issues about bonuses and compensation and things like that, but there are also a lot of ordinary people that work on wall street that lost their jobs, and i think it would have been nice for him to go across the street -- >> i think it speaks to his relationship right now with wall street. >> absolutely. >> strained. >> don't forget tonight a two-hour cnbc special event, one year later, a week that shook the world.d. a look back at the meltdown, where we are today, and where we are heading. >> don't forget, be sure to join john harwood with his interview with the president tonight only on cnbc, and as if the president wasn't enough, you will want to tune in for cramer's take on the fall of leman brothers. that will be after the obama interview. it kicks off 6:30 eastern time tonight on cnbc. >> but that does it for this special edition of "power lunch." we'll see you tomorrow. >> thanks for joining us. erin burnett with "street signs" is coming up in 30 seconds. see you tomorrow. >> this is cnbc.com news now. a federal judge has rejected bank of america's $33 million

deal with the s.e.c. to settle charges it didn't properly disclose bonuses at merrill lynch. president obama warns wall street against ignoring the lessons of the financial crisis and calls for a common sense rules of the road to prevent another taxpayer rescue. the president's interview with john harwood intairs tonig at 6:30 a.m. i'm sharon epperson. hello, everyone. i'm i'mer i'm erin burnett. wall street is talking about one thing, the president's visit to wall street. how many more banks will fail, a crucial question. then the president says we're putting people to work in building wind turbines and solar panels. we've lost nearly 7 million

jobs. is the green dream a pipe dream. plus america's most famous real estate investor timed the crisis perfectly. he got out in time. he's betting big on housing, but not in america. the president did visit, across the street, to federal hall where george washington was sworn in as president. this president didn't minutes words. . >> i have always been a strong believer in the power of the free market.t. i believe that jobs are best created not by government but by businesses and entrepreneurs willing to take a risk on a good idea. i believe that the role of the government is not to disparage wealth, but to expand its reach. to provide the ground rules and level playing fields to help make the markets more vibrant. >> the president did not add to his reform proposal plan. it includes a consumer protection agency, some limits on compensation, regulation of derivatives, that systemic

regulator, but still he says that his plan is about better regulation, not necessarily more of it. >> we will not go back to the days of reckless behavior and unchecked excess that was at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses. those on wall street cannot resume taking risks without regard for consequences and expect that next time american taxpayers will be there to break their fall. >> obviously, there he was continuing to talk about wall street, but he did make it loud and clear that he doesn't think that more regulation is the solution, although a lot of people would say there's a lot more regulation in this plan, and that's where the talk of the floor is today. that in addition to the fact that the president still in new york, bob pisani, who knows whether that means he comes here or not, but he didn't after his speech. bob pisani and art cashin are

with us. >> it's funny, the speech itself curiously did not elicit much interest from the trading community. the general feeling was the reason it happened is health care reform is totally overshadowed financial regulatory reform.. i think the important thing is there is an awful lot of support for financial regulatory reform amongst the general population. a lot of the more savvy traders think the president is setting us up for a push on regulatory reform later after health care passes. i guess art, the question i have is how do you do regulatory reform when it's not even clear what form the banking industry is ultimately going to take?? it's a tricky thing to accomplish, isn't it? >> looks like we have an issue with art's microphone. we'll work on that. bob, as we do, what is the gossip on the floor that he didn't come over and visit? people want to read something into that. he could still come. he's not leaving until after 3:00. >> i think people wanted him to

come here because it would be logical. it was 200 feet across the street. i'm sure you should read too much into it. i would agree with the general idea that at the time the president is criticizing wall l street, shaking hands with traders on the floor may send the wrong message. i personally don't feel that way. but i can understand how politicos in the white house would feel that way. >> i have the same feeling about how they may see it. art, what is your reaction to what he had to say and if you have any comment on sort of his relationship with wall street and what sort of a walk through perhaps might have meant to that. >> well, i think what he had to say was not in particular shocking or strange, but i think the concern here is not so much what the president is going to say in a speech but does he hand the ball off to congress and do we get back into a lot of those us and them controversies that we saw as the crisis was deepening. it would be best to work

