they've got to add. they're stuck in a position where they have to buy. >> if everybody's waiting for something, and this went for recessions when we went for years and years without a recession, if you're waiting for it and waiting for it, it's never going -- >> not never, it just takes longer than you think. the crash was in '29, 1937, eight years, right of waiting, but it eventually came. we wound up the rubber band and then let it go. >> i feel bad for the people who missed out the last six months. >> can't go up without them. don't feel bad for them. >> but they've missed. >> but it can't go up without them not being in. that's what makes for the dynamic. >> but if you were in for the drop and missed out on a 50% gain. >> if you were out of the dr pepper drop and got in february. >> you need them out to -- >> to keep it going.

>> and when was that we've been quoting him about 1700 for over a month? 1,700 on the s&p. he's saying the same thing. in the last 50 years, every bull market has been in the face of where the equity backdrop wouldn't induce you to buy. you would have plenty of reasons not to buy. >> jim grant who is not necessarily the most optimistic guy who said look at this. and he's optimistic with this thinks the bears are going to get slaughtered. >> points out that you could not get someone to use the words bull market for what we've seen. and after what we were through for the past 18 months, it's hard to say bull market, especially with unemployment, you know, going up to 10%. it just seems totally -- it seems ludicrous to call anything a bull market, but 56% qualifies as a bull market even though we're still well below where we were. >> right. not to say that we've solved any of the long-term problems. >> except that he says that the

negatives that we're all so aware of are right in front of our nose, that there's nothing that a market hasn't considered about this period. and markets digest a lot of that. >> like a car headlightheadligh only show so much so far in advance. it's hard to argue we dealt with. >> like which ones? >> well, government spending, death, trading balances. >> these are all good things. >> okay. busy week on the economic front today, the conference board releasing the leading indicators, forecasters expect the data to show further growth prospects for the economy. tomorrow the fed begins a two-day policy setting meeting. widely expected to keep rates at a record low, near zero. but chairman bernanke and company could use a more optimistic tone and signal ways to wind down some of those programs. on thursday, weekly jobless

claims and existing homeless sales, and friday consumer sentiment and new home sales, as well. >> we hear something really weird in the background. >> could be a fuse burning. no, it's like air. you can't hear that over there? coming from over there. whatever. watch the bond market this week. the government's scheduled to auction a record -- wow, $112 billion in debt. the fed's been on course, of course, it's one of the biggest buyers of treasuries and government-backed debt. that's going to continue this week, $116 billion. but we are going to, at least, it's got 80 points of downward pressure today. oil as we've been talking about a lot the last couple of weeks responding largely to currency effects even as we have the futures down this morning. and we await some inventory numbers starting tomorrow, down $1.38, the dollar is doing pretty well, rebounding off some of the lows we've been hitting

over the past couple of weeks. 92.15, yen, we nearly got a handle last week, stronger dollar seeing a lot of the prices down, copper just finished the third week down last week and we look at gold down 9.80, a couple pennies above $1,000 at $1,020. president obama had a jam-packed agenda this week. yesterday he made appearances on five sunday morning talk shows. starts today at community college in troy, new york. he says help spur innovation and transform the u.s. economy. later today heading to manhattan to tape an interview on the "late show" with david letterman. he'll attend the g-20 summit taking place in pittsburgh along with someone else. carl, you're going to be at the g-20. >> we're going to cover the g-20 thursday and friday. >> at that gathering, the president is expected to say he'll tell the world's leading

powers that the progress has been made in stabilizing the global financial system. he's also going to argue that a lot of work has to be done to produce needed jobs and growth. carl's going to be there with john harwood, those live reports starting at the g-20, thursday at 6:00 a.m. eastern time. >> make sure that does not run again. >> just you and harwood? >> and producers. you want me to name some of them, as well? >> no, but we're going to be on with you, though. >> we're not going -- >> but i'm going to be here holding down the fort and holding down -- >> dude -- >> i'm going to hold down the fort and be the right side of the -- >> we'll get you a green screen and put pittsburgh behind you. >> okay. i think brian williams is going to be down. >> i'm sure chuck todd, all of the big shots over at nbc. >> okay. >> i'll be watching. actually i'll be watching from here. then i'm going to be -- >> right here. >> i'm going to be watching you and harwood.

>> because i am watching you. . let's get overseas. first, though, in london louisa. >> we'll give you love from this end. the european markets lower by somewhere in the region of 1.5% or so. not being able to hold on quite to those 11 months gains, a little bit of money off the table on friday. and continuing a little bit today. the basic resources pulling down one of the worst-performing sectors this morning. there are reports speculating we're doing the rounds could be looking to take the large pile of cash and use it towards acquisitions and that stock is trading off around 2.5% at the moment or so. i want to draw your attention to one of the bigger stories, as well, rbs, the royal bank of scotland, one of the huge financial institutions on this side of the pond lower by 5.5%, considering a small reduction in

the u.s. of the government money to insure their bad assets, 70% stake controls. but expected to launch a huge rights issue. let's see what's going on in asia. >> not quite. actually it's chloe here. great to see you. we had a softer picture out here in asia. a lot of reduced volumes given a lot of the markets are closed, ie, japan, singapore, india, let's talk about china. we have the market actually trading mostly in negative territory for most of today. but as you can see, actually managed to pull higher by about .2%. we had some support from the retailers given next week the chinese are going on a week-long move because of the national holiday there. on the other hand, though, plenty of concerns about ipos coming on to the market today, we have the world's largest, second largest ipo, china metallurgical had a pop of 28%,

this is nothing compared to the average. we're talking about 60%. and going forward, there's going to be a lot of worries about the amount of liquidity coming on to the market, especially as we heard today, 13 approvals for ipos in this nasdaq-style board over in chen sen. 13 ipos together take up about $500 million. but already another ten companies are going on road shows to raise money. and these concerns appear to be pretty much justified given that the latest wire suggests that china is starting to limit financial companies ipos access to invest. so this is something that could impact sentiment out here in asia going forward later this week, as well. and what is also interesting to note is that in the past four months, chinese regulators have not issued any such licenses that would enable institutional investors including mutual

funds, private wealth management and also qualify those to participate in offline bidding. plenty of ipo concerns coming on to the market. and as for the other markets, the korean market snapping a four-day winning streak. that market is now included in the developed marked status. we're expected to see a lot more volume, liquidity coming down to the market. but stepping back by about .25%, but this market is already at fresh highs. and let me send it back to you. japan, of course, only comes back online on thursday. and because of the aging society, they're no longer calling it the golden week in japan, calling it silver week. happy monday, everybody. >> very good. let's see if we can make some decisions or at least learn something here from david, chief economist with nomora. and i kind of have a similar

question. david, deep recession, what do we get? a muted comeback or a spring-loaded comeback? >> muted. i think we're in a period. this quarter's going to look pretty good. we raised our forecast 3.5% for the third quarter. and looks like we'll be somewhere in the twos for the fourth quarter. next year, though, i don't think we're going to be much better than the long-run potential growth of the economy. i don't see the snapback with all of this debt. >> debt. okay. but compared to where we were, haven't we deleveraged significantly? >> oh, yeah, we've delevered, but have a long way to go before the process is over. and i think it's going to be an orderly and long drawn out process in which it's going to keep consumer spending growth in the twos for most of the next couple of years. >> that's going to be the paradox. it'll end up being good. the savings rate will go up, but it's not going to help companies that try to sell things? >> i think we have to be careful about the savings rate. it's not going to snap up to 8%

to 10% like some forecast. if it did that, we'd be in an even worse environment. but instead, i think we're going to see a gradual upward drift and along with that some easing of consumer installment debt and other forms of consumer debt. >> that was black and white. are we due for a correction? or too many people looking for a correction in the stock market? >> well, i think we are at a critical period. our investment strategy's been driven by the notion that the economy is stabilizing and is starting to turn. so i think that's been the most critical assumption when trying to decide how to invest. right now i think we're at an important juncture over the next four to six weeks where the better economic news that we've seen over the last several months needs to translate into better corporate profits. as we get into the earnings confession period and the third quarter earnings numbers, i think investors are going to be hoping for some translation of

better economic numbers into higher corporate profits growth. and that's where the risk will come. >> the less bad has been good enough. fedex, whatever was down 50% or something, but less bad and the stock goes up four points. could we see -- especially with the weak comparison that we're going to have from the same period last year, it shouldn't be hard to have positive comps, you know? >> well, i think you're right in that regard. but i think that a lot of the forgiveness if you were to use that term in the second quarter earnings reports was related to cost cutting. so in that sense, the less bad was good enough in the second quarter. i think that's an argument that is probably going to ware a little thin with investors as we look at third quarter earnings. they're going to want to see top line growth. i do expect further cost cutting, but i also expect investors to be a little bit more demanding on the earnings and that's why i think the market advance from here could be a bit more select i have as

we finish out the year. >> if we were to -- looks like today we're going to be down and we didn't -- we got up to 10,000, not quite, and people said that's a given. a lot of people said we're going to hit it. do you think that's true? or could this be the start of something where we could correct 5% or 10%? >> well, i think -- the market has run very nicely and, again, a lot of it is based on expectations of better earnings, continued low interest rates and that we have come back. but again, at some point there's going to have to be. but i think we are at a critical juncture where the investors are going to have to digest the specifics on a company by company basis in the third quarter. and i think that could give us some turbulence over the next several weeks. >> david, the dollar has gotten weaker and a lot of assets have gone up including equities. when does that become a head wind instead of a tail wind? >> i think it's going to be a

problem for a good while. i don't see the dollar turning around. >> hasn't been a problem, it's been positive. when does it turn into a problem? >> i think it's going to turn into a problem as investors start to come to grips. as allen said, the fact that there's not a lot of type line growth. the world economy led by the u.s. is going to be in a slower growth mode than seems to be starting price into the markets. and i think that the markets are going to be focusing on the dollar because the u.s. needs to be the center of leadership here and the g-20 meetings are going to focus them, i think. >> so when does it actually hit bonds do you think too? that would be -- that might be a double whammy. the worry that the decline gets disorderly and then the foreigners are going to -- >> well, for bond yields to move sharply higher, i think the economy's got to be much healthier than it looks like it's going to be.

start generating net demand for credit. and frankly, everyone's wringing their hands about credit supply, limiting growth of the economy. there's not a lot of demand for credit right now and that's going to keep rates relatively low until the economy gets some real steam behind it and we think that's not going to come until next year. >> thank you. thank you for this monday morning. see you later. >> thank you. >> thanks. coming up, we've got your business travelers forecast. plus president obama on a media blitz this week. we've got the events you cannot afford to miss. as we head to a break, let's take a look at last week's winners and losers.

