this is the last trading day of the week. we've watched five days in a row where the major market averages, stock market averages have all been higher. we watched the dollar under quite a bit of pressure. that continues to play out today. we heard from art cashin who says it's a little hard to figure out at this point and he needs to do more work before giving us specifics. >> flowery or -- i've heard in the past, no country in the history of the world has ever flourished by dividing its currency. but for some reason that is what's helping the stock market. it can't go on forever. fits orderly, they say, but it's definitely something that it can turn around and bite you just as quickly as it -- it can be a headwind as quickly as it was a tail wind. something that people are going to watch closely. i don't know how much further you want this dollar to go down before you start worrying about all the markets. >> something the markets are watching today. that does it for us. make sure you join us on monday. "squawk on the street" is next. this is cnbc.com news now. >> a changing of the guard at

morgan stanley, john mack staying on as chair but stepping down as the wall street giant ce oerks, one of the firm's president james gorman will succeed him in that role january 1st. china reporting stimulus spending boost output, inve investment and retail sales. and u.s. import prices rising a bit more than expected. equity futures are mixed at this hour following the data's release. i'm rebecca jarvis. live from the financial capital of the world, this is "squawk on the street." good morning, everybody. mark haines here. stocks coming off a fifth straight day of gains. longest winning streak for the s&p since november. last november, consumer sentiment just under an hour could say whether the run will continue. there's a somber feeling here on wall street for obvious reasons. >> that's right. here in washington, too, mark.

good morning. today we are marking the eighth anniversary of the terror attack which struck at the heart of lower manhattan and here in our nation's capital. of course, also in western pennsylvania. there are ceremonies and remembrances being held throughout the day. we will observe some of them here on "squawk on the street." >> let's check out the futures for you. right now they are up 3.40 on the s&ps. that is 2.60. not now, it's 340. and fair value is plus about two. to we have a very modest upward bias to the open. let's see how things are cooking premarket with our reporters standing by. here come the judge, scott wapner is down here at the big board. good morning, scott. >> going for six in a row on the s&p. we've got pretty good economic data out of china. watching the dollar as usual as it has hit a 52-week low for the last six days. gold is higher today. that's another thing we are

watching. the financial stocks. how about this? goldman sachs, citi raising the price target andernings thanks to the recent run we've seen in the market. the target bumped up the $215 on goldman, from $175. citi says they're poised to gain market share. aig, 4% premarket. wells fargo downgraded to it underperform. we also want to talk about morgan stanley. stock is higher by 1%. news that john mack will be replaced by james gorman as i'm sure you heard on cnbc. campbell's soup out with the earnings. stock up 2%. earnings beat improved gross margin is what campbell is talking about that. let's go back to rebecca jarvis at headquarters. >> we have breaking news on fedex. guiding higher on the earnings guidance. upping the guidance to 58 cents per diluted share for the first quarter. that's up from 30 cents to 45 cents per diluted share. that was the previous guidance. the company will be reporting on

september 17th, 2009, the earnings report. i want to point out that along with this information comes the announcement that it reflects the current outlook for fuel prices and continued modest recovery in the global economy. back over to you, scott. >> actual ily, i'm going to take it. 9:03 september 11th, eight years later. a moment of silence is going to be observed here at the -- this is time of the second plane striking. >> but there is also one thing all americans know to be true, and which we remember most when we come to this site. in our joys and in our sorrows, we know we belong to one another. tell me about despair, yours, and i will tell you mine, wrote the poet mary elder. meanwhile, the world goes on.

meanwhile, the sun and the clear pebbles of rain are moving across the landscapes, over the prairies and the deep trees, the mountains and the rivers. meanwhile, the wild geese high in the blue air are heading home again. whomever you are, no matter how lonely the world offers itself to your imagination, calls to you like a wild goose, harsh and exciting, over and over, announcing your place in the family of things. >> now let's return to our market coverage. bertha coombs is standing by at the nasdaq. bertha? >> thanks very much, mark. you know, yesterday we did see the semiconductor stocks really

help lead tech higher. and once again, this morning we're seeing that kind of momentum. intel sat out the rally yesterday. intel and applied materials, two of the biggest components of the stock, were the drag while you saw mike raise theirs. intel supposed 1% here in the premarket. semiconductor, one of the drags, has a new offering. and that has the stock lower this morning. but watch the semis more or less. also watch microsoft, no surprise, reports indicate that the justice department has asked for more information about their new tie-up. a number of analysts are not expecting it's going to be as big a deal as it might have can yoo hoo and google had done that deal, that deal, remember, was announced back in july. and wynn resorts this morning is higher by about 3 1/2%. indicates they have been approved for a $1 billion ipo in hong kong. and that it could list as soon

as at 9th. let's move on over to the nooi members and shar nymex. >> we have a mixed energy picture right now at the new york mercantile exchange. they pointed to the raising of the world oil demand forecast due to the increase in chinese demand. and we are looking at positive economic data out of china in terms of industrial production as well as crude oil imports and power generation, all are up more than expectations. the dollar, as scott mentioned, was also a very important factor the traders are watching, with the dollar weakness against the euro continuing today. and the fact that the dollar has weakened so much against the euro really does not have so much to do with risk appetite to currency strategist, it has more to do with what is happening to the green back itself and the hedge that a lot of folks are trying to make against the euro. also, the gold purchases that have been made in china. keep in mind, as we look at the weakness in the dollar, you can also look at the strength in gold prices. over that $1,000 mark, once

again, we continue to watch the rally in gold. rick santelli, to you in chicago. >> thank you. we're watching the dollar as well. all i can tell you is one week ago today, we had a euro currency around 143. right now it's hovering around 14 of. we had a dollar/yen. the dollar index, scott "the judge" told you, the last week in terms of trading days. as far as gold and the dollar and all the dollar commodities, there's a lot of debate here as to whether china is really buying the precious metal. remember, when they were stockpiling, look what happened? basically here we are still struggling with 1,000. many believe what's going on with the dollar has a lot to do with bigger macro, fund menial issues about things like spending, deficits, and, of course, money we may spend in the future. but even more so, many traders tell me handicapping our

recovery against other recoveries, like in china, like in europe, they did have some positive gdp. a lot of things to consider here. now let's go back to our nation's capital, erin burnett. >> thank you, rick santelli. and i'm here with steve liesman. last night we hosted a town hall with treasury secretary timothy geithner. he talked about a lot of things, including the deficit, which he says will be cut once the u.s. economy is on standard footing. that obviously does mean higher taxes. jim cramer's rant around the world was right on target. we're save that moment for later. but steve liesman is here. we have three specific topics we wanted to hit this morning. >> first of all, overall i thought he was, you know, his point was to justify why the government got in, talk about what effect it had. he says a good one. and then talked about getting out. those are the three themes that geithner kind of hit. i asked him act the pressure right now to get out of some of these programs he's? >> here's what he said.