together rather than make wall street the whipping boy for what was going on. a lot of those people are out of the way now. you know, i think we want to do something constructive. the economy needs it. the nation needs it. >> some people said why didn't he talk more about compensation? to me it makes sense why he didn't. he doesn't want to make it the center piece of the reform because the pay czar is about to sign off on pay packages that to a lot of americans may seem offensive, but this time there's no political cover for the president. it's his pay czar. it makes sense why he doesn't want to focus on compensation. >> look, a consumer protection agency is going to be in this bill. almost every agrees on that. you'll get a systemic risk regulator to deal with some of the banks. what's interesting, erin, is most of the rest of it is pretty fuzzy. there were several hundred pages of documents submitted a couple months ago to congress, stuff they'd like to see. but this thing is still very much up in the air. i don't think the final form of this is in any way clear other than a consumer protection agency will be in it. >> thank you very much, art,

bob, we appreciate it. most of the focus for the past year has truly been on the bankers of wall street, but we during the crisis liked to talk to the bankers on main street. people who deal with people across america's deposits and their mortgages and loans to small businesses. that's where we got a sense of how bad things were. well, when things started to pick up. so today we wanted to bring back a summit of our banking all-stars from 2008. they're all still in business, all doing well. so these are some of we're using the word all-stars purposely. r ron, john, capital federal financial chairman and ceo, a bank that proved credit still existed in dorothy's hometown. if you don't know where that is, change the channel. i don't know, president and ceo who has taken advantage of the current situation to expand. we're talking about upstate new york and he's expanded in sur bush of pennsylvania.

we broke this down into four things. we'll start with the availability of credit which seems to be so crucial. can people get loans to do business? you were not very optimistic on this. >> right. >> in fact, i asked you to rate it on a scale of one to between. on second mortgages you gave me a two. and on consumer mortgages you gave me a 2.5. where are we? >> i think i would first understand, as you have allowed me over the years to talk, we do first mortgages. >> right. >> i'd say that first mortgage credit is available, and this year it would show. i'm having another record after a record last year as far as production is concerned. but why i rated the other two categories so lowly is because property values have started to drop. second mortgages are harder to find. people are not willing to give you above your original equity. as a matter of fact, i think

they've cut them back. when i get down to pure consumer credit, some that is unsecured, try to find unsecured credit today, it's just not possible.. >> for credit cards and stuff like that. >> credit cards -- you don't get the offers in the mail anymore.. >> what's interesting is your optimistic first mortgage ranking was a five. john, i want to bring you in here because you're going to say you must live in another country. you're rating it a nine. i know in kansas it wasn't ever as bad as it was on the east coast. >> fortunately, in kansas we didn't have the ups of the markets in the appraisals and the business that went on in '05, '06, and '07 that really created a lot of where we are today. thus, we didn't have the drops either. we've been pretty insulated from it. that doesn't mean we don't have our issues and problems as the economy continues to struggle and you see more and more layoffs and people out of work. they struggle, but as far as our

availability of credit for capital federal, we've got about a $5.4 billion loan portfolio, and we have written since last october when t.a.r.p. came out $2.5 billion of loans. so the availability is there. you do have to qualify, which should have been a hallmark of our regulatory and financial system the whole time. unfortunately, we got away from that. >> john, you rated availability of credit to about a 4.5. you also have been aggressively expanding. is this the opportunity of a lifetime do you think still for a bank that was realwell-run to bigger? >> it's certainly the opportunity of the moment, and we've been able to continue to deliver for the benefit of credit-worthy customers, whether that be in upstate or recently in western p.a. and pittsburgh and look forward to doing that in southeastern p.a. and philly.

dollars in banks like ours that you're talking to today are there. i think the broader, bigger picture challenge is the significant impact that the major players and the pressure expectation need that they have to shrink. they have got to shrink their balance sheet. they don't have the capital base to leverage at optimal levels as the rest of us do. that's put pressure on the bigger picture and the overall ability of the banking system to further lend. >> so the next question is we are one year out from the crisis. are things getting better for the economy? are we definitively turning up, and as part of that, what is your biggest concern?n? i know each of you has shared that with us. please answer the are we on the slope up, ron? >> i think we're getting closer, erin. i think property values have come close to the bottom, and that's important because secured credit needs that. i think that's where we are today, but i think there's less

