their options and they should do that. it's a time of low interest rates. that makes leasing a little cheaper, but it's important to look at the buy, the purchase option as well. >> yeah. >> all right. thank you very much. appreciate you taking the time. i'd be interested to see if that increases auto sales. cash for clunkers got us a little above that. would leasing give you an extra little fill up? >> yeah. i just don't want to see them dig themselves another hole. that's been a problem. an ongoing problem. >> rating agencies, a crucial part of the process. an announcement today from the attorney general. >> we're done. i'll see you tomorrow. time for "the call." activity in the mid-atlantic

states jumped to a two-year high in september. it hit 40.1. david faber says it is unlikely that general electric will buy the 20% stake in nbc universal. the dow tops 9800. a close above that would be the first time since last october. good morning, everyone and welcome to "the call." stocks moving higher. we're up 30 points on the dow. as investors digest positive economic data. what is this about your investing now? does this mean that blue chips are back in style? we're going to talk about that coming up. i'm melissa francis. we'll have an interview with jeffrey katzenberg.

and president obama to hold a health care rally at the university of maryland. plus, we'll discuss if the president can regain the initiative on health care reform. this is "the call." we are cnbc. whatever happened to the june swoon? stocks continue to move higher. some positive economic news on housing starts and jobless claims. right now, the dow's up 29 points. the s&p is also up 2.5 points. and the nasdaq is obediently rising 3.5 points. the september swoon never happened, trish. what does it mean? >> i think you must be feeling pretty good these days. are you, larry? >> the answer is yes, for an old guy. >> we got positive economic data. housing starts, those are in

line for august. initial jobless claims lower. you did see continuing claims rise, but really, that's to be expected in this kind of environment. because you're seeing the pace of firing slow down. however, companies are still reluctant to hire and that's to be expected as we come out of this downturn. phillies coming in better than expected. some news investors can hang their hat on. up 33 points. hi, bob. good to see you. there are some real standouts today. amr is one of them. >> we're up nine out of ten days. the bears are really pulling their hair out. there are some good fundamentals. airlines have had a terrific week. united and delta, earlier in the week, raised guidance. delta announced they were seeking to raise $5 million and amr raised 2.9 billion by

selling frequent flier miles. aviation also gave them a loan. i expect continental to also make a comment. >> pretty stunning. that was as expected. >> here's the one problem with fedex. the revenues were $200 million on the light side and they had lower fuel charges. price is were a bit of an issue there, so fedex was a bit of a disappointment on the revenue side. >> as you pointed out in your notes, that's not as bad. >> and the important thing is they're able to get that through, apparently. one quick comment on general electric. the meeting is ongoing. doesn't seem to be too much

going on there. we were not expecting comments in terms of renewed kind of guidance from them, so if there's anything happening, we'll let you know. the important thing is that as ge hit $15, the stock moved up dramatically. it was a technical factor that helped move that stock up. >> and volume has been increasing, so we're seeing more people get in that had previously been on the sidelines because they were fearful they could miss out. >> we have seen notable increases. >> thanks so much. we want to head uptown. brian shactman is at the nasdaq. >> we're up, but that's not what i want to show people. pull up a chart of the s&p technology sector. this morning, briefly, it went positive sense lehman. it did back just a tiny bit, but it's the first sector to do so. according to robert, one of our great producers. the next closest sector,

consumer discretionary. what's moving today? yahoo! up about 15% in a week's time. apple up 1.8%. google pulled back a little bit, so those still on the move. oracle, little bit disappointing. met on the bottom line, light at the top, a little hazy on the guidance toward the lower end. the pressure's still there. research in motion, even though citi has a buy on it with a $100 price target, it's down 1%. amazon up yesterday. another lagger, philly semiconductor. intel, and a positive report. back to you. >> thanks so much. housing starts and building permits rose to their highest level in nine months. more evidence a recovery is on the way.

joining us now to discuss where we are in the housing cycle, real estate agent -- and diana olick with us as well. a surge in permits, that's what happens when a secessirecession ending, right? >> exactly. it's a reflection of the overall economy. good news. >> sherry, you agree with that? >> yes. absolutely. we're starting to see some sustained patterns in the home starts in particular between last month and this month, which of course were at a peak in '05, '06 and tanked in '08. we're starting to see patterns in home sales. also, the home price es and values are going down less rapidly and last month, we saw a decrease in the number of foreclosures, which are down by 1%. >> diana, you've heard optimism.

