joe fwiden was reading that poem, a beautiful poem. so we looked it up. it's by mary oliver, an american poet born in ohio in 1935, she's still alive, lives in massachusetts, but the poem's name was "wild geese." "whoever you are, the world offers itself to your imagination." >> that's a great line. >> mary oliver, born in ohio, september 10th incidentally, 1935. >> wow. well, i'm definitely going to see if i can find some of her work. that was a beautiful poem. >> yes. i believe she was a professor at bennington college. >> that's a beautiful spot, too. we've got to go. the dow is up. i'll sue you monday, erin will be back. >> i'll be back. right now it's time for "the call." consumer sentiment improved

earlier this month. the index hits a three-month high. wholesale inventories falls in july, combined with the largest one-month sales gain in a year. stocks are slightly higher. a gain today would be a sixth straight win. that's cnbc news now, first in business worldwide. i'm rebecca jarvis. welcome to "the call." i'm melissa francis. trish is off today. we're going to talk stocks with five-star fund manager donald yakman who has shown returns of nearly 50% in the past year, larry. >> i'm larry kudlow. erin burnett asked tim geithner point-blank 23 taxes were going higher. he didn't give a point-blank ants, but in "the call of the wild "we'll debate if higher taxes are inevitable. this is the call, we are cnbc point-blank.

all right. the mark seesawing so far. fedex reporting better than expected earnings. consumer sentiment rising to the strongest level this three months. more on both of those stories in a few minutes. right now we've slipped into negative territory, but we've got positive and negative throughout the morning. the s&p is essentially flat, and the nasdaq right now is trading on the plus side, but just barely. it's also flat on the session. let's help over to scott wapner at the new york stock exchange. >> add to the fact we got pretty good economic news out of the china today, the story continuing weaker dollar, higher commodities, energy and gold stocks among the leaders today. let's begin with the shippers, specifically fedex and u.p.s., and also fedex raised their outlook for the second quarter, so higher by about 7%. that gave a lift to u.p.s. as

well. let's talk about the gold stocks now. gold, as i checked the board here, $1010 an hour, then look at energy stocks. that remains a story as well. schlumberger, as goldman upgrades that stock to a buy. there is positive news to report, mostly related to goldman sachs. citi has taken estimates and the price target higher. they expect more market gains there. going to 215 from one 75. . finally we want to talk about campbell soup. improved gross margins, the story there. nat semi also out with numbers. let's go up to berth ta coombs.

>> perfect segue, scott, because the chips have been an interesting conundrum. we seem to have a sense from analysts and from what we're hearing in terms of preannouncements that are kind of perhaps bottoming, we're starting to see an up tick of demand. whether it's sell-through or start to go replace a bit of inventory that's worked through, that's the debate. one of the things we're seeing is different kind of performances from different kinds of chip stops. you would think it's a bad day for intel, yet roth upgrading numbers today, including intel. they also upgraded volume terra, and marvel, which hits a new high again today after microdevices and texas instruments said things were looking better in the communications chip better. asml also boosted its outlook

this is a chip equipment company. it's the smaller-cap names that seem to be getting more of a lift off thinks preannouncements and off these upgrades, and, larry, some of that i'm hearing from traders is they have run so much as we're looking here inle september, they're looking for a little bait on some of the names that may not be as big. back to you. >> thanks very much, berth that. consumer sentiment rising to its strongest level in three months, this as consumers expect improvement in the economy. joining us to discuss what it means for the economy, tom higgins. steve liesman, symptom, i want to ask you, import prices up.

what do you make of it? >> well, a rise in important price says more a function of energy costs. ex-fuel still going up. i don't mean to be rude. two of the last three months, x fuel also up significant significantly. >> actually the consumer is where i'm focused. and what we want to see and what we are seeing right now is this rebound in confidence. then we could get positive grout to the rebound in government spending orring in as well as the inventory data was also positive for q3 gdp. >> steve, do you draw good conclusions, or is that reading too much into it? >> i don't make all that much.

