good morning. move over, john mack. tim geithner holds a town hall, acknowledging the problems of the past year and promising change. the markets on the move, the s&p 500 riding its strongest streak since november november as "squawk box" begins right now.

good morning, everybody. i'm becky quick along with joe kernen. carl is off today. but our guest host this morning, former governor george pataki. thanks for being here this morning. >> thanks for having me. >> we're going to start things off this morning with morgan stanley. john mack is staying on as chairman of the company, but he is stepping down as the wall street giant's ceo. one of the firm's current copresidents, james gorman will succeed him in that role come october 1st. mary thompson joins us now this morning with more. >> good morning, becky. as you noted within i spoke with both mr. gorman and mr. mack briefly. the 51-year-old goreman telling cnbc that it's a table one, something that's been a bit of a rarity among wall street firms

recently. but don't look for any major changes once he takes the reigns. he has been intimately involved with strategic decisions at morgan. currently been he's copresident of the firm and chairman of that brokerage at jb. and his job will be to make sure that the integration of that joint venture stay owes track. his second challenge will be to make sure that the company's sales and trading operations are on firm footing. oofr a seven-year still at merrill lynch where gorman is credited with improving profits, critics say if there is a chink in his armor, core man conceded those points last night when pointing out he does spend a lot of his day working on the institutional side of the business.

mack, who returned to join morgan stanley in 2005 after two years earlier, said the board looks at six or eight candidates but ultimately decided to stay with someone on the inside. mack described his own tenure at ceo as up and down, saying he feels credit when he looks at the work he did with the credit crisis. referring to the $9 become join venture he struck with mitsubishi in september of last year, a deal that helped stave off a perilous decline. the stock is dounl since mack came back to the firm. more recently, his tenure has been marked by three straight quarterly losses.

once the highest paid ceo among s&p 500 companies, mack has declined bonuses over the last two years. and when asked whether or not he thinks that his role just as chairman may merit a pay raise, mack told us, he hopes so. back to you. >> thank you very much, mary. there have been some questions, as you mentioned, some of the tunnels up and down with his tenure. there's been talk and reporting by charlie gasparino that there was tension from the board. did you pick up on any of that when you were speaking with the board yesterday? >> i didn't pick up anything like that about the company. the word from the company is that mack told them 18 years ago that he wanted to step down. he will turn 65 on november 16th, so this is something that they say had been in the works for a while. >> mary, thank you very much. we're going to see you again later in the morning. also in the next half hour, we'll be talking to industrial analyst dick bove and and him

what this leadership change means to morgan stanley. he is very optimistic about it, saying that this leadership change is a welcome one. >> our other top story this morning, treasury secretary tim geithner was on cnbc last night hosting a town hall, kind of a cohost. that was after a grilling by the t.a.r.p. committee. did you watch any of that? >> i watched a lot of it. >> he did well, i thought. >> and last night he did well, as well. he was able to take some of the tougher questions and get a laugh out of the government. >> he can always say look around. they say what about this, what about that, what about this? look around compared to where we were a year ago. if you were to second-guess, fine, but we're much better off.

he offered a blunt assessment of the u.s. economy. he vigorously defended the government's attempt to avoid another great depression. >> today because of the effectiveness of the actions we've taken, and it's just the beginning, we've had more than $80 billion come back into the treasury. that money goes to reduce the amount we have to borrow and it means we have more tools to address the issues of our country's needs. >> one notable moment yesterday, talking about the stress test and professor warren was saying, you know, you went to -- i think it assumed 8.9% and we're already averaging over 9 for the year and we're at 9.7. he said check how much money

came into the banks after the stress test. it gave enough transparency to get the private sector back into the market because the confidence was back in and that's the bottom line. he also showed some of the other -- you can't just use employment or unemployment as what they used. when he's been here, leisman has given exactly what assumptions were made, assumptions that were far worse than what happened in the great depression. we don't have any idea where we would look at it, and he told her no. she said, well, can we go and do more than the top 20 banks? he said, there's 9 thougs banks. she said, how about the next 100? he would say something and she would immediately jump in. when the treasury secretary comes here, we kind of --

>> yes, sir. >> yeah. but these guys in congress, they want it when you're talking to them, but they don't give it when you're talking to somebody else. >> we talked to her earlier this week, as well. let's take a look at the markets this morning. the dow has been up for five days in a row. the futures are just below fair value this morning, but not by a whole lot. you're talking about the dow futures down by about 9.5 points below fair value. nasdaq is slightly down, as well. it is down by about 2.75 points. anything could happen on this friday, the last trading day of the week. we've been keeping an eye on oil prices. if you want to take a look right flower, oil prices are down to $71.78. and the ten-year t-note, 3.35%. the dollar is the major story

today. dennis gartman says if you want to know what is happening, you have to keep an eye on the dollar. he says if you start to see the aussie dollar trading, then if you start to see the canadian and u.s. rate down to 0.25, then you have to look out for the u.s. dollar. he thinks there's going to be a real route. gold at this point, up by $4.30. back above $1 thois at $1,001.10 an ounce. christine tan is standing by in singapore, but we're going to start things off in london with steve sedgwick. he has the latest on what's happening in europe. steve. >> thanks, becky. thank you very much, indeed. we have got the rally back on track. london for one snapped his four-day winning streak yesterday. today it's back up above the 5,000 level, a pretty psychological level, really, trading up 50.22.

it's the old high beater stocks, financial services banks and basic resources is one of the biggest ganlers in the market so far. of course wbl gm has now got an agreement in place. there's been a bit of convention from the likes of volkswagen. gm will still keep a minority stake in. in china, 62.3% increase in sales of bmws in the past month. that's the european story. let's get out to china with christine. >> xhien na's economy continues to show signs of strength.

that's all risk taking come back on to the table. the shanghai composite surging 2.2%. helping to surge the markets is saying that the government will continue this massive spending. gains were more muted in hong kong. inest havers staying cautious after the index scaled to its highest level since august 2008. but it was a different picture over in japan with the nikkei sliding, the strong yen dragging down resources. that saw the economy great at 0.65%. >> today, it's the eighth anniversary -- well, it's not appear anniversary, but it's been eight years since september 11th and the attacks. george pataki was the new york governor at that time.

and governor, it will always be september 11th. that will never -- it's like september -- what is it -- >> december 7th. >> towards '41 made that same mistake. people have a different way of looking at it and that gives us some insight into where we are. the "new york times" shows the skyscraper and says the city did not become a fortress. people continue to move into skyscrapers. others look at progress made elsewhere. i think you have a unique perspective in that if you look at some of the access that have been taking veevent recently, ir what is happening. >> it's september 11 yes. and the story i think stinks. i know this is a business program and a business channel, but i doubt if rate years after december 7th people would think of it as the fifth or sixth story and particularly because,

you know, we're still at risk. we're at war. we're at war today in iraq. weir at war today in aflg. and we know that those who want to do it before want to do it again. . it's interesting, but we can't forget september 11th. we did that after the towers were blown up in 1993 with tragic consequence. >> and the part of the divide in the country, there is one side that would say we're less safe now because we've made terrorists angry. others would say the steps taken by this administration have made us less safe. and you look at congress kind of looks -- they had a chance to say this enhance dollars intear gais investigation techniques are illegal. they had a chance to pass legislation. they were apparently on board in the days and months after 9/11. now there's investigations,

there's i didn't know that was going to be done, you know. >> yeah. >> now, that may be making -- >> it worried me. i think we are safer than we were on september 11th, 2001, primarily because of the actions that were taken by the bush administration. forp eight years, we were not attacked and others were. great britain had its bombings, turkey, argentina, around the globe and we weren't attacked. but i am frightful that we are not as safe as we were on january 20th of this year. >> what are your big concerns? >> there's basically three of them. we no longer have the ability to use the enhanced interrogation technique that i believe and i think information shows us avoiding a number of attacks on the united states. we are releasing certainly people caught on the battlefield from guantanamo, terrorists, and we know from those that have been released before, many go

back to the battlefield. we have seen them captured and killed after they leave guantanamo. if you think of september 11th, the greatest failing was a failing of intelligence. we just didn't see it coming. what do we need? we need morrow bust, stronger, more aimpressive actions by our intelligence agencies to find these plots and find these actions before they happen. and now we have the cia being investigated, while guantanamo debates are going to be released. so if the cia has to look over their shoulder at our own justice dcht while they're trying to find out what attacks might be plotting out there against us, i don't think we can say we were at safe as we were six months ago. >> is there a sense that there could be checks and values.

we have a special court that the executive has to go to before they can get certain actions. so we need checks and balances. we always need to make sure we monitor and improve those balances if they're not strong enough, but i think investigating the cia jeopardizes our security. i think releasing people from guantanamo when we know a number of them will rurp to the battlefield, that's not speculation or partisanism. we've seen that. we've seen that ham. so i am concerned. >> you saw the picture of khalid sheikh mohammed yesterday? >> yeah. >> yeah. it's art to although at his picture, kind of had a smirk. pretty solid. >> declaring that the war on court reporter -- we don't use that term any more. >> correct. >> and hue hugo chavez, high

five. >> ahmadinejad, sworn to the destruction of israel. and it's not as though we live in a safe world. i fear from the lesson of september 11th that we have to be proactive and eternally vigilant has to get less and less important in people's minds, particularly in washington. >> is there a way to make people remember that again? >> just -- you have to speak out. you know, you have to raise -- >> i'm not putting it six. >> instead of waiting and god forbid, we all pray there is never another tack, but instead of waiting and saying, i told you so, if that hopefully never does, but does happen, i think now is the time to say, hey, we've got to be a little more proactive and aggressive in defending our freedom. and you know the big debate on health care, whether or not illegal immigrants are covered, we have to do more to protect our borders. not certainly because we want to know that people are coming here legally for a lot of reasons, but one of them pooem being if

you don't know who is coming and we know they're coming illegally, what might they be planning to do? >> is the biggest image is the passage of time abdomen a change in add member administration, what -- >> i think it's all of that. the passage of time, especially when you avoid other attacks, people move on. that's exactly what you should do. on september 12th of 2001, we needed to look forward and move on. that's what i fear, that message is not being heard by this administration. >> we don'tny to apologize and apiece all of our enemies, either. >> it's almost as if the attitude is that was bush's war. it wasn't bush's war. it was the cause to protect us

from another september 11th. it should be the american people. just one of the things that i will never forget, or there are many things about september 11th was the tremendous sense of unity, the way everybody came together. we were all new yorkers, we were all americans and we had all been attacked and we've lost that, particularly in washington. and when it comes to defending ourselves, we have to reclaim that and hopefully on a lot of yaers, as well. >> as long as you're here, we'll be talking about it, governor. >> all right. comments or questions about anything you see here on this program this morning, go ahead and e-mail us. squawk@krnlz.com. we're going to take a quick break right now. when we return, get gelt get ready for that, just ahead.