liquidity. the normal lenders aren't there. there are fewer of us. there's been almost 100 banks that have failed, and over 350 nonfinancial entities failed who provide nonregulated credit. >> which is a number we don't always hear about. we hear about the friday night bank failures. >> i don't know, to get each of think we have a lot more bank failures? >> my biggest fear is more regulatory reform and the president's speech on regulatory reform and how it affects a lot of the institutions like ron's and john's and ours that have been out there and lending money in the communities where we're doing business and that's what we're supposed to be doing, but when you look at regulatory reform, some of the things they talk about are the elimination of the thrift charter which i believe all three of us have at

this point, and what kind of impact that will have on our communities because a lot of us are serving small communities and we need to stay there and do that to keep that credit available to those borrowers who qualify. >> a final word to you briefly, john, i'd pick up on john's comments. i think the regulatory backlash or overreaction is clearly our biggest fear. they can't make it hard for the good guys. they can't make it difficult for those of us that have continued to do it well and do it right and frankly have to pick up the slack for the rest of the industry. so need to be very, very careful there and not make it unduly challenging for us while otherwise achieving an perpetuating a better state. >> thank you very much, we appreciate it. >> thank you, erin. >> we'll be keeping a close eye on this. this key issue of whether the fdic will deal with the huge

deficit by taxing the people you saw in this segment even more. stay tuned at 8:00 eastern. mark haines is going to be in. we're hosting a two-hour special event. a look back at last september's historic meltdown and a look ahead. we'll be talking about that and prior to that the big event of the day, john harwood sitting down for an interview with president obama on the state of the economy and wall street regulation. that begins at 6:30 eastern right here on cnbc. then jim cramer's take on the fall of lehman. we have a special lineup for you all day. next, america's lost nearly 7 million jobs in this recession. many of those may never be coming back unless we do something dramatic.c. what is dramatic? plus, microsoft declared war on google about three months ago. has bing become the next big thing in search. microsoft's search chief with us. you're watching "street signs." we'll be back.

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a is double digit unemployment here to stay? nearly 7 million jobs lost in this recisiession may not come k and unemployment may be the defining issue of the president obama administration.

josh, you know, i'm so glad we're having this discussion today because it's relevant with what the president had to say and david gregory had brought you on "meet the press" to talk about this issue of joblessness. the president has said the jobs are going to come from alternative energy. here is a quick listen to what he said. >> and recovery plan is providing help to the unemployed and tax relief for working families all the while spurring consumer spending.. it's prevented layoffs of tens of thousands of teachers and police officers and other essential public servants and thousands of recovery projects are under way all across america, including right here in new york city putting people to work, building wind turbines and solar panels, renovating schools and hospitals, repairing our nation's roads and bridges. >> he's listing some of the things in the recovery plan he's working on.. you heard what he said about wind turbines. it takes a lot of people to build wind turbines.

>> it doesn't take a lot of people, that's the problem. that's the issue philosophically.y. exciting as green jobs are and as important as they are, they really represent only a small fraction of the jobs that have been lost so far. there's a bigger question here, which is what's the future of the american economy? where is natural productive growth going to come from? >> jacob, that's something i know that josh had recommended you have a lot of interesting thoughts on this. where do those jobs come from? do we have any idea? is green in any way big enough? >> no, i frankly do not believe with he have any idea, and i completely agree with josh that green by any standard in the foreseeable future will not be big enough. so where they're going to come from is a very big question. but what i think is clear is that what we're starting to see in this recession is that the historic shift towards, you know, more and more employment in the services sector, that picture is starting to fray a little bit at the edges because

more and more services sectors are, nshin fact, losing jobs ov the last business cycle. >> and you had pointed that out. what, are we going to be all nurses? is. >> i don't think that solve the problem. the president's speech today is an important benchmark, it's this kind of belief if you fix the financial economy, everything else will get fixed. it's true. it's very important. it doesn't answer the question of what you're going to do with millions of unemployed americans. is economic growth enough to return the jobs? what we're seeing is it may not be. >> you had said unless we find the next, quote, big thing. do you have any sense, if it's not going to be green jobs, is it just going to be making things again in which case frank we have to have protectionist policies? >> one is we can't predictt the nature of economic growth, rapid productivity, you never know in advance what's going to cause t you try to adopt policies that