i think it's certificate of a sense of things getting to normal rather than being depressed. i think you come back to a level that is just not reflective of the panic no longer happening. i don't think it leads directly to spending, but certainly you would rather have it up than down. >> did you get anything out of the gheit first yesterday, dollar is falling, gold is rising, we've got something going here. i don't think it's a great story. >> his sense on the dollar i think, larry is that he wants to rebound on the economy. we did not get to your question, larry, unfortunately. >> i was crushed. because, you know, i was ready. >> i'm very sorry. >> he's like a deposed and exiled dictator. >> anybody care about the value of our money in this country? >> as you know, see, i'm not as

bold as you are. i know you completely ignore the producers when they tell you to wrap it, but i was about to introduce your question, and i got the big wrap of the dollar. >> are you as concerned about the dollar as larry is. >> nobody cares. >> going through a thousand bucks. do you see this as a long-term problem? >> in the short term, i'm not concerned about the dollar. but again the industrialized, the yen or the euro, why would the dollar drift any lower? >> where do you think we are on the inventory restocking story. everyone is saying the consumer will not come back until

businesses start laying off people or start making them more where are we in that cycle, do you think. >> it's -- we just need to flatline in terms of needing an inventory rebuild. and then they'll probably start adding in q4, as companies start expanding out. >> steve liesman, you dis consumer confidence, you dis the dollar, you dis me and the relationship to producers, let me try one more. >> but i really like melissa. >> i love you too, steve. >> a lot of people feel the same way. >> fred smith, ceo of fedex, is it getting better? transcript stocks are doing well.

what kind of economic signals? >> i think the signals have been pretty decent. we'll ge a rebound in the third quarter, and i think it will continue to the fourth. look, none of this is math mattic. it has a lot to do with psychology and with confidence. the people get the confidence, especially businesses get the confident to restock, if consumers get the confident to begin buying, you make an interesting point about savings and income. if we hid this desire savings left, and i think you made this point a week ago, larry, income grown and spending growth comes later. >> i agree. >> savings is good. steve liesman, i am so proud of you for your intellectual advancement on these important things. >> only under your tutelage, mr. kudlow. >> no, this is from the heart. >> kinnian -- you open the door

for more investment and more product activity and more business formation and more jobs. >> and you don't import capital. >> that's one of the worst left-handed compliments i've ever heard. >> he did say that last night, he did point out because of higher savition we do have to import less capital and he's not concerned, by the way, about the chinese buying our bonds. he believes they will continue to do so. >> that's a debate for another day. >> nobody cares about king dollar. >> thanks for joining us. when we come back, the regime change, and what it means for one of the last brokerages standing. >> plus one of the very few fund managers making money. donald yacktman will join us here. as we go to break, a live look at the 9/11 memorial service in new york city today, remembering september 11th,

2001, eight years ago. america was under attack. for those who lost their livers, may they rest in peace. god bless all of them. >> frank anthony palmer. >> alan n.polumbo. >> christopher matthew panitera. >> paul jay panicini. esesesesess

a change in command at morgan stanley, tapping james gorman as the next ceo replacing john mac. this is how margen stanley has been trading. it is up better than 2% on the day on the news mary thompson is outside morgan headquarters with more. hi, mary. >> reporter: hey there, melissa, john mac will remain as ceo. gorman will be stepping into the rode of ceo come january 1st. the company's other co-president, walid chammah, and them addressing the troops this morning in a sometimes emotional hour punctuated with a lot of applause. the firm has been tell graphering this traz since transition for a few months.

gorming says there are key challenges, wub listen getting the sales and trading operation on firm footingally well as keeping the integration of the joint venture on track. as co-president, the australian native has been credited with getting that joint venture with the citigroup unit finalized ahead of schedule. gorming joined morgan stanley in february of 2006. at merrill, he's credited with improving profits, a feat he repeated. jeff hart says gorman is the key man for the job. >> the one concern i have and i don't think it's a new concern, he does lack experience on the institutional side of the business, some of the investment banking, and that kind of side of it. >> reporter: as for the 64-year-old mac, he described

the four-ine tur yur as being up and down. he says he feels great about the work he did during the credit crisis, notably securing a investment from mitsubishi, helping to stem what had been a dangerous flag for morgan stock. still ill-timed decisions by mac like increasing the exposure to mortgages and hedge funds ahead of the crisis, some say those are marks on his career. melissa, back to you. >> mary thompson, thanks so much. let's bring in david faber. thanks so much for coming out here and joining us. how do you think history will judge john mac. >> he's been around for a long time. i remember him as a lieutenant at morgan stanley, well regarded in the investment basicing world, but you have to say it's a mixed record, given the stresses that morgan stanley has gone through in the last few years. could he have done a better job in terms of mitigating the risk

