>> you can balance your checkbook and count up the national debt at the same time. as seen on television. >> our other empty calories segment is a continuation from yesterday. >> this is a story that will not go away. >> it's a very important business story and it has to do with chicken feet. and michelle -- >> we were talking about how there was a story in the new york times about how chicken feet could prevent a trade war because chinese people like to eat american chicken feet because they're plumper because americans like to eat chicken breasts and they're bred for large larger breasts. you can read my op-ed piece. all those snarky bloggers, i outsnarked you. >> that does it for us on "power lunch." have a great weekend. >> erin burnett with "street signs" is up to 30 seconds. >> this is cnbc.com news now. apple's reiterating it did

not reject the google voice application for the iphone and that it's still talking to google about changes. google told the fcc in a letter that apple did reject that application. american airlines says traffic and revenue will decline for the third quarter. it also says its shrinking mainline capacity by nearly 10% in september. and home builders are among stocks rising today after jpmorgan upgraded builders, toll brothers and kb home. i'm rebecca jarvis. hello, everyone. happy friday. i'm erin burnett. it's not even friday but the witches are flying, the brooms are out. we're in the final stretch of a big afternoon on wall street. two survivors that are thriving. one year ago hank paulson warned of armageddon. and then three big headlines coming next week you can make

money on right now. we'll tell but them. finally barack obama's big decision. citi's ceo says $100 million is too much for a trader. so what's the right number for the taxpayers' highest paid man? mr. president, will you pay or will you -- well, this is a big decision you have to make. let's get to the trading floors and let's go straight to where the witches are flying around wild and crazy and that means, yes, bob, to you. >> thank you very much. and she's referring to quadruple witching expiration which is the quarterly expiration of options as well as futures on the indices as well as individual stocks. that's creating big volume, really big volume, but not an awful lot of volume pit. we're also getting a rebalancing on the major indices worldwide including the ftse. we're getting some really movement in the stock prices of some of the stocks over in london as they close because of

this rebalancing. budweiser, novartis also moved dramatically in the middle of the day. at the close we'll see some action in citigroup because citigroup is getting a rebalancing in the s&p 500. a lot of big additions to the common stock for citigroup that. will be reflected today. coca-cola will have a significant amount of action at the close. that's what we're expecting. brian, we've had a nice move up here. we're up about 2% on the week on the s&p 50, a0, and right now w will close at new highs for the year on the s&p. >> thank you very much. up 0.4 of 1%. apple and google both had price targets raised today. the thing is this fcc letter how apple said google rejected one of its apps. it's a little game of i know what you are but what am i. research in motion up 1.5%. big names seeing some strength. ebay up half a percent. intel up 1.2%. same for oracle.

seeing real strength in some of the big names. arena pharmaceutical, had a situation where it had a major run up leading into an announcement about their weight loss drug and then sold off. it's the number two volume mover on the nasdaq today. finally want to talk about starbucks. had an upgrade, new 52-week high. sonic down 2.2%. er erin, back to you. >> as we get ready to talk to our guests who not only survived but thrived, they were on with us a year ago today, here is what happened on that day. the dow went up 310 points. as treasury secretary henry wallson, ben bernanke, and christopher cox rushed to capitol hill to talk about the market bailout. here is the aftermath. >> what we are working on now is an approach to deal with the

systemic risk and the stresses in our capital markets. >> it sounds bad, but the next day the markets continued their rally. actually went up 778 points over the two-day period. by the way, this was before the weekend you may recall when henry paulson got on his knee in front of nancy pelosi and begged for that t.a.r.p. to pass. investors were cheered by the hope that washington was finally doing something about those toxic assets a year ago today. so what happened? government had all those programs, all the acronyms. did it work? some of the people you thought might have died in the middle of this crisis are one that is have thrived, and they are three faces who are very familiar. brian whalen, sandy, and tony senior vice president and portfolio manager at pimco although he did switch firms between a year ago when you saw

him and now. good to have all three of you. it started with you, brian, and i mean -- i don't mean you individually obviously, but you were in the middle of subprime. you and i two years ago started talking almost every day about what was going on. you're still alive. you have thrived. where are you right now? is subprime, is that a place to make money? >> it actually is. it's been one of the asset classes that throughout the summer has lagged most of the other asset classes or at least within bonds. we've seen the prime mortgage-backed securities rally j anywhere from 25% to 30%. subprime is up in price but still significantly lagging. it comes with the most hair on it and requires the most due diligence. >> and you noted, brian, subprime right now is still trading at 30 cents on the dollar. if you had to say in your world what the biggest opportunity is today, what is it?

