.s. foreclosures rising 18%, still near record levels.

the properties receiving notice did decline a bit. ti raising earnings, expects a gradual recovery in the global chip industry. now seeing earnings per share of 25. 25.36. meredith whitney, founder and ceo of meredith whitney advisory group is joining us. meredith, great to have you back again. >> thanks. >> last time you were on the show, made major news, moved markets for the day and came out and said positive things about financials you have been down on. since then those names have been up 25% if you look at the financial sector. the question is, what do you think? >> i didn't bring any special gift. i had upgraded goldman the morning i came on and was working on a lot of stuff. a lot of things are constant, u.s. consumer and small business

doesn't have any credit and credit is still contracting. the banks are taking advantage of what the government is doing by inflating -- artificially inflating asset prices so they can ride a steep yield curve. they are going to have another third quarter that reflects that. engaging in loan modifications that allow them to have lower delinquencies than people expect. that should ride out until the fourth quarter. the third quarter will be similar to the second. core earnings are still a question for the banks. when i came on last time banks were since mid july right before the banks reported, the banks were undervalued. the way i looked at it was i looked at what the potential change in capital will be. the banks have moved beyond -- caught up to those changes, reflective of second quarter results and moved beyond those changes. at this point, i don't think you'll see as much of them. you're not going to see a similar move when the banks

report third quarters. >> here i am and my chronology may not be right. you call this whole mess an everything happens. then you come on and credit cards were next. we were hoping things would get better. you came on and dashed so many hopes. you brought up so many other shoes that will drop. you came on last time and we're expecting more of that and you rightly said these stocks are at a point where they are going to go up. based on having a big mortgage quarter these companies are going to have a big surprise. that's why it was such a surprise to us -- >> surprise to everyone. >> surprise to everyone. now where -- i'm just trying to figure out where you are right now. are we back to -- are you -- we have huge looming problems coming or has the move in these stocks, will they be able to keep this move we've seen and move forward from here? >> the fundamentals haven't improved.

so the government has allowed some of the underlying technicals of the bank to improve allowing them to have capital provisions, disaggregating, liquidity, credit discount, supported capital level so the banks weren't impailing capital. back on for the rest of the world. you had loan modifications make credit quality look better but it's still against it. 9.7% unemployment rate. people are still having problems paying bills. you have some aspects that are helping the banks right now that just kick the can down the road. so the fundamentally things haven't gotten better. obviously the crisis situation is over but it's going to be a long hall, difficult and painful for states, municipalities. that's an issue still on the table that's concerning. there's a lot of opportunity to trade around these stocks positive and negative. doesn't happen to be -- a

negative catalyst because the government has banks basically on their lap and coddling them. >> it's no different than what cash for clunkers did for cars? >> exactly, right. >> it's just the dynamic of what happens when the government adds resources, either they get withdrawn or fizzle out. it's a sugar high as el-erian calls it. >> i love the cash for clunkers analogy. in many respects financials look like the auto industry. they are on life support. so when you have the big financials not lending aggressively, there's opportunities within the market all over the place. there's opportunity for new technology, innovation -- i mean that in a good way -- i don't mean financial products innovation, capital construction as opposed to -- but the big banks aren't going to be many of the leaders. >> you want to go to a hold on any stocks you upgraded last

time you were on? >> i only have one buy, that's goldman sachs. >> that was the day you were on -- doesn't sound like you're necessarily saying -- keep buying it? >> goldman sachs has a lot of gas in its tank. that was my bear market call. it's benefiting from all the movement in the debt market. so they are playing along with the government's activities in terms of it's buying agency, treasury paper, non-agency mortgage backed securities, municipal bond issuance up dramatically. fees on bond issue is a boring aspect of the market have never been higher. they reached an eight-year higher. using it as a muni player, how unsexy but they are in the business. all the things you wouldn't associate with goldman sachs, arthritis. goldman is taking a lot of place lehman left behind. >> when you say they are kicking this down the road, that implies

there's going to be a time when the markets and everyone else figure out these guys are not going to be performing as well. at that point there will be some sort of day of reckoning. >> yes. >> you think there's another leg down when it comes to stocks? >> yes. what i pay attention to now are the government's purchasing plans, the government less than strongly articulated exit strategy from those programs. i think october is going to be a big month because the fed is supposed to wean itself off from a lot of these programs in december. that will be a month of reckoning. you'll see whether loan modifications worked or the rate of redefault kicks in again. when the government stops buying assets, who steps in. the government is 20% of the guilt market. difficult to see what the u.s.

government is in terms of purchasing. i don't think the guy on main street is going out and buying treasuries. >> so then does it naturally follow you think the government should continue to buy, continue to support the market? >> no. i think that you only have so much opportunityu you know, then the dollar is at an all-time low. things are catching up. it's a question, do things catch up all at once or does it work seamlessly. i know you are doing a lot of work on year anniversary special. a lot of good things have happened. fdic has moved to increase deposit insurance from $100,000 to $250,000. that saved a lot of panic on the streets in terms of runs on banks. that kept things running smoothly. what the treasury did in march,

april was successful. it does a lot of mental voodoo on you and you think -- a lot of people are, have i missed it? do i have to get in? the core earnings of these banks is still not what people would expect. >> we were hoping a steep yield curve would buy them time to do what they do, borrow low, lend high. >> financial rehab. >> but as the borrowing low starts getting cut back, if they are not lending high -- they are not lending. >> they are not lending to mitigate the runoff of their portfolio, the ones being charged off. there are portfolios are contracting. they are trying to sell assets and delever. the steep yield curve, the rehab you're seeing is what japan did in the last decade which is borrow low and clip a coupon by purchasing securities. so it's not -- i'll give you wells fargo as an example. many of these banks who

dramatically increased their bank's mbs purchase portfolio. they are not making loans, they are holding them as investments. that's how they are riding the yield curve. >> that could pay off as things turn around and these items that have been marked down so far. at this point banks don't want to sell them, take losses and mark them down, right? >> i look at it this way. when people didn't want to sell cdos and fought against it, the price kept getting lower and lower and lower. the guy who sells first usually gets the best price. it's a question of when you have home prices performing, there's a big issue, we talked about this last time, the loan modification is important because if you lower the rate and you allow someone to stay in for a little bit longer but they really can't afford their home or they lose their job, that's ultimately going to erode the value of the asset on your balance sheet. the banks are carrying those assets just about where the loans are performing now without

the expectation of there could be another material leg down. most banks assume that peak to trough assumptions are right about where they are now. they are moderated because of loan modification efforts. fourth quarter then you see another leg down. although that's my strong opinion. some of the banks say the modification efforts will be strong enough to mitigate what's regular seasonality. >> meredith will be with us for the next hour. we have much more to talk about and she'll be here. >> any questions or comments, we'd love to here you. our address is squawk@cnbc.com. we'll be joend by ann mulcahy and carol bartz. democratic congressman anthony weiner and peter ross

cam will face off next on "squawk." do not go away. >> time now for today's aflac security question. under what name was diet pepsi marketed in 19631 the answer when cnbc "squawk box" continues. well...i couldn't have gotten by without 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. under what name was diet pepsi marketed in 1963? the answer: diet patio cola. >> the time for bickering is over. the time for games have passed. now is the season for action. now is the when we must bring the best ideas of both parties together and show the american people that we can still do what we were sent here to do. now is the time to deliver on health care. >> in an effort to revive health care, the president made his argument again. >> also claim our reform efforts would in sure illegal immigrants. this, too, is false. the reform -- the reforms i'm proposing would not apply to those who are here illegally.