all right, welcome back, everybody. scott williams of the weather channel is here with us. scott. >> good morning, everybody. as we talk about your weather, we will see headaches mainly as we move into the lonestar state, scattered showers and storms, northern plains, and, of course, that slow moving coastal low that we continue to watch, bringing heavy rainfall, gusty conditions into the northeast around the big apple, back down through philadelphia, delmarva peninsula, as well. baltimore, the nation's capital seeing the rain.

watch out for delays later on in the northeast in excess of an hour of some of the major hubs. also, a severe thunderstorm and tornado potential here as we watch a tornado watch until noon, including much of the jersey shore. a few interstate forecasts for you this morning, looking along the i-95 corridor, cool conditions, windy, new york city look for a high today of 64 degrees. back to you. >> scott, thank you very much. by the way, folks, it is official. the nfl season has kicked off. if you went to bed early, you missed quite a start. the super bowl championship team pittsburgh steelers beating the tennessee titans 13-10 in overtime on jeffrey's 33-yard field goal. >> is that all you're going to read? they got the rest out. i wanted to see you try and pronounce this guy's name. >> oh, yeah, show me. i'll pronounce it. ready? >> yes. >> it's troy polamalu. >> good. excellent. did you delete that or did they just -- >> no. they shortened it up a little

bit. >> they decided to make it shorter because we don't have time, which i just wasted. stocks on a winning streak, let's see how the markets are shaping up so far this morning. joining us, robert stein and patricia chadwick, president of raven gate. patricia, let me start with you. off camera, we were just talking to the governor about this five-day winning streak. i guess it can be explained with the dollar. sooner or later, if the dollar goes down every day until it gets to zero, i would think the market probably eventually would stop going up on that, no? >> oh, that's so correct. >> really? the governor said it. >> but we know, currencies don't go to zero and interest rates and, you know, momentum playing and a whole bunch of things have a bearing on the dollar, but the dollar does matter and i don't think that it's healthy for the dollar to be discarded, if you will, by our government officials. and it seems as though that's not something that's on their

mind right now. and i think the dollar does matter, but that having been said, you know, you look at the amount of money that's being poured into this country and people say, well, do i really want to buy their debt if the interest rates are as low as they are? and i think there is are a differential. but i think we need a strong dollar longer term. >> now, i do this for a long and i can't figure identity any of it. how can the normal person on the street figure out, commodity res going up, gold is near 1,000, but the ten year is at 330. why are stocks going up at the same time as commodities when they're not always together? and then you say, well, we sell more stuff abroad if the dollar is weaker, but then who is going to buy our debt? the chinese will stop buying our debt because the dollar is losing money on it. i mean, there's so many factors on both sides, i don't see how you can decide what to do, patricia. >> well, you know, it used to be

that there were fewer variables. right now, though, if the dollar gets too weak, you'll notice what happened with gold and oil, that they decided to buy more in euros. it used to be that the dollar was the currency for a lot of commodities and that's not necessarily the case right now. but you're right, there are so many permanentmitations and they all play at odds with each other. i never know how to judge it. there are long-term cycles and short-term cycles and i think it's one more variable. overall, i think it supports having a global approach to invest in. >> robert, how about this? the dollar is purely a reflection of the risk trade and we're moving back. we're more comfortable with risk. so the dollar is going to take it on the chin a little and then that explains gold and everything else. and stocks go up because that's a reflection of the risk trade coming back, as well. >> joe, you took my line. >> i did? >> yeah, absolutely. especially yeah, we think we're

getting away from risk aversion. as that happens, stocks tend to go up and expectations of more economic demand tend to drive commodities higher. that demand is coming a little bit from the u.s. and also from the rest of the world, particularly asia. the one thing that doesn't fit with that theory is what's happening to long-term interest rates. if that theory is all encompassing and true, then we should looking for a higher interest rate. >> we've had some really smart guys on. they describe so much about interest rates and the way they're behaving that they think somebody is buying safety still and because they're saying something wicked. they use that quote, something wicked this way comes. they're expecting something to happen to explain why t-bills are the way they are and why the ten-year is at 3.35% when everyone else seems to be less

risk averse. >> but then why aren't they selling stocks and commodities? >> i don't know. it does that. maybe a guy like santelli can figure out technical reasons why the bonds continue to get so much buying time. >> or they just say that the bond traders know what they're doing better than the guys buying the stocks. >> but there's a bar bell really about deflation and inflation. we're watching deflation continue, if you will, and real estate prices and things like that. yet when you pour this much money into the system, the notion ultimately has to be inflationary. and yet we saw japan threw money at the system for a long time and it wasn't inflationary. but i think that is one of the dichotomies, as well. >> robert, as chief economist -- >> actually, i think that's senior economist, joe. >> is it? >> yeah. but if you want to give me a promotion, that's fine with me. >> it's right here in my script, and i read the script, so you are -- you know, you can tell your colleagues, you're a chief economist now. slap them around a little bit because they work for you. but will this -- is it written

that this will be a jobless recovery or could it surprise us and maybe it won't be as bad as we're expecting? >> today is not a good way to be an american worker when the unemployment rate is 9.5% to 10%. but if you look back at those jobless recoveries back in the early 1990s and even earlier this decade, what seems to happen is that the job growth doesn't pick up and the unemployment rate doesn't start coming down until real economic growth hits a consistent 3% rate. so the real question is whether we're going to hit that 3% rate. back in the early 90s and earlier in the decade, we didn't for a long time after the recession was over. so we kept on losing jobs. i think this time around, because of the inventory story and because of the improvement in our trade balance or at least the trend improvement in our trade balance, we're going to hit that 3% number quickly after

the recession. so we think that the job number will be better than in the previous expansion. that doesn't mean we're going to keep on doing that for the next five years, but in the early stages, it will be a little bit better. >> thank you, robert, patricia, we appreciate it this morning. we know it's early. but we're here. the governor is here. >> right. when we return, we'll have more of the morning's top stories, including the changing of the guard at morgan stanley. plus, can the united states afford health care reform right now? we will tell you why the former top accountant is concerned. david walker is our special guest when "squawk box" comes right back.

welcome back. john mack staying on as chairman and stepping down from the wall street giant. james gorman, he's going to succeed mr. mack in that role come january 1st. the troubled bank could be on the verge of an earnings turn around. dick, tell me, do you want me to say rockdaily or roach dale? >> rock dale. we're rocks. >> three straight quarters of losses while goldman has been doing better indicates all the hoopla about not taking enough risk on, this seems to be a continuation of that since this guy is going to -- you know, his bread and butter is running the low risk brokerage business. why is it going to be better for morgan? >> well, i mean, let's put morgan into perspective a little

bit. over the last couple of years, it's lost $400 billion in assets. at the peak, it had $32 billion in revenue. this year, it will be lucky to get $23 billion. that's a 25% decline. it's had three bad quarters, as you've just indicated, and nobody made any money in this stock for a decade. it's selling pretty much where it was selling in the year 2000. and there's reasons for that. the reason is because it's never had a coherent strategy. in the beginning of this decade, it was a big dotcom company. then it went to emphasizing profit margins over revenues. then it decided it wanted to take a time of risk in the alternative market. then it decided that it had to be a regional bank and get deposits to fund its balance sheet. now it's decided it wants to go back to trading and investment banking. >> dick, the real reason it lost all of it was a year ago this month, it lost about 85% of its value. it had been doing okay to that point, no?

>>. >> well, no, not really. it was nowhere near the peak and then came back down again. the problem is, you cannot change a strategy based on the new fad in the market. in other words, the instability in top management at this firm is legendary. i can only think of citigroup as being the other company, which has been as mismanaged as morgan stanley. >> does that include mack? >> absolutely. mr. mack came from credit suisse, where he was fired. he's now at morgan stanley, which has shown virtually no improvement since he's been there. i don't think that we've seen strong core management at this company for a long time. >> well, then are you concerned that he's staying on as chairman? >> yes. i think it's a big mistake.

once the ceo leaves the company, he should leave the company. because if he stays on at chairman and stays o bod, he represents a threat to the existing ceo and that creates a problem. james gorman, i think, is a capable executive. s know how to establish a strategy, he knows how to execute that strategy. he's had success wherever he's been. i think the cfo of this company is a very strong executive. so i think they have very strong people now at the head of this company. but this company for ten years has been a mess. >> dick, should these companies be ramping risk back up or should they be, you know, watching closely that we don't, you know, have another repeat of what happened a year ago? >> the problem with risk is that they don't understand what it is and they don't understand how to

manage it. so then to simply say we're going to ramp up risk without telling us, they change all the mistakes of the past is a very bad mistake. risk has to be managed properly. that's why goldman is effective. that's why everybody else is ineffective. >> well, if they're no good add it, then they should stick with the brokerage business of the dick barneys. it's going to be hard as an investment bank to do anything. they're packaging life insurance policies hoping people die sooner. >> there will be a huge wave of mergers and acquisitions in the next year. >> thanks, dave. what a lame business. >> the life insurance thing? it drives me crazy. >> we're going to pay now, but don't live too long because we're secure advertising. >> and it doesn't matter if you're in the investment bank, you're going to make money whether they live or not.