>> the biggest opportunity today i think would rely -- it would be in the subprime and the bottom part of the alt day market. i think going forward we could see opportunities in the commercial real estate market but we're still in the early part of the downturn in that segment. >> what would you say, sandy, best opportunity today and keeping in mind you focus on high yield and corporate debt. >> well, erin, high yield market has been spectacular, up 47%, but more importantly the robust market started in mid-december of last year, and really hasn't looked back. it's largely led by fund flows. about $26 billion has flowed into the mutual funds and that's certainly led to new issuance within the marketplace. that's at a fast and furious point at this pace. but it still feels very good in high field. the average yield is still 10.25%. spreads are wider than their historical average t feels

reasonably good in high yield even still. >> spreads are wider than historical average so you could get a little more on top of the near 50% we've gone. tony, interesting analysis in barrons where they were talking about corporate bonds are pricing in an economy growing 2%. stocks are pricing in an economy growing at 4%. either they're both wrong or only one is right. >> corporate profits are up 10%. that's over $100 billion. they're expected up about 20%. so it's not inconsistent that corporate bonds and equities can do well. both depend on cash flow. what they care about is getting his or her money back. the rise in profits, which is in part because of the big cost cutting, the cut in the labor force, helps support the corporate bond market. it's not inconsistent. >> are we healed, sandy, when you look at different parts of the market. obviously you're talking about near record issue witneance in

bonds. pretty close. are there any categories that still stand out as it is not functioning? >> well, in general the high yield markets are very forward looking. as you mentioned, about 230 deals are priced this year for $103 billion or so. so certainly from that perspective it certainly looks like things are healed. however, i think that in general we have to fear the rising rate environment that at some point may come our way. so in terms of today, yes, but you certainly have to look around the corner and anticipate what rising rates might do to the overall credit markets. >> brian, a lot of people talked about the asset backed commercial paper market. i know it's not an area you personally deal in every day. that that is an area still not functioning and might be a big opportunity in terms of fixing it. do you agree? >> yes, there's parts of the market that still represent opportunity, but i think it all depends on your definition of functioning. you can look at that market, you can look at the jumbo mortgage market. yeah, the secondary assets are

trading and much more liquid and they're highing er in dollar pr. >> so do you all sort of feel it's fair to say we went to the abyss, we've come back, who knows how much further we have to go in some of these hard-hit areas, but none of you seem afraid. >> well, erin, we have to remember that there's $1 trillion of federal reserve credit in the system. we don't know yet how the hand-off will occur between fiscal and monetary-led stimulus and to the private sector. it's very problematic. even though household net wert increased $2 trillion we saw in the second quarter, new data from the fed on thursday, it's still down about $13 trillion from the peak of $65 trillion. that type of thing means there's a lot of challenges in that hand-off for 2010. >> brian, you have raise d this.

if those programs were taken away and a lot of federal money in the system, what would happen right now? >> i think you would see asset prices plummet, at least in the fixed income credit markets. things feel better today and that's because programs like talf from the new york fed, the ppip program from treasury, the fed and treasury both buying agency mortgages trying to bring down the rates. what that's given the market is a sense of security, that there's a floor on the prices. if we go back down in prices, they will just expand that's prices and make sure we don't deteriorate even further. >> thanks to all three of you. we appreciate it. if brian is right and we get that subprime to go from 30 even to 40, brooib, you would be doing pretty darn well. good to see all three of you. >> thanks, erin. they're all talking about the debt market and how there's been a lot of healing. the subprime meltdown is still taking its toll on the states that got hit the hardest and

bertha coombs has the latest numbers about that. ber th? >> that's right, erin. the government is out with this latest state unemployment report and when you look at the map, it's those states where you saw the big housing boom where you see things continuing to get worse. unemployment increases in the west contributed to last month's spike in the national unemployment rate. real estate booms like california and nevada both logged new post war record high unemployment in august. california is now above 12% with over 1 million jobs lost in the last year. in august payrolls fell another 12,000. and the majority of that job loss continues to be related to construction and real estate. construction jobs fell 7,000 last month. that was the majority of the losses bringing the year-over-year losses in california construction jobs to more than 140,000. that represents an 18.5% year-over-year decline. nevada had the second highest unemployment after michigan at a