when it plunged headlong into the mortgage market like so many competent torts. but not nearly less enough. and, of course, took significant logging as a result. that being said, the firm is still here. when many thought a little less than a year ago that might not be the case. so, you know, mixed picture is what i would have to say certainly in terms of the last four years. >> david faber, is this a back to basics retail system, we call it wealth management now, and when the investment bankers do a deal, they don't do structured products, they do a deal and sell it through a retail system. is this a back to the old-time religion? >> there is a lot of that here.

that's where gorman's expert says is. we've talked about this joint venture that was done in the heat of the crisis with citigroup, contributing smith barney to this new behemoth. morgan stanley ultimately under the terms of that deal will likely control all of that and become the biggest brokerage firm, surpassing that of merrill lynch in the process. right now it's the largest such entity, but they own 51%. so it would be an extraordinarily important component of this firm there's no doubt 'll be throwing a lot of the stuff through the retail system. the question is whether they'll still be doing a lot of the trading that seems to take so much of the profitability at this point of so many firms. still so many questions about the ultimate model. >> he's a retail guy, and you can make pretty good money there if you control your risk properly. what do you hear about that?

>> you hear mary mention the brief conversation she had with gorman, every other comment i've seen as well. it's not like the investment bankers there start leaving in droves. there's no doubt they will continue to do the things they've always done, raise debt and equity in significant amounts, try to go tub top of the league tables. that doesn't stop, but it will be interesting to see how the firm changes. >> we all remember the day he came back to thunderous applause. thanks, david. charlie gasparino will have a live interview with john mac on "power lunch". up next, a five-star fund manager who fought off the financial crisis and posted gains while doing so. done yachtman on how to bulletproof your portfolio. >> new details on what's being called a clash of the titans.

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one of the big stories today, gold is roaring, up $12. last count the dollar is falling, moving downward toward 76 on the level. dollar's at the lowest in a year, gold rising, stocks are at the highest in the year. there's a story there. we may just cover it. while most money managers struggled to weather the economic downturn, the next guest fund is up almost 50%. donald yachtman, president and cochief executive officer, thanks for joining us. did you change your strategy. >> i would say it's the same yesterday, today and tomorrow. >> so tell us about that strategy. >> well, our strategy is basically putting a forward rate of return on everything, and then looking at the quality level. so though we own or equity-like

return items, treated like buying it like a bond. to when the spreads open up wide enough, we're willing to go to a lower-grade bond, so we adjust accordingly. >> don, you have a pearl of wisdom on this story, dollar lowest in a year, stocks highest in a year, what's going on here? >> i don't spend a lot of time worrying about gold, but i think what it's telling you is people don't have a lot of confidence in the dollar. i'm not surprised. i mean, you know, bernanke is basically his nick snape is helicopter ben, and he basically said i'm going to flood enough money in there to make sure the economy turns around. >> how long can the dollar fall and stocks still rise? are we going to pay the piper for that? right now it seems to be perfect

symmet symmetry. >> it's always fun to talk about this, but the real emphasis i think is a matter of looking at what you buy, because ultimately it's what you buy and what you pay for. >> so what is it that you're buying right now? >> well, what's happened over the last two years is we were in cash and mainly very high -- what i would call high-quality bonds or stocks, coke, pepsi, the market tanked, we ended up going into other things that had more cyclical nature to them, or because they just looked like higher forward returns. now we're almost back to where we started. what people i think forget is that because of the ddecent i m the levels -- we're basically back to coke, pepsi, protecter,

those kinds of things, news corp and viacom remain two of the big holdings. pfizer is in there also. >> would you add to any of those positions? anything out there you would buy? >> that's where we have our biggest holdings. that tells you, you know, where we're at. we have a very concentrated portfolio in the focused fund, the top ten holdings plus cash will be 75% of the assets. so what i'm telling you represents a very large part of the portfolio enchts how do you feel about microsoft? >> that's the point. a lot of the really good companies didn't participate in the rebound, partly because they didn't go down. that's why they show up as values relative -- i wouldn't say they're spectacular values, the markets is up dramatically