>> right. innovation is good, but you can't get blood from a stone. >> right. health care is the talk of the town this week. president obama's joint congressional address on wednesday sought to set the record straight on his proposal and what it will mean for the u.s. deficit. >> put simply, our health care problem is our deficit problem. nothing else even comes close. >> i will not sign it if it adds one dime to the deficit now or in the period, future. the public option is only a means to that end and we should remain open to that idea that accomplishes our ultimate goal. >> joining us now is david walker, president and ceo of the peter g. peterson foundation. david, you heard it yourself from the president. he will not sign this bill if it adds one time to the deficit. can he do that? >> well, first, we have to define the term future.

in washington, future generally means ten years. the country will last longer than ten years. does it add to the deficit over ten years? does it add beyond ten years? does it bend the health care cost curve down rather than up and does it result in a significant reduction in the tens of trillions of unfunded obligations we already have for health care? right now, we're zero for four for the energy and commerce bill. we'll see what comes out of senate finance. but that is the test and we'll see whether they can meet it. >> if you look pat what has been proposed in the senate, that seems to be the idea that president obama is building more around. do you feel better about that? i feel better, but it doesn't meet the test. >> you have a new study that's been put out. they looked at these costs for you. what did you find from the study? >> well, it was good news and bad news. they found that the uninsured comes down from about 50 million

to 0 million. and it almost comes close to paying for itself. i mean 39 billion short for the next ten years. the bad news is that it costs $1 trillion or adds $1 trillion to the deficit. in the second ten years and gets worse after that. in addition, total health care costs go up rather than down. therefore, it bends the curve up rather than down. in other words, we've got to add in washington is we want to bend the curve down, not up. >> so people have been looking in the wrong direction on this. >> right. >> democrats would say, we need to get the coverage out there and we'll worry about the rest. >> they have it totally backward. you cannot reduce costs by controlling spending. we have on a path to bankruptcy. we need to get costs under control.

yes, we need universal coverage at some basic level, but a much more streamlined level and fundamental level than is being talked about right now. >> david, the president says that a half trillion in savings is going to come from cuts in medicaid and medicare, and yet we don't know how. he's going to have this mission that is going to look at it and decide what to do. is there any reason of a commission like this being successful and achieving this massive magnitude of cuts? >> not unless they have extraordinary powers. right now in the energy and commerce bill, the commissions in there, it would be repealed. so even when congress passes something that says they're going to get tough, they don't have a history of falling through on it. >> a little discourse is out of control on both sides. you just said it's a nonpartisan statement. we're going to get mail that says that, you know, you

obviously want the president to fail, you're saying that you're putting, you know, the putting the horse in front of the -- or the cart in front of the horse. who put you up to that? did one of your republican openists put you up to that? >> i've been a political independent since 1997. i'm not saying anything different now than i've said for 17 years. i agree with the president that we need some level of universal coverage in this country. i think we have to be much more realistic about what we can afford and sustain. and the fact is that we've got to focus on the primary problem first and that's cost. >> a time of people great with a lot of things. i think the democrats and the republicans agree with that. yet you've seen that thrown forward with all types of high beshly and rhetoric as the insurance companies look for ways to not cover you when we know that's not the issue any more. both sides agree.

>> really, i think you put your finger on a very important issue. i think we will get something done, but it needs to be scaled back because otherwise you'll get sustainable -- >> parts of the party won't allow that. >> the president said 60% to 80% of what is in there is probably a pi partisan agreement on that much of it. do you think that's the case? >> i think you can get a bipartisan agreement on insurance reform, i think you might be able to bipartisan agreement on some expansion of coverage for the poor and near poor, although we have to define the term poor. poor is not 400% of the poverty level. >> the president mentioned that what he is trying to achieve to save some funds is competition. and he pointed out alabama where 90% of the state only has one provider. i believe that we should allow people to buy health insurance from any other state across state lines. you can buy a car from anywhere

in the country. would that not reduce significantly the cost of health care and create this competition without having a so-called government option? >> to the extent that we have a more meaningful competition, that's going to help. i agree with you, we shouldn't limit it to state lines. but it hasn't cost quite as much as they thought it was going to cost because there is a xeltive element in there. and so if you do it right, you can save money. but we've already promised tens of trillions more than we know what we're going to pay for. >> what was the opposition viewpoint for not letting you do that? because i know when the president was a senator, he voted against opening up insurance. >> i think the argument is some states require certain coverage and other states don't. >> so you can't open it up? >> so if you open it up, and new york requires acupuncture. ours is very expensive and very

inclusi inclusive. if you're a young person, you don't need that type of coverage, you don't want that type of coverage, you're going to go past the state and the interest groups don't want to allow you to have a policy that doesn't require you to have them in the projects. >> you see, i think one of the fundamental things is we have to focus on getting people preventive and wellness and catastrophic coverage. give them options for more than that if they want. give them choice. go across state lines, whatever, but we've got to make sure that the basics, preventive wellness and catastrophic is universal. >> that chair is not taken typically. and this job with the peterson foundation, does that take a lot of time? >> could you be here every day? >> i could be here more. >> all right.

we well, we're going to take you at your value on this. >> i'm free. everybody wants you when you're free. >> there's an open chair. >> david, thank you very much. >> it's a pleasure. >> we will see you again very soon. >> a quick break now, we have much more -- and you're invited, too, governor. i didn't mean to slight you on that. >> no, no, i'm fine. >> but governor pataki will be with us until 8:00. >> we'll have his take on everything from energy policy, maybe more politics. don't complain about it, please.

welcome back, everyone. let's check in with our guest host, governor george pataki. what did you think about what david had to say? >> i think david had a very important point. that is that the president makes these flat out assertions. i'm not going to sign a bill that adds a cent to the deficit. it's going to add to the deficit unless it's changed. many say things like no bureau accurate will come between you and your doctor whether it's a private plan or a public option. that just can't be the case. there's no plan in the world that doesn't have some sort of monitor who looks at what you're doing. so -- >> democrats will say it's a bureau accurate who comes between you and your plan right now if you're dealing with a health care plan. >> that's absolutely the case. and what we have to do is regulate it better. but to say that there's never going to be anybody between you and your doctor is completely untrue. it's just not the case. so it makes you wonder, when you have these flat out assertions and they just don't seem to be

correct. >> in his speech the other night, he did seem to make some reaches. he offered some olive branches out to the republicans on things like tort reform, on issues like looking at what john mccain had proposed and making sure that we can get some of those proposals back. >> absolutely. he offered it as an olive branch a day ago. they have a deadline of wednesday morning to stop negotiations and stop debate. how serious an offer is it when he's given 112 speeches on the bill and now at the last minute when they're shutting down negotiations, he says, well, maybe if you do something on med-mal practice reform, we'll put it in there. we need mel matt malpractice reform. i appreciate the president saying he will consider it. i hope that is, in fact, what happens when we go into

negotiations. >> when we return, one final session to place your trade these week. we're going to talk about what's happening in the markets, take a look at the futures.

welcome back, everybody. take a look at the futures. they are starting to catch up. dow 3.5 below value. five days of gains for the

market. we'll see what today has to offer as the last trading day of the week. when we return, tim geithner answers your questions. cnbc host ag town hall with treasury secretary last night. we'll bring you the highlights.

ceo of morgan stanley calling it quits and clearing the way for his successor. what it means for the financial powerhouse. chief party protesters take their fight to washington. >> you are talking down to the american people, if you think we are that stupid. >> the conservative movement showing it's dislike for the president's health care plan, setting the stage for rallies in washington this weekend.

>> guest host and former new york governor george pataki joins dim army to talk about health care, spending and the deficit. the second hour of "squawk box" begins right now. good morning, welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick. carl is out today because we didn't realize it was his birthday until the end of the show and he got out of is yesterday, now he's gone today. he says he's 39. that's what everyone says they are, but i think he is. i've been 39 for a while. host george pataki, 39. >> i'm actually 49. >> he's with a law firm which specializes in insurance

matters, energy. we're going to talk about all that. but first becky has this morning's headlines. she stayed here. >> i didn't abandon you. >> thank you. >> let's talk about this, top stories. treasury secretary tim geithner hosting a town hall offered a blunt assessment of the u.s. economy and financial system while vigorously attempting attempts to avoid another great depression. >> today because of the effectiveness of the actions we've taken, this is just the beginning, more than $80 million back to the treasury. that goes to reduce how much we have to borrow and means we have more resources available to do the necessary things our country needs. >> geithner cautions the recovery will be slow and painful. steve liesman will be here shortly with more on geithner's comments. ceo of morgan stanley stepping down in january. he'll continue as chairman. the co-president stepping into

the role. outside headquarters in manhattan with more on that story. mary. >> reporter: i did speak with both men briefly last night. the wonderful thing about this transition, it's a stable one, a rarity among wall street firms. the 51-year-old goreman telling cnbc the 50 year strategy will stay in place. the opportunities or challenge of the ceo get the firm's sales and trading operations on firm footing and keeping the integration of morgan stanley and smith barney brokerage on track. he's credited with getting that finalized ahead of schedule. the australian native joining morgan in 2006, this avs a seven-year stint at merrill lynch. at merrill credited with improving profits and was repeated at dean widther. goreman is a steady hand needed

after shifting strategies and management changes right below the c suite. >> james gorman is a capable executive. he knows strategy, knows how to execute that strategy. he's had success wherever he's been. >> gorman did concede critics remarks about lack of experience running a trading or investment bank but spends time dealing with the business, the majority of profits as it expands its retail brokerage arm. the 60-year-old mack will stay on as chairman. he told us the board considered six to eight external candidates before deciding to stay with the internal candidate gorman. he described his tenure up and down. he added he feels great about the work he did during the