>> how much concern do you have right now or how much pressure are you under right now to dial back on these programs right now? >> 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 a day longer than nest. look at what we've done. we already have $80 billion of capital coming back into the treasury. >> people were there from all over the country. we covered a lot of ground . >> we did. >> including the lehman weekend, by the way, where he said he spent two weeks at the new york fed, the longest time he didn't see his family. i didn't get the follow-up, was it pizza or chinese food. >> it was serious. yes, in keeping the point, he wanted to dial back. one other thing that stuck out to me was this point on housing. and we asked him directly whether housing prices are going

to go down. here's what he said on that. when you look at housing now we find out today foreclosure rates are near record highs and influential analysts today on cnbc said housing prices could go down another 25%, which is a shocking number for many americans. do you think that could happen, that we still have that much more pain in housing? >> i think we have a very good chance of overt that kind of dramatic deterioration. if you look at the housing market today, it is true that way too many americans are still facing the risk of foreclosure. as unemployment rises more people are at risk of losing their homes. and that's why it's so important we stick with this until we fix this. if you look at lot of broad measures in the housing market dl is a more stability today in the housing market than many people would have flaft. >> i video to be honest, i don't hear an answer out of anyone in the administration. not that there should be one on exactly how we're going to get out of this housing mess.

>> i think they feel it's up to the economy, which means it's not necessarily entirely in their hands. if they can bring down the unemployment rate, stop them from losing their jobs, if they can take some of the pressure off the banks, that's the thing. the thing that bugged me the most was about cramer, though, saying that cramer was right. >> we're saving that. >> but it bothers me. >> you're so excited. you can't say anymore. you have to watch "street signs" to see this. i know a lot of people watching wants to know what he said on bonuses. here's what he says on bonuses. you cannot have people getting long-term guarantees from bonuses. direct quote from our treasury secretary. and he said there should be clawbacks. now, a lot of people say, okay, we are expecting he was very loud and clear on that. >> that's in the bill. they submitted it to congress. and he thinks that's critical for how the banks organize themselves and the kinds of risk-taking that goes on at the banks. as long as they're short-term

oriented, this issue of systemic risk is still on table. >> much more perceived and more with jim that i am saving although he tried to put it out there. >> okeydoke i c. john mack stepping down as ceo at the first of the year. plus, the friday faber report and the s&p riding the strongest streak since last november. the word on the street and the buzz beyond a couple of moments away.

all right. futures remain as they were. we had a blip because of the fedex announcement that their earnings are going to exceed expectations. we have now settled back down to where we were before the announcement. and again, as you can see there, for example, on the dow jones futures, they're up 18, but fair value is plus 18.48. so it's pretty neutral this morning on the futures department. a changing of the guard at morgan stanley, john mack plans to hand off the ceo duties at the end of the year to co-president james gorman. our mary thompson talked to both of them outside morgan stanley's headquarters with more on all of this. good morning, mary. >> good morning, mark. i spoke briefly with both men on

the phone last night. gorman says that this change will not mean any change at morgan stanley. he was one of the architects on the strategy. the 51-year-old, though, does see challenges as being to get the firm's sales and trading operations on firm footing as well as keeping integration of the morgan stanley/smith barney on track. he is credited with getting this venture finalized ahead of schedule. he joined them in 2006 after a seven-year stint at merrill where he is credited with improving profits there. he is repeating that at morgan stanley/dean witter's organization. they told cnbc gorman is a steady hand at morgan, after strategy and management changes. >> james gorman, i think is a very capable executive. i think james gorman has proven

that, number one, he knows how to establish a strategy, he knows how to execute that strategy, he's had success wherever he's been. >> if there is a king in his armor it's the fact that gorman doesn't have any experience in trading and investment banking. and while gorman concedes that, he does say he spends a great deal of his day working on the institutional side of morgan's businesses. mack will stay on as chairman. he told cnbc he describes his tenure as ceo as being up and down. while he says he feels great about this work he did during the credit crisis, notably securing a $9 billion investment from japan's mitsubishi last september, critics say ill timed decisions like ramping up risk in proprietary trading and expanding exposure to mortgages on the eve of credit crisis are blemishes on mack's career. you want to stay tuned on cnbc because mr. mack will be our guest on "power lunch" at 1:00

eastern time today. back to you. >> thank you, mary. we will all want to see john mack this afternoon. now, let's go back to the fabled one, david faber. good morning. >> good morning, erin. well-done last night. following up on mary briefly and then getting to fedex as well because that's a developing story this morning. it will be interesting to see, of course, what morgan stanley looks like in the future. you know b, as mary said in that report, it has not performed as well as some of its rivals. chief amongst them, goldman sachs because of taking risk down. but ultimately time will tell. here we are one year after lehman brothers went bankrupt and the -- well, just the huge tomult in the market after that and goldman and morgan amongst so many others, key amongst them became bank holding companies. it's early to say what the true motto will ultimately be what we still call the world global investment banks.

even though as i said they are regulated as commercial banks at this point. interesting to note an earlier report from this earlier this week from jpmorgan in which they talked about roes declining by as much as 3 to 17% for many of these banks as they deal with the new regulatory regime and they have to shift employee compensation to shareholders to generate what would still be a 15% return on equity. these are some of the questions that gorman will be dealing with as the main man over at morgan stanley. and perhaps one of the reasons why the company ultimately may be lauded for focussing in part for a lot more on wealth management than it has in the past. keeping that huge deal with smith barney. ultimate underwhich morgan stanley will take control of that brother raenlg over time. we're talking about stock impacts here. deutsche bank, goldman sachs and morgan stanley as the global

investment bank. we will see. yes, gold man stacachs made a g amount of money but through trading and not through the businesses that are still not really fro deucing much in terms of revenue. let's quickly get to fedex this morning because the company has increased the first quarter earnings or i should say it's saying the first quarter earnings will exceed guidance and expects to report earning of 58 cents diluted per share for what it calls its fiscal first quarter ended august 31st. that's still down 53%. you can see this having a very posive impact on that stock and on the stock of its chief competitor ups. it says that the first quarter financial performance exceeded guidance thanks to better than expected fedex international priority volume, strict cost management, and what they call solid execution of their strategy. they still say that despite encouraging signs in the overall

global economy, it is difficult to predict the timing and pace of any economic recovery, revenue per shipment declined year over year and each transportation segment as fuel sur charges decline and we continue to face a very competitive pricing environment. those better than expected first quarter numbers, fiscal first quarter numbers from fedex doing good things for that stock and for the futures overall. erin, back to you. >> thank you very much. certainly fed exhelping futures. the question is as we go through the day is going to be, is that enough to make it six days in a row of gains? we've got the word and the buzz coming up on the other side of the break. this is "squawk on the street."

we're down on the floor here ready to go. the futures right now have some commit to minus 2.90. and somebody changed that monitor. anyway, gordon charlop, aka "dr. know." still cautious? >> i am cautious. people overall are trying to predict a day when something is going to turn around. there are conflicting signals and still too much government in the building for me. comes out with a health care proposal, says it's going to be paid for. again, it just seems like it's more red ink. i'm leery. but again, you know, look, you can't buck the trend, mark. you don't want to sell them here but on the other hand keep your eye on the other store. >> you can't fight the trend, or

you can't fight the tape. if you had to pick a spot to be in the market, a sector, where would you be? >> i would say if you believe that it's going to carry through you've got to be in like materials and looking at energy stocks. but you know, your guess. i really don't know, mark, at this point. it could turn around quick. >> fair enough. we now have a minute of silence to remember 9/11. >> today the hearts of the staff and more than 40,000 volunteers -- [ moment of silence ]

you are looking right now at the pentagon, the president is there commemorating the attacks of 9/11 on the eighth anniversary, as we continue to observe the many memorials around the country. and, mark, obviously a particularly on the floor where it's always a bear just remembering how many people there knew people and how important this day is for them every year. >> yes. it's always a tough day to deal with. interestingly enough, the dow on september 10th, 2001, was at