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welcome back. monday's a good day for a travelers forecast. business travelers forecast. a lot of people on the move. scott williams of the weather channel is here. >> good morning, joe.

well, we certainly have some weather problems in parts of the deep south, especially along the i-20 corridor just outside metro atlanta. so expect some showers and storms from atlanta into the motor city today, also from the twin cities back down into kansas city. look out for some scattered showers and some thunderstorms. now, as far as some of the conditions to expect as we move along the i-20 corridor, slow go, flash flooding concerns, flash watches in effect from birmingham, all the way to metro atlanta, expect some delays around the world's busiest airport, as well. some low ceilings, scattered showers and storms this morning, temperatures generally in the 70s. also around chicago's o'hare, look for morning clouds and also a chance for foggy conditions to start. so as far as some of your overall airport delays, we are expecting some as we move into atlanta. look out in and around cincinnati for some scattered showers and storms. denver also and around the twin cities later on this afternoon and evening. now back to you. >> scott, thanks for that.

over at the weather channel this morning. the president making the sunday morning talk show rounds and as you might guess, health care was a favorite topic. >> the bottom line is that the american people can't afford to stay on the current path. we know that. and that both sides are going to have to give some. everybody's going to have to give some in order to get something done. >> john harwood is our chief washington correspondent from d.c. this morning. are you in d.c., john? >> i'm in d.c. >> very nice. so there are a couple of headlines coming out of this. he says he does not count on republican votes and he, especially with george stephanopoulos tried to argue that the tax for not buying insurance is not a tax on americans. he -- did he do any good? >> it's very hard to measure the impact. he's been out there a lot, lately, i think he's trying to provide air cover for politicians on the hill, democrats in particular trying to hold them together behind his plan. it's hard to know how beneficial those things were. he had a spirited exchange with

george about the individual mandate. but i think the president really the inside game is what's critical right now. the senate finance committee as you know carl's going to take up this bill this week. they've got 500 amendments to sift through and try to figure out if they can move the baucus bill to the floor. i think they can. and then you're going to get into the sort of end stage horse trading on the senate floor and the house. and the president's got a pretty good shot to get something this fall. but there's a lot of nitty-gritty work to do. >> yeah. except for health care, there's the issue of governor patterson here in new york and these reports that the president has asked him not to run for fear he might lose against rudy giuliani. how uncommon is it for a president to weigh in on state politics like that? and what does i say about the democrats' worry about losing an important state? >> it's pretty uncommon and pretty worried. david patterson was an accidental governor and somebody

who has not shown a great deal of dexterity in the office. and the administration is looking at the prospects for somebody like rudy giuliani getting into that race. and winning that state, maybe hurting the prospects for some house members. democrats have made some head way in taking away republican seats lately. and you can see that this white house has got some serious political antenna. the president's not reluctant to use his political clout. and david patterson doesn't like it too much. he's pushing back and may be bad news for the democrats. >> if you tell the guy not to run because he's not strong enough to run, he insists on running, his chances of winning arguably just went down, not up. >> yes, now it's a democratic state and who knows what's going to happen when you get into the campaign season, but the signs do suggest that republicans are headed for a pretty good 2010. and it may be in this particular case that new york state in that

statewide race and maybe some of the house races below are one of the places where republicans could make some headway. >> you know, ted, the late ted kennedy big early backer of the president. caroline kennedy hand picked maybe to get that spot and that did not happen. she was one of the favorites of the president, as well. >> no question about it. there's tension. >> there's tension and patterson doesn't do it and now, you know, there's a little price to pay for that now. >> definitely. and, you know, the white house always has to try to figure out, not just in white house but any white house, where do you weigh in? where do you weigh in in primary politics and instate politics? and this was a case where the obama white house, i don't think they tried to dictate that choice, but i think their sentiment was clear what they wanted was clear and he wasn't going there. >> we think you shouldn't run, get out. >> no, no -- >> oh, the caroline kennedy.

>> i think they said don't pick the the person he picked too. do not pick -- >> they were worried her house seat will then go to the republicans too. >> the democrats did hold nit the special, but that's one of the seats that could be at risk in the general election when if you've got a weak patterson at the top of the ticket. >> when are we going to find out what happens in massachusetts? >> well, we've got a race that's going to play out in early january. you've got people lining up on both sides pretty spirited contests. >> but they're not going to change it back -- >> i don't think so. doesn't look like it. >> so you're going to be missing -- >> yes. and democrats, this is by the way what i wrote about in my column, the democrats are going to have 59 votes and they're going to try to put that together with olympia snow who said some flattering things about president obama in an interview i had with her last week and see if they can get

past the filibuster that way. not going to be easy to hold all 59 democrats and not going to be easy for her to join them. but that looks like the most promising route of the obama health care plan right now. >> busy week. talk you soon. john harwood. >> are you guys -- >> i hope so. >> it's just that we're tightening the belt here. and hotel rooms in washington are outrageous. for an average room it's like -- >> but they're going to pittsburgh. >> that's right. you're always in d.c. when you're doing there with john. >> pittsburgh. >> well, that might not -- but it's starting the g-20. >> room rates are going to be higher than normal, vacancy. >> are you willing to? >> willing, able. >> you're willing -- >> eager. >> you guys compare notes. you would, you'll do it? >> following your lead. >> you could have some of the producers on the sleeping bags on the fu tons on the floor too. >> i'll take the floor, that's

okay, they can have the bed. >> i hope you're willing to do what -- >> you know i am, whatever it takes. >> you see all of this stuff that's happening. if you were to -- more stories about what they're going to do and we've got to suck it up here at nbc. >> are you suggesting there's going to be a change in control? >> you know what i think probably happens, if the vendy decides to get out i think we get one of our friendly private equity guys to take that stake. have it in friendly hands, i don't know about an ipo, i don't know about us buying it, but it's going to be fun to watch. >> yeah. >> i do know that ed zucker was a heck of a leader. but you know the thing about the public company, you've got to open your books -- >> something -- >> we're willing to do it. what's wrong? you're watching me dig deeper and deeper and deeper?

i'm like right about here now aren't i? >> zucker, great exec, we'll leave it there. >> there's a guy waiting for the ceo to shine, waiting to shine. >> already shining. >> shining already. all right. coming up, this morning eas top stories, plus the picture from the futures in chicago. all right hereby when "squawk box" comes right back. t. oh please. you got the presentation? oh yeah right here. let me stow that for you, sir. thank you.

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good morning, welcome back to "squawk box," i'm joe kernan along with becky and carl. the futures at this hour aren't indicating anything positive, at least so far. maybe it's the start of something. i guess we're going to head to the trading pits in chicago. >> that's right, we've got brian standing by of performance stress capital partners. and brian, we've been trying to figure out what to make of these lower futures this morning. obviously it's been 8 out of 10 weeks we've seen the stock market higher. this week we've got fomc meeting coming up. >> the fed meeting will be nothing, the gop meeting will probably be nothing too. everybody's going to pat themselves on the back. the only thing interesting in pittsburgh to see if there'll be riots or not. i think the interesting thing that happened over the weekend

and i'm with mario on this one. he said we've rallied a long way on technicals. we were down at the bottom and now we've come back. i think we have to start attaching the stock market to the economy again. the next leg up will be whether the economy gets better. are we really going to have growth? the bond market says no. if you look at the 30-day and the three-month treasury bill, they've fallen off a cliff, they're down in the single digit return. there's plenty of liquidity in the system, but it's also hiding. so i don't think the economy feels that well because there's people still hiding. secondly last week's sheila bair said they might have to close the banks down, we still have a bank problem in the u.s. where there's assets and commercial real estate certainly that has to be recognized. the fundamental underlying economy. marches don't end up well, and you can ask the residents of

atlanta. you can't always march in the same direction. >> people like jim grant who wrote over the weekend say you're very likely going to see a strong snapback in this economy because when you -- the bounceback always tends to reflect the opposite of what the downturn was, and this was such a severe downturn. you see a fear of upturn, or strong upturn when it comes to the economy. what do you say to something like that. >> sure, absolutely. and we have that 56% snap back. i think we've experienced the snap back. what we have to tease out from the -- >> he was talking about specifically about the economy when you start looking at gdp over 2010, he was talking about the economy. if you see the economy snap back sharply, does that mean you'll continue to see the stock market gain? >> sure. but there's one contra indicator anat's government involvement. i've said it this is a public policy show when you get away from the business because government in washington is so involved. i think he's right, we're going to have a snap back in the

economy but a lot of that is due to the stimulus money that's starting to roll in here. the fed is buying mortgage bonds to keep rates down. when they start pulli ining awa. we're going to find out if the economy can stand on its own two feet. next week, big regulatory hearings about financial markets. so there's more talk about how we can't down speculation which might have the unintended consequence of making credit less available and more expensive. a lot of longer term big issues being dealt with in the next two weeks. >> thank you very much. good to talk to you. >> comments and questions this morning, we'd love to hear from you. our address is squawk@cnbc.com. still ahead, the health pitch, new diagnosis out of washington, it seems like every day. what is this final bill going to end up looking like? we'll talk to tommy thompson who knows a thing about this or two after the break.

a star studded week of political power players on "squawk box." tomorrow, white house chief of staff rahm emanuel, tomorrower president bill clinton, and his former chief of staff john podeta. live in washington at the national energy summit with industry leaders and government decision makers. thursday and friday, "squawk" reporting live from the g-20 meeting in pittsburgh. president obama gathering with other heads of states. the global economy front and center. an epic week of "squawk box" starting at 6:00 a.m. eastern.

what i've said is the public option, i think should be a part

of this, but we shouldn't think that somehow that's the silver bullet that solves health care. >> the president appears on the sunday talk show circuit pushing that health care overhaul plan. former wisconsin governor tommy thompson was the health and human services secretary in the second bush administration. he's getting up early for this morning on the west coast to join us on the conversation. good morning to you, governor, good to have you back. >> good morning, it's always a pleasure to be on "squawk box." >> not just the message from the president, but the way he's delivered it. have you ever seen a president go on so many talk shows in one day? >> no, i never have. but i don't think anybody else has either. it's quite remarkable that the president is on every talk show and is speaking so often on health care. it's obvious that he considers this an integral part of his presidency and whether or not it's going to be successful. and you've got to look at the plans out there. there's a lot of confusion. and the democrats feel very strongly that the president's

the only one that can really sell it and he's out there doing his job. >> when you look at the myriad plans, would you argue that the baucus plan as we now know is it t template? >> no, it is not. probably the template in the senate. but you also know that speaker pelosi and chairman miller and wrangle and all the other people that have been involved in this thing have all said they're going to have a public plan that's going to pass the house. so you're going to have the public plan passing the house, a modified co-op passing the senate, and then you're going to go to conference committee. and i would argue with anyone it will have a public plan. >> why would a house measure win out when it goes to the conference? >> take a look at the individuals that are going to be on the conference committee. speaker pelosi, miller, randall, stark, and the individuals that are really dedicated to a public

plan are absolutely believe this is their last best chance to get a government-controlled health care. >> and you don't believe the math in the senate is a significant road block to that? >> no, i do not. i think they're going to change, go with the nuclear option. yesterday on the talk shows president obama said he didn't believe he was going to get any republican votes and if he he doesn't believe, that means that the whole health care debate and the bill that's coming out of both the senate and the house is going to be much more to the left. and that is in order to get the necessary votes in the house they're going to have to go to a public option. and that's what i believe is going to be the final thing. and i think when it gets to a conference committee, the president has many ways to convince wayward members to vote for it. give one more vote for the president. i'll come in and do a fund raising for you. i can help you get a special project through. there are many ways to convince a committee or a member that

it's necessary to vote this particular way. >> he's going to start getting challenged, the president on the degree to which this is a tax increase. he got challenged yesterday on the issue over the individual mandate, the story in the times this morning about how taxing some of these cadillac plans is likely in their words hits more of the chevrolets than the cadillacs. is that not going to resinate with some of the members of the house you're talking about? >> sure, it is. there's no question about it. but look at the numbers. the individual members that have the liberal coalition in the house have about 65 members. the blue dogs and the more conservative members in the house have about 45. and the individuals that are on the liberal side, the individuals that really believe that it's necessary for a public plan really have the majority members in the house. and i am certain that with speaker pelosi leading it and saying she has to have a public plan they will get it out of the house. let's just assume they get it out of the house and goes over to the senate.