creates an environment where it's possible. we don't hear much discussion about those policies.s. also what's missing is leadership on washington on dealing with people who are unemployed today. we're almost 10% unemployment today. we're heading towards historic levels of unemployment. if you're unemployed today, it's pretty much the time as if you were unemployed ten yors agoear >> what about the retraining? one thing that josh had raised yesterday was the training programs that are out there right now for unemployed people are very short in nature and perhaps not of the time frame that we would really need for people to have new skills and enter some kind of a new economy, whatever that is. >> i think that's an absolutely crucial point, and, unfortunately, we are in a situation in this country where the broader worker retraining opportunities and life-long learning as you usually refer to it has been systematically underfunded for decades, and

these are the kinds of institutions you don't create them overnight. therefore, what is it that we need right now? well, we certainly need a very big sustained effort by congress right away to put in place, you know, long-term funding for these kinds of institutions. >> and you had a final thing saying let's put a jobs bill in front of congress. they're going to have to extend the unemployment benefits, but something else in front of it. >> i think everybody knows we need to do something. let's get an omnibus employment bill so we can at least have a discussion about it. there's almost no discussion on it. >> they're going to try to sneak through the extension in benefits. >> i'm not sure that's sufficient. >> josh, thank you very much. we appreciate it. jacob, we also appreciate your taking the time. let us know what you think about what might be the next big thing to get 7 million americans back to work and all those other people underemployed right now. the president has made it clear more regulation or better regulation is coming to wall

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jim goldman is here from the front lines of the search wars with an exclusive guest. jim? >> we're at the annual tech crunch event here in san francisco. the event that microsoft has chosen to unveil some new and improved bing enhancements. this is the search engine from the world's largest softwaremaker unveiled just three short months ago. what do you do after 90 days? you unveil some improvements. this is the senior vice president of the microsoft bing division. thanks for being with us. >> thanks, good to be here. >> tell me what the new advances are and how this is going to be the magic bullet to unseat google as the world leader in all of this. >> well, i'll tell you a little bit about what we're working on. it's a long game for us. we should be clear about that. visual search which we're announcing today is basically a new approach to searching that is designed to use the cliche of

a picture of 1,000 words. you're looking to discover knowledge, much easier to visually look at a whole series of photos. people can find what they're looking for 40% faster with pictures. >> when you look at bing, when this was unveiled, your ceo said it is going to be a long process. we are not trying to grab instant domination in search. we're going to evolve this slowly. we got some stats today from stat counter that suggests that maybe, well, the adoption is slowing, but nielson says the adoption is increasing. this is good news for bing. is it tracking the way microsoft had hoped. >> it's early and it's a long game. we know that. but nonetheless in 90 days we have grown share, which is a feat that pretty much no one else has been able to do with exception of the leader. it's early but positive. we're settling in for a long run. >> all attention is on the new deal with microsoft and yahoo!

no money up front but a lot of collaboration, cooperation between the two companies. is that going to help bing unseat google or is that a separate thing and bing's innovation is all its own and the yahoo! thing is merely going to be gravy? >> the collaboration with yahoo! is important for the creation of a credible number two. it will help us with bing in terms of getting more data, and it will help advertisers and publishers. >> the microsoft/yahoo! deal has been announced but it still faces justice department scrutiny. we got word the feds are taking an extra special and deep look into the deal. how optimistic and confident are you that this deal is going to sail through and the two companies will be able to work together as the two of you have planned? >> well, we remain very optimistic it's going to come together. i have personally talked with a number of large advertisers and agencies and publishers. they're all broadly supportive of this coming together because we're able to create more value

for everyone in the industry. >> when you talk about more value, will we see incremental changes? you got to do so much to move the needle at microsoft. when can we expect legitimately for this kind of deal to move that needle and microsoft investors, who have been dealing with a stock in the doldrums for so long, can actually see some return on all this excitement?? >> 2002 big things, f-- two big advertising, we hope this will expand a lot of opportunities. and second bing should grow our shore and delight a lot of customers. >> this is the senior vice president of microsoft's bing division. as you see, it's only three months old, but innovation alive and well. erin, back to you. >> thank you very much. jim goldman. neck on t next on the show, jim lehm cram his special lehman extravaganza

day. and when the president took on speculators, cliff fought back. find out what he thinks of the president's plan to fix wall street. we're up ten for the dow and we'll be right back. 