over the six, eight months. >> i don't hear you talking about reflags, commodities, energy, industrials, but i don't hear the recovery story. are you a doubter? >> again, i don't spend a loot of time trying to call the economy, but i don't see the economy -- again, it's fun to talk about. i don't see it roaring ahead. all the things that the federal government is doing seem to be negating -- i mean, instead of encouraging business investment and cutting taxes so that people have more money to spend, they're taking more to allocate. that usually doesn't mean good things. >> so no industrials, no commodity-based materials? no transports, things like that? you're out of that area? >> we have news corp and viacom, which i think have plenty of economic sensitivity to them, but not the other kind of things. the other thing to look at, though, coming back to your comment are things like coca-cola, where 80% of their

earnings are outside the united states and they have the ability to reprice their product. so i think one needs to be careful to what kind of things they because. >> don, thank you very much. we appreciate it, sir. very interesting. up next here,ness the town hall meeting, did tim geithner call for higher taxes? >> i think he did. >> or not? we'll weigh in. we'll tell you what he said and we'll debate whether higher taxes are inevitable, death and higher classes. >> plus the clash of the titans, jamie dimon versus bob diamond. we'll have that when we come back.

welcome back. take a look. we were having fun at the commercial break. the dow is down about 13 points, almost flat on the session. the s&p right now is essentially almost exactly, just fractionally. gold up, dollar down, i'll just add that. folks, yesterday on "the call" i asked erin burnett what her biggest question would be for treasury secretary tim geithner ahead of last night's town hall event. she said taxes, and she stuck to her guns. take a listen. >> will taxes go up? >> i want to do it -- let me do it this way. i want to do this carefully --

>> as long as you answer the question, you can do it any way you'd like. >> right now, if you're worried, as most americans should be about how we're going to afford these things in the future, 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. when we do that, the world needs to understand, americans need to understand we'll bring those down. that brings we'll have to bring our commitments and resources closer into balance. it's going to require we do difficult things. but again, i think most americans understand that if we don't do that, we'll face a risk of slower growth, higher unemployment, a darker future, and that's not something we can afford to do. >> sounded a bit like a yes to me. >> a little bit like a yes? >> okay. let's talk more about what lies

ahead for tax policy in america. >> give me a break. that was a yes without question. >> joining us is steven moore from "wall street journal," and dana millback, "the washington post." good to see you both. dana, what did you hear? you're a reply wall reporter, darn good political reporter, what did you just hear? >> larry, i think you got all the answer you needed in the steamer that he started with there. so clearly the answer is, yes, it's just a question of the timing. given the trouble they have already inflicted on themselves, they won't want to go into an off-year election next year with the central focus being a new tax high. it is inevitable, and i think that's what he's saying, at some point people will have to accept the pain. i think mr. geithner and president obama would rather perhaps the next guys accept the pain. we always seem good at putting off our diet here.

>> the only other possible interpretation is they're going to cut spending. i don't believe for a moment they're going to do that. steve? >> of course not. the easiest way to bring the deficit down in the short term, the dana, why not just get rid of the $600 billion of stimulus money that hasn't been spent. we can all declare the stimulus a huge failure. there's been no jobs created by it the. the other think is the obama administration thinks it can pay for the enormous bills that it has rung up by taxes the rich. even if they went after everybody like larry kudlow, they could only fund the government for about four or five months, so they have to go after the middle class. >> will there be any course corrections. the public is furious about the deficits and debt. unlike past years when it hasn't been an issue this, year it is. will the obama-com deal with

this? what the heck do you think geithner was signaling? obama will speak here in new york on monday. >> i see no sign of it all. if you listen to the speech to congress on wednesday night it was basically the theory of two wrongs make a right. we can afford this, because the guy before me, bush, was able to spend even more on iraq and afghanistan, and on tax cuts. the problem is each one builds on the mistakes of the previous one. i certainly certainly he didn't create the situation. what's going to have to happen is some kind of economic ka lambity greater than what we saw last year for our debtholders to force us into some sort of deficit reduction. >> there's another part to this. i think the obama administration has deluded itself into thinking we'll get a bipartisan health care bill and then i think they

think we can get a bipartisan deficit reduction with a middle-class tax increase, but larry and melissa, i don't think there's a single republican, not one in the house or senate that would vote for a middle-class tax increase, nor should they. >> let's get back to the tax issue for a second. being in vienna this week, i talked to a lot of international investors and reporters, the perception is the obama administration haz backed away from the idea of taxing the rich. i couldn't believe that was the perception, because that doesn't seem to be the case at all. do you think that he's selling that, that maybe taxes aren't going up across the board? >> first of all, i think it's a major mista, i think it will hurt the markets, and hurt the very -- i mean, look -- >> but it probably going to happen? >> oh, yeah, i think it will. >> what are you talking about? it's already in the law. >> right.