the senate will reject that and take up a baucus modified plan because the baucus plan is really not going to have the support that is necessary to get it passed. but they'll make the modifications. they'll have a co-op or a trigger in it. and once that co-op and trigger goes to a conference committee, i think it's going to morph into a public option plan much more so. and there will be the tax increase and it's going to have a lot of opposition. but when it is all said and done with all of the movement forward and the fact that congress feels very strongly that they have to pass the health care bill, i believe the only thing that's going to come out of there that's going to have enough votes will be one that has a public option and that is the thing that really scares me a great deal about the reform. >> do you see the republicans able to make the bill anymore palletable, or are democrats going to ram it through the without any give? >> i think you're going to see modifications this week in the mark-up.

you're going to see the republicans putting amendments in. some of those are going to be adopted because senator baucus really would like to get senator grassley, especially, into a bipartisan bill. and i think they will make some progress as far as a bipartisan bill, one that is less onerous than what the house is going to pass. that doesn't mean that once it passes the senate and it may even have a couple republican votes. but when it goes to the conference committee, the house will reject that modified senate bill. it goes to a conference committee. and that's where the real horse trading and that's where the deals are going to be cut. and that's where, i believe, that you'll find the public option coming forward for -- front and center. >> interesting. a lot of times we hear that the house is where the fringes are and the senate sort of knocks them back into line. but you're seeing a different kind of dynamic takes place. >> well, when you've got the house and the president supporting a public option, that's a powerful source. and when the house says they

won't pass a bill, that health bill, they've got 65 members that say they will not pass a house bill without a public option, it's pretty strong saying that they will end up with a public option. that's where i think will eventually come up. >> governor, we will see and we hope to have you back sometime soon. good to see you again. >> thank you very much. always a pleasure. all right. coming up, we are squawking off set. we're going to head to the chairs and share some of the stories that have us talking this morning. tomorrow on squaux "squawk box," the push for health reform, keeping the economy going, and the one man keeping track of it all, opens up to "squawk." president obama's chief of staff rahm emanuel in a rare interview. that's tomorrow on "squawk box." in these turbulent times,

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cloudy with meatballs. it's a book. i didn't know it was a book. it was just read to me not too long ago. >> as you were going night night. >> penelope read it to both of us. >> $30 million.

>> two of the producers were children when the a team was on. i want to talk about bill clinton and the cover day. 79 interviews given to taylor branch, george mcgovern's campaign manager in texas in 1972. but a lot of really interesting stuff. he'd call up clinton -- clinton would call up taylor branch in the afternoon and say i've got a couple of hours at night. clinton loves to talk, loves to talk about himself, obviously. and interesting things that happen. here is one tidbit. boris yeltsin's late night drinking in 1995 almost created an international incident because the russian president was standing outside blair house in the middle of the street in his underwear just slurring and stumbling when the secret service a little found him there, only in his underwear, standing alone on pennsylvania

avenue trying to tell a cab he wanted a pizza. >> boris yeltsin. >> then they found him the next night, the same thing. avoided security, was drinking again and almost got shot by somebody. they thought he was an intruder. >> the rules behind interviews were, i'll tell you this stuff but you can't use it until -- >> i guess so, until after his on memoir. there's an interesting thing, you get some insight into maybe the bad blood that gore and clinton, what happened after 2000 where gore had lost and met with clinton. clinton said i was underutilized. if you had dispatched me in cedar, arkansas, new hampshire, he was popular in both ways, he would have swung it gore's ways. he replied the scandalous shadow of the lewinsky affair followed him everywhere and the two men

exploded. not a whole lot. but i don't think he felt comfortable about that hole affair. >> history is colored by these tiny moments of relationships between people. >> are you interested in this? in clinton? i'm interested. >> yeah, from a historical purpose. >> it's been enough time at least for me to mellow a little. i appreciate it. >> it's great. >> he'll be on with us tomorrow, too, president clinton. >> yes. >> how is that? >> he's on the show tomorrow? >> on the show. why didn't i see his picture. >> rahm emanuel and bill clinton. >> that's fun y. i saw rahm and i didn't notice -- >> you didn't notice the former president. >> 38 million people -- 54 million people have some small amount of dementia.

i read that this morning. i thought there are times when i feel myself -- i feel myself slipping a little bit. >> did you watch the emmies last night? interesting, "mad men" winning again for best drama," "30 rock"" third straight years the best comedy. tina fey thanked them for keep it on the air even though viewership is not that high. "mad men" said they worked very hard not to have it stink. amy poler and julia lewis dreyfuss about how much people would watch tv. they said they were honored on the last year. >> did you see it? >> i didn't. >> couple of surprises. >> i don't know what any of

this -- >> i know. coming up, top stories. if he builds it, will they buy it. tishman construction, his take on commercial real estate and more. on cnbc, first in business worldwide. you're watching "squawk box" on cnbc, first in business worldwide.

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good morning. one of the president's top economic advisors warning of commercial real estate pitfalls. how are companies with money on the table feeling about the state of the industry?

guest host will give us his insight. investors getting ready for a two-day finance meeting, encouraging words for wall street. one of the most promising words on health care tells us what it means for insurance companies. "squawk box" begins right now. good monday morning, welcome to "squawk" on cnbc. i'm carl quintanilla with joe kernen and becky quick. dow coming off the bess weekly gain in two months, although we have some downward action, downward day in asia as we get ready for a week filled with activity. the fed meeting and g-20 and so forth. we're going to start the day off 70 points below fair value. oil with a stronger dollar might be coming off a little bit. $1.51, 753. ten-year note a lot of treasury supply.

$100 billion worth yield on the ten-year, 3467. dow off the lows we saw. on the board, close to 92 again. almost to 80, just under 90 earlier last week. then with a stronger dollar gold is off a little, still above 1,000 at last check to 1,000170, down $8.60. >> shell announcing acquisition for perot systems. it's a $3.9 billion. market cap at 18, 2.16 billion for perot systems. bid is 27, ask is $29 a share, create a comprehensive computer focus i.t. service company it says. not subject to financing. it's cash for $30. it will be a tender offer to

acquire all outstanding shares. the directors expected to consider ross perot jr. chairman. he'll probably, i guess, stay. it will add to fiscal year gaap earnings in 2012. >> i mean, that's really interesting, pro syste interesting, perot is a service company, you wonder if ibm -- ibm has going towards services, services, building thaup. you wonder if it's news for that. they consider it a premium asset with great people that enhances opportunities for immediate and long-term growth. again, you mention ross perot jr., chairman of the board of perot systems. he talks about this, too. >> guest host. >> we've visited him in texas. these companies are based in tech. when my father founded perot system he envisioned global technology leader new built on the promise of the success by taking expertise to more customers than ever.

>> $8 billion of service out there. >> biggest thing coming back. done a lot of things to right the ship. this is ross perot jr. >> dana carvey. in the media, right? >> not bad. i'd give that a b minus. pretty good. good day for texas. one is round rock, the other is plano. >> will you show me how it's done with him. >> after the show. >> do you do him? >> it's been a while? >> do you do dana carvey doing him? >> i'll think about that. that's getting a little tripy, i'll try. you were talking about the name. >> i finished. we gave all the information we have on the m and a. i'll give you dell's quote, closed at 1669. so dell is going to -- even

though it's a cash deal you are seeing a little weakness, 1568 to 1609. >> you're talking about a lot more m and a over the last two weeks. series of deals or potential deals. >> yes. >> all right. our guest host this morning is one of the world's most successful and innovative builders of commercial real estate. dan tishman, chairman and ceo of tishman construction. great to have you. >> good morning, becky. >> he's very concerned about what's happening in commercial real estate, still thinks there's something we should be watching there. you're somebody that knows this inside out. this is something we've heard from many people in commercial real estate. is it significant the government seems to be taking notice of it, too? >> it's very significant. it's a bit refreshing. as i said for the last year, commercial real estate perhaps the second shoe to drop, the lagging cater, getting through the housing issue, single-family

housing issue, consumer, the numbers that have been involved in commercial real estate in all sectors are staggering. trillions of dollars. in 2007 $3.5 trillion initiated. in the next five to seven years, the rollover of that $3.7 trillion worth of commercial mortgage money is going to have to be refinanced. the capacity just isn't there. >> what does the government have to do? what's been done to this point and what do you think it needs to do to facilitate some of those transactions? >> the government has to do a number of things. number one, they have to find new programs. they have the talf program which is good but it's set to expire at the end of the year. that needs to be extended. they need to start distinguishing between

properties that are performing that have good asset value but are in the market to be refinanced and just can't find any financing. that's the creation of any sort of government entity like they have in many industry whether it's loosening some of the regulations on servicers, the servicers are able to extend without liability to their shareholders. they have to be creative. in a good year, there was only ever about $40 billion worth of bank lending available. the other part is the mortgages are divided up into three or four different sectors. insurance companies lend, banks lend and then there's this amorphous thing, cbbs, commercial mortgage backed securities but there's problems in all those sentors. >> what was the number that needed to be financed? >> there is a total outstanding of $3.4 trillion. >> all right. what is -- how much is it under

water in what would you say it's actually worth? >> it has to be divided up into the various sectors, some say 20 to 50%. >> 20 to 50%. >> depending. >> who eats that? >> hope fully nobody did. >> how does that work? >> well, some of the diminution of value is significantly related to the fact if you had to refinance tomorrow you couldn't. but if you had to refinance perhaps in three years, the value would rebound, because the value is directly related to the ability to refinance the property. >> so it's almost like you're not going to market to market. >> there's a lot of not marketing to market going on. >> that will work. >> it should. >> we don't need to -- how much do local and community banks -- they don't hold a lot? >> i think they are very exposed. >> they are? that's why we're doing to lose another 1,000 banks. >> there are huge numbers of expected bank problems.