welcome back to "street signs." rick santelli here. well, next week's supply weekly had some t bills today, $58 billion. very aggressive auctions once again. with all eyes on currency, many currency traders eyes' focused on the end. let's look at the dollar index by comparison.n. a basket of currencies. it's holding onto very small gains. very important to pay attention here. many stories about how the dollar is the new carry currency the way the yen used to be. this has significance for reserve currency.

the highest yields of the day. the s&p and the dollar at the highest price of the day. that definitely is something that's correlated. watch the data like retail sales to give us more clues about what may lie ahead. erin, back to you. >> thank you, rick. okay, it is time to stop trading. guess who is here? that's right. how are you, jim? >> look, i have to tell you, i got up this morning at 4:00. the market was looking down a percent to a percent and a half. everybody was fighting again. look what kind of day we have. president, i disagree with everyone's take on it, i'll say that tonight. he should have been more positive. i was surprised he was so down beat. maybe he's too fed up with this health care situation. you come downtown, you come up with an upbeat message, not this message message. i'm going to speak to his people later. >> i think they're in a tough spot. i'm getting it loud and clear they're really excited with how things are going, but they are so mindful of the fact that with unemployment where it is and

incomes where they are, that to look like cheerleaders would be very damning for them. i think that's the balance.. maybe you disagree with where they're coming out on it. >> i think you can cheer lead versus the rest of the world. we're well ahead of europe. we made a lot of good moves. one of the things that rob rubin taught us, give praise. tim geithner is doing a great job. he's working hard for you. ben bernanke is doing a great job. put out praise and then talk about the justice department after aig. justice is after lehman. justice is after these other firms. but you give them some positive message. the president was not on message. he was too down beat. >> interesting. >> yeah. >> well, jim, what is your take on where we are one year later? now, i just want to throw out a few things and you bat them any oferd you want. thing one, dow down 15%. thing two, markets up 50% since the march low. thing three market closed friday back where it closed on september 10th, 2001.

those are three different stories. >> i first thing the september 10th, 2001, is a complete kennard. these ephemeral. i do believe very strongly that the real takeaway year-over-year is our banking system did not xlaps, th collapse, that the stress tests were real stick, and the consumer whether it comes to housing, retail, or auto is much stronger than i would have thought. obviously there's still pockets of weakness.. i think if you ask the average guy on wall street who never wants to admit anything that's good because that seems to be the nature of good, it's like why aren't we out of business? this system turns outside to be stronger. i spoke to three partners at goldman sachs. we were all amazed what happened. the business is coming back. >> right, right. i just for regular people it does feel different. i think that's just politically that's -- >> unemployment is the driving -- is the driver of

everything, but i think when you read an article, a positive article about rockwell automation hiring people this weekend, it was the first of what i expect to see many articles. >> then they say in the same article it laid off thousands. you have to start somewhere, i completely agree with you, i'm just saying celebrating hiring a few people when you've laid off thousands it's tough, right? >> it's tough. but there are -- you celebrate success and you talk about prosecutions. america wants to see people behind bars who stole money.y. that's what america wants. so you come after them on a hard law enforcement, not only new regulation, that doesn't help. we're enforcing the old regulations. we're going to put the bad guys in jail. the guys who are left are clean. that's an upbeat message for most of america. they want revenge against the people who took their jobs away. >> right. now, jim, i want to get a trade in here today because i know you have got -- well, let's talk about the banks. >> yes. >> when you hear what the president is going to say, you get a regulator for the big

guys.. unclear how it shakes out. >> the company that would be most hurt by regulation if it were serious might be wells fargo because they have such a huge percentage of the mortgage market. the second one would be jpmorgan. i'm going to exclude bank of america. wells fargo went up during the president's speech as did jpmorgan. what does it say? they are in compliance. that would have been good to say we have found good banks and bad banks. people want retribution but they also want success. you have to throw some people to the lions.. he didn't throw the bad guys to the lions and didn't talk about the good guys. we believe in a black and white villains and good guy situation in this country. he has to give us the villains and he can cheer the heroes. >> thank you. much more of jim tonight. jim has a strong view on what the headlines mean.

that and his lehman trade, obviously not lehman itself. will hedge funds be the target of president obama's reform agenda? one of the highest profile people in the business is going to be our guest. he isn't called the grave dancer for nothing as o-- he's investig in real estate somewhere else. find out where. >> all the recommendations he can pressed by jim cramer are solely his and are not the opinion of cnbc and may have been previously disseminated by him. before acting on a recommendation, consider its suit aebl fability for your circumstances and consider seeking advice from your own financial adviser. [ thunder rumbles ]