credit crisis. he spoke of the trouble to keep afloat, working with the federal reserve, a $9 million investment from japan's mitsubishi, an investment that caused a perilous decline in stock in december. morgan stock is down since he returned as ceo in 2005. in fact critics say it's due in part to ill timed decisions by mack that included ramping up risk and increasing exposure to mortgages right on through the credit crisis. there is another management change that has to take place. keep in mind gorman's co-president is going to be named chairman of morgan stanley international. he's going to remain based in london. the question is who becomes president. morgan says that is up to gorman and will probably happen at a later date. back to you. >> mary, thank you very much. joining us with more reaction, dino, as we tell you a former new york bank executive but

happens to be former managing director at morgan stanley. he's the perfect person to talk to about this. what do you think of the changes, john mack stepping down, first of all, staying on as chairman and gorman stepping in. >> looks like the board of directors asserted itself and said, we'll need a succession plan. there had been questions pout when this transition will take place. coming up to 65, seems like a reasonable time to plan that succession. they set up this horse race sometime back. james gorman. i don't think it's a surprise it was one of those two. gorman is a terrific executive. has he a great record with merrill and more recently with morgan stanley. he reified their operation. >> what does it tell us about the future of the company. there have been all kinds of questions pout morgan when it

was agreeing to put on extra, when it was not. seems like it was timed badly. >> one wants to look at john mack's legacy. on the positive side, he steered the firm away from this crisis. on the other hand, as mary thompson pointed out, they ramped up private equity at the wrong time, they ramped up hedge fund acquisitions at the wrinkle time, ramped up risk without putting management in control to manage that risk in trading. there were some missteps. they could have dealt with management dealing with black rock. they didn't do that. merrill did. it ended up being merrill's best asset. you did have missteps along the line. it was a mixed legacy. by mack's own admission it was up and down. looking forward james gorman's experience is more on what i'll call the agency side of the business. brokerage and asset management, less on the trading side. i think he -- i heard him once say a couple of years ago he liked the agency side of the

business because they hire multiples in the marketplace, they do. whether that means he shifts the focus of the business towards those. morgan stanley does have a premier investment banking franchise a laumpling off point for a lot of stuff they do. that looks like it's going to remain in place. it will be interesting to see how he directs this. >> jeff harte is joining us, financial analyst. jeff, your take on this succession plan, what do you think about the change of management? >> in hindsight, it's not that big a surprise. i can't tell you i was expecting it to happen right away. in looking at it, the last two years financial crisis has been hard on john mack. he's pushing 65. it's not all that big of a surprise. i do think james gorman is probably the right person to fill the job. he is a strategic figure, a former management consultant, a lot of success executing across

business, across from theory to actual reality to getting things done. i suppose the one concern i have with him, i don't think this is a new concern, he really does lack experience on the institutional side of the business, non-retail trading, some of the investment banking, that side of it. i actually think that the stock should probably be fairly neutral with this case james gorman is a pretty well-known commodity on the street and i think people like him. >> what about the depth of the bench there. will he have people around him helping him? >> he should. there's a couple of things. in a firm like morgan stanley, you can say this about goldman sachs and other competitors as well. they are deep, long franchises. there's a lot of talent at morgan stanley. the second, with the turnover, phil pursell, mack, now gorman, there's been a lot of people switching seats. i don't know it personally like i would at a goldman sachs.

i'm sure they have the right people there to support him. >> when you look at your universe of stocks, how does morgan fit in in that growth? >> as we sit here now, i think morgan stanley is certainly one of the top investment banks in the world and probably the top retail brokerage firm. that's a good thing. the bad thing i'm hoping james gorman can fix, they have been strategically inconsistent over the years. phil pursell didn't want any rest, john mack did it at the peak of the credit cycle. now more risk averse. getting a consistent strategy in there should go a long way to getting them back on a course. at the end of the day a big franchise at a discount. that's a long way of saying i think morgan stanley does good as the stock turns. >> so what's the new wall

street? >> new wall street is going to be like the financial system, less lever, tighter regulations, lower return on equity. that's going to be the defining feature of wall street going forward. >> dino, thank you for coming in. jeff, thank you for joining us. we appreciate it. >> all right. let's turn our guest host and get his thoughts on wall street firms and where he stands in economic recovery, former new york governor george pataki is here. some people pine for the old days, some are glad they are over. >> i worry about them. >> you've got some tax revenues from it. >> we got a lot of tax revenues from wall street but i worry about it. dino talking about less leverage, less return. my fear it's going to be less important in a global economy. we are just seeing china booming, asian markets moving forward. and we're just at best kind of stagnant. the dow is up but the dollar is down. i worry whether or not great institutions like morgan stanley are going to continue to play

the role in the global economy and the dollar, whether the dollar is going to play the role it historically has in the global economy. we change fiscal policy in washington. we can't have $9 trillion in deficit before the health care program and not expect financial activity to move offshore in the united states. >> so you want to change the fiscal policy. once again it's not a united country here. there are those that say the most important thing we do is new regulations proposed by treasury secretary geithner. that's what we said about enron, we have to do something about horrible mismanagement and we did. sarbanes oxley turns out to be an overreaction where we went too far. you're seeing listings on new york stock exchange decline, listing in london and elsewhere, because of the burden, reporting requirements placed on companies in the united states.

that's not to mention the tax break. we had the second highest tax break in the globe. that's one of the reasons. when you talk about our economy, the word that hasn't been used by the president or very often in dialogue is jobs. that's what it comes down to. we need more jobs. when you're forcing businesses that build a new plato because of the comes disparity and tax disparity, it means our economy is not going to create the jobs we need to get out of this recession. i think we need some fairly dramatic change in fiscal policies so we don't have these massive deficits, largest in history, so we can do something to stimulate business and create jobs. this is not just a jobless recovery. to the extent it's a recovery we are continuing to lose jobs. >> is there anything in the reforms that have been proposed that we need to do? >> sure. one of the problems we had was the risk of overleveraging and

having collateralization where you didn't know who owned the entities at the end of the day. you need to restrict that. one bank we're talking about john mack and how when he took over from phil pursell, morgan stanley was underleveraged. by 2008, everybody was overleveraged. you need to have regulation saying you can't leverage 35 or 40 to 1 or you end up with a lehman circumstance. you can't have institutions too large to sale so they are essentially guaranteed by the united states taxpayer when they make mistakes. that's not right. >> big banks are getting bigger. >> where will that end? is citi going to continue being the entity is down the road? we don't know the answer to that yes, we need more regulation and competition. not just among ourselves but in a global economy that seems to be focused more on investing in

asia or in a place like brazil than in the united states. that's not good for our long-term interest. that's not good for people who need a job. >> when you look at the g-8 and the movement they are trying to make to get everybody on the same page that's not going to take into account changes in china, brazil and other places. is that a good first step to try and get on board. >> i think it is. you need the eight economies of the world trying to move in concert. we each have our national interest that are different but ultimately a lot of commerce. we're seeing it today. to the extent there is a recovery, it's largely being driven not by u.s. economic growth but by chinese and other growth. their growth is good growth. we need to see it here as well. >> all right. if you, the guest that always has somewhere to go. where are we going? >> commercial. >> e-mail us here at

squawk@cnbc.com. if you like what you're seeing, stay tuned. we have dick armey. up next tim geithner defending the bailout plan. at the town hall meeting that was cool. later the march is on, thousands ready to hit the streets of washington to oppose the president's health care plan. you've had fair warning. stay tuned. your you're watching "squawk box" on cnbc, first in business worldwide. >> time now for today's aflac trivia question. what is the fastest flying insect? the answer when cnbc "squawk box" continues. what is the fas

flying insect? the answer, the australian dragonfly. >> treasury secretary tim geithner offering a defense to the administration's bank bailout plan at last night's town hall meeting hosted by cnbc reporter steve liesman. he joins us -- co-hosted, i guess. you're calling him a host, too, of the town hall meeting. >> whatever you want to call it.

>> after watching with elizabeth warren yesterday and then last night, he answered a lot of questions. he's got a lot of patience. >> i think he has reason for it. whether or not you agree with him, geithner doesn't necessarily agree with it. he defended the action taken by the government but insisted the government would be getting out of private markets as soon as it could and also bringing down deficits of the question is how. he was pressed first by the audience then moderators about whether tax holy spirit to go up. give a listen. >> will taxes go up? >> right now if you're worried, as most americans should be, about how we're going to afford things in the future, live within our means, the most important thing now we can do is to get this economy back to where we're growing, where firms are investing again, people are creating jobs again. and when we do that, we'll bring

those deficits down. and that means we're going to have to bring our commitments and our resources into balance. it's going to require we do difficult things. but again, i think most americans understand if we don't do that, we're going to face a risk of slower growth, higher unemployment and a darker future and that's not something we can afford to do. >> sounds a little bit like a yes to me. >> want me to repeat exactly what i said? >> so resources and commitments, you be the judge. a big buyer of u.s. debt. while markets improved, too early to begin winding down these programs. becky everybody has to interpret it, what he said about resources and commitments but i thought it was pretty clear. >> the other thing so interesting, steve, was to watch him for an hour, in this open

forum, which we really haven't seen before. he seems very comfortable with the audience, with the questions, with explaining and defending those positions. >> i think he's gotten more confident in his job, becky. i think that's a big part of why he seems more comfortable. he started off really rocky, you remember, with a plan that didn't materialize to buy the toxic debt. the economy has improved, he can point to growth now. i asked him the last question, will more americans be employed than there are now, he said confidently yes. the fact he has stuff underneath them. no more panic, can walk away from there. as a public servant he feels a requirement to explain what they are doing. the fed has gradually come along there, too. he feels more of a need to explain what's going on. >> i notice you not only asked him where would we be a year from now if more americans are working but you ask him if that's what he would tell you a year from now sitting in that

seat. very good. >> i learned it from you guys. i'm just a fill-in anchor but i learned from you guys. >> you did a masterful job. >> thanks a lot. >> busloads of activists planning a massive protest. former house majority leader dick armey will be watching those events closely. he joins us for his take on the obama health care plan and what he would like to see come out of this weekend's event. as we head to break, where oil is trading down $0.15, below $72 at 71.79. "squawk box" will be right back. your you're watching "squawk box" on cnbc, first in business worldwide.

