good morning. stocks end lower for the first time this week. can the bulls finish strong on a friday? regulation revolution, pay packages, trading rules, reserve requirements, new mandates coming out of washington left and right. the picture at this hour, asian mblths mostly lower overnight. a mixed start to the session in europe and we have the dow and s&p futures trading around fair value as "squawk box" begins right now.

good morning, everybody opinion welcome back to "squawk box" here on cnbc. i'm becky quick along with joe kernen and carl quintanilla. we've been keeping an eye on the markets this morning. let's start with taking a look at the futures. you can see right now that the futures at this point are above fair value, but not a heck of a lot. you're talking about dow futures above fair value. anything could happen today. we have four key sxirations. you have the stock index and options and stock index and options. the volatility at this point could be the name of the game. you've been watching volatility drop in recent sessions. at this point, the vik onlilty about 23.5%. anything could happen. >> as we continue to wait to see if the we get to dow 10,000, guys. we've added 500 points to the dow this week. it's been pretty amazing to watch. big consolidation. pullback yesterday.

>> 0.08%. >> and this morning, i was a little tentative reading that, that the futures were -- they were down 25 and what is it, did fair value down 12 or something. but it's very thin, liquid trading at this point. but there is that rally. you know, i was thinking about something, about just how people feel about their net worth. if you take 55% and add it to everybody's stock portfolio, it's down a lot from where it was. but 55% versus where we were, you definitely -- your net worth after two years of the u.s. investor losing net worth -- >> we're back to 99. >> we're gaining again, yeah. >> 1121 s&p is 50% retracement of the entire bear market. >> do you have a 401(k)? >> i do. >> but you look at it -- >> you stop looking for a while and you open it all of a sudden and you can, wow, there's

something coming back in. >> you'll maybe be able to retire at -- >> let's not get carried away. >> 2 handle might be an 8 instead of a 9. >> for some of us. also in the news this morning, the nation's biggest banks could be soon forcing curbs on pay. it would allow the fed to reject any compensation policy it thinks encourages bank employees to take too much risk. the fed would review and amend salary and bonus policies. no congressional approval is required. the fed reportedly thinks existing powers give it the authority to carry out that policy. that's going to make huge waves on wall street. >> very different from what we've seen in the past where they said we would cap the top pay tajs. now they're talking about how this is something that sets up systemic risk when you start seth up these pay packages.

>> 45,000 firms affected. >> yeah. this is all happening ahead of the g-20 meeting next week in pittsburgh. this is something that the french in particular have been calling for. the idea is that you have to get everybody on the same page or you're setting up one company to look like the others. >> no congressional approval is required. >> no, just the fed. but remember, this is setting off a storm in congress because there are many who think that the fed has too much authority. there's a proposal to try and strip some of it away from the fed. >> on the other hand, do you really want congress doing the approval? >> do they have the ability to stop it? >> that's a good question. i guess if they pass the authority they could. >> how many different jobs are there at a bank? 5,000 institutions and the bank is going to loot every job? >> but i think they'll be focusing on the largest 25 banks, see if there's any

outliars. and you'll probably see them push to do things like what we've seen at citigroup already where citigroup is now tending to pay much more in stock than an actual cash. and you're probably talking about the use of clawbacks. >> but it seems like if you did the overall amount of leverage, if you regulated the -- you can't go 30 to 1 and negative you do, you can't go more than 10 to 1. if you have somebody really good at what thier doing, if they make too much -- >> no, but they're probably going to do stuff more like what you're talking about because the banks that have more cash reserves would have allowed to have more freedom? >> how do you know so much about this? >> i read the story in the wall street journal. >> the whole thing? >> the whole thing. >> already. you're way ahead. have you read other things today? >> a few things, yeah. >> she's read money & investing. do you ever read that page? >> i used to read marketing

section first. now i read money & investing first. >> depending on what the story is, i may give it to you. >> no, i'm -- that's it. >> joe is going to be -- in other news. >> that's right. i was done with today monday. vickram pandit now says $100 million is too much for an employee to earn given the bank's circumstances. citi ceo andy hall is entitled to a package that could be worth that much money. hall's plan was put under fire, but it was put in place before the authority over compensation agreements. pandit says he is working to turn it into an asset manager that investor money from outside investors instead of trading citi's money. $100 million. it is a lot, relatively speaking, on the street. >> it is a lot. although he was the guy who was to be the big rainmaker and

bringing in so many money for them. >> last trading -- >> no, no, i'm done. i'm done. eats all you. >> just read the pretty words. >> the s.e.c. votesing nancy to propose a ban on that terrible thing known as flash trading. >> that's pretty good. >> these are orders that stock exchanges sent to a select group of traders right before reviewing them publicly. >> you know all about that. >> yeah, we do. and i know the firm that is the best at this that makes the most money and everything. who shall remain nameless. the practice who -- >> voldimore. >> i thought you thought goldman. giving an unfair advantage to those with lightning fast computer trading software. so, you know, you get enough computer software and you can make about a percentage point a

day, i guess. no, i don't think it's that much. the s.e.c. proposal will be put out for public comments. >> the flip side is it's supposed to create more liquidity in the markets. >> people argue both ways for it. >> meantime, the s.e.c. is approving new disclosure rules for credit rating firms. the agency will be able tody close more of the rating's history. and banks will have to share data that they use to rate financial products. the s.e.c. is seeking comment on whether credit agencies should be called experts under securities law. if they were, they would be subject to tougher standards of liability. i think that's a pretty good idea. >> and the federal housing administration's cash reserves is set to fall below the minimum. today, david stevens will announce the measures to help those reserves rebound. in an interview with the washington post, he says the agency is trying to figure out how to avoid either asking congress for emergency aid or charging borrowers for taking

out more faa insured loans. it's almost 80% of the new mortgage market, so we don't want it to go away. bankrate.com reports the average 30-year fixed has fallen from 5 much 38% to 5.34% last week. raids on large jumbos are back to levels last seen in early august. it's one thing to get a loan under $417,000. but -- >> well, the jumbo loans have been increased temporarily. >> historically, the average, i believe -- >> no, i got smarter when i went away. >> were you reading on the plane? >> i read -- no, i didn't get a lot of sleep, but i read a lot. i read every paper yesterday because i was stuck on a maybe for 6 1/2 hours. traveling makes you smarter.

it makes you sit there and read all these things. >> joe is playing video games. >> it's up to 715,000 and the big concern is when they pull that back down, what's going to happen to the other side of the market. >> i try to keep my son from kicking the seat. >> business travel advantage, you're sitting by yourself with nothing to do but read the papers. >> we think about how to do it. it would be good if one of us was in the seat in front of him. senator majority leader reed is endorsing a bill to extend the $8,000 home buyer tax credit for six months. this is controversial, as well. you're sapping demand. the people that are buying the houses would have bought them either way. they need to live somewhere. they're going to buy a house. $8,000 is more money that's add to go our problem. >> it's cash for clunkers in a home -- but i do know a couple of people who went out and

bought homes who actually qualified, one guy in particular i know he wouldn't have moved out of his apartment otherwise. >> she talks to people who are -- i missed you guys. it's pointing and talking to people about the real world. >> no. it's just that in order to say anything in the past few days, i had to yen i know, i know, i know, to get my mike turned on. >> auto republican senator, johnny i'v johnny iverson has been pushing this to increase the credit to $15,000. the white house has yet to make a recommendation. the credit is currently set to expire at the end of november. >> move restrictions on income? >> yeah, it wouldn't matter how -- here we go again. bipartisan group in the house is introducing legislation to create an independent trust to manage the government's assets

under t.a.r.p. it would cover all the assets of t.a.r.p. and the trust would have a mandate to divest asset by december 11th. >> let's get a check on the markets of this friday. as beck mentioned at the top, this is a little more accurate. asia was down overnight as the dow did break that winning streak. again, 500 points this week on the dow and now people are beginning to talk about that dow 10,000 mark. oil is down, back below 72 at $71.86 on the october contract. ten-year note, we talked yesterday with tim breen about how equity markets dropped. it's at 3.395%. today the dollar is largely up,

that's part of the reason that the ekts have been down. 91 yes or no, 1.47 euro. people are saying that a time of the dollar short and that 1.50 euro is not fair away. let's get oversees. maura fogarty is standing by in lulgs rling pore and chris in long. >> good morning, guys. everybody is looking forward to some sort of concrete deal in pittsburgh. the eu summit, apparently they came up with some stuff language says the bonus bubble has burst tonight, so said the finance prime minister. jose manwell ferosa, it sounds tough until you said the uk has said we're not signing up to any of this at the moment. we're going to leave this aside. so i'm in another not sure if it's rhetoric or if we're going to get something serious in

pittsburgh. you've got quad ruining witching, the germans have triple witching and until the uk, we've got double witching, as well. we have individual stock open g openings expiring on the close. as it is, the markets trading around the flat line. not sure whether it wants to take a bit of a pass for growth which has seen banking stocks rally from their allows, which has outpaced the various individual indices. lloyd's banking group is leveraged 40% with the government and it's trying not to put more assets into the government because of that. the government is having none of it. let's find out what's going on in singapore with maura. >> good morning, everyone. markets here in asia decidedly took a pause today and fell back on this friday. in japan, trading was cautious.

we have a long holiday weekend coming up. the nikkei was off the session lows. you had reuters reporting today that american airlines as well as british airways are going to make a joint offer to expand their business ties. 6/currently, all three airlines are in the move. now, hong kong fell back from 13-month-highs. but it was shanghai that saw the biggest drop. it lost more than 3%. concern about the oversupply of shares once again on investors' minds. monday, mutt lurnlgal corporation's debuts in shanghai. steel stocks today fell back sharply in china on reports that the u.s. may impose tariffs on china-made steel tubes, escalating tensions between the two companies. one outperformer was south korea today.

there was heavy foreign buying keeping the kospi in positive territory. we saw a lot of funds buying into the korean market. over to you now. >> maura, thanks for a that, maura fogarty over in singapore this morning. let's check on how the u.s. markets are shaping up as we prepare to wrap up a decent week of trading. phil orlando is with us and julia coronado. good to see you both, guys. >> good morning. >> where do you think we are? we've got valuations close to 2004 levels. mom and pop seem to be coming back. day trading, online volume is back and yetd yet, people are saying that they're becoming unfashionably bulis, that the market is going to do what it's supposed to do. we got up to the 1040, enjoyed a

5% or 6% pullback and now we're running again. we think in the next six months or so, maybe a 1200 level. we're not going to see another 60% over the next six months, but we could grind higher. >> because of what the economy is doing or because we are awash of liquidity in the environment. >> there are three reasons. the reason for that is these, number one, we absolutely believe the economy has turned. we've been out for four months saying the recession is over. bernanke is now in our camp the last couple of days. number two, corporate earnings for the third and fourth quarter we think will be better than expected. modest top line gains. excellent bottom line gains because of the productivity and the cost cuts. number three, there is a mountain of cash on the sidelines. there is $2 trillion in cash that needs to come back in. so you get a pullback, that is going to keep that money?