9605, here it is eight years later, 9627. but it's a tough day to deal with, but obviously we do deal with it and move on. here at the big board, the september concert organization, eighth anniversary of the september 11th terror attack. at the nasdaq, the new york fire department, new york police department, the usa, the september 11th families association, mygooddeed.org and tuesday's children all chipping in to help open the nasdaq trading today. >> and let's get to our market reporters standing by. at all of the markets, scott wapner is at the big board this morning. scott? >> erin, thanks so much. the s&p, of course, is going or six day in a row. we had pretty good economic news out of china. story continues with weaker dollar. gold is really spiking higher this morning as well. and then there was the fedex news that broke about 20 minutes

ago or so that really gave a lift to the futures. they are saying their preliminary results for the first quarter will exceed expectations and, also, raise their outlook for the second quarter. fedex is going to open right behind me but it's going to open higher. if question is what is it going to mean for the overall market. is it going to be enough with the other things to give us six days in a row on the s&p. let's talk about financials as women. citi came out with a note on goldman sachs, raising the price target from 215 to 175 thanks to the recent run we have seen in the market. they expect goldman to add market share. aig is down 4% this morning. wells fargo is downgrading the stock to underperform. says the company has virtually no tangible book value. morgan stanley though to the plus side by about a percentage. john mack stepping down as ceo as you heard here on cnbc, replaced by gorman. campbell, earnings beat expectations. the story there. let's head uptown to bertha

coombs at the nasdaq. >> thanks, scott. chips have really been in focus over the last couple of days. we've gotten a number of semiconductor companies. this is sort of the concession season. so far the concessions have been to the upside. intel yesterday sat out the chip rally. this morning it's getting a boost at ross capital p. still hear for more chip companies raising the outlook. it had said it might have negative sales. now it says sales might be break even or to the upside by 3%. applied materials, one of the other big chip equipment companies yesterday that sat out the rally. this morning is up 9 cents. that's .7 of a percent increase. the company did come in, this is the company that works in fiber optic area, telecom activity. came in with earnings right in line. pretty good outlook. however, it is doing one stock and the stock is down about 6% on that news. steel dynamics, in the steel area, boosting its outlook right

now. not getting too much of a boost on that news. real networks is one of the big decliners this morning. it's earning a downgrade at jpmorgan. it has an application for the i touch and iphone. jpmorgan doesn't think it's going to move that application. apple this morning is down again off by 35 cents he open here. let's move on over to sharon epperson down at the nymex. >> bertha, we're looking at gold prices at $1,010 an ounce, up $13. closing in on that all-time high with the momentum trade we're looking right now with that all-time high being $1,033 an ounce. we are looking at high volume, high open interest, all of that helping to fuel the trade and what has become a familiar force according to rbc capital markets george with the weaker dollar. dollar index at the lowest level in a year. and then, of course, higher crude prices and higher gold prices. looking at oil prices above $72

a barrel here at the nymex and higher in london as well. and the other part of the energy complex that is higher today, natural gas. natural gas continues the rally after that really sharp rise yesterday, up 15% in the session. follow that energy department report showing that the storage levels that had increased, did so less than expected. we are looking at natural gas rallying of 18% in two days time. rick santelli, to you in chicago. >> thank you, sharon. over the last 15 or 20 minutes, interest rates have started to slip a bit. you are now down several plus basis points on the day on a ten. if you look at where the tens were a week ago, down a dozen basis points from that level. and, of course, if you look at all the options this week, they're highly profitable because yields can move lower right through the supplies. of course, the big story continues to be the dollar. and not only on a daily basis but on a weekly basis. a monthly basis, these are rather large moves. of course, very hard not to talk about gold. it may be one of the most

alluring trades that there is, going back for not only in the u.s., especially the 79 and 80 but for hundreds of years. if you look at where it was trading on 1980 february, i was in the pit that day. get close to $900 in futures. adjusted for inflation. the real high for gold as comp should be around $21, $2200? mark haines, back to you. >> that's a good point, rick. yeah. inflation adjusted, it isn't at new high. thank you. >> thank you. >> markets flat at the open. that could all change, of course, when consumer sentiment comes out in 20 minutes. joining us from beantown this morning, chief market strategist with lbl financial and bob lutz at cabot money management founder and cio. geoff, always had a soft spot for boston, so i'll start with

geoff. what's going on with this market? >> well, you you no we, mark, we've seen just an incredible return to the marketplace of investors here. i think we saw kind of a consolidation through a a lot of july as investors got, okay, we're in a recovery but what's next? now we're starting to see what's next. two things. one, it's better earnings numbers. company dramatically upping guidance as fedex did this morning. it's also a new buyer coming into the market. m and a is back. in the last week and a half we've seen it in technology and consumer discretionary, energy, these bids are coming in, you know, 20%, 30% premiums, listing the target prices. the acquirer stocks aren't going down either. we've got a whole new buyer coming into the marketplace. combine that with the better fundamentals on the earnings front and there's more legs to this rally. >> can you quantify the risk and the potential reward? i mean, 5% down, 10% down, 10%

up, what. >> we've been telling advisers at lpl if they haven't fully come back yet, don't get greedy. don't look for the big pullbacks, i don't think we're going to get them. the dips are going to be bought. you can buy in the thousand and upper 900. use thoses a opportunities to dollar cost per average. on the upside we could certainly see 1100. there's no reason why we couldn't see that number just based on where earnings are headed. on a 15 times 4 multiple. the average forward multiple, we could get to 1100. >> all right. so let me ask you, rob, what would your best idea right now, just a simple question, best idea today? >> best idea today, i think i would focus on the alternative energy space. i like very much what's going on in washington in terms of cap and trade. i think we've got real change in the auto industry. we're like a couple of companies

like jci, johnson controls, staff group, a french company. they're both in the hybrid battery business. we think they're going to get a good boost in the next few years. the auto industry hasn't changed dramatically in the 20, 30 years. we think this next decade is a change. i also like climate exchange, which is the way to play cap and trade. we think that's coming through. inmost investors, to follow on what jeff said, 3.6 trillion in money markets today earning .2%, takes 350 years to double your money to 0.2%. there's a lot of fuel to support this market today. the market climbs a wall of worry. we still see all the bad news out there. but the fact is, this money is going to come back to some other location. it's going to go to bonds, as we've been seeing in the mutual fund flows, then it's going to see to stock. i'm bullish today. >> you say there's a new buyer in the market. >> yeah, that's right. i mean, i think if you take a

look at the potential, we just talked about all the cash flow. potentially available from individual investors, but what about corporations? the enormous amount of cash sitting on the sidelines, they're beginning to spend that again. they're spending it on hiring, i think we're going to start to see that tick up. but i think they're also going to be spending this on these -- continue this trend of acquisition. that's really good news because, you know, that's just a new buyer coming back to the market. we haven't seen in a long time and could certainly mean a lot, plar will in sectors like technology, health care, and consumer discretionary. >> gentlemen, thank you very much. thank you both. up next, our favorite time of the morning, the kahuna and the brain, about whom poets have waxed, songwriters have written. plus, "because you clicked," first solar, it's a high-flying volatile stock grabbing your

attention. up almost 72% this week alone. we're going to have analyst theodore o'neal what's going on. you're watching "squawk on the street."