>> you lie. >> the heckling from representative wilson. congressmen, good morning to you both. >> good morning. >> congressman wiener, it's been suggested the president's mission was not necessarily to bring republicans into the fold but more congressmen and senators like you maybe to the left of him. did he do anything to change your mind. >> he didn't have to do much about the idea we need to solve the problem. i'm more convinced than ever that we need competition to private insurance companies. left to their own devices they have shown over two generations, health care is going to keep going out of control and people that need care aren't going to get it. i do think he did make more than a few hat tips to the republican side of the aisle and offered to keep an open mind to their suggestion. we had a rough month of august,

a lot of shouting and yelling going on. i think this was the president saying, okay, it's time for the adults in the process to get to the hard work of solving this problem. >> you made news last month or recent weeks when you stuck to your guns on the public option. he seemed to suggest there might be wiggle room. have you moved in that direction at all? >> he made it clear you need to bring down costs. i think peter and i both agree you need to do that. the only element of the plan that does that in a concrete way the part that gives competition to consumers in the public plan. if there's no public plan, many americans won't have any choice as it's been described. i think the public option he made a good argument and i'm going to keep arguing for it. >> congressman, your vote in some circles, you could argue, may not matter much. >> i wouldn't suggest that. i think this is a complete jump

ball right now. president obama came in with a goal of a pretty heavy list, that was to keep the political left in place and at its flank but actually to try to move the debate beyond the august consternation. i don't think there's any question they understand the government-run public option insurance plan and have wholeheartedly rejected it. seen it through 44 members of the democratic party of the house. they are not going to vote in favor of the bill. i think you see it in the polling. so the challenge that the president this, i think he really kind of missed the opportunity, frankly, was hit ultimately the reset button. the res set button, we're going to drop the public option and go on. let's go to where the public generally wants us move towards increasing access and driving health care costs down but not at the expense of a public option. >> you think anything short of divorcing himself from that element is falling short of success. that's clearly not what happened

last night. >> i think the president has -- if his goal is to stay whetted to the public option insurance plan, i don't think he's going to be able to pass the bill. i think if he wants to sort of recap the vision, that is driving costs down and pursuing other elements of accessibility, great. i think there's a wholehearted desire on the heart of folks on both sides of the aisle to move that goal but a public option can't be -- >> i'm sure you're as frustrated as we are on the outside trying to figure out how the public option alters the survivability of the bill. especially when a hoyer and pelosi can't agree on what's passable and what's not. >> i'll let somebody else do the punditry. it's like a rorschach test of the public option. here is the bottom line. you figure there's three things to do, make sure people who aren't covered get covered. second, make sure people that

have insurance don't lose it for the reasons they should. the third, elevator in the room, control costs. if you don't have competition, the marketplace making decisions, if you don't have that, what do you have? frankly we have yet to hear what you want to do. tort reform. cbo took a look at that and said in all 46 states rates don't go down, they go up. interstate competition but no one suggesting they lose their trust competition. as you know, i think we don't go far enough. i believe in a single payer system like medicare. people like medicare and understand it. putting that aside, because the president isn't endorsing that. i say, what do you want to bring down prices? >> i think there's two things. let me speak directly to the tort reform issue, because i think the president came up short. even the president acknowledges tort reform will bring cost down. he did add a hat tip to the gop

but it was essentially authorizing secretary of hhs to do a study. where tort reform has been in place in places like california and texas over the past 30 years, premiums have increased at a much less vigorous rate than in the places where it hasn't. the other element is this notion of opening up the competition across state lines. i think there's no question if you can bring a robustness of competition and allow people to pull together that's going to change the debate vis-a-vis insurance companies. the final point to anthony's point on cost, focus in substantively on the waste, fraud and abuse question. the president acknowledged there's tremendous fraud in medicare. >> congressman roskam quickly on congressman wilson's heckling, is he in any kind of trouble today? >> it's going to be a tough day.

it was an inappropriate remark and he apologized but he's going to have a tough day. it wasn't a wise thing to do. >> as the debate continues anew, gentlemen, thank you for your time. coming up market action, mirror mirror on the wall, who is the most powerful woman in business at all? right here on "squawk box" at 8:00 eastern time. we'll be right back. ::8:::::

all right. after four trading segssions, te futures are trading. coming up, we'll have the top stories of the day. plus her calls have been well-known to move the market. we're spending the morning with meredith whitney. her calls ahead. president obama making a direct appeal for health care reform. this morning big business reacts. ceo tom ryan when "squawk box" comes right back.

>> you're watching "squawk box" on cnbc, first in business worldwide. tools are uncomplicated?

nothing complicated about a pair of 10 inch hose clamp pliers. you know what's complicated? shipping. shipping's complicated. not really. with priority mail flat rate boxes from the postal service shipping is easy. if it fits, it ships anywhere in the country for a low flat rate. that's not complicated. come on. how about...a handshake. alright. priority mail flat rate boxes only from the postal service. a simpler way to ship.

welcome back to "squawk

box," everyone. let's look at the markets. dow futures are down by about 16 points below fair value. keep an eye on that, watching health care stocks today after president obama renewed his push for health care reform before a joint session of congress last night. that's been one of the most volatile sectors as of late as investors try to determine which proposals may take root and which would be hurt or help. obviously a lot of confusion but something the market will watch closely today. general motors said the decision about european unit. it will be announced at 10:00 a.m. eastern time. some say they will keep the unit. others say they will go ahead with plans to try and sell it. stick around on that as well. shares of texas instruments called higher after the company raised its third quarter forecast. it's taking action based on the gradual recovery from the semiconductor industry. carl. >> thanks. want more insight from our guest host famed analyst, it says,

famed analyst meredith whitney. >> i wrote that. >> with meredith whitney advisory group. we touched base briefly on home prices earlier. you think another 25% on the downside? >> yes. a question of time. the can has been punted down the road. you talk even to regulators and you say what do you think home ownership returns to, what level, they all say 65%. that means obviously less demand, equal supply and house prices go down further. do you keep people in their homes that they otherwise wouldn't be able to afford it longer. the bulls say a burnout. the guys that couldn't afford their homes are burning out of the system. unemployment, no bank underwrote a loan with 10% unemployment on the horizon. majority over $7 trillion in loans were underwritten with under 6% unemployment