. jewelal, we'll get to the economy in just a second. would you graduate with that overall? i mean, i think what we're seeing now is that the market is pricing in a pretty nice rebound in earnings next year. we think that is likely to be somewhat disappointed, but this market can go for some time before that news actually comes in. so there's tons of liquidity, tons of cash on the sidelines. so yes, i think that the equity market could rally further. but i think the bond market is sending us some interesting signals about the longer term prospects. the bond markets held in very, very well. i think there's concern about the sustainability of this market. >> the market is so all in on a strong recovery, that it's going to take severely -- it's going to take much weaker data to get them off that pedestal, wouldn't

you agree? >> i would agree. >> we're not going to get that for a while, especially this week. >> we're in a global economy and that data is going to run pretty hat for probably a few months, maybe the end of the year. but we think this is a pretty big shock that we're working our way through, there's a lot of damage to the plumbing of the criticism. ultimately, we see some pullback in growth, but it could be months away from now. >> so is it going to lift all boats when it comes to stocks or you'll want companies with pricing power, right? >> i think you have to be somewhat selective here. we've had about 7% overweight stocks in our stock bond model. but we've focused on domestic small cap here. we love international particularly emerging and we love junk bonds. so we're krauing the credit side of the fixed income market. with the weak dollar here, domestic large cap companies will do particularly well because their ex ports are

flying off the shelves. >> where does the ten-year go from here, julia? >> well, we think it's kind of stuck in a range for a while and we've seen it bouncing between 330 and 360 for some time. again, at the turn of the year, we think see a rally and we can see a break it down. >> so was there a time when you looked around and you heard everyone saying that this market is way ahead of itself and you took that into account? i mean, you've been around long enough to know that that is a very bulis thing, when everybody says this is totally unjustified and that nobody -- you know, a lot of people aren't in so they're talking because they've been stayed bearish for too long and they keep saying, this has got to correct. do you take in -- that's a technical -- >> it absolutely is. >> based on fundamentals, you wouldn't have been in this market. why were you in it?

>> we were in it because we felt the economy was going to turn. the market looks six to nine months in advantage. we felt that the lagged impact distorted at the beginning of '08 was gone to begin the turn the economy -- >> you already had 40%. >> we've got low levels of interest rates, polluted levels of the nine inflation. even though multiples have expanded here, we can see multiples turning up. as we blow away estimates for the third and fourth quarter -- >> i thought we all wanted top line growth. >> those are the people that, you know, apparently you don't use them to stay bulis, you don't even care what anyone else is saying. it helps to listen to other people to know most of them are going to be ng wrote. >> it absolutely helps. certainly we anticipate the fact that there could be 5% to 10% pullbacks here. we saw that in the late august,

early september time frame. we think the cycle is moving in the right direction. economically, fundamentally, we think the technicals are in pretty good shape. we think the market will be at 1,200 in the next 60s months. >> and the pay back, that's even further down -- >> we're looking at core inflation right now at 1 much 35%. i'm concerned looking out 2011, 2012 and beyond. >> you don't need to be an am during. a lot of the pros build the wall of worry. >> and this is a benefit for us right here. guys, we appreciate that. quick break now, your business traveler's forecast when we return. a lot of people travel on friday. i'm busily finding witch socks. i need a life. >> witchy woman. >> witchy woman?

do you know the witch? >> ding-dong the witch is dead. >> a little snow white, wizard of oz, witch's brew. oops, i'm not allowed to say that because that's miles davis. you're my coanchor. do my coanchor. it came out in the 60s, so sue me. i'm not talking about a chicken or anything, plucking a chicken as we head to break. if i had to sit on the bench due to diabetes...

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welcome back. let's get our business traveler's forecast from scott william from the weather channel. >> the weekend is going to be fine across the northeast and warmer temperatures in the big apple, as well. not so much traveling friday in parts of the deep south because we will see the clouds, the showers and some airport delays. case in point, as we zoom in around the charlotte/douglas international airport this morning, low ceilings, scattered showers from time to time. call ahead if you are moving out of that airport.

atlanta, watch out for some foggy conditions, low ceilings and a chance for scattered showers and storms later on this ranch and evening. so the overall friday travel map, fairly quiet in parts of the northeast. a few scattered showers. interior sections of new england. airport delays possible as we move into atlanta, charlotte, nashville, birmingham, alabama. great weather for traveling in chicago. here is a look at that weekend forecast across the northeast. mostly sunny conditions. that cold front will push through, high pressure will build in. looking great for saturday, remaining unsettled here across parts of the deep south. into the lonestar state, looking dry for that big gain that will be taking place as we move into sunday. in dallas texas, the new stadium there, of course, remaining dry across the major cities and parts of the northeast for sunday. back to you. >> scott, thank you very much. it takes a tough man to come up with a tender forecast like that been we appreciate it. >> excellent. >> excellent. >> they baited me. they made me say it.

>> i may talk about that in chairs. >> some people may not know what we're talking about. >> we'll talk about what happened and there but for the grace of god go any of us that ad-lib. >> we're surprised we haven't said anything like that before. >> but then that makes it -- then we're just doing it again. we would probably get away with it bringing up things in the past where dirty words have come out that you didn't mean, but then you're saying the dirty word again. >> no, let's not do that. >> as i understand it, i did that and i did it when i talked about flu shots. >> you were fame yuts when you tried to say -- >> reeses pieces and peanut butter -- reeses peanut better cups and reeses pieces, we were talking about e.t. and -- >> and you did it. >> a local anchor misspoke.

>> and you meant to say plucking a chicken and he didn't. >> ernie, i feel for you. anyway, coming up, this morning's top stories, plus the pictures from the futures pits. >> you did it again.

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. morning. welcome back to "squawk box" here on cnbc. i'm joe kernen along with carl quintanilla and becky quick. it's quadruple witching. there are only three in macbeth, right? we're taking suggestions for witch songs, if you have any. we don't pretend to know everything, all the songs about witches that have ever been written. spooky songs, blair witch video. that was weird, the black and white -- whatever. think about it for us and send it in. let's go to bob iaccino. he's with lotus brokerage.com and it used to be a little more interesting. what did they do, bob, years ago? they made the settlement. they changed the settlement for triple or quadruple witching. sometimes it happens during the week, a lot of the things that used to. on friday. what did they change, when things were settled? >> yeah. and that was due to electronic

trading. we used to have set trading hours, obviously, when there was the pit. but because of the different time frames that electronic trading takes, you can sort of change the timing of the quadruple witching hour. that started to get people anticipate patory you don't -- by the way, witchy woman, can we throw that one in there? >> no! not the eagles, man. >> what? >> i have not heard witchy woman. >> no way. >> get out of my cab. >> get out of my cab. >> not the eagles, man, no! we will not play that. >> it makes today kind of a throw away day, to be honest with you. after a good week, the quadruple witching, not three, but four witches, makes the day sort of a throw away day, to be honest. it doesn't bother me if it goes down. it encourages me if it goes up. 1038 is the number in the s&p where some of the people will

get nervous. quite a ways away from that, i don't think anyone expects to see it. it's not as nerve-racking. >> so you are, at this point, riding the wave. you think this is the momentum tire and you're going along with it? >> i'm going along with it. everything is about time frames. we've talked about this before. i don't disagree with the people that say we might have a rough 200, maybe first, second quarter 2010. but there are some good economic numbers. but there's anecdotal stories, as well. i have a friend in santa cruz. he owns a small manufacturing firm. his name is brian smith. they do custom electronic wiring, the kind of manufacturing that still has to stay here because of some of the custom work and the entrepreneurial spirit of it. 750,000 to a million a year and last year they laid off half hr workforce. they've all been hired back already. >> you're talking about things getting -- there is evidence of things improving a little in the economy. that's when you start getting

nervous. that's why i don't understand all these pros that says, look, things are bad. we could go higher. >> we can go higher. i don't consider myself a pros. you guys know what an idiot i am. but to me, it's a situation where when you start hearing this anecdotal stuff from small and medium size companies -- i was going to say as long as we don't get the government screwing it up, but that's rick's area. when the small to medium sized businesses start to rehire and put out product, i start to get a warm, fazzy feeling about the rest of the year. >> 1058 on the down side? >> 10,000 dow is inevitable at this point. it hats to get there. >> and some of the better looking stocks that aren't just rebounding, some of them are near the high end of recent ranges, some of them..

some of the better stocks that aren't financials where they're just rebounding, some of them are starting to move, too. >> 10,000 is inevitable in the dow. you don't want to be the idiot trading selling at 9,009. 10,000 to me means one point higher than 9,999. it doesn't mean anything to me in terms of what equities are going to do going forward. >> is there only a 1% chance that it goes to 11,000 before a 5% or 10% correction or is it something greater than one? >> no. it's probably two. guys are going to sell at 10,100, 10,200. >> it's not likely we go to 10,000 without pulling back 1% or 2%? >> but we're in that mind-set down here. z i'm saying 10684 today and in the next couple of days. down to 9.

you'll have people scaling into buys. when we get to 968, the retracement of the move, you'll get a flush of buying there again. if we can get below there, now you start to get nervous. that is a long ways away. who owns reese's? that is where i want to be long right now. >> is it hershey's, mars? >> it should be reeses. >> their stock will jump today, mark my word. >> is that a real back drop behind you? >> behind me? >> yeah. >> no. it's fake. it's canvas. do you hear that? >> i thought that was real! >> it's a joke, guys, come on. it's a joke. i do the other joke. >> his is fake. when he's in the control room, he's not. >> the chair is real, the back drop is fake. yeah, the hair is real, the back drop is fake. wireless devicemaker palm is reporting its ninth quarterly

loss after the bell. it does this despite the fact that it launched its new prephone. here to talk more about pupil's forecast, which stopped estimates and much more today is david eler. he is the tech special situation analyst at jrpg. david, last night we did see palm beating the street's expectations, but that stock took a dive in after hours trading. what's the concern? >> people are wondering whether or not the prehas enough legs to launch the company. it hasn't been competitive with the iphone, and nor should it be. but that seemed to be the expectation. kwe talk to people who have hands on on the product day in and day out. when the iphone produce was reduced to $99 for the 3g, that

took a bit of wind out of palm sales. so the information showed the sales of it were slowing down throughout the course of the summer. now they're going back and tapping back into capital markets. at the same time that they're gooi guiding up and not giving very much disclosure about which units are which when they're announcing earnings. so there is a bit of an issue around the offering. there's a bit of a around the dmat demand is. >> what is the chance, has it picked up again once they've cut the prices? >> no, it hasn't. that's a big concern, too. the pixi is a lower price phone.