back by popular demand, held over for the tenth week, whatever, the kahuna and the brain. good morning, gentlemen. >> good morning. >> he always does that. he sees himself and sees something out of place. >> the hair. >> by the way -- >> i'm getting a hair cut. >> i'm sorry. joe, i'm sorry. can i ask you who was the guest who was what lining me on "squawk box" yesterday? >> carol bartz. >> who? >> carol from auto desk.

see, it wasn't something that happened yesterday, mark, which would be suspect as to whether you would remember. this is something that actually happened probably three or four or five years ago. she was at auto desk, the ceo. she was a guest host. you guys used to get into it, argue a lot about stuff. >> oh, and anyone who argues with her is, by definition, an a-hole, huh? okay. >> a royal a-hole. >> she called him a royal a-hole on the air? >> she and barney frank are running that club now. >> she's outspoken. she's always been. i was trying to get, you know -- >> if you can't disagree with someone without calling them a name, i don't have a lot of respect for you. >> you were almost an anti-capitalism streak at one point. you know how you get on those once in a while. >> i repeat if you have to resort to calling names, i don't have much respect for you. anyway. >> she didn't call you that. i think i was paraphrasing for her. >> you really causing trouble? i find that hard to believe. >> you? >> i don't believe that. >> i might have been instigating

a little bit. >> no. >> david wants to talk about something that you said you're going to make this interesting. >> $9 billion investment, they own barneys, chief investment in wineberg, own a small position in the hedge fund glg, 1.5%. $9 billion fund that is probably going to be sort of dissolved and the investment sold. it will take quite some time. i think it's interesting. it's part of dubai world, part of the sovereign funds. it's done poorly. now, face is very important in that part of the world, you know, keeping your reputation. now that it's out there, bloomberg reported it. i have talked to some people who know the company well. they've gotten rid of two of their managers. the third one, david jackson, probably on his way out. i think it's kind of interesting. there's glg, by the way, not going to impact that at all.

barney's could be in deep trouble in terms of dealing with the current environment. i think it's an interesting story, when a $9 billion firm -- by the way, you go to dubai, that's the place where everybody leaves their ferraris at the airport because they can't pay for them and then they get on a plane and leave. >> is it near abu dhabi? >> yes. >> confusing. >> it is confusing. >> but the airport parking lots are filled with the highest end cars you can imagine, people just left them. >> especially when you hear abu dhabi and apple or abu dubai is buying a chip company and other networks report that apple was buying it. remember that? >> yes. they're making references that are fairly -- >> i'm trying to make this story interesting. >> okay. why don't we move on to something that you always find interesting, which is fedex. >> right. and we can always say, hey, when you absolutely, positively need something interesting or -- i'm going to deliver it. actually, look at it. that's up. that's a big move.

>> it is. >> my only point in looking at fedex is some people watch cardboard boxes. some people watch the number of trucks on i-75 that are passing at any given time. there's a lot of these anecdotal stories and this is one that people like to watch. and they -- volume has been something that's been an issue in the recession. and by raising guidance and by saying things -- even though say say we have no idea. >> the quote is there are encouraging signs but it's difficult to put extra timing and pace in any recovery. >> so when you're trying to explain why the market's up 50% and you're trying to explain to all of these market-savvy guys that have said this is a sugar high, this is not warranted, the fundamentals don't justify the mood that we've had, there's going to be a day of reckoning, the market thinks the market is fine and in the overall economy it's not fine. sooner or later it's going to come home to roost. >> or the consumer continues to

pull back. >> we're up five straight days again. and then the market is going to be down a day and then fedex comes out. it always seems like there's another little, you know, sgive them something to look ahead. maybe the market can still look ahead. >> a reason to believe. it gives them a reason to believe. >> haven't you seen, really, guys like el erian. >> believe me, there's lots. there's plenty of guys playing who feel like they have to play because we're going up, but they don't believe it that the fundamentals have truly turned. but we'll see. we'll see. that's the big question. >> we're going toss toss it back to that big royal a-hole back on the -- down at the -- oh, no. you know what, mark, what i was thinking about again? you were great eight years ago. you were the man. you were the man. september 11th again today. >> oh, yeah, yeah.

all right. thank you, gentlemen. >> all right. up next, some stocks on the move including a couple of well-known retailers. >> plus, because you clicked, first solar. now, mark, this is one of the most searched stock on our website, also one of the most volatile. how do you prevent yourself from getting burned? find out. we'll be back. it's "squawk on the street." -d-d

hi. matt nesto here. welcome back to "squawk on the street." i'd like to introduce you to the hottest stock today in the hottest sector, and that's going to be energy. check out chesapeake. the stock is up 20% this week, up 6% today. fedex hot, chesapeake hotter. natural gas up 20% this week. schlumberger just cresting at dubai from neutral. it's higher today. keep up with me. minute to walk, 5% higher.

it was kicked out of the s&p 500. best thing that ever happened to them. maybe. stocks up 35%. booted at the end of august. the stock is now a strong buy from neutral at buckingham. and then also mentioning textron here today. lots of positive comments on the industrials here today. up almost 5% from overweight to equal rate. ann taylor performed higher. they think the stock is headed to 19. also, best buy down 1%, 1 1/2% here today. they say there's little room for upside or for additional upside at oppenheimer. the company has been taking advantage of the market share disruptions due to the demise of circuit city. they bring it down to what they call perform, which i would call neutral, from out perform. and lastly, let's check out clorox, down 1.6% to neutral from buy it goes at goldman sachs. mark, back to you. we had a guest within the

last week, i believe, who recommended chesapeake. wasn't -- it was only a few days ago, on the basis that gas was so cheap compared to oil. anyway, first solar -- i wish i could remember who it was. first solar is one of the most actively viewed stocks on cnbc.com. stock gaining 30% since the march low. has it run out of steam? is it clouding over? "because you clicked" we're talking to theo o'neal. you were one of the first analysts who have a sell rating on first solar. why are you so cloudy about this? >> well, mark, it's a growth story that's lost the growth. the company, just to try to keep things moving forward in the first six months of this year, has had to finance customers, financing wouldn't otherwise be available. they've had to help out with their distributors. you look at their receivables. it's going up six fold since the end of the year. and the world is a wash right now with low cost, solar panels,

forcing first solar to compete for the first time ever. if you boil this all down, fund men me mentally, commodity maybe you get single digit gross margin, high teens. there's a long way to go from their margins in the 50% range down to that level. >> so, it sounds like a commoditization kind of story. would that be fair? >> it is. there's no intellectual property involved in making solar cells. and if you wanted to, you could make them yourself. last year if you did, you could have sold them. right now we're a wash in a lot of very cheap panels. but the issue is it is a commodity. it's likely to stay a commodity. in that kind of market, you're going to see a lot of this move offshore, production moving to

china. >> on that note, we've had various people on who have said there is no chance the u.s. has of ever being number one in solar. it may be a commodity but we know that the sun is going to keep shine for another 5 billion years. do you think there's any chance we can have that produced here? >> sure. there's always going to be a market here for that sort of thing. there's going to be issues about getting financing from reputable companies that have a long history. i mean, one of the things that's positive about first solar is they do have a very good reputation. you can get financing to put into solar farm, using first solar products that you might not be to at the moment with the third tier players. >> thanks, theo. you did have a sale on first solar. wtra. mark, would you want to live next door to a sitting president, obama? >> no. >> no, you would not. >> no. no offense, but, i mean, the traffic, the supreme court tirks

everything. >> that's right. his neighbor doesn't want to, either. we've got the full story. why they don't want to live next to the obamas. we'll be right back.