assumption. i think there's no doubt they go down immediately from here but just a question of when. >> would be 50% or so. >> yes. >> violent enough where home prices spur more defaults, foreclosures, sales, and lore prices in return. does the vicious cycle come back? >> it's just a supply jam. i don't know about the vicious cycle necessarily. you've got very strong variables that make the odds of this happening unavoidable, which are you have obviously a natural rate of home ownership about 55, 54%. rising unemployment. people having difficulty keeping up with their payments. exotic recess coming forward. then you have issues of chronically underfunded state and local governments. so 44 states have to balance their budget. and most states are underwater. the states that are most

underwater are florida, arizona, nevada and california. now, florida has still got a massive leg to go down. so when you see unemployment and furloughs and the government pullback from spending, then you'll see another way. i don't know necessarily the vicious cycle caused by selling, which triggers other areas, it's just that people haven't hit the bid. again, common theme for so many asset classes, they haven't hit the bid. at a certain point you'll hit the bid and you'll see a supply jam. >> optimists who are grasping for sfraus say mortgage aps are god, people trying to get a new home. >> $8,000 toward a new mortgage if you're a new homeowner. still relatively low. 5% inflection point, rates dip

below 5%, now below 5%, you're going to have -- you're also working from very low numbers. remember, you know, it's difficult to qualify for a mortgage. the banks that are originating are originating and selling. they are not keeping a lot of the mortgages on their own books. look at the home sales that have transpired. bulls could also say there have been a lot of home sales transpired. those have been heavily discounted loans, not high-end. >> down, more in non-luxury homes, lower level homes, is there anything you could see on the horizon to make you say, hold on, i'm going to rethink this entire scenario. it may not be as bad because of x or y. unemployment numbers, jobless, any numbers or data we check all the time. >> i take a very basic approach to things. if you look at the drivers for unemployment, i don't see that

reversing any time soon. i think that customer behavior can always surprise you. what you have now is the good -- the solid credits are paying down their debt. more dubious credits are reaching out for more credit and not get it. so if consumers were to be able to react in a very different way than they have acted historically, you know, what i feel like spending again, a high margin good again, that would be a game changer. that would be contrary to how consumers react naturally. one thing i've been surprised by on the credit card issue, i had estimated that 2.7 trillion of line would be cut by 2010, so far it's a trillion and a quarter. a lot of that has come from, okay, we don't want to have exposure in nevada, exposure in this area. then unutilized line. you're not utilizing your credit card of there's line management

and regulatory change people still haven't adopted. we're steadily moving towards $2.7 trillion. what i underestimated was the fact how much people didn't want debt. so they are actually carrying value of consumer debt has gone down dramatically. you saw a big drop in consumer credit this week. that surprised me. that doesn't bode well for spending. another trend, people not spending so much on credit cards, they are spending more on debit cards. >> spend what they have. >> they know they can afford. they will buy -- have more transactions but lower ticket transactions. >> no better economist than the head of the household. despite the mistakes they have made they know what to do with the current cards they have been delta. >> no pun intended. 80% of most household economic decisions are made by women. >> there you go, boys. >> that says a lot.

>> a lot more from meredith later on. >> eighty, that would be news. it's going down. >> banks give commercial -- >> 99.9 -- like pi, 99.9 and up. industry the heart of the health care debate, man on the front lines, chairman and ceo tom ryan joins us next. later two corporate america's best known leaders, xerox's chairwoman anne mulcahey and carol bartz. on business, health care and the state of the global economy. you're watching "squawk box" on cnbc first in business worldwide. - ( classical music playing throughout ) - wireless can bring

even more freedom to the freest country on earth. so why should you be penalized for talking to someone, just because they're on another network. shouldn't you be able to call any mobile... on any network, at any time? it's a free country. knock yourself out. announcer: introducing the revolutionary any mobile, anytime. now on the sprint network you're free to call 250 million mobile phones nationwide without worrying about the meter running. only from sprint. the now network. deaf, hard of hearing and people with speech disabilities access www.sprintrelay.com.

♪ so blessed with inspiration ♪ ♪ i don't know much ♪ but i know i love you

♪ and that may be ♪ all i need ♪ to know (announcer) customers love ge aircraft engines almost as much as we love making them. innovation today for america's tomorrow. insurance executives don't do this because they are bad people, they do it because it's proper. as one former insurance executive testified before congress, insurance companies are not only encouraged to find reasons to drop the seriously ill, they are rewarded for it. all of this is in service of

meeting what this former executive called wall street's relentless profit expectations. >> president obama talking about health care reform in a special joint session addressed the congress last nichlt tom ryan, chairman and ceo of cbs care mark this morning. it's great to have you on from where you sit, tom, do we have health care -- we had one on earlier from the carefusion spin-off. couldn't get much -- tried to get him to comment on some aspects of the plan. i think he'll sell a heck of a lot more ventilators to 47 million people, that's about what i got out of him. what do you think of the plan? i look at your notes. we need reform but you think a public option is not the right way to go. >> we don't think the public option is the way to go, joe. we think that will stifle public competition and innovation. if anything, a public-private partnership might be the answer. you can look at the federal employee health care program or

you can look at medicare part d with the seniors on drug coverage. that's a program that was put in place, administered by the government and then private players, insurers and pbms negotiated and participated in the program. and we've saved seniors $1200 a year on average. the program is coming in at a third less than the government estimates. there's very few government programs that come in less than the original estimate. >> what should we do? some people say let's do a reset and come back and bring both sides in again. what do we need to do? we want to try to cover everyone, cover people who can't afford it, cut costs. there are things everybody agrees on what we could do. how can we get there? any indication from last night's speech we can get there? >> this is a long process. we've been talking about this since the roosevelt years as the president talked about last

night. i think a step approach where we cover catastrophic coverage. no american should be wiped out because they have some disease they can't cover or some medical procedure they can't pay for. so million malpractice, catastrophic coverage where the government would backstop, that's the way we can start. insurance reform. the president talked about that last night around pre-existing conditions or affordability, buying across state lines. >> that's done. sorry to interrupt. that's done. the insurance industry has agreed to cover people with pre-existing conditions. i don't know why we keep arguing, he keeps making that point. you know, they want to drop people that have a cat -- they don't want to cover people with a pre-existing condition. that almost seems like a straw man. we've already got them to agree to do that, right? >> i guess so. it keeps coming up.