and the question is whether or not the pixi is added to the top line or whether or not it cannibalizes the top line. >> and i know you have concerns right now about rim's tour out there. some issues with the roller ball there? >> yeah. it's a victim of its own success. the company produced a very nice looking phone with one flaw. apparently they shifted to a new manufacturer for the track ball. and it's -- it doesn't work properly. it's been consistently a problem for the last month or so. >> as a result, do you like apple shares better than the other two as a result? >> really, rimm will fix the problem. the bigger issue is whether or not this deteriorates the relationship with verizon who sells a tremendous amount of rimm phones. apple is definitely the company to be right now because they provide an integrated solution rather than just a phone. they're not going to compete head to head with anybody for quite some time.

so from a stock perspective, there's a lot of opportunities for them in the coming years. >> david, thank you very much for joining us today and we hope to see you soon. >> thanks. >> if you have any comments or can we go questions about anything you see here on squawk, e-mail us squawk@cnbc.com. we're going to take a quick break right now. news making headlines outside the world of business when we come back.

time now for a check on the news outside the world of

business. alex witt joins us with the headlines. >> good morning to you, joe. and a happy friday, everyone. a yale university lab technician has been charged with the murder of annie le. raymond clark was arrested yesterday and appeared in court to face charges and his bond was set at $3 million. months into the neigh's health care debate, we're getting a new look at how voters feel in washington. according to a new poll, president obama has a 55% approval rating. meanwhile, gallup polls show approvals for both parties are at their lowest levels in a decade. and in new york, 271 people turned out to break the guinness record for world's biggest pie fight. participants through 1,500 coconut pies at each other. i guess that's better than boston cream or boysen berry.

>> i think they had to throw for a straight minute, right, alex? >> yeah. can you imagine? 1,500 pies. ow! >> there's some mornings when the three of us could go -- >> what a terrible, terrible waste. do not show that video on squawk on the street. that's a shame that you're wasting those. do not run that on squawk on the street. >> who would be upset about that? >> alex, we're trying to find witch songs. you have a -- are you still in that all girl sexy band? what's the name of that? >> mrs. robinson. >> i rest my case, kukukachu, mrs. robinson. do you have any witchy songs snm. >> no. you know what my favorite witchy song is? witchy woman. >> no! no! no eagles! >> what is wrong with you? what do you mean no eagles? oh, my god, the best, the best.

>> no eagles, man. >> southern california girls, the eagles rock. they're the best. >> no. i have to leave this camp. >> i have to leave this conversation if you're not considering the eagles. >> no, no. >> it doesn't work for me. >> the eagles to you are like the animal osrchestra to me. >> maybe you could combine the two. >> i do not like a few of them. >> which one do you not like? we'll combined that and manage to annoy you both. >> when we come back this morning, becky is back from california so we are celebrating her return, our reunion by going back to the chairs. if history is any indication, yeah. yep. there's no telling what will -- wow, i was fat there. >> when we leave the set. the stories that have us talking after a break. then we'll go to the squawk board room. look who is sitting at the table today. famed corporate leader, business legend larry bossidy is our guest host.

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in are repressive society, should we be embarrassed. in spain, a big billboard, a

woman's breast, beaches, everybody naked. if you're in conversation with ceos off camera or government, that word might come out three, four times every minute, the f word. >> not something you strive for. >> you can bring a loaded gun to a town meeting but if you use the f word on tv -- i don't know. here is what happened. we're not taking any satisfaction in this, although it was kind of funny. when you're doing everything live, ad-libbing, hope fully it's on cable if you do do it. and yesterday -- >> yes i do do. >> it was a local anchor in new york. he was talking to the weatherman about it takes a tender weather man to make a tough forecaster,

taking off the old frank purdue ads we all loved. then he said something about keep plucking that chicken. here is the picture the "new york post" has. it's his co-anchor's expression that i liked about this. it happened -- he smiled. he said it. you know you're on a two-shot, but sometimes you just can't control your normal human reaction. like oh, my word. anyway, ernie apologized. i hope they accept that. we had her on with that jo scarborough. she thought they were recording prom os. it's a word. you have used it.

>> never. we feel bad. >> there's a lot more to live tv. >> there is. >> it's page three. it's in the daily news. i know it's a local story but it's bigger -- >> you can find it on youtube. >> we laughed. we hope we don't do that ourselves. >> we do. >> for the first time in two years, household wealth in america is advancing, 3.9%. the biggest reason for this are the gains in the stock market. we know we're still off the highs in the original fall from grace. the major stock index, 50% off march lows. that is definitely helping americans out. home prices are starting to rise since 2006. americans have been saving more money, paying down debt. it all adds up to better household wealth. >> a week ago, going down another 13% on house prices. are they already starting to rise? >> another 25%.

>> california and other places have seen increases. the ones that were hit hardest and hit first have seen some increases. >> good. government debt -- >> 28%. government taking on debt and households not as much. >> one thing they are spending money on, fast-food. when you go to fast-food, you know, if you're going to splurge, you're going to splurge on something not that expensive. so mcdonald's, which already rolled out angus burger rolled out angus third pounder deluxe. more advanced, more fancy. wendy's has something called bacon deluxe. >> that's not fast-food, it's wendy's. >> that's their tag line. >> up scale casual? jack in the box, mini sirloin burgers. they have done these studies. the word angus and sirloin makes a difference.

it's a way to get pricing power without raising prices in the store. >> when you go, you get it pretty fast, pretty quickly. >> they say it's not fast-food. >> i didn't realize how vulnerable you were to -- >> the symbol. >> only the media. anyway, coming up, we'll have more of this morning's top stories. plus the man who wrote the book on corporate leadership, literally, former honeywell chairman larry bossidy is our guest host. we'll talk economy and more. "squawk box" will be right back. >> your. you're watching "squawk box" on cnbc, first in business worldwide. ♪ look at this man ♪ so blessed with inspiration ♪ ♪ 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.

click today. stocks snap a winning streak, investors taking a light breather after the market's impressive rally. two veterans weigh in on whether or not this run-up will run out of steam. >> three years after buying the new york observer, a new paper focusing on commercial real estate. the commercial observer launching this week. we get the outlook for the commercial real estate scene. >> are you ready for some football. america's team ready to kick off a new season in front of 100,000 screaming fans. some are calling interference. we speak to cowboys owner jerry jones as the second hour of "squawk" begins right now. >> i've tasted greatness, and i'm hungry for it again.

>> good friday morning. welcome back to squawk on cnbc. i'm carl quintanilla along with joe kernen and becky quick. guest host larry bossidy, cnbc contributor. a lot to talk with larry about. a check on the market. futures have been relatively positive, although asia did take a breather along with dow's respite yesterday. we were down just a tad on the u.s. markets but gaining a little steam, 25 points above fail value. oil coming down a little bit below 72, dollar has strengthened, 71.70 last check. ten-year note flirting around the three four level. dollar have a decent number off the lows. gold is still trying to kiss that record of 1033. hasn't gotten there yet this morning, 1015.20. becky standing by with headlines.

>> thank you, carl. let's get tower top stories this morning. the federal housing administration cash reserves are said to fall below congressman dated 2% minimum. today fha will announce measures to help the rebound. he says the agency is trying to figure out how to avoid asking congress for emergency aid or charging borrowers more for taking out fha insured loans. the s.e.c. voting unanimously to impose a ban on flash trading. this is orders they send to a select grooch traders. fractions of a second before publicly. they have criticized for unfair advantage to those with lightning fast computer trading software. texas instruments raising dividend. they will pay december 16th. shareholders on record as of october 30th. joe, this is what a real control room looks like. it's not a green screen back here. this is for real. >> go over and touch. >> see.

it's real. real control room. >> i thought they should talk back to me with my green screen in the control room standing right where you are, which would be impossible. >> i know it's a hike but it's a real thing. >> why would i go? i'm fine. this is good. >> that's where the news happens. >> yeah. the news needs to be delivered with all that. it's much more credible. much more credible. we're speaking with guest host former honeywell chairman and ceo larry bossidy, a cnbc contributor as well. larry, i've got a great question to ask you. i'm trying to distill it down what everybody wants to know. this time around, we're bouncing in a year. we know that the market is better, the economy looks better. is it going to be a typical recovery or do we have more of the piper to pay? that's what people have to say? >> i think we'll have an unusual recovery. deep recessions the likes of which we've been through, we generally see a robust recovery.

we're going to be misled, see a surge in gdp beyond 4% as inventories get replenished from record lows and stimulus programs, including cash for clunkers and the real estate credit are finally suspended. so the fourth quarter i think less robust in terms of gdp growth so to speak. and next year 3 to 4 gdp. until employment starts, i don't see a robust recovery. >> that's not too bad. that's like boom time. >> in terms of recovery of recession, it's anemic. >> deep recession, rule of thumb, like a spring-loaded recovery. >> yes. >> should be strong. this time it's going to be a surprise it's not as strong because we have structural problems. >> yes. >> you're a little pessimistic. >> i'm not pessimistic. i think we've come through a relatively difficult time in

relatively good shape. i sometimes wonder why they are taking potshots at paulson. i think he's been an arrow here. he has done some things in realtime that other people would have taken months to do. >> do you think it was because he's lucky or smart? >> i think a combination. i think he had some experience and a sense of what's going on in terms of severity and i think he did some heroic stuff. >> other recovers, people in india and china were out walking behind oxes farming. why can't you view it this recovery we've got a couple of turbo charged extra pistons in the global economy and it will be better. >> i'll tell you what. even though we're going to be helped by recovers in europe and asia, which you have read about every day as well, the thing that concerns me is we continue to lose manufacturing jobs. those jobs are not going to come back in the main. so what are we going to do about unemployment in the country. having been through the recession we just experienced,

businesses are going to hire people very carefully. until there's consumer confidence there's going to be job growth, i think it's a conservative path. i think all this discussion in health care scares people to death in terms of what it might mean to them, what it might cost, adding to an enormous federal deficit. there's too many concerns out there to stimulate a robust recovery. >> some of them we're doing to ourselves, the government. >> yes, we are. i think -- i don't know where health care goes. the legislation just is starting now. i mean, we've got four or five proposals. none of them are going to be enacted in their current state. what will happen is unknown in my mind, but i think it concerns people. a whole different number of perspectives. >> deficits, cap and trade. >> and me, am i going -- even though the president says i won't have to change my policy, not me but people in general, people are concerned they may have to.