record 13.2%. a full six points below last year. 31,000 construction jobs lost over the last year. let's look at the southeast. florida, another place where you saw a lot of real estate development. unemployment remains steady, but still above 10% now for the third straight month. the sunshine state continues to hemorrhage jobs losing another 21,000 jobs last month and in terms of construction those jobs are down 13% year-over-year and arizona's unemployment rate remains well below the national average dipping about 0.1% in august but above 9% for the second month. august payroll changes were down 8,500. construction jobs in arizona are down 27% year-over-year. those are the areas that are really finding it hard to see things come back right now. >> bertha coombs. thank you very much. next on "street signs," what do a battery company, a financial company, and an online gaming company, oh, and a

hospital operator have in common? well, we'll tell you about what they have in common and why there are some trades there. and also does president obama have a $100 million headache? what will his pay czar do about citigroup's $100 million man? the president can't blame this one on someone else. we'll be back. could someone toss me an eleven sixteenths wrench over here? here you go. eleven sixteenths... (announcer) from designing some of the world's cleanest and most fuel-efficient jet engines... to building more wind turbines than anyone in the country... the people of ge are working together... creating innovation today for america's tomorrow. thanks! no problem! [ telephone rings ] [ ring ]

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

eight ipos are set to debut next week. here to tell us which ones to keep an eye on is linda killian. i'm very excited to have you. we were just talking about a fixed income market, how there's been so much improvement. however if the government were to go away, get out of the way, things would come crashing down to earth. but a sign of improvement in confidence is the ipo market. what's sparking this biggest week since 2007? >> well, it's a number of things. one is that the ipos that have come since the beginning of the year have returned very good returns to the early investors. it's very much like the 1970s which was a period of real severe recession. it was very different but it was very severe, and we looked at that and during that period there were a couple things that happened. there weren't many ipos but the ipos that came out provided

excellent returns to investors and there was a slow acceleration of the number of ipos and that's exactly what we're seeing now. >> which would be a healthy sign. you have a few examples. obviously we have many next week. we'll be flashing them across the week. linda wanted to highlight a few. let's start with select medical. one you're very interested in. it's got a very boring name, but obviously you don't think it's going to have a boring return. what do they do? >> it's the number two provider of specialty hospital services and rehab services. in fact, it has -- it's been public before. testifies lbo'd and now it's going public again. it has a terrific management. it's our renaissance capital pick of the week. >> select medical. >> folks can get detail at renaissance capital.com. >> all right. >> it's going to be a big deal, and it should pretty well. >> interesting. akut long-term care hospitals. obviously, you have now done a

very thorough analysis out of what cops out of washington and this works within that. >> it's not a product of washington. it was public before and -- >> i mean health care reform. does it matter for this company? >> well, it's always tough to say. it's been affected very much by medicare reimbursement cuts. >> okay. >> as has every company in the industry. but it should -- we're going to need hospitals regardless. >> fair point on that. okay. another one our viewers are interested is colony capital. what is this? and what's in colony financial? why might you buy it? >> well, several reasons. one is that it is one of the many commercial and residential companies that is going after distressed debt in the commercial and residential mortgage market, and it's he

helping to capitalize on that and the government coming in and providing guarantees. >> that's what brian was saying, subprime still trading on 30 cents on the dollar. you're giving people a vehicle to do that. >> there have been a number of them. there have been a number of them since the beginning of the year. there have been five of them. there are three more coming this week. there are another ten or so in the pipeline. >> time for one more. this online gaming and this is china. who growth areas. and you would buy this as well. >> this is a very fast-growing area in a very fast-growing country. the chinese love online games, and this is a provider of online games, 5and the other ones have done very, very well as well. shangu is the best ipo so far this year. >> there you go from linda who manages the fund. these are all names you are going to be trying to buy yourself. >> i can't say that but we've

researched -- >> but she likes these names so take from that what you will. i got it. linda killian, thanks so much. good to see you. there's a few names for you. you can go to cnbc.com, watch the segment again if you want to see all the names of the ipos going next week. september has been a wild ride for natural gas. this could be the biggest trade out there. so should you jump in now or should you run for the hills? and a major u.s. gaming company, a little different than the one linda was talking about, but this one may finally be ready to place a bet on vegas. the inside story from jane wells coming up later.