the president brought up medical malpractice. that wasn't in initially. i think that's another piece we should be talking about. we're practicing defensive medicine. >> you can put it in law, they agree to it. they are on board. >> after having a gun put to  their head. >> somebody is going to have to deny somebody somewhere, a government bureaucrat or insurance bureaucrat to draw the line on cutting costs. >> the bottom line if we're spending $3 trillion on health care we can't put 47 million uninsured on top of it. we have to find a way to do it piecemeal where we expand the coverage for the low income, we cover catastrophic situations and then we look for cost savings around evidence-based medicine, use of generics. we talk about prescription drugs. prescription drugs are 10% of the health care spend. anybody you talk to, a dollar

invested into prescription drugs where people take them appropriately save $7 in the health care system. so there are ways to save money around the system and the president alluded to some last night. >> you said something about making the insurance industry truly competitive by letting go across state. that would seem to make sense. the argument is whether the government -- if the government was -- let's say it was a single payer. what is the government's motivation to hold down costs? if you're competing with insurance companies all around the country, you're going to try to hold down costs, you're going to try to do things people don't want to have done to them obviously. seems like that would be the way to control costs. the government has never been good at controlling any cost. >> as i said earlier, you look at the medicare part d program, it's a perfect example where the government administered the program and then private insurers and pbms bid for the

program. >> that sounds like a public -- that's a public plan, though, tom. why not do a public plan that has a private partnership? >> yeah. it's not really a public plan, it's administered. the government would set guidelines similar to what congressman get around health care. it's a program, five different choices, programs in that, but the government administers it. it's a private plan. it is the best of all worlds. we can do that for those that don't get insurance. look at our small state, less than a million people. we have three insurers in the state now and another one coming in. so there's competition. there's competition out there. last time we talked about uninsured. we have coverage we spend probably three-quarters of a billion dollars covering our employees and we offer a pretty decent health care plan, only 83% of our people eligible take it. there's other reasons people don't take health care in this country. >> you could make a case that the government should run the

airline industry. you could make a case the government, if it's good at running things should run everything. >> you could also make the case health care, this idea that you have to have -- >> making sure to control the cost. >> we arrived at a market economy for a reason. >> the government should be a backstop, similar to social security. there should be, as i said, catastrophic coverage. >> what's your axe to grind, tom? what's your axe to grind here? why do you feel that way? you're running a big health care company. do you have an axe to grind or that's truly what you feel. >> no, i don't have an axe to grind. i just think the free marketplace works and we've experienced it. we're going through tough times in the economy now. you can't blame everything on private business. i think, you know, we need some reform in health care but we don't need to have the pendulum swing entirely to a

government-run system. >> that's the argument we have every day, fundamental philosophical argument, journal versus editorial pages in the "new york times" and it's that fundamental argument played out every day. thanks, tom. appreciate it. we've got to go. good to see you. hope to see you again soon. >> when we come back, truth in the ticker, stocks on the move and stories you need to know. plus as we mentioned, president outlining health care proposals last night. now he's sending his team out to try and close a sale to the american public and corporate america. this morning congress secretary gary locke when we come back. >> your. you're watching "squawk box" on cnbc, first in business worldwide. when this school district added aflac to complement

their employee benefits package, guess who became the new teacher's pet?

aflac, aflac, aflac, aflac, aflac find out more at... aflac!

take a look at a stock to watch. texas instruments guiding third quarter revenue, 2.87, the old guidance 2.5 to 2.8. raising lower and upper end of guidance. earnings per share goes to 31.47, that prior $0.29 to $0.39. reuters $0.35. you're above estimates. all right. president obama laying out his health care proposals in that rare speech to congress last night. joining us right now first on cnbc to talk about the administration's latest approach

to health care reform is commerce secretary gary locke. secretary locke, thank you for joining us. we appreciate your time. >> my pleasure. >> we know you go around the country talk to ceos, entrepreneurs, employees. where do you think the president's speech, how do you think it addressed the concerns they raised to you over the last couple of months. >> i think what i've heard from businesses large and small, especially medium and small-sized businesses, they are very alarmed at the rising cost of health care where every year the cost of premiums to cover their employees is going up by 10%. and as expected to double in the next ten years. what's happening is they are very concerned their revenues are not doing to keep pace with the reesing cost of health insurance they purchase for their employees. many are forced to cut back on benefits which puts the burden on families. they very much wan health care

reform. i think the president's message was for the 85% of americans and companies out there that now provide health insurance, coming will change. they will not be required to do anything differently. they can continue to buy the insurance that they want or use the doctors they want, but actually they will benefit because no longer will there be limit on the type of coverage that insurance companies can offer. people will not be rejected if they get sick. companies will not suddenly have to pay a lot more because one or two of their employees got sick. i think the health insurance reforms talked about is very welcomed by the business community. >> also, we heard the president lay out ideas for how to pay for expanding coverage. one of those was to require individuals and families to have some minimum level of coverage. another was that businesses would be required to make sure that they are offering insurance come their employees. if they don't, they will be

paying some sort of fine. the devil will be in the details how that comes out. the question is what level of business does that affect? is it going to be very small businesses? are there exemptions for this? what do you expect to hear hashed out in that plan. >> all the bills before congress provide exemptions for small businesses so they would not be required to offer health insurance to employees, provide coverage from employees but then the individuals would have to get that health insurance. that's why the idea of an exchange, pioneered in many states with republican governors is so appealing, so that those individuals can purchase health insurance, what's now called individual market, they will be lumped and pooled together with so many small businesses they actually have more purchasing power. small businesses pay 18% more for health insurance for their employees for the exact same

coverage large companies provide. it's trying to get that purchasing power and helping pool together to buy in bulk. that's where individuals will benefit and also small businesses. but in all the various plans small businesses would not be required to buy health insurance for their employees. if they do -- but if they do, they would get a tax break. >> can this be done in small steps. we heard from ceo of caremark say some ideas about catastrophic coverage. is that something the administration of sign off on? >> it will take a while to implement ideas, republican ideas incorporated, like these changes. basically that's what the members of congress have, they buy into a pool of health insurance, employees, really an exchange where everybody is lumped together so you get cost savings of it's going to take a while to get some of those exchanges up and running. that's why, for instance,

senator mccain had a proposal, which the president endorsed, to say those that cannot get health insurance now because they have a pre-existing condition, a prior illness insurance companies refused to sign them up for, then there will be an opportunity to have their medical procedures covered. so the president is willing to accept these good ideas from democrats, republicans, liberals and conservatives. it will take a while to get ideas fully implemented. >> secretary locke, thank you for joining us today. >> thank you. >> we appreciate your time. >> kaeg up, more of this morning's top stories, plus the world's most powerful business leaders turn to "squawk" every morning. who is the most influential of all? fortune magazine unveils its list of the most powerful women in business right after this. in the next hour we're joined by two well-known names who are no stranger to these rankings. xerox charlie and former ceo

anne mulcahy and yahoo! ceo carol bartz will be joining us when we come right back. for a smarter way to trade online. only fidelity lets you back-test your strategies against an entire portfolio of stocks. plus you'll get advanced, customizable trading platforms. and you get the kind of execution you'd expect from fidelity... ...with a dedicated specialist to talk about even your most complex trades. they'll even help expedite the account transfer process. trade like a pro. trade with fidelity.

welcome to progressive. how may i help you? i'm looking for a deal on car insurance. i think i might have a coupon in here. there's an easier way. we've got the "name your price" option. you do? follow me. you tell us how much you want to pay, and we'll build you a policy that fits your budget. and i still get great coverage? uh-huh. go ahead. you're the boss. i'm the boss of savings. more like the c.e.o. oh, oh. no glass ceiling. the freedom to name your price. now, that's progressive. call or click today.

influential banking analyst meredith whitney. >> you have some aspects that are helping the bank right now that just kick the can down the road. >> all that and breaking economic news on jobs all coming up on this hour of "squawk box." >> welcome back to "squawk box" on cnbc first in business worldwide. i'm joe kernen with becky quick, carl quintanilla. our guest home. meredith whit if i. >> i don't say joe kern. i don't butcher your name.