>> among other things. >> so you think that will constrict their willingness to spend? >> i do. i think the consumer is in a conservative mode. they are still deleveraging. savings rates will continue to be at high levels as they are now. i don't think you'll see the consumer bounce back at least to any significant amount in 2010. >> look at what consumer credit that done so far in the past nine months. >> yeah. >> the big -- people who worry on a global level say all the trade surplus countries, right, the low saving countries depended on our consumption, seeing its financing interrupted, that's going to be problem attic. >> it is going to be problematic. another thing on this consumer thing. you see in terms of regulation, proposed regulation, they are going to put more safeguards on consumer lending. basically that's going to restrict credit. >> it's already very tight right now. >> an unintended consequence.

we've put measures in to clean up some of the practices that existed there. that's at least enough. >> how about restricting banker's pay. >> outrageous. on the one hand you're disenfranchising boards of directors, supposed to have compensation committees to take care of this. on the other hand they are going to look at policies. i've looked at a lot of compensation policies and believe me, these guys will never figure out what happened. >> they will find another way. >> absolutely. they are three steps ahead of these guys anyway. >> how can you get boards to be more responsible? >> i would think -- i would like to think in light of what's occurred in the last year and a half that they will be more responsible. they have witnessed what was clearly excessive. i'd like to think they are going to do their jobs a little more responsibly in terms of putting a governor on this at least to a rational extent. not depriving these people of

imagination and entrepreneurial spirit but nonetheless putting caps in place where it's appropriate. citigroup has decided it's going to be paying out a lot more in stock than cash on these issues, but citigroup is also listening to a lot of what the government is saying. do you think plans like that are good ones? >> you know, stocks, options, they all change over time, depending on the moment. now the deal is you give people restricted stocks. when i came through, for example, if we had restricted stock, we thought we died and wen to heaven. there was no downside. instead of stock options, your stock had to appreciate to make money. that will pass in time, too. but i do think it's more tolerable in this environment to give people stock and that's what they are doing. i was interested to hear them say $100 million would be dpef from one of their traders. somebody wrote the contract at citi and signed it. not necessarily mr. pandit but

somebody d it's a moving target. i think it will be restrained in light of what we've been through. >> more later on our guest host larry bossidy. are you legendary. >> i'm old. that makes a difference. >> that's part of being a legend. >> so i fulfill one mandate. >> got any comments or questions about any of that, give us a shout. our address is squawk@cnbc.com. up next, dare we say it, dow 10,000. talk about whether the market has enough steam to pass that milestone a couple hundred points away. later on america seen ready to open the new stadium against nfc rival giants, dallas cowboys we're talking about. inside look at new era of sports stadiums with jerry jones, cowboys manager and owner. stick with "squawk box" on cnbc, we're first in business worldwide. time now for today's aflac

trivia question. what movie star danced mary jane's last dance with tom petty? the answer when cnbc "squawk box" continues. ldn't have gotten by without aflac! is that different from health insurance? well yeah... ...aflac pays you cash to help with the bills that health insurance doesn't cover. really? well, if you're hurt and can't work, who's going to help pay for gas? ..the mortgage, all kinds of expenses? aflacc it's the protection you need to stay ahead of the game... exactly! aflac. we've got you under our wing. aflac, aflac, aflac... aflac, aflac, aflac

now the answer to today's aflac trivia question. what movie star danced "mary

jane's last dance" with tom petty? the answer, kim bassinger. >> hurry up. >> according to aleck baldwin, kim ranks up there on a quadruple witching day. i would hesitate to say. that was not donovan. that was i think al cooper. quadruple witching friday, if you haven't figured that out. stocks, index, futures and options that could add to volatility in today's trading. it hasn't always been the case during recent quadruple witching days they tried to moderate the volatility they used to be 20 years ago on triple witching you'd just sit there and wait and play with these out of the money options. things that happened in the last

hour, they would be eight, move it to three. >> like being in one of those booths with the dollars flying around. >> almost red and black at the roulette wheel. you could make a bet one way or another. you could see incredible -- >> you are a closet options expert. >> in my own account, i generated $100,000 in commissions one year. in my own account, as options. now it's 50% discount. that was working with $10,000. whoa! >> what are you doing here? >> because it was $10,000 i generated commissions, but it was all. you will invest all your money in options eventually unless you sell them. if you buy options, you'll make a small fortune from a large

fortune. >> talk about that and a lot more on the market. from wells capital management, paulson, holland & company. >> one of the things things you mentioned was the outright fear surrounding invitesment in this country. are we now where you think we should be? >> well, i think where we should be is we're continuing to recover. i think we're going to continue to do that, carl. the worst thing, one thing that's gotten worse is people now feel more bullish. i think that that starts to increase the odds that you do have a correction at some point. i don't know when that will come exactly. i still think it could come now, a few months from now at higher

levels. i think it's going to be a relatively small correction in relation to how much further this market could still go up. we're maybe, what, one month beyond the bottom of a recession. it's not very high odds that a market recovery and economic recovery would end that soon. so i think we're really early in this yet and there's pretty substantial upside left, but it's not doing to come in a straight line. >> mike, a lot of those very frustrated bears in recent weeks are pointing to things like online volume, up day trading back 401(k) activity up, mom and pop back, insiders selling rising, insider buying zero. why should we not feel like the top is closer rather than far away. >> all those things are factual, carl, but the problem with peoples being bearish, every recovery -- every correction has been very muted. it's like larry bossidy talking about the economic recovery,

that's muted. if each of these corrections is muted, you don't get satisfaction on the downside. nobody gets scared. it just continues to move its way up. less than 3% to get to 10,000. those are headlines some people will be sucked in as well. >> larry bossidy, one question that disturbs me is this loss of manufacturing jobs in this country, a lot of which will not return. what kind of impedence will that have on recovery as it becomes more evident in the news for 2010. >> before i answer the question, you're such a breath of fresh air from what we hear in washington. thank you for what you're saying and doing. you know better than any of us here, we are in a service economy. i just got back from china, they have taken over a lot of the stuff that you in your business career used to do. i think we made this transition. i don't think it's necessarily something that's a bad thing, it

just is. i think our recovery is going to be muted. china is chock a block with activity. their recovery is going to be better than hours. >> mike, have you been in a camp you say more people will get sucked in, as in suckers, or have you been in the camp this is -- >> sweet nectar. >> have you been fighting this for 2500 points. >> i sat there with you back in march and april and we talked about the fact the economy and washington were so silly. yet as we looked at the 1970s, we could have a stock market do in a direction that would be anathema to bearish people. we've moved to huge amounts since march, april, to get crazy here to the upside. >> it was in july when the initial move had been made and people said that's all the bounce we'll get. that's when it was tough to be bullish and a lot of pros got bearish and stayed bearish, which was a bullish sign. >> people who called not the

bottom but were optimistic back in march and april -- >> they turned in july. >> they turned. i'm not going to ignore those people. to take a little off the table, why not in that's crazy. >> paul is saying how much of what you do is based on deciding fundamentals in the economy are good or everybody else thinks things are bad? >> i think it's mainly fundamentals, joe. i just think -- i think the sentiment affects maybe short-term selloffs and corrections but not really the major direction we're going to go over the next few years. >> you're an optimist. >> we're pushing hard. >> you're an optimist. >> it was backed up -- i was reading some of your stuff. you worry about the consumer going bought holiday season. the differential between consumption growth and the number of jobs we've lost, consumers are spending more stubbornly than you would expect, right? >> i just find it interesting,

carl, everyone has passed judgment on the consumer. it's a new era, they are never going to get back, definitely downshifted. they are basing it on, look, they are saving more right now, taking less debt right now. i'm thinking, well, why wouldn't they. we're losing 250,000 jobs a month right now. real income has been poor. you would expect that there wouldn't be much robust news on consumer spending. let's give a couple quarters of positive growth. let's return to job creation, then let's look at the consumer and pass some judgment on what we're dealing with. i think what we're going to find, after -- let's say we grow 4% the rest of this year, by the end of the year job creation starts again. i think in the first or second quarter next year, we're going to find out that old spending culture of the consumer isn't quite as dead as we thought. right through this recession even job creation off 4.5 to 5%. yet real consumption in the last year is just down slightly. that's a much greater

differential than typically the differences between consumption growth and jobs. it's generally about two percentage points above job growth, it's now about five. >> it's never that different as people say it's different. you always bring that to us. really, the consumer is never coming back. right? >> i think they will be better than we think. if you give them a good price, if you give them cash for clunkers price, if you discount foreclosed home prices, look, they step up in droves. >> tell you about the mall, short hills, must havey. must havey -- >> those diamonds, they look great on you. that's what they were saying. i've got to tell you, the people in shanghai were at all the malls as well. >> you really believe the china story. >> it's not about belief, it's observation. unlike a lot of people i've never spent a lot of time paying attention to government numbers. but going over there over the years, to get a sense of when things are good and when they

are bad. let me report, one thing i picked up this day, they believe telling what they see six to twelve months out. they say inflation 4 to 5%. they also see continued growth. the 4 to 5% inflation number surprised me. before i leave, the witches song by mary ann fate in 1990. never heard of it, it's from google. >> bart simpson singing witch craft, old blue eye's witch craft. bart's rendition. good to see you. >> happy friday. >> when you started to say that, i thought you were going to say something else. >> i was careful.