president clinton proctor & gamble up nearly 3%. it's the biggest gainer in the dow. in part because citi raised its rating to a buy. it's not called the widowmaker for nothing. there must be a lot of natural gas widows this month when we look on trading floors. overall, if you look at natural gas, it's up 34% since september 3rd. so what's the next trade? here now is chris and john.

good to have both of you with us. we wanted to focus in as you both know on the short term. by that i don't mean any given day, all in natural gas that could make or break you, but really over the next couple months. let's start with you, john, so you can make the bull case for why gas should go up and, of course, we'll note the reason we started having this conversation is because oil was up here and gas was down here and we had never seen them so far apart. >> that's right. although i wasn't really necessarily a buyer of that trade, the relationship does seem to be converging a bit once again. so i just think the run down, the recent low price we saw just below $2.50 was overdone. we're seeing the prices at work here on producing market forces. less production, rigs being taken down, and industrial demand pick up to a degree. i think we'll be a more normal price. up above $4, not below $3. >> what do you say to that,

chris? >> i think we're entering, the next month or so there's a possibility of an extreme oversupply or containment issue. we have five weeks to go to the end of injection season. storage levels are 17% higher than the five-year average, and natural gas is produced and it must be either burned or stored, and -- >> so it's going to be burned or stored. you're saying we have too much of it. >> yeah. >> no way to get rid of the excess supply. >> yeah, september and october are historically very low demand months. on top of that you have a new breed of producer, these unconventional shale drillers, who 75% hedged, and they can drill pulling gas out of the ground at $1 or $2, and unabated it seems. additional you have the peak of hurricane season was september 10th. so every day we have moving forward, there's less and less probability of a major supply disruption in the gulf. >> so, john, he does make a case

there. just take the one headline that chris threw out there, that we've got 17% -- we're 17% above our long-term average. we have a lot in storage. that would push prices over. >> i think the rundown to $2.50 was calculating in an even greater storage overhang, if you will. we would be getting up towards a number we had never seen before. an unprecedented amount of gas. we're not getting the robust injections. we will chew through this inventory. weav we've seen this before, going into winter with record levels of storage. >> we'll give the final word to you, here, chris. what about over the longer term? so let's say you're right and we do go down in the next five or six weeks.

is that your longer term view, that we just have too much of the stuff. it's a local market. we got plenty of natural gas in the united states. >> yeah. no, it's more my short term view is bearish. longer term i'm definitely bullish. i think once we get over the next five weeks and these possible containment issues and we can move forward, there anecdotal evidence that industrial demand will pick up. >> and finally, your oil trade before we go quickly from each of you. long or short, john? >> long. i think we'll see $100 a barrel before the end of the year still. >> and you, chris? >> i'm long as well. >> wow, you agree on that. would you agree on that $100? that's a projection for you? >> come on, chris, help me out. >> all right. we'll let chris off the hook on that one. but thanks so much to both of you. we appreciate it. you have the bull and bear case

over nat gas. get ready to stop trading. jim has a big call. will it be as big as the rant rae heard around the world? should vikram pandit pay citi's super trader $100 million? now that problem has landed in barack obama's lap. "street signs" will be back in a moment. tdd#: 1-800-345-2550 if i'm breathing, i'm thinking about trading. tdd#: 1-800-345-2550 i always have my eye out for a stock on the move. tdd#: 1-800-345-2550 doesn't matter if a company sells computer chips tdd#: 1-800-345-2550 or, i don't know, fish and chips. tdd#: 1-800-345-2550 i'll look at all kinds of stocks before i settle on one. tdd#: 1-800-345-2550 if i think i'm onto something i'll check it out, tdd#: 1-800-345-2550 you know, see what other traders are up to. tdd#: 1-800-345-2550 when everything feels right though, tdd#: 1-800-345-2550 that's when i get serious. tdd#: 1-800-345-2550 and the minute i get into something, tdd#: 1-800-345-2550 i already know when i want to get out. tdd#: 1-800-345-2550 of course, every now and then i'll talk with somebody tdd#: 1-800-345-2550 who knows what i'm trying to do.