and larry, you know, it's interesting, tim geithner sounded like a reagan supply-sider. he's you can't grow the economy by raising the rates. >> dana, if i were those guys, i would ride this out and hope for surprisingly good growth. growth is the antidote to the deficit. just ride it out. maybe we'll be surprised. there's a lot of guys on wall street who are say v-shaped recovery, maybe 4%. some guys are saying more than that. isn't that what they're going to wait for? >> by wait, you mean not raise taxes until we see that? that's the theme i was hearing, i'm not sure that's the case. >> i'm just speculating, dana, political, economically, heck, let them see how good is the recovery and maybe the deficit will go away? >> it is all about postponing pain, and particularly when you're looking at an election year. if it's not happening right now, it is not going to happen until

2011. you have even bernanke saying let me by moral, just not qui yet. >> are you in favor of a value-added tax or some kind of national sales tax? >> yeah, in we could get rid of the income tax i would be in favor of it, just like i would be in favor of the carbon tax if we had use the receipts to eliminate our corporate income tax. we were increase taxes on consumption and reduce taxes on investment and saving and risk-taking. we don't that. >> that is a novel idea. >> come on, melissa, it's going to happen. >> i just saw steven come out in favor of two taxes. i thought he was the supply-side of this. >> i think he's not a global warming activist now. >> this is political cross-dressing of the worst kind. >> guys, thanks so much for joining us. up next, a surprising story you haven't heard about the battle over lehman brothers.

>> a new report calls it hardball capitalism at its best and worse. jamie dimon versus bob diamond. the shocking inside story is straight ahead. only here on "the call.

well, here's something, how about wells fargo, the san francisco-based bank plans to add 150 jobs in a north carolina hub that specializes in serving wealthy customers. adding jobs. jobs, jobs, jobs. right now the stock is basically flat, and they're adding jobs and catering to risen people. >> what a notion. one year ago lehman brothers was on the brink of collapse. our next guest wrote the deal of the century in, between barclays and jpmorgan. joining us is tom janot. i loved what i said where it was a knife fight in an operating rom. >> this is during the most ka

lambitious week in capitalism since the great depression. i went in thinking the barclays purchase of lehman brothers would you say going to be sort of heralding a kumbaya moment. >> no such thing. >> definitely no such thing. >> they went at it pretty hard. >> tell me about the knife fight part. this part of your story, which i had forgotten about or maybe never knew, that jpmorgan took $7 billion out of custodial accounts from barclays. that's the kind of thing that could have stimulated a run on the whole bank. i assume that was deliberate. is that the knife fight? >> that's the knife fight that we're talking about. the $7 billion was put in the

barclays account because of the -- some of the difficulties -- at the heart of the deal of the lehman/barclays/jpmorgan deal is a repo trade done at the behest of the fed. due to some difficulties in that trade, barclays didn't get enough assets, so $7 billion was put into its account there was a battle that went on between jpmorgan and barclays on the 23rd of september, the tuesday morning. barclays discovered that $7 billions has been taken out of its custodial account at jpmorgan. >> but if i can say in jpmorgan's defense, there was a musical game of chairs, and you kind of paint it out that they stole this money. but this was going on in a lot of different places.