>> the new jewel of texaco's with controversy. a four-sided giant video board 90 feet above the field. some around the league are calling it interference. what does jerry jones think? we'll ask him in a bit. "squawk box" will be right back. your you're watching "squawk box" on cnbc, first in business worldwide.

welcome back to "squawk box." the average 30-year fixed mortgage rate has fallen to 5.38 from 5.4%. lenders are commanding higher rates on loans that don't have government backing averaging 6.6%, rates on large jumbos back to those seen. >> everything bigger in texas and the new cowboys stadium is no exception. darren is there. he joins us next. >> we'll go behind the sends of this $1.2 stadium including largest hd video board with dallas cowboys owner jerry jones. "squawk box" live from the new cowboys stadium will be right back. we are first in business worldwide.

welcome back to "squawk," a check on the market. futures looking relatively positive as we try to close out this week on a winning note.

we've added 500 points so far this week. the world's health organization says production of h1n1 flu vaccine will be less than previously forecast. based on reports from 25 drugmakers, the organization says production levels are well below 4.9 billion doses it thought would be produced and will be inadequate. microsoft suing alleged malvertisers, a word that fool users into downloading malware. warn users about security problems and try to get them to install rogue security software. fha officials say agency cash levels will drop below federally mandated minimums because of the impact of the mortgage crisis. they will announce new measures to try to boost those reserve levels. beck, back to you. >> carl, thank you very much. let's get a check on the markets. i've been watching futures, it's

quadruple witching friday. standing by with the cme group watching everything happening, ben, what do you think on a quadruple witching day. what's it really mean down there? >> normally we see heightened volatility. i think that's going to be somewhat neutralized today with the jewish holiday. i think that's going to slowly settle in this afternoon. i think we'll see a little less participation in this comparation than we would normally. i think some of it has been played out. the market seems to be extraordinarily soft. at least that's the way it acted. we are slightly higher on overnight session highs basically but, you know, the market again has been in this extreme phase of vertical development for a while right now. it's got a lot of traders sidelined as far as what i've been seeing. it's difficult to measure risk-reward. the risk easy to measure, reward upside is did. it's difficult to measure levels.

based on it, you have to look back a year ago to see some of these levels. again, we continue to see the dow, the nasdaq posting yearly highs. as i said, the market is in vertical development continues to be at least until we reach the stopping point and develop horizontally. was yesterday the stopping point? i think that's anyone's guess. people have been looking for that stopping point for a while root now. anyone who has been gambling and betting on it that we've seen it have been wrong. until we establish on the way up, we're having a little bit of a problem, it's going to be difficult to make that guess at this point. >> you sound pretty skeptical about this but i'm just trying to make sure i understand correctly. >> i have been for a little while. i don't think -- i think that this week i've slowly started to come around a bit. some fundamentals are starting to add up. one of the things i'm concerned about for the most part during the rally volume hasn't been

there. market sbernls haven't been there. again, really favorable comments, bernanke speaking this week saying basically the recession is probably over. >> right. >> unfortunately unemployment is still a major concern of mine. it was all the way on the way down and has been on the way up. again, i think one of your -- steve liesman came out this week saying he didn't think we'd see 10% employment. that helps as well. do you get a sense people are throwing in the towel and chasing after. >> i think there's less participation by the sellers helping the market, leaving this open door policy for the market to follow the path of least resistance, which was something i was arguing about with joe months ago, whether the path of least resistance was up or down. obviously up, joe was right. again, i feel like it's less participation on behalf of the seller rather than high energy participation on behalf of the buyer at this point. >> all right. ben, thank you very much. have a great weekend and keep us

informed today. >> thank you. >> okay. thank you. >> my turn. all right. he's the man launching a commercial real estate newspa r newspaper. but launching a newspaper at the same time concerns are escalating about a collapse. jared kushner, owner of the group. commercial observer went on sale this week and covers new york city real estate market. mr. contrarian, real estate and newspaper rolled into one, why? >> it's a good time to try and innovate. we've looked at a lot of things. my main business is real estate and i own a newspaper and other sites and online media businesses. at the end of the day we're looking at different niches where we can try to create good markets. i think now in the real estate market especially there's such a need and demand for information. it's not so easy to lease space

anymore. people, the information about different competitors, brokers, buildings, it's very helpful. we can create a niche targeted product that will help people get their message across and find out what's doing on. >> i'm not going to be a person who will find this on -- you can't get it on a news stand. i probably wouldn't be interested in it. what? >> you might be. >> no. it's for people in the business. >> but we have so many -- >> $240 a year and it's for people -- >> might be helpful if we have commercial real estate. >> not your normal newspaper out on the stands. this is an industry newsletter for people involved in the business, right? >> it's more of a weekly paper. there are a bunch of products that cater just to the real estate industry in new york. what we're doing is putting forth a weekly product that is targeted all of the 2000 commercial are getting it, builders, people outside they

are paying for it. >> $240 a year. is there an initial number that you will -- is it 10,000? >> we have 8,000 we send it to. >> this is not your typical news story in that you can make a profit on this because you know how many people are going to buy it and you know what it costs you to print it. so do you know this is going to be in the black. >> we already are. we've exceeded expect achlgs the real thought process is have you a lot of advertisers that want to let people know about deals they are doing and spaces available. they only want to reach 8,000 people but they have to pay a rate per page that they reach 60,000 or 100,000. >> it's like launching a newspaper, not really -- it would be better -- can we talk about the observer. >> sure. >> there keeps being scuttlebutt -- it's a great thing to have, great thing to launch ore you're in your 20s and you're like a mogul with a

newspaper. but it's still not making money, it will never make money, do you care whether it makes money. rupert doesn't care in the "new york post." >> i do. with the observer, a great base. business has been better and better. people asking me how are you doing with the recession, the way the place was run for so many years, it was run like it's been a recession for the last 21. we're used to what's going on. we've done a lot of things. we've found new avenues, bought different businesses, bought bsi from isc, short list, daily e-blast, a great business. it's been profitable for us acht new jersey website we bought two years ago making a nice profit and commercial observer, parenting magazine. we've got a lot of answer later businesses making good money for us. in media, good thing about observer we're not printing 500,000, we're printing 70,000, we've got a 60,000 circulation.

at the end of the day we speak to the most important influential people in new york, most important influential people in the world essentially. it's a targeted product and doesn't make a lot to make it work. we've been very lucky. >> why not online? at your age and your grasp of the media, why isn't some of this stuff online. >> we do a lot online. our new jersey website is an online business. we do a lot of stuff in eblast. >> our website revenue is growing exponentially, investing resources and making that work. a lot of advertisers and consumers are analog. at the end of the day if you can provide a place for them to kind of communicate with each other, you can still find a way to make that profitable. >> i personally love newspapers, grew up on newspapers, always want to read a newspaper. do you think the hard copy newspaper business has a future let's say 10, 15, 20 years down the road. >> if you would have asked me a few years ago, i would have said

yes. at the end of the day, what we're seeing now, this whole recession we've been through, it's accelerated things dramatically. you speak with people at all these different companies coming out with new age technologies to create new platforms on which come communicate. i've seen a few of them and it's very impressive what they are doing. i think once again, i think necessity is the mother of all innovation and it's forcing people to think about the world in a much different way. >> they say that the previous publisher, owners of the observer had run it right, there wouldn't be a need for a gawker. have you been shopping it around? if the right deal came along -- >> the difference between our publication and other places that speculate we call for sources and facts. i think we haven't -- >> a lot of work. >> i'm sorry what's a lot of work. >> calling for -- >> you guys are journalists, you know what it's like. but at the end of the day, it's

something that i've been very happy with. you know, it's obviously been a challenging business climb but i'm incredibly proud of my team and what we've accomplished, to take this product from where it was when i bought it and where it is today, to have a whole enterprise that would probably break even to profitable next year i think is a pretty incredible thing. >> i think the problem, media the way it's going you feed journalists, who you call for sources and confirm facts go to the aggregators. they go to the aggregators and they are like parasites. not to speak ill of the huff post. they are not investing in journalism. >> they are smart. at the end of the day if other people are providing journalism why should they. you go to huffington post, i see that as the modern day example of the "new york times" except they have a broader range of journalists to call on. >> "the huffington post" is -- the drudge report, maybe "the

wall street journal." let's talk about -- >> it's just in the sense the news for you. >> all right. you've got another business you kind of have to focus on. how many thousand units, apartment units? >> we've downsized. we own probably 25, 30,000 at the peak. we sold in 2007, about 19,000 units to aig. >> right. that was pretty close to the p top. commercial real estate, the next shoe to drop everyone says? >> i think it's already dropped. i mean -- >> not from the banks. no cpbs, nowhere to refinance these mortgages right now. that's coming. >> that's a big problem. i think there's obviously a lot of distress that's out there. i think there's more distress to come. right now it's funny, the brokers used to be the people who were the most people people in your world because you knew what you can get, the deals, how you're going to buy. these days people are spend ag

lot more time with banks because they are the owners of a lot of assets. they are going to take back. they are very important to working with borrowers in a lot of cases to do what's rational to help maximize their recovery and hope fully work with the borrowers to help out with properties they own. >> will there be -- you said newspapers hit a bottom and there's going to be newspapers in five or ten years. is that still what you think? >> i think there will always be -- >> good there's quality. >> the demand for information is stronger than it's ever been, a question of what the channel looks like prfr i hate it. >> i like to see the layout, where you put the story. >> i don't want a kendall. >> it's been retranslated. >> you still need the journalist to have the content. >> absolutely. >> thank you. >> thank you guys. >> thanks for coming in. great to see you. >> come back, comments or questions, drop us a note.

our address is squawk@cnbc.com. when we return, america's team getting ready to open the stadium sunday night against nfc rival new york giants. a look inside of the sports stadium with dallas cowboys and jerry jones when we continue. >> your. you're watching "squawk box" on cnbc, first in business worldwide.

they say everything is bigger in texas, cowboy stadium is no exception. in dallas this morning with a special guest, darren. >> thanks, becky. america's most popular and valuable sports team is now in america's most expensive football stadium, opening in a $1.2 billion cowboys stadium on sunday night football against the giants. joining us right now is jerry jones the owner of the dallas cowboys. thanks so much for being on "squawk box" this morning. first question, how does it feel? this has obviously been a long process for you. you've seen the blueprints a million times. how does it look to be real?