are you ready to join the parade? question mark. >> i always say to you, larry, not much to join the parade. just my job to look at the numbers and tell you what i see. on the housing start numbers, you want to look at single family versus multifamily. we saw it in multifamily, which has been at a record low. that's because multifamily in the commercial market can't get the credit to build these buildings. we did see a small drop in the starts for single families, but it's still rising overall. because experts say they look at a one to two-year period. the big surge we saw was in multifamily, which continues to struggle. >> go ahead. >> there are also other important things to keep in mind in terms of perspective.

one is that there's a big difference between things getting less worse and an actual recovery. so even though housing starts may be up 1% overall, they're still up 70% from the peak. >> well, you don't want housing starts to be jumping by too much. we still haven't cleared out the inventory. >> but in terms of keeping perspective. when we talk about foreclosure numbers being down, we still have to remember that 360,000 people lost their homes last month, so we still have a huge -- >> and guys, i think also it's important to remember, keep that first time home buyer tax credit in mind because new homes have been relying on that a lot. the builders have been saying they're on capitol hill pushing harder than ever trying to get that extended. without that, i'm interested to see what happens with new home

sales. >> susan -- there's a couple of data points. single family home starts. 88% last three months, annual rate. single family permits. 68% at an annual rate. i mean, i would pray at the alter. that would be the greatest thing at the history of the earth. let me get your take on this. >> to me, the best piece of news is inventory. inventories are down substantially. a big jump down, which mean that is the bullish for housing prices going forward which feeds back to foreclosures. >> everyone's talking about the housing trends, which the national association of realtors love because they love any little subsidy they can get. i want to ask a scientific question. do we encourage and put too many resources in housing? what about business investment?

cap ex? why do we so want to put all of this into housing for heaven sakes. it's not necessarily good economics, is it? >> we all do live in a house. >> but the question of this particular tax subsidy is are you really risk averse? do you want to really stop it now as we are bottoming? >> and sherry, let me ask you about fannie and freddie. they are back out there again making loans with 3 and 5% down. it seems like in that group, they're inflating the bubble again. does that make sense? >> that goes to two points. it goes to some of the variables still in place like the housing credit, but also interest rates. that is helping to keep interest rates down. one other variable is the modifications that are being done now.

tradition traditionally, they have about a 6% failure rate. the point is that you know, they're buying up some of these -- making credit more available to people is a big part of the variables playing into how this will end up. >> yeah. for better or for worse, some would argue. >> why don't we get full cash expensing for the investment by businesses. for example, manufacturing, transportation, we have to be competitive worldwide. we put too much into housing. >> got to leave it there. thanks so much for joining us. up next, we're going to take a look at the post recession, economy and when the economic climate may start to feel a little stronger. that would be nice, larry. >> i'm feeling stronger. dreamworks ceo jeffrey katzenberg from the 3-d entertainment summit. he's going to give a speech, but

first joins us. [ telephone rings ] [ ring ] [ "catch the wind" plays ] what is the sign of a good decision? in the world of personal finance, it's massmutual. find strength and stability in a company that's owned by its policyholders. ask your advisor or visit massmutual.com.

we've got ben bernanke claiming the recession is technically over, but convincing main street of that is another issue because once technicals for main street isn't necessarily so real.

it got us thinking here, if it's technically over, when is it going to feel like it's over? steve, what is it going take? do people need to see that unemployment rate go down. >> if the past two recessions are any indications, they shouldn't even bother to call the end to the recession. it will take months and years for americans to start feeling the effects of the actual recovery. unemployment at recession. unemployment in the last recession, the '91 recession, peaked 15 months after it ended and 19 months after the '01 recession ended. we'd be into november of 2010 before we start to climb the rate. look at payrolls. about two years after '91. that means to put the same amount of americans back to