fedex shares soaringing over 5%. the company sees stable fuel prices and a continued modest recovery in the global economy. seconds from now, trade numbers for july. stocks are slightly higher a half hour after the open. they're try for a seventh straight day of gains. that's cnbc news now. i'm rebekaa jarvis. look at michigan consumer confidence, 70.2. that's pretty good. several months back we did hit 70.8. it was in november we had this low in this cycle of 55 and change. good number. hasn't taken out the highs. let's switch gears and go to wholesale inventories. july number, so we're looking back a bit. minus 1.4 from a revised 1. 2 originally reported as minus 1.7. let's emphasize. many are looking for inventory to be at least a temporary gdp

booster in just about every industrialized country on the plan planet. watching these inventories go down may expect a back look of gdp revisions. it's the forward look on the shelves become completely empty and leave people hanging their hat on that. the market, treasuries popped a little bit and came back in terms of michigan and the equities markets, as you can see, are up a smidge, but only 16. mark, back to you. >> rick santelli. let's find out how the morning news is playing out in the second half hour of trading. our reporters are standing by as usual. we start off with scott wapner here at the big board. scottie. >> mark, gold stocks are higher today. energy stocks are higher. dollar is weaker. sound familiar? the dollar index has been at a new 52-week low almost every day for the past week or so. how about fedex? look fedex and ups, giving a lift to the market. fedex saying the first quarter earnings would top expectations. the outlook for the second quarter were positive as well.

fedex by 5% and ups 3 1/4% there. citi raised the price target and earnings estimate of goldman sachs, thanks to the recent run in the market, they expect goldman to add to the market share. the price target goes from 215 to 175. campbell soup out stock is getting a lift. expectations, improved gross marg margin. radio shack there, ceo saying the economic economy, quote, may be slower than people are hoping it will be. best buy, meantime, oppenheimer downgrading the stock from perform from out perform. it's trading near peak valuation. that semi was under a little bit of pressure this morning despite the fact that they beat and gave a pretty good outlook. for that note, up to bertha coombs at the nasdaq. >> scott, it's been interesting because we are starting to hear about third quarter outlooks from a number of semiconductor companies. we've heard good news from the

communication chips makers and starting to hear good news as well from the chip equipment makers. it's not helping the big guys like intel. intel this morning can't seem to get any traction despite an upgrade. yesterday when we saw the chips move higher, intel sat out the rally this morning as they're under pressure. it's really one of the ways. a lot of semi conductor is helping to boost the chip stock. up higher by 2 1/2%. sees sales at the higher end of the prior outlook. applied material which had sat out with intel yesterday getting a boast on that. asml said they're going to have better earnings. today seeing profit taking on that stock. yahoo! has been higher earlier but just holding in at the moment. alibaba.com has a 1% stake in there. 40% of the stock, actually. yahoo! is -- it's going to be coming to the u.s. and this morning the chinese portals are all doing fairly well. in fact, looking a new one-year

high as is oracle today, all doing pretty well. chm ended up getting an up graid over on the big board. let's move down to the nymex and sharon epperson. >> the traders in the pits trading gold faced a bit of a lull during the summer months. gold didn't do very much. it's done a lot in the last week. it's broken. the new highs here above $1010 an ounce. keep in mind moving toward that $1033 mark that was hit in march 2008. that was all-time high for gold. and, of course, we're looking at the momentum trade building on itself here with the technical rally as we have the weaker rally here. gold prices up 6% in the last week. a number of folks talking about the bullishness in the market. it's going to dehead its gold contracts. citi group raising the price forecast because of dollar weakness. today a report out from deutsche bank looking at overall what has happened in the commodities sector as the dollar has

weakened, since 1973 until now, look at this dollar weakness. you can see overall return for commodities up 275%. stronger dollar environment, only up 40%. erin, send it ever to you to the nation eats can nation's capital. >> consumer sentiment, up in september. timothy geithner making positive comments to us last night with strong data out of china overnight, so some people are saying maybe things are getting better. joining us to talk about it, bob, chief economist, fact and opinion economics, steve liesman and rick santelli are also with us. steve, can i ask you a question? as the numbers cross and we said, wow, expectations for the future are up, obviously,linked spending and inflation expectation. >> right. >> how does that survey work? come out to 2.8% based on what? >> they ask the people. >> i'm supposed to give a number? >> it's a key metric. as much as you may doubt the value of the inflation expectation it's a key metric

followed by the fed because they believe people -- >> they call people up at home and say what do you expect? they say 2.9%? >> whatever they come up with is the number that matters. >> bob, do you believe that people across the country can come up with a number that means anything? i would be thinking what percentage, that's not an easy question. i'm just wondering about the validity of the data. >> similar survey in the conference board report that is giving numbers like 5%, i think most of the federal reserve officials really book at the tip spread, the spread between tip securities and treasuries. and you get a market look at inflation with some reasonable assumptions from that. that's been a lot lower number, a lot more stable money. people with that money on that number, that's one that the fed officials like to looked more. >> rick santelli, we're in a bizarre spot, the conference board is even higher and see inflation on the consumer expectation. then you look at the tips market and you don't really see it. >> well, i think i would side

with the average guy or the respondents in this instance. yes, the one in five-year outlook both move lower to 2.8. consider the government's numbers that t.i.p.s ways off on, they have an interest in keeping cost indices that they have to pay out on a lower side. there's been much debate that t.i.p.s is as good as investments like institutions like them, hedges. donna they're reflective. i would say the t.i.p.s is on the low side and average guy is on the high side. >> bob brusca. >> yes. >> putting aside politics and the arguments over what sort of health care reform we should have, i just want your opinion on what happens to our economy if we don't have health care, where things stay the same. it. >> doesn't have any impact on the economy. the problem with health care are

the out-year deficits that have to do with medicare, medicaid problems. what the administration is proposing to do is doing something that is going to interrupt a medical system right now that's working well, according to 70% of americans. while 50% of americans also say that things need to be fixed, there are some things that need to be fixed, it's not really clear what that means. i think the greater thing is you start fooling around with health care and you start hurting people that had health care situations that they liked and it doesn't have anything to do with competitiveness or anything like that. the health care problems the administration warns about that need to be fixed are not the problems that are going to be fixed in this program. that simple. >> viewer confidence level and tim geithner as treasury secretary. >> on a scale of one to ten. >> you pick it. >> okay. maybe 2 1/2. >> what, is one the high or the low? >> usually ten is the high. >> oh. why?