>> i think the blueprints have ever given me a sense. when you look at this digital board behind me, 600 tons and 3 million square feet. as we've evolved i've got an better sense of the size and scope. i've had super bowl week, three of them, but never will i get to be a part of an opening of a stadium. this is on par with that. i'm excited. i can't sleep. i was up three hours ago to come visit with you. >> let's talk about the score board a little bit. obviously the controversy, former titans hit it. it's above 85 feet, which is above what the nfl regulation was, 90 feet. they said for this year it will not be changed. are you confident that won't be moved for the rest of time? >> i like what we've done. we have our rules in place if it is hit, they be we know what will happen in the competition in the game.

i think it's going to be fine. because if you're in a competitive situation where you're not just trying to see how high -- it's kind of like the home run derby, they hit those home runs right and left. you say why don't they do that in the games. they would strike out in every game if they did that. if you punt directionally, which most do in these circumstances, punt for distance, i think we'll be fine. the rule is in place. the league did right by putting the rule in place. >> let's talk about naming rights. at&t, you're unveiling that, that was once a rumored partner. the naming rights for this were said to be worth $300 to $400 million. do you still think you can get that type of money and how long are you willing to wait? >> the word is -- our concept is sensitive to the times we're in. these aren't exactly naming right times. from the standpoint of the long-term association, for instance, at&t is the kind of

partner you want to be with. this is the tradition of the country, if you will. that's what we're about as far as the brand of the dallas cowboys. yes, i feel like as we move along, the economy moves along, we're going to easily be one of the most visible buildings there is in this country. and if so, i think that will come. >> you said sensitive to the times. sensitive to the times you have up to 35,000 standing room seats called party passes. $29 each. at the same time people who bought personal seat licenses for $89 say where does this come from. how do you win? >> i think this. first of all, the seat license let's that individual sell that seat to anybody he wants to for the next 30 years. our party pass, the standing room only, does not have that option. but it allows us to go to a price point for nfl fans that

heretofore hasn't been available in the nfl. the economics of stadiums prevent that. when i designed this stadium, i wanted this area. probably spent about $150 million of the billion two to have these decks and patios so that our fans could create a collegiate atmosphere, move around, move up and down. i think it's going to be exciting for our fans that are in the seats or in the suites. shoot, i may not like there to go there as often as i used to but i like to know everybody else is down there having a good time. i think it's going to be fun. it really addresses, i think, the economics and future of fans coming to the nfl. >> final question. you're america's team. that is a right? how long does it have to be for you to win the next super bowl? do you have to win that next super bowl in order to stay america's team? >> the first part first. there's no right here. if i had the right, if i knew it was going to always be there, i

might have second guessed spend a billion dollars. we wanted to do something that was wow, something that perception meant that just staying at home isn't enough. you can come and have a great experience. but let me say this. yes, we've got to not only get it done but we have to have the appearance that we're trying to get it done. when you make this kind of investment, lay it on the line, i'm saying to our players, now, i've emptied my bucket, you empty yours, go get it. i think it is inspirational. i think our fabs get it. i had tex schramm tell me, jerry, this is a heck of a business if you didn't have to play the football games. have you to. you have to make it happen. i know that as much as anybody in sports. yeah, we've got to win. >> one more time say i am american business, i am cnbc. >> i am american business, and that's the way we're going to dig our way out of the times

we're in. i do love cnbc and watch it all the time. >> thanks so much for joining us this morning. hope fully you'll go to two and 0 against the giants. that's sunday night football. football in america kicks off at 7:00 p.m. eastern time on nbc. becky, back to you. >> thank you very much. jerry, thank you. got a list of everybody cheering around the table. >> what about the cheerleaders say i am cnbc -- i am american business, i watch -- >> maybe that's something they can check out later. coming up, your list of stocks to watch. as we head to a break, let's look at the most widely held stocks and yesterday's performance for those stocks. stay right here. "squawk box" on cnbc will be right back. we are first in business worldwide.

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when we come back, gold, oil, we'll watch after the break. is the nation out of the recession or a chance of a double dip. big question for morgan stanley

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>> i'll get you, you little pretty, and your little dog, too. >> gold over 1,000, crude hanging around $70 a barrel and the dow on a bull run. chief commodity and dennis garthman of the guardman letter an playing these trends. keeping the economic recovery on track. morgan stanley chief u.s. economist dick berner gives us his forecast without a double dip on the horizon. and a small pharmaceuticalmaker gets fat over a new trial for a diet drug. >> don't you have any respect for yourself? >> it's absolutely gross. that boy is a p-i-g pig. >> "squawk box" begins right now.

♪ because it's witch craft wicked witchcraft ♪ there we go. a lot of requests there, welcome back to "squawk box," cnbc, first in business worldwide. what a virus. i'm joe kernen along with becky quick and carl quintanilla. our guest host, frank boefd, contributor and former chairman and ceo of honeywell. was she not the great witch? she was so scary. >> and her minions, they were scary, too. >> up 27 points, that much upward pressure above fair value. we'll see what happens. a lot of times, you know, on a witching friday, you don't know what is going to finally happen. that's why you've got to stay tuned until 4:00. carl. >> that's it?

that's the toss. >> let me give it what it deserves. >> try that again. >> let me go back. carl quintanilla is now in the control room with the biggest headlines of this quadruple witching friday. carl. >> thank you very much, joe. absolutely. the nation's biggest banks the face some curves and be forced to answer the fed. the proposal in the works would allow feds to reject any compensation policy if it encourages bank employees to take too much risk. the fed would review and amend salary and bonuses but not compensation levels for individuals. voting a ban on flash trading, those they send to a group of traders, actions seconds before revealing them publicly. the s.e.c. proposal will now put out the public comment. the commission will schedule a meeting and decide whether to adopt that proposal. bankrate.com reports average 30 year fixed down to 5.38 and 5.4

last week. lenders still commanding higher rates on loans that lack government backing, levels last seen in early august. joseph back to you from here in the control room. wait a minute. how is this possible? are you in the control room? are you here? somewhere here? >> that is weird, carl. you didn't see me sneak up on you, did you? >> no. >> this is amazing what we were able to do. >> left me out back out on the set by myself. >> becky? >> yes. >> tell us about gold? >> all right. let me tell you guys a little about gold. joe, you've got to come back to work. enough playing around. >> darren. this is crane. >> where is the point we're having too much fun. >> it's triple witching -- quadruple witching. >> well done, gentlemen. let's focus on business.

despite a pullback on the markets, commodities have been on a role. crude oil, natural gas all higher, can this rally last. joining us jim steel, chief commodities analyst, jim garthman. we've been watching commodity prices. some showing surprise as we see a weak economy yet commodities powering higher. what's the reason? >> i think the reason for the rally specifically is the weakness in the dollar. that i think more than anything else has pressed gold in particular higher. platinum and palladium have gotten a good boost in the recovery from auto demand and that's likely to continue. >> you think the weakness in the dollar trend will hold out over time because of concerns about what the government is spending? >> i think the auto recovery will continue and continue to boost the pgms. the gold rally i do think will continue at least in the short-term. as we get up to new highs, maybe over 1030 to 1050 level and

anything further, it's going to be increasingly difficult for gold to hold itself up there. at least in the near term, the bullion market certainly looks firm. >> dennis, in trading these markets, it's incredibly difficult. at this point, the short trades on people betting against some of these issues has really gotten crowded? >> becky, unbelievable. double probation, quadruple witching day. yes, very crowded out there. everybody you know is short the u.s. dollar. it's astonishing. i don't know anybody who isn't. that is clearly what has been driving the gold market higher. it's been what's driving crude oil market higher. it was what was driving copper higher. i'm very fearful of the fact perhaps you're going to get a correction in the dollar. you could actually see strengthening that wouldn't be fundamentally warranted but technically warranted, psychologically warranted and that may be some pressure on the gold market. so those of you alone with gold, be careful if the dollar starts

to get stronger, you'll find difficulty owning gold in other currencies might be the way to go. >> dennis, larry bossidy, nice to see you. >> i look forward to you being on the show. you're one of the best out there. >> thank you. let's assume the economy does, in fact, pick up momentum as 2010 unwraps and we get demand for some commodities where the demand is low and the dollar begins to strengthen, are we going to see commodities high as far as the eye can see in that kind of scenario? >> people ask me, are we going to see inflation or deflation, i say both. inflation in commodity prices. demand offshore from china obviously, from india obviously is going to continue. there will be deflationary precious on wages around the world from india and china in the world markets. yes, i think you're going to see commodity prices generally on balance higher six months from now, higher a year from now than you'll see them now. >> larry, you agree with that? >> i do. i think that's doing to happen.

these things are always subject to change in unforeseen circumstances. if you see the world as it appears today, i think we'll have high commodity prices for a long time. i think it's clear that the world is coming out of this protracted recession. i think it's abundantly clear we may be slower than everybody else and may well be a jobless recovery. we are coming out of this recovery. you can see that evidence in the fact that the industrial precious metal, silver, platinum, palladium as jim steel is talking about, doing better than gold. that's evidence of that kind of economic growth. >> you know, jim, we've been looking at this as oil prices when they were at $140 a barrel. we thought it was a one off, because it came back so quickly. if you listen to what dennis and larry are saying about this, that is really a situation we could be headed back toward? >> well, i don't have oil too much anymore. i stick mostly to the precious metals now. certainly we are seeing more industrial demand coming in at least for the pgms and also to a

lesser degree for the silver. what you've got to watch out for in the gold, each individual commodity still has its separate supply a&e demand fundamentals. what concerns me a little about the precious metals rally as we go forward, if, in fact, we continue to get increases in the scrap supply, recycled scraps still comes onto the market particularly at higher prices. and also weakness in jewelry demand. these markets are still self-balancing and there is still a mechanism within them that will eventually restrain the rally. in the near term i don't see that materializing. >> you guys are talking about two different things. jim points out he thinks what's really happening lately has been the weakness of the dollar. dennis, has there been an issue this could turn as quickly as it began if the dollar strengthened. people look around the globe and there's not anywhere else people are doing better. >> yes. the answer to that is absolutely. it's one of the reasons why i don't own gold in dollar terms. i own gold in terms of sterling.

i own gold in terms. euro. i'm fearful the dollar could get a good deal stronger. the hard trait is to be long on the dollar. if we start to see economic strength in the united states and we are. i think we're starting to see clear signs, even housing starts are starting for the better, long overdue. if we start seeing that happening, you see the dollar strengthening as money comes back. for right now you have to admit the trend for the dollar is down. it's just a very crowded boat. one of the things you learn in this business when the boat gets listing to one side, everybody tips out and very few have life preservers. >> what would happen. you think the weak dollar at this point but if you see it strengthen because of strong numbers out of the united states does that mean commodities would halt or continue to grow because people see the strong economy and say it doesn't matter,

dollar no longer the driving factor. >> in particular precious metals would retrace. that's the worry if we get a snapback in the dollar, whether it be for a long period or short period you will see in particular precious metals react negative to that. there's also as time goes on an inflation trade in the gold market. our view is still that consumer price averages globally will remain under 2% this year rises will remain 2% this year and next year. i'm fearful in the longer term as we get into 2010 that you'll see some inflation-led liquidation in the gold market as you effectively get disappointed as broad-based inflation does not materialize which i think was the point brought up earlier. >> all right. jim, dennis, gentlemen, thank you both very much. great to have both of you here. have a great weekend and we'll see you soon. >> thanks, becky. >> we'll talk more about the markets and economic recovery

with morgan stanley's chief economist in a minute. we'll find out if he's in the double dip recession camp. first president and health care reform road show. can he close the deal with the american people? david gregory of meet the press is up after a break. you're watching "squawk box" on cnbc, first in business worldwide.