america, three years and three months. what about growth? it took three quarters to hit and maintain the 3% after '91. '01, six quarters. the stock market however, a very different deal. first, let's look at profits. it took eight quarters in '91 to get back to peak s&p levels, but regained the peak level during the recession. there's your evidence of the stock market being a forward discounting mechanism. unfortunately, six years to get back. that would be a different case because there was a bubble that we were trying to regain the levels of. on the other side, some argue that monetary stimulus along with severe depths, maybe we'll have a "v." without credit, some say this is

why we'll have a lackluster recovery. pretty interesting stuff. >> i love the metrics, steve. good stuff there. 23 months after '91. stay with us. we want to talk more about the recession recovery. we want to bring in mory harris. chief economist at ubs. you heard the numbers as well. is there any way this can be sped up? >> well, i think you have to distinguish between making everybody happy about everything and the time sequence for things starting to look better and more of the public starting to feel better, but not everybody. specifically, i think by the end of this year, you're going to see an end of the job losses. you're not going to see a decline until the second half of next year because jobs are going

to have trouble keeping up with the labor force. the jobless claims were down in the last two weeks. we're seeing a stabilization of product demand. when that happens, a stabilization of labor demand isn't that far away. i think we're going to see further jobless claims which will make the public feel somewhat better, but you have to stabilize jobs before people feel much better. >> okay. what about the psychology in this? steve, you look at the paper every day and read how tough things are. i mean granted, yes, things have been improving, but there's a certain slant in mainstream media that sends to stress is negative. how much does that affect the average person at home? >> following how the media covers the unemployment number, it's the rate that is the thing that grabs the headline, where as the payrolls is more suggestive and is likely to be here, that unemployment rate

will continue to tick up. that ends up undermining confidence. i think confidence has bounced back. what was interesting was following the high-growth numbers during the bush years and yet the very low poll numbers. there could be discomfort in strong economic times. one of the key issues here is job security. peoplel secure in their jobs and their income is going up. >> mory harris, back to you. in the '80s recovery, we saw job creation pretty quickly. that had been the pattern in prior business cycles. and i want to ask you, isn't this going to be a business-led recovery? and number two, might we actually see positive payrolls in the fourth quarter? >> larry, you know, the history is that whatever you have a big negative recession, there's this

one, you always have a strong recovery. there's been no exception. the reason why most of us aren't forecasting that is because of the credit situation. but is it going to be business-led? it has to be. because we need the businesses to cut back on the layoffs, which they are doing. i suspect that we can see cap ex coming back faster because it was cut so much. >> exactly. that's where i'm going. just as a last thought. we all obsess about the consumer, but the business side is so darn important and we forget about business to business transactions. maybe we're going to be surprised at the business comeback including jobs. your quick take. >> one big difference between the '80s and now was that i believe we had a tax cut in the '80s.

>> there you go. >> we've got an increase coming now. >> they cut business taxes substantially as well as personal taxes. that's an excellent point. i wonder with tax hikes in 2011, maybe people are going to bring income ahead in 2010. >> i would point out, you've had tax cuts in 2003 and while they helped turn around the economy, it didn't help with it being a jobless recovery. i don't know that we know the recipe for how to take -- >> so jobs took off after the tax cuts. >> but it took a very long -- >> we got to get out of here. >> we don't have the recipe for how to turn the end of the recession into a feel good -- >> listen to what he has. >> thanks, guys. first, there was disney buying marvel and now, speculation is running high that

dreamworks could be the next media acquisition. >> we'll ask the ceo live in an exclusive interview straight ahead here on "the call."

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crude oil is up another half a percentage point, sitting above 70 bucks a barrel. gold is down, but sitting at 1018. it's been a good year for dreamworks. the company trading at a 52-week high. very nice. 25%. but ever since disney acquired marvel, speculation is riding high that dreamworks animation could be next. julia boorstin joins us with more. >> that's absolutely right and we're joined now with an exclusive interview with jeffrey katzenberg, ceo of dreamworks. very good to see you again. >> good morning, good to see you. >> you have to forgive me. i'm going to get straight to the

topic. is dreamworks up for sale? >> as you know, i can't comment on any of the speculation going on, but you know, we're having a great year and our business is strong and looking forward to probably the biggest year in the company's history in 2010 and so you know, i think it brings a lot of attention to the company. >> time warner has been a subjected buyer. >> again, i can't want comment on that, as you know, and you know, i'm happy they're all talking about us. >> here's a question that i think you will be able to answer. pixar just bought marvel entertainme entertainment. how does that change the competitive landscape? >> well, it doesn't. what it does is once again reaffirm the great value of content and particularly, i