>> carl quinn sounds like a guy -- >> superhero. >> you're built like a superhero. >> thank you. >> meredith whitney, ceo are meredith whitney advisory group. futures have been indicating a lower open. check it out now. they have till come back from down 28 or so. going to be a long session with jobless claims today. that could influence things. >> president making a pitch to health care reform to a joint session of congress. >> the time for bickering is over. the time for gain has passed. now is the season for action. now is when we must bring the best ideas of both parties together and show the american people that we can still do what we were sent here to do. now is the time to deliver on health care. >> the president still wants

that public option in a bill. although he does say he remains open to some alternatives. gm made a decision about the future of european opel unit. gm is considering two potential bidders but there are also some reports it may actually decide to keep that unit. home foreclosures remain near record high. realtytrac says foreclosures were down but they will probably rise for another year before finally abating. >> now we have a special "squawk" exclusive. the latest issue of fortune magazines hits the stands today. it features the annual 50 most powerful women's list. joining us for the next hour to unveil this list, talk about how they put it together, describe who is on this list, fortune magazine editor at large. big unveil, one of the women featured, meredith whitney.

patty, thanks for joining us. >> thanks, becky. >> this is a big deal. we've been waiting to hear the names. why don't you tell us who is at the top of the list. indra nooyi, ceo of kraft, big deal with cad bury, hostile bid number two. >> when did you put it together? when i saw irene number two i thought, wow, this couldn't be better timing. >> she was number two last year. all fortune 500 ceos in the top ten. >> when you started this 11 years ago there were only two women running fortune 500 companies at this point. >> that's right. now there are 13 fortune 500 ceos. everybody talks about the glass ceiling, leaky pipeline.

this is a testament that women are gaining in power. every year we find that the women who are on our list running fortune 500 companies are actually running bigger fortune 500 companies each year we do the list. >> in terms of size, what are we talking about over the last 11 years of the list? >> back in -- ten years ago there was jill barad running mattel, completely off the radar. >> that didn't go so well. >> that was a marketer who wasn't really qualified to be a ceo. andrea jung on the list since we began. she was one of the early fortune 500 ceos at avon. anne mulcahy we'll see during this hour she turned over to ursula burns, new ceo. >> hadn't happened before. >> first female to female

hand-off in the 500. so you know, it's like when we started doing this list 11 years ago, it took about a billion dollars of revenue under you to get on this list. now in general it takes about 6 billion. >> why don't we talk about the rest of the top five. we mentioned one and two, three is pat wirt, four, angela braly, number five andrea. how did you come about this order, pecking order, who is in the top spot, who goes first, what the measuring stick is. >> fortune does a lot of lists. this the first list we ever did that was subjective but as objective as we can make it. mot based purely on revenues, a survey. basically four criteria. we look at the size and importance of the business in the global economy, the health and direction of the woman's

business, the arc of the woman's career, her resume and runway ahead and something we call societal and cultural influence which is what put oprah high on the list. oprah happens to be the only non-fortune 500 ceo in the top ten. >> but she's a power deal. she's at number six on the list. >> a little bit of cultural influence. when she endorsed the kendall, the sales went crazy. >> we did a whole hour on her influence helping markers market their products. she's not number five, she's number ten? >> it's so hard to decide is oprah more powerful than angela braly, ceo of well point. that's a company that's bigger than pepsico. >> okay. >> so why would indra beat her

out. >> i don't know the profit numbers on the two but i think it has to do with profitability. it certainly has to do with market caps. we look closely at market caps. >> health care is so much in the headlines right now. >> it is so much in the headlines but wellpoint has market cap. >> no one is arguing for j. lo at this point, right? >> it's only women who run for profit businesses. oprah is a chairman. >> she gets in on that, in terms of pure power you can make that argument -- where is martha? what happened? >> look at her market cap? it's very, very -- >> she has a tv show.

>> she is. we had her on the list for a long time. >> is there an argument about this? >> she would argue. martha like to be on the list. >> she should be. >> martha is very powerful. some of the newcomers on the bottom of the list this year. the woman that builtboro bravo, nbc universal, the whole women's thing that's growing, bonnie hammer, another nbc universal. in fact, nbc universal may have more women -- is this why you have me on? >> no. we had you on before we knew that. meredith whitney is joining us today, too. she's number 39 on the list. how do you measure up and look at meredith for all these things, too. >> number 39. >> meredith is another woman we

argue about. is she more powerful than a ceo. meredith moves markets. meredith made her golden call in july was that? >> yes. >> you know, it started what, like a two-week bank stock run-up, right? it moved markets. you were the only only fed analyst at the jackson hole meeting last month. >> totally crew. i was star struck. plaque socks and sandals crowd. lehman, he had black socks and sandals. >> meredith, what does it mean to be on this list and participating in the conference, fortune's most powerful women's conference? >> when patty invited me in january, my first conference, i

thought she's doing to pull back the invitation. i was so excited. she asked me, i said, okay. nothing cool about it. i have to say it has influenced me in so many ways and really influenced me to go start my own business. nothing less than extraordinary for this crowd. i have a not worthy complex being here. me, too. people get so excited about this. you see more impressive women around which makes you want to do better. it would be the same if you were surrounded by a bunch of men or women that speak the same language, so it's changed me in so many great ways. i've made so many great friends from the conference. being on the list is unreal.

host of women. it's something i never appreciated i was missing. something that's been such an enormous luxury and such an influence on me. >> the whole silicon valley group of women, as a new york, wall street woman i wouldn't meet, they influence me. >> i did a story about this emerging leaders of silicon valley, including cheryl sandburg, ceo of facebook. >> a rock star. >> it's so interesting. these women in silicon valley, these tech women are so networked and they are building social networking companies to facilitate their own networking and they all help each other. these women in new york on the east coast, in banking especially, financial services,

try not to know each other. since you met the tech group, you've been trying to build a network. >> i have. a small group at my house. michael lewis came and presented to one of the events. cheryl sandburg presented at another event. it's just amazing. watching what cheryl does and what she gives back, doing anything less wouldn't be an honor to the people you're around. >> meredith we want to thank you for joining us the last hour and 15 minutes and patty will be with us for the next hour. >> exclusive interviews with women who have been there, done that in the business world. former xerox chief anne mulcahy. later ceo of yahoo! carol bartz on the front lines of the search war, battling google, microsoft.