>> i think that the actions that he took when he was at the fed are really somewhat suspect around meeting the fell this their office. that story that appeared in the "new york times." i think that cast some questions about tim. i think that failing to see the importance of lehman brothers although the fed may not have been able to save lehman bus it didn't have collateral as bernanke says, somebody should have known the circumstances and conveyed how important it was. arguably the fed was in the position to do that and it didn't. and what fed are we talking about? we're talking about the new york fed. i worked there for five years. job and market surveillance and they fail down on that job. >> robert, i think that meeting with blankfein was widely discredited. i don't think they had that meeting that everybody has talked about. in addition, the question i have is, what main decision ever came out of that which was -- foh if ever had -- is about aig. if you are argue that aig should have gone down and they should have let it go down, that's a

different argument as to geithner did anything at the new york fed it. >> should have been different because blankfein even to this day is vague about what happened. they said they had aig collateral and they asked for additional collateral. no idea in my mind that they didn't have 100% collateral. >> nothing to do with just bailing out goldman, right? all the creditors of aig were made whole in that, not a single individual separate from others. >> goldman was the largest. >> the largest but not by far the largest. the next was $8 billion. they were 13 versus 9. i know that. >> we can get bogged down in that, okay? we can argue that forever. geithner has been involved in a number of controversial decisions. i think that some of his actions at treasury secretary suggests that, you know, he really doesn't have the command that he should for some of these issues that are at hand and i'm just not really impressed with him. i think he still has to prove to us that he's the right guy to do

this job. we still have larry summers, you know, at the white house that seems to be more of a principle architect of policy. i really don't know what geithner's role is. i don't know. i don't know how much confidence he really has and how much he has in the administration. >> thank you very much. goes to show you there is, well, still a lot of debate on this. >> bob's opinion. what can i tell you. that's his opinion. it has to be weighed in the decisions, i think, that are made. >> mark? >> okay. up next, a presidential open house. if you want to be obama's neighbor, your time has arrived. the house next to his chicago home is on the market. but can just anyone walk in and buy it? and then, what is keeping america's business leefrs up at night? and later, the s&p coming off the fifth day running of gains. longest streak since last

november. we don't want any since novembers. let's just take that month off the map. what does this mean for your money as we head into the weekend if?

and this morning sound check. former governor of new york, george pataki, on what concerns him the nemost right now. and a bank analyst on the changes at morgan stanley. >> i worry whether or not great institutions like morgan stanley are going to continue to play a role in the global economy and the dollar, whether the dollar is going to play the role it has historically in the global economy. i think we need to change fiscal policy in washington. we can't have $9 trillion in projected deficits even before the health care program. >> we are on a path to bankruptcy. we need to get cost under

control. yes, we need universal coverage at some basic and level that makes sense that is affordable and sustainable but much more streamline level and fundamental level than is being talked about right now. >> the last two years the financial crisis has really been hard on john mack. he's pushing 65. so it's not all that big of a surprise. i do think that james gorman is probably the right person to fill the job. >> would you like to live next door to a sitting president? that's a tough question. we're not talking, by the way, about the house that the obamas happen to live in here in the nation's capital. we're talking about chicago. the obama's neighbors there are putting their home on the market. the sellers are talking to cnbc about what it's like to live next to the world's most powerful man. diana olick is here in washington with the story and also, of course, some people may be wondering who is allowed to buy the house. >> and the answer is, whoever wants to buy the house, erin, because we all know the thing about the white house here in washington, of course, is no neighbors, right? well, that is not true about

their permanent residence out in chicago. now, it turns out their next door neighbors are putting their house on the market, talk about the ultimate gated community. >> his tor the ultimate gated community. >> his toic mansion district and surrounded by million plus dollar home on large lots, secluded area. secret service protection outside now, i think it's the best protection the united states government can buy. >> so i'm guessing no open houses at the house that sits ten feet from the president. the secret service probably wouldn't like that. in fact, they didn't like the fact that the sellers are letting us bring our camera over so out of respect for security, we did agree to blur the neighbor's house. that would be mr. obama's house even though you probably have seen it already on tv. now, i know all anybody wants to know is how much for this 6,000 square foot, 17-room home, right? well, that, believe it or not, is all up to you potential buyers. yes, the realtor and owner are looking for you to appraise the, quote, obama factor. that is, what's it worth or not worth to live next to the most

powerful family in america. the sellers, bill and jacqui grimshaw, already know. >> we used to meet each other on the back porch. he would be sneak a cigarette. michelle won't let him smoke in the house. >> when he comes we have to go through bomb-sniffing dogs. so it's an advantage of not having him here, just because the security increases, you know, tenfold, when he's around. but no, i mean, it's challenging. in really disrupts the neighbor hood. >> they say that the fed did approach them to either leave or buy their home to have it kind of be a staging ground for the secret series but supposedly the deal just didn't happen. i don't know if it was a price thing or what they're looking for. but it is on the market today. go make a bid. >> i just wonder about this whole anybody can bid thing. >> we'll see. >> i don't buy it. that's all i can say. it's on my mind. conspiracy theory side. it's a great story.

diana olick, thank you. mr. haines, what do we have coming up? >> yeah, i think a guy with a collection of high-powered sniper rifles would probably not be an oideal neighbor there. >> probably not. up next, what's the single biggest economic concern facing corporate america? the exclusive results of the brand new survey on the other side of this break. >> you know, mark, i think i might be looking for a good tomato farmer. >> yeah. later -- >> i'll be glad to give him some of my tomatoes. dara richardson is going to be on with us. the ceo of fail yit of the susan g. comean race for the cure is our guest.

new survey out this morning on whether business community stands on health care reform.

it's a crucial group of people. 2009 leaders surveyed, 90% of the business leaders cite rising health care cost as their single biggest concern. if they do not change, one in three say rising costs will cause layoffs of workers. jim, i think we should note right here that you did respondents just over the past couple of weeks, they cover 81% of the national payroll. so, i mean, we are talking the people that you surveyed really do represent the entire country. >> we capture a small, medium, and large businesses, cover a variety of sectors and we also did it by region. what you find are the results are generally yooun form. >> they want reform and they like the public option. >> right. there's no surprise that health care is a number one concern because all the other previous surveys suggested that. what's really changed this year is that they're facing tougher choices because of the economy. a year a, go less than half of employers expected to cut benefits or increase copays. now we're seeing the results in the 80s and the 70s.

as you said, one in three are expecting layoffs in the next five years if we don't sell the problem. >> so they are literally saying -- and right now you are already saying we're seeing it. deductibles are going up, co-payments are going up. they are cutting benefits across the board today. >> it makes sense for 30 years, health care costs have risen faster than the economy. and businesses are seeing a sloelg economy, the economy is getting worse. it's the gap between the growth in the health care cost and the growth in the economy is doubling this year. >> mark? oh, i'm sorry. i thought he wanted to get in there. okay. so the other issue that i really wanted to hone in is this whole issue of insurance exchange. we know the majority of americans are employed by small businesses, not big businesses. so this issue of an insurance exchange could be crucial because most small businesses -- i was talking to one this morning, 30 employees, can't afford it. he's not sure whether a current exchange would make that better or not. do you get a sense from your survey that people understand what this is and support it?