think for dreamworks animation, you know, we probably are the last standing independent company that really owns the ip and has our business is more rebust than ever. i think a marvel deal is fantastic for disney and a very, very smart acquisition for them. the rest of the town is buzzing and i think envy yous of it and it's been very good. >> you have a big slate next year. releasing three films for the first time and they're all in 3-d. are you trying to increase your standard? >> we announced last spring we were going to go to five pictures every two years and we are starting to see a bigger opportunity for a little increase in the volume of

production. >> now, they're expected to convert more theatres to 3-d, but there is concern that there are more of these movies than theatres to show them. is this the challenge? do you think your business is being more robust if the rollout weren't so slow? >> again, we were sort of in the cat bird seat here, being the first movie with "monsters versus aliens." we really did quite well and were able to capitalize by being pretty much the only film in the marketplace. what we are seeing right now is a very, very fast acceleration of the rollout of 3-d screens. they were 3800 in march. by the time avitar comes, we think there will be close to 78

screens and by the time shrek comes, about 10,000. the market is expanding and i think we'll be able to service multiple pictures. >> there's new technology to bring 3-d to home televisions. will it keep people from paying a premium to see it in theatre? >> i don't think so. i think it is simply going to add to the interest and to the rate of innovation in 3-d. i think the experience in the home, what we've seen so far is very exciting, but not -- i don't really feel -- i guess the analogy would be it's like going to see a football game live and watching a football game live in your home. very, very different experience. >> one quick, final question. i know you were a reporter with president obama during his campaign. what's your sense of how he's doing so far on health care and the economy? >> well, i think he's inherited

probably the most challenging set of problems of any president in modern times and you know, i think he is continued to show great leadership. i have a lot of confidence in him and the administration and know they've got a very, very tough set of challenges and you know, i think we're lucky to have him there. >> thank you very much for joining us. trish, i'm going to toss it over to you. september's bucking the trend here for being the worst month for stocks. it's leading the way higher. with some blue chips. does that mean it's time to buy? does it mean it's time to buy those blue chips? that's up next. and a good government turf war could be coming to lawn near you. you're watching cnbc, first in business worldwide. uuuuuuuuuuuuu

welcome back. we're watching this rally here. up 38. what happened to that september swoon everybody had thought might come along? with ge and ibm breaking out in the past week, does this subject blue chips are on their way back? we want to ask our bulls. and also our bear, president of leader capital corporation. great to see you here. dan, i'll kick it off with you. our resident bear here -- or

bull, forgive me. quite a move here in september this is far. what is this saying to you about blue chips? >> i think what we're seeing is that the september swoon has been washed away with excess cash on the sidelines. frankly, a real change of attitude of people who don't want to be the last man standing on bear island by themselves. it's the fundamentals that have driven this market vant changed. we're seeing nothing that's unusual. analysts overestimated with records to what they felt was going to happen with the earnings and recovery on the downside. now, they're underestimating what we're seeing on the top. but pes have stayed the same. what we're seeing now is a very reasonable case that we're going to see 72 to 75. that's going to put us about 10% potential. >> you say it's an earnings story, but a lot of these companies have managed to

improve earnings through cost cutting. at what point will that happen and what will that mean? >> i think there's two very positive aspects of that. one, it has been through cost cutting. that's normal. that's the first and most effective thing management can do to change their business condition. now, you're dealing with a coiled spring and a very small amount of top line growth. we're going to see a positive gdp, about 2.9, then about 2.2. when we look at the fourth quarter, i think it will be an improvement in export. we're going to see that modest, but in the third and fourth quarter. >> john, how important is third quarter earnings going to be because it strikes me that the