8:30 eastern time here on "squawk." we're coming right back. your you're watching "squawk box" on cnbc, first in business worldwide. @

take a look at futures this morning, although the global stock rally continues in asia overseas, emerging markets continue to do well overnight. flattish action here this morning. jobless claims in 15 minutes at 8:30 a.m. eastern time. during her tenure at the helm of one of america's leading companies, a woman a recurring member of the fortune 500 top leading women list, former ceo of xerox. nice to have you back. >> nice to be here. >> you're not on this year, you've had plenty of years. you heard us talking to meredith about what it means. all your accomplishments at c xerox aside, what has it added to what you've done? >> well, i think that, you know, clearly being at this point in my career is really a focus on

the transition of leadership at xerox, which has been a really important part of what we've been focused on, which has gone really smoothly and making sure that the economy and impact it's having on the economy, making ia stronger, better, better prepared to come out of this as a leader in our industry. >> patty sellers is with us, mentioned in the last block one of the things considered is the trajectory of not only the woman's career but the company. you came into xerox when people have questions and doubts about the viability of the company. did you think at any point that maybe that trajectory was not going to end well? >> you know, i can say now thatc certainly, yeah, those thoughtsc occurred to us along the way. it was a very difficult time in the early part of this decade but i think it's a tribute to the people of xerox and the focus we had on making sure that the company not just survived

but really became a leader in our industry. that's really what has been accomplished over the past decade. >> what are you seeing now just on a very broad level. we have ceos on all the time probably not very many with your bred breadth of experience.c are you optimistic? >> optimistic but conservative. i think it's important we plan conservatively until we see a trend that is more predictable and one we can depend on in plans of an upturn.c i think being conservative and dealing with, you know, making sure the balance street is strong, costs are disciplined and under control and not mortgaging the future is really how we're planning to move forward. >> we hear -- in decoding this i'm hearing not a lot of hiring, not a lot of capital expenditures.

you're looking at what the market has done so far this summer, a lot has been an expansion of multiples, hoping earnings will catch up. that may happen but certainly not going to come on with the consumer on the coattails, a right? >> i think we're being really c cautious. you're exactly right. we are hiring, we are investing but it's a high hurdle rate when you're dealing with an uncertain economy. and right now we don't see enough of a trend to really get more bullish in terms of being aggressive. >> you know, you think of, you know, i want to xerox something and what that means. xerox the way eastman kodak was seems like a daunting challenge to set up xerox for the future. what do you do, make it an office management company? you must -- >> you print out reams of paper. >> i know i do.

i know. but you must sit around as a futurist trying to figure out i we go more and more paperless, figure out what to do as a xerox -- >> sounds like you're in insuring there's no risk in the immediate future here but i would say we're doing more than thinking about it.c we really have transformed our business. a large part of our business is in document services. we're helping our customers actually get out of the paper world and live in the digital world. and it's not something we're beginning, it's something we're well entrenched in right now. our service is a major part of our business and it's all about solutions and services that help our customers actually live between the paper and digital world. >> you're certainly not alone. look at the network business, digital nickel for analog dollars. we're all scared, writing aboutc this. no money to be made in the future seems like.

>> i think that's, you know, important not to be scared and actually embrace the reality. >> i'm not running anything luckily. >> luckily for all of us. >> i can sit here and quiver. >> anne, you wrote in our fortune 500 issue this year about not cutting back on r&d. and do you increase r&d spending during this recession or do you hold it steady?c what's your strategy there? >> i think, you know, we've learned that r&d is such an important part of the foundation of what creates competitive advantage, that you you really are mortgaging the future if that's where you find your efficiencies. we have maintained our spend in r&d. you're also working to make -- get a better return from that spend, to make it more efficient. but literally that's really where we drive our competitive advantage is through the innovation both on the hardwarec and technology side as well as the services side where we're

increasing our r&d spend significantly. >> and you mentioned you're being more conservative as a company. when you look out there at consumers and businesses, which are those groups do you think is also being more conservative? >> i think our experience and our know how is really in the business to business world. i think we've all learned to operate differently.c i don't think we're going to return to the old ways.a i think, you know, we're clearly more efficient in so many thingc we're doing in terms of managinc our inventory, in terms of stretching our investments.a so i believe that a lot of the adjustments we've made during this period of recession will continue to just be best practices going forward to drive better productivity. >> you started out at xerox as a sales reply in '76. the predecessor, the woman who succeeded you was a mechanical engineering intern in 1980.

for young women just getting into corporate america now, graduating from business school or whatever, do they have it easier because the runway is laid out a little bit clearer or is there so much more c competition, is it working so c well it will be harder to get tc positions like yours. >> i wouldn't say the degree of difficulty has changed a great c deal. i think there's new challenges.c i think that the benefit in a lot of what i think this fortune issue is about is really showing the doability of it and showing the success stories. one of the things i'm most c pleased about is to see this next generation really growing and providing a much larger basc of talent than we've had in thea past. so, you know, i hope it is inspirational and that it encourages more and more women to be ambitious about the possibilities of what they can achieve in their careers.

>> certainly they just need to look to you for a sign of that. always good to see you. >> thanks so much. >> anne mulcahy. >> in the next half our carl bartz, a young ceo used to host for us all the time. she's number eight on the list of most powerful women coming up. know no shame ♪ ♪ watching in slow motion ♪ as you turn to me and say ♪ take my breath away (announcer) ge locomotives. customers love them almost as much as we love making them. ♪ my love (announcer) innovation today for america's tomorrow.

tdd#: 1-800-345-2550 if i'm breathing, i'm thinking about trading. tdd#: 1-800-345-2550 i always have my eye out for a stock on the move. tdd#: 1-800-345-2550 doesn't matter if a company sells computer chips tdd#: 1-800-345-2550 or, i don't know, fish and chips. tdd#: 1-800-345-2550 i'll look at all kinds of stocks before i settle on one. tdd#: 1-800-345-2550 if i think i'm onto something i'll check it out, tdd#: 1-800-345-2550 you know, see what other traders are up to. tdd#: 1-800-345-2550 when everything feels right though, tdd#: 1-800-345-2550 that's when i get serious. tdd#: 1-800-345-2550 and the minute i get into something, tdd#: 1-800-345-2550 i already know when i want to get out. tdd#: 1-800-345-2550 of course, every now and then i'll talk with somebody tdd#: 1-800-345-2550 who knows what i'm trying to do. tdd#: 1-800-345-2550 (announcer) switch to schwab today.

tdd#: 1-800-345-2550 you'll get the tools, the technology tdd#: 1-800-345-2550 and the support to trade your way. tdd#: 1-800-345-2550 go to schwab.com/trader tdd#: 1-800-345-2550 or call 1-800-540-7304 tdd#: 1-800-345-2550 right now. tdd#: 1-800-345-2550 but opportunities can vanish like that... tdd#: 1-800-345-2550 ...so most days, i'm right there tdd#: 1-800-345-2550 when the market opens.