>> first the problems. the small business is in general pay nearly 20% more for premiums than large business. >> why is that? >> among smaller businesses, small businesses, it can be as high as 27%. they lack economies of scale, lack bargaining power. the whole notion of the exchange is to introduce the market into the system more effectively. and this is critical because our economies rely more and more on small businesses. our current health kare system doesn't serve them well. in our new economy people switch jobs all the time. so the idea of an exchange or trying to solve the problem with pre-existing conditions is absolutely critical for the new economy. >> and one other thing i think we should make clear here is people typically think business leaders are republican. you're saying, yes, they are. perhaps that means especially things like support for a public option are even more important than that. >> we found strong support for addressing the pre-existing condition problem. we found majority of support for a public option. this is among a group that is 1 1/2 times more likely to be republican than the general

public. it also skews heavily independent. and they favor by majority a public option. >> all right, sir. jim, thank you very much. jim doyle from business forward. keep in mind that we're going to be talking a lot about this this weekend. david gregory on "meet the press" tackling health care head on with his round-table of howard dean and newt gingrich. i'll be talking about this on "meet the press" and we're going to talk about timothy geithner and taxes as part of that round-table. you won't want to miss it. up next, charities, victim of the recession. what is happening with charitable giving? we have a special guest coming our way. eseseseseseseseseseseses

the nasdaq -- i'm remembering the september 11th victims and families with a moment of silence. it is now 10:28. at this time eight years ago the north tower of the trade center collapsed. [ moment of silence ]

we want to update you on a story we heard as well. there were apparently some shots here in the washington area over the potomac. obviously given the 9/11 date people were a little concerned. the coastguard has confirmed it was a training exercise. i believe that's a coast guard helicopter you're looking at. again, we had heard some shots. okay, we heard what we thought were shots but apparently it was not. it is part of a training exercise. mark? >> thank you very much, erin. this sunday estimated 25,000 runners and walkers will be in central park for the annual susan g. komen race for a cure.

it's a 5k race raising money for breast cancer research. yesterday lehman collapsed the day after the race. as a result, many corporations have decreased their donations. one year later how is the charity holding up? here onset is dr. dara richards richardson-heron, affiliate of susan g. komen for the cure. thank you for being with us. >> thank you for having me. >> donations, how are they this year? >> by and large, they're down. corporation donations are down. but you know, our mission is so important, people are still giving and we're very happy to know that. >> what can we do to get these cheap scapes to open up their wallet? >> if you're anywhere near new york, come to central park or one of the sites our our website. >> give us that. >> okay.

>> komennyc.org. >> that's right. you can sign up for the race until 12:00 noon tomorrow. you can also go do the hilton hotel, which is at 53rd street and 6th avenue. and we can do preregistration there until 9:00 tonight or until 5:00 tomorrow. you can register on race day. we just want everyone to come out and support us. >> how can i go about making a donation? i'm not real big on racing. >> well, i have to admit i'm not either. but you know, it's important for people to know, it's not a race. most people walk. >> right. >> 25,000 people. most people actually walk. so you can come on out and walk with us. >> five kilometers. >> 3.1 miles. >> will you give me like two days to do it? >> yeah, we'll give you two days. depends on the extent of your donation. >> well, i'll donate as much as it takes for you to allow me to

days to walk five kilometers. where do we stand in terms of progress? how are we getting -- medically, are we getting anywhere? >> we are getting somewhere. 27 years ago when our organization was founded, you know, we didn't even say the word breast. and people immediately thought about breast cancer as a death sentence. i'm a 12-year and counting breast cancer survivor. even 12 years ago the treatments were so different. now women are being treated, they're surviving and they're thriving. the medications are different. they're not as devastating as they used to be. we've come a long way. survival rate is so much better now. for five-year, a person who was diagnosed with breast cancer before it spread to other parts of the body prks five-year survival rate is now 98%. that's 27 years ago, it was about 74%. we've come a long way but we have a long way to go. >> survival rate, i would imagine, also depends on catching it early.

>> that's right. early detection is key to surviving breast cancer. i'm certainly a living witness to that. but once breast cancer spreads beyond the breast, it's much more difficult to treat. and it's much less responsive to treatment. >> yes. >> some people i know in the medical community feel that we're actually making progress toward making certain kinds of cancer chronic conditions. in other words, we can't cure it yet. but we are prolonging lives to the point where people actually just manage to survive with the cancer. it stopped growing, and i have a friend of mine in that very situation. was diagnosed ten years ago and is still, you know, still got the cancer but is still alive because they've managed to control it. >> i think that -- i think that

speaks to progress. you know, certainly when i was training as a medical student, women more often than not died either of the breast cancer or frts treatment itself. now women are surviving and thriving. the medications are better. the treatments are less devastating. i think it's a good thing. there are over 2.5 million survivors in the world. >> all right. again, the website is komennyc.org. >> that's correct. >> doctor, thank you very much for being with us. >> it's a pleasure to be here. come out and support us. okay. it's time to reflect what happened here a year ago. and see how far we've come from the financial brink, the abyss that we were staring into one year ago. maria back at hq with reflections from the street. >> a lot of memories, of course, on this day, september 11th. but also on this week, one year ago this week we were all feeling very differently in terms of the financial system.

we're remembering the sense of urgency, the panic, the uncertainty as rumors circulated about the financial system. lehman looking for a white night, lehman could file for bankruptcy and what happens to citi group and the impact of the entire financial system. what happens to merrill lynch and aig. all of this happening so fast one year ago this week, regulators and executives needed to get news out before the asia markets opened for trading that sunday night. remember, here's what john mack and vick told me there week. >> the impact to me was really how bad or not how bad, how do you contain this contagion. and is there a way that you can build a buffer that stops with lehman, and clearly it didn't. >> finding a solution to lehman was important for confidence in the financial markets. and then we ought to do everything we can to ensure confidence remains, because ultimately it's confidence that

drivesly quitity and capital access for all banks. >> of course, we are seeing confidence in the markets right now. of course, one year later we can look back and we can clearly see who saw the opportunities in that wreckage. bla blackrock's larry fink, goldman sachs, jamie dimon comes out a winner, and jpmorgan. and barclays was able to secure a solid foot hold in the united states by acquiring lehman's assets. regardless, everybody involved was fielding phone calls all weekend to ensure their own survival. >> going into the first part of this year, we just went from bad to worse, worse to worse to worse. and the marketplace was so frightened that people put so much of their free money into cash. they had to store their wealth in something that was earning zero. >> it was stressful. it was emotional.

we know we were playing for big stakes. so on the one hand we knew that if lehman went into bankruptcy, there would be huge implications on the market. on the other hand, we wanted to look at whether or not there was a transaction that made sense both for barclays as well as for the markets. >> and there obviously was. we visited that barclays trading floor which, of course, was the lehman brothers. they did well after selling the global investor business, a asset management business of barclays to blackrock who is the largest manager of assets with $3 trillion under management. the playing field has changed a lot, fewer players, less risk and bigger government. as mohammed el erian calls it, the new normal. sunday night we look ahead to the opportunities in the next year. where is blackrock putting all of that money? what is they doing?

don't miss our special frent tags, "1 year later, reflections from the street." now back to erin in washington. >> looking forward to seeing that, maria. thank you. coming up, president obama's big stakes speech on health care, and how it will shape the path of reform. perhaps the single most important question facing our economy today. open up the harwood file. this is "squawk on the street." we'll be right back.