>> how about reits. >> reits are doing well? >> they don't own a lot. >> they own a lot but they have the ability to raise capital. there's a lot of money in the guidelines. last week was a banner week for reits. tons of money. you can look at most major reits in the country and they have all done essentially rounds of new money raising which will help them defer some of their -- >> in terms of the actual refinancing, when is the first test? >> it's going on right now. >> this year probably in total about $200 billion worth of financing that has to be done, about $70 billion cmbs market. the properties are distinguishing themselves. right now the properties are -- there are a large number of properties are assets, making investors money but can't find money to refinance. they will probably get breathing room. there are also properties which

just speculative by nature that aren't performing and cash flow. perhaps those are the ones. >> was there a bubble in commercial real estate? we can talk about how if we can hold things off three years and a lot of people can refinance, valuations will be back to where they are now but not necessarily back to where they were a year ago. >> i suspect there was a bubble in value. it's different from the last traumatic downturn, the late 80s, early 90s saw a tremendous amount of speculative building going on. the bubble created by an oversupply. today the bubble was created by i think an overeagerness of lending. you know, one property being acquired and then being lent on and lent on and lent on. there was a ladder approach. as long as you could make a small return through your interest rate, there was reason to take that package and resell it. there were multiple levels of

return that were required for each property. that's, i think, how the bubble happened. i'm not sure we will see those values. there are all sorts of prognosticators out there. we certainly won't see the values come back in a year or two or three. >> dan will be with us for the rest of the program. we have much more to talk with him about. again, we should mention that news that just broke we told you at the top of the hour. dell buying perot systems. we'll speak to the ceos of both companies live on "squawk" in just a few minutes. up next on "squawk," we've got your tools of trade, oil, gold, currencies. we've got it all for you as we come back this weekend and get set for a full week of trading. let's take a look at the most widely held stocks. "squawk box" will be right back. we are first in business worldwide.

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aflac trivia question. on this day in 1793, george washington laid the cornerstone to what historic u.s. building? the answer, the united states capital building. the home of the legislative branch of american government. >> all right. if you are just waking up, here is some news that broke in the last 15 minutes. dell is buying perot systems for $3.9 billion, $30 a share, cash deal, not subject to financing conditions. it's expected to close in dell's november to january quarter and dell is saying at this point it will be 2012. we'll be speaking with ross perot jr., chairman of perot and michael dell, chairman of dell in a few moments. again, voted on by both boards and expected to close in the next quarter for dell. federal communications

systems looking to enforce rules that would keep internet service providers from the flee flow of information among networks. the proposals would uphold president obama's campaign pledge to support that so-called internet neutrality, treatment of all internet traffic. verizon or at&t from blocking slowing services that flow through their vast networks. >> oil, commodity, gold, kerr from kerr trading international. he'll be talking gold. kevin, you used to talk oil a lot, too, didn't you? >> kevin here? >> no, kevin is not. >> all right. peter, tell me. the most confusing thing about oil for me is announcing gasoline prices come down, not much weakness in oil. they can trade separately based on the amount of inventory we

have in gasoline? >> yes. gasoline is its own separate commodity and we do have a tendency to see the differential between crude oil and gasoline start to compact to its lowest point in the autumn. normally what happens, once we get into march, april, may, that starts to separate again. then we normally see the highest differential between gasoline and crude oil between july 4th and labor day during the peak season, peak driving season. >> as far as oil goes, peter, what's your forecast here? i mean, it has had trouble getting much above. there's a lot of calls for $85. it didn't happen but also hasn't cracked either, hasn't pulled back at all. what's going on? is it investment money again? what is it? >> we have a lot of investment money in this market. we have two completely different

markets. we have oil and commodity, which is probably worth $55 or $60 based on the supply and demand. we have oil as an asset class or investment and that's what people are saying could go to $85 based on the recent breakdown in the dollar and the recent breakout to the upside inequities. those two factors really hadn't been oil market fundamentals for 25 years between '82 and '07. we really only spoke about equity markets on black monday in 1987. that was only time i remember it being a factor until years ago. now when equities are higher, the economy is getting stronger, more oil demand. as a result we're seeing it as a bullish factor. at some point the two will separate because higher oil prices are eventually going to be seen as in imcal to higher prices because they are inflationary and they take money

out of the consumer's pocket. >> you know, peter, i just keep hearing about what a glut there is. there is a glut or not? >> there's plenty of oil. >> sooner or later doesn't hispanic crack one way or the other if there's too much? >> yeah. i personally feel we should be at 55 or 60, if we didn't have equities or the dollar intervening in this and being extraneous factors that are bringing in investment money that is not traditional commodity money, we would be substantially lower. and i do believe that particularly if we see an october high in the stock markets, we often also see an october high in oil markets, then we normally see prices move lower into march. so i would not be surprised if at the end of february, early march, we were looking at an oil price of $55 to $60. i think that's really where it belongs. we have more distillate than we've had since january 1983 and

we haven't even started winter yet. normally we build during the month of october, more than we have in previous years. we may not this year. refinery margins are very, very low right now. there's no real reason to make extra heating oil before this particular season. >> what do you agree and disagree with? >> i agree it's trading as a speculative commodity as it did last year. we had a lot of interest and memory up to $147. there really wasn't any demand to push for that. that was supply, supply of people in the market looking for a trading venue. that's what we're seeing here now. you have the stock market is stronger and you have the dollar weaker. both of these are points for traders to buy oil regardless of demand but traders to buy oil. i think that's what we're seeing. >> how long -- >> go ahead. who is here? >> it's investors more than traders that see that as the reason to buy. but i have to agree completely.

that's why we are where we are. that's why you see some of the big investment bankers talk about $85, because investment money is looking at oil as an asset class rather than as a commodity with its own unique supply and demand factors that could promote a price that would be substantially lower. >> are you here now, kevin? >> i am. >> were you here before and you thought it would be funny not to answer me? >> i always like to make a dramatic entrance. >> thanks for being here. you can talk a while, too. you want to talk gold. barons, 10 to 20% pullback then back up? how do they know that? >> i don't know. i'd like to find out. i'd like to see a pullback. we've got a couple of thips going on. ins, dollar decimated. a little pop in gold could get a pullback. we look at this as more of a buying opportunity. look, all the things in place,

we've been driving gold higher, weaker dollar, zero and negative interest rates, these things are going to continue. fears of hyperinflation, china moving people into gold, encouraging them to buy gold privately. hong kong recalling its physical gold from london. all of these things are really in my mind creating a paradigm shift in the view of gold. >> first thing you said about zero interest rates and hyperinflation, i don't see how that works. >> there's a little disconnect. >> maybe the fear of hyperinflation down the road from all the excess printing of money we constantly hear about and the stimulus, this is a real fear in the market worldwide. i know it's very difficult to accept the fact that the lar may not be the reserve currency going forward. i know there's a lot of crazy talk. i was at a dinner a couple weeks ago, having a very meaningful conversation with another bull on gold. his comment at the end was, gold

is going to $25,000. now, it's hard to have a meaningful conversation when you're talking about that pricing. but i think gold at $2200 by the end of 2010 is very realistic. >> i know guys like, that too. was that you? >> that was probably me. >> that was you at that dinner, $25,000. >> i was in the back. >> have you got comments on that? >> a lot of what's doing on, seems to me right now, is being driven by trading activity, what you call investment. it is money going around the world looking to make returns when it's questionable that it can find returns at least of the degree it wants in normal economic activity. i think that's what we're seeing. we see it in oil, seeing it against the dollar. seeing it certainly in other commodities. seeing perhaps in some degree the stock market. this is, i think, a function which is a real shift in the way our financial world works of the ability to chase returns almost on a second to second basis. >> seems like you're putting the

cart in front of the -- i don't see why deciding that something should be higher, even if the fundamentals don't warrant it, enough momentum happens and money flows in, one person pays more than the last person but no underlying reason for moves to be made. >> true. but from a trading point of view, as a trader, totally irrelevant whether there's any basis for it. >> there would seem to be a day of reckoning when there's a big air pocket under the reason for the price there and it comes crashing down. >> that's true. you'll see, get the kind of events we had last fall in the spring, but there isn't anything right now to spur that besides, the money still has to go somewhere. it went to treasuries last fall. so it will go somewhere else. you'll get the same type of move in a different investment commodity. >> thanks, joe. thanks for finally answering me, kevin. appreciate that. real funny. he was right over there. >> he wanted to leave you

hanging. >> exactly. exactly. thanks. thanks, peter, you, too. >> cricket got in my house. you don't want a cricket in your living room. >> what happened? >> i guess maybe met an untimely -- i don't know. how long do they live. >> put him in a couple and put him outside. >> i could not find him. i looked everywhere. when you get close they stop. >> they are smart. they know you're going to whack them. >> exactly. >> again, dell buying perot, $3.9 billion deal all in cash. we're going to be speaking with michael dell, chairman and ceo of dell. also speaking with ross perot jr., chairman of perot systems. that's coming up in just about ten minutes. up next on "squawk box," ceos of america's health insurance plans on fixing america's health care crisis. much more right after this. prfr check out tomorrow's

"squawk box" lineup, live interview with former president bill clinton, former chief of staff john podesta and president obama's chief of staff rahm emanuel in a rare interview. that's tomorrow on "squawk box."

tomorrow on "squawk box," mayor rudy giuliani joins us on the set. the market in washington among many talking points. that's tomorrow on "squawk box." "squawk box," a show that giuliani, president clinton, rahm emanuel, john podesta. you really think that's not -- >> so what you're holding. >> are you there? rebels and icons. that's our add. >> we look very sweaty. >> becky, you look -- that is

huge. they like us. they really -- >> all right, sally. >> did you ever think you'd be saying -- i know 15 years ago i didn't think i'd be saying, president clinton, rudy giuliani -- >> we're a policy show. >> you know we have in a couple of minutes? ross perot and michael jr. >> i'm nervous and furious. >> let's get a check on markets. we've been watching futures. they have been under pressure. talking about right now futures down by -- you're talking about 70 points at this point. we're watching everything that's happening. things could change because we have seen activity. in the last 30 minutes an announcement dell will acquire perot systems for $30 a share in cash, $3.9 billion roughly for that acquisition. perot systems closed friday at

$17.09. this represents $68% premium for perot, bid 29.70, ask 29.78. this is a cash deal. that acquisition is supposed to help dell provide a broader range of i.t. services but we'll be speaking with ross perot jr. and michael dell in a few moments. european union presenting e-mail evidence shows intel illegally pressured computermakers to use its chips rather than rival affirm md. they were fined $4.5 million in may but has appealed that fine. the justice department is objecting to a settlement between google and book authors and publishers. the settlement gave google rights to books. it raises significant legal concerns including google possibly earning money that is rightfully due to authors instead. >> thanks, beck. president obama has a jam-packed

week this week. yesterday he made appearances as you know on all five talk shows. he starts today at a community college in troy, new york, plans to discuss already in place programs he says help spur innovation and transform the economy. later he'll go to manhattan, tape an interview on the late show with david letterman, speak to the u.n. general assembly, attend the g-20 summit in pittsburgh. he'll tell leading powers progress has been made in the financial system but a lot of work must be done to produce needed jobs and growth. we'll be obvious there live from the g-20 at 6:00 a.m. eastern time with john harwood while becky and joe join us from here. >> carl won't be down there, then you brought up your own picture. you're an unbelievable -- >> that pick is four years ago. >> you're just a huge self-promoter. >> you're bringing the picture.