september swoon estimate was an underestimate of recovery. >> first of all, september's not over, larry. i certainly appreciate the point of view. as you know, we think we'll break the lows by o end of october, first part of november. we think third quarter will be a disaster. >> what will cause that retest of the lows? are you talking the march lows or what? >> the march lows and i'll tell you what fund mentally will drive -- earnings have been negative. number two, the cost of refinancing corporate debt is moving up, 200 to 500 basis points from where debt has been. there's a tremendous amount of corporate debt. that's going to have to move down the curve. that's going to take some time and be hard on the system. i think that the primarily, the

net bottom line's going to be driven by terminating more people. you'll see unemployment climb to 16%. >> dan, i want you to react to john's posseessimism on the eco and earnings. >> what happened is that the analysts, they overestimated what the downside was going to be. you're seeing it in sequin shl quarters. >> there's a lot of the money on the sidelines. >> i'm not hearing anything valid. give me your numbers, something to put behind your comments there. >> i think we're probably going to see in the third quarter and fourth quarter, an earnings number of 16 for the s&p. we're on a good track to see almost 18 on a quarterly basis,

which is going to put us as 72 to 75 next year. and down to 16, that's going to put you at 1150 to 1200 on the s&p. with dividends, you've got 10 to 14% of return potential. people with excess cash are going to support that with buying power. >> there's a lot of excess cash out there. john, we'd love for you to get a chance to respond, butter out of time. thank you so much to both of you. >> thanks for having me. >> thank you. up next, the president continue to push for health care reform. >> so, can obama regain control over the national health care debate? we're going to discuss it.

all right. check out amr. the carrier has raised $2.9 billion in frequent flier miles to citigroup. right now, trading $8.67. big numbers. transportation. go figure. president obama renewing his health care push today due to speak live at the rally on reforming health care insurance. the university of maryland's comcast center. let's check in with john harwood. >> this is the fast-moving story and as you mentioned, the president's continuing his campaign today especially in light of what happened yesterday. senate finance committee chairman max baucus laid out his bill. $850 billion over ten years or

slightly less. what was notable was who wasn't there. chuck grassley, the ranking republican on finance and he said the situation is simply now out of his hands. >> what has happened here is the politics has taken over. the white house is getting anxious. senator reid is getting anxious. i suppose senator pelosi wants cover for her liberal bail and the politics stepping in is going to make it very, very difficult. >> senator grassley is correct that there is a lot of anxiousness to get going and move this timetable, but it's also true that politics has taken over and both sides. republicans are almost unanimously opposed and democrats almost unanimously for it. the question is, can democrats get at least one vote from republicans. that would be olympia snowe.

>> that's right, john. i agree with you. politics has taken over on both sides. stay with us. we're going to have more on president obama, whether he can regain his health care initiative. let's bring in former vermont governor, howard dean. we also have jimmy pete. when i look at this bill, i see a lot of new taxes. i'm concerned that this is not the right time to be adding more taxes. >> that's a big concern. in a way, they should have tried to push this through maybe a little earlier in the year. i think when there was a greater sense of panic and they could have forced it through like the stimulus package. now they're wondering, gee, the unemployment rate is higher, so there's a great deal of concern. there's like ten separate taxes.

>> besides taxes and fees, the dean of the harvard medical school has to know something about this subject. jeffrey flier. he says the breaks should go to the individuals and if we had that, we'd have a more cost competitive system. that is nowhere to be found. why not? >> it's hard to know what he means by that. >> i'll be specific. give them the tax exception. the tax breaks that businesses have. let individuals choose. that's what he's trying to say, howard. the dean at harvard med school. >> let me defend max baucus' bill for a second. the taxes that are in there are taxes on health insurance

companies and things like that. also, he's really just rearranging the money. it's not like american consumers will see a lot of new taxes in this. most is paid for by savings in medicare. the big problem with this bill is that it's not reformed. it is insurance reformed, but you shouldn't have to pay $2 billion over two years. they're still forced into a really inefficient, private market. until it is health care reform, we shouldn't put money into it. we need really frankly, the kennedy bill to advance and not this one. >> john, one of the problems, you look at a poll, i think it was out of "usa today," saying the more americans hear about this plan, especial ly from the president, how do you combat that? that was from john harwood, actually. >> the president's trying to combat it by being out there.