welcome back, everybody. ceo pandit says $100 million is too much for an employee to earn given the bank's circumstances. city trader andrew hall is contractually entitled to a 2009 pay package that could be worth that amount. the plan that come under fire but was put in place before the february cutoff date before the agreement. hall works with the energy trading unit. pandit says he's working to turn it into an asset manager to invest money from outside investors. instead of trading citigroup's money. this is a sticky situation. >> this is kind of at the far end of being reasonable in the sense that this guy made a lot of money for citibank obviously. the question is, even if you make that much money, what's the

right level of compensation. if you're in a public company it's too high. if you're private, you're doing an asset manager job and that's what it turns out to be, that's acceptable. not in a public company under these circumstances. >> would it have been acceptable prebailout conditions? would it have been acceptable for the collapse and only in hindsight that it's a problem? >> absolutely right this was not a one off situation before the bell. maybe not 100 but big numbers. that situation has changed dramatically given the risks taken and consequences of those risks. so certainly a different situation today than it was -- >> there's got to be a line somewhere. where is it? >> a matter of judgment. i think you always have to be in public companies, you've got to pass the smell test. if it gets in the new york times, gets to your share owners and they paid carl $100 million, is that going to pass the smell

test. >> yes. >> if it does, you're going to keep doing it. >> got to look at circumstances, got to look at what's happening outside in the world. >> do you. >> it's a market. unless you sell ceos short what their role is in society, i mean, there are people that get paid $25, $30 million a year some of who i would say are less important -- not less important. but a ceo has an important role. if you're a great ceo, have you what it takes, you make the right decisions that benefit shareholders, society and consumers and employees, you can be worth as much as an all-star third baseman, a person in a movie that makes $20 million in a movie because they bring people into the theater. it's hard to say anybody is worth $50 million. people get paid that. >> one thing less important than ceo. >> joe, here is the difference. when you're part of a public company there's governance rules you've got to abide by.

you're going to be inspected more carefully than a-rod in terms of the new york yankees. >> your governance involves doing your best for the company. >> i'm talking about a guy who really has what it takes. >> i agree. >> he's going to go somewhere else. >> even if you have the best guy in the world at something in business, do you pay him $100 million that's the question. i think you can make an argument. >> across the street they are going to. >> if you're getting mope from the government, can you still do it? >> do taxpayers want to get paid back? >> i think citigroup is in a unique position. >> as becky said, the rules have changed. in light of the fact the government had to go bail them out, that caused people to think differently. >> it wouldn't be a payday if the government didn't bail them out. >> the government goes in to bail out the yankee, a-rod is not going to get the paycheck.

>> the love affair with the michael moore take, nobody is worth more than a million dollars, nobody should need it, use it. >> do you just make that -- >> there are some people that will tell you nobody is worth $20 million a year. >> isn't there some middle ground. in a circumstance where the government has to bail you out -- >> in a socialist way that's what you're going to get into. >> there's markets and bids for markets. that what decides it. >> does anybody really need $20 million a year? in a socialist chavez congress, you should spread that around to people who do need it. >> now you're talking like your arch enemy. >> can anybody use $20 million a year. >> could it be better spent getting vaccinations to people in appalachians. >> speaking of all this, the president will make the rounds on the talk shows as his push for health care reform reaches a peak. david gregory, moderator of meet

the press. he joins us from washington. david, it is hard in this country onhave a conversation with just about anything without it getting heated. as someone who is going to be interviewing the president, is part of the reason he's doing these shows, to put a roadblock in front of all of this. >> i think that's part of it. there's a narrow reason. that's health care. the president wants to get this health care reform across the finish line. that's no easy task. the key to doing that is owning the debate and it's driving up public support for his version of reform. if he can do that, then he has greater ability to apply that leverage to those wavering lawmakers. it's democrats we're talking about, not just republicans that we'd like to pull over a few republicans. i think that's the real narrow part of this strategy and why the president made the decision to do as much as he can to reach as much of the public as he can. >> as someone who is going to question him, obviously you want to get to the policy of health care. when you're facing a.c.o.r.n. bizarre controversy, joe wilson,

jimmy carter and race, not to mention afghanistan and iran, he's having to fight an onslaught of political distractions or real policy distractions, right? >> there's no question about it. huge maybe some distractions or huge issues that parallel or measure up to health care depending on your point of view. there's no question there's a lot going on right now. i think the difficulty for the president is trying to contain what he thinks is a distraction and keep people focused where he wants the focus to be. when you're president, it's not always so easy to do that you see the missile defense story cropping up yesterday in europe or afghanistan or iran. all of these things are operating on their own tracks at the same time. >> just throw something out, david, for the other side. we had professor porter from harvard. we talked about instead of health care reform, all the things that need to be done to form the delivery of health care. complex things. things we can handle if we do it right, if given some time.

at times it seems like the president wants to do this so quickly, to go on all three shows, to go on letterman. we've seen him in front of congress. we saw two more speeches in front of labor. we got it. he wants to do it now. is it really to help everyone with health reform or is it because he needs to do it for his presidency? >> i think that's a particularly cynical view about, you know, the timing of it. obviously the president has been talking about this for a long time. >> what's the rush? >> there's obviously a lot of people who don't feel there's a rush. there is a political calendar. everybody faces this, republican or democrat about what you can achieve in a window of time for your presidency. something like health care in terms of getting congress on board, not even to vote on it, but whether to be focused on the issue is something that's important to do earlier on in the presidency than not. the important point you're making, is this version of reform getting to some of the core systemic problems for delivery of health care an

containment of cost or have political problems imperative made it more difficult to get at some of the more fundamental change. >> if it's 18% of the economy, you want to get it right. >> right, okay. but you can make that argument about any time any president takes something on. you always want to get it right. >> if it was a wednesday deadline when he opened the door to tort reform but said, yes, you're going to do some of that, it's got to be on my desk by wednesday. >> i don't think they really -- joe, i don't think they want to do tort reform or they would have done something a little more robust than suggesting that the bush administration pilot program should be given a shot. they are not talking about doing anything legislatively, the president said it makes it different in terms of overall cost. i don't think they seem really committed to doing that. >> speaking of which, we have people who come on the program, david. i'm sure on yours as well, saying let's back up, back away from the baucus proposal and basically start over they say. what's the likelihood of that?

is our only option at that point to build on what's been built over the past several weeks and months? >> that's not going to happen. basically the president's plan is the baucus plan. that's what he's trying to build on. house proposals more expensive, more politically difficult in terms of getting some kind of agreement. so they have got to build on this because they don't have as much time to try to cobble something together that actually works. as you get farther into next year, beyond next fall, difficult to keep people on board, facing re-election. they have to be able to cast a vote for something they feel they can defend. this is already on the margins for a lot of people who -- in congress up for re-election next year. >> i thought gibbs was saying this wasn't necessarily exactly what the president had in his mind, the baucus plan. >> no. it isn't exactly what he had in mind. the president came out and said the public option is a good idea. he recognizes it's not going to pass the senate. does that mean he's going to go in on a conference committee,

his allies will push to get a public plan back in there? i don't think that will work in terms of getting the overall votes. he can't get the democrats to vote for that, let alone the few republicans he wants to pick-off. when i say this is his plan, this the plan i think they are trying to build onto as they go through. there's going to be amendments, other trading that goes on in the course of this but they have the amount task, can they get it out of the finance committee. >> david, we'll all be watching this weekend. thanks for your time david gregory. >> appreciate it. >> tune into meet the press, nbc, with president obama, check your local listing for times. >> the battle against obesity may get a new weapon. the small pharmaceutical that could have a big breakthrough. "squawk box" will be right back.

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welcome back to "squawk box" here on cnbc, first in business worldwide. we're just one hour away from the opening bell. let's get to some of the stocks we're going to be keeping an eye on. first up, procter & gamble upgraded to a buy from hold at citi. increasing its price target from $66 to $54 saying earning expectations are conservative.

reporting a smaller than expected quarterly loss and announcing sales figures well above streets expectation. the surge was led by a demand for palm-free mart phony. by the way, take a at texas instruments. another stock to watch as they upped their quarterly dividends. let the handicapping begin. the last of three companies working on a new prescription diet pill out with their final stage results. pharmaceuticals reporter mike huckman joins us with more. what a blitz of news in this very narrow space. >> another week, another diet drug. shares of arena pharmaceutical surged 44% just on the announcement they willed unveil the data. drug met its goals and fda criteria for approval. nearly half the patients lost 5% of their body weight. top responders lost an average

of 35 pounds plus it appears to be safe. this drug works similarly to the infamous fen-phen but targets. however difference between the weight loss of patients on placebo and those on the drug was only 3%, even less than the first of arena's two big late stage studies. nonetheless, the company is saying the drug is safe and effective and plans to file for fda approval in december of this year. analysts and investors will be comparing these numbers big-time to the robust, some said unprecedented results last week. as a side night, the stock is up, shoes you how investors are handicapping the result. also a new prescription diet pill from another company. if they approve any of these, they could be marketed next year or 2011. coming up on stock on the

street, cnbc interview, an interview 10:20 eastern time this morning. check out the blog. follow me on twitter. now what we'll be waiting for in addition to what fda is going to do here is to see if all of these drugs are unpartnered. which company will partner up with whom. now that they have got all the results in, the company can stand back, do due diligence and say which one again. >> so the dance again. >> fun to watch. >> how often do you tweet? >> how often? some days not much. on average i haven't figured it out. i would say a couple dozen tweets a day. >> 24 tweets a day. >> get news on it. >> i treat you guys as like my personal wire service, headlines, analyst commentaries and the occasional frivolous observation but i try to keep the naval gazing to a minimum. >> 4,000. >> you never said i just had a

burger. >> never. i won't. >> that's silly. >> it's stupid. >> larry, what do you usually tweet about? >> i do more than 24 a day. >> you've done 24 sitting right there. >> i can't get away from it. >> it's highly addictive. there's something about it, guys, there's a gravitational pull. >> you had me for a second. >> jack welsh is tweeting. >> i haven't got there yet. >> me neither. >> you don't need to be a twit to tweet. it's called twitter. >> you can call me a twit. >> it's called twitter. >> that wouldn't be anything new. >> it's called twitter, from quit. they are tweets not twits. >> one of these days. >> fed chairman bernanke says the recession is over. that may be. but the question of whether we're in for a so-called double

dip is still very much open. joining us dick berner, chief economist at morgan stanley. welcome. great to see you. great to be on the show. >> good to be on with you, joe. >> we keep going back and forth really about two ways to think about a deep recession. spring-loaded so it surprises people with strength or whatever caused it is not completely dealt with and there's still structural problems that will hold it back. which is it. joe, i still think a lot of head winds, one of the reasons i think moderate rather than v-shaped. the most important is sustainability. you mentioned. once the fiscal stimulus goes away, last back into recession or double dips. i think there are four reasons why that's not likely to be the case.