>> he's not giving the cue to bring it up. >> let me read it next time. >> be my guest. >> i will shower you with the type of praise you gave yourself. >> now i'm really afraid if that's what's going to happen. >> we should assume. i'm going to stop acting like i'm excited about it. this is not a big deal we're having a president -- >> even though we are excited. >> we are. let's turn to dan tishman, ceo of tishman construction. talking about g-20, a lot of discussion about government stimulus and policy. in terms of instruction, public construction stimulus has not given us the bang for the buck, right? >> correct. stimulus has yet to come. we hope it does. it's been disappointing. despite $800 billion worth of stimulus program, the piece of it that impacts our industry, which i think has the greatest impact on employment in the construction industry, the numbers are very clear.

$90 billion was allocated to infrastructure, government programs, really only about $55 billion was related to constructi construction, only $31 billion has been earmarked for specific projects. very little has been did he moid. in july construction spending actually went down. total construction spending went down in july by about 3%. that's the lowest it's been since 2004. it's thought perhaps that's because the money has been identified but not deployed yet. >> governor rendell, coming on a little later this morning, mayor michael bloomberg and rudy giuliani, i believe, are they pushing for this, to try to get more money towards infrastructure? >> they have -- governor rendell. >> i'm sorry, schwarzenegger. >> has been the leader. the sad irony, there is one area we know china is cleaning our

clock. china has deployed $250 billion worth of bricks and mortar stimulus. they have spent about half of that. in addition, most importantly they have developed bank lines where there's about another trillion deployed for real estate and real estate spending. >> can i ask you a question but i don't want you to get mad. >> i'll try not to get mad. >> big democratic supporter, fund-raiser. any fire for support at this point? >> i tend to be a supporter of people that do the right job. i'm a huge supporter of pat aci. i did support obama. i think he's on the right track. there are some things i don't agree with him. the owner of a mid-sized company, we feel the tax issue very, very dramatically.

for companies like us it has a direct impact on our employment. we can't carry the burden for a lot of social programs and not have it affect our bottom line. we treat our people well and give them great health insurance, great benefits. as it becomes more expensive to do business in an economy where there's less business to do, you know, it's a challenge. i think on balance of things i believe in, he's leading us in the right direction. >> so the balance between government and -- even the president sums up what all of this comes from, all the divide every day, one side thinks there should be more government. the other side thinks there would be more -- the balance is good -- >> i think the balance is rebalancing from the last administration. i consider myself -- >> the last 30 years. >> well, maybe. but i think -- i can see myself a social liberal and fiscal

conservative. i think the current administration is trying to deal with a lot of things they perceive as problems. we all know when you're running a business, he's the most powerful ceo in the world, he's trying to deal with what he perceives are a lot of business problems and unfortunately he's forced to have to deal with them all at once. >> mr. fix it. >> there's times when you say you can be a social liberal and fiscal conservative but to do all the things socially almost makes it hard to be the fiscal conservative. it almost seems like it can be somewhat mutually exclusive. i'm not talking social morays, the religious right, if you want to provide everything for every society that can make it difficult. >> i'm not so sure the answer from my perspective is to provide everything for everybody in society. i think it's to give opportunity for everybody that wants to make a meaningful impact on society

should have a chance to do that. >> in case you're waking up, we do have a monday morning deal. dell is acquiring perot for $3.5 million. joining us, ross perot and michael dell. good to have you back. good morning to you. congratulations. >> carl, thank you. >> michael, let me begin with you. how long has it been in the works. should people now start thinking of dell more as a services company than a hardware company? >> you know, we've been partnered with perot systems for several years now. this has been an ongoing discussion over the last several years that ross and i have had, so it's not a new topic. as you might know, the combination of these two will create an $8 billion services

company. so dell has, in its own right, substantial services assets. and the addition of the perot systems capabilities will broaden the ability for us to serve a much wider set of customers. certainly we'll take those appear ability toss a new geography. we think it's a exciting opportunity. it's all about growth. >> ross, do you want to tell us how the specific deal came to the table and your initial reaction. >> michael and i have known each other for a long time. michael has been a good customer of perot system. michael is a good salesman as we know. michael talked to us a lot about this. we talked this summer and realized michael had a good idea. it would give us tremendous reach around the world, scale around the world. carl, as you know, we had huge

opportunities in china and india. teaming up with dell will give us great scale to catch these opportunities. it's a huge new mountain for us. to go back to your first question, we at perot intend to make dell a services powerhouse. we're going to work very, very hard to add huge strength to this great dell company. >> gentlemen, this is $30 a share in cash, cash deal, that is not subject to financing conditions, which is interesting given the backdrop. i guess if you could both tell us a little about how things will change when you put these two organizations together. do you expect you'll see layoffs? how will you streamline things? what's the organization going to look like after this goes through. >> it's fundamentally about growth. because the capabilities of perot system are really quite different than ones that exist within dell, this is a foundational acquisition that creates a new pillar of growth

opportunities for the company. so we see much more expansion opportunity and we're very excited to bring really a fantastic team of colleagues into the dell organization. >> michael, it's been a while. you look like a seasoned ceo. you've got a little of what i've got coming in here. you don't look like that college guy worth $12 alabama or whatever it is. you came back, single digit stocks, some people say the dell model which got you to where arguably one of the most successful startups in the history of the planet, but has that ship sailed, the way that you used to do it? does it not work anymore? have you had to reinvest everything? is this part of it? >> joe, if you look at our last quarter, we generated $1.1 billion cash flow from operations. so i feel pretty good about the

business that we have. certainly there's been a pause and slowdown in buying in our sector, but we've really been transforming dell in a number of ways. one of the ways that we're doing that is becoming a solutions integrator, providing the best value solutions to help companies run a very efficient enterprise architecture and enterprise solutions. the addition of the perot systems team here will really allow us to extend that to a much broader set of customers, much broader set of solutions. >> letting, you know, building things with components that were going down every week and then being able to undercut it, just that whole model seems to -- i mean, have you thought about being a gadgetmaker like apple

or consumer? i mean, what did you finally decide on to go into the 2010 at this point? looks like service? >> our business is pretty broad, joe. it expands certainly, you know, the data center and services and servers and storage. we did an acquisition about two years ago of a company called equal logic, made us the number one provider of storage in the fastest growing area. you know, that business is about four times larger than it was when we bought it just a few years ago. certainly we continue to provide the client products, the products you see in front of you, desk tops, notebooks. and we do that for a broad range of customers, 10 million small business customers. we sell directly to consumers

with 100 million visitors a month to dell.com, 42,000 retail locations. our business is very broad in its scope. now we're expanding those capabilities to bring more solutions to more customers around the world. >> ross, maybe you can tell us a little bit more about some of the growth opportunity. where do you see that specific growth, more of an international story, u.s. story, who are some of your customers? >> i think it's both. it's international, it's u.s. but certainly half of the perot systems business is health care. we're in the middle of this huge health care revolution around the world. to be able to work with the dell channel, dell sales force in 180 countries around the world it gives the perot product great reach around the world and gives our team huge opportunities to grow and be part of this exciting dell story. we think the big focus on health care, big focus around the world, but certainly a strong u.s. focus and strong focus on u.s. health care industry. >> ross, sounds like you're

anticipation something coming out of this process in washington regarding health care to involve this electronic records. is it as simple as that? >> electronic medical records. technology will drive the efficiency we're going to need in order to save the health care dollars we're going to have to have as a country. i think the key, it's a u.s. problem. it's also a global problem. as i mentioned to you this summer, we're very active in china. chinese have the same health care challenges we have in the united states, the indians have those same challenges. every country around the world has to improve their health care and has to improve their efficiency in health care. it's a massive industry. we at perot are the experts at it. now teamed up with dell we have that firepower to really be the dominant player around the world. >> ross, how worried are you broadly about small business's ability to expand or at least get the financeing to expand right now? we keep hearing worries about regional banks, that they are the life line to small business around the country. but the lines of liquidity at

least at that level of clogged. is that true? >> small business is the heart of the american economy. small business we all have to worry about the banking system it is difficult to get the lines of credit, keep the small business going. i think the fed is focused on it. i think the government is focused on it. as we start to come into this recovery, you should see the banks ease out businesses, find the capital. a great business will find the money. there's plenty of money on the sidelines pt it might be untraditional money. they can find the money. we at perot, perot group, loaning money to small businesses and companies that need help. lots of private groups like ours that are active in this business. that's where you can find different untraditional sources of capital. the american people are optimistic. they are tough. american businesses are tough. we'll get through this one more time. what's going to be great, we'll be stronger and better when we get through this recession than we are today.

>> you know, the perot to 10, you're paying 30, could you have paid 25, you couldn't talk him into 25? comment on what i thought would be a gap in 2012. >> that's two years from now. >> becomes a gaap, is it different for non-gaap? >> we don't report -- >> never -- that never is an issue at dell at this point. you do all gaap. >> we do all non-gaap here usually. >> we'll certainly consider that. >> maybe it can be a creative this year. >> could you make your reports more friendly to us, that would be great. >> it would help us a little bit, why go all the way to -- make sure there was no question it was going to be done at 30.

>> we think it's a very fair and full price. certainly this is a great asset, and, you know, one that will be a fantastic addition to dell's global capabilities. >> ross, let me ask you, the last time we spoke with you, you were in china. you were negotiating some of those deals. you are seen as the key salesperson for perot systems. are you going to be actively involved on an ongoing basis? >> i will. i'm going on the dell board. so michael and i are going to be making sales calls around the world, which is going to be a great experience and i'm looking forward to that. we're going to be a very strong team and we're doing to win a lot of business and it's going to be a very exciting time in this next chapter of perot systems and dell. >> michael, can you tell us a little about what you see in the economy right now? obviously it's been a rough down turin for not only america but around the globe. are you seeing some signs of a

resurgence? >> we saw in our second quarter that ended at the end of july an 11% sequential increase in revenues in both the united states and the non-japan part of asia. we've sort of moved from the stability theme to a little bit focus more on productivity. that causes organizations to really start thinking about tools again and, you know, as we said about a month ago, we do think there has been a very large deferral of purchases. and with, you know, a new products cycle coming, with new processors, new operating systems, new applications, new tools like virtualization, you know, the -- there will be, i think, a pretty healthy 2010 as far as spending goes in our sector. we're not, you know, kind of

calling for a v-shaped recovery in the tech sector. i think there's still plenty of reasons to be cautious, but, you know, we feel very good about the position that our firm is in and the opportunities in front of us. >> do you think more caution coming from business side or from the consumer? >> in our beneficiary, the stability is the key theme. there's been some nice growth in consumer, the public sector we have a particularly strong performance in our global public sector organization, 20% sequential improvement from the first quarter to the second quart quarter. commercial organizations large and small, i would say there's been a gradual improvement month