president obama will give a speech on monday about health care. no, no, not really. okay. it's about -- not on monday anyway. it's about the financial crisis. it's been one year since the collapse of the lehman brothers, the fall of lehman last year triggered a worldwide financial crisis and accelerated obama's

race to the presidency. the president made financial regulatory reform as a platform of his candidacy and tried to push through measures we were just talking about with the governor. some of them are universally recognized. a lot of them seem to be falling by the wayside as we focus. that's why i said that about health care. >> pushed to the back burner. >> we have had a single mind. maybe we'll hear a couple of comments. you might hear a couple of things about health care. >> he's going to be in new york down by wall street. >> by wednesday they want something -- they want it basically finished by wednesday? >> a bid on the senate bill, negotiations they want done. >> you made a point, i don't know if everything i read on drugs is right. i heard republicans haven't been invited to discuss it since april. >> they haven't been since then. >> the olive branch goes out but

you have to do it by wednesday. >> you have to sit down and talk. i've been involved in a lot of these negotiations, particularly something as dramatic as health care. what's the rush? you have to take time to consider alternatives. >> i say drudge to generate more mail. how about this i got it on the huff post. i can go either way. >> when we come back, more of this morning's top stories. as we head to a break, let's take a look at widely held stock. uuuuuuuuuuuuuuuuuuuuuuuuuu

welcome back to "squawk box," everyone. let's get a check on the markets. watching the futures moving into positive territory. dow futures down by 10.5 points below fair value. this comes after five days of gains for major markets on the last trading session of the week. making headlines this morning, a changing of the guard at morgan stanley. john mack is staying on as chairman but he is stepping down as the wall street giant's ceo. one of the firm's current co-presidents james gorman will succeed him in that role on january 1st. positive news out of asia. china reporting stimulus spending helped boost industrial output. investment and retail sales at

the third largest economy. general motors is launching a major new marketing effort. the lawmaker will offer full refunds if they don't like their cars in the first 60 days. joe, send it back to you. >> thanks. thousands of americans expected to rally in washington sunday to protest government spending, the taxpayer march is being sponsored by freedom works and "squawk" regular former house majority leader dick armey is leading the charge. good morning, leader army. i better call you chairman. i get a lot of maim when i call you leader. that's typical of someone who is a leader. >> you've got to remember that's what bob dole called his dog. >> all right. so this is not specifically about health care, the march. >> no. this is the largest gathering of fiscal conservatives trying to make a point about the need to bring in the excesses of big government and get some insanity in washington. obviously the health care is the

issue of the day but you've got cap and trade right around the corner. i just saw an ad haass night where they are continuing to push the notion that they got to save the working men and women of america from vagrancies of secret ballots and protect their rights. there are so many big government plans for this administration that our folks gathered from all over the country come in here, by the way, each and every one of them on their own hoof, their own dime. nobody is bringing busloads of people with government money like they do with acorn. they are making a point. we need the government to get responsible with taxpayer's money. >> let's talk health care for a while. you saw the president's speech the other night, right? >> yes, i did. as usual, the president gives a very good speech. he could have starred himself in

pacific with that speech. i thought it's fascinating. he's gone from in the speech a plan that was reported out of committees that had a cost of $2.4 trillion to now he's proposing a plan of $900 billion, just short of a trillion. first of all, my guess is he's talking about consistent misrepresentation under a statement of the cost by taking a ten-year period that includes the first four years. still that's a dramatic reduction from where he'd be. again, we never really got concerned or upset about the plan he seems now to be putting aside until we started reading the details. we're all excited and anxious to see what's the chapter and verse detail that he will finally reveal to us hope fully before it gets voted on and passed through congress maybe if the members of congress don't read

it maybe the taxpayers will have a chance to read it. if they do i fear he might find the same kind of reaction he had last august. >> when we have republicans in leadership positions. they say this will get done. regardless of what's finally in it, there's a bill that will be signed. do you agree with that and what will it look like? >> if nothing else in the final analysis they will have a face saving bill, one that will lay down markers, build some foundation on which they can build. one of the things that really sort of irritates me in this whole discourse, the president says if you're not for our exactly plan you're for status quo. they have to remember there are many republicans that have had health care reform bills out there since long before president obama came to washington.

37 bills offered by republicans. they don't even recognize their existence, let alone give them a fair hearing in the process. >> the others will say when the republicans were in power nothing was done. none of those bills made it all the way through or were signed into law. >> that's not all together true. there was something done. obviously president bush's big part d adventure was done. much was tried. as you know and you've seen today, a minority particularly in the senate can stop what they perceive to be bad legislation whether it's the republicans pushing good legislation and democrats stopping it or the democrats pushing bad legislation and the republicans stopping it. it's a bit disingenuous to say when the republicans were in the majority they didn't get it done, they didn't care when today they are in the majority and can't get it down. are we now to conclude they

don't care? they have a bigger majority than we ever had. >> is there any shot of a bipartisan agreement or plan that could get supporters from both sides of the aisle? >> there's always an opportunity for productive reform. right now there is in washington something i call a hardening of the attitudes that the degree of anger, resentment, animosity that is expressed across the aisle is beyond anything i ever saw, certainly not like in the old days when ronald reagan and tip o'neill were the jolly two fellows always enjoying each other's company. the fact of the matter, today it's very hard to reach across the aisle on any subject whatsoever because politics has become personalized to the point where it is almost like go into a if you reject my idea you reject me. i'm nothing. no ground i stand on except the

idea i have. therefore they just got thin skinned and very, very impatient with anybody that disagrees with them. and nobody more impatient than the president of the united states who says if you disagree with us, it's a lie and we're going to call you out. i mean, i thought that was a fairly dramatic moment in the speech that very few people noticed. >> a few friends in congress on both sides of the aisle. where does the country stand if it were to go through on reconciliation. i'm harkening back to days when you were in a contract with america. are you expecting history to repeat or history to rhyme or it won't happen at all in 2010? >> no, my own view is at some point -- remember these patriots showed up last april. they said they weren't real, just ignored these people. they showed up through august. they said they were astroturf,

just ignore these people. they are going to show up saturday. at some point i think members of congress and even the administration will realize there's a substantial and serious number of american people that have grave reservations about this. we have to slow it down. lay down our marker if in fact we want to make sure we get credit sometime and maybe seriously consider this in light of the grand history of this great nation and the clear preference for the american people to remain free in their practice of health care within their family and their physician. the fact of the matter is, the add manage is just taken steps to the left, government control of the most heartfelt sector of the economy. at some point they are either going to have to come to terms with we want do this or ram it through. if they ram it through, it is

going to be a political catastrophe for the democrats. i don't wish that on them because i don't want a policy catastrophe for america. >> george pataki, good luck with the rally and all you're doing with freedomworks. the words we don't hear very often right now is jobs. this is a recession where we're continuing to lose jobs. you talked about the spending and how we have to fight against it. you are right. the other element that isn't talked about that much is taxes. we know this administration is looking to raise taxes. there was a clip from tim geithner where he was talking in convoluted language he never said, but we know they are doing to try to raise taxes. just the suggestion to come out there and require people to take a pledge they are not going to raise taxes, percentage jobs and continue to raise taxes. >> we continue to work on that. if you take it again and again, the health care is not

insignificant in terms of a big government initiative. and what are they doing? they are going to impose sanctions and taxes on small business. these are the job factories of america. america right now is living in a world, they have got a big gluttonous government bigger than they need already. it's no wonder they hesitate to risk their capital to get out there in this arena and create that new business, expand that new idea, create that job opportunity when they don't know what the government will do to punish their efforts. it's a reservation like the '70s, if you're doing invention and innovation, investors. they are holding back because they are scared of where the government is going. >> thank you. congressman armey. i don't want to use your first

name. >> just don't call me late for lunch. >> i don't want to call you what bob dole called his dog, leader. coming up, final thoughts from our guest host of the day, former governor george pataki. then geared up for opening on wall street. can we make it six straight days of gains? we'll find out what traders are watching at opening bell. stay tuned.

all right. final thoughts from our guest host. george pataki served governor three terms including september 11th, 2001. thank you for joining us. we know from here you head down to the site of the world trade center. >> becky and joe, thank you for having me out again. i've enjoyed it. this is september 11th, for all the business and health care didn't, i just pray people don't forget what happened that day and the lesson we have to be eternally vigilant in defending our freedom. i'm going to lower manhattan where we'll have the memorial service and we'll be able to see what is taking place at the site. to me the most important thing is that we're going to have a

memorial there where the towers stood. there will be reflecting pools, the name of every hero who died. the memorial is on time, under budget, as mayor bloomberg said two nights ago, we're going to have it completed by the tenth anniversary. i think it's going to tell the story of the magnitude of our loss, the courage new yorkers showed when we responded september 11th. i think it will be very moving. >> absolutely. >> governor, we want to thank you very much for your time on a morning like this, things we have going on, stopping here. >> thank you. appreciate it. >> thank you. >> coming up, head to the futures in chicago for a check on what's moving markets this morning. trying to figure out if this market can continue its climb and make it six straight. take a look at yesterday's big volume movers. "squawk box" on cnbc will be right back. i have to say this. we're first in business. >> worldwide. >> first in business worldwide.

up next on "squawk box." don't make a trade until you know which stocks are making headlines. joe tells you pretrade news you need to know in stocks to watch right after the break.