the single most important question facing our economy today, overhauling the health care system. there is no doubt about that. as we said, the congressional budget office said that the health care could suck up a quarter of our economy. the president's speech, did it change where we're going with health care or not? chief washington correspondent

john harwood has had a lot of time to think about it and talk to everybody who knows. john, what's in the harwood file? >> thanks, erin. glad you're in d.c. listen, president obama was never in quite as much trouble as conventional wisdom suggested on health care because of the size of the majorities that we has in the congress. and it's also true that no presidenti presidential's speech changes the world overnight. however, this speech on wednesday night was effective for many reasons. what's in the speech? the president in addressing not just the members of congress in the capitol but average voters around the country reassured independents. he did that by reaching out to republicans, trying to make the case that he included conservative ideas, he rejected the left wing of his party. so that had the effect of helping him to yunify the democratic party so they felt a lot better than they did going in. the third thing it did was

settle the the financing argument. how are they going to principally reyes raise money to pay for coverage expansion. not the sur tax the house was looking at. rather, the insurance excise fee that the senate is looking at which may have also the effect of building the cost curve. let's look at the road map ahead going from here legislatively because the president wants a bill by tend of the year. the first thing that the democrats on the hill want to do is speak the blessing of the congressional budget office for the proposal that's moving through the senate finance committee. they've gotten a preliminary score that was favorable that indicated it would, in fact, not increase the deficit. the second thing is, democrats have to woo that 60th vote from olympia snow in maine for the moderate. one way to do that is to adopt her idea of the triggered public option. you can do that in the senate finance committee which would be key to getting action there. finally, the house representatives plans to wait

until after the senate finance committee votes after two weeks. moderates in the house want to be reassured, they don't want to march out on a him by itself. at the end of the day what it adds up to is this speech did move the ball forward, erin, the president's chances of achieving goals looks good at the moment. >> i keep coming down to this. when this comes down to how we're going to pay for it, what do you think the ultimate answer is going to be? i know they say that they'll have cost cuts in some places and i know that you say the tax on the rich may be off the table. it does seem some sort of a tax is going to happen somewhere, right? >> yes. their plan is to raise $900 billion over ten years. two thirds of that, $600 billion, from cuts, largely out of medicare, that is the medicare advantage program they think there are undue subsidies for insurance companies. they're going to take that out. $200 billion will come from the fee that i mentioned on insurance companies. that is the companies offering

high value plans. the other $100 billion comes from a variety of sources including taxes on medical device manufactures, pharmaceutical companies. they're going to get it from within the health sector and they're going to hit business, erin, to get that money they think it's worth it in order to make this package down. >> we're all going to pay for it. >> oh, yeah. there's no -- there's no free lunch in any aspect of government and certainly not in health care. but the argument that the president is going to make is that we're already paying for this health care system and we're paying more than we can if we reform the system because so many people don't have coverage going to the emergency room, that costs a lot more than if they had care in the first place. >> seems to me, john, what the president was you doing was laying a groundwork for a democrat-only plan. >> you are correct. >> i mean, he was saying he made the case, my door is open and now he can go to the public later and say, you know, we couldn't wait for these guys to stop being obstructionists.

>> that is what he's doing, with the exception of olympia snow. the reason why at least want one republican in the senate is because if they get her vote on a filibuster vote that means that they can pass this through normal senate procedures. they don't want to go that reconciliation, the sort of senate equivalent of the cram-down route because it makes it more difficult to get a comprehensive bill. they want one republican. by and large, you're correct, they have no expectation of significant republican support on this bill. >> the way they behaved that night, it's pretty clear. all right. >> thanks. >> thank you, john. next, it's that time of the week, time for the friday trade, peanut butter and jelly. sadly, i'm not with mark but i will be back on monday. >> i still don't understand what that banana -- oh, you're coming back? we missed you. >> i'm kind of lonely down here, mark. >> it's lonely up here, too. although, no one is eating my tomatoes except me. anyway, first, oh, melissa!

>> breaking up the love fest. okay. coming up on the top of the hour we have a five-star fund manager up 50% in the last year, donald yakman will join us live. and in a cnbc town hall meeting last night, did treasury secretary tim geithner call for higher taxes or not? we've been fighting about it amongst ourselves all morning. you can be the judge on what it means for your wallet. all that and consumer sentiment, on on "the call" at the top of the hour.

we're back. i'm on the floor with alan valdes. good morning. >> good to see you. >> friday trade time. >> i guess the theme is kind of what can i do to be safe over the weekend? >> yeah, you know, we're looking at iyt. it's an etf, transfer etf. >> iyt etf. >> yes. we think the market will continue to rally at least until the end of the year, and this is

a transport. transports have been light lately. they have to participate in a rally. the market can't rally without the transports, and useeing it today. >> i yt, a transport etf. >> yes. >> i'll buy into that. oh, it's the dow transportation average, so broadly based. >> yeah. >> nose one of these -- >> no. >> because there's concern about etfs. >> no, this one is broad based. >> oh, wait a minute, i'm now told that our shot with peter anderson has been restored. peter, good morning, thanks for being with us. >> you're welcome. >> give us an idea, how can we -- you like bp? >> i love bp, mark. recently they made a giant discovery in the gulf of mexico, new oil reserves. they're trading at nine times

forward earnings, they have a 6% dividend yield. that yield -- actually the dividend looks sustainable. this is very interesting. when you look at the stock and the dividend that it pays, compared to the ten-year bp bond, the bond only yields 4%. the stock yields 6%. very unusual relation-and it's very income-oriented for an investor out there that's looking, instead of buying the bond, perhaps you should buy the stock, and you would also have the up side of the stock. >> what would be your trade if natural gas prices moved sharply higher? >> this would be interesting, because if natural gas prices moved higher, then the alignment between gas and oil will probably get more into the classic historical ratio, and bp is a nice way to play recovering commodities market. you have to remember, compared to say exxon, it trades at a discounts to exxon, but analysts are predicting because of this giant oil find, they actually

call it an elephant in the industry, they're projecting that earnings should increase strongly over the next two years. so i think it's a very safe play and also has income to offset the volatility you may encounter in the stock. >> what do you think of this whole question of why is natural gas so low? and people are trying to gain? we'll end up hear about some hedge fund that failed because they bet it would go up and it didn't. it's so out of wack, i wonder if there's a story there. >> you never know, but you may think there's a headline coming down the road. i think never helps the transports. if it goes up to like $80, that will help the transports, won't stall them out and will help the market in general for the rest of the year. >> can i get gutsy here, go short oil and long gas, arbitrage to spread? >> you could do that, but i think there are easier opportunities, mark. one of the them might be to look

at companies where you're interested in the ten-year bond yield of those companies, and look and see if they're paying a dividend that either equals that yield or is greater than that yield. to me it's much more easily determined trade to do, and as i said, you're looking for income here, but you also want the up side of the stock. a name like bp, you can check all the boxes on something like that. >> finally give me big-picture thoughts. what do you think of the market? >> i think the market is poised for still to continue going up. >> dow 10,000 before 9,000? >> i'm not a soothesayer, but i'll tell you this. consumer confident is tronger. 10 before 9, yes or no? >> balance sheets are great. >> 10 before 9, yes. >> 10 before 9. thank you, gentlemen. have a great weekend. okay. we'll be right back, with a

final check on the markets. don't go away.