to month going from kind of late spring through to this period. but it's not, you know, a tremendous increase in demand. >> you know, ross, you also mentioned health care is one of the huge areas where you're going to see growth from perot systems and now from dell and a larger source. is that reliant on what happens with some sort of health care plan passing through the senate, the house and being signed into law or is that something you think is coming with or without any federal help? >> becky, it's with or without in my opinion. the health care challenge is so large, if a bill is not passed that problem is still there. you look at medicare, medicaid spending. it's out of control. the nation can't afford it. we're doing to have to become more efficient. technology will make us more efficient. i think it doesn't depend on the legislature. >> is there any reason you guys aware to think about antitrust if the current administration even does get tougher? any concerns you should be

asking about there that could hold us up? >> we don't see concerns there. this is really about expanding the opportunities on the geographic basis and with customers. there's not a large concentration here in any particular area. >> michael, you mentioned another acquisition you'd made in the past couple of years. we have this one now. should people be thinking that you're tooth for being inquisitive is getting sweeter or less sweet? >> we've done about eight acquisitions in the last two or three years and certainly this is a significant one for us. we'll be focused on capturing the values for a very successful integration. but i would look for more. >> is there a reason you decided to do cash not stock, michael? >> well, you know, at the end of

the last quarter we had almost $13 billion in cash and short-term investments and generated significant cash flow. we feel cash is -- this is a great use of that cash. >> gentlemen, appreciate your time. again, thanks for coming on "squawk" for the additional guidance. >> thank you. >> if you missed it. michael dell and ross perot jr. buying for $3.9 in cash. >> these guys get wiser looking. we don't age one bit. >> it's funny, i don't think -- >> just here. >> he used to look like he was 22-year-old. i was very resentful. that successful, that hand some. now he has aged and i haven't. >> i can see a reason you use cash on a deal like, that you think your stock is going to keep climbing, right? >> you hear that stock deals

over time sometimes don't seem to work out as well. plus chevy chase in caddy shake. he's got -- oh, we had $13 billion, looking around, a big pile of cash. i'm going to use four here. >> good to have them on the show. be right back. uuuuuuuuuuuuuuuuuu

all right. quickly, stocks to watch. comments about ge, which had been coming from quite a few of the big firms. goldman weighed in, this is morgan stanley raising] from 19 to 17, overweight rating. there's a piece in barron's about how the option has shifted from a defensive position expecting flip spread, turned around, people setting themselves up for stock trading higher. maybe not back to 40 but at least back to the high teens or so. >> barons. >> the options piece. >> wells fargo upgraded, abercrombie and fitch downgraded. >> all right. still ahead on "squawk" this morning, pennsylvania governor ed rendell on politic, health care reform and the u.s. economy. you are watching "squawk box" on cnbc, first in business worldwide. fithe same tools the pros use,

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this is a special presentation, stock financial

summit, bond king, pemco's bill gross, real estate giant daniel tishman, plus pennsylvania governor ed rendell on health care reform and jump-starting infrastructure projects. "squawk box" begins right now. >> welcome back to "squawk box" here on cnbc, first in business worldwide. i'm joe kernen with becky quick and carl quintanilla. our guest host one of the world's most successful and innovative builders in commercial real estate dan tishman, chairman and ceo of tishman construction. we probably should have left the cameras on when we talked about disney world. when you've been there, you look around and think, who built this? who painstakingly put this -- france. >> the hotel, monorail. >> it was you. >> a lot of hammers. >> doing it right.

it takes forever and never looks like it's going to get done. i mean, it's a pain, right? >> it's all in the planning. it takes about half the time when you're building a project as massive as epcot or city center which we're doing in vegas. half the time is planning. i about the time you start construction you really know what every move is going to be. >> you do. >> there are a few that come up and surprise us. you really build it on paper many times before you start on the ground. >> good. you build it so things don't happ happen. >> consultants all around the world. i'm glad engineers didn't go to journalism school. i hope they are better, you know what i mean, learn more. >> they are a little more exact. >> you would hope they are not slackers. not that journalists are. >> meantime top story, dell is going to acquire perot systems at $30 a share cash, $3.9

billion. the acquisition will help dell provide a broader range of i.t. services. perot systems closed friday at 1791. so the deal is nearly 68 pours premium. we just spoke to ross perot jr. and michael dell about that deal a couple of minutes ago. >> the addition of perot terms capabilities will broaden the ability for us to serve a much wider set of customers. and certainly we'll take those capabilities to a new geography. we think it's a very exciting opportunity. it's really all about growth. >> we at perot plan to make dell a services powerhouse. we're going to work revery hard to add huge strength to this great dell company. >> take a look at the bid ask. in the meantime, check out futures. i'm not sure -- >> helping a little. >> more mulch and a. >> tech was never really the

problem child for the whole -- because they didn't have a lot of debt. no non-gaap at all. >> yeah. >> that's a rare thing to have no -- >> why would we ever use that. >> how many gaaps do we do? about one out of five are actual gaaps that you don't have to excuse to compare expectations. >> the future is under a little pressure but dow in striking distance of 10,000 even as doubts remain about the economy and the market so this is a perfect time for our "squawk box" financial summit. joining us founder and ceo of pemco. bowl daal, vice-chairman of equities for black rock. again, dan tishman, chairman and ceo of tishman construction. welcome. it's great to see both of you this morning. i can't think of a better time to ask you this, the world seems to be in two camps when it comes

to looking at the market. either glass half full or glass half empty. bill, which do you come on? >> we're half empty. we look at the market as sort of a will rogers, barney fife type comparison. twelve months ago the world was concerned about return on its assets as opposed to return of. i don't know what barney would say about the market but goofy, speculative, running far too high. we're conservative. we think the stock market is doing a pullback, setback, if only because it's gone so far and economic growth cannot go so far. the bond market itself, same thing in terms of high yield, corporate bonds. high yield up 50% as well as stocks. we're due for consolidatation at least. >> bill, thank you very much.

going to have barney fife his face and voice running through my mind. >> one bullet in his gun. >> bob, what about you, glass half full or glass half empty. >> i agree with everything bill said about the markets come a long way, due for a pullback at any point in time, economy can't grow as fast as it normally does off a recession low. however, i still think markets should be looked at as glass half full for the same reason policymakers looking at the same thing as is the public. what do i mean by that? all kinds of emphasis to continue to stimulate. as long as they are focused on stimulus, i think that's the sweet spot for the markets. then of course there's so many people on the sidelines with a ton of cash waiting for that proverbial pullback to put make money in. we'll get it at some point in time. i don't deny that. markets don't go straight in one direction. i still think we're in a sweet

spot and haven't seen the high for this market. >> bob, when you try to figure out where the high should be. it's difficult to try and put numbers on these sort of things, what would get you to the point where you start to feel uncomfortable. >> let me be completely honest and say the target we have from the beginning of the year, the s&p would end the year between 1,000 and 1050, that could still be the case. i think there's an ultimate objective of this cyclical bull market higher than where we are. calm it somewhere in the neighborhood of 1250 sometime over the next several years. >> jim grant had an editorial over the weekend, talked about how he looked around. you've seen a steep pullback in the economy that he can't help but think the economic rebound is going to be just as steep in the other direction. he's looking at things like gdp for 2010 and thinks we could see significant gains. if we see those numbers, whether or not they are temporary, whether there's a piper to pay

at the end, will the markets respond accordingly. >> i think they will if we see those numbers. i thought that piece was un-jim grant. he's an expert at economic history and very well spoken, well written author, but to the extent he spoke to a v-shaped recovery was a little disingenuous or un-jim grant-like. his whole philosophy is based on money creation, in addition to the velocity of the money. to the extent, yes, a lot of money has been created by the fed and other in the trillions of dollars we can expect a v-shaped economy but the private market has to put that to work. that's where we speak in terms of velocity. when velocity goes down in combination with money going upu don't necessarily see the v you see a mild shape of u and pimco and others forecasted.

>> when you see the real economy, you mentioned on the show you have issues on what's happening with the banks. are they lending or not lending. when you look at those troubles, why don't you lay that out for these gentlemen. >> sure. we were dug earlier, we see lots of talk about a v-shaped recovery or u-shaped, but we in the construction industry have not started to see the roerve at all yet. we're a lagging cater. i'd be really interested to know, bill, there's been a lot said about the next shoe to drop, which is the huge amount of commercial mortgage paper that's out there, that there's several trillion dollars that come due over the next ten years or so. there's no access, there's no market for that. it certainly has not loosened up. i'd really be interested in your take as to how you think that's going to impact the next two or three years of the economy. >> sure, dan. i think it will have an impact, much like residential mortgages

in the last 12 to 18 months, had a downer type of influence in terms of economic growth. commercial real estate will as well. two positive things, though, let's not all be negative, glass half empty. one, in the past three months, actually in june, the fed basically allowed commercial mortgage-backed securities to be palpable. that's complicated jargon but basically means private market in combination with the feds and leverage can releverage commercial mortgage backed securities and allow them a refinancing alternative. secondly the last weeks, most importantly, regulators have basically allowed services of commercial mortgage-backed securities to readjust the terms of commercial mortgage-backed loans. to the extent they can do that, like they are doing that in the residential, it's not really a

great thing for property, right, but certainly a solution, a palliative for commercial real estate. we've got some positive things going forward but definitely going to be a drag in the next six to 12 months. >> bob we'll see a lot of issuance in the equity markets, 21 total i believe it's eight and 13 secondary stock offerings. is the market going to be able to absorb all that? >> i believe so, beck y. that's not the first week it happened. last months couple hundred billion dollars that have been raised in the markets and pretty success fully on most of those deals. i think this is part of the restoration of health to balance sheets that need it. the fact that the window is open for that financing is good news. six months ago was closed even for some of the highest quality companies. >> bill and bob are going to be with us for the next hour. going to talk more about what's happening with treasury options issued this week, also some of that merger and acquisitions activities.

so gentlemen, everybody stick around. more in a few minutes. >> we are going to sneak a quick break in. "squawk box" financial summit will return in a moment. 8:30 a.m., pennsylvania governor ed rendell will talk about president obama's health care push, infrastructure projects and pennsylvania's role as a host state for the g-20 which takes place later this week. "squawk" continues in a moment. >> star studded week of political power players on "squawk box." tomorrow white house chief of staff rahm emanuel, former president bill clinton and his former chief of staff john podesta. wednesday the show is live in washington. the national energy summit with industry leaders and government decisionmakers. thursday and friday "squawk" reporting live from the g-20 meeting in pittsburgh. president obama gathering with other heads of states. the global economy front and center. an epic week of "squawk box" starting at 6:00 a.m. eastern.