>> i don't think i ever used the word "stole, but executives felt the money was taken, taken without being -- without them being notified, and it was taken without authorization. they called it unprecedented. >> yes, right. >> if that's not "steal," what would that be? >> your words, not mine. >> it's like put ago knife in their back, everybody was talking about threatened runs on the bank, which is what brought lehman down. look it, i don't get this. jpmorgan was in interested in buying lehman brothers. why did they deliberately attack barclays? what was the motive? >> it wasn't a matter of them want to go buy lehman brothers. it was them wanding to unload their crappy lehman brothers assets. they looked at barclays' purchase of lehman brothers as an opportunity to unload some of their crappy collateral. and barclays wouldn't do it, and

hence the $7 billion. >> it seems like in your article, you know, you're trying or succeeding in putting a didn't in the image of jamie dimon. do you think he's not as masterful as wall street thinks or more ruthless? how would you say we have misperceived him? >> i think the latter. i think that jamie dimon is presented in many cases as sort of a quasi-i public servant. he's a banker who was looking out for himself, which means to preserve as many as he possibly can. i think if you talk to some lehman brothers, they look at jamie dimon as a ruthless guy. >> just real fast -- >> there's nothing wrong with try to go do the beth for your shareholders. >> he bought it for less than a penny, so he's the real winner? >> bob diamond definitely

emerges as one of the winners of last year's crisis. >> and barclays is big now. >> they turned themselves into a top-tier wall street firm. >> look boom, overnight. nobody ever gives them credit for that. >> this is the october issue of "esquare. quags thank you for joining us. we appreciate it. >> yeah, great stuff. what's not underestimated is "power lunch" michelle caruso-cabrera, what was in store? >> listen to this. the man who hayes made the most news in the last 24 hours, john packs sits down with charlie gasparino, along with bill and i, talking to him about his legacy, the future of morgan stanley. eric leacher, he founded the m & a business, ran it, he is a titan for the m & a world. he'll relax to the interview as

well. and on the eve of michael jordan being inducted into the hall of fame, big auction coming up of basketball memorabilia. the first along, some lebron james stuff in there as well. those two guys are so famous in sports, even i know who they are. >> we look forward to the show. up next, maria bartiromo has firsthand accounts. as we go to break, here's another live look at the 9/11 memorial service at ground zero in new york city. >>. >> michael morgan taylor. >> paul a.tetmire.

as we near the one-year anniversary. cnbc will air a special on sunday at 10:00 p.m. eastern, reflexes on waite wall street. maria bartiromo sits down with self people to get their firsthand take on what happened

and how far we've come back. maria joins us right now with more. it sounds like a heck after good program. >> thank you so much. we're all feeling so differently one year later. one year ago we were feeling more frantic. we remember the sense of urgency, the panic, uncertainty, as rumors circulated. lehman was looking for a white knight, would merrill lynch be sold? what was going to be the impact on the entire financial system? of course, all of this happening so fast. regulators and executives needed to get news out before the asian markets opened for trading on sunday nipgt. i spoke with vikram pandit this week. >> there were a number of us there who knew this wasn't a question of only about intercompany contracts and whether we make money or somebody else makes money, but if something did happened to

lehman it could undermine confidence in the entire system, which would drive away investors invested in financial system bonds and financial capital, and that could have feedback effects, so much so that it could cause a lot of gridlock in the capital markets, the funding markets, all of that. of course larry fivg came out a big winner. barclays was able to pursue a solid foothold. we visited barclays trading floor, which of course was lehman's trading floor. the firm was doing well today. the asset management system was sold to blackrock, who becomes the largest manager of assets. the plays field has played quite a bit to fewer players, less

ri risk, one year later, reflections from the street, and of course, larry and melissa, we're going to talk about what now? >> you know, in the tim geithner town hall yesterday, geithner said at least once, if not more, we must make regulatory changes to ensure and assure this will never happen again, quote/unquote. do you believe this will never happened again? >> no, i think as a society we get so comfortable with euphoria, and we just see bubbles happen. by the way, what's wrong with sort of, you know, boom and bust economies anyway. doesn't boom and bust economy, doesn't that introduce or open the door for people to make money? >> entrepreneurship. >> and the door for people to get in. >> that's a great answer. >> it looks like you guys coordinated this. >> the idea that this will

happen never again, that's almost silly. >> health care reform is front and center now, we wonder if the momentum with the markets will lose that. >> god forgive. >> great show, great stuff. we're going to take a quick break. and a list of stock toss watch as we head to afternoon trading, we are first in business worldwide.

all right. time for our call to action on stocks you need to watch. let's bring in matt nesto. >> it's a tough market, things are weakening up today. the win i today, this week, this month, it's industrials, folks. if you look at how this group has outperformed it's up. if you look at the transports,