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i'm sharon epperson at the nymex. we're looking at oil trading right around $72 a barrel. we are weaker today for the second day in a row, but oil is going to manage to eke out a gain for the week. keep in mind the factors that have brought oil prices where they are right now. namely, the dollar. the dollar weakness this week to the one-year low is what helped oil prices support themselves over the first three days of the week. then, of course, the dollar's strength today is why we're slightly lower. the dollar index is still at its lowest level since last september but has climbed for the first time in five days. the big question is what's going to happen to gold next week. gold is firmly above the $1,000 mark. it's at an 18-month high right now. will it go bast that $1,033 left

we saw last week -- rather last year in march of 2008? that was the all-time high. that's a big question. we'll see an exploration of the oil futures contract for october on tuesday. that could bring some volatility to the oil side of the game. erin, back to you. >> sharon, thank you very much. so jim cramer is here. time to stop trading. because we just came from sharon and the natural gas conversation. jim's take was, interesting they disagreed on nat gas but agreed on ouil. >> i thought that was great. that tells me a lot of people feel, i know i do, that the futures themselves are inflated. but it just hasn't mattered. it hasn't mattered, and if you decided that they were inflated and you didn't play the giant oil companies or yesterday the refiners, you've missed a really monster move. and i guess it's not done yet. >> it's an interesting conversation. >> i like that. i like both those guys. >> the other segment, i love

having you on sometimes -- >> i like what they say. >> it's like having the third branch of power. so all the ipos, we've got eight ipos next month. the most since december 2007. i like linda's view that doesn't necessarily mean irrational he be e-- >> the hospital one -- >> that's the one she likes. select medical. long term acute care. >> i want to be in that. that's the people who -- they'll hate this that i say this, they skip the cream that's high-priced business and the hospital sector has been red hot. >> she wasn't sure though what the bill might mean for them. there's a risk in there. >> a lot of people thought tenant would be bad. it's been great. we have a scarcity of plays in this important end of health care. it's like thank you for creating one we need to trade. the old american hospital, i remember when there were tons of

hospital companies, hca, we would say that group, that group, there's no group. there's no group. >> they all went away. >> we have a new one. i like it. >> another one going out, i'm throwing this out to you. we have this list of companies that got money from the government for batteries. now, they either are in michigan or really foreign company that is changed their name to look like they're american. a 123 is i think a legitimately u.s. one. what do you think about this battery craze? >> okay. i don't think -- i got to be very careful with this. it feels like ethanol to me. it feels like ethanol. and everyone went nuts on the ethanol stocks and it turned out to be they just took advantage and timed the market perfectly. i think batteries will be the same and that's why i felt your natural gas discussion was so interesting. i think it's three months away from being what batteries are right now. >> natural gas is they say -- >> 100 years of fuel.

>> okay. why not have a natural gas -- >> because the president doesn't like it. plain and simple. president doesn't like it. >> here is a little thing. do you want to know the country that has developed a natural gas star -- >> argentina -- >> they have developed a car that can go as fast. i have all the specs somewhere, but guess what country it is. >> poland. >> it is the home of ahmadinejad. >> iran. they're building nuclear power. they'll do anything. i'm surprised they're not importing coal there. >> jim is raising the point people don't realize. iran despite having so much oil has never invested in refineries. when oil prices go up, so do gas prices and they get killed because they have to import their gas. >> that's just a total rogue state in every single way. we ought to sit down and break bread with them. that's my -- >> okay. let's move on to --

>> proctor & gamble upgrade. proctor & gamble upgrade is just classic. it's the kind of thing you do when you say will you give me something to recommend. they sat down with the management team at proctor, what a chart, fabulous chart, and this time the proctor guy said we mean it. this time we mean it. and you know what? it's like, okay, maybe they got religion. i feel like it is a psychological call that -- >> maybe ahmadinejad will stop building nukes. >> i thought this had the least substance and the most impact i've come across. i like the research. it says mea culpa, we've done badly, and you know that once you admit that you've been screwing up, which they -- >> once you admit, it's a huge first step. >> they hadn't been doing. they have been basically saying, listen, everyone in the quarter started out. this was a great quarter. that was a great quarter. you know what? they finally admitting it wasn't a great quarter and unilever

have and colgate have been pantsing them. >> it's amazing unilever has been pantsing anybody. >> i wish they'd come on our network. it's a great company. >> listen to jim. >> a lot of people talk about -- >> come on my show, come on my show. >> what does everyone tell me about you and in-depth? is it like the baseball that was thrown away at the -- >> right here on cnbc, much more of jim. what he is a great trader worth to a company, jim? one like andrew hall who had $2 billion for citigroup. >> get a new picture, you look like a tiger. >> it's tiger. he made $2 billion last year. he made more than andrew hall. >> a quick reminder all the recommendations expressed are

solely his and are not the opinions of cnbc. before acting on a recommendation consider its suitability for your circumstances and consider seeking advice from your own financial visor.