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take a look at perot systems this morning. there's bid ask. we told you dell is buyer perot

for cash. one of the top stories of the money. we just chatted with michael dell and ross perot jr. turning back to financial summit, bob doll and dan tishman, bob are we on the wave of a new m and a. >> i believe so. there's more to come of a strategic nature like this one. i think as companies look at the sluggish economy in front of us, they will say how am i going to grow my top line, how am i going to grow my bottom line. they are not going to coup with good answers so merging down the street in the same business, maybe two can be better than one. i do think we'll see more. >> we've seen some in emergency, food, this is obviously in tech is it going to be limited to sector is that story you mentioned about trying to get that top line going, does that cut across the board. >> i think it's pretty

widespread. four of the very largest pharmaceutical companies will become two at the end of this year. i think we'll see it in lots of different industries. >> bill, back to you, asking you about broad econquestions, the difference urgence between stocks and bonds and according to some discounting a level of consumer spending that would be the biggest in a long time. back when consumers were spending at a 6% clip year after year. that is data going to disappoint and pull the market back or do we actually think some of these numbers are going to be possible? >> well, we do need a consumer revival, carl. what this experience in the past six to 12 months is a downdraft in terms of consumer spending and increases savings. we've gone from savings rate of 0% as high as 6% some would think that the savings rate is headed to 10 which means consumption will probably lag a long, long time. that speaks directly to the top

line bob doll has just spoken to in terms of mergers and quichlgts the top line is very difficult to increase to corporate america if you can't increase consumption. consumption 70% of the economy or was, declining, get the consumer back and depends upon employment, means unless we can get unemployment down we're going to have problems. >> bob, people are beginning to get their hopes up after cash for clunkers dynamic is playing itself out. there's some report september auto sales could actually set a new record on the low, which would be worse than february. are we just going to see the choppiness in the data the next six to 12 months. >> i'm afraid so. that's what a sluggish recovery is about. overall the numbers will be positive, pockets of geography, pockets of sectors that say what do you mean the recession is over, still feels like it. lots of fits and starts. that's what the market has to contend w at times it will

question is the growth rate positive. that's when we'll get setbacks. bob, can you talk a minute about china? we were discussing earlier, we read in the paper this morning there were two big deals, goldman made a big investment in a china automakers, carlyle made a big investment in a dairimaker. the largest ip in the lead in the world acquisition of a chinese construction company something in the magnitude of $7.5 billion. that construction company is now spreading across the world, contacts everywhere. is china where the action is going to be in the next years. >> it's a key part of the action. we already know prior to the on set of the problems in the last 18 months, the center of gravity for economic growth on the planet was moving east. i think the events of the last 18 months only accelerated that. china, among a few others, is a key spot for all these good things.

look, for the developed countries that grow, they are going to have to figure out ways to support these other areas of growth, china again chief among them. your three data points i think support that. this is where a lot of action is taking place. look, we have -- we have to not forget china is an emerging economy. it will have bumps along the way. like a child seeking maturity, adolescence is difficult. my guess is point to point, china will have done great things but a few bumps on the way. >> bill, you agree? >> i think so. china has been the biggest stimulator over the past 12 months relative to any other global economy in the united states and uk, in terms of stimulative programs. china on relative basis they probably experienced a deficit of $3 trillion or more. the problem they have now, though, that money went out so

quickly that banks and financial institutions have made some marginal, risky loans. even china as welly as it's going to be has to be concerned in terms of financing. >> why is the ten-year held so well, the dollar declined so much. how do you explain that? >> i think inflation is low. that's one of the things. >> why is gold up, then? >> gold is being financed as 0% interest rate so it doesn't cost much to carry that call, so to speak. the treasury market i think is inflation-based, also supply and demand-based. we have $100 billion this year, twos, fives, and sevens, threes and tens and 0s. another week we have treasury bills. so the supply of treasuries is almost overwhelming matching

that is the fed buying mortgages. so it's sort of been a back and forth balance, but instead disappears and they will at the end of the year. we may have problems going forward. >> you made bullish comments about the long end recently even. knowing what our future funding is for everything we're doing from stimulus to all the fed initiatives to all these programs. and yet you still make positive -- it doesn't -- none of it seems to make sense long-term. >> you know, that's a consideration on an intermediate basis, a flattener. it would work, long bonds would do better if we got the trade that basically -- the anti-green shoots trade to the extent that the economy moved back closer to zero as opposed to up 2 or 3 or 4%. the markets would begin to anticipate deflation, would

begin to anticipate low economic growth or recession in 2010. in terms of recession. >> you're all in on that trade, you and el-erian, view of the stock market and bonds and everything. you've got a lot of money on the line. >> i think there's purity of thought. >> it all comes from that. >> we're never all in, we tend to measure our risk. it's more like professional blackjack as opposed to hold 'em. >> are we fools for walking in here every week and wondering if china is going to meet the supply that we speak in treasuries? >> i think that's a valid consideration. at some point china is going to be reluctant to exchange goods for paper. you know, i'm suggesting that the moment that the treasury paper they are taking is valid and has value to them, if only to keep their populace employed. at some point the trade will be not to buy dollars, treasuries

but to buy euro dominated securities, to buy other currencies and exchange agreements between various companies such as brazil and china. so it's not a forever type of thing. i think the treasury, the fed policymakers in the united states have to be concerned down the road. >> we're doing to hear more from -- you said it earlier, bill, bob, and dan. uh-huh, yeah, all righty, then. billy bob could be one guy. >> uh-huh. >> i hit you in the head and just kill you. pennsylvania governor ed rendell join us at 8:30 eastern time. economy, health care and host of the g-20 coming up on "squawk box." we'll be right back.

up next, playing host to the g-20 summit, pennsylvania governor ed rendell will be the special guess. we'll hit on everything from fixing the economy to america's health care crisis. stay right here. "squawk box" will be right back. everyone awaits the return of the fishing boats. ♪ their safe arrival is highly anticipated, ♪ as is something else. a shipment of natural sea salt from cargill, essential for preserving the catch. we deliver the salt on precise schedules... and ship it efficiently all along the alaskan coast;

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welcome back on cnbc, first in business worldwide. we're just one hour away from the opening bell. in the headlines this morning, perot systems, those shares are called sharply higher. dell is acquiring perot for $30 a share in cash, a 68% premium over friday's closing price. both the boards have already approved this deal. dell is going to be using the deal to expand its offerings and

information technology services. home builder lennar, 30% higher than a year order. number of deliveries fell but so did orders. irs expecting to announce its extending a tax amnesty program to october 159. that program aimed at holders of international bank accounts expected to dodge taxes originally expected to expire wednesday. >> pennsylvania governor ed rendell has lone to celebrate. he and lawmakers reached a deal on the budget, ending a stalemate. governor, good to see you. >> thanks, joe. >> we're fine, recession is over, do you concur or maybe with a few exceptions? >> well, i think it's a little too early but the signs are good even employment in pennsylvania.

the last three two-week cycles we've had more expansions than we've had closings and lay-offs. that hasn't happened since august '08. the early signs are good. the stimulus is starting to have an effect, reaching its peak. we have $750 million of our billion dollars in road construction and bridge construction under way, wastewater, stimulus is having a little bit of an effect. the economy is starting to turn. manufacturing is a little bit on the upside. that's mostly orders coming from the stimulus program and our own state stimulus program. we're optimistic, our unemployment rate has stayed consistently below the national average. we're 1.1% below the national average. still not good by any means but there's good signs. >> big show is coming, not philly but other big state in pittsburgh. there's always protesters but a

lot of women down with carl quintanilla coming down to anchor our coverage. >> protesting me. >> no question about it. >> exactly. are you ready? >> we're ready. you know, it's interesting. i think for a big city like new york or philadelphia or san francisco having a g-20 is not a big deal, but for pittsburgh it is a big deal. because the world still thinks of pittsburgh as a smokestack city with a lot of smog. it's converted itself into a beautiful city. i think usa "today" said it had the second most beautiful skyline, took advantage of i.t. revolution, science revolution now the green energy job revolution. it's transformed its economy and a pretty vibrant city that has missed the worst affects of the recession. it's a real success story and pittsburgh is going to get a chance to show itself to the world. >> do you have advice for some of the other states? what do you need to do? you finally got this through.

did you have have to give, did they? how did it work? >> my main thrust was to preserve goals on education. we were just named by center for education research in washington as the only state in the union in the last six years to make gains at every grade level and every subject level. we've done very well. i wanted to keep education funding growing even in this tough economy. the republicans, and they were right, they wanted to cut spending. i agreed with them, made over $2.5 billion in cuts. some republicans wanted to cut spending more. i wanted hold the line on education. we held the line, found more cuts. it was an onerous process. we should have started earlier in the budget cycle. we never seem to do. i think the end rule is a good budget. i think we're probably one of the handful of states, maybe the only state in this recession to increase education funding. >> we hear governors now are more comfortable with some of the provisions not one bill

obviously but for a while governors were concerned about what states would have to pony up for provisions both the house and senate plan. are your fears, have they been allay allayed. >> in the house plan, the house plan is the one we're most comfortable with. it says the increases in medicaid, bringing medicaid 100% of federal poverty to 103%, that will be basically paid for almost all in by the federal government. the senate finance committee bill has a sliding scale. the states would have to pay a share of that money we don't have now. the senate finance committee tells us when we read the whole bill we'll find out that there are plus sides like we'll be able to get a larger rebate for prescription drugs for our medicaid program soit will balance off. there's more certainty on the house side than the senate finance bill. governors are wary, it's easy to

pass a mandate on to the states as a way of paying for this. right now states are in trouble. we couldn't have had a budget without a stimulus plan. i know there's debate about stimulus plan. if states hadn't gotten money for medicaid and help stabilize education, the layoff and damage would have been at an incredible level. particularly 2011 when the stimulus money goes away. >> governor if you were up for re-election and the president asked you not to run, i have a hard time believing you would take that down. what's your -- >> no, listen. everyone has to make up their own mind before they decide to run for office. when i was deciding to run for governor, people said a philadelphiaan county be elected governor. truth told no one had been elected since 1914. couldn't beat a casey in pennsylvania. i had to run against bob casey jr. in the democratic primary. i believed in myself.

i thought i was way behind. i knew i could win and stuck to it and i won. governor paterson has to make that decision himself. the white house input is important. it gauges how much support you're going to get from the white house. it's something that the governor should weigh. if he believes in himself and candidacy and believes he can bounce back from where he is, it's done all the time in politics, he should run. if he doesn't, if he doesn't, he shouldn't. >> a lot of people believe for the good of the party you look at where he is, do you think he could win if the election were today? >> the great thing about politic, guys, the election isn't today. when i was told a philadelphiaan couldn't run in january, i was 25 point behind bob casey in the democratic primary but i decided that's what campaigns were for. governor paterson is an engaging personality. i don't know if you've talked to him. >> he's been on the show. >> i love it when he says he's not much into the vision thing. he's got a great sense of humor,

he's an engaging guy. a lot of the problems new york is undergoing are problems every state is undergoing. can he fight back? it's an uphill climb but that's his decision. the president's advice, he is the leader of our party. you should certainly weigh that advice. it's important to weigh it. in the end everyone has to make that decision themselves. in politics there are a lot of stories about rising from the dead, a lot of stories. >> governor, dan tishman, i know you're a huge believer and one of the real leaders in the stimulus program. truly believe in stimulus job creation, special stimulus part. you've deployed 170 million of the billion dollars in pennsylvania. the reality is, you just mentioned, three years from now or two years from now when stimulus starts to go away, the real solution is going to be

jobs, to bring consumers back, to bring the economy back. reality seems like a billion dollars sounds like a lot of money. even for a state like pennsylvania when you think about the roads, the infrastructure, the new distribution system for the green power movement, a billion dollars really is a drop in the bucket. what will you do and what needs to be done to lead the way for the next tranche of stimulus money, true infrastructure stimulus package that will create jobs and bring the infrastructure in the united states up to a modern realm? >> well, i'm a great believer that the stimulus was good but could have been great. there was too much tax cuts and a little too much on social spending. there should have been more infrastructure. infrastructure produces jobs on site but produces jobs back in the factories. every time you fix a bridge, steel, asphalt, timber, lighting fixtures, the whole gamut of things.