all right. stocks to watch. let's start with best buy

downgraded. the target price increased to 44 from 42, oppenheimer notes that the shares are trading near peak valuation. garman upgraded to buy from underperformed. merrill lynch. price objective increased to 45 from 30. it's a good move. bank of america should definitely move up their price target from 30. if you're at 37 you're wrong. probably not good to stay underperform on that. i don't know but give this guy a raise. electronic arch, objective cut to 19 from 26. no long area $26 price tag, 19 looks better. analysts can say 19, that's a

neutral. >> news corp. underperform, accounting company, accounts that news corp.'s evaluation implies a robust advertising recovery over the next two years which believed to be unlikely. increased marketing will increase growth in goldman sachs for colgate. same firm goldman cuts 66 to 67 on clorox. limited exposure to stronger emerging markets and higher resin prices. slumber jay upgraded to buy from neutral. finally all state downgraded from neutral. goldman sachs analysts moves today. >> find out what traders are watching. ira harris joins us from cme.

we know the market has been up five days in a row largely because of the weakness of the dollar. what's happening today with the dollar? what are people thinking? >> the dollar is a little bit weaker, becky, at this point. that's the correlation here. where we used to watch the euro, people have seen this correlation break down because s&p index has new highs. that zero yen cross emblematic of the trade isn't nearly as high as when the markets were under stress. that tells us the dollar is certainly the vehicle for all the trades that take place in the world. a lot is in the trade as i've talked about for months, equity markets are the recipients of the cash quote, unquote, carry trade. >> that's great news in the short-term. when do we hit the point where weakness in the dollar is bad

news for the stock market. >> that's the question. i think right now it's all good to go because, you know, i know rick talks about it. as long as the debt market holds in here there's no severe stress for the dollar. yes, the dollar is going down but i believe the u.s., this administration has a weak dollar policy no matter what they verbalize. when you look behind the scenes, there is a weak dollar policy implicit. that being said we're going to g-20 meeting. i was reading notes from the last one, the point is there would be no competitive evaluation of people's currency. the dollar is on a downward path. we hear from the bank of canada, heard from new zealanders, everyone concerned about currency guys. the switch for the last two months can't do enougho talk currencies down. but we are in around the precipice of a major problem

here because everybody wants a weaker currency. right now the only ones who are getting it are the dollar. >> right. >> we'll see if anybody goes up. that's why gold stands here, nearing uncertainty. >> are we nearing the point of a disorderly decline? >> i hope not. one misstep, i don't know what that misstep would be, but one misstep would probably unleash ugly forces. we are not there yet. it's an orderly move. we'll see some types of retracements. it could be a freight problem if people really start to say, hey, they really do have a weak dollar policy, i'm out of here. debt will show itself, the debt market, at least allow people to start sell debt. >> at this point washington has been focused on the health care plan and the talk has been all about that. but on monday president obama is

coming to new york, going to be giving a speech on financial regulation. what does this mean for the floor? is this something that will be watched closely? the biggest concern or hopes. >> i think the administration has got the wall on this regulatory issue. i know they had a lot on their plate when they came out of the box but regulation is needed. in fact, i wrote an article that was published in the financial times in 2001 talking about repeal of glass ceiling on proportion. i actually asked phil gramm that question directly in a roundtable discussing. he rolled his eyes and said it worries them. you had amalgamation of the industry. >> too big to fail. >> absolutely too big to fail. that's okay. my proposal would be, if you really want regulation, if you want to be a trading group like

goldman sachs or jpmorgan, you know, what have you to opt out of the fdic insurance pool. because if you're not willing to show me as an investor and ultimately a taxpayer, the ultimate guarantor, show me the risks you can't have the fdic insurance. to me that's a simple way to get to the regulation. everything else is non-sense. get out of the pool and pay real levels of interest from the capital you use based on the risk you're taking. right now they get that free ride so they have truly socialized their risk, privatized the reward. fdic insurance pool, opt out, if you're not willing to pay and run a giant shop. >> thank you. more on john mack's departure from morgan stanley and what is next at the white shoe firm. still to come btoday, remembering events of eight years ago.

chairman ceo ludwig will be our guest. stay right here.

good morning, a changing of the guard at morgan stanley. john mack out as ceo. what's next for the wall street giant. financial crisis and recovery. treasury secretary fields your questions. tim geithner host ag cnbc town hall last night promising americans that clinics will change. >> people should be angry. people should be deeply angry and frustrated. that's why it's so important we find the will as a country to fix it. country on the role. stocks higher. we will look to the rally. "squawk box" begins right now. welcome back to "squawk box" on cnbc, first in business worldwide. i'm joe kernen with becky quick.

carl is off, he really is 39. everybody wants to be 39 again and again and again. he really is. you're not, are you "no, i'm not. >> you can say that. you've got that to look forward to. five straight days of higher -- we're now, with all the angst, people waiting for corrections, 9687, what's next, 11,000 or 8,000? >> our top story is changing of the guard at morgan stanley. john mack staying on as chairman but stepping down as the wall street giant's ceo. mary thompson joins us with the latest on this story. she is standing outside the firm's headquarters in manhattan. mary. >> becky on january 1st, one of the firm's co-presidents games gorman is succeeding mack. the news is not a complete surprised as basically it's been telegraphed for months.

dporm says he will stick with the current strategy. he sees a key challenge as ceo to get the firm's sales and trading operations on firm footing as well as keeping integration of the morgan stanley smith barney brokerage venture on track. as co-president gorman is credited with getting that joint venture finalized ahead of schedule. the australian native joining morgan in february 2006, this after a seven-year stint at merrill lynch. at merrill he's credited with improving profits at its brokerage arnl, a feat he repeated. he thinks gorman is the right choice even without experience in key parts of the operation. >> the one concern i have with him, i don't think it's a new concern, he really does lack experience on the institutional side of the business, non-retail trading, investment banking, kind of that side of it. >> now, gorman concedes these

concerns. he told cnbc he still spends a good part of his day on the institutional side of the business, a side he expects will generate the majority of morgan's profits. as for 64-year-old mack, he told cnbc he considers his four-year tenure as ceo one that can be called up and down. while he says he feels great about the work he did during the credit crisis notably securing the $9 billion investment from japan's mitsubishi that helped halt a perilous decline in september, critics will say ill timed decisions by mack, included ramping up risk at the firm, increasing exposure to mortgage and hedge funds all on the eve of the credit crisis are blemishes on his career. back to you. >> all right, mary, stay right there. let's broaden out this conversation. david faber is joining us on set. david, a lot of people look back and say, okay, in hindsight this is not all that surprising. john mack is reaching 65, the company clearly needs to lay out some sort of succession but how

do you read this? >> i do read it largely that way. what i've understood for sometime, this has been around for a while he's stepping down. there was an expectation he would be stepping aside at the end of this year. that certainly built during the course of this tumultuous year. not a huge surprise in that. but in some ways you wonder whether he didn't want to try and stick around to sort of resuscitate his reputation to a certain extent and try to also see the firm on even firmer ground if i can use that analogy because it's been a difficult year certainly for morgan stanley. while it has survived and that is the key, nonetheless it's hard to argue. >> is he single-handedly responsible for his firm's survival if you look back at the firm unfolding. >> i don't know. the government. >> and goldman sachs. the fact is any of these firms despite what was done, goldman

did many things right and some wrong, too, they would be out of business, too. when you're funding long-term assets short-term and confidence is gone, you're done. so mack did a good job getting $9 billion from mitsubishi. will it be there, not be there? >> afraid they would welch. >> he was loud and vociferous people were trying to destroy the firm. it should not be destroyed. he did st. patrick's up to the plate and say that the best he's going to be remembered for is saving the firm. that's going to come with the caveat the timing on getting into these areas was totally wrong and you almost got yourself -- >> wasn't as big in buying and packaging as lehman, not as big as bear stearns, merrill, but that was right up there. that was a decision made like so many other firms inability to understand the full risk being taken on.

they didn't buy all the worst mortgages. we've done a lot of work on this but they bought plenty of them. they were huge creating mortgage-backed securities and took losses like so many others and didn't avoid them as did goldman sachs. morgan stanley would put goldman sachs in their sights and say we're equal, in a competition that will continue for some time. now it seems as though that has changed. goldman is clearly ahead of morgan stanley. now the question of the character of the firm changes also with gorman being appointed. retail brokerage being an important component in the future given 51% ownership with the joint venture with smithsonian barney, eventually a wholly owned subsidiary. >> you spoke with both gentlemen last night, mack and gorman. when they talk about the future of the trading operation, of the investment bank, what sort of insights did you get on that? >> very few.

a pretty brief conversation, other than what gorman told me, one of his focuses will be to get sales and trading operation on firmer footing whereas certainly has a problem for proprietary trading, ramp up risk, dialed it down. that's another criticism. at the time of the credit crisis, at the time why didn't they become more aggressive. that, too is a criticism. >> we're still only a year out from the catastrophe of last year. nobody knows the full model yet in so-called investment banking. there's still parts of this business that hasn't come back at all. products, mortgage business, huge profit drivers no longer there. it will be interesting to see what gorman decides to do. we can say they didn't ramp up risks, they cut risks back, didn't do it fast enough. we'll see where it all plays out and what the leadership -- ultimately what history shows and what gorman chooses to do.

still what is an uncertain world. >> all this talk of the life insurance, the latest thing people are talking about. bankers have to be out there right now looking for new ways to ramp things up in all kinds of directions. >> morgan had a great franchise, capital, investment and debt, advising on acquisitions. both have started to come back, a lot less than debt and equity origination. but they are going to be a player there for the foreseeable future in a strong way and will always have a strong franchise. interesting to see how gorman chooses to emphasize or deemphasize. i don't know. he was a merrill guy. >> you make it a point to try. >> i do. i remember meeting dick fisher when john mack was a lieutenant 15 years ago and meeting john mack then when he was a star in fixed income. then of course he went to csfb,

then he came back after purcell coup when it didn't really work out after they bought dean widther. >> people said a lot of good things about them, positive things. said whatever he ran, he ran really well. >> i don't know the guy but i'm sure i'll get to know him. you don't know him. >> no. >> 51. >> 51 is that young. >> a young man. >> doesn't like being called jim. >> i'll remember that if i meet him. i'll call him mr. gorman. >> thanks, mary. i think her mike was on. comments, questions, anything you see, e-mail us on "squawk." someone called me a purser?