coming up the weekly jobless claims report at 8:30 a.m. eastern time. >> still to come, yahoo! ceo carol bartz, she's on the fortune list and talking to "squawk" exclusively. you're watching "squawk box" on cnbc, first in business worldwide.ac ter that accident. well...i couldn't have gotten by without 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

all right. weekly jobless claims, international trade, those numbers about to be released. standing by at the cme group, steve liesman in washington. rick, take those numbers away. >> international trade, trade deficit, because it's always a deficit, minus $32 billion. this is actually not good news. it's a lot smaller number than we're used to if you go back several years coming from a slightly revised $27.5 billion, about where expectations were for unchanged and it's not. if you look at initial claims they drop substantially. they drop $26,000 to $550,000 in continuing claims, moderated significantly from just shy of six and a quarter million to

much closer to $6 million at 6.09. i'm rounding. it's up to you viewers and economists to try to discern how much of the benefits are sliding off the table versus actual progress, and in terms of the marketplace the dow has cut its losses in the future from minus 10 to minus two goose egg affect there. interest rates slightly lower probably with an eye towards both supply and, of course, trying to handicap all the other variables out there. back to you. >> joe. >> let's get more reaction now from steve liesman. steve, are you there, buddy? >> i'm here. >> are you okay? >> couldn't be better? >> really? okay. go ahead. what's up? what do you have coming up tonight. >> a quick word, rick is right. the improvement is noticeable, 26,000. remember, we need to get to a 400, maybe 450 k to start to see

any noticeable improvement in the jobs market and payroll numbers. on the trade deficit side, 26 to 31 billion we got means that the estimate for growth will be revised down just a little bit assuming this number remains. tonight, joe, we have a little town hall with tim geithner. he's coming up, me and erin burnett, erin burnett and i will be hosting the town hall on geithner. i was wondering, joe, if you would like to continue to ask. >> i have a lot to ask but i trust you to ask all the right questions. we had meredith whitney on earlier. i guess the biggest thing to ask, are we at a point where the exit strategy is going to be not noticed or is it going to make a big difference? meredith seemed to say a lot of these things are still helping

keep things where they are. you pull the rug out, may not be the greatest thing to watch. >> he's been the guy who has been in favor of kind of keeping things in place. one of the things i'm excited about i've had a chance to interview the treasury secretary three times now since he's been in office, always an on the news kind of thing. we're going to do a bunch of things. i have questions, erin has questions, questions from the audience, cnbc viewers and people from all over, really, writing in. we have thousands of questions. >> i have a question. >> go ahead. >> i want you to ask him what his definition of monetizing debt is and how he can say we aren't when we use assets to buy. >> that's a good one, worthy of asking, how long he expects feds to coin and buy the treasury debt. >> i know the answer, they are going to extend it. i want to know how --

>> are you sure? what's the money on that? the money, scheduled to end in october, you're saying for sure gets extended. >> that's my opinion just based on history, lack of conservatism within the federal reserve when it comes to liquidity. >> one observation. what do they do, rick? do they come in with another $300 billion or $500 billion? >> i don't know the answer. i don't know the answer. depends on how many overtime hours they are going to give to the press. >> what do you mean press? >> with all due respect, rick, i think you're wrong on that. >> i hope i'm wrong. steve, i would never wish that you would be so right on this one. i hope i'm wrong. >> i'll tell you why. i don't think they would think it's all that effective. i think they are getting better bang for their buck. >> what's the litmus test for programs we've seen out of various parts of the government, boy, that would be pretty neat. >> i agree. i'm just saying i don't think they got their bang for the buck. >> i agree. >> if they had money to spend

they would spend it elsewhere. what was interesting, we talked about this a lot. yields went down after the feds announced they were ending the program. do with that what you want, i don't think they needed to extend it to keep the cap on yields. the market was going to do what the market was going to do either way. $300 million was minimized. one other thing, rick, chance to interview treasury secretary several times always on the news. we have a whole hour. one of the things i'm most excited about, the last section we built in, was to ask him, hey, what's your vision of the future here. what's the vision of the economy, financial section, he tells us how america gets the mojo back. that will be the last section we'll concentrate anh tuan. >> that should be a very czarring comment from him. >> you leap from bog to bog to bog, dry land to dry land in the

swamp, you're -- >> listen, we'll all tune in. steve, ask tough questions. we want meat on the bones from some of these leaders. we want to know what's doing on. >> you got it, rick. >> get to it, steve. >> you have my e-mail if anything comes up. send me an e-mail. >> if you don't do it, he'll hit you in your other eye, steve. all right. i guess we're not going to find out anything. i'll send you an e-mail. what's going on, steve, an allergy or something? >> just -- i was camping with the boys and i got a stye somehow. >> got a stye. >> he was partying with rick and he finally -- rick finally just said -- >> i've had it. >> i've had it. all right. see you later. our next guest, let me mention p and d quickly, i do see it is moving stocks. 53.76 the close, now bidding

54.16. you saw we blast it on the screen what the company is saying. 349 to 4.12 that looks good doesn't include a $0.44% boost from pharma sale, 12% dilution on the sale. i guess you probably add, what is that, 30 cents to that old number, then anything above that, it would be actual an estimate. the one thing taken positively, previously the company's organic sales would be worse. they are saying they still see first quarter, that's the quarter we're in, they still see the first quarter organic sales flat to down 3%. no worse than that. i think maybe some of the -- >> the cfo says we clearly see that we are approaching an inflection point in procter &

gamble sales trend. investments are having an impact on the market. the comps and the prior year results will get easier as we move into the second quarter. inflection point for sales growth and easier comps ahead. >> once we get past the anniversary, some will get supe÷ easy. put this together with what ibm said earlier in the week, it makes you a little positive. >> maybe the stock market is not completely wrong about everything just because someone says it should be cheaper. our next guest number eight on the fortune list of most powerful women in business. carol bartz touch on everything from bringing new life to the search engine, battling google and hooking up with microsoft. "squawk box" coming right back. your you're watching "squawk box" on cnbc, first in business worldwide.

all right. take a look at futures right now, actually in positive territory. dow futures about eight, make that nine or ten points above fair value. watching through the morning. futures picking up steam. >> yahoo! shares trading higher. stock upgraded to buy over neutral at bank of america to merrill lynch. that's a little broker upgrade.

>> that is. our next guest credited with giving yahoo! new life, fortune magazine tops number eight on most powerful women's list. joining membership in "squawk box" exclusive our old friend carol bartz who we knew -- we've known since -- i do have to ask you, now yahoo! ceo. >> i've never been invited back. >> yes. i have said call her immediately when you got that position. it would have been tough to get host for two hours with all this going on. maybe sometime? >> sure. you know i'd like that. i'm calm and reflective and never have an opinion on this. >> we love that. who can forget those great hanes bartz interactions. sell us on this. i guess everyone wants to hear about the deal that finally did

with bomber and microsoft. sell us on this again. >> think of it this way. we're simply taking the powering search engine. think of almost like an intel chip. we're adding the experience around it. we really got to lay our cost off and keep 80% of the revenues. we're still in the search business. in fact, we actually will be competing with our technology on top of those results. just like hp can compete with dell, renovo. frankly adds revenue and takes cost off of our p&l and we'll be a stronger business. we can focus where we add value and focus on the emotional part of advertising of it's great for yahoo!. 581 million people come to yahoo! every month, million. so we want to make it a great

experience for them. not only search, whereby the way they only spend 3% of their time on internet doing search. the other 97 entertained, informed, communicating with friends. we know the social story. that's what yahoo! will do best. >> when you hear criticism from shareholders, even not shareholders, what do you attribute it to? i guess a lot of people are just mad that some of those higher bids weren't accepted by previous management. is that what they are mad about? i think that's true. a lot would like to go back to la la a year and a half ago before lehman, life was easier. they are creating a deal that was pre -- this current economic condition to today. you can't do that. any deal you put together a year and a half ago -- by the way, should management have taken that? i don't know. i wasn't management then.