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quantitative computer driven hedge funds ar misse-- are a

mysterious bunch. as we heard the president suggest earlier, mystery is not necessarily a good word to use to describe financial markets or financial players after the crisis we went through. in the case of aqr capital management, maybe one millisecond ahead of its primary competitor, that can mean the world of difference. we are joined with a special and rare interview with the ceo of aqr. take it away, ty. >> thank you very much. as you mention, at the schwab impact conference with cliff. cliff, i know you did not hear the president's speech.h. you have been actually working today. >> yeah. >> but back in the spring you were critical of the president when he took off after hedge funds in the context of the chrysler debacle.e. today he made the case for strengthened regulation. do we need more regulation and, if so, what sort? >> you know, it's interesting.

the chrysler thing was not necessarily about regulation or not. that was very much about bankruptcy and the rule of contracts and law. it's not -- i am a small government guy. i'm a university of chicago ph.d. i believe we're not allowed to like regulation as a rule, but it doesn't mean every regulation is bad. i think a thoughtful thinking through makes some sense, but there are a bunch of things that do scare me. there's been talk recently of so-called tax on every transaction. i think that would be a disaster for market liquidity. i'm cynical about systemic risk regulator only because i think anyone who could do that should be making about $12 billion a year because it means you know bubbles are coming. so while regulation can be improved, particularly at the nitty grit ni level, i still do think capitalism is the golden goose. i think we have a risk of maybe not killing it, but maybe

thinning it up a bit. >> what about the position some people take that certain kinds of derivative contracts that are now traded off market ought to be brought onto a more transparent exchange so that there is greater clarity, less opaqueness, and presumably less risk systemic risk. what do you think of that? >> first of all, i discovered this is a lot easier when you actually don't see the president's speech. i'm not constrained by any of the facts. it's wonderful. i think that's a great idea. where i tend to differ is i think the marketplace would move there now anyway.. it was a horrible lesson to learn. i'm not saying it was fun. but i don't think many people would be super comfortable with trading these off exchange anyway in a huge way. i think the market would learn, and markets learn a lot quicker than government's learn. i think it's a great idea. it's one i don't think needs to be mandated. i thinkç we will get there prey quickly anyway. that would bother me much less than other regulations because i

think we're getting there anyway. >> the president did speak, i don't want to put you in a position of speaking about t things you didn't see, but he did talk about systemic risk. can systemic risk really ever be regulated away? >> even the way you asked the question i know you know the answer and it's not even close. i think systemic risk will always be with us. where i think you actually get a paradox, the more you try to regulate it away, you can reduce the probability of a bad event happening. when everyone thinks it's less probable, when it does happen, it's much worse.e. it's kind of like -- not i'm saying it's going to happen, if the federal deposit insurance fails, it's far worse than if we never had it to begin with. the lower the chance as we squeeze the risk out, but the bigger the pain the chance of something happening. part of the new plans actuallyy do emphasize this. they talk about a living will being written, i have heard the

term, for companies that are very big to focus on what we do if they do fail. not try to prevent them from failing, not try to see the future, not try to regulate all their activities, but actually have a game plan.. one of the lessons of lehman was -- we all ran around like a chicken without other head from the government to wall street to the media saying what happens when something like lehman fails. i like the term living will, that i think is wonderful stuff. >> let's talk about what you do best, which is investing. you have moved from not -- not from but added to your hedge fund business a group of mutual funds, most especially the diverse arbitrage fund. you're known as a momentum value investor. you told barrons what you like to do is find things that are cheap but getting better. what's cheap today but getting better? >> well, it is funny. what we do in the diversified arbitrage fund is a little

different in that we try to get exposure to a lot of famous hedge fund arbitrage. all kinds of strategies based on one thing being cheap versus another thing. hopefully that closes over time. we try to do it in a low-risk, low-leverage way in a mutual fund. but you happened to ask a question that's exactly dead on. the single largest weight in our fund is convertible arbitrage. it has the two characteristics we love. you said value and momentum. we like things that are cheap but have started to get better. convertible arbitrage was as world record cheapness late last year. it was multiples of how cheap it had ever been. when i say cheap, convertible bond was trading at a small price versus it's constituent parts. that has fixed itself a lot of the way, but not all the way. it's still cheaper than ever in the past so. it has value and momentum right now. >> when we say convertible arbitrage fund we're not talking