he's doing all the sunday shows this weekend. she's trying to use his purr swasive power on this. on the question of the tax increases, yes, it's going to cost money to expand coverage. president obama argues they're off setting benefits that if you consider the plan in its totality and the congressional budget office has said the baucus plan will save money, you're talking about the hope that increased competition, even without the public option, would bring down rates for others and have off setting economic benefits. so there are two sides. >> jimmy, doctors are complaining, i don't know if you saw the daily polling, half say if this goes through, that may retire. here's their basic point. they're saying you can't insure 47 million new people given the shrinkage of doctors. there aren't enough doctors or

for that matter, enough nurses to service nearly 50 million new people. what do you make of that? >> that is a legitimate issue. one way to get more doctors would be to bring doctors from overseas. you would think it's very easy to get a medical license, but it's very difficult. it could be easier to get more foreign doctors here. that is just one of many problems with this bill. the white house is very confidence they'll have something to sign. that the liberals will eventually come around. i'm not so sure about that. i think they're closer to getting no bill than the perfect -- >> i hate to interrupt -- we're going to continue this debate on the other side of the break. we saw see president obama coming out so we wanted to get a quick break then we'll continue this.

welcome back. we've got breaking news. the president is speaking there in maryland. let's listen in.

>> the mayor is here. state senate majority leader, tom miller, is in the house. congresswoman, donna edwards, is here. congressman elijah cummings. congressman, chris van holland. congressman sorbaines is here. and to your president, president of the university of maryland, thank you so much. you know -- who?

you know, the last time i was here, it was in the heat of a very long and very tough campaign. and in that campaign, i promised to be a president -- you guys can sit down, by the way. in that campaign, i promised to be a president who didn't just clean up yesterday's crises. i wasn't just content with standing still. i promised to be a president who would build a better future. who would move this nation forward. who would ensure that this generation, your generation had the same chances and the same

opportunities that our parents gave us. that's what i'm here to do. that's why i ran for president of the united states of america. i ran for president because of people like rachel. did she not do an outstanding job in the introduction? part of that promise is an economy that leads the world in science and technology and innovation. part of that promise is a clean energy revolution that protects our planet, protects our security -- >> president obama trying to make a push here for health care. we want to bring back howard dean and jimmy. jimmy, one of the big concerns being that individuals don't

have enough choice here that tax breaks would be going to individuals. the reality is that it doesn't look like that's going to happen. do you think if anything gets through, it would be a success for the president? anything as far as health care goes. >> well, yeah. because if they don't get anything through, it's going to be a disaster. december, i think he will sign something. >> you think it's going to be a disaster if he doesn't get anything through? >> i think it will be a disaster for the democratic party because they have 60 senate votes all control the house and they can't pass health care reform, looking confident. >> but they'll get something through, realistically, right? >> absolutely. >> howard, i wanted to ask you, you said that if we turn it over to individuals, do we necessarily have to have a public option? i don't understand how you get from a to p there.

>> they have the right to kick you off your health insurance. you lose your job, you lose your insurance. you need a public option for people who would like something different. >> you can have insurance reform and still create a -- where people can buy their own health insurance. >> the private sector in health care by nature is more inefficient. >> the public sector -- >> excuse me, i didn't interrupt you. you have be so pessimistic. >> i'm an optimistic humanoid. you guys tell me, first of all, they're going to take $500 billion out of medicare, which is going to absolutely come out of the hides of doctors. they're already in short supply and now, you want to add 50 million people. that's what happened in massachusetts, in maine, in

hawaii, in england and canada. how can you deny that? >> well, it's been hard to get a word in, but i almost disagree with everything that's been said on this program. i think the cbs poll is wrong. second, the investors polling of doctors is certainly wrong. the majority of primary care doctors favor a single payer because of the way they've been treated by insurance companies. thirdly, you don't have -- in the bill exists mechanisms for improving the private physicians. and secondly, using nurse practitioners is also -- >> are we running the danger of creating another massive, massive program similar to social security? >> you already have medicare, why not use that. >> a massive program that's

bankrupting us. there is no reason -- >> hang on one second. >> so the market can work in a consumer driven market. >> we got to go, guys. we didn't solve the problem. that is it for "the call." i'm melissa francis. >> we'll try again tomorrow. >> see you tonight in the kudlow report, 7:00 p.m. eastern and now, "power lunch" is up next.