who knows what was real, what was not real. you can't take a deal that was a year and a half or what you speculate was a deal a year and a half ago and compare it to a deal today. >> that was my question. knowing what you know about the company now, carol, if you had been in the chair, would you have taken that bill with 33 or 34? >> sure. >> where you are now? >> you think imstupid, 15, 34, yeah, i think so. but -- we were hoping you'd start that sure with an epithet. >> no, no, no. >> let me ask you this, though. from here on out, you've got to be -- you've got to know content. is it mostly going to have to be content because everything else, there's innovators everywhere else and you just need to focus on that? >> wait a minute. innovators everywhere else. we innovate as well.

we still manage the search results on our page. we still add value to those search results. we still add value in the very complex scientific insights of display advertising. when you talk about conten, this is not a minor issue. when you can serve millions of ads a day, when you can serve up live podcast as we do in as many languages around the world there's huge technology around this. don't just talk about content. a lot of innovation. >> that was a compliment, obviously a strong tool. what is going to be the next great frontier for yahoo! to distinguish itself. is it something like where did he go, the next big thing. i have no involvement in this. i have no social life. what's the next big thing? >> well, you know, in effect, the next big thing is that people really need a little more

organization on the internet. you know, you are running over here to tweet and you're running over here to check on your friends and whatever. when you get up in the morning, you've got to have your life a little organized. think about what time you break up. what is the breaking news, what happened to my teams, what is the portfolio. there still is the need to have very, very good information managed for people. open access and just, you know, to know what your online life, which is by the way becoming a center of your life, how can that be organized and who do you trust to give you the right information? when you have five minutes, do you want to play or be entertained, the plane landed, jon and kate. >> how do you update my yahoo! it's been up for a while and organizing stuff for me. how do you take it to the next level? >> you know what's interesting,

becky, is only 15% of the people opt for my yahoo! because they didn't want profiles. the new home page we launched actually has a lot of features in much more -- it isn't to work to optimize exactly what you want to see on that page from local news to where you are to national to feeds from the journal, videos from "squawk box," et cetera. so that -- we want to get people that didn't want to work too hard that real personal experience. >> the complete opposite of google's tack, announcing its update to the home page, making the search box bigger and fun, the print inside it, but other than that it's still basically the same home page. >> i don't wake up and say, gosh, what am i going to search?

i wake up and say what's happening. that's really what yahoo! is. we want to be the center of people's online lives. by the way 12.7% of the people give their time, more time on yahoo! than any other site on the internet. we just haven't been out there talking about us. we're, you kno we're, you know - we got trapped in the millieu of last year and we've got to come out swinging. >> carol, when you came in in the beginning of this year, it was a very dysfunctional organization that has not been decisive. seems to me that you came in and said we need to decide what we're going to do and what we're not going to do. what decides pow-- besides poweg

the search is yahoo! not doing now? >> that's a really good question. i'd say the company was so innovative that anybody could do anything. for instance, we have like 90 some entertainment sites around the world. you don't really need 90 some internet sites. entertainment sites. we need some, you know, scale. so listen, if there's a new movie coming out that you need the trailers on, you know, all these sites, you don't need each site trying to organize something with the movie studios, so forth. so just a lot more systemic approach to how we do this. so frankly, so we can innovate faster, i think in the early days of the internet people said step on the wall and isn't it fun? but there's still a lot of technology that has to happen behind all of this. and frankly, if you get the basis right, you move faster. so really, the search deal was just a lot of more flexibility,

and yet to stay in the business. >> carol, would you consider selling any investment stakes you have in yahoo! japan or ali baba? >> there are two different things here. japan adds company revenue to the company. that's not an investment. that is a partnership and that actually very much adds to our profit picture. alibaba is an investment. frankly, when i first got here i thought, oh, my gosh, we're not in china. everybody's got to be in china. but we all know that china is a tough market to be in, especially media. and my firm belief is the chinese government is much more interested in media companies being chinese media companies. so i view this as a way to profit from the china internet market through alibaba, so i view it frankly as a very good

investment for the future. we have no running power of alibaba. that is, we have an investment only in them. but very different from japan. i went from thinking, oh, my god, no japan to saying, hey, you know what, we can rise a a chinese internet without the hassles of, you know, operating in the country. >> all right. you're going to be there for a while, i guess, huh, at yahoo!? you sell some stock for tax reasons? any of these guys -- >> i didn't sell anything, no, no, no. >> you reacquired it. >> yeah. >> you do anything, you're going to see from some shareholders that are still mad about jerry yang that you're not going to sell. that's probably part of it. so you're long hauler, right? >> you know, listen -- >> you look at me like you used to look at haines. you've got the same look you used to give him. >> well, you know, you're kind of taking over the you know what spot. >> he's been doing that for a

long time. >> does it begin with an "a"? forget it. anyway, thanks, carol. and hope to see you soon. >> i'm around a long time. i will answer your question. yes, i'm around a long time. >> then you're going to have to sit here or somewhere on the set when you're back here. >> i will. >> okay, good. thank you. >> thank you. >> want to pick a date right now? you're so good at booking on the air. >> i have to. then how do they say no to the booking when they call. >> a lot more "squawk" still ahead. update on the early market action. the jobless claims numbers. don't forget the economy will be front and center tonight during a special town hall. the treasury secretary taking questions from the audience and from you, tonight 7:00 p.m. eastern time. "squawk" continues in a moment.s room for the internet. with my new netbook from at&t. with its built-in 3g network, it's fast and small, so it goes places other laptops can't. anything before takeoff mr. kurtis? prime rib, medium rare. i'm bill kurtis,

and i've got plenty of room for the internet. and the nation's fastest 3g network. (announcer) sign up today and get a netbook for $199.99 after mail-in rebate. with built-in access to the nation's fastest 3g network. only from at&t.

when we return we'll have the top headline, and a final round with our guest host. ♪ on this endless ocean

♪ finally lovers know no shame ♪ ♪ watching in slow motion ♪ as you turn to me and say ♪ take my breath away (announcer) ge locomotives. customers love them almost as much as we love making them. ♪ my love (announcer) innovation today for america's tomorrow.

it doesn't cover everything. and what it doesn't cover can cost you some money. that's why you should consider... an aarp medicare supplement insurance plan... insured by united healthcare insurance company. it can help cover some of what medicare doesn't... so you could save up to thousands of dollars... in out-of-pocket expenses. call now for this free information kit... and medicare guide. if you're turning 65 or you're already on medicare, you should know about this card; it's the only one of its kind... that carries the aarp name -- see if it's right for you. you choose your doctor. you choose your hospital. there are no networks and no referrals needed. help protect yourself from some of what medicare doesn't cover. save up to thousands of dollars... on potential out-of-pocket expenses... with an aarp medicare supplement insurance plan... insured by united healthcare insurance company. call now for your free information kit... and medicare guide and find out... how you could start saving.