about a convertible bond fund. >> exactly right. convertible arb is only one of the strategies but it is a very diversified portfolio of convertible bonds and hedging away the stock market risk, the credit risk, and the interest rate risk to get at what we call the arbitrage. if that security is cheap, you don't want to just bet on bonds or stocks. you want to catch tour that cheapness. >> about half a percentage point as opposed to the usual model. >> we try to do better. we're trying to bring kind of good hedge fund prices at a fair price to the average investor.. >> thanks very much.. >> good to meet you. >> back to you, erin. >> thank you very much, tyler. next on the show, sam tell famous for his famous timing. find out where he is investing right now. you're watching cnbc. we'll be right back. these days, wouldn't it be great

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the stock market booming this year. and one of america's real estate

investors is betting on housing in bra skil. it's one of the largest home builders in the country and it trades here. gfa. that's on the big board, up 232% this year. yes, that means it's more than tripled. zell said 7% of the firm focuses on low-income housing. what does zell see? let's ask carlos, ceo. we appreciate it. >> my pleasure. >> it's interesting, this isn't just sort of a financial investment for mr. zell. he comes down and visits and has looked into this deeply.y. >> yes. he was there about two weeks ago. it's really to see the huge opportunity that that brazil represents. we need to see it from a more fundamental level. which brazil today has 60 million families of which about 32 million, more than half, is really in the low-income segment. >> and that's where you focus. >> and that is exactly where

tenda focuses. it's currently the only pure play player in this segment of low income, with more than 30 years of experience. >> some people in the u.s. say, low income, they get worried about, gosh, are you extending mortgages or loans to people that might not be able to pay them back. how do you answer that concern? >> well, first of all, on the contrary, low income have their only thing is that they want to do is to pay their debt. because they have their name to keep. so they don't have anything else. so it's their name, it's sacred. in brazil, there is 7 million homes in deficit units, in terms of units. and this is where the government is really sort of putting a strong program with $18 billion in funding to come in and construct over the next two years, 1 million houses. and that is where exactly where it fits in. tenda is really able to capture that opportunity better than anyone else, because first we

have a national footprint in several states, extended to several states. we have a unique sales method. and we also now reducing our construction cycle from 12 months to 6 months. which will give us a huge opportunity to really do well in this market. >> and so your price here is $58,000, u.s. dollars, on average, for one of these homes, and you've got more than 60% of the market? >> yes. we basically have the ability to be the lowest price point builder in the large scale, because we are able to do it in such a way that we bring quality. but in the industrialized way. so that we can bring value to those customers. >> thank you very much. we appreciate your taking the time, carlos, in giving everybody a brief primer of how to get in the housing market in ba zil. 7% is the largest low income

housing provide in brazil. you heard what president obama said today on wall street. find out what john harwood is going to ask him tonight. we'll get a little sneak peek. i'm sure he will hold something back, perhaps if folks from the white house are watching. we don't want to give away all of the questions. that's next. n ♪ ♪ i don't know much ♪ but i know i love you ♪ and that may be ♪ all i need ♪ to know (announcer) customers love ge aircraft engines almost as much as we love making them. innovation today for america's tomorrow. boss: come on in, i had some other things you can tell people about geico - great claims service and a 97% customer satisfaction rate. show people really trust us. gecko: yeah right, that makes sense. boss: trust is key when talking about geico. you gotta feel it.

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there's your sprint nextel, biggest gainers, up 13%.

there's talk that that is not a big happening right now. stock markets selling sprint nextel higher in the session. john harwood will sit down with the president in a couple of hours, to answer real questions of what's going to be in the regular reform bill and what's going on with our economy and health care. and anything else is on the table. john harwood is here to join us. john, any main themes, or things that you feel like you really want to push for, elus days perhaps from the speech today? >> reporter: first of all, this is a point of which all of washington is feeling circuit overload in terms of all the initiatives this president is pushing, from health care to economic stimulus to climate change and carbon caps, the financial re-regulation. so one of the natural questions is how do you manage all that. is it t