ebullient. sears holding just edging out starbucks. the obama administration already has a pay czar to watch over companies being kept afloat by multiple injections on taxpayer money. mary thompson has more on what the headline really means. >> the plan under consideration would impact employees well beyond the executive suite. well fed sources say it doesn't want to limit pay, it does want some control over it. outsized pay is seen as a contributing factor to the risk taking that created the financial crisis. people close to the fed say it's within its authority as a regulator to monitor pay if it threatens a bank's safety and soundness. the fed's proposals would impact pay of management. at the heart of the pay proposals, cutting short-term incentives by giving bonuses

based on a couple years' performance, not one. deferring payments and maybe just maybe using clawbacks. also, the fed wants bonuses given on a risk adjusted basis when companies have the method for measuring that risk. those close to the centralback says the fed wants the biggest banks to use these principles to design pay plans the fed would approve and then monitor through on-site regulators. not everyone is convinced this will reduce risk. dale winston doubts the fed can enforce it. paul hodgson wonders does the fed have the staff to do it? well, fed's board will vote on the final proposals in a couple week f they're approved they will be available for public comment. erin?

>> thank you very much, mary thompson. mary talking about all this conversation you may have seen on the front page of every paper today about what the fed is really talking about. well, now mary has told you. let's get to the bottom of executive pay. it really is the issue. vikram pandit last evening said that $100 million is too much for someone to earn. interesting vikram pandit would say that because, well, it is a trader at citigroup who is apparently contractually guaranteed to get up to $100 million this year. well, that puts the administration and the president's pay czar in a tough spot. the administration wants to make major changes to corporate conversation, is it all hot air or not? let's bring in james and rich d richard. good to have both of you with us. we appreciate it. want to get straight to this, james. this is a great analysis. dick bove from rockdale research just ran the numbers for who are the top paid americans in 2007

and 2008. here is what he got. the top 15, the average -- when you look at the 15 you're looking at the highest paid people, stumbled there, highest paid people were not financial executives. they were sports stars. in fact, nonfinancial executives made more money than bank ceos. are we just really looking at the wrong group? >> i think that study shows how pay can vary in different professions. and the financial world is clearly not the only world that the superstars at the top are making a lot of money. it also brings it down to something the average people can understand. people can understand why tiger woods or a football or baseball star can make a lot of money. people don't see what happens in the banking sector or in the average business, but pay can vary just as dramatically in those areas, too. the point is there is no upper cap on pay. there is no set formula that is the best one to use for pay, and

it has to be done on a case by case business really and by the businesses hiring the people. it simply is not something that government can do adequately. >> richard, it sounds like the obama administration is sort of trying to have its cake and eat it, too. saying they're going to regulate compensation and in saenz it sounds like the fed thing is maybe even giving the fed a veto. if we think your pay is too risky, we can make you change it. it's not really setting rules in any way by which you could actually do that. so is this just a whole lot of rhetoric out of the administration? so they can get political cover for what's going to be some very big pay numbers coming out in the next 30 days? >> i think what the administration needs to do is help set the rules of the game but not cap pay. the big problem is that boards of directors compensation committees have really dropped the ball and they need to step to the plate right now. they need to make sure that pay is long term, performance based, and that it's reasonable. certainly pay up until this point hasn't been organized that way.

just look at the big pay package there. in order to enforce those new principles for boards, shareholders need to come to the table, and that's where the fed -- a federal regulation comes in. we need to be able to replace directors on compensation committees that aren't doing their job based on those principles. and replace them with new people who actually have got a much better sense of what to do. and then we also need shareholders to have a say on pay. if shareholder value is being destroyed by a faulty compensation package, we want to be able to vote on that package. >> look, i think that it is certainly true that the executive compensation committees need to look at pay and i'm sure they're looking at it quite in a detailed way over the last year. but that decision has to be made at the board level and by the executive compensation committees, not by the federal reserve. the federal reserve is not running these companies, shouldn't run these companies, and doesn't know the best pay