>> import export prices, inside the beltway and beyond debate. meet the "squawk" with nbc's david gregory, number one still by a long shot, by a wide margin on sunday morning. see what he's talking about this sunday when we come right back. >> your. you're watching "squawk box" on cnbc, first in business worldwide. -d-d-d-d-d-d-d-d-d-d-d

check on the futures this morning. down just a little bit now before fair value after five straight sessions of gains looking at about 11 points lower for the dow. we're now fully into september. people are hope fully back at this point. next week trading in ernest. we've got to remember there's a lot on trader's minds given it's been eight years since september 11th. never forget maria had to run outside after the first one happened and basically saw the second one hit. it was all happening right next to wall street. >> in fact that's going to be something they are monitoring

today. there will be a moment of silence at 8:46 for the stock exchange. we'll take that as well. a moment of reflection, day of reflection as well. also talking about some of the business stories today. bank of america is reportedly still in talks on how to compensate the government for cost sharing agreement. oversight and government reform, ceo ken lewis says the bank is confident it will resolve the issue. albany of america negotiating how much it needs to pay for an agreement in which the government said it would share losses on $118 billion of toxic assets. treasury secretary tim geithner hosting a cnbc town hall. steve liesman a moderator of that town hall. steve, what struck you the most? what did you talk away from the conversation? >> i think there are three things going on. one he defended the government's role stepping in during the financial crisis. by the way that is the other anniversary we are marking today and discuss why the government has to stay in. also discussed the government's

plans to get out. >> how much concern do you have right now, how much pressure are you under right now to dial back on these programs? >> no one is going to be more eager than i am. you're just not going to care about that more than me. we do not want to be in any of these institutions any longer than necessary. look at what we've done. we've already have $80 billion as capital coming back into the treasury. >> the expectation another $50 billion is coming back in. with a cnbc poll finding four out of five americans believe regulators are too close to the regulated. geithner talked about what needs to change in order to restore trust in the financial system. >> you cannot have an effective financial system if banks get to choose who the regulators are.

they got to shock for the weakest. you can't have a system that works. if they get to choose how much capital they hold. if they get to decide how to hold risk, it doesn't work. we had a test of that. it doesn't work out forth country. >> his vision is one where the government exits its extreme position it has now but has a hand like during the extreme credit bubble. becky, he also said, we'll talk about this later today when cramer was right when he ranted. >> he said they were not. everybody missed it. >> kramer was right. talk about inflating the ego, i'm worried about the affect on jim later today when the secretary says he's right. >> he hasn't said a lot of kind things about geithner. we'll see if now he starts liking geithner at this point. he didn't think -- at least

haass i heard he didn't think geithner should have been the guy. >> well, he is the guy. >> he is. i was going to say, steve, he slept well last night. a lot of words expended. more than some msnbc hosts extend. >> who could you be talking about. >> he must have been exhausted. >> i tried to keep the questions short, if i could, and get to the guy. the audience questions were great. everybody was really involved. people are really concerned about this stuff. we need to have this ongoing conversation, how much government involvement, when do you get out. the issue of getting out too soon are really, really critical questions. i know there's ideology they bring to it, history, academic studies, which we know those are the first things to throw out in a discussion. in any event, we have a lot of thinking to do, not only writing the history of a year ago which we'll be talking about over the next several days, but discussing where we do from

here, not entirely clear. >> do you listen to things that don't have ideology associateed with them, steve. >> maybe amoebas. maybe basketball might not -- >> charlie sheen thinks republicans invented bacteria. >> that could be. could be. >> thanks, jim. president obama laumnching a renewed push calling for an end to political bickering, returning to action. joining us david gregory. there's an m in moderator, that's capitalized. i looked at the rundown. howard dean who is great from his perspective on the side of things, who is so knowledgeable. he's a doctor, an m.d. then you've got gingrich, are they on at the same time? >> yeah, they are. we wanted to put together this

unique discussion with two players in this debate and two players on the outside who are influencing the debate. i think it's going to be a dynamic discussion because ultimately it comes down to what is it that the president actually accomplished and what is it that is possible at this point. that's really where the action is in terms of what the president is going to be able to achieve here. >> maybe you can get these guys to tell us what it's really going to look like in the end. we know it's going to be something, david. i guess it depends on whether it's something that doesn't go through reconciliation or something that does. that changes the entire scope of what it's going to look like. >> i think you're right. my reporting is telling me this morning, as much talk as there's been of reconciliation, the strategy talking to people inside and outside the white house is a 60-vote strategy in the senate. they have their eyes focused on senator maine, the 60th vote.

the president has to work moderate democrats and keep them in line. it goes to two things, middle of the road people politically have to believe this thing can be paid for. and that if you've got insurance, what the president is talking about is going to improve your situation, make your health insurance more stable, that you won't be dropped, et cetera. those are the two conditions that the president that got to win on a daily basis if he's going to get this thing done. >> that could frame the rest of his presidency, how that works out. that would mean he'd be dising the far left. a lot would argue you've got to be like clinton, at some point move closer to the center. that could set up the next three years. >> absolutely right. i think the president actually, he did two things on his speech. on the one hand he gave the left more what it wanted. he a lot more fight. he positioned the republicans as

obstructionists and dared them to maintain that posture. saying i'm going to call you out if you engage in misrepresentation. at the same time he said we've got to get on board and stop talking about the public option like it's the be all, end all of this health care reform. it will be interesting to ask howard dean, dr. dean, listen, this is why you were elected, a health care plan. the president is saying that's not possible unless the left gets over it. be interesting to hear them talk about that. >> david, earlier we had former new york governor george pataki. we pointed out he offered olive branches in his speech where he says things like tort reform, all ideas he's willing to consider. governor pataki said expected to be wrapped up by wednesday morning for the senate. he doesn't think these were

legitimate sort of offers of bipartisanship. do you get the sense there is real bipartisanship taking place or this just call things we're seeing on the surface. >> i think these are surface things. doesn't mean the white house wouldn't want them, be willing to negotiate some things. i think that the political play here is to look at which republicans are even possible votes. and you've got one, i mentioned senator snowe, maybe two. that's really about it. republicans have made a decision that the basic frame of this health care reform is not something they can sign onto. whether amendments or things that bring people along, perhaps, but the politics are such i really don'ten that's possible. i don't think the white house thinks it's possible to cut a wider swath into republican territory. >> it's all we're talking about, in a week of the anniversary of the lehman debacle. you're not going to touch on

that. >> we are. we're going to have erin burnett as well as chuck todd, joan cooper ramos with the cover story on "time" magazine. also unemployment. we can't get away from the fact as much as we're talking about health care unemployment is america's dirty little secret right now. that's an issue that is sort of the overhang for the entire administration. when are those jobs coming back, when are the administration's efforts on stimulus and for that matter financial regulation really working, government intervention, whether it's working. we'll get into that as well. >> i saw if you weren't worried about losing your job you weren't worried about losing health insurance. we could have done that first and then been more open to health care reform. i don't know. it's been 60 years, david. seems like a pretty good time. thank you. >> okay. >> be sure to tune spoke meet the press on nbc sunday. check local listings. that's going to be cool.

governor dean said absolutely not a robust public plan, why even bother. he told us that. >> coming up counting down to this morning's breaking economic data, import export prices at 8:30 eastern, eight minutes away. check out crude oil, down $0.33, 71.61. you are watching "squawk box" on cnbc, first in business worldwide.

dour futures bouncing around, 11 points below fair value. s&p futures in line with fair values, five days of gains from the symptoms. after five days of losses for the dollar. when we come back, we have breaking economic news, import and export prices. we'll have the numbers and instant analysis all straight ahead. you are watching "squawk box" on cnbc, first in business worldwide. 

welcome back to "squawk box" here on cnbc first in business worldwide. we are one hour away from the opening bell. we've got breaking news right now. import and export prices for august. we've got rick santelli, jack from index futures group from the group in chicago. the dow 9627, jack. you can start preparing some type of answer to how that happened. steve liesman in washington.

futures at this hour pointing to a flat opening, so maybe down seven points or so. we've got continuing action in gold again today trading up over 1,000 and yet we still have the ten year down in the low threes, which rick can't possibly explain in any coherent way, i don't think. let's go to him for the numbers first. >> the numbers are up 2% on imports in terps of the price index. that, of course, is month over month. if you look at year over year, it's minus 15. that's coming minus 19.2. actually year over year at 15, down 15% is roughly in line with expectations. the headline number is a little bit larger. once again i think you need to balance much of this out on some of the volatility and big things like energy, of course. doesn't seem to have any -- actually i take that back.

you're getting a little selloff from treasuries pushing yields up. preopening on equities are still holding up. boy are they holding up. as far as explaining something, come on. look at it for what it is, look at three categories. category that is, one, stocks. like all the fund traders were long, looking for trades even though their brain told them that wasn't the answer. it's about holding position, being profitable. high frequency, huge amount of activity more short minded in strategy than medium or long-term. think about the domestic accounts. some of these banks and institutions that have taken and have lots of money but they are not lending. you think some of that is going in treasuries? it's a combination of anxieties globally, domestically and money not going into business's pockets spoke investments in things like treasuries. if you really want to know

what's going on, look at the dollar. >> it's crazy, rick. if i told you -- >> markets are always crazy. >> if i told you six or eight months when the dollar would be, where gold would be, i ask you to pick where the ten year would be, you know you would have given me four plus. >> i tell you what, i was smack on on the dollar. in terms of equities he said they would probably do up. i didn't think they would have a fundamental backing. on some rates, deficit and debt would have a bigger impact. we will be right there. at some point in the future, there will be a digital change in interest rates when psychologist change, things look a little better, rates will go up. in terms of gold, listen, the crisis we've been through didn't bring it to 15002.,000, 3,000, getting long up here. if it's diversity in your portfolio, get a couple of percent e percent. retail account, long here, my hat is off to bravery.