policy actually especially monetary is supportive and i don't think the fed is going to go away any time soon. they have made that clear. financial conditions are improving reflecting that. second i think the fiscal policy, even though the fiscal thrust or change in the deficit to the economy may start to go away in the middle of next year. the impact will continue into 2011. a couple of other reasons i think are important. one is that the global economy is coming on strong. that's going to help u.s. exports and earnings from overseas. last but not least i think are the classic cyclical signs we're taking some of the excesses out of the economy like inventory overhangs, the inventory overhang is tarting to come down particularly in motor vehicles. but it's also starting to come down elsewhere in the economy. slower liquidation of inventories is going to trigger

stronger output game. starting to take others out as well like capacity, set the stage for capital spending growth next year. so that's important. we're also taking out some of of the excesses in housing. a better balance between supply and demand. and then last consumers are taking out some of their imbalances, too. they are delevering and getting balance sheets back in place. when i look at all those things, i say the sustainability of the recovery is reasonably good. >> you're now at morgan stanley, you have more account executives or financial consultants than anyone else. do you go on "squawk box" and tell these guys what to do, what to tell their clients to do? with what you just said, what do you tell them to do in terms of asset allocation, stocks, bonds, commodities, what should they do. i'm not a strategist but a strategy team i work with

closely is pretty optimistic about further improvement and risk assets. obviously this is not going to go in a straight line. we've had a fantastic rally inequities and credit. i think fundamentals which i'm talking about are still in place to support that. >> are you confident that the fed and the rest of the initiatives, treasury initiatives can extricate themselves from the private market or is this going to go on for years. >> there's a big discussion around that. that's obviously going to be critical. thinking about once the recovery is on firmer ground and once we see a bottoming in inflation we think is around next year, how we start the strategies, special from monetary policies, also need to think about that in terms of fiscal policies and there are big challenges to do that. >> how do you respond to those that say it's absurd that the solution to a dead overhang is more debt. people are comparing toyota a wildfire in california where you

put out the fire, you don't allow it to burn and you just leave the brush for an even larger fire to come down and destroy the forest. >> i think we're delevering private sector and households and businesses. we see that in the flow of fund. household and business balance sheets are really getting cleaned up. >> but how far along are they? >> i think there's more to go, carl of i think that consumers probably have more dead paydowns to do. unfortunately we know there's going to be more foreclosures and write-offs. that's involuntary. i would say probably a third to halfway through that process. business balance sheets are getting in better shape. they are going to tart to look like they are in better shape as we start to see earnings improve. ratios as we look at debt

relative to ebitda. those are starting to improve. we have further to go. improvement is a very important factor in the marketplace. >> thank you. great to have you on today, dick. dick berner, a broker, morgan stanley, a little management shake-up, too there. we're going to be talking morgan stanley a lot. >> checking on futures, looks like we'll see interesting action with quadruple wichlg witching. we have slowly built onto future over the course of the morning session. asia was down after the dow take the day off yesterday trading down moderately. when we come back, how to pay for health care reform. the former acting director of the congressional bunl office, former member of council of economic advisors and can tell us if the nation could actually afford this big overhaul when "squawk" continues on friday morning. when this shoe store added aflac

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cost of health care reform has been at the center of debate. here with analysis, the former acting director for the congressional budget office, the ceo we talk about, former member of the president's council of economic advisors. presently the visiting director

of the georgetown public policy institute joins us from las cruces. we paid attention to the buck us proposal as we have to forms of this overhaul. as someone who worked closely with the cbo, are we at least getting the numbers to move in the right direction? >> un, we are absolutely. the baucus bill is an enormous step forward from where we were in the house bill. take chairman baucus's description, his bill will cost $850 billion over the next ten years. people haven't noted it, if you go back to the house bill on a comparable basis it would have cost $1.5 trillion. it's enormous step forward on the budget side. >> how confident are you in some of these long-term projections. we can look back over the past ten years when it comes to things like the deficit. nobody really had those targets right. >> it was obviously the futures are hard to predict.

things can move either way. the particular challenge on health care, if you look at the balks bill, a lot of the ways he proposes to pay for it, how much we paid various providers and health care and medicare and medicate. one thing to write those down on a piece of paper and say this going to happen ten years from now but when the ten years are up and you're trying to do cuts it's another difficult thing to do cuts. we see that today with the doctors. i think that's the main concern on the budget side about this bill, many of the pay fors are things we may not have the backbone to actually do. >> larry bossidy, one question that continues to come forward. in the baucus bill still there's a lot of increased taxes for middle income americans which is not going to set very well with the democrats on the one hand. there's big fees assigned to medical providers and medical provides set for pharmaceutical companies which doesn't set very well on the right side of things. seems to me on the baucus bill,

nobody likes it. where are we going to go from here. >> so you know, in washington that's a sign you're doing things well, getting yelled out from left and right. that's something to look for. i would say on the tax pieces, i think many economists believe our current tax treatment of health insurance is flawed, shouldn't subsidize so much by employer sponsored health insurance exempt from taxes. therefore within the health debate, there is a strong rational for doing something on the tax side. to me, most economists who would make sense to do that on the individual side, where as the baucus bill tries to do it through the insurance company. one of the things you're seeing, people are recognizing on both the left and right, if you do it on the insurance companies it's going to pass through americans anyway, which leads me to believe we might as well do it directly on the income side as well. >> are co-ops less efficient than the so-called government option? >> you know, we have co-ops in

this world. it's not as though the bill would create a new beast the world has never seen before, it would just be an organization with initial subsidies from the government. again going to my backbone question, the concern i have about either a public plan or co-ops that are financed at least beginning by the public sector is whether we have the backbone to turn off those subsidies once they get up and running. >> one of the worries obviously has been the degree to which employers would take employees off the roles if in fact there was a public option. there's been dispute on that. louen group says quite a bit, president says could be 5.5%. what's the take on that? how much would a public plan force companies to let their employees go? >> well, it wouldn't force them to let them go. it would be a choice of the choice for the companies would be to value the cost or health insurance versus cost and whatever penalty would be imposed for letting people go into the pool. >> sure. >> the challenge, when you go

back -- i haven't looked, they haven't scored the baucus bill but if you look at the house bill the big distinction turns out to be ceos around 10 or 12 million people in the plan, the group around 100 million. they have different projections about what a certain government official is going to do five years from now where basically the government official is granted the flexibility about how much to expand changes and expand eligibility for public plan. cbo thinks future official will turn that up a little bit, the other thinks they will turn it up a lot. your mileage may vary. that's an important thing to predict. >> i don't think they make crystal balls with that kind of accuracy. we'll see where it goes, now that we have the balks thing out of the gate and what happens the next few weeks. donald, great to have you on the show. loved having your dad but you as well. former m.i.t. graduate. >> all right.

the beaver. thanks. next dow suffers do you session in trading days. a new trading day about to begin. we have quadruple witching, an arcane outlook. art cashin will have the traders edge. first check on dollars as we head to break. "squawk box" will be right back. you're watching "squawk box" on cnbc, first in business worldwide. this is humiliating.

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time for the trader's edge. joining us is art cashin, director of floor operations at ubs financial services. what's on your radar? quadruple witching, you probably heard the great songs we are playing, art. do you have a favorite? >> "ding dong the witch is dead." >> try to sing that. i don't know. eventually as people start talking about 10,000, we're going to build up some of that positive sentiment, i think, art, don't you? >> yeah. i think you are. you know, obviously today is the i expirati

expiration. i don't know why it popped into my mind but do you recall the charles manson trial and he stood up and started singing that old black magic in the middle of the trial? and the judge had to silence him. >> it's funny that you members him because yesterday i x'd someone from my world. there's a lot of references from that. you've got to be older to remember them. >> i fit that category. >> yeah, so do i. i just wonder, art, how this ends, some of the good things happening. we talked with dennis gartman that you've got to watch gold because the dollar could have a reflex rally because everybody is short. i wonder if a reflex rally in the dollar causes equities to fall? >> it certainly looks that way, joe. i mean, the markets -- almost all the asset classes have been moving directly in relationship to the dollar. frustration down here that you don't even have to look at the news ticker anymore. you just tell me what the dollar is doing and i'll tell you what stocks are going to do, what

oild oil is going to do, what gold is going to do. that became the dominant factor here. i agree with dennis if p the dollar finds a level and begins to reverse, that could cause trouble across many p asset classes. we're going to watch for the end of the month. actually three days before the end of the month to see if there's any change in momentum in the market. i think a lot of this has been underinvested portfolio manager saying, oh, my god, my report card is due when october comes. three days before you have to clear it and get it into the account will be the day that i watch for. >> that was going to be my question, art. the degree to which these managers are going to want to look good in just a cup of weeks. are you saying that will be a significant driving force? >> i think it has been already. i assume it will continue unless there are some other variables. there's enough confusion around. you were talking earlier that the president was trying to concentrate his argument and then try and change to missile shields in europe and now a new

issue on the table. it's hard to gauge this. people said, hey, it says on the door, cash in the money manager, not cash in the money register. >> next week, fed meeting and g20. >> if it's not one thing, it's another. >> the equinox, let's not forget that. have a great weekend. i'll be marinating a lot and trying to get solutions. >> marinating ice cubes. >> see you next week. coming up, a final round with our guest host today. before we go to a break, check out gold prices this morning. "squawk box" will be right back.

all right. welcome back. our guest host today is a cnbc contributor and, of course, you know him as the former honeywell chairman and ceo. larry, one of the top stories today, what is happening with regulation, as we move forward, just ahead of the g-20 look like they are going to try and clamp down on executive pay. >> well, the first thing, i think they're gng