package. now, it's also tempting to say is the shareholders should have -- >> why shouldn't they, james? that seems to be the least controversial part. >> well, look, say i'm a shareholder in a company like apple. i'm investing in apple because steve jobs is in charge and i want steve jobs to be there. do i want to put my money up if there's a chance my fellow shareholders who i don't known will vote him out or vote him a lower package or drive him away? >> that's an interesting example because actually the apple board of directors agreed to give shareholders voluntarily a say on pay because they thought that would be an interesting and important new data point for them in terms of when they decide -- >> have they come to you for your vote yet? >> my point is the corporations can choose for themselves. the shareholders can choose what kind of company they invest in. there are lots of rationale reasons you would not want your fellow shareholders to be doing

this through detective democracy. >> i'm not familiar with the apple situation. let's assume richard you're right when you say they voluntarily said that he would go ahead with it. does that mean, james, you would actually sell because you're oured about what your other shareholders would do? >> i may. i'm not an actual apple shareholder, but it depends on the situation. ultimately, the shareholder's power is the power to sell the shares or keep their shares. that's a decision they always will have. my point is it's a completely yation n rationale decision to want to invest in the company where you know the management and know the board of directors is making strategic decisions and not your fellow shareholders who you may not trust. shareholder votes can be affected by a lot of things, including outside activists, labor unions, lots of people who don't have the interests of the company at heart. lots of reasons why you may not want that decision made directly by the shareholders. >> a lot of those issues are actually just red herrings. the question is do the owners of

the company, particularly when shareholder value is destroyed, have the ability to talk to their agents, the boards, to change the way they're doing business. that's not the government intervening. that's the owners of the company. >> but we can't say that's the best suggestion for every company. >> we have to leave it there for now. as you both know, this conversation is only going to get more and more heated as we come into the final results from the pay czar and what he's going to pay people. by the way, highest paid american was tiger woods with that $128 million. andrew hall wouldn't even come close. next on the show, china's economy booming again. should we be on bubble watch? that's the big trade, and that's next. ♪ look at this man

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the shanghai market down more than 3% today. even after the dip, it's up more than 60% for the year. part of the reason why, an economy and recovery. the latest data point on that. "the new york times" reporting chinese factories are rehiring and having a hard time finding enough qualified workers.

is all the stimulus in china just inflateding a bubble? the world's largest real estate developer hiked the prices on two pent houses by 50% at $39 million each. luxury home prices up this year as well. on fire as we have learned. not always a good sign. let's check in with our traders and see which data points they think are important. joining us from the trading floors with their view, jimmy, and gordan from rosen blat. gordon, what do you think is going to tell the tale of where the chinese stock market goes from here? i know it's not always linked to the chinese economy. housing bubble, or things are so good, they can't find enough people to do the work? >> there's questions about what's going on there, erin. we've been looking at it. the thing you've got to wonder about, how much of this rise was fueled by easy credit, and once again, when they removed some of those stimulus ideas, you know, what will happen to the market overall. you look at the "times" today talking about how china's fine

and the united states is languishing. i'm not so sure that's the case. >> jim, which headline is more important? >> we should always be in bubble watch, that's the most important thing to take out of it. what's interesting to me, china, you don't want to miss it if it's a real story and going to be a real boom. we also can't completely chuck the data we get out of china. the better way to play it is to buy the australian etf, ewa, australia a key trading partner with china. it seems the correlation exists a lot when china goes up. yesterday when the shanghai composite had a key reversal and looks like it's going down, the shanghai hangs in. the important thing to me, some people can't stomach these huge swings in the shanghai composite. up 300%, down, and then up. it seems like a better way to play it straight. >> ewa, the idea from jimmy, thanks to both of you. have a wonderful weekend. one vegas casino goes bust.

that could be a jackpot for another company. jane wells has that story.

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national gaming, the "wall street journal" reporting, now is the time to roll the dice on

vegas. jane wells, please take it away. >> easy for you to say, erin. what we're hearing on the street is this will only happen if they really get it for cheap. the "wall street journal" is reporting sources of the talks between penn and the bankrupt fon tan bleu, saying it could fall apart. why would want to buy a las vegas business now. you would be assuming debt and it would take an estimated $1.5 billion to finish. treasure island sold for half that amount this spring. the fontainebleau would be on a part of the strip, something of a development graveyard right now. the echelon right now, across the street, is on hold by boyd gaming. the ad group hasn't done anything with a huge loss since paying over $1 billion for it just two years ago. open heimer says while getting into vegas isn't critical for