>> china. >> come on. i hear this over and over. you talk about urban legends. why would china buy the commodity? what is china doing, joe? they are smarter than that. they are buying business, mines, rare earth mineral mines. if they want gold they will buy the mines, the products. what will they do buy it, shine it up and keep their money in negative? i don't buy it. >> it's merit season i'm going to hang my heat advisory on nuptials. yeah. >> i've got a quote from doug cass about when in rome. if value is in the eye of the beholder i need glasses. i was dead wrong in my resent call for a market top. test the low at 6,000. gave me all those reasons. we're at 9600,000. >> you know what, joe, i've been wrong, too. >> that's all i want.

that's all i ask. we're not going to test the lows? >> you know what, not anymore. i'll tell you why. >> good. >> something fundamental has happened. we have seen the pendulum shift considerably from left to center. the fact the president came out and extended that olive branch to the right talking about in exchange for insurance, talking about various things the conservative side, the right, more importantly the market was looking at was very important. the market is starting to fight. having said, that remember, the market is still hitting very lot ofy levels, getting on what mohammed el-erian called that sugar high. >> he might be wrong. >> he's going to have to come out and basically say the same thing i did. the reality is this. it all goes back to yra harris, a smart man. right now dollar is a discounting mechanism. i don't care what they are

buying, commodities, equities, these are global equities denominated in dollars. that's one of the reasons the market is taking off the way it is. we have to start understanding what's happening. the real question was asked by becky, when does that weak dollar become a problem. >> doesn't even notice, jack. i have a new rule. i am not political, i just like to look at things for what they are. everything that our politicians talk about the most they can do the least about. what they talk about the least they should be doing the most about. >> all right, tv. >> remember the market was so scared when talking about health care reform, they moved to the center. what speech were you watching, jeff? >> you know what, i watched the speech where he actually extended an olive branch for the first time. look, i'm giving the man the benefit of the doubt. i'm giving the man the benefit of the doubt. more importantly he's starting to do things -- >> a government program that's

going to survive by saving money from another government program? holy cow. >> rick, the market doesn't lie. it's priced at these levels. more importantly your market, the debt mark is not showing -- it is not showing the cracks we all thought it would. that's why i find myself on the sidelines with that $10 trillion. >> this is what we usually -- you usually play his part in here. >> i'm loving it. i want to say i'm wrong, too. as long as we're holding hands and admitting. i was wrong on commodity. i had inflation right. what i want to point out the number economists are looking at consumer goods auto, minus 0.2. the idea of inflation, should be inflation everybody was worried about, didn't happen. although commodity prices did go

up. some commodity prices are quite a bit higher. on the issue of the dollar, i think there's concern about the dollar. i don't think they see it at crisis levels right now. look, let's talk about what we're talking about here, which is what kind of adjustments have to take place on a macrobasis. if you sit there and defend the dollar given the terms of trade that are out there right now, i think that's the wrong government policy. i think the right government policy is the dollar should adjust. the dollar is so strong to every viewer, probably non-elite viewers that cut their own grass, buy their own groceries they feel it. >> elite ones -- >> you just said one thing that really disturbs me. you said the dollar is in crisis

levels. if our government only pays attention to thinks at crisis levels -- >> we've got to go. just said have to cut them up, i hate to do it. we have howard ludwig coming up. jack, appreciate it. you're fired up. wish we had more time. >> today marks eight years in the 9/11 attack in honor of those that lost their lives bcg partners will hold the fifth annual charity day where celebrity brokers will take to the phone. joining us from the trading floor where all this action is taking place is the chairman and ceo of b.e.g. partners. i know what a difficult day this has to be for you. it was the hardest hit day on 9/11, 658 employees gone. why don't you tell us what this

charity day is all about. >> if you think of cantor fitzgerald and bcg on 9/11 you wake up and know it's going to be a tough day. our entire business donates every trade, every dollar. not of profits but all the revenues so all our clients will help us and do business with us. every dollar we do that to charity. last year $12 million we raised. this year i hope we'll do even more. >> you have a number of celebrities joining you. what's their role? >> well, we asked the charities, wounded warriors, bone marrow, boomer situation particular fibrosis, hedge banks, funds, other institutions and money managers. what gets them excited, we put great people on the phone from all the guys from the sopranos,

great sports stars, also it's a legend to people in the media. they come and pick up the phone and trade. whoopi goldberg trade. dr. ruth comes and promises customers great sex if they do a big trade with us. these are -- it basically makes it a fun day. everybody knows every dollar going to charity. we know we're taking care of our family and other people's families because on 9/11 so many people came and helped us out. we think the best way to help out is help other people. that's what cantor fits grade and bgc is doing all day. >> how has it started out? >> started well. a great friend offered two tickets to the yankees game. they get to go on field and give cc sabathia pitcher of the money awart. whoever does the best this morning gets the tickets. we have a bunch of clients doing

enormous business with us. hundreds of thousands to us in order to win those tickets. basically they are doing their business here, raising money for charity. you know, they are just doing a great thing. so many people come and help us. what it does, it really makes us feel good on a day that obviously as you said starts real tough. >> it does start very tough. what are some of the charities? >> well, we have the wounded warriors, which is a great organization, intrepid fallen heroes fund taken care of. guys defending our freedom. bone marrow. we have cancer, coast-to-coast a lot of cancer charities. a lot of children's charities. mercy center, valerie fund. lots and lots of children's charities. then we do this, by the way, in england. manchester united in our uk

officer. prince charles is coming by. we do this across the world. we have 25 in america, 25 in europe. you know, it's a day where we can do good on the toughest day of the year. thank you for joining us, we wish you the best of luck. we hope you'll come back and tell us how the event goes. >> sure, thanks. i don't know if you can see the energy behind me. >> we can. >> it feels great. it feels great. when you see the guys from the sopranos say i'm going to bust you up if you do not do the trade, it just -- it's a lot of fun for all the right reasons. >> we hope it's a huge success today. again, we hope you'll come back and tell us how things do. >> thanks. look forward to seeing you later on. >> i appreciate it. coming up trades ahead. "squawk box" will be right back.

it was eight years ago the trade center and pentagon were attacked, in pennsylvania the plane down there. coming up on a moment of silence remembering the time the very first plane struck the tower 8:46 eastern time.

can you see right now preparations under way already taking place in new york and at the white house. same story here as they await the president and first lady to observe this moment of silence. eight years ago today, a day that has not been forgotten, remembered around the nation and around the world today. listen in right now as that moment of silence begins. eight years --

time for the trader's edge. joining us is art cashin, director of floor operations at ubs financial services. you can't witness that moment of silence, art, without thinking back, especially wall street, the stock exchange, the world trade center. it was all so linked at the time. i remember being on the air and everything. it's hard to go right into the trader's edge with art cashin right after that, but i'm going to try. how do you want to start out? >> certainly, i remember, joe, for weeks after, the only sniling faces on wall street were the photographs in the missing posters what the families put up trying to look for people. and absolutely dreadful time. it will never leave any of us who were down here at the time. despite others trying to move

on, i think it's something that's going to last down here for a long time. >> yes. >> away from that, i'm still so much skeptical about this. i took some money off the table, as i told you, about a week and a half, two weeks ago. didn't take it all off. may take some more off if they keep going. there's just some eerie things about this. it's reminiscent, believe it or not, of spring and summer of '87 when nobody believed the rally and it kept going up, people shorting into it. it ate them alive, until it suddenly turned. the two topics that year were the dollar and iran. >> art, you were, i think, representative of a lot of wall street pro. it wasn't a week and a half ago. i mean, there has been skepticism from wall street pros on this rally, is it three months? it must be about 2,000 points,

don't you think? a whole 50% move but then we had a lull after the first 25 or 30. doug had that generational low, he even came out and said it was too soon to call for a top. and we nad a lot of -- we made another 20, 25 percentage points on the dow. >> i think the skepticism really started to kick in late july. everybody was starting to worry about it, because these prices have nothing to do with the underlying fundamentals, you know? this is the kind of wish list rally. we'll see what happens. >> yeah. the understand lying fundamentals but we always have to point out under the circumstances hard to know exactly what the underlying fundamentals are going to be nine months from now. maybe in a mythical. maybe the jobless recovery isn't as bad as people thought. maybe, you know, i don't know, the rest of the world recovers. we got a weaker dollar. the consumer is able to come back quicker.

who knows what it can be. maybe we don't know that there's better things going on than the market does now. >> well, the market looked ahead in october of 2007 and saw the wrong thing. it looked ahead on marnch 6th o this year, it was the wrong thing. >> it wasn't seeing 6,000. >> no, it certainly wasn't. we got the march low. they were discounting the end of the world. so it's kind of an imperfect prism that we look through down here, so we'll have to wait and see. i'm going to work up some chart patterns. middle of the month, we have option expiration next week. next week, maybe we can give you more specific. >> more important things to worry about today anyway. >> sure are. >> thanks, art. >> okay. have a good weekend. >> you, too. up next, we'll get to this morning's top stories to watch, as we head into this last trading day of the week. first, though, check out gold prices this morning. keeping an eye on them, right now up $7.20 to $1,004 an ounce. "squawk box" will be right back.

what the fed can't take the risk of is an unintend end consequence of a failure in a intermediary today because they don't know where that ripple goes. >> that was peter cohen on "squawk box" one year ago today warning of the consequences if lehman brothers should fail. former chairman of sheer son lehman hutton will be on monday. of course, monday marks the one year anniversary to the day after lehman brothers collapsed. all of those things he had been warning us about, we'll get to chance to see what happened and what didn't. we've been watching the futures this morning. at this point it looks like the futures are