it's the best job producer particularly in manufacturing and construction, which are the two sectors of our economy that have been hurt the worst. i think we need to go on a very significant nationwide, very large infrastructure program. not just roads, bridges and highways. airports, ports, school buildings, water and wastewater systems. if we do that, we'll be putting the american infrastructure back into competitive status, improving quality of lives. best of all, a five to ten-yore jobs program in the areas and sectors of the economy we need most. the best idea for america. it isn'tsy as you know, the word infrastructure, people glaze over. for me, it's crucial to the long-term economic health of the country. we've got to get toyota. i think the president understands it. one of the things they might do is put together an ice tea bill at a significant level never seen before in the country but something necessary to do the

work we need and to create literally muscles new jobs. >> governor, thank you. my thanks to you today and we'll be seeing you again from g-20. take care of our boy down there. we worry you're going into danger. >> i will. >> you will? >> we've got 1500 state police assigned. i'll give him at least two. >> thank you. >> the ride from the airport. >> futures this morning, we're starting out in the negative. asia had a rough night overnight. not dramatically so but shanghai was the only index that was up. we're onclose to the session lows. when we come back, "squawk box" financial summit continues with pimco's bim gross, bob doll, bill tichman we'll find out where the smoort money is. don't go away. >> tomorrow on "squawk box," push for health care reform, overhauling financial regulation, keeping the economy going and the one man keeping track of it all opens up to

"squawk." president obama's chief of staff rahm emanuel in a rare interview. that's tomorrow on "squawk box."

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welcome back, everybody. let's go back to the financial summit for discussion. our guest host, dan tishman, chairman and ceo of tishman construction. i want to talk about glass half

empty, half full again. when i asked you at the top of the hour, you sounded like you were basically a glass half full kind of guy. there was an argument in the "wall street journal" that says if you look at the big gains, gains of 50% in the equity market, that's only happened six times in the last 100 years. in each of those cases, either in the 1930s or '70s when you had a lot of volatility of gains. never able to hold onto them. do you worry we could see a big downturn before you start to see continual gains? >> i do think there's a risk of a correction, becky, given how far and how fast we've come, as i acknowledged earlier. kind of the risk level i'm looking at is 950 on the s&p. we could do that at any point in time after the big gains. but i think comparing where we are only to the march low, as important as that is, is missing the int. why don't we compare ourselves to where we were, let's say before the lehman crisis a year ago. how about the all-time high in the market, how different

valation levels, how different earnings estimates and earnings expectation. we have long-term problems in this country, no question about it. but i still think we're at the sweet spot of the cyclical recovery process. >> why don't we talk a little bit, we have the meeting tuesday and wednesday, on wednesday we'll be getting a statement. there's a lot of speculation about what we might see, people wondering if the feds are going to start preparing for ventiality of the programs, will they talk about commercial real estate. >> i think they will have to begin to prepare us for an exit on what they call and the market calls using policy. there's two parts to the program, one 0% interest rates and quantitative, which basically meant the fed would buy trillions of assets whether

morgue loans or agency securities. those programs are basically scheduled to end towards the end of the year and in most cases at the end of the year. and so we won't have that purchasing power available from the fed to bolster and prop up asset prices on the treasury and mortgage market. i think the fed has to begin to prepare the market for that unless they want to extend it. i do think they have a problem going forward, the absence of $2 trillion of purchasing power will have not a significant affect on asset prices, bond prices and higher yields but a marginal affect. the fed has to be careful in terms of exit strategy. i don't think they are going to touch the statement in terms of 0% interest rates for a long time. >> bill, as we await the statement this week, can they start removing pieces of jenga

tower without sparking fears a rate hike is imminent? >> well, the market must expect at some point, some time period, 18, 24 months the fed will try at least to return to a more normalized type of market that would be interest rates at least 1 to 2% on the short-term side and absence of quantitative easing. whether they can be successful in that approach is debatable. at pimco we debate that every day in terms of our investment community and we expect it's not going to be an easy task to follow. they are trying to replace and have replaced shadow banking system over the past 12 months, which basically allowed for lending of 4 to 5 to $6 trillion of assets now the fed is trying to make up for to the extent that hole is not filled and becomes a hole again, then we might see a recess, so to speak,

a retreat in market asset prices and the fed has to be very careful. not just the feds but other central banks around the world. >> hey, bob. you mentioned earlier you get the scene there's still a lot of money on the sidelines, people waiting to jump back in. if i'm one of those people, where would you suggest or recommend they should be putting their money right now? >> i think they should still be betting on cyclical recovery, subpar recovery. i think you can own i'll call it risk assets be they corporate bonds or equities. i would stick with a higher quality. they have lag number one and valuations are not a lot of difference between the high-quality and low-quality. if we're right economic recovery subpar, another reason to own higher quality. the shift will come. we've been in an environment equity, corporate bonds, commodities, treasury bonds all moving up. how do we explain that? i think the answer is lots of cash getting zero and people are

saying i don't want zero when our assets are going up, so these other categories are all moving up. that will eventually separate. i agree with the notion of the last conversation treasury is probably the first to give up in that rally. >> bill, where would you be directing people? >> well, just the opposite, becky, out of risk assets back into relatively risk-free assets. doesn't mean treasuries, high-quality aa and aaa securities. the spread is an example in a high-yield market are very nar oechlt high-yield bombs issued these days at issue market 8% levels. twelve months ago they were at 15, 16 month lows. you can see how far we've come. against that you can measure in mortgages 4.5 to 5% treasuries, 12% plus or minus. the spread and advantage to risk assets in the bond market certainly isn't there. i suspect it's not there in the equity market as well. >> all right, bill, bob, past

hour. we appreciate it. dan is going to be with us for the rest of the hour. gentlemen, thank you very much. >> you're welcome. coming up, we'll check this morning's action, the first opening bell of the week. and tomorrow, in addition to ron emmanuel and bill clinton and also, rudy giuliani, america's mayor, will help us with the g-27th. "squawk box" will be right back. welcome to the now network. right now five coworkers are working from the road using a mifi-- a mobile hotspot that provides up to five shared wi-fi connections. two are downloading the final final revised final presentation. - one just got an email. - woman: what?! hmph. it's being revised again. the copilot is on mapquest. and tom is streaming meeting psych-up music - from meltedmetal.com. - ( heavy metal music playing ) that's happening now with the new mifi from sprint--

the mobile hotspot that fits in your pocket. sprint. the now network. deaf, hard-of-hearing, and people with speech disabilities access www.sprintrelay.com. check out tomorrow's "squawk

box" lineup, review with bill clinton, former chief of staff, and president obama's chief of staff, rahm emanuel, in a rare interview. that's tomorrow on "squawk box." when we come back, the futures ahead of the opening bell, and a final round with

your guest host. first, though, check out gold. dollar's having a good morning. gold is up more than ten bucks. $9.99. could someone toss me

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futures have been very stubborn so far this morning. pretty much sticking in the red after some downward action in asia overnight. and in europe this morning. we've been chatting here all morning with our guest host dan, ceo of tishmanconstruction. you've got city center and vegas, which some didn't i have would happen and will open soon. >> i think you might have thought it wasn't going to happen. city center is the largest commercial project undertaken in the world. it was conceived about four years ago. it will open on the day it was projected to be opened, the end of this year. it's going well. it's probably the largest employer in the city of las vegas right now by a long shot. there are probably about 14,000 trades people working on it between finishing it, opening it

and doing the interiors. it's a remarkable project. >> are there new -- is there new plans to break ground on something else? something completely new from scratch? >> right now the private sector has really shut down. there are small projects around the united states, rental projects, university projects. the large-scale projects, they're surfing, as we've been talking about, from the inability to find credit. the fact that tenants aren't moving around and expectations have reduced significantly. i think it's going to be a little bit of time before you see mega projects in the united states. contrary to the united states, we're quite busy in places like middle east where there are very large projects happening, and the building in china is phenomenal. >> even still? >> even still. >> after all this time? >> absolutely. >> people worried about a hangover but that hasn't happened if. >> i think in china they have a different way of looking at things. even if the olympics expansion

was -- is being underutilized, they put that aside and go on to the next. >> are you relatively more confident in residential? >> i'm not particularly -- i'm more confident in the large residential on the rental side today than i am in the condominium side, which is going to take a while to absorb the stock. >> a lot of inventory overhang. >> yes. >> it's been fascinating having you here. >> thank you. >> thank you. appreciate it. keep an eye on the futures. they run der pressure today. that does it for us today. join us tomorrow. right now it's time for "squawk on the street." shares are sharply higher being bought for $30 a share. that's 68% premium over friday's close. and the set to report the august index,ing economic indicator at 10:00 eastern time. we will get an additional $77 million from the government to tin anybody development of its

flu treatment. now receiving a total of $180 million. that's cnbc.com news now. we're first in business worldwide. i'm courtney reagan. live from the financial capital of the world in the heart of lower manhattan, this is a special edition of "squawk on the street." "squawk" around the world. today we are taking you to the ends of the earth and the other big financial capitals, london, the financial head of europe, right now stocks are a little bit of a down morning. and taking their cues from asia to sydney in the pacific rim where it's almost tomorrow. one year after the melt down around the global markets. we're looking at how the world is fairing right now. wow, that's a beautiful picture. good morning. i'm erin burnett. in the u.s., a $3.9 billion tech deal, upbeat view on the housing market from lennar, not enough to turn futures positive.

ross? >> erin, you know, we are down today. got to remember where we've come from. european stocks up over 6 1/2% in the last two weeks. a little bit of profit taking, off a percent at the moin moment. retail stocks are weaker. let's find out how we're getting along in the other part of the world over in asia. how are you doing there? >> hi, there, ross. well, you know, the asian equity market might have been down today but hot day for the asian ipo markets. guess what, folks, they're only going to get hotter. i've got all the details coming up during the show. erin, back to you. >> thank you. we're so excited to have mandy and ross with us, especially poor mandy staying up all night to be here on this show with you today. let's look at the futures in the u.s. lower open across the board. merger monday, dell buying perot systems for $30 a share. talk about back to the heady days of